UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☑QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

þ ~~QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

For the quarterly period ended December ~~29, 2018~~28, 2019

¨ ~~TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission file number: 1-5256

V. F. CORPORATION

(Exact name of registrant as specified in its charter)



Pennsylvania		23-1180120
(State or other jurisdiction of incorporation or organization)		(I.R.S. employer identification number)

~~105 Corporate Center Boulevard~~8505 E. Orchard Road

~~Greensboro, North Carolina 27408~~Greenwood Village, Colorado80111

(Address of principal executive offices)

~~(336) 424-6000~~(720) 778-4000

(Registrant’s telephone number, including area code)



Securities registered pursuant to Section 12(b) of the Act:
(Title of each class)	(Trading Symbol(s))	(Name of each exchange on which registered)
Common Stock, without par value, stated capital, $0.25 per share	VFC	New York Stock Exchange
0.625% Senior Notes due 2023	VFC23	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yesþ☑ No¨☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yesþ☑ No ¨☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer	þ ☑	Accelerated filer	¨ ☐

Non-accelerated filer	¨☐	Smaller reporting company	¨☐

		Emerging growth company	¨☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes¨☐ Noþ☑

On January ~~26, 2019,~~25, 2020, there were ~~395,605,444~~394,720,284 shares of the registrant’s common stock outstanding.

VF CORPORATION

Table of Contents



	Page No.
Part I — Financial Information

Item 1 — Financial Statements (Unaudited)	3

Consolidated Balance Sheets: December ~~2018,~~2019, March ~~2018~~2019 and December ~~2017~~2018	3

Consolidated Statements of Income: Three and nine months ended December ~~2018~~2019 and December ~~2017~~2018	4

Consolidated Statements of Comprehensive Income: Three and nine months ended December ~~2018~~2019 and December ~~2017~~2018	5

Consolidated Statements of Cash Flows: Nine months ended December ~~2018~~2019 and December ~~2017~~2018	6

Consolidated Statements of Stockholders’ Equity: Three and nine months ended December ~~2018~~2019 and December ~~2017~~2018	78

Notes to Consolidated Financial Statements	910

Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations	3633

Item 3 — Quantitative and Qualitative Disclosures about Market Risk	4744

Item 4 — Controls and Procedures	4744

Part II — Other Information

Item 1 — Legal Proceedings	4845

Item 1A — Risk Factors	4845

Item 2 — Unregistered Sales of Equity Securities and Use of Proceeds	4845

Item 6 — Exhibits	4946

Signatures	5047

PART I — FINANCIAL INFORMATION

ITEM 1 — FINANCIAL STATEMENTS (UNAUDITED).

VF CORPORATION

Consolidated Balance Sheets

(Unaudited)


(In thousands, except share amounts)	December 2018			March 2018			December 2017			December 2019			March 2019			December 2018
ASSETS
Current assets
Cash and equivalents	$	535,312		$	680,762		$	563,483		$	583,951		$	445,119		$	451,978
Accounts receivable, less allowance for doubtful accounts of: December 2018 – $28,483; March 2018 – $24,993; December 2017 – $26,266	1,774,460			1,408,587			1,429,986
Accounts receivable, less allowance for doubtful accounts of: December 2019 ‑ $21,283; March 2019 - $19,638; December 2018 - $20,932										1,641,758			1,465,855			1,566,202
Inventories	1,866,075			1,861,441			1,706,609			1,564,970			1,432,660			1,401,621
Other current assets	436,244			358,953			296,986			365,019			433,793			391,800
Current assets of discontinued operations	—			373,580			380,700			—			896,030			800,490
Total current assets	4,612,091			4,683,323			4,377,764			4,155,698			4,673,457			4,612,091
Property, plant and equipment, net	1,041,640			1,011,617			1,014,638			908,771			915,177			902,665
Intangible assets, net	2,055,965			2,120,110			2,089,781			1,948,232			1,972,364			2,002,906
Goodwill	1,756,156			1,693,219			1,692,644			1,539,579			1,541,314			1,536,544
Operating lease right-of-use assets										1,298,631			—			—
Other assets	818,458			803,041			783,675			963,351			772,755			756,065
Other assets of discontinued operations										—			481,718			474,039
TOTAL ASSETS	$	10,284,310		$	10,311,310		$	9,958,502		$	10,814,262		$	10,356,785		$	10,284,310
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Short-term borrowings	$	677,891		$	1,525,106		$	729,384		$	56,001		$	659,060		$	674,676
Current portion of long-term debt	5,576			6,265			6,165			4,677			5,263			5,576
Accounts payable	645,678			583,004			760,997			456,993			580,867			536,406
Accrued liabilities	1,233,902			938,427			1,146,535			1,444,421			1,154,932			1,115,371
Current liabilities of discontinued operations	—			86,027			101,019			—			261,482			231,018
Total current liabilities	2,563,047			3,138,829			2,744,100			1,962,092			2,661,604			2,563,047
Long-term debt	2,135,240			2,212,555			2,187,789			2,110,488			2,115,884			2,135,240
Operating lease liabilities										1,052,854			—			—
Other liabilities	1,285,399			1,271,830			1,306,713			1,121,238			1,232,200			1,239,503
Other liabilities of discontinued operations										—			48,581			45,896
Commitments and contingencies
Total liabilities	5,983,686			6,623,214			6,238,602			6,246,672			6,058,269			5,983,686
Stockholders’ equity
Preferred Stock, par value $1; shares authorized, 25,000,000; no shares outstanding at December 2018, March 2018 or December 2017	—			—			—
Common Stock, stated value $0.25; shares authorized, 1,200,000,000; shares outstanding at December 2018 – 395,472,173; March 2018 – 394,313,070; December 2017 – 395,821,781	98,868			98,578			98,955
Preferred Stock, par value $1; shares authorized, 25,000,000; no shares outstanding at December 2019, March 2019 or December 2018										—			—			—
Common Stock, stated value $0.25; shares authorized, 1,200,000,000; shares outstanding at December 2019 - 394,528,067; March 2019 - 396,824,662; December 2018 - 395,472,173										98,632			99,206			98,868
Additional paid-in capital	3,829,994			3,607,424			3,523,340			4,182,102			3,921,784			3,829,994
Accumulated other comprehensive income (loss)	(886,565		)	(864,030		)	(926,140		)	(895,372		)	(902,075		)	(886,565		)
Retained earnings	1,258,327			846,124			1,023,745			1,182,228			1,179,601			1,258,327
Total stockholders’ equity	4,300,624			3,688,096			3,719,900			4,567,590			4,298,516			4,300,624
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	10,284,310		$	10,311,310		$	9,958,502		$	10,814,262		$	10,356,785		$	10,284,310

See notes to consolidated financial statements.

3 VF Corporation Q3 ~~FY19~~FY20 Form 10-Q

VF CORPORATION

Consolidated Statements of Income

(Unaudited)


	Three Months Ended December						Nine Months Ended December						Three Months Ended December						Nine Months Ended December

(In thousands, except per share amounts)	2018			2017			2018			2017			2019			2018			2019			2018
Net revenues	$	3,940,159		$	3,649,283		$	10,635,691		$	9,310,837		$	3,384,746		$	3,227,712		$	9,049,493		$	8,584,237
Costs and operating expenses
Cost of goods sold	1,896,472			1,769,819			5,232,050			4,601,336			1,500,463			1,464,761			4,133,884			4,015,441
Selling, general and administrative expenses	1,451,782			1,394,845			3,922,185			3,489,679			1,305,481			1,242,131			3,624,450			3,389,891
Total costs and operating expenses	3,348,254			3,164,664			9,154,235			8,091,015			2,805,944			2,706,892			7,758,334			7,405,332
Operating income	591,905			484,619			1,481,456			1,219,822			578,802			520,820			1,291,159			1,178,905
Interest income	4,550			4,423			10,788			12,577			5,489			3,116			17,601			6,746
Interest expense	(28,397		)	(26,971		)	(84,032		)	(78,269		)	(22,303		)	(28,336		)	(65,240		)	(83,640		)
Other income (expense), net	(1,774		)	(1,902		)	(56,495		)	(7,032		)	(22,152		)	(1,027		)	(18,367		)	(52,422		)
Income from continuing operations before income taxes	566,284			460,169			1,351,717			1,147,098			539,836			494,573			1,225,153			1,049,589
Income taxes	103,158			533,148			221,517			639,165
Income (loss) from continuing operations	463,126			(72,979		)	1,130,200			507,933
Income tax expense													87,089			85,453			26,156			162,981
Income from continuing operations													452,747			409,120			1,198,997			886,608
Income (loss) from discontinued operations, net of tax	383			(17,290		)	788			(102,173		)	12,256			54,389			(35,772		)	244,380
Net income (loss)	$	463,509		$	(90,269	)	$	1,130,988		$	405,760
Net income													$	465,003		$	463,509		$	1,163,225		$	1,130,988
Earnings (loss) per common share - basic
Continuing operations	$	1.17		$	(0.18	)	$	2.86		$	1.29		$	1.14		$	1.03		$	3.02		$	2.24
Discontinued operations	—			(0.04		)	—			(0.26		)	0.03			0.14			(0.09		)	0.62
Total earnings (loss) per common share - basic	$	1.17		$	(0.23	)	$	2.86		$	1.03
Total earnings per common share - basic													$	1.17		$	1.17		$	2.93		$	2.86
Earnings (loss) per common share - diluted
Continuing operations	$	1.16		$	(0.18	)	$	2.82		$	1.27		$	1.13		$	1.02		$	2.99		$	2.21
Discontinued operations	—			(0.04		)	—			(0.26		)	0.03			0.14			(0.09		)	0.61
Total earnings (loss) per common share - diluted	$	1.16		$	(0.23	)	$	2.82		$	1.02
Total earnings per common share - diluted													$	1.16		$	1.16		$	2.90		$	2.82
Weighted average shares outstanding
Basic	395,294			394,577			395,117			394,967			395,940			395,294			396,806			395,117
Diluted	399,767			400,378			400,418			399,425			400,322			399,767			401,499			400,418

See notes to consolidated financial statements.

VF Corporation Q3 ~~FY19~~FY20 Form 10-Q 4

VF CORPORATION

Consolidated Statements of Comprehensive Income

(Unaudited)


	Three Months Ended December						Nine Months Ended December							Three Months Ended December						Nine Months Ended December

(In thousands)	2018			2017			2018			2017				2019			2018			2019			2018
Net income (loss)	$	463,509		$	(90,269	)	$	1,130,988		$	405,760
Net income														$	465,003		$	463,509		$	1,163,225		$	1,130,988
Other comprehensive income (loss)													��
Foreign currency translation and other
Gains (losses) arising during the period	(67,820		)	13,779			(241,578		)	154,603				46,813			(67,820		)	(10,831		)	(241,578		)
Income tax effect	(3,345		)	7,984			(18,680		)	41,477				5,154			(3,345		)	(815		)	(18,680		)
Defined benefit pension plans
Current period actuarial gains														35,971			1,428			21,361			53,470
Amortization of net deferred actuarial losses	6,676			10,026			22,153			30,058				4,203			6,676			12,236			22,153
Amortization of deferred prior service costs (credits)	(58		)	646			552			1,934				13			(58		)	38			552
Current period actuarial gains (losses)	1,428			(45,356		)	53,470			(45,356		)
Curtailment losses and settlement charges	662			6,230			18,329			6,230
Reclassification of net actuarial loss from settlement charge														24,943			662			25,462			8,846
Reclassification of deferred prior service cost due to curtailments														—			—			—			9,483
Income tax effect	(2,313		)	4,664			(24,530		)	(3,094		)		(16,334		)	(2,313		)	(15,835		)	(24,530		)
Derivative financial instruments
Gains (losses) arising during the period	43,836			(21,136		)	153,705			(128,622		)		(56,699		)	43,836			9,471			153,705
Income tax effect	(7,217		)	5,892			(18,664		)	13,076				10,163			(7,217		)	(759		)	(18,664		)
Reclassification to net income for (gains) losses realized	5,391			8,352			35,554			(7,576		)		(22,563		)	5,391			(56,746		)	35,554
Income tax effect	(889		)	(2,325		)	(2,846		)	(830		)		3,689			(889		)	9,689			(2,846		)
Other comprehensive income (loss)	(23,649		)	(11,244		)	(22,535		)	61,900				35,353			(23,649		)	(6,729		)	(22,535		)
Comprehensive income (loss)	$	439,860		$	(101,513	)	$	1,108,453		$	467,660
Comprehensive income														$	500,356		$	439,860		$	1,156,496		$	1,108,453

See notes to consolidated financial statements.

5 VF Corporation Q3 ~~FY19~~FY20 Form 10-Q

VF CORPORATION

Consolidated Statements of Cash Flows

(Unaudited)


	Nine Months Ended December						Nine Months Ended December

(In thousands)	2018 ^(a)			2017 ^(a)			2019			2018
OPERATING ACTIVITIES
Net income	$	1,130,988		$	405,760		$	1,163,225		$	1,130,988
Income (loss) from discontinued operations, net of tax							(35,772		)	244,380
Income from continuing operations, net of tax							1,198,997			886,608
Adjustments to reconcile net income to cash provided by operating activities:
Impairment of goodwill	—			104,651
Depreciation and amortization	216,361			224,065			204,341			192,049
Amortization of operating lease right-of-use assets							287,439			—
Stock-based compensation	80,501			66,600			95,304			67,577
Provision for doubtful accounts	16,325			18,481			9,592			11,413
Pension expense in excess of contributions	2,932			17,241			9,428			2,932
Loss on sale of businesses, net of tax	28,115			27,426			—			33,501
Other, net	(36,404		)	(101,154		)	(124,056		)	(36,393		)
Changes in operating assets and liabilities:
Accounts receivable	(428,753		)	(22,854		)	(185,259		)	(418,983		)
Inventories	(58,401		)	176,717			(132,862		)	(69,211		)
Accounts payable	62,175			228,727			(121,532		)	54,306
Income taxes	(39,971		)	494,406			(44,092		)	(43,935		)
Accrued liabilities	491,925			54,649			(82,948		)	444,424
Operating lease right-of-use assets and liabilities							(318,636		)	—
Other assets and liabilities	(29,130		)	(9,893		)	32,697			(12,562		)
Cash provided by operating activities - continuing operations							828,413			1,111,726
Cash provided by operating activities - discontinued operations							13,213			324,937
Cash provided by operating activities	1,436,663			1,684,822			841,626			1,436,663
INVESTING ACTIVITIES
Business acquisitions, net of cash received	(320,405		)	(740,541		)	—			(320,405		)
Proceeds from sale of businesses, net of cash sold	430,273			214,968			—			430,273
Capital expenditures	(195,250		)	(128,697		)	(186,281		)	(180,241		)
Software purchases	(42,548		)	(44,520		)	(37,333		)	(42,533		)
Other, net	(20,616		)	(9,124		)	51,985			(16,189		)
Cash used by investing activities - continuing operations							(171,629		)	(129,095		)
Cash used by investing activities - discontinued operations							(2,327		)	(19,451		)
Cash used by investing activities	(148,546		)	(707,914		)	(173,956		)	(148,546		)
FINANCING ACTIVITIES
Net (decrease) increase in short-term borrowings	(852,547		)	424,297
Net decrease in short-term borrowings							(596,559		)	(852,547		)
Payments on long-term debt	(4,675		)	(253,410		)	(4,496		)	(4,675		)
Payment of debt issuance costs	(2,123		)	—			—			(2,123		)
Purchases of treasury stock	(150,676		)	(762,059		)	(500,003		)	(150,676		)
Cash dividends paid	(565,176		)	(511,966		)	(562,298		)	(565,176		)
Cash received from Kontoor Brands, net of cash transferred of $126.8 million							906,148			—
Proceeds from issuance of Common Stock, net of shares withheld for taxes	137,470			86,610			135,086			137,470
Cash used by financing activities	(1,437,727		)	(1,016,528		)	(622,122		)	(1,437,727		)
Effect of foreign currency rate changes on cash, cash equivalents and restricted cash	(681		)	737			(4,927		)	(681		)
Net change in cash, cash equivalents and restricted cash	(150,291		)	(38,883		)	40,621			(150,291		)
Cash, cash equivalents and restricted cash – beginning of year	689,190			608,280			556,587			689,190
Cash, cash equivalents and restricted cash – end of period	$	538,899		$	569,397		$	597,208		$	538,899

Balances per Consolidated Balance Sheets:
Cash and cash equivalents	$	535,312		$	563,483
Other current assets	2,872			2,452
Current assets of discontinued operations	—			2,592
Other assets	715			870
Total cash, cash equivalents and restricted cash	$	538,899		$	569,397


^(a) Continued on next page.	The cash flows related to discontinued operations have not been segregated, and remain included in the major classes of assets and liabilities. Accordingly, the Consolidated Statements of Cash Flows include the results of continuing and discontinued operations.

See notes to consolidated financial statements.

VF Corporation Q3 ~~FY19~~FY20 Form 10-Q 6

VF CORPORATION

Consolidated Statements of Cash Flows

(Unaudited)



	Nine Months Ended December

(In thousands)	2019		2018
Balances per Consolidated Balance Sheets:
Cash and cash equivalents	$	583,951	$	451,978
Other current assets	3,448		2,855
Current and other assets of discontinued operations	—		83,351
Other assets	9,809		715
Total cash, cash equivalents and restricted cash	$	597,208	$	538,899

See notes to consolidated financial statements.

7 VF Corporation Q3 FY20 Form 10-Q

VF CORPORATION

Consolidated Statements of Stockholders’ Equity

(Unaudited)


																				Three Months Ended December 2019
																										Additional Paid-in Capital				Accumulated Other Comprehensive Income (Loss)				Retained Earnings
																				Common Stock
(In thousands, except share amounts)																				Shares			Amounts						Total
Balance, September 2019																				398,865,790			$	99,716					$			4,072,640			$	(930,725	)		$	1,405,988			$	4,647,619
Net income																				—			—						—					—				465,003				465,003
Dividends on Common Stock ($0.48 per share)																				—			—			—					—				(188,694		)		(188,694		)
Purchase of treasury stock																				(5,840,550	)		(1,460		)	—				—				(498,543		)		(500,003		)
Stock-based compensation, net																				1,502,827			376			109,462				—				(1,526		)		108,312
Foreign currency translation and other																				—			—			—				51,967				—				51,967
Defined benefit pension plans																				—			—			—				48,796				—				48,796
Derivative financial instruments																				—			—			—				(65,410		)		—				(65,410		)
Balance, December 2019																				394,528,067			$	98,632		$	4,182,102			$	(895,372	)		$	1,182,228			$	4,567,590

	Three Months Ended December 2018																			Three Months Ended December 2018
						Additional Paid-in Capital			Accumulated Other Comprehensive Income (Loss)			Retained Earnings														Additional Paid-in Capital				Accumulated Other Comprehensive Income (Loss)				Retained Earnings
	Common Stock														Common Stock
(In thousands, except share amounts)	Shares		Amounts					Total							Shares			Amounts							Total
Balance, September 2018	397,161,808		$	99,290				$			3,795,395		$	(862,916	)		$	1,147,787			$	4,179,556			397,161,808			$	99,290			$	3,795,395			$	(862,916	)		$	1,147,787			$	4,179,556
Net income	—		—					—				—				463,509				463,509				—			—				—				—				463,509				463,509
Dividends on Common Stock ($0.51 per share)	—		—			—				—			(201,325		)		(201,325		)		—			—			—				—				(201,325		)		(201,325		)
Purchase of treasury stock	(1,863,724	)	(466		)	—			—			(149,730		)		(150,196		)		(1,863,724	)		(466		)	—				—				(149,730		)		(150,196		)
Stock-based compensation, net	174,089		44			34,599			—			(1,914		)		32,729				174,089			44			34,599				—				(1,914		)		32,729
Foreign currency translation and other	—		—			—			(71,165		)	—				(71,165		)		—			—			—				(71,165		)		—				(71,165		)
Defined benefit pension plans	—		—			—			6,395			—				6,395				—			—			—				6,395				—				6,395
Derivative financial instruments	—		—			—			41,121			—				41,121				—			—			—				41,121				—				41,121
Balance, December 2018	395,472,173		$	98,868		$	3,829,994		$	(886,565	)	$	1,258,327			$	4,300,624			395,472,173			$	98,868		$	3,829,994			$	(886,565	)		$	1,258,327			$	4,300,624

	Three Months Ended December 2017
						Additional Paid-in Capital			Accumulated Other Comprehensive Income (Loss)			Retained Earnings
	Common Stock
(In thousands, except share amounts)	Shares		Amounts					Total
Balance, September 2017	394,502,698		$	98,626				$			3,456,661		$	(914,896	)		$	1,297,029			$	3,937,420
Net income	—		—					—				—				(90,269		)		(90,269		)
Dividends on Common Stock ($0.46 per share)	—		—			—				—			(181,686		)		(181,686		)
Purchase of treasury stock	—		—			—			—			—				—
Stock-based compensation, net	1,319,083		329			66,679			—			(1,329		)		65,679
Foreign currency translation and other	—		—			—			21,763			—				21,763
Defined benefit pension plans	—		—			—			(23,790		)	—				(23,790		)
Derivative financial instruments	—		—			—			(9,217		)	—				(9,217		)
Balance, December 2017	395,821,781		$	98,955		$	3,523,340		$	(926,140	)	$	1,023,745			$	3,719,900

Continued on next page.

See notes to consolidated financial statements.

