VF Corporation third quarter revenues rose 15% to a record $2.07 billion, compared with $1.81 billion in the third quarter of 2006, driven by higher revenues across the Outdoor, Jeanswear and Imagewear businesses and from revenues from 2007 acquisitions, including, most recently, Seven For All Mankind and lucy activewear. Income from continuing operations in the current quarter increased 13% to $209.3 million, compared with $186.0 million in the prior year’s quarter. Earnings per share from continuing operations rose 13%, to a record $1.86 from $1.64 last year. Net income, including the effects of discontinued operations was $207.2 million, or $1.84 per share, compared with $197.7 million, or $1.75 per share in the prior year quarter.

For the nine months of 2007, revenues rose 14% to a record $5.26 billion from $4.62 billion. Income from continuing operations also increased 14% to $449.2 million, compared with $393.7 million in the prior year period. Earnings per share from continuing operations rose 13% to $3.96. Net income, including the effects of discontinued operations, was $427.2 million, or $3.76 per share, compared with $424.9 million, or $3.77 per share in the prior year period.

“These results – in this environment – prove that VF has the right brands and strategies to win,” said Mackey J. McDonald, Chairman and Chief Executive Officer. “We are uniquely positioned within the apparel industry for long-term success. Due to our successful transformation, VF is a very different company than it used to be. What sets VF apart today is our highly diversified base of products and customers, our large and rapidly growing international business, our expanding base of owned retail stores and our very successful track record of acquisitions. Above all, it is our ability to consistently execute on well-defined goals and strategies that will enable us to continue to generate strong returns for our shareholders.”

Third Quarter Business Review

Outdoor

Our Outdoor coalition continues to experience tremendous growth. Revenues increased 22% to $806 million, with our domestic and international businesses each growing more than 20% during the quarter. The North Face, Vans, JanSport, Kipling and Napapijri brands each enjoyed double-digit revenue gains in the quarter. The early 2007 acquisition of the Eagle Creek brand of adventure travel gear added $10 million to revenues in the quarter. Outdoor operating income grew 16% in the quarter, with operating margins remaining at the 20% level.

Jeanswear

Revenues in our Jeanswear coalition, which includes our Wrangler, Lee and Riders brands, rose 3% in the quarter, driven by a 13% increase in revenues of our international jeans business. Foreign currency translation contributed to the international revenue gain, accounting for about half of the increase. Our Lee and Wrangler brands both experienced strong growth in Europe. Our jeans business in China grew more than 40% in the quarter, with healthy revenue gains also in Canada, Mexico and Russia. Domestic jeanswear revenues declined slightly in the quarter, reflecting softer retail market conditions in the U.S. Total Jeanswear operating income rose strongly, up 15%, with operating margins reaching nearly 18% in the quarter.

Sportswear

Total revenues of our Sportswear coalition, which includes our Nautica and John Varvatos brands as well as the Kipling brand in North America, declined 6% in the quarter. Our Kipling and John Varvatos businesses each posted double-digit revenue growth. Revenues of our Nautica branded business declined 10% in the quarter, reflecting the impact of a shift in shipping dates by most of the brand’s customers and generally sluggish conditions in department stores. Operating income declined in the quarter due to the Nautica brand volume decrease and increased promotional activity. We expect more favorable comparisons in the fourth quarter, with an increase in revenues and operating margins more consistent with prior year levels.

Contemporary Brands

In August we completed the acquisitions of the Seven For All Mankind premium denim and lucy women’s activewear businesses, and formed our new Contemporary Brands coalition. Reflecting the revenues of the two businesses since being acquired, our Contemporary Brands coalition generated $33 million in revenues and $5 million in operating income in the quarter. Both the 7 For All Mankind and lucy brands continue to have great potential and will be important contributors to the future growth of our lifestyle brand portfolio.

