What changed in this filing

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Item 1A. Risk Factors

2022-05-26 compared with 2021-05-27 · 170 added, 190 removed, 280 unchanged (56% of the section changed)

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A decline in consumer spending could have a material adverse effect on VF.

The success of VF’s business depends on consumer spending on apparel and footwear, and there are a number of factors that influence consumer spending, including actual and perceived economic conditions, disposable consumer income, interest rates, consumer credit availability, inflationary pressures (such as current inflation related to global supply chain disruptions), unemployment, stock market performance, weather conditions and natural disasters, energy prices, public health issues (including the COVID-19 pandemic), geopolitical instability (such as the current conflict between Russia and Ukraine and related economic and other retaliatory measures taken by the United States, European Union and others), consumer discretionary spending patterns and tax rates in the international, national, regional and local markets where VF’s products are sold.

Decreased consumer spending could result in reduced demand for our products, reduced orders from customers for our products, order cancellations, lower revenues, higher discounts, increased inventories and lower gross margins.

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If global economic and financial market conditions do not improve, adverse economic trends or other factors could negatively impact the level of consumer spending, which could have a material adverse impact on VF.

The coronavirus (COVID-19) pandemic has and will continue to materially and adversely affect our business, financial condition and results of operations.

Our business has been, and will continue to be, impacted by the effects of the COVID-19 pandemic in countries and territories where we operate and our employees, suppliers, third-party service providers, consumers or customers are located.

These effects include recommendations or mandates from governmental authorities to close businesses, require staged reopening, limit travel, prevent large gatherings, and require individuals to follow self-quarantine, curfew, shelter-in-place, and stay-at-home orders.

The countries and territories in which our products are made, manufactured, distributed or sold are in varying stages of restrictions and reopening to address the COVID-19 pandemic.

Certain jurisdictions have begun reopening following precautionary measures such as limited operating hours and limited occupancy levels, only to return to further restrictions and closures in the face of a rising number of COVID-19 cases.

There is significant uncertainty around retail store openings and the extent to which stores may remain open if and where there is a resurgence in COVID-19, and the duration and severity of any related restrictions.

The coronavirus (COVID-19) pandemic has and could continue to materially and adversely affect our business, financial condition and results of operations.

Our business has been, and could continue to be, impacted by the effects of the COVID-19 pandemic in countries and territories where we operate and our employees, suppliers, third-party service providers, consumers or customers are located.

As a result of the COVID-19 pandemic, and in response to government recommendations or mandates, as well as decisions we made to protect the health and safety of our employees, consumers and communities, our operations where our products are made, manufactured, distributed or sold were temporarily closed, or operated with limited operating hours and limited occupancy levels.

Most of our operations have reopened, but there continues to be uncertainty around the extent to which operations may be closed again or experience operational restrictions if and where there is a resurgence in COVID-19 or new variants of the virus emerge, and the duration and severity of any related restrictions.

Some of the impacts of the COVID-19 pandemic on our business have included, and could continue to include, the following:

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• inability to meet our consumers’ and customers’ needs for inventory production and fulfillment due to disruptions in our supply chain and increased costs associated with mitigating the effects of the pandemic caused by, among other things:

reduction or loss of workforce due to illness, quarantine or other restrictions or facility closures, scarcity of and/or increased prices for raw materials, scrutiny or embargoing of goods produced in infected areas, and increased freight and logistics costs, expenses and times;

reduction or loss of workforce due to illness, quarantine or other restrictions or facility closures, including vaccine mandates or return to work policies, scarcity of and/or increased prices for raw materials, scrutiny or embargoing of goods produced in infected areas, capacity constraints, vessel, container and other transportation shortages, and port congestion and increased freight and logistics costs, expenses and times;

failure of third parties on which we rely, including our suppliers, customers, distributors, service providers and commercial banks, to meet their obligations to us or to timely meet those obligations, or significant disruptions in their ability to do so, which may be caused by their own financial or operational difficulties, including business failure or insolvency and collectability of existing receivables;

• significant changes in the conditions in markets in which we do business, including quarantines, governmental or regulatory actions, closures or other restrictions, including voluntarily adopted practices, that limit or close our operating and manufacturing facilities and restrict our employees’ ability to perform necessary business functions, including operations necessary for the design, development, production, distribution, sale, marketing and support of our products and increase the likelihood of litigation;

• increased costs, including increased employee costs, such as for expanded benefits and essential employee incentives, and increased operating costs, including those associated with provision of personal protective

• significant changes in the conditions in markets in which we do business, including quarantines, governmental or regulatory actions, closures or other restrictions, including voluntarily adopted practices, that limit or close operating and manufacturing facilities and restrict our employees’ ability to perform necessary business functions, including operations necessary for the design, development, production, distribution, sale, marketing and support of our products and increase the likelihood of litigation;

• increased costs, including increased employee costs, such as for expanded benefits and essential employee

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equipment and compliance with governmental or public health organization mandates or guidance, allowances or extended payment terms for customers, and inventory write-offs, all of which have negatively impacted our profitability;

incentives, and increased operating costs, including those associated with provision of personal protective equipment and compliance with governmental or public health organization mandates or guidance, allowances or extended payment terms for customers, and inventory write-offs, all of which have negatively impacted our profitability;

• increased risk to the health, safety and wellness, including mental and emotional health, of our employees due to the virus or the impact of related restrictions;

• increased tax risk related to employees working remotely in a tax location other than their normal work location;

• amplified data security risks as a result of more employees working remotely, including increased demand on our information technology resources and systems, increased phishing and other cybersecurity attacks, and an increase in the number of points of potential attack, such as laptops and mobile devices.

These impacts have placed, and will continue to place limitations on our ability to execute our business plan and materially and adversely affect our business, financial condition and results of operations.

We continue to monitor the situation and may adjust our current policies and procedures as more information and guidance become available regarding the evolving situation.

These impacts have placed, and could continue to place limitations on our ability to execute our business plan and materially and adversely affect our business, financial condition and results of operations.

We continue to monitor the situation and may adjust our current policies and procedures as more information and guidance become available.

The impact of COVID-19 may also exacerbate other risks discussed in this “Risk Factors” section, any of which could have a material effect on us.

The extent of the impact of the COVID-19 pandemic will depend on future developments, including the duration, severity and any resurgences of COVID-19, which are uncertain and cannot be predicted.

This situation is dynamic and changing rapidly and additional impacts may arise that we are not aware of currently.

The apparel and footwear industries are highly competitive, and VF’s success depends on its ability to gauge consumer preferences and product trends, and to respond to constantly changing markets.

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• price products appropriately;

• provide best-in-class marketing support and intelligence;

• provide best-in-class marketing support and intelligence and optimize and react to available consumer data;

• ensure product availability and optimize supply chain efficiencies;

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• adapt to a more digitally driven consumer landscape.

Failure to compete effectively or to keep pace with rapidly changing consumer preferences, markets, technology, business

model and product trends could have a material adverse effect on VF’s business, financial condition and results of operations.

Failure to compete effectively or to keep pace with rapidly changing consumer preferences, markets, technology, business model and product trends could have a material adverse effect on VF’s business, financial condition and results of operations.

Moreover, there are significant shifts underway in the wholesale and retail (e-commerce and retail store) channels, which have been accelerated because of the COVID-19 pandemic.

