V F CORP 10-K

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. OVERVIEW VF Corporation (together with its subsidiaries, collectively known as “VF” or the "Company”) is a portfolio of leading outdoor, active and workwear brands, including The North Face ® , Vans ® , Timberland ® and Dickies ® . VF is committed to providing consumers with innovative products that are rooted in performance and elevated design, while delivering sustainable and long-term value for its employees, communities, and shareholders. VF is diversified across brands, product categories, channels of distribution, geographies and consumer demographics. We own a broad portfolio of brands in the apparel, footwear and accessories categories. Our products are marketed to consumers through our wholesale channel, primarily in specialty stores, national chains, mass merchants, department stores, independently-operated partnership stores and with strategic digital partners. Our products are also marketed to consumers through our own direct-to-consumer operations, which include VF-operated stores, concession retail stores, brand e-commerce sites and other digital platforms. VF is organized by groupings of brands and businesses represented by its reportable segments for financial reporting purposes. The three reportable segments are Outdoor, Active and Work. BASIS OF PRESENTATION VF operates and reports using a 52/53 week fiscal year ending on the Saturday closest to March 31 of each year. All references to the years ended March 2025 ("Fiscal 2025"), March 2024 ("Fiscal 2024") and March 2023 ("Fiscal 2023") relate to the 52-week fiscal years ended March 29, 2025, March 30, 2024, and April 1, 2023, respectively. The following discussion and analysis focuses on our financial results for the years ended March 2025 and 2024 and year-to-year comparisons between these years. A discussion of our results of operations for the year ended March 2024 compared to the year ended March 2023 is included in Part II, Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the year ended March 30, 2024 , filed with the SEC on May 23, 2024, and is incorporated by reference into this Form 10-K. All per share amounts are presented on a diluted basis. All percentages shown in the tables below and the discussion that follows have been calculated using unrounded numbers. References to the year ended March 2025 foreign currency amounts and impacts below reflect the changes in foreign exchange rates from the year ended March 2024 when translating foreign currencies into U.S. dollars. 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. 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 ("Supreme"). On October 1, 2024, VF completed the sale of Supreme. During the second quarter of Fiscal 2025, the Company determined that Supreme met the held-for-sale and discontinued operations accounting criteria. Accordingly, VF has reported the results of Supreme and the related cash flows as discontinued operations in the Consolidated Statements of Operations and Consolidated Statements of Cash Flows, respectively, through the date of sale. In addition, interest expense and the related interest rate swap impact for the delayed draw Term Loan ("DDTL") were allocated to discontinued operations due to the requirement within the DDTL Agreement, as amended, that the DDTL be prepaid upon the receipt of the net cash proceeds from the sale of Supreme. The related held-for-sale assets and liabilities have been reported as VF Corporation Fiscal 2025 Form 10-K 25 Table of Conten ts assets and liabilities of discontinued operations in the Consolidated Balance Sheets, through the date of sale. These changes have been applied to all periods presented. Refer to Note 3 to VF’s consolidated financial statements for additional information on discontinued operations. Unless otherwise noted, amounts, percentages and discussion for all periods included below reflect the results of operations and financial condition from VF’s continuing operations. RECENT DEVELOPMENTS Impact of Tariffs In April 2025, the U.S. government announced broad-based, reciprocal tariffs on foreign imports. The implementation of some of the announced tariffs has been delayed, while some have taken effect. Additionally, in response, certain governments have announced retaliatory tariffs on goods imported from the U.S. VF has a diversified sourcing country mix. Approximately 85% of products purchased for sale in the U.S. are sourced through Southeast Asia and Central and South America, with Vietnam, Bangladesh, Cambodia and Indonesia comprising the top four sourcing markets. Less than 2% of total U.S. products are sourced through China. While the situation is dynamic and evolving, VF continues to analyze the impact of these tariffs on our business and is taking steps to mitigate our tariff exposure. Mitigation strategies include sourcing optimization, accelerating production and shipments into the U.S. during the period of delayed application of the reciprocal tariffs, negotiations with our vendors, and potential price increases. However, the duration and scope of the tariffs are difficult to predict, along with the extent to which VF will be able to offset the impact through our mitigation efforts. Supreme Divestiture As noted above, VF completed the sale of Supreme on October 1, 2024. VF received proceeds of $1.506 billion , net of cash sold, resulting in a final after-tax loss on sale of $126.6 million, which is included in the income (loss) from discontinued operations, net of tax line item in the Consolidated Statement of Operations for the year ended March 2025 . VF used a portion of the net cash proceeds to prepay $1.0 billion of the DDTL on October 4, 2024, pursuant to the terms of the DDTL Agreement, as amended, which required repayment within ten business days of VF’s receipt of the net cash proceeds from the sale of Supreme, and to repay $450.0 million of commercial paper borrowings upon maturity during the third quarter of Fiscal 2025. 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 first announced steps in this transformation, which cover the following priorities: improve North America results, deliver the Vans ® turnaround, reduce costs and strengthen the balance sheet, are as follows: • Establish global commercial organization, inclusive of an Americas region: VF changed the operating model with the establishment of a global commercial structure. This includes the creation of an Americas regional platform, modeled on the Company's successful operations in the Europe and Asia-Pacific regions. With this change, VF has created the role of Chief Commercial Officer, with responsibility for go-to-market execution globally. • Sharpen brand presidents' focus on sustainable growth: A direct consequence and intent of the operating model change, which is particularly critical at this stage for the Vans ® brand, enables brand presidents to direct greater focus and attention to long-term brand-building, product innovation and growth strategies. • Appoint new Vans ® president : Sun Choe was appointed the new Global Brand President of Vans ® effective late July 2024. • Optimize cost structure to improve operating efficiency and profitability: Actions have been implemented in a large-scale cost reduction program, which delivered $300.0 million in gross cost savings, by removing spend in non-strategic areas of the business, and simplifying and right-sizing VF's structure. • Reduce debt and leverage: In addition to improving operating performance, VF is committed to deleveraging the balance sheet. VF used the proceeds from the sale of Supreme to prepay the DDTL and to repay $450.0 million of commercial paper borrowings. In March 2025, VF completed an early redemption of $750.0 million in aggregate principal amount of its outstanding 2.400% Senior Notes due in April 2025. In Fiscal 2025, the Company initiated the second phase of Reinvent, which is focused on a return to growth and improvements to profitability. In doing so, the Company initiated a set of transformational workstreams focused on revenue growth, margin expansion and selling, general and administrative expense contraction. VF aims to generate between $500.0 and $600.0 million in net operating income expansion in Fiscal 2028. Reinvent restructuring charges in the year ended March 2025 were $81.4 million and cumulative charges were $190.1 million since the inception of the program, which primarily included costs associated with severance and employee-related benefits and the impact of asset impairments and write-downs. For additional information regarding recent developments, see "Item 1A. Risk Factors." 