Notes to Consolidated Financial Statements
(Unaudited)
Note A Basis of
Presentation
VF Corporation (together with its subsidiaries, collectively known as VF or the Company) uses a 52/53 week fiscal
year ending on the Saturday closest to December 31 of each year. For presentation purposes herein, all references to periods ended September 2016, December 2015 and September 2015 relate to the fiscal periods ended on October 1, 2016,
January 2, 2016 and October 3, 2015, respectively.
On August 26, 2016, VF completed the sale of its Contemporary Brands coalition. As a result,
VF has reported the operating results of this coalition in the income (loss) from discontinued operations line in the Consolidated Statements of Income for all periods presented. In addition, the related assets and liabilities were reported
as assets of discontinued operations and liabilities of discontinued operations in the Consolidated Balance Sheets through the date of sale. Unless otherwise noted, discussion within these notes to the consolidated financial statements relates
to continuing operations. See Note B for additional information on discontinued operations.
The accompanying unaudited consolidated financial
statements have been prepared in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X and do not include all of the information and notes required by generally accepted accounting principles in the United States of America
(GAAP) for complete financial statements. Similarly, the December 2015 consolidated balance sheet was derived from audited financial statements but does not include all disclosures required by GAAP. In the opinion of management, the
accompanying unaudited consolidated financial statements contain all normal and recurring adjustments necessary to fairly state the consolidated financial position, results of operations and cash flows of VF for the interim periods presented.
Operating results for the three and nine months ended September 2016 are not necessarily indicative of results that may be expected for any other interim period or for the year ending December 31, 2016. For further information, refer to the
consolidated financial statements and notes included in VFs Annual Report on Form 10-K for the year ended December 2015 (2015 Form 10-K).
Note B Discontinued Operations
On August 26,
2016, VF completed the sale of its Contemporary Brands coalition to Delta Galil Industries, Ltd. for $116.9 million. The Contemporary Brands coalition included the businesses of the
7 For All Mankind
®
,
Splendid
®
, and
Ella Moss
®
brands (the Businesses) and
was previously disclosed as a separate reportable segment of VF.
The transaction resulted in an after-tax loss on sale of $104.4 million which is
included in the income (loss) from discontinued operations line in the Consolidated Statements of Income for the first nine months of 2016. The after-tax loss on sale included in income (loss) from discontinued operations for the third quarter of
2016 was $3.8 million.
Beginning in the second quarter of 2016, VF has reported the results of the Businesses in the income (loss) from discontinued
operations line item in the Consolidated Statements of Income and excluded them from continuing operations and segment results. Prior to the sale, the assets and liabilities of the Businesses were recorded in the assets of discontinued operations
and liabilities of discontinued operations line items, respectively, in the Consolidated Balance Sheets.
Certain corporate overhead costs and interest
expense previously allocated to the Contemporary Brands coalition for segment reporting purposes did not qualify for classification within discontinued operations and have been reallocated to continuing operations. In addition, goodwill and
intangible asset impairment charges related to the Contemporary Brands coalition, previously excluded from the calculation of coalition profit, were reallocated to discontinued operations. These changes were applied to all periods presented.
VF will provide certain support services under transition services agreements for a limited period of time.
8
The following table summarizes the major line items included in the income (loss) from discontinued operations
for each of the periods presented.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September
|
|
|
Nine Months Ended September
|
|
In thousands
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
Revenues
|
|
$
|
43,186
|
|
|
$
|
83,194
|
|
|
$
|
187,821
|
|
|
$
|
257,605
|
|
Cost of goods sold
|
|
|
20,199
|
|
|
|
39,169
|
|
|
|
85,303
|
|
|
|
117,172
|
|
Selling, general and administrative expenses
|
|
|
26,062
|
|
|
|
40,660
|
|
|
|
99,295
|
|
|
|
126,535
|
|
Interest income (expense), net
|
|
|
(1
|
)
|
|
|
(161
|
)
|
|
|
(109
|
)
|
|
|
(483
|
)
|
Other income (expense), net
|
|
|
7
|
|
|
|
(2
|
)
|
|
|
3
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax income (loss) from discontinued operations
|
|
|
(3,069
|
)
|
|
|
3,202
|
|
|
|
3,117
|
|
|
|
13,416
|
|
Pre-tax loss on the disposal of discontinued operations
|
|
|
(4,439
|
)
|
|
|
|
|
|
|
(154,275
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total pre-tax income (loss) from discontinued operations
|
|
|
(7,508
|
)
|
|
|
3,202
|
|
|
|
(151,158
|
)
|
|
|
13,416
|
|
Income tax benefit (expense)
|
|
|
2,963
|
|
|
|
(973
|
)
|
|
|
52,737
|
|
|
|
(2,634
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from discontinued operations
|
|
$
|
(4,545
|
)
|
|
$
|
2,229
|
|
|
$
|
(98,421
|
)
|
|
$
|
10,782
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table summarizes the carrying amounts of major classes of assets and liabilities of discontinued operations for
each of the periods presented.
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands
|
|
September
2016
|
|
|
December
2015
|
|
|
September
2015
|
|
Accounts receivable, net
|
|
$
|
|
|
|
$
|
29,596
|
|
|
$
|
29,857
|
|
Inventories
|
|
|
|
|
|
|
56,634
|
|
|
|
66,336
|
|
Other current assets, including cash and equivalents
|
|
|
|
|
|
|
2,946
|
|
|
|
4,170
|
|
Property, plant and equipment
|
|
|
|
|
|
|
42,668
|
|
|
|
46,490
|
|
Intangible assets
|
|
|
|
|
|
|
164,008
|
|
|
|
308,471
|
|
Other assets
|
|
|
|
|
|
|
3,355
|
|
|
|
3,291
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets of discontinued operations
(a)
|
|
$
|
|
|
|
$
|
299,207
|
|
|
$
|
458,615
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current portion of long-term debt
|
|
$
|
|
|
|
$
|
9,928
|
|
|
$
|
9,983
|
|
Accounts payable
|
|
|
|
|
|
|
8,988
|
|
|
|
8,920
|
|
Accrued liabilities
|
|
|
|
|
|
|
7,102
|
|
|
|
8,001
|
|
Other liabilities
|
|
|
|
|
|
|
10,915
|
|
|
|
11,246
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities of discontinued operations
(a)
|
|
$
|
|
|
|
$
|
36,933
|
|
|
$
|
38,150
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Amounts at December 2015 and September 2015 have been classified as current and long-term in the Consolidated Balance Sheets.
|
Because the cash flows of the Businesses were not material for any of the periods presented, we have not segregated them in our Consolidated Statements of
Cash Flows.
Note C Sale of Accounts Receivable
VF has an agreement with a financial institution to sell selected trade accounts receivable on a recurring, nonrecourse basis. This agreement was amended in
January 2016 to permit up to $367.5 million of VFs accounts receivable to be sold to the financial institution and remain outstanding at any point in time, compared to the $237.5 million limit in place at December 2015 and September 2015. VF
removes the accounts receivable from the Consolidated Balance Sheets at the time of sale. VF does not retain any interests in the sold accounts receivable but continues to service and collect outstanding accounts receivable on behalf of the
financial institution. During the first nine months of 2016, VF sold total accounts receivable of $983.5 million. As of September 2016, December 2015 and September 2015, $212.3 million, $144.9 million and $167.5 million, respectively, of the
sold accounts
9
receivable had been removed from the Consolidated Balance Sheets but remained outstanding with the financial institution. The funding fee charged by the financial institution is included in other
income (expense), net, and was $0.8 million and $2.5 million for the third quarter and first nine months of 2016, respectively, and $0.5 million and $1.4 million for the third quarter and first nine months of 2015, respectively. Net proceeds of this
program are classified in operating activities in the Consolidated Statements of Cash Flows.