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Recently there have been consolidations, reorganizations, restructurings, bankruptcies and ownership changes in the retail industry.

In addition, the COVID-19 pandemic has resulted in closed stores, and reduced consumer traffic and purchasing, as governments impose mandatory business closures and similar measures to curtail the spread of the disease, and consumers limit shopping due to illness or to avoid exposure.

In addition, the COVID-19 pandemic has resulted, and could continue to result, in closed stores, and reduced consumer traffic and purchasing.

These events individually, and together, could have (and, in the case of the COVID-19 pandemic, have had) a material, adverse effect on VF's business.

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Further, the global economy periodically experiences recessionary conditions with rising unemployment, reduced availability of credit, increased savings rates and declines in real estate and securities values.

These recessionary conditions, including as a result of the current COVID-19 pandemic, could have a negative impact on retail sales of apparel and other consumer products.

These recessionary conditions, including as a result of the COVID-19 pandemic, could have a negative impact on retail sales of apparel, footwear and other consumer products.

The lower sales volumes, along with the possibility of restrictions on access to the credit markets, could result in our customers experiencing financial difficulties including store closures, bankruptcies or liquidations.

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VF’s profitability may decline as a result of increasing pressure on margins.

The apparel industry is subject to significant pricing pressure caused by many factors, including intense competition, consolidation in the retail industry, rising commodity and conversion costs, pressure from retailers to reduce the costs of products, changes in consumer demand and shifts to online shopping and purchasing.

Consumers may increasingly seek markdown allowances, incentives and other forms of economic support.

The apparel industry is subject to significant pricing pressure caused by many factors, including intense competition, consolidation in the retail industry, rising commodity and conversion costs, inflation, rising freight costs, rising labor costs, pressure from retailers to reduce the costs of products, changes in consumer demand and shifts to online shopping and purchasing.

Customers may increasingly seek markdown allowances, incentives and other forms of economic support.

If these factors cause us to reduce our sales prices to retailers and consumers, and we fail to sufficiently reduce our product costs or operating expenses, VF’s profitability will decline.

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BUSINESS AND OPERATIONAL RISKS

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In addition, brand value is based in part on consumer perceptions on a variety of qualities, including merchandise quality and corporate integrity.

Negative claims or publicity regarding VF, its brands or its products, including licensed products, could adversely affect our reputation and sales regardless of whether such claims are accurate.

Social media, which accelerates the dissemination of information, can increase the challenges of responding to negative claims.

In the past, many apparel companies have experienced periods of rapid growth in sales and earnings followed by periods of declining sales and losses.

Our businesses may be similarly affected in the future.

Negative claims or publicity regarding VF, its brands or its products, including licensed products, or its culture and values, or its employees, endorsers, sponsors or suppliers could adversely affect our reputation and sales regardless of whether such claims are accurate.

The rapidly changing media environment, including our increasing reliance on social media and online marketing, which accelerates the dissemination of information, can increase the challenges of responding to negative claims.

In addition, we have sponsorship contracts with a number of athletes, musicians and celebrities and feature those individuals in our advertising and marketing efforts.

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In addition, actions taken by those individuals associated with our products could harm their reputations, which could adversely affect the images of our brands.

Our reputation and brand image also could be damaged as a result of our support of, association with or lack of support or disapproval of certain social causes, as well as any decisions we make to continue to conduct, or change, certain of our activities in response to such considerations.

VF’s revenues and cash requirements are affected by the seasonal nature of its business.

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We seek to grow organically and through acquisitions.

We seek to grow by building our lifestyle brands, expanding our share with winning

customers, stretching VF’s brands to new regions, leveraging our supply chain and information technology capabilities across VF and expanding our direct-to-consumer business, including opening new stores, remodeling and expanding our existing stores and growing our e-commerce business.

However, we may not be able to grow our existing businesses.

We seek to grow by building our lifestyle brands, expanding our share with winning customers, stretching VF’s brands to new regions, leveraging our supply chain and information technology capabilities across VF and expanding our direct-to-consumer business, including opening new stores, remodeling and expanding our existing stores and growing our e-commerce business.

However, we may not be able to grow our business.

• We may have difficulty completing acquisitions or dispositions to reshape our portfolio, and we may not be able to successfully integrate a newly acquired business or achieve the expected growth, cost savings or synergies from such integration, or it may disrupt our current business.

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• We may not be able to expand our market share with winning customers, or our wholesale customers may encounter financial difficulties and thus reduce their purchases of VF products.

• We may not be able to expand our brands in Asia or other geographies.

• We may not be able to achieve the expected results from our supply chain initiatives and establish and maintain effective supply chain capabilities, infrastructure, and the sourcing strategy necessary to optimally meet current and future business needs.

• We may not be able to successfully distort investments to Asia or meet evolving consumer needs to unlock growth opportunities for our brands or expand in other geographies.

• We may not be able to effectively deploy resources and allocate capital towards investments in new and organic businesses and capabilities in order to drive strategic objectives.

• We may not be able to achieve the expected results from our supply chain initiatives and establish and maintain effective supply chain systems, data, and capabilities, infrastructure, and the sourcing strategy necessary to optimally meet current and future business needs.

• We may have difficulty recruiting, developing or retaining qualified employees.

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Moreover, VF is engaged in a business model transformation to become more consumer-minded, retail-centric and hyper-digital.

Failure to successfully execute VF’s transformation agenda at a fast enough pace with clear objectives, assignments, accountability, project management, governance and appropriate consideration for change management could result in a diminished ability to remain competitive.

Further, organizational effectiveness, agility and execution are important to VF’s success.

Failure to successfully execute VF’s transformation agenda at a fast enough pace with clear objectives, assignments, accountability, project management, governance and

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appropriate consideration for change management could result in a diminished ability to remain competitive.

Further, organizational effectiveness, agility and execution are important to VF’s success.

Failure to create an agile and efficient operating model and organizational structure or to effectively define, prioritize, and align on clear achievable and appropriately resourced strategic priorities could result in an inability to remain competitive in a rapidly changing marketplace and lead to increase in costs, inefficient resource allocation, reduced productivity, organizational confusion, and reduced employee morale.

VF relies significantly on information technology.

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Despite our preventative efforts, our systems and those of our third-party service providers may be vulnerable to damage, failure or interruption due to viruses, data security incidents, technical malfunctions, natural disasters or other causes, or in connection with upgrades to our system or the implementation of new systems.

The failure of these systems to operate effectively, problems with transitioning to upgraded or replacement systems, difficulty in integrating new systems or systems of acquired businesses or a breach in security of these systems could adversely impact the operations of VF’s business, including our reputation, management of inventory, ordering and replenishment of products, manufacturing and distribution of products, e-commerce operations, retail business credit card transaction authorization and processing, corporate email communications and our interaction with the public on social media.

Moreover, failure to provide effective digital capabilities and information technology infrastructure could result in an inability to meet current and future business needs and a resulting loss of brand competitiveness.

VF is subject to data security and privacy risks that could negatively affect its business operations, results of operations or reputation.

In the normal course of business, we often collect, retain and transmit certain sensitive and confidential customer information, including credit card information, over public networks.

There is a significant concern by consumers and employees over the security of personal information transmitted over the Internet, identity theft and user privacy.

Data security breaches are increasingly sophisticated, and are difficult to detect for long periods of time.