26 VF Corporation Fiscal 2025 Form 10-K Table of Conten ts SUMMARY OF THE YEAR ENDED MARCH 2025 • Revenues decreased 4% to $9.5 billion com pared to the year ended March 2024. • Outdoor segm ent revenues increased 1% to $5.6 billion compared to the year ended March 2024, including a 1% unfavorable impact from foreign currency. • Active segment revenues decreased 12% to $3.1 billion compared to the year ended March 2024, including a 1% unfavorable impact from foreign currency. • Work segment revenues decreased 7% to $833.1 million compared to the year ended March 2024, i ncluding a 1% unfavorable impact from foreign currency. • Wholesale revenues we re down 2% compared to the year ended March 2024. • Direct-to-consumer revenues were down 6% compared to the year ended March 2024. • I nternational revenues decreased 2% compared to the year ended March 2024, including a 1% unfavorable impact from foreign currency. • Revenues in the Americas reg ion decreased 7% co mpared to the year ended March 2024, i ncluding a 1% unfavorable impact from foreign currency. • Gross margin increased 190 basis points to 53.5% in the year ended March 2025 compared to the year ended March 2024, primarily driven by lower product costs and improved inventory quality. • Earnings (loss) per share wa s $0.18 in the year ended March 2025 compared to ($2.62) in the year ended March 2024. The year ended March 2024 included increased tax expense due to the unfavorable decision in the Timberland tax case, which negatively impacted earnings per share by $1.72. The increase in earnings per share was also due to lower impairment charges in the current year compared to the year ended March 2024 and increased profitability in the Outdoor and Work segments. The increase in earnings per share was also partially offset by lower profitability in the Active segment. ANALYSIS OF RESULTS OF OPERATIONS Consolidated Statements of Operations The following table presents a summary of the changes in revenues for the year ended March 2025 compared to the year ended March 2024: (In millions) Year Ended March Revenues — 2024 $ 9,915.7 Organic (361.3) Impact of foreign currency (49.7) Revenues — 2025 $ 9,504.7 Year Ended March 2025 Compared to Year Ended March 2024 VF reported a 4% decrease in reven ues in Fiscal 2025 compared to Fiscal 2024. The revenue decrease was driven by declines across the Active and Work segments, partially offset by an increase in the Outdoor segment. The revenue decrease was also due to declines across the Americas and Europe regions, with the most significant declines in the Americas region. Additional details on revenues are provided in the section titled “Information by Reportable Segment”. The following table presents the percentage relationship to revenues for components of the Consolidated Statements of Operations: Year Ended March 2025 2024 Gross margin (revenues less cost of goods sold) 53.5 % 51.6 % Selling, general and administrative expenses 49.4 47.9 Impairment of goodwill and intangible assets 0.9 5.1 Operating margin 3.2 % (1.5 %) Note: Amounts may not sum due to rounding. VF Corporation Fiscal 2025 Form 10-K 27 Table of Conten ts Year Ended March 2025 Compared to Year Ended March 2024 Gross margin increased 190 basis points to 53.5% in Fiscal 2025 compared to 51.6% in Fiscal 2024. The increase in gross margin in Fiscal 2025 was driven b y lower product costs and improved inventory quality. Selling, general and administrative expenses as a percentage of revenues increased 150 basis points in Fiscal 2025 comp ared to Fiscal 2024, reflecting lower leverage of operating expenses due to decreased revenues. Selling, general and administrative expenses decreased $57.8 million in Fiscal 2025 compared to Fiscal 2024 . The decrease was primarily due to cost savings from Reinvent, lower information technology costs and distribution expenses and gains recognized from sale leaseback transactions, partially offset by Reinvent restructuring charges and project-related costs and higher compensation costs, including performance-based compensation. During the year ended March 2025 , VF recorde d goodwill and intangible asset impairment charges of $89.2 million related to the Dickies indefinite-lived trademark intangible asset and Icebreaker reporting unit. During the third quarter of Fiscal 2025, VF determined that a triggering event had occurred requiring a quantitative analysis of the Dickies indefinite-lived trademark intangible asset, and as a result of the impairment testing performed, VF recorded an indefinite-lived trademark intangible asset impairment charge of $51.0 million . As a result of VF's annual impairment testing as of the beginning of the fourth quarter of Fiscal 2025, VF recorded a goodwill impairment charge of $38.2 million related t o the Icebreaker reporting unit. During the year ended March 2024 , VF recorded goodwill impairment charges of $507.6 million related to the Timberland, Dickies and Icebreaker reporting units. During the third quarter of Fiscal 2024, VF determined that a triggering event had occurred requiring a quantitative analysis of the Timberland and Dickies reporting units, and as a result of the impairment testing performed, VF recorded goodwill impairment charges of $195.3 million and $61.8 million, respectively . As a result of VF's annual impairment testing as of the beginning of the fourth quarter of Fiscal 2024, VF recorded a goodwill impairment charge of $38.8 million related to the Icebreaker reporting unit. During the fourth quarter of Fiscal 2024, VF also performed an impairment analysis of the Timberland reporting unit as a result of a triggering event and recorded an additional goodwill impairment charge of $211.7 million. In Fiscal 2025, operating margin increased to 3.2% from (1.5%) in Fiscal 2024, primarily due to the items described above. N et interest expense decreased $16.4 million to $149.2 million in Fiscal 2025. The decrease in net interest expense was primarily due to decreased levels of short-term commercial paper borrowings and long-term debt, and an increase in interest income due to higher average cash equivalents and rates during the year. T otal outstanding interest-bearing debt averaged $5.0 billion and $6.7 billion for Fiscal 2025 and Fiscal 2024, respectively, with short-term borrowings representing 4.1% and 5.8% of average debt outstanding for the respective years. The weighted average interest rate on outstanding debt was 3.2% in Fiscal 2025 and 2.6% in Fiscal 2024 . Other income (expense), net primarily consists of components of net periodic pension cost (excluding the service cost component), certain foreign currency and hedging gains and losses and other non-operating gains and losses. Other income (expense) netted to ($9.4) million a nd $24.7 million in Fiscal 2025 and Fiscal 2024, re spectively. Other income (expense), net in Fiscal 2025 primarily included equity investment impairments of $15.6 million, cyber insurance recoveries of $13.7 million received in Fiscal 2025, $4.2 million of net periodic pension cost and $2.3 million of foreign currency and hedging losses. Other income (expense), net in Fiscal 2024 primarily includ ed legal settlement gains of $29.1 million, $3.2 million of net periodic pension cost and $2.0 million of foreign currency and hedging losses. T he effective income tax rate was 52.2% in Fiscal 2025 compared to (257.5%) in Fiscal 2024. The Fiscal 2025 effective income tax rate included a net discrete tax expense of $19.4 million , which included a $1.1 million net tax benefit related to unrecognized tax benefits and interest, a $5.1 million tax expense related to stock compensation, a $12.0 million tax expense related to return to accrual adjustments, and a $6.7 million net tax expense related to tax rate changes on deferred tax items. Refer to Note 20 to VF's consolidated financial statements for additional information. The $19.4 million n et discrete tax expense in Fiscal 2025 increased t he effective income tax rate by 13.4% compared to a favorable 247.4% impact of discrete items for Fiscal 2024. Excluding discrete items, the effective tax rate during Fiscal 2025 increased by approximately 48.9% primarily due to jurisdictional mix of earnings and the impact of nondeductible goodwill impairment. As a result of the above, income (loss) from continuing operations in Fiscal 2025 was $69.3 million ( $0.18 p er diluted share), compared to ($1.0) billion (($2.62) per diluted share) in Fiscal 2024. Refer to additional discussion in the “Information by Reportable Segment” section below. 28 VF Corporation Fiscal 2025 Form 10-K Table of Conten ts Information by Reportable Segment VF's reportable segments are: Outdoor, Active and Work. The primary financial measures used by management to assess performance and allocate resources to VF's segments are segment revenues and segment profit. Segment profit comprises the operating income and other income (expense), net line items of each segment. Refer to Note 21 to the consolidated financial statements for a summary of results of operations by segment, along with a reconciliation of segment profit to income (loss) from continuing operations before income taxes. Year Ended March 2025 Compared to Year Ended March 2024 The following tables present a summary of the changes in segment revenues and profit in the year ended March 2025 compared to the year ended March 2024 and revenues by region for our Top 4 brands for the years ended March 2025 and 2024: Segment Revenues: Year Ended March (In millions) Outdoor Active Work Total Segment revenues — 2024 $ 5,501.4 $ 3,522.7 $ 891.5 $ 9,915.7 Organic 98.1 (404.7) (54.6) (361.3) Impact of foreign currency (23.2) (22.7) (3.8) (49.7) Segment revenues — 2025 $ 5,576.3 $ 3,095.3 $ 833.1 $ 9,504.7 Segment Profit: Year Ended March (In millions) Outdoor Active Work Total Segment profit — 2024 $ 602.7 $ 237.5 $ 17.6 $ 857.9 Organic 121.3 (84.3) 35.8 72.8 Impact of foreign currency 0.4 (0.4) (0.3) (0.3) Segment profit — 2025 $ 724.4 $ 152.8 $ 53.1 $ 930.4 Note: Amounts may not sum due to rounding. Top Brand Revenues: Year Ended March 2025 (In millions) The North Face ® Vans ® Timberland ® (a) Dickies ® Total Americas $ 1,612.6 $ 1,435.8 $ 749.0 $ 382.0 $ 4,179.4 Europe 1,315.0 661.2 626.9 102.0 2,705.1 Asia-Pacific 775.8 252.4 231.8 58.0 1,318.0 Global $ 3,703.4 $ 2,349.4 $ 1,607.7 $ 542.1 $ 8,202.5 Year Ended March 2024 (In millions) The North Face ® Vans ® Timberland ® (a) Dickies ® Total Americas $ 1,704.4 $ 1,708.2 $ 682.7 $ 437.2 $ 4,532.5 Europe 1,312.5 726.3 641.3 113.4 2,793.5 Asia-Pacific 656.4 351.2 233.0 67.8 1,308.4 Global $ 3,673.3 $ 2,785.7 $ 1,556.9 $ 618.4 $ 8,634.4 (a) The global Timberland brand includes Timberland ® , reported within the Outdoor segment and Timberland PRO ® , reported within the Work