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Document And Entity Information (USD $)
12 Months Ended
Dec. 31, 2011
Jan. 28, 2012
Jul. 02, 2011
Document And Entity Information [Abstract]
Document Type 10-K
Amendment Flag false
Document Period End Date Dec 31, 2011
Entity Registrant Name V F CORP
Entity Central Index Key 0000103379
Current Fiscal Year End Date --12-31
Document Fiscal Year Focus 2011
Document Fiscal Period Focus FY
Entity Filer Category Large Accelerated Filer
Entity Common Stock, Shares Outstanding 110,600,040
Entity Well-known Seasoned Issuer Yes
Entity Voluntary Filers No
Entity Current Reporting Status Yes
Entity Public Float $ 8,780,000,000
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Consolidated Balance Sheets (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2011
Jan. 01, 2011
ASSETS
Cash and equivalents $ 341,228 $ 792,239
Accounts receivable, less allowance for doubtful accounts of $54,010 in 2011 and $44,599, in 2010 1,120,246 773,083
Inventories 1,453,645 1,070,694
Deferred income taxes 106,717 68,220
Other current assets 166,108 121,824
Total current assets 3,187,944 2,826,060
Property, Plant and Equipment 737,451 602,908
Intangible Assets 2,958,463 1,490,925
Goodwill 2,023,460 1,166,638
Other Assets 405,808 371,025
Total assets 9,313,126 6,457,556
LIABILITIES AND STOCKHOLDERS' EQUITY
Short-term borrowings 281,686 36,576
Current portion of long-term debt 2,744 2,737
Accounts payable 637,116 510,998
Accrued liabilities 744,486 559,164
Total current liabilities 1,666,032 1,109,475
Long-term Debt 1,831,781 935,882
Other Liabilities 1,290,138 550,880
Commitments and Contingencies      
Stockholders' Equity
Preferred Stock, par value $1; shares authorized, 25,000,000; no shares outstanding in 2011 and 2010      
Common Stock, stated value $1; shares authorized, 300,000,000; 110,556,981 shares outstanding in 2011 and 107,938,105 outstanding in 2010 110,557 107,938
Additional paid-in capital 2,316,107 2,081,367
Accumulated other comprehensive income (loss) (421,477) (268,594)
Retained earnings 2,520,804 1,940,508
Total equity attributable to VF Corporation 4,525,991 3,861,219
Noncontrolling interests (816) 100
Total stockholders' equity 4,525,175 3,861,319
Total liabilities and stockholders' equity $ 9,313,126 $ 6,457,556
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Consolidated Balance Sheets (Parenthetical) (USD $)
In Thousands, except Share data, unless otherwise specified
Dec. 31, 2011
Jan. 01, 2011
Consolidated Balance Sheets [Abstract]
Allowance for doubtful accounts $ 54,010 $ 44,599
Common stock, stated value $ 1 $ 1
Common stock, shares authorized 300,000,000 300,000,000
Common stock, shares outstanding 110,556,981 107,938,105
Preferred Stock, par value $ 1 $ 1
Preferred Stock, shares authorized 25,000,000 25,000,000
Preferred Stock, shares outstanding 0 0
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Consolidated Statements Of Income (USD $)
In Thousands, except Per Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2011
Jan. 01, 2011
Jan. 02, 2010
Consolidated Statements Of Income [Abstract]
Net Sales $ 9,365,477 $ 7,624,599 $ 7,143,074
Royalty Income 93,755 77,990 77,212
Total Revenues 9,459,232 7,702,589 7,220,286
Costs and Operating Expenses
Cost of goods sold 5,128,602 4,105,201 4,025,122
Marketing, administrative and general expenses 3,085,839 2,574,790 2,336,394
Impairment of goodwill and intangible assets 201,738 [1] 121,953 [1]
Costs and Operating Expenses, Total 8,214,441 6,881,729 6,483,469
Operating Income 1,244,791 820,860 736,817
Other Income (Expense)
Interest income 4,778 2,336 2,230
Interest expense (77,578) (77,738) (85,902)
Miscellaneous, net (7,248) 4,754 1,528
Other Income (Expense), Total (80,048) (70,648) (82,144)
Income Before Income Taxes 1,164,743 750,212 654,673
Income Taxes 274,350 176,700 196,215
Net Income 890,393 573,512 458,458
Net (Income) Loss Attributable to Noncontrolling Interests (2,304) (2,150) 2,813
Net Income Attributable to VF Corporation $ 888,089 $ 571,362 $ 461,271
Earnings Per Common Share Attributable to VF Corporation Common Stockholders
Basic $ 8.13 $ 5.25 $ 4.18
Diluted $ 7.98 $ 5.18 $ 4.13
Cash Dividends Per Common Share $ 2.61 $ 2.43 $ 2.37
[1] Goodwill and trademark impairment charges totaling $201.7 million in 2010 related to Contemporary Brands and totaling $122.0 million in 2009 related to: Outdoor & Action Sports - $63.5 million and Sportswear - $58.5 million. See Notes F, G, and T.
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Consolidated Statements Of Comprehensive Income (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2011
Jan. 01, 2011
Jan. 02, 2010
Consolidated Statements Of Comprehensive Income [Abstract]
Net Income $ 890,393 $ 573,512 $ 458,458
Foreign currency translation
Gains (losses) arising during year (47,791) (81,984) 52,735
Less income tax effect 10,220 16,586 (15,267)
Reclassification to Net Income for gains realized (11,995)
Less income tax effect 4,134
Defined benefit pension plans
Current year actuarial losses (195,799) (51,925) (9,916)
Amortization of net deferred actuarial loss 43,088 45,731 60,525
Plan amendment (13,024)
Amortization of prior service cost 3,453 3,948 4,266
Less income tax effect 58,690 2,091 (16,830)
Derivative financial instruments
Gains (losses) arising during year (41,559) 13,910 (8,971)
Less income tax effect 16,012 (5,388) 3,457
Reclassification to Net Income for losses realized 21,298 (6,649) 9,802
Less income tax effect (8,202) 2,591 (3,778)
Marketable securities
Gains (losses) arising during year (5,027) 2,000 3,553
Less income tax effect 237
Reclassification to net income for (gains) losses recognized 832
Less income tax effect (237)
Other comprehensive income (loss) (152,883) (58,852) 66,552
Foreign currency translation attributable to noncontrolling interests (229) 56 74
Other comprehensive income (loss) including noncontrolling interests (153,112) (58,796) 66,626
Comprehensive Income 737,281 514,716 525,084
Comprehensive (Income) Loss Attributable to Noncontrolling Interests (2,075) (2,206) 2,739
Comprehensive Income Attributable to VF Corporation $ 735,206 $ 512,510 $ 527,823
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Consolidated Statements Of Cash Flows (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2011
Jan. 01, 2011
Jan. 02, 2010
Operating Activities
Net income $ 890,393 $ 573,512 $ 458,458
Adjustments to reconcile net income to cash provided by operating activities:
Impairment of goodwill and intangible assets 201,738 [1] 121,953 [1]
Depreciation 127,203 116,837 113,207
Amortization of intangible assets 41,708 39,373 40,500
Other amortization 29,824 17,186 16,745
Stock-based compensation 76,739 63,538 36,038
Provision for doubtful accounts 12,490 7,441 24,836
Pension contributions under (over) expense 46,346 (45,850) (114,149)
Deferred income taxes (10,867) (92,068) 54,674
Other, net 32,665 29,179 (6,923)
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable (154,487) (12,954) 75,449
Inventories (7,509) (114,334) 209,439
Other current assets (18,449) (7,689) 77,173
Accounts payable (32,898) 140,470 (69,560)
Accrued compensation 2,448 27,817 (11,714)
Accrued income taxes 16,009 (14,649) 14,763
Accrued liabilities (10,834) 50,889 (25,182)
Other noncurrent assets and liabilities 40,590 20,846 (42,222)
Cash provided by operating activities 1,081,371 1,001,282 973,485
Investing Activities
Capital expenditures (170,894) (111,640) (85,859)
Business acquisitions, net of cash acquired (2,207,065) (38,290) (212,339)
Trademarks acquisition (58,132)
Software purchases (20,102) (13,610) (9,735)
Other, net (3,840) (16,940) (8,943)
Cash used by investing activities (2,460,033) (180,480) (316,876)
Financing Activities
Net increase (decrease) in short-term borrowings 250,824 (9,741) (11,019)
Payments on long-term debt (2,738) (203,063) (3,242)
Proceeds from long-term debt 898,450
Payments of debt issuance and hedging settlement costs (55,536)
Purchases of Common Stock (7,420) (411,838) (111,974)
Cash dividends paid (285,722) (264,281) (261,682)
Proceeds from issuance of Common Stock, net 134,012 137,732 62,590
Tax benefits of stock option exercises 33,153 8,599 6,464
Acquisitions of noncontrolling interest (52,440)
Other, net (338) (240) (480)
Cash provided (used) by financing activities 912,245 (742,832) (319,343)
Effect of Foreign Currency Rate Changes on Cash and Equivalents 15,406 (17,280) 12,439
Net Change in Cash and Equivalents (451,011) 60,690 349,705
Cash and Equivalents - Beginning of Year 792,239 731,549 381,844
Cash and Equivalents - End of Year $ 341,228 $ 792,239 $ 731,549
[1] Goodwill and trademark impairment charges totaling $201.7 million in 2010 related to Contemporary Brands and totaling $122.0 million in 2009 related to: Outdoor & Action Sports - $63.5 million and Sportswear - $58.5 million. See Notes F, G, and T.
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Consolidated Statements Of Stockholders' Equity (USD $)
In Thousands
Common Stock [Member]
Additional Paid-In Capital [Member]
Accumulated Other Comprehensive Income (Loss) [Member]
Retained Earnings [Member]
Non-Controlling Interests [Member]
Total
Balance at Jan. 03, 2009 $ 109,848 $ 1,749,464 $ (276,294) $ 1,972,874 $ 1,353
Net income 461,271 (2,813) 458,458
Dividends on Common Stock (261,682)
Purchase of treasury stock (1,560) (110,415)
Stock compensation plans, net 1,977 115,035 (12,732)
Common Stock held in trust for deferred compensation plans 20 793
Distributions to noncontrolling interests (480)
Foreign currency translation 37,468 74
Defined benefit pension plans 25,021
Derivative financial instruments 510
Marketable securities 3,553
Balance at Jan. 02, 2010 110,285 1,864,499 (209,742) 2,050,109 (1,866)
Net income 571,362 2,150 573,512
Dividends on Common Stock (264,281)
Purchase of treasury stock (5,023)       (401,925)   
Stock compensation plans, net 2,815 216,868 (4,072)
Common Stock held in trust for deferred compensation plans (139) (10,685)
Distributions to noncontrolling interests (240)
Foreign currency translation (65,398) 56
Defined benefit pension plans (155)
Derivative financial instruments 4,464
Marketable securities 2,237
Balance at Jan. 01, 2011 107,938 2,081,367 (268,594) 1,940,508 100 3,861,319
Net income 888,089 2,304 890,393
Dividends on Common Stock (285,722)
Stock compensation plans, net 2,685 284,966 (15,645)
Common Stock held in trust for deferred compensation plans (66) (6,426)
Distributions to noncontrolling interests (338)
Acquisition of noncontrolling interests (50,226) (2,653) (52,440)
Foreign currency translation (45,432) (229)
Defined benefit pension plans (90,568)
Derivative financial instruments (12,451)
Marketable securities (4,432)
Balance at Dec. 31, 2011 $ 110,557 $ 2,316,107 $ (421,477) $ 2,520,804 $ (816) $ 4,525,175
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Summary Of Significant Accounting Policies
12 Months Ended
Dec. 31, 2011
Summary Of Significant Accounting Policies [Abstract]
Summary Of Significant Accounting Policies

Note A — Summary of Significant Accounting Policies

Fiscal Year:    VF operates and reports using a 52/53 week fiscal year ending on the Saturday closest to December 31 of each year. All references to "2011", "2010" and "2009" relate to the 52 week fiscal years ended December 31, 2011, January 1, 2011 and January 2, 2010, respectively. Certain foreign subsidiaries report using a December 31 year-end due to local statutory requirements.