Accordingly, if unauthorized parties gain access to our networks or databases, or those of our third-party service providers, they may be able to steal, publish, delete, hold ransom or modify our private and sensitive information, including credit card information and personal information.

We have implemented systems and processes designed to protect against unauthorized access to or use of personal information, and rely on encryption and authentication technology to effectively secure transmission of confidential customer information, including credit card information.

Despite these security measures, there is no guarantee that they are adequate and our facilities and systems and those of our third-party service providers may be vulnerable and unable to anticipate or detect security breaches and data loss.

The failure of these systems to operate effectively or remain innovative, problems with transitioning to upgraded or replacement systems, difficulty in integrating new systems or systems of acquired businesses or a breach in security of these systems could adversely impact the operations of VF’s business, including our reputation, management of inventory, ordering and replenishment of products, sourcing and distribution of products, e-commerce operations, retail business credit card transaction authorization and processing, corporate email communications and our interaction with the public on social media.

Moreover, failure to provide effective digital (including omnichannel) capabilities and information technology infrastructure could result in an inability to meet current and future business needs and a resulting loss of brand competitiveness, leading to loss of revenue and market share and decreased business agility.

VF is subject to data and information security and privacy risks that could negatively affect its business operations, results of operations or reputation.

In the normal course of business, we often collect, retain and transmit certain sensitive and confidential customer information, including credit card information and employee information, over public networks.

There is a significant concern by consumers and employees over the security of personal information collected, retained or transmitted over the Internet, identity theft and user privacy.

Data and information security breaches are increasingly sophisticated, and can be difficult to detect for long periods of time.

We have implemented systems and processes

designed to protect against unauthorized access to or use of personal information and other confidential information, and rely on encryption and authentication technology to effectively secure transmission of such information, including credit card information.

Despite these security measures, there is no guarantee that they will prevent all unauthorized access to our systems and information, and our facilities and systems and those of our third-party service providers may be vulnerable and unable to anticipate or detect security breaches and data loss.

In addition, employees may intentionally or inadvertently cause data security breaches that result in the unauthorized release of personal or confidential information.

VF and its customers could suffer harm if valuable business data, or employee, customer and other proprietary information were corrupted, lost or accessed or misappropriated by third parties due to a security failure in VF’s systems or due to one of our third-party service providers or our employees.

It could require significant expenditures to remediate any such failure or breach, severely damage our

reputation, confidence in our e-commerce platforms and our relationships with customers and employees, result in business disruption, unwanted and negative media attention and lost sales, and expose us to risks of litigation, liability and increased scrutiny from regulatory entities.

VF and its customers could suffer harm if valuable business data, or employee, customer and other confidential and proprietary information were corrupted, lost or accessed or misappropriated by third parties due to a security failure in VF’s systems or due to one of our third-party service providers or our employees.

It could require significant expenditures to remediate any such failure or breach, severely damage our reputation, confidence in our e-commerce platforms and our relationships with customers and employees, result in business disruption, unwanted and negative media attention and lost sales, and expose us to risks of litigation, liability and increased scrutiny from regulatory entities.

In addition, as a result of recent security breaches at a number of prominent retailers, the media and public scrutiny of information security and privacy has become more intense and the regulatory environment has become increasingly uncertain, rigorous and complex.

As a result, we may incur significant costs to comply with laws regarding the privacy and security of personal information and we may not be able to comply with new regulations such as the General Data Protection Regulation in the European Union, the California Consumer Privacy Act and the Virginia Consumer Data Protection Act.

As a result, we may incur significant costs to comply with laws regarding the privacy and security of personal information and we may not be able to comply with new data protection laws and regulations being adopted around the world.

Any failure to comply with the laws and regulations and consumer expectations surrounding the privacy and security of personal information could subject us to legal and reputational risk, including significant fines and/or litigation for non-compliance in multiple jurisdictions, negative media coverage, diminished consumer confidence and decreased attraction to our brands, any of which could have a negative impact on revenues and profits.

In addition, our existing insurance policies may not reimburse us for all of the damages that we might incur as a result of a security breach.

In addition, while we maintain cyber insurance policies, those existing insurance policies may not adequately protect VF from all of the adverse effects and damages that could be caused by a security breach.

Moreover, if our associates or vendors, intentionally or inadvertently, misuse consumer data or are not transparent with consumers about how we use their data, our brands, reputation and relationships with consumers could be damaged.

There are risks associated with VF’s acquisitions and portfolio management.

Any acquisitions or mergers by VF, including the recent acquisition of Supreme, will be accompanied by the risks commonly encountered in acquisitions of companies.

Any acquisitions or mergers by VF will be accompanied by the risks commonly encountered in acquisitions of companies.

These risks include, among other things, higher than anticipated acquisition costs and expenses, the difficulty and expense of integrating the operations, systems and personnel of the companies and the loss of key employees and customers as a result of changes in management.

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We may not be successful in overcoming these risks or any other problems encountered in connection with any acquisitions.

Moreover, failure to effectively manage VF’s portfolio of brands in line with growth targets and shareholder expectations, including acquisition choices, integration approach and divestiture timing could result in unfavorable impact to growth and value creation.

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Our acquisitions may cause large one-time expenses or create goodwill or other intangible assets that could result in significant impairment charges in the future.

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If our estimates or assumptions used to value these assets and liabilities are not accurate, we may be exposed to losses that may be material.

VF uses third-party suppliers and manufacturing facilities worldwide for a substantial portion of its raw materials and finished products, which poses risks to VF’s business operations.

During Fiscal 2021, approximately 96% of VF’s units were purchased from independent manufacture rs primarily located in Asia.

Any of the following could impact our ability to produce or

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deliver VF products, or our cost of producing or delivering products and, as a result, our profitability:

• political or labor instability in countries where VF’s facilities, contractors and suppliers are located;

• changes in local economic conditions in countries where VF’s facilities, contractors and suppliers are located;

• public health issues, such as the current COVID-19 pandemic, could result in (or continue to result in) closed factories, reduced workforces, scarcity of raw materials and scrutiny or embargoing of goods produced in infected areas;

• political or military conflict could cause a delay in the transportation of raw materials and products to VF and an increase in transportation costs;

VF uses third-party suppliers and manufacturing facilities worldwide for its raw materials and finished products, which poses risks to VF’s business operations.

During Fiscal 2022, VF’s products were sourced from independent manufacturers primarily located in Asia.

Any of the following could impact our ability to source or deliver VF products, or our cost of sourcing or delivering products and, as a result, our profitability:

• political or labor instability in countries where VF’s contractors and suppliers are located;

• changes in local economic conditions in countries where VF’s contractors and suppliers are located;

• public health issues, such as the COVID-19 pandemic, have resulted in (or could continue to result in) closed factories, reduced workforces, scarcity of raw materials and scrutiny or embargoing of goods produced in infected areas;

• political or military conflict could cause a delay in the transportation of products to VF and an increase in transportation costs;

• disruption at ports of entry, could cause delays in product availability and increase transportation times and costs;

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• decreased scrutiny by customs officials for counterfeit goods, leading to more counterfeit goods and reduced sales of VF products, increased costs for VF’s anti-counterfeiting measures and damage to the reputation of its brands;

• disruptions at manufacturing or distribution facilities caused by natural and man-made disasters;

• imposition of regulations and quotas relating to imports and our ability to adjust timely to changes in trade regulations could limit our ability to produce products in cost-effective countries that have the required labor and expertise;

• disruptions at manufacturing or distribution facilities or in shipping and transportation locations caused by natural and man-made disasters;

• imposition of regulations and quotas relating to imports and our ability to adjust timely to changes in trade regulations could limit our ability to source products in cost-effective countries that have the required labor and expertise;

• imposition of duties, taxes and other charges on imports;

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This, along with the damage to our reputation, could have a material adverse effect on VF’s revenues and, consequently, our results of operations.