segment. Note: Amounts may not sum due to rounding. VF Corporation Fiscal 2025 Form 10-K 29 Table of Conten ts 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. Outdoor Year Ended March (Dollars in millions) 2025 2024 Percent Change Segment revenues $ 5,576.3 $ 5,501.4 1.4 % Segment profit 724.4 602.7 20.2 % Segment profit margin 13.0 % 11.0 % The Outdoor segment includes the following brands: The North Face ® , Timberland ® , Altra ® , Smartwool ® and Icebreaker ® . Year Ended March 2025 Compared to Year Ended March 2024 Global revenues for Outdo or increased 1% in Fiscal 2025 compared to Fiscal 2024, including a 1% unfavorable impact due to foreign currency. Revenues in the Asia-Pacific region increased 14% in Fiscal 2025, includin g a 14% increase in Greater China (which includes Mainland China, Hong Kong and Taiwan). Revenue s in the Europe region remained flat. Revenues in the Americas region decreased 2% in Fiscal 2025, including a 1% unfavorable impact from foreign currency. Global revenues for The North Face ® brand increased 1% in Fiscal 2025. Revenues in the Asia-Pacific region increased 18% in Fiscal 2025, including a 1% unfavorable imp act from foreign currency. Revenues in the Europe region remained flat in Fiscal 2025. Revenues in the Americas reg ion decreased 5% in Fiscal 2025. Global revenues for the Timberland ® brand increased 3% in Fiscal 2025. Revenues in the Americas region increased 12% in Fiscal 2025, including a 1% unfavorable i mpact from foreign currency. Revenues in the Asia-Pacifi c region decreased 1% in Fiscal 2025, including a 2% unfavorable impact from for eign currency. Revenues in the Europe regio n decreased 2% in Fiscal 2025. Global d irect-to-consumer revenues for Outdoor increased 6% in Fiscal 2025. The increase was primarily due to The North Face ® brand across all regions. Global wholesale revenues decreased 2% in Fiscal 2025, including a 1% unfavorable impact from foreign currency. The decrease w as primarily driven by declines i n The North Face ® brand in the Americas and Europe regi ons. Segment profit margin increased in Fiscal 2025 compared to Fiscal 2024 , reflecting higher gross margin, primarily driven by lower product costs and less promotional activity. Active Year Ended March (Dollars in millions) 2025 2024 Percent Change Segment revenues $ 3,095.3 $ 3,522.7 (12.1 %) Segment profit 152.8 237.5 (35.7 %) Segment profit margin 4.9 % 6.7 % The Active segment includes the following brands: Vans ® , Kipling ® , Napapijri ® , Eastpak ® and JanSport ® . Year Ended March 2025 Compared to Year Ended March 2024 Glo bal revenues for Active decreased 12% in Fiscal 2025 compared to Fiscal 2024, including a 1% unfavorable imp act from foreign currency. Revenues in the Americas region decreased 13% in Fiscal 2025, including a 1% unfavorable i mpact from foreign currency. Revenues in the Asia-Pacific regio n decreased 23% in Fiscal 2025, including a 1% unfavorable impac t from foreign cu rrency, and a 31% decrease in Greater China, including a 1% unfavorable impac t from foreign currency. Revenues in the Europe region decreased 7% i n Fiscal 2025. Vans ® brand global revenues decreased 16% in Fiscal 2025, including a 1% unfavorable i mpact from foreign currency. The overall decline in F iscal 2025 was most significantly driven by a 16% decrease in the Americas region, including a 1% unfavorable impact from foreign currency. The decrease in the Americas region was partially offset by the deliberate actions taken to right-size inventories in the Americas wholesale channel in the second half of Fiscal 2024. Revenues in the Asia-Pacific region decreased 28% in Fiscal 2025, including a 1% unfavorable impact from foreign currency. Revenues in the Europe region decreased 9% in Fiscal 2025. The decline in Vans ® was also attributed to deliberate strategic actions taken in Fiscal 2025, including reducing wholesale store fronts and inventory in the Asia-Pacific region (specifically in China), exiting value-channel wholesale customers and closing unprofitable owned retail stores in the Americas region, and reducing distressed sales. Global direct-to-consumer revenues for Active decreased 20% in Fiscal 2025. The decrease was primarily due to declines in the Americas region, which decreased 21% in Fiscal 2025, including a 1% unfavorable impact from foreign currency . Global wholesale revenues for Active decreased 3% in Fiscal 2025, including a 1% unfavorable impact from foreign currency. Wholesale revenues in the Europe region decreased 4% in Fiscal 2025. Wholesale revenues in the Asia-Pacific region decreased 14%, including a 1% unfavorable impact from foreign currency. The decrease in Fiscal 2025 was partially offset by a 1% increase in the Americas region, including a 2% unfavorable impact from foreign currency. Segment profit margin decreased in Fiscal 2025 compared to Fiscal 2024, reflecting legal settlement gains of $29.1 million recorded in the prior year and lower leverage of operating expenses due to decreased revenues. 30 VF Corporation Fiscal 2025 Form 10-K Table of Conten ts Work Year Ended March (Dollars in millions) 2025 2024 Percent Change Segment revenues $ 833.1 $ 891.5 (6.6 %) Segment profit 53.1 17.6 201.2 % Segment profit margin 6.4 % 2.0 % The Work segment includes the following brands: Dickies ® and Timberland PRO ® . Year Ended March 2025 Compared to Year Ended March 2024 Global Work revenues decreased 7% in Fiscal 2025 compared to Fiscal 2024, including a 1% unfavorable impact fro m foreign currency. Revenues in the Americas region decreased 5% in Fiscal 2025. Revenues in the Europe region decreased 10%. Revenues in the Asia -Pacific region decreased 14%, including a 1% unfavorable impact fro m foreign currency. Dickies ® brand global revenues decreased 12% in Fiscal 2025. The decline was primarily driven by a decrease in the Americas region of 13%, reflecti ng lower inventory replenishment and weakness with certain key U.S. wholesale cust omer accounts . Revenues in the Europe regi on decreased 10% in Fis cal 2025. Revenues in the Asia-Pacific region decreased 14%, including a 1% unfavorable imp act from foreign curre ncy, primarily due to broad-based weakness in Greater China. Segment profit margin increased in Fiscal 2025 compared to Fiscal 2024, reflecting higher gross margin, primarily driven by improved inventory quality . Reconciliation of Segment Profit to Income (Loss) From Continuing Operations Before Income Taxes 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 respective businesses, (ii) corporate and other expenses, which are excluded from segment profit to the extent they are not allocated to the segments, and (iii) interest expense, net, which is excluded from segment profit because substantially all financing costs are managed at the corporate office and are not under the control of segment management. Impairment of goodwill and intangible assets and net interest expense are discussed in the “Consolidated Statements of Operations” section, and corporate and other expenses are discussed below. Year Ended March (In millions) 2025 2024 Percent Change Impairment of goodwill and intangible assets $ 89.2 $ 507.6 (82.4 %) Corporate and other expenses 546.7 469.6 16.4 % Interest expense, net 149.2 165.7 (9.9 %) 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. Information Systems and Shared Services These costs include management information systems and the centralized finance, supply chain and human resources functions that support worldwide operations. The costs also include software system implementations and upgrades and other strategic projects. Operating costs of information systems and shared services are charged to the segments based on utilization of those services. Costs to develop new software and related applications are generally not allocated to the segments. Corporate Headquarters’ Costs Headquarters’ costs include compensation and benefits of corporate management and staff, legal and professional fees, and general and administrative expenses that have not been allocated to the segments. Other This category includes (i) costs of corporate programs or corporate-managed decisions that are not allocated to the segments, (ii) costs of registering, maintaining and enforcing certain of VF’s trademarks, and (iii) miscellaneous consolidated activities, the most significant of which is related to VF’s centrally-managed U.S. defined benefit pension plans. Corporate and other expenses increased $77.1 million in Fiscal 2025 when compared to Fiscal 2024. The increase was due to higher Reinvent restructuring charges and project-related costs, higher compensation costs, including performance-based compensation, and equity investment impairments, partially offset by cost savings from Reinvent. VF Corporation Fiscal 2025 Form 10-K 31 Table of Conten ts International International revenues decreased 2% in Fiscal 2025 compared to Fiscal 2024. Foreign currency had an unfavorable impact of 1% on international revenues in Fiscal 2025. Revenues in the Europe re gion decreased 3% in Fisca l 2025. Revenues in the Americas (non-U.S.) region decreased 7% in Fiscal 2025, including a 5% unfavorable impact from foreign currency. In the Asia-Pacific re gion, revenues increased 1% in Fiscal 2025, including a 1% unfavorable impact from foreign currency . Revenues in Greater China increased 3% in Fiscal 2025, including a 1% unfavorable impac t from foreign currency. International revenues were 55% of total VF revenues in Fiscal 2025 compared to 54% in Fiscal 2024. Direct-to-Consumer Direct-to-consumer reven ues decreased 6% in Fiscal 2025 compared to Fiscal 2024. VF's e-commerce business decreased 6% in Fiscal 2025, including a 1% unfavorable impact from