Cash and Equivalents are demand deposits, receivables from third party credit card processors, and highly liquid investments that have maturities within three months of their purchase dates. Cash equivalents totaling $89.6 million and $530.5 million at December 2011 and 2010, respectively, consist of institutional money market funds that invest in obligations issued or guaranteed by the U.S. or foreign governments and short-term time deposits of foreign commercial banks.

Recently Issued Accounting Standards:    In May 2011, the FASB issued an update to their authoritative guidance regarding fair value measurements and related disclosures. Additional disclosure requirements in the update include: (1) for Level 3 fair value measurements, quantitative information about unobservable inputs used, a description of the valuation processes used, and a qualitative discussion about the sensitivity of the measurements to changes in the unobservable inputs; (2) for the use of a nonfinancial asset that is different from the asset's highest and best use, the reason for the difference; (3) for financial instruments not measured at fair value but for which disclosure of fair value is required, the fair value hierarchy level in which the fair value measurements were determined; and (4) the disclosure of all transfers between Level 1 and Level 2 of the fair value hierarchy. This guidance will be effective in the first quarter of fiscal 2012, and is not expected to have a material impact on the financial statements.

In June 2011, the FASB issued an update to their accounting guidance regarding other comprehensive income which requires that all non-owner changes in stockholders' equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements of income and comprehensive income. The guidance provided by this update becomes effective for VF in the first quarter of fiscal 2012. The adoption of this guidance will not have a material effect on the financial statements.

In September 2011, the FASB issued an update to their authoritative guidance regarding goodwill impairment testing. The amendment is intended to reduce the complexity of testing by allowing companies to assess qualitative factors to determine the likelihood of goodwill impairment and whether it is necessary to perform the two-step impairment test currently required. This guidance will be effective for fiscal years beginning after December 15, 2011, and is not expected to have a material effect on the financial statements.

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Acquisitions
12 Months Ended
Dec. 31, 2011
Acquisitions [Abstract]
Acquisitions

Note B — Acquisitions

Acquisitions in 2011:    On September 13, 2011, VF acquired 100% of the outstanding shares of The Timberland Company ("Timberland") for $2.3 billion in cash. The purchase price was funded by the issuance of $900.0 million of term debt together with cash on hand and short-term borrowings.

Timberland is a global footwear and apparel company based in New Hampshire whose primary brands are Timberland® and SmartWool®. Timberland contributed $712.9 million of revenues and $49.2 million of pretax earnings in 2011. In addition, VF incurred $33.5 million of acquisition-related expenses during 2011. The results of Timberland have been included in VF's consolidated financial statements since the date of acquisition and are reported as part of the Outdoor & Action Sports Coalition.

This acquisition strengthens VF's position within the outdoor apparel and footwear industry by adding two strong, global and authentic brands with significant momentum and growth opportunities. Factors that contributed to recognition of goodwill for the acquisition included (i) expected growth rates and profitability of Timberland, (ii) the opportunity to leverage VF's skills to achieve higher growth in sales, income and cash flows of the business and (iii) expected synergies with existing VF business units. Goodwill resulting from this transaction is not tax deductible and has been assigned to the Outdoor & Action Sports Coalition.

 

The Timberland® and SmartWool® trademarks and trade names, which management believes have indefinite lives, have been valued at $1,274.1 million. Amortizable intangible assets have been assigned values of $174.4 million for customer relationships, $5.8 million for distributor agreements and $4.5 million for license agreements. Customer relationships are being amortized using an accelerated method over 20 years. Distributor agreements and license agreements are being amortized on a straight-line basis over ten and five years, respectively.

The allocation of the purchase price is preliminary and subject to change, primarily for income tax matters. Accordingly, adjustments may be made to the values of the assets acquired and liabilities assumed as additional information is obtained about the facts and circumstances that existed at the valuation date. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition:

 

     In thousands  

Cash and equivalents

   $ 92,442   

Inventories

     390,180   

Other current assets

     310,111   

Property, plant and equipment

     89,581   

Intangible assets

     1,458,800   

Other assets

     33,127   
  

 

 

 

Total assets acquired

     2,374,241   
  

 

 

 

Current liabilities

     361,346   

Other liabilities, primarily deferred income taxes

     585,272   
  

 

 

 

Total liabilities assumed

     946,618   
  

 

 

 

Net assets acquired

     1,427,623   

Goodwill

     871,884   
  

 

 

 

Purchase price

   $ 2,299,507   
  

 

 

 

Unaudited pro forma results of operations for VF are presented below assuming that the 2011 acquisition of Timberland had occurred at the beginning of 2010:

 

Pro forma financial information is not necessarily indicative of VF's operating results if the acquisition had been completed at the date indicated, nor is it necessarily an indication of future operating results. Amounts do not include any marketing leverage, operating efficiencies or cost savings that VF believes are achievable.

 

Timberland's historical filings with the Securities and Exchange Commission can be located at www.sec.gov.

On March 30, 2011, VF acquired the trademarks and related intellectual property of Rock & Republic Enterprises, Inc. for $58.1 million, including expenses. VF has accounted for this transaction as an asset acquisition and recorded the purchase price as an indefinite-lived intangible asset. Rock & Republic® jeanswear and related products will be offered in the United States through an exclusive wholesale distribution and licensing arrangement with Kohl's Department Stores. Operating results will be reported as part of the Jeanswear Coalition.

On September 30, 2011, VF acquired the remaining noncontrolling interest in Napapijri Japan Ltd. for $0.1 million. Additionally, on November 2, 2011, VF acquired the remaining noncontrolling interest in VF Arvind Brands Private Ltd. (a joint venture in India) for $52.4 million. These acquisitions were accounted for as equity transactions since VF maintained control of these subsidiaries prior to the acquisitions. Therefore, VF recorded a decrease to additional paid-in capital of $50.2 million in 2011 related to these transactions. The changes in VF's ownership interests in these subsidiaries impacted consolidated equity during 2011 as follows:

Acquisitions in prior years:    On March 10, 2010, VF acquired 100% ownership of its former 50%-owned joint venture that marketed Vans® branded products in the wholesale channel in Mexico. As part of this transaction, VF also acquired the Vans® retail stores that had been operated by the joint venture partner (together with the wholesale business, "Vans Mexico"). The purchase price was $31.0 million. The carrying value of our initial 50% investment, which had been accounted for using the equity method, was $7.9 million at the acquisition date. VF recognized a $5.7 million gain in Miscellaneous Income in 2010 from remeasuring its original 50% investment in the joint venture to fair value, measured using the income and market approaches. Revenues and pretax earnings recognized in VF's 2010 operating results since the acquisition date were $28.2 million and $6.4 million (excluding the $5.7 million gain), respectively. Acquisition expenses were not significant. Vans Mexico is reported as part of the Outdoor & Action Sports Coalition.

On March 11, 2009, VF completed the acquisition of Mo Industries Holdings, Inc. ("Mo Industries"), owner of the Splendid® and Ella Moss® brands of premium sportswear, by acquiring the remaining two-thirds equity for $160.8 million (consisting of $156.1 million of cash and $4.7 million of notes) and payment of $52.3 million of debt. In June 2008, VF had acquired one-third of the outstanding equity of Mo Industries for $77.4 million. The carrying value of the investment was $80.5 million at the time of the March 2009 acquisition, consisting of the initial cost of the investment plus the equity in net income of the investment through the acquisition date. VF recognized a $0.3 million gain in Miscellaneous Income during 2009 from remeasuring its one-third interest in Mo Industries to fair value. Operating results of the acquisition have been included in the consolidated financial statements since March 11, 2009 and are reported as part of the Contemporary Brands Coalition.

Management allocated the purchase price of each acquisition to acquired tangible and intangible assets, and assumed liabilities, based on their respective fair values, with the excess purchase price recorded as goodwill. Factors that contributed to recognition of goodwill included (i) expected growth rates and profitability of the acquired companies, (ii) the ability to expand the brands within their markets or to new markets, (iii) their experienced workforces, (iv) VF's strategies for growth in revenues, income and cash flows and (v) expected synergies with existing VF business units. The Mo Industries acquisition is consistent with VF's goal of acquiring strong lifestyle brands that have high growth potential within their target markets, and the Vans Mexico acquisition gave VF control of this leading brand in additional international markets. None of the goodwill recognized for these acquisitions is deductible for income tax purposes.

Management believes the Vans®, Splendid® and Ella Moss® trademarks and trade names have indefinite lives. Amounts assigned to amortizable intangible assets relate primarily to customer relationships, which are being amortized using accelerated methods over their estimated useful lives of 10 years for Vans Mexico and 18 years for Mo Industries.

Contingent consideration of $1.8 million ($1.1 million after income tax effect) and $3.8 million was recorded as goodwill in 2011 and 2009, respectively, related to acquisitions prior to 2008.

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Accounts Receivable
12 Months Ended
Dec. 31, 2011
Accounts Receivable [Abstract]
Accounts Receivable

Note C — Accounts Receivable

 

     2011      2010  
     In thousands  

Trade

   $ 1,079,770       $ 757,171   

Royalty and other

     94,486         60,511   
  

 

 

    

 

 

 

Total accounts receivable

     1,174,256         817,682   

Less allowance for doubtful accounts

     54,010         44,599   
  

 

 

    

 

 

 

Accounts receivable, net

   $ 1,120,246       $ 773,083   
  

 

 

    

 

 

 

VF has an agreement with a financial institution to sell selected trade accounts receivable on a nonrecourse basis. This agreement allows VF to have up to $237.5 million of accounts receivable held by the financial institution at any point in time. After the sale, VF continues to service and collect these accounts receivable on behalf of the financial institution but does not retain any other interests in the receivables. At the end of 2011 and 2010, accounts receivable in the Consolidated Balance Sheets had been reduced by $115.4 million and $112.3 million, respectively, related to balances sold under this program. During 2011 and 2010, VF sold a total of $1,187.7 million and $1,062.8 million, respectively, of accounts receivable at their stated amounts, less a funding fee. The funding fee charged by the financial institution for this program, which totaled $2.0 million in 2011, $1.8 million in 2010 and $0.4 million in 2009, is recorded in Miscellaneous, net. Net proceeds of this accounts receivable sale program are recognized as part of the change in accounts receivable in Cash Provided by Operating Activities in the Consolidated Statements of Cash Flows.

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Inventories
12 Months Ended
Dec. 31, 2011
Inventories [Abstract]
Inventories

Note D — Inventories

 

     2011      2010  
     In thousands  

Finished products

   $ 1,197,928       $ 843,230   

Work in process

     86,902         78,226   

Materials and supplies

     168,815         149,238   
  

 

 

    

 

 

 

Inventories

   $ 1,453,645       $ 1,070,694   
  

 

 

    

 

 

 
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Property, Plant And Equipment
12 Months Ended
Dec. 31, 2011
Property, Plant And Equipment [Abstract]
Property, Plant And Equipment

Note E — Property, Plant and Equipment

 

     2011      2010  
     In thousands  

Land

   $ 53,138       $ 48,158   

Buildings and improvements

     754,391         606,532   

Machinery and equipment

     1,022,510         1,008,609   
  

 

 

    

 

 

 

Property, plant and equipment, at cost

     1,830,039         1,663,299   

Less accumulated depreciation and amortization

     1,092,588         1,060,391   
  

 

 

    

 

 

 

Property, plant and equipment, net

   $ 737,451       $ 602,908   
  

 

 

    

 

 

 

Assets under capital leases, primarily buildings and improvements, are included in Property, Plant and Equipment at a cost of $43.6 million, less accumulated amortization of $16.2 million, at the end of 2011, and a cost of $45.3 million, less accumulated amortization of $15.4 million, at the end of 2010. Amortization expense for assets under capital leases is included in depreciation expense.

