Item 1. Financial Statements
ITEM 1 — FINANCIAL STATEMENTS (UNAUDITED).
VF CORPORATION
Consolidated Balance Sheets
(Unaudited)
(In thousands, except share amounts) June 2024 March 2024 June 2023
ASSETS
Current assets
Cash and equivalents
$ 637,420 $ 674,605 $ 806,529
Accounts receivable, less allowance for doubtful accounts of: June 2024 - $ 28,542 ; March 2024 - $ 26,369 ; June 2023 - $ 33,076
1,055,571 1,273,965 1,214,223
Inventories
2,110,598 1,766,366 2,787,021
Other current assets
545,542 512,011 405,784
Total current assets 4,349,131 4,226,947 5,213,557
Property, plant and equipment, net
794,212 823,886 943,163
Intangible assets, net
2,571,765 2,628,482 2,640,827
Goodwill
1,360,782 1,460,414 1,973,615
Operating lease right-of-use assets
1,332,950 1,330,361 1,349,725
Other assets
1,132,523 1,142,873 1,923,011
TOTAL ASSETS $ 11,541,363 $ 11,612,963 $ 14,043,898
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Short-term borrowings
$ 263,709 $ 263,938 $ 58,520
Current portion of long-term debt
1,749,601 1,000,721 928,736
Accounts payable
1,157,755 817,128 1,282,313
Accrued liabilities
1,237,909 1,375,192 1,546,866
Total current liabilities 4,408,974 3,456,979 3,816,435
Long-term debt
3,940,668 4,702,284 5,722,448
Operating lease liabilities
1,167,415 1,156,858 1,155,852
Other liabilities
636,401 638,477 632,400
Total liabilities 10,153,458 9,954,598 11,327,135
Commitments and contingencies
Stockholders’ equity
Preferred Stock, par value $ 1 ; shares authorized, 25,000,000 ; no shares outstanding at June 2024, March 2024 or June 2023
— — —
Common Stock, stated value $ 0.25 ; shares authorized, 1,200,000,000 ; shares outstanding at June 2024 - 389,181,642 ; March 2024 - 388,836,219 ; June 2023 - 388,836,545
97,295 97,209 97,209
Additional paid-in capital
3,580,175 3,600,071 3,733,777
Accumulated other comprehensive loss
( 1,053,627 ) ( 1,064,331 ) ( 1,053,529 )
Accumulated deficit
( 1,235,938 ) ( 974,584 ) ( 60,694 )
Total stockholders’ equity 1,387,905 1,658,365 2,716,763
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 11,541,363 $ 11,612,963 $ 14,043,898
See notes to consolidated financial statements.
3 VF Corporation Q1 FY25 Form 10-Q
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VF CORPORATION
Consolidated Statements of Operations
(Unaudited)
Three Months Ended June
(In thousands, except per share amounts) 2024 2023
Net revenues
$ 1,907,301 $ 2,086,336
Costs and operating expenses
Cost of goods sold
915,643 985,269
Selling, general and administrative expenses
1,086,551 1,110,059
Impairment of goodwill and intangible assets
145,000 —
Total costs and operating expenses
2,147,194 2,095,328
Operating loss
( 239,893 ) ( 8,992 )
Interest income
3,554 5,494
Interest expense
( 59,231 ) ( 55,213 )
Other income (expense), net
( 1,950 ) ( 3,567 )
Loss before income taxes
( 297,520 ) ( 62,278 )
Income tax benefit
( 38,634 ) ( 4,853 )
Net loss
$ ( 258,886 ) $ ( 57,425 )
Net loss per common share
Basic
$ ( 0.67 ) $ ( 0.15 )
Diluted
$ ( 0.67 ) $ ( 0.15 )
Weighted average shares outstanding
Basic
388,741 388,160
Diluted
388,741 388,160
See notes to consolidated financial statements.
VF Corporation Q1 FY25 Form 10-Q 4
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VF CORPORATION
Consolidated Statements of Comprehensive Loss
(Unaudited)
Three Months Ended June
(In thousands) 2024 2023
Net loss
$ ( 258,886 ) $ ( 57,425 )
Other comprehensive income (loss)
Foreign currency translation and other
Losses arising during the period
( 15,773 ) ( 16,530 )
Income tax effect
( 3,680 ) 3,381
Defined benefit pension plans
Current period actuarial gains
— 1,001
Amortization of net deferred actuarial losses
5,046 4,232
Amortization of deferred prior service credits
( 144 ) ( 135 )
Reclassification of net actuarial loss from settlement charges
— 3,292
Income tax effect
( 1,270 ) ( 1,909 )
Derivative financial instruments
Gains (losses) arising during the period
20,021 ( 22,740 )
Income tax effect
( 4,236 ) 4,138
Reclassification of net (gains) losses realized
13,729 ( 10,680 )
Income tax effect
( 2,989 ) 1,939
Other comprehensive income (loss)
10,704 ( 34,011 )
Comprehensive loss
$ ( 248,182 ) $ ( 91,436 )
See notes to consolidated financial statements.
5 VF Corporation Q1 FY25 Form 10-Q
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VF CORPORATION
Consolidated Statements of Cash Flows
(Unaudited)
Three Months Ended June
(In thousands) 2024 2023
OPERATING ACTIVITIES
Net loss
$ ( 258,886 ) $ ( 57,425 )
Adjustments to reconcile net loss to cash provided by operating activities:
Impairment of goodwill and intangible assets
145,000 —
Depreciation and amortization
67,781 67,075
Reduction in the carrying amount of right-of-use assets
92,495 95,728
Stock-based compensation
14,662 15,784
Provision for doubtful accounts
4,424 4,633
Pension expense in excess of (less than) contributions
2,219 ( 10,661 )
Other, net
( 20,220 ) 10,645
Changes in operating assets and liabilities:
Accounts receivable
202,973 395,110
Inventories
( 356,053 ) ( 493,720 )
Accounts payable
345,494 344,482
Income taxes
( 82,414 ) ( 30,667 )
Accrued liabilities
( 67,785 ) ( 66,581 )
Operating lease right-of-use assets and liabilities
( 87,786 ) ( 102,688 )
Other assets and liabilities
17,926 ( 8,140 )
Cash provided by operating activities
19,830 163,575
INVESTING ACTIVITIES
Proceeds from sale of assets
45,596 1,170
Capital expenditures
( 25,187 ) ( 61,763 )
Software purchases
( 16,106 ) ( 22,827 )
Other, net
( 15,364 ) ( 7,142 )
Cash used by investing activities
( 11,061 ) ( 90,562 )
FINANCING ACTIVITIES
Net increase (decrease) in short-term borrowings
( 230 ) 47,029
Payments on long-term debt
( 275 ) ( 268 )
Payment of debt issuance costs
— ( 346 )
Cash dividends paid
( 35,015 ) ( 116,575 )
Proceeds from issuance of Common Stock, net of payments for tax withholdings
( 1,924 ) ( 1,725 )
Cash used by financing activities
( 37,444 ) ( 71,885 )
Effect of foreign currency rate changes on cash, cash equivalents and restricted cash
( 8,340 ) ( 9,326 )
Net change in cash, cash equivalents and restricted cash
( 37,015 ) ( 8,198 )
Cash, cash equivalents and restricted cash – beginning of year
676,957 816,319
Cash, cash equivalents and restricted cash – end of period
$ 639,942 $ 808,121
Balances per Consolidated Balance Sheets:
Cash and cash equivalents $ 637,420 $ 806,529
Other current assets 2,397 1,465
Other assets 125 127
Total cash, cash equivalents and restricted cash $ 639,942 $ 808,121
See notes to consolidated financial statements.