In addition, although we audit our third-party material suppliers and contracted manufacturing facilities and set strict compliance standards, actions by a third-party supplier or manufacturer that fail to comply could result in such third-party supplier failing to manufacture products that consistently meet our quality standards and/or expose VF to claims for damages, financial penalties and reputational harm, any of which could have a material adverse effect in our business and operations.

A substantial portion of VF’s revenues and gross profit is derived from a small number of large customers.

In addition, although we audit our third-party material suppliers and contracted manufacturing facilities and set strict compliance standards, actions by a third-party supplier or manufacturer that fail to comply could result in such third-party supplier failing to manufacture products that consistently meet our quality standards or engaging in unfavorable labor practices or providing unfavorable working conditions that negatively impact worker health, safety and wellness.

Such noncompliance could expose VF to claims for damages, financial penalties and reputational harm, any of which could have a material adverse effect in our business and operations.

A significant portion of VF’s revenues and gross profit is derived from a small number of large customers.

The loss of any of these customers or the inability of any of these customers to pay VF could substantially reduce VF’s revenues and profits.

A few of VF’s customers account for a significant portion of revenues.

Sales to VF’s ten largest customers wer e

approximately 16% of total revenues in Fiscal 2021, with our largest customer accounting for approximately 2% of revenues.

Sales to VF’s ten largest customers were approximately 17% of total revenues in Fiscal 2022, with our largest customer accounting for approximately 2% of revenues.

Sales to our customers are generally on a purchase or der basis and not subject to long-term agreements.

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Talent management, employee retention and experience are important factors in VF’s success.

Our future success also depends on our ability to attract, develop, and retain talent with the necessary knowledge, skills and experience and maintain a culture of wellbeing, empowerment and diversity to ensure VF is innovative and remains competitive in a rapidly-changing global marketplace.

Competition for experienced and well-qualified personnel is intense and we may not be successful in attracting and retaining such personnel, which could impact VF’s ability to remain competitive.

Our future success also depends on our ability to attract, develop, and retain talent with the necessary knowledge, skills and experience and maintain a culture of wellbeing, empowerment and diversity and inclusion to ensure VF is innovative and remains competitive in a rapidly-changing global marketplace.

Competition for experienced and well-qualified personnel is intense and we may not be successful in attracting, developing, and retaining such personnel, which could impact VF’s ability to remain competitive.

Additionally, changes to our office environments, the adoption of new work models, and our requirements and/or expectations about when or how often certain employees work on-site or remotely may not meet the expectations of our employees.

As businesses increasingly operate remotely, traditional geographic competition for talent may change in ways that we cannot presently predict.

If our employment proposition is not perceived as favorable compared to other companies, it could negatively impact our ability to attract and retain our employees.

If we are unable to retain, attract, and motivate talented employees with the appropriate skill sets, or if changes to our organizational structure, operating results, or business model adversely affect morale or retention, we may not achieve our objectives and our results of operations could be adversely impacted.

VF depends on the services and management experience of its executive officers and business leaders who have substantial experience and expertise in VF’s business.

VF depends on the services and management experience of its executive officers and business leaders who have substantial experience and expertise in VF’s business, and in developing and retaining employees.

The unexpected loss of services of one or more of these individuals or the inability to effectively identify a suitable successor to a key role could have a material adverse effect on VF.

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VF’s direct-to-consumer business includes risks that could have an adverse effect on its results of operations.

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Risks include, but are not limited to, (i) U.S.

or international resellers purchasing merchandise and reselling it overseas outside VF’s control, (ii) failure of the systems that operate the stores and websites, and their related support systems, including computer viruses, theft of customer information, privacy concerns, telecommunication failures and electronic break-ins and similar disruptions, (iii) credit card fraud, and (iv) risks related to VF’s direct-to-consumer distribution centers and processes.

or international resellers purchasing merchandise and reselling it overseas outside VF’s control, (ii) failure or interruption of the systems that operate the stores and websites, and their related support systems, including due to computer viruses, theft of customer information, privacy concerns, telecommunication failures, electronic break-ins and similar disruptions, technical malfunctions, and natural disasters or other causes (iii) credit card fraud, (iv) risks related to VF’s direct-to-consumer distribution centers and processes, and (v) shift in consumer preferences away from retail stores.

Risks specific to VF’s e-commerce business also include (i) diversion of sales from VF stores or wholesale customers, (ii) difficulty in recreating the in-store experience through direct channels, (iii) liability for online content, (iv) changing patterns of consumer behavior, and (v) intense competition from online retailers.

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Due to the high fixed-cost structure associated with our direct-to-consumer operations, a decline in sales or the closure of or poor performance of individual or multiple stores could result in significant lease termination costs, write-offs of equipment and leasehold improvements and employee-related costs.

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VF’s net sales depend on the volume of traffic to its stores and the availability of suitable lease space.

A growing portion of our revenues are direct-to-consumer sales through VF-operated stores.

A significant portion of our revenues are direct-to-consumer sales through VF-operated stores.

In order to generate customer traffic, we locate many of our stores in prominent locations within successful retail shopping centers or in fashionable shopping districts.

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VF’s trademarks and other intellectual property rights are important to its success and its competitive position.

VF is susceptible to others copying its products and infringing its intellectual property rights, especially with the shift in product mix to higher priced brands and innovative new products in recent years.

Some of VF’s brands, such as The North Face ® , Timberland ® , Vans ® , JanSport ® , Dickies ® and Supreme ® enjoy significant worldwide consumer recognition, and the higher pricing of those products creates additional risk of counterfeiting and infringement.

susceptible to others copying its products and infringing its intellectual property rights, especially with the shift in product mix to higher priced brands and innovative new products in recent years.

Some of VF’s brands, such as Vans ® , The North Face ® , Timberland ® , Dickies ® and Supreme ® enjoy significant worldwide consumer recognition, and the higher pricing of certain of the brands' products creates additional risk of counterfeiting and infringement.

VF’s trademarks, trade names, patents, trade secrets and other intellectual property are important to VF’s success.

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In addition, unilateral actions in the U.S.

or other countries, including changes to or the repeal of laws recognizing trademark or other intellectual property rights, could have an impact on VF’s ability to enforce those rights.

or other countries, including changes to or the repeal of laws recognizing trademark or other intellectual property rights, such as the Russian government's recent announcements that it would not protect intellectual property rights, including patent rights and rights that could block parallel imports of gray market goods, as a result of the sanctions imposed on Russia in connection with the Russia-Ukraine conflict, could have an impact on VF’s ability to enforce those rights.

The value of VF’s intellectual property could diminish if others assert rights in or ownership of trademarks and other intellectual property rights of VF, or trademarks that are similar to VF’s trademarks, or trademarks that VF licenses from others.

