Item 2 - Management's Discussion and Analysis of Financial Condition and Results
of Operations
Overview
Impact of the Current Global Economic Environment Our third quarter and nine month performance was negatively impacted by the deep global recessionary environment and its impact on consumer spending. While there were improvements in consumer spending in the third quarter and other signs of stability, we expect difficult economic conditions to continue throughout 2009.
Highlights of the Third Quarter of 2009
• Although global volatility and challenging economic conditions have affected our businesses, available data indicates that each of our largest brands - Wranglerā, The North Faceā, Leeā and Vansā, which combined account for over 60% of our total annual revenues - gained market share in most markets driven by new product innovation. See the "Information by Business Segment" section below.

• Revenues decreased 5% from the prior year quarter to $2,093.8 million, with 2% of the decrease resulting from the effects of foreign currency translation.

• Our business in Asia continues to grow rapidly, with revenues up 32% in the quarter.

• Our direct-to-consumer business grew 6% in the quarter, driven by higher sales and new store openings for our Vansā, The North Faceā, 7 for All Mankindā and Napapijriā brands. At September 2009, we had 733 VF-operated retail stores.

• Earnings per share declined to $1.94 from $2.10 in the prior year quarter, with higher pension expense and foreign currency translation negatively impacting third quarter 2009 earnings by $0.17 per share. The third quarter of 2008 also included a net benefit of $0.07 from unusual items, primarily one-time tax benefits partially offset by restructuring charges. (All per share amounts are presented on a diluted basis.)

• Our balance sheet remains strong with a debt to total capital ratio of 26.6% and a net debt to total capital ratio of 20.8%. VF has over $1.1 billion of available liquidity under committed bank credit lines and no long-term debt payments due until late 2010.

• Inventories at September 2009 declined 13% from the prior year quarter, reflecting our aggressive management of inventory levels in a difficult economic environment.

• In October 2009, the Board of Directors declared a quarterly cash dividend of $0.60 per share, an increase of $0.01 per share.

• We repurchased 750,000 shares of our Common Stock in the third quarter, utilizing our operating cash flow, and plan to repurchase an additional 750,000 shares in the fourth quarter.

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