VF Corporation Q1 FY25 Form 10-Q 6
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VF CORPORATION
Consolidated Statements of Stockholders’ Equity
(Unaudited)
Three Months Ended June 2024
Additional Paid-in Capital Accumulated Other Comprehensive Loss Accumulated Deficit
Common Stock
(In thousands, except share amounts) Shares Amounts Total
Balance, March 2024 388,836,219 $ 97,209 $ 3,600,071 $ ( 1,064,331 ) $ ( 974,584 ) $ 1,658,365
Net loss
— — — — ( 258,886 ) ( 258,886 )
Dividends on Common Stock ($ 0.09 per share)
— — ( 35,015 ) — — ( 35,015 )
Stock-based compensation, net
345,423 86 15,119 — ( 2,468 ) 12,737
Foreign currency translation and other
— — — ( 19,453 ) — ( 19,453 )
Defined benefit pension plans
— — — 3,632 — 3,632
Derivative financial instruments
— — — 26,525 — 26,525
Balance, June 2024 389,181,642 $ 97,295 $ 3,580,175 $ ( 1,053,627 ) $ ( 1,235,938 ) $ 1,387,905
Three Months Ended June 2023
Additional Paid-in Capital Accumulated Other Comprehensive Loss Accumulated Deficit
Common Stock
(In thousands, except share amounts) Shares Amounts Total
Balance, March 2023 388,665,531 $ 97,166 $ 3,775,979 $ ( 1,019,518 ) $ 57,086 $ 2,910,713
Net loss
— — — — ( 57,425 ) ( 57,425 )
Dividends on Common Stock ($ 0.30 per share)
— — ( 59,489 ) — ( 57,086 ) ( 116,575 )
Stock-based compensation, net
171,014 43 17,287 — ( 3,269 ) 14,061
Foreign currency translation and other
— — — ( 13,149 ) — ( 13,149 )
Defined benefit pension plans
— — — 6,481 — 6,481
Derivative financial instruments
— — — ( 27,343 ) — ( 27,343 )
Balance, June 2023 388,836,545 $ 97,209 $ 3,733,777 $ ( 1,053,529 ) $ ( 60,694 ) $ 2,716,763
See notes to consolidated financial statements.
7 VF Corporation Q1 FY25 Form 10-Q
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VF CORPORATION
Notes to Consolidated Financial Statements
(Unaudited)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS PAGE NUMBER
NOTE 1 Basis of Presentation
9
NOTE 2 Recently Adopted and Issued Accounting Standards
9
NOTE 3 Revenues
10
NOTE 4 Inventories
11
NOTE 5 Intangible Assets
11
NOTE 6 Goodwill
12
NOTE 7 Leases
12
NOTE 8 Supply Chain Financing Program
12
NOTE 9 Pension Plans
13
NOTE 10 Capital and Accumulated Other Comprehensive Loss
13
NOTE 11 Stock-based Compensation
15
NOTE 12 Income Taxes
15
NOTE 13 Reportable Segment Information
16
NOTE 14 Net Loss Per Share
16
NOTE 15 Fair Value Measurements
17
NOTE 16 Derivative Financial Instruments and Hedging Activities
19
NOTE 17 Restructuring
21
NOTE 18 Subsequent Event s
22
VF Corporation Q1 FY25 Form 10-Q 8
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NOTE 1 — BASIS OF PRESENTATION
Fiscal Year
VF Corporation (together with its subsidiaries, collectively known as “VF” or the “Company”) uses a 52/53 week fiscal year ending on the Saturday closest to March 31 of each year. The Company's current fiscal year runs from March 31, 2024 through March 29, 2025 (“Fiscal 2025”). Accordingly, this Form 10-Q presents our first quarter of Fiscal 2025. For presentation purposes herein, all references to periods ended June 2024 and June 2023 relate to the fiscal periods ended on June 29, 2024 and July 1, 2023, respectively. References to March 2024 relate to information as of March 30, 2024.
Basis of Presentation
The accompanying unaudited interim consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X and do not include all of the information and notes required by generally accepted accounting principles in the United States of America (“GAAP”) for complete financial statements. Similarly, the March 2024 consolidated balance sheet data was derived from audited financial statements but does not include all disclosures required by GAAP. In the opinion of management,
the accompanying unaudited interim consolidated financial statements contain all normal and recurring adjustments necessary to fairly state the consolidated financial position, results of operations and cash flows of VF for the interim periods presented. Operating results for the three months ended June 2024 are not necessarily indicative of results that may be expected for any other interim period or for Fiscal 2025. For further information, refer to the consolidated financial statements and notes included in VF’s Annual Report on Form 10-K for the year ended March 30, 2024 (“Fiscal 2024 Form 10-K”).
Certain prior year amounts have been reclassified to conform to
the Fiscal 2025 presentation.
Use of Estimates
In preparing the interim consolidated financial statements, management makes estimates and assumptions that affect amounts reported in the interim consolidated financial statements and accompanying notes. Actual results may differ from those estimates.
NOTE 2 — RECENTLY ADOPTED AND ISSUED ACCOUNTING STANDARDS
Recently Adopted Accounting Standards
In September 2022, the Financial Accounting Standards Board (" FASB") issued A ccounting Standards Update ("ASU") No. 2022-04, " Liabilities — Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations ". This guidance requires companies with supplier finance programs to disclose sufficient qualitative and quantitative information about the program to allow a user of the financial statements to understand the nature of, activity in, and potential magnitude of the program. The guidance became effective for VF in the first quarter of Fiscal 2024, except for the rollforward information that will be effective for annual periods beginning in Fiscal 2025 on a prospective basis. The Company adopted the required guidance in the first quarter of Fiscal 2024 and will disclose the rollforward information in our Annual Report on Form 10-K for the year ended March 29, 2025. Refer to Note 8 for disclosures related to the Company's supply chain financing program.
