Notre Dame Investment Club

February 13, 2020

VF Corporation (NYSE:VFC) Patrick Witteman and Dakai Long Investment Thesis

Recommendation

VF Corporation (NYSE: VFC) offers attractive growth in the somewhat stagnant apparel/retail industry

Rationale VFC’s streamlined portfolio of high growth brands are consistent with management’s vision for the company. The aggressive pursuit of DTC distribution channels, a healthy balance sheet, and emphasis on technological development, VFC should be distinguished from other consumer retail companies

We believe that growth in the APAC region will outperform 1 market estimates due to an underestimation of brand and cultural value Management has a track record of incubating developing 2 brands which makes the development of growing brands and potential acquisitions exciting

The market is currently overreacting to Q3 3 underperformance, especially that of Timberland & coronavirus fears Price Target: $103.69

38.1% upside from current price of $75.08

2 VFC Overview

VFC has a varied, streamlined portfolio of brands that is relatively balanced in the channels and regions they sell through

Sales Overview Major Brands

50% of products sold Geographically 50% of all through segmented brand sales wholesale to 50% in the US DTC and E- outlet and and 50% Commerce specialty international retailers

3 VFC Overview (Cont’d)

Management focuses on long-term sustainable growth

Management’s 2017-2021 Growth Strategy Management’s Long Term Perspective

Retool brand portfolio in order to enable VF’s other brands • Through key divestitures and acquisitions, VF will streamline their 1 portfolio and focus on its consumer-oriented vision “Our transformation journey is a multi- Shift the business to a consumer and retail-centric model year endeavor. Investments over the 2 • Key divestitures from workwear and jeanswear businesses streamline VF portfolio and make the company more consumer facing past 2.5 years have laid the foundation Elevating direct-to consumer while prioritizing digital • . DTC digital expansion driving growth. They project DTC digital that we'll now begin to build on.” – Steve 3 growth for all brands, with Vans +30-31% CAGR in growth Distorting investment toward Asia, with heightened focus Rendle (Latest Earnings Call) 4 on China (Thesis Point 1)

Key VFC Management 5Y Stock Chart

18 Price Target: $103.69 120 16 100 14 12 80 10 60 8 6 40 4 20 2 Velia Carboni Steve Rendle Scott Roe 0 0 Chief Digital and VFC CEO VFC CFO Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20 Technology Officer Joined The North Face Joined VFC in 1996, VFC US Equity - Volume (mm) VFC US Equity - Last Price 20 Year of Development in 1999, Extensive VFC extensive experience Experience Career Price Target

4 APAC Growth will Outperform

APAC region will outperform market estimates due to an underestimation of brand and cultural value

Japanese Historical Success Purple Label Collection

• The North Face distribution and production in Japan is licensed to Goldwin Co. – a company that then produces the garments and manages distribution • The brand is valued at $135M capturing over 2% of the $13Bn Japanese sportswear market • Label name has dramatically boosted TNF Japan into a staple of urban culture – The North Face Purple Label and The North Face Black Series have been popularized Japanese fashion statements • Mixture of style and comfort for urban exploration Weibo Followers Mirrored Chinese Breakout

700,000 645,000 • 620,000 We are currently seeing similar mirrored effects for The North Face in China as Japan 600,000 • Recent collaborations with other brands have sold out in record time 500,000 throughout shops in Beijing and Shanghai • Collaborations with Chinese companies have allowed The North 400,000 Face to build a strong base in China with exclusive products • The North Face has almost 3x the followers of Canada Goose on 300,000 243,772 Chinese site Weibo 199,000 • Lifestyle branding working well with Chinese consumerism trends 200,000 towards urban exploration and integration with Chinese Culture as 123,348 other premium products are struggling to adjust 100,000 • Chinese consumers are increasingly looking away from premium/luxury brands as homegrown brands start to increase 0 Columbia The North Face Moncler Canada Goose Arct eryx

Weibo 5 APAC Growth will Outperform (Cont’d.)