Note D Inventories
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands
|
|
September 2016
|
|
|
December 2015
|
|
|
September 2015
|
|
Finished products
|
|
$
|
1,744,064
|
|
|
$
|
1,313,646
|
|
|
$
|
1,716,568
|
|
Work-in-process
|
|
|
98,686
|
|
|
|
94,355
|
|
|
|
93,198
|
|
Raw materials
|
|
|
157,246
|
|
|
|
147,359
|
|
|
|
162,024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total inventories
|
|
$
|
1,999,996
|
|
|
$
|
1,555,360
|
|
|
$
|
1,971,790
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note E Property, Plant and Equipment
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands
|
|
September 2016
|
|
|
December 2015
|
|
|
September 2015
|
|
Land and improvements
|
|
$
|
95,442
|
|
|
$
|
93,923
|
|
|
$
|
93,665
|
|
Buildings and improvements
|
|
|
1,026,266
|
|
|
|
983,666
|
|
|
|
963,647
|
|
Machinery and equipment
|
|
|
1,295,215
|
|
|
|
1,233,656
|
|
|
|
1,220,327
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, at cost
|
|
|
2,416,923
|
|
|
|
2,311,245
|
|
|
|
2,277,639
|
|
Less accumulated depreciation and amortization
|
|
|
1,467,611
|
|
|
|
1,365,754
|
|
|
|
1,342,571
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
|
$
|
949,312
|
|
|
$
|
945,491
|
|
|
$
|
935,068
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note F Intangible Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 2016
|
|
|
December 2015
|
|
In thousands
|
|
Weighted
Average
Amortization
Period
|
|
|
Amortization
Methods
|
|
|
Cost
|
|
|
Accumulated
Amortization
|
|
|
Net
Carrying
Amount
|
|
|
Net
Carrying
Amount
|
|
Amortizable intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer relationships
|
|
|
20 years
|
|
|
|
Accelerated
|
|
|
$
|
280,909
|
|
|
$
|
132,435
|
|
|
$
|
148,474
|
|
|
$
|
156,047
|
|
License agreements
|
|
|
24 years
|
|
|
|
Accelerated and
straight-line
|
|
|
|
179,488
|
|
|
|
99,228
|
|
|
|
80,260
|
|
|
|
86,540
|
|
Trademark
|
|
|
16 years
|
|
|
|
Straight-line
|
|
|
|
58,132
|
|
|
|
2,725
|
|
|
|
55,407
|
|
|
|
|
|
Other
|
|
|
10 years
|
|
|
|
Straight-line
|
|
|
|
6,358
|
|
|
|
2,678
|
|
|
|
3,680
|
|
|
|
3,443
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortizable intangible assets, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
287,821
|
|
|
|
246,030
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Indefinite-lived intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trademarks and trade names
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,682,967
|
|
|
|
1,702,581
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intangible assets, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,970,788
|
|
|
$
|
1,948,611
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In connection with the contract renewal during the first quarter of 2016, VF determined that the trademark intangible asset
related to the
Rock
& Republic
®
brand has a finite life. Accordingly, we reclassified the $58.1 million trademark balance from indefinite-lived intangible
assets to amortizable intangible assets, and commenced amortization of the trademark over its estimated useful life of 16 years.
Amortization expense for
the third quarter and first nine months of 2016 was $6.9 million and $20.8 million, respectively. Based on the carrying amounts of amortizable intangible assets noted above, estimated amortization expense for the years 2016 through 2020 is $27.5
million, $26.5 million, $25.9 million, $25.2 million and $24.3 million, respectively.
10
There were no impairment charges recorded in the third quarter or first nine months of 2016. Refer to Note O for
discussion of the Companys interim impairment testing of the
Nautica
®
trademark during the third quarter of 2016.
Note G Goodwill
Changes in goodwill are
summarized by business segment as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands
|
|
Outdoor &
Action Sports
|
|
|
Jeanswear
|
|
|
Imagewear
|
|
|
Sportswear
|
|
|
Total
|
|
Balance, December 2015
|
|
$
|
1,359,475
|
|
|
$
|
212,871
|
|
|
$
|
58,747
|
|
|
$
|
157,314
|
|
|
$
|
1,788,407
|
|
Currency translation
|
|
|
8,443
|
|
|
|
1,624
|
|
|
|
|
|
|
|
|
|
|
|
10,067
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, September 2016
|
|
$
|
1,367,918
|
|
|
$
|
214,495
|
|
|
$
|
58,747
|
|
|
$
|
157,314
|
|
|
$
|
1,798,474
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated impairment charges were $43.4 million for the Outdoor & Action Sports coalition and $58.5 million for the
Sportswear coalition as of the dates presented above.
There were no impairment charges recorded in the third quarter or first nine months of 2016. Refer
to Note O for discussion of the Companys interim impairment testing of the
Nautica
®
reporting unit during the third quarter of 2016.
Note H
Short-term Borrowings and Long-term Debt
In June 2016, VF entered an accession agreement to increase the existing $1.75 billion senior unsecured revolving line of credit to $2.25 billion. This line of
credit supports VFs commercial paper program which was also increased to $2.25 billion.
In September 2016, VF issued 850 million of 0.625%
fixed-rate notes maturing in September 2023. The outstanding balance of the notes was $947.1 million at September 2016, which was net of unamortized original issue discount and debt issuance costs. Interest expense on these notes is recorded at an
effective annual interest rate of 0.712% which includes amortization of original issue discount and debt issuance costs.
Note I Pension Plans
The components of pension cost for VFs defined benefit plans are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September
|
|
|
Nine Months Ended September
|
|
In thousands
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
Service cost benefits earned during the period
|
|
$
|
6,478
|
|
|
$
|
7,305
|
|
|
$
|
19,434
|
|
|
$
|
21,984
|
|
Interest cost on projected benefit obligations
|
|
|
16,991
|
|
|
|
19,415
|
|
|
|
51,066
|
|
|
|
58,229
|
|
Expected return on plan assets
|
|
|
(24,869
|
)
|
|
|
(27,784
|
)
|
|
|
(74,714
|
)
|
|
|
(83,334
|
)
|
Amortization of deferred amounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net deferred actuarial losses
|
|
|
16,303
|
|
|
|
15,493
|
|
|
|
48,928
|
|
|
|
46,485
|
|
Deferred prior service costs
|
|
|
645
|
|
|
|
760
|
|
|
|
1,937
|
|
|
|
2,281
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net periodic pension cost
|
|
$
|
15,548
|
|
|
$
|
15,189
|
|
|
$
|
46,651
|
|
|
$
|
45,645
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
VF contributed $12.8 million to its defined benefit plans during the first nine months of 2016, and intends to make
approximately $2.4 million of additional contributions during the remainder of 2016.
VF incurred $2.4 million and $4.0 million in settlement charges
during the third quarter and first nine months of 2015, respectively, related to the recognition of deferred actuarial losses resulting from lump sum payments of retirement benefits to participants in VFs supplemental defined benefit pension
plan. No settlement charges were incurred during the first nine months of 2016.
11
Note J Capital and Accumulated Other Comprehensive Income (Loss)
During the first nine months of 2016, the Company purchased 15.9 million shares of Common Stock in open market transactions for $1.0 billion under its
share repurchase program authorized by VFs Board of Directors. These transactions were treated as treasury stock transactions.
Common Stock
outstanding is net of shares held in treasury which are, in substance, retired. During the first nine months of 2016, VF restored 16.0 million treasury shares to an unissued status, after which they were no longer recognized as shares held in
treasury. There were 2,600 shares held in treasury at the end of September 2016, no shares held in treasury at the end of December 2015, and 1,900 shares held in treasury at the end of September 2015. The excess of the cost of treasury shares
acquired over the $0.25 per share stated value of Common Stock is deducted from retained earnings.