for eign currency . The decrease was primarily driven by declines i n the e-commerce business in the Americas region. Revenues from VF-operated reta il stores decreased 8% i n Fiscal 2025. VF ope ned 73 stores in Fiscal 2025, bringing the total number of VF-owned retail stores to 1,127 at March 2025, which also reflects 114 s tore closures during the period. There were 1,168 VF-owned retail stores at March 2024. Direct-to-consumer revenues w ere 44% of total VF revenues in Fiscal 2025 compared to 45% in Fiscal 2024. Wholesale Wholesale revenues decreased 2% in Fiscal 2025 compared to Fiscal 2024. The results were primarily driven by declines in the wholesale business in t he Americas and Europe regions. Wholesale revenues were 56% of total revenues in Fiscal 2025 compared to 55% in Fiscal 2024. ANALYSIS OF FINANCIAL CONDITION Balance Sheets The following discussion refers to significant changes in balances for continuing operations at March 2025 compared to March 2024: • Decrease in short-term borrowings — primarily due to a decrease in commercial paper borrowings resulting from a $450.0 million repayment using the proceeds from the sale of Supreme. • Decrease in current portion of long-term debt — due to the prepayment of $1.0 billion of long-term debt due in December 2024 related to the DDTL, partially offset by the reclassification of €500.0 million of long-term notes due in March 2026 to current liabilities. • Decrease in long-term debt — due to the early redemption of $750.0 million of long-term notes due in April 2025 and the reclassification of €500.0 million of long-term notes due in March 2026 to current liabilities. Liquidity and Cash Flows We consider the following to be measures of our liquidity and capital resources: (Dollars in millions) March 2025 March 2024 Working capital $1,088.2 $733.6 Current ratio 1.4 to 1 1.2 to 1 Net debt to total capital 76.8% 80.1% The increase in working capital and the current ratio at March 2025 compared to March 2024 was primarily due to a net decrease in current liabilities driven by decreased short-term borrowings and current portion of long-term debt as discussed in the "Balance Sheets" section above. The increase at March 2025 compared to March 2024 was partially offset by a net decrease in current assets driven by lower cash and cash equivalents. For the ratio of net debt to total capital above, net debt is defined as short-term and long-term borrowings, in addition to operating lease liabilities, net of unrestricted cash and cash equivalents. Total capital is defined as net debt plus stockholders’ equity. The decrease in the net debt to total capital ratio at March 2025 compared to March 2024 was primarily driven by a decrease in net debt. The decrease in net debt was primarily due to the prepayment of $1.0 billion of long-term debt in October 2024 related to the DDTL, the early redemption of 32 VF Corporation Fiscal 2025 Form 10-K Table of Conten ts $750.0 million of long-term notes in March 2025 and a decrease in short-term borrowings as discussed in the "Balance Sheets" section above, partially offset by lower cash and cash equivalents at March 2025 . T he decrease in the net debt to total capital ratio at March 2025 com pared to March 2024 was partially offset by a decrease in stockholders' equity. The decrease in stockholders' equity was primarily driven by the net loss for the period and payments of dividends. 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 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 $2.25 billion senior unsecured revolving line of credit (the "Global Credit Facility") , available cash balances and international lines of credit. In summary, our cash flows from continuing operations were as follows: Year Ended March (In millions) 2025 2024 Cash provided by operating activities $ 438.5 $ 884.7 Cash provided (used) by investing activities 1,432.5 (158.7) Cash used by financing activities (2,146.0) (959.6) Cash Provided by Operating Activities Cash flows related to operating activities are dependent on income (loss) from continuing operations, adjustments to income (loss) from continuing operations and changes in working capital. The decrease in cash provided by operating activities in Fiscal 2025 compared to Fiscal 2024 was primarily due to a decrease in net cash provided by working capital and a decrease in income from continuing operations, excluding the write-off of income tax receivables and interest related to the Timberland tax case in the prior year and higher impairment charges in the prior year. Cash Provided (Used) by Investing Activities The increase in cash provided by investing activities in Fiscal 2025 compared to Fiscal 2024 was primarily due to proceeds from the sale of Supreme, net of cash sold, of $1.506 billion in the period. Fiscal 2025 also included proceeds from the sale of assets of $88.2 million, primarily related to a sale leaseback transaction of a distribution center, sale of an aircraft hangar, sale of a corporate-owned aircraft and sale of an office building. The increase was also due to a decrease in capital expenditures of $49.5 million and a decrease in software purchases of $21.7 million in Fiscal 2025 compared to Fiscal 2024. Cash Used by Financing Activities The increase in cash used by financing activities in Fiscal 2025 compared to Fiscal 2024 was primarily due to a $1.0 billion prepayment of the DDTL and a $750.0 million early redemption of long-term debt in Fiscal 2025 , compared to a $907.1 million payment of long-term debt in Fiscal 2024. The increase was also due to a $507.2 million net decrease in short-term borrowings for the periods compared. The increase was partially offset by a $163.0 million decrease in dividends paid for the periods compared. Share Repurchases VF did not purchase shares of its Common Stock in the open market during Fiscal 2025 or Fiscal 2024 under the share repurchase program authorized by VF's Board of Directors. As of the end of Fiscal 2025, VF had $2.5 billion remaining for future repurchases under its share repurchase authorization. VF's capital deployment priorities in the near-to-medium term will be focused on reducing leverage and reinvesting a portion of cost savings to drive profitable and sustainable growth. Revolving Credit Facility, DDTL Agreement and Short-term Borrowings VF relies on its ability to generate cash flows to finance its ongoing operations. In addition, VF has significant liquidity from its available cash balances and credit facilities. VF maintains a G lobal Credit Facility t hat expires in November 2026. VF may request an unlimited number of one-year extensions so long as each extension does not cause the remaining life of the Global Credit Facility to exceed five years, subject to stated terms and conditions; however, granting of any extension is at the discretion of the lenders. The Global Credit Facility may be used to borrow funds in U.S. dollars or any alternative currency (including euros and any other currency that is freely convertible into U.S. dollars, approved at the request of the Company by the lenders) and has a $75.0 million letter of credit sublimit. The Global Credit Facility supports VF’s global commercial paper program for short-term, seasonal working capital requirements and general corporate purposes. Outstanding short-term balances may vary from period to period depending on the level of corporate requirements. VF has restrictive covenants on its Global Credit Facility and had restrictive covenants on the DDTL Agreement. The agreement for the Global Credit Facility, as amended in May 2025, includes a consolidated net indebtedness to consolidated net capitalization financial ratio covenant, starting at 70% with future step downs. The calculation of consolidated net indebtedness is net of unrestricted cash and cash equivalents 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 agreement. The covenant calculation also excludes operating lease liabilities. The agreement requires the pledge of certain assets of VF and certain of its subsidiaries pursuant to the agreement. Additionally, the amended agreement restricts the total amount of cash dividends and share repurchases to VF Corporation Fiscal 2025 Form 10-K 33 Table of Conten ts $500.0 million annually, on a calendar-year basis. The terms for the DDTL Agreement, as amended in August 2024, required the repayment of the DDTL upon the completion of the Supreme sale. O n October 4, 2024, VF made an aggregate $1.0 billion prepayment of the DDTL using the net cash proceeds from the sale of Supreme. As of March 2025, VF was in compliance w ith all covenants. VF has a global 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. Based on VF's current ratings, there is no active market for commercial paper. As of March 2025, there were no U.S. or euro commercial paper borrowings. The euro commercial paper borrowing program was terminated in January 2025. Standby letters of credit issued under the Global Credit Facility as of March 2025 w ere $0.6 million, leaving approximately $2.2 billion available for borrowing against the Global Credit Facility at March 2025, subject to applicable financial covenants. VF has $90.4 million o f 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 we re $11.9 million at March 2025. Borrowings under these arrangements had a weighted average interest rate of 43.8% at March 2025. Additionally, VF had $429.4 million of un restricted cash and cash equivalents at March 2025. Redemption On March 27, 2025, VF completed an early redemption of $750.0 million in aggregate principal amount of its outstanding 2.400% Senior Notes due April 2025. The redemption price was equal to 100% of the principal amount of the Notes to be redeemed. 