7VF Corporation Q3 ~~FY19~~FY20 Form 10-Q8

VF CORPORATION

Consolidated Statements of Stockholders’ Equity

(Unaudited)


	Nine Months Ended December 2018																			Nine Months Ended December 2019
						Additional Paid-in Capital			Accumulated Other Comprehensive Income (Loss)			Retained Earnings														Additional Paid-in Capital				Accumulated Other Comprehensive Income (Loss)				Retained Earnings
	Common Stock														Common Stock
(In thousands, except share amounts)	Shares		Amounts					Total							Shares			Amounts							Total
Balance, March 2019																				396,824,662			$	99,206			$	3,921,784			$	(902,075	)		$	1,179,601			$	4,298,516
Adoption of new accounting standard, ASU 2016-02																				—			—				—				—				(2,491		)		(2,491		)
Adoption of new accounting standard, ASU 2018-02																				—			—			—				(61,861		)		61,861				—
Net income																				—			—			—				—				1,163,225				1,163,225
Dividends on Common Stock ($1.42 per share)																				—			—			—				—				(562,298		)		(562,298		)
Purchase of treasury stock																				(5,840,550	)		(1,460		)	—				—				(498,543		)		(500,003		)
Stock-based compensation, net																				3,543,955			886			260,318				—				(28,919		)		232,285
Foreign currency translation and other																				—			—			—				(11,646		)		—				(11,646		)
Defined benefit pension plans																				—			—			—				43,262				—				43,262
Derivative financial instruments																				—			—			—				(38,345		)		—				(38,345		)
Spin-off of Jeans Business																				—			—			—				75,293				(130,208		)		(54,915		)
Balance, December 2019																				394,528,067			$	98,632		$	4,182,102			$	(895,372	)		$	1,182,228			$	4,567,590

																				Nine Months Ended December 2018
																										Additional Paid-in Capital				Accumulated Other Comprehensive Income (Loss)				Retained Earnings
																				Common Stock
(In thousands, except share amounts)																				Shares			Amounts						Total
Balance, March 2018	394,313,070		$	98,578				$			3,607,424		$	(864,030	)		$	846,124			$	3,688,096			394,313,070							$	98,578			$	3,607,424			$	(864,030	)	$	846,124	$	3,688,096
Adoption of new accounting standard	—		—					—				—				1,956				1,956
Adoption of new accounting standard, ASU 2014-09																				—			—						—					—				1,956				1,956
Net income	—		—			—				—			1,130,988				1,130,988				—			—			—					—				1,130,988				1,130,988
Dividends on Common Stock ($1.43 per share)	—		—			—			—			(565,176		)		(565,176		)		—			—			—				—				(565,176		)		(565,176		)
Purchase of treasury stock	(1,868,934	)	(467		)	—			—			(150,209		)		(150,676		)		(1,868,934	)		(467		)	—				—				(150,209		)		(150,676		)
Stock-based compensation, net	3,028,037		757			222,570			—			(5,356		)		217,971				3,028,037			757			222,570				—				(5,356		)		217,971
Foreign currency translation and other	—		—			—			(260,258		)	—				(260,258		)		—			—			—				(260,258		)		—				(260,258		)
Defined benefit pension plans	—		—			—			69,974			—				69,974				—			—			—				69,974				—				69,974
Derivative financial instruments	—		—			—			167,749			—				167,749				—			—			—				167,749				—				167,749
Balance, December 2018	395,472,173		$	98,868		$	3,829,994		$	(886,565	)	$	1,258,327			$	4,300,624			395,472,173			$	98,868		$	3,829,994			$	(886,565	)		$	1,258,327			$	4,300,624

	Nine Months Ended December 2017
						Additional Paid-in Capital			Accumulated Other Comprehensive Income (Loss)			Retained Earnings
	Common Stock
(In thousands, except share amounts)	Shares		Amounts					Total
Balance, March 2017	406,964,289		$	101,741				$			3,367,026		$	(988,040	)		$	1,892,330			$	4,373,057
Net income	—		—					—				—				405,760				405,760
Dividends on Common Stock ($1.30 per share)	—		—			—				—			(511,966		)		(511,966		)
Purchase of treasury stock	(13,993,773	)	(3,498		)	—			—			(758,561		)		(762,059		)
Stock-based compensation, net	2,851,265		712			156,314			—			(3,818		)		153,208
Foreign currency translation and other	—		—			—			196,080			—				196,080
Defined benefit pension plans	—		—			—			(10,228		)	—				(10,228		)
Derivative financial instruments	—		—			—			(123,952		)	—				(123,952		)
Balance, December 2017	395,821,781		$	98,955		$	3,523,340		$	(926,140	)	$	1,023,745			$	3,719,900

See notes to consolidated financial statements.

9VF Corporation Q3 ~~FY19~~FY20 Form 10-Q8

VF CORPORATION

Notes to Consolidated Financial Statements

(Unaudited)

NOTE 1 — BASIS OF PRESENTATION

VF Corporation (together with its subsidiaries, collectively known as “VF” or the “Company”) ~~changed to~~uses a 52/53 week fiscal year ending on the Saturday closest to March 31 of each year. ~~VF previously used a 52/53 week fiscal year ending on the Saturday closest to December 31 of each year.~~ The Company's current fiscal year runs from ~~April 1, 2018~~March 31, 2019 through March ~~30, 2019~~28, 2020 ("Fiscal ~~2019"~~2020"). Accordingly, this Form 10-Q presents our third quarter of Fiscal ~~2019.~~2020. For presentation purposes herein, all references to periods ended December ~~2018, March 2018~~2019 and December ~~2017~~2018 relate to the fiscal periods ended on December 28, 2019 and December 29, 2018, respectively. References to March ~~31, 2018 and December~~2019 relate to information as of March 30, ~~2017, respectively.~~2019.

~~The~~ ~~Nautica~~On May 22, 2019, VF completed the spin-off of its Jeans business, which included the Wrangler^® ~~brand~~, Lee^® and Rock & Republic^® brands, as well as the VF Outlet^TM business, into an independent, publicly traded company. As a result, VF reported the operating results for the Jeans business in the income (loss) from discontinued operations, net of tax line item in the Consolidated Statements of Income and the ~~Licensing Business (which comprised the Licensed Sports Group and~~ ~~JanSport~~^® ~~brand collegiate businesses)~~related cash flows have been reported as discontinued operations in ~~our~~the Consolidated Statements of ~~Income, and~~Cash Flows, for all periods presented. In addition, the related ~~held-for-sale~~ assets and liabilities have been ~~presented~~reported as assets and liabilities of discontinued operations in the Consolidated Balance Sheets, through ~~their dates~~the date the spin-off was completed.

On April 30, 2018, VF completed the sale of ~~disposal. These changes have~~the Nautica^® brand business. As a result, the Nautica^® brand business has been ~~applied to all periods presented. Unless~~reported as discontinued operations in our Consolidated Statements of Income and Consolidated Statements of Cash Flows.

Unless otherwise noted, discussion within these notes to the consolidated financial statements relates to continuing operations. Refer to Note 5 for additional information on discontinued operations.

Certain prior year amounts have been reclassified to conform to the Fiscal 2020 presentation.

The accompanying unaudited condensed 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 2019 condensed consolidated balance sheet was derived from audited financial statements but does not include all disclosures required by GAAP. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all normal and recurring adjustments necessary to fairly state the consolidated financial position, results of operations and cash flows of VF for the interim periods presented. Operating results for the three and nine months ended December ~~2018~~2019 are not necessarily indicative of results that may be expected for any other interim period or for Fiscal ~~2019.~~2020. 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 ~~December~~March 30, ~~2017~~2019 (“~~2017~~Fiscal 2019 Form 10-K”).

NOTE 2 — RECENTLY ADOPTED AND ISSUED ACCOUNTING STANDARDS

Recently Adopted Accounting Standards

In ~~May 2014,~~February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. ~~2014-09,~~ ~~"Revenue from Contracts with Customers~~2016-02, “Leases (Topic ~~606)"~~842)”, a new accounting standard on ~~revenue recognition that outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers.~~leasing. The FASB subsequently issued updates to the standard to provide additional clarification on specific ~~topics.~~topics, including permitted transition methods. Collectively, the guidance is referred to as FASB Accounting Standards Codification ~~Topic 606~~ ("~~ASC 606"~~ASC")~~. The~~ 842. This standard ~~prescribes~~requires companies to record most leased assets and liabilities on the balance sheet, and also retains a ~~five-step~~dual model approach to revenue recognition: (1) identify the contracts with the customer; (2) identify the separate performance obligations in the contracts; (3) determine the transaction price; (4) allocate the transaction price to separate performance obligations;for assessing lease classification and (5) recognize revenue when, or as, each performance obligation is satisfied. The standard also requires additional disclosure regarding the nature, amount, timing and uncertainty of revenues and cash flows arising from contracts with customers.recognizing expense. The Company adopted this standard on ~~April 1, 2018,~~March 31, 2019, utilizing the modified retrospective method and ~~applying this approach to contracts not completed as of that date. The~~has recognized the cumulative effect of initially applying the new standard ~~has been recognized~~ in retained earnings. ~~Comparative~~The effective date of the adoption has been used as the date of initial application, and thus comparative prior period financial information has not been restated and continues to be reported under accounting standards in effect for those periods.

The standard provides certain optional practical expedients for transition. The Company elected the transition relief package of practical expedients by applying previous accounting conclusions under ASC Topic 840, Leases ("ASC 840"), to all leases that existed prior to the transition date. As a result, VF did not reassess (i) whether existing or expired contracts contain leases, (ii) lease classification for any existing or expired leases, or (iii) whether lease origination costs qualified as initial direct costs. The

Company also elected the land easement practical expedient, which allows the Company to apply ASC 842 prospectively to land easements after the adoption date if they were not previously accounted for under ASC 840. Certain leases contain both lease and non-lease components. For leases associated with specific asset classes, including certain real estate, vehicles, manufacturing machinery and IT equipment, VF has elected the practical expedient which permits entities to account for separate lease and non-lease components as a single component. For all other lease contracts, the Company has elected to account for each lease component separately from the non-lease components of the contract. When applicable, VF will measure the consideration to be paid pursuant to the agreement and allocate this consideration to the lease and non-lease components based on relative stand-alone prices. Further, the Company made an accounting policy election to not recognize right-of-use assets and lease liabilities for leases with terms of 12 months or less.

The adoption of ASC ~~606~~842 resulted in a net ~~increase~~ decrease of~~$2.0~~ $2.5 millionin the retained earnings line item of the Consolidated Balance Sheet as of ~~April 1, 2018.~~March 31, 2019. The ~~cumulative effect adjustment relates primarily to i)~~adoption of ASC 842 also resulted in the recognition of ~~revenues for certain wholesale~~operating lease right-of-use assets and e-commerce transactions at shipment rather than upon delivery to the customer based on our evaluation of the transfer of control of the goods, ii) discontinued capitalization of certain costs related to ongoing customer arrangements and iii) adjustments to the timing of recognition for certain royalty amounts.

~~Other effects of the adoption include~~ ~~presentation of allowances for sales incentive programs, discounts, markdowns, chargebacks, and returns as refund~~operating lease liabilities ~~rather than as a reduction to accounts receivable and presentation of the right of return asset~~ within ~~other current assets rather than as a component of inventory in~~ the Consolidated Balance Sheet. Additionally, sourcing fees received from customers and advertising contributions from licensees that had previously been reported as an offset to costs or expenses are now reported as revenue in the Consolidated Statements of Income. Refer to Note 310 for additional ~~revenue~~lease disclosures.

9VF Corporation Q3 ~~FY19~~FY20 Form 10-Q10

~~The following tables compare amounts reported in accordance with the requirements of ASC 606 to the amounts that would have been reported had the new standard not been applied:~~

Condensed Consolidated Balance Sheet
December 2018
(In thousands) As Reported Impact of Adoption Balances without Adoption of ASC 606
ASSETS
Cash and equivalents $ 535,312
$ —
$ 535,312

Accounts receivable, net 1,774,460
(223,546 ) 1,550,914

Inventories 1,866,075
71,909
1,937,984

Other current assets 436,244
(64,794 ) 371,450

Total current assets 4,612,091
(216,431 ) 4,395,660

Property, plant and equipment, net 1,041,640
—
1,041,640

Goodwill and intangible assets, net 3,812,121
—
3,812,121

Other assets 818,458
345
818,803

TOTAL ASSETS $ 10,284,310
$ (216,086 ) $ 10,068,224

LIABILITIES AND STOCKHOLDERS' EQUITY
Short-term borrowings and current portion of long-term debt $ 683,467
$ —
$ 683,467

Accounts payable 645,678
—
645,678

Accrued liabilities 1,233,902
(204,407 ) 1,029,495

Total current liabilities 2,563,047
(204,407 ) 2,358,640

Long-term debt 2,135,240
—
2,135,240

Other liabilities 1,285,399
(1,545 ) 1,283,854

Total liabilities 5,983,686
(205,952 ) 5,777,734

Total stockholders' equity 4,300,624
(10,134 ) 4,290,490

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 10,284,310
$ (216,086 ) $ 10,068,224

Condensed Consolidated Statements of Income
Three Months Ended December 2018 Nine Months Ended December 2018
(In thousands) As Reported Impact of Adoption Balances without Adoption of ASC 606 As Reported Impact of Adoption Balances without Adoption of ASC 606
Net revenues $ 3,940,159
$ 7,702
$ 3,947,861
$ 10,635,691
$ (8,281 ) $ 10,627,410

Cost of goods sold 1,896,472
2,802
1,899,274
5,232,050
(17,603 ) 5,214,447

Selling, general and administrative expenses 1,451,782
6,266
1,458,048
3,922,185
15,060
3,937,245

Total costs and operating expenses 3,348,254
9,068
3,357,322
9,154,235
(2,543 ) 9,151,692

Operating income 591,905
(1,366 ) 590,539
1,481,456
(5,738 ) 1,475,718

Interest income (expense) and other income (expense), net (25,621 ) —
(25,621 ) (129,739 ) —
(129,739 )
Income from continuing operations before income taxes 566,284
(1,366 ) 564,918
1,351,717
(5,738 ) 1,345,979

Income taxes 103,158
(242 ) 102,916
221,517
(1,016 ) 220,501

Income from continuing operations 463,126
(1,124 ) 462,002
1,130,200
(4,722 ) 1,125,478

Income (loss) from discontinued operations, net of tax 383
—
383
788
(3,456 ) (2,668 )
Net income $ 463,509
$ (1,124 ) $ 462,385
$ 1,130,988
$ (8,178 ) $ 1,122,810

~~VF Corporation Q3 FY19 Form 10-Q~~ 10

Condensed Consolidated Statement of Cash Flows - Operating Activities
Nine Months Ended December 2018
(In thousands) As Reported Impact of Adoption Activities without Adoption of ASC 606
OPERATING ACTIVITIES
Net income $ 1,130,988
$ (8,178 ) $ 1,122,810

Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization 216,361
190
216,551

Other adjustments, net 91,469
3,193
94,662

Changes in operating assets and liabilities:
Accounts receivable (428,753 ) 213,953
(214,800 )
Inventories (58,401 ) (66,338 ) (124,739 )
Accounts payable 62,175
—
62,175

Income taxes (39,971 ) (1,016 ) (40,987 )
Accrued liabilities 491,925
(204,726 ) 287,199

Other assets and liabilities (29,130 ) 62,922
33,792

Cash provided by operating activities $ 1,436,663
$ —
$ 1,436,663

~~There was no impact to investing or financing activities within the Consolidated Statement of Cash Flows as a result of the adoption of ASC 606.~~

In ~~January 2016,~~August 2017, the FASB issued ASU No. ~~2016-01,~~ 2017-12, "~~Financial Instruments—Overall (Subtopic 825-10)~~Derivatives and Hedging (Topic 815): ~~Recognition and Measurement of Financial Assets and Financial Liabilities"~~Targeted Improvements to Accounting for Hedging Activities", an update that amends and simplifies certain aspects of hedge accounting rules to better portray the economic results of risk management activities in the financial statements. The FASB subsequently issued updates to the ~~accounting~~standard to provide additional guidance related to the recognition and measurement of certain financial instruments. This guidance affects the accounting for equity investments, financial liabilities under the fair value option and the presentation and disclosure requirements for financial instruments.on specific topics. This guidance became effective for VF in the first quarter of Fiscal ~~2019,~~2020, but did not impact VF's consolidated financial statements. ~~The~~

In February 2018, the FASB ~~has subsequently~~ issued ASU No. 2018-02, "Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income", an update that addresses the effect of the change in the U.S. federal corporate income tax rate due to ~~clarify~~ the ~~previous guidance.~~enactment of the Tax Cuts and Jobs Act ("U.S. Tax Act") on items within accumulated other comprehensive income (loss). The ~~amendments in this updated~~ guidance became effective for VF in the ~~second~~first quarter of Fiscal ~~2019, but~~2020. The Company elected to reclassify the income tax effects of the U.S. Tax Act on items within accumulated other comprehensive income (loss) of $61.9 million to retained earnings, which primarily related to deferred taxes previously recorded for pension benefits. The adoption of this guidance did not have an impact on VF's consolidated ~~financial statements.~~results of operations or cash flows.

In ~~March 2016,~~June 2018, the FASB issued ASU No. ~~2016-04,~~ 2018-07, "~~Liabilities—Extinguishments of Liabilities (Subtopic 405-20)~~Compensation—Stock Compensation (Topic 718): ~~Recognition of Breakage for Certain Prepaid Stored-Value Products"~~Improvements to Nonemployee Share-Based Payment Accounting", an update that expands the scope of Topic 718 to ~~the accounting guidance on extinguishments of financial liabilities that exempts prepaid stored-value products, or gift cards,~~include share-based payment transactions for acquiring goods and services from ~~the existing guidance. The updated guidance requires that financial liabilities related to prepaid stored-value products be subject to breakage accounting, consistent with ASC 606.~~nonemployees. This guidance became effective for VF in the first quarter of Fiscal ~~2019,~~2020, but did not impact ~~VF’s~~VF's consolidated financial statements.

In ~~August 2016,~~July 2018, the FASB issued ASU No. ~~2016-15,~~ 2018-09, "~~Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments"~~Codification Improvements", an update tothat provides technical corrections, clarifications and other improvements across a variety of accounting topics. The transition and effective date guidance is based on the ~~accounting guidance that addresses how certain cash receipts~~facts and ~~cash payments are presented and classified in the statement~~circumstances of ~~cash flows. This guidance~~each update; however, many of them became effective for VF in the first quarter of Fiscal ~~2019 but~~2020. The guidance did not impact ~~VF’s Consolidated Statements of Cash Flows.~~

~~In January 2017, the FASB issued ASU No. 2017-01,~~ ~~"Business Combinations (Topic 805): Clarifying the Definition of a Business"~~, an update that provides a more narrow framework to be used in evaluating whether a set of assets and activities constitutes a business. This guidance became effective for VF in the first quarter of Fiscal 2019 and was applied when accounting for the acquisitions

~~completed subsequent to the adoption date, but did not impact our conclusions on whether they were a business. Refer to Note 4 for further information related to acquisitions.~~

~~In March 2017, the FASB issued ASU No. 2017-07,~~ ~~"Compensation—Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost"~~, an update which requires employers to disaggregate the service cost component from other components of net periodic benefit costs. The standard requires employers to report the service cost component in the same line item as other compensation costs and to report the other components of net periodic benefit costs (which include interest cost, expected return on plan assets, amortization of prior service costs or credits and deferred actuarial gains and losses) separately and outside of operating income. The update specifies that only the service cost component is eligible for capitalization, which is consistent with VF’s current practice. The presentation change in the Consolidated Statements of Income requires application on a retrospective basis. The ASU was adopted by the Company on April 1, 2018, and as a result, VF reported increases in operating income and non-operating expense of $3.3 million and $6.4 million for the three and nine months ended December 2017, respectively. VF applied the practical expedient permitted under the guidance which allows entities to use information previously disclosed in the pension and other post-retirement benefit plans footnote as the basis to apply the retrospective presentation requirements. Refer to pension disclosure in Note 10.

~~In May 2017, the FASB issued ASU No. 2017-09, "Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting"~~, an update that amends the scope of modification accounting for share-based payment arrangements. This update provides guidance on the types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting. This guidance became effective for VF beginning in the first quarter of Fiscal 2019, but did not impact VF’sVF's consolidated financial statements.

11 ~~VF Corporation Q3 FY19 Form 10-Q~~

In January 2018, the FASB released guidance on the accounting for tax on the global intangible low-taxed income ("GILTI") provisions of the Tax Cuts and Jobs Act ("Tax Act"). The GILTI provisions impose a tax on foreign income in excess of a deemed return on tangible assets of foreign corporations. The guidance indicates that companies must make a policy decision to either record deferred taxes related to GILTI inclusions or treat any taxes on GILTI inclusions as period costs. The Company has completed its analysis related to this accounting policy election and has determined it will treat the taxes resulting from GILTI as a current-period expense, which is consistent with the treatment prior to the accounting policy election.

~~In March 2018, the FASB issued ASU No. 2018-05,~~ ~~"Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118",~~ which allowed the Company to record provisional amounts in earnings for the year ended December 30, 2017 due to the complexities involved in accounting for the enactment of the Tax Act. The Company recognized the estimated income tax effects of the Tax Act in its 2017 consolidated financial statements in accordance with Securities and Exchange Commission ("SEC") Staff Accounting Bulletin No. 118 ("SAB 118") and recorded revisions of our provisional estimate during the three months ended March 2018, June 30, 2018 ("June 2018") and September 29, 2018 ("September 2018"). VF finalized its accounting for the impact of the Tax Act during the three months ended December 2018. Refer to Note 13 for more information regarding the amounts recorded.

Recently Issued Accounting Standards

~~In February 2016, the FASB issued ASU No. 2016-02,~~ ~~"Leases (Topic 842)"~~, a new accounting standard on leasing. The FASB has subsequently issued updates to the standard to provide additional clarification on specific topics, including permitted transition methods. This new standard will require companies to record most leased assets and related liabilities on the balance sheet, and also retains a dual model approach for assessing lease classification and recognizing expense. VF's cross-functional implementation team has completed the design phase of the project, which involved reviewing the standard's provisions, evaluating real estate and non-real estate lease arrangements and identifying arrangements that may contain embedded leases. This project is now in the final stages of the implementation phase which included collecting information from lease contracts, assessing potential embedded leases, evaluating accounting policy elections and implementing a new lease management system. Additionally, VF is updating processes and internal controls over systems and financial reporting to respond to relevant risks associated with the new standard including the preparation of the required financial information and new disclosures. VF expects this standard will have a material impact on the Consolidated Balance Sheets but does not expect it to have a material impact on the Consolidated Statements of Income. The Company will adopt the new standard in the first quarter of the year ended March 28, 2020 ("Fiscal 2020") utilizing the modified retrospective method and will recognize a cumulative-effect adjustment in retained earnings, if any, at the beginning of the period of adoption.