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If VF encounters problems with its distribution system, VF’s ability to deliver its products to the market could be adversely affected.

VF relies on owned or independently-operated distribution facilities to warehouse and ship product to its customers.

VF’s distribution system includes computer-controlled and automated equipment, which may be subject to a number of risks related to security or computer viruses, the proper operation of software and hardware, power interruptions or other system failures.

Because substantially all of VF’s products are distributed from a relatively small number of locations, VF’s operations could also be interrupted by earthquakes, floods, fires or other natural disasters or other events outside VF's control affecting its distribution centers.

VF relies on owned or leased VF-operated and third party-operated distribution facilities to warehouse and ship product to VF customers.

VF’s distribution system includes computer-controlled and automated equipment, which may be subject to a

VF Corporation Fiscal 2022 Form 10-K 15

number of risks related to security or computer viruses, the proper operation of software and hardware, power interruptions or other system failures.

We maintain business interruption insurance under our property and cyber insurance policies, but it may not adequately protect VF from the adverse effects that could be caused by significant disruptions in VF’s distribution facilities.

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The impact of disruptions may vary based on the length and severity of the disruption.

VF’s failure to create systems of monitoring, prevention, response, crisis management, continuity and recovery to mitigate potential threats impacting its business, people, processes and facilities could result in extended disruptions and unpredictability.

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VF’s failure to create and implement systems of monitoring, prevention, response, crisis management, continuity and recovery to anticipate, prepare, prevent, mitigate, and respond to potential threats impacting its business, people, processes and facilities could result in extended disruptions and unpredictability.

LEGAL, REGULATORY AND COMPLIANCE RISKS

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Any of these effects of Brexit, and others we cannot anticipate could adversely affect our business, results of operations and financial condition.

Beginning in February 2022, in response to the military conflict between Russia and Ukraine, the U.S.

and other North Atlantic Treaty Organization member states, as well as non-member states, announced targeted economic sanctions on Russia, including certain Russian citizens and enterprises, and the continuation of the conflict may trigger additional economic and other sanctions.

To date, we have experienced revenue impacts due to cessation of business in Russia, currency devaluation, and costs associated with compliance with sanctions and other regulations.

In addition, as of April 2, 2022, there was approximately $31.0 million of cash in Russia that, although it can be used without limits within Russia, is currently limited on

movement out of Russia.

Further impacts of the conflict could include macro financial impacts resulting from the exclusion of Russian financial institutions from the global banking system, volatility in foreign exchange rates and interest rates, inflationary pressures on raw materials and energy, heightened cybersecurity threats, harm to employee health and safety, reputational harm, increase in counterfeiting and intellectual property activity, nationalization of our assets, and additional costs associated with compliance with sanctions and other regulations and risks associated with failure to comply with the same.

Although our operations in Russia are not significant, the conflict could escalate and result in broader economic and security concerns, including in other geographies, which could in turn adversely affect our business, financial condition or results of operations.

Changes to U.S.

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as a result of such changes, could adversely affect our business.

government has instituted or proposed changes in trade policies that include the negotiation or termination of trade agreements, the imposition of higher tariffs on imports into the U.S., economic sanctions on individuals, corporations or countries, and other government regulations affecting trade between the U.S.

and other countries where we conduct our business.

It may be time-consuming and expensive for us to alter our business operations in order to adapt to or comply with any such changes.

As a result of recent policy changes of the U.S.

government and recent U.S.

government proposals, there may be greater restrictions and economic disincentives on international trade.

For example, the U.S.

government has instituted changes in trade policies imposing higher tariffs on imports into the U.S.

Tariffs and other changes in U.S.

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Such changes have the potential to adversely impact the U.S.

economy or certain sectors thereof, our industry and the global

demand for our products, and as a result, could have a material adverse effect on our business, financial condition and results of operations.

economy or certain sectors thereof, our industry and the global demand for our products, and as a result, could have a

16 VF Corporation Fiscal 2022 Form 10-K

material adverse effect on our business, financial condition and results of operations.

Changes in tax laws could increase our worldwide tax rate and tax liabilities and materially affect our financial position and results of operations.

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Tax Act continues to be released.

To the extent any future guidance differs from our interpretation of the law, or the new U.S.

Presidential Administration takes further action, including through its recent proposal of a higher U.S.

To the extent any future guidance differs from our interpretation of the law, or the current U.S.

Presidential Administration takes further action, including through its proposal of a higher U.S.

federal corporate tax rate and increased taxation of offshore income, such guidance or action could have a material effect on our financial position and results of operations.

The Swiss government enacted the Federal Act on Tax Reform and AHV Financing (“Swiss Tax Act”) which became effective on January 1, 2020.

The Swiss Tax Act was enacted to ensure that Switzerland stays in conformity with the European Union (“EU”) as well as Organisation for Economic Co-operation and Development (“OECD”) standards on international taxation.

The impact of the Swiss Tax Act has been reported based on the official initial guidelines provided by the Swiss Federal and Cantonal Authorities.

Future guidance that differs from our preliminary interpretation or any negative reaction from the EU member states to the Swiss Tax Act, could have material effect on our financial position and results of operations.

The EU has also developed a list of non-cooperative jurisdictions for tax purposes (referred to as the “blacklist”).

We continuously monitor the blacklist to determine any potential impact to VF.

In addition, many countries in the EU and around the globe have adopted and/or proposed changes to current tax laws.

Further, organizations such as the OECD have published action plans that, if adopted by countries where we do business, could increase our tax obligations in these countries.

More specifically, the OECD has proposed an approach to address tax challenges arising from the digitalization of the economy.

The ultimate outcome of these proposals and the agreed upon solution that is enacted into law in each country may result in a material financial impact to VF.

In addition, many countries in the European Union ("EU") and around the globe have adopted and/or proposed changes to current tax laws.

Further, organizations such as the Organisation for Economic Co-operation and Development ("OECD") have published action plans that, if adopted by countries where we do business, could increase our tax obligations and compliance costs in these countries.

More specifically, the OECD has released rules to address tax challenges arising from the digitalization of the economy.

The ultimate outcome of these rules that are enacted into law in each country may result in a material financial impact to VF.

Due to the large scale of our U.S.

and international business activities, many of these enacted and proposed changes to the taxation of our activities could increase our worldwide effective tax rate and harm our financial position and results of operations.

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We may have additional tax liabilities from new or evolving government or judicial interpretation of existing tax laws.

As a global company, we determine our income tax liability in various tax jurisdictions based on an analysis and interpretation of U.S.

and local tax laws and regulations.

This analysis requires a significant amount of judgment and estimation and is often based on various assumptions about the future actions of the tax authorities.

and international tax laws and regulations.

This analysis requires a significant amount of judgment and estimation and is often based on various assumptions about the future actions of tax authorities.

These determinations are the subject of periodic U.S.

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For example, VF was granted a ruling which lowered the effective income tax rate on taxable earnings for years 2010 through 2014 under Belgium’s excess profit tax regime.

In February 2015, the EU opened a state aid investigation into Belgium’s rulings.

On January 11, 2016, the EU announced its decision that these rulings were illegal and ordered that tax benefits granted under these rulings should be collected from the affected companies, including VF.

On March 22, 2016, the Belgium government filed an appeal seeking annulment of the EU decision.

