Reporting by Anna Driver Editing by Steve Orlofsky Funds News ETFs News

(Reporting by Anna Driver; Editing by Steve Orlofsky) Funds News ETFs News. Operating income and margins declined reflecting the lower volumes, particularlythose in our industrial and protective apparel businesses where profitabilitylevels are higher than the coalition average. Second half revenue and operating income results are expected to showimprovement over those reported in the second quarter due primarily to easiercomparisons in our Licensed Sports business versus the prior year period. Whilewe do not anticipate any near term improvement in employment levels in our keyindustry sectors, the rate of decline in our Image business should moderate inthe second half versus the first half. Total Imagewear revenues in the secondhalf are expected to decline at a high single digit rate, and operating marginsshould return to double-digit percentage levels. VF`s gross margins increased slightly to 43.9% from 43.8% in the quarter.Operating margins declined to 8.1% from 9.8%, reflecting a 140 basis pointimpact from the higher pension expense as well as the impact of investments togrow our retail business in this seasonally low period. International revenues declined 4% on a constant currency basis due to weakmarket conditions in Europe.

However, on a constant dollar basis, internationalrevenues of our Vans®, The North Face®, 7 For All Mankind® and Kipling® brandsrose in the quarter. Our Asian business continued to grow strongly, withrevenues up 13% in the quarter. Our direct-to-consumer business increased 4% in the quarter, driven by strongincreases in Vans®, The North Face® and 7 For All Mankind® brands. Seventeenstores were opened in the quarter, including new stores for our Vans®, The NorthFace® and 7 For All Mankind® brands, bringing the total number of owned retailstores to 717 at the end of the quarter. Our balance sheet remains very strong; cash and equivalents were $385 millionand should exceed $600 million at year-end assuming no additional acquisitionsthis year. Inventories declined 9% from June 2008 and by year-end are expectedto be more than 10%, or $100 million, below year-end 2008 levels.

We continue toexpect another year of strong cash flow from operations in 2009, which shouldexceed $750 million. OutlookWe continue to anticipate that 2009 revenues will be down 5 to 7%, with abouthalf, or 3%, of the decline due to foreign currency translation. Earnings pershare should approximate $4.70 to $5.00 versus $5.42 in 2008, including anegative impact of approximately $.70 per share from higher pension expense andcurrency translation. Despite slightly better than anticipated earnings in thesecond quarter and some upside from currency translation, given the uncertainenvironment, we are maintaining our guidance at this time. Second half revenue and earnings comparisons should improve relative to those ofthe first half, due to easier comparisons. Fourth quarter earnings comparisonsshould be the strongest, given the absence of restructuring actions that reducedfourth quarter earnings by $.30 per share, the seasonality of our growing retailbusiness and a lower impact from currency effects.

However, currency effectswill remain a significant impact in the third quarter, which is the largestquarter in both revenues and profits in our international business. In addition,last year`s third quarter benefited from $.07 per share in favorable taxsettlements. Dividend DeclaredThe Board of Directors declared a cash dividend of $.59 per share, payable onSeptember 18, 2009 to shareholders of record as of the close of business onSeptember 8, 2009. Constant Currency Financial MeasuresThis press release contains constant currency financial information, which is ameasure of financial performance that is not prepared in accordance withgenerally accepted accounting principles ("GAAP"). An explanation ofmanagement's use of this nonGAAP financial information is described in thesupplemental financial information on page 10.