Recently Issued Accounting Standards
In November 2023, the FASB issued ASU No. 2023-07, " Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures" , which updates reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses that are regularly provided to the individual or group identified as the chief operating decision maker ("CODM"). The guidance also requires disclosure of the title and position of the CODM and how reported measures of
segment profit or loss are used to assess performance and allocate resources. The guidance will be effective for annual disclosures beginning in Fiscal 2025, and has expanded requirements to include all disclosures about a reportable segment's profit or loss and assets in subsequent interim periods. Early adoption is permitted. The guidance requires retrospective application to all prior periods presented in the financial statements. The Company is evaluating the impact that adopting this guidance will have on VF's disclosures.
In December 2023, the FASB issued ASU No. 2023-09, " Income Taxes (Topic 740): Improvements to Income Tax Disclosures" , which is intended to enhance the transparency and decision usefulness of income tax disclosures by requiring that an entity, on an annual basis, disclose additional income tax information, primarily related to the rate reconciliation and income taxes paid. The rate reconciliation disclosures will require specific categories and additional information for reconciling items that meet a quantitative threshold. The income taxes paid disclosures will require disaggregation by individual jurisdictions that are greater than 5% of total income taxes paid. The guidance will be effective for annual disclosures beginning in Fiscal 2026. Early adoption is permitted. The amendments are required to be applied on a prospective basis; however, retrospective application is permitted. The Company is evaluating the impact that adopting this guidance will have on VF's disclosures.
9 VF Corporation Q1 FY25 Form 10-Q
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NOTE 3 — REVENUES
Contract Balances
The following table provides information about contract assets and contract liabilities:
(In thousands) June 2024 March 2024 June 2023
Contract assets (a)
$ 3,188 $ 2,393 $ 2,645
Contract liabilities (b)
68,254 67,115 62,942
(a) Included in the other current assets line item in the Consolidated Balance Sheets.
(b) Included in the accrued liabilities line item in the Consolidated Balance Sheets.
For the three months ended June 2024, the Company recognized $ 46.3 million of revenue that was included in the contract liability balance during the period, including amounts recorded as a contract liability and subsequently recognized as revenue as performance obligations were satisfied within the same period, such as order deposits from customers. The change in the contract asset and contract liability balances primarily results from the timing differences between the Company's satisfaction of performance obligations and the customer's payment.
Performance Obligations
As of June 2024, the Company expects to recognize $ 75.8 million of fixed consideration related to the future minimum guarantees in effect under its licensing agreements and expects such
amounts to be recognized over time based on the contractual terms through March 2031. The variable consideration related to licensing arrangements is not disclosed as a remaining performance obligation as it qualifies for the sales-based royalty exemption. VF has also elected the practical expedient to not disclose the transaction price allocated to remaining performance obligations for contracts with an original expected duration of one year or less.
As of June 2024, there were no arrang ements with transaction price allocated to remaining performance obligations other than contracts for which the Company has applied the practical expedients and the fixed consideration related to future minimum guarantees discussed above.
Disaggregation of Revenues
The following tables disaggregate our revenues by channel and geography, which provides a meaningful depiction of how the nature, timing and uncertainty of revenues are affected by economic factors.
Three Months Ended June 2024
(In thousands) Outdoor Active Work Total
Channel revenues
Wholesale $ 441,881 $ 435,264 $ 136,644 $ 1,013,789
Direct-to-consumer 345,290 499,957 33,933 879,180
Royalty 3,028 6,918 4,386 14,332
Total $ 790,199 $ 942,139 $ 174,963 $ 1,907,301
Geographic revenues
Americas $ 373,400 $ 526,726 $ 144,643 $ 1,044,769
Europe 264,181 270,153 18,522 552,856
Asia-Pacific 152,618 145,260 11,798 309,676
Total $ 790,199 $ 942,139 $ 174,963 $ 1,907,301
VF Corporation Q1 FY25 Form 10-Q 10
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Three Months Ended June 2023
(In thousands) Outdoor Active Work Total
Channel revenues
Wholesale $ 489,931 $ 462,265 $ 146,169 $ 1,098,365
Direct-to-consumer 336,333 597,621 39,654 973,608
Royalty 3,433 6,123 4,807 14,363
Total $ 829,697 $ 1,066,009 $ 190,630 $ 2,086,336
Geographic revenues
Americas $ 404,406 $ 625,847 $ 153,571 $ 1,183,824
Europe 288,221 277,126 19,001 584,348
Asia-Pacific 137,070 163,036 18,058 318,164
Total $ 829,697 $ 1,066,009 $ 190,630 $ 2,086,336
NOTE 4 — INVENTORIES
(In thousands) June 2024 March 2024 June 2023
Finished products $ 2,063,417 $ 1,718,676 $ 2,731,511
Work-in-process 36,881 39,539 41,827
Raw materials 10,300 8,151 13,683
Total inventories $ 2,110,598 $ 1,766,366 $ 2,787,021
NOTE 5 — INTANGIBLE ASSETS
June 2024 March 2024
(In thousands) Weighted
Average
Amortization
Period Amortization
Method Cost Accumulated
Amortization Net
Carrying
Amount Net
Carrying
Amount
Amortizable intangible assets:
Customer relationships and other 19 years Accelerated $ 261,408 $ 189,927 $ 71,481 $ 74,963
Indefinite-lived intangible assets:
Trademarks and trade names 2,500,284 2,553,519
Intangible assets, net $ 2,571,765 $ 2,628,482
During the three months ended June 2024, VF determined that a triggering event had occurred requiring impairment testing of the Supreme ® indefinite-lived trademark intangible asset. VF's assessment gave consideration to the ongoing negotiations to sell the Supreme ® brand. As a result of the impairment testing performed, VF recorded an impairment charge of $ 51.0 million to the Supreme ® indefinite-lived trademark intangible asset related to an increase in the market-based discount rate applied. Refer to Note 15 for additional information on fair value measurements.
Amortization expense for the three months ended June 2024 was $ 3.3 million. B ased on the carrying amounts of amortizable intangible assets noted above, estimated amortization expense for the next five years beginning in Fiscal 2025 is $ 13.2 million, $ 12.2 million, $ 11.7 million, $ 10.8 million and $ 9.8 million, respectively.