Property, Plant and Equipment at the end of 2011 includes $22.6 million of land and buildings owned by an independent contractor. When the contractor completes construction in 2012, VF has an obligation to purchase these assets at an estimated $38.3 million. The purchase obligation, representing the portion of the construction completed by the contractor through the end of 2011, has been recorded in Accrued Liabilities (Note J).

Assets subject to a mortgage have a cost of $21.2 million, less accumulated depreciation of $2.0 million and $1.5 million at the end of 2011 and 2010, respectively. All other Property, Plant and Equipment is unencumbered.

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Intangible Assets
12 Months Ended
Dec. 31, 2011
Intangible Assets [Abstract]
Intangible Assets

Note F — Intangible Assets

 

     Weighted                       
     Average                    Net  
     Amortization             Accumulated      Carrying  
     Period      Cost      Amortization      Amount  
     Dollars in thousands  

December 2011

           

Amortizable intangible assets:

           

Customer relationships

     19 years       $ 615,900       $ 138,083       $ 477,817   

License agreements

     24 years         183,704         59,465         124,239   

Trademarks and other

     8 years         19,364         7,430         11,934   
           

 

 

 

Amortizable intangible assets, net

              613,990   

Indefinite-lived intangible assets:

           

Trademarks and trade names

              2,344,473   
           

 

 

 

Intangible assets, net

            $ 2,958,463   
           

 

 

 
     Weighted                       
     Average                    Net  
     Amortization             Accumulated      Carrying  
     Period      Cost      Amortization      Amount  
     Dollars in thousands  

December 2010

           

Amortizable intangible assets:

           

Customer relationships

     19 years       $ 445,388       $ 108,081       $ 337,307   

License agreements

     24 years         179,557         51,816         127,741   

Trademarks and other

     8 years         15,035         10,365         4,670   
           

 

 

 

Amortizable intangible assets, net

              469,718   

Indefinite-lived intangible assets:

           

Trademarks and trade names

              1,021,207   
           

 

 

 

Intangible assets, net

            $ 1,490,925   
           

 

 

 

Intangible assets are amortized using the following methods: customer relationships — accelerated methods; license agreements — accelerated and straight-line methods; trademarks and other — straight-line method.

Intangible assets increased during 2011 primarily due to the Timberland acquisition and the Rock & Republic® trademarks acquisition. See Note B.

In 2010, VF recorded an impairment charge of $6.6 million to reduce the carrying value of its 7 For All Mankind® indefinite-lived trademarks to their fair value. Similarly in 2009, VF recorded impairment charges of $5.6 million for Reef® and $14.5 million for lucy® to reduce the carrying values of those trademarks to their fair values. See Note T for additional information.

Amortization expense was $41.7 million in 2011, $39.4 million in 2010 and $40.5 million in 2009. Estimated amortization expense for the years 2012 through 2016 is $48.5 million, $46.3 million, $44.6 million, $42.8 million and $41.1 million, respectively.

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Goodwill
12 Months Ended
Dec. 31, 2011
Goodwill [Abstract]
Goodwill

Note G — Goodwill

Changes in goodwill are summarized by business segment as follows:

 

     Outdoor &                        Contemporary        
     Action Sports     Jeanswear     Imagewear      Sportswear     Brands     Total  
     In thousands  

Balance, December 2008

     606,612        235,818        56,703         215,767        198,898      $ 1,313,798   

2009 acquisition

                                  142,361        142,361   

Impairment charges

     (43,398                    (58,453            (101,851

Contingent consideration

     3,818                                     3,818   

Adjustments to purchase price allocation

     (302                           (3,152     (3,454

Currency translation

     8,149        3,112                       1,747        13,008   
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Balance, December 2009

     574,879        238,930        56,703         157,314        339,854        1,367,680   

2010 acquisition

     16,938                                     16,938   

Impairment charge

                                  (195,169     (195,169

Contingent consideration

     (78                                  (78

Currency translation

     (16,992     (3,417                    (2,324     (22,733
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Balance, December 2010

     574,747        235,513        56,703         157,314        142,361        1,166,638   

2011 acquisition

     871,884                                     871,884   

Contingent consideration

                   1,065                       1,065   

Currency translation

     (9,035     (7,092                           (16,127
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Balance, December 2011

   $ 1,437,596      $ 228,421      $ 57,768       $ 157,314      $ 142,361      $ 2,023,460   
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

In 2010, in connection with its annual impairment testing, VF recorded an impairment charge of $195.2 million to reduce the carrying value of goodwill in its 7 For All Mankind® business unit, which is part of the Contemporary Brands Coalition. Similarly in 2009, VF recorded impairment charges of $31.1 million, $12.3 million and $58.5 million to reduce the carrying values of goodwill related to its Reef®, lucy® and Nautica® business units. The Reef® and lucy® business units are part of the Outdoor & Action Sports Coalition, and Nautica® is part of the Sportswear Coalition. The impairment charges in 2010 and 2009 shown above represent the cumulative impairment charges for the business segments. See Note T for additional information.

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Other Assets
12 Months Ended
Dec. 31, 2011
Other Assets [Abstract]
Other Assets

Note H — Other Assets

 

     2011      2010  
     In thousands  

Investments held for deferred compensation plans (Note M)

   $ 181,416       $ 184,108   

Other investments

     15,177         23,292   

Deferred income taxes (Note P)

     29,304         38,523   

Computer software, net of accumulated amortization of $39,723 in 2011 and $40,529 in 2010

     50,189         43,558   

Shop-in-shop costs, net of accumulated amortization of $31,735 in 2011 and $16,625 in 2010

     33,157         24,072   

Deferred debt issuance costs

     15,326         9,256   

Unrealized gains on hedging contracts (Note U)

     7,252         3,272   

Other

     73,987         44,944   
  

 

 

    

 

 

 

Other assets

   $ 405,808       $ 371,025   
  

 

 

    

 

 

 

Investments held for deferred compensation plans consist of mutual funds and life insurance contracts. Other investments include marketable securities and life insurance contracts.

Mutual funds are classified as trading securities and carried at fair value. Marketable securities are classified as available-for-sale securities and are carried at fair value with unrealized gains and losses, net of related tax effects, reported as a component of Accumulated Other Comprehensive Income until realized. Life insurance contracts are carried at cash surrender value.

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Short-Term Borrowings
12 Months Ended
Dec. 31, 2011
Short-Term Borrowings [Abstract]
Short-Term Borrowings

Note I — Short-term Borrowings

International lending arrangements totaled $34.6 and $36.6 million at December 2011 and 2010, respectively. These arrangements are unsecured and had a weighted average interest rate of 11.3% and 7.7% at the end of December 2011 and 2010, respectively.

In December 2011, VF entered into a $1.25 billion senior unsecured revolving line of credit (the "Global Credit Facility"). The Global Credit Facility expires in December 2016. VF may request two extensions of one year each, subject to stated terms and conditions. The Global Credit Facility replaced the previous $1.0 billion senior domestic unsecured revolving facility and the €250.0 million senior international unsecured revolving facility, both of which were scheduled to expire in October 2012. The Global Credit Facility, which supports VF's $1.25 billion U.S. commercial paper program described below, has a $750.0 million sublimit to borrow readily available non-US dollar currencies and a $100.0 million letter of credit sublimit. Borrowings under the Global Credit Facility are currently priced at a credit spread of 90 basis points over the appropriate LIBOR benchmark for each currency. VF is also required to pay a facility fee currently equal to 10 basis points to the lenders under the Global Credit Facility. The credit spread and facility fee are subject to adjustment based on VF's credit ratings.

The Global Credit Facility contains certain restrictive covenants, which include maintenance of a consolidated indebtedness to consolidated capitalization ratio, as defined therein, equal to or below 60%. If VF fails in the performance of any covenants, the lenders may terminate their obligation to make advances and declare any outstanding obligations to be immediately due and payable. At the end of 2011, VF was in compliance with all covenants, and the entire amount of the Global Credit Facility was available for borrowing, except for $21.1 million of standby letters of credit issued on behalf of VF.

VF has commercial paper programs that allow for borrowings up to $1.25 billion to the extent that it has borrowing capacity under the Global Credit Facility. There were $247.1 million of commercial paper borrowings outstanding as of December 2011, and none outstanding at December 2010.

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Accrued Liabilities
12 Months Ended
Dec. 31, 2011
Accrued Liabilities [Abstract]
Accrued Liabilities

Note J — Accrued Liabilities

 

     2011      2010  
     In thousands  

Compensation

   $ 187,053       $ 155,563   

Deferred compensation (Note M)

     25,613         23,000   

Income taxes

     17,284         10,499   

Deferred income taxes (Note P)

     9,740         6,897   

Other taxes

     94,893         72,013   

Advertising

     38,880         31,461   

Customer discounts and allowances

     35,725         30,412   

Interest

     17,360         10,451   

Unrealized losses on hedging contracts (Note U)

     19,326         25,440   

Insurance

     21,118         23,215   

Product warranty claims (Note L)

     13,791         12,334   

Pension liabilities (Note M)

     7,965         5,873   

Freight, duties, and postage

     40,220         16,956   

Construction obligation (Note E)

     22,648           

Other

     192,870         135,050   
  

 

 

    

 

 

 

Accrued liabilities

   $ 744,486       $ 559,164   
  

 

 

    

 

 

 
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Long-Term Debt
12 Months Ended
Dec. 31, 2011
Long-Term Debt [Abstract]
Long-Term Debt

Note K — Long-term Debt

 

     2011      2010  
     In thousands  

Floating rate notes, due 2013

   $ 400,000       $   

5.95% notes, due 2017

     250,000         250,000   

3.50% notes, due 2021

     498,496           

6.00% notes, due 2033

     293,096         292,949   

6.45% notes, due 2037

     350,000         350,000   

Other long-term debt

     10,702         10,867   

Capital leases

     32,231         34,803   
  

 

 

    

 

 

 

Total long-term debt

     1,834,525         938,619   

Less current portion

     2,744         2,737   
  

 

 

    

 

 

 

Long-term debt, due beyond one year

   $ 1,831,781       $ 935,882   
  

 

 

    

 

 

 

In August 2011, VF issued $900.0 million of term debt to provide funding for the Timberland acquisition. The debt is comprised of $500.0 million of 3.50% fixed rate notes due in 2021 and $400.0 million of floating rate notes due in 2013. The floating rate notes bear interest at the three-month LIBOR rate plus .75%. The interest rate resets quarterly and was 1.25% at the end of 2011. Interest payments are due quarterly on the floating rate notes and semi-annually on the fixed rate notes.

All notes, along with any amounts outstanding under the Global Credit Facility (Note I), rank equally as senior unsecured obligations of VF. All notes contain customary covenants and events of default, including limitations on liens and sale-leaseback transactions and a cross-acceleration event of default. The cross-acceleration provision of the 2033 notes is triggered if more than $50.0 million of other debt is in default and has been accelerated by the lenders. For the 2013, 2017, 2021 and 2037 notes, the cross-acceleration trigger is $100.0 million. If VF fails in the performance of any covenant under the indentures that govern the respective notes, the trustee or lenders may declare the principal due and payable immediately. At the end of 2011, VF was in compliance with all covenants. None of the long-term debt agreements contain acceleration of maturity clauses based solely on changes in credit ratings. However, if there were a change in control of VF and, as a result of the change in control, the 2013, 2017, 2021 and 2037 notes were rated below investment grade by recognized rating agencies, then VF would be obligated to repurchase those notes at 101% of the aggregate principal amount of notes repurchased, plus any accrued interest.