Economic Class Breakdown, Urban Households Disposable Income, in USD, Urban vs Rural Households

2012 2022 6000 5,495 5,095 Affluent 4,706 3% 9% 5000 4,367 4,038 3,705 4000 3,439 3,053 3000 2,675 Upper Middle 14% 1,881 2,046 54% 1,731 2000 1,468 1,599 1,108 1,320 829 977 1000

0 2010 2011 2012 2013 2014 2015 2016 2017 2018 Mass Middle 54% 22% Urban Households Rural Households Average Parka Price, The North Face and Competitors

3000

2500 Poor 29% 16% 2000 $1,825 1500 Household incomes: 1000 $1,050 Affluent>$34,000 Upper Middle: $16,000-$34,000 Mass Middle: $9,000-16,000 500 $457 Poor:<$9,000 $250 0

1

Canada Goose The North Face Moncler Columbia

Source: McKinsey, Business Insider, Statista 6 APAC Growth will Outperform (Cont’d)

APAC region will outperform market estimates due to an underestimation of brand and cultural value

APAC Vans Strength APAC Vans Skateboarding Culture

• Vans is capitalizing on opportunities to collaborate with Chinese artists like Zhao Zhao in a collaboration for Year of the Rat • Vans does not collaborate with celebrities, only people they deem to be Key Opinion Leaders (KOL) • KOL are experts in products and influential in product fields, they drive Chinese social media • China recently held the X-Games, a yearly action- sports competition with a heavy dose of skateboarding Key Chinese Fitness Trends

Rank Trend 1 Exercise for weight loss • Key fitness trends paired with increases in 2 Exercise and sport for children and adolescents ecotourism and domestic tourism should 3 Exercise is Medicine cement strong growth for TNF and VFC 4 Strength training portfolio brands in the APAC region 5 Fitness and dietary • We believe that, as air pollution becomes a 6 Square dance more significant problem, TNF and outdoor 7 Group training tourism will continue to grow 8 Personal Training • Near-term risks like Coronavirus will not have 9 Outdoor Activities a material difference on LT growth 10 Walking/running/jogging/ cycling clubs

Bain & Company 7 APAC Growth will Outperform (Cont’d)

APAC region will outperform market estimates due to an underestimation of brand and cultural value

Chinese Tailwinds Tourism Growth (mm person-times)

5,540 • Chinese mall industry is increasing on a large scale 6,000 5,001 • 4,435 Growing Middle Class, TNF targets a different audience than winter 5,000 3,990 3,611 luxury brands with urban and outdoor exploration as the focus 3,262 4,000 2,957 • Ctrip, an online travel agent in China, reported that Chinese domestic 2,641 3,000 2,103 1,7121,902 tourists are using key words like “smog escape”, “lung cleaning”, 1,3941,610 and “forests” while looking for a destination with fresh air 2,000 1,1021,212 • The Chinese Tourism Academy estimated that Chinese tourists 1,000 spent around $200bn on rural tourism alone, which suggests that 0 people are seeking out experiences away from urban pollution 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Domestic Tourists Inbound Tourists Chinese Tmall Strategic Partnership Competitive Advantage in APAC

VF’s Brands Specialize in Outdoor Activity • In comparison with athleisure brands like Lululemon, VF’s core brands focus on outdoor activity • The North Face (hiking/climbing/exercise), Vans (skateboarding), and Timberland (rugged outdoor) target a different activity than LULU VF Athletic/Lifestyle Product Mix • VF competitors do not have the same mix of athletic and lifestyle products. VF has the capacity to target athleisure and outdoor

VFC recently announced a strategic partnership with VF Cultural Integration Alibaba subsidiary Tmall, which should see their product reach more Chinese storefronts • We believe that VF’s historical roots in the APAC region with both Vans and The North Face set it apart from new entrants into the region

Bain & Company 8 Management Capital Allocation

VFC has a strong history of developing and managing high growth brands in an industry that is otherwise struggling Transaction Highlights Divestitures and Sales • Purchased The North Face, Jansport, and Eastpak • Recently divested from their jeanswear business as in 2000 for $25.4mm the business was not consistent with management’s • Outdoor segment revenues, generated mostly from overall strategy The North Face was over $4bn • Now exists as Kontoor Brands (NYSE: KTB) • Vans was purchased for $396 mm • Sold Nautica and Reef to private companies (both • Revenues now approaching $4bn private equity and holdings companies)

2000 2004 2007 2009 2011 2016 2017 2018 2019

Acquisition Sale Spin-Off

VF Corporation 2019 Investor Day Presentation 9 Shareholder Value

Based on stable payout, ROI, and ROIC ratios, it is clear that management has been successful at creating value for shareholders VFC Payout Ratio, % VFC ROC vs Comparable Companies’ ROC

100% 18% NYSE:KTB jeanswear spin-off, ~237% 90% 16% 80% 14% 67.% 70% 12% 59.% 58.% 60% 53.% 51.% 10% 47.% 50% 41.% 8% 36.% 6% 40% 31.% 33.% 4% 30% 2% 20% 0% 10% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 0% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 5 Year VFC ROC Comparable Companies ROC Yearly VFC ROIC %

20% 18% 18% 17% 17% 18% 18% 17% 16% 14% 16% 13% 14% 12% 11% 10% 8% 6% 4% 4% 2% 0% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 5-Year