11 VF Corporation Q1 FY25 Form 10-Q
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NOTE 6 — GOODWILL
Changes in goodwill are summarized by reportable segment as follows:
(In thousands) Outdoor Active Work Total
Balance, March 2024 $ 205,868 $ 1,203,046 $ 51,500 $ 1,460,414
Impairment charge — ( 94,000 ) — ( 94,000 )
Foreign currency translation 383 ( 6,015 ) — ( 5,632 )
Balance, June 2024 $ 206,251 $ 1,103,031 $ 51,500 $ 1,360,782
During the three months ended June 2024, VF determined that a triggering event had occurred requiring impairment testing of the Supreme reporting unit goodwill. VF's assessment gave consideration to the ongoing negotiations to sell the Supreme reporting unit. As a result of the impairment testing performed, VF recorded an impairment charge of $ 94.0 million to the Supreme reporting unit goodwill related to the estimates of fair value subsequently confirmed by the transaction price discussed in Note 18. The Supreme reporting unit is part of the Active
segment. Refer to Note 15 for additional information on fair value measurements.
Accum ulated impairm ent charges for the Outdoor and Work segments were $ 769.0 million and $ 61.8 million , respectively, as of June 2024 and March 2024 . Accum ulated impairm ent charges for the Active segment were $ 488.1 million and $ 394.1 million a s of June 2024 and March 2024, respectively .
NOTE 7 — LEASES
The Company leases certain retail locations, office space, distribution facilities, machinery and equipment, and vehicles. The substantial majority of these leases are operating leases. Total lease cost includes operating lease cost, variable lease cost, finance lease cost, short-term lease cost and gain recognized from a sale leaseback transaction. The components of lease cost were as follows:
Three Months Ended June
(In thousands) 2024 2023
Operating lease cost $ 105,143 $ 106,131
Other lease cost 22,231 35,319
Total lease cost $ 127,374 $ 141,450
During the three months ended June 2024, the Company entered into a sale leaseback transaction for certain warehouse real estate and related assets. The transaction qualified as a sale, and thus the Company recognized a gain of $ 15.5 million in the selling, general and administrative expenses line item in VF's Consolidated Statement of Operations for the three months ended June 2024.
During the three months ended June 2024 and 2023, the Company paid $ 105.4 million and $ 114.2 million for operating leases, respectively. During the three months ended June 2024 and 2023, the Company obtained $ 102.7 million and $ 71.8 million of right-of-use assets in exchange for lease liabilities, respectively.
NOTE 8 — SUPPLY CHAIN FINANCING PROGRAM
VF facilitates a voluntary supply chain finance ("SCF") program that enables a significant portion of our inventory suppliers 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. The SCF program is administered through third-party platforms that allow participating suppliers to track payments from VF and elect which 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. The terms between VF and the supplier, including the amount due and scheduled payment terms (which are generally
within 90 days of the invoice date), are not impacted by a supplier's participation in the SCF program. All amounts due to suppliers that are eligible to 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. At June 2024, March 2024 and June 2023, the accounts payable line item in VF’s Consolidated Balance Sheets included total outstanding obligations of $ 843.0 million, $ 485.0 million and $ 931.0 million, respectively, due to suppliers that are eligible to participate in the SCF program.
VF Corporation Q1 FY25 Form 10-Q 12
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NOTE 9 — PENSION PLANS
The components of pension cost for VF’s defined benefit plans were as follows:
Three Months Ended June
(In thousands) 2024 2023
Service cost – benefits earned during the period $ 2,408 $ 2,192
Interest cost on projected benefit obligations 11,680 11,812
Expected return on plan assets ( 15,296 ) ( 15,877 )
Settlement charge — 3,292
Amortization of deferred amounts:
Net deferred actuarial losses 5,046 4,232
Deferred prior service credits ( 144 ) ( 135 )
Net periodic pension cost $ 3,694 $ 5,516
VF has reported the service cost component of net periodic pension cost in operating loss and the other components, which include interest cost, expected return on plan assets, settlement charges and amortization of deferred actuarial losses and prior service credits, in the other income (expense), net line item in the Consolidated Statements of Operations.
VF contributed $ 1.5 million to its defined benefit plans during the three months ended June 2024, and intends to make approximately $ 7.7 million of contributions during the remainder of Fiscal 2025.
VF recorded a $ 3.3 million settlement charge in the other income (expense), net line item in the Consolidated Statement of Operations for the three months ended June 2023. The settlement charge related to the recognition of deferred actuarial losses resulting from lump-sum payments of retirement benefits in the supplemental defined benefit pension plan. Actuarial assumptions used in the interim valuation were reviewed and revised as appropriate.
NOTE 10 — CAPITAL AND ACCUMULATED OTHER COMPREHENSIVE LOSS
Common Stock
During the three months ended June 2024, the Company di d no t purchase shares of Common Stock in open market transactions under its share repurchase program authorized by VF’s Board of Directors. These are treated as treasury stock transactions when shares are repurchased.
Common Stock outstanding is net of shares held in treasury which are, in substance, retired. There were no shares held in treasury at the end of June 2024, March 2024 or June 2023. The excess of the cost of treasury shares acquired over the $ 0.25 per sh are stated value of Common Stock is deducted from retained earnings (accumulated deficit).