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 March 2025 and 2024 , the accounts payable line item in VF's Consolidated Balance Sheets included total outstanding obligations of $481.7 million and $485.0 million , respectively, due to suppliers that are eligible to participate in the SCF program. Rating Agencies At th e end of March 2025 , VF’s long-term debt ratings were ‘BB’ by Standard & Poor’s ("S&P") Global Ratings and ‘Ba1’ by Moody’s Investors Service ("Moody's"), and U.S. commercial paper ratings by those rating agencies were ‘B’ and ‘NP’, respectively. Based on VF's current ratings, there is no active market for commercial paper. VF's credit rating outlook by S&P and Moody's was 'stable' at the end of March 2025 . Further downgrades to VF's ratings would neg atively impact borrowing costs. None of VF’s long-term debt agreements contain acceleration of maturity clauses based solely on changes in credit ratings. However, if there were a change in control of VF and, as a result of the change in control the notes were rated below investment grade by recognized rating agencies, then VF would be obligated to repurchase the notes at 101% of the aggregate principal amount, plus any accrued and unpaid interest, if required by the respective holders of the notes. The change of control provision applies to all notes, except for the notes due in 2033. Dividends Cash dividends totaled $0.36 per share in Fiscal 2025 compared to $0.78 in Fiscal 2024. The dividend payout ratio was (74.5%) o f diluted earnings (loss) per share in Fiscal 2025 compared to (31.3%) in Fiscal 2024. The Company declared a dividend of $0.09 per share that is payable in the first quarter of Fiscal 2026. Subject to approval by its Board of Directors, VF intends to continue to pay quarterly dividends. 34 VF Corporation Fiscal 2025 Form 10-K Table of Conten ts Contractual Obligations Following is a summary of VF’s material contractual obligations and commercial commitments at the end of March 2025 that will require the use of funds: Payment Due or Forecasted by Fiscal Year (In millions) Total 2026 2027 2028 2029 2030 Thereafter Recorded liabilities: Long-term debt (1) $ 3,996 $ 542 $ 2 $ 1,043 $ 542 $ 2 $ 1,865 Operating leases (2) 1,545 351 330 238 168 122 334 Unrecorded commitments: Interest payment obligations (3) 743 127 104 91 89 66 266 Inventory obligations (4) 1,950 1,879 68 3 — — — $ 8,234 $ 2,899 $ 505 $ 1,375 $ 800 $ 190 $ 2,465 Note: Amounts may not sum due to rounding. (1) Long-term debt consists of required undiscounted principal payments on long-term debt and finance lease obligations. (2) Operating leases represent required undiscounted lease payments during the noncancelable lease term. Variable payments for occupancy-related costs, real estate taxes, insurance and contingent rent are not included above. In addit ion, approximately $130.2 million of leases (on an undiscounted basis) that have not yet commenced with terms of 2 to 15 years beginning primarily in Fiscal 2026 are not included above . (3) Interest payment obligations represent required interest payments on long-term debt. Amounts exclude amortization of debt issuance costs, debt discounts and acquisition costs that would be included in interest expense in the consolidated financial statements. (4) Inventory obligations represent binding commitments to purchase finished goods and raw materials that are payable upon VF taking ownership of the inventory. This obligation excludes the amount included in accounts payable at March 2025 related to inventory purchases. VF had other financial commitments at the end of Fiscal 2025 that are not included in the above table but may require the use of funds under certain circumstances: • $111.9 million of surety bonds, custom bonds, standby letters of credit and international bank guarantees are not included in the table above because they represent contingent guarantees of performance under self-insurance and other programs and would only be drawn upon if VF were to fail to meet its other obligations. • Purchase orders for goods or services in the ordinary course of business are not included in the above table because they represent authorizations to purchase rather than binding commitments. Management believes that VF has sufficient liquidity and flexibility to operate its business and meet its current and long-term obligations as they become due. VF does not participate in transactions with unconsolidated entities or financial partnerships that are reasonably likely to have a material impact on the Company. Risk Management VF is exposed to risks in the ordinary course of business. Management regularly assesses and manages exposures to these risks through operating and financing activities and, when appropriate, by (i) taking advantage of natural hedges within VF, (ii) purchasing insurance from commercial carriers, or (iii) using derivative financial instruments. Some potential risks are discussed below: Insured risks VF is self-insured for a significant portion of its employee medical, workers’ compensation, vehicle and general liability exposures. VF purchases insurance from highly-rated commercial carriers to cover other risks, including directors and officers, cyber, property, stock throughput, employment practices, wage and hour and umbrella, and to establish stop-loss limits on self-insurance arrangements. Cash and cash equivalents risks VF had $429.4 million of cash and cash equivalents at the end of Fiscal 2025. Management continually monitors the credit ratings of the financial institutions with whom VF conducts business and geopolitical risks that may impact countries where VF has cash balances. Management also monitors the credit quality of cash equivalents. Defined benefit pension plan risks At the end of Fiscal 2025, VF’s defined benefit pension plans were overfunded by a net total of $95.0 million. The overfunded status includes a $51.2 million liability related to our U.S. unfunded supplemental defined benefit plan, $33.1 million of net liabilities related to our non-U.S. defined benefit plans, and a $179.3 million net asset related to our U.S. qualified defined benefit plan. VF’s reported earnings are subject to risks due to the volatility of its pension cost, which has ranged in recent years from cost of $12.1 million in the year ended March 2024 to cost of $101.9 million in the year ended March 2023. These fluctuations are primarily due to differences in the amount of settlement charges recorded in the respective periods. The changes are also impacted by varying amounts of actuarial gains and losses that are deferred and amortized to future years’ pension cost. The assumptions that impact actuarial gains and losses include the VF Corporation Fiscal 2025 Form 10-K 35 Table of Conten ts rate of return on investments held by the pension plans, the discount rate used to value participant liabilities and demographic characteristics of the participants. VF has taken a series of steps to manage the risk and volatility in the pension plans and their impact on the financial statements, including the following: • The U.S. qualified and supplemental defined benefit plans were closed to new entrants at the end of 2004 and all future benefit accruals were frozen as of December 31, 2018. • During the year ended March 2020, VF offered former employees in the U.S. qualified plan a lump-sum option to receive a distribution of their deferred vested benefits. The U.S. qualified plan participants were reduced by 10% as a result of this offer. No additional funding of the pension plan was required as all distributions were paid out of existing plan assets, and the plan's funded status remained materially unchanged. • During the year ended March 2023, VF entered into an agreement with The Prudential Insurance Company of America (“Prudential”) to purchase an irrevocable group annuity contract relating to approximately $330 million of the U.S. qualified defined benefit pension plan obligations. The transaction closed on June 30, 2022 and was funded entirely by existing assets of the plan. Under the group annuity contract, Prudential assumed responsibility for benefit payments and annuity administration for approximately 17,700 retirees and beneficiaries. • During the year ended March 2025, in efforts to de-risk the U.S. qualified plan, VF implemented an asset allocation of 100% liability-hedging asset classes, primarily in fixed-income investments. • Subsequent to the end of Fiscal 2025, in May 2025, VF executed a resolution to terminate the U.S. qualified plan. The termination of the plan is anticipated to be effective in July 2025, is subject to the appropriate regulatory approvals, and is expected to be completed in Fiscal 2026. VF's settlement obligations and related charges will depend upon both the nature and timing of participant settlements and prevailing market conditions. VF currently estimates settlement charges to be between $200.0 and $300.0 million. Interest rate risks VF limits the risk of interest rate fluctuations by managing the mix of fixed and variable interest rate debt. In addition, VF may use derivative financial instruments to manage risk. Since all of VF’s long-term debt has fixed interest rates, the exposure relates to changes in interest rates on variable rate short-term borrowings (which averaged approximately $202.5 million at a 9.9% ra te during Fiscal 2025). Howev er, any change in interest rates would also affect interest income earned on VF’s cash equivalents. Based on the average amount of variable rate borrowings and cash equivalents during Fiscal 2025, the effect of a hypothetical 1% increase in interest rates woul d be an increase in reported net income of approximately $3.2 million