In June 2016, the FASB issued ASU No. 2016-13, "Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments", which requires entities to use a forward-looking approach based on expected losses to estimate credit losses on certain types of financial instruments, including trade receivables. The FASB has subsequently issued updates to the standard to provide additional clarification on specific topics.

This guidance will be effective for VF in the first quarter of the year ~~ended~~ending April 3, 2021 ("Fiscal 2021") ~~with early adoption permitted. The Company is evaluating the impact that adopting this guidance will have on VF’s consolidated financial statements.~~

~~In August 2017, the FASB issued ASU No. 2017-12,~~ ~~"Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities"~~, an update that amends and simplifies certain aspects of hedge accounting rules to better portray the economic results of risk management activities in the financial statements. The FASB has subsequently issued updates to the standard to provide additional guidance on specific topics. This guidance will be effective for VF in the first quarter of Fiscal 2020 with early adoption permitted. The Company does not expect the adoption of this guidance to have a material impact on VF's consolidated financial statements.

~~In February 2018, the FASB issued ASU No. 2018-02, "Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income~~", an update that addresses the effect of the change in the U.S. federal corporate income tax rate due to the enactment of the Tax Act on items within accumulated other comprehensive income (loss). The guidance will be effective for VF in the first quarter of Fiscal 2020 with early adoption permitted. The Company is evaluating the impact that adopting this guidance will have on VF's consolidated financial statements.

~~In June 2018, the FASB issued ASU No. 2018-07,~~ ~~"Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting"~~, an update that expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. The guidance will be effective for VF in the first quarter of Fiscal 2020 with early adoption permitted. The Company does not expect the adoption of this guidance to have a material impact on VF's consolidated financial statements.

~~In July 2018, the FASB issued ASU No. 2018-09,~~ ~~"Codification Improvements"~~, an update that provides technical corrections, clarifications and other improvements across a variety of accounting topics. The transition and effective date guidance is based on the facts and circumstances of each update; however, many of them will be effective for VF in the first quarter of Fiscal 2020. The Company does not expect the adoption of this guidance to have a material impact on VF's consolidated financial statements.

In August 2018, the FASB issued ASU No. 2018-13, "Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement", an update that modifies the disclosure requirements for fair value measurements by removing, modifying or adding certain disclosures. The guidance will be effective for VF in the first quarter of Fiscal 2021 with early adoption permitted. The Company ~~is evaluating~~does not expect the ~~impact that adopting~~adoption of this guidance ~~will~~to have a material impact on VF's disclosures.

In August 2018, the FASB issued ASU No. 2018-14, "Compensation— Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans", an update that modifies the disclosure requirements for employers who sponsor defined benefit pension or other postretirement plans. The guidance will be effective for VF in Fiscal 2021 with early adoption ~~permitted. The~~permitted.The Company ~~is evaluating~~does not expect the ~~impact that adopting~~adoption of this guidance ~~will~~to have a material impact on VF's disclosures.

~~VF Corporation Q3 FY19 Form 10-Q~~ 12

In August 2018, the FASB issued ASU No. 2018-15, "Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract", an update that aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with

the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The guidance will be effective for VF in the first quarter of Fiscal 2021 with early adoption permitted. The Company does not expect the adoption of this guidance to have a material impact on VF's consolidated financial statements.

In December 2019, the FASB issued ASU No. 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes", an update that amends and simplifies the accounting for income taxes by removing certain exceptions in existing guidance and providing new guidance to reduce complexity in certain areas. The guidance will be effective for VF in the first quarter of the year ending April 2, 2022 ("Fiscal 2022") with early adoption permitted. The Company is evaluating the impact that adopting this guidance will have on VF's consolidated financial statements.

11 VF Corporation Q3 FY20 Form 10-Q

NOTE 3 — REVENUES

Revenue is recognized when performance obligations under the terms of a contract with the customer are satisfied based on the transfer of control of promised goods or services. The transfer of control typically occurs at a point in time based on consideration of when the customer has i) an obligation to pay for, ii) physical possession of, iii) legal title to, iv) risks and rewards of ownership of and v) accepted the goods or services. The timing of revenue recognition within the wholesale channel occurs either on shipment or delivery of goods based on contractual terms with the customer. The timing of revenue recognition in the direct-to-consumer channel generally occurs at the point of sale within VF-operated or concession retail stores and either on shipment or delivery of goods for e-commerce transactions based on contractual terms with the customer. For finished products shipped directly to customers from our suppliers, the Company's promise to the customer is a performance obligation to provide the specified goods, and thus the Company is the principal in the arrangement and revenue is recognized on a gross basis at the transaction price. For sourcing arrangements, the Company's promise to the customer is to arrange for certain goods, typically finished products, to be provided and thus the Company is acting as an agent and revenue is recognized on a net basis at the fee amount earned.

The duration of contractual arrangements with our customers in the wholesale and direct-to-consumer channels is typically less than one year. Payment terms with customers are generally between 30 and 60 days. The Company does not adjust the promised amount of consideration for the effects of a significant financing component as it is expected, at contract inception, that the period between the transfer of the promised good or service to the customer and the customer payment for the good or service will be one year or less.

The amount of revenue recognized in both wholesale and direct-to-consumer channels reflects the expected consideration to be received for providing the goods or services to the customer, which includes estimates for variable consideration. Variable consideration includes allowances for trade terms, sales incentive programs, discounts, markdowns, chargebacks and product returns. Estimates of variable consideration are determined at contract inception and reassessed at each reporting date, at a minimum, to reflect any changes in facts and circumstances. The Company utilizes the expected value method in determining its estimates of variable consideration, based on evaluations of specific product and customer circumstances, historical and anticipated trends, and current economic conditions.

Certain products sold by the Company include an assurance warranty. Product warranty costs are estimated based on historical and anticipated trends, and are recorded as cost of goods sold at the time revenue is recognized.

~~Revenue from the sale of gift cards is deferred and recorded as a contract liability until the gift card is redeemed by the customer, factoring in breakage as appropriate.~~

Various VF brands maintain customer loyalty programs where customers earn rewards from qualifying purchases or activities, which are redeemable for discounts on future purchases or other rewards. For its customer loyalty programs, the Company estimates the stand-alone selling price of the loyalty rewards and allocates a portion of the consideration for the sale of products to the loyalty points earned. The deferred amount is recorded as a contract liability, and is recognized as revenue when the points are redeemed or when the likelihood of redemption is remote.

The Company has elected to treat all shipping and handling activities as fulfillment costs and recognize the costs as selling, general and administrative expenses at the time the related revenue is recognized. Shipping and handling costs billed to customers are included in net revenues. Sales taxes and value added taxes collected from customers and remitted directly to governmental authorities are excluded from the transaction price.

The Company has licensing agreements for its symbolic intellectual property, most of which include minimum guaranteed royalties. Royalty income is recognized as earned over the respective license term based on the greater of minimum guarantees or the licensees' sales of licensed products at rates specified in the licensing contracts. ~~Royalty income related to the minimum guarantees is recognized using a measure of progress with variable amounts recognized only when the cumulative earned royalty exceeds the minimum guarantees.~~ ~~As of~~ ~~December 2018, the Company expects to recognize~~ ~~$97.8 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 through December~~ ~~2024. The variable consideration is not disclosed as a remaining performance obligation as the licensing arrangements qualify for the sales-based royalty exemption.~~

The Company has applied the practical expedient to recognize incremental costs of obtaining a contract as an expense when incurred if the amortization period of the asset that otherwise would have been recognized is one year or less.

~~Performance Obligations~~

Disclosure is required for the aggregate transaction price allocated to performance obligations that are unsatisfied at the end of a reporting period, unless the optional practical expedients are applicable. VF is electing the practical expedients to not disclose the transaction price allocated to remaining performance obligations for i) variable consideration related to sales-based royalty arrangements and ii) contracts with an original expected duration of one year or less.

As of December 2018, there were no arrangements with transaction price allocated to remaining performance obligations other than contracts for which the Company has applied the practical expedients and fixed consideration related to future minimum guarantees discussed above.

13 ~~VF Corporation Q3 FY19 Form 10-Q~~

~~For the three and nine months ended December 2018, revenue recognized from performance obligations satisfied, or partially satisfied, in prior periods was not material.~~

~~Contract Balances~~

~~Accounts receivable represent the Company's unconditional right to receive consideration from a customer and are recorded at net invoiced amounts, less an estimated allowance for doubtful accounts.~~

Contract assets are rights to consideration in exchange for goods or services that have been transferred to a customer when that right is conditional on something other than the passage of time. Once the Company has an unconditional right to consideration

under a contract, amounts are invoiced and contract assets are reclassified to accounts receivable. The Company's primary contract assets relate to sales-based royalty arrangements, which are discussed in more detail above.

Contract liabilities are recorded when a customer pays consideration, or the Company has a right to an amount of consideration that is unconditional, before the transfer of a good or service to the customer and thus represent the Company's obligation to transfer the good or service to the customer at a future date. The Company's primary contract liabilities relate to gift cards, loyalty programs and sales-based royalty arrangements, which are discussed in more detail above.

The following table provides information about accounts receivable, contract assets and contract liabilities:


(In thousands)	December 2018		At Adoption - April 1, 2018 ^(a)		December 2019		March 2019		December 2018
Accounts receivable, net	$	1,774,460	$	1,408,587	$	1,641,758	$	1,465,855	$	1,566,202
Contract assets ^(b)(a)	3,368		2,600		1,789		2,569		550
Contract liabilities ^(c)(b)	40,615		28,252		56,356		30,181		37,875


^(a)	~~The Company adopted ASC 606 on April 1, 2018. Refer to Note 2 for additional information.~~


^(b)	Included in the other current assets line item in the Consolidated Balance Sheets.


^(c)(b)	Included in the accrued liabilities and other liabilities line items in the Consolidated Balance Sheets.

For the three and nine months ended December ~~2018,~~2019, the Company recognized ~~$19.7~~$106.2 million and ~~$44.1~~$151.2 million, respectively, of revenue that was ~~previously~~ included in the contract liability ~~balance.~~balance during the periods, including amounts recorded as a contract liability and subsequently recognized as revenue as performance obligations are 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.

For the three and nine months ended December 2019, revenue recognized from performance obligations satisfied, or partially satisfied, in prior periods was not material.

As of December 2019, the Company expects to recognize $68.6 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 through December 2024. 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 December 2019, there were no arrangements 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 Revenue

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. The wholesale channel includes fees generated from sourcing activities as the customers and point-in-time revenue recognition are similar to other wholesale arrangements.


	Three Months Ended December 2018												Three Months Ended December 2019
(In thousands)	Outdoor		Active		Work		Jeans		Other		Total		Outdoor		Active		Work		Other		Total
Channel revenues
Wholesale	$	839,579	$	490,985	$	434,409	$	557,642	$	3,559	$	2,326,174	$	857,939	$	527,206	$	415,262	$	4,750	$	1,805,157
Direct-to-consumer	769,775		642,571		50,788		91,514		29,975		1,584,623		796,632		706,186		56,059		1,340		1,560,217
Royalty	3,251		9,024		8,390		8,697		—		29,362		4,537		6,070		8,765		—		19,372
Total	$	1,612,605	$	1,142,580	$	493,587	$	657,853	$	33,534	$	3,940,159	$	1,659,108	$	1,239,462	$	480,086	$	6,090	$	3,384,746

Geographic revenues
United States	$	889,298	$	638,179	$	400,739	$	494,575	$	33,534	$	2,456,325	$	903,184	$	686,733	$	372,808	$	—	$	1,962,725
International	723,307		504,401		92,848		163,278		—		1,483,834		755,924		552,729		107,278		6,090		1,422,021
Total	$	1,612,605	$	1,142,580	$	493,587	$	657,853	$	33,534	$	3,940,159	$	1,659,108	$	1,239,462	$	480,086	$	6,090	$	3,384,746

VF Corporation Q3 ~~FY19~~FY20 Form 10-Q 1412


	Three Months Ended December 2017												Three Months Ended December 2018
(In thousands)	Outdoor		Active		Work		Jeans		Other		Total		Outdoor		Active		Work		Other		Total
Channel revenues
Wholesale	$	735,349	$	441,521	$	421,709	$	591,729	$	—	$	2,190,308	$	839,579	$	490,985	$	414,333	$	652	$	1,745,549
Direct-to-consumer	718,199		535,704		54,347		92,933		33,313		1,434,496		769,775		642,571		49,152		—		1,461,498
Royalty	3,106		6,758		6,771		7,844		—		24,479		3,251		9,024		8,390		—		20,665
Total	$	1,456,654	$	983,983	$	482,827	$	692,506	$	33,313	$	3,649,283	$	1,612,605	$	1,142,580	$	471,875	$	652	$	3,227,712

Geographic revenues
United States	$	789,583	$	522,250	$	385,002	$	510,029	$	33,313	$	2,240,177	$	889,298	$	638,179	$	379,237	$	652	$	1,907,366
International	667,071		461,733		97,825		182,477		—		1,409,106		723,307		504,401		92,638		—		1,320,346
Total	$	1,456,654	$	983,983	$	482,827	$	692,506	$	33,313	$	3,649,283	$	1,612,605	$	1,142,580	$	471,875	$	652	$	3,227,712


	Nine Months Ended December 2018												Nine Months Ended December 2019
(In thousands)	Outdoor		Active		Work		Jeans		Other		Total		Outdoor		Active		Work		Other		Total
Channel revenues
Wholesale	$	2,280,071	$	1,829,861	$	1,267,633	$	1,643,404	$	21,074	$	7,042,043	$	2,375,117	$	1,897,118	$	1,185,716	$	22,730	$	5,480,681
Direct-to-consumer	1,358,287		1,728,779		123,051		226,294		83,899		3,520,310		1,410,658		1,969,700		134,026		7,692		3,522,076
Royalty	9,350		20,838		18,332		24,818		—		73,338		9,890		18,404		18,442		—		46,736
Total	$	3,647,708	$	3,579,478	$	1,409,016	$	1,894,516	$	104,973	$	10,635,691	$	3,795,665	$	3,885,222	$	1,338,184	$	30,422	$	9,049,493

Geographic revenues
United States	$	1,826,230	$	1,934,778	$	1,127,168	$	1,364,659	$	104,973	$	6,357,808	$	1,943,491	$	2,109,479	$	1,064,516	$	—	$	5,117,486
International	1,821,478		1,644,700		281,848		529,857		—		4,277,883		1,852,174		1,775,743		273,668		30,422		3,932,007
Total	$	3,647,708	$	3,579,478	$	1,409,016	$	1,894,516	$	104,973	$	10,635,691	$	3,795,665	$	3,885,222	$	1,338,184	$	30,422	$	9,049,493

	Nine Months Ended December 2017
(In thousands)	Outdoor		Active		Work		Jeans		Other		Total
Channel revenues
Wholesale	$	2,091,005	$	1,575,246	$	834,934	$	1,707,810	$	—	$	6,208,995
Direct-to-consumer	1,272,275		1,389,219		58,041		232,266		91,003		3,042,804
Royalty	10,626		18,424		6,771		23,217		—		59,038
Total	$	3,373,906	$	2,982,889	$	899,746	$	1,963,293	$	91,003	$	9,310,837

Geographic revenues
United States	$	1,730,340	$	1,525,746	$	791,610	$	1,391,102	$	91,003	$	5,529,801
International	1,643,566		1,457,143		108,136		572,191		—		3,781,036
Total	$	3,373,906	$	2,982,889	$	899,746	$	1,963,293	$	91,003	$	9,310,837



	Nine Months Ended December 2018
(In thousands)	Outdoor		Active		Work		Other		Total
Channel revenues
Wholesale	$	2,280,071	$	1,829,861	$	1,209,150	$	10,222	$	5,329,304
Direct-to-consumer	1,358,287		1,728,779		119,347		—		3,206,413
Royalty	9,350		20,838		18,332		—		48,520
Total	$	3,647,708	$	3,579,478	$	1,346,829	$	10,222	$	8,584,237

Geographic revenues
United States	$	1,826,230	$	1,934,778	$	1,065,774	$	10,222	$	4,837,004
International	1,821,478		1,644,700		281,055		—		3,747,233
Total	$	3,647,708	$	3,579,478	$	1,346,829	$	10,222	$	8,584,237

13 VF Corporation Q3 ~~FY19~~FY20 Form 10-Q

NOTE 4 — ACQUISITIONS

~~Williamson-Dickie~~

On October 2, 2017, VF acquired 100% of the outstanding shares of Williamson-Dickie Mfg. Co. (“Williamson-Dickie”) for $800.7 million in cash, subject to working capital and other adjustments. The purchase price was primarily funded with short-term borrowings. During the three months ended March 2018, the purchase consideration was reduced by $2.3 million associated with the final working capital adjustment, resulting in a revised purchase price of $798.4 million. No additional adjustments have been made since that date, and the purchase price allocation was finalized during the three months ended September 2018.

~~Williamson-Dickie was a privately held company based in Ft. Worth, Texas, and was one of the largest companies in the workwear sector with a portfolio of brands including~~ ~~Dickies~~^®, ~~Workrite~~^®, ~~Kodiak~~^®, ~~Terra~~^® ~~and~~ ~~Walls~~^®. The acquisition of Williamson-Dickie brings together complementary assets and capabilities, and creates a workwear business that will now serve an even broader set of consumers and industries around the world.

For the six months ended September 2018, Williamson-Dickie contributed revenues of $471.9 million and net income of $33.3 million. Given the ongoing integration and change in operating nature of the acquired business, it is impracticable to determine the revenues or operating results contributed in the three months ended December 2018.

~~The following table summarizes the fair values of the Williamson-Dickie assets acquired and liabilities assumed at the date of acquisition:~~

(In thousands) October 2, 2017
Cash and equivalents $ 60,172
Accounts receivable 146,403
Inventories 251,778
Other current assets 8,447
Property, plant and equipment 105,119
Intangible assets 397,755
Other assets 9,665
Total assets acquired 979,339

Short-term borrowings 17,565
Accounts payable 88,052
Other current liabilities 109,964
Deferred income tax liabilities 15,160
Other noncurrent liabilities 33,066
Total liabilities assumed 263,807

Net assets acquired 715,532
Goodwill 82,863
Purchase price $ 798,395

The goodwill is attributable to the acquired workforce of Williamson-Dickie and the significant synergies expected to arise as a result of the acquisition. All of the goodwill was assigned to the Work segment and $52.3 million is expected to be deductible for tax purposes.

~~The~~ ~~Dickies~~^®, ~~Kodiak~~^®, ~~Terra~~^® ~~and~~ ~~Walls~~^® ~~trademarks, which management determined to have indefinite lives, have been valued at $316.1 million. The~~ ~~Workrite~~^® ~~trademark, valued at $0.8 million, is being amortized over three years.~~

Amortizable intangible assets have been assigned values of $78.6 million for customer relationships and $2.3 million for distribution agreements. Customer relationships are being amortized using an accelerated method over periods ranging from 10-13 years. Distribution agreements are being amortized on a straight-line basis over four years.

Total transaction expenses for the Williamson-Dickie acquisition were $15.0 million, all of which were recognized in the year ended December 2017 in the selling, general and administrative expenses line item in the Consolidated Statements of Income.

~~VF Corporation Q3 FY19 Form 10-Q~~ 16

~~The following unaudited pro forma summary presents consolidated information of VF as if the acquisition of Williamson-Dickie had occurred on January 3, 2016:~~

(In thousands) Three Months Ended
December 2017
(unaudited) Nine Months Ended
December 2017
(unaudited)
Net revenues $ 3,649,283
$ 9,766,005
Income (loss) from continuing operations (61,494 ) 544,094
Earnings (loss) per common share from continuing operations
Basic $ (0.16 ) $ 1.38
Diluted (0.15 ) 1.36

These pro forma amounts have been calculated after applying VF’s accounting policies and adjusting the results of Williamson-Dickie to reflect the additional depreciation and amortization that would have been charged assuming the fair value adjustments to property, plant, and equipment and intangible assets had been applied from January 3, 2016, with related tax effects.

Pro forma financial information is not necessarily indicative of VF’s operating results if the acquisition had been effected at the date indicated, nor is it necessarily indicative of future operating results. Amounts do not include any marketing leverage, operating efficiencies or cost savings that VF believes are achievable.

Icebreaker

On April 3, 2018, VF acquired 100% of the stock of Icebreaker Holdings Limited ("Icebreaker") forNZ$274.4 million ($198.5 million) in cash, subject to working capital and other adjustments. The purchase price was primarily funded with short-term borrowings. The purchase price decreased NZ$1.4 million ($0.9 million) during the year ended March 2019, related to working capital adjustments, resulting in a revised purchase price of NZ$273.0 million ($197.6 million). The purchase price allocation was ~~unchanged~~finalized during the three months ended December 2018 and decreased NZ$2.3 million ($1.6 million) during the nine months ended December 2018, related to working capital adjustments. The revised purchase price as of December 2018 is NZ$272.1 million ($197.0 million).March 2019.

Icebreaker was a privately held company based in Auckland, New Zealand. Icebreaker^®,the primary brand, specializes in high-performance apparel based on natural fibers, including Merino wool, plant-based fibers and recycled fibers. It is an ideal complement to VF's Smartwool^® brand, which also features Merino wool in its clothing and accessories. Together, the Smartwool^® and Icebreaker^® brands ~~will~~ position VF as a global leader in the Merino wool and natural fiber categories.

~~For the three and nine months ended December 2018, Icebreaker~~contributed revenues of $47.7 million and $127.1 million, respectively, representing 1.2% of VF's revenues in both periods. Icebreaker contributed net income of $3.9 million and $10.1 million in the three and nine months ended December 2018, respectively, representing 0.8% and 0.9% of VF's net income in the respective periods.

The allocation of the purchase price is preliminary and subject to change for certain income tax matters. Accordingly, further adjustments may be made to the value of the assets acquired and liabilities assumed as additional information is obtained about the facts and circumstances that existed at the acquisition date.