Sources: Bloomberg, Morningstar 10 Management Capital Allocation (Cont’d)

VFC has a strong history of developing and managing high growth brands in an industry that is otherwise struggling Core Competencies Yearly Acquisition Spend (Public Transactions), $mm

• Acquisitions generate value through synergies in supply chain and 2500 distribution $2,024 • VFC currently produces 33% of product through owned factories 2000 granting more access to supply chain management • Management has significant experience with environmentally 1500 conscious production and bases advertising off nature campaigns $885 • Marketing division has significant experience in building 1000 $820 customer engagement through athletic and community events $622 • R&D division has historically been extremely strong with constant 500 $315 improvement for comfort and durability among all brands $208 $83 $3 • SG&A has increased due to more DTC but COGS has decreased 0 drastically from 56% to 48% which indicates economies of scale 2000 2001 2003 2004 2007 2009 2011 2017 COGS and SG&A as a % of Revenue, 2005-2019 2020 Prospective M&A Targets

60% 55% 50% LTM Q3 45% 2018A 2019 2019E 2018A 2019A 2020E 40% Revenue 778.8 857.3 895.74 Revenue 2,802.3 3,042.5 3,210.0 Growth 13.6% 8.6% 5.51% 35% Growth 21.8% 15.9% 15.02% GP - GP 383.1 440.8 - 30% 1,386.3 1,515.7 Margin % 49.2% 51.4% 51.79% Margin % 49.5% 49.8% 49.97 25% % EBITDA 134.9 151.2 182.02 EBITDA 407.0 516.7 523.12 20% Margin % 17.3% 17.6% 20.32% Margin % 14.5% 17.0% 16.30 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 % COGS % of Revenue SG&A % of Revenue

10-Q 11 Primary Research

Jacob Spatz Sr. Financial Analyst The North Face

Internal strategy prioritizes DTC and e- The DTC margin is much higher with commerce specialized products compared to wholesale

Constant comparison of stores to They analyze every part of their e-commerce competitors strategy to stay on top of consumer trends Willing to constantly reevaluate stores on a They are willing to revamp their websites as rolling basis (using conversion, traffic, and frequently as needed average dollar sales

12 Overreaction is Unwarranted

The market is currently overreacting to Q3 underperformance & coronavirus

Timberland Inflection Point Google Trends Overview • Timberland is pursuing a fundamental brand change from a winter shoe brand to a lifestyle brand. • Currently at an inflection point for the Timberland Brand and a Surge in Vans popularity over the last few years reduction in sales is expected for the next year or so during the transition • Digital expansion of revenues are evidence that the diversification is having some success Although Timberland had a revenue contraction, • In Q4 of 2019, Timberland brand ~20% growth in DTC Digital search frequency remains stable and ~5% single digit growth in North America • Strong growth in segments excluding Timberland’s classic line indicate an inflection point for the brand, as Timberland transitions to a more diverse product line The North Face has retained popularity since 2010

Google Trends Brands

120

100

80

60

40

20

0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Va ns The North Face The Timberland Company Canada Goose

Bain & Company, Google Trends 13 Coronavirus

A near-term threat but overreaction is a buying opportunity Immediate Implications & Mitigants Overreaction • • 60% of VF owned and partnered stores are Great Recession – 50% stock drop with closed in China recovery in 8 months, much greater threat as • 16% of COGS are sourced directly from China US sales made up 65% of sales at that point • of which 7% go to the US Does a temporary drop of 2.5% of revenue • Downside case of sales revision at 300 million warrant 10.51% drop in stock price? drop in revenue predicted Recent Market Overreaction, Financial Crisis Behavior • Vans and The North Face most affected 105 • 10.51% drop over last 3 days 100 95 90 85 80 75 70 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20

• Fundamentals remain solid with demand 25 expected to return to normal levels 20 • Online store sales likely to receive a bump 15 slightly offsetting experiential retail drop 10 • APAC sales only 12% of revenue 5 0 Jan-07 Jun-07 Nov-07 Apr-08 Sep-08 Feb-09 Jul-09 Dec-09