The 2013 notes are not redeemable. VF may redeem its other notes, in whole or in part, at a price equal to the greater of (i) 100% of the principal amount, plus accrued interest to the redemption date, or (ii) the sum of the present value of the remaining scheduled payments of principal and interest discounted to the redemption date at an adjusted treasury rate, as defined, plus 20 basis points for the 2017 and 2021 notes and 25 basis points for the 2037 notes, plus accrued interest to the redemption date. In addition, the 2021 notes can be redeemed at 100% of the principal amount plus accrued interest to the redemption date within the three months prior to maturity.

The 2021 notes have a principal balance of $500.0 million and are recorded net of unamortized original issue discount. Interest expense on these notes is recorded at an effective annual interest rate of 4.69%, including amortization of a deferred loss on an interest rate hedging contract (Note U), original issue discount and debt issuance costs.

The 2033 notes have a principal balance of $300.0 million and are recorded net of unamortized original issue discount. Interest expense on these notes is recorded at an effective annual interest rate of 6.19%, including amortization of a deferred gain on an interest rate hedging contract (Note U), original issue discount and debt issuance costs.

Capital leases relate primarily to buildings and improvements (Note E). These leases expire at dates through 2021 and have an effective interest rate of 5.06%.

The scheduled payments of long-term debt and future minimum lease payments for capital leases at the end of 2011 are summarized as follows:

 

     Notes and
Other
     Capital
Leases
     Total  
     In thousands  

2012

   $ 174       $ 4,148       $ 4,322   

2013

     400,187         4,156         404,343   

2014

     200         4,123         4,323   

2015

     213         4,123         4,336   

2016

     9,928         4,345         14,273   

Thereafter

     1,400,000         19,893         1,419,893   
  

 

 

    

 

 

    

 

 

 
     1,810,702         40,788         1,851,490   

Less debt discount included above

     8,408                 8,408   

Less amounts representing interest

             8,557         8,557   
  

 

 

    

 

 

    

 

 

 

Total long-term debt

     1,802,294         32,231         1,834,525   

Less current portion

     174         2,570         2,744   
  

 

 

    

 

 

    

 

 

 

Long-term debt, due beyond one year

   $ 1,802,120       $ 29,661       $ 1,831,781   
  

 

 

    

 

 

    

 

 

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Other Liabilities
12 Months Ended
Dec. 31, 2011
Other Liabilities [Abstract]
Other Liabilities

Note L — Other Liabilities

 

      2011      2010  
     In thousands  

Deferred compensation (Note M)

   $ 196,443       $ 190,732   

Pension liabilities (Note M)

     394,753         201,499   

Income taxes (Note P)

     118,091         33,409   

Deferred income taxes (Note P)

     415,852         7,936   

Deferred rent liabilities

     79,445         49,954   

Product warranty claims

     30,936         30,001   

Unrealized losses on hedging contracts (Note U)

     4,187         3,375   

Other

     50,431         33,974   
  

 

 

    

 

 

 

Other liabilities

   $ 1,290,138       $ 550,880   
  

 

 

    

 

 

 

Activity relating to accrued product warranty claims is summarized as follows:

 

     2011     2010     2009  
     In thousands  

Balance, beginning of year

   $ 42,335      $ 41,473      $ 40,069   

Accrual for products sold during the year

     15,749        11,436        9,052   

Repair or replacement costs incurred

     (12,911     (9,397     (8,193

Currency translation

     (446     (1,177     545   
  

 

 

   

 

 

   

 

 

 

Balance, end of year

     44,727        42,335        41,473   

Less current portion (Note J)

     13,791        12,334        11,763   
  

 

 

   

 

 

   

 

 

 

Long-term portion

   $ 30,936      $ 30,001      $ 29,710   
  

 

 

   

 

 

   

 

 

 
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Retirement And Savings Benefit Plans
12 Months Ended
Dec. 31, 2011
Retirement And Savings Benefit Plans [Abstract]
Retirement And Savings Benefit Plans

Note M — Retirement and Savings Benefit Plans

VF has several retirement and savings benefit plans covering eligible employees. VF retains the right to amend any aspect of the plans, or to curtail or discontinue any of the plans, subject to local regulations.

Defined Benefit Pension Plans:    VF sponsors a noncontributory qualified defined benefit pension plan covering most full-time domestic employees employed before 2005 and an unfunded supplemental defined benefit pension plan that provides benefits earned that exceed limitations imposed by income tax regulations. VF also sponsors contributory defined benefit plans covering selected international employees. Defined benefit plans provide pension benefits based on compensation and years of service. The components of pension cost for all defined benefit plans were as follows:

 

      2011     2010     2009  
     Dollars in thousands  

Service cost — benefits earned during the year

   $ 20,867      $ 18,085      $ 14,904   

Interest cost on projected benefit obligations

     78,859        76,691        71,799   

Expected return on plan assets

     (89,689     (76,846     (53,515

Amortization of deferred amounts:

      

Net deferred actuarial losses

     43,088        45,731        60,525   

Deferred prior service cost

     3,453        3,948        4,266   
  

 

 

   

 

 

   

 

 

 

Total pension expense

   $ 56,578      $ 67,609      $ 97,979   
  

 

 

   

 

 

   

 

 

 

Assumptions used to determine domestic pension expense:

      

Discount rate

     5.65     6.05     6.50

Expected long-term return on plan assets

     7.75     7.75     8.00

Rate of compensation increase

     4.00     4.00     4.00

The actuarial assumptions presented above relate to domestic defined benefit plans, which comprise approximately 93% of total plan assets and projected benefit obligations at December 2011. For international plans, assumptions reflect economic circumstances applicable to each country.

The following provides a reconciliation of the changes in fair value of the pension plans' assets and projected benefit obligations for each year, and the plans' funded status at the end of each year:

 

      2011     2010  
     Dollars in thousands  

Fair value of plan assets, beginning of year

   $ 1,211,588      $ 1,034,368   

Actual return on plan assets

     4,029        126,396   

VF contributions

     10,232        113,460   

Participant contributions

     2,455        1,946   

Benefits paid

     (82,787     (62,712

Currency translation

     (1,339     (1,870
  

 

 

   

 

 

 

Fair value of plan assets, end of year

     1,144,178        1,211,588   
  

 

 

   

 

 

 

Projected benefit obligations, beginning of year

     1,418,960        1,285,253   

Service cost

     20,867        18,085   

Interest cost

     78,859        76,691   

Participant contributions

     2,455        1,946   

Actuarial loss

     110,254        101,669   

Benefits paid

     (82,787     (62,712

Currency translation

     (1,712     (1,972
  

 

 

   

 

 

 

Projected benefit obligations, end of year

     1,546,896        1,418,960   
  

 

 

   

 

 

 

Funded status, end of year

   $ (402,718   $ (207,372
  

 

 

   

 

 

 
      2011     2010  
     Dollars in thousands  

Amounts included in Consolidated Balance Sheets:

    

Current liabilities (Note J)

   $ (7,965   $ (5,873

Noncurrent liabilities (Note L)

     (394,753     (201,499
  

 

 

   

 

 

 

Funded status

   $ (402,718   $ (207,372
  

 

 

   

 

 

 

Accumulated Other Comprehensive Income (Loss):

    

Net deferred actuarial losses

   $ 567,864      $ 415,153   

Deferred prior service cost

     15,176        18,629   
  

 

 

   

 

 

 
   $ 583,040      $ 433,782   
  

 

 

   

 

 

 

Accumulated benefit obligations

   $ 1,498,583      $ 1,367,777   
  

 

 

   

 

 

 

Assumptions used to determine obligations for domestic defined benefit plans:

    

Discount rate

     5.10     5.65

Rate of compensation increase

     4.00     4.00

Accumulated benefit obligations at any pension plan measurement date are the present value of vested and unvested pension benefits earned through the measurement date, without projection to future periods. Projected benefit obligations are the present value of vested and unvested pension benefits earned, with projected future compensation increases.

Deferred actuarial losses result from differences in any year between actual results and amounts estimated using actuarial assumptions. These amounts are deferred as a component of Accumulated OCI and amortized to future years' pension expense. These unrecognized actuarial gains and losses are amortized as follows: amounts in excess of 20% of projected benefit obligations at the beginning of the year are amortized over five years; amounts between (i) 10% of the greater of projected benefit obligations or plan assets and (ii) 20% of projected benefit obligations are amortized over the expected average remaining years of service of active participants; and amounts less than the greater of 10% of projected benefit obligations or plan assets are not amortized. Deferred prior service costs are also recorded in OCI and amortized to future years' pension expense. The estimated amounts of Accumulated OCI to be amortized to pension expense in 2012 are $70.5 million of deferred actuarial losses and $3.2 million of deferred prior service costs.

Management's investment objective is to invest the plans' assets in a diversified portfolio of securities to provide long-term growth in plan assets that, along with VF contributions, will meet the plans' benefit payment obligations. Investment strategies focus on diversification among multiple asset classes (in accordance with the target allocations presented below), a balance of long-term investment return at an acceptable level of risk, and liquidity to meet benefit payments. Plan assets are generally liquid securities diversified across equity, fixed income, real estate and other asset classes. Funds are allocated among independent investment managers who have full discretion to manage their portion of the investments, subject to strategy and risk guidelines established with each manager. The overall strategy, the resulting allocations of plan assets and the performance of individual investment managers are continually monitored. Derivative instruments may be used by investment managers for hedging purposes and by the commodity investment manager to gain exposure to commodities through the futures market. There are no investments in VF debt or equity securities and no significant concentrations of security risk.

The expected long-term rate of return on the plans' assets was based on an evaluation of the weighted average of the expected returns for the major asset classes in which the plans invest. Expected returns by asset class were developed through analysis of historical market returns, current market conditions, inflation expectations, and equity and credit risks. The target allocation of investments by asset class for the domestic defined benefit plan in 2012 is provided below:

 

The fair value of investments held by VF's pension plans at December 2011 and 2010, by asset class, is summarized below. See Note T for a description of the three levels of fair value measurement hierarchy. Level 2 securities generally represent institutional funds measured at their daily net asset value derived from quoted prices of the underlying investments.

 

VF makes contributions to its pension plans sufficient to meet minimum funding requirements under applicable laws, plus discretionary amounts as considered prudent. VF made discretionary contributions of $100.0 million and $200.0 million to the domestic qualified defined benefit plan in 2010 and 2009, respectively. VF is not required under applicable regulations to make a contribution to the domestic qualified defined benefit pension plan during 2012. VF does not currently plan to make any contributions to the domestic qualified defined benefit plan during 2012, but continues to evaluate whether discretionary contributions would be appropriate. VF intends to make contributions totaling approximately $13.6 million to the other pension plans during 2012. The plans' estimated future benefit payments are approximately $71.0 million in 2012, $73.3 million in 2013, $77.6 million in 2014, $80.7 million in 2015, $83.8 million in 2016 and $471.7 million for the years 2017 through 2021.