and a hypothetical 1% decrease in interest rates would be a decrease in reported net income of approximate ly $3.2 million. Foreign currency exchange rate risks VF is a global enterprise subject to the risk of foreign currency fluctuations. Approximatel y 55% of VF’s revenues in the year ended March 2025 were generated in international markets. Most of VF’s foreign businesses operate in functional currencies other than the U.S. dollar. In periods where the U.S. dollar strengthens relative to the euro or other foreign currencies where VF has operations, there is a negative impact on VF’s operating results upon translation of those foreign operating results into the U.S. dollar. As discussed later in this section, management hedges VF’s investments in certain foreign operations and foreign currency transactions. The reported values of assets and liabilities in these foreign businesses are subject to fluctuations in foreign currency exchange rates. For net advances to and investments in VF’s foreign businesses that are considered to be long-term, the impact of changes in foreign currency exchange rates on those long-term advances is deferred as a component of accumulated other comprehensive loss ("OCL") in stockholders’ equity. The U.S. dollar value of net investments in foreign subsidiaries fluctuates with changes in the underlying functional currencies. In March 2023 and February 2020, VF issued €1.0 billion of euro-denominated fixed-rate notes. These notes have been designated as net investment hedges of VF’s investment in certain foreign operations. Because this debt qualified as a nonderivative hedging instrument, foreign currency transaction gains or losses on 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. Any amounts deferred in accumulated OCL will remain until the hedged investment is sold or substantially liquidated. VF monitors net foreign currency market exposures and enters into derivative foreign currency contracts to hedge the effects of exchange rate fluctuations for a significant portion of forecasted foreign currency cash flows or specific foreign currency transactions (relating to cross-currency inventory purchases, product sales, operating costs and intercompany royalty payments). VF’s practice is to buy or sell foreign currency exchange contracts that cover up to 80% of foreign currency exposures for periods of up to 24 months. Currently, VF uses only foreign exchange forward contracts but may use options or collars in the future. This use of financial instruments allows management to reduce the overall exposure to risks from exchange rate fluctuations on VF’s cash flows and earnings, since gains and losses on these contracts will offset a portion of losses and gains on the transactions being hedged. For cash flow hedging contracts outstanding at the end of Fiscal 2025, a hypothetical 10% decrease and 10% increase in foreign currency exchange rates compared to rates at the end of Fiscal 2025, would result in an increase in the unrealized net gain of approximately $75.7 million and a decrease in the unrealized net gain of approximately $61.7 million, respectively. However, any change in the fair value of the hedging contracts would be substantially offset by a change in the fair value of the underlying hedged exposure impacted by the currency rate changes. Counterparty risks VF is exposed to credit-related losses in the event of nonperformance by counterparties to derivative hedging instruments. To manage this risk, we have established counterparty credit guidelines and only enter into derivative 36 VF Corporation Fiscal 2025 Form 10-K Table of Conten ts transactions with financial institutions that have ‘A minus/A3’ investment grade credit ratings or better. VF continually monitors the credit rating of, and limits the amount hedged with, each counterparty. Additionally, management utilizes a portfolio of financial institutions to minimize exposure to potential counterparty defaults and adjusts positions as necessary. VF also monitors counterparty risk for derivative contracts within the defined benefit pension plans. Commodity price risks VF is exposed to market risks for the pricing of cotton, leather, rubber, wool and other materials, primarily due to the impact on the cost of sourced finished goods from independent contractors. To manage risks of commodity price changes, management negotiates prices of finished goods in advance when possible. VF has not historically managed commodity price exposures by using derivative instruments. Deferred compensation and related investment security risks VF has nonqualified deferred compensation plans in which liabilities to the plans’ participants are based on the market values of the participants’ selection of a hypothetical portfolio of investment funds. VF invests in a portfolio of securities and variable life insurance contracts that substantially mirror the participants’ investment selections. The increases and decreases in deferred compensation liabilities are substantially offset by corresponding increases and decreases in the market value of VF’s investments, resulting in an insignificant net exposure to operating results and financial position. CRITICAL ACCOUNTING POLICIES AND ESTIMATES VF has chosen accounting policies that management believes are appropriate to accurately and fairly report VF’s operating results and financial position in conformity with accounting principles generally accepted in the U.S. VF applies these accounting policies in a consistent manner. Significant accounting policies are summarized in Note 1 to the consolidated financial statements. The application of these accounting policies requires that VF make estimates and assumptions about future events and apply judgments that affect the reported amounts of assets, liabilities, revenues, expenses, contingent assets and liabilities, and related disclosures. 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 on an ongoing basis. In addition, VF may retain outside specialists to assist in valuations of business acquisitions and impairment testing of goodwill and intangible assets. Because VF’s business cycle is relatively short (i.e., from the date inventory is purchased until that inventory is sold and payment is collected), actual results related to most estimates are known within a few months after any balance sheet date. If actual results ultimately differ from previous estimates, the revisions are included in results of operations when the actual amounts become known. VF believes the following accounting policies involve the most significant management estimates, assumptions and judgments used in preparation of the consolidated financial statements or are the most sensitive to change from outside factors. The application of these critical accounting policies and estimates is discussed with the Audit Committee of the Board of Directors. Business Combinations VF accounts for business combinations using the acquisition method of accounting. Under the acquisition method, the consolidated financial statements reflect the operations of an acquired business starting from the closing date of the acquisition. All assets acquired and liabilities assumed are recorded at fair value as of the acquisition date. VF allocates the purchase price of an acquired business to the fair values of the tangible and identifiable intangible assets acquired and liabilities assumed, with any excess purchase price recorded as goodwill. Contingent consideration, if any, is included within the purchase price and is recognized at its fair value on the acquisition date. The application of the acquisition method of accounting for business combinations and determination of fair value requires management to make judgments and may involve the use of significant estimates, including assumptions related to estimated future revenues, growth rates, cash flows, discount rates and royalty rates, among other items. VF generally evaluates fair value at acquisition using three valuation techniques - the replacement cost, market and income methods - and weights the valuation methods based on what is most appropriate in the circumstances. The process of assigning fair values, particularly to acquired intangible assets, is highly subjective. VF also utilizes third-party valuation specialists to assist management in the determination of the fair value of assets acquired and liabilities assumed. Management estimates of fair value are based on assumptions believed to be reasonable, but are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. If the actual results differ from the estimates and judgments used, the amounts recorded in the consolidated financial statements may be exposed to potential impairment of the intangible assets and goodwill, as discussed in the "Long-Lived Assets, Including Intangible Assets and Goodwill" section below. During the measurement period, which is up to one year from the acquisition date, adjustments to the assets acquired and liabilities assumed may be recorded, with the corresponding offset to goodwill. VF Corporation Fiscal 2025 Form 10-K 37 Table of Contents Long-Lived Assets, Including Intangible Assets and Goodwill Definite-Lived Assets VF’s depreciation policies for property, plant and equipment reflect judgments on the estimated economic lives and residual values, if any. VF’s amortization policies for definite-lived intangible assets reflect judgments on the estimated amounts and duration of future cash flows expected to be generated by those assets. In evaluating the amortizable life for customer relationship intangible assets, management considers historical attrition patterns for various groups of customers. In determining the lease term used to amortize