14 Key Risks

Key Retailers Experience Financial Distress Mitigants

• Wholesale to retailers that are financially distressed is a large issue as many retailers are losing margins and customers from e- Movement to DTC and Management has been commerce • Sears bankruptcy in 2018 resulted in the spun off jeanswear E-commerce reduces willing to pursue business to decline by 6% exposure to distressed strategic options for • European weakness in 2018 also resulted in substantial cuts to Vans and Timberland profit retailers middling brands • TNF and Vans have significant exposure to retailers like REI which could face more pressure as e-commerce is taking larger market share in the outdoor exploration apparel market Diversified holdings Timberland classics results in about ½ of Timberland Transition Slows division will not see total revenue generated significant rapid decline • There is risk that management will be unsuccessful in their plan to from the U.S reinvent the Timberland brand • Recently decline in revenue in Q3 may signal a larger shift away from the Classic line that is too fast for the apparel divisions to Movement to lifestyle Timberland women's compensate • Timberland is a secondary driver in our estimates that the outdoor brands for all-weather apparel and workwear segment will increase to 7.5% revenue over 6 years activities rather than showing evidence of • If revenue continues to contract at a pace of 2-3% yoy the outdoor segment stands to increase at a 5% growth rate instead purely winter focus improvement

15 Final Recommendation

Recommendation: Buy Valuation Method Weight Implied Price Contribution Discounted Cash Flow (Multiple) 50% $115.69 $57.84 Discounted Cash Flow (PGR) 50% $91.70 $45.85 Comparable Companies (TEV / Revenue) - - $92.95 - - Comparable Companies (TEV / EBITDA) - - $98.25 - - Comparable Companies (P / E) - - $76.56 - - Intrinsic Value per Share $103.69 Current Price (as of February 24, 2020 ) $75.08

Implied Upside to Current 38.1%

• APAC growth set to overperform as tailwinds and cultural brand factors line up

• 15+ years of experience of growing brands into strong performers allows for strategic options to be pursued and value creation from economies of scale

• Buying opportunity is presented as price dipped 17% & 10% on overreaction with fundamentals remaining solid

• Timberland may continue to underperform and may need to be put under review for strategic options

• Investments in R&D and marketing continuously fail to generate value

16 Appendix

17 VF Corporation Income Statement

FYE March 31 2015A 2016A 2017A 2018A 2019A 2020P 2021P 2022P 2023P 2024P 2025P

Revenue 10,996 11,026 11,811 12,356 13,849 12,223 13,318 14,578 15,966 17,520 19,261

Cost Of Goods Sold 5,348 5,312 5,562 5,820 6,462 5,500 5,953 6,458 7,025 7,656 8,359 Gross Profit 5,648 5,714 6,250 6,536 7,386 6,723 7,365 8,120 8,941 9,864 10,902 Gross Margin 51.4% 51.8% 52.9% 52.9% 53.3% 55.0% 55.3% 55.7% 56.0% 56.3% 56.6%

Selling General & Admin Exp. 3,748 3,897 4,407 4,708 5,175 4,571 4,954 5,394 5,876 6,412 7,011 % of Revenue 34.1% 35.3% 37.3% 38.1% 37.4% 37.4% 37.2% 37.0% 36.8% 36.6% 36.4% Depreciation & Amort. 256 254 276 284 301 318 346 379 415 456 501 % of Revenue 2.3% 2.3% 2.3% 2.3% 2.2% 2.6% 2.6% 2.6% 2.6% 2.6% 2.6% Amort. of Goodwill and Intangibles 16 ------Other Operating Exp., Total 4,020 4,152 4,684 4,992 5,476 4,889 5,301 5,773 6,291 6,868 7,512

EBIT 1,645 1,562 1,566 1,544 1,910 1,833 2,064 2,347 2,650 2,996 3,390 % Margin 15.0% 14.2% 13.3% 12.5% 13.8% 15.0% 15.5% 16.1% 16.6% 17.1% 17.6%

Interest Expense (89) (95) (102) (103) (108) (65) (65) (54) (47) (44) (40) Interest Expense % (4.8%) (4.1%) (3.5%) (2.7%) (3.9%) (1.7%) (1.8%) (2.0%) (1.9%) (4.0%) (4.1%) Interest and Invest. Income 7 9 16 16 23 14 16 17 17 17 16 Net Interest Exp. (82) (86) (86) (87) (86) (51) (49) (37) (30) (27) (24)

Currency Exchange Gains (Loss) 10 3 (2) (3) 0 2 0 (0) (0) 0 0 Other Non-Operating Inc. (Exp.) (10) (1) - 3 (9) (3) (2) (2) (3) (4) (3) EBT Excl. Unusual Items 1,563 1,479 1,478 1,458 1,816 1,781 2,013 2,307 2,617 2,965 3,363

Restructuring Charges - (55) (28) (15) (108) ------Merger & Related Restruct. Charges - - (17) (1) (6) ------Impairment of Goodwill - (39) ------Gain (Loss) On Sale Of Invest. 1 ------Gain (Loss) On Sale Of Assets - - - - (37) ------Asset Writedown - (49) (17) - (6) ------Other Unusual Items - (51) - - (132) ------EBT Incl. Unusual Items 1,564 1,285 1,416 1,441 1,527 1,781 2,013 2,307 2,617 2,965 3,363 % Margin 14.2% 11.7% 12.0% 11.7% 11.0% 14.6% 15.1% 15.8% 16.4% 16.9% 17.5%