Additionally, on June 21, 2016, VF Europe BVBA filed its own application for annulment of the EU decision.

On February 14, 2019 the General Court annulled the EU decision and on April 26, 2019 the EU appealed the General Court's annulment.

Both listed requests for annulment remain open and unresolved.

Additionally, the EU has initiated proceedings related to individual rulings granted by Belgium, including the ruling granted to VF.

VF notes that the exposure for this tax matter is estimated at approximately $37 million, which has already been paid by VF.

Also, VF petitioned the U.S.

Tax Court to resolve an Internal Revenue Service ("IRS") dispute regarding the timing of income inclusion associated with the 2011 Timberland acquisition.

VF remains confident in our timing and treatment of the income inclusion, and therefore this matter is not reflected in our financial statements.

We are vigorously defending our position, and do not expect the resolution to have a material adverse impact on VF's financial position, results of operations or cash flows.

While the IRS argues immediate income inclusion, VF's position is to include the income over a period of years.

As the matter relates to 2011, nearly half of the timing in dispute has passed VF including the income, and paying the related tax, on our income tax returns .

VF notes that should the IRS prevail in this timing matter, the net interest expense would be up to $181.0 million.

Further, this timing matter is impacted by the U.S.

Tax Act that reduced the U.S.

corporate income tax rate from 35% to 21%.

If the IRS is successful, this rate differential would increase tax expense by approximately $136.3 million.

2015, the EU investigated and announced its decision that the ruling was illegal and ordered that tax benefits granted under the ruling should be collected from the affected companies, including VF Europe, BVBA, a subsidiary of VF.

Requests for annulment were filed by Belgium and VF Europe BVBA, individually.

During 2017 and 2018, VF Europe BVBA was assessed and paid €35.0 million in tax and interest, which was recorded as an income tax receivable based on the expected success of the requests for annulment.

During 2019, the General Court annulled the EU decision and the EU subsequently appealed the General Court’s annulment.

In September 2021, the General Court’s judgment was set aside by the Court of Justice of the EU and the case was sent back to the General Court to determine whether the excess profit tax regime amounted to illegal State aid.

The case remains open and unresolved.

If this matter is adversely resolved, the tax and interest amounts paid by VF will not be collected by VF.

Also, as previously reported, VF petitioned the U.S.

Tax Court (the "Court") to resolve an Internal Revenue Service ("IRS") dispute regarding the timing of income inclusion associated with VF's acquisition of The Timberland Company in September 2011.

While the IRS argues that all such income should have been immediately included in 2011, VF has reported periodic income inclusions in subsequent tax years.

Both parties moved for summary judgment on the issue, and on January 31, 2022, the Court issued its opinion in favor of the IRS.

VF believes the opinion of the Court was in error based on the technical merits and intends to appeal;

however, VF will be required to pay the 2011 taxes and interest being disputed or post a surety bond.

It is anticipated that during Fiscal 2023, the IRS will assess, and VF will pay, the 2011 taxes and interest, which would be recorded as a tax receivable based on the technical merits of our position with regards to the case.

The gross amount of taxes and interest as of April 2, 2022 was estimated at approximately $845.0 million and will continue to accrue interest until paid.

VF continues to believe its timing and treatment of the income inclusion is appropriate and VF is vigorously defending its position.

However, should the Court opinion ultimately be upheld on appeal, this tax receivable may not be collected by VF.

If the Court opinion is upheld, VF should be entitled to a refund of taxes paid on the periodic inclusions that VF has reported.

However, any such refund could be substantially reduced by potential indirect tax effects resulting from application of the Court opinion.

Deferred tax liabilities, representing VF’s future tax on annual inclusions, would also be released.

The net impact to tax expense estimated as of April 2, 2022 could be up to $700.0 million .

Although we accrue for uncertain tax positions, our accrual may be insufficient to satisfy unfavorable findings.

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The costs of compliance with, or the violation of, such laws and regulations by VF or by independent suppliers who manufacture products for VF could have an adverse effect on our operations and cash flows, as well as on our reputation.

Our business is subject to comprehensive national, state and local laws and regulations on a wide range of environmental, consumer protection, employment, privacy, safety and other matters.

Our business is subject to comprehensive national, state and local laws and regulations on a wide range of environmental,

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climate change, consumer protection, employment, privacy, safety and other matters.

VF could be adversely affected by costs of compliance with or violations of those laws and regulations.

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Climate change is occurring around the world and may impact our business in numerous ways.

Such change could lead to an increase in raw material and packaging prices, reduced availability, for example, due to water shortages which could adversely impact raw material availability.

Increased frequency of extreme weather (storms and floods) could cause increased incidence of disruption to the production and distribution of our products and an adverse impact on consumer demand and spending.

Investor advocacy groups, certain institutional investors, investment funds, other market participants, shareholders, and stakeholders have focused increasingly on the environmental,

VF Corporation Fiscal 2021 Form 10-K 17

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social and governance ("ESG") and related sustainability practices of companies.

These parties have placed increased importance on the implications of the social cost of their investments.

If our ESG practices do not meet investor or other stakeholder expectations and standards, which continue to evolve, our brands, reputation and employee retention may be negatively impacted.

Failure to monitor, adapt, build

resilience, and develop solutions against the physical and transitional impacts from climate change may lead to revenue loss, market share loss, business interruptions, and rising costs.

Climate change could lead to increased volatility due to physical impacts of climate change on the supply chain, including the availability, quality and cost of raw materials.

Increased frequency and severity of extreme weather events (storms and floods) could cause increased incidence of disruption to the production and distribution of our products and an adverse impact on consumer demand and spending.

Investor advocacy groups, certain institutional investors, investment funds, other market participants, shareholders, and other stakeholders, including non-governmental organizations, employees, and consumers, have focused increasingly on the environmental, social and governance ("ESG") and related sustainability practices of companies.

These parties have placed increased importance on the implications of the social cost of their investments and/or have higher expectations of corporate conduct.

If our ESG practices do not meet investor or other stakeholder expectations and standards, including related to climate change, sustainability, and human rights, and do not meet related regulations and expectations for increased transparency, which continue to evolve, our brands, reputation and employee retention may be negatively impacted.

It is possible that stakeholders may not be satisfied with our ESG practices or the speed of their adoption.

We could also incur additional costs and require additional

resources to monitor, report, and comply with various ESG practices.

Also, our failure, or perceived failure, to manage reputational threats and meet expectations with respect to socially responsible activities and sustainability commitments could negatively impact our credibility, employee retention, and the willingness of our customers and suppliers to do business with us.

While we may announce voluntary ESG targets, we may not be able to meet such targets in the manner or on such a timeline as initially contemplated, including, but not limited to as a result of unforeseen costs or technical difficulties associated with achieving such results.

We could also incur additional costs and require additional resources to monitor, report, and comply with various ESG practices and regulations.

Also, our failure, or perceived failure, to manage reputational threats and meet stakeholder expectations or shifting consumer preferences with respect to socially responsible activities and products and packaging and sustainability commitments and regulations could negatively impact our brand, image, reputation, credibility, employee retention, and the willingness of our customers and suppliers to do business with us.

FINANCIAL RISKS

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For these impairment tests, we use various valuation methods to estimate the fair value of our business units and intangible assets.

If the fair value of an asset is less than its carrying value, we would recognize an impairment charge for the difference.