VF Common Stock is also held by the Companys
deferred compensation plans and is treated as treasury shares for financial reporting purposes. During the first nine months of 2016, the Company purchased 4,000 shares of Common Stock in open market transactions for $0.2 million. Balances related
to shares held for deferred compensation plans were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands, except share amounts
|
|
September 2016
|
|
|
December 2015
|
|
|
September 2015
|
|
Shares held for deferred compensation plans
|
|
|
450,067
|
|
|
|
562,649
|
|
|
|
560,049
|
|
Cost of shares held for deferred compensation plans
|
|
$
|
5,434
|
|
|
$
|
6,823
|
|
|
$
|
6,651
|
|
Accumulated Other Comprehensive Income (Loss)
Comprehensive income consists of net income and specified components of other comprehensive income (OCI), which relates to changes in assets and
liabilities that are not included in net income under GAAP but are instead deferred and accumulated within a separate component of stockholders equity in the balance sheet. VFs comprehensive income is presented in the Consolidated
Statements of Comprehensive Income. The deferred components of OCI are reported, net of related income taxes, in accumulated OCI in stockholders equity, as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands
|
|
September 2016
|
|
|
December 2015
|
|
|
September 2015
|
|
Foreign currency translation and other
|
|
$
|
(670,551
|
)
|
|
$
|
(718,169
|
)
|
|
$
|
(585,275
|
)
|
Defined benefit pension plans
|
|
|
(340,891
|
)
|
|
|
(372,195
|
)
|
|
|
(348,537
|
)
|
Derivative financial instruments
|
|
|
13,422
|
|
|
|
47,142
|
|
|
|
35,037
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated other comprehensive income (loss)
|
|
$
|
(998,020
|
)
|
|
$
|
(1,043,222
|
)
|
|
$
|
(898,775
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12
The changes in accumulated OCI, net of related taxes, are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 2016
|
|
In thousands
|
|
Foreign
Currency
Translation
and Other
|
|
|
Defined
Benefit
Pension Plans
|
|
|
Derivative
Financial
Instruments
|
|
|
Total
|
|
Balance, June 2016
|
|
$
|
(675,213
|
)
|
|
$
|
(351,298
|
)
|
|
$
|
25,056
|
|
|
$
|
(1,001,455
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss) before
reclassification
|
|
|
4,662
|
|
|
|
|
|
|
|
5,896
|
|
|
|
10,558
|
|
Amounts reclassified from accumulated other
comprehensive income (loss)
|
|
|
|
|
|
|
10,407
|
|
|
|
(17,530
|
)
|
|
|
(7,123
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net other comprehensive income (loss)
|
|
|
4,662
|
|
|
|
10,407
|
|
|
|
(11,634
|
)
|
|
|
3,435
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, September 2016
|
|
$
|
(670,551
|
)
|
|
$
|
(340,891
|
)
|
|
$
|
13,422
|
|
|
$
|
(998,020
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 2015
|
|
In thousands
|
|
Foreign
Currency
Translation
and Other
|
|
|
Defined
Benefit
Pension Plans
|
|
|
Derivative
Financial
Instruments
|
|
|
Total
|
|
Balance, June 2015
|
|
$
|
(599,297
|
)
|
|
$
|
(360,125
|
)
|
|
$
|
45,796
|
|
|
$
|
(913,626
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss) before
reclassification
|
|
|
14,022
|
|
|
|
|
|
|
|
3,456
|
|
|
|
17,478
|
|
Amounts reclassified from accumulated other
comprehensive income (loss)
|
|
|
|
|
|
|
11,588
|
|
|
|
(14,215
|
)
|
|
|
(2,627
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net other comprehensive income (loss)
|
|
|
14,022
|
|
|
|
11,588
|
|
|
|
(10,759
|
)
|
|
|
14,851
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, September 2015
|
|
$
|
(585,275
|
)
|
|
$
|
(348,537
|
)
|
|
$
|
35,037
|
|
|
$
|
(898,775
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 2016
|
|
In thousands
|
|
Foreign
Currency
Translation
and Other
|
|
|
Defined
Benefit
Pension Plans
|
|
|
Derivative
Financial
Instruments
|
|
|
Total
|
|
Balance, December 2015
|
|
$
|
(718,169
|
)
|
|
$
|
(372,195
|
)
|
|
$
|
47,142
|
|
|
$
|
(1,043,222
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss) before
reclassification
|
|
|
47,618
|
|
|
|
|
|
|
|
20,331
|
|
|
|
67,949
|
|
Amounts reclassified from accumulated other
comprehensive income (loss)
|
|
|
|
|
|
|
31,304
|
|
|
|
(54,051
|
)
|
|
|
(22,747
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net other comprehensive income (loss)
|
|
|
47,618
|
|
|
|
31,304
|
|
|
|
(33,720
|
)
|
|
|
45,202
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, September 2016
|
|
$
|
(670,551
|
)
|
|
$
|
(340,891
|
)
|
|
$
|
13,422
|
|
|
$
|
(998,020
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 2015
|
|
In thousands
|
|
Foreign
Currency
Translation
and Other
|
|
|
Defined
Benefit
Pension Plans
|
|
|
Derivative
Financial
Instruments
|
|
|
Marketable
Securities
|
|
|
Total
|
|
Balance, December 2014
|
|
$
|
(356,941
|
)
|
|
$
|
(377,134
|
)
|
|
$
|
31,389
|
|
|
$
|
414
|
|
|
$
|
(702,272
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss) before
reclassification
|
|
|
(228,334
|
)
|
|
|
|
|
|
|
31,925
|
|
|
|
300
|
|
|
|
(196,109
|
)
|
Amounts reclassified from accumulated other comprehensive income (loss)
|
|
|
|
|
|
|
28,597
|
|
|
|
(28,277
|
)
|
|
|
(714
|
)
|
|
|
(394
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net other comprehensive income (loss)
|
|
|
(228,334
|
)
|
|
|
28,597
|
|
|
|
3,648
|
|
|
|
(414
|
)
|
|
|
(196,503
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, September 2015
|
|
$
|
(585,275
|
)
|
|
$
|
(348,537
|
)
|
|
$
|
35,037
|
|
|
$
|
|
|
|
$
|
(898,775
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13
Reclassifications out of accumulated OCI are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands
|
|
Affected Line Item in the
Consolidated Statements
of
Income
|
|
Three Months Ended September
|
|
|
Nine Months Ended September
|
|
Details About Accumulated Other
|
|
|
|
Comprehensive Income (Loss) Components
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
Amortization of defined benefit pension plans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net deferred actuarial losses
|
|
(a)
|
|
$
|
(16,303
|
)
|
|
$
|
(15,493
|
)
|
|
$
|
(48,928
|
)
|
|
$
|
(46,485
|
)
|
Deferred prior service costs
|
|
(a)
|
|
|
(645
|
)
|
|
|
(760
|
)
|
|
|
(1,937
|
)
|
|
|
(2,281
|
)
|
Pension settlement charges
|
|
Selling, general and administrative expenses
|
|
|
|
|
|
|
(2,400
|
)
|
|
|
|
|
|
|
(3,992
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total before tax
|
|
|
(16,948
|
)
|
|
|
(18,653
|
)
|
|
|
(50,865
|
)
|
|
|
(52,758
|
)
|
|
|
Tax benefit
|
|
|
6,541
|
|
|
|
7,065
|
|
|
|
19,561
|
|
|
|
24,161
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net of tax
|
|
|
(10,407
|
)
|
|
|
(11,588
|
)
|
|
|
(31,304
|
)
|
|
|
(28,597
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gains (losses) on derivative financial instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange contracts
|
|
Net sales
|
|
|
14,676
|
|
|
|
(22,434
|
)
|
|
|
11,997
|
|
|
|
(51,279
|
)
|
Foreign exchange contracts
|
|
Cost of goods sold
|
|
|
15,485
|
|
|
|
39,142
|
|
|
|
80,094
|
|
|
|
80,633
|
|
Foreign exchange contracts
|
|
Selling, general and administrative expenses
|
|
|
(1,098
|
)
|
|
|
|
|
|
|
(3,611
|
)
|
|
|
|
|
Foreign exchange contracts
|
|
Other income (expense), net
|
|
|
526
|
|
|
|
7,541
|
|
|
|
2,653
|
|
|
|
20,515
|
|
Interest rate contracts
|
|
Interest expense
|
|
|
(1,131
|
)
|
|
|
(1,078
|
)
|
|
|
(3,356
|
)
|
|
|
(3,200
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total before tax
|
|
|
28,458
|
|
|
|
23,171
|
|
|
|
87,777
|
|
|
|
46,669
|
|
|
|
Tax expense
|
|
|
(10,928
|
)
|
|
|
(8,956
|
)
|
|
|
(33,726
|
)
|
|
|
(18,392
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net of tax
|
|
|
17,530
|
|
|
|
14,215
|
|
|
|
54,051
|
|
|
|
28,277
|
|
Gains (losses) on sales of marketable securities
|
|
Other income (expense), net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,177
|
|
|
|
Tax expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(463
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net of tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
714
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total reclassifications for the period
|
|
Net of tax
|
|
$
|
7,123
|
|
|
$
|
2,627
|
|
|
$
|
22,747
|
|
|
$
|
394
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
These accumulated OCI components are included in the computation of net periodic pension cost (see Note I for additional details).