Income Tax Expense 347 206 695 672 268 285 322 369 419 474 538 Tax Rate 22.2% 16.0% 49.1% 46.6% 17.6% 16.0% 16.0% 16.0% 16.0% 16.0% 16.0% Earnings from Cont. Ops. 1,217 1,079 721 769 1,259 1,496 1,691 1,938 2,199 2,491 2,825

Earnings of Discontinued Ops. 15 (5) (106) (111) 1 ------Extraord. Item & Account. Change ------Net Income to Company 1,232 1,074 615 659 1,260 1,496 1,691 1,938 2,199 2,491 2,825 % Margin 11.2% 9.7% 5.2% 5.3% 9.1% 12.2% 12.7% 13.3% 13.8% 14.2% 14.7%

Shares Outstanding Basic 425.4 416.1 399.2 394.5 395.2 390 385 380 375 370 365 Diluted 432.1 422.1 403.6 399.9 400.5 396 391 386 381 376 371 Dilution 1.6% 1.4% 1.1% 1.4% 1.3% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% Growth in Basic Shares (2.2%) (4.1%) (1.2%) 0.2% (5.0) (5.0) (5.0) (5.0) (5.0) (5.0)

Per Share Items Basic EPS $2.90 $2.58 $1.54 $1.67 $3.19 $ 3.83 $ 4.39 $ 5.10 $ 5.86 $ 6.73 $ 7.74 Diluted EPS $2.85 $2.55 $1.53 $1.65 $3.14 $ 3.78 $ 4.32 $ 5.02 $ 5.77 $ 6.63 $ 7.62

Total Stock Based Compensation 73 68 82 102 105 98 107 117 128 140 154 % of Revenue 0.7% 0.6% 0.7% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% VF Corporation Balance Sheet

FYE March 31 2015A 2016A 2017A 2018A 2019A 2,020 2,021 2,022 2,023 2,024 2,025 ASSETS Cash And Equivalents 944 1,228 564 681 543 1,568 2,083 2,791 3,707 4,862 6,285 Total Cash & ST Investments 944 1,228 564 681 543 1,568 2,083 2,791 3,707 4,862 6,285

Accounts Receivable 1,290 1,149 1,430 1,409 1,713 1,403 1,532 1,678 1,837 2,010 2,216 Total Receivables 1,290 1,149 1,430 1,409 1,713 1,403 1,532 1,678 1,837 2,010 2,216

Inventory 1,555 1,425 1,707 1,861 1,943 1,654 1,786 1,937 2,108 2,297 2,508 Restricted Cash - - 3 4 4 4 4 4 4 4 4 Other Current Assets 373 492 675 729 471 471 471 471 471 471 471 Total Current Assets 4,163 4,293 4,378 4,683 4,673 5,099 5,875 6,880 8,126 9,643 11,483

Land and Improvements 94 88 104 103 101 98 98 98 98 98 98 Buildings and Improvements 984 999 1,071 1,076 1,114 1,002 1,076 1,076 1,178 1,290 1,416 Machinery and Equipment 1,234 1,289 1,314 1,295 1,377 1,218 1,327 1,452 1,590 1,745 1,919 Gross Property, Plant & Equipment 2,311 2,234 2,490 2,474 2,592 2,219 2,501 2,626 2,867 3,133 3,432

Accumulated Depreciation 1,366 1,338 1,475 1,463 1,535 1,725 1,933 2,161 2,410 2,683 2,983 Net Property, Plant & Equipment 945 896 1,015 1,012 1,057 935 802 656 496 321 129

Long-term Investments 11 11 13 12 13 13 13 13 13 13 13 Goodwill 1,788 1,555 1,693 1,693 1,755 1,755 1,755 1,755 1,755 1,755 1,755 Other Intangibles 2,126 1,729 2,322 2,360 2,249 2,249 2,249 2,249 2,249 2,249 2,249 Deferred Tax Assets, LT 39 42 104 105 110 110 110 110 110 110 110 Deferred Charges, LT 47 312 35 34 34 34 34 34 34 34 34 Other Long-Term Assets 519 902 400 411 466 466 466 466 466 466 466 Total Assets 9,640 9,739 9,959 10,311 10,357 10,660 11,303 12,162 13,248 14,591 16,238

