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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended JANUARY 1, 2000
Commission file number: 1-5256
V. F. CORPORATION
(Exact name of registrant as specified in its charter)
PENNSYLVANIA 23-1180120
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
628 GREEN VALLEY ROAD, SUITE 500
GREENSBORO, NORTH CAROLINA 27408
(Address of principal executive offices)
(336) 547-6000
(Registrant's telephone number, including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
<TABLE>
<CAPTION>
Name of each exchange
Title of each class on which registered
------------------- -------------------
<S> <C>
Common Stock, without par value, New York Stock Exchange
stated capital $1 per share and
Preferred Stock Purchase Rights Pacific Exchange
</TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements for
the past 90 days. YES X NO
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
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As of March 7, 2000, 115,114,495 shares of Common Stock of the registrant were
outstanding, and the aggregate market value of the common shares (based on the
closing price of these shares on the New York Stock Exchange) of the registrant
held by nonaffiliates was approximately $2.0 billion. In addition, 1,669,444
shares of Series B ESOP Convertible Preferred Stock of the registrant were
outstanding and convertible into 2,671,110 shares of Common Stock of the
registrant, subject to adjustment. The trustee of the registrant's Employee
Stock Ownership Plan is the sole holder of such shares, and no trading market
exists for the Series B ESOP Convertible Preferred Stock.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Report to Shareholders for the fiscal year ended January
1, 2000 (Item 1 in Part I and Items 5, 6, 7, 7A and 8 in Part II).
Portions of the Proxy Statement dated March 23, 2000 for the Annual Meeting of
Shareholders to be held on April 25, 2000 (Item 4A in Part I and Items 10, 11,
12 and 13 in Part III).
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PART I
ITEM 1. BUSINESS
VF Corporation, through its operating subsidiaries, designs, manufactures and
markets branded jeanswear, intimate apparel, children's playwear, occupational
apparel, knitwear and other apparel. VF Corporation, organized in 1899, oversees
the operations of its individual businesses, providing them with financial and
administrative resources. Unless the context indicates otherwise, the term
"Company" used herein means VF Corporation and its subsidiaries.
The Company manages its business through over two dozen consumer-focused
marketing units that support specific brands. Management of the individual
marketing units has the responsibility to build and develop their brands within
guidelines established by Company management. Marketing units with generally
similar products have been grouped together into three reportable business
segments - Consumer Apparel, Occupational Apparel and All Other.
Certain financial information regarding the Company's three reportable segments,
as well as geographic information and sales by product category, is included
in Note N of the Company's consolidated financial statements in the Company's
Annual Report to Shareholders for the fiscal year ended January 1, 2000 ("1999
Annual Report"), which is incorporated herein by reference.
CONSUMER APPAREL SEGMENT
JEANSWEAR AND RELATED PRODUCTS
Jeanswear and related casual products are manufactured and marketed in the
United States and in many international markets. In the United States, jeanswear
products are manufactured and marketed under the LEE(R), WRANGLER(R),
RUSTLER(R), RIDERS(R) and BRITTANIA(R) brands. The Company also offers cotton
casual pants and shirts under the LEE CASUALS(R) and TIMBER CREEK BY WRANGLER(R)
brands.
In domestic markets, LEE branded products are sold through department and
specialty stores. WRANGLER westernwear is marketed through western specialty
stores, and other WRANGLER brand products are sold primarily through the mass
merchant and discount store channels. The RUSTLER and RIDERS brands are marketed
to national and regional discount chains. Sales for all brands are generally
made directly to retailers through full-time salespersons.
According to industry data, approximately 664 million pairs of jeans made of
denim, twill, corduroy and other fabrics were sold in the United States in 1999,
representing a 3.9% increase over 1998. This same data indicates that the
Company currently has the largest combined unit market share at approximately
25%, with the WRANGLER, LEE and RUSTLER brands having the second, third and
fourth largest unit shares of the jeans market in the United States,
respectively.
In international markets, the Company's largest jeanswear operation is in
Western Europe, where the Company manufactures and markets LEE, WRANGLER,
MAVERICK(R) and OLD AXE(R) jeanswear and related products. LEE and WRANGLER
jeanswear products are sold through department stores and specialty shops, while
the MAVERICK and OLD AXE brands are sold to discount stores. Jeanswear in Europe
and in most international markets is more of a fashion product and has a higher
relative price
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than similar products in the United States. Jeanswear products are sold to
retailers through the Company's sales forces and independent sales agents.
The LEE and WRANGLER brands are also marketed in Canada and Mexico.
Additionally, over the last three years, the Company has converted several
licensed operations in South America into owned operations. Currently, the
Company manufactures and markets the WRANGLER and LEE brands in several South
American countries through operations based in Brazil, Argentina and Chile.
These products are sold through department and specialty stores. Also, in late
1999, the Company acquired a business that manufactures and markets the licensed
UFO brand, a leading local jeans brand in Argentina and other countries.
The Company also manufactures and markets WRANGLER products in Japan and LEE
products in China, and participates in joint ventures in Spain and Portugal. In
foreign markets where the Company does not have owned operations, LEE and
WRANGLER jeanswear and related products are marketed through distributors,
agents or licensees.
INTIMATE APPAREL
The Company manufactures and markets women's intimate apparel under the VANITY
FAIR(R), LILY OF FRANCE(R) and the licensed OSCAR DE LA RENTA(R) labels for
sales to domestic department and specialty stores. Products include bras,
panties, daywear, shapewear, robes and sleepwear. During 1999, the Company
introduced a line of sports bras under the licensed NIKE(R) label. In addition,
the Company entered into a license agreement with Tommy Hilfiger Corporation to
produce and distribute women's intimate apparel. This line of intimates will be
in department stores for fall 2000 and will include bras, panties, daywear and
shapewear.
Women's intimate apparel is also manufactured and marketed under the
VASSARETTE(R), BESTFORM(R) AND EXQUISITE FORM(R) brands for sale to the discount
store channel of distribution. The Company also has a significant private label
lingerie business with various national chain and specialty stores in the United
States. Most products are sold through the Company's sales force.
Women's intimate apparel is also manufactured and marketed to department and
specialty stores under the LOU(R) and BOLERO(R) brand names primarily in France
and under the GEMMA(R), INTIMA CHERRY(R) and BELCOR(R) brands in Spain. Intimate
apparel is marketed in discount stores in France under the VARIANCE(R) brand. In
2000, the Company will begin marketing the VANITY FAIR, VASSARETTE, BESTFORM and
EXQUISITE FORM brands in Europe.
CHILDREN'S PLAYWEAR
Infant and children's apparel is manufactured and marketed in the United States
under the HEALTHTEX(R) and LEE brands and under the licensed NIKE brand.
Products are sold primarily to department and specialty stores. During 1999, the
HEALTHTEX brand was made available over the internet through its website,
www.healthtex.com, as the Company's first e-commerce initiative directly to
consumers.
SWIMWEAR
The Company designs, manufactures and markets an extensive line of women's
swimwear under the JANTZEN(R) trademark and the licensed NIKE label. Products
are sold primarily to department and specialty stores in the United States and
Canada through the Company's sales force. The JANTZEN
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trademark is licensed to other companies in several foreign countries. Swimwear
is also manufactured and marketed under various labels in Spain and France.
OCCUPATIONAL APPAREL SEGMENT
The Company produces occupational and career apparel sold under the RED KAP(R)
label in the United States. Approximately two-thirds of sales are to industrial
laundries that in turn supply work clothes to employers, primarily on a rental
basis, for on-the-job wear by production, service and white-collar personnel.
Products include work pants, slacks, work and dress shirts, overalls, jackets
and smocks. Since industrial laundries maintain minimal inventories of work
clothes, a supplier's ability to offer rapid delivery is an important factor in
this market. The Company's commitment to customer service, supported by an
automated central distribution center with several satellite locations, has
enabled customer orders to be filled within 24 hours of receipt and has helped
the RED KAP brand obtain a significant share of the industrial laundry rental
business.
Through four acquisitions since the fourth quarter of 1998, the Company has
expanded its product offerings to include restaurant apparel and linen products,
customized business uniforms and "clean room" apparel. In addition, the Company
markets safety apparel in the United States and Canada under the BULWARK(R)
brand.
ALL OTHER SEGMENT
KNITWEAR
The Company manufactures and markets knitted fleecewear and T-shirts in the
United States. Blank fleece and T-shirt products are marketed under the LEE
brand to wholesalers and garment screen-print operators. Approximately 40% of
knitwear sales are for private label accounts, including NIKE, Inc. and various
national chain, department and discount stores.
The Company also designs, manufactures and markets imprinted sports apparel
under licenses granted by the four major American professional sports leagues,
NASCAR and other parties. These sports apparel products for adults are
distributed through department, sporting goods and athletic specialty stores
under the LEE SPORT(R), NUTMEG(R) and CHASE AUTHENTICS(R) brands. CSA(R) branded
products, primarily in children's sizes, are distributed through mass
merchandisers and discount stores.
DAYPACKS AND RELATED PRODUCTS
The Company manufactures and markets JANSPORT(R) brand daypacks sold through
department and sports specialty stores and college bookstores in the United
States and through department and specialty stores in Europe. WOLF CREEK(R)
brand daypacks are marketed through discount stores in the United States.
JANSPORT daypacks and bookbags have a leading brand share in the United States.
JANSPORT branded fleece casualwear and T-shirts imprinted with college logos are
sold through college bookstores. In addition, JANSPORT backpacking and
mountaineering gear is sold through outdoor and sporting goods stores.
RAW MATERIALS AND MANUFACTURING
Raw materials include fabrics made from cotton, synthetics and blends of cotton
and synthetic yarn. The Company also purchases thread and trim (buttons,
zippers, snaps and lace) from numerous
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suppliers.
For most domestic operations, the Company purchases fabric, primarily from
several domestic suppliers, against scheduled production. Purchased fabric is
cut and sewn into finished garments in owned domestic and offshore manufacturing
facilities. In addition, the Company contracts the sewing of products from
independent contractors, primarily in foreign countries. To obtain a more
balanced sourcing mix, an increasing percentage of production is in lower cost
offshore plants, primarily in Mexico and the Caribbean Basin. By the end of
1999, approximately 65% of domestic sales were derived from products sewn
outside the United States.
In the Company's domestic knitwear and a portion of its domestic intimate
apparel businesses, operations are vertically integrated and include the entire
process of converting yarn into finished garments. The Company knits purchased
yarn into fabric in its facilities. The knit fabric is then dyed, finished and
cut in domestic facilities before it is sewn into finished garments. For the
knitwear operations, cotton yarn and cotton and synthetic blend yarn are
purchased from a major textile company under a long-term supply agreement. Yarn
is also available from numerous other sources.
For the Company's international businesses, fabric, thread and trim are
purchased from several international suppliers. In the European jeanswear
operations, fabric is cut and sewn into finished garments in owned plants in
Malta, Poland and Turkey, with the balance (mostly tops) sourced from
independent contractors. In intimate apparel, fabric is sewn into finished
garments in owned plants in France, Spain and Tunisia, with the remainder
manufactured by independent contractors. To obtain a more balanced sourcing mix,
jeanswear and intimate apparel sourcing has been shifted from owned plants in
Western Europe to lower cost owned and contracted production outside of Western
Europe. At the end of 1999, approximately 43% of international sales were
derived from Company-owned plants.
The Company did not experience difficulty in obtaining fabric and other raw
materials to meet production needs during 1999 and does not anticipate
difficulties in 2000. The loss of any one supplier would not have a significant
adverse effect on the Company's business.
SEASONALITY
The apparel industry in the United States has four primary retail selling
seasons -- Spring, Summer, Back-to-School and Holiday, while international
markets typically have Spring and Fall selling seasons. Sales to retailers
generally precede the retail selling seasons, although demand peaks have been
reduced in recent years as more products are being sold on a replenishment
basis.
Overall, with its diversified product offerings, the Company's operating results
are not highly seasonal. On a quarterly basis, consolidated net sales range from
a low of approximately 23% of full year sales in the first quarter to a high of
27% in the third quarter. Sales of knitwear products, however, are more seasonal
in nature, with approximately 57% of its sales of fleece and T-shirt products in
the second half of the year.
Working capital requirements vary throughout the year. Working capital increases
during the first half of the year as inventory builds to support peak shipping
periods, and accordingly decreases during the second half. Cash provided by
operations is substantially higher in the second half of the year due to higher
net income and reduced working capital requirements during that period.
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ADVERTISING
The Company supports its brands through extensive advertising and promotional
programs and through sponsorship of special events. The Company advertises on
national and local radio and television and in consumer and trade publications.
It also participates in cooperative advertising on a shared cost basis with
major retailers in radio, television and various print media. In addition,
point-of-sale fixtures and signage are used to promote products at the retail
level. During 1999, the Company spent $258 million advertising and promoting its
products.
OTHER MATTERS
COMPETITIVE FACTORS
The apparel industry is highly competitive and consists of a number of domestic
and foreign companies. Management believes that there is only one competitor in
the United States that has consolidated assets and sales greater than those of
the Company. However, in certain product categories in which the Company
operates, there are several competitors that have more assets and sales than the
Company in those categories.
TRADEMARKS AND LICENSES
Trademarks are of material importance to all of the Company's marketing efforts.
Company-owned brands are protected by registration or otherwise in the United
States and most other markets where the Company's brands are sold. These
trademark rights are enforced and protected by litigation against infringement
as necessary. The Company has granted licenses to other parties to manufacture
and sell products under the Company's trademarks in product categories and in
geographic areas in which the Company does not operate.
In some instances, the Company pays a royalty to use the trademarks of others.
Apparel is manufactured and marketed under licenses granted by Major League
Baseball, the National Basketball Association, the National Football League, the
National Hockey League, NASCAR, NIKE, Inc., Tommy Hilfiger Corporation and
others. Some of these license arrangements are for a short term and may not
contain specific renewal options. Management believes that the loss of any
license would not have a material adverse effect on the Company.
CUSTOMERS
The Company's customers are primarily department, chain, specialty and discount
stores in the United States and in international markets, primarily in Europe.
Sales to Wal-Mart Stores, Inc. totaled 13.0% of total sales in 1999 and 12.3% in
1998. Sales to the Company's ten largest customers amounted to 40% of total
sales in 1999 and 41% in 1998.
EMPLOYEES
The Company employs approximately 73,000 men and women. Approximately 4,100
employees are covered by various collective bargaining agreements. Employee
relations are considered to be good.
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BACKLOG
The dollar amount of backlog of orders believed to be firm as of any fiscal
year-end is not material for an understanding of the business of the Company
taken as a whole.
CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS
Certain statements included in Item 1 - "Business" and Item 7 - "Management's
Discussion and Analysis of Financial Condition and Results of Operations" are
"forward-looking statements" within the meaning of the federal securities laws.
This includes any statements concerning plans and objectives of management
relating to the Company's operations or economic performance, and assumptions
related thereto. In addition, the Company and its representatives may from time
to time make other oral or written statements that are also forward-looking
statements.
These forward-looking statements are made based on management's expectations and
beliefs concerning future events impacting the Company and therefore involve a
number of risks and uncertainties. Management cautions that forward-looking
statements are not guarantees and that actual results could differ materially
from those expressed or implied in the forward-looking statements.
Important factors that could cause the actual results of operations or financial
condition of the Company to differ include, but are not necessarily limited to,
the overall level of consumer spending for apparel; changes in trends in the
segments of the market in which the Company competes; the financial strength of
the retail industry; actions of competitors that may impact the Company's
business; and the impact of unforeseen economic changes in the markets where the
Company competes, such as changes in interest rates, currency exchange rates,
inflation rates, recession, and other external economic and political factors
over which the Company has no control.
ITEM 2. PROPERTIES.
The Company owns most of its facilities used in manufacturing, distribution and
administrative activities. Certain other facilities are leased under operating
leases that generally contain renewal options. Management believes all
facilities and machinery and equipment are in good condition and are suitable
for the Company's needs. Manufacturing and distribution facilities being
utilized at the end of 1999 are summarized below by reportable segment:
<TABLE>
<CAPTION>
Square
Footage
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<S> <C>
Consumer Apparel 14,600,000
Occupational Apparel 2,700,000
All Other 4,000,000
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21,300,000
==========
</TABLE>
In addition, the Company also owns or leases various administrative and office
space having 1,200,000 square feet of space and owns or leases facilities having
2,800,000 square feet that are used for factory outlet operations. Approximately
83% of the factory outlet space is used for selling and warehousing the
Company's products, with the balance consisting of space leased to tenants and
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common areas. Finally, the Company owns facilities having 900,000 square feet of
space formerly used in its operations but now held for sale.
ITEM 3. LEGAL PROCEEDINGS.
The Company is a party to litigation arising in the ordinary course of its
business. In management's opinion, there are no pending claims or litigation,
the outcome of which would have a material adverse effect on the Company's
consolidated financial position, results of operations or cash flows.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
ITEM 4A. EXECUTIVE OFFICERS OF THE COMPANY.
The following are the executive officers of VF Corporation as of March 7, 2000.
The term of office of each of the executive officers continues to the next
annual meeting of the Board of Directors to be held April 25, 2000. There is no
family relationship among any of the VF Corporation executive officers.
<TABLE>
<CAPTION>
Period Served
Name Position Age In Such Office(s)
- ---- -------- --- -----------------
<S> <C> <C> <C>
Mackey J. McDonald Chairman of the Board 53 October 1998 to date
President October 1993 to date
Chief Executive Officer January 1996 to date
Director October 1993 to date
Candace S. Cummings Vice President - Administration 52 March 1996 to date
and General Counsel
Secretary October 1997 to date
Peter E. Keene Vice President - Controller 42 August 1999 to date
Timothy A. Lambeth Vice President - Global Processes 58 March 1999 to date
Terry L. Lay Vice President and Chairman - 52 March 1999 to date
International Coalition
Daniel G. MacFarlan Vice President 49 April 1995 to date
Chairman - Knitwear, Playwear July 1996 to date
& Intimate Apparel Coalitions
Frank C. Pickard III Vice President - Treasurer 55 April 1994 to date
</TABLE>
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<TABLE>
<S> <C> <C> <C>
John P. Schamberger Chairman - North & South 51 February 1995 to date
America Jeanswear and
Workwear Coalitions
Vice President April 1995 to date
Robert K. Shearer Vice President - Finance and 48 July 1998 to date
Chief Financial Officer
</TABLE>
Mr. McDonald joined the Company's Lee division in 1983, serving in various
management positions until his election as Executive Vice President of the
Wrangler division in 1986 and President of Wrangler in 1988. He was named Group
Vice President of the Company in 1991, President of the Company in 1993, Chief
Executive Officer in January 1996 and Chairman of the Board in October 1998.
Additional information is included on page 2 of the Company's definitive proxy
statement dated March 23, 2000 for the Annual Meeting of Shareholders to be held
on April 25, 2000 ("2000 Proxy Statement").
Mrs. Cummings joined the Company as Vice President - General Counsel in January
1995 and became Vice President - Administration and General Counsel in March
1996 and Secretary in October 1997. Previously, she had been a senior business
partner at the international law firm of Dechert Price & Rhoads where she had
been employed since 1972.
Mr. Keene joined the Company in 1990 as Controller at the Lee Company. In 1992,
he was named Vice President - Human Resources for Lee, and from 1994 to December
1996 he held the position of Vice President/General Manager for the Lee Casuals
and Riders businesses. He served as Chief Financial Officer for VF Knitwear
until July 1998, Chief Financial Officer for VF Europe until August 1999 and was
elected Vice President - Controller in August 1999.
Mr. Lambeth joined the Company in 1968 and has served in various finance,
administrative and marketing positions. He served as president of the Company's
Healthtex division from 1991 to 1992 and president of Lee Company from 1992 to
July 1996. He was elected a Vice President of the Company in July 1996,
President - European and Asian Operations in August 1996 and Vice President -
Global Processes in February 1999.
Mr. Lay joined the Company's Lee division in 1971 and held various positions at
both the Lee and Jantzen divisions, including Vice President - Product
Development at the Lee division from 1992 to 1994. In 1994, he was appointed
President - Wrangler Europe and later that year President - VF Europe. He served
as President of the Company's Lee division from August 1996 until he was elected
Vice President of the Company and Chairman - International Coalition in February
1999.
Mr. MacFarlan joined the Company's Jantzen division in 1978 and served in
various marketing and administrative capacities. He served as President of the
Company's VF Factory Outlet division from 1993 to 1995. He was elected as
President of the Company's Nutmeg division in 1994 and was elected as the
Company's Chairman - Decorated Knitwear and Playwear Coalitions in February
1995, which was expanded in July 1996 to Chairman - Knitwear, Playwear &
Intimate Apparel Coalitions, and Vice President in April 1995.
Mr. Pickard joined the Company in 1976 and was elected Assistant Controller in
1982, Assistant Treasurer in 1985, Treasurer in 1987 and Vice President -
Treasurer in 1994.
Mr. Schamberger joined the Company's Wrangler division in
1972 and held various positions until
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his election as President of Wrangler in 1992. He was elected as the Company's
Chairman - North & South America Jeanswear and Workwear Coalitions in February
1995 and Vice President in April 1995.
Mr. Shearer joined the Company in 1986 as Assistant Controller and was elected
Controller in 1989, Vice President - Controller in 1994 and Vice President -
Finance and Chief Financial Officer in July 1998.
PART II
ITEM 5. MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
Information concerning the market and price history of the Company's Common
Stock, plus dividend information, as reported under the caption "Quarterly
Results of Operations" on page 20 and under the captions "Investor Information -
Common Stock, Shareholders of Record, Dividend Policy, Dividend Reinvestment
Plan, Dividend Direct Deposit and Quarterly Common Stock Price Information" on
page 36 of the 1999 Annual Report, is incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA.
Selected financial data for the Company for each of its last five fiscal years
under the caption "Financial Summary" on pages 32 and 33 of the 1999 Annual
Report is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
A discussion of the Company's financial condition and results of operations is
incorporated herein by reference to pages 16 to 19 of the 1999 Annual Report.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
A discussion of the Company's market risks is included in the section "Risk
Management" incorporated herein by reference to pages 18 and 19 of the 1999
Annual Report.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Financial statements of the Company and specific supplementary financial
information are incorporated herein by reference to pages 20 through 31 of the
1999 Annual Report.
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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY.
Information under the caption "Election of Directors" on pages 2 through 5 of
the 2000 Proxy Statement is incorporated herein by reference. See Item 4A with
regard to Executive Officers.
Information under the caption "Section 16(a) Beneficial Ownership Reporting
Compliance" on page 21 of the 2000 Proxy Statement is incorporated herein by
reference.
ITEM 11. EXECUTIVE COMPENSATION.
Information on pages 11 through 17 of the 2000 Proxy Statement is incorporated
herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Information under the caption "Certain Beneficial Owners" on page 19 and "Common
Stock Ownership of Management" on page 20 of the 2000 Proxy Statement is
incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Information under the caption "Election of Directors" with respect to Messrs.
Hurst and Sharp on page 3 and with respect to Mr. Crutchfield on page 4 of the
2000 Proxy Statement is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) The following documents are filed as a part of this report:
1. Financial statements - Included on pages 21 through 31 of the 1999
Annual Report (Exhibit 13) and incorporated by reference in Item 8:
Consolidated statements of income - - Fiscal years ended January 1,
2000, January 2, 1999 and January 3, 1998
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Consolidated statements of comprehensive income - - Fiscal years ended
January 1, 2000, January 2, 1999 and January 3, 1998
Consolidated balance sheets - - January 1, 2000 and January 2, 1999
Consolidated statements of cash flows - - Fiscal years ended
January 1, 2000, January 2, 1999 and January 3, 1998
Consolidated statements of common shareholders' equity - - Fiscal years
ended January 1, 2000, January 2, 1999 and January 3, 1998
Notes to consolidated financial statements
Report of independent accountants
2. Financial statement schedules - The following consolidated financial
statement schedule is included herein:
Schedule II - - Valuation and qualifying accounts
All other schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission are
not required under the related instructions or are inapplicable and
therefore have been omitted.