It is possible that we could have an impairment charge for goodwill or trademark and trade name intangible assets in future periods if (i) overall economic conditions in Fiscal 2022 or future years vary from our current assumptions, (ii) business conditions or our strategies for a specific business unit change from our current assumptions, (iii) investors require higher rates of return on equity investments in the marketplace, or (iv) enterprise values of comparable publicly traded companies, or of actual sales transactions of comparable companies, were to decline, resulting in lower comparable multiples of revenues and earnings before interest, taxes, depreciation and amortization and, accordingly, lower implied values of goodwill and intangible assets.

If the fair value of an asset is less

than its carrying value, we would recognize an impairment charge for the difference.

It is possible that we could have an impairment charge for goodwill or trademark and trade name intangible assets in future periods if (i) overall economic conditions in Fiscal 2023 or future years vary from our current assumptions, (ii) business conditions or our strategies for a specific business unit change from our current assumptions (including changes in discount rates), (iii) investors require higher rates of return on equity investments in the marketplace, or (iv) enterprise values of comparable publicly traded companies, or of actual sales transactions of comparable companies, were to decline, resulting in lower comparable multiples of revenues and earnings before interest, taxes, depreciation and amortization and, accordingly, lower implied values of goodwill and intangible

18 VF Corporation Fiscal 2022 Form 10-K

A future impairment charge for goodwill or intangible assets could have a material effect on our consolidated financial position or results of operations.

Fluctuations in wage rates and the price, availability and quality of raw materials and finished goods could increase costs.

Fluctuations in the price, availability and quality of fabrics, leather or other raw materials used by VF in its manufactured products, or of purchased finished goods, could have a material adverse effect on VF’s cost of goods sold or its ability to meet its customers’ demands.

The prices we pay depend on demand and market prices for the raw materials used to produce them.

The price and availability of such raw materials may fluctuate significantly, depending on many factors, including general economic conditions and demand, crop yields, energy prices, weather patterns, public health issues (such as the COVID-19 pandemic) and speculation in the commodities markets.

Prices of purchased finished products also depend on wage rates in Asia and other geographic areas where our independent contractors are located, as well as freight costs from those regions.

Inflation can also have a long-term impact on us

because increasing costs of materials and labor may impact our ability to maintain satisfactory margins.

For example, the cost of the materials that are used in our manufacturing process, such as oil-related commodity prices and other raw materials, such as cotton, dyes and chemical and other costs, such as fuel, energy and utility costs, can fluctuate as a result of inflation and other factors.

Similarly, a significant portion of our products are manufactured in other countries and declines in the values of the U.S.

Fluctuations in the price, availability and quality of purchased finished goods or the fabrics, leather, cotton or other raw materials used therein could have a material adverse effect on VF’s cost of goods sold or its ability to meet its customers’ demands.

Prices of purchased finished products may depend on wage rate increases required by legal or industry standards in Asia and other geographic areas where our independent contractors are located, as well as increasing freight costs from those regions.

Inflation, including as a result of inflationary pressures related to global supply chain disruptions, can also have a long-term impact on us because increasing costs of materials and labor may impact our ability to maintain satisfactory margins.

For example, the cost and availability of the materials that are used in our products, such as oil-related commodity prices and other raw materials, such as cotton, dyes and chemical and other costs, such as fuel, energy and utility costs, can fluctuate significantly as a result of inflation in addition to many other factors, including general economic conditions and demand, crop yields, energy prices, weather patterns, public health issues (such as the COVID-19 pandemic) and speculation in the commodities markets.

A significant portion of our products also are manufactured in other countries and declines in the values of the U.S.

dollar may result in higher manufacturing costs.

In addition, fluctuations in wage rates required by legal or industry standards could increase our costs.

In the future, VF may not be able to offset cost increases with other cost reductions or efficiencies or to pass higher costs on to its customers.

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dollar value of the foreign currency-denominated amounts at which VF’s international businesses purchase products, incur costs or sell products.

In addition, for VF’s U.S.-based businesses, the majority of products are sourced from independent contractors or VF plants located in foreign countries.

In addition, for VF’s U.S.-based businesses, the majority of products are sourced from independent contractors located in foreign countries.

As a result, the costs of these products are affected by changes in the value of the relevant currencies.

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Further, our use of derivative financial instruments may expose VF to counterparty risks.

Although VF only enters into hedging contracts with counterparties having investment grade credit ratings, it is possible that the credit quality of a counterparty could be downgraded or a counterparty could default on its obligations, which could have a material adverse impact on VF’s financial condition, results of operations and cash flows.

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Our ability to obtain short-term or long-term financing on favorable terms, if needed, could be adversely affected by geopolitical risk and volatility in the capital markets.

Although VF only enters into hedging contracts with counterparties having investment grade credit

ratings, it is possible that the credit quality of a counterparty could be downgraded or a counterparty could default on its obligations, which could have a material adverse impact on VF’s financial condition, results of operations and cash flows.

Our ability to obtain financing on favorable terms, if needed, could be adversely affected by geopolitical risk and volatility in the capital markets.

Any disruption in the capital markets could limit the availability of funds or the ability or willingness of financial institutions to extend capital in the future.

Future volatility in the financial and credit markets, including the recent volatility due, in part, to the current COVID-19 pandemic, could make it more difficult for us to obtain financing or refinance existing debt when the need arises, including upon maturity, or on terms that would be acceptable to us.

Future volatility in the financial and credit markets, including the recent volatility due, in part, to the COVID-19 pandemic and/or the conflict in Ukraine, could make it more difficult for us to obtain financing or refinance existing debt when the need arises, including upon maturity, or on terms that would be acceptable to us.

This disruption or volatility could adversely affect our liquidity and funding resources or significantly increase our cost of capital.

An inability to access capital and credit markets may have an adverse effect on our business, results of operations, financial condition and cash flows.

In addition, the U.K.

Financial Conduct Authority announced in 2017 that it intends to phase out LIBOR by the end of 2021.

In November 2020, ICE Benchmark Administration, the administrator of LIBOR, with support from the U.S.

Federal Reserve, announced a consultation period on its intention to continue U.S.

LIBOR quotes for the most actively used maturities on legacy transactions until June 2023, with the remainder to phase out by the end of 2021, as previously announced.

Following this announcement, multiple U.S.

governmental agencies issued a joint statement encouraging banks to transition away from LIBOR for new contracts as soon as practicable and no later than December 31, 2021.

Uncertainty regarding rates may make borrowing or refinancing our indebtedness more expensive or difficult to achieve on terms we consider favorable.

Effective January 1, 2022, the publication of LIBOR on a representative basis ceased for the one-week and two-month U.S.

dollar LIBOR settings and all sterling, yen, euros, and Swiss franc LIBOR settings.

All other remaining U.S.

dollar LIBOR settings will cease July 1, 2023.

In connection with the sunset of certain LIBOR reference rates occurring at the end of 2021, we amended the credit agreement for our senior unsecured revolving credit facility to include provisions for the replacement of LIBOR upon the cessation thereof that are customary for credit facilities of this nature.

We continue to monitor developments related to the upcoming transition from U.S.

dollar LIBOR settings to an alternative benchmark reference rate.