LIABILITIES Accounts Payable 681 620 761 583 695 601 652 708 770 837 916 Accrued Exp. 683 660 879 719 1,111 818 892 976 1,069 1,173 1,290 Short-term Borrowings 450 26 729 1,525 665 79.55 80 80 80 80 80 Curr. Port. of LT Debt 3 254 6 6 ------Curr. Port. of Cap. Leases - - - - 5 5 5 5 5 5 5 Curr. Income Taxes Payable 60 70 135 67 68 68 68 68 68 68 68 Other Current Liabilities 65 156 233 238 118 118 118 118 118 118 118 Total Current Liabilities 1,942 1,785 2,744 3,139 2,662 1,690 1,815 1,955 2,110 2,281 2,476

Long-Term Debt 1,402 2,039 2,188 2,213 2,087 2,087 2,087 2,087 2,087 2,087 2,087 Long-Term Leases - - - - 29 935 935 935 935 935 935 Pension & Other Post-Retire. Benefits 157 166 189 177 175 175 175 175 175 175 175 Def. Tax Liability, Non-Curr. 241 147 58 41 69 69 69 69 69 69 69 Other Non-Current Liabilities 512 661 1,059 1,054 1,037 1,037 1,037 1,037 1,037 1,037 1,037 Total Liabilities 4,255 4,798 6,239 6,623 6,058 5,993 6,118 6,257 6,412 6,583 6,779

Common Stock 107 104 99 99 99 99 99 99 99 99 99 Additional Paid In Capital 3,193 3,333 3,523 3,607 3,922 4,020 4,126 4,243 4,370 4,511 4,665 Retained Earnings 3,129 2,545 1,024 846 1,180 1,859 2,679 3,691 4,902 6,342 8,048 Treasury Stock - - - - - (409) (817) (1,226) (1,634) (2,043) (2,451) Comprehensive Inc. and Other (1,043) (1,042) (926) (864) (902) (902) (902) (902) (902) (902) (902) Total Common Equity 5,385 4,941 3,720 3,688 4,299 4,667 5,185 5,905 6,836 8,007 9,459

Total Equity 5,385 4,941 3,720 3,688 4,299 4,667 5,185 5,905 6,836 8,007 9,459

Total Liabilities And Equity 9,640 9,739 9,959 10,311 10,357 10,660 11,303 12,162 13,248 14,591 16,238 VF Corporation Cash Flow Statement

FYE March 31 2015A 2016A 2017A 2018A 2019A 2,020 2,021 2,022 2,023 2,024 2,025

Net Income 1,232 1,074 615 659 1,260 1,496 1,691 1,938 2,199 2,491 2,825 Depreciation & Amort. 256 254 276 284 301 318 346 379 415 456 501 Amort. of Goodwill and Intangibles 16 ------Depreciation & Amort., Total 272 254 276 284 301 318 346 379 415 456 501

(Gain) Loss From Sale Of Assets - - 0 - 24 ------Asset Writedown & Restructuring Costs - 80 ------Stock-Based Compensation 73 68 82 102 105 98 107 117 128 140 154 Provision & Write-off of Bad debts 12 17 21 11 23 ------Net Cash From Discontinued Ops. 144 132 148 75 5 ------Other Operating Activities (236) 2 (57) (22) (96) ------Less Change in Acc. Receivable (124) 47 (107) 155 (373) (311) 130 145 160 173 206 Less Change In Inventories (175) (37) 17 (625) (135) (289) 132 152 170 189 211 Plus Change Accrued Expenses - (23) 219 (160) 391 (292) 73 84 93 104 117 Plus Change in Acc. Payable - (60) 141 (178) 112 (94) 51 55 62 67 79 Plus Change in Inc. Taxes 4 (130) 460 (261) (20) ------Change in Other Net Operating Assets (12) (17) (3) (952) 460 ------Cash from Ops. 1,204 1,481 1,475 (973) 1,664 2,126 2,006 2,277 2,567 2,895 3,259

Capital Expenditure (255) (176) (170) (218) (251) (196) (213) (233) (255) (280) (308) Cash Acquisitions - - (741) - (320) ------Divestitures - 116 215 - 430 ------Sale (Purchase) of Intangible assets (63) (44) (65) (77) (56) ------Invest. in Marketable & Equity Securt. ------Net (Inc.) Dec. in Loans Originated/Sold ------Other Investing Activities (5) (8) (16) 71 (24) ------Cash from Investing (323) (112) (776) (224) (221) (196) (213) (233) (255) (280) (308)

Short Term Debt Issued 432 - 686 ------Long-Term Debt Issued - 952 ------Total Debt Issued 432 952 686 3,184 ------Short Term Debt Repaid - (421) - - (864) (586) - - - - - Long-Term Debt Repaid (4) (13) (254) - (6) ------Total Debt Repaid (4) (434) (254) (6) (870) (586) - - - - -