17 ~~VF Corporation Q3 FY19 Form 10-Q~~

The following table summarizes the estimated fair values of the Icebreaker assets acquired and liabilities assumed at the date of acquisition:



(In thousands)	April 3, 2018
Cash and equivalents	$	6,444
Accounts receivable	16,781
Inventories	31,728
Other current assets	3,931
Property, plant and equipment	3,858
Intangible assets	98,041
Other assets	4,758
Total assets acquired	165,541

Short-term borrowings	7,235
Accounts payable	2,075
Other current liabilities	21,262
Deferred income tax liabilities	26,870
Other noncurrent liabilities	433
Total liabilities assumed	57,875

Net assets acquired	107,666
Goodwill	89,943
Purchase price	$	197,609

(In thousands) April 3, 2018
Cash and equivalents $ 6,444
Accounts receivable 16,781
Inventories 31,728
Other current assets 3,931
Property, plant and equipment 3,858
Intangible assets 98,041
Other assets 4,758
Total assets acquired 165,541

Short-term borrowings 7,235
Accounts payable 2,075
Other current liabilities 21,919
Deferred income tax liabilities 22,802
Other noncurrent liabilities 433
Total liabilities assumed 54,464

Net assets acquired 111,077
Goodwill 85,875
Purchase price $ 196,952

The goodwill is attributable to the acquired workforce of Icebreaker and the significant synergies expected to arise as a result of the acquisition. All of the goodwill has been assigned to the Outdoor segment and none is expected to be deductible for tax purposes.

The Icebreaker^®trademark, which management determined to have an indefinite life, ~~has been~~was valued at $70.1 million.Amortizable intangible assets ~~have been~~were assigned values of $27.8 million for customer relationships and $0.2 million for distribution agreements. Customer relationships are being amortized using an accelerated method over 11.5 years. Distribution agreements are being amortized on a straight-line basis over four years.

Total transaction expenses for the Icebreaker acquisition of $7.4 million ~~have been~~were recognized in the selling, general and administrative expenses line item in the Consolidated Statements of Income, of which $4.1 million was recognized during the ~~three~~nine months ended ~~June~~December 2018 and the remainder was recognized prior to Fiscal 2019. In addition, the Company ~~has~~ recognized a $9.9 million gain on derivatives used to hedge the purchase price of Icebreakerin the other income (expense), net line item in the Consolidated Statements of Income, of which $0.3 million was recognized during the ~~three~~nine months ended ~~June~~December 2018 and the remainder was recognized prior to Fiscal 2019.

Pro forma results of operations of the Company would not be materially different as a result of the Icebreaker acquisition and therefore are not presented.

VF Corporation Q3 FY20 Form 10-Q 14

Altra

On June 1, 2018, VF acquired 100% of the stock of Icon-Altra LLC, plus certain assets in Europe ("Altra"). The purchase price was $131.7 million in cash, subject to working capital and other adjustments and was primarily funded with short-term borrowings. The purchase price ~~was unchanged during the three months ended December 2018 and~~ decreased $0.1 million during the ~~nine months~~year ended ~~December 2018,~~March 2019, related to working capital adjustments, resulting in a revised purchase price of $131.6 million. The allocation of the purchase price was finalized during the three months ended December 2018, resulting in a decrease of goodwill

by $1.5 million related to a final adjustment to working capital balances.

Altra^®, the primary brand, is an athletic and performance-based lifestyle footwear ~~brand, based in Logan, Utah.~~brand. Altra provides VF with a unique and differentiated technical footwear brand and a capability that, when applied across VF's footwear platforms, will serve as a catalyst for growth.

~~For the three and nine months ended December 2018, Altra~~contributed revenues of $9.9 million and $30.9 million, respectively. During the three and nine months ended December 2018, Altra had a net loss of $1.1 million and net income of $0.7 million, respectively.

~~VF Corporation Q3 FY19 Form 10-Q~~ 18

The following table summarizes the estimated fair values of the Altra assets acquired and liabilities assumed at the date of acquisition:



(In thousands)	June 1, 2018
Accounts receivable	$	11,629
Inventories	9,310
Other current assets	575
Property, plant and equipment	1,107
Intangible assets	59,700
Total assets acquired	82,321

Accounts payable	5,068
Other current liabilities	7,415
Total liabilities assumed	12,483

Net assets acquired	69,838
Goodwill	61,719
Purchase price	$	131,557

(In thousands) June 1, 2018
Accounts receivable $ 11,629
Inventories 9,310
Other current assets 575
Property, plant and equipment 1,107
Intangible assets 59,700
Total assets acquired 82,321

Accounts payable 5,068
Other current liabilities 7,415
Total liabilities assumed 12,483

Net assets acquired 69,838
Goodwill 61,719
Purchase price $ 131,557

The goodwill is attributable to the significant growth and synergies expected to arise as a result of the acquisition. All of the goodwill was assigned to the Outdoor segment and is expected to be deductible for tax purposes.

The Altra^®trademark, which management determined to have an indefinite life, ~~has been~~was valued at $46.4 million.Amortizable intangible assets ~~have been~~were assigned values of $13.0 million for customer relationships and $0.3 million for distribution agreements. Customer relationships are being amortized using an accelerated method over 15 years. Distribution agreements are being amortized on a straight-line basis over four years.

Total transaction expenses for the Altra acquisition were $2.3 million, all of which were recognized in the selling, general and administrative expenses line item in the Consolidated ~~Statements~~Statement of Income during the ~~three~~nine months ended ~~June~~December 2018.

Pro forma results of operations of the Company would not be materially different as a result of the Altra acquisition and therefore are not presented.

15 VF Corporation Q3 FY20 Form 10-Q

NOTE 5 — DISCONTINUED OPERATIONS AND OTHER DIVESTITURES

The Company continuously assesses the composition of its portfolio to ensure it is aligned with its strategic objectives and positioned to maximize growth and return to shareholders.

Discontinued Operations

~~Nautica~~Jeans Business

On May 22, 2019, VF completed the spin-off its Jeans business, which included the Wrangler^®, Lee^® and Rock & Republic^® brands, as well as the VF Outlet^TM business, into an independent, publicly traded company now operating under the name Kontoor Brands, Inc. ("Kontoor Brands") and trading under the symbol "KTB" on the New York Stock Exchange. The spin-off was effected through a distribution to VF shareholders of one share of Kontoor Brands common stock for every seven shares of VF common stock held on the record date of May 10, 2019. Accordingly, the Company has reported the results of the Jeans business and the related cash flows as discontinued operations in the Consolidated Statements of Income and Consolidated Statements of Cash Flows, respectively, and presented the related assets and liabilities as assets and liabilities of discontinued operations in the Consolidated Balance Sheets, through the date the spin-off was completed.

In connection with the spin-off, Kontoor Brands entered into a credit agreement with respect to $1.55 billion in senior secured credit facilities consisting of a senior secured five-year $750.0 million term loan A facility, a senior secured seven-year $300.0 million term loan B facility and a five-year $500.0 million senior secured revolving credit facility (collectively, the "Kontoor Credit Facilities"). Prior to the effective date of the spin-off, Kontoor Brands incurred $1.05 billion of indebtedness under the Kontoor Credit Facilities, which was primarily used to fund a transfer of $906.1 million to VF and its subsidiaries, net of $126.8 million of cash received from VF. As a result of the spin-off, VF divested net assets of $54.9 million, including the indebtedness under the Kontoor Credit Facilities. Also included in the net assets divested was $75.3 million of net accumulated other comprehensive losses attributable to the Jeans business, primarily related to foreign currency translation.

The results of the Wrangler^®, Lee^® and Rock & Republic^® brands were previously reported in the Jeans segment, the results of the Wrangler^®RIGGS brand were previously reported in the Work segment, and the results of the non-VF products sold in VF Outlet^TMstores were previously reported in the Other category included in the reconciliation of segment revenues and segment profit. The results of the Jeans business recorded in the income (loss) from discontinued operations, net of tax line item in the Consolidated Statements of Income were income of $12.3 million and a loss of $35.8 million for the three and nine months ended December 2019, respectively, and income of $54.0 million and $243.6 million for the three and nine months ended December 2018, respectively.

Certain corporate overhead costs and segment costs previously allocated to the Jeans business for segment reporting purposes did not qualify for classification within discontinued operations and have been reallocated to continuing operations. The results of the Jeans business reported as discontinued operations include $59.5 million of separation and related expenses during the nine months ended December 2019.

In connection with the spin-off of the Jeans business, the Company entered into several agreements with Kontoor Brands that govern the relationship of the parties following the spin-off including the Separation and Distribution Agreement, the Tax Matters Agreement, the Transition Services Agreement, the VF Intellectual Property License Agreement and the Employee Matters Agreement. Under the terms of the Transition Services Agreement, the Company and Kontoor Brands agreed to provide each other certain transitional services including information technology, information management, human resources, employee benefits administration, supply chain, facilities, and other limited finance and accounting related services for periods up to 24 months. Payments and operating expense reimbursements for transition services are recorded within the reportable segments or within the corporate and other expenses line item, in the reconciliation of segment profit in Note 15, based on the function providing the service.

Nautica^® Brand Business

During the three months ended December 30, 2017, the Company reached the strategic decision to exit the Nautica^® brand business, and determined that it met the held-for-sale and discontinued operations accounting criteria. Accordingly, the Company has reported the results of the Nautica^® brand business and the related cash flows as discontinued operations in the Consolidated Statements of Income and ~~presented the related held-for-sale assets and liabilities as assets and liabilities~~Consolidated Statements of ~~discontinued operations in the Consolidated Balance Sheets through the date of sale.~~Cash Flows, respectively.

On April 30, 2018, VF completed the sale of the Nautica^® brand business. The Company received proceeds of $285.8 million, net of cash sold, resulting in a final after-tax loss on sale of $38.2 million, of which a $0.4 million and $5.4 million decrease in the estimated loss on sale iswas included in the income (loss) from discontinued operations, net of tax line item in the Consolidated Statements of Income for the three and ninemonths ended December 2018, respectively. ~~The three and nine months ended December 2017 include a $25.5 million estimated loss on sale.~~

The results of the Nautica^®brand's North America business were previously reported in the former Sportswear segment, and the results of the Asia business were previously reported in the former Outdoor & Action Sports segment. The results of the ~~Nautica~~^® brand business recorded in the income (loss) from discontinued operations, net of tax line item in the Consolidated Statements of Income were income of $0.4 million ~~(including~~(reflecting a $0.4 million decrease in the estimated loss on sale) and $0.8 million (including a $5.4 million decrease in the estimated loss on sale) for the three and nine months ended December 2018, respectively, and losses of $17.4 million and $96.7 million for the three and nine months ended December 2017, respectively, including a $25.5 million estimated loss on sale in both periods and a $104.7 million impairment charge recorded during the three months ended September 30, 2017 ("September 2017").respectively.

~~Certain corporate overhead costs and segment costs previously allocated to the~~ ~~Nautica~~^® ~~brand business for segment reporting purposes did not qualify for classification within discontinued operations and have been reallocated to continuing operations.~~

19 ~~VF Corporation Q3 FY19 Form 10-Q~~

Under the terms of the transition services agreement, the Company ~~is providing~~provided certain ~~support~~ services for periods up to 12 months from the closing date of the transaction. Revenue and related expense items associated with the transition services ~~are~~were recorded in the Other category, and operating expense reimbursements ~~are~~were recorded within the corporate and other expenses line item, in the reconciliation of segment revenues and segment profit in Note ~~14.~~15.

~~Licensing Business~~

~~During the three months ended April 1, 2017, the Company reached the strategic decision to exit its Licensing Business, which comprised the Licensed Sports Group ("LSG") and the~~ ~~JanSport~~^® brand collegiate businesses. Accordingly, the Company has reported the results of the businesses as discontinued operations in the Consolidated Statements of Income and presented the related held-for-sale assets and liabilities as assets and liabilities of discontinued operations in the Consolidated Balance Sheets through their respective dates of sale.

~~LSG included the~~ ~~Majestic~~^® brand and was previously reported within the former Imagewear segment. On April 28, 2017, VF completed the sale of LSG to Fanatics, Inc. The Company received proceeds of $213.5 million, net of cash sold, resulting in a final after-tax loss on sale of $4.1 million, of which $2.7 million is included in the income (loss) from discontinued operations, net of tax line item in the Consolidated Statements of Income for the nine months ended December 2017. The final adjustment to the after-tax loss on sale was $0.3 million in the three months ended September 2017.

~~The LSG results recorded in the income (loss) from discontinued operations, net of tax line item in the Consolidated Statements of Income were losses of $4.3 million (including a $2.7 million~~

~~adjustment to the estimated loss on sale) for the nine months ended December 2017.~~

~~During the three months ended December 30, 2017,~~ VF ~~completed the sale of the assets associated with the~~ ~~JanSport~~^® brand collegiate business, which was previously included within the former Outdoor & Action Sports segment. The Company received net proceeds of $1.5 million and recorded a final after-tax loss on sale of $0.2 million, of which a $0.6 million and $0.8 million decrease in the estimated loss on sale is included in the income (loss) from discontinued operations, net of tax line item in the Consolidated Statements of Income for the three and nine months ended December 2017, respectively.Corporation Q3 FY20 Form 10-Q 16

~~The~~ ~~JanSport~~^® brand collegiate results recorded in the income (loss) from discontinued operations, net of tax line item in the Consolidated Statements of Income were income of $0.1 million (including a $0.6 million decrease to the estimated loss on sale) and losses of $1.2 million (including a $0.8 million decrease to the estimated loss on sale) for the three and nine months ended December 2017, respectively.

Certain corporate overhead and other costs previously allocated to the Licensing Business for segment reporting purposes did not qualify for classification within discontinued operations and have been reallocated to continuing operations.

Under the terms of the transition services agreement, the Company is providing certain support services for periods up to 24 months from the closing date of the transaction. Revenue and related expense items associated with the transition services are recorded in the Work segment, and operating expense reimbursements are recorded within the corporate and other expenses line item in the reconciliation of segment revenues and segment profit in Note 14.

Summarized Discontinued Operations Financial Information

The following table summarizes the major line items for the ~~Nautica~~^® ~~brand~~Jeans business and ~~the Licensing Business~~Nautica^® brand business that are included in the income (loss) from discontinued operations, net of tax line item in the Consolidated Statements of Income:


	Three Months Ended December					Nine Months Ended December						Three Months Ended December					Nine Months Ended December

(In thousands)	2018		2017			2018			2017			2019		2018			2019			2018
Net revenues	$	—	$	139,878		$	21,913		$	385,716		$	—	$	712,447		$	335,203		$	2,073,367
Cost of goods sold	—		77,888			14,706			218,081			—		431,711			203,124			1,231,315
Selling, general and administrative expenses	—		44,356			12,391			129,825			—		209,651			152,798			544,685
Impairment of goodwill	—		—			—			104,651
Interest expense, net	—		(1		)	—			(9		)
Interest, net												—		1,373			(552		)	3,650
Other income (expense), net	—		(3		)	272			5			—		(747		)	(667		)	(3,801		)
Income (loss) from discontinued operations before income taxes	—		17,630			(4,912		)	(66,845		)	—		71,711			(21,938		)	297,216
Gain (loss) on the sale of discontinued operations before income taxes	383		(24,513		)	4,589			(30,488		)
Gain on the sale of discontinued operations before income taxes												—		383			—			4,589
Total income (loss) from discontinued operations before income taxes	383		(6,883		)	(323		)	(97,333		)	—		72,094			(21,938		)	301,805
Income tax (expense) benefit	—		(10,407		)	1,111			(4,840		)
Income tax benefit (expense) ^(a)												12,256		(17,705		)	(13,834		)	(57,425		)
Income (loss) from discontinued operations, net of tax	$	383	$	(17,290	)	$	788		$	(102,173	)	$	12,256	$	54,389		$	(35,772	)	$	244,380


^(a)	Income tax benefit for the three months ended December 2019 reflects a return to accrual adjustment to the previously recorded tax expense. Income tax expense for the nine months ended December 2019 includes additional tax expense on nondeductible transaction costs and uncertain tax positions.

~~VF Corporation Q3 FY19 Form 10-Q~~ 20

The following table summarizes the carrying amounts of major classes of assets and liabilities of discontinued operations for each of the periods presented:



(In thousands)	December 2019		March 2019		December 2018
Cash and equivalents	$	—	$	97,892	$	83,334
Accounts receivable, net	—		242,941		208,258
Inventories	—		510,370		464,454
Other current assets	—		44,827		44,444
Property, plant and equipment, net	—		142,091		138,975
Intangible assets	—		51,913		53,059
Goodwill	—		213,570		219,612
Other assets	—		74,144		62,393
Total assets of discontinued operations	$	—	$	1,377,748	$	1,274,529

Short-term borrowings	$	—	$	5,995	$	3,215
Accounts payable	—		113,866		109,272
Accrued liabilities	—		141,621		118,531
Other liabilities	—		48,581		45,896
Total liabilities of discontinued operations	$	—	$	310,063	$	276,914

17 VF Corporation Q3 FY20 Form 10-Q

(In thousands) December 2018 March 2018 December 2017
Cash $ —
$ 2,330
$ 2,592
Accounts receivable, net —
26,298
27,941
Inventories —
55,610
43,297
Other current assets —
1,247
2,497
Property, plant and equipment, net —
15,021
14,914
Intangible assets —
262,202
262,352
Goodwill —
49,005
49,005
Other assets —
3,961
3,631
Allowance to reduce assets to estimated fair value, less costs to sell —

(42,094 ) (25,529 )
Total assets of discontinued operations $ —
$ 373,580
$ 380,700

Accounts payable $ —
$ 11,619
$ 16,993
Accrued liabilities —
10,658
18,203
Other liabilities —
11,912
12,011
Deferred income tax liabilities ^(a)
—
51,838
53,812
Total liabilities of discontinued operations $ —
$ 86,027
$ 101,019


^(a)	~~Deferred income tax balances reflect VF’s consolidated netting by jurisdiction.~~

The cash flows related to discontinued operations have not been segregated, and are included in the Consolidated Statements of Cash Flows. There were no significant capital expenditures for any periods presented. Depreciation and amortization expense was $10.2 million for the nine months ended December 2017. An operating noncash item of $104.7 million related to the impairment of goodwill for the ~~Nautica~~^®~~brand business is included in the Consolidated Statement of Cash Flows for the nine months ended December 2017.~~

Other Divestitures

Reef^®Brand Business

During the three months ended September 29, 2018, the Company reached the decision to sell the Reef^® brand business, which was included in the Active segment.

VF signed a definitive agreement for the sale of the Reef^® brand business on October 2, 2018, and completed the transaction on October 26, 2018. VF received cash proceeds of $139.4 million, and recorded ~~an estimated~~a $14.4 million final loss on sale, of which $4.5 million and $14.4 million were recorded in the three and nine months ended December 2018, respectively. The loss was included in the other income (expense), net line item in the Consolidated Statements of ~~Income for the three and nine months ended December 2018, respectively. The estimated loss is subject to working capital and other adjustments.~~

Under the terms of the transition services agreement, the Company is providing certain support services for periods up to 21 months from the closing date of the transaction. Revenue and related expense items associated with the transition services and operating expense reimbursements are recorded in the Other category in the reconciliation of segment revenues and segment profit in Note 14.Income.

Van Moer Business

During the three months ended September 29, 2018, the Company reached the decision to sell the Van Moer business, ~~acquired with Williamson-Dickie,~~ which was acquired in connection with the Williamson-Dickie business and included in the Work segment. VF recorded a $22.4 million estimated loss on the sale which was included in the other income (expense), net line item in the Consolidated Statement of Income for the three months ended September 2018.

VF completed the sale of the Van Moer business on October 5, 2018, and received cash proceeds of €7.0 million ($8.1 million). ~~There were no changes during the three months ended December 2018 to the estimated~~VF recorded a $22.4 million final loss ~~previously recorded.~~

~~Spin-Off of Jeans Business~~

~~On August 13, 2018, VF announced its intention to spin-off its Jeans business,~~on sale, which ~~will include the~~ ~~Wrangler~~^®, ~~Lee~~^® ~~and~~ ~~Rock & Republic~~^® brands, as well as the VF Outlet business, into an independent, publicly-traded company. For the three and nine months ended December 2018, the Company incurred $51.3 million and $63.8 million, respectively, of separation and related expenses associated with the spin-off. Of these expenses, VF recognized $40.4 million and $52.9 million in selling, general and administrative expenses for the three and nine months ended December 2018, respectively, and $10.9 million in cost of goods sold for both the three and nine months ended December 2018.

21 ~~VF Corporation Q3 FY19 Form 10-Q~~

~~NOTE 6 — SALE OF ACCOUNTS RECEIVABLE~~

~~VF has an agreement with a financial institution to sell selected trade accounts receivable on a recurring, nonrecourse basis. This agreement~~ was amended in August 2018 to permit up to $377.5 million of VF’s accounts receivable to be sold to the financial institution and remain outstanding at any point in time, compared to the $367.5 million limit in place at March 2018 and December 2017. VF removes the accounts receivable from the Consolidated Balance Sheets at the time of sale. VF does not retain any interests in the sold accounts receivable but continues to service and collect outstanding accounts receivable on behalf of the financial institution. During the nine months ended December 2018 and 2017, VF sold total accounts receivable of $865.7 million and $895.6

million, respectively. As of December 2018, March 2018 and December 2017, $190.9 million, $191.2 million and $219.1 million, respectively, of the sold accounts receivable had been removed from the Consolidated Balance Sheets but remained outstanding with the financial institution. The funding fee charged by the financial institution is included in the other income (expense), net line item in the Consolidated ~~Statements~~Statement of Income ~~and was $1.5 million and $4.4 million~~ for the ~~three and~~ nine months ended December 2018, respectively, and $1.2 million and $3.0 million for the three and nine months ended December 2017, respectively. Net proceeds of this program are classified as operating activities in the Consolidated Statements of Cash Flows.2018.

NOTE 6 — SALE OF ACCOUNTS RECEIVABLE

In connection with the spin-off of its Jeans business, VF terminated its agreement with the financial institution to sell trade accounts receivable on a recurring, non-recourse basis. As of December 2019, the Company had 0 outstanding amounts related to accounts receivable previously sold to the financial institution and no other obligations or liabilities related to the agreement.

