Item 2 - Management's Discussion and Analysis of Financial Condition and Results
of Operations
Overview
Impact of the Current Global Economic Environment The global economy experienced significant volatility and change during late 2008 and early 2009. This resulted in declines in residential and commercial real estate values that spread across the globe, rapid and extreme changes in commodity prices and currency markets, sharp declines in global securities markets, rising unemployment, and a credit and liquidity crisis. Our first quarter 2009 performance was negatively impacted by the deteriorating global economic environment and its impact on consumer spending. There is every indication that these difficult economic conditions will continue through 2009.
Highlights of the first quarter of 2009:
• Although global volatility and challenging economic conditions have affected our businesses, we believe each of our largest brands that comprise over 60% of our total annual revenues - Wranglerā, The North Faceā, Leeā and Vansā- gained market share in most markets where sold. See the "Information by Business Segment" section below.

• Revenues decreased 7% from the prior year quarter to $1,725.5 million with approximately 5% of the decrease resulting from the effects of foreign currency translation.

• Our business in Asia continues to grow rapidly, with revenues up 24% in the first quarter.

• Our direct-to-consumer business grew 4% in the quarter, driven by higher sales and new store openings within the retail operations of our The North Faceā and Vansā brands.

• Our balance sheet remains strong with a debt to total capital ratio of 28.6% and a net debt to total capital ratio of 24.4%. VF has $1.1 billion of available liquidity under committed bank credit lines and no long-term debt payments due until late 2010.

• We completed the acquisition of Mo Industries Holdings, Inc. ("Mo Industries"), a Los Angeles-based company that owns the SplendidŅ and Ella MossŅbrands of premium sportswear marketed to upscale department and specialty stores.