Issuance of Common Stock 31 49 90 176 199 ------Repurchase of Common Stock (733) (1,001) (1,200) (1,001) (151) (409) (409) (409) (409) (409) (409)

Common Dividends Paid (565) (636) (685) (726) (767) (817) (870) (927) (987) (1,051) (1,119) % Growth 13% 8% 6% 6% 7% 7% 7% 7% 7% 7% Total Dividends Paid (565) (636) (685) (726) (767) (817) (870) (927) (987) (1,051) (1,119)

Special Dividend Paid ------Other Financing Activities (2) (7) - - (2) 906 - - - - - Cash from Financing (840) (1,077) (1,363) 1,627 (1,591) (905) (1,279) (1,335) (1,395) (1,460) (1,528)

Foreign Exchange Rate Adj. (67) (7) 3 49 15 (1) (1) (1) (1) (1) (1) Net Change in Cash (26) 285 (662) 479 (133) 1,025 514 708 916 1,155 1,423

Memo Free Cash Flow 949 1,305 1,305 (1,190) 1,414 1,930 1,793 2,044 2,311 2,615 2,951 FCF Conversion 77% 121% 212% (181%) 112% 129% 106% 105% 105% 105% 104% FYE March 31 2015A 2016A 2017A 2018A 2019A 2020P 2021P 2022P 2023P 2024P 2025P

Revenue 10,996 11,026 11,811 12,356 13,849 12,223 13,318 14,578 15,966 17,520 19,261 COGS 5,348 5,312 5,562 5,820 6,462 5,500 5,953 6,458 7,025 7,656 8,359 Gross Margin 5,648 5,714 6,250 6,536 7,386 6,723 7,365 8,120 8,941 9,864 10,902

Operating Expenses 4,020 4,152 4,684 4,992 5,476 4,889 5,301 5,773 6,291 6,868 7,512 EBIT 1,629 1,562 1,566 1,544 1,910 1,833 2,064 2,347 2,650 2,996 3,390

Income Taxes 347 206 695 672 268 285 322 369 419 474 538 NOPAT 1,281 1,356 871 872 1,642 1,549 1,742 1,978 2,232 2,521 2,852

D&A 256 254 276 284 301 318 346 379 415 456 501 Capex (255) (176) (170) (218) (251) (196) (213) (233) (255) (280) (308) Change in NWC - (160) 308 521 (255) (214) 137 157 175 192 221 Unlevered FCF 1,283 1,595 669 418 1,947 1,885 1,738 1,967 2,217 2,505 2,824 Periods 0.25 1.25 2.25 3.25 4.25 5.25 WACC 7.86% Discounted Cash Flows 98% 91% 84% 78% 73% 67% Present Value of FCF 1,849.5 1,581.2 1,659.1 1,733.3 1,816.1 1,897.9

Enterprise Value Sensitivity Perpituity Method FCF in Terminal Year 1,897.9 FCF+1 2,047.09 Perpetual Growth Rate 2.75% Terminal Value 40,060.46 Present Value of Terminal Value 26,927.67 Enterprise Value 37,464.74 Less: Net Debt (518.87) Equity Value 36,945.86 Implied Share Price $ 94.68 Implied Upside 16%

EBITDA Multiple Terminal Year EBITDA 3,891 Memo Terminal Value EBITDA Multiple 14.0x -Terminal Value EBITDA Multiple chosen as 3 less than current multiple at 17x Terminal Value 54,469 -Slowing growth towards 2025 Present Value of Terminal Value 36,613 -PGR chosen as representative of consumer retail industry but with high growth prospects Enterprise Value 47,150.06 -Used Rolling Betas and more comprehensive cost of Equity for our WACC Less: Net Debt (518.87) -Periods are calculated with a fiscal year end at March with 3 quarters out for 2020 FY Equity Value 46,631.19 Implied Share Price $ 119.50 Implied Upside 46%

Current Stock Price 81.83 Share Count 390.2075767 Share Price - Perpetuity Approach (Growth Rate vs WACC) Share Price - EBITDA Multiple Approach (Exit Multiple vs Terminal Yr. EBITDA) 6.90% 7.40% 7.86% 8.40% 8.90% $3,511.33 $3,696.14 $3,890.67 $4,085.20 $4,289.46 2.25% $108.92 $97.31 $97.31 $79.98 $73.37 12.5x $101.28 $97.50 $97.50 $101.09 $108.82 2.75% $118.87 $104.98 $104.98 $84.82 $77.31 13.5x $106.72 $102.67 $102.67 $106.52 $114.80 3.25% $131.54 $114.49 $114.49 $90.60 $81.94 14.5x $112.07 $107.75 $107.75 $111.86 $120.69 3.75% $148.23 $126.62 $126.62 $97.62 $87.47 15.5x $117.34 $112.76 $112.76 $117.11 $126.48 4.25% $171.23 $142.59 $142.59 $106.34 $94.19 16.5x $122.52 $117.68 $117.68 $122.28 $132.18