NOTE 7 — INVENTORIES



(In thousands)	December 2019		March 2019		December 2018
Finished products	$	1,422,605	$	1,284,293	$	1,250,764
Work-in-process	80,338		73,968		73,480
Raw materials	62,027		74,399		77,377
Total inventories	$	1,564,970	$	1,432,660	$	1,401,621

(In thousands) December 2018 March 2018 December 2017
Finished products $ 1,638,028
$ 1,654,137
$ 1,490,788
Work-in-process 110,438
103,757
110,467
Raw materials 117,609
103,547
105,354
Total inventories $ 1,866,075
$ 1,861,441
$ 1,706,609

NOTE 8 — INTANGIBLE ASSETS



			December 2019						March 2019
(In thousands)	Weighted Average Amortization Period	Amortization Method	Cost		Accumulated Amortization		Net Carrying Amount		Net Carrying Amount
Amortizable intangible assets:
Customer relationships	17 years	Accelerated	$	330,196	$	151,286	$	178,910	$	197,129
License agreements	19 years	Accelerated	7,516		4,893		2,623		2,807
Trademark	3 years	Straight-line	800		575		225		399
Other	8 years	Straight-line	8,213		4,976		3,237		4,032
Amortizable intangible assets, net							184,995		204,367
Indefinite-lived intangible assets:
Trademarks and trade names							1,763,237		1,767,997
Intangible assets, net							$	1,948,232	$	1,972,364

December 2018 March 2018
(In thousands)
Weighted
Average
Amortization
Period

Amortization
Method
Cost
Accumulated
Amortization

Net
Carrying
Amount

Net
Carrying
Amount
Amortizable intangible assets:
Customer relationships 17 years Accelerated $ 344,757
$ 139,230
$ 205,527
$ 201,544
License agreements 19 years Accelerated 7,663
4,743
2,920
6,256
Trademarks 16 years Straight-line 58,932
11,236
47,696
50,623
Other 8 years Straight-line 8,283
3,935
4,348
5,170
Amortizable intangible assets, net 260,491
263,593
Indefinite-lived intangible assets:
Trademarks and trade names 1,795,474
1,856,517
Intangible assets, net $ 2,055,965
$ 2,120,110

Intangible assets decreased during the nine months ended December ~~2018~~2019 due to amortization and the ~~divestiture~~impact of ~~the~~ ~~Reef~~^® ~~brand business and~~ foreign currency ~~fluctuations, which were partially offset by the addition of intangible assets from the Icebreakerand Altra acquisitions.~~fluctuations.

Amortization expense for the three and nine months ended December ~~2018~~2019 was ~~$7.5~~$6.1 million and ~~$23.3~~$18.6 million, respectively.

Based on the carrying amounts of amortizable intangible assets noted above, estimated amortization expense for the next five years beginning in Fiscal ~~2019~~2020 is ~~$32.4~~$25.5 million, ~~$31.2~~$24.1 million, ~~$29.7~~$22.6 million, ~~$27.8~~$21.2 million and ~~$26.3~~$20.4 million, respectively.

VF Corporation Q3 ~~FY19~~FY20 Form 10-Q 2218

NOTE 9 — GOODWILL

Changes in goodwill are summarized by reportable segment as follows:



(In thousands)	Outdoor			Active			Work			Total
Balance, March 2019	$	983,889		$	393,956		$	163,469		$	1,541,314
Currency translation	(1,201		)	(309		)	(225		)	(1,735		)
Balance, December 2019	$	982,688		$	393,647		$	163,244		$	1,539,579

(In thousands) Outdoor Active Work Jeans Total
Balance, March 2018 $ 844,726
$ 463,187
$ 172,472
$ 212,834
$ 1,693,219

Fiscal 2019 acquisitions 147,594
—
—
—
147,594

Fiscal 2019 divestitures —
(48,329 ) (52 ) —
(48,381 )
Currency translation (11,726 ) (17,016 ) (1,816 ) (5,718 ) (36,276 )
Balance, December 2018 $ 980,594
$ 397,842
$ 170,604
$ 207,116
$ 1,756,156

In connection with the realignment of the Company's segment reporting structure, the Company allocated goodwill to any newly identified reporting units using a relative fair value approach as of the first day of the first quarter of Fiscal 2019. Balances as of March 2018 have been retrospectively adjusted to reflect the reallocation. Refer to Note 14 for additional information regarding the Company's reportable segments.

~~During the three months ended December 2018, the Company completed the sales of the~~ ~~Reef~~^® ~~brand and Van Moer businesses, at which time the remaining goodwill of $48.4 million related to~~

these reporting units was removed from the Consolidated Balance Sheet. Accumulated impairment charges for the goodwill removed from the Active segment were $31.1 million as of December 2018 and March 2018. Refer to Note 5 for additional information regarding the divestitures.

NoNaN impairment charges were recorded during the nine months ended December ~~2018~~2019 and there are no remaining accumulated impairment charges.

NOTE 10 — LEASES

VF determines if an arrangement is or contains a lease at contract inception and determines its classification as an operating or finance lease at lease commencement. The Company leases certain retail locations, office space, distribution facilities, machinery and equipment, and vehicles. While the substantial majority of these leases are operating leases, certain distribution centers and office spaces are finance leases.

Leases for real estate typically have initial terms ranging from 3 to 15 years, generally with renewal options. Leases for equipment typically have initial terms ranging from 2 to 5 years and vehicle leases typically have initial terms ranging from 1 to 8 years. In determining the lease term used in the lease right-of-use asset and lease liability calculations, the Company considers various factors such as market conditions and the terms of any renewal or termination options that may exist. When deemed reasonably certain, the renewal and termination options are included in the determination of the lease term and calculation of the lease right-of-use assets and lease liabilities.

Most leases have fixed rental payments. Many of the real estate leases also require additional variable payments for occupancy-related costs, real estate taxes and insurance, as well as other payments (i.e., contingent rent) owed when sales at individual retail store locations exceed a stated base amount. Variable lease payments are excluded from the measurement of the lease liability and are recognized in profit and loss in the period in which the event or conditions that triggers those payments occur.

VF estimates the amount it expects to pay to the lessor under a residual value guarantee and includes it in lease payments used to measure the lease liability only for amounts probable of being owed by VF at the commencement date.

VF calculates lease right-of-use assets and lease liabilities as the present value of lease payments over the lease term at

commencement date. When readily determinable, the Company uses the implicit rate to determine the present value of lease payments, which generally does not happen in practice. As the rate implicit in the majority of the Company's leases is not readily determinable, the Company uses its incremental borrowing rate based on the information available at the lease commencement date, including the lease term, currency, country specific risk premium and adjustments for collateralized debt.

Operating lease expense is recorded as a single lease cost on a straight-line basis over the lease term. For finance leases, right-of-use asset amortization and interest on lease liabilities are included separately in the Consolidated Statements of Income.

The Company assesses whether a sale leaseback transaction qualifies as a sale when the transaction occurs. For transactions qualifying as a sale, VF derecognizes the underlying asset and recognizes the entire gain or loss at the time of the sale. The corresponding lease entered into with the buyer-lessor is accounted for as an operating lease. During the nine months ended December 2019, the Company entered into a sale leaseback transaction for certain office real estate and related assets. The transaction qualified as a sale, and thus the Company recognized a gain of $11.3 million resulting from the transaction during the nine months ended December 2019.

As of December 2019, the Company has signed certain distribution center leases that have not yet commenced but will create significant rights and obligations. The leases will commence in Fiscal 2020 and Fiscal 2021 and have lease terms of 15 years. Other leases signed that have not yet commenced are not individually significant. The Company does not have material subleases.

19 VF Corporation Q3 FY20 Form 10-Q

The assets and liabilities related to operating and finance leases were as follows:



(In thousands)	Location in Consolidated Balance Sheet	December 2019
Assets:
Operating lease assets	Operating lease right-of-use assets	$	1,298,631
Finance lease assets	Property, plant and equipment	22,499
Total lease assets		$	1,321,130

Liabilities:
Current
Operating lease liabilities	Accrued liabilities	$	312,704
Finance lease liabilities	Current portion of long-term debt	4,677
Noncurrent
Operating lease liabilities	Operating lease liabilities	1,052,854
Finance lease liabilities	Long-term debt	24,959
Total lease liabilities		$	1,395,194

The components of lease costs were as follows:



(In thousands)	Three Months Ended December 2019		Nine Months Ended December 2019
Operating lease cost	$	105,510	$	315,938
Finance lease cost – amortization of right-of-use assets	970		3,002
Finance lease cost – interest on lease liabilities	253		807
Short-term lease cost	672		1,937
Variable lease cost	31,707		89,693
Impairment	3,035		3,035
Gain recognized from sale-leaseback transactions	—		(11,329		)
Total lease cost	$	142,147	$	403,083

Supplemental cash flow information related to leases was as follows:



(In thousands)	Nine Months Ended December 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows – operating leases	$	320,589
Operating cash flows – finance leases	807
Financing cash flows – finance leases	3,967
Right-of-use assets obtained in exchange for lease liabilities:
Operating leases ^(a)	358,159
Finance leases	—


^(a)	Excludes amounts recorded upon adoption of ASC 842.

VF Corporation Q3 FY20 Form 10-Q 20

Lease terms and discount rates were as follows:



	December 2019
Weighted average remaining lease term:
Operating leases	5.54 years
Finance leases	13.64 years

Weighted average discount rate:
Operating leases	2.43	%
Finance leases	3.12	%

Maturities of operating and finance lease liabilities for the next five fiscal years (including the remainder of Fiscal 2020) and thereafter as of December 2019 were as follows:



(In thousands)	Operating Leases		Finance Leases		Total
Remainder of 2020	$	42,116	$	1,006	$	43,122
2021	417,892		6,532		424,424
2022	300,452		1,910		302,362
2023	223,579		1,626		225,205
2024	146,783		1,550		148,333
Thereafter	334,070		23,495		357,565
Total lease payments	1,464,892		36,119		1,501,011
Less: present value adjustment	99,334		6,483		105,817
Present value of lease liabilities	$	1,365,558	$	29,636	$	1,395,194

The Company excluded approximately $295.0 million of leases (undiscounted basis) that have not yet commenced. These leases will commence beginning in Fiscal 2020 with lease terms of 2 to 15 years.

Future minimum lease payments under operating leases with noncancelable lease terms in excess of one year from continuing operations as of March 2019, prior to the adoption of ASC 842, were as follows:



(In thousands)	Operating Leases
2020	$	320,224
2021	287,829
2022	212,918
2023	154,920
2024	100,789
Thereafter	251,228
Total lease payments	$	1,327,908

21 VF Corporation Q3 FY20 Form 10-Q

NOTE 11 — PENSION PLANS

The components of pension cost (income) for VF’s defined benefit plans were as follows:



	Three Months Ended December						Nine Months Ended December

(In thousands)	2019			2018			2019			2018
Service cost – benefits earned during the period	$	3,401		$	6,097		$	10,192		$	17,882
Interest cost on projected benefit obligations	14,581			15,807			44,085			47,638
Expected return on plan assets	(23,176		)	(23,185		)	(69,505		)	(70,216		)
Settlement charges	24,943			662			25,462			8,846
Curtailments	—			—			—			9,483
Amortization of deferred amounts:
Net deferred actuarial losses	4,203			6,676			12,236			22,153
Deferred prior service costs (credits)	13			(58		)	38			552
Net periodic pension cost (income)	$	23,965		$	5,999		$	22,508		$	36,338

Three Months Ended December Nine Months Ended December

(In thousands) 2018 2017 2018 2017
Service cost – benefits earned during the period $ 6,097
$ 6,157
$ 17,882
$ 18,474
Interest cost on projected benefit obligations 15,807
14,735
47,638
44,174
Expected return on plan assets (23,185 ) (23,830 ) (70,216 ) (71,452 )
Pension settlement charges 662
—
8,846
—
Pension curtailment losses —
1,671
9,483
1,671
Amortization of deferred amounts:
Net deferred actuarial losses 6,676
10,026
22,153
30,058
Deferred prior service costs (credits) (58 ) 646
552
1,934
Net periodic pension cost $ 5,999
$ 9,405
$ 36,338
$ 24,859

The amounts reported in these disclosures for prior periods have not been segregated between continuing and discontinued operations.

~~On April 1, 2018, VF adopted ASU No. 2017-07,~~ ~~"Compensation—Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost",~~ ~~which requires the Company to disaggregate the service cost component from other components of net periodic pension cost. Accordingly, in the Consolidated Statements of Income,~~ VF has reported the service cost component ~~within~~of net periodic pension cost (income) in operating income and the other components ~~of net periodic pension cost~~ (which include interest cost, expected return on plan assets, amortization of prior service costs ~~or credits~~(credits) and ~~deferred~~ actuarial ~~gains and~~ losses) in the other income (expense), net line ~~item.~~item in the Consolidated Statements of Income.

VF contributed ~~$33.4~~$13.1 million to its defined benefit plans during the nine months ended December ~~2018,~~2019, and intends to make approximately ~~$6.7~~$13.2 million of contributions during the remainder of Fiscal ~~2019.~~2020.

In the first quarter of Fiscal 2019, VF approved a freeze of all future benefit accruals under the U.S. qualified defined benefit pension

plan and the supplemental defined benefit pension plan, effective December 31, 2018. Accordingly, the Company recognized a $9.5 million pension curtailment loss in the other income (expense), net line item in the Consolidated Statement of Income for the nine months ended December 2018.

During the three months ended ~~June 2018. Actuarial valuations were obtained as~~December 2019, the Company offered former employees in the U.S. qualified plan a one-time option to receive a distribution of ~~June 30, 2018.~~their deferred vested benefits.

Approximately 2,400 participants accepted a distribution, representing approximately 40% of offered participants and an approximate 10% reduction in the total number of plan participants. In December 2019, the plan paid approximately $130 million in lump-sum distributions to settle approximately $170 million of projected benefit obligations related to these participants. VF recorded a $22.9 million settlement charge in the other income (expense), net line item in the Consolidated Statement of Income during the three months ended December 2019 to recognize the related deferred actuarial losses in accumulated OCI.

Additionally, VF reported ~~$0.7~~$2.0 million and ~~$8.8~~$2.5 million inof settlement charges in the other income (expense), net line item in the Consolidated Statements of Income for the three and nine months ended December 2019, respectively, as well as $0.7 million and $8.8 million for the three and nine months ended December 2018, ~~respectively,~~respectively. The settlement charges related to the recognition of deferred actuarial losses resulting from lump sum payments of retirement benefits in the supplemental defined benefit pension plan. ~~Actuarial valuations were obtained as of April 30, 2018, September 29, 2018 and December 29, 2018.~~

23 ~~VF Corporation Q3 FY19 Form 10-Q~~

Actuarial assumptions used in the interim valuations were reviewed and revised as appropriate. The discount rates used to determine the pension obligations were as follows:



	December 31, 2019		September 30, 2019
U.S. qualified defined benefit pension plan	3.34	%	N/A
Supplemental defined benefit pension plan	3.35	%	3.23	%

VF Corporation Q3 FY20 Form 10-Q 22

December 29, 2018 September 29, 2018 June 30, 2018 April 30, 2018
U.S. qualified defined benefit pension plan N/A
N/A
4.25 % N/A
Supplemental defined benefit pension plan 4.36 % 4.29 % 4.24 % 4.22 %

NOTE 1112 — CAPITAL AND ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Common Stock

During the nine months ended December ~~2018,~~2019, the Company purchased ~~1.9~~5.8 million shares of Common Stock in open market transactions for ~~$150.0~~$500.0 million under its share repurchase program authorized by VF’s Board of Directors. These transactions were treated as treasury stock transactions.

Common Stock outstanding is net of shares held in treasury which are, in substance, retired. During the nine months ended December ~~2018,~~2019, VF restored ~~2.0~~5.8 million treasury shares to an unissued status, after which they were no longer recognized as shares held in treasury. There were no0 shares held in treasury at the end of ~~December 2018, March 2018~~or~~December 2017. The~~

December 2019, March 2019orDecember 2018. The excess of the cost of treasury shares acquired over the $0.25 per share stated value of Common Stock is deducted from retained earnings.

Prior to March 2019, VF Common Stock iswas also held by the Company’s deferred compensation plans and iswas treated as treasury shares for financial reporting purposes. ~~During~~As of December 2019, there were 0 shares held in the ~~nine months ended December 2018, the Company purchased 7,680 shares of Common Stock in open market transactions related to its~~Company's deferred compensation ~~plans for $0.7 million.~~plans.

Balances related to shares held for deferred compensation plans were as follows:



(In thousands, except share amounts)	December 2019		March 2019		December 2018
Shares held for deferred compensation plans	—		—		147,464
Cost of shares held for deferred compensation plans	$	—	$	—	$	2,126

(In thousands, except share amounts) December 2018 March 2018 December 2017
Shares held for deferred compensation plans 147,464
284,785
317,515
Cost of shares held for deferred compensation plans $ 2,126
$ 3,621
$ 3,901

Accumulated Other Comprehensive Income (Loss)

Comprehensive income consists of net income and specified components of other comprehensive income (“OCI”), which relates to changes in assets and liabilities that are not included in net income under GAAP but are instead deferred and accumulated within a separate component of stockholders’ equity in the balance sheet. VF’s comprehensive income is presented in the Consolidated Statements of Comprehensive Income. The deferred components of OCI are reported, net of related income taxes, in accumulated OCI in stockholders’ equity, as follows:



(In thousands)	December 2019			March 2019			December 2018
Foreign currency translation and other	$	(663,319	)	$	(725,679	)	$	(737,127	)
Defined benefit pension plans	(249,530		)	(243,184		)	(219,644		)
Derivative financial instruments	17,477			66,788			70,206
Accumulated other comprehensive income (loss)	$	(895,372	)	$	(902,075	)	$	(886,565	)

(In thousands) December 2018 March 2018 December 2017
Foreign currency translation and other $ (737,127 ) $ (476,869 ) $ (546,201 )
Defined benefit pension plans (219,644 ) (289,618 ) (291,949 )
Derivative financial instruments 70,206
(97,543 ) (87,990 )
Accumulated other comprehensive income (loss) $ (886,565 ) $ (864,030 ) $ (926,140 )

The changes in accumulated OCI, net of related taxes, were as follows:


	Three Months Ended December 2018											Three Months Ended December 2019
(In thousands)	Foreign Currency Translation and Other			Defined Benefit Pension Plans			Derivative Financial Instruments		Total			Foreign Currency Translation and Other			Defined Benefit Pension Plans			Derivative Financial Instruments			Total
Balance, September 2018	$	(665,962	)	$	(226,039	)	$	29,085	$	(862,916	)
Balance, September 2019												$	(715,286	)	$	(298,326	)	$	82,887		$	(930,725	)
Other comprehensive income (loss) before reclassifications	(71,165		)	1,065			36,619		(33,481		)	51,967			26,827			(46,536		)	32,258
Amounts reclassified from accumulated other comprehensive income (loss)	—			5,330			4,502		9,832			—			21,969			(18,874		)	3,095
Net other comprehensive income (loss)	(71,165		)	6,395			41,121		(23,649		)	51,967			48,796			(65,410		)	35,353
Balance, December 2018	$	(737,127	)	$	(219,644	)	$	70,206	$	(886,565	)
Balance, December 2019												$	(663,319	)	$	(249,530	)	$	17,477		$	(895,372	)



	Three Months Ended December 2018
(In thousands)	Foreign Currency Translation and Other			Defined Benefit Pension Plans			Derivative Financial Instruments		Total
Balance, September 2018	$	(665,962	)	$	(226,039	)	$	29,085	$	(862,916	)
Other comprehensive income (loss) before reclassifications	(71,165		)	1,065			36,619		(33,481		)
Amounts reclassified from accumulated other comprehensive income (loss)	—			5,330			4,502		9,832
Net other comprehensive income (loss)	(71,165		)	6,395			41,121		(23,649		)
Balance, December 2018	$	(737,127	)	$	(219,644	)	$	70,206	$	(886,565	)

23VF Corporation Q3 ~~FY19~~FY20 Form 10-Q24

Three Months Ended December 2017
(In thousands) Foreign Currency Translation and Other Defined Benefit Pension Plans Derivative Financial Instruments Total
Balance, September 2017 $ (567,964 ) $ (268,159 ) $ (78,773 ) $ (914,896 )
Other comprehensive income (loss) before reclassifications 21,763
(30,223 ) (15,244 ) (23,704 )
Amounts reclassified from accumulated other comprehensive income (loss) —
6,433
6,027
12,460

Net other comprehensive income (loss) 21,763
(23,790 ) (9,217 ) (11,244 )
Balance, December 2017 $ (546,201 ) $ (291,949 ) $ (87,990 ) $ (926,140 )


	Nine Months Ended December 2018												Nine Months Ended December 2019
(In thousands)	Foreign Currency Translation and Other			Defined Benefit Pension Plans			Derivative Financial Instruments			Total
Balance, March 2018	$	(476,869	)	$	(289,618	)	$	(97,543	)	$	(864,030	)
In thousands													Foreign Currency Translation and Other			Defined Benefit Pension Plans			Derivative Financial Instruments			Total
Balance, Balance, March 2019													$	(725,679	)	$	(243,184	)	$	66,788		$	(902,075	)
Adoption of new accounting standard, ASU 2018-02													(9,088		)	(50,402		)	(2,371		)	(61,861		)
Other comprehensive income (loss) before reclassifications	(260,258		)	39,877			135,041			(85,340		)	(11,646		)	15,108			8,712			12,174
Amounts reclassified from accumulated other comprehensive income (loss)	—			30,097			32,708			62,805			—			28,154			(47,057		)	(18,903		)
Spin-off of Jeans Business													83,094			794			(8,595		)	75,293
Net other comprehensive income (loss)	(260,258		)	69,974			167,749			(22,535		)	62,360			(6,346		)	(49,311		)	6,703
Balance, December 2018	$	(737,127	)	$	(219,644	)	$	70,206		$	(886,565	)
Balance, December 2019													$	(663,319	)	$	(249,530	)	$	17,477		$	(895,372	)