Accumulated Other Comprehensive Loss
Comprehensive loss consists of net loss and specified components of other comprehensive income (loss), which relate to changes in assets and liabilities that are not included in net loss under GAAP but are instead deferred and accumulated within a separate component of stockholders’ equity in the balance sheet. VF’s comprehensive loss is presented in the Consolidated Statements of Comprehensive Loss. The deferred components o f other comprehensive income (loss) are reported, net of related income taxes, in accumulated other comprehensive loss ("OCL") in stockholders’ equity, as follows:
(In thousands) June 2024 March 2024 June 2023
Foreign currency translation and other $ ( 887,892 ) $ ( 868,439 ) $ ( 872,800 )
Defined benefit pension plans ( 178,701 ) ( 182,333 ) ( 161,211 )
Derivative financial instruments 12,966 ( 13,559 ) ( 19,518 )
Accumulated other comprehensive loss $ ( 1,053,627 ) $ ( 1,064,331 ) $ ( 1,053,529 )
13 VF Corporation Q1 FY25 Form 10-Q
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The changes in accumulated OCL, net of related taxes, were as follows:
Three Months Ended June 2024
(In thousands) Foreign Currency Translation and Other Defined Benefit Pension Plans Derivative Financial Instruments Total
Balance, March 2024 $ ( 868,439 ) $ ( 182,333 ) $ ( 13,559 ) $ ( 1,064,331 )
Other comprehensive income (loss) before reclassifications
( 19,453 ) ( 10 ) 15,785 ( 3,678 )
Amounts reclassified from accumulated other comprehensive loss
— 3,642 10,740 14,382
Net other comprehensive income (loss)
( 19,453 ) 3,632 26,525 10,704
Balance, June 2024 $ ( 887,892 ) $ ( 178,701 ) $ 12,966 $ ( 1,053,627 )
Three Months Ended June 2023
(In thousands) Foreign Currency Translation and Other Defined Benefit Pension Plans Derivative Financial Instruments Total
Balance, March 2023 $ ( 859,651 ) $ ( 167,692 ) $ 7,825 $ ( 1,019,518 )
Other comprehensive income (loss) before reclassifications
( 13,149 ) 1,088 ( 18,602 ) ( 30,663 )
Amounts reclassified from accumulated other comprehensive loss
— 5,393 ( 8,741 ) ( 3,348 )
Net other comprehensive income (loss)
( 13,149 ) 6,481 ( 27,343 ) ( 34,011 )
Balance, June 2023 $ ( 872,800 ) $ ( 161,211 ) $ ( 19,518 ) $ ( 1,053,529 )
Reclassifications out of accumulated OCL were as follows:
(In thousands) Three Months Ended June
Details About Accumulated Other Comprehensive Loss Components Affected Line Item in the Consolidated Statements of Operations
2024 2023
Amortization of defined benefit pension plans:
Net deferred actuarial losses
Other income (expense), net $ ( 5,046 ) $ ( 4,232 )
Deferred prior service credits
Other income (expense), net 144 135
Pension settlement charges
Other income (expense), net — ( 3,292 )
Total before tax
( 4,902 ) ( 7,389 )
Tax benefit
1,260 1,996
Net of tax
( 3,642 ) ( 5,393 )
Gains (losses) on derivative financial instruments:
Foreign exchange contracts
Net revenues ( 4,331 ) 1,090
Foreign exchange contracts
Cost of goods sold ( 10,126 ) 8,075
Foreign exchange contracts
Selling, general and administrative expenses ( 408 ) 1,301
Foreign exchange contracts
Other income (expense), net ( 56 ) ( 511 )
Interest rate contracts
Interest expense 1,192 725
Total before tax
( 13,729 ) 10,680
Tax benefit (expense)
2,989 ( 1,939 )
Net of tax
( 10,740 ) 8,741
Total reclassifications for the period, net of tax $ ( 14,382 ) $ 3,348
VF Corporation Q1 FY25 Form 10-Q 14
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NOTE 11 — STOCK-BASED COMPENSATION
Stock Options Granted
During the three months ended June 2024, VF granted stock options to employees and nonemployee members of VF's Board of Directors to purchase 5,485,215 shares of its Common Stock at an exercise price of $ 12.35 per share. The exercise price of each option granted was equal to the fair market value of VF Common Stock on the date of grant. Employee stock options vest and become exercisable in equal annual installments over three years . St ock options granted to nonemployee members of VF's Board of Directors vest upon grant and become exercisable one year from the date of grant. All options have ten-year terms.
The grant date fair value of each option award was calculated using a lattice option-pricing valuation model, which incorporated a range of assumptions for inputs as follows:
Three Months Ended June 2024
Expected volatility 37 % to 53 %
Weighted average expected volatility 47 %
Expected term (in years) 5.5 to 7.2
Weighted average dividend yield 2.1 %
Risk-free interest rate 4.54 % to 5.43 %
Weighted average fair value at date of grant $ 4.93
Equity Awards Contingent Upon Shareholder Approval
During the three months ended June 2024, VF contingently granted certain equity awards under VF's 1996 Stock Compensation Plan (the “1996 Plan”) as part of VF’s regular annual grant program. Grants for performance-based restricted stock units (“RSUs”) and nonperformance-based RSUs, totaling 3,642,883 shares, were contingent upon shareholder approval of
an amendment and restatement of VF’s 1996 Plan. Proposed changes to the 1996 Plan included an increase in the number of shares of common stock available for awards. Shareholders approved the proposed changes to the 1996 Plan at the 2024 Annual Meeting of Shareholders held on July 23, 2024, which is the accounting grant date for the contingently awarded RSUs.
NOTE 12 — INCOME TAXES
The effective income tax rate for the three months ended June 2024 was 13.0 % compared to 7.8 % in the 2023 period. The three months ended June 2024 included a net discrete tax expense of $ 7.1 million, which was comprised primarily of a $ 3.6 million net tax expense related to unrecognized tax benefits and interest, and a $ 4.3 million tax expense related to stock compensation. Excluding the $ 7.1 million net discrete tax expense in the 2024 period, the effective income tax rate would have been 15.4 %. The three months ended June 2023 included a net discrete tax expense of $ 0.2 million, which was comprised primarily of a $ 4.7 million net tax expense related to unrecognized tax benefits and interest, a $ 3.1 million tax expense related to stock compensation and a $ 7.5 million net tax benefit for interest on income tax receivables. Excluding the $ 0.2 million net discrete tax expense in the 2023 period, the effective income tax rate would have been 8.2 %. Without discrete items, the effective income tax rate for the three months ended June 2024 increased by 7.2 % compared with the 2023 period primarily due to the jurisdictional mix of earnings and year-to-date losses generated in the current year, including non-deductible goodwill impairment.
VF files a consolidated U.S. federal income tax return, as well as separate and combined income tax returns in numerous state and international jurisdictions. In the U.S., the Internal Revenue Service ("IRS") examinations for tax years through 2015 have been effectively settled. In addition, VF is currently subject to examination by various state and international tax authorities. Management regularly assesses the potential outcomes of both ongoing and future examinations for the current and prior years and has concluded that VF’s provision for income taxes is adequate. The outcome of any one examination is not expected to have a material impact on VF’s consolidated financial statements. Management believes that some of these audits and negotiations will conclude during the next 12 months.
During the three months ended June 2024, the amount of net unrecognized tax benefits and associated interest increased by $ 5.3 million to $ 308.1 million. Management believes that it is reasonably possible that the amount of unrecognized income tax benefits and interest may decrease during the next 12 months by approximately $ 4.1 million due to settlement of audits and expiration of statutes of limitations, of which $ 1.0 million would reduce income tax expense.
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NOTE 13 — REPORTABLE SEGMENT INFORMATION
VF's President and Chief Executive Officer, who is considered the Company's CODM, allocates resources and assesses performance based on a global brand view that represents VF's operating segments. The operating segments have been evaluated and combined into reportable segments because they meet the similar economic characteristics and qualitative aggregation criteria set forth in the relevant accounting guidance.
The Company's reportable segments have been identified as: Outdoor, Active and Work.