operating lease right-of-use assets, VF considers initial terms and any renewal or termination options that may exist. When deemed reasonably certain, the renewal and termination options are included in the determination of lease term. VF’s policy is to review property, plant and equipment, definite-lived intangible assets and operating lease right-of-use assets for potential impairment whenever events or changes in circumstances indicate the carrying value of an asset or asset group may not be recoverable. VF tests for potential impairment at the asset or asset group level, which is the lowest level for which there are identifiable cash flows that are largely independent. VF measures recoverability of the carrying value of an asset or asset group by comparison to the estimated pre-tax undiscounted cash flows expected to be generated by the asset. If the forecasted pre-tax undiscounted cash flows to be generated by the asset are not expected to be adequate to recover the asset’s carrying value, a fair value analysis is performed, and an impairment charge is recorded if there is an excess of the asset’s carrying value over its estimated fair value. When testing property, plant and equipment for potential impairment, VF uses the income-based discounted cash flow method using the estimated cash flows of the respective asset or asset group. The estimated pre-tax undiscounted cash flows of the asset or asset group through the end of its useful life are compared to its carrying value. If the pre-tax undiscounted cash flows of the asset or asset group exceed its carrying value, there is no impairment charge. If the pre-tax undiscounted cash flows of the asset or asset group are less than its carrying value, the estimated fair value of the asset or asset group is calculated based on the after-tax discounted cash flows using an appropriate weighted average cost of capital ("WACC"), and an impairment charge is recognized for the difference between the estimated fair value of the asset or asset group and its carrying value. When testing customer relationship intangible assets for potential impairment, management considers historical customer attrition rates and projected revenues and profitability related to customers that existed at acquisition. Management uses the multi-period excess earnings method, which is a specific application of the discounted cash flow method, to value customer relationship assets. The estimated pre-tax undiscounted cash flows of the asset through the end of its useful life are compared to its carrying value. If the pre-tax undiscounted cash flows of the asset exceed its carrying value, there is no impairment charge. If the pre-tax undiscounted cash flows of the asset are less than its carrying value, the estimated fair value of the asset is calculated based on the present value of the after-tax cash flows expected to be generated by the customer relationship asset after deducting contributory asset charges, and an impairment charge is recognized for the difference between the estimated fair value of the asset and its carrying value. When testing operating lease right-of-use assets for potential impairment, VF uses the income-based discounted cash flow method using the estimated cash flows of the respective asset or asset group. The estimated pre-tax undiscounted cash flows of the asset or asset group through the end of its useful life are compared to its carrying value. If the pre-tax undiscounted cash flows of the asset exceed its carrying value, there is no impairment charge. If the pre-tax undiscounted cash flows of the asset or asset group are less than its carrying value, the estimated fair value of the asset or asset group is calculated considering what a market participant would pay to lease the asset for its highest and best use, and an impairment charge is recognized for the difference between the estimated fair value of the asset or asset group and its carrying value. The impairment loss is allocated to the long-lived assets of the group on a pro-rata basis using the relative carrying amounts of those assets. Indefinite-Lived Intangible Assets and Goodwill Fair value for acquired intangible assets is generally based on the present value of expected cash flows. Indefinite-lived trademark or trade name intangible assets (collectively referred to herein as “trademarks”) represent individually acquired trademarks, some of which are registered in multiple countries. Goodwill represents the excess of cost of an acquired business over the fair values of the tangible and identifiable intangible assets acquired and liabilities assumed, and is assigned at the reporting unit level. VF’s policy is to evaluate indefinite-lived intangible assets and goodwill for possible impairment as of the beginning of the fourth quarter of each fiscal year, or whenever events or changes in circumstances indicate that the fair value of such assets may be below their carrying amount. As part of its annual impairment testing, VF may elect to assess qualitative factors as a basis for determining whether it is necessary to perform quantitative impairment testing. If management’s assessment of these qualitative factors indicates that it is more likely than not that the fair value of the intangible asset or reporting unit is more than its carrying value, then no further testing is required. Otherwise, the intangible asset or reporting unit is quantitatively tested for impairment. An indefinite-lived intangible asset is quantitatively tested for possible impairment by comparing the estimated fair value of the asset to its carrying value. Fair value of an indefinite-lived trademark is based on an income approach using the relief-from-royalty method. Under this method, forecasted revenues for products sold with the trademark are assigned a royalty rate that would be charged to license the trademark (in lieu of ownership), and the estimated fair value is calculated as the present value of those forecasted royalties avoided by owning the trademark. The discount rate is based on the reporting unit’s WACC that considers market participant assumptions and is adjusted, as appropriate, to factor in the risk of the intangible asset. The royalty rate is selected based on consideration of (i) royalty rates included in active license agreements, if applicable, (ii) royalty rates received by market participants in the apparel and footwear industry, and (iii) the current performance of the reporting unit. If the estimated fair value of the trademark 38 VF Corporation Fiscal 2025 Form 10-K Table of Contents intangible asset exceeds its carrying value, there is no impairment charge. If the estimated fair value of the trademark is less than its carrying value, an impairment charge is recognized for the difference. Goodwill is quantitatively evaluated for possible impairment by comparing the estimated fair value of a reporting unit to its carrying value. Reporting units are businesses with discrete financial information that is available and reviewed by management. For goodwill impairment testing, VF estimates the fair value of a reporting unit using both income-based and market-based valuation methods. The income-based approach is based on the reporting unit’s forecasted future cash flows that are discounted to present value using the reporting unit’s WACC, as discussed above. For the market-based approach, management uses both the guideline company and similar transaction methods. The guideline company method analyzes market multiples of revenues and earnings before interest, taxes, depreciation and amortization (“EBITDA”) for a group of comparable public companies. The market multiples used in the valuation are based on the relative strengths and weaknesses of the reporting unit compared to the selected guideline companies. Under the similar transactions method, valuation multiples are calculated utilizing actual transaction prices and revenue/EBITDA data from target companies deemed similar to the reporting unit. Management typically assigns more weight to the income-based valuation method. Management also evaluates the fair value estimates of reporting units in the context of VF's total enterprise market value. Based on the range of estimated fair values developed from the income and market-based methods, VF determines the estimated fair value for the reporting unit. If the estimated fair value of the reporting unit exceeds its carrying value, the goodwill is not impaired and no further review is required. However, if the estimated fair value of the reporting unit is less than its carrying value, VF calculates the impairment loss as the difference between the carrying value of the reporting unit and the estimated fair value, limited to the amount of reporting unit goodwill. The income-based fair value methodology requires management’s assumptions and judgments regarding economic conditions in the markets in which VF operates and conditions in the capital markets, many of which are outside of management’s control. At the reporting unit level, fair value estimation requires management’s assumptions and judgments regarding the effects of overall economic conditions on the specific reporting unit, along with assessment of the reporting unit’s strategies and forecasts of future cash flows. Forecasts of individual reporting unit cash flows involve management’s estimates and assumptions regarding: • Annual cash flows, on a debt-free basis, arising from future revenues and profitability, changes in working capital, capital spending and income taxes for a forecast period. • A terminal growth rate for years beyond the forecast period. The terminal growth rate is selected based on consideration of growth rates used in the forecast