Nine Months Ended December 2017
(In thousands) Foreign Currency Translation and Other Defined Benefit Pension Plans Derivative Financial Instruments Total
Balance, March 2017 $ (742,281 ) $ (281,721 ) $ 35,962
$ (988,040 )
Other comprehensive income (loss) before reclassifications 196,080
(30,223 ) (115,546 ) 50,311

Amounts reclassified from accumulated other comprehensive income (loss) —
19,995
(8,406 ) 11,589

Net other comprehensive income (loss) 196,080
(10,228 ) (123,952 ) 61,900

Balance, December 2017 $ (546,201 ) $ (291,949 ) $ (87,990 ) $ (926,140 )

25 ~~VF Corporation Q3 FY19 Form 10-Q~~



	Nine Months Ended December 2018
In thousands	Foreign Currency Translation and Other			Defined Benefit Pension Plans			Derivative Financial Instruments			Total
Balance, March 2018	$	(476,869	)	$	(289,618	)	$	(97,543	)	$	(864,030	)
Other comprehensive income (loss) before reclassifications	(260,258		)	39,877			135,041			(85,340		)
Amounts reclassified from accumulated other comprehensive income (loss)	—			30,097			32,708			62,805
Net other comprehensive income (loss)	(260,258		)	69,974			167,749			(22,535		)
Balance, December 2018	$	(737,127	)	$	(219,644	)	$	70,206		$	(886,565	)

Reclassifications out of accumulated OCI ~~are~~were as follows:



(In thousands) Details About Accumulated Other Comprehensive Income (Loss) Components	Affected Line Item in the Consolidated Statements of Income	Three Months Ended December						Nine Months Ended December
		Three Months Ended December						Nine Months Ended December

		2019			2018			2019			2018
Amortization of defined benefit pension plans:
Net deferred actuarial losses	Other income (expense), net	$	(4,203	)	$	(6,676	)	$	(12,236	)	$	(22,153	)
Deferred prior service (costs) credits	Other income (expense), net	(13		)	58			(38		)	(552		)
Pension curtailment losses and settlement charges	Other income (expense), net	(24,943		)	(662		)	(25,462		)	(18,329		)
Total before tax		(29,159		)	(7,280		)	(37,736		)	(41,034		)
Tax benefit		7,190			1,950			9,582			10,937
Net of tax		(21,969		)	(5,330		)	(28,154		)	(30,097		)
Gains (losses) on derivative financial instruments:
Foreign exchange contracts	Net sales	(5,507		)	772			(11,226		)	6,244
Foreign exchange contracts	Cost of goods sold	27,157			(4,570		)	60,989			(31,146		)
Foreign exchange contracts	Selling, general and administrative expenses	1,231			(1,020		)	3,329			(5,240		)
Foreign exchange contracts	Other income (expense), net	1,006			690			7,574			(1,673		)
Interest rate contracts	Interest expense	(1,324		)	(1,263		)	(3,920		)	(3,739		)
Total before tax		22,563			(5,391		)	56,746			(35,554		)
Tax (expense) benefit		(3,689		)	889			(9,689		)	2,846
Net of tax		18,874			(4,502		)	47,057			(32,708		)
Total reclassifications for the period, net of tax		$	(3,095	)	$	(9,832	)	$	18,903		$	(62,805	)

(In thousands)
Details About Accumulated Other Comprehensive Income (Loss) Components
Affected Line Item in the Consolidated Statements of Income Three Months Ended December Nine Months Ended December

2018 2017 2018 2017
Amortization of defined benefit pension plans:
Net deferred actuarial losses Other income (expense), net $ (6,676 ) $ (10,026 ) $ (22,153 ) $ (30,058 )
Deferred prior service (costs) credits Other income (expense), net 58
(646 ) (552 ) (1,934 )
Pension curtailment losses and settlement charges Other income (expense), net (662 ) (566 ) (18,329 ) (566 )
Total before tax (7,280 ) (11,238 ) (41,034 ) (32,558 )
Tax benefit 1,950
4,805
10,937
12,563
Net of tax (5,330 ) (6,433 ) (30,097 ) (19,995 )
Gains (losses) on derivative financial instruments:
Foreign exchange contracts Net sales 772
8,567
6,244
27,228
Foreign exchange contracts Cost of goods sold (4,570 ) (12,153 ) (31,146 ) (10,664 )
Foreign exchange contracts Selling, general and administrative expenses (1,020 ) (2,398 ) (5,240 ) (3,523 )
Foreign exchange contracts Other income (expense), net 690
(1,163 ) (1,673 ) (1,900 )
Interest rate contracts Interest expense (1,263 ) (1,205 ) (3,739 ) (3,565 )
Total before tax (5,391 ) (8,352 ) (35,554 ) 7,576
Tax benefit 889
2,325
2,846
830
Net of tax (4,502 ) (6,027 ) (32,708 ) 8,406
Total reclassifications for the period, net of tax $ (9,832 ) $ (12,460 ) $ (62,805 ) $ (11,589 )

VF Corporation Q3 ~~FY19~~FY20 Form 10-Q 2624

NOTE 1213 — STOCK-BASED COMPENSATION

Spin-Off of Jeans Business

In connection with the spin-off of the Jeans business on May 22, 2019, the Company adjusted its outstanding equity awards in accordance with the terms of the Employee Matters Agreement between the Company and Kontoor Brands. Adjustments to the underlying shares and terms of outstanding stock options, restricted stock units ("RSUs") and restricted stock were made to preserve the intrinsic value of the awards immediately before the separation. The adjustment of the underlying shares and exercise prices, as applicable, was determined using a ratio based on the relative values of the VF pre-distribution stock value and the VF post-distribution stock value as determined by the Company. The outstanding awards continue to vest over their original vesting

periods. The Company will recognize $13.0 million of total incremental compensation cost related to the adjustment of the VF equity awards, of which $0.2 million and $12.5 million were recognized during the three and nine months ended December 2019, respectively.

In connection with the spin-off, stock options to purchase 756,709 shares of VF Common Stock, 52,018 performance-based RSUs, 79,187 nonperformance-based RSUs and 112,763 restricted shares of VF Common Stock were converted into Kontoor Brands equity awards.

Incentive Equity Awards Granted

During the nine months ended December ~~2018,~~2019, VF granted stock options to employees and nonemployee members of VF's Board of Directors to purchase ~~89,471~~1,505,009 shares of its Common Stock at a weighted average exercise price of ~~$80.84~~$84.28 per share. The exercise price of each option granted was equal to the fair market value of VF Common Stock on the date of grant. Employee stock options vest in equal annual installments over three years. Stock options granted to nonemployee members of VF's Board of Directors vest upon grant and become exercisable one year from the date of grant.

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:



		Nine Months Ended December ~~2018~~2019
Expected volatility		~~22%~~24% to ~~29%~~27%
Weighted average expected volatility		25%
Expected term (in years)		6.1 to ~~7.5~~7.6
Weighted average dividend yield		~~2.6%~~2.5%
Risk-free interest rate		~~2.1%~~1.6% to ~~3.2%~~2.4%
Weighted average fair value at date of grant		$~~16.74~~17.19

Also during the nine months ended December ~~2018,~~2019, VF granted ~~17,233~~274,512 performance-based ~~restricted stock units (“RSU”)~~RSUs to employees that enable them to receive shares of VF Common Stock at the end of a three-year performance cycle. Each performance-based RSU has a potential final payout ranging from ~~zero~~0 to ~~two~~2 shares of VF Common Stock. The number of shares earned by participants, if any, is based on achievement of three-year financial targets set by the Talent and Compensation Committee of the Board of Directors. Shares will be issued to participants in the year following the conclusion of the three-year performance period. The weighted average fair market value of VF Common Stock at the dates the units were granted was ~~$80.18~~$84.28 per share.

The actual number of performance-based RSUs earned may also be adjusted upward or downward by 25% of the target award, based on how VF’s total shareholder return (“TSR”) over the three-year period compares to the TSR for companies included in the Standard & Poor’s 500 Consumer Discretionary Index. The grant date fair value of the TSR-based adjustment related to the performance-based RSU grants was determined using a Monte Carlo simulation technique that incorporates option-pricing model inputs, and was ~~$4.61~~$7.11 per share.

VF granted ~~51,166~~10,780 nonperformance-based RSUs to nonemployee members of the Board of Directors during the nine months ended December 2019. These units vest upon grant and will be settled

in shares of VF Common Stock one year from the date of grant. The fair market value of VF Common Stock at the date the units were granted was $84.23 per share.

VF granted 7,500 nonperformance-based RSUs to certain key employees in international jurisdictions during the nine months ended December ~~2018.~~2019. These units ~~generally~~ vest 50% over ~~periods of~~

~~up to four years~~a two-year period and 50% over a four-year period from the date of grant and each unit entitles the holder to ~~one~~1 share of VF Common Stock. The fair market value of VF Common Stock at the date the units were granted was $84.23 per share.

In addition, VF granted 174,042 nonperformance-based RSUs to employees during the nine months ended December 2019. These awards vest 50% over a two-year period and 50% over a four-year period from the date of grant and entitle the holder to 1 share of VF Common Stock. The weighted average fair market value of VF Common Stock at the dates the units were granted was ~~$76.82~~$84.25 per share.

~~In addition,~~ VF granted 27,707 nonperformance-based RSUs to employees during the nine months ended December 2018. These awards generally vest 50% over a two-year period and 50% over a four-year period from the date of grant and entitle the holder to one share of VF Common Stock. The weighted average fair market value of VF Common Stock at the dates the units were granted was $83.15 per share.

For all nonperformance-based RSUs granted during the nine months ended December 2018, dividend equivalents accrue and are payable in additional shares of VF Common Stock at the vesting date. Dividend equivalents are subject to the same risk of forfeiture as the nonperformance-based RSUs.

~~VF granted 69,476~~70,884 restricted shares of VF Common Stock to certain members of management during the nine months ended December ~~2018.~~2019. These shares vest over periods of up to four years from the date of grant. The weighted average fair market value of VF Common Stock at the dates the shares were granted was ~~$79.66~~$85.63 per share.

25 VF Corporation Q3 FY20 Form 10-Q

NOTE 1314 — INCOME TAXES

On ~~December 22, 2017,~~May 19, 2019, Switzerland voted to approve the ~~U.S. government enacted~~Federal Act on Tax Reform and AHV Financing ("Swiss Tax Act"). Certain provisions of the Swiss Tax Act ~~which included a broad range of complex provisions impacting~~were enacted during the taxation of multi-national companies. Generally, accounting for the impacts of newly enacted tax legislation is required to be completed in the period of enactment; however, in response to the complexities and ambiguity surrounding the Tax Act, the SEC released SAB 118 to provide companies with relief around the initial accounting for the Tax Act. Pursuant to SAB 118, the SEC provided a one-year measurement period for companies to analyze and finalize accounting for the Tax Act. During the one-year measurement period, SAB 118 allows companies to recognize provisional amounts when reasonable estimates can be made for the impacts resulting from the Tax Act.

~~During the fourth~~second quarter of ~~2017, VF recognized a provisional charge of approximately $465.5 million~~Fiscal 2020, which resulted in adjustments to ~~reflect the impacts resulting from the Tax Act, primarily comprised of approximately~~

~~$512.4 million related to the transition tax and approximately $89.5 million of tax benefits related to revaluing U.S.~~ deferred tax assets and liabilities using the new U.S. corporate tax rate of 21%. Other provisional charges of $42.6 million were primarily related to U.S. federal and state tax on foreign income and dividends, and establishing a deferred tax liability for foreign withholding taxes as the Company is not asserting indefinite reinvestment on short-term liquid assets of certain foreign subsidiaries. All other foreign earnings, including basis differences of certain foreign subsidiaries, continue to be considered indefinitely reinvested.

During the three months ended December 2018, VF finalized its accounting for the impact of the Tax Act, which resulted in additional net charges of $10.4 million. During the one-year measurement period provided for under SAB 118, VF recognized additional net charges of $18.2 million, primarily comprised of $14.3 million of charges related to the transition tax, additional tax

27 ~~VF Corporation Q3 FY19 Form 10-Q~~

benefits of $0.3 million related to revaluing U.S. deferred tax assets and liabilities using the new U.S. corporate tax rate of 21%, and other charges of $4.2 million related to establishing a deferred tax liability for foreign withholding taxes, resulting in a cumulative net charge of $483.7 million. The measurement period adjustments include $5.1 million ofliabilities. A net tax benefit ~~recognized~~of $164.4 million was recorded during the second quarter. Subsequent to the end of VF's third quarter, the Swiss Tax Act was enacted for purposes of GAAP in the ~~three months ended March 2018 and $23.3 million~~canton of ~~net tax expense recognized during Fiscal 2019.~~

The Tax Act has significant complexity and guidance continues to be issued by the U.S. Treasury Department, the Internal Revenue Service ("IRS") and state and local tax authorities. After quarter-end, final regulations under Section 965 relatedTicino. As a result, it is expected that adjustments to the ~~transition tax were made available on the IRS website. The Company is currently evaluating these regulations and any tax effect~~amounts previously recorded will be ~~accounted for during~~made in VF's fourth quarter, ~~of Fiscal 2019,~~ which is the period of enactment in ~~which these final regulations were issued.~~Ticino.

Under GAAP, companies are allowed to make an accounting policy election to either treat taxes resulting from GILTI as a current-period expense when they are incurred or factor such amounts into the measurement of deferred taxes. The Company has completed its analysis related to this accounting policy election and has determined it will treat the taxes resulting from GILTI as a current-period expense, which is consistent with the treatment prior to the accounting policy election. See Note 2 for additional discussion on the GILTI policy election.

The effective income tax rate for the nine months ended December ~~2018~~2019 was ~~16.4%~~2.1% compared to ~~55.7%~~15.5% in the ~~2017~~2018 period. The nine months ended December 2019 included a net discrete tax benefit of $169.7 million, which primarily related to the $164.4 million tax benefit recognized due to the enactment of the Swiss Tax Act. The $169.7 million net discrete tax benefit in the 2019 period reduced the effective income tax rate by 13.9%. The 2018 period included a net discrete tax expense of ~~$12.9~~$14.8 million, which ~~included~~primarily related to a $17.8 million tax benefit related to stock compensation, a $3.4 million net tax expense related to unrecognized tax benefits and interest, a $5.9 million net tax expense related to return to accrual adjustments and a $23.3 million of net tax expense related to adjustments to provisional amounts recorded in 2017 under the U.S. Tax Act, $20.2 million of tax benefit related to stock compensation, $10.2 million of net tax expense related to unrecognized tax benefits and interest, $1.9 million of tax benefit related to adjustments of previously recorded amounts based on proposed regulations and $1.6 million of tax expense related to adjustments to previously recognized state income tax credits.Act. The ~~$12.9~~$14.8 million net discrete tax expense in the ~~nine months ended December~~ 2018 increased the effective income tax rate by 1.0%. The 2017 period included a net discrete tax expense of $440.0 million, which included $465.5 million of net tax expense related to the Tax Act, $22.2 million of tax benefit related to stock compensation, $5.6 million of net tax benefits related to the realization of previously unrecognized tax benefits and interest, and $1.9 million of discrete tax expense related to the effects of tax rate changes. The $440.0 million net discrete tax expense in the 2017 period increased the effective income tax rate by ~~38.3%~~1.4%. Without discrete items, the effective income tax rate for the nine months ended December ~~2018 decreased~~2019 increased by ~~2.0%~~1.9% compared with the ~~2017~~2018 period primarily due to a lower ~~U.S. corporate~~percentage of income in lower tax rate ~~that was effective beginning January 1, 2018.~~jurisdictions.

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 ~~IRS~~Internal Revenue Service ("IRS") examinations for tax

years through ~~2014~~2015 have been effectively settled. The examination of Timberland’s 2011 tax return is ongoing. The IRS has proposed material adjustments to Timberland’s 2011 tax return that would significantly impact tax expense and assessment of interest charges. The Company has formally disagreed with the proposed adjustments. During 2015, VF filed a petition to the U.S. Tax Court to begin the process of resolving this matter, but it has not yet reached a resolution.

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.

VF was granted a ruling which lowered the effective income tax rate on taxable earnings for years 2010 through 2014 under Belgium’s excess profit tax regime. In February 2015, the European Union Commission (“EU”) opened a state aid investigation into Belgium’s rulings. On January 11, 2016, the EU announced its decision that these rulings were illegal and ordered that tax benefits granted under these rulings should be collected from the affected companies, including VF.

On March 22, 2016, the Belgium government filed an appeal seeking annulment of the EU decision. Additionally, on June 21, 2016, VF Europe BVBA filed its own application for annulment of the EU decision. ~~Both of the listed requests for annulment remain open and unresolved.~~

On December 22, 2016, Belgium adopted a law which entitled the Belgium tax authorities to issue tax assessments, and demand timely payments from companies which benefited from the excess profits regime. On January 10, 2017, VF Europe BVBA received an assessment for €31.9 million tax and interest related to excess profits benefits received in prior years. VF Europe BVBA remitted €31.9 million ($33.9 million) on January 13, 2017, which was recorded as an income tax receivable based on the expected success of the aforementioned requests for annulment. An additional assessment of €3.1 million ($3.8 million) was received and paid in January 2018. On February 14, 2019 the General Court annulled the EU decision and on April 26, 2019 the EU appealed the General Court’s annulment. Both listed requests for annulment remain open and unresolved. Additionally, the EU has initiated proceedings related to individual rulings granted by Belgium, including the ruling granted to VF. If this matter is adversely resolved, these amounts will not be collected by VF.

During the nine months ended December ~~2018,~~2019, the amount of net unrecognized tax benefits and associated interest ~~increased~~decreased by ~~$9.9~~$24.4 million to ~~$178.9~~$149.5 million. Management believes that it is reasonably possible that the amount of unrecognized income tax benefits and interest may decrease during the next 12 months by approximately ~~$7.9~~$15.1 million related to the completion of examinations and other settlements with tax authorities and the expiration of statutes of limitations, of which ~~$5.5~~$11.0 million would reduce income tax expense.

VF Corporation Q3 ~~FY19~~FY20 Form 10-Q 2826

NOTE 1415 — REPORTABLE SEGMENT INFORMATION

In light of recently completed portfolio management actions and organizational realignments, the Company realigned its internal reporting structure in the first quarter of Fiscal 2019 to reflect the organizational changes to better support and assess the operations of the business. The chief operating decision maker allocates resources and assesses performance based on a global brand view which represents VF's operating segments. The

operating segments have been evaluated and combined into reportable segments because they ~~have met~~meet the similar economic characteristics and qualitative aggregation criteria set forth in the relevant accounting guidance. ~~Based on this assessment, the~~

The Company's reportable segments have been identified as: Outdoor, Active ~~Work~~ and ~~Jeans.~~

~~Below is a description of VF's reportable segments and the primary brands~~Work. We have included ~~within each:~~



~~REPORTABLE SEGMENT~~		~~PRIMARY BRANDS~~
~~Outdoor~~ ~~- Outdoor apparel, footwear and equipment~~		~~The North Face~~^®
		~~Timberland~~^®~~(excluding~~ ~~Timberland PRO~~^®)
		~~Smartwool~~^®
		~~Icebreaker~~^®
		~~Altra~~^®

~~Active~~ ~~- Active apparel, footwear and accessories~~		~~Vans~~^®
		~~Kipling~~^®
		~~Napapijri~~^®
		~~JanSport~~^®
		~~Reef~~^®
		~~Eastpak~~^®
		~~Eagle Creek~~^®

~~Work~~ ~~- Work and work-inspired lifestyle apparel, footwear and occupational apparel~~		~~Dickies~~^®
		~~Bulwark~~^®
		~~Red Kap~~^®
		~~Timberland PRO~~^®
		~~Wrangler~~^® ~~RIGGS~~
		~~Walls~~^®
		~~Terra~~^®
		~~Kodiak~~^®
		~~Horace Small~~^®

~~Jeans~~ ~~- Denim and casual apparel~~		~~Wrangler~~^®~~(excluding~~ ~~Wrangler~~^® ~~RIGGS~~)
		~~Lee~~^®
		~~Rock and Republic~~^®

an Other ~~- included~~ category in the ~~tables~~table below for purposes of reconciliation of revenues and profit, but it is not considered a reportable segment. ~~Includes sales~~Other includes results related to the sale of non-VF products at ~~VF Outlet~~^® ~~stores~~ and ~~results from~~ transition services primarily related to the ~~sales~~sale of the Nautica^®~~and~~ ~~Reef~~^®brand ~~businesses.~~

In the tables below, the Company has recast historical financial information to reflect the new reportable segments. The recast historical information has no impact on the Company's previously reported consolidated financial statements.

The results of Williamson-Dickie have been included in the Work segment since the October 2, 2017 acquisition date. The results of Kipling North America, which were previously included in the former Sportswear segment, have been included in the Active segment for all periods presented. The results of Icebreaker and

~~Altra have been included in the Outdoor segment since their acquisition dates of April 3, 2018 and June 1, 2018, respectively.~~

~~The results of the Van Moer business have been included in the Work segment through the October 5, 2018 date of sale. The results of the~~ ~~Reef~~^® ~~brand business have been included in the Active segment through the October 26, 2018 date of sale.~~

~~The primary financial measures used by management to evaluate the financial results of VF's reportable segments are segment~~

29 ~~VF Corporation Q3 FY19 Form 10-Q~~

~~revenues and segment profit. Segment profit comprises the operating income and other income (expense), net line items of each segment.~~

Accounting policies used for internal management reporting at the individual segments are consistent with those in Note A of the 2017 Form 10-K, except as stated below. Corporate costs (other than common costs allocated to the segments), impairment charges and net interest expense are not controlled by segment management and therefore are excluded from the measurement of segment profit. Common costs such as information systems processing, retirement benefits and insurance are allocated from corporate costs to the segments based on appropriate metrics such as usage or employment. Corporate costs that are not

allocated to the segments consist of corporate headquarters expenses (including compensation and benefits of corporate management and staff, certain legal and professional fees and administrative and general costs) and other expenses which include a portion of defined benefit pension costs, development costs for management information systems, costs of registering, maintaining and enforcing certain of VF's trademarks and miscellaneous consolidated costs. Defined benefit pension plans in the U.S. are centrally managed. The current year service component of pension costs is allocated to the segments, while the remaining pension cost components are reported in corporate and other expenses.business.