Implied Upside - Perpetuity Approach (Growth Rate vs WACC) Implied Upside - EBITDA Multiple Approach (Exit Multiple vs Terminal Yr. EBITDA) 6.90% 7.40% 7.86% 8.40% 8.90% $3,511.33 $3,696.14 $3,890.67 $4,085.20 $4,289.46 2.25% 33.1% 18.9% 18.9% (2.3%) (10.3%) 12.5x 23.8% 19.2% 19.2% 23.5% 33.0% 2.75% 45.3% 28.3% 28.3% 3.7% (5.5%) 13.5x 30.4% 25.5% 25.5% 30.2% 40.3% 3.25% 60.7% 39.9% 39.9% 10.7% 0.1% 14.5x 37.0% 31.7% 31.7% 36.7% 47.5% 3.75% 81.1% 54.7% 54.7% 19.3% 6.9% 15.5x 43.4% 37.8% 37.8% 43.1% 54.6% 4.25% 109.2% 74.2% 74.2% 29.9% 15.1% 16.5x 49.7% 43.8% 43.8% 49.4% 61.5% 3.6x 3.4x 29.0x 3.2x 27.0x 3.0x 25.0x 2.8x 23.0x 2.6x 21.0x 2.4x 2.2x 19.0x 2.0x 17.0x

Jun-18 Oct-18 Jun-19 Oct-19 Feb-18Apr-18 Aug-18 Dec-18 Feb-19Apr-19 Aug-19 Dec-19 Feb-20 Feb-18Apr-18 Jun-18Aug-18Oct-18Dec-18 Feb-19Apr-19 Jun-19Aug-19Oct-19Dec-19 Feb-20 -1 STDEV Forward EV/Revenue -1 STDEV Forward P/E +1 STDEV AVERAGE +1 STDEV AVERAGE

22.0x 20.0x 18.0x 16.0x 14.0x 12.0x 10.0x Jun-16 Jun-17 Jun-18 Jun-19 Sep-16 Sep-17 Sep-18 Sep-19 Dec-15 Dec-16 Dec-17 Dec-18 Dec-19 Mar-16 Mar-17 Mar-18 Mar-19

-1 STDEV Forward EV/EBITDA +1 STDEV AVERAGE ($ in millions) FYE March 31, FYE March 31, 2016A 2017A 2018A 2019A 2020P 2021P 2022P 2023P 2024P 2025P

Outdoor 4,123.40 4,209.00 4,261.90 4,649.00 4,881.5 5,174.3 5,536.5 5,940.7 6,392.2 6,897.2 Active 3,318.40 3,791.70 4,054.50 4,721.80 5,241.2 5,922.6 6,692.5 7,562.5 8,545.6 9,656.6 Work 776.20 1,099.70 1,342.00 1,862.00 1,973.7 2,092.1 2,217.7 2,328.6 2,445.0 2,567.2 Jeanswear 2,960.10 2,597.60 2,586.60 2,491.80 Spinoff of Jeanswear Brand Other 118.00 113.20 111.30 124.10 126.6 129.1 131.7 134.3 137.0 139.8 Total Revenue $11,296.1 $11,811.2 $12,356.3 $13,848.7 $12,223.0 $13,318.1 $14,578.4 $15,966.1 $17,519.8 $19,260.7

2016A 2017A 2018A 2019A 2020P 2021P 2022P 2023P 2024P 2025P 2026P

Outdoor Growth % 2.1% 1.3% 9.1% 5.0% 6.0% 7.0% 7.3% 7.6% 7.9% 8.0% Active Growth % 14.3% 6.9% 16.5% 11.0% 13.0% 13.0% 13.0% 13.0% 13.0% 13.0% Work Growth % 41.7% 22.0% 38.7% 6.0% 6.0% 6.0% 5.0% 5.0% 5.0% 5.0% Jeanswear Growth % (12.2%) (0.4%) (3.7%) Jeanswear Spinoff Other Growth % (4.1%) (1.7%) 11.5% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% Total Revenue Growth % 4.6% 4.6% 12.1% (11.7%) 9.0% 9.5% 9.5% 9.7% 9.9%