3. Exhibits
Number Description
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3 Articles of incorporation and bylaws:
(A) Articles of Incorporation, as amended and restated as of
April 18, 1986 (Incorporated by reference to Exhibit 3(A)
to Form 10-K for the year ended January 4, 1992)
(B) Articles of Amendment amending Article Fifth of the
Amended and Restated Articles of Incorporation
(Incorporated by reference to Exhibit 3(B) to Form 10-Q
for the quarter ended March 4, 1998)
(C) Statement with Respect to Shares of Series B ESOP
Convertible Preferred Stock (Incorporated by reference to
Exhibit 4.2 to Form 8-K dated January 22, 1990)
(D) Articles of Amendment with Respect to Designation of
Series A Participating Cumulative Preferred Stock
(Incorporated by reference to Exhibit 3(C) to Form 10-K
for the year ended January 3, 1998)
(E) Bylaws, as amended through April 20, 1999 and as presently
in effect
4 Instruments defining the rights of security holders, including
indentures:
(A) A specimen of the Company's Common Stock certificate
(Incorporated by reference to Exhibit 3(C) to Form 10-K
for the year ended January 3, 1998)
(B) A specimen of the Company's Series B ESOP Convertible
Preferred Stock certificate (Incorporated by reference to
Exhibit 4(B) to Form 10-K for the year ended December 29,
1990)
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(C) Indenture between the Company and Morgan Guaranty Trust
Company of New York, dated January 1, 1987 (Incorporated
by reference to Exhibit 4.1 to Form S-3 Registration No.
33-10939)
(D) First Supplemental Indenture between the Company, Morgan
Guaranty Trust Company of New York and United States
Trust Company of New York, dated September 1, 1989
(Incorporated by reference to Exhibit 4.3 to Form S-3
Registration No. 33-30889)
(E) Second Supplemental Indenture between the Company and
United States Trust Company of New York as Trustee
(Incorporated by reference to Exhibit 4.1 to Form 8-K
dated April 6, 1994)
(F) Rights Agreement, dated as of October 22, 1997, between
the Company and First Chicago Trust Company of New York
(Incorporated by reference to Exhibit 1 to Form 8-A
dated January 23, 1998)
(G) Amendment No. 1 to Rights Agreement dated as of January
28, 2000, between the Company and First Chicago Trust
Company of New York (Incorporated by reference to
Exhibit 2 to Form 8-A (Amendment No. 1) dated January
31, 2000)
10 Material contracts:
*(A) 1982 Stock Option Plan (Incorporated by reference to
Exhibit 4.1.1 of Post-Effective Amendment No. 1 to Form
S-8/S-3 Registration No. 33-26566)
*(B) 1991 Stock Option Plan (Incorporated by reference to
Exhibit A to the 1992 Proxy Statement dated March 18,
1992)
*(C) 1995 Key Employee Restricted Stock Plan (Incorporated by
reference to Exhibit 10(U) to Form 10-K for the year
ended December 30, 1995)
*(D) 1996 Stock Compensation Plan, as amended (Incorporated
by reference to Exhibit 10(A) to Form 10-Q for the
quarter ended October 2, 1999)
*(E) Annual Discretionary Management Incentive Compensation
Program
*(F) Deferred Compensation Plan
*(G) Executive Deferred Savings Plan, as amended and restated
as of September 1, 1999
*(H) Amended and Restated Supplemental Executive Retirement
Plan, dated May 16, 1989 (Incorporated by reference to
Exhibit 10(F) to Form 10-K for the year ended December
31, 1994)
*(I) Second Amended Annual Benefit Determination under the
Amended and Restated Supplemental Executive Retirement
Plan for Mid-Career Senior Management (Incorporated by
reference to Exhibit 10(H) to Form 10-K for the year
ended December 31, 1994)
14
<PAGE> 15
*(J) Third Amended Annual Benefit Determination under the
Amended and Restated Supplemental Executive Retirement
Plan for Senior Management (Incorporated by reference to
Exhibit 10(I) to Form 10-K for the year ended December
31, 1994)
*(K) Fourth Amended Annual Benefit Determination under the
Amended and Restated Supplemental Executive Retirement
Plan for Participants in the Company's Deferred
Compensation Plan (Incorporated by reference to Exhibit
10(J) to Form 10-K for the year ended December 31, 1994)
*(L) Fifth Amended Annual Benefit Determination under the
Amended and Restated Supplemental Executive Retirement
Plan which funds certain benefits upon a Change in
Control (Incorporated by reference to Exhibit 10(K) to
Form 10-K for the year ended December 31, 1994)
*(M) Seventh Amended Annual Benefit Determination under the
Amended and Restated Supplemental Executive Retirement
Plan for Participants in the Company's Executive
Deferred Savings Plan (Incorporated by reference to
Exhibit 10(L) to Form 10-K for the year ended December
31, 1994)
*(N) Eighth Amended Annual Benefit Determination under the
Amended and Restated Supplemental Executive Retirement
Plan for Participants whose Pension Plan Benefits are
limited by the Internal Revenue Code (Incorporated by
reference to Exhibit 10(M) to Form 10-K for the year
ended December 31, 1994)
*(O) Ninth Supplemental Annual Benefit Determination under
the Amended and Restated Supplemental Executive
Retirement Plan relating to the computation of benefits
for Senior Management
*(P) Resolution of the Board of Directors dated December 3,
1996 relating to lump sum payments under the Company's
Supplemental Executive Retirement Plan (Incorporated by
reference to Exhibit 10(N) to Form 10-K for the year
ended January 4, 1997)
*(Q) Form of Change in Control Agreement with senior
management of the Company (Incorporated by reference to
Exhibit 10(J) to Form 10-K for the year ended December
29, 1990)
*(R) Form of Change in Control Agreement with other
management of the Company (Incorporated by reference to
Exhibit 10(K) to Form 10-K for the year ended December
29, 1990)
*(S) Form of Change in Control Agreement with management of
subsidiaries of the Company (Incorporated by reference
to Exhibit 10(L) to Form 10-K for the year ended
December 29, 1990)
*(T) Form of Amendment to Change of Control Agreements with
senior management and other management of the Company
and with management of subsidiaries of the Company
*(U) Executive Incentive Compensation Plan (Incorporated by
reference to Exhibit 10(R) to Form 10-K for the year
ended December 31, 1994)
15
<PAGE> 16
*(V) Restricted Stock Agreement (Incorporated by reference to
Exhibit 10(S) to Form 10-K for the year ended December
31, 1994)
*(W) Discretionary Supplemental Executive Bonus Plan
(Incorporated by reference to Exhibit 10(T) to Form 10-K
for the year ended December 31, 1994)
*(X) VF Corporation Deferred Savings Plan for Non-Employee
Directors (Incorporated by reference to Exhibit 10(W) to
Form 10-K for the year ended January 4, 1997)
*(Y) Mid-Term Incentive Plan, a subplan under the 1996 Stock
Compensation Plan (Incorporated by reference to Exhibit
10 (X) to Form 10-K for the year ended January 2, 1999)
(Z) Revolving Credit Agreement, dated July 15, 1999
(Incorporated by reference to Exhibit 10(B) to Form 10-Q
for the quarter ended October 2, 1999)
* Management compensation plans
13 Annual report to security holders
21 Subsidiaries of the Corporation
23.1 Consent of PricewaterhouseCoopers LLP
23.2 Report of PricewaterhouseCoopers LLP
24 Power of attorney
27 Financial data schedule
All other exhibits for which provision is made in the applicable
regulations of the Securities and Exchange Commission are not required
under the related instructions or are inapplicable and therefore have
been omitted.
(b) Reports on Form 8-K:
There were no reports on Form 8-K filed during the last quarter of the
year ended January 1, 2000.
16
<PAGE> 17
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Company has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
V.F. CORPORATION
By: /s/ Mackey J. McDonald
Mackey J. McDonald
Chairman of the Board
President
(Chief Executive Officer)
By: /s/ Robert K. Shearer
March 24, 2000 Robert K. Shearer
Vice President - Finance
(Chief Financial Officer)
By: /s/ Peter E. Keene
Peter E. Keene
Vice President - Controller
(Chief Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Company and in
the capacities and on the dates indicated:
Erskine B. Bowles Director
Robert D. Buzzell* Director
Edward E. Crutchfield Director
Ursula F. Fairbairn* Director
Barbara S. Feigin* Director March 24, 2000
George Fellows* Director
Daniel R. Hesse* Director
Robert J. Hurst* Director
Mackey J. McDonald* Director
William E. Pike* Director
L. Dudley Walker* Director
* By: /s/ C. S. Cummings March 24, 2000
---------------------------------------------
C. S. Cummings, Attorney-in-Fact
17
<PAGE> 18
VF CORPORATION
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D COL. E
- -----------------------------------------------------------------------------------------------------------------------
ADDITIONS
------------------------
(1) (2)
Charged to
Balance at Charged to Other Balance at
Beginning Costs and Accounts Deductions End of
Description of Period Expenses Describe Describe Period
- -----------------------------------------------------------------------------------------------------------------------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
Fiscal year ended January 1, 2000
Allowance for doubtful accounts $52,011 $15,548 $13,082 (A) $54,477
======= ======= =========== =======
Valuation allowance for deferred
income tax assets $34,249 $22,523 $10,246 (B) $46,526
======= ======= =========== =======
Fiscal year ended January 2, 1999
Allowance for doubtful accounts $39,576 $20,802 $8,367 (A) $52,011
======= ======= =========== =======
Valuation allowance for deferred
income tax assets $32,506 $ 7,984 $6,241 (B) $34,249
======= ======= =========== =======
Fiscal year ended January 3, 1998
Allowance for doubtful accounts $40,253 $16,205 $16,882 (A) $39,576
======= ======= =========== =======
Valuation allowance for deferred
income tax assets $29,296 $ 5,337 $2,127 (B) $32,506
======= ======= =========== =======
</TABLE>
(A) Deductions include accounts written off, net of recoveries.
(B) Deductions relate to circumstances where it is more likely than not that
deferred tax assets will be realized.
<PAGE> 19
VF CORPORATION
INDEX TO EXHIBITS
Number Description
------ -----------
3 Articles of incorporation and bylaws:
(E) Bylaws, as amended through April 20, 1999 and as presently
in effect
10 Material Contracts:
(E) Annual Discretionary Management Incentive Compensation
Program
(F) Deferred Compensation Plan
(G) Executive Deferred Savings Plan, as amended and restated
as of September 1, 1999
(O) Ninth Supplemental Annual Benefit Determination under
the Amended and Restated Supplemental Executive
Retirement Plan relating to the computation of benefits
for Senior Management
(T) Form of Amendment to Change of Control Agreements with
senior management and other management of the Company
and with management of subsidiaries of the Company
13 Annual report to security holders
21 Subsidiaries of the Corporation
23.1 Consent of PricewaterhouseCoopers LLP
23.2 Report of PricewaterhouseCoopers LLP
24 Power of attorney
27 Financial data schedule
<PAGE> 1
Exhibit 3(E)
VF CORPORATION
BY-LAWS
Effective April 20, 1999
<PAGE> 2
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
ARTICLE I - MEETINGS OF SHAREHOLDERS............................................ 1
Section 1. Place of Meeting........................................... 1
Section 2. Annual Meeting............................................. 1
Section 3. Special Meetings........................................... 1
Section 4. Adjournment................................................ 2
Section 5. Notice of Meetings......................................... 2
Section 6. Quorum of Shareholders..................................... 2
Section 7. Organization............................................... 2
Section 8. Voting..................................................... 2
(a) Voting Rights........................................... 2
(b) Proxies................................................. 2
(c) Ballot.................................................. 3
(d) Required Vote........................................... 3
(e) Shares Owned by the Corporation......................... 3
(f) Shares Owned by Other Corporations...................... 3
(g) Shares Jointly Held or Held by Fiduciaries.............. 3
(h) Use of Conference Telephone and
Similar Equipment................................. 4
Section 9. Judges of Election......................................... 4
Section 10. Determination of Shareholders of Record.................... 4
Section 11. Voting Lists............................................... 5
Section 12. Nominating Procedure....................................... 5
ARTICLE II - BOARD OF DIRECTORS................................................. 6
Section 1. Powers and Election....................................... 6
Section 2. Qualifications............................................ 7
Section 3. Number, Classification, and Term of Office................ 7
Section 4. Resignations.............................................. 7
Section 5. Removal................................................... 7
Section 6. Vacancies................................................. 7
Section 7. Place of Meeting.......................................... 8
Section 8. Annual Meeting............................................ 8
Section 9. Regular Meetings.......................................... 8
Section 10. Special Meetings.......................................... 8
Section 11. Notice of Meetings; Adjournment........................... 8
Section 12. Quorum.................................................... 8
Section 13. Organization.............................................. 9
Section 14. Action Without a Meeting or By Conference
Telephone or Similar Communications Equipment......... 9
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
Section 15. Compensation of Directors................................. 9
ARTICLE III - COMMITTEES........................................................ 9
Section 1. Executive Committee........................................ 9
Section 2. Other Committees........................................... 10
ARTICLE IV - NOTICE - WAIVER.................................................... 10
Section 1. Notice - What Constitutes.................................. 10
Section 2. Waiver in Writing.......................................... 10
Section 3. Waiver by Attendance....................................... 10
Section 4. Notice Not Required........................................ 10
ARTICLE V - OFFICERS AND AGENTS................................................. 11
Section 1. Officers................................................... 11
Section 2. Qualifications............................................. 11
Section 3. Election and Term of Office................................ 11
Section 4. Resignations............................................... 11
Section 5. Removal of Officers........................................ 11
Section 6. Vacancies.................................................. 11
Section 7. The Chairman of the Board of Directors..................... 12
Section 8. The President.............................................. 12
Section 9. The Vice Presidents........................................ 12
Section 10. The Secretary.............................................. 12
Section 11. Assistant Secretaries...................................... 12
Section 12. The Treasurer.............................................. 13
Section 13. Assistant Treasurers....................................... 13
Section 14. The Controller............................................. 13
Section 15. Compensation of Officers and Others........................ 13
Section 16. Agents and Employees....................................... 13
ARTICLE VI - BORROWING, DEPOSITS, PROXIES, ETC.................................. 14
Section 1. Borrowing, etc............................................. 14
Section 2. Deposits................................................... 14
Section 3. Proxies.................................................... 14
Section 4. Execution of Instruments................................... 14
ARTICLE VII - CORPORATE RECORDS - INSPECTION.................................... 14
Section 1. Records to be Kept......................................... 14
Section 2. Inspection................................................. 15
ARTICLE VIII - SHARE CERTIFICATES, TRANSFER..................................... 15
Section 1. Share Certificates......................................... 15
Section 2. Transfer of Shares......................................... 15
Section 3. Transfer Agent and Registrar; Regulations.................. 16
</TABLE>
<PAGE> 4
<TABLE>
<S> <C>
Section 4. Lost, Destroyed, and Mutilated
Certificates...................................... 16
ARTICLE IX - FINANCIAL REPORTS.................................................. 16
ARTICLE X - INDEMNIFICATION..................................................... 16
Section 1. Right to Indemnification................................... 16
Section 2. Advance of Expenses........................................ 17
Section 3. Procedure for Determining Permissibility................... 17
Section 4. Contractual Obligation..................................... 17
Section 5. Limitation of Liability.................................... 18
ARTICLE XI - AMENDMENTS TO BY-LAWS.............................................. 18
ARTICLE XII - PROVISIONS RELATING TO THE ACT OF APRIL 27, 1990
(P.L. 129, NO. 36)............................................ 19
</TABLE>
<PAGE> 5
BY-LAWS
OF
VF CORPORATION
(A Pennsylvania Corporation)
ARTICLE I
MEETINGS OF SHAREHOLDERS
SECTION 1. PLACE OF MEETING. Meetings of shareholders shall be held at
such places, within or without the Commonwealth of Pennsylvania, as may be fixed
from time to time by the Board of Directors. If no such place is fixed by the
Board of Directors, meetings of the shareholders shall be held at the registered
office of the Corporation.
SECTION 2. ANNUAL MEETING. The Annual Meeting of the shareholders for
the election of directors and for the transaction of such other business as may
properly come before the meeting shall be held in each calendar year, commencing
with the year 2000, at such time and on such date as the Board of Directors
shall determine, or if the Board of Directors fails to set a time and date, at
10:30 a.m. on the fourth Tuesday in April in each year, if such day is not a
legal holiday, and if a legal holiday, then on the first following day that is
not a legal holiday, at such place and time as shall be fixed by the Board of
Directors. If the Annual Meeting shall not be called and held within six months
after the designated time, any shareholder may call such meeting at any time
thereafter.
SECTION 3. SPECIAL MEETINGS. Special meetings of shareholders may be
called at any time by the Chairman, the President, or the Board of Directors,
and may be called by a shareholder only as provided in Section 2521(b) of the
Pennsylvania Business Corporation Law. At any time, upon written request of any
person or persons entitled to call a special meeting, such request stating the
purpose or purposes of such meeting, it shall be the duty of the Secretary
forthwith to call a special meeting of the shareholders, which, if the meeting
is called pursuant to a statutory right, shall be held at such time as the
Secretary may fix, not more than 60 days after the receipt of the
1
<PAGE> 6
request. If the Secretary shall neglect or refuse to issue such call, the person
or persons making the request may do so.
SECTION 4. ADJOURNMENT. Adjournment or adjournments of any annual or
special meeting may be taken, including one at which directors are to be
elected, for such period as the shareholders present and entitled to vote shall
direct.
SECTION 5. NOTICE OF MEETINGS. Written notice (conforming to the
provisions of Section 1 of Article IV of these By-Laws) of every meeting of the
shareholders shall be given by the Secretary in the case of an Annual Meeting,
and by or at the direction of the person or persons authorized to call the
meeting in the case of a special meeting, to each shareholder of record entitled
to vote at the meeting, at least 10 days prior to the day named for the meeting,
unless a greater period of notice is by law required in a particular case.
When a meeting is adjourned, it shall not be necessary to give any
notice of the adjourned meeting or of the business to be transacted at an
adjourned meeting, other than by announcement at the meeting at which such
adjournment is taken, unless the Board of Directors fixes a new record date for
the adjourned meeting.
SECTION 6. QUORUM OF SHAREHOLDERS. A shareholders' meeting duly called
shall not be organized for the transaction of business unless a quorum is
present. The presence, in person or by proxy, of the holders of a majority of
the outstanding shares entitled to cast a vote on the particular matters to be
acted upon shall constitute a quorum. The shareholders present at a duly
organized meeting can continue to do business until adjournment, notwithstanding
the withdrawal of enough shareholders to leave less than a quorum. If a meeting
cannot be organized because a quorum has not attended, those present may adjourn
the meeting to such time and place as they may determine, but in the case of any
meeting called for the election of directors, those who attend the second of
such adjourned meetings, although less than a quorum as fixed in this Section,
shall nevertheless constitute a quorum for the purpose of electing directors.
SECTION 7. ORGANIZATION. At every meeting of the shareholders, the
Chairman of the Board of Directors, or in his absence, the President, or, in his
absence, a Vice President, shall act as chairman of the meeting and the
Secretary, or in his absence, a person appointed by the Chairman, shall act as
secretary of the meeting.
SECTION 8. VOTING.
(a) VOTING RIGHTS. Except as otherwise provided in the Articles, or by
law, every shareholder of record shall have the right, at every shareholders'
meeting, to one vote for every share standing in his name on the books of the
Corporation. Holders of fractional shares shall not be entitled to any vote in
respect thereof. Every shareholder may vote either in person or by proxy.
2
<PAGE> 7
(b) PROXIES. Every proxy shall be executed in writing by the
shareholder, or by his duly authorized attorney in fact, and filed with the
Secretary of the Corporation. A proxy, unless coupled with an interest, shall be
revocable at will, notwithstanding any other agreement or any provision in the
proxy to the contrary, but the revocation of a proxy shall not be effective
until notice thereof has been given to the Secretary of the Corporation. No
unrevoked proxy shall be valid after three years from the date of its execution,
unless a longer time is expressly provided therein. A proxy shall not be revoked
by the death or incapacity of the maker unless before the vote is counted or the
authority is exercised, written notice of such death or incapacity is given to
the Secretary of the Corporation. A shareholder shall not sell his vote or
execute a proxy to any person for any sum of money or anything of value.
(c) BALLOT. No vote by the shareholders need be by ballot, except, in
elections of directors, upon demand made by a shareholder entitled to vote at
the election before the voting begins.
(d) REQUIRED VOTE. Except as otherwise specified in the Articles, these
By-Laws or provided by law, all matters shall be decided by the vote of the
holders of a majority of the of shares cast at a meeting at which a quorum shall
be present, though such majority be less than a majority of all the outstanding
shares entitled to vote thereon. The shareholders present at a duly organized
meeting can continue to do business until adjournment, notwithstanding the
withdrawal of enough shareholders to leave less than a quorum. In all elections
for directors, the candidate receiving the highest number of votes up to the
number of directors to be elected shall be elected.
(e) SHARES OWNED BY THE CORPORATION. Shares of its own capital stock
belonging to the Corporation (other than shares of its own capital stock, if
any, held by it in a fiduciary capacity) shall not be voted, directly or
indirectly, at any meeting, and shall not be counted in determining the total
number of outstanding shares for voting purposes at any given time.
(f) SHARES OWNED BY OTHER CORPORATIONS. Shares in this Corporation
owned by another corporation may be voted by any officer or agent of the latter
or by proxy appointed by any such officer or agent, unless some other person, by
resolution of its Board of Directors or a provision of its Articles or By-Laws,
a copy of which resolution or provision certified to be correct by one of its
officers has been filed with the Secretary of this Corporation, shall be
appointed its general or special proxy, in which case such person shall be
entitled to vote such shares.
(g) SHARES JOINTLY HELD OR HELD BY FIDUCIARIES. Shares in this
Corporation held by two or more persons jointly or as tenants in common, as
fiduciaries or otherwise (including a partnership), may be voted by any one or
more of such persons, either in person or by proxy. If the persons are equally
divided upon whether
3
<PAGE> 8
the shares held by them shall be voted or upon the manner of voting the shares,
the voting of the shares shall be divided equally among the persons without
prejudice to the rights of the joint owners or the beneficial owners thereof
among themselves. If there has been filed with the Secretary of the Corporation
a copy, certified by an attorney at law to be correct, of the relevant portions
of the agreement under which the shares are held or the instrument by which the
trust or estate was created or the order of court appointing them or of an order
of court directing the voting of the shares, the persons specified as having
such voting power in the latest document so filed, and only those persons, shall
be entitled to vote the shares but only in accordance therewith.
(h) USE OF CONFERENCE TELEPHONE AND SIMILAR EQUIPMENT. Unless
specifically authorized by the Board of Directors, no shareholder may
participate in any meeting of shareholders by means of conference telephone or
similar communications equipment.
SECTION 9. JUDGES OF ELECTION. In advance of any meeting of
shareholders, the Board of Directors may appoint Judges of Election, who need
not be shareholders, to act at such meeting or any adjournment thereof. If
Judges of Election be not so appointed, the Chairman of any such meeting may,
and on the request of any shareholder or his proxy shall, make such appointment
at the meeting. The number of Judges shall be one or three. If appointed at a
meeting on the request of one or more shareholders or proxies, the majority of
shares present and entitled to vote shall determine whether one or three Judges
are to be appointed. No person who is a candidate for office shall act as a
Judge.
In case any person appointed as Judge fails to appear or fails or
refuses to act, the vacancy may be filled by appointment made by the Board of
Directors in advance of the convening of the meeting, or at the meeting by the
person or officer acting as Chairman.
The Judges of Election shall determine the number of shares outstanding
and the voting power of each, the shares represented at the meeting, the
existence of a quorum, the authenticity, validity, and effect of proxies,
receive votes or ballots, hear and determine all challenges and questions in any
way arising in connection with the right to vote, count and tabulate all votes,
determine the result, and do such acts as may be proper to conduct the election
or vote with fairness to all shareholders. The Judges of Election shall perform
their duties impartially, in good faith, to the best of their ability, and as
expeditiously as is practical. If there be three Judges of Election, the
decision, act, or certificate of a majority shall be as effective in all
respects as the decision, act, or certificate of all.