Financial information for VF's reportable segments iswas as follows:


	Three Months Ended December						Nine Months Ended December						Three Months Ended December						Nine Months Ended December

(In thousands)	2018			2017			2018			2017			2019			2018			2019			2018
Segment revenues:
Outdoor	$	1,612,605		$	1,456,654		$	3,647,708		$	3,373,906		$	1,659,108		$	1,612,605		$	3,795,665		$	3,647,708
Active	1,142,580			983,983			3,579,478			2,982,889			1,239,462			1,142,580			3,885,222			3,579,478
Work	493,587			482,827			1,409,016			899,746			480,086			471,875			1,338,184			1,346,829
Jeans	657,853			692,506			1,894,516			1,963,293
Other	33,534			33,313			104,973			91,003			6,090			652			30,422			10,222
Total segment revenues	$	3,940,159		$	3,649,283		$	10,635,691		$	9,310,837		$	3,384,746		$	3,227,712		$	9,049,493		$	8,584,237
Segment profit:
Segment profit (loss):
Outdoor	$	338,009		$	275,509		$	512,635		$	464,087		$	348,995		$	338,009		$	525,107		$	512,635
Active	272,862			198,872			893,110			656,592			286,474			272,862			982,240			893,110
Work	62,491			57,509			175,652			125,928			54,556			56,178			140,791			156,425
Jeans	67,804			93,196			252,511			292,017
Other	(151		)	209			2,548			(895		)	(2,800		)	520			(2,035		)	3,470
Total segment profit	741,015			625,295			1,836,456			1,537,729			687,225			667,569			1,646,103			1,565,640
Corporate and other expenses ^(a)	(150,884		)	(142,578		)	(411,495		)	(324,939		)	(130,575		)	(147,776		)	(373,311		)	(439,157		)
Interest expense, net	(23,847		)	(22,548		)	(73,244		)	(65,692		)	(16,814		)	(25,220		)	(47,639		)	(76,894		)
Income from continuing operations before income taxes	$	566,284		$	460,169		$	1,351,717		$	1,147,098		$	539,836		$	494,573		$	1,225,153		$	1,049,589

^(a)

Certain corporate overhead and other costs of $~~4.1~~25.3 million and $~~12.5~~70.9 million for the three and nine-month periods ended December ~~2017,~~2018, respectively, previously allocated to the former ~~Sportswear~~Jeans segment and ~~Outdoor & Action Sports segments~~Other category for segment reporting purposes, have been reallocated to continuing ~~operations as discussed in Note 5.~~operations.

27VF Corporation Q3 ~~FY19~~FY20 Form 10-Q30

NOTE 1516 — EARNINGS PER SHARE



	Three Months Ended December				Nine Months Ended December

(In thousands, except per share amounts)	2019		2018		2019		2018
Earnings per share – basic:
Income from continuing operations	$	452,747	$	409,120	$	1,198,997	$	886,608
Weighted average common shares outstanding	395,940		395,294		396,806		395,117
Earnings per share from continuing operations	$	1.14	$	1.03	$	3.02	$	2.24
Earnings per share – diluted:
Income from continuing operations	$	452,747	$	409,120	$	1,198,997	$	886,608
Weighted average common shares outstanding	395,940		395,294		396,806		395,117
Incremental shares from stock options and other dilutive securities	4,382		4,473		4,693		5,301
Adjusted weighted average common shares outstanding	400,322		399,767		401,499		400,418
Earnings per share from continuing operations	$	1.13	$	1.02	$	2.99	$	2.21

Three Months Ended December Nine Months Ended December

(In thousands, except per share amounts) 2018 2017 2018 2017
Earnings per share – basic:
Income (loss) from continuing operations $ 463,126
$ (72,979 ) $ 1,130,200
$ 507,933
Weighted average common shares outstanding 395,294
394,577
395,117
394,967
Earnings (loss) per share from continuing operations $ 1.17
$ (0.18 ) $ 2.86
$ 1.29
Earnings per share – diluted:
Income (loss) from continuing operations $ 463,126
$ (72,979 ) $ 1,130,200
$ 507,933
Weighted average common shares outstanding 395,294
394,577
395,117
394,967
Incremental shares from stock options and other dilutive securities 4,473
5,801
5,301
4,458
Adjusted weighted average common shares outstanding 399,767
400,378
400,418
399,425
Earnings (loss) per share from continuing operations $ 1.16
$ (0.18 ) $ 2.82
$ 1.27

Outstanding options to purchase approximately 1.5 million shares were excluded from the calculations of diluted earnings per share for both the three and nine-month periods ended December 2019, and outstanding options to purchase approximately 0.1 million and 0.6 million shares were excluded from the calculations of diluted earnings per share for the three and nine-month periods ended December 2018, respectively, ~~and outstanding options to purchase 2.0~~because the effect of their inclusion would have been anti-dilutive.

In addition, 0.8 million ~~and 5.7 million~~ shares of performance-based RSUs were excluded from the calculations of diluted earnings per share for both the three and nine-month periods ended December ~~2017, respectively, because the effect of their inclusion would have been antidilutive.~~

~~In addition,~~ 2019, and0.9 million shares of performance-based RSUs were excluded from the calculations of diluted earnings per share for both the three and nine-month periods ended December 2018, and 0.6 million and 0.9 million shares of performance-based RSUs were excluded from the calculations of diluted earnings per share for the three and nine-month periods ended December 2017, respectively, because these units were not considered to be contingent outstanding shares in those periods.

NOTE 1617 — 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.

31VF Corporation Q3 ~~FY19~~FY20 Form 10-Q28

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)						Total Fair Value		Fair Value Measurement Using ^(a)
(In thousands)			Level 1		Level 2		Level 3				Level 1		Level 2		Level 3
December 2018
December 2019
Financial assets:
Cash equivalents:
Money market funds	$	193,607	$	193,607	$	—	$	—	$	247,270	$	247,270	$	—	$	—
Time deposits	6,124		6,124		—		—		2,689		2,689		—		—
Derivative financial instruments	88,910		—		88,910		—		51,643		—		51,643		—
Investment securities	161,720		152,381		9,339		—		134,026		128,409		5,617		—
Financial liabilities:
Derivative financial instruments	7,361		—		7,361		—		42,979		—		42,979		—
Deferred compensation	182,262		—		182,262		—		145,814		—		145,814		—
	Total Fair Value		Fair Value Measurement Using ^(a)						Total Fair Value		Fair Value Measurement Using ^(a)
(In thousands)			Level 1		Level 2		Level 3				Level 1		Level 2		Level 3
March 2018
March 2019
Financial assets:
Cash equivalents:
Money market funds	$	185,118	$	185,118	$	—	$	—	$	248,560	$	248,560	$	—	$	—
Time deposits	7,714		7,714		—		—		8,257		8,257		—		—
Derivative financial instruments	31,400		—		31,400		—		92,771		—		92,771		—
Investment securities	194,160		183,802		10,358		—		186,698		176,209		10,489		—
Financial liabilities:
Derivative financial instruments	106,174		—		106,174		—		22,337		—		22,337		—
Deferred compensation	227,808		—		227,808		—		199,336		—		199,336		—

The amounts reported in the table above for the prior period have not been segregated between continuing and discontinued operations. The March 2019 balances include $50.8 million of deferred compensation liabilities and associated assets related to the Jeans business, which were transferred in connection with the spin-off.


^(a)	There were no transfers among the levels within the fair value hierarchy during the nine months ended December ~~2018~~2019 or the ~~three months~~year ended March ~~2018~~2019.

VF’s cash equivalents include money market funds and short-term time deposits that approximate fair value based on Level 1 measurements. The fair value of derivative financial instruments, which consist of foreign exchange forward contracts, is determined based on observable market inputs (Level 2), including spot and forward exchange rates for foreign currencies, and considers the credit risk of the Company and its counterparties. Investment securities are held in VF’s deferred compensation plans as an economic hedge of the related deferred compensation liabilities. These investments ~~are classified as trading securities and~~ primarily include mutual funds (Level 1) that are valued based on quoted prices in active markets and a separately managed fixed-income fund (Level 2) with underlying investments that are valued based on quoted prices for similar assets in active markets or quoted prices in inactive markets for identical assets. Liabilities related to 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 financial assets and financial liabilities are recorded in the consolidated financial statements at cost, except life insurance contracts which are recorded at cash surrender value. These other financial assets and financial liabilities include cash held as demand deposits, accounts receivable, short-term borrowings, accounts payable and accrued liabilities. At December ~~2018~~2019 and March ~~2018,~~2019, their carrying values approximated fair value. Additionally, at December ~~2018~~2019 and March ~~2018,~~2019, the carrying

values of VF’s long-term debt, including the current portion, were ~~$2,140.8~~$2,115.2 million and ~~$2,218.8~~$2,121.1 million, respectively, compared with fair values of ~~$2,282.6~~$2,392.0 million and ~~$2,403.9~~$2,318.6 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

Certain non-financial assets, primarily property, plant and equipment, goodwill and intangible assets, are not required to be measured at fair value on a recurring basis and are reported at carrying value. However, these assets are required to be assessed for impairment whenever events or circumstances indicate that their carrying value may not be fully recoverable, and at least annually for goodwill and indefinite-lived intangible assets. In the event an impairment is required, the asset is adjusted to estimated fair value, using market-based assumptions.

During the three months ended September 28, 2019, management performed a quantitative impairment analysis of the Timberland reporting unit goodwill and indefinite-lived trademark intangible asset. Based on the analysis, management concluded both the goodwill and indefinite-lived trademark intangible asset were not impaired. See Critical Accounting Policies and Estimates within Management's Discussion and Analysis for additional discussion.

29VF Corporation Q3 ~~FY19~~FY20 Form 10-Q32

NOTE 1718 — DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES

Summary of Derivative Financial Instruments

All of VF’s outstanding derivative financial instruments are foreign exchange forward 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 derivative contracts were $2.8 billion at December 2019,$2.8 billionatMarch

~~contracts were~~2019 and $2.7 billion at December 2018, ~~and $2.9 billion at both March 2018 and December 2017,~~ consisting primarily of contracts hedging exposures to the euro, British pound, Canadian dollar, Mexican peso, Swiss franc, ~~Swedish krona,~~ South Korean won, ~~New Zealand dollar,~~Swedish krona, Polish zloty, Japanese yen and ~~Polish zloty.~~New Zealand dollar. Derivative contracts have maturities up to 20 months.

The following table presents outstanding derivatives on an individual contract basis:



	Fair Value of Derivatives with Unrealized Gains						Fair Value of Derivatives with Unrealized Losses

(In thousands)	December 2019		March 2019		December 2018		December 2019			March 2019			December 2018
Foreign currency exchange contracts designated as hedging instruments	$	46,573	$	92,356	$	88,910	$	(42,050	)	$	(21,798	)	$	(7,197	)
Foreign currency exchange contracts not designated as hedging instruments	5,070		415		—		(929		)	(539		)	(164		)
Total derivatives	$	51,643	$	92,771	$	88,910	$	(42,979	)	$	(22,337	)	$	(7,361	)

Fair Value of Derivatives
with Unrealized Gains

Fair Value of Derivatives
with Unrealized Losses

(In thousands) December 2018 March 2018 December 2017 December 2018 March 2018 December 2017
Foreign currency exchange contracts designated as hedging instruments $ 88,910
$ 21,496
$ 17,639
$ (7,197 ) $ (105,795 ) $ (99,606 )
Foreign currency exchange contracts not designated as hedging instruments —
9,904
5,331
(164 ) (379 ) (432 )
Total derivatives $ 88,910
$ 31,400
$ 22,970
$ (7,361 ) $ (106,174 ) $ (100,038 )

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 of its foreign exchange forward contracts on a net basis in accordance with the terms of its master netting agreements, the amounts presented in the Consolidated Balance Sheets would be adjusted from the current gross presentation to the net amounts as detailed in the following table:



	December 2019						March 2019						December 2018

(In thousands)	Derivative Asset			Derivative Liability			Derivative Asset			Derivative Liability			Derivative Asset			Derivative Liability
Gross amounts presented in the Consolidated Balance Sheets	$	51,643		$	(42,979	)	$	92,771		$	(22,337	)	$	88,910		$	(7,361	)
Gross amounts not offset in the Consolidated Balance Sheets	(27,958		)	27,958			(22,274		)	22,274			(7,273		)	7,273
Net amounts	$	23,685		$	(15,021	)	$	70,497		$	(63	)	$	81,637		$	(88	)

December 2018 March 2018 December 2017

(In thousands)
Derivative
Asset

Derivative
Liability

Derivative
Asset

Derivative
Liability

Derivative
Asset

Derivative
Liability
Gross amounts presented in the Consolidated Balance Sheets $ 88,910
$ (7,361 ) $ 31,400
$ (106,174 ) $ 22,970
$ (100,038 )
Gross amounts not offset in the Consolidated Balance Sheets (7,273 ) 7,273
(20,918 ) 20,918
(18,313 ) 18,313
Net amounts $ 81,637
$ (88 ) $ 10,482
$ (85,256 ) $ 4,657
$ (81,725 )

Derivatives are classified as current or ~~noncurrent~~non-current based on maturity dates, as follows:



(In thousands)	December 2019			March 2019			December 2018
Other current assets	$	49,650		$	83,582		$	78,594
Accrued liabilities	(34,710		)	(18,590		)	(5,540		)
Other assets	1,993			9,189			10,316
Other liabilities	(8,269		)	(3,747		)	(1,821		)

(In thousands) December 2018 March 2018 December 2017
Other current assets $ 78,594
$ 26,741
$ 20,771
Accrued liabilities (5,540 ) (96,087 ) (87,205 )
Other assets 10,316
4,659
2,199
Other liabilities (1,821 ) (10,087 ) (12,833 )

Cash Flow Hedges

VF uses derivative contracts primarily to hedge a portion of the exchange risk for its forecasted sales, purchases, production costs, operating costs and intercompany royalties. The effects of cash flow hedging included in VF’s Consolidated Statements of Income and Consolidated Statements of Comprehensive Income are summarized as follows:


(In thousands)	Gain (Loss) on Derivatives Recognized in OCI Three Months Ended December					Gain (Loss) on Derivatives Recognized in OCI Nine Months Ended December					Gain (Loss) on Derivatives Recognized in OCI Three Months Ended December					Gain (Loss) on Derivatives Recognized in OCI Nine Months Ended December

Cash Flow Hedging Relationships	2018		2017			2018		2017			2019			2018		2019		2018
Foreign currency exchange	$	43,836	$	(21,136	)	$	153,705	$	(128,622	)	$	(56,699	)	$	43,836	$	9,471	$	153,705

33VF Corporation Q3 ~~FY19~~FY20 Form 10-Q30



(In thousands)	Gain (Loss) Reclassified from Accumulated OCI into Income Three Months Ended December						Gain (Loss) Reclassified from Accumulated OCI into Income Nine Months Ended December

Location of Gain (Loss)	2019			2018			2019			2018
Net sales	$	(5,507	)	$	772		$	(11,226	)	$	6,244
Cost of goods sold	27,157			(4,570		)	60,989			(31,146		)
Selling, general and administrative expenses	1,231			(1,020		)	3,329			(5,240		)
Other income (expense), net	1,006			690			7,574			(1,673		)
Interest expense	(1,324		)	(1,263		)	(3,920		)	(3,739		)
Total	$	22,563		$	(5,391	)	$	56,746		$	(35,554	)

(In thousands)
Gain (Loss) Reclassified from Accumulated OCI into Income
Three Months Ended December

Gain (Loss) Reclassified from
Accumulated OCI into Income
Nine Months Ended December

Location of Gain (Loss) 2018 2017 2018 2017
Net sales $ 772
$ 8,567
$ 6,244
$ 27,228
Cost of goods sold (4,570 ) (12,153 ) (31,146 ) (10,664 )
Selling, general and administrative expenses (1,020 ) (2,398 ) (5,240 ) (3,523 )
Other income (expense), net 690
(1,163 ) (1,673 ) (1,900 )
Interest expense (1,263 ) (1,205 ) (3,739 ) (3,565 )
Total $ (5,391 ) $ (8,352 ) $ (35,554 ) $ 7,576

Derivative Contracts Not Designated as Hedges

VF uses derivative contracts to manage foreign currency exchange risk on third-party accounts receivable and payable, as well as intercompany borrowings. These contracts are not designated as hedges, and are recorded at fair value in the Consolidated Balance

Sheets. Changes in the fair values of these instruments are recognized directly in earnings. Gains or losses on these contracts largely offset the net transaction losses or gains on the related assets and liabilities.

~~Following is a summary~~ 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 ~~derivatives included~~instruments are also recognized directly in ~~VF’s~~earnings.

Foreign currency exchange contracts not designated as hedges as of December 2019 also include contracts still owned by VF that are related to the former Jeans business. In connection with the spin-off, VF transferred the value of the unrecognized gain on these contracts to Kontoor Brands.

The changes in fair value of derivative contracts not designated as hedges that have been recognized as gains or losses in VF's Consolidated Statements of ~~Income:~~Income were not material for the three and nine months ended December 2019 and December 2018.

(In thousands)
Location of Gain (Loss)
on Derivatives
Recognized in Income

Gain (Loss) on Derivatives
Recognized in Income
Three Months Ended December

Gain (Loss) on Derivatives
Recognized in Income
Nine Months Ended December

Derivatives Not Designated as Hedges 2018 2017 2018 2017
Foreign currency exchange Cost of goods sold $ (1,565 ) $ (1,635 ) $ (2,195 ) $ (2,203 )
Foreign currency exchange Other income (expense), net (35 ) 3,106
634
1,497
Total $ (1,600 ) $ 1,471
$ (1,561 ) $ (706 )

Other Derivative Information

~~There were no significant amounts recognized in earnings for the ineffective portion of any hedging relationships during the three and nine-month periods ended December 2018 and December 2017.~~

At December ~~2018,~~2019, accumulated OCI included ~~$69.1~~$25.5 million of pre-tax net deferred gains for foreign currency exchange contracts that are expected to be reclassified to earnings during the next 12 months. The amounts ultimately reclassified to earnings will depend on exchange rates in effect when outstanding derivative contracts are settled.

VF entered into interest rate swap derivative contracts in 2011 and 2003 to hedge the interest rate risk for issuance of long-term debt due in 2021 and 2033, respectively. In each case, the contracts were terminated concurrent with the issuance of the debt, and the realized gain or loss was deferred in accumulated OCI. The remaining pre-tax net deferred loss in accumulated OCI was ~~$13.0~~$7.8 million at December ~~2018,~~2019, which will be reclassified into interest expense in the Consolidated Statements of Income over the remaining terms of the associated debt instruments. VF reclassified $1.3 million and ~~$3.7~~$3.9 million of net deferred losses from accumulated OCI into interest expense for the three and nine-month periods ended December ~~2018,~~2019, respectively, and ~~$1.2~~$1.3 million and ~~$3.6~~$3.7 million for the three and nine-month periods ended December ~~2017,~~2018, respectively. VF expects to reclassify ~~$5.2~~$5.4 million to interest expense during the next 12 months.

Net Investment Hedge

The Company has designated its €850.0 million of euro-denominated fixed-rate notes 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 OCI as an offset to the foreign currency translation adjustments on the hedged investments. During the three and nine-month periods ended December ~~2018,~~2019, the Company recognized an after-tax loss of $15.3 million and an after-tax gain of ~~$10.9 million and $55.8~~$2.3 million, respectively, in OCI related to the net investment hedge, and an after-tax ~~loss~~gain of ~~$27.4~~$10.9 million and ~~$85.1~~$55.8 million for the three and nine-month periods ended December ~~2017,~~2018, respectively. Any amounts deferred in accumulated OCI will remain until the hedged investment is sold or substantially liquidated. ~~The Company recorded no ineffectiveness from its net investment hedge during the three and nine-month periods ended December 2018 and December 2017.~~

31VF Corporation Q3 ~~FY19~~FY20 Form 10-Q34

NOTE 1819 — RESTRUCTURING

The Company typically incurs restructuring charges related to strategic initiatives and cost optimization of business activities, primarily related to severance and employee-related benefits. During the three and nine months ended December ~~2018,~~2019, VF leadership approved ~~$21.0~~$3.9 million and ~~$44.6~~$9.7 million, respectively, of restructuring charges. VF recognized ~~$9.9~~$3.7 million and ~~$27.7~~$7.1 million in selling, general and administrative expenses for the three and nine months ended December ~~2018,~~2019, respectively, and ~~$11.1~~$0.2 million and ~~$16.9~~$2.6 million in cost of goods sold for the three and nine months ~~ended December 2018, respectively. The~~

ended December 2019, respectively. The Company has not recognized significant incremental costs related to the ~~2016 and 2017 initiatives. Management expects to recognize additional expense~~actions for ~~activities during Fiscal 2019.~~the year ended March 2019 or prior periods.

Of the ~~$55.1~~$34.9 million total restructuring accrual at December ~~2018, $47.8~~2019, $34.2 million is expected to be paid out within the next 12 months and is classified within accrued liabilities. The remaining ~~$7.3~~$0.7 million will be paid out beyond the next 12 months and thus is classified within other liabilities.