Deferred Compensation Plans:    VF sponsors a nonqualified retirement savings plan for employees whose contributions to a tax qualified 401(k) plan would be limited by provisions of the Internal Revenue Code. This plan allows participants to defer receipt of a portion of their compensation and to receive matching contributions for a portion of the deferred amounts. Expense under this plan was $4.3 million in 2011 and $3.9 million in each of 2010 and 2009. Participants earn a return on their deferred compensation based on their selection of a hypothetical portfolio of publicly traded mutual funds, a fixed income fund and VF Common Stock. Changes in the fair value of the participants' hypothetical investment selections are recorded as an adjustment to deferred compensation liabilities, with an offset to compensation expense in the Consolidated Statements of Income. Deferred compensation, including accumulated earnings on the participant-directed investment selections, is distributable in cash at participant-specified dates or upon retirement, death, disability or termination of employment. Similarly, under a separate nonqualified plan, nonemployee members of the Board of Directors may elect to defer their Board compensation and invest it in hypothetical shares of VF Common Stock. VF also has remaining obligations under deferred compensation plans of acquired companies. At December 2011, VF's liability to participants in all deferred compensation plans was $222.0 million, of which $25.6 million was recorded in Accrued Liabilities (Note J) and $196.4 million was recorded in Other Liabilities (Note L).

VF has purchased (i) publicly traded mutual funds, a fixed income fund and VF Common Stock in the same amounts as most of the participant-directed investment selections underlying the deferred compensation liabilities and (ii) variable life insurance contracts that, in turn, invest in institutional funds that are substantially the same as other participant-directed investment selections. These investment securities and earnings thereon, held in an irrevocable trust, are intended to provide a source of funds to meet the deferred compensation obligations, subject to claims of creditors in the event of VF's insolvency, and an economic hedge of the financial impact of changes in deferred compensation liabilities. VF also has assets related to deferred compensation plans of acquired companies. At December 2011, the fair value of investments held for all deferred compensation plans was $205.4 million, of which $24.0 million was recorded in Other Current Assets and $181.4 million was recorded in Other Assets (Note H). The VF Common Stock purchased to match participant-directed investment selections is treated for financial reporting purposes as treasury stock (Note N), which is the primary reason for the difference in carrying value of the investment securities and the recorded deferred compensation liabilities. Realized and unrealized gains and losses on these investments (other than VF Common Stock) are recorded in compensation expense in the Consolidated Statements of Income and substantially offset losses and gains resulting from changes in deferred compensation liabilities to participants.

Other Retirement and Savings Plans:    VF also sponsors 401(k) plans as well as other domestic and foreign retirement and savings plans. Expense for these plans totaled $16.9 million in 2011, $14.6 million in 2010 and $13.3 million in 2009.

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Capital And Accumulated Other Comprehensive Income (Loss)
12 Months Ended
Dec. 31, 2011
Capital And Accumulated Other Comprehensive Income (Loss) [Abstract]
Capital And Accumulated Other Comprehensive Income (Loss)

Note N — Capital and Accumulated Other Comprehensive Income (Loss)

Common Stock outstanding is net of shares held in treasury, and in substance retired. There were 19,289,690 treasury shares at the end of 2011, 19,099,644 treasury shares at the end of 2010 and 13,943,457 treasury shares at the end of 2009. The excess of the cost of treasury shares acquired over the $1 per share stated value of Common Stock is deducted from Retained Earnings. In addition, 238,275 shares of VF Common Stock at the end of 2011, 246,860 shares at the end of 2010 and 241,446 shares at the end of 2009 were held in trust for deferred compensation plans (Note M). These shares held for deferred compensation plans are treated for financial reporting purposes as treasury shares at a cost of $11.0 million, $10.7 million and $9.9 million at the end of 2011, 2010 and 2009, respectively.

Accumulated Other Comprehensive Income (Loss):    Comprehensive income consists of net income and specified components of Other Comprehensive Income ("OCI"). OCI consists of changes in assets and liabilities that are not included in net income under GAAP but are instead deferred and accumulated within a separate component of stockholders' equity in the balance sheet. VF's comprehensive income is presented in the Consolidated Statements of Comprehensive Income. The deferred components of other comprehensive income (loss) are reported, net of related income taxes, in Accumulated Other Comprehensive Income (Loss) in Stockholders' Equity, as follows:

 

      2011     2010  
     In thousands  

Foreign currency translation

   $ (51,159   $ (5,727

Defined benefit pension plans

     (356,693     (266,125

Derivative financial instruments

     (14,167     (1,716

Marketable securities

     542        4,974   
  

 

 

   

 

 

 

Accumulated other comprehensive income (loss)

   $ (421,477   $ (268,594
  

 

 

   

 

 

 
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Stock-Based Compensation
12 Months Ended
Dec. 31, 2011
Stock-Based Compensation [Abstract]
Stock-Based Compensation

Note O — Stock-based Compensation

VF is authorized to grant nonqualified stock options, restricted stock units ("RSUs") and restricted stock to officers, key employees and nonemployee members of VF's Board of Directors under the amended and restated 1996 Stock Compensation Plan approved by stockholders. All stock-based compensation awards are classified as equity awards, which are accounted for in Stockholders' Equity in the Consolidated Balance Sheets. Compensation cost for all awards expected to vest is recognized over the shorter of the requisite service period or the vesting period. Awards that do not vest are forfeited. VF has elected to compute income tax benefits associated with stock option awards under the short cut method as allowed by the applicable accounting literature. Total stock-based compensation cost and the related income tax benefits recognized in the Consolidated Statements of Income were $76.7 million and $28.2 million in 2011, $63.5 million and $23.4 million in 2010, and $36.0 million and $13.3 million in 2009, respectively. Stock-based compensation cost capitalized as part of inventory was $0.3 million at December 2011 and 2010. At the end of 2011, there was $44.9 million of total unrecognized compensation cost related to all stock-based compensation arrangements that will be recognized over a weighted average period of one year.

At the end of 2011, there were 10,861,373 shares available for future grants of stock options and stock awards under the 1996 Stock Compensation Plan. Shares for option exercises are issued from VF's authorized but unissued Common Stock. VF has a practice of repurchasing shares of Common Stock in the open market to offset, on a long-term basis, dilution caused by awards under equity compensation plans.

Stock Options:    Stock options are granted with an exercise price equal to the market value of VF Common Stock on the date of grant. Employee stock options vest in equal annual installments over three years, and compensation cost is recognized ratably over the vesting period. Stock options granted to members of the Board of Directors become exercisable one year from the date of grant. All options have ten year terms. The grant date fair value of each option award is calculated using a lattice option-pricing valuation model, which incorporates a range of assumptions for inputs as follows:

 

    

2011

  

2010

  

2009

Expected volatility

   27% to 38%    24% to 39%    33% to 48%

Weighted average expected volatility

   34%    35%    38%

Expected term (in years)

   5.6 to 7.5    5.5 to 7.6    4.9 to 7.4

Dividend yield

   3.1%    3.7%    3.5%

Risk-free interest rate

   0.2% to 3.5%    0.2% to 3.7%    0.5% to 2.9%

Weighted average grant date fair value

   $25.12    $18.46    $15.39

Expected volatility over the contractual term of an option was based on a combination of the implied volatility from publicly traded options on VF Common Stock and the historical volatility of VF Common Stock. The expected term represents the period of time over which options that vest are expected to be outstanding before exercise. VF used historical data to estimate option exercise behaviors and to estimate the number of options that would vest. Groups of employees that have historically exhibited similar option exercise behaviors were considered separately in estimating the expected term for each employee group. Dividend yield represents expected dividends on VF Common Stock for the contractual life of the options. Risk-free interest rates for the periods during the contractual life of the option were the implied yields at the date of grant from the U.S. Treasury zero coupon yield curve.

Stock option activity for 2011 is summarized as follows:

 

      Number
of Shares
    Weighted
Average
Exercise
Price
     Weighted
Average
Remaining
Contractual
Term (Years)
     Aggregate
Intrinsic
Value

(In  thousands)
 
      

Outstanding, December 2010

     6,372,908      $ 65.40         

Granted

     945,517        96.06         

Exercised

     (2,401,094     62.47         

Forfeited/cancelled

     (116,230     76.98         
  

 

 

         

Outstanding, December 2011

     4,801,101        72.62         6.7       $ 261,044   
  

 

 

      

 

 

    

 

 

 

Exercisable, December 2011

     2,780,921      $ 66.78         5.5       $ 167,445   
  

 

 

      

 

 

    

 

 

 

The total fair value of stock options vested during 2011, 2010 and 2009 was $20.6 million, $22.7 million, and $30.6 million, respectively. The total intrinsic value of stock options exercised during 2011, 2010 and 2009 was $113.5 million, $61.6 million and $37.7 million, respectively.

Restricted Stock Units:    VF has granted performance-based RSUs to key employees as a long-term incentive. These RSUs enable the recipients to receive shares of VF Common Stock at the end of a three year period. Each RSU has a potential final value ranging from zero to two shares of VF Common Stock. The number of shares earned by participants, if any, is based on achievement of a three year baseline profitability goal and annually established performance goals set by the Compensation Committee of the Board of Directors. Shares are issued to participants in the year following the conclusion of each three year performance period.

VF has also granted nonperformance-based RSUs to a smaller group of key employees and members of the Board of Directors. Each RSU entitles the holder to one share of VF Common Stock. The employee RSUs generally vest four years after the date of grant. The RSUs granted to members of the Board of Directors vest upon grant and will be settled in shares of VF common stock one year from the date of grant.

Dividend equivalents, payable in additional shares of VF Common Stock, accrue without compounding on the RSUs, and are subject to the same risks of forfeiture as the RSUs.

 

RSU activity for 2011 is summarized as follows:

 

     Performance-based      Nonperformance-based  
     Number
Outstanding
    Weighted
Average
Grant Date
Fair Value
     Number
Outstanding
    Weighted
Average
Grant Date
Fair Value
 

Outstanding, December 2010

     855,357      $ 68.09         76,300      $ 79.49   

Granted

     240,672        95.76         86,336        114.31   

Issued as Common Stock

     (238,290     77.54         (576     95.56   

Forfeited/cancelled

     (36,528     75.87         (9,300     71.91   
  

 

 

      

 

 

   

Outstanding, December 2011

     821,211        73.11         152,760        99.57   
  

 

 

      

 

 

   

Vested, December 2011

     480,140      $ 65.90         5,760      $ 95.56   
  

 

 

      

 

 

   

The weighted average fair value of performance-based RSUs granted during 2011, 2010 and 2009 was $95.76, $72.11 and $57.42, respectively, which was equal to the market value of the underlying VF Common Stock. The total market value of awards outstanding at the end of 2011 was $104.3 million. Awards earned and vested for the three year performance period ended in 2011 and distributable in early 2012 totaled 526,164 shares of VF Common Stock having a value of $74.6 million, as approved by the Compensation Committee of the Board of Directors. Similarly, 314,705 shares of VF Common Stock with a value of $27.2 million were earned for the performance period ended in 2010, and 213,052 shares of VF Common Stock with a value of $15.3 million were earned for the performance period ended in 2009.

The weighted average grant date fair value of each nonperformance-based RSU granted during 2011, 2010 and 2009 was $114.31, $84.01 and $57.38, respectively, which was equal to the market value of the underlying VF Common Stock. The total market value of awards outstanding at the end of 2011 was $20.0 million.

Restricted Stock:    VF has granted restricted shares of VF Common Stock to certain members of management. The fair value of the restricted shares, equal to the market value of VF Common Stock at the grant date, is recognized ratably over the vesting period. Restricted shares are issued in the name of the employee but generally do not vest until four years after the date of grant. Dividends are payable in additional restricted shares when the restricted stock vests, and are subject to the same risk of forfeiture as the restricted stock.