Financial information for VF's reportable segments is as follows:
Three Months Ended June
(In thousands) 2024 2023
Segment revenues:
Outdoor $ 790,199 $ 829,697
Active 942,139 1,066,009
Work 174,963 190,630
Total segment revenues $ 1,907,301 $ 2,086,336
Segment profit (loss):
Outdoor $ ( 83,415 ) $ ( 43,661 )
Active 98,549 123,782
Work 5,328 6,831
Total segment profit 20,462 86,952
Impairment of goodwill and intangible assets
( 145,000 ) —
Corporate and other expenses
( 117,305 ) ( 99,511 )
Interest expense, net ( 55,677 ) ( 49,719 )
Loss before income taxes
$ ( 297,520 ) $ ( 62,278 )
NOTE 14 — NET LOSS PER SHARE
Three Months Ended June
(In thousands, except per share amounts) 2024 2023
Net loss per common share – basic:
Net loss
$ ( 258,886 ) $ ( 57,425 )
Weighted average common shares outstanding
388,741 388,160
Net loss per common share
$ ( 0.67 ) $ ( 0.15 )
Net loss per common share – diluted:
Net loss
$ ( 258,886 ) $ ( 57,425 )
Weighted average common shares outstanding
388,741 388,160
Incremental shares from stock options and other dilutive securities
— —
Adjusted weighted average common shares outstanding
388,741 388,160
Net loss per common share
$ ( 0.67 ) $ ( 0.15 )
In the three-month periods ended June 2024 and June 2023, the dilutive impacts of all outstanding stock options and other dilutive securities were excluded from dilutive shares as a result of the Company's net loss for the periods and, as such, their inclusion would have been anti-dilutive. As a result, a total of
22.6 million and 18.6 million potentially dilutive shares related to stock options and other dilutive securities were excluded from the diluted loss per share calculations for the three-month periods ended June 2024 and June 2023, respectively.
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NOTE 15 — FAIR VALUE MEASUREMENTS
Financial assets and financial liabilities measured and reported at fair value are classified in a three-level hierarchy that prioritizes the inputs used in the valuation process. A financial instrument’s categorization within the valuation hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The hierarchy is based on the observability and objectivity of the pricing inputs, as follows:
• Level 1 — Quoted prices in active markets for identical assets or liabilities.
• Level 2 — Significant directly observable data (other than Level 1 quoted prices) or significant indirectly observable
data through corroboration with observable market data. Inputs would normally be (i) quoted prices in active markets for similar assets or liabilities, (ii) quoted prices in inactive markets for identical or similar assets or liabilities, or (iii) information derived from or corroborated by observable market data.
• Level 3 — Prices or valuation techniques that require significant unobservable data inputs. These inputs would normally be VF’s own data and judgments about assumptions that market participants would use in pricing the asset or liability.
Recurring Fair Value Measurements
The following table summarizes financial assets and financial liabilities that are measured and recorded in the consolidated financial statements at fair value on a recurring basis:
Total Fair Value Fair Value Measurement Using (a)
(In thousands) Level 1 Level 2 Level 3
June 2024
Financial assets:
Cash equivalents:
Money market funds $ 189,722 $ 189,722 $ — $ —
Time deposits 7,897 7,897 — —
Derivative financial instruments 41,357 — 41,357 —
Deferred compensation and other 94,365 94,365 — —
Financial liabilities:
Derivative financial instruments 27,578 — 27,578 —
Deferred compensation 89,570 — 89,570 —
Total Fair Value Fair Value Measurement Using (a)
(In thousands) Level 1 Level 2 Level 3
March 2024
Financial assets:
Cash equivalents:
Money market funds $ 171,931 $ 171,931 $ — $ —
Time deposits 54,853 54,853 — —
Derivative financial instruments 32,548 — 32,548 —
Deferred compensation and other 95,236 95,236 — —
Financial liabilities:
Derivative financial instruments 40,234 — 40,234 —
Deferred compensation 90,804 — 90,804 —
(a) There w ere no tr ansfers among the levels within the fair value hierarchy during the three months ended June 2024 or the year ended March 2024.
VF’s cash equivalents include money market funds and time deposits with maturities within three months of their purchase dates, that approximate fair value based on Level 1 measurements. The fair value of derivative financial instruments, which consist of foreign exchange forward contracts and interest rate swap contracts, is determined based on observable market inputs (Level 2), including spot and forward exchange rates for foreign currencies and interest rate forward curves, and considers the credit risk of the Company and its counterparties. VF’s deferred compensation assets primarily represent investments held within plan trusts as an
economic hedge of the related deferred compensation liabilities. These investments primarily include mutual funds (Level 1) that are valued based on quoted prices in active markets. Liabilities related to VF’s deferred compensation plans are recorded at amounts due to participants, based on the fair value of the participants’ selection of hypothetical investments.
All other significant financial assets and financial liabilities are recorded in the consolidated financial statements at cost, except life insurance contracts which are recorded at cash surrender value. These other financial assets and financial liabilities
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include cash held as demand deposits, accounts receivable, short-term borrowings, accounts payable and accrued liabilities. At June 2024 and March 2024, their carrying values approximated their fair v alues. Additionally, at June 2024 and March 2024, the carrying values of VF’s long-term debt, including the current portion, were $ 5,690.3 million and $ 5,703.0 million, respectively, compared with fair values of $ 5,231.4 million and $ 5,263.3 million at those respective dates. Fair value for long-term debt is a Level 2 estimate based on quoted market prices or values of comparable borrowings.
Nonrecurring Fair Value Measurements
Supreme Reporting Unit and Indefinite-Lived Intangible Asset Impairment Analysis
During the three months ended June 2024, VF determined that a triggering event had occurred requiring impairment testing of the Supreme reporting unit goodwill and indefinite-lived trademark intangible asset. VF's assessment gave consideration to the ongoing negotiations to sell the Supreme reporting unit. The carrying values of the goodwill and indefinite-lived trademark intangible asset at the testing date were $ 811.6 million and $ 852.0 million, respectively. As a result of the impairment testing performed, VF recorded impairment charges of $ 94.0 million and $ 51.0 million to the Supreme reporting unit goodwill and indefinite-lived trademark intangible asset, respectively.
The Supreme reporting unit is included in the Active reportable segment.
Management estimated the fair value of the Supreme reporting unit using Company-specific inputs, including estimates of fair value subsequently confirmed by the transaction price discussed in Note 18. The fair value of the Supreme ® indefinite-lived trademark intangible asset was estimated using valuation
techniques consistent with those discussed in the Critical Accounting Policies and Estimates section included in Management’s Discussion and Analysis in the Fiscal 2024 Form 10-K.
Management’s revenue forecasts used in the Supreme ® indefinite-lived trademark intangible asset valuation considered recent and historical performance, strategic initiatives, industry trends and macroeconomic factors. Assumptions used in the valuation were similar to those that would be used by market participants performing independent valuations of the asset.