|
Note K Stock-based Compensation
During the first
nine months of 2016, VF granted stock options to employees and nonemployee members of VFs Board of Directors to purchase 3,132,609 shares of its Common Stock at a weighted exercise price of $61.31 per share. The exercise price of each option
granted was equal to the fair market value of VF Common Stock on the date of grant. Employee stock options vest in equal annual installments over three years. Stock options granted to nonemployee members of VFs Board of Directors become
exercisable one year from the date of grant. The grant date fair value of each option award is calculated using a lattice option-pricing valuation model, which incorporates a range of assumptions for inputs as follows:
|
|
|
|
|
2016
|
Expected volatility
|
|
21% to 29%
|
Weighted average expected volatility
|
|
24%
|
Expected term (in years)
|
|
6.3 to 7.6
|
Weighted average dividend yield
|
|
2.2%
|
Risk-free interest rate
|
|
0.4% to 1.7%
|
Weighted average fair value at date of grant
|
|
$12.08
|
Also, during the first nine months of 2016, VF granted 605,658 performance-based restricted stock units (RSU) to
employees that enable them to receive shares of VF Common Stock at the end of a three-year period. Each performance-based RSU has a potential final payout ranging from zero to two shares of VF Common Stock. The number of shares earned by
participants, if any, is based on achievement of a three-year baseline profitability goal and annually established performance goals set by the Compensation Committee of the Board of Directors. Shares are issued to participants in the year following
the conclusion of each three-year performance period. The weighted average fair market value of VF Common Stock at the date the units were granted was $61.31 per share.
14
The actual number of performance-based RSUs earned may also be adjusted upward or downward by 25% of the target
award, based on how VFs total shareholder return (TSR) over the three-year period compares to the TSR for companies included in the Standard & Poors 500 Index. The grant date fair value of the TSR-based adjustment
related to the 2016 performance-based RSU grants was determined using a Monte Carlo simulation technique that incorporates option-pricing model inputs, and was $4.48 per share.
VF granted 13,013 nonperformance-based RSUs to nonemployee members of the Board of Directors during the first quarter of 2016. These units vest upon grant and
will be settled in shares of VF Common Stock one year from the date of grant. The fair market value of VF Common Stock at the date the units were granted was $61.29 per share.
VF granted 69,100 nonperformance-based RSUs to certain key employees in international jurisdictions during the first nine months of 2016. These units vest
four years from the date of grant and each unit entitles the holder to one share of VF Common Stock. The weighted average fair market value of VF Common Stock at the date the units were granted was $61.93.
VF granted 128,737 restricted shares of VF Common Stock to certain members of management during the first nine months of 2016. These shares vest over periods
of up to five years from the date of grant. The weighted average fair market value of VF Common Stock at the date the shares were granted was $61.66 per share.
Note L Income Taxes
The effective income tax rate
for the first nine months of 2016 was 18.7% compared to 23.6% in the first nine months of 2015. The first nine months of 2016 included a net discrete tax benefit of $40.6 million, which included a $26.5 million tax benefit related to the early
adoption of the accounting standards update on stock compensation (see Note Q), $15.6 million of net tax benefits related to the realization of previously unrecognized tax benefits and interest, and $4.1 million of discrete tax expense related to
the effects of tax rate changes. The $40.6 million net discrete tax benefit in 2016 reduced the effective income tax rate by 3.6%. The first nine months of 2015 included a net discrete tax benefit of $29.0 million, which included $33.7 million
of tax benefits related to the settlement of tax audits and $5.0 million of discrete tax expense related to the effects of tax rate changes. The $29.0 million net discrete tax benefit in 2015 reduced the effective income tax rate by 2.4%. Without
discrete items, the effective income tax rate for the first nine months of 2016 decreased by 3.7% compared to the 2015 period primarily due to a higher percentage of income in lower tax rate jurisdictions and the impact of tax law changes in the
U.S.
VF files a consolidated U.S. federal income tax return, as well as separate and combined income tax returns in numerous state and international
jurisdictions. In the U.S., the Internal Revenue Service (IRS) examinations for tax years through 2011 have been effectively settled. The examination of Timberlands 2011 tax return is ongoing. The IRS has proposed material
adjustments to Timberlands 2011 tax return that would significantly impact the timing of cash tax payments and assessment of interest charges. The Company has formally disagreed with the proposed adjustments and, during 2015, VF filed a
petition to the U.S. Tax Court to begin the process of resolving this matter. In addition, VF is currently subject to examination by various state and international tax authorities. Management regularly assesses the potential outcomes of both
ongoing and future examinations for the current and prior years, and has concluded that VFs provision for income taxes is adequate. The outcome of any one examination is not expected to have a material impact on VFs consolidated
financial statements. Management believes that some of these audits and negotiations will conclude during the next 12 months.
In February 2015, the
European Union Commission (EU) opened a state aid investigation into rulings granted to companies under Belgiums excess profit tax regime. On January 11, 2016, the EU announced its decision that these rulings granted by the
Belgian government were illegal and ordered that tax benefits granted under these rulings should be collected from the affected companies, including VF. In March 2016, the Belgian government filed an appeal seeking annulment of the EU state aid
decision. During the second quarter of 2016, the Company filed a separate appeal to the EU seeking annulment of the state aid decision.
During the second
quarter of 2016, the Company received an assessment from the Belgian government regarding the amount of tax and interest due as a result of the excess profits ruling. The Company has not paid the assessed tax and interest as of the third quarter of
2016. The Company has evaluated all available information, including the technical merits of the excess profits ruling, and has concluded the amount of benefit previously recognized by the Company is the amount more likely than not to be sustained.
As such, the Company has not made any additional accruals regarding the EU state aid decision. The Company does not expect the outcome of the appeals to have a material impact on the Companys financial statements in future periods.
During the first nine months of 2016, the amount of net unrecognized tax benefits and associated interest increased by $96.4 million to $169.5 million.
Management believes that it is reasonably possible that the amount of unrecognized income tax benefits and interest may decrease during the next 12 months by approximately $18.8 million related to the completion of examinations and other settlements
with tax authorities and the expiration of statutes of limitations, of which $16.6 million would reduce income tax expense.
15
Note M Business Segment Information
VFs businesses are grouped into product categories, and by brands within those product categories, for internal financial reporting used by management.