Restricted stock activity for 2011 is summarized below:

 

     Nonvested
Shares
Outstanding
    Weighted
Average
Grant Date
Fair Value
 

Nonvested shares, December 2010

     143,259      $ 74.79   

Granted

     68,000        114.77   

Dividend equivalents

     3,367        113.31   

Vested

     (29,152     57.52   

Forfeited

     (5,137     73.47   
  

 

 

   

Nonvested shares, December 2011

     180,337      $ 93.41   
  

 

 

   

Nonvested shares of restricted stock had a market value of $22.9 million at the end of 2011. The market value of the shares vested during 2011 was $3.7 million.

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Income Taxes
12 Months Ended
Dec. 31, 2011
Income Taxes [Abstract]
Income Taxes

Note P — Income Taxes

The provision for Income Taxes was computed based on the following amounts of Income Before Income Taxes:

 

      2011      2010      2009  
     In thousands  

Domestic

   $ 582,198       $ 417,906       $ 402,379   

Foreign

     582,545         332,306         252,294   
  

 

 

    

 

 

    

 

 

 

Income before income taxes

   $ 1,164,743       $ 750,212       $ 654,673   
  

 

 

    

 

 

    

 

 

 

The provision for Income Taxes consisted of:

 

      2011     2010     2009  
     In thousands  

Current:

      

Federal

   $ 193,433      $ 188,072      $ 80,585   

Foreign

     57,738        53,260        45,208   

State

     34,046        27,436        15,748   
  

 

 

   

 

 

   

 

 

 
     285,217        268,768        141,541   

Deferred, primarily federal

     (10,867     (92,068     54,674   
  

 

 

   

 

 

   

 

 

 

Income taxes

   $ 274,350      $ 176,700      $ 196,215   
  

 

 

   

 

 

   

 

 

 

The differences between income taxes computed by applying the statutory federal income tax rate and income tax expense in the consolidated financial statements are as follows:

 

      2011     2010     2009  
     In thousands  

Tax at federal statutory rate

   $ 407,660      $ 262,574      $ 229,136   

State income taxes, net of federal tax benefit

     23,147        15,968        9,415   

Foreign rate differences

     (144,327     (100,712     (76,059

Change in valuation allowance

     (12,126     6,531        4,781   

Goodwill impairment

                   35,648   

Tax credits

     (8,454     (11,336     (4,364

Other

     8,450        3,675        (2,342
  

 

 

   

 

 

   

 

 

 

Income taxes

   $ 274,350      $ 176,700      $ 196,215   
  

 

 

   

 

 

   

 

 

 

Foreign rate differences include $1.6 million in tax benefits in 2011, $5.6 million in 2010 and $3.8 million in 2009 from the favorable audit outcomes on certain tax matters and from expiration of statutes of limitations. 2010 foreign rate differences also include $13.0 million of tax benefits for refund claims related to prior years' tax filings in a foreign jurisdiction.

VF has been granted a lower effective income tax rate on taxable earnings for years 2010 through 2014 in a foreign jurisdiction based on investment and employment level requirements. This lower rate, when compared with the country's statutory rate, resulted in an income tax reduction of $6.2 million ($0.05 per diluted share) in 2011 and $6.0 million ($0.05 per diluted share) in 2010. Income tax was reduced by $7.1 million ($0.06 per diluted share) in 2009 pursuant to a separate agreement that expired in 2009. In addition, VF has been granted a lower effective income tax rate on taxable earnings in another foreign jurisdiction for the period 2010 through 2019. This lower rate, when compared with the country's statutory rate, resulted in an income tax reduction of $5.5 million ($0.05 per diluted share) in 2011 and $4.5 million ($0.04 per diluted share) in 2010.

Additionally, income tax expense in 2011 and 2010 included $8.5 million and $7.5 million, respectively, of tax credits related to prior years.

Deferred income tax assets and liabilities consisted of the following:

 

As of the end of 2011, VF has not provided deferred taxes on $1,527.0 million of undistributed earnings from international subsidiaries where the earnings are considered to be permanently reinvested. VF's intent is to continue to reinvest these earnings to support the strategic priority for growth in international markets. If management decides at a later date to repatriate these funds to the United States, VF would be required to provide taxes on these amounts based on applicable U.S. tax rates net of foreign taxes already paid. VF has not determined the deferred tax liability associated with these undistributed earnings, as such determination is not practicable.

 

VF has potential tax benefits totaling $116.7 million for foreign operating loss carryforwards, of which $100.5 million have an unlimited carryforward life. In addition, there are $23.3 million of potential tax benefits for federal operating loss carryforwards that expire between 2017 and 2027, $16.3 million of benefits for state operating loss carryforwards that expire between 2011 and 2029 and $18.6 million of benefits for federal capital loss carryforwards that expire between 2012 and 2014. Some of the foreign and substantially all of the federal and state operating loss carryforward amounts relate to acquired companies for periods prior to their acquisition by VF. A valuation allowance has been provided where it is more likely than not that the deferred tax assets related to those operating loss carryforwards will not be realized.

Valuation allowances totaled $106.1 million for available foreign operating loss carryforwards, $13.3 million for available federal operating loss carryforwards, $7.9 million for available state operating loss carryforwards, $18.3 million for federal capital loss carryforwards and $6.0 million for other foreign deferred income tax assets. During 2011, VF had a net decrease in valuation allowances of $5.1 million related to foreign operating loss carryforwards and other deferred tax assets, a decrease of $1.3 million related to state operating loss carryforwards, an increase of $5.9 million upon the acquisition of Timberland, an increase of $3.5 million related to federal capital loss carryforwards, and a decrease of $1.4 million related to foreign currency translation effects.

A reconciliation of the change in the accrual for unrecognized income tax benefits is as follows:

 

     Unrecognized
Income Tax
Benefits
    Accrued
Interest
    Unrecognized
Income Tax
Benefits,
Including Interest
 
     In thousands  

Balance, December 2008

   $ 57,431      $ 10,821      $ 68,252   

Additions for current year tax positions

     2,780               2,780   

Additions for prior year tax positions

     1,264        2,274        3,538   

Reductions for prior year tax positions

     (7,651     (1,958     (9,609

Reductions due to statute expirations

     (9,624     (1,795     (11,419

Payments in settlement

     (2,555     (763     (3,318

Currency translation

     233               233   
  

 

 

   

 

 

   

 

 

 

Balance, December 2009

     41,878        8,579        50,457   

Additions for current year tax positions

     8,460        377        8,837   

Additions for prior year tax positions

     15,053        2,229        17,282   

Reductions for prior year tax positions

     (214     (200     (414

Reductions due to statute expirations

     (5,315     (409     (5,724

Payments in settlement

     (1,573     (746     (2,319

Currency translation

     (721            (721
  

 

 

   

 

 

   

 

 

 

Balance, December 2010

     57,568        9,830        67,398   

Additions for current year tax positions

     14,862        4        14,866   

Additions for prior year tax positions

     12,038        6,661        18,699   

Additions for prior year — Timberland acquisition

     48,077        1,792        49,869   

Reductions for prior year tax positions

     (13,975     (570     (14,545

Reductions due to statute expirations

     (6,748     (4,006     (10,754

Payments in settlement

     (6,951     (579     (7,530

Currency translation

     88               88   
  

 

 

   

 

 

   

 

 

 

Balance, December 2011

   $ 104,959      $ 13,132      $ 118,091   
  

 

 

   

 

 

   

 

 

 

 

     2011      2010  

Amounts included in Consolidated Balance Sheets:

     

Unrecognized income tax benefits, including interest

   $ 118,091       $ 67,398   

Less deferred tax benefit

     15,368         9,821   
  

 

 

    

 

 

 

Total unrecognized tax benefits

   $ 102,723       $ 57,577   
  

 

 

    

 

 

 

The net unrecognized tax benefits and interest of $102.7 million at the end of 2011, if recognized, would reduce the annual effective tax rate.

VF files a consolidated U.S. federal income tax return, as well as separate and combined income tax returns in numerous state and foreign jurisdictions. In the United States, the Internal Revenue Service ("IRS") is currently examining tax years 2007, 2008 and 2009. Tax years prior to 2007 have been effectively settled with the IRS, with the exception of outstanding refund claims. VF is currently subject to examination by various state and international tax authorities. Management regularly assesses the potential outcomes of both ongoing and future examinations for the current and prior years to ensure VF's provision for income taxes is sufficient. The outcome of any one examination is not expected to have a material impact on VF's consolidated financial statements. Management believes that some of these audits and negotiations will conclude during the next 12 months. Management also believes that it is reasonably possible that the amount of unrecognized income tax benefits may decrease by $9.7 million within the next 12 months due to settlement of audits and expiration of statutes of limitations, $9.4 million of which would reduce income tax expense.

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Business Segment Information
12 Months Ended
Dec. 31, 2011
Business Segment Information [Abstract]
Business Segment Information

Note Q — Business Segment Information

VF's businesses are grouped by product categories, and by brands within those product categories, for internal financial reporting used by management. These groupings of businesses within VF are referred to as "coalitions" and are the basis for VF's reportable business segments, as described below:

 

   

Outdoor & Action Sports — Outerwear and action sports apparel and footwear, backpacks, bags, and technical equipment

 

   

Jeanswear — Jeanswear and related products

 

   

Imagewear — Occupational apparel and licensed apparel

 

   

Sportswear — Fashion sportswear

 

   

Contemporary Brands — Premium lifestyle apparel

 

   

Other — Primarily VF Outlets

Management at each of the coalitions has direct control over and responsibility for its revenues, operating income and assets, hereinafter termed "Coalition Revenues," "Coalition Profit" and "Coalition Assets," respectively. VF management evaluates operating performance and makes investment and other decisions based on Coalition Revenues and Coalition Profit. Accounting policies used for internal management reporting at the individual coalitions are consistent with those in Note A, except as stated below. Common costs such as information systems processing, retirement benefits and insurance are allocated to the coalitions based on appropriate metrics such as usage or employment.

Corporate costs, (other than allocated costs directly related to the coalitions), impairment charges and net interest expense are not controlled by coalition management and therefore are excluded from the Coalition Profit performance measure used for internal management reporting. Corporate and Other Expenses consists of corporate headquarters expenses that are not allocated to the coalitions (including compensation and benefits of corporate management and staff, certain legal and professional fees, and administrative and general) and other expenses related to but not allocated to the coalitions for internal management reporting (including a portion of defined benefit pension costs, development costs for management information systems, costs of maintaining and enforcing certain of VF's trademarks, adjustments for the LIFO method of inventory valuation (prior to 2011) and miscellaneous consolidating adjustments). Defined benefit pension plans in the United States are centrally managed. The current year service cost component of pension cost is allocated to the coalitions, while other cost components are reported in Corporate and Other.

Coalition Assets, for internal management purposes, are those used directly in or resulting from the operations of each business unit, such as accounts receivable, inventories and property, plant and equipment. Corporate assets include corporate facilities, investments held in trust for deferred compensation plans and information systems assets.

Financial information for VF's reportable segments is as follows:

 

     2011     2010     2009  
     In thousands  

Coalition revenues:

      

Outdoor & Action Sports

   $ 4,561,998      $ 3,204,657      $ 2,806,126   

Jeanswear

     2,731,770        2,537,591        2,522,459   

Imagewear

     1,025,214        909,402        865,472   

Sportswear

     543,515        497,773        498,317   

Contemporary Brands

     485,142        438,741        417,742   

Other

     111,593        114,425        110,170   
  

 

 

   

 

 

   

 

 

 

Total revenues

   $ 9,459,232      $ 7,702,589      $ 7,220,286   
  

 

 

   

 

 

   

 

 

 

Coalition profit:

      

Outdoor & Action Sports(a)

   $ 828,228      $ 636,720      $ 492,889   

Jeanswear

     413,187        431,942        370,886   

Imagewear

     145,655        111,174        87,489   

Sportswear

     56,312        52,354        51,993   

Contemporary Brands

     35,860        14,046        50,844   

Other

     (1,024     (61     1,194   
  

 

 

   

 

 

   

 

 

 

Total coalition profit

     1,478,218        1,246,175        1,055,295   

Impairment of goodwill and trademarks(b)

            (201,738     (121,953

Corporate and other expenses(a)

     (240,675     (218,823     (194,997

Interest, net

     (72,800     (75,402     (83,672
  

 

 

   

 

 

   

 

 

 

Income before income taxes

   $ 1,164,743      $ 750,212      $ 654,673   
  

 

 

   

 

 

   

 

 

 

 

(a) 2011 amounts include $33.5 million of expenses related to the acquisition of Timberland, reported in: Outdoor & Action Sports - $23.7 million and Corporate - $9.8 million. See Note B.

 

(b) Goodwill and trademark impairment charges totaling $201.7 million in 2010 related to Contemporary Brands and totaling $122.0 million in 2009 related to: Outdoor & Action Sports - $63.5 million and Sportswear - $58.5 million. See Notes F, G, and T.

 

     2011      2010      2009  
     In thousands  

Coalition assets:

        

Outdoor & Action Sports

   $ 1,762,774       $ 954,441       $ 870,761   

Jeanswear

     898,733         841,865         849,888   

Imagewear

     356,782         319,179         320,889   

Sportswear

     128,823         127,567         106,911   

Contemporary Brands

     195,528         181,399         190,105   

Other

     63,262         61,065         62,220   
  

 

 

    

 

 

    

 

 

 

Total coalition assets

     3,405,902         2,485,516         2,400,774   

Cash and equivalents

     341,228         792,239         731,549   

Intangible assets and goodwill

     4,981,923         2,657,563         2,902,801   

Deferred income taxes

     136,021         106,743         76,141   

Corporate assets

     448,052         415,495         362,598   
  

 

 

    

 

 

    

 

 

 

Consolidated assets

   $ 9,313,126       $ 6,457,556       $ 6,473,863   
  

 

 

    

 

 

    

 

 

 

Capital expenditures:

        

Outdoor & Action Sports

   $ 90,381       $ 49,658       $ 34,681   

Jeanswear

     21,076         19,906         17,547   

Imagewear

     5,318         2,843         2,131   

Sportswear

     5,902         3,770         1,776   

Contemporary Brands

     16,534         10,975         15,535   

Other

     5,370         5,627         4,412   

Corporate

     26,313         18,861         9,777   
  

 

 

    

 

 

    

 

 

 
   $ 170,894       $ 111,640       $ 85,859   
  

 

 

    

 

 

    

 

 

 

Depreciation and amortization expense:

        

Outdoor & Action Sports

   $ 83,559       $ 62,563       $ 54,467   

Jeanswear

     41,207         34,304         39,297   

Imagewear

     11,513         12,055         12,438   

Sportswear

     12,072         12,155         12,821   

Contemporary Brands

     26,590         32,864         26,139   

Other

     4,122         3,638         3,530   

Corporate

     19,672         15,817         21,760   
  

 

 

    

 

 

    

 

 

 
   $ 198,735       $ 173,396       $ 170,452   
  

 

 

    

 

 

    

 

 

 

Supplemental information (with revenues by geographic area based on the location of the customer) is as follows:

 

     2011      2010      2009  
     In thousands  

Total revenues:

        

United States

   $ 6,220,933       $ 5,411,533       $ 5,078,065   

Foreign, primarily Europe

     3,238,299         2,291,056         2,142,221   
  

 

 

    

 

 

    

 

 

 
   $ 9,459,232       $ 7,702,589       $ 7,220,286   
  

 

 

    

 

 

    

 

 

 

Property, plant and equipment:

        

United States

   $ 521,838       $ 446,718       $ 449,091   

Other foreign, primarily Europe

     215,613         156,190         165,087   
  

 

 

    

 

 

    

 

 

 
   $ 737,451       $ 602,908       $ 614,178   
  

 

 

    

 

 

    

 

 

 

Sales to Wal-Mart Stores, Inc., primarily from the Jeanswear Coalition, comprised 9% of Total Revenues in 2011, 10% in 2010 and 11% in 2009.

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Commitments
12 Months Ended
Dec. 31, 2011
Commitments [Abstract]
Commitments

Note R — Commitments

VF is obligated under noncancelable operating leases. Rent expense included in the Consolidated Statements of Income was as follows:

 

                         
     2011      2010      2009  
     In thousands  

Minimum rent expense

   $ 233,845       $ 181,190       $ 176,490   

Contingent rent expense

     14,625         6,828         5,966   
    

 

 

    

 

 

    

 

 

 

Rent expense

   $ 248,470       $ 188,018       $ 182,456   
    

 

 

    

 

 

    

 

 

 

Future minimum lease payments are $274.9 million, $220.1 million, $181.7 million, $154.4 million and $116.4 million for the years 2012 through 2016, respectively, and $254.3 million thereafter. In addition, VF will receive total payments of $6.3 million over the period of a noncancelable sublease through 2016.

VF has entered into licensing agreements that provide VF rights to market products under trademarks owned by other parties. Royalties under these agreements are recognized in Cost of Goods Sold in the Consolidated Statements of Income. Certain of these agreements contain minimum royalty and minimum advertising requirements. Future minimum royalty payments, including any required advertising payments, are $63.5 million, $77.9 million, $80.5 million, $29.3 million and $30.9 million for the years 2012 through 2016, respectively, and $29.2 million thereafter.

In the ordinary course of business, VF has entered into purchase commitments for raw materials, contract production and finished products. These agreements, typically ranging from 2 to 6 months in duration, require total payments of $1,244.4 million in 2012. In addition, VF has a remaining commitment to purchase $52.5 million of finished product, with a minimum of $15.0 million per year, in connection with the sale of a business in a prior year.

VF has entered into commitments for (i) service and maintenance agreements related to its management information systems, (ii) capital spending and (iii) advertising. Future payments under these agreements are $196.0 million, $32.8 million, $18.7 million, $5.1 million and $1.8 million for the years 2012 through 2016, respectively, and none thereafter.

Surety bonds, standby letters of credit and international bank guarantees representing contingent guarantees of performance under self-insurance and other programs totaled $101.7 million as of December 2011. These commitments would only be drawn upon if VF were to fail to meet its claims or other obligations.

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Earnings Per Share
12 Months Ended
Dec. 31, 2011
Earnings Per Share [Abstract]
Earnings Per Share

Note S — Earnings Per Share

 

     2011     2010     2009  
     In thousands, except per share amounts  

Earnings per share — basic:

      

Net income

   $ 890,393      $ 573,512      $ 458,458   

Net (income) loss attributable to noncontrolling interests

     (2,304     (2,150     2,813   
  

 

 

   

 

 

   

 

 

 

Net income attributable to VF Corporation

   $ 888,089      $ 571,362      $ 461,271   
  

 

 

   

 

 

   

 

 

 

Weighted average Common Stock outstanding

     109,287        108,764        110,389   
  

 

 

   

 

 

   

 

 

 

Earnings per share attributable to VF Corporation common stockholders

   $ 8.13      $ 5.25      $ 4.18   
  

 

 

   

 

 

   

 

 

 

Earnings per share — diluted:

      

Net income attributable to VF Corporation

   $ 888,089      $ 571,362      $ 461,271   
  

 

 

   

 

 

   

 

 

 

Weighted average Common Stock outstanding

     109,287        108,764        110,389   

Incremental shares from stock options and other dilutive securities

     2,001        1,564        1,216   
  

 

 

   

 

 

   

 

 

 

Adjusted weighted average Common Stock outstanding

     111,288        110,328        111,605   
  

 

 

   

 

 

   

 

 

 

Earnings per share attributable to VF Corporation common stockholders

   $ 7.98      $ 5.18      $ 4.13   
  

 

 

   

 

 

   

 

 

 

Outstanding options to purchase 0.5 million shares, 1.9 million shares and 4.1 million shares of Common Stock were excluded from the computations of diluted earnings per share in 2011, 2010 and 2009, respectively, because the effect of their inclusion would have been antidilutive. In addition, 0.5 million restricted stock units in 2011, 2010 and 2009 were excluded from the computations of diluted earnings per share because these units have not been earned yet in accordance with the vesting conditions of the plan.

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Fair Value Measurements
12 Months Ended
Dec. 31, 2011
Fair Value Measurements [Abstract]
Fair Value Measurements

Note T — Fair Value Measurements

Fair value is the price that would be received from the sale of an asset or paid to transfer a liability (i.e., an exit price) in the principal or most advantageous market in an orderly transaction between market participants. In determining fair value, the accounting standards distinguish between (i) market data obtained or developed from independent sources (i.e., observable data inputs) and (ii) a reporting entity's own data and assumptions that market participants would use in pricing an asset or liability (i.e., unobservable data inputs). Financial assets and financial liabilities measured and reported at fair value are classified in a three level hierarchy that prioritizes the inputs used in the valuation process. The hierarchy is based on the observability and objectivity of the pricing inputs, as follows:

 

   

Level 1 — Quoted prices in active markets for identical assets or liabilities.

 

   

Level 2 — Significant directly observable data (other than Level 1 quoted prices) or significant indirectly observable data through corroboration with observable market data. Inputs would normally be (i) quoted prices in active markets for similar assets or liabilities, (ii) quoted prices in inactive markets for identical or similar assets or liabilities or (iii) information derived from or corroborated by observable market data.

 

   

Level 3 — Prices or valuation techniques that require significant unobservable data inputs. Inputs would normally be VF's own data and judgments about assumptions that market participants would use in pricing the asset or liability.

The fair value measurement level for an asset or liability is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques maximize the use of observable inputs and minimize the use of unobservable inputs.

Recurring Fair Value Measurements:    The following table summarizes financial assets and financial liabilities measured and recorded at fair value on a recurring basis:

 

            Fair Value Measurement Using  
     Total
Fair
Value
     Quoted Prices
in Active
Markets for
Identical Assets

(Level 1)
     Significant
Other
Observable
Inputs
(Level 2)
     Significant
Unobservable
Inputs

(Level 3)
 
     In thousands  

December 2011

           

Financial assets:

           

Cash equivalents:

           

Money market funds

   $ 117       $ 117       $       $   

Time deposits

     89,585         89,585                   

Derivative instruments

     46,328                 46,328           

Investment securities

     175,225         144,391         30,834           

Other marketable securities

     4,913         4,913                   

Financial liabilities:

           

Derivative instruments

     23,513                 23,513           

Deferred compensation

     220,056                 220,056           

December 2010

           

Financial assets:

           

Cash equivalents:

           

Money market funds

   $ 437,229       $ 437,229       $       $   

Time deposits

     93,254         93,254                   

Derivative instruments

     18,568                 18,568           

Investment securities

     182,673         147,380         35,293           

Other marketable securities

     12,388         12,388                   

Financial liabilities:

           

Derivative instruments

     28,815                 28,815           

Deferred compensation

     212,011                 212,011           

Life insurance contracts are carried at cash surrender value which approximates fair value. All other financial assets and financial liabilities are carried at cost, which may differ from fair value. At December 2011 and 2010, the carrying values of VF's cash held as demand deposits, accounts receivable, short-term borrowings, accounts payable and accrued liabilities approximated their fair values. At December 2011 and 2010, the carrying value of VF's long-term debt, including the current portion, was $1,834.5 million and $938.6 million, respectively, compared with fair value of $2,079.5 million and $1,025.1 million at those dates. Fair value for long-term debt was estimated based on quoted market prices or values of comparable borrowings.