The Alternative Reference Rates Committee has proposed the Secured Overnight Financing Rate ("SOFR") as its recommended alternative to U.S.

dollar LIBOR, and the Federal Reserve Bank of New York began publishing SOFR rates in April 2018.

At this time, the effects of the phase out of U.S.

dollar LIBOR and the adoption of alternative benchmark rates have not been fully determined, but uncertainty regarding rates may make borrowing or refinancing our indebtedness more expensive or difficult to achieve on terms we consider favorable.

VF’s indebtedness could have a material adverse effect on its business, financial condition and results of operations and prevent VF from fulfilling its financial obligations, and VF may not be able to maintain its current credit ratings, may not continue to pay dividends or repurchase its common stock and may not remain in compliance with existing debt covenants.

As of April 2, 2022, VF had approximately $5.4 billion of debt outstanding.

VF’s debt and interest payment requirements could have important consequences on its business, financial condition and results of operations.

V F’s debt and interest payment requirements could have important consequences on its business, financial condition and results of operations.

For example, it could:

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• limit VF’s flexibility in planning for or reacting to general adverse economic conditions or changes in its business and the industries in which it operates;

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• place VF at a competitive disadvantage compared to its competitors that have less indebtedness outstanding;

• negatively affect VF's credit ratings and limit, along with the financial and other restrictive covenants in VF’s debt documents, its ability to borrow additional funds.

• negatively affect VF's credit ratings and limit, along with the financial and other restrictive covenants in VF’s debt documents and its ability to borrow additional funds.

In addition, VF may incur substantial additional indebtedness in the future to fund acquisitions, repurchase common stock or fund other activities for general business purposes.

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Although VF has historically declared and paid quarterly cash dividends on its common stock and has been authorized to repurchase its stock subject to certain limitations under its share repurchase programs, any determinations by the board of directors to continue to declare and pay cash dividends on VF’s common stock or to repurchase VF’s common stock will be based primarily upon VF’s financial condition, results of operations and business requirements, its access to debt capital markets or other forms of financing, the price of its common stock in the case of the repurchase program and the board of directors’ continuing determination that the repurchase programs and the declaration and payment of dividends are in the best interests of VF’s shareholders and are in compliance with all laws and agreements applicable to the repurchase and dividend programs.

For example, during Fiscal 2021, VF decided to temporarily pause its share repurchase program to support its business in response to the COVID-19 pandemic.

In the event VF does not declare and pay a quarterly dividend or once again discontinues its share repurchases, VF’s stock price could be adversely affected.

In the event VF does not declare and pay a quarterly dividend or discontinues its share repurchases, VF’s stock price could be adversely affected.

VF is required to comply with certain financial and other restrictive debt covenants in its debt documents.

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VF is subject to the risk that its licensees may not generate expected sales or maintain the value of VF’s brands.

During Fiscal 2021, $51.7 million of VF’s rev enues were derived from licensing royalties.

Although VF generally has significant control over its licensees’ products and advertising, we rely on our licensees for, among other things, operational and financial controls over their businesses.

During Fiscal 2022, $66.6 million of VF’s revenues were derived from licensing royalties.

A lthough VF generally has significant control over its licensees’ products and advertising, we rely on our licensees for, among other things, operational and financial controls over their businesses.

Failure of our licensees to successfully market licensed products or our inability to replace existing licensees, if necessary, could adversely affect VF’s revenues, both directly from reduced royalties received and indirectly from reduced sales of our other products.

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In addition, VF relies on its licensees to help preserve the value of its brands.

Although we attempt to protect VF’s brands through approval rights over design, production processes, quality, packaging, merchandising, distribution, advertising and promotion of our licensed products, we cannot completely control the use of licensed VF brands by our licensees.

control the use of licensed VF brands by our licensees.

The misuse of a brand by a licensee, including through the marketing of products under one of our brand names that do not meet our quality standards, could have a material adverse effect on that brand and on VF.

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Volatility in securities markets, interest rates and other economic factors could substantially increase VF’s defined benefit pension costs.

VF currently has obligations under its defined benefit pension plans.

The funded status of the pension plans is dependent on many factors, including returns on investment assets and the discount rate used to determine pension obligations.

The funded status of the pension plans is dependent on many factors, including returns on investment assets and the discount rates used to determine pension obligations.

Unfavorable impacts from returns on plan assets, decreases in discount rates, changes in plan demographics or revisions in the applicable laws or regulations could materially change the timing and amount of pension funding requirements, which could reduce cash available for VF’s business.

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Differences between estimated and actual results give rise to gains and losses that are deferred and amortized as part of future pension expense, which can create volatility that adversely impacts VF’s future operating results.

We may be unable to achieve some or all of the benefits we expect to achieve from the spin-off.

On May 22, 2019, we completed the spin-off of our Jeans business, Kontoor Brands, Inc.

("Kontoor Brands").

Although we believe that the spin-off will enhance our long-term value, we may not be able to achieve some or all of the anticipated benefits from the separation of our businesses, and the spin-off may adversely affect our business.

Separating the businesses resulted in two independent, publicly traded companies, each of which is now a smaller, less diversified and more narrowly focused business than before the spin-off, which makes us more vulnerable to changing market and economic conditions.

Additionally, a potential loss of synergies from separating the businesses could negatively impact the balance sheet, profit margins or earnings of both businesses and the combined value of the common stock of the two publicly traded companies may not be equal to or greater than the value of VF common stock had the spin-off not occurred.

If we fail to achieve some or all of the benefits that we expect to achieve as a result of the spin-off, or do not achieve them in the time we expect, our results of operations and financial condition could be materially adversely affected.

The Kontoor Brands spin-off could result in substantial tax liability to us and our shareholders.

The spin-off of Kontoor Brands, Inc.

could result in substantial tax liability to us and our shareholders.

We received opinions of tax advisors substantially to the effect that, for U.S.

Federal income tax purposes, the spin-off and certain related transactions qualify for tax-free treatment under

certain sections of the Internal Revenue Code.

Federal income tax purposes, the May 22, 2019 spin-off of our Jeans business, Kontoor Brands, Inc.

("Kontoor Brands") and certain related transactions qualify for tax-free treatment under certain sections of the Internal Revenue Code.

However, if the factual assumptions or representations made by us in connection with the delivery of the opinions are inaccurate or incomplete in any material respect, including those relating to the past and future conduct of our business, we will not be able to rely on the opinions.

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In addition, these potential tax liabilities may discourage, delay or prevent a change of control of us.

A director who serves on our Board of Directors also serves as a director of Kontoor Brands, and ownership of shares of common stock of Kontoor Brands by our directors and executive officers may create, or appear to create, conflicts of interest.

A director who serves on our Board of Directors currently serves on the Board of Directors of Kontoor Brands.

This may create, or appear to create, conflicts of interest when our or Kontoor Brands' management and directors face decisions that could have different implications for us and Kontoor Brands, including the resolution of any dispute regarding the terms of the agreements governing the spin-off and our relationship with Kontoor Brands or any other commercial agreements entered into in the future between us and Kontoor Brands.

Some of our executive officers and non-employee directors currently own shares of the common stock of Kontoor Brands.

The continued ownership of such common stock by our directors and executive officers may create, or may appear to create, a conflict of interest when these directors and executive officers are faced with decisions that could have different implications for us and Kontoor Brands.

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UNRESOLVED STAFF COMMENTS.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors