What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-11-02 compared with 2022-08-05 · 264 added, 185 removed, 234 unchanged (66% of the section changed)

2 unchanged sentences

The Company's current fiscal year runs from April 3, 2022 through April 1, 2023 ("Fiscal 2023").

Accordingly, this Form 10-Q presents our first quarter of Fiscal 2023.

For presentation purposes herein, all references to periods ended June 2022 and June 2021 relate to the fiscal periods ended on July 2, 2022 and July 3, 2021, respectively.

Accordingly, this Form 10-Q presents our second quarter of Fiscal 2023.

For presentation purposes herein, all references to periods ended September 2022 and September 2021 relate to the fiscal periods ended on October 1, 2022 and October 2, 2021, respectively.

References to March 2022 relate to information as of April 2, 2022.

All per share amounts are presented on a diluted basis and all percentages shown in the tables below and the following discussion have been calculated using unrounded numbers.

References to the three months ended June 2022 foreign currency amounts below reflect the changes in foreign exchange rates from the three months ended June 2021 and their impact on translating foreign currencies into U.S.

References to the three and six months ended September 2022 foreign currency amounts below reflect the changes in foreign exchange rates from the three and six months ended September 2021 and their impact on translating foreign currencies into U.S.

VF’s most significant foreign currency exposure relates to business conducted in euro-based countries.

Additionally, VF conducts business in other developed and emerging markets around the world with exposure to foreign currencies other than the euro.

Additionally, VF conducts business in other developed and emerging markets

around the world with exposure to foreign currencies other than the euro.

On June 28, 2021, VF completed the sale of its Occupational Workwear business.

7 unchanged sentences

RECENT DEVELOPMENTS

Macroeconomic Environment

The macroeconomic environment continues to dynamically evolve.

Global trends, including inflationary pressures, are weakening consumer sentiment, negatively impacting consumer spending behavior and creating variable traffic patterns across channels.

These conditions are leading to elevated inventories in certain markets and an increased promotional environment.

Additionally, the strong U.S.

dollar has resulted in unfavorable foreign currency exchange rate changes, which have significantly impacted the results of our international businesses.

There is ongoing uncertainty around the global economy and macroeconomic environment, which we expect to continue and cause disruption and near-term challenges for our business.

Russia-Ukraine Conflict

In response to the ongoing conflict in Ukraine, all VF-operated retail locations within Russia are currently closed and commercial shipments to both Russia and Ukraine are suspended.

In response to the ongoing conflict in Ukraine, all VF-operated retail locations within Russia are currently closed.

Limited wholesale shipments to both Russia and Ukraine have resumed.

Revenues in Russia and Ukraine represented less than 1% of VF's total Fiscal 2022 revenue.

4 unchanged sentences

The coronavirus ("COVID-19") pandemic significantly impacted global economic conditions, as well as VF's business operations and financial performance during Fiscal 2022 and continues to impact Fiscal 2023.

VF-operated retail stores across the globe have been impacted during the first quarter of Fiscal 2023 and Fiscal 2022 due to COVID-19, including temporary closures for varying periods of time in certain regions, most notably in Asia-Pacific.

VF-operated retail stores across the globe have been impacted due to COVID-19, including temporary closures for varying periods.

In Fiscal 2023, the impacts have been most notable in the Asia-Pacific region, including Mainland China.

VF is continuing to monitor the COVID-19 outbreak globally and will comply with guidance from government entities and public health authorities to prioritize the health and well-being of its employees, customers, trade partners and consumers.

As COVID-19 uncertainty continues, retail store reclosures may occur.

As COVID-19 uncertainty continues, retail store closures may recur.

COVID-19 has also impacted some of VF's suppliers, including raw material suppliers, third-party manufacturers, logistics providers and other vendors.

At this time, the majority of VF's supply chain is operational.

Suppliers are complying with local

health advisories and governmental restrictions which has resulted in product delays.

The resurgence of COVID-19 lockdowns in key sourcing countries resulted in additional manufacturing capacity constraints during Fiscal 2022 and the first quarter of Fiscal 2023;

Suppliers are complying with local health advisories and governmental restrictions which has resulted in product delays.

The resurgence of COVID-19 lockdowns in key sourcing countries resulted in additional manufacturing capacity constraints and logistical challenges during Fiscal 2022 and the first and second quarters of Fiscal 2023;

however, the situation has improved over time.

6 unchanged sentences

29 VF Corporation Q2 FY23 Form 10-Q

HIGHLIGHTS OF THE FIRST QUARTER OF FISCAL 2023

• Revenues were up 3% to $2.3 billion compared to the three months ended June 2021, including a 4% unfavorable impact from foreign currency.

• Active segment revenues decreased 4% to $1.3 billion compared to the three months ended June 2021, including a 4% unfavorable impact from foreign currency.

• Outdoor segment revenues increased 24% to $768.6 million compared to the three months ended June 2021, including a 7% unfavorable impact from foreign currency.

• Work segment revenues decreased 13% to $238.9 million compared to the three months ended June 2021, including a 2% unfavorable impact from foreign currency.

HIGHLIGHTS OF THE SECOND QUARTER OF FISCAL 2023

• Revenues were down 4% to $3.1 billion compared to the three months ended September 2021, including a 6% unfavorable impact from foreign currency.

• Outdoor segment revenues increased 3% to $1.6 billion compared to the three months ended September 2021, including a 7% unfavorable impact from foreign currency.

• Active segment revenues decreased 9% to $1.3 billion compared to the three months ended September 2021, including a 5% unfavorable impact from foreign currency.

• Work segment revenues decreased 11% to $265.2 million compared to the three months ended September 2021, including a 2% unfavorable impact from foreign currency.

• Direct-to-consumer revenues were down 4% over the 2021 period, including a 5% unfavorable impact from foreign currency.

E-commerce revenues decreased 7% in the current period, including a 6% unfavorable impact from foreign currency.

Direct-to-consumer revenues accounted for 44% of VF's net revenues for the three months ended June 2022.

• International revenues decreased 1% compared to the three months ended June 2021, including a 10% unfavorable impact from foreign currency.

Direct-to-consumer revenues accounted for 37% of VF's net revenues for the three months ended September 2022.

• International revenues decreased 5% compared to the three months ended September 2021, including a 13% unfavorable impact from foreign currency.

Greater China (which includes Mainland China, Hong Kong and Taiwan) revenues decreased 15%, including a 5% unfavorable impact from foreign currency.

International revenues represented 44% of VF's net revenues for the three months ended June 2022.

• Gross margin decreased 260 basis points to 53.9% compared to the three months ended June 2021, primarily driven by unfavorable mix and higher freight costs, partially offset by price increases.

International revenues represented 49% of VF's net revenues for the three months ended September 2022.

• VF recorded goodwill and intangible asset impairment charges of $229.0 million and $192.9 million, respectively, in the three months ended September 2022 related to the Supreme reporting unit.

• Gross margin decreased 230 basis points to 51.4% compared to the three months ended September 2021, primarily driven by higher costs and increased discounts and other promotional activity, partially offset by price increases.

• Earnings (loss) per share was $(0.31) compared to $1.18 in the 2021 period.

The decrease was primarily driven by a pension settlement charge and lower profitability in the Active segment in the three months ended June 2022, and a decrease in the estimated fair value of the contingent consideration liability associated with the Supreme Holdings, Inc.

("Supreme") acquisition in the three months ended June 2021 .

The decrease was primarily driven by the goodwill and intangible asset impairment charges related to the Supreme reporting unit and lower profitability in the Active segment in the three months ended September 2022.

ANALYSIS OF RESULTS OF OPERATIONS

Consolidated Statements of Operations

The following table presents a summary of the changes in net revenues for the three months ended June 2022 from the comparable period in 2021:

(In millions) Three Months Ended June

The following table presents a summary of the changes in net revenues for the three and six months ended September 2022 from the comparable period in 2021:

(In millions) Three Months Ended September Six Months Ended September

Net revenues — 2021 $ 3,198.2 $ 5,392.8

2 unchanged sentences

Net revenues — 2022 $ 3,080.6 $ 5,342.2

VF reported a 3% increase in revenues for the three months ended June 2022, compared to the 2021 period.

The revenue increase was primarily driven by global growth in the Outdoor segment.

The increase in the three months ended June 2022 was partially offset by declines in the Asia-Pacific region and an overall 4% unfavorable impact from foreign currency.

The Asia-Pacific region has been negatively impacted by COVID-19 resurgence, which has caused disruption and consumption pressure in the region, particularly in Mainland China.

VF reported a 4% and 1% decrease in revenues for the three and six months ended September 2022, respectively, compared to the 2021 periods.

The revenue decrease in both periods was primarily driven by declines in the Active segment and a 6% and 5% unfavorable impact from foreign currency in the three and six months ended September 2022, respectively.

Revenues in the Active segment during the three months ended September 2022 were impacted by weakness in the Americas region, primarily driven by declines in the Vans ® brand.

Revenues in the Active

segment during the three and six months ended September 2022 were also impacted by declines in the Asia-Pacific region, which has been negatively impacted by COVID-19 resurgence that has caused disruption and consumption pressure in the region, particularly in Mainland China.

The decrease in both periods was partially offset by global growth in the Outdoor segment.

Additional details on revenues are provided in the section titled “Information by Reportable Segment.”

VF Corporation Q2 FY23 Form 10-Q 30

The following table presents the percentage relationships to net revenues for components of the Consolidated Statements of Operations:

Three Months Ended June

Three Months Ended September Six Months Ended September

2022 2021 2022 2021

Gross margin (net revenues less cost of goods sold) 51.4 % 53.7 % 52.4 % 54.8 %

Selling, general and administrative expenses 40.6 36.2 45.0 40.7

Impairment of goodwill and intangible assets 13.7 — 7.9 —

Operating margin (2.9) % 17.5 % (0.5) % 14.1 %

Gross margin decreased 260 basis points in the three months ended June 2022, compared to the 2021 period.

The decrease was primarily d riven by unfavorable mix as wholesale and Outdoor segment revenues, which generally have lower margins, represented a larger portion of VF consolidated revenues in the three months ended June 2022.

The decrease was also

attributed to higher freight costs, partially offset by price increases.

Selling, general and administrative expenses as a percentage of total revenues increased 380 basis points during the three months ended June 2022 compared to the 2021 period.

Selling, general and administrative expenses increased $119.1 million in

23 VF Corporation Q1 FY23 Form 10-Q

the three months ended June 2022, compared to the 2021 period, primarily due to a $73.0 million decrease in the estimated fair value of the contingent consideration liability associated with the Supreme acquisition, which was recognized in the selling, general and administrative expense line item in the three months ended June 2021.

The increase was also due to higher distribution spending and increased technology spending in the three months ended June 2022.

Net interest expen se decreased $1.5 million during the three months ended June 2022, compared to the 2021 period.

The decrease in net interest expense in the three months ended June 2022 was primarily due to the repayment of the $1.0 billion in aggregate principal of the 2.050% Senior Notes due April 2022, partially offset by higher short-term borrowings in the three months ended June 2022.

Total outstanding debt averaged $5.4 billion in the three months ended June 2022 and $5.8 billion in the three months ended June 2021, with a weighted average interest rate of 2.1% for both periods.

Other income (expense), net decreased $103.8 million during the three months ended June 2022, compared to the 2021 period.

The decrease in the three months ended June 2022 was primarily due to a $91.8 million pension settlement charge recorded in the three months ended June 2022, which resulted from the purchase of a group annuity contract and transfer of a portion of the assets and liabilities associated with the U.S.

qualified defined pension plan to an insurance company.

The effective income tax rate for the three months ended June 2022 was 10.6% compared to 14.1% in the 2021 period.

The three months ended June 2022 included a net discrete tax expense of $0.8 million, which included a $1.6 million net tax expense related to unrecognized tax benefits and interest and a $0.8 million net tax benefit related to withholding taxes on prior foreign earnings.

Gross margin decreased 230 and 240 basis points in the three and six months ended September 2022, respectively, compared to the 2021 periods.

The decreases were primarily driven by higher costs and increased discounts and other promotional activity, partially offset by price increases.

The decrease for the six months ended September 2022 was also attributed to unfavorable mix as wholesale and Outdoor segment revenues, which generally have lower margins, represented a larger portion of VF consolidated revenues for the periods compared.

Selling, general and administrative expenses as a percentage of total revenues increased 440 and 430 basis points during the three and six months ended September 2022, respectively, compared to the 2021 periods.

Selling, general and administrative expenses increased $91.0 million and $210.1 million in the three and six months ended September 2022, respectively, compared to the 2021 periods, including $35.0 million and $108.0 million decreases in the estimated fair value of the contingent consideration liability associated with the Supreme acquisition, which were recognized in the selling, general and administrative expense line item in the three and six months ended September 2021, respectively.

The increase was also due to higher corporate restructuring charges, direct-to-consumer and distribution costs, and investments in information technology in the three and six months ended September 2022.

Net interest expen se decreased $0.5 million and $2.0 million during the three and six months ended September 2022, respectively, compared to the 2021 periods.

The decrease in net interest expense in both the three and six months ended September 2022 was primarily due to the repayment of the $1.0 billion in aggregate principal of the 2.050% Senior Notes due April 2022, partially offset by higher short-term borrowings in the three and six months ended September 2022.

Total outstanding debt averaged $5.3 billion in the six months ended September 2022 and $5.9 billion in the same period in 2021, with weighted average interest rates of 2.3% and 2.1% in the six months ended September 2022 and 2021, respectively.

Other income (expense), net decreased $16.8 million and $120.6 million during the three and six months ended September 2022, respectively, compared to the 2021 periods.

The decrease in both the three and six months ended September 2022 was primarily driven by lower net periodic pension income and higher foreign currency losses compared to the 2021 periods.

The decrease in the six months ended September 2022 included a

$91.8 million pension settlement charge, which resulted from the purchase of a group annuity contract and transfer of a portion of the assets and liabilities associated with the U.S.

qualified defined benefit pension plan to an insurance company.

VF recorded goodwill and intangible asset impairment charges of $229.0 million and $192.9 million, respectively, in the three and six months ended September 2022 related to the Supreme reporting unit.

During the three months ended September 2022, due to continued increases in the federal funds rate and strengthening of the U.S.

dollar relative to other currencies, the Company determined that a triggering event had occurred requiring impairment testing of the Supreme reporting unit goodwill and indefinite-lived trademark intangible asset.

The impairment related to an increase in the market-based discount rates used in the valuations and the negative impact of foreign currency exchange rate changes on financial projections.

The effective income tax rate for the six months ended September 2022 was 11.3% compared to 13.1% in the 2021 period.

The six months ended September 2022 included a net discrete tax expense of $5.1 million, which primarily related to unrecognized tax benefits and interest.

Excluding the $5.1 million net discrete tax expense in the 2022 period, the effective income tax rate would have been 13.9%.

The three months ended June 2021 included a net discrete tax benefit of $2.3 million, which included a $1.2 million net tax expense related to unrecognized tax benefits and interest, a $1.1 million tax benefit related to stock compensation and a $2.4 million net tax benefit related to tax rate change on deferred tax items.

Excluding the $2.3 million net discrete tax benefit in the 2021 period, the effective income tax rate would have been 15.3%.

Without discrete items, the effective income tax rate for the three months ended June 2022 decreased by 3.3% compared with the 2021 period primarily due to year-to-date losses generated in the current quarter.

As a result of the above, income (loss) from continuing operations in the three months ended June 2022 was $(56.0) million ($(0.14) per diluted share) compared to $154.0 million ($0.39 per diluted share) in the 2021 period.

The six months ended September 2021 included a net discrete tax benefit of $0.2 million, which included a $3.4 million net tax expense related to unrecognized tax benefits and interest, a $1.4 million tax benefit related to stock compensation and a $2.4 million net tax benefit related to tax rate change on deferred tax items.

The $0.2 million net discrete tax benefit in the 2021 period had an insignificant impact on the effective income tax rate.

Without discrete items, the effective income tax rate for the six months ended September 2022 increased by 0.8% compared with the 2021 period primarily due to year-to-date losses generated in the current year.

As a result of the above, income (loss) from continuing operations in the three months ended September 2022 was $(118.4) million ($(0.31) per diluted share) compared to $464.1 million ($1.18 per diluted share) in the 2021 period, and income (loss) from continuing operations in the six months ended September 2022 was $(174.4) million ($(0.45) per diluted share) compared to $618.0 million ($1.57 per diluted share) in the 2021 period.

Refer to additional discussion in the “Information by Reportable Segment” section below.

31 VF Corporation Q2 FY23 Form 10-Q

Information by Reportable Segment

2 unchanged sentences

We have included an Other category in the tables below for purposes of reconciliation of revenues and profit, but it is not considered a reportable segment.

Included in this Other category are results primarily related to the sale of non-VF products and sourcing activities related to transition services.

Included in this Other category are results primarily related to sourcing activities related to transition services.

Refer to Note 14 to the consolidated financial statements for a summary of results of operations by segment, along with a reconciliation of segment profit to income (loss) before income taxes.

The following tables present a summary of the changes in segment revenues and profit in the three months ended June 2022 from the comparable period in 2021 and revenues by region for our Top 4 brands for the three months ended June 2022 and 2021:

The following tables present a summary of the changes in segment revenues and profit (loss) in the three and six months ended September 2022 from the comparable period in 2021 and revenues by region for our top 4 brands for the three and six months ended September 2022 and 2021:

Segment Revenues:

Three Months Ended June

Three Months Ended September

(In millions) Outdoor Active Work Other Total

3 unchanged sentences

Segment revenues — 2022 $ 1,555.3 $ 1,260.1 $ 265.2 $ — $ 3,080.6

Six Months Ended September

(In millions) Outdoor Active Work Other Total

Segment revenues — 2021 $ 2,124.4 $ 2,694.2 $ 573.9 $ 0.3 $ 5,392.8

Organic 345.4 (48.1) (57.0) (0.2) 240.1

Impact of foreign currency (145.8) (132.0) (12.9) — (290.7)

Segment revenues — 2022 $ 2,324.0 $ 2,514.1 $ 504.0 $ 0.1 $ 5,342.2

Segment Profit (Loss):

Three Months Ended June

Three Months Ended September

(In millions) Outdoor Active Work Other Total

3 unchanged sentences

Segment profit (loss) — 2022 $ 260.4 $ 180.3 $ 39.5 $ (0.2) $ 480.0

Six Months Ended September

(In millions) Outdoor Active Work Other Total

Segment profit (loss) — 2021 $ 212.3 $ 555.2 $ 103.0 $ (0.6) $ 869.9

Organic 20.3 (130.5) (26.8) 0.2 (136.8)

Impact of foreign currency (19.0) (30.4) (1.7) — (51.1)

Segment profit (loss) — 2022 $ 213.6 $ 394.3 $ 74.5 $ (0.4) $ 682.0

VF Corporation Q2 FY23 Form 10-Q 32

Top Brand Revenues:

Three Months Ended June 2022

Three Months Ended September 2022

(In millions) Vans ®

5 unchanged sentences

Global $ 952.1 $ 950.8 $ 524.2 $ 186.4 $ 2,613.5

Three Months Ended June 2021

Three Months Ended September 2021

(In millions) Vans ®

5 unchanged sentences

Global $ 1,090.3 $ 883.7 $ 545.4 $ 230.0 $ 2,749.4

Six Months Ended September 2022

(In millions) Vans ®

The North Face ®

Timberland ® (a)

Americas $ 1,234.3 $ 780.1 $ 407.0 $ 260.9 $ 2,682.3

Europe 423.2 456.3 290.8 41.5 1,211.8

Asia-Pacific 241.5 195.5 95.8 54.4 587.2

Global $ 1,899.0 $ 1,431.9 $ 793.6 $ 356.8 $ 4,481.3

Six Months Ended September 2021

(In millions) Vans ®

The North Face ®

Timberland ® (a)

Americas $ 1,291.2 $ 656.5 $ 429.9 $ 315.5 $ 2,693.1

Europe 475.0 436.7 267.6 39.6 1,218.9

Asia-Pacific 344.0 156.7 97.3 74.2 672.2

Global $ 2,110.2 $ 1,249.9 $ 794.8 $ 429.3 $ 4,584.2

(a) The global Timberland brand includes Timberland ® , reported within the Outdoor segment and Timberland PRO ® , reported within the Work segment.

Amounts may not sum due to rounding.

33 VF Corporation Q2 FY23 Form 10-Q

The following sections discuss the changes in revenues and profitability by segment.

For purposes of this analysis, royalty revenues have been included in the wholesale channel for all periods.

Three Months Ended June

Three Months Ended September Six Months Ended September

(Dollars in millions) 2022 2021 Percent

Change 2022 2021 Percent

Segment revenues $ 1,555.3 $ 1,506.6 3.2 % $ 2,324.0 $ 2,124.4 9.4 %

Segment profit (loss) (46.9) (71.7) 34.7 %

Segment profit 260.4 284.1 (8.3) % 213.6 212.3 0.6 %

Operating margin 16.7 % 18.9 % 9.2 % 10.0 %

1 unchanged sentence

The North Face ® , Timberland ® , Smartwool ® , Icebreaker ® and Altra ® .

Global revenues for Outdoor increased 24% in the three months ended June 2022 compared to 2021, including a 7% unfavorable impact from foreign currency.

Global revenues for Outdoor increased 3% in the three months ended September 2022 compared to 2021, including a 7% unfavorable impact from foreign currency.

Revenues in the Americas region increased 4%, including a 1% unfavorable impact from foreign currency.

Revenues in the Europe region decreased 1%, including a 16% unfavorable impact from foreign currency.

Revenues in the Asia-Pacific region increased 13%, including a 7% unfavorable impact from foreign currency.

Global revenues for Outdoor increased 9% in the six months ended September 2022 compared to 2021, including a 7% unfavorable impact from foreign currency.

Revenues in the Americas region increased 11%.

1 unchanged sentence

Revenues in the Asia-Pacific region increased 13%, including a 6% unfavorable impact from foreign currency.

Global revenues for The North Face ® brand increased 31% in the three months ended June 2022, compared to the 2021 period.

This includes a 6% unfavorable impact from foreign currency in the three months ended June 2022.

The overall revenue growth reflects increases in all regions and channels during the three months ended June 2022.

The overall growth was led by the Europe region, which increased 28% in the three months ended June 2022, including a 15% unfavorable impact from foreign currency, and growth in the Americas region, which increased 39% in the three months ended June 2022.

Global revenues for the Timberland ® brand increased 16% in the three months ended June 2022, compared to the 2021 period, including an 8% unfavorable impact from foreign currency.

The overall revenue growth reflects increases in all regions during

the three months ended June 2022.

The overall growth was led by the Europe region, which increased 27%, including a 16% unfavorable impact from foreign currency in the three months ended June 2022, and growth in the Asia-Pacific region, which increased 23% in the three months ended June 2022, including a 7% unfavorable impact from foreign currency.

Global direct-to-consumer revenues for Outdoor increased 5% in the three months ended June 2022, compared to the 2021 period, including a 5% unfavorable impact from foreign currency.

Global revenues for The North Face ® brand increased 8% and 15% in the three and six months ended September 2022, respectively, compared to the 2021 periods.

This includes a 6% unfavorable impact from foreign currency in both the three and six months ended September 2022.

The increases reflect growth in all regions that was led by the Asia-Pacific region, which increased 31% and 25% in the three and six months ended September 2022, respectively, including a 6% and 5% unfavorable impact from foreign currency in the respective periods.

Global revenues for the Timberland ® brand decreased 6% and 1% in the three and six months ended September 2022, respectively, compared to the 2021 periods, driven by an 8% and

9% unfavorable impact from foreign currency in the respective periods.

Revenues in the Europe region increased 2% and 9% in the three and six months ended September 2022, respectively, including a 17% unfavorable impact from foreign currency in both periods.

Revenues in the Americas region decreased 12% and 9% in the three and six months ended September 2022, respectively, driven by lower wholesale shipments for the periods compared primarily due to supply chain challenges, including an unfavorable impact of 1% from foreign currency in the six months ended September 2022.

Global direct-to-consumer revenues for Outdoor increased 6% in both the three and six months ended September 2022 compared to the 2021 periods, including an 8% and 6% unfavorable impact from foreign currency in the respective periods.

The increase was primarily due to strength in The North Face ® brand.

Global wholesale revenues increased 41% in the three months ended June 2022, compared to the 2021 period, including a 7% unfavorable impact from foreign currency.

The growth reflects increases across all regions and brands.

Operating margin increased in the three months ended June 2022 compared to the 2021 period primarily due to leverage of operating expenses on increased revenues and price increases.

The increase was partially offset by unfavorable channel mix and higher freight costs.

Global wholesale revenues increased 2% and 11% in the three and six months ended September 2022, respectively, compared to the 2021 periods, including a 7% unfavorable impact from foreign currency in both periods.

Operating margin decreased in the three and six months ended September 2022 compared to the 2021 periods primarily due to increased discounts and other promotional activity and higher costs, including materials, freight, direct-to-consumer and distribution expenses, which were partially offset by price increases in both periods.

The decrease for the six months ended September 2022 was also impacted by unfavorable channel mix, partially offset by leverage of operating expenses on increased revenues.

VF Corporation Q2 FY23 Form 10-Q 34

Three Months Ended June

Three Months Ended September Six Months Ended September

(Dollars in millions) 2022 2021 Percent

Change 2022 2021 Percent

Segment revenues $ 1,260.1 $ 1,392.2 (9.5) % $ 2,514.1 $ 2,694.2 (6.7) %

3 unchanged sentences

Vans ® , Supreme ® , Kipling ® , Napapijri ® , Eastpak ® and JanSport ® .

Global revenues for Active decreased 4% in the three months ended June 2022 compared to the 2021 period, including a 4% unfavorable impact from foreign currency.

Revenues in the Americas region increased 5%.

Global revenues for Active decreased 9% in the three months ended September 2022 compared to the 2021 period, including a 5% unfavorable impact from foreign currency.

Revenues in the Americas region decreased 9%, including a 1% unfavorable impact from foreign currency.

Revenues in the Europe region decreased 8%, driven by a 15% unfavorable impact from foreign currency.

Revenues in the Asia-Pacific region decreased 33%, including a 5% unfavorable impact from foreign currency and a 53% decrease in Greater China (including a 1% unfavorable impact from foreign currency) primarily due to the negative impact of COVID-19 resurgence in Mainland China.

Vans ® brand global revenues decreased 7% in the three months ended June 2022, compared to the 2021 period.

This includes a 3% unfavorable impact from foreign currency in the three months ended June 2022.

The overall decline in the three months ended June 2022 was driven by a 38% decrease in the Asia-Pacific region, including a 3% unfavorable impact from foreign currency, primarily due to the negative impact of COVID-19 resurgence in Mainland China.

Revenues in the Europe region decreased 9%, including a 11% unfavorable impact from foreign currency in the three months ended June 2022.

The overall decrease in the three months ended June 2022 was partially offset by an increase of 3% in the Americas region.

Global direct-to-consumer revenues for Active decreased 11% in the three months ended June 2022, compared to the 2021 period, including a 3% unfavorable impact from foreign currency.

The decrease was primarily due to the Asia-Pacific region, which decreased 28%, including a 7% unfavorable impact from foreign currency in the three months ended June 2022.

The Asia-Pacific region was negatively impacted by COVID-19 resurgence in Mainland China.

Global wholesale revenues increased 7% in the three months ended June 2022, and included a 5% unfavorable impact from foreign currency.

The increase in the three months ended June 2022 was primarily due to a 29% increase in the Americas region, partially offset by a 41% decrease in the Asia-Pacific region, including a 3% unfavorable impact from foreign currency.

Operating margin decreased in the three months ended June 2022 compared to the 2021 period, reflecting unfavorable channel mix, higher freight costs and lower leverage of operating expenses due to decreased revenues, partially offset by price increases.

Three Months Ended June

Revenues in the Asia-Pacific region decreased 17%, including an 8% unfavorable impact from foreign currency, and a 37% decrease in Greater China including a 4% unfavorable impact from foreign currency.

Global revenues for Active decreased 7% in the six months ended September 2022 compared to the 2021 period, including a 5% unfavorable impact from foreign currency.

Revenues in the Americas region decreased 2%.

Revenues in the Europe region decreased 5%, driven by a 14% unfavorable impact from foreign currency.

Revenues in the Asia-Pacific region decreased 26%, including a 7% unfavorable impact from foreign currency, and a 46% decrease in Greater China including a 2% unfavorable impact from foreign currency.

Vans ® brand global revenues decreased 13% and 10% in the three and six months ended September 2022, respectively, compared to the 2021 periods.

This includes a 5% and 4% unfavorable impact from foreign currency in the three and six months ended September 2022, respectively.

The overall declines were driven by a 20% and 30% decrease in the Asia-Pacific region for the three and six months ended September 2022, respectively, including a 6% and 4% unfavorable impact from foreign currency in the respective periods.

Revenues in the Americas region decreased 11% and 4% in the three and six months ended September 2022, respectively.

Revenues in the Europe region decreased 12% and 11% in the three and six

months ended September 2022, respectively, driven by a 14% and 13% unfavorable impact from foreign currency in the respective periods.

Global direct-to-consumer revenues for Active decreased 9% and 10% in the three and six months ended September 2022, respectively, compared to the 2021 periods, including a 4% unfavorable impact from foreign currency in both periods.

The decrease was primarily due to declines in the Americas region, which decreased 8% in both the three and six months ended September 2022.

Global wholesale revenues decreased 10% and 2% in the three and six months ended September 2022, respectively, and included an 8% and 6% unfavorable impact from foreign currency in the respective periods.

The decrease was primarily due to a 24% and 32% decrease in the Asia-Pacific region in the three and six months ended September 2022, respectively, including a 5% and 3% unfavorable impact from foreign currency in the respective periods.

Wholesale revenues in the Americas region decreased 10% and increased 10% in the three and six months ended September 2022, respectively.

Wholesale revenues in the Europe region decreased 5% and 3% in the three and six months ended September 2022, respectively, driven by a 15% unfavorable impact from foreign currency in both periods.

Operating margin decreased in the three and six months ended September 2022 compared to the 2021 periods, reflecting lower leverage of operating expenses due to decreased revenues in both periods.

The decreases were also impacted by increased discounts and other promotional activity, higher freight costs and unfavorable channel mix, which were partially offset by price increases.

35 VF Corporation Q2 FY23 Form 10-Q

Three Months Ended September Six Months Ended September

(Dollars in millions) 2022 2021 Percent

Change 2022 2021 Percent

Segment revenues $ 265.2 $ 299.2 (11.4) % $ 504.0 $ 573.9 (12.2) %

3 unchanged sentences

Dickies ® and Timberland PRO ® .

Global Work revenues decreased 13% in the three months ended June 2022 compared to the 2021 period, including a 2% unfavorable impact from foreign currency.

The decrease in revenues during the period was attributed to declines in both the Dickies ® and Timberland PRO ® brands.

Global Work revenues decreased 11% in the three months ended September 2022 compared to the 2021 period, including a 2% unfavorable impact from foreign currency.

Revenues in the Americas region decreased 8%, including a 1% unfavorable impact from foreign currency.

Revenues in the Europe region decreased 1% , driven by a 17% unfavorable impact from foreign currency.

Revenues in the Asia-Pacific region decreased 35%, including an 8% unfavorable impact from foreign currency.

Global Work revenues decreased 12% in the six months ended September 2022 compared to the 2021 period, including a 2% unfavorable impact from foreign currency.

Revenues in the Americas region decreased 11%.

Revenues in the Europe region increased 5%, including a 16% unfavorable impact from foreign currency.

Revenues in the Asia-Pacific region decreased 12%, including a 6% unfavorable impact from foreign currency, driven by declines in Mainland China primarily due to the negative impact of COVID-19 resurgence.

Dickies ® brand global revenues decreased 15% in the three months ended June 2022, compared to the 2021 period, including a 2% unfavorable impact from foreign currency.

decline in the three months ended June 2022 was primarily driven by a decrease of 17% in the Americas region, reflecting a more conservative inventory posture by the brand's largest U.S.

The decline was also attributed to a decrease in the Asia-Pacific region of 12%, including a 6% unfavorable impact from foreign currency, partially offset by an increase of 15% in the Europe region, including a 15% unfavorable impact from foreign currency.

Operating margin decreased in the three months ended June 2022 compared to the 2021 period, reflecting lower leverage of operating expenses due to decreased revenues and higher freight costs.

The decrease was partially offset by favorable channel mix and price increases.

VF Corporation Q1 FY23 Form 10-Q 26

Revenues in the Asia-Pacific region decreased 27%, including a 7% unfavorable impact from foreign currency.

Dickies ® brand global revenues decreased 19% and 17% in the three and six months ended September 2022, respectively, compared to the 2021 periods, including a 4% and 3% unfavorable impact from foreign currency in the respective

The decline was primarily driven by a decrease of 17% in the Americas region in both the three and six months ended September 2022, reflecting a more conservative inventory posture by the brand's largest U.S.

The decline in the three and six months ended September 2022 was also attributed to a decrease in the Asia-Pacific region of 35% and 27%, respectively, including an 8% and 7% unfavorable impact from foreign currency in the respective periods.

Revenues in the Europe region decreased 1% and increased 5% in the three and six months ended September 2022, respectively, including a 17% and 16% unfavorable impact from foreign currency in the respective periods.

Operating margin decreased in the three and six months ended September 2022 compared to the 2021 periods, reflecting lower leverage of operating expenses due to decreased revenues in both periods.

The decreases were also impacted by higher costs, including materials and freight, which were partially offset by price increases and favorable channel mix.

Reconciliation of Segment Profit to Income (Loss) Before Income Taxes

There are two types of costs necessary to reconcile total segment profit, as discussed in the preceding paragraphs, to consolidated income (loss) from continuing operations before income taxes.

These costs are (i) corporate and other expenses, discussed below, and (ii) interest expense, net, which was discussed in the “Consolidated Statements of Operations” section.

Three Months Ended June

There are three types of costs necessary to reconcile total segment profit to consolidated income (loss) from continuing operations before income taxes.

These costs are (i) impairment of goodwill and intangible assets, which is excluded from segment profit because these costs are not part of the ongoing operations of the businesses, (ii) corporate and other expenses, discussed below, and (iii) interest expense, net, which was discussed in the “Consolidated Statements of Operations” section.

Three Months Ended September Six Months Ended September

(Dollars in millions) 2022 2021 Percent

Change 2022 2021 Percent

Impairment of goodwill and intangible assets $ 421.9 $ — 100.0 % $ 421.9 $ — 100.0 %

Corporate and other expenses 158.2 64.0 147.2 % 391.5 91.9 326.0 %

Interest expense, net 33.9 34.4 (1.4) % 65.2 67.1 (2.9) %

*Calculation not meaningful

Corporate and other expenses are those that have not been allocated to the segments for internal management reporting, including (i) information systems and shared service costs, (ii) corporate headquarters costs, and (iii) certain other income and expenses.

The increase in the three months ended June 2022 was primarily attributed to a $91.8 million pension

settlement charge in the three months ended June 2022 and a $73.0 million decrease in the estimated fair value of the contingent consideration liability associated with the Supreme acquisition in the three months ended June 2021.

The increase was also due to higher information technology spending of $17.3 million, and other corporate costs.

The increase in corporate and other expenses was driven by an increase in corporate restructuring charges of $41.9 million and $46.6 million in the three and six months ended September 2022, respectively, and increases in information technology costs of $19.1 million and $36.4 million in the three and six months ended September 2022, respectively.

The increase in the six months ended September 2022 also included a $91.8 million pension settlement charge.

Additionally, the increase in the three and six months ended September 2022 when compared to the 2021 periods was driven by a $35.0 million and $108.0 million decrease in the estimated fair value of the contingent consideration liability associated with the Supreme acquisition in the three and six months ended September 2021, respectively.

VF Corporation Q2 FY23 Form 10-Q 36

International Operations

International revenues decreased 1% in the three months ended June 2022, compared to the 2021 period.

Foreign currency had an unfavorable impact of 10% on international revenues in the three months ended June 2022.

Revenues in Europe increased 10% in the three months ended June 2022, including a 14% unfavorable impact from foreign currency.

In the Asia-Pacific region, revenues decreased 20% in the three months ended June 2022.

Foreign currency had an unfavorable impact of 5% on

Asia-Pacific revenues in the three months ended June 2022.

Revenues in Greater China decreased 33% in the three months ended June 2022, which was negatively impacted by COVID-19 resurgence in Mainland China, including a 3% unfavorable impact from foreign currency.

International revenues were 44% and 45% of total revenues in the three-month periods ended June 2022 and 2021, respectively.

International revenues decreased 5% and 3% in the three and six months ended September 2022, respectively, compared to the 2021 periods.

Foreign currency had an unfavorable impact of 13% and 11% on international revenues in the three and six months ended September 2022, respectively.

Revenues in the Europe region decreased 4% and increased 1% in the three and six months ended September 2022, respectively, including a 16% and 15% unfavorable impact from foreign currency in the respective periods.

In the Asia-Pacific region, revenues decreased 6% and 12% in the three and six months ended September 2022, respectively.

Foreign currency had an unfavorable impact of 8% and 6% on Asia-Pacific revenues in the

three and six months ended September 2022, respectively.

Revenues in Greater China decreased 15% and 23% in the three and six months ended September 2022, respectively, which was negatively impacted by COVID-19 resurgence in Mainland China.

Foreign currency had an unfavorable impact of 5% and 4% on Greater China revenues in the three and six months ended September 2022, respectively.

International revenues were 49% of total revenues in both the three-month periods ended September 2022 and 2021, and 47% and 48% of total revenues in the six-month periods ended September 2022 and 2021, respectively.

Direct-to-Consumer Operations

Direct-to-consumer revenues decreased 7% in the three months ended June 2022, compared to the 2021 period, including a 4% unfavorable impact from foreign currency.

The decline in direct-to-consumer revenues was primarily due to a decrease of 22% in the Asia-Pacific region, including a 6% unfavorable impact from foreign currency.

The decline was also due to an 18% decrease in our e-commerce business in the three months ended June 2022, including a 4% unfavorable impact from foreign currency.

The overall decrease was partially offset by a 3% increase in revenues from VF-operated retail stores, including a 4% unfavorable impact from foreign currency.

There were 1,297 VF-owned retail stores at June 2022 compared to 1,364 at June 2021.

Direct-to-consumer revenues were 44% and 49% of total revenues in the three-month periods ended June 2022 and 2021, respectively.

Direct-to-consumer revenues decreased 4% and 5% in the three and six months ended September 2022, respectively, compared to the 2021 periods, including a 5% and 4% unfavorable impact from foreign currency in the respective periods.

VF's e-commerce business decreased 7% and 13% during the three and six months ended September 2022, respectively, including a 6% and 5% unfavorable impact from foreign currency in the respective periods.

Revenues from VF-operated retail stores decreased 3% during the three months ended September 2022 driven by a 4%

unfavorable impact from foreign currency in the period, and revenues were flat for the six months ended September 2022, including a 3% unfavorable impact from foreign currency.

There were 1,283 VF-operated retail stores at September 2022 compared to 1,358 at September 2021.

Direct-to-consumer revenues were 37% of total revenues in both the three-month periods ended September 2022 and 2021, and 40% and 42% of total revenues in the six-month periods ended September 2022 and 2021, respectively.

37 VF Corporation Q2 FY23 Form 10-Q

1 unchanged sentence

Consolidated Balance Sheets

The following discussion refers to significant changes in balances at June 2022 compared to March 2022:

• Decrease in accounts receivable — primarily due to the seasonality of the business and timing of wholesale shipments.

• Increase in inventories — driven by increased in-transit inventory resulting from the modification of terms with the majority of our suppliers to take ownership of inventory near point of shipment rather than destination, and due to the seasonality of the business.

The following discussion refers to significant changes in balances at September 2022 compared to March 2022:

• Increase in accounts receivable — primarily due to the seasonality of the business and timing of wholesale shipments.

• Increase in other current assets — primarily due to an increase in derivative assets resulting from unrealized gains on foreign currency exchange contracts.

• Decrease in intangible assets — primarily due to a $192.9 million impairment charge related to the Supreme ® indefinite-lived trademark intangible asset recorded in the three months ended September 2022.

• Decrease in goodwill — primarily due to a $229.0 million goodwill impairment charge related to the Supreme reporting unit recorded in the three months ended September 2022.

• Increase in short-term borrowings — primarily due to an increase in commercial paper borrowings to support working capital requirements.

• Decrease in the current portion of long-term debt — due to the repayment of $500.0 million of long-term notes due in April 2022.

• Increase in the current portion of long-term debt — due to the reclassification of €850.0 million ($831.2 million) of long-term notes due in September 2023, partially offset by the repayment of $500.0 million of long-term notes in April 2022.

• Increase in accounts payable — primarily due to the increase of in-transit inventory.

• Decrease in accrued liabilities — primarily due to lower accrued compensation, lower accrued income taxes and the payout of the contingent consideration liability associated with the Supreme acquisition.

The following discussion refers to significant changes in balances at June 2022 compared to June 2021:

• Decrease in short-term investments — due to the sale of short-term investments.

• Increase in other current assets — primarily due to an increase in derivative assets.

• Decrease in long-term debt — due to the reclassification of €850.0 million ($831.2 million) of long-term notes due in September 2023.

The following discussion refers to significant changes in balances at September 2022 compared to September 2021:

• Increase in other current assets — primarily due to an increase in derivative assets resulting from unrealized gains on foreign currency exchange contracts.

• Decrease in g oodwill — primarily due to a $229.0 million goodwill impairment charge related to the Supreme reporting unit recorded in the three months ended September 2022.

• Increase in short-term borrowings — primarily due to an increase in commercial paper borrowings to support working capital requirements.

• Increase in accounts payable — primarily due to the increase of in-transit inventory.

• Decrease in other liabilities — primarily due to a decrease in the accrual for unrecognized tax benefits resulting from the reclassification to accrued liabilities and the payout of the contingent consideration liability associated with the Supreme acquisition.

• Decrease in the current portion of long-term debt — due to the early redemption of $500.0 million in December 2021 and repayment of the remaining $500.0 million of long-term notes in April 2022, which is partially offset by the reclassification of €850.0 million ($831.2 million) of long-term notes due in September 2023.

• Increase in accounts pa yable — primarily due to the increase of in-transit inventory.

• Decrease in long-term debt — due to the reclassification of €850.0 million ($831.2 million) of long-term notes due in September 2023.

• Decrease in other liabilities — primarily due to a decrease in the accrual for unrecognized tax benefits and other accrued income taxes resulting from the reclassification to accrued liabilities.

Liquidity and Capital Resources

We consider the following to be measures of our liquidity and capital resources:

June March June

September March September

(Dollars in millions) 2022 2022 2021

2 unchanged sentences

Net debt to total capital 68.9% 61.0% 62.0%

The decrease in the current ratio at June 2022 comp ared to both March 2022 and June 2021 was primarily due to a net increase in current liabilities driven by higher short-term borrowings and accounts payable, partially offset by a net increase in current assets driven by higher inventories, for the periods compared as discussed in the "Consolidated Balance Sheets" section above.

The decrease in the current ratio at September 2022 compared to both March 2022 and September 2021 was primarily due to a net increase in current liabilities driven by higher short-term borrowings and accounts payable, partially offset by a net increase in current assets driven by higher inventories for the periods compared as discussed in the "Consolidated Balance Sheets" section above.

For the ratio of net debt to total capital, net debt is defined as short-term and long-term borrowings, in addition to operating lease liabilities, net of unrestricted cash.

Total capital is defined as net debt plus stockholders’ equity.

The increase in the net debt to total capital ratio at June 2022 compared to March 2022 was primarily driven by an increase in net debt to support working capital demands at June 2022 and a decrease in stockholders' equity.

The decrease in stockholders' equity was primarily driven by payments of dividends.

The net debt to total capital ratio at June 2022 compared to June 2021 was relatively unchanged.

The increase in the net debt to total capital ratio at September 2022 compared to March 2022 and September 2021 was primarily driven by an increase in net debt to support working capital demands at September 2022 and a decrease in stockholders' equity for the periods compared.

VF Corporation Q2 FY23 Form 10-Q 38

The increase in net debt was primarily attributed to the increase in short-term borrowings, as discussed in the "Consolidated Balance Sheet" section above.

The decrease in stockholders' equity as of September 2022 compared to March 2022 was primarily driven by payments of dividends and net losses in the period, and the decrease compared to September 2021 was primarily due to payments of dividends and share repurchases, partially offset by net income in the period.

VF’s primary source of liquidity is its expected annual cash flow from operating activities.

Cash from operations is typically lower in the first half of the calendar year as inventory builds to support peak sales periods in the second half of the calendar year.

Cash from operations is typically lower

in the first half of the calendar year as inventory builds to support peak sales periods in the second half of the calendar year.

Cash provided by operating activities in the second half of the calendar year is substantially higher as inventories are sold and accounts receivable are collected.

Additionally, direct-to-consumer sales are highest in the fourth quarter of the calendar year.

VF's additional sources of liquidity include available borrowing capacity against its Global Credit Facility, available cash balances and international lines of credit.

VF Corporation Q1 FY23 Form 10-Q 28

VF's additional sources of liquidity include available borrowing capacity against its Global Credit Facility and term debt facility, available cash balances and international lines of credit.

In summary, our cash flows from continuing operations were as follows:

Three Months Ended June

Six Months Ended September

(In thousands) 2022 2021

Cash provided (used) by operating activities $ (358,320) $ 74,918

Cash used by operating activities $ (913,957) $ (177,227)

Cash provided (used) by investing activities (131,704) 1,052,885

Cash used by financing activities (261,221) (174,447)

Cash Provided (Used) by Operating Activities

Cash provided (used) by financing activities 408,764 (359,853)

Cash Used by Operating Activities

Cash flows related to operating activities are dependent on net income (loss), adjustments to net income (loss) and changes in working capital .

The decrease in cash pr ovided by operating activities in the three months ended June 2022 compared to June 2021 is primarily due to an increase in net cash used by working capital and lower earnings for the periods compared.

The increase in cash used by operating activities in the six months ended September 2022 compared to September 2021 is primarily due to an increase in net cash used by working capital and lower earnings for the periods compared.

Cash Provided (Used) by Investing Activities

The decrease in cash provided by investing activities in the three months ended June 2022 was primarily due to $616.5 million of net proceeds from the sale of the Occupational Workwear business in the three months ended June 2021.

Capital expenditures decreased $40.6 million and software purchases increased $5.9 million in the three months ended June 2022 compared to the 2021 period.

Cash Used by Financing Activities

The increase in cash used by financing activities during the three months ended June 2022 was primarily due to a $500.0 million payment of long-term debt, the $57.0 million payment of Supreme contingent consideration and a $22.7 million decrease in proceeds from the issuance of Common Stock in the three months ended June 2022, which were partially offset by a $494.9 million net increase in short-term borrowings for the periods compared.

The decrease in cash provided by investing activities in the six months ended September 2022 was primarily due to $616.5 million of net proceeds from the sale of the Occupational Workwear business and $598.8 million of proceeds from sale of short-term investments in the six months ended September 2021.

Capital expenditures decreased $54.6 million and software purchases increased $5.7 million in the six months ended September 2022 compared to the 2021 period.

Cash Provided (Used) by Financing Activities

The increase in cash provided by financing activities during the six months ended September 2022 was primarily due to a net increase in short-term borrowings of $1.4 billion for the periods compared, which was partially offset by a $500.0 million payment of long-term debt, the $57.0 million payment of Supreme contingent consideration and a $27.9 million decrease in net proceeds from the issuance of Common Stock for the periods compared.

Share Repurchases

VF did not purchase shares of its Common Stock in the open market during the three months ended June 2022 or the three months ended June 2021 under the share repurchase program authorized by VF's Board of Directors.

As of the end of June 2022, VF had $2.5 billion remaining for future repurchases under its share repurchase authorization.

VF will continue to evaluate its use of capital, giving first priority to investments in organic growth and business acquisitions, then to direct shareholder return in the form of dividends and share repurchases.

VF did not purchase shares of its Common Stock in the open market during the six months ended September 2022 or the six months ended September 2021 under the share repurchase program authorized by VF's Board of Directors.

As of the end of September 2022, VF h ad $2.5 billion re maining for future repurchases under its share repurchase authorization.

VF will continue to evaluate its use of capital, giving priority to investments in organic growth, business acquisitions and direct shareholder return in the form of dividends and share repurchases.

Revolving Credit Facility and Short-term Borrowings

11 unchanged sentences

The calculation of consolidated net indebtedness is net of unrestricted cash.

As of June 2022, the covenant calculation includes cash and equivalents and excludes consolidated operating lease liabilities.

As of June 2022, VF was in compliance with all covenants.

As of September 2022, the covenant calculation excludes consolidated operating lease liabilities.

As of September 2022, VF was in compliance with all covenants.

VF has a commercial paper program that allows for borrowings of up to $2.25 billion to the extent that it has borrowing capacity under the Global Credit Facility.

There were $820.8 million in commercial paper borrowings as of June 2022 .

Standby letters of credit issued as of June 2022 were $24.3 million, leaving approximately $1.4 billion available for borrowing against the Global Credit Facility at June 2022.

Additionally, VF had $528.0 million of cash and equivalents at June 2022.

VF has $56.4 million of international lines of credit with various banks, which are uncommitted and may be terminated at any time by either VF or the banks.

Total outstanding balances under these arrangements were $6.6 million at June 2022.

There wer e $1.7 billion in commercial paper borrowings as of September 2022 .

Standby letters of credit issued as of September 2022 were $24.9 million, leaving approximately $539.9 million available for borrowing against the Global Credit Facility at September 2022.

Additionally, VF had $552.8 million of cash and equivalents at September 2022.

VF ha s $94.8 million of international lines of credit with various banks, which are uncommitted and may be terminated at any time by either VF or the banks.

Total outstanding balances under these arrangements were $7.5 million at September 2022.

39 VF Corporation Q2 FY23 Form 10-Q

On April 25, 2022, VF repaid the remaining $500.0 million in aggregate principal amount of its outstanding 2.050% Senior Notes due April 2022, in accordance with the terms of the notes.

Term Debt Facility

VF plans to raise additional capital through a term debt facility during Fiscal 2023 to ensure adequate liquidity to support general corporate purposes, including tax payments, working capital, capital expenditures and other transactions.

The amount of the incremental borrowing, which could be up to approximately $1.0 billion, will take into consideration expected cash flows, access to commercial paper borrowings and availability under the Global Credit Facility.

On August 11, 2022, the Company entered into a delayed draw Term Loan Agreement (the “DDTL Agreement”).

Under the DDTL Agreement, the lenders have agreed to provide up to three separate delayed draw term loans (each, a “Delayed Draw”) to the Company in an aggregate principal amount of up to $1.0 billion (which may be increased to $1.1 billion subject to the terms and conditions of the DDTL Agreement).

The DDTL Agreement has a stated termination date of the earlier of December 30, 2024 or the two-year anniversary of the latest Delayed Draw under the DDTL Agreement.

Subject to the terms and conditions of the DDTL Agreement, the Company may request extensions of the stated termination date.

Any commitments of the lenders to provide Delayed Draws that remain undrawn will automatically terminate on December 30, 2022.

VF completed its first draw under the DDTL Agreement of $800.0 million on October 18, 2022, which will mature no later than December 30, 2024.

Supply Chain Financing Program

During the three months ended June 2022, VF reinstated its voluntary supply chain finance ("SCF") program.

During the first quarter of Fiscal 2023, VF reinstated its voluntary supply chain finance ("SCF") program.

The SCF program enables a significant portion of our suppliers of inventory to leverage VF's credit rating to receive payment from participating financial institutions prior to the payment date specified in the terms between VF and the supplier.

29 VF Corporation Q1 FY23 Form 10-Q

program is administered through third-party platforms that allow participating suppliers to track payments from VF and elect which VF receivables, if any, to sell to the financial institutions.

The SCF program is administered through third-party platforms that allow participating suppliers to track payments from VF and elect which VF receivables, if any, to sell to the financial institutions.

The transactions are at the sole discretion of both the suppliers and financial institutions, and VF is not a party to the agreements and has no economic interest in the supplier's decision to sell a receivable.

1 unchanged sentence

Amounts due to suppliers who voluntarily participate in the SCF program are included in the accounts payable line item in VF's Consolidated Balance Sheets and VF payments made under the SCF program are reflected in cash flows from operating activities in VF's Consolidated Statements of Cash Flows.

VF has been informed by the participating financial institutions that amounts payable to them for suppliers who voluntarily participated in the SCF program and included in the accounts payable line item in VF's Consolidated Balance Sheet was $164.1 million at June 2022.

The amount settled through the SCF program was $15.0 million during the three months ended June 2022.

During Fiscal 2023, VF plans to extend its payment terms with eligible suppliers under the SCF program.

The amounts settled through the SCF program during the three and six months ended September 2022 were $417.2 million and $432.2 million, respectively.

During the three months ended September 2022, VF extended its payment terms with eligible suppliers under the SCF program.

The extended payment terms are expected to have a positive impact on Fiscal 2023 cash flows from operating activities;

2 unchanged sentences

VF’s credit agency ratings allow for access to additional liquidity at competitive rates.

At the end of June 2022, VF’s long-term debt ratings were ‘A-’ by Standard & Poor’s ("S&P") Global Ratings and ‘Baa1’ by Moody’s Investors Service, and commercial paper ratings by those rating agencies were ‘A-2’ and ‘P-2’, respectively.

In June 2022, S&P revised VF's credit rating outlook to 'negative' from 'stable'.

At the end of September 2022, VF’s long-term debt ratings were ‘A-’ by Standard & Poor’s ("S&P") Global Ratings and ‘Baa1’ by Moody’s Investors Service, and commercial paper ratings by those rating agencies were ‘A-2’ and ‘P-2’, respectively.

VF's credit rating outlook was revised to 'negative' from 'stable' by S&P in June 2022 and Moody's in October 2022.

On October 31, 2022, S&P downgraded VF's long-term debt rating to 'BBB+', while maintaining VF's commercial paper rating of 'A-2' and credit rating outlook of 'negative'.

None of VF’s long-term debt agreements contain acceleration of maturity clauses based solely on changes in credit ratings.

1 unchanged sentence

The change of control provision applies to all notes, except for the 2033 notes.

The Company paid cash dividends of $0.50 per share during the three months ended June 2022, and the Company has declared a cash dividend of $0.50 per share that is payable in the second quarter of Fiscal 2023.

The Company paid cash dividends of $0.50 per share and $1.00 per share during the three and six months ended September 2022, respectively, and the Company has declared a cash dividend of $0.51 per share that is payable in the third quarter of Fiscal 2023.

Subject to approval by its Board of Directors, VF intends to continue to pay its regularly scheduled dividend.

1 unchanged sentence

Management’s Discussion and Analysis in the Fiscal 2022 Form 10-K provided a table summarizing VF’s material contractual obligations and commercial commitments at the end of Fiscal 2022 that would require the use of funds.

As of June 2022, there have been no material changes in the amounts of unrecorded commitments disclosed in the Fiscal 2022 Form 10-K, except as noted below:

• Inventory purchase obligations decreased by approximately $1.1 billion at the end of June 2022 primarily due to changes in terms with suppliers that increased in-transit inventory.

As of September 2022, there have been no material changes in the amounts of unrecorded commitments disclosed in the Fiscal 2022 Form 10-K, except as noted below:

• Inventory purchase obligations decreased by approximately $1.3 billion at the end of September 2022 primarily due to changes in terms with suppliers that increased in-transit inventory and the timing of fulfilled orders following periods of supply chain disruption.

As previously reported, VF petitioned the U.S.

3 unchanged sentences

On January 31, 2022, the Court issued its opinion in favor of the IRS and on July 14, 2022 issued its final decision.

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 July 2, 2022 was estimated at approximately $857.5 million and will continue to accrue interest until paid.

VF believes the opinion of the Court was in error based on the technical merits and filed a notice of appeal on October 7, 2022.

On October 19, 2022, VF paid $875.7 million related to the 2011 taxes and interest being disputed, which will be recorded as a tax receivable based on the technical merits of our position with regards to the case.

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, the tax receivable may not be collected by VF.

However, should the Court opinion ultimately be upheld on appeal, this tax receivable will 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.

However, any such refund could

VF Corporation Q2 FY23 Form 10-Q 40

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 July 2, 2022 could be up to $715.0 million.

There continues to be uncertainty about the duration and extent of the impact of COVID-19.

However, management believes that VF has sufficient liquidity and flexibility to operate during and after the disruptions caused by the COVID-19 pandemic and related governmental actions and regulations and health authority advisories, and meet its current and long-term obligations as they become due.

The net impact to tax expense is estimated to be up to $730 million.

There continues to be uncertainty about the duration and extent of the impact of the challenging macroeconomic environment

and COVID-19 pandemic.

However, management believes that VF has sufficient liquidity and flexibility to operate during and after the disruptions caused by the challenging macroeconomic environment and COVID-19 pandemic, and meet its current and long-term obligations as they become due.

Recent Accounting Pronouncements

7 unchanged sentences

These estimates, assumptions and judgments are based on historical experience, current trends and other factors believed to be reasonable under the circumstances.

Management evaluates these estimates and

assumptions, and may retain outside consultants to assist in the evaluation.

Management evaluates these estimates and assumptions, and may retain outside consultants to assist in the evaluation.

If actual results ultimately differ from previous estimates, the revisions are included in results of operations in the period in which the actual amounts become known.

1 unchanged sentence

Except as disclosed in Note 1 to VF's consolidated financial statements, there have been no material changes in VF's accounting policies from those disclosed in our Fiscal 2022 Form 10-K.

Refer to Note 16 for additional detail of critical accounting estimates during the three months ended September 2022, which were associated with impairment testing of the Supreme reporting unit goodwill and indefinite-lived trademark intangible asset.

Cautionary Statement on Forward-looking Statements

19 unchanged sentences

VF's ability to create and maintain an agile and efficient operating model and organizational structure;

its vendors’ ability to maintain the strength and security of information technology systems;

the risk that VF’s facilities and systems and those of our third-party service providers may be vulnerable to and unable to anticipate or detect data or information security breaches and data or financial loss;

VF’s and its vendors’ ability to maintain the strength and security of information technology systems;

the risk that VF’s facilities and systems and those of our third-party service providers may be vulnerable to and unable to anticipate or detect data or

information security breaches and data or financial loss;

VF’s ability to properly collect, use, manage and secure business, consumer and employee data and comply with privacy and security regulations;

6 unchanged sentences

VF’s ability to protect trademarks and other intellectual property rights;

possible goodwill and other asset impairment;

possible goodwill and other asset impairment such as the recent impairment charges related to the Supreme ® reporting unit goodwill and indefinite-lived trademark intangible asset;

maintenance by VF’s licensees and distributors of the value of VF’s brands;

1 unchanged sentence

business resiliency in response to natural or man-made economic, political or environmental disruptions;

changes in tax laws and additional tax liabilities, including for the timing of income inclusion associated with our acquisition of the Timberland ® brand in 2011;

changes in tax laws and additional tax liabilities, including the timing of income inclusion associated with our acquisition of the Timberland ® brand in 2011;

legal, regulatory, political, economic, and geopolitical risks, including those related to the current conflict in Ukraine;

5 unchanged sentences

More information on potential factors that could affect VF’s financial results is included from time to time in VF’s public reports filed with the Securities and Exchange Commission, including VF’s Annual Report on Form 10-K.

VF Corporation Q2 FY23 Form 10-Q 42

ITEM 3 — QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

There have been no significant changes in VF’s market risk exposures from what was disclosed in Item 7A in the Fiscal 2022 Form 10-K.

31 VF Corporation Q1 FY23 Form 10-Q

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-Q

Item 2. Management’s Discussion and Analysis