On the request of the Chairman of the meeting, or of any shareholder or
his proxy, the Judges shall make a report in writing of any challenge or
question or matter determined by them, and execute a certificate of any fact
found by them. Any
4
<PAGE> 9
report or certificate made by them shall be prima facie evidence of the facts as
stated therein.
SECTION 10. DETERMINATION OF SHAREHOLDERS OF RECORD. The Board of
Directors may fix a time prior to the date of any meeting of shareholders, or
prior to any other date, including, but not limited to, the date fixed for the
payment of any dividend or distribution, as a record date for the determination
of the shareholders entitled to notice of, and to vote at, any such meeting or
entitled to receive payment of any such dividend or distribution or as a record
date for any other purpose. In the case of a meeting of shareholders, the record
date shall be not more than 90 days prior to the date of the meeting, except in
the case of an adjourned meeting. Only such shareholders as shall be
shareholders of record on the date so fixed shall be entitled to notice of, and
to vote at, such meeting, or to receive payment of such dividend or
distribution, or to such other rights as are involved, notwithstanding any
transfer of any shares on the books of the Corporation after any record date
fixed as aforesaid.
Unless a record date is fixed by the Board of Directors: (1) the record
date for determining shareholders entitled to notice of or to vote at a meeting
of shareholders shall be at the close of business on the tenth day next
preceding the day on which notice is given or, if notice is waived, at the close
of business on the day immediately preceding the day on which the meeting is
held, (2) the record date for determining shareholders entitled to express
consent or dissent to corporate action in writing without a meeting, when prior
action by the Board of Directors is not necessary, shall be the close of
business on the day on which the first written consent or dissent is filed with
the Secretary of the Corporation, and (3) the record date for determining
shareholders for any other purpose shall be at the close of business on the day
on which the Board of Directors adopts the resolution relating thereto.
SECTION 11. VOTING LISTS. The officer or agent having charge of the
transfer books for shares of the Corporation shall make a complete list of the
shareholders entitled to vote at the meeting, arranged in alphabetical order,
with the address of and number of shares held by each, which list shall be
produced and kept open at the time and place of the meeting and shall be subject
to the inspection of any shareholder during the whole time of the meeting. The
original share ledger or transfer book, or a duplicate thereof kept in the
Commonwealth of Pennsylvania, shall be prima facie evidence as to who are the
shareholders entitled to examine such list or share ledger or transfer book, or
to vote, in person or by proxy, at any meeting of shareholders. Notwithstanding
the foregoing, at any time when the Corporation has 5,000 or more shareholders,
in lieu of making a list, the Corporation may make such information available at
the meeting by any other means.
SECTION 12. NOMINATING PROCEDURE. Subject to the rights of any class or
series of stock having a preference over the common stock as to dividends or
upon dissolution to elect directors under specified circumstances, nominations
for election of directors may be made by any shareholder entitled to vote for
the election of directors
5
<PAGE> 10
only if written notice of such shareholder's intent to nominate a director at
the meeting is given by the shareholder and received by the Secretary of the
Corporation in the manner and within the time specified herein. Notice must be
received by the Secretary of the Corporation not less than 150 days prior to the
date fixed for the annual meeting of shareholders pursuant to these By-Laws;
provided, however, that if directors are to be elected by the shareholders at
any other time, notice must be received by the Secretary of the Corporation not
later than the seventh day following the day on which notice of the meeting was
first mailed to shareholders. The notice may either be delivered or may be
mailed to the Secretary of the Corporation by certified or registered mail,
return receipt requested.
The notice shall be in writing and shall contain:
(i) the name and residence of such shareholder;
(ii) a representation that the shareholder is a holder of voting stock
of the Corporation and intends to appear in person or by proxy at the meeting to
nominate the person or persons specified in the notice;
(iii) such information regarding each nominee as would have been
required to be included in a proxy statement filed pursuant to Regulation 14A of
the rules and regulations established by the Securities and Exchange Commission
under the Securities Exchange Act of 1934 (or pursuant to any successor act or
regulation) had proxies been solicited with respect to such nominee by the
management or Board of Directors of the Corporation.
(iv) a description of all arrangements or understandings among the
shareholder and each nominee and any other person or persons (naming such person
or persons) pursuant to which such nomination or nominations are to be made by
the shareholders; and
(v) the consent of each nominee to serve as director of the Corporation
is so election.
The Chairman of the meeting may, if the facts warrant, determine and
declare to the meeting that any nomination made at the meeting was not made in
accordance with the foregoing procedures and, in such event, the nomination
shall be disregarded.
ARTICLE II
BOARD OF DIRECTORS
6
<PAGE> 11
SECTION 1. POWERS AND ELECTION. The business and affairs of the
Corporation shall be managed by the Board of Directors, and all powers of the
Corporation, except as otherwise provided by law, by the Articles, or by these
By-Laws, shall be exercised by the Board of Directors.
Except in the case of vacancies, directors shall be elected by the
shareholders.
SECTION 2. QUALIFICATIONS. Directors shall be natural persons of full
age but need not be residents of the Commonwealth of Pennsylvania or
shareholders in the Corporation. A director may also be a salaried officer or
employee of the Corporation. No person shall be eligible to be elected a
director of the Corporation for a period extending beyond the Annual Meeting of
Shareholders immediately following his attaining the age of 70 years. If any
person elected as a director shall within 30 days after notice of his election
fail to accept such office, either in writing or by attending a meeting of the
Board of Directors, the Board of Directors may declare his office vacant.
SECTION 3. NUMBER, CLASSIFICATION, AND TERM OF OFFICE. The number of
directors of the Corporation shall be not less than six and may consist of such
larger number as may be determined from time to time by the Board of Directors.
The Board of Directors shall be divided into three classes, each class of which
shall be as nearly equal in number as possible, the term of office of at least
one class shall expire in each year, and the members of a class shall not be
elected for a shorter period than one year, or for a longer period than three
years. One-third (or the nearest approximation thereto) of the number of the
Board of Directors, determined as aforesaid, shall be elected at each Annual
Meeting of the shareholders for terms to expire at the third subsequent meeting
of shareholders at which directors are elected. Each director shall hold office
for the term for which he is elected and until his successor shall have been
elected and qualified, subject to earlier termination as herein provided.
SECTION 4. RESIGNATIONS. Any director of the Corporation may resign at
any time by giving written notice to the Board of Directors, to the Chairman, to
the President, or to the Secretary of the Corporation. Such resignation shall
take effect at the date of the receipt of such notice or at any later time
specified therein; and, unless otherwise specified therein, the acceptance of
such resignation shall not be necessary to make it effective.
SECTION 5. REMOVAL. The entire Board of Directors, or a class of the
Board, or any individual director may be removed from office by the vote of
shareholders entitled to cast at least 80% of the votes which all shareholders
would be entitled to cast at any election of directors or of such class of
directors only for cause. In case the Board or such a class of the Board or any
one or more directors be so removed, new directors may be elected at the same
meeting. The repeal of a provision of the Articles or By-Laws prohibiting, or
the addition of a provision to the Articles or
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By-Laws permitting, the removal by the shareholders of the Board, a class of the
Board or a director without assigning any cause shall not apply to any incumbent
director during the balance of the term for which he was elected.
SECTION 6. VACANCIES. Vacancies in the Board of Directors, whether
occurring because of death, resignation, removal, increase in the number of
directors, or because of some other reason, may be filled by a majority of the
remaining members of the Board, though less than a quorum. Any director chosen
to fill a vacancy, including a vacancy resulting from an increase in the number
of directors, shall hold office until the next election of the class for which
such director has been chosen, and until his successor has been selected and
qualified or until his earlier death, resignation or removal.
SECTION 7. PLACE OF MEETING. The meetings of the Board of Directors may
be held at such place, within the Commonwealth of Pennsylvania or elsewhere, as
a majority of the directors may from time to time determine, or as may be
designated in the notice calling the meeting.
SECTION 8. ANNUAL MEETING. Immediately after each annual election of
directors the Board of Directors shall meet for the purpose of organization,
election of officers, and the transaction of other business, at the place where
such election of directors was held. Notice of such meeting need not be given.
In the absence of a quorum at said meeting, the same may be held at any other
time or place which shall be specified in a notice given as hereinafter provided
for special meetings of the Board of Directors.
SECTION 9. REGULAR MEETINGS. Regular meetings of the Board of Directors
shall be held at such time and place, if any, as shall be designated from time
to time by resolution of the Board of Directors. If the date fixed for any such
regular meeting be a legal holiday under the laws of the State where such
meeting is to be held, then the same shall be held on the next succeeding
secular day not a legal holiday under the laws of said State, or at such other
time as may be determined by resolution of the Board of Directors. At such
meetings the directors shall transact such business as may properly be brought
before the meeting.
SECTION 10. SPECIAL MEETINGS. Special meetings of the Board of
Directors may be called by the Chairman of the Board of Directors, by the
President, or by a majority of the directors, and shall be held at such time and
place as shall be designated in the call for the meeting.
SECTION 11. NOTICE OF MEETINGS; ADJOURNMENT. Notice, in accordance with
the provisions of Article IV, Section 1 of these By-Laws, of each special
meeting shall be given, by or at the direction of the person authorized to call
such meeting, to each director, at least six hours prior to the commencement of
the meeting. Notice of regular meetings need not be given. When a meeting is
adjourned, it shall not be
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necessary to give any notice of the adjourned meeting, or of the business to be
transacted at an adjourned meeting, other than by a an announcement at the
meeting at which such adjournment is taken.
SECTION 12. QUORUM. A majority of the directors in office shall be
necessary to constitute a quorum for the transaction of business, and the acts
of a majority of the directors present at a meeting at which a quorum is present
shall be the acts of the Board of Directors.
SECTION 13. ORGANIZATION. At every meeting of the Board of Directors,
the Chairman of the Board of Directors, or in his absence, the President, or, in
his absence, a Vice President, or, in the absence of each Vice President, a
chairman chosen by a majority of the directors present, shall preside, and the
Secretary, or, in his absence, any person appointed by the chairman, shall act
as secretary.
SECTION 14. ACTION WITHOUT A MEETING OR BY CONFERENCE TELEPHONE OR
SIMILAR COMMUNICATIONS EQUIPMENT. Any action which may be taken at a meeting of
the directors or any Board committee may be taken without a meeting if a consent
in writing setting forth the action so taken shall be signed by all of the
directors or the members of the committee, as the case may be, and shall be
filed with the Secretary of the Corporation. One or more directors may
participate in a meeting of the Board or of any Board committee by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can communicate with each other.
SECTION 15. COMPENSATION OF DIRECTORS. Each director who is not a
salaried officer or employee of the Corporation or its subsidiaries shall be
compensated for his services as a member of the Board or any committee thereof
in such manner as the Board of Directors by resolution shall from time to time
provide. Directors shall also be reimbursed by the Corporation for all
reasonable expenses incurred in travelling to and from the place of each meeting
of the Board of Directors or any such committee.
ARTICLE III
COMMITTEES
SECTION 1. EXECUTIVE COMMITTEE. The Board of Directors may, by
resolution adopted by a majority of the whole Board, delegate the Chairman of
the Board, and one or more additional directors to constitute an Executive
Committee which, to the extent provided in such resolution, shall have and
exercise the authority of the Board of Directors in the management of the
business of the Corporation, except that such Executive Committee shall not have
any power or authority as to the following: (i) the submission to shareholders
of any action requiring approval of
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shareholders under the Pennsylvania Business Corporation Law; (ii) the creation
or filling of vacancies in the Board of Directors; (iii) the adoption, amendment
or repeal of the By-Laws; (iv) the amendment or repeal of any resolution of the
Board that by its terms is amendable or repealable only by the Board; and (v)
action on matters committed by the By-Laws or resolution of the Board of
Directors to another committee of the Board.
The Executive Committee shall keep regular minutes of its proceedings
and report the same to the Board of Directors at each regular meeting.
SECTION 2. OTHER COMMITTEES. The Board of Directors may, at any time
and from time to time, appoint one or more other committees, consisting of
directors or others, to perform such duties and make such investigations and
reports as the Board of Directors shall by resolution determine, except that any
such committee shall be subject to the same restrictions on power and authority
as the Executive Committee set forth in Section 1 of this Article III. Such
committees shall determine their own organization and times and places of
meeting, unless otherwise directed by such resolution.
ARTICLE IV
NOTICE - WAIVER
SECTION 1. NOTICE - WHAT CONSTITUTES. Whenever written notice is
required to be given to any person, it may be given to such person, either
personally or by sending a copy thereof by first class or express mail, postage
prepaid, or by telegram (with messenger service specified), telex or TWX (with
answerback received) or courier service, charges prepaid, or by telecopier, to
his address (or to his telex, TWX, telecopier, or telephone number) appearing on
the books of the Corporation, or supplied by him to the Corporation for the
purpose of notice. If the notice is sent by mail, telegraph, or courier service,
it shall be deemed to have been given to the person entitled thereto when
deposited in the United States mail or with a telegraph office or courier
service for transmission to such person or in the case of telex, telecopier, or
TWX, when dispatched. If notice of any meeting is given by telephone, it shall
be deemed to have been given when a message is received by either the person
entitled to such notice or a representative authorized to receive such message.
Such notice shall specify the place, day, and hour of the meeting, and, in the
case of a special meeting of shareholders, the general nature of the business to
be transacted.
SECTION 2. WAIVER IN WRITING. Whenever any written notice is required
to be given, a waiver thereof in writing, signed by the person or persons
entitled to such notice, whether before or after the time stated therein, shall
be deemed equivalent to the giving of such notice. Except in the case of a
special meeting of shareholders,
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neither the business to be transacted at nor the purpose of the meeting need be
specified in the waiver of notice of such meeting.
SECTION 3. WAIVER BY ATTENDANCE. The presence of a person, either in
person or by proxy, at any meeting shall constitute a waiver of notice of such
meeting, except where a person attends a meeting for the express purposes of
objecting, at the beginning of the meeting, to the transaction of any business
because the meeting was not lawfully called or convened.
SECTION 4. NOTICE NOT REQUIRED. The giving of notice required under
these By-Laws is not required to be given to any shareholder with whom the
Corporation has been unable to communicate for more than 24 consecutive months,
if such communications to the shareholder are returned unclaimed or the
shareholder has otherwise failed to provide the Corporation with a current
address. Whenever the shareholder provides the Corporation with a current
address, notice shall be given to that shareholder as required under these
By-Laws.
ARTICLE V
OFFICERS AND AGENTS
SECTION 1. OFFICERS. The officers of the Corporation shall be a
Chairman of the Board of Directors, a President, a Secretary, a Treasurer, and
may include one or more Vice Presidents, one or more Assistant Secretaries, one
or more Assistant Treasurers, a Controller, and such other officers and
assistant officers as the Board of Directors may from time to time determine.
SECTION 2. QUALIFICATIONS. Any two or more offices may be held by the
same person except the offices of President and Secretary. It shall not be
necessary for the officers to be directors. The Board of Directors may secure
the fidelity of any or all of the officers by bond or otherwise. The officers,
other than the Treasurer, shall be natural persons of full age. The Treasurer
shall be either a natural person of full age or a corporation.
SECTION 3. ELECTION AND TERM OF OFFICE. The officers of the Corporation
shall be elected or appointed by the Board of Directors at its annual meeting,
but the Board of Directors may elect or appoint officers or fill any vacancies
among the officers at any other meeting. Subject to earlier termination of
office as herein provided, each officer shall hold office for one year and until
his successor shall have been duly elected or appointed and qualified.
SECTION 4. RESIGNATIONS. Any officer may resign at any time by giving
written notice to the Board of Directors, or to the Chairman, or to the
President, or to the Secretary, of the Corporation. Any such resignation shall
take effect at the date of
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the receipt of such notice or at any later time specified therein; and unless
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective.
SECTION 5. REMOVAL OF OFFICERS. Any officer or agent of the Corporation
may be removed by the Board of Directors with or without cause, but such removal
shall be without prejudice to the contract rights, if any, of the persons so
removed. Election or appointment of an officer or agent shall not of itself
create contract rights.
SECTION 6. VACANCIES. The Board of Directors shall have power to fill
any vacancies in any office occurring from whatever reason.
SECTION 7. THE CHAIRMAN OF THE BOARD OF DIRECTORS. The Chairman of the
Board of Directors shall serve as Chairman of the Executive Committee, subject,
however, to the control of the Board of Directors. He shall, if present thereat,
preside as Chairman at all meetings of the shareholders and of the directors. He
shall be, ex officio, a member of all standing committees of the Board of
Directors except the Audit, Nominating and Organization and Compensation
Committees. He shall have such other powers and perform such further duties as
may be assigned to him by the Board of Directors.
SECTION 8. THE PRESIDENT. The President shall be the chief executive
officer of the Corporation and shall have general supervision over the business
and operations of the Corporation, subject, however, to the control of the Board
of Directors. He shall be, ex officio, a member of all standing committees of
the Board of Directors except the Audit, Nominating and Organization and
Compensation Committees.
SECTION 9. THE VICE PRESIDENTS. In the absence or disability of the
President, any Vice President designated by the Board of Directors may perform
all the duties of the President, and, when so acting, shall have all the powers
of, and be subject to all the restrictions upon, the President; provided,
however, that no Vice President shall act as a member of or as chairman of any
special committee of which the President is a member or chairman by designation
or ex officio, except when designated by the Board of Directors. The Vice
Presidents shall perform such other duties as from time to time may be assigned
to them respectively by the Board of Directors, the Chairman or the President.
SECTION 10. THE SECRETARY. The Secretary shall record all the votes of
the shareholders and of the directors and the minutes of the meetings of the
shareholders and of the Board of Directors in a book or books to be kept for
that purpose; he shall see that notices of meetings of the Board of Directors
and shareholders are given and that all records and reports are properly kept
and filed by the Corporation as required by law; he shall be the custodian of
the seal of the Corporation and shall see that it is affixed to all documents to
be executed on behalf of the Corporation under its seal; he shall take note in
the minutes of a dissent of a
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director and shall file a written dissent filed by a director prior to the
adjournment of a meeting or immediately thereafter, and, in general, he shall
perform all duties incident to the office of Secretary, and such other duties as
may from time to time be assigned to him by the Board of Directors, the Chairman
or the President.
SECTION 11. ASSISTANT SECRETARIES. In the absence or disability of the
Secretary, any Assistant Secretary may perform all the duties of the Secretary,
and, when so acting shall have all the powers of, and be subject to all the
restrictions upon, the Secretary. The Assistant Secretaries shall perform such
other duties as from time to time may be assigned to them respectively by the
Board of Directors, the Chairman, the President or the Secretary.
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SECTION 12. THE TREASURER. The Treasurer shall have charge of all
receipts and disbursements of the Corporation and shall have or provide for the
custody of its funds and securities; he shall have full authority to receive and
give receipts for all money due and payable to the Corporation from any source
whatever, and to endorse checks, drafts, and warrants in its name and on its
behalf and to give full discharge for the same; he shall deposit all funds of
the Corporation, except such as may be required for current use, in such banks
or other places of deposit as the Board of Directors may from time to time
designate; and, in general, he shall perform all duties incident to the office
of Treasurer and such other duties as may from time to time be assigned to him
by the Board of Directors, the Chairman or the President.
SECTION 13. ASSISTANT TREASURERS. In the absence or disability of the
Treasurer, any Assistant Treasurer may perform all the duties of the Treasurer,
and, when so acting, shall have all the powers of and be subject to all the
restrictions upon the Treasurer. The Assistant Treasurers shall perform such
other duties as from time to time may be assigned to them respectively by the
Board of Directors, the Chairman, the President or the Treasurer.
SECTION 14. THE CONTROLLER. The Controller shall be the accounting
officer of the Corporation, shall have the duties and responsibilities for
corporate, general, plant, distribution, and cost accounting, budgeting,
forecasting, financial reporting, systems and procedures, data processing,
taxes, and such other duties as may from time to time be assigned by the Board
of Directors, the Chairman or the President.
SECTION 15. COMPENSATION OF OFFICERS AND OTHERS. The compensation of
all officers shall be fixed from time to time by the Board of Directors or a
Committee thereof or by the Chairman. No officer shall be precluded from
receiving such compensation by reason of the fact that he is also a director of
the Corporation. Additional compensation, fixed as above provided, may be paid
to any officers and/or employees for any year, based on the success of the
operations of the Corporation during such year.
SECTION 16. AGENTS AND EMPLOYEES. The Chairman, the President or any
officer or employee of the Corporation authorized by the Chairman or the
President may appoint or employ such agents and employees as shall be requisite
for the proper conduct of the business of the Corporation, and may fix their
compensation and the terms of their employment; provided that without the
approval of the Board of Directors first had and obtained no agent or employee
shall be appointed or employed under a contract unless it is terminable by the
Corporation on not more than 60 days' notice.
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ARTICLE VI
BORROWING, DEPOSITS, PROXIES, ETC.
SECTION 1. BORROWING, ETC. No officer or officers, agent or agents,
employee or employees of the Corporation shall have any power or authority to
borrow money on its behalf, to pledge its credit, or to mortgage or pledge its
real or personal property, except within the scope and to the extent of the
authority delegated by resolution of the Board of Directors. Authority may be
given by the Board of Directors for any of the above purposes and may be general
or limited to specific instances.
SECTION 2. DEPOSITS. All funds of the Corporation shall be deposited
from time to time to the credit of the Corporation in such banks, trust
companies, or other depositaries, as the Board of Directors may approve or
designate, and all such funds shall be withdrawn only upon checks signed by such
one or more officers or employees as the Board of Directors shall from time to
time determine.
SECTION 3. PROXIES. Unless otherwise ordered by the Board of Directors,
any officer of the Corporation may appoint an attorney or attorneys (who may be
or include such officer himself), in the name and on behalf of the Corporation,
to cast the votes which the Corporation may be entitled to cast as a shareholder
or otherwise in any other corporation any of whose shares or other securities
are held by or for the Corporation, at meetings of the holders of the shares or
other securities of such other corporation, or, in connection with the ownership
of such shares or other securities, to consent in writing to any action by such
other corporation, and may instruct the person or persons so appointed as to the
manner of casting such votes or giving such consent, and may execute or cause to
be executed in the name and on behalf of the Corporation and under its seal such
written proxies or other instruments as he may deem necessary or proper in the
premises.
SECTION 4. EXECUTION OF INSTRUMENTS. Except as otherwise authorized by
the Board of Directors, any note, mortgage, evidence of indebtedness, contract,
or other instrument of writing, or any assignment or endorsement thereof,
executed or entered into between the Corporation and any other person,
co-partnership, association or corporation, when signed by any one of the
Chairman, the President, a Vice President, the Treasurer and the Secretary shall
be held to have been properly executed for and on behalf of the Corporation.
ARTICLE VII
CORPORATE RECORDS - INSPECTION
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SECTION 1. RECORDS TO BE KEPT. The Corporation shall keep an original
or duplicate record of the proceedings of the shareholders and of the directors,
and a copy of these By-Laws, including all amendments or alterations thereto, to
date, certified by the Secretary of the Corporation. It shall also keep at its
registered office, its principal office, or at the office of a Transfer Agent or
Registrar within the Commonwealth of Pennsylvania, an original or a duplicate
share register giving the names of the shareholders, in alphabetical order, and
showing their respective addresses, the number and classes of shares held by
each, the number and date of certificates issued for the shares, and the number
and date of cancellation of every certificate surrendered for cancellation. It
shall also keep appropriate, complete, and accurate books of records of account,
which may be kept at its registered office or at its principal place of
business. Any books, minutes or other records may be in written form or any
other form capable of being converted into written form within a reasonable
time.
SECTION 2. INSPECTION. Every shareholder shall, upon written verified
demand stating the purpose thereof, have a right to examine, in person or by
agent or attorney, at any reasonable time or times, for any proper purpose, the
share register, books or records of account, and records of the proceedings of
the shareholders and directors, and to make copies or make extracts therefrom.
ARTICLE VIII
SHARE CERTIFICATES, TRANSFER
SECTION 1. SHARE CERTIFICATES. Unless otherwise determined by the Board
of Directors, the shares of the Corporation shall be represented by share
certificates. Share certificates shall contain the matters required by law, and
shall be signed by any one or more of the Chairman of the Board, the President,
a Vice President, the Treasurer and the Secretary. Where such certificate is
signed by a Transfer Agent or a Registrar, the signature of any corporate
officer upon such certificate, and the corporate seal if one is affixed, may be
a facsimile, engraved or printed. In case any officer who has signed, or whose
facsimile signature has been placed upon, any share certificate shall have
ceased to be such officer because of death, resignation, or otherwise, before
the certificate is issued, it may be issued by the Corporation with the same
effect as if the officer had not ceased to be such at the date of its issue.
Every shareholder of record shall be entitled to a share certificate
representing the shares owned by him, but a share certificate shall not be
issued by the Corporation to any shareholder until the shares represented
thereby have been fully paid for. The Board of Directors may determine that any
or all classes and series of shares, or any part thereof, shall be
uncertificated shares, in which case the Corporation shall send to the
registered owner thereof a written notice containing such information as is
required by law.
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SECTION 2. TRANSFER OF SHARES. Transfers of share certificates and the
shares represented thereby shall be made only on the books of the Corporation by
the owner thereof, or by his attorney thereunto authorized, by a power of
attorney duly executed and filed with the Secretary or a Transfer Agent of the
Corporation, and on surrender of the share certificate or certificates. In the
case of uncertificated shares, the transfer of shares shall be made upon receipt
of such documentation as the Corporation may require.
SECTION 3. TRANSFER AGENT AND REGISTRAR; REGULATIONS. The Corporation
may, if and whenever the Board of Directors may so determine, maintain in the
Commonwealth of Pennsylvania or any other state, or in both, one or more
transfer offices or agencies, each in charge of a Transfer Agent or Agents
designated by the Board of Directors, where the shares of the Corporation shall
be directly transferable, and also one or more registry offices, each in charge
of a Registrar or Registrars designated by the Board of Directors, where such
shares shall be so registered, and no certificates for shares of the Corporation
in respect of which a Transfer Agent and Registrar shall have been designated
shall be valid unless countersigned by such Transfer Agent and registered by
such Registrar. The Board of Directors may also make such additional rules and
regulations as it may deem expedient concerning the issue, transfer, and
registration of share certificates of the Corporation.
SECTION 4. LOST, DESTROYED, AND MUTILATED CERTIFICATES. The holder of
any share certificate of the Corporation shall immediately notify the
Corporation of any loss, destruction, or mutilation thereof, and the Board of
Directors may, in its discretion, by either special or standing resolution,
provide for and cause the issuance to him of a new share certificate or
certificates, in the case of mutilation upon surrender of the mutilated
certificate, or, in case of loss or destruction of the certificate, upon such
proof of loss or destruction and such reasonable notice by publication and/or
the deposit of a bond in such form and in such sum and with such surety or
sureties, as in such resolution the Board of Directors may direct.
ARTICLE IX
FINANCIAL REPORTS
The directors shall cause to be sent to shareholders annual reports,
containing financial statements certified by an independent certified public
accountant, and such other interim reports as may be deemed desirable or
necessary; provided that reports to shareholders shall comply with the
requirements of applicable federal or state securities laws and of the rules and
listing agreements of any national securities exchange where a class of the
Corporation's securities is listed for trading.
ARTICLE X
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INDEMNIFICATION; LIMITATION OF LIABILITY
SECTION 1. RIGHT TO INDEMNIFICATION. The Corporation shall indemnify to
the fullest extent permitted by applicable law any person who was or is a party
or is threatened to be made a party to or is otherwise involved in any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (a "Proceeding"), by reason of the
fact that such person is or was a director or officer of the Corporation, or is
or was serving at the request of the corporation as a director or officer of
another corporation or of a partnership, joint venture, trust or other
enterprise or entity, whether or not for profit, whether domestic or foreign,
including service with respect to an employee benefit plan, its participants or
beneficiaries, against all liability, loss and expense (including attorneys'
fees, judgments, fines and amounts paid in settlement) actually and reasonably
incurred by such person in connection with such Proceeding, whether or not the
indemnified liability arises or arose from any Proceeding by or in the right of
the Corporation.
SECTION 2. ADVANCE OF EXPENSES. Subject to Section 3 hereof, expenses
incurred by a director or officer in defending (or acting as a witness in) a
Proceeding shall be paid by the Corporation in advance of the final disposition
of such Proceeding, subject to the provisions of applicable law, upon receipt of
an undertaking by or on behalf of the director or officer to repay such amount
if it shall ultimately be determined that such person is not entitled to be
indemnified by the Corporation under applicable law.
SECTION 3. PROCEDURE FOR DETERMINING PERMISSIBILITY. To determine
whether any indemnification or advance of expenses under this Article X is
permissible, the Board of Directors by a majority vote of a quorum consisting of
directors who are not parties to such proceeding may, and on request of any
person seeking indemnification or advance of expenses shall, reasonably
determine (i) in the case of indemnification, whether the standards under
applicable law have been met and (ii) in the case of advance of expenses prior
to a change of control of the Corporation as provided below, whether such
advance is appropriate under the circumstance, provided that each such
determination shall be made by independent legal counsel if such quorum is not
obtainable, or even if obtainable, a majority vote of a quorum of directors who
are not parties to the Proceeding so directs; and provided further that, if
there has been a change in control of the Corporation between the time of the
action or failure to act giving rise to the claim for indemnification or advance
of expenses and the time such claim is made, at the option of the person seeking
indemnification or advance of expenses, the permissibility of indemnification
shall be determined by independent legal counsel and the advance of expenses
shall be obligatory subject to receipt of the undertaking specified in Section 2
hereof. The reasonable expenses of any director or officer in prosecuting a
successful claim for indemnification, and the fees and expenses of any
independent legal counsel engaged to determine permissibility of indemnification
or advance of expenses, shall be borne by the Corporation.
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SECTION 4. CONTRACTUAL OBLIGATION. The obligations of the Corporation
to indemnify a director or officer under this Article X, including, if
applicable, the duty to advance expenses, shall be considered a contract between
the Corporation and such director or officer, and no modification or repeal of
any provision of this Article X shall affect, to the detriment of the director
or officer, such obligations of the Corporation in connection with a claim based
on any act or failure to act occurring before such modification or repeal.
SECTION 5. LIMITATION OF LIABILITY. A director of the Corporation shall
not be personally liable for monetary damages as such for any action taken, or
any failure to take any action, unless (a) the director has breached or failed
to perform the duties of his office under Section 511 of the Pennsylvania
Associations Code or as such law may be amended from time to time and (b) the
breach or failure to perform constitutes self-dealing, willful misconduct or
recklessness; provided, however, that the provisions of this Section shall not
apply to the responsibility or liability of a director pursuant to any criminal
statute or the liability of a director for the payment of taxes pursuant to
local, state or federal law.
ARTICLE XI
AMENDMENTS TO BY-LAWS
These By-Laws may be amended, altered, or repealed, or new By-Laws may
be adopted, either (a) upon receiving at least 80% of the votes which all voting
shareholders are entitled to cast on the proposed By-Law change or adoption at
any annual or special meeting of shareholders, or (b) in the event that the
proposed By-Law change or adoption has been proposed by a majority of the
Disinterested Directors (as defined below), upon receiving at least a majority
of the votes cast at a duly convened meeting by the holders of shares entitled
to vote on the proposed By-Law change, or (c) by a vote of a majority of the
Disinterested Directors of the Corporation at any regular or special meeting of
the directors.
The term "Disinterested Director" means any member of the Board of
Directors who is unaffiliated with an Interested Shareholder and was a member of
the Board prior to the time that the Interested Shareholder became an Interested
Shareholder, and any successor of a Disinterested Director who is unaffiliated
with the Interested Shareholder and is recommended to succeed a Disinterested
Director by a majority of Disinterested Directors then on the Board. A member of
the Board of Directors who is affiliated with an Interested Shareholder shall
nevertheless be considered a Disinterested Director for the purpose of voting
upon any matter in which the interests of such Interested Shareholder (or any
affiliate or associate of such Interested Shareholder) are solely as a holder of
shares of capital stock and are
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undifferentiated from the interests of other holders of the same class of shares
of capital stock.
The term "Interested Shareholder" shall mean and include any
individual, corporation, partnership or other person or entity (other than the
Corporation or any subsidiary thereof) who or which, together with its
affiliates and associates (as those terms are defined in Rule 12b-2 promulgated
under the Securities Exchange Act of 1934 as in effect on October 17, 1989) (a)
becomes the beneficial owner (as that term is defined in Rule 13d-3 promulgated
under the Securities Exchange Act of 1934 as in effect on October 17, 1989) of
an aggregate of 20% or more of the outstanding voting stock of the Corporation,
(b) is an affiliate or associate of the Corporation and at any time within the
five-year period immediately prior to the date in question was the beneficial
owner, directly or indirectly, of 20% or more of the voting power of the then
outstanding voting stock or (c) is the beneficial owner of 5% or more of the
shares of any class of voting stock which were at any time within the five-year
period immediately prior to the date in question beneficially owned by any
Interested Shareholder; provided, however, that the term "Interested
Shareholder" shall not include any employee benefit plan of the Corporation or a
majority-owned subsidiary of the Corporation or any trustee or fiduciary with
respect to any such plan when acting in the capacity of a trustee or fiduciary.
A majority of the Disinterested Directors of the Corporation shall have
the power and duty to determine for the purposes of this Article XI, on the
basis of information known to them after reasonable inquiry, (a) whether a
person is an Interested Shareholder or a Disinterested Director, (b) the number
of shares of each class of stock beneficially owned by any person, and (c)
whether a person is an affiliate or associate of another. A majority of the
Disinterested Directors of the Corporation shall have the further power to
interpret all of the terms and provisions of this Article XI.
ARTICLE XII
PROVISIONS RELATING TO THE ACT OF APRIL 27, 1990
(P.L. 129, NO. 36)
The provisions of Subsections (d) through (f) of Section 511,
Subsections (e) through (g) of Section 1721 and Subchapters G and H of Chapter
25 of the Pennsylvania Business Corporation Law shall not be applicable to the
Corporation.
20
<PAGE> 1
Exhibit 10(E)
VF CORPORATION
DISCRETIONARY MANAGEMENT INCENTIVE COMPENSATION PLAN - ANNUAL
A. BASIC POLICY
1. Each year, the Board of Directors approves the performance goals for
the Corporation, its domestic subsidiaries and the foreign components
of the International Division. When the goals are attained, officers
and key employees Corporate-wide are entitled to be considered for
bonus payments that are recommended by management and presented to the
Board for approval. Notwithstanding the foregoing, commencing with
bonus awards payable in 1995 with respect to fiscal 1994 performance,
persons who are designated as "executive officers" of the Corporation
for purposes of and pursuant to Rule 16a-1(f) of the Securities
Exchange Act of 1934 as of the end of the preceding fiscal year shall
not be eligible for bonus consideration under the Plan.
2. Since Corporate goals (such as EPS) and Division Goals (such as
Pre-tax Income) are separate and distinct, a Division that achieves
its goal is eligible for bonus consideration even if the Corporate
goal is not achieved.
B. PERFORMANCE/REWARD RELATIONSHIPS
1. The Plan establishes a minimum level of performance to receive a bonus
award. Conversely, a maximum level bonus payout is prescribed for
achieving performances that are far above competitive levels.
2. The Plan is discretionary and the Board of Directors may make
discretionary awards even if the minimum established performance level
has not been achieved.
3. Determination of a bonus award is contingent upon the level of
performance attained and the upward or downward variation from the
Target Bonus.
<PAGE> 1
Exhibit 10(F)
VF CORPORATION
DEFERRED COMPENSATION PLAN
(AMENDED AND RESTATED
AS OF JANUARY 1, 1993)
The VF Corporation Deferred Compensation Plan was established
effective January 1, 1985 (the "Original Plan") by VF Corporation and certain of
its Subsidiaries to allow senior executive personnel who are among a select
group of management or highly-compensated employees and Board members to defer
their compensation. The intention of VF Corporation and the participating
Subsidiaries is that the Plan be at all times maintained on an unfunded basis
for federal income tax purposes under the Internal Revenue Code of 1986, as
amended, and administered as a "top hat" plan, exempt from the substantive
requirements of the Employee Retirement Income Security Act of 1974, as amended.
This Amended and Restated Plan is effective as of January 1,
1993. Unless otherwise expressly specified herein or determined by the Committee
in its discretion, this Amended and Restated Plan shall not apply to any person
who was covered under the Original Plan and ceased, for any reason, to be
eligible to defer compensation under such Plan prior to January 1, 1993. The
adoption of this Amended and Restated Plan shall not, under any circumstances,
eliminate or reduce a Participant's Deferred Compensation or any rights thereto
as determined or provided for under the Original Plan as of December 31, 1992.
I. DEFINITIONS.
Unless otherwise required by the context, the terms used
herein shall have the meanings as set forth below:
1. AGREEMENT: A Deferred Compensation Agreement between a
Participant and a Participating Employer pursuant to this Plan.
<PAGE> 2
2. BENEFICIARY: The individual or entity named pursuant to the
Plan to receive payments hereunder in the event of the death of the Participant.
3. COMMITTEE: The VF Corporation Pension Plan Committee.
4. COMPANY: VF Corporation, a Pennsylvania corporation.
5. COMPENSATION: The Participant's total salary, including
bonus payments made pursuant to the VF Corporation Discretionary Management
Incentive Compensation Program and any other cash bonus payments to a
Participant in a Plan Year. For purposes of this Plan, Compensation shall be
determined without regard to any other salary or bonus deferrals which may be
made by a Participant to any other plan maintained by a Participating Employer.
However, Compensation shall not include any reimbursement for expenses paid to a
Participant by a Participating Employer nor shall it include any payments or
contributions made by a Participating Employer to a plan or arrangement, on
behalf of a Participant, which results in imputed income to the Participant for
federal income tax purposes.
6. DEFERRED COMPENSATION: Compensation which has been deferred
pursuant to the Plan and any Interest Equivalents which are attributable
thereto.
7. DEFERRED COMPENSATION ACCOUNT: A book reserve account
maintained by the Participating Employer for the account of the Participant.
8. INTEREST EQUIVALENT: A rate of interest equal to the
average yield of one-year U.S. Government Treasury Bills, adjusted semi-annually
on the basis of the previous 26-week trailing average, or any other appropriate
index as may be determined by the Committee from time to time. Interest is to be
recorded in the Participant's Deferred Compensation Account on a quarterly
basis.
9. PARTICIPANT: An employee of the Company or a Subsidiary who
participates in the VF Corporation Discretionary Management Incentive
Compensation Program, a member of the Company's Board of Directors or any other
key employee of the Company or a
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<PAGE> 3
Subsidiary designated by the Committee.
10. PARTICIPATING EMPLOYER: The Company and each Subsidiary
designated by the Company's Board of Directors to participate in this Plan.
11. PAYMENT METHOD: The form of payment of the Participant's
Deferred Compensation.
12. PERIODIC INSTALLMENTS: Annual payments (not to exceed ten)
of Deferred Compensation to a Participant or his or her Beneficiary.
13. PLAN: The VF Corporation Deferred Compensation Plan, as it
may be amended from time to time. The term Plan refers to the Original Plan
(effective January 1, 1985), the Amended and Restated Plan (effective January 1,
1993) or both, as the context requires.
14. PLAN YEAR: The calendar year.
15. RETIREMENT: A Participant's termination of employment
under circumstances making him or her immediately eligible to receive pension
payments under the VF Pension Plan.
16. SPOUSE: The person to whom the Participant is legally
married.
17. SUBSIDIARY: Any related company or business designated by
the Company's Board of Directors to participate in this Plan which, by
appropriate action, has agreed to participate in the Plan.
II. ELECTION TO DEFER COMPENSATION.
Section 2.01. ELECTION. During the December immediately prior
to the following Plan Year, each Participant shall be given the opportunity to
elect, on forms supplied by the Committee, the manner and extent to which the
Participant's Compensation for such following Plan Year shall be deferred under
this Plan. Failure of a Participant to make an effective election by any date
fixed by the Committee shall preclude such person from participating in the Plan
with respect to his or her Compensation for the next Plan Year, unless otherwise
determined by the Committee in its sole discretion. Each Participant shall
execute and deliver to the Committee an
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<PAGE> 4
Agreement upon his or her initial participation in the Plan and as thereafter
required by the Committee. An effective Agreement shall be a condition precedent
to a Participant's inclusion in the Plan.
Section 2.02. CHANGE OF ELECTION. A Participant, by submitting
a written election form to the Committee prior to the first day of a calendar
quarter during any Plan Year, may request a change in the level of Compensation
to be deferred during such calendar quarter and for the remainder of the Plan
Year. If the Committee consents, such change shall become effective no later
than the first day of the calendar quarter next following such consent.
Section 2.03. DISTRIBUTION DATE. A Participant may defer
Compensation until (1) the attainment of a specified age by the Participant, (2)
the expiration of a specified period of time or (3) the Participant's
Retirement. Notwithstanding the foregoing, however, if a Participant's
employment is terminated for any reason other than Retirement prior to the time
or event specified by the Participant, his or her Deferred Compensation shall be
payable in lump sum as soon as practicable following such termination of
employment, subject to the Participant's (or, if applicable, the Beneficiary's)
right to request that such Deferred Compensation be paid in Periodic
Installments pursuant to Section 3.02. For these purposes, a termination of
employment does not occur if a Participant transfers to another Participating
Employer or to any related company or enterprise.
Section 2.04. ACCRUAL OF INTEREST. From and after the
commencement of accrual of Deferred Compensation for any Plan Year, Interest
Equivalents on all unpaid Deferred Compensation shall be computed quarterly and
credited to the Participant's Deferred Compensation Account.
III. PAYMENT OF DEFERRED COMPENSATION.
Section 3.01. TIME OF PAYMENT. Deferred Compensation shall be
paid to a Participant at the time or event specified by the Participant pursuant
to Section 2.03 and in the
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<PAGE> 5
Payment Method described in Section 3.02. If, however, the Participant
terminates employment in the manner described in Section 2.03, Deferred
Compensation shall be paid to the Participant (or, if applicable, the
Participant's Beneficiary) as soon as practicable following such termination of
employment and in the Payment Method described in Section 3.02.
Section 3.02. PAYMENT METHOD. The normal form of Payment
Method shall be a lump sum. Notwithstanding the foregoing, a Participant (or, if
applicable, the Participant's Beneficiary) may request, by filing an application
in writing to the Committee, that the Payment Method be made in Periodic
Installments. Such written application must be made to the Committee at least
sixty (60) days prior to the relevant distribution event, and the decision to
grant or deny the requested Payment Method shall be made at the sole discretion
of the Committee taking into account the interests of the Participant, the
Company and, if applicable, the Participating Employer.
Section 3.03. ACCELERATION OF PAYMENT. Payment of Deferred
Compensation may be accelerated, in whole or in part, upon approval of the
Committee in the following circumstances:
(a) Unforeseeable Emergency -- The Participant shall
file a written request to the Committee, and the Committee shall determine in
its sole discretion if an unforeseeable emergency exists, based on the facts of
each case. For this purpose, "unforeseeable emergency" means severe financial
hardship to the Participant resulting from a sudden and unexpected illness or
accident involving the Participant, his or her Spouse or member of immediate
family, loss of the Participant's property due to casualty, or other similar
extraordinary or unforeseeable circumstance arising as a result of events beyond
the control of the Participant; provided that distribution shall not be made to
the extent such hardship is or may be relieved through reimbursement or
compensation by insurance or otherwise, by liquidation of the Participant's
assets (to the extent such liquidation would not itself cause severe financial
hardship),
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<PAGE> 6
or by cessation of the Participant's current deferrals under the Plan.
(b) Postretirement Deferrals -- If Deferred
Compensation would otherwise be payable to a Participant at specified times or
events following the Participant's Retirement, he or she may request that such
Deferred Compensation instead be paid either in lump sum at Retirement or in
Periodic Installments commencing at Retirement. Such request must be made by
written application to the Committee at least 60 days prior to the Participant's
Retirement and the decision to grant or deny the Participant's request shall be
made in the sole discretion of the Committee taking into account the interests
of the Participant, the Company and, if applicable, the Participating Employer.
Section 3.04. BENEFICIARY. Each Participant should designate a
Beneficiary (along with alternate beneficiaries) to whom, in the event of the
Participant's death, any benefit is payable hereunder. Each Participant has the
right to change any designation of Beneficiary and such change automatically
revokes any prior designation. A designation or change of Beneficiary must be in
writing on forms supplied by the Committee and any change of Beneficiary will
not become effective until filed with the Committee; provided, however, that the
Committee shall not recognize the validity of any designation received after the
death of the Participant. The interest of any Beneficiary who dies before the
Participant will terminate unless otherwise provided. If a Beneficiary is not
validly designated, or is not living or cannot be found at the date of payment,
any amount payable pursuant to this Plan will be paid to the Spouse of the
Participant if living at the time of payment, otherwise in equal shares to such
of the children of the Participant as may be living at the time of payment;
provided, however, that if there is no surviving Spouse or child at the time of
payment, such payment will be made to the estate of the Participant.
IV. FUNDING STATUS.
This Plan is unfunded. All obligations hereunder shall
constitute an unsecured promise of the Participating Employer, to pay a
Participant's benefit out of general assets, subject
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<PAGE> 7
to all of the terms and conditions of the Plan, as amended from time to time. A
Participant shall have no greater right to benefits provided hereunder than that
of any unsecured general creditor of the Participating Employer.
V. ADMINISTRATION.
Section 5.01. POWERS AND RESPONSIBILITIES. The Plan shall be
administered by the Committee which shall have the following powers and
responsibilities:
(a) Routine and Conforming Amendments -- to make, by
unanimous consent, routine or conforming amendments, without prior action or
approval of the Company's Board of Directors, where the substantive rights and
obligations of the Company, the Participating Employer, or the Participants will
not be affected, including, without limitation, amendments required by
applicable law or regulation or which are merely ministerial in nature;
(b) Constructions and Determinations -- to construe
the Plan, make factual determinations, consider requests made by Participants,
correct defects, and take any and all similar actions to the extent necessary to
administer the Plan, with any constructions or interpretations of the Plan made
in good faith by the Committee to be final and conclusive for all purposes; and
(c) All Reasonable Actions -- to take all other
actions and do all necessary things which are reasonable and necessary to the
proper administration of the Plan.
Section 5.02. DELEGATION. The Committee may, in writing,
delegate some or all of its powers and responsibilities to any other person or
entity.
Section 5.03. MEETINGS. The Committee may hold meetings upon
such notice, at such time or times, and at such place or places as it may
determine. The majority of the members of the Committee at the time in office
will constitute a quorum for the transaction of business at all meetings and,
unless otherwise provided for herein, a majority vote of those present and
constituting a quorum at any meeting will be required for action. The Committee
may also
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<PAGE> 8
act by written consent of a majority of its members.
Section 5.04. RULES OF ADMINISTRATION. The Committee may adopt
such rules for administration of the Plan as is considered desirable, provided
they do not conflict with the Plan. Records of administration of the Plan will
be kept, and Participants and their Beneficiaries may examine records pertaining
directly to themselves.
Section 5.05. AGENTS. The Committee may retain such counsel,
and actuarial, medical, accounting, clerical and other services as it may
require to carry out the provisions and purposes of the Plan.
Section 5.06. RELIANCE. The Committee shall be entitled to
rely upon all tables, valuations, certificates, and reports furnished by any
duly appointed auditor, or actuary, upon all certificates and reports made by
any investment manager, or any duly appointed accountant, and upon all opinions
given by any duly appointed legal counsel.
Section 5.07. LIABILITY AND INDEMNIFICATION. No member of the
Committee shall be liable by virtue of any instrument executed by the member, or
on the member's behalf, as a member of the Committee. Neither the Company, a
Participating Employer, nor any of its officers or directors, nor any member of
the Committee, shall be liable for any action or inaction with respect to any
duty or responsibility imposed upon such person by the terms of the Plan unless
such action or inaction is judicially determined to be gross negligence or
wilful misconduct. The Company or a Participating Employer, as applicable, shall
indemnify and hold harmless its officers, directors, and each member of the
Committee against any and all claims, losses, damages, expenses (including
attorney's fees), and liability (including, in each case, amounts paid in
settlement), arising from any action or failure to act, except when the same is
judicially determined to be due to the gross negligence or willful misconduct of
such officer, director or member of the Committee. The foregoing right of
indemnification shall be in addition to any other rights to which any such
person may be entitled as a matter of law.
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<PAGE> 9
Section 5.08. CONFLICT OF INTEREST. If any Participant is a
member of the Committee, he or she shall not participate as a member of the
Committee in any determination under the Plan relating to his or her Deferred
Compensation.
VI. MODIFICATION AND TERMINATION.
The Company's Board of Directors reserves the right to
terminate this Plan at any time or to modify, amend or suspend it from time to
time. Any such termination or modification shall be effective at such date as
the Board may determine and may be effective as to the Company and all
Participating Employers, or as to one or more of such entities and their
respective employees. The Board shall promptly give notice of any such
modification or termination to all affected entities and their respective
employees. A modification may affect Participants, irrespective of whether they
are past, current or future Participants, provided, however, that a modification
may not eliminate or reduce the account balance of any Participant as of the
effective date of such modification.
VII. GENERAL PROVISIONS.
Section 7.01. NO EMPLOYMENT RIGHT. Nothing contained herein
shall be deemed to give any employee the right to be retained in the service of
the Company or a Participating Employer, as applicable, or to interfere with the
rights of any such employer to discharge any employee at any time.
Section 7.02. INTEREST NONASSIGNABLE. It is a condition of
this Plan, and all rights of each Participant shall be subject thereto, that no
right or interest of any Participant under this Plan or in his or her Deferred
Compensation shall be assignable or transferable in whole or in part, either
directly or by operation of law or otherwise, including but without limitation,
execution, levy, garnishment, attachment, pledge, bankruptcy, or in any other
manner, subject, however, to applicable law, but excluding devolution by death
or mental incompetency, and no right or interest of any Participant under this
Plan or in his or her Deferred Compensation shall be
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<PAGE> 10
liable for or subject to any obligation or liability of such Participant,
subject, however, to applicable law.
Section 7.03. TAXES AND WITHHOLDING. All payments of Deferred
Compensation under the Plan shall be subject to such taxes and other
withholdings (federal, state or local) as may be due thereon, and the
determination of the Committee as to withholding with respect to payments shall
be binding upon the Participant and each Beneficiary.
Section 7.04. SALE OF ASSETS. The sale of all or substantially
all of the assets of a Participating Employer, or a merger, consolidation or
reorganization of the Participating Employer wherein the Participating Employer
is not the surviving corporation, or any other transaction which, in effect,
amounts to a sale of the Participating Employer or voting control thereof, shall
not terminate this Plan or any related Agreements, and the obligations created
hereunder or thereby shall be binding upon the successors and assigns of the
Participating Employer.
Section 7.05. LEGAL INCAPACITY. If a Participant or
Beneficiary entitled to receive any benefits hereunder is deemed by the
Committee or is adjudged to be legally incapable of giving valid receipt and
discharge for such benefits, the benefits will be paid to such persons as the
Committee might designate or to the duly appointed guardian.
Section 7.06. GOVERNING LAW. This Plan shall be governed by
and construed in accordance with the laws of the Commonwealth of Pennsylvania,
notwithstanding the conflict of law rules applicable therein.
[END]
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Exhibit 10(G)
VF EXECUTIVE DEFERRED SAVINGS PLAN
(Amended and Restated as of September 1, 1999)
The VF Executive Deferred Savings Plan, amended and restated as of
September 1, 1999 (the "Plan"), has been adopted by VF Corporation to allow
senior executive personnel of the Company and its subsidiaries who are among a
select group of management or highly-compensated employees to defer their
compensation. The intention of VF Corporation is that the Plan be at all times
maintained on an unfunded basis for federal income tax purposes under the
Internal Revenue Code of 1986, as amended ("Code"), and administered as a "top
hat" plan, exempt from the substantive requirements of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA").
SECTION I
DEFINITIONS
Unless otherwise required by the context, the terms used herein shall
have the meanings as set forth below:
1. "ACCRUED BENEFIT" means the sum of a Participant's Basic Deferrals
(and any gains and losses credited thereon) and the vested portion of the
Participating Employer's Matching Deferrals (and any gains and losses credited
thereon).
2. "BASIC DEFERRAL" means that portion of a Participant's Earnings
elected to be deferred under the terms of this Plan.
3. "BENEFICIARY" means the individual or entity named pursuant to the
Plan to receive benefit payments hereunder in the event of the death of the
Participant.
4. "CHANGE OF CONTROL" of the Company means the same under this Plan as
it does in the then-current Form of Change in Control Agreement with senior
management of the Company.
5. "COMMITTEE" means the VF Corporation Pension Plan Committee, as
appointed from time to time by the Board of Directors of the Company.
6. "COMPANY" means VF Corporation, a Pennsylvania corporation.
7. "EARNINGS" means a Participant's total salary, including any cash
bonus payments made to a Participant by a Participating Employer in a Plan Year.
For purposes of this Plan, Earnings shall be determined after taking into
account any deferrals made by the Participant under the VF Corporation Deferred
Compensation Plan. Earnings shall not include any reimbursement for expenses
paid to a Participant by a Participating Employer nor shall Earnings include any
payments or contributions made by a Participating Employer pursuant to a plan or
<PAGE> 2
arrangement, on behalf of a Participant, which results in imputed income to the
Participant for federal income tax purposes. Notwithstanding the foregoing,
however, Earnings shall not be deemed reduced by the amount of a Participant's
Basic Deferrals under this Plan or by the amount of a Participant's pre-tax
elective contributions under a "cafeteria plan" (as defined under Code Section
125 and applicable regulations) maintained by a Participating Employer.
8. "MATCHING DEFERRAL" means the additional deferral amount credited to
a Participant by a Participating Employer under the terms of this Plan.
9. "PARTICIPANT" means an eligible employee who voluntarily agrees to
participate in this Plan in accordance with its provisions.
10. "PARTICIPATING EMPLOYER" means and includes the Company, where
applicable, and any subsidiary corporation of the Company, the eligible
employees of which are designated by the Committee to participate in this Plan.
11. "PLAN" means the VF Executive Deferred Savings Plan, amended and
restated as of September 1, 1999 and as it may be amended subsequently from time
to time.
12. "PLAN YEAR" means the calendar year.
13. "SERVICE" means the sum of (i) the vesting service, if any, the
Participant accrued, or such service as is recognized for the Participant, under
the VF Corporation Tax-Advantaged Savings Plan for Salaried Employees as of the
date the Participant commences participation in this Plan and (ii) service while
eligible to participate under this Plan. An employee shall be credited with
Service under (ii) hereof for each calendar month during which he or she
performs services while eligible to participate in this Plan. Service shall also
include the following periods:
(a) Any leave of absence from employment which is
authorized by the Participating Employer;
(b) Any period of military service in the Armed Forces of
the United States required to be credited by law;
provided, however, that the Participant returns to
the employment of a Participating Employer within the
period his or her re-employment rights are protected
by law; and
(c) Service with any related VF company or enterprise if,
and to the extent that, the Committee determines that
such service should be counted.
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<PAGE> 3
14. "SEVERANCE FROM SERVICE" means the date on which a Participant's
employment with a Participating Employer is terminated for any reason other than
death or Total Disability. A Severance from Service does not occur if a
Participant is transferred to another Participating Employer. If the Committee,
in its discretion, revokes a subsidiary's status as a Participating Employer or
if a Participating Employer ceases to be a subsidiary of the Company, either
through sale, merger or other transaction, then all Participants employed by
such Participating Employer shall be deemed to have incurred a Severance from
Service effective as of the date of such revocation or such transaction, as
applicable, unless and to the extent that the Committee determines otherwise.
The Committee may also determine, in selected cases, that a Participant's
Severance from Service occurs at a date subsequent to his or her actual
termination date.
15. "SPOUSE" means the person to whom the Participant is legally
married at the time relevant to any determination under the Plan.
16. "TOTAL DISABILITY" means a physical or mental impairment that
qualifies a Participant for disability benefits under a long-term disability
benefits plan maintained by a Participant's Participating Employer and/or
eligibility for disability benefits under the Social Security Act. All
determinations of Total Disability for purposes of this Plan shall be based on
the fact that the Participant is in receipt of disability payments under either
or both the above-referenced disability benefits plans.
SECTION II
ELIGIBILITY
1. An individual shall be eligible to participate in this Plan if he or
she is working for a Participating Employer in a capacity classified by the
Participating Employer as that of an employee and, for compensation purposes, is
classified by the Participating Employer as grade 20 (or its equivalent) or
above.
2. Participation in this Plan by an eligible employee is voluntary.
3. In the event that an individual ceases to be an eligible employee
after becoming a Participant hereunder, he or she shall make no further Basic
Deferrals unless and until he or she shall again become an eligible employee.
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<PAGE> 4
SECTION III
DEFERRALS
1. BASIC DEFERRALS.
(a) ELECTION. A Participant may elect to defer any
portion of his or her Earnings ("Basic Deferral") by
directing his or her Participating Employer to reduce
his or her Earnings by a whole percentage or amount
authorized by a written election form executed by the
Participant and approved by the Committee; provided,
however, that a Participant may not reduce his or her
annual salary below the applicable Social Security
taxable wage base. Such Basic Deferral election shall
be made during the December immediately prior to the
Plan Year to which the election relates. A
Participant who incurs a Total Disability, or who is
on a leave of absence with the Participating
Employer's consent, or in military service in
conformity with the Participating Employer's
policies, may continue to elect Basic Deferrals if
Earnings are being continued by the Participating
Employer.
(b) VESTING. A Participant shall have a nonforfeitable
right to his or her Basic Deferrals and any credited
gains or losses attributable thereto.
(c) CHANGE OF ELECTION. The percentage or amount of
Earnings designated by the Participant as a Basic
Deferral shall continue in effect, notwithstanding
any change in Earnings, unless and until the
Participant requests a change of such percentage or
amount (increase, decrease or suspension) and obtains
the consent of the Committee. A Participant, by
submitting a written election form to the Committee
prior to the first day of the calendar quarter for
which the election is to become effective, may
request a change of the percentage or amount of Basic
Deferral. If the Committee consents, such change
shall become effective no later than the first day of
the calendar quarter next following such consent.
2. MATCHING DEFERRALS.
(a) AMOUNT. The Participating Employer shall credit an
additional deferral amount ("Matching Deferral")
equal to 50% of a Participant's Basic Deferral;
provided, however, that such Matching Deferral shall
not exceed $10,000 for any given Plan Year or such
other amount as the Committee shall approve from time
to time.
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<PAGE> 5
(b) VESTING. A Participant shall become vested in his or
her Matching Deferrals and any credited gains or
losses attributable thereto at the rate of
one-sixtieth (1/60th) per month of Service.
Notwithstanding the foregoing, a Participant shall
become 100% vested in his or her Matching Deferrals
and any credited gains or losses attributable thereto
if, prior to his or her Severance from Service (i)
the Participant attains age 65, incurs a Total
Disability or dies, or (ii) a Change of Control
occurs.
(c) FORFEITURES. A Participant shall forfeit, upon his or
her Severance from Service prior to the attainment of
age 65, any right to Matching Deferrals (including
credited gains or losses attributable thereto) in
which he or she is not vested.
SECTION IV
INVESTMENT
1. INVESTMENT ELECTION. A Participant may elect, pursuant to procedures
established by the Committee and subject to applicable limitations herein, that
his or her Basic and Matching Deferrals be credited with gains and losses as if
such Deferrals had been invested (in increments of at least 1%) in one or more
of the investment funds offered under the Plan, as may be determined by the
Committee from time to time.
2. CHANGE OF INVESTMENT ELECTION. A Participant may elect, pursuant to
procedures established by the Committee and subject to applicable limitations
herein, a change with respect to his or her previously-made investment election.
3. SPECIAL RULE FOR CERTAIN PARTICIPANTS WHO INVEST IN THE VF
CORPORATION STOCK FUND. If a Participant who is either a director or officer of
the Company or otherwise subject to Section 16 of the Securities Exchange Act of
1934 (the "Exchange Act") has Basic Deferrals or Matching Deferrals which, under
this Plan, are credited with gains and losses as if invested in a fund composed
of common stock of the Company (the "VF Corporation Stock Fund"), then such
amounts shall continue to be so credited until such Participant's Severance from
Service, Total Disability, or death, and, prior thereto, shall not be available
for a hardship distribution pursuant to Section VIII. Any Participant who
becomes subject to this limitation by reason of being appointed a director or
officer of the Company or to such other position subject to Section 16 of the
Exchange Act may elect, in accordance Subsection 2, that any portion of his or
her prior Deferrals that had been previously credited with gains and losses as
if invested in the VF Corporation Stock Fund be changed (together with all gains
and losses credited thereto) to a different Fund or Funds under this Plan;
provided, however, that such election is made and such change is implemented
prior to the date of such appointment. For purposes of this Subsection 3,
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the term "officer" shall have the same meaning as that term is defined in Rule
16a-1(f) under the Exchange Act.
SECTION V
RECORDS
The Committee shall create and maintain adequate records, in book entry
form, for each Participant of Basic and Matching Deferrals and gains or losses
credited thereto. Each Participant shall be informed of the status of his or her
Accrued Benefit and vested percentage at least quarterly.
SECTION VI
PLAN BENEFITS
1. SEVERANCE FROM SERVICE. Upon a Participant's Severance from Service,
he or she shall be entitled to his or her Accrued Benefit payable in accordance
with Section VII.
2. DEATH. In the event of the death of a Participant prior to Severance
from Service, the Participant's Beneficiary shall be entitled to a benefit equal
to the Participant's Accrued Benefit payable in accordance with Section VII. In
the event of the death of a Participant after a Severance from Service, the
Participant's Beneficiary shall be entitled to that part, if any, of the
Participant's Accrued Benefit which has not yet been paid to the Participant
payable in accordance with Section VII.
3. TOTAL DISABILITY. In the event a Participant incurs a Total
Disability prior to Severance from Service, the Participant shall be entitled to
his or her Accrued Benefit payable in accordance with Section VII.
4. BENEFICIARY. Each Participant may designate a Beneficiary (along
with alternate beneficiaries) to whom, in the event of the Participant's death,
any benefit is payable hereunder. Each Participant has the right to change any
designation of Beneficiary and such change automatically revokes any prior
designation. A designation or change of Beneficiary must be in writing on forms
supplied by the Committee and any change of Beneficiary shall not become
effective until filed with the Committee; provided, however, that the Committee
shall not recognize the validity of any designation received after the death of
the Participant. The interest of any Beneficiary who dies before the Participant
shall terminate unless otherwise provided. If a Beneficiary is not validly
designated, or is not living or cannot be found at the date of payment, any
amount payable pursuant to this Plan shall be paid to the Spouse of the
Participant if living at the time of payment, otherwise in equal shares to such
of the children of the Participant as may be living at the time of payment;
provided, however, that if there is no surviving Spouse or child at the time of
payment, such payment shall be made to the estate of the Participant.
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<PAGE> 7
SECTION VII
PAYMENT OF BENEFITS
1. The normal form for the payment of a Participant's Accrued Benefit
shall be a lump-sum payment in cash, payable as soon as practicable after the
event giving rise to the distribution.
2. Notwithstanding the foregoing: (a) A Participant may request, by
filing an application in writing to the Committee, that payment be made in
installments over a period of not more than ten (10) years. Such written
application must be made to the Committee at least sixty (60) days prior to the
event which would entitle the Participant to a distribution, and the decision to
permit the requested form of payment shall be made at the sole discretion of the
Committee taking into account the interests of the Participant and the Company.
(b) (i) If a Participant dies prior to a Severance from Service and prior to
filing a written application to the Committee for an installment payment, his or
her Beneficiary shall have the right to file a similar application; provided,
however, that in such circumstances, the Accrued Benefit shall not be payable to
the Beneficiary (in whole or in part) prior to the ninetieth (90th) day
following the Participant's death (unless the Committee determines otherwise)
and the Beneficiary must file the written application with the Committee at
least sixty (60) days prior to such payment day. (ii) If a Participant dies
after a Severance from Service and the commencement of installment payments or
at a time when installment payments are scheduled to commence, his or her
Beneficiary shall have the right to file a written application to the Committee
to receive any unpaid installments either in lump sum or in accordance with the
schedule previously requested by the Participant and approved by the Committee;
provided, however, that in such circumstances, the Accrued Benefit shall not be
available to the Beneficiary (in whole or in part) prior to the ninetieth (90th)
day following the Participant's death (unless the Committee determines
otherwise) and the Beneficiary must file a written application with the
Committee at least sixty (60) days prior to such payment date. The decision to
permit the requested form of payment in either (i) or (ii) shall be in the sole
discretion of the Committee taking into account the interests of the Beneficiary
and the Company.
SECTION VIII
HARDSHIP DISTRIBUTION
Distribution may be made to a Participant of some or all of his or her
Accrued Benefit in the event of an unforeseeable emergency; provided, however,
that such a distribution shall not be made to any Participant who is a director
of the Company or an officer as defined in Subsection 3 of Section IV or
otherwise subject to Section 16 of the Exchange Act, from any Basic Deferrals or
Matching Deferrals (or earnings thereon) which have been credited with gains and
losses as if invested in the VF Corporation Stock Fund. The Participant shall
file a written request with the Committee, and the Committee shall determine in
its sole discretion, if an unforeseeable emergency exists, based on the facts of
each case. For this purpose, "unforeseeable
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<PAGE> 8
emergency" means severe financial hardship to the Participant resulting from a
sudden and unexpected illness or accident involving the Participant, his or her
Spouse or member of immediate family, loss of the Participant's property due to
casualty, or other similar extraordinary and unforeseeable circumstance arising
as a result of events beyond the control of the Participant; provided, however,
that distribution shall not be made to the extent such hardship is or may be
relieved through reimbursement or compensation by insurance or otherwise, by
liquidation of the Participant's assets (to the extent such liquidation would
not itself cause severe financial hardship), or by cessation of a Participant's
Basic Deferrals under the Plan. The Committee may, in its discretion, consider
making similar distributions to a Beneficiary following the death of a
Participant and the Beneficiary's incurring an unforeseeable emergency.
SECTION IX
FUNDING STATUS
This Plan is unfunded. All obligations hereunder shall constitute an
unsecured promise of the Company to pay a Participant's benefit out of the
general assets of the Company, subject to all of the terms and conditions of the
Plan, as amended from time to time, and applicable law. A Participant hereunder
shall have no greater right to benefits provided hereunder than that of any
unsecured general creditor of the Company.
SECTION X
ADMINISTRATION
1. The Plan shall be administered by the Committee which shall have the
following powers and responsibilities.
(a) to amend the Plan;
(b) to terminate the Plan;
(c) to construe the Plan, make factual determinations,
consider requests made by Participants, correct
defects, and take any and all similar actions
considered by the Committee to be necessary to
administer the Plan, with any instructions or
interpretations of the Plan made in good faith by the
Committee to be final and conclusive for all
purposes;
(d) determine the investment options which may be
utilized under the Plan, including any default option
to be utilized if a Participant makes no investment
request; and
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<PAGE> 9
(e) to take all other actions and do all other things
which are considered by the Committee to be necessary
to the administration of the Plan.
2. The Committee shall have complete discretion in carrying out its
powers and responsibilities under the Plan, and its exercise of discretion
hereunder shall be final and conclusive.
3. The Committee may, in writing, delegate some or all of its powers
and responsibilities to any other person or entity.
4. The Committee may hold meetings upon such notice, at such time or
times, and at such place or places as it may determine. The majority of the
members of the Committee at the time in office shall constitute a quorum for the
transaction of business at all meetings and a majority vote of those present and
constituting a quorum at any meeting shall be required for action. The Committee
may also act by written consent of a majority of its members.
5. The Committee may adopt such rules for administration of the Plan as
is considered desirable, provided they do not conflict with the Plan.
6. The Committee may retain such counsel, and actuarial, medical,
accounting, clerical and other services as they may require to carry out the
provisions and purposes of the Plan.
7. The Committee shall be entitled to rely upon all tables, valuations,
certificates, and reports furnished by any duly appointed auditor, or actuary,
upon all certificates and reports made by any investment manager, or any duly
appointed accountant, and upon all opinions given by any duly appointed legal
counsel.
8. No member of the Committee shall be personally liable by virtue of
any instrument executed by the member, or on the member's behalf, as a member of
the Committee. Neither the Company nor a Participating Employer, nor any of
their respective officers or directors, nor any member of the Committee, shall
be personally liable for any action or inaction with respect to any duty or
responsibility imposed upon such person by the terms of the Plan except when the
same is finally judicially determined to be due to the self dealing, willful
misconduct or recklessness of such person. The Company shall indemnify and hold
harmless its officers, directors, and those of any Participating Employer, and
each member of the Committee against any and all claims, losses, damages,
expenses (including attorneys' fees and the advancement thereof), and liability
(including, in each case, amounts paid in settlement), arising from any action
or failure to act regarding the Plan, to the greatest extent permitted by
applicable law. The foregoing right of indemnification shall be in addition to
any other rights to which any such person may be entitled.
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<PAGE> 10
SECTION XI
MODIFICATION AND TERMINATION
The Committee reserves the right to terminate this Plan at any time or
to modify, amend or suspend it from time to time, such right to include, without
limitation, the right to distribute any and all Accrued Benefits. Any such
termination, modification, amendment or suspension shall be effective at such
date as the Committee may determine and may be effective as to all Participating
Employers, or as to one or more Participating Employers, and their respective
employees. The Committee shall notify all affected Participants of any such
termination, modification, amendment or suspension and, in appropriate
circumstances as determined by the Committee, shall also notify the relevant
Participating Employers. A termination, modification, amendment or suspension
may affect Participants generally, by class or individually, and may apply
irrespective of whether they are past, current or future Participants; provided,
however, that any such action may not eliminate or reduce the Accrued Benefit of
any Participant as of the effective date of such action.
SECTION XII
PARTICIPATING EMPLOYERS
Any subsidiary corporation of the Company, the eligible employees of
which are designated by the Committee to participate in this Plan, shall be a
Participating Employer. The Committee, in its discretion, may revoke a
subsidiary's status as a Participating Employer.
SECTION XIII
GENERAL PROVISIONS
1. Nothing contained herein shall be deemed to give any employee the
right to be retained in the service of a Participating Employer or to interfere
with the rights of a Participating Employer to discharge any employee at any
time.
2. It is a condition of this Plan, and all rights of each Participant
shall be subject thereto, that no right or interest of any Participant under
this Plan or in his or her credited Deferrals (and any credited gains or losses
attributable thereto) shall be assignable or transferable in whole or in part,
either directly or by operation of law or otherwise, including without
limitation, execution, levy, garnishment, attachment, pledge, bankruptcy, or in
any other manner, subject, however, to applicable law, but excluding devolution
by death or mental incompetency, and no right or interest of any Participant
under this Plan or in his or her credited Deferrals (and any credited gains or
losses attributable thereto) shall be liable for or subject to any obligation or
liability of such Participant, subject, however, to applicable law.
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<PAGE> 11
3. All payments of benefits under the Plan shall be subject to such
taxes and other withholdings (federal, state or local) as may be due thereon,
and the determination of the Committee as to withholding with respect to
payments shall be binding upon the Participant and each Beneficiary.
4. The sale of all of the assets of the Company, or a merger,
consolidation or reorganization of the Company wherein the Company is not the
surviving corporation, or any other transaction which, in effect, amounts to a
sale of the Company or voting control thereof, shall not terminate this Plan or
any related agreements and the obligations created hereunder or thereby and the
same shall be binding upon the successors and assigns of the Company.
5. If a Participant or Beneficiary entitled to receive any benefits
hereunder is deemed by the Committee or is adjudged to be legally incapable of
giving valid receipt and discharge for such benefits, the benefits will be paid
to such persons as the Committee designate or to the duly appointed guardian.
6. This Plan shall be governed by and construed in accordance with the
laws of the Commonwealth of Pennsylvania, notwithstanding the conflict of law
rules applicable therein.
[END]
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<PAGE> 1
Exhibit 10(O)
NINTH SUPPLEMENTAL ANNUAL BENEFIT DETERMINATION
PURSUANT TO THE VF CORPORATION AMENDED AND RESTATED
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
ARTICLE I. PURPOSE.
The purpose of this Ninth Supplemental Annual Benefit Determination (the
"Determination") is to provide to designated Participants a Supplemental Pension
under the VF Corporation Amended and Restated Supplemental Executive Retirement
Plan (the "SERP").
ARTICLE II. DEFINITIONS.
As used herein, words and phrases shall have such meanings as are set forth in
the SERP and the VF Corporation Pension Plan ("Pension Plan"). "Committee" shall
mean the Organization and Compensation Committee of the Board of Directors of VF
Corporation.
ARTICLE III. ELIGIBILITY FOR BENEFITS.
The Supplemental Pension shall be payable to the Participant if his or her
employment terminates by reason of: 1) retirement on his or her Normal
Retirement Date, 2) retirement on his or her Early or Disability Retirement Date
or 3) death while an Employee.
ARTICLE IV. SUPPLEMENTAL PENSION BENEFITS.
4.01 NORMAL RETIREMENT: The Participants in this Determination shall
receive the following Supplemental Pension payable at Normal or Late Retirement:
(a) The Normal Retirement Benefit otherwise payable to
the Participant under the Pension Plan computed
without reduction for any maximum contribution,
benefit or compensation limitations imposed by ERISA
or the Code on the Corporation and including in the
Normal Retirement Benefit calculation any
compensation deferred by Participant. The
Participant's "Average Annual Compensation" for
Supplemental Pension calculation purposes shall mean
the average of the highest three years of the full
amount of the Participant's salary and bonus
compensation for the five-year period preceding his
or her Retirement Date.
(b) The Supplemental Pension set forth in Section 4.01(a)
shall be reduced by any benefits payable to the
Participant under the Pension Plan.
4.02 EARLY OR DISABILITY RETIREMENT: The Supplemental Pension payable
by reason of the Participant's Early or Disability Retirement shall be equal to
the benefit provided by Section 4.01 above.
<PAGE> 2
4.03 DEATH WHILE AN EMPLOYEE: The Supplemental Pension payable upon the
death of the Participant while an Employee shall be as provided by Section 4.02.
4.04 FORM OF SUPPLEMENTAL PENSION: The form of benefits payable to the
Participant shall be the form which has been elected under the Pension Plan
unless the Participant or Beneficiary has elected a different form under this
Determination. Payment of Supplemental Pension benefits hereunder shall commence
at the same time as the Participant's or Beneficiary's benefits commence under
the Pension Plan, and shall be subject to the same reductions for commencement
of payments prior to Normal Retirement Date as apply to the recipient's benefits
under the Pension Plan. Notwithstanding the foregoing, if a Participant dies
while employed, his or her Beneficiary may elect to receive in a lump sum the
actuarial present value (determined pursuant to the assumptions set forth in the
Pension Plan) of the Participant's Supplemental Pension under this
Determination.
ARTICLE V. PARTICIPANTS.
The Committee designates as Participants for purposes of this Determination any
Employee who is classified as salary grade 25 or above for compensation purposes
as of the date he or she becomes eligible for benefits under this Determination
in accordance with Article III hereof; provided, however, that any Employee who
has been designated in any other SERP Determination shall be excluded from this
Determination to the extent that such other Determination provides for the
Supplemental Pension set forth above.
ARTICLE VI. VESTING.
The Participant shall become vested in the Supplemental Pension payable pursuant
to this Determination upon his or her termination of employment by reason of 1)
retirement on his or her Normal Retirement Date, 2) retirement on his or her
Early or Disability Retirement Date or 3) death while an Employee. Nothing in
this Determination shall preclude the Board of Directors from discontinuing
eligibility to participate in the SERP and this Determination at any time before
the Participant shall become vested hereunder.
ARTICLE VII. ADOPTION.
This Determination was approved and adopted by the Board of Directors of the
Corporation on October 20, 1999, to be effective for Participants whose last day
worked for purposes of the Pension Plan is on or after December 31, 1999.
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<PAGE> 1
Exhibit 10(T)
AMENDMENT NO. [ ] TO RESTATED AGREEMENT
AMENDMENT, made as of the 21st day of July 1998 by and between
[ ] the "Executive") and VF CORPORATION, a Pennsylvania corporation (the
"Corporation").
BACKGROUND
The Executive and the Corporation are parties to an Agreement
dated [ ] (the "Agreement") relating to the Corporation providing
the Executive with certain severance benefits in the event his employment
terminates subsequent to a "change in control" (as defined in the Agreement) of
the Corporation under the circumstances described therein. The Corporation's
principal executive offices have relocated from Wyomissing, Pennsylvania to
Greensboro, North Carolina, effective on or about July 1, 1998.
The parties desire to amend the Agreement to reflect the
relocation of the Corporation's principal executive offices.
NOW, THEREFORE, the parties, intending to be legally bound
hereby, agree as follows:
1. Paragraphs 3(iii)(D) and (E) of the Agreement are amended
by substituting "Greensboro, North Carolina" for "Reading, Pennsylvania"
therein.
2. The foregoing amendments to the Agreement are effective as
of the date of the relocation of the Corporation's principal executive offices
from Wyomissing, Pennsylvania to Greensboro, North Carolina.
3. All of the provisions of the Agreement are incorporated
herein and are hereby modified to conform with this Amendment No. [ ], but in
all other respects the provisions of the Agreement are to be and shall remain in
full force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment
No. [ ] as of the date first above written.
EXECUTIVE
Witness:___________________________ ___________________________(SEAL)
VF CORPORATION
Attest:___________________________ By:______________________________
Candace S. Cummings Mackey J. McDonald
Secretary President and Chief Executive
Officer
<PAGE> 1
Exhibit 13
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF OPERATIONS AND FINANCIAL CONDITION
ANALYSIS OF OPERATIONS
Consolidated sales rose 1% to a record $5,551 million in 1999. The sales
increase in 1999 was primarily due to the acquisitions of occupational apparel
businesses in late 1998/early 1999 and jeanswear businesses in South America,
offset in part by a slowdown of jeanswear sales in Europe and in the mid-tier
channel in the U.S. Sales in 1998 rose 5% over the 1997 level, due primarily to
the acquisition of Bestform Group, Inc., a major manufacturer and marketer of
women's intimate apparel.
Gross margins were 34.1% of sales in 1999, compared with 34.5% in 1998 and
34.1% in 1997. Margins were favorably impacted during the last two years from
the continuing shift to lower cost sourcing, lower raw material costs and
increased operating efficiencies. However, in 1999 this was offset by lower
gross margins in the domestic Lee jeanswear, European jeanswear and workwear
businesses. In jeanswear, these reductions resulted from lower than anticipated
volume and the resulting impact in expense absorption, as well the need to
reduce inventory levels closer to demand. In workwear, lower margins resulted
from the newly acquired companies.
For the United States market, VF manufactures its products in owned
domestic plants and offshore plants, primarily in Mexico. In addition, VF
contracts production from independent contractors mostly located outside of the
U.S. There has been a shift over the last three years toward a more balanced
sourcing mix, with more products being manufactured in and contracted from lower
cost facilities in Mexico and the Caribbean Basin. The amount of domestic sales
derived from products sewn outside the United States has increased each year so
that now 65% is sourced from international locations. Similarly, in foreign
markets, sourcing is being shifted from higher cost owned plants located
primarily in Western Europe to lower cost owned and contracted production in
locations outside of Western Europe.
Marketing, administrative and general expenses were 22.2% of sales in
1999, compared with 21.9% and 22.5% in 1998 and 1997, respectively. Expenses as
a percent of sales increased in 1999 primarily due to fixed short-term expenses
on a lower sales level in European jeanswear. This increase was partially offset
by lower advertising spending.
Other operating income and expense includes goodwill amortization expense,
offset by net royalty income. In each of the last two years, amortization of
goodwill increased from acquisitions completed during those years, and net
royalty income declined from the conversion of certain formerly licensed
businesses to owned operations.
Net interest expense increased in each of the last two years due to higher
short-term borrowings related to the business acquisitions. Interest income
includes $3.0 million in 1999 and $10.5 million in 1997 related to settlements
of prior years' tax examinations.
The effective income tax rate was 38.5% in 1999 and 1998 and 40.1% in
1997. The effective rate declined in 1998 due to a reduction in foreign
operating losses with no current tax benefit, lower state income taxes and
higher tax-free income attributable to investments that fund certain deferred
compensation plans.
Information by Business Segment The Consumer Apparel segment consists of
jeanswear, women's intimate apparel and swimwear, and children's apparel
businesses. Overall, segment sales were relatively flat in 1999. Record sales in
mass market domestic jeanswear sold in the discount channel and sales in the
newly acquired Latin American jeanswear businesses offset declines reported in
the Lee branded domestic business and in European jeanswear businesses. The
decline in Lee was due to softness in retail sales in mid-tier department stores
in the U.S., and the decline in Europe was due to a consumer shift away from
basic jeans products to alternative fabrics and stylings. Segment profit in 1999
declined due to lower
[16]
<PAGE> 2
sales in Lee, lower sales in Europe, European jeanswear consolidation efforts
that created operating difficulties, and a $6 million charge to close the
Jantzen women's sportswear division. In 1998, segment sales advanced due to the
acquisition of Bestform and growth in all categories of domestic jeanswear,
offset in part by the elimination of unprofitable children's playwear product
lines. Segment profit in 1998 increased due to the acquisition of Bestform and
higher profitability in domestic jeanswear, existing intimate apparel businesses
and children's playwear, offset in part by a modest decline in European
jeanswear.
The Occupational Apparel segment includes the Company's industrial, career
and safety apparel businesses. Sales increased in 1999 over the prior two years
due to one acquisition in the latter part of 1998 and three acquisitions in
early 1999. Segment profit as a percent of sales declined from 1997 and 1998 due
to the lower level of profitability of the acquired businesses and to systems,
distribution and other costs incurred to integrate these new businesses into
VF's existing infrastructure.
The All Other segment includes the Company's knitwear, daypack and
backpack businesses. The decline in sales and segment profit over the last two
years is due to difficult market conditions existing in the knitwear market.
ANALYSIS OF FINANCIAL CONDITION
In managing its capital structure, VF balances financial leverage with equity to
reduce its overall cost of capital, while providing the flexibility to pursue
investment opportunities that may become available. It is management's goal to
maintain a debt to capital ratio of less than 40%. Our debt to capital ratio
remains within these guidelines: 30.1% at the end of 1999 and 27.1% at the end
of 1998.
BALANCE SHEETS Accounts receivable increased in 1999 due to higher December
sales and slightly higher days sales outstanding in the recently acquired
companies. Inventories increased slightly in 1999 due to balances at recently
acquired companies being higher than historic VF levels. Excluding businesses
acquired in 1999, inventories declined by 6%.
Intangible assets increased during 1999 due to the acquisitions completed
during the year. Other assets increased during 1999 due to an increase in
deferred income tax assets over the 1998 level and an increase in life insurance
contracts and other investment securities underlying the Company's deferred
compensation and retirement programs.
The deficit in the Accumulated Other Comprehensive Income component of
Common Shareholders' Equity increased during 1999 due to foreign currency
translation adjustments resulting from the strengthening of the U.S. dollar in
relation to the currencies of most European countries where the Company has
operations.
LIQUIDITY AND CASH FLOWS Working capital was $763.9 million and the current
ratio was 1.7 to 1 at the end of 1999, compared with $815.1 million and 1.8 to 1
at the end of 1998. The decline in 1999 was due to an increase in short-term
borrowings.
The primary source of liquidity is the Company's strong cash flow provided
by operations, which was $423.4 million in 1999, $429.3 million in 1998 and
$460.7 million in 1997.
Capital expenditures were $150.1 million in 1999, compared with $189.1
million and $154.3 million in 1998 and 1997, respectively. Capital expenditures
relate to expansion of offshore manufacturing capacity, primarily in jeanswear,
investments in information systems and ongoing capital improvements in our
worldwide manufacturing and other facilities. Capital expenditures in 2000 are
expected to be less than the 1999 level and to be funded by cash flow from
operations.
[17]
<PAGE> 3
During 1999, the Company purchased 4.0 million shares of its Common Stock
in open market transactions at a cost of $149.1 million. During 1998, the
Company purchased 3.2 million shares for $147.4 million. Under its current
authorization from the Board of Directors, the Company may purchase up to an
additional 8.0 million shares. Depending on the level of acquisition
opportunities during 2000, the Company intends to continue to invest available
cash flow to repurchase shares.
Cash dividends totaled $.85 per common share in 1999, compared with $.81
in 1998 and $.77 in 1997. The dividend payout rate was 28% in 1999, compared
with 26% in 1998 and 28% in 1997. The indicated annual dividend rate for 2000 is
$.88 per share. VF has paid dividends on its Common Stock annually since 1941
and intends to maintain a long-term payout rate of 30%.
Looking ahead to 2000, operating results should benefit from steps taken
to improve profitability in the Lee domestic business, the European jeanswear
businesses and the recently acquired companies. Next year will bring continued
investments in systems and technology, as well as expenses related to further
reducing our product cost and operating cost structure. The combined effect of
these actions indicates that earnings in 2000 may be flat with 1999 and that
cash flow from operations should exceed $500 million. With our strong financial
position, unused credit lines and additional borrowing capacity, the Company has
substantial liquidity and flexibility to meet investment opportunities that may
arise.
EURO CURRENCY CONVERSION Effective January 1, 1999, 11 of the 15 member
countries of the European Union established fixed conversion rates between their
existing currencies and a single new currency, the "euro." During a transition
period through June 2002, business transactions can be conducted in both the
euro and the legacy currencies. After that date, the euro will be the sole
currency of the participating countries. Approximately 11% of the Company's 1999
sales were generated in the European Union.
Management is evaluating the many areas involved with introduction of the
euro, including information technology systems. As of January 1, 2000,
substantially all of these systems were euro compliant, with the remainder
expected to be compliant by the end of 2000. Management is also evaluating the
strategic implications of adoption of the euro, including pricing and
distribution of the Company's products. Although this evaluation is ongoing, it
is likely that the euro will lead to a more uniform pricing in all European
markets, including those that have not adopted the euro as their common
currency.
The Company is unable to determine the financial impact of the conversion
on its operations, if any, because the impact will depend on the competitive
situations that exist in the various regional markets. However, management
believes that the conversion to the euro will not have a material effect on the
Company's results of operations or financial position. All costs relating to the
conversion to the euro, which are not significant, are being expensed as
incurred.
YEAR 2000 UPDATE The Year 2000 issue relates to computer systems that may
not properly recognize date-sensitive information when the year changed to 2000.
Since entering the year 2000, the Company has not experienced any disruptions to
its business, nor is it aware of any significant Year 2000 issues impacting its
suppliers and customers. The Company will continue to monitor its critical
systems over the next several months but does not anticipate any exposures from
its internal systems or from the activities of its suppliers and customers. The
total cost of resolving the Year 2000 issues, including internal personnel and
outside vendors and consultants, was $26 million over the period 1997 through
1999, which was expensed as incurred.
RISK MANAGEMENT The Company is exposed to a variety of market risks in the
ordinary course of business, including the effects of changes in interest rates,
foreign currency exchange rates and the
[18]
<PAGE> 4
value of marketable securities. The Company regularly assesses these potential
risks and has policies and procedures to manage these risks.
The Company limits its risk from interest rate fluctuations on its net
income and cash flows by managing its mix of long-term borrowings at fixed
interest rates and short-term borrowings at variable interest rates. The Company
may also use derivative instruments to minimize its interest rate risk. The
primary interest rate exposure, which is not significant, relates to short-term
domestic and foreign borrowings. These borrowings averaged $430 million during
1999 and $245 million during 1998. In addition, at the end of 1998, the Company
had an interest rate swap contract related to $100 million of long-term debt.
This swap expired in October 1999.
The Company has assets and liabilities in foreign subsidiaries that are
subject to fluctuations in foreign currency exchange rates. Investments in these
primarily European subsidiaries are considered to be long-term investments, and
accordingly, the Company uses a functional currency other than the U.S. dollar.
The Company does not hedge these net investments and does not hedge the
translation of foreign currency operating results into the U.S. dollar. In
addition, a growing percentage of the total product needs to support our
domestic businesses are manufactured in Company-owned plants in foreign
countries or by foreign contractors. The Company's primary foreign currency
exposures relate to the euro and to the Mexican peso. Management monitors
foreign currency exposures and may in the ordinary course of business enter into
foreign currency forward exchange contracts related to specific foreign currency
transactions or anticipated cash flows occurring within twelve months. The
amount of these contracts, and related gains and losses, are not material. There
are no financial instruments held for trading or speculative purposes.
The Company is exposed to changes in the overall investment securities
markets because amounts accrued under various nonqualified deferred compensation
plans are based on market values of investment funds that are selected by the
plans' participants. Changes in the market values of the participants'
underlying investment selections expose the Company to risks of stock market
fluctuations. This securities market risk is hedged by the Company's investments
in a portfolio of variable life insurance contracts and other securities that
substantially mirror the investment selections underlying the deferred
compensation liabilities. Increases and decreases in deferred compensation
liabilities are substantially offset by corresponding increases and decreases in
the market value of the Company-owned investment securities, resulting in an
insignificant net exposure to the Company's operating results and financial
position.
CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS From time to time, the
Company may make oral or written statements, including statements in this Annual
Report, that constitute "forward-looking statements" within the meaning of the
federal securities laws. This includes statements concerning plans and
objectives of management relating to the Company's operations or economic
performance, and assumptions related thereto.
Forward-looking statements are made based on management's expectations and
beliefs concerning future events impacting the Company and therefore involve a
number of risks and uncertainties. Management cautions that forward-looking
statements are not guarantees and actual results could differ materially from
those expressed or implied in the forward-looking statements.
Important factors that could cause the actual results of operations or
financial condition of the Company to differ include, but are not necessarily
limited to, the overall level of consumer spending for apparel; changes in
trends in the segments of the market in which the Company competes; the
financial strength of the retail industry; actions of competitors that may
impact the Company's business; and the impact of unforeseen economic changes in
the markets where the Company competes, such as changes in interest rates,
currency exchange rates, inflation rates, recession, and other external economic
and political factors over which the Company has no control.
[19]
<PAGE> 5
QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
In thousands, Earnings Per Common Share Dividends Per
except per share amounts Net Sales Gross Profit Net Income Basic Diluted Common Share
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1999
First quarter $1,358,244 $ 467,470 $ 85,566 $ .70 $ .69 $ .21
Second quarter 1,364,830 461,935 79,582 .65 .64 .21
Third quarter 1,464,856 502,913 103,896 .87 .85 .21
Fourth quarter 1,363,686 462,178 97,198 .82 .81 .22
- ---------------------------------------------------------------------------------------------------------------------------
$5,551,616 $1,894,496 $ 366,242 $ 3.04 $ 2.99 $ .85
===========================================================================================================================
1998
First quarter $1,326,205 $ 453,225 $ 78,106 $ .63 $ .62 $ .20
Second quarter 1,350,319 455,956 86,781 .70 .69 .20
Third quarter 1,458,780 514,108 119,615 .98 .96 .20
Fourth quarter 1,343,503 468,832 103,804 .86 .84 .21
- ---------------------------------------------------------------------------------------------------------------------------
$5,478,807 $1,892,121 $ 388,306 $ 3.17 $ 3.10 $ .81
===========================================================================================================================
1997
First quarter $1,262,781 $ 417,837 $ 70,186 $ .54 $ .53 $ .19
Second quarter 1,255,549 427,650 78,904 .61 .60 .19
Third quarter 1,416,906 487,311 108,692 .86 .84 .19
Fourth quarter 1,287,010 448,837 93,160 .75 .74 .20
- ---------------------------------------------------------------------------------------------------------------------------
$5,222,246 $1,781,635 $ 350,942 $ 2.76 $ 2.70 $ .77
===========================================================================================================================
</TABLE>
[20]
<PAGE> 6
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
In thousands, except per share amounts Fiscal year ended January 1, 2000 January 2, 1999 January 3, 1998
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Sales $ 5,551,616 $ 5,478,807 $ 5,222,246
Costs and Operating Expenses
Cost of products sold 3,657,120 3,586,686 3,440,611
Marketing, administrative and general expenses 1,230,009 1,198,854 1,175,598
Other operating expense, net 11,855 9,098 964
- ------------------------------------------------------------------------------------------------------------------------------
4,898,984 4,794,638 4,617,173
- ------------------------------------------------------------------------------------------------------------------------------
Operating Income 652,632 684,169 605,073
Other Income (Expense)
Interest income 8,936 6,411 23,818
Interest expense (71,426) (62,282) (49,695)
Miscellaneous, net 5,434 3,300 6,684
- ------------------------------------------------------------------------------------------------------------------------------
(57,056) (52,571) (19,193)
- ------------------------------------------------------------------------------------------------------------------------------
Income Before Income Taxes 595,576 631,598 585,880
Income Taxes 229,334 243,292 234,938
- ------------------------------------------------------------------------------------------------------------------------------
Net Income $ 366,242 $ 388,306 $ 350,942
==============================================================================================================================
Earnings Per Common Share
Basic $ 3.04 $ 3.17 $ 2.76
Diluted 2.99 3.10 2.70
Cash Dividends Per Common Share $ .85 $ .81 $ .77
==============================================================================================================================
</TABLE>
See notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
<TABLE>
<CAPTION>
In thousands Fiscal year ended January 1, 2000 January 2, 1999 January 3, 1998
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Income $ 366,242 $ 388,306 $ 350,942
Other Comprehensive Income
Foreign currency translation,
net of income taxes (39,117) 10,471 (42,538)
- -----------------------------------------------------------------------------------------------------------
Comprehensive Income $ 327,125 $ 398,777 $ 308,404
===========================================================================================================
</TABLE>
See notes to consolidated financial statements.
[21]
<PAGE> 7
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
In thousands January 1, 2000 January 2, 1999
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current Assets
Cash and equivalents $ 79,861 $ 63,208
Accounts receivable, less allowances of
$54,477 in 1999 and $52,011 in 1998 732,502 705,734
Inventories 964,040 954,007
Deferred income taxes 74,067 99,608
Other current assets 26,946 25,595
- --------------------------------------------------------------------------------------------------
Total current assets 1,877,416 1,848,152
PROPERTY, PLANT AND EQUIPMENT 804,422 776,091
INTANGIBLE ASSETS 992,463 951,562
OTHER ASSETS 352,213 260,861
- --------------------------------------------------------------------------------------------------
$ 4,026,514 $ 3,836,666
==================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term borrowings $ 408,932 $ 244,910
Current portion of long-term debt 4,751 969
Accounts payable 332,666 341,126
Accrued liabilities 367,124 446,001
- --------------------------------------------------------------------------------------------------
Total current liabilities 1,113,473 1,033,006
LONG-TERM DEBT 517,834 521,657
OTHER LIABILITIES 194,113 181,750
REDEEMABLE PREFERRED STOCK 51,544 54,344
DEFERRED CONTRIBUTIONS TO EMPLOYEE STOCK OWNERSHIP PLAN (14,268) (20,399)
- --------------------------------------------------------------------------------------------------
37,276 33,945
COMMON SHAREHOLDERS' EQUITY
Common Stock, stated value $1; shares
authorized, 300,000,000; shares outstanding,
116,204,655 in 1999 and 119,466,101 in 1998 116,205 119,466
Additional paid-in capital 831,054 801,511
Accumulated other comprehensive income (64,756) (25,639)
Retained earnings 1,281,315 1,170,970
- --------------------------------------------------------------------------------------------------
Total common shareholders' equity 2,163,818 2,066,308
- --------------------------------------------------------------------------------------------------
$ 4,026,514 $ 3,836,666
==================================================================================================
</TABLE>
See notes to consolidated financial statements.