Key assumptions developed by management and used in the quantitative analysis of the Supreme ® indefinite-lived trademark intangible asset include:
• Financial projections that are comparable to those used in the prior year testing, as the brand is executing on its strategy, with moderate revenue growth throughout the forecast period that reflects the long-term strategy for the business, and terminal growth rates based on the expected long-term growth rate of the business;
• Tax rates based on the statutory rates for the countries in which the related intellectual property is domiciled;
• Royalty rates based on market data as well as active license agreements with similar VF brands; and,
• Market-based discount rates that are slightly higher than prior testing due to overall market conditions.
The valuation models used by management in the impairment testing assumes continued recovery in the brand’s operating results with revenue growth over the projection period. If the brand is unable to achieve the financial projections or if market-based discount rates increase, additional impairment of the reporting unit goodwill and indefinite-lived trademark intangible asset could occur in the future.
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NOTE 16 — DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES
Summary of Derivative Financial Instruments
VF’s outstanding derivative financial instruments include foreign currency exchange forward contracts and interest rate swap contracts. Although derivatives meet the criteria for hedge accounting at the inception of the hedging relationship, a limited number of derivative contracts intended to hedge assets and liabilities are not designated as hedges for accounting purposes.
The notional amounts of all outstanding foreign currency exchange forward contracts were $ 3.1 billion at June 2024, $ 3.1 billion at March 2024 and $ 3.5 billion at June 2023, consisting primarily of contracts hedging exposures to the euro, British
pound, Canadian dollar, Swiss franc, Mexican peso, Polish zloty, Swedish krona, South Korean won, Chinese renminbi and Japanese yen. These derivative contracts have maturities up to 20 months.
The notional amount of VF's outstanding interest rate swap contracts was $ 500.0 million at June 2024, March 2024 and June 2023. These contracts hedge the cash flow risk of interest payments on VF's variable-rate delayed draw Term Loan ("DDTL") Agreement.
The following table presents outstanding derivatives on an individual contract basis:
Fair Value of Derivatives
with Unrealized Gains Fair Value of Derivatives
with Unrealized Losses
(In thousands) June 2024 March 2024 June 2023 June 2024 March 2024 June 2023
Derivatives Designated as Hedging Instruments:
Foreign exchange contracts $ 38,160 $ 29,657 $ 27,902 $ ( 27,436 ) $ ( 39,639 ) $ ( 74,050 )
Interest rate contracts 1,690 2,335 4,582 — — —
Total derivatives designated as hedging instruments 39,850 31,992 32,484 ( 27,436 ) ( 39,639 ) ( 74,050 )
Derivatives Not Designated as Hedging Instruments:
Foreign exchange contracts 1,507 556 404 ( 142 ) ( 595 ) ( 7,978 )
Total derivatives
$ 41,357 $ 32,548 $ 32,888 $ ( 27,578 ) $ ( 40,234 ) $ ( 82,028 )
VF records and presents the fair values of all of its derivative assets and liabilities in the Consolidated Balance Sheets on a gross basis, even though they are subject to master netting agreements. If VF were to offset and record the asset and liability balances on a net basis in accordance with the terms of its master netting agreements, the amounts presented in the Consolidated Balance Sheets would be adjusted from the current gross presentation to the net amounts as detailed in the following table:
June 2024 March 2024 June 2023
(In thousands) Derivative
Asset Derivative
Liability Derivative
Asset Derivative
Liability Derivative
Asset Derivative
Liability
Gross amounts presented in the Consolidated Balance Sheets
$ 41,357 $ ( 27,578 ) $ 32,548 $ ( 40,234 ) $ 32,888 $ ( 82,028 )
Gross amounts not offset in the Consolidated Balance Sheets
( 6,699 ) 6,699 ( 11,322 ) 11,322 ( 27,128 ) 27,128
Net amounts
$ 34,658 $ ( 20,879 ) $ 21,226 $ ( 28,912 ) $ 5,760 $ ( 54,900 )
Derivatives are classified as current or noncurrent based on maturity dates, as follows:
(In thousands) June 2024 March 2024 June 2023
Derivative Instruments Balance Sheet Location
Foreign exchange contracts Other current assets $ 33,562 $ 26,366 $ 26,145
Foreign exchange contracts Accrued liabilities ( 24,802 ) ( 35,578 ) ( 73,049 )
Foreign exchange contracts Other assets 6,105 3,847 2,161
Foreign exchange contracts Other liabilities ( 2,776 ) ( 4,656 ) ( 8,979 )
Interest rate contracts Other current assets 1,690 2,335 —
Interest rate contracts Other assets — — 4,582
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Cash Flow Hedges
VF primarily uses foreign currency exchange forward contracts to hedge a portion of the exchange risk for its forecasted sales, inventory purchases, operating costs and certain intercompany transactions, including sourcing and management fees and royalties. The Company also uses interest rate swap contracts to hedge against a portion of the exposure related to its interest payments on its variable-rate debt. The effects of cash flow hedging included in VF’s Consolidated Statements of Comprehensive Loss and Consolidated Statements of Operations are summarized as follows:
(In thousands) Gain (Loss) on Derivatives
Recognized in Accumulated OCL
Three Months Ended June
Cash Flow Hedging Relationships 2024 2023
Foreign exchange contracts $ 19,501 $ ( 29,160 )
Interest rate contracts 520 6,420
Total $ 20,021 $ ( 22,740 )
(In thousands) Gain (Loss) Reclassified from
Accumulated OCL into Net Loss
Three Months Ended June
Cash Flow Hedging Relationships Location of Gain (Loss) 2024 2023
Foreign exchange contracts Net revenues $ ( 4,331 ) $ 1,090
Foreign exchange contracts Cost of goods sold ( 10,126 ) 8,075
Foreign exchange contracts Selling, general and administrative expenses ( 408 ) 1,301
Foreign exchange contracts Other income (expense), net ( 56 ) ( 511 )
Interest rate contracts Interest expense 1,192 725
Total $ ( 13,729 ) $ 10,680
Derivative Contracts Not Designated as Hedges
VF uses foreign currency exchange contracts to manage foreign currency exchange risk on third-party and intercompany accounts receivable and payable, as well as third-party and intercompany borrowings and interest payments. These contracts are not designated as hedges, and are recorded at fair value in the Consolidated Balance Sheets. Changes in the fair values of these instruments are recognized directly in earnings. Gains or losses on these contracts largely offset the net transaction losses or gains on the related assets and liabilities. In the case of derivative contracts executed on foreign currency exposures that are no longer probable of occurring, VF de-designates these hedges and the fair value changes of these instruments are also recognized directly in earnings. During the three months ended June 2023, certain derivative contracts were de-designated as the related hedged forecasted transactions were no longer deemed probable of occurring. Accordingly, the Company reclassified amounts from accumulated OCL and recognized an $ 8.4 million loss in cost of goods sold during the three months ended June 2023.