Nonrecurring Fair Value Measurements:    Goodwill and indefinite-lived intangible assets are tested for possible impairment at least annually. During the 2010 impairment test, management concluded that the carrying value of goodwill in the 7 For All Mankind® business unit exceeded its fair value and, accordingly, recorded an impairment charge of $195.2 million to write down the goodwill to its implied fair value (Note G). Management also concluded that the carrying value of the 7 For All Mankind® trademark intangible asset exceeded its fair value and, accordingly, recorded an impairment charge of $6.6 million to write down the asset to its fair value (Note F). Similarly in 2009, management recorded goodwill impairment charges totaling $101.9 million to write down the goodwill of its Reef®, lucy® and Nautica® business units. Also in 2009, management recorded impairment charges totaling $20.1 million to write down the carrying value of the Reef® and lucy® trademark intangible assets to their fair values. Impairment charges included in the 2010 and 2009 Consolidated Statements of Income, along with the respective business units' remaining amounts of goodwill and trademark intangible assets at the end of 2011, are summarized as follows:

 

     2010      2009  
     7 For All Mankind  ®      Reef ®      lucy ®      Nautica ®      Total  
     In thousands  

Impairment charge

              

Goodwill

   $ 195,169       $ 31,142       $ 12,256       $ 58,453       $ 101,851   

Trademarks

     6,569         5,600         14,502                 20,102   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 201,738       $ 36,742       $ 26,758       $ 58,453       $ 121,953   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Balances, December 2011

              

Goodwill

   $       $ 48,329       $ 39,344       $ 153,656       $ 241,329   

Trademarks

     300,664         74,400         40,300         217,400         332,100   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 300,664       $ 122,729       $ 79,644       $ 371,056       $ 573,429   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

These nonrecurring fair value measurements were developed using significant unobservable inputs (Level 3). For goodwill, the primary valuation technique used was an income methodology based on management's estimates of forecasted cash flows for each business unit, discounted to present value using rates commensurate with the risks of those cash flows. In addition, management used a market-based valuation method involving analysis of market multiples of revenues and of earnings before interest, taxes, depreciation and amortization ("EBITDA") for (i) a group of comparable public companies and (ii) recent transactions, if any, involving comparable companies. For trademark intangible assets, management used the income-based relief-from-royalty valuation method in which fair value is the discounted value of forecasted royalty revenues arising from a trademark using a royalty rate that an independent party would pay for use of that trademark.

Management's assumptions at each valuation date were based on analysis of current and expected economic conditions and updated strategic plans for each business unit. Assumptions used were similar to those that would be used by market participants performing valuations of these business units.

Subsequent operating performance for each of these business units has met or exceeded the operating results and cash flows assumed in the 2010 and 2009 impairment tests. Accordingly, no additional impairment charges were required in the 2011 impairment test.

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Derivative Financial Instruments And Hedging Activities
12 Months Ended
Dec. 31, 2011
Derivative Financial Instruments and Hedging Activities [Abstract]
Derivative Financial Instruments And Hedging Activities

Note U — Derivative Financial Instruments and Hedging Activities

Summary of Derivative Instruments:    All of VF's outstanding derivative instruments are forward exchange contracts. Most derivatives meet the criteria for hedge accounting at the inception of the hedging relationship, but a limited number of derivative contracts intended to hedge assets and liabilities are not designated as hedges for accounting purposes. Additionally, derivative instruments that are cash flow hedges of forecasted third party sales are dedesignated as hedges near the end of their term and do not qualify for hedge accounting after the date of dedesignation. The notional amounts of outstanding derivative contracts at December 2011 and December 2010 totaled $1.5 billion and $1.1 billion, respectively, consisting of contracts hedging primarily exposures to the euro, British pound, Mexican peso, Polish zloty, Japanese yen and Canadian dollar. Derivative contracts have maturities up to 20 months. The following table presents outstanding derivatives on an individual contract basis:

 

                                 
     Fair Value of Derivatives
with Unrealized Gains
     Fair Value of Derivatives
with Unrealized Losses
 
     December
2011
     December
2010
     December
2011
     December
2010
 
     In thousands  

Foreign exchange contracts designated as hedging instruments

   $ 45,071       $ 18,389       $ 22,406       $ 27,916   

Foreign exchange contracts dedesignated as hedging instruments

     1,245         179         930         899   

Foreign exchange contracts not designated as hedging instruments

     12                 177           
    

 

 

    

 

 

    

 

 

    

 

 

 

Total derivatives

   $ 46,328       $ 18,568       $ 23,513       $ 28,815   
    

 

 

    

 

 

    

 

 

    

 

 

 

Outstanding derivatives have been included in the Consolidated Balance Sheets and classified as current or noncurrent based on the derivatives' maturity dates, as follows:

 

                 
     December 2011     December 2010  
     In thousands  

Other current assets

   $ 39,076      $ 15,296   

Accrued current liabilities

     (19,326     (25,440

Other assets (noncurrent)

     7,252        3,272   

Other liabilities (noncurrent)

     (4,187     (3,375

 

Fair Value Hedge Strategies and Accounting Policies:    VF enters into derivative contracts to hedge intercompany loans between related parties having different functional currencies. VF's Consolidated Statements of Income include the following effects related to fair value hedging:

 

                     

Fair Value

Hedging
Relationships

   Location
of Gain
(Loss) on
Derivatives
Recognized

in Income
   Gain (Loss) on
Derivatives
Recognized in
Income
   Hedged Items
In Fair Value
Hedge
Relationships
   Location of
Gain (Loss)
Recognized
on Related
Hedged Items
   Gain
(Loss)

on Related
Hedged
Items
Recognized
in Income
          In thousands             

 In thousands

2011

                        
           

Foreign exchange

   Miscellaneous
income
   $2,413    Advances —

intercompany

   Miscellaneous

income

   $(3,329)
      (expense)              (expense)     
           

2010

                        
           

Foreign exchange

   Miscellaneous
income
   $17,914    Advances —

intercompany

   Miscellaneous income
(expense)
   $(18,041)
      (expense)                    

Cash Flow Hedge Strategies and Accounting Policies:    VF uses derivative contracts primarily to hedge a portion of the exchange risk for its forecasted inventory purchases and production costs and for its forecasted cash receipts arising from sales of inventory. In addition, VF's domestic companies hedge the receipt of forecasted intercompany royalties from foreign subsidiaries. As discussed below in "Derivative Contracts Dedesignated as Hedges", cash flow hedges of forecasted third party sales of inventory are dedesignated as hedges when the sale is recorded, and hedge accounting is not applied after that date. The effects of cash flow hedging included in VF's Consolidated Statements of Income and Consolidated Statements of Comprehensive Income are summarized as follows:

 

 

                                     

Cash Flow

Hedging

   Gain (Loss) on
Derivatives

Recognized in OCI
    

Location of

Gain (Loss)

Reclassified from

Accumulated

OCI into Income

   Gain (Loss) Reclassified
from Accumulated

OCI into Income
 

Relationships

   2011      2010         2011      2010  
     In thousands           In thousands  

Foreign exchange

   $ 6,707       $ 14,042       Net sales    $ 6,525       $ (5,907)   
                       Cost of goods sold      (16,958)         10,328   
                       Miscellaneous income (expense)      (8,441)         2,186   

Interest rate

     (48,266)               Interest expense      (2,424)         116   
    

 

 

    

 

 

         

 

 

    

 

 

 

Total

   $ (41,559)       $ 14,042            $ (21,298)       $ 6,723   
    

 

 

    

 

 

         

 

 

    

 

 

 

Derivative Contracts Dedesignated as Hedges and Accounting Policies:    As previously noted, cash flow hedges of certain forecasted third party sales are dedesignated as hedges when the sales are recognized. At that time, hedge accounting is no longer applied, and the amount of unrealized hedging gain or loss is recognized in net sales. These derivatives remain outstanding and serve as a hedge of foreign currency exposures related to the ultimate collection of the trade receivables. During the period that hedge accounting is not applied, changes in the fair values of the derivative contracts are recognized directly in earnings. For the years ended December 2011 and December 2010, VF recorded net losses of $1.7 and $3.3 million, respectively, in Miscellaneous Income (Expense) for derivatives dedesignated as hedging instruments, effectively offsetting the net remeasurement gains on the related assets and liabilities.

Derivative Contracts Not Designated as Hedges and Accounting Policies:    VF uses derivative contracts to manage foreign currency exchange risk on intercompany accounts receivable and payable, and third-party accounts receivable and payable. These contracts, which are not designated as hedges, are recorded at fair value in the Consolidated Balance Sheets, with changes in the fair values of these instruments recognized directly in earnings. Gains or losses on these contracts largely offset the net remeasurement gains or losses on the related assets and liabilities. Following is a summary of these hedges included in VF's Consolidated Statements of Income:

 

                     

Derivatives Not

Designated

as Hedges

  

Location of

Gain (Loss)

on Derivatives

Recognized in Income

   Gain (Loss)
on Derivatives
Recognized in Income
 
      2011      2010  
     In thousands              

Foreign exchange

   Miscellaneous income (expense)    $ 3,995       $   

 

Net Investment Hedge Strategies and Accounting Policies:    In limited instances, VF may choose to hedge the risk of changes in its investments in foreign subsidiaries. Changes in the fair values of derivatives designated as net investment hedges are reported as a component of OCI and deferred in Accumulated OCI, along with the foreign currency translation adjustments on those investments. Upon settlement of the net investment hedges, cash flows are classified in investing activities in the Consolidated Statements of Cash Flows. The effects of net investment hedging included in VF's Consolidated Statements of Income and Consolidated Statements of Comprehensive Income were not material during the last three years.

There were no significant amounts recognized in earnings for the ineffective portion of any hedging relationships during the last three years.

At December 2011, Accumulated OCI included $15.4 million of net deferred pretax gains for foreign exchange contracts that are expected to be reclassified to earnings during the next 12 months. Actual amounts to be reclassified to earnings will depend on exchange rates in effect when currently outstanding derivative contracts are settled.

VF entered into interest rate swap derivative contracts in 2011 and 2003 to hedge the interest rate risk for issuance of long-term debt due in 2021 and 2033, respectively (Note K). In each case, the contracts were terminated concurrent with the issuance of the debt, and the realized gain or loss was deferred in Accumulated OCI. The remaining net pretax deferred loss in Accumulated OCI related to these contracts was $43.2 million at December 2011, which will be reclassified into the Consolidated Statement of Income over the remaining terms of the associated debt instruments.

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Supplemental Cash Flow Information
12 Months Ended
Dec. 31, 2011
Supplemental Cash Flow Information [Abstract]
Supplemental Cash Flow Information

Note V — Supplemental Cash Flow Information

 

     2011      2010      2009  
     In thousands  

Income taxes paid, net of refunds

   $ 205,333       $ 262,802       $ 191,857   

Interest paid

     66,775         81,083         85,191   

Noncash transactions:

        

Accretion of long-term debt

     194         139         131   

Notes issued to seller in acquisition

                     4,700   

Equity in net income of investments accounted for under the equity method

             518         770   

Issuance of Common Stock for compensation plans

     21,692         16,493         27,924   

Capitalization of property under construction and related obligation

     22,648                   
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Subsequent Events
12 Months Ended
Dec. 31, 2011
Subsequent Events [Abstract]
Subsequent Events

Note W — Subsequent Events

VF's Board of Directors declared a regular quarterly cash dividend of $0.72 per share, payable on March 19, 2012 to shareholders of record on March 9, 2012. The Board of Directors also granted approximately 860,000 stock options, 200,000 performance-based RSUs and 5,500 shares of restricted VF Common Stock at market value.

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Quarterly Results Of Operations
12 Months Ended
Dec. 31, 2011
Quarterly Results Of Operations [Abstract]
Quarterly Results Of Operations