Imagewear

Total revenues of our Imagewear coalition rose 24%. The February 2007 acquisition of the Majestic Athletic business contributed $44 million to revenues in the quarter. Organic growth was 4% in the quarter, driven by a double-digit revenue increase in our licensed sports apparel business. As part of its acquisition of Majestic Athletic, VF Imagewear extended its licensing agreements with both Major League Baseball and the Major League Baseball Players Association. These license agreements cover authentic, replica and fanwear products across multiple channels of distribution. Additionally, we recently renewed our licensing agreement with the National Football League for fanwear products across various distribution channels. Operating income increased 23% in the quarter, with margins remaining strong and stable.

VF’s gross margins moved to 43.9% from 43.8%, while operating income rose 15% in the quarter, with operating margins reaching 16.0%.

Our balance sheet continues to be in excellent shape. On October 15 we completed the placement of $600 million of long-term debt, with the proceeds used to repay short-term borrowings related to recent acquisitions. While we have invested over $1 billion in acquisitions this year, we continue to expect our year-end debt to capital ratio to be near prior year levels.

International growth continues to be a key driver. International revenues grew 19% in the third quarter and comprised 30% of total revenues in the period. Excluding the impact of foreign currency translation, international revenues were up 12%.

Another key growth driver is the expansion of our direct-to-consumer business primarily through retail store expansion. We continue to grow our retail store base, ending the quarter with 608 owned retail stores, up from 544 at the end of the second quarter and reflecting the addition of 50 lucy stores. Our retail revenues grew 21% in the quarter, with double-digit revenue growth in our Vans, The North Face, Kipling and John Varvatos brand stores.

Outlook

We continue to expect very strong fourth quarter and full year results, despite current retail market conditions. For the fourth quarter, we expect an increase in revenues and earnings per share of 18% and 13%, respectively. Reflecting the better-than-anticipated results in the third quarter and our fourth quarter expectations, we now see full year revenues rising 15%, up from our previous guidance of 14%. Earnings per share should increase slightly more than 13%, versus our previous guidance of 12%. We also continue to expect another very strong year of cash flow from operations of approximately $625 million.

“We’re looking forward to wrapping up another record year in both revenues and earnings, and to continuing the momentum into next year,” said Mr. McDonald. “At the present time, we are optimistic that we can deliver another record year in 2008, with strong top and bottom line growth. We are gratified by the tremendous success of our Growth Plan and transformation, yet we are perpetually driven to execute at continually higher levels. We expect to continue our momentum with a focus on organic growth, growing our retail sales, expanding our international business, adding new lifestyle brands and continuing to transform our mix of business toward higher growth, higher margin businesses.”

Dividend Increased

The Board of Directors declared a quarterly cash dividend of $.58 per share, an increase of $.03. The dividend is payable on December 20, 2007 to shareholders of record as of the close of business on December 10, 2007.

VF CORPORATION
Consolidated Statements of Income
(In thousands, except per share amounts)
Three Months Ended September Nine Months Ended September
2007 2006 2007 2006
Net Sales $ 2,053,136 $ 1,791,648 $ 5,207,175 $ 4,561,246
Royalty Income 20,023 18,450 56,996 55,787
Total Revenues 2,073,159 1,810,098 5,264,171 4,617,033
Costs and Operating Expenses
Cost of goods sold 1,163,399 1,018,021 2,975,009 2,608,175
Marketing, administrative and general expenses 578,721 504,253 1,574,336 1,387,932
1,742,120 1,522,274 4,549,345 3,996,107
Operating Income 331,039 287,824 714,826 620,926
Other Income (Expense)
Interest income 2,202 1,439 7,494 4,149
Interest expense (19,349 ) (15,835 ) (46,373 ) (42,370 )
Miscellaneous, net 1,834 1,869 3,583 3,240
(15,313 ) (12,527 ) (35,296 ) (34,981 )
Income from Continuing Operations Before Income Taxes 315,726 275,297 679,530 585,945
Income Taxes 106,409 89,340 230,330 192,287
Income from Continuing Operations 209,317 185,957 449,200 393,658
Discontinued Operations
Income (loss) from operations (1,870 ) 11,750 2,567 31,266
Loss on disposal (240 ) (24,554 )