[22]
<PAGE> 8
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
In thousands Fiscal year ended January 1, 2000 January 2, 1999 January 3, 1998
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATIONS
Net income $ 366,242 $ 388,306 $ 350,942
Adjustments to reconcile net income
to cash provided by operations:
Depreciation 134,335 128,495 128,734
Amortization of intangible assets 33,097 32,890 27,518
Other, net 5,341 27,764 (3,405)
Changes in current assets and liabilities:
Accounts receivable (12,379) (48,771) (9,972)
Inventories 43,655 (52,406) (55,677)
Accounts payable (21,414) (17,013) (12,587)
Other, net (125,516) (29,983) 35,099
- -------------------------------------------------------------------------------------------------------------------------------
Cash provided by operations 423,361 429,282 460,652
INVESTMENTS
Capital expenditures (150,076) (189,059) (154,262)
Business acquisitions (156,587) (299,900) (16,003)
Other, net (13,114) (16,943) (13,578)
- -------------------------------------------------------------------------------------------------------------------------------
Cash invested (319,777) (505,902) (183,843)
FINANCING
Increase in short-term borrowings 145,768 212,457 8,745
Proceeds from long-term debt 1,032 4,132 --
Payment of long-term debt (3,269) (2,998) (1,253)
Purchase of Common Stock (149,075) (147,398) (391,651)
Cash dividends paid (104,302) (101,660) (100,141)
Proceeds from issuance of Common Stock 25,323 45,689 64,964
Other, net 1,269 2,115 1,983
- -------------------------------------------------------------------------------------------------------------------------------
Cash provided (used) by financing (83,254) 12,337 (417,353)
EFFECT OF FOREIGN CURRENCY RATE CHANGES ON CASH (3,677) 3,397 (5,991)
- -------------------------------------------------------------------------------------------------------------------------------
NET CHANGE IN CASH AND EQUIVALENTS 16,653 (60,886) (146,535)
CASH AND EQUIVALENTS - BEGINNING OF YEAR 63,208 124,094 270,629
- -------------------------------------------------------------------------------------------------------------------------------
CASH AND EQUIVALENTS - END OF YEAR $ 79,861 $ 63,208 $ 124,094
===============================================================================================================================
</TABLE>
See notes to consolidated financial statements.
<PAGE> 9
CONSOLIDATED STATEMENTS OF COMMON
SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Additional Accumulated Other Retained
In thousands Stock Paid-in Capital Comprehensive Income Earnings
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BALANCE JANUARY 4, 1997 $ 63,908 $ 668,554 $ 6,428 $ 1,234,849
Net income -- -- -- 350,942
Cash dividends:
Common Stock -- -- -- (96,337)
Series B Preferred Stock -- -- -- (3,804)
Tax benefit from Preferred Stock dividends -- -- -- 700
Redemption of Preferred Stock -- -- -- (1,855)
Purchase of treasury shares (5,239) -- -- (386,412)
Exercise of stock options,
net of shares surrendered 1,457 76,074 -- (48)
Restricted Common Stock 9 (520) -- 601
Foreign currency translation, net of
$22,905 deferred income taxes -- -- (42,538) --
Two-for-one stock split 61,090 -- -- (61,090)
- -------------------------------------------------------------------------------------------------------------------------------
BALANCE JANUARY 3, 1998 121,225 744,108 (36,110) 1,037,546
Net income -- -- -- 388,306
Cash dividends:
Common Stock -- -- -- (97,943)
Series B Preferred Stock -- -- -- (3,717)
Tax benefit from Preferred Stock dividends -- -- -- 568
Redemption of Preferred Stock -- -- -- (2,763)
Purchase of treasury shares (3,223) -- -- (144,175)
Exercise of stock options,
net of shares surrendered 1,678 57,195 -- (87)
Restricted Common Stock 19 208 -- (37)
Common Stock held in trust for
deferred compensation plans (233) -- -- (6,728)
Foreign currency translation, net of
$5,638 deferred income taxes -- -- 10,471 --
- -------------------------------------------------------------------------------------------------------------------------------
BALANCE JANUARY 2, 1999 119,466 801,511 (25,639) 1,170,970
Net income -- -- -- 366,242
Cash dividends:
Common Stock -- -- -- (100,755)
Series B Preferred Stock -- -- -- (3,547)
Tax benefit from Preferred Stock dividends -- -- -- 437
Redemption of Preferred Stock -- -- -- (3,284)
Purchase of treasury shares (4,000) -- -- (145,075)
Exercise of stock options,
net of shares surrendered 793 29,209 -- (131)
Restricted Common Stock 20 334 -- (56)
Common Stock held in trust for
deferred compensation plans (74) -- -- (3,486)
Foreign currency translation, net of
$21,063 deferred income taxes -- -- (39,117) --
- -------------------------------------------------------------------------------------------------------------------------------
BALANCE JANUARY 1, 2000 $ 116,205 $ 831,054 $ (64,756) $ 1,281,315
===============================================================================================================================
</TABLE>
See notes to consolidated financial statements.
<PAGE> 10
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION: The consolidated financial statements include the
accounts of VF Corporation and all majority owned subsidiaries after elimination
of intercompany transactions and profits.
Inventories are stated at the lower of cost or market. Inventories stated on the
last-in, first-out method represent 42% of total 1999 inventories and 48% in
1998. Remaining inventories are valued using the first-in, first-out method.
PROPERTY AND DEPRECIATION: Property, plant and equipment are stated at cost.
Depreciation is computed by the straight-line method over the estimated useful
lives of the assets, ranging up to 40 years for buildings and 10 years for
machinery and equipment.
Intangible Assets represent the excess of costs over the fair value of net
tangible assets of businesses acquired, less accumulated amortization of $270.5
million and $243.5 million in 1999 and 1998. These assets are amortized on the
straight-line method over 10 to 40 years.
The Company's policy is to evaluate intangible assets for possible impairment
whenever events or changes in circumstances indicate that the carrying amount of
such assets may not be recoverable. An impairment loss may be recorded if
undiscounted future cash flows, net of income tax payments, are not expected to
be adequate to recover the assets' carrying value.
REVENUE RECOGNITION: Sales are recorded when products are shipped to customers,
net of discounts and allowances.
Advertising Costs are expensed as incurred and were $257.6 million in 1999,
$287.5 million in 1998 and $309.3 million in 1997.
STOCK-BASED COMPENSATION: Compensation expense is recorded for the excess, if
any, of the market price of VF Common Stock at the date of grant over the amount
the employee must pay for the stock.
Other Comprehensive Income consists of certain changes in assets and liabilities
that are not included in Net Income but are instead reported under generally
accepted accounting principles within a separate component of Common
Shareholders' Equity. All amounts in Accumulated Other Comprehensive Income
relate to foreign currency translation and are net of income taxes at a 35%
rate.
STOCK SPLIT: During 1997, the Company declared a two-for-one stock split. Common
Stock increased and Retained Earnings decreased by $61.1 million, representing
the stated value of additional shares issued. Amounts presented in the
Consolidated Statements of Common Shareholders' Equity are based on actual share
amounts outstanding for each period presented.
RECLASSIFICATIONS: Certain amounts in prior years have been reclassified to
conform with the current year presentation.
USE OF ESTIMATES: In preparing financial statements in accordance with generally
accepted accounting principles, management makes estimates and assumptions that
affect amounts reported in the financial statements and accompanying notes.
Actual results may differ from those estimates.
NOTE B ACQUISITIONS
In 1999, the Company acquired the common stock of Horace Small Holdings
Corporation of Delaware, Inc., a manufacturer and marketer of occupational
apparel, for $57.7 million in cash, plus repayment of $23.3 million in debt. The
Company also acquired two other workwear and four jeanswear businesses for an
aggregate cost of $78.4 million, plus additional contingent consideration if
future earnings targets are attained. Intangible assets related to these
acquisitions totaled $87.4 million. The Company accrued various restructuring
charges in connection with certain of these businesses. The charges relate to
severance, closure of manufacturing and distribution facilities, and lease and
contract termination costs. Cash payments related to these actions will be
substantially completed during 2000. Charges are summarized as follows (in
thousands):
<TABLE>
<CAPTION>
Facilities Lease and
Exit Contract
Severance Costs Termination Total
<S> <C> <C> <C> <C>
Restructuring accrual $ 5,061 $ 1,622 $ 17,948 $ 24,631
Cash payments (1,362) (208) (2,218) (3,788)
-------- -------- -------- --------
Estimated remaining costs $ 3,699 $ 1,414 $ 15,730 $ 20,843
======== ======== ======== ========
</TABLE>
During 1998, the Company acquired Bestform Group, Inc. for $184.3 million in
cash, plus repayment of $44.4 million in debt. The Company also acquired three
other businesses in 1998 for an aggregate cost of $76.1 million and three
businesses in 1997 for an aggregate cost of $16.0 million. Intangible assets
related to these acquisitions totaled $168.5 million in 1998 and $10.0 million
in 1997.
The following unaudited pro forma results of operations assume that
acquisitions during the last two years had occurred at the beginning of 1998:
<TABLE>
<CAPTION>
In thousands, except per share amounts 1999 1998
------------- -------------
<S> <C> <C>
Net sales $ 5,614,028 $ 5,826,443
Net income 363,097 383,933
Earnings per common share:
Basic $ 3.01 $ 3.13
Diluted 2.96 3.06
============= =============
</TABLE>
All acquisitions have been accounted for as purchases, and accordingly, the
purchase prices have been allocated to the net assets acquired based on fair
values at the dates of acquisition. The excess of cost over fair value of the
purchased businesses has been allocated to intangible assets and is being
amortized over periods from 19 to 40 years. Operating results of these
businesses have been included in the consolidated financial statements since the
dates of acquisition.
NOTE C INVENTORIES
<TABLE>
<CAPTION>
In thousands 1999 1998
-------- --------
<S> <C> <C>
Finished products $575,617 $552,729
Work in process 171,275 185,929
Materials and supplies 217,148 215,349
-------- --------
$964,040 $954,007
======== ========
</TABLE>
The current cost of inventories stated on the last-in, first-out method is not
significantly different from their value determined under the first-in,
first-out method.
[25]
<PAGE> 11
NOTE D PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
In thousands 1999 1998
---------- ----------
<S> <C> <C>
Land $ 46,626 $ 45,296
Buildings 478,372 443,619
Machinery and equipment 1,289,064 1,222,216
---------- ----------
1,814,062 1,711,131
Less accumulated depreciation 1,009,640 935,040
---------- ----------
$ 804,422 $ 776,091
========== ==========
</TABLE>
NOTE E SHORT-TERM BORROWINGS
<TABLE>
<CAPTION>
In thousands 1999 1998
-------- --------
<S> <C> <C>
Commercial paper $319,033 $ --
Banks 89,899 244,910
-------- --------
$408,932 $244,910
======== ========
</TABLE>
The weighted average interest rate for short-term borrowings was 6.5% at the end
of 1999 and 5.8% at the end of 1998. The Company maintains an unsecured
revolving credit agreement with a group of banks for $750.0 million that
supports commercial paper borrowings and is otherwise available for general
corporate purposes. The agreement, which extends to July 2004, requires an .08%
facility fee per year and contains various financial covenants, including a debt
to net worth requirement. At January 1, 2000, there were no borrowings under the
agreement.
NOTE F ACCRUED LIABILITIES
<TABLE>
<CAPTION>
In thousands 1999 1998
-------- --------
<S> <C> <C>
Income taxes $ 59,242 $ 70,112
Compensation 71,798 103,769
Other 236,084 272,120
-------- --------
$367,124 $446,001
======== ========
</TABLE>
NOTE G LONG-TERM DEBT
<TABLE>
<CAPTION>
In thousands 1999 1998
-------- --------
<S> <C> <C>
9.50% notes, due 2001 $100,000 $100,000
6.63% notes, due 2003 100,000 100,000
7.60% notes, due 2004 100,000 100,000
6.75% notes, due 2005 100,000 100,000
9.25% debentures, due 2022 100,000 100,000
Other 22,585 22,626
-------- --------
522,585 522,626
Less current portion 4,751 969
-------- --------
$517,834 $521,657
======== ========
</TABLE>
The scheduled payments of long-term debt are $114.0 million in 2001, $.5 million
in 2002, $100.4 million in 2003 and $100.4 million in 2004. The Company paid
interest of $73.4 million in 1999, $59.5 million in 1998 and $48.0 million in
1997.
NOTE H OTHER LIABILITIES
<TABLE>
<CAPTION>
In thousands 1999 1998
-------- --------
<S> <C> <C>
Deferred compensation $179,321 $151,436
Deferred income taxes -- 11,512
Other 14,792 18,802
-------- --------
$194,113 $181,750
======== ========
</TABLE>
NOTE I BENEFIT PLANS
The Company sponsors a noncontributory defined benefit pension plan covering
substantially all full-time domestic employees and a nonqualified supplemental
defined benefit pension plan covering key employees. The effect of the defined
benefit plans on income is as follows:
<TABLE>
<CAPTION>
In thousands 1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Service cost - benefits earned
during the year $ 22,174 $ 20,391 $ 17,264
Interest cost on projected
benefit obligation 41,166 38,584 35,934
Expected return on plan assets (50,692) (45,270) (34,771)
Amortization of:
Transition asset -- (3,068) (4,378)
Prior service cost 5,359 5,667 5,475
Actuarial (gain) loss (831) 610 391
-------- -------- --------
Pension expense $ 17,176 $ 16,914 $ 19,915
======== ======== ========
</TABLE>
The following provides a reconciliation of the changes in fair value of the
pension plans' assets and benefit obligations, based on a September 30 valuation
date, plus the funded status at the end of each year:
<TABLE>
<CAPTION>
In thousands 1999 1998
--------- ---------
<S> <C> <C>
Fair value of plan assets, beginning of year $ 553,591 $ 526,087
Actual return on plan assets 112,848 28,013
Company contributions 24,000 20,400
Benefits paid (23,144) (20,909)
--------- ---------
Fair value of plan assets, end of year 667,295 553,591
--------- ---------
Benefit obligations, beginning of year 591,726 503,340
Service cost 22,174 20,391
Interest cost 41,166 38,584
Plan amendments -- 22,427
Actuarial (gain) loss (44,831) 29,019
Benefits paid (24,385) (22,035)
--------- ---------
Benefit obligations, end of year 585,850 591,726
--------- ---------
Funded status, end of year 81,445 (38,135)
Unrecognized net actuarial (gain) loss (88,095) 17,825
Unrecognized prior service cost 29,911 35,269
--------- ---------
Pension asset, net $ 23,261 $ 14,959
========= =========
Amount included in:
Other Assets $ 47,633 $ 35,164
Other Liabilities (24,372) (20,205)
--------- ---------
$ 23,261 $ 14,959
========= =========
</TABLE>
[26]
<PAGE> 12
For the unfunded supplemental defined benefit pension plan, the projected
benefit obligation and the accumulated benefit obligation were $50.2 million and
$37.6 million, respectively, at the end of 1999 and $41.2 million and $27.9
million, respectively, at the end of 1998. To support these benefit liabilities,
the Company has purchased life insurance contracts and other investment
securities. These securities are held in irrevocable trusts and are included in
Other Assets. The cash value of life insurance and the market value of other
investments, which approximates cost, was $27.9 million in 1999 and $23.7
million in 1998.
The projected benefit obligation was determined using an assumed discount
rate of 7.8% in 1999, 6.8% in 1998 and 7.5% in 1997. The assumption for
compensation increases was 4.0% in 1999 and 1998 and 4.5% in 1997, and the
assumption for return on plan assets was 8.8% in each year.
The Company sponsors an Employee Stock Ownership Plan (ESOP) as part of a
401(k) savings plan covering most domestic salaried employees. Contributions
made by the Company to the 401(k) plan are based on a specified percentage of
employee contributions. Cash contributions by the Company were $6.9 million in
1999, $6.5 million in 1998 and $5.7 million in 1997. Plan expense was $5.2
million in 1999 and $5.5 million in 1998 and 1997, after giving effect to
dividends on the Series B Preferred Stock of $3.5 million in 1999, $3.7 million
in 1998 and $3.8 million in 1997.
The Company also sponsors other savings and retirement plans for certain
domestic and foreign employees. Expense for these plans totaled $6.2 million in
1999, $6.5 million in 1998 and $5.8 million in 1997.
NOTE J CAPITAL
Common shares outstanding are net of shares held in treasury, and in substance
retired, of 21,136,952 in 1999, 17,134,370 in 1998 and 13,910,519 in 1997. In
addition, 306,698 shares of VF Common Stock at the end of 1999 and 232,899
shares at the end of 1998 are held in trust for deferred compensation plans.
These shares are treated for financial accounting purposes as treasury shares at
a cost of $10.5 million and $7.0 million, respectively.
There are 25,000,000 authorized shares of Preferred Stock, $1 par value. As
of January 1, 2000, 2,000,000 shares are designated as Series A Preferred Stock,
of which none has been issued. In addition, 2,105,263 shares are designated as
6.75% Series B Preferred Stock, which were purchased by the ESOP.
There were 1,669,444 shares of Series B Preferred Stock outstanding at
January 1, 2000, 1,760,119 outstanding at January 2, 1999 and 1,824,820
outstanding at January 3, 1998, after share redemptions.
Each outstanding share of Common Stock has one preferred stock purchase right
attached. The rights become exercisable ten days after an outside party
acquires, or makes an offer for, 15% or more of the Common Stock. Once
exercisable, each right will entitle its holder to buy 1/100 share of Series A
Preferred Stock for $175. If the Company is involved in a merger or other
business combination or an outside party acquires 15% or more of the Common
Stock, each right will be modified to entitle its holder (other than the
acquirer) to purchase common stock of the acquiring company or, in certain
circumstances, VF Common Stock having a market value of twice the exercise price
of the right. In some circumstances, rights other than those held by an acquirer
may be exchanged for one share of VF Common Stock. The rights, which expire in
January 2008, may be redeemed at $.01 per right prior to their becoming
exercisable.
NOTE K REDEEMABLE PREFERRED STOCK
Each share of Series B Preferred Stock has a redemption value of $30.88 plus
cumulative accrued dividends, is convertible into 1.6 shares of Common Stock and
is entitled to two votes per share along with the Common Stock. The trustee for
the ESOP may convert the preferred shares to Common Stock at any time or may
cause the Company to redeem the preferred shares under certain circumstances.
The Series B Preferred Stock also has preference in liquidation over all other
stock issues.
The ESOP's purchase of the preferred shares was funded by a loan of $65.0
million from the Company that bears interest at 9.80% and is payable in
increasing installments through 2002. Interest related to this loan was $2.6
million in 1999, $3.3 million in 1998 and $3.9 million in 1997. Principal and
interest obligations on the loan are satisfied as the Company makes
contributions to the savings plan and dividends are paid on the Preferred Stock.
As principal payments are made on the loan, shares of Preferred Stock are
allocated to participating employees' accounts within the ESOP. At the end of
1999, 1,207,392 shares of Preferred Stock had been allocated to participating
employees' accounts.
NOTE L STOCK OPTION PLAN
The Company has granted nonqualified stock options to officers, directors and
key employees under a stock compensation plan at prices not less than fair
market value on the date of grant. Options become exercisable one year after the
date of grant and expire ten years after the date of grant. Activity in the
stock compensation plan is summarized as follows:
<TABLE>
<CAPTION>
Weighted
Shares Average
Under Exercise
Options Price
---------- ----------
<S> <C> <C>
Balance January 4, 1997 8,164,472 $ 26.21
Options exercised (2,521,346) 25.78
Options canceled (131,510) 29.88
---------- ----------
Balance January 3, 1998 5,511,616 28.21
Options granted 1,940,000 43.30
Options exercised (1,680,000) 27.26
Options canceled (69,310) 25.41
---------- ----------
Balance January 2, 1999 5,702,306 33.65
Options granted 1,975,400 43.20
Options exercised (795,400) 31.87
Options canceled (250,810) 32.88
---------- ----------
Balance January 1, 2000 6,631,496 $ 36.74
========== ==========
</TABLE>
[27]
<PAGE> 13
Stock options outstanding at January 1, 2000 are summarized as follows:
<TABLE>
<CAPTION>
Weighted
Average Weighted
Range of Remaining Average
Exercise Number Contractual Exercise
Prices Outstanding Life Price
- -------- ----------- ----------- --------
<S> <C> <C> <C>
$ 6 - 10 8,900 .9 years $ 8.09
16 - 20 44,220 1.9 years 17.95
21 - 25 641,616 4.6 years 23.49
26 - 30 1,179,510 4.7 years 27.01
31 - 35 1,127,900 6.9 years 34.48
40 - 45 3,629,350 8.6 years 43.25
--------- --- ------
$ 6 - 45 6,631,496 7.2 years $36.74
========= === ======
</TABLE>
All above options are exercisable, except for those granted in 1999. There
are 4,646,983 shares available for future grants of stock options and stock
awards, of which no more than 1,030,053 may be grants of restricted stock
awards.
Since all stock options are granted at market value, compensation expense is
not required. However, had compensation expense been determined based on the
fair value of the options on the grant dates, the Company's net income would
have been reduced by $11.9 million ($.10 per share) in 1999, $9.7 million ($.08
per share) in 1998 and $9.0 million ($.07 per share) in 1997.
The fair value of options granted during 1999 was $9.97 per share and of
options granted during 1998 was $8.78 per share. Fair value is estimated based
on the Black-Scholes option-pricing model with the following assumptions for
grants in 1999 and 1998: dividend yield of 2.0%; expected volatility of 26% in
1999 and 20% in 1998; risk-free interest rates of 4.8% in 1999 and 5.4% in 1998;
and expected lives of 4 years.
The Company has granted to key employees 67,367 shares of restricted stock
that vest in the year 2005. Compensation equal to the market value of shares at
the date of grant is amortized to expense over the vesting period. Expense for
these shares was $.3 million in 1999 and $.2 million in 1998 and 1997.
In 1999, the Company granted stock awards to certain key employees under a
new stock award plan, which replaced a portion of the cash incentive
compensation for those employees. The stock awards entitle the participants to
the right to receive shares of VF Common Stock, with the number of shares to be
earned based on the three year total shareholder return of VF Common Stock
compared with a peer group of other major apparel companies. Shares earned at
the end of each three year period are issued to participants in the following
year, unless they elect to defer receipt of the shares. A total of 44,962 shares
of VF Common Stock were earned for the three year performance period ended in
1999. At the end of 1999, there are 34,062 stock awards outstanding for the
performance period ending in 2000 and 34,062 for the performance period ending
in 2001. Compensation expense equal to the market value of the shares to be
issued is recognized ratably over each three year performance period. In 1999,
expense of $2.0 million was recognized for this plan.
NOTE M INCOME TAXES
The provision for income taxes is computed based on the following amounts of
income before income taxes:
<TABLE>
<CAPTION>
In thousands 1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Domestic $567,545 $582,128 $514,028
Foreign 28,031 49,470 71,852
-------- -------- --------
$595,576 $631,598 $585,880
======== ======== ========
</TABLE>
The provision for income taxes consists of:
<TABLE>
<CAPTION>
In thousands 1999 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
Current:
Federal $ 175,052 $ 174,346 $ 201,924
Foreign 14,113 35,082 46,466
State 19,607 14,757 19,553
--------- --------- ---------
208,772 224,185 267,943
Deferred, primarily federal 20,562 19,107 (33,005)
--------- --------- ---------
$ 229,334 $ 243,292 $ 234,938
========= ========= =========
</TABLE>
The reasons for the difference between income taxes computed by applying the
statutory federal income tax rate and income tax expense in the financial
statements are as follows:
<TABLE>
<CAPTION>
In thousands 1999 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
Tax at federal statutory rate $ 208,452 $ 221,059 $ 205,058
State income taxes,
net of federal tax benefit 12,744 9,592 12,709
Amortization of intangible assets 8,241 7,916 7,084
Foreign operating losses
with no current benefit 11,608 4,715 4,033
Other, net (11,711) 10 6,054
--------- --------- ---------
$ 229,334 $ 243,292 $ 234,938
========= ========= =========
</TABLE>
Deferred income tax assets and liabilities consist of the following:
<TABLE>
<CAPTION>
In thousands 1999 1998
--------- ---------
<S> <C> <C>
Deferred income tax assets:
Employee benefits $ 51,582 $ 62,564
Inventories 19,990 16,780
Other accrued expenses 79,767 103,811
Operating loss carryforwards 71,911 38,083
Foreign currency translation 34,869 13,806
--------- ---------
258,119 235,044
Valuation allowance (46,526) (34,249)
--------- ---------
Deferred income tax assets 211,593 200,795
--------- ---------
Deferred income tax liabilities:
Depreciation 56,103 59,288
Other 25,244 39,857
--------- ---------
Deferred income tax liabilities 81,347 99,145
--------- ---------
Net deferred income tax assets $ 130,246 $ 101,650
========= =========
Amount included in:
Current Assets $ 74,067 $ 99,608
Other Assets 56,179 13,554
Other Liabilities -- (11,512)
--------- ---------
$ 130,246 $ 101,650
========= =========
</TABLE>
[28]
<PAGE> 14
The Company has $141.8 million of foreign operating loss carryforwards
expiring at various dates; a valuation allowance has been provided where it is
more likely than not that the deferred tax assets relating to certain of those
loss carryforwards will not be realized. Income taxes paid were $228.0 million
in 1999, $215.2 million in 1998 and $230.1 million in 1997. Interest income
includes $3.0 million in 1999 and $10.5 million in 1997 relating to settlements
of prior years' tax examinations.
NOTE N BUSINESS SEGMENT INFORMATION
The Company designs and manufactures apparel products marketed primarily under
Company-owned brand names. Customers are primarily department, discount and
specialty stores throughout the world.
The Company manages its businesses through separate marketing companies that
support specific brands. Manufacturing and product sourcing needs are met by
groups that support individual or in some cases several different product types.
These operations have been aggregated into three reportable segments. The
"Consumer Apparel" segment includes jeanswear and related products, women's
intimate apparel and swimwear, and children's apparel, all having similar
characteristics of economic performance, product type, production process,
method of distribution and class of customer. The "Occupational Apparel" segment
is distinguished from the Consumer Apparel segment because of a different class
of customer. The "All Other" segment consists of the Company's knitwear, daypack
and backpack operations, which have different product or economic
characteristics than those in the other segments. The Occupational Apparel
segment is separately reportable for 1999 because of recent acquisitions;
accordingly, prior years' segment information has been restated to conform to
the 1999 presentation.
Management evaluates the operating performance of each of its marketing
companies based on their income from operations. Accounting policies used for
segment reporting are consistent with those stated in Note A, except that
inventories are valued on a first-in, first-out basis and that interest income
and expense and amortization of intangible assets are not allocated to
individual segments. Corporate and other expenses include expenses incurred in
and directed by the Corporate offices that are not allocated to specific
business units. Segment assets are those used directly in the operations of each
business unit, such as accounts receivable, inventories and property, plant and
equipment. Corporate assets include investments and deferred income taxes.
Financial information for the Company's reportable segments is as follows:
<TABLE>
<CAPTION>
In thousands 1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
Net sales:
Consumer Apparel $ 4,276,809 $ 4,313,082 $ 3,963,869
Occupational Apparel 640,227 482,931 461,940
All Other 634,580 682,794 796,437
----------- ----------- -----------
Consolidated net sales $ 5,551,616 $ 5,478,807 $ 5,222,246
=========== =========== ===========
Segment profit:
Consumer Apparel $ 629,127 $ 693,638 $ 574,384
Occupational Apparel 79,164 80,988 72,626
All Other 57,715 38,686 73,517
----------- ----------- -----------
Total segment profit 766,006 813,312 720,527
Interest, net (62,490) (55,871) (25,877)
Amortization of intangible assets (33,097) (32,890) (27,518)
Corporate and other expenses (74,843) (92,953) (81,252)
----------- ----------- -----------
Consolidated income before
income taxes $ 595,576 $ 631,598 $ 585,880
=========== =========== ===========
Segment assets:
Consumer Apparel $ 1,783,225 $ 1,858,873 $ 1,506,035
Occupational Apparel 379,004 247,734 217,239
All Other 332,850 377,155 421,389
----------- ----------- -----------
Total segment assets 2,495,079 2,483,762 2,144,663
Cash and equivalents 79,861 63,208 124,094
Intangible assets 992,463 951,562 814,332
Corporate assets 459,111 338,134 239,693
----------- ----------- -----------
Consolidated assets $ 4,026,514 $ 3,836,666 $ 3,322,782
=========== =========== ===========
Depreciation expense:
Consumer Apparel $ 89,313 $ 83,382 $ 81,199
Occupational Apparel 14,958 11,769 11,631
All Other 23,555 26,165 29,993
Corporate 6,509 7,179 5,911
----------- ----------- -----------
Consolidated depreciation expense $ 134,335 $ 128,495 $ 128,734
=========== =========== ===========
Capital expenditures:
Consumer Apparel $ 97,196 $ 129,532 $ 109,458
Occupational Apparel 20,845 19,362 16,821
All Other 8,358 11,480 15,856
Corporate 23,677 28,685 12,127
----------- ----------- -----------
Consolidated capital expenditures $ 150,076 $ 189,059 $ 154,262
=========== =========== ===========
</TABLE>
Information by geographic area is presented below, with sales based on the
location of the customer:
<TABLE>
<CAPTION>
In thousands 1999 1998 1997
---------- ---------- ----------
<S> <C> <C> <C>
Net sales:
United States $4,605,624 $4,552,785 $4,368,474
Foreign, primarily Europe 945,992 926,022 853,772
---------- ---------- ----------
Consolidated net sales $5,551,616 $5,478,807 $5,222,246
========== ========== ==========
Long-lived assets, primarily
property, plant and equipment:
United States $ 650,577 $ 634,231 $ 596,125
Mexico 71,627 60,400 41,055
Other foreign, primarily Europe 83,029 83,842 73,253
---------- ---------- ----------
Total long-lived assets $ 805,233 $ 778,473 $ 710,433
========== ========== ==========
</TABLE>
[29]
<PAGE> 15
Worldwide sales by product category are as follows:
<TABLE>
<CAPTION>
In thousands 1999 1998 1997
---------- ---------- ----------
<S> <C> <C> <C>
Jeanswear and related products $2,936,196 $2,962,790 $2,888,967
Intimate apparel 981,798 965,782 648,937
Occupational apparel 640,227 482,931 461,940
Knitwear 453,103 506,365 614,798
Other 540,292 560,939 607,604
---------- ---------- ----------
Total $5,551,616 $5,478,807 $5,222,246
========== ========== ==========
</TABLE>
Sales to one domestic discount store group comprise 13.0% of consolidated
sales in 1999, 12.3% in 1998 and 11.1% in 1997.
NOTE O LEASES
The Company leases certain facilities and equipment under
noncancelable operating leases. Rental expense was $59.3 million
in 1999, $64.3 million in 1998 and $66.2 million in 1997. Future minimum lease
payments are $54.7 million, $44.2 million, $35.3 million, $28.0 million and
$20.4 million for the years 2000 through 2004 and $43.1 million thereafter.
NOTE P EARNINGS PER SHARE
<TABLE>
<CAPTION>
In thousands, except per share amounts 1999 1998 1997
-------- -------- --------
Basic earnings per share:
<S> <C> <C> <C>
Net income $366,242 $388,306 $350,942
Less Preferred Stock dividends
and redemption premium 6,394 5,912 5,003
-------- -------- --------
Net income available for
Common Stock $359,848 $382,394 $345,939
-------- -------- --------
Weighted average Common
Stock outstanding 118,538 120,744 125,504
-------- -------- --------
Basic earnings per share $ 3.04 $ 3.17 $ 2.76
======== ======== ========
Diluted earnings per share:
Net income $366,242 $388,306 $350,942
Increased ESOP expense if
Preferred Stock were converted
to Common Stock 1,036 1,136 1,227
-------- -------- --------
Net income available for
Common Stock and dilutive
securities $365,206 $387,170 $349,715
-------- -------- --------
Weighted average Common
Stock outstanding 118,538 120,744 125,504
Additional Common Stock
resulting from dilutive securities:
Preferred Stock 2,724 2,854 2,955
Stock options and other 996 1,397 1,261
-------- -------- --------
Weighted average Common
Stock and dilutive securities
outstanding 122,258 124,995 129,720
-------- -------- --------
Diluted earnings per share $ 2.99 $ 3.10 $ 2.70
======== ======== ========
</TABLE>
Outstanding options to purchase 2.1 million shares of Common Stock have been
excluded from the computation of diluted earnings per share in 1999 because the
option exercise prices were greater than the average market price of the Common
Stock.
NOTE Q FINANCIAL INSTRUMENTS
The carrying amount and fair value of financial instruments included in the
balance sheets are as follows:
<TABLE>
<CAPTION>
In thousands 1999 1998
---- ----
Carrying Fair Carrying Fair
Amount Value Amount Value
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Financial liabilities:
Short-term borrowings $408,932 $408,932 $244,910 $244,910
Long-term debt 522,585 507,297 522,626 552,476
Series B Preferred Stock 51,544 80,133 54,344 132,008
======== ======== ======== ========
</TABLE>
The fair value of the Company's short-term and long-term debt is estimated
based on quoted market prices or values of comparable borrowings. The fair value
of the Series B Preferred Stock is based on a valuation by an independent
financial consulting firm.
The Company enters into short-term foreign currency forward exchange
contracts to manage exposures related to specific foreign currency transactions
or anticipated cash flows. Changes in the fair values of these contracts are
recognized currently in operating income. The amounts of the contracts, and
related gains and losses, are not material. The fair value of foreign currency
financial instruments approximates their carrying value.
[30]
<PAGE> 16
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders
VF Corporation
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of income, comprehensive income, cash flows and common
shareholders' equity present fairly, in all material respects, the financial
position of VF Corporation and its subsidiaries at January 1, 2000 and January
2, 1999, and the results of their operations and their cash flows for each of
the three fiscal years in the period ended January 1, 2000, in conformity with
accounting principles generally accepted in the United States. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States, which require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for the opinion expressed above.
[PricewaterhouseCoopers LLP]
PricewaterhouseCoopers LLP
Greensboro, North Carolina
February 3, 2000
[31]
<PAGE> 17
VF CORPORATION FINANCIAL SUMMARY
<TABLE>
<CAPTION>
In thousands, except per share amounts 1999 1998 1997
----------- ----------- -----------
Summary of Operations
<S> <C> <C> <C>
Net sales $ 5,551,616 $ 5,478,807 $ 5,222,246
Cost of products sold 3,657,120 3,586,686 3,440,611
----------- ----------- -----------
Gross margin 1,894,496 1,892,121 1,781,635
Marketing, administrative and other 1,241,864 1,207,952 1,176,562
----------- ----------- -----------
Operating income 652,632 684,169 605,073
Interest, net (62,490) (55,871) (25,877)
Miscellaneous, net 5,434 3,300 6,684
----------- ----------- -----------
Income before income taxes 595,576 631,598 585,880
Income taxes 229,334 243,292 234,938
----------- ----------- -----------
Net income $ 366,242 $ 388,306 $ 350,942
----------- ----------- -----------
Per share of Common Stock(1)
Earnings - basic $ 3.04 $ 3.17 $ 2.76
Earnings - diluted 2.99 3.10 2.70
Dividends .85 .81 .77
Average number of common shares outstanding 118,538 120,744 125,504
Net income as % of average common shareholders' equity 17.3% 19.7% 18.2%
Net income as % of average total assets 8.9% 10.2% 10.1%
=========== =========== ===========
Financial Position
Accounts receivable, net $ 732,502 $ 705,734 $ 587,934
Inventories 964,040 954,007 774,755
Total current assets 1,877,416 1,848,152 1,601,466
Property, plant and equipment, net 804,422 776,091 705,990
Total assets 4,026,514 3,836,666 3,322,782
Total current liabilities 1,113,473 1,033,006 765,908
Long-term debt 517,834 521,657 516,226
Common shareholders' equity 2,163,818 2,066,308 1,866,769
=========== =========== ===========
Other Statistics
Working capital $ 763,943 $ 815,146 $ 835,558
Current ratio 1.7 1.8 2.1
Debt to capital ratio(2) 30.1% 27.1% 22.5%
Dividends $ 104,302 $ 101,660 $ 100,141
Purchase of Common Stock 149,075 147,398 391,651
Cash provided by operations 423,361 429,282 460,652
Capital expenditures (excluding acquisitions) 150,076 189,059 154,262
Depreciation and amortization 167,432 161,385 156,252
=========== =========== ===========
Market Data
Market price range(1) $55-27 7/16 $54 11/16-33 7/16 $48 1/4-32 1/4
Book value per common share(1) 18.62 17.30 15.40
Price earnings ratio - high-low 18.1-9.0 17.3-10.5 17.5-11.7
Rate of payout(3) 28.0% 25.6% 27.9%
=========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
In thousands, except per share amounts 1996 1995
----------- -----------
Summary of Operations
<S> <C> <C>
Net sales $ 5,137,178 $ 5,062,299
Cost of products sold 3,458,166 3,577,555
----------- -----------
Gross margin 1,679,012 1,484,744
Marketing, administrative and other 1,121,729 1,137,354
----------- -----------
Operating income 557,283 347,390
Interest, net (49,387) (66,217)
Miscellaneous, net 512 2,962
----------- -----------
Income before income taxes 508,408 284,135
Income taxes 208,884 126,844
----------- -----------
Net income $ 299,524 $ 157,291
----------- -----------
Per share of Common Stock(1)
Earnings - basic $ 2.32 $ 1.20
Earnings - diluted 2.28 1.19
Dividends .73 .69
Average number of common shares outstanding 127,292 127,486
Net income as % of average common shareholders' equity 16.2% 8.8%
Net income as % of average total assets 8.6% 4.4%
=========== ===========
Financial Position
Accounts receivable, net $ 592,942 $ 629,506
Inventories 730,823 841,907
Total current assets 1,706,326 1,667,637
Property, plant and equipment, net 721,524 749,880
Total assets 3,449,535 3,447,071
Total current liabilities 766,267 868,320
Long-term debt 519,058 614,217
Common shareholders' equity 1,973,739 1,771,506
=========== ===========
Other Statistics
Working capital $ 940,059 $ 799,317
Current ratio 2.2 1.9
Debt to capital ratio(2) 21.4% 32.3%
Dividends $ 97,036 $ 92,038
Purchase of Common Stock 61,483 86,251
Cash provided by operations 711,454 323,656
Capital expenditures (excluding acquisitions) 138,747 155,206
Depreciation and amortization 160,578 167,721
=========== ===========
Market Data
Market price range(1) $34 15/16-23 13/16 $28 9/16-23 3/8
Book value per common share(1) 15.44 13.96
Price earnings ratio - high-low 15.1-10.3 23.8-19.5
Rate of payout(3) 31.5% 57.5%
=========== ===========
</TABLE>
(1) Per share computations and market price ranges have been adjusted to reflect
a two-for-one stock split in November 1997.
(2) Capital is defined as common shareholders' equity plus short-term and
long-term debt.
(3) Dividends per share divided by earnings per share.
[32]
<PAGE> 18
INVESTOR INFORMATION
COMMON STOCK
Listed on the New York Stock Exchange and Pacific Exchange - trading symbol VFC.
SHAREHOLDERS OF RECORD
As of February 18, 2000, there were 6,974 shareholders of record.
DIVIDEND POLICY
Quarterly dividends on VF Corporation Common Stock, when declared, are paid on
or about the 20th day of March, June, September and December.
DIVIDEND REINVESTMENT PLAN
The Plan is offered to shareholders by First Chicago Trust Company of New York.
The Plan provides for automatic dividend reinvestment and voluntary cash
contributions for the purchase of additional shares of VF Corporation Common
Stock. Questions concerning general Plan information should be directed to the
Office of the Vice President - Administration, General Counsel and Secretary of
VF Corporation.
DIVIDEND DIRECT DEPOSIT
Shareholders may have their dividends deposited into their savings or checking
account at any bank that is a member of the Automated Clearing House (ACH)
system. A brochure describing this service may be obtained by contacting First
Chicago.
QUARTERLY COMMON STOCK PRICE INFORMATION
The high and low sales prices for the periods indicated were as follows:
<TABLE>
<CAPTION>
1999 1998 1997
- --------------------------------------------------------------------------------------------------------
High Low High Low High Low
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
First quarter $50 13/16 $40 7/8 $53 1/4 $40 3/4 $35 11/16 $32 1/2
Second quarter 55 37 1/2 54 11/16 49 11/16 43 5/8 32 1/4
Third quarter 43 3/8 30 52 1/4 36 5/8 48 1/4 42 9/16
Fourth quarter 32 5/8 27 7/16 50 11/16 33 7/16 47 3/16 41 11/16
</TABLE>
<PAGE> 1
EXHIBIT 21
VF CORPORATION
SUBSIDIARIES OF THE CORPORATION
Following is a listing of the significant subsidiaries of the Corporation, at
January 1, 2000:
<TABLE>
<CAPTION>
Name Jurisdiction of Organization
---- ----------------------------
<S> <C>
Bestform, Inc. Delaware
Bulwark Protective Apparel, Ltd Canada
The H. D. Lee Company, Inc. Delaware
H. H. Cutler Company Michigan
JanSport, Inc. Delaware
Jantzen Inc. Nevada
Les Dessous Boutique Diffusion S.A. France
Vanity Fair, Inc. Delaware
Vanity Fair Intimates, Inc. Alabama
Vives Vidal Vivesa, S.A. Spain
VF Chile S.A. (65% owned) Chile
VF Diffusion, S.A.R.L. France
VF de Argentina S.A. Argentina
VF do Brasil Ltda. Brazil
VF Ege Soke Giyim Sanayi Ve Ticaret A.S. Turkey
VF Europe N.V. Belgium
VF Factory Outlet, Inc. Delaware
VF Germany Textil-Handels GmbH Germany
VF Italia, S.r.l. Italy
VF (J) France, S.A. France
VF Japan K.K. (70% owned) Japan
VF Jeanswear, Inc. Alabama
VF Knitwear, Inc. Virginia
VF Lingerie (France) S.A. France
VF Northern Europe Ltd. United Kingdom
VF Playwear, Inc. Delaware
VF Polska Sp. zo.o. Poland
VF Scandinavia A/S Denmark
VF Uniforms, Inc. Florida
VF Workwear, Inc. Delaware
Wrangler Apparel Corp. Delaware
Wrangler Clothing Corp. Delaware
</TABLE>
Excludes subsidiaries which, if considered as a single subsidiary or after
taking into account the elimination of intercompany accounts, would not
constitute a significant subsidiary. Subsidiaries are 100% owned unless
otherwise indicated.
<PAGE> 1
Exhibit 23.1
Consent of Independent Accountants for Form 10-K
We hereby consent to the incorporation by reference in the below Registration
Statements of VF Corporation of our report dated February 3, 2000 relating to
the consolidated financial statements, which appears in the Annual Report to
Shareholders, which is incorporated by reference in this Annual Report on Form
10-K. We also consent to the incorporation by reference of our report dated
February 3, 2000 relating to the consolidated financial statement schedule,
which appears in this Form 10-K.
(1) Post-Effective Amendment No.1 to Registration Statement No. 333-32789
on Form S-8, which constitutes Post-Effective Amendment No. 9 to
Registration Statement No. 2-85579 on Form S-8, Post-Effective
Amendment No. 5 to Registration Statement No. 33-26566 on Form S-8,
Post-Effective Amendment No. 2 to Registration Statement No. 33-55014
on Form S-8 and Post-Effective Amendment No. 2 to Registration
Statement No. 33-60569 on Form S-8;
(2) Post-Effective Amendment No. 1 to Registration Statement No. 33-33621
on Form S-8, which constitutes Post-Effective Amendment No. 2 to
Registration Statement No. 2-99945 on Form S-8;
(3) Registration Statement No. 333-59727 on Form S-8;
(4) Post-Effective Amendment No. 1 to Registration Statement No. 33-41241
on Form S-8;
(5) Registration Statement No. 333-72267 on Form S-8;
(6) Post-Effective No. 1 to Registration Statement No.333-49023 on Form
S-8;
(7) Registration Statement No. 33-10491 on Form S-3;
(8) Registration Statement No. 33-53231 on Form S-3;
(9) Registration Statement No. 333-84193 on Form S-8 and Post-Effective
Amendment No. 1 thereto;
(10) Registration Statement No. 333-94205 on Form S-8.
/s/ PricewaterhouseCoopers LLP
- -------------------------------
Greensboro, North Carolina
March 28, 2000
<PAGE> 1
Exhibit 23.2
Report of Independent Accountants on Financial Statement Schedule
To the Board of Directors
VF Corporation
Our audits of the consolidated financial statements referred to in our report
dated February 3, 2000 appearing on page 31 of the 1999 Annual Report to
Shareholders of VF Corporation (which report and consolidated financial
statements are incorporated by reference in this Annual Report on Form 10-K)
also included an audit of the financial statement schedule listed in
Item14(a)(2) of this Form 10-K. In our opinion, this financial statement
schedule presents fairly, in all material respects, the information set forth
therein when read in conjunction with the related consolidated financial
statements.
/s/ PricewaterhouseCoopers LLP
- --------------------------------
Greensboro, North Carolina
February 3, 2000
<PAGE> 1
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that V.F. Corporation and the
undersigned directors and officers of V.F. Corporation do hereby constitute and
appoint Candace S. Cummings, Robert K. Shearer, and Peter E. Keene, and each of
them, true and lawful attorneys-in-fact of the undersigned to execute on their
behalf the Annual Report of V.F. Corporation on Form 10-K (including any
amendments thereof] of the Securities and Exchange Commission for the fiscal
year of V.F. Corporation ended January 1, 2000.
IN WITNESS WHEREOF, each of the undersigned has duly executed this
Power of Attorney this 8th day of February, 2000.
ATTEST: V.F. CORPORATION
/s/ Candace S. Cummings By: /s/ Mackey J. McDonald
- ------------------------ ------------------------
Candace S. Cummings Mackey J. McDonald
Secretary Chairman of the Board, President
and Chief Executive Officer
Principal Executive Officer: Principal Financial Officer:
/s/ Mackey J. McDonald /s/ R.K. Shearer
- ------------------------ ------------------------
Mackey J. McDonald Robert K. Shearer
Chairman of the Board, President Vice President-Finance and
and Chief Executive Officer Chief Financial Officer
Principal Accounting Officer:
/s/ Peter E. Keene
- ------------------------
Peter E. Keene, Controller
/s/ Robert D. Buzzell
- ------------------------ ------------------------
Erskine B. Bowles, Director Robert D. Buzzell, Director
/s/ Ursula Fairbairn
- ------------------------ ------------------------
Edward E. Crutchfield, Director Ursula F. Fairbairn, Director
/s/ Barbara S. Feigin /s/ George Fellows
- ------------------------ ------------------------
Barbara S. Feigin, Director George Fellows, Director
/s/ Daniel R. Hesse /s/ Robert J. Hurst
- ------------------------ ------------------------
Daniel R. Hesse, Director Robert J. Hurst, Director
/s/ Mackey J. McDonald /s/ M. Rust Sharp
- ------------------------ ------------------------
Mackey J. McDonald, Director M. Rust Sharp, Director
/s/ L. Dudley Walker
- ------------------------
L. Dudley Walker, Director
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the 1999
Annual Report and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-01-2000
<PERIOD-END> JAN-01-2000
<CASH> 79,861
<SECURITIES> 0
<RECEIVABLES> 786,969
<ALLOWANCES> 54,477
<INVENTORY> 964,040
<CURRENT-ASSETS> 1,877,416
<PP&E> 1,814,062
<DEPRECIATION> 1,009,640
<TOTAL-ASSETS> 4,026,514
<CURRENT-LIABILITIES> 1,113,473
<BONDS> 517,834
37,276
0
<COMMON> 116,205
<OTHER-SE> 2,047,613
<TOTAL-LIABILITY-AND-EQUITY> 4,026,514
<SALES> 5,551,616
<TOTAL-REVENUES> 5,551,616
<CGS> 3,657,120
<TOTAL-COSTS> 3,657,120
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 71,426
<INCOME-PRETAX> 595,576
<INCOME-TAX> 229,334
<INCOME-CONTINUING> 366,242
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 366,242
<EPS-BASIC> 3.04
<EPS-DILUTED> 2.99
</TABLE>
