VF Corp. Sells Off Intimates Business to Fruit of the Loom

VF Corporation has signed a definitive agreement to sell its global intimate apparel business to Fruit of the Loom, Inc., a subsidiary of Berkshire Hathaway, Inc. for $350 million in cash. VF's intimate apparel business includes such leading brands as Vanity Fair®, Lily of France®, Vassarette®, Bestform® and Curvation® in the U.S., and Lou®, Gemma® and Belcor® in Europe. The agreement is subject to government approvals and customary closing conditions and is expected to be completed in the first quarter of 2007.

VF currently intends to use the proceeds from the sale to repurchase shares in 2007.

“This marks an important chapter in VF's ongoing transformation toward becoming a higher growth, higher margin lifestyle company – and another example of our willingness to take bold steps to enhance total shareholder value,” said Mackey J. McDonald, VF's Chairman and Chief Executive Officer. “Our Intimates business has been a positive and important contributor to VF's success over our 100-plus year history. But the time has come to strategically rebalance our portfolio and to focus our energies and resources on the many growth opportunities across our Jeanswear, Outdoor, Imagewear and Sportswear businesses.”

Key highlights of this move in VF's transformation include the following:

Business Mix: An increase in the contribution to total revenues from VF's growing lifestyle businesses – Outdoor and Sportswear – to 40%, with the Company's strong heritage businesses – Jeanswear and Imagewear – accounting for 60%. In 2005, lifestyle businesses accounted for 30% of total revenues.

Revenue Growth Targets: We are targeting 8% annual revenue growth including acquisitions, and expect strong organic growth of 5% annually. Acquisitions will continue to be an important component of our growth plan.
Operating Margin Goal: Operating margins should approach our goal of 14% in 2007, up from 12.7% reported in both 2005 and 2004.

Fruit of the Loom plans to operate these businesses as Vanity Fair Brands, a wholly-owned subsidiary. Curt Holtz, President of VF's Intimates coalition, and his management team will continue directing current operations from headquarters in Alpharetta, Georgia and Igualada, Spain.

“We are delighted at the prospect of adding such strong brands to our portfolio,” said John Holland, Chief Executive Officer of Fruit of the Loom. “We were most impressed with the heritage, experience and innovative talent of the VF Intimates worldwide team.”