These groupings of businesses within VF are referred to as coalitions and are the basis for VFs reportable segments. Financial information for VFs reportable segments is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September
|
|
|
Nine Months Ended September
|
|
In thousands
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
Coalition revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outdoor & Action Sports
|
|
$
|
2,335,993
|
|
|
$
|
2,296,551
|
|
|
$
|
5,399,916
|
|
|
$
|
5,299,784
|
|
Jeanswear
|
|
|
701,416
|
|
|
|
747,869
|
|
|
|
2,041,186
|
|
|
|
2,055,725
|
|
Imagewear
|
|
|
281,542
|
|
|
|
291,540
|
|
|
|
805,892
|
|
|
|
823,224
|
|
Sportswear
|
|
|
140,705
|
|
|
|
161,697
|
|
|
|
373,977
|
|
|
|
439,545
|
|
Other
|
|
|
28,570
|
|
|
|
31,969
|
|
|
|
77,458
|
|
|
|
88,098
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total coalition revenues
|
|
$
|
3,488,226
|
|
|
$
|
3,529,626
|
|
|
$
|
8,698,429
|
|
|
$
|
8,706,376
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Coalition profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outdoor & Action Sports
|
|
$
|
490,470
|
|
|
$
|
487,929
|
|
|
$
|
841,413
|
|
|
$
|
883,674
|
|
Jeanswear
|
|
|
142,427
|
|
|
|
158,603
|
|
|
|
388,564
|
|
|
|
395,103
|
|
Imagewear
|
|
|
46,634
|
|
|
|
41,830
|
|
|
|
124,546
|
|
|
|
118,627
|
|
Sportswear
|
|
|
15,080
|
|
|
|
23,194
|
|
|
|
26,156
|
|
|
|
50,468
|
|
Other
(a)
|
|
|
(272
|
)
|
|
|
354
|
|
|
|
(3,134
|
)
|
|
|
15,478
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total coalition profit
|
|
|
694,339
|
|
|
|
711,910
|
|
|
|
1,377,545
|
|
|
|
1,463,350
|
|
Corporate and other expenses
(b)
|
|
|
(60,008
|
)
|
|
|
(73,625
|
)
|
|
|
(196,744
|
)
|
|
|
(213,241
|
)
|
Interest expense, net
(b)
|
|
|
(22,588
|
)
|
|
|
(20,657
|
)
|
|
|
(64,056
|
)
|
|
|
(61,214
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before income taxes
|
|
$
|
611,743
|
|
|
$
|
617,628
|
|
|
$
|
1,116,745
|
|
|
$
|
1,188,895
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Includes a $16.6 million gain recognized on the sale of a
VF Outlet
®
location in the first quarter of
2015.
|
(b)
|
Certain corporate overhead costs and interest expense previously allocated to the Contemporary Brands coalition for segment reporting purposes have been reallocated
to continuing operations as discussed in Note B.
|
Note N Earnings Per Share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September
|
|
|
Nine Months Ended September
|
|
In thousands, except per share amounts
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
Earnings per share basic:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
$
|
503,034
|
|
|
$
|
457,635
|
|
|
$
|
908,194
|
|
|
$
|
908,602
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding
|
|
|
413,461
|
|
|
|
425,208
|
|
|
|
417,067
|
|
|
|
425,273
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share from continuing operations
|
|
$
|
1.22
|
|
|
$
|
1.08
|
|
|
$
|
2.18
|
|
|
$
|
2.14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share diluted:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
$
|
503,034
|
|
|
$
|
457,635
|
|
|
$
|
908,194
|
|
|
$
|
908,602
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding
|
|
|
413,461
|
|
|
|
425,208
|
|
|
|
417,067
|
|
|
|
425,273
|
|
Incremental shares from stock options and other dilutive securities
|
|
|
5,779
|
|
|
|
6,252
|
|
|
|
6,410
|
|
|
|
6,818
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted weighted average common shares outstanding
|
|
|
419,240
|
|
|
|
431,460
|
|
|
|
423,477
|
|
|
|
432,091
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share from continuing operations
|
|
$
|
1.20
|
|
|
$
|
1.06
|
|
|
$
|
2.14
|
|
|
$
|
2.10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding options to purchase 5.2 million and 5.3 million shares of Common Stock were excluded from the calculations of
diluted earnings per share for the three and nine-month periods ended September 2016, respectively, and options to purchase 2.4 million shares were excluded from the calculations of diluted earnings per share for both the three and nine-month
periods ended September 2015, because the effect of their inclusion would have been antidilutive to those periods. In addition, 1.0 million shares of performance-based RSUs were excluded from the calculations of diluted earnings per share for all
periods presented because these units were not considered to be contingent outstanding shares in those periods.
16
Note O Fair Value Measurements
Financial assets and financial liabilities measured and reported at fair value are classified in a three-level hierarchy that prioritizes the inputs used in
the valuation process. A financial instruments categorization within the valuation hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The hierarchy is based on the observability and
objectivity of the pricing inputs, as follows:
|
|
|
Level 1 Quoted prices in active markets for identical assets or liabilities.
|
|
|
|
Level 2 Significant directly observable data (other than Level 1 quoted prices) or significant indirectly observable data through corroboration with observable market data. Inputs would normally be
(i) quoted prices in active markets for similar assets or liabilities, (ii) quoted prices in inactive markets for identical or similar assets or liabilities, or (iii) information derived from or corroborated by observable market data.
|
|
|
|
Level 3 Prices or valuation techniques that require significant unobservable data inputs. Inputs would normally be VFs own data and judgments about assumptions that market participants would use in pricing
the asset or liability.
|
The following table summarizes financial assets and financial liabilities that are measured and recorded in the
consolidated financial statements at fair value on a recurring basis:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
Fair Value Measurement Using
(a)
|
|
In thousands
|
|
Fair Value
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
September 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash equivalents:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Money market funds
|
|
$
|
460,504
|
|
|
$
|
460,504
|
|
|
$
|
|
|
|
$
|
|
|
Time deposits
|
|
|
32,987
|
|
|
|
32,987
|
|
|
|
|
|
|
|
|
|
Derivative financial instruments
|
|
|
75,497
|
|
|
|
|
|
|
|
75,497
|
|
|
|
|
|
Investment securities
|
|
|
204,384
|
|
|
|
186,176
|
|
|
|
18,208
|
|
|
|
|
|
Financial liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative financial instruments
|
|
|
32,181
|
|
|
|
|
|
|
|
32,181
|
|
|
|
|
|
Deferred compensation
|
|
|
237,175
|
|
|
|
|
|
|
|
237,175
|
|
|
|
|
|
December 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash equivalents:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Money market funds
|
|
$
|
495,264
|
|
|
$
|
495,264
|
|
|
$
|
|
|
|
$
|
|
|
Time deposits
|
|
|
39,813
|
|
|
|
39,813
|
|
|
|
|
|
|
|
|
|
Derivative financial instruments
|
|
|
105,791
|
|
|
|
|
|
|
|
105,791
|
|
|
|
|
|
Investment securities
|
|
|
203,797
|
|
|
|
190,792
|
|
|
|
13,005
|
|
|
|
|
|
Financial liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative financial instruments
|
|
|
28,032
|
|
|
|
|
|
|
|
28,032
|
|
|
|
|
|
Deferred compensation
|
|
|
252,723
|
|
|
|
|
|
|
|
252,723
|
|
|
|
|
|
(a)
|
There were no transfers among the levels within the fair value hierarchy during the first nine months of 2016 or the year ended December 2015.
|
VFs cash equivalents include money market funds and short-term time deposits that approximate fair value based on Level 1 measurements. The fair value
of derivative financial instruments, which consist of forward foreign currency exchange contracts, is determined based on observable market inputs (Level 2), including spot and forward exchange rates for foreign currencies, and considers the credit
risk of the Company and its counterparties. Investment securities are held in VFs deferred compensation plans as an economic hedge of the related deferred compensation liabilities. These investments are classified as trading securities and
primarily include mutual funds (Level 1) that are valued based on quoted prices in active markets and a separately managed fixed-income fund (Level 2) with underlying investments that are valued based on quoted prices for similar assets in
active markets or quoted prices in inactive markets for identical assets. Liabilities related to VFs deferred compensation plans are recorded at amounts due to participants, based on the fair value of the participants selection of
hypothetical investments.
17
Prior to the second quarter of 2015, other marketable securities consisted of common stock investments classified
as available-for-sale, the fair value of which was based on quoted prices in active markets. During the second quarter of 2015, VF sold all of its available-for-sale securities for $5.9 million in cash proceeds and recognized a gain of $1.5 million,
which is included in other income (expense), net, in the 2015 Consolidated Statement of Income.
All other financial assets and financial liabilities are
recorded in the consolidated financial statements at cost, except life insurance contracts which are recorded at cash surrender value. These other financial assets and financial liabilities include cash held as demand deposits, accounts receivable,
short-term borrowings, accounts payable and accrued liabilities. At September 2016 and December 2015, their carrying values approximated their fair values. Additionally, at September 2016 and December 2015, the carrying values of VFs long-term
debt, including the current portion, were $2,350.8 million and $1,405.2 million, respectively, compared with fair values of $2,647.0 million and $1,582.5 million at those respective dates. Fair value for long-term debt is a Level 2 estimate based on
quoted market prices or values of comparable borrowings.
Nonrecurring Fair Value Measurements
During the third quarter of 2016, management determined that the continued revenue and profitability decline in the
Nautica
®
brand, combined with a downward revision to the forecast for the remainder of the year, was a triggering event that required an interim impairment analysis of the goodwill and trademark
intangible assets. The
Nautica
®
brand is part of the Sportswear coalition and represents primarily all of the coalitions goodwill value. Based on the quantitative impairment
analysis performed, VF determined the goodwill and trademark intangible assets of
Nautica
®
were not impaired. For goodwill, the fair value of the reporting unit exceeded the
carrying value by 45%. The fair value of the trademark intangible asset exceeded its carrying value by a significant amount.
The impairment testing of
goodwill and trademark intangible assets utilized significant unobservable inputs (Level 3) to determine fair value.
The fair value of the
Nautica
®
reporting unit for goodwill impairment testing was determined using a combination of two valuation methods: an income approach and a market approach. The income approach was based on
projected future (debt-free) cash flows that were discounted to present value. The discount rate was based on the reporting units calculated weighted average cost of capital (WACC), which takes into consideration the
characteristics of relevant peer companies, market observable data, and company-specific risk factors. For the market approach, management used both the guideline company and similar transaction methods. The guideline company method analyzed market
multiples of revenues and earnings before interest, taxes, depreciation and amortization (EBITDA) for a group of comparable public companies. The market multiples used in the valuation were based on the relative strengths and weaknesses
of the reporting unit compared to the selected guideline companies. Under the similar transactions method, valuation multiples were calculated utilizing actual transaction prices and revenue/EBITDA data from target companies deemed similar to the
reporting unit.
VF used the income-based relief-from-royalty method to value the
Nautica
®
trademark intangible asset. In applying this method, revenues expected to be generated by the trademark were multiplied by a selected royalty rate. The royalty rate was
selected based on consideration of i) royalty rates included in active license agreements, if applicable, ii) royalty rates received by market participants in the apparel industry, and iii) the current performance of the reporting unit. The
estimated after-tax royalty revenue stream was then discounted to present value using the reporting units WACC plus a spread that factors in the risk of the intangible asset.
Managements revenue and profitability forecasts used in the
Nautica
®
reporting
unit and intangible asset valuations considered recent performance and trends, strategic initiatives and negative industry trends. Assumptions used in the valuations were similar to those that would be used by market participants performing
independent valuations of these businesses.
Key assumptions developed by VF management and used in the quantitative analysis include:
|
|
|
Long-term growth in revenues primarily due to expanded distribution channels, including conversion of licensing arrangements in key international markets.
|
|
|
|
A gradual return to historical profitability rates over the remaining forecast period.
|
|
|
|
Royalty rates based on active license agreements of the brand.
|
|
|
|
Market-based discount rates.
|
18
Management performed sensitivity analyses on the goodwill impairment model and determined that neither a 100
basis point decrease in the compounded annual growth rate for EBITDA nor a 100 basis point increase in the discount rate caused the estimated fair value of the reporting unit to decline below its carrying value.
It is possible VFs conclusions regarding impairment of the
Nautica
®
reporting unit
goodwill or intangible assets could change in future periods. There can be no assurance the estimates and assumptions used in our goodwill and intangible asset impairment testing performed in the third quarter of 2016 will prove to be accurate
predictions of the future. For example, variations in our assumptions related to discount rates, comparable company market approach inputs, business performance and execution of planned growth strategies could impact future conclusions. A future
impairment charge for goodwill or intangible assets could have a material effect on VFs consolidated financial position and results of operations.
Note P Derivative Financial Instruments and Hedging Activities
Summary of Derivative Financial Instruments
All of
VFs outstanding derivative financial instruments are forward foreign currency exchange contracts. Although derivatives meet the criteria for hedge accounting at the inception of the hedging relationship, a limited number of derivative
contracts intended to hedge assets and liabilities are not designated as hedges for accounting purposes. The notional amounts of outstanding derivative contracts were $2.2 billion at September 2016, $2.4 billion at December 2015 and $2.4 billion at
September 2015, consisting primarily of contracts hedging exposures to the euro, British pound, Canadian dollar, Swiss franc, Mexican peso, Swedish krona, Japanese yen and Polish zloty. Derivative contracts have maturities up to 24 months.
The following table presents outstanding derivatives on an individual contract basis:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value of Derivatives
with Unrealized Gains
|
|
|
Fair Value of Derivatives
with Unrealized Losses
|
|
In thousands
|
|
September 2016
|
|
|
December 2015
|
|
|
September 2015
|
|
|
September 2016
|
|
|
December 2015
|
|
|
September 2015
|
|
Foreign currency exchange contracts designated as hedging instruments
|
|
$
|
75,497
|
|
|
$
|
105,536
|
|
|
$
|
94,113
|
|
|
$
|
(31,996
|
)
|
|
$
|
(27,896
|
)
|
|
$
|
(46,808
|
)
|
Foreign currency exchange contracts not designated as hedging instruments
|
|
|
|
|
|
|
255
|
|
|
|
112
|
|
|
|
(185
|
)
|
|
|
(136
|
)
|
|
|
(373
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total derivatives
|
|
$
|
75,497
|
|
|
$
|
105,791
|
|
|
$
|
94,225
|
|
|
$
|
(32,181
|
)
|
|
$
|
(28,032
|
)
|
|
$
|
(47,181
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
VF records and presents the fair values of all of its derivative assets and liabilities in the Consolidated Balance Sheets on
a gross basis, even though they are subject to master netting agreements. However, if VF were to offset and record the asset and liability balances of its forward foreign currency exchange contracts on a net basis in accordance with the terms of its
master netting agreements, the amounts presented in the Consolidated Balance Sheets would be adjusted from the current gross presentation to the net amounts as detailed in the following table:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 2016
|
|
|
December 2015
|
|
|
September 2015
|
|
In thousands
|
|
Derivative
Asset
|
|
|
Derivative
Liability
|
|
|
Derivative
Asset
|
|
|
Derivative
Liability
|
|
|
Derivative
Asset
|
|
|
Derivative
Liability
|
|
Gross amounts presented in the
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Balance Sheets
|
|
$
|
75,497
|
|
|
$
|
(32,181
|
)
|
|
$
|
105,791
|
|
|
$
|
(28,032
|
)
|
|
$
|
94,225
|
|
|
$
|
(47,181
|
)
|
Gross amounts not offset in the
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Balance Sheets
|
|
|
(19,328
|
)
|
|
|
19,328
|
|
|
|
(22,213
|
)
|
|
|
22,213
|
|
|
|
(36,597
|
)
|
|
|
36,597
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net amounts
|
|
$
|
56,169
|
|
|
$
|
(12,853
|
)
|
|
$
|
83,578
|
|
|
$
|
(5,819
|
)
|
|
$
|
57,628
|
|
|
$
|
(10,584
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives are classified as current or noncurrent based on maturity dates, as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands
|
|
September 2016
|
|
|
December 2015
|
|
|
September 2015
|
|
Other current assets
|
|
$
|
66,231
|
|
|
$
|
92,796
|
|
|
$
|
85,405
|
|
Accrued liabilities
|
|
|
(28,852
|
)
|
|
|
(25,776
|
)
|
|
|
(40,969
|
)
|
Other assets
|
|
|
9,266
|
|
|
|
12,995
|
|
|
|
8,820
|
|
Other liabilities
|
|
|
(3,329
|
)
|
|
|
(2,256
|
)
|
|
|
(6,212
|
)
|
19
Cash Flow Hedges
VF uses derivative contracts primarily to hedge a portion of the exchange risk for its forecasted sales, purchases, production costs, operating costs and
intercompany royalties. The effects of cash flow hedging included in VFs Consolidated Statements of Income and Consolidated Statements of Comprehensive Income are summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands
|
|
Gain (Loss) on Derivatives
Recognized in OCI
Three Months Ended September
|
|
|
Gain (Loss) on Derivatives
Recognized in OCI
Nine Months Ended September
|
|
Cash Flow Hedging Relationships
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
Foreign currency exchange
|
|
$
|
9,571
|
|
|
$
|
5,634
|
|
|
$
|
32,837
|
|
|
$
|
52,068
|
|
|
|
|
In thousands
|
|
Gain (Loss) Reclassified from
Accumulated OCI into Income
Three Months Ended September
|
|
|
Gain (Loss) Reclassified from
Accumulated OCI into Income
Nine Months Ended September
|
|
Location of Gain (Loss)
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
Net sales
|
|
$
|
14,676
|
|
|
$
|
(22,434
|
)
|
|
$
|
11,997
|
|
|
$
|
(51,279
|
)
|
Cost of goods sold
|
|
|
15,485
|
|
|
|
39,142
|
|
|
|
80,094
|
|
|
|
80,633
|
|
Selling, general and administrative expenses
|
|
|
(1,098
|
)
|
|
|
|
|
|
|
(3,611
|
)
|
|
|
|
|
Other income (expense), net
|
|
|
526
|
|
|
|
7,541
|
|
|
|
2,653
|
|
|
|
20,515
|
|
Interest expense
|
|
|
(1,131
|
)
|
|
|
(1,078
|
)
|
|
|
(3,356
|
)
|
|
|
(3,200
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
28,458
|
|
|
$
|
23,171
|
|
|
$
|
87,777
|
|
|
$
|
46,669
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative Contracts Not Designated as Hedges
VF uses derivative contracts to manage foreign currency exchange risk on third-party accounts receivable and payable, as well as intercompany borrowings. These
contracts are not designated as hedges, and are recorded at fair value in the Consolidated Balance Sheets. Changes in the fair values of these instruments are recognized directly in earnings. Gains or losses on these contracts largely offset the net
transaction gains or losses on the related assets and liabilities. Following is a summary of these derivatives included in VFs Consolidated Statements of Income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands
Derivatives Not Designated as Hedges
|
|
Location of Gain (Loss)
on Derivatives
Recognized in Income
|
|
|
Gain (Loss) on Derivatives
Recognized in Income
Three Months Ended September
|
|
|
Gain (Loss) on Derivatives
Recognized in Income
Nine Months Ended September
|
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
Foreign currency exchange
|
|
|
Cost of goods sold
|
|
|
$
|
(510
|
)
|
|
$
|
|
|
|
$
|
225
|
|
|
$
|
|
|
Foreign currency exchange
|
|
|
Other income (expense), net
|
|
|
|
(110
|
)
|
|
|
836
|
|
|
|
(1,196
|
)
|
|
|
(1,625
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
$
|
(620
|
)
|
|
$
|
836
|
|
|
$
|
(971
|
)
|
|
$
|
(1,625
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Derivative Information
There were no significant amounts recognized in earnings for the ineffective portion of any hedging relationships during the three and nine-month periods ended
September 2016 and September 2015.
20
At September 2016, accumulated OCI included $42.8 million of pre-tax net deferred gains for foreign currency
exchange contracts that are expected to be reclassified to earnings during the next 12 months. The amounts ultimately reclassified to earnings will depend on exchange rates in effect when outstanding derivative contracts are settled.
VF entered into interest rate swap derivative contracts in 2011 and 2003 to hedge the interest rate risk for issuance of long-term debt due in 2021 and 2033,
respectively. In each case, the contracts were terminated concurrent with the issuance of the debt, and the realized gain or loss was deferred in accumulated OCI. The remaining pre-tax net deferred loss in accumulated OCI was $23.8 million at
September 2016, which will be reclassified into interest expense in the Consolidated Statements of Income over the remaining terms of the associated debt instruments. VF reclassified $1.1 million and $3.4 million of net deferred losses from
accumulated OCI into interest expense for the three and nine-month periods ended September 2016, respectively, and $1.1 million and $3.2 million for the three and nine-month periods ended September 2015, respectively. VF expects to reclassify $4.7
million to interest expense during the next 12 months.
Net Investment Hedge
The Company has designated its 850 million of euro-denominated bonds as a net investment hedge of VFs investment in certain foreign operations.
Because this debt qualified as a nonderivative hedging instrument, foreign currency transaction gains or losses of the debt are recorded in the cumulative translation adjustment component of accumulated OCI as an offset to the foreign currency
translation adjustments on the hedged investments. During the third quarter of 2016, the Company recognized $1.7 million of gains in accumulated OCI related to the net investment hedge transaction. The amount will remain in OCI until the hedged
investment is sold or substantially liquidated. The Company recorded no ineffectiveness from its net investment hedge in the third quarter of 2016.
Note Q Recently Adopted and Issued Accounting Standards
Recently Adopted Accounting Standards
In June 2014, the
FASB issued an update to their accounting guidance related to stock-based compensation. The guidance requires that a performance target that affects vesting, and that could be achieved after the requisite service period, be treated as a performance
condition. This guidance became effective in the first quarter of 2016, but did not impact VFs consolidated financial statements.
In February 2015,
the FASB issued an update to their existing consolidation model that changes the analysis a reporting entity must perform to determine whether it should consolidate certain types of legal entities. This guidance became effective in the first quarter
of 2016, but did not impact VFs consolidated financial statements.
In April 2015, the FASB issued new guidance related to a customers
accounting for fees paid in a cloud computing arrangement. The guidance provides clarification on whether a cloud computing arrangement should be treated as a software license or a service contract. This guidance became effective in the first
quarter of 2016, but did not impact VFs consolidated financial statements.
In April 2015, the FASB issued an update to their accounting guidance
related to debt issuance costs. The guidance requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with the
presentation of debt discounts. The Company early adopted this guidance as of December 2015 on a retrospective basis. The impact of adopting this guidance on VFs September 2015 Consolidated Balance Sheet is presented in the table below.
In May 2015, the FASB issued an update to their accounting guidance related to fair value measurements. The guidance removes the requirement to categorize
within the fair value hierarchy all investments for which fair value is measured using the net asset value per share practical expedient, and requires separate disclosure instead. The Company early adopted this guidance as of December 2015 on a
retrospective basis. The new guidance did not impact disclosures related to VFs investments, but did impact disclosures related to the Companys defined benefit pension plan assets as of December 2015.
In September 2015, the FASB issued an update to their accounting guidance related to business combinations that simplifies the accounting for
measurement-period adjustments. The guidance requires an acquirer to recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined, thus
eliminating the requirement to restate prior period financial statements for measurement-period adjustments. This guidance became effective in the first quarter of 2016, but did not impact VFs consolidated financial statements.
In November 2015, the FASB issued an update to their accounting guidance on income taxes that eliminates the requirement for companies to present deferred
income tax assets and liabilities as current and noncurrent in a classified balance sheet. Instead, companies are required to classify all deferred tax assets and liabilities as noncurrent. The Company early adopted this guidance as of December 2015
on a retrospective basis. The impact of adopting this guidance on VFs September 2015 Consolidated Balance Sheet is presented in the table below.
21
The impact of adopting the new accounting guidance on classification of debt issuance costs and deferred income
taxes on VFs September 2015 Consolidated Balance Sheet is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands
Balance Sheet Line Item
|
|
September 2015
Consolidated
Balance Sheet
(As Previously Reported)
(a)
|
|
|
Reclassification of Debt
Issuance Costs
Increase (Decrease)
|
|
|
Reclassification of
Deferred Income Taxes
Increase (Decrease)
|
|
|
September 2015
Consolidated
Balance Sheet
(Reclassified)
|
|
Other current assets
|
|
$
|
455,354
|
|
|
$
|
|
|
|
$
|
(163,935
|
)
|
|
$
|
291,419
|
|
Other assets
|
|
|
621,767
|
|
|
|
(10,388
|
)
|
|
|
35,513
|
|
|
|
646,892
|
|
Accrued liabilities
|
|
|
896,666
|
|
|
|
|
|
|
|
(6,092
|
)
|
|
|
890,574
|
|
Long-term debt
|
|
|
1,411,446
|
|
|
|
(10,388
|
)
|
|
|
|
|
|
|
1,401,058
|
|
Other liabilities
|
|
|
1,084,413
|
|
|
|
|
|
|
|
(122,330
|
)
|
|
|
962,083
|
|
(a)
|
Excludes assets and liabilities previously reported in the Contemporary Brands coalition.
|
In March 2016, the FASB issued an update to their accounting guidance on stock compensation that intends to simplify and improve the accounting and statement
of cash flow presentation for income taxes at settlement, forfeitures, and net settlements for withholding tax. The new standard is effective in the first quarter of 2017 with early adoption permitted. The Company early adopted this guidance as of
the beginning of the first quarter of 2016. Accordingly, VF recognized $8.9 million and $26.5 million of excess tax benefits in our provision for income taxes, rather than paid-in capital, for the third quarter and first nine months of 2016,
respectively. Also starting in the first quarter of 2016, the Company changed its earnings per share calculation to exclude excess tax benefits previously assumed under the treasury stock method, which had a minimal impact on diluted
shares. The Company has elected to continue its existing practice of estimating expected forfeitures in determining compensation cost. VF did not have any awards that were subject to the amendment regarding employee shares eligible for tax
withholding, and no changes were required related to the classification of employee taxes paid for withheld shares in the Consolidated Statements of Cash Flows since VF has historically classified these within financing cash flows.
The Company began to present excess tax benefits as an operating cash flow in the first quarter of 2016 as required by the updated guidance, and elected to
retrospectively adjust its first nine months of 2015 operating and financing cash flows, as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands
Statement of Cash Flows
|
|
September 2015
Consolidated Statement of
Cash Flows
(As Previously Reported)
|
|
|
Reclassification of Tax
Benefits of
Stock-based
Compensation
Increase (Decrease)
|
|
|
September 2015
Consolidated Statement of
Cash Flows (Reclassified)
|
|
Cash used by operating activities
|
|
$
|
(330,961
|
)
|
|
$
|
50,750
|
|
|
$
|
(280,211
|
)
|
Cash provided by financing activities
|
|
|
197,806
|
|
|
|
(50,750
|
)
|
|
|
147,056
|
|
Recently Issued Accounting Standards
In May 2014, the FASB issued a new accounting standard on revenue recognition that outlines a single comprehensive model for entities to use in accounting for
revenue arising from contracts with customers. Additional updates have been issued. This guidance will be effective in the first quarter of 2018 with early adoption permitted. The Company is evaluating the impact that adopting this guidance will
have on VFs consolidated financial statements.
In July 2015, the FASB issued an update to their accounting guidance related to inventory that
changes the measurement principle from lower of cost or market to lower of cost or net realizable value. This guidance will be effective in the first quarter of 2017 with early adoption permitted, but will not impact VFs consolidated financial
statements.
In January 2016, the FASB issued an update to their accounting guidance related to the recognition and measurement of certain financial
instruments. The guidance affects the accounting for equity investments, financial liabilities under the fair value option and the presentation and disclosure requirements for financial instruments. This guidance will be effective in the first
quarter of 2018 with early adoption permitted. The Company does not expect the adoption of this accounting guidance to have a significant impact on VFs consolidated financial statements.
22
In February 2016, the FASB issued a new accounting standard on leasing. The new standard will require companies
to record most leased assets and liabilities on their balance sheet, and also proposes a dual model for recognizing expense. This guidance will be effective in the first quarter of 2019 with early adoption permitted. The Company is evaluating the
impact that adopting this guidance will have on VFs consolidated financial statements.
In March 2016, the FASB issued an update to their accounting
guidance on extinguishments of financial liabilities that exempts prepaid stored-value products, or gift cards, from the existing guidance. The updated guidance requires that gift card liabilities be subject to breakage accounting, consistent with
the new revenue recognition standard discussed above. This guidance will be effective in the first quarter of 2018 with early adoption permitted. The Company does not expect the adoption of this accounting guidance to have a significant impact on
VFs consolidated financial statements.
In March 2016, the FASB issued an update to their accounting guidance on equity method accounting. The
guidance eliminates the requirement to retroactively apply the equity method when an entity obtains significant influence over a previously held investment. This guidance will be effective in the first quarter of 2017 with early adoption permitted.
The Company does not expect the adoption of this accounting guidance to have a significant impact on VFs consolidated financial statements.
In
March 2016, the FASB issued an update to their accounting guidance on derivative financial instruments when there is a change in the counterparty to a derivative contract, or novation. The new guidance clarifies that the novation of a derivative
contract that has been designated as a hedging instrument does not, in and of itself, require dedesignation of that hedging relationship, provided that all other hedge accounting criteria continue to be met. This guidance will be effective in the
first quarter of 2017 with early adoption permitted. The Company is evaluating the impact that adopting this guidance will have on VFs consolidated financial statements.
In March 2016, the FASB issued an update to their accounting guidance on derivative financial instruments that clarifies the steps required to determine
bifurcation of an embedded derivative. This guidance will be effective in the first quarter of 2017 with early adoption permitted. The Company does not expect the adoption of this accounting guidance to have a significant impact on VFs
consolidated financial statements.
In June 2016, the FASB issued an update to their accounting guidance on the measurement of credit losses on financial
instruments, which amends the impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses on certain types of financial instruments, including trade receivables. This guidance will
be effective in the first quarter of 2020 with early adoption permitted. The Company is evaluating the impact that adopting this guidance will have on VFs consolidated financial statements.
In August 2016, the FASB issued an update to their accounting guidance addressing how certain cash receipts and cash payments are presented and classified in
the statement of cash flows. This guidance will be effective in the first quarter of 2018 with early adoption permitted. The Company does not expect the adoption of this guidance to have a significant impact on VFs consolidated financial
statements.
In October 2016, the FASB issued an update to their accounting guidance on the recognition of current and deferred income taxes for
intra-entity asset transfers. This guidance will be effective in the first quarter of 2018 with early adoption permitted. The Company is evaluating the impact that adopting this guidance will have on VFs consolidated financial statements.
Note R Subsequent Events
On October 20, 2016,
VFs Board of Directors declared a quarterly cash dividend of $0.42 per share, payable on December 19, 2016 to stockholders of record on December 9, 2016.
23