Other Derivative Information
A t June 2024, accumulated OCL included $ 4.0 million of pre-tax net deferred losses for foreign currency exchange contracts and
a $ 1.7 million pre-tax deferred gain for interest rate swap contracts, which are expected to be reclassified to earnings during the next 12 months. The amounts ultimately reclassified to earnings will depend on exchange rates and interest rates in effect when outstanding derivative contracts are settled.
Net Investment Hedge
The Company has designated its euro-denominated fixed-rate notes, which represented € 2.0 billion in aggregate principal as of June 2024, as a net investment hedge of VF’s investment in certain foreign operations. Because this debt qualified as a nonderivative hedging instrument, foreign currency transaction gains or losses of the debt are deferred in the foreign currency translation and other component of accumulated OCL as an offset to the foreign currency translation adjustments on the hedged investments. During the three-month periods ended June 2024 and June 2023, the Company recognized an after-tax gain of $ 10.8 million and an after-tax loss of $ 10.4 million, respectively, in OCL related to the net investment hedge transaction. Any amounts deferred in accumulated OCL will remain until the hedged investment is sold or substantially liquidated.
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NOTE 17 — RESTRUCTURING
The Company incurs restructuring charges related to strategic initiatives and cost optimization of business activities. A description of significant restructuring programs and other restructuring charges is provided below.
Reinvent
On October 30, 2023, VF introduced Reinvent, a transformation program to enhance focus on brand-building and to improve operating performance and allow VF to achieve its full potential. The Company currently estimates it will incur approximately $ 140.0 million to $ 160.0 million in restructuring charges in connection with Reinvent, and that substantially all actions will be completed by the end of Fiscal 2025. Of the total estimated
charges, the Company anticipates that approximately 70 % will relate to severance and employee-related benefits and the remainder will primarily relate to asset impairments and write-downs. Cash payments are generally expected to be paid within one year of charges incurred. During the three months ended June 2024, $ 12.3 million of cash payments related to the Reinvent charges were made.
The type of cost and respective location of restructuring charges related to Reinvent for the three months ended June 2024 and the cumulative charges recorded since the inception of Reinvent were as follows:
(In thousands) Three Months Ended June 2024 Cumulative Charges
Type of Cost Statement of Operations Location
Severance and employee-related benefits Selling, general and administrative expenses $ 11,141 $ 75,963
Severance and employee-related benefits Cost of goods sold 181 4,691
Contract termination and other Selling, general and administrative expenses 737 737
Contract termination and other Cost of goods sold 157 157
Asset impairments and write-downs Selling, general and administrative expenses 500 39,886
Accelerated depreciation Selling, general and administrative expenses 861 861
Accelerated depreciation Cost of goods sold 17 17
Total Reinvent Charges $ 13,594 $ 122,312
All restructuring charges related to Reinvent recognized in the three months ended June 2024 as well as all the cumulative charges were reported within 'Corporate and other' expenses in Note 13, Reportable Segment Information.
Other Restructuring Charges
Other Restructuring Charges are related to various approved initiatives. The type of cost and respective location of Other Restructuring Charges for the three months ended June 2024 and 2023 were as follows:
Three Months Ended June
(In thousands) 2024 2023
Type of Cost Statement of Operations Location
Severance and employee-related benefits Selling, general and administrative expenses $ — $ 676
Contract termination and other Selling, general and administrative expenses 437 19
Total Other Restructuring Charges $ 437 $ 695
Other Restructuring Charges by business segment were as follows:
Three Months Ended June
(In thousands) 2024 2023
Outdoor $ — $ 242
Active — 434
Work — —
Corporate and other 437 19
Total $ 437 $ 695
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Consolidated Restructuring Charges
The activity in the restructuring accrual related to Reinvent and Other Restructuring Charges for the three-month period ended June 2024 was as follows:
(In thousands) Severance Other Total
Accrual at March 2024 $ 60,331 $ 345 $ 60,676
Charges 11,322 894 12,216
Cash payments and settlements ( 13,527 ) ( 897 ) ( 14,424 )
Adjustments to accruals ( 180 ) — ( 180 )
Impact of foreign currency ( 15 ) — ( 15 )
Accrual at June 2024 $ 57,931 $ 342 $ 58,273
Of the $ 58.3 million total restructuring accrual at June 2024, $ 55.3 million is expected to be paid out within the next 12 months and is classified within accrued liabilities. The remaining $ 3.0 million will be paid out beyond the next 12 months and thus is classified within other liabilities. The Company has not recognized any significant incremental costs related to the accruals for the year ended March 2024 or prior periods.
NOTE 18 — SUBSEQUENT EVENTS
On July 16, 2024, VF entered into a definitive Stock and Asset Purchase Agreement (the "Purchase Agreement") with EssilorLuxottica S.A. to sell the Supreme ® brand business for an aggregate base purchase price of $ 1.5 billion in cash, subject to customary adjustments for cash, indebtedness, working capital and transaction expenses as more fully set forth in the Purchase Agreement.
The divestiture of the Supreme ® brand business is expected to meet the "held-for-sale" criteria in the second quarter of Fiscal 2025, and VF has determined that the sale represents a strategic shift that will have a significant effect on VF's operations. As such, the results of operations, including any expected loss recognized, and the related cash flows will be reclassified to discontinued operations on the Consolidated Statements of Operations and Consolidated Statements of Cash Flows, respectively, for all periods presented beginning in the second quarter of Fiscal 2025. In addition, the assets and liabilities will be presented separately on the Consolidated Balance Sheets for both current and prior periods beginning in the second quarter of Fiscal 2025. VF could incur a loss upon closing the transaction, but is unable to estimate with certainty, pending
determination of amounts to be transferred. The transaction is expected to close by the end of the third quarter of Fiscal 2025.
On July 23, 2024, VF’s Board of Directors declared a quarterly cash dividend of $ 0.09 per share, payable on September 18, 2024 to stockholders of record on September 10, 2024.
On August 2, 2024, VF entered into amendments to its $ 2.25 billion senior unsecured revolving line of credit (the “Global Credit Facility”) and its DDTL Agreement. The amended agreements define restrictive covenants, including a consolidated net indebtedness to consolidated net capitalization financial ratio covenant. The calculation of consolidated net indebtedness is net of unrestricted cash and the calculation of consolidated net capitalization permits certain addbacks, including non-cash impairment charges and material impacts resulting from adverse legal rulings, as defined in the amended agreements. Additionally, the amended agreements require the repayment of the DDTL upon the completion of the sale of the Supreme ® brand business.
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