period, historical performance of the reporting unit and economic conditions. • A discount rate that reflects the risks inherent in realizing the forecasted cash flows. A discount rate considers the risk-free rate of return on long-term treasury securities, the risk premium associated with investing in equity securities of comparable companies, the beta obtained from comparable companies and the cost of debt for investment grade issuers. In addition, the discount rate may consider any company-specific risk (at the reporting unit level) in achieving the prospective financial information. Under the market-based fair value methodology, judgment is required in evaluating market multiples and recent transactions. Management believes that the assumptions used for its impairment tests are representative of those that would be used by market participants performing similar valuations of VF’s reporting units. Fiscal 2025 Impairment Testing Interim Impairment Testing During the third quarter of Fiscal 2025, management determined that the continued downturn in the Dickies financial results and projections, combined with expectations of a slower recovery than previously anticipated , was a triggering event that required management to perform a quantitative impairment analysis of the Dickies indefinite-lived trademark intangible asset. The carrying value of the indefinite-lived trademark intangible asset at the November 23, 2024 testing date was $290.0 million . As a result of the impairment testing performed, VF recorded an impairment charge of $51.0 million in the Consolidated Statement of Operations in the third quarter of Fiscal 2025 to write down the Dickies indefinite-lived trademark intangible asset to its estimated fair value. Annual Impairment Testing Management performed its annual goodwill and indefinite-lived intangible asset impairment testing as of the beginning of the fourth quarter of Fiscal 2025. VF elected to bypass the qualitative analysis for the Icebreaker and Smartwool reporting unit goodwill and indefinite-lived trademark intangible assets and for the Timberland PRO reporting unit goodwill. As a result of the annual impairment testing, VF recorded a goodwill impairment charge of $38.2 million in the Consolidated Statement of Operations for the year ended March 2025 related to Icebreaker. Based on the analysis, management concluded that Icebreaker's indefinite-lived trademark intangible asset was not impaired and the estimated fair value exceeded its carrying value by a significant amount. No other impairment charges were required as a result of the annual impairment testing. Based on the analyses, the estimated fair value of the Timberland PRO reporting unit exceeded its carrying value by 18% and the estimated fair value of the Smartwool reporting unit exceeded its carrying value by a significant amount. Based on the analysis, the estimated fair value of the Smartwool indefinite-lived trademark intangible asset exceeded its carrying value by a significant amount. For the remaining reporting units and indefinite-lived trademark intangible assets, VF elected to perform a qualitative analysis during the annual goodwill and indefinite-lived intangible asset impairment testing, as of the beginning of the fourth quarter of Fiscal 2025, to determine whether it was more likely than not that the goodwill and indefinite-lived trademark intangible assets in those reporting units were impaired. Based on the results of the qualitative assessment, VF concluded it was more likely than not the carrying values of the goodwill and indefinite- VF Corporation Fiscal 2025 Form 10-K 39 Table of Contents lived trademark intangible assets were less than their fair values, and that further quantitative testing was not necessary. Refer to Notes 8, 9 and 24 to the consolidated financial statements for additional discussion on Fiscal 2025 impairment testing. Management’s Use of Estimates and Assumptions Management made its estimates based on information available as of the date of our assessments, using assumptions we believe market participants would use in performing an independent valuation of the business. Although management believes the estimates and assumptions used in the impairment testing are reasonable and appropriate, it is possible that VF's assumptions and conclusions regarding impairment or recoverability of goodwill or indefinite-lived trademark intangible assets in any reporting unit could change in future periods. There can be no assurance the estimates and assumptions, particularly our long-term financial projections, used in our goodwill and indefinite- lived intangible asset impairment testing will prove to be accurate predictions of the future, if, for example, (i) the businesses do not perform as projected, (ii) overall economic conditions in Fiscal 2026 or future years vary from current assumptions (including changes in discount rates, royalty rates, foreign currency exchange rates and tariffs), (iii) business conditions or strategies change from current assumptions, including loss of major customers or channels, (iv) investors require higher rates of return on equity investments in the marketplace, or (v) enterprise values of comparable publicly traded companies, or actual sales transactions of comparable companies, were to decline, resulting in lower multiples of revenues and EBITDA. Changes in these estimates and assumptions could result in a future impairment charge of goodwill or indefinite-lived intangible assets and such charges could have a material effect on VF’s consolidated financial position and results of operations. Income Taxes As a global company, VF is subject to income taxes and files income tax returns in over 100 U.S. and foreign jurisdictions each year. Due to economic and political conditions, tax rates in various jurisdictions may be subject to significant change. The Company could be subject to changes in its tax rates, the adoption of new U.S. or international tax legislation or changes in interpretation of existing tax laws and regulations or rulings by courts or government authorities leading to exposure to additional tax liabilities. In particular, tax authorities and the courts have increased their focus on income earned in no- or low-tax jurisdictions or income that is not taxed in any jurisdiction. Tax authorities have also become skeptical of special tax rulings provided to companies offering lower taxes than may be applicable in other countries. VF makes an ongoing assessment to identify any significant exposure related to increases in tax rates in the jurisdictions in which VF operates. The calculation of income tax liabilities involves uncertainties in the application of complex tax laws and regulations, which are subject to legal interpretation and significant management judgment. VF’s income tax returns are regularly examined by federal, state and foreign tax authorities, and those audits may result in proposed adjustments. VF has reviewed all issues raised upon examination, as well as any exposure for issues that may be raised in future examinations. VF has evaluated these potential issues under the “more-likely-than-not” standard of the accounting literature. A tax position is recognized if it meets this standard and is measured at the largest amount of benefit that has a greater than 50% likelihood of being realized. Such judgments and estimates may change based on audit settlements, court cases and interpretation of tax laws and regulations. Income tax expense could be materially affected to the extent VF prevails in a tax position or when the statute of limitations expires for a tax position for which a liability for unrecognized tax benefits or valuation allowances has been established, or to the extent VF is required to pay amounts greater than the established liability for unrecognized tax benefits. Under the more-likely-than-not standard, VF does not currently anticipate any material impact on earnings from the ultimate resolution of income tax uncertainties. There are no accruals for general or unknown tax expenses. As of March 2025, VF h ad $698.9 million of gr oss deferred income tax assets related to operating loss, credit and capital loss carryforwards, and $531.0 million of valuation allowances against those assets. Realization of deferred tax assets related to operating loss, credit and capital loss carryforwards is dependent on future taxable income in specific jurisdictions, the amount and timing of which are uncertain, and on possible changes in tax laws. If management believes that VF will not be able to generate sufficient taxable income or capital gains to offset losses or credits during the carryforward periods, VF records valuation allowances to reduce those deferred tax assets to amounts expected to be ultimately realized. If in a future period management determines that the amount of deferred tax assets to be realized differs from the net recorded amount, VF would record an adjustment to income tax expense in that future period. Recently Issued and Adopted Accounting Standards Refer to Note 1 to the consolidated financial statements for discussion of recently issued and adopted accounting standards. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. A discussion of VF’s market risks is incorporated by reference to “Risk Management” in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Annual Report. 40 VF Corporation Fiscal 2025 Form 10-K Table of Contents ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. See “Index to Consolidated Financial Statements and Financial Statement Schedule” on page F-1 of this Annual Report for information required by this Item 8. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. Not applicable.