The activity in the restructuring accrual for the nine-month period ended December ~~2018 is~~2019 was as follows:



(In thousands)	Severance			Other			Total
Accrual at March 2019	$	58,106		$	11,035		$	69,141
Charges	7,116			2,564			9,680
Cash payments	(33,965		)	(11,246		)	(45,211		)
Adjustments to accruals	3,101			1,144			4,245
Impact of foreign currency	(2,285		)	(713		)	(2,998		)
Accrual at December 2019	$	32,073		$	2,784		$	34,857

(In thousands) Severance Other Total
Accrual at March 2018 $ 43,145
$ 444
$ 43,589

Charges 42,003
2,639
44,642

Cash payments (26,238 ) (1,017 ) (27,255 )
Adjustments to accruals (5,641 ) —
(5,641 )
Currency translation (253 ) (11 ) (264 )
Accrual at December 2018 $ 53,016
$ 2,055
$ 55,071

Restructuring charges were incurred as follows:



	Three Months Ended December				Nine Months Ended December

(In thousands)	2019		2018		2019		2018
Outdoor	$	1,670	$	2,276	$	6,400	$	15,171
Active	322		485		789		3,537
Work	1,460		—		2,084		3,939
Corporate and other	407		1,045		407		3,546
Total	$	3,859	$	3,806	$	9,680	$	26,193

(In thousands) Three Months Ended December 2018 Nine Months Ended December 2018
Outdoor $ 2,276
$ 15,171

Active 485
3,537

Work —
3,939

Jeans 17,172
18,449

Corporate and other 1,045
3,546

Total $ 20,978
$ 44,642

NOTE 1920 — CONTINGENCIES

The Company petitioned the U.S. Tax Court to resolve an IRS dispute regarding the timing of income inclusion associated with the 2011 Timberland acquisition. The Company remains confident in our timing and treatment of the income inclusion, and therefore this matter is not reflected in our financial statements. We are vigorously defending our position, and do not expect the resolution to have a material adverse impact on the Company's financial position, results of operations or cash flows. While the IRS argues immediate income inclusion, the Company's position is to include the income over a period of years. As the matter relates to 2011, nearly half of the timing at dispute has passed with the Company including the income, and paying the related tax, on our income

tax returns. The Company notes that should the IRS prevail in this timing matter, the net interest expense would be up to $151 million. Further, this timing matter is impacted by the U.S. Tax Act that reduced the U.S. corporate income tax rate from 35% to 21%. If the IRS is successful, this rate differential would increase tax expense by approximately $136 million.

The Company is currently involved in other legal proceedings that are ordinary, routine litigation incidental to the business. The resolution of any particular proceeding is not currently expected to have a material adverse impact on the Company's financial position, results of operations or cash flows.

NOTE 21 — SUBSEQUENT EVENTS

On January ~~15, 2019,~~17, 2020, VF’s Board of Directors declared a quarterly cash dividend of ~~$0.51~~$0.48 per share, payable on March ~~18, 2019~~20, 2020 to stockholders of record on March ~~8, 2019.~~10, 2020.

On January 21, 2020, VF announced that it is considering the divestiture of the occupational portion of its Work segment. The occupational portion of the Work segment is comprised primarily of the following brands and businesses: Red Kap^®, VF Solutions^®, Bulwark^®, Workrite^®, Walls^®, Terra^®, Kodiak^®, Work Authority^® and Horace Small^®.

From December 30, 2019 to February 3, 2020, the Company repurchased approximately 1.9 million shares of Common Stock

in open market transactions for $160.5 million (average price per share of $83.59). VF's current intent is to repurchase up to $500.0 million of Common Stock in open market transactions during the fourth quarter of Fiscal 2020. The repurchases are at the Company's discretion and are subject to change based on circumstances.

35On February 3, 2020, VF announced the commencement of cash tender offers for any and all of its $300.0 million aggregate principal amount of outstanding 6.00% notes due 2033 and $350.0 million aggregate principal amount of outstanding 6.45% notes due 2037. Additionally, VF issued a notice of redemption for its $500.0 million aggregate principal amount of outstanding 3.50% notes due 2021.

VF Corporation Q3 ~~FY19~~FY20 Form 10-Q32

ITEM 2 — MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

All per share amounts are presented on a diluted basis and all percentages shown in the tables below and the following discussion have been calculated using unrounded numbers. All references to foreign currency amounts below reflect the changes in foreign currency exchange rates from the same period in ~~2017~~2018 and their impact on translating foreign currencies into U.S. dollars. All references to foreign currency amounts also reflect the impact of foreign currency-denominated transactions in countries with highly inflationary economies. 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.~~euro, such as Argentina, which is a highly inflationary economy.

In light of the recently completed portfolio management actions and organizational realignments, the Company realigned its internal reporting structure in the first quarter of Fiscal 2019 to reflect the organizational changes to better support and assess the operations of the business. The chief operating decision maker allocates resources and assesses performance based on a global brand view with the reportable segments: Outdoor, Active, Work and Jeans. In the tables below, the Company has recast historical financial information to reflect the new reportable segments. These changes had no impact on previously reported consolidated results of operations. Refer to additional discussion in the “Information by Reportable Segment” section below and Note 14 to VF's consolidated financial statements.

On October 2, 2017, VF acquired 100% of the outstanding shares of Williamson-Dickie Mfg. Co. ("Williamson-Dickie") and the business results have been included in the Work segment. On April 3, 2018, VF acquired 100% of the stock of Icebreaker Holdings

~~Limited ("Icebreaker").~~ On June 1, 2018, VF acquired 100% of the stock of Icon-Altra LLC, plus certain assets in Europe ("Altra"). The business results for ~~Icebreaker and~~ Altra have been included in the Outdoor segment. All references to contributions from ~~acquisitions~~acquisition below represent the operating results of ~~Williamson-Dickie through~~Altra for the two months ended May 2019, which reflects the one-year anniversary of the ~~acquisition and the operating results of Icebreaker and Altra from their respective dates of~~ acquisition. Refer to Note 4 to VF's consolidated financial statements for additional information on acquisitions.

On October 5, 2018, VF completed the sale of the Van Moer business, which was included in the Work segment. On October 26,

2018, VF completed the sale of the Reef^® brand business, which was included in the Active segment. All references to dispositions below represent the impact of operating results of the Reef^® brand and ~~the~~ Van Moer businesses through their dates of disposition, for the three and nine months ended December 2018.

On May 22, 2019, VF completed the spin-off of its Jeans business, ~~beginning~~which included the Wrangler^®, Lee^® and Rock & Republic^® brands, as well as the VF Outlet^TM business, into an independent, publicly traded company now operating under the name Kontoor Brands, Inc. ("Kontoor Brands"). As a result, VF reported the operating results for the Jeans business in the ~~period~~income (loss) from discontinued operations, net of ~~disposition.~~

~~The~~ ~~Nautica~~^® ~~brand business~~tax line item in the Consolidated Statements of Income and the ~~Licensing Business (which comprised the Licensed Sports Group and~~ ~~JanSport~~^® ~~brand collegiate businesses)~~related cash flows have been reported as discontinued operations in ~~our~~the Consolidated Statements of ~~Income, and~~Cash Flows, for all periods presented. In addition, the related ~~held-for-sale~~ assets and liabilities have been ~~presented~~reported as assets and liabilities of discontinued operations in the Consolidated Balance Sheets, through ~~their respective dates~~the date the spin-off was completed.

On April 30, 2018, VF completed the sale of ~~disposal.~~ the Nautica^® brand business. As a result, the Nautica^® brand business has been reported as discontinued operations in our Consolidated Statements of Income and Consolidated Statements of Cash Flows.

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.

~~On August 13, 2018, VF announced its intention to spin-off its Jeans business, which will include the~~ ~~Wrangler~~^®, ~~Lee~~^® ~~and~~ ~~Rock & Republic~~^® brands, as well as the VF Outlet business. The spin-off will create two independent, publicly-traded companies. The transaction is expected to be tax-free to VF and its shareholders and will be effected through a pro-rata distribution of the new company’s stock to existing VF shareholders. The spin-off is expected to be completed in the first quarter of Fiscal 2020.

Refer to Note 5 to VF’s consolidated financial statements for additional information on discontinued operations and other divestitures.

~~VF Corporation Q3 FY19 Form 10-Q~~ 36

HIGHLIGHTS OF THE THIRD QUARTER OF FISCAL ~~2019~~2020

~~Revenues were up~~ 8% to ~~$3.9 billion~~ ~~compared to the three months ended~~ ~~December 2017, including a $57.6 million contribution from acquisitions and a 2% unfavorable impact from foreign currency.~~

~~Active segment revenues increased 16% to~~ ~~$1.1 billion~~ ~~compared to the three months ended~~ ~~December 2017, including a 2% unfavorable impact from foreign currency.~~

~~Outdoor segment revenues increased 11% to $1.6 billion compared to the three months ended~~ ~~December 2017, including a $57.6 million contribution from acquisitions and a 1% unfavorable impact from foreign currency.~~

~~Direct-to-consumer revenues were up~~ ~~10%~~ ~~over the~~ ~~2017~~ period, including a 2% unfavorable impact from foreign currency. E-commerce revenues increased 24% in the current period, including a 2% unfavorable impact from foreign currency. Direct-to-consumer revenues accounted for 40% of total revenues for the three months ended ~~December 2018~~.

~~International revenues increased 5% compared to the three months ended~~ ~~December 2017, including a 4% unfavorable~~


•	Revenues were up 5% to $3.4 billion compared to the three months ended December 2018, primarily due to the $183.8 million contribution from organic growth, partially offset by a 1%unfavorable impact from foreign currency.


•	Active segment revenues increased8% to $1.2 billion compared to the three months ended December 2018, including a 1%unfavorable impact from foreign currency.


•	Outdoor segment revenues increased3% to $1.7 billion compared to the three months ended December 2018, including a 1%unfavorable impact from foreign currency.


•	Direct-to-consumer revenues were up 7% over the 2018 period. E-commerce revenues increased16% in the current period, including a 1%unfavorable impact from foreign currency. Direct-to-consumer revenues accounted for 46% of net revenues for the three months ended December 2019.


•	International revenues increased8% compared to the three months ended December 2018, including a 1%unfavorable

impact from foreign currency. International revenues represented ~~38%~~42% of ~~total~~net revenues in the current period.


•	Gross margin increased 110 basis points to 55.7% compared to the three months ended December 2018 primarily driven by a mix-shift to higher margin businesses and a favorable net foreign currency transaction impact.

•

Earnings per share increased 11% to $1.13 from $1.02 in the 2018 period. The increase was driven by organic growth in all segments, and continued strength in our direct-to-consumer and international businesses. These improvements were partially offset by the impact from a pension settlement charge, costs related to the relocation of our global headquarters and certain brands to Denver, Colorado, specified strategic business decisions in South America, continued investments in our key strategic growth initiatives and the unfavorable impacts from foreign currency.

~~Gross margin increased 40 basis points to 51.9% compared to the three months ended December 2017 driven by a mix-shift to higher margin businesses.~~

~~Earnings per share increased to~~ ~~$1.16~~ ~~from a loss per share of~~ ~~$(0.18)~~ ~~in the~~ ~~2017~~ period. The three months ended December 2017 included a $1.16 negative transitional impact from the enactment of the Tax Cuts and Jobs Act (“Tax Act”) compared to a $0.03 negative impact in the three months ended December 2018. The increase was also driven by organic growth in the Active, Outdoor and Work segments, continued strength in our direct-to-consumer and international businesses and contributions from acquisitions. These improvements were partially offset by expenses related to the acquisition, integration and separation of businesses, declines in the Jeans segment and an unfavorable impact from foreign currency.

33 VF Corporation Q3 FY20 Form 10-Q

ANALYSIS OF RESULTS OF OPERATIONS

Consolidated Statements of Income

The following table presents a summary of the changes in ~~total~~net revenues for the three and nine months ended December ~~2018~~2019 from the comparable periods in ~~2017:~~2018:


(In millions)	Three Months Ended December			Nine Months Ended December			Three Months Ended December			Nine Months Ended December
Net revenues — 2017	$	3,649.3		$	9,310.8
Organic growth	313.7			770.5
Acquisitions	57.6			629.9
Net revenues — 2018							$	3,227.7		$	8,584.2
Organic							183.8			681.7
Acquisition							—			11.8
Dispositions	(23.0		)	(23.0		)	(4.4		)	(96.3		)
Impact of foreign currency	(57.4		)	(52.5		)	(22.4		)	(131.9		)
Net revenues — 2018	$	3,940.2		$	10,635.7
Net revenues — 2019							$	3,384.7		$	9,049.5

VF reported ~~an 8% and 14%~~a 5% increase in revenues for both the three and nine months ended December ~~2018, respectively,~~2019, compared to the ~~2017~~2018 periods. The revenue increase in both periods was attributable to organic growth in ~~the Active, Outdoor~~all segments and ~~Work segments,~~ continued strength in our direct-to-consumer and

international ~~businesses and contributions from acquisitions.~~businesses. The increases in both periods were partially offset by lower revenues due to the Reef^® brand and Van Moer business dispositions and an unfavorable impact from foreign currency. Excluding the impact of foreign currency, ~~lower revenues due to dispositions and declines in the Jeans segment. International~~international sales grew in every region in both the three and nine months ended December ~~2018.~~

2019.

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

37 ~~VF Corporation Q3 FY19 Form 10-Q~~

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

Three Months Ended December Nine Months Ended December

2018 2017 2018 2017
Gross margin (total revenues less cost of goods sold) 51.9 % 51.5 % 50.8 % 50.6 %
Selling, general and administrative expenses 36.8
38.2
36.9
37.5
Operating income 15.0 % 13.3 % 13.9 % 13.1 %



	Three Months Ended December				Nine Months Ended December

	2019		2018		2019		2018
Gross margin (net revenues less cost of goods sold)	55.7	%	54.6	%	54.3	%	53.2	%
Selling, general and administrative expenses	38.6		38.5		40.1		39.5
Operating margin	17.1	%	16.1	%	14.3	%	13.7	%

Gross margin increased 40110 basis points ~~and 20 basis points~~ in both the three and nine months ended December ~~2018, respectively,~~2019, compared to the ~~2017~~2018 periods. Gross margin in both the three and nine months ended December ~~2018~~2019 was positively impacted by a mix-shift to higher margin businesses and ~~increased pricing, partially offset by costs related to the acquisition, integration and separation of businesses and certain increases in product costs.~~a favorable net foreign currency transaction impact.

Selling, general and administrative expenses as a percentage of total revenues ~~decreased 140 basis points~~increased 10 and 60 basis points during the three and nine months ended December ~~2018,~~2019, respectively, compared to the ~~2017~~2018 periods. The ~~decrease~~increase in both periods was primarily due to leverage of operating expenses on higher revenues and was partially offset by expenses related to the acquisition, integration and separation of businesses. The three and nine months ended December 2018 also include costs related to the relocation of our global headquarters and certain brands to Denver, Colorado and specified strategic business decisions in South America. The increase in both periods was also due to continued investments in our key strategic growth initiatives. These costs were partially offset by leverage of operating expenses on higher revenues and lower transaction and deal-related costs in both the three and nine months ended December 2019, and a gain of approximately $11 million in the nine months ended December 2019 on the sale of office real estate and related assets in connection with the relocation of VF's global headquarters and certain brands to Denver, Colorado.

Net interest expense ~~increased $1.3~~decreased $8.4 million and ~~$7.6~~$29.3 million during the three and nine months ended December ~~2018,~~2019, respectively, compared to the ~~2017~~2018 periods. The decrease in net interest expense in both the three and nine months ended December 2019 was primarily due to lower rates on decreased borrowings of short-term debt, partially due to repayment activity funded by the cash received from Kontoor Brands, and higher

international cash balances in higher yielding currencies. Total outstanding debt averaged $2.6 billion in the nine months ended December 2019 and $3.6 billion in the same period in 2018, with weighted average interest rates of 3.2% and 3.0%, respectively.

Other income (expense), net increased $21.1 million and decreased $34.1 million during the three and nine months ended December 2019, respectively, compared to the 2018 periods. The increase in ~~net interest expense~~the three months ended December 2019 was primarily due to higher pension settlement charges of $24.3 million. The increase was partially offset by the estimated loss on sale of $4.5 million recorded in the three months ended December 2018, ~~was primarily due~~related to ~~higher interest rates on short-term borrowings.~~the divestiture of the Reef^® brand. The ~~increase~~decrease in ~~net interest expense for~~ the nine months ended December ~~2018~~2019 was primarily due to ~~higher interest rates~~losses on ~~increased levels~~sale of ~~short-term borrowings. The increases in both periods were partially offset by lower interest on long-term debt due to the payoff of the $250~~$14.4 million ~~of 5.95% fixed rate notes on November 1, 2017. Total outstanding debt averaged $3.6 billion~~and $22.4 million recorded in the nine months ended December 2018, related to the divestitures of the Reef^® brand and ~~$3.5 billion in the same period in 2017, with weighted average interest rates of 3.0% and 2.9%,~~Van Moer businesses, respectively.

VF Corporation Q3 FY20 Form 10-Q 34

adjustments and a $23.3 million of net tax expense related to adjustments to provisional amounts recorded in 2017 under the U.S. Tax ~~Act, $20.2 million of tax benefit related to stock compensation, $10.2 million of net tax expense related to unrecognized tax benefits~~Cuts and interest, $1.9 million of tax benefit related to adjustments of previously recorded amounts based on proposed regulations and $1.6 million of tax expense related to adjustments to previously recognized state income tax credits.Jobs Act. The ~~$12.9~~$14.8 million net discrete tax expense in the ~~nine months ended December~~ 2018 increased the effective income tax rate by 1.0%. The 2017 period included a net discrete tax expense of $440.0 million, which included $465.5 million of tax expense related to the Tax Act, $22.2 million of tax benefit related to stock compensation, $5.6 million of net tax benefits related to the realization of previously unrecognized tax benefits and interest, and $1.9 million of discrete tax expense related to the effects of tax rate changes. The $440.0 million net discrete tax benefit in the 2017 period increased the effective income tax rate by ~~38.3%~~1.4%. Without discrete items, the effective income tax rate for the nine months ended December ~~2018 decreased~~2019 increased by ~~2.0%~~1.9% compared with the ~~2017~~2018 period primarily due to a lower ~~U.S. corporate~~percentage of income in lower tax rate ~~that was effective beginning January 1, 2018.~~jurisdictions.

As a result of the above, income from continuing operations in the three months ended December ~~2018~~2019 was ~~$463.1~~$452.7 million ($~~1.16 income~~1.13 per diluted share) compared to ~~a loss of $73.0~~$409.1 million ($~~0.18 loss~~1.02 per diluted share) in the ~~2017~~2018 period, and income from continuing operations in the nine months ended December ~~2018~~2019 was ~~$1,130.2~~$1,199.0 million ($~~2.82~~2.99 per diluted share) compared to ~~$507.9~~$886.6 million ($~~1.27~~2.21 per diluted share) in the ~~2017~~2018 period. Refer to additional discussion in the “Information by Reportable Segment” section below.

~~VF Corporation Q3 FY19 Form 10-Q~~ 38

Information by Reportable Segment

As discussed above, VF realigned its internal reporting structure in the first quarter of Fiscal 2019 to reflect organizational changes to better support and assess the operations of the business. The newVF's reportable segments are: Outdoor, Active ~~Work~~ and ~~Jeans.~~Work. We have included an ~~other~~Other category in the tables below for purposes of reconciliation of revenues and profit, but it is not considered a reportable segment. ~~The Company has recast~~

~~historical financial information~~Included in this Other category are results related to ~~reflect~~ the ~~new reportable segments. These changes had no impact on previously reported consolidated results~~sale of ~~operations.~~non-VF products and transition services primarily related to the sale of the Nautica^®brand business.

Refer to Note 1415 to the consolidated financial statements for a summary of results of operations by segment, along with a reconciliation of segment profit to income before income taxes.

The following tables present a summary of the changes in segment revenues and profit in the three and nine months ended December ~~2018~~2019 from the comparable periods in ~~2017:~~2018:

Segment Revenues:


	Three Months Ended December																	Three Months Ended December
(In millions)	Outdoor			Active			Work			Jeans			Other		Total			Outdoor			Active			Work			Other^(a)		Total
Segment revenues — 2017	$	1,456.7		$	984.0		$	482.8		$	692.5		$	33.3	$	3,649.3
Segment revenues — 2018																		$	1,612.6		$	1,142.6		$	471.9		$	0.6	$	3,227.7
Organic	120.9			189.2			23.6			(20.2		)	0.2		313.7			58.7			109.8			10.1			5.2		183.8
Acquisitions	57.6			—			—			—			—		57.6
Dispositions	—			(12.1		)	(10.9		)	—			—		(23.0		)	—			(3.1		)	(1.3		)	—		(4.4		)
Impact of foreign currency	(22.6		)	(18.5		)	(1.9		)	(14.4		)	—		(57.4		)	(12.2		)	(9.8		)	(0.6		)	0.2		(22.4		)
Segment revenues — 2018	$	1,612.6		$	1,142.6		$	493.6		$	657.9		$	33.5	$	3,940.2

	Nine Months Ended December
(In millions)	Outdoor			Active			Work			Jeans			Other		Total
Segment revenues — 2017	$	3,373.9		$	2,982.9		$	899.7		$	1,963.3		$	91.0	$	9,310.8
Organic	138.4			612.3			49.8			(44.0		)	14.0		770.5
Acquisitions	158.0			—			471.9			—			—		629.9
Dispositions	—			(12.1		)	(10.9		)	—			—		(23.0		)
Impact of foreign currency	(22.6		)	(3.6		)	(1.5		)	(24.8		)	—		(52.5		)
Segment revenues — 2018	$	3,647.7		$	3,579.5		$	1,409.0		$	1,894.5		$	105.0	$	10,635.7
Segment revenues — 2019																		$	1,659.1		$	1,239.5		$	480.1		$	6.0	$	3,384.7



	Nine Months Ended December
(In millions)	Outdoor			Active			Work			Other^(a)			Total
Segment revenues — 2018	$	3,647.7		$	3,579.5		$	1,346.8		$	10.2		$	8,584.2
Organic	195.6			439.0			22.9			24.2			681.7
Acquisition	11.8			—			—			—			11.8
Dispositions	—			(71.3		)	(25.0		)	—			(96.3		)
Impact of foreign currency	(59.4		)	(62.0		)	(6.5		)	(4.0		)	(131.9		)
Segment revenues — 2019	$	3,795.7		$	3,885.2		$	1,338.2		$	30.4		$	9,049.5

Segment Profit:


	Three Months Ended December																		Three Months Ended December
(In millions)	Outdoor			Active			Work			Jeans			Other			Total			Outdoor			Active			Work			Other^(a)			Total
Segment profit — 2017	$	275.5		$	198.9		$	57.5		$	93.2		$	0.2		$	625.3
Segment profit — 2018																			$	338.0		$	272.9		$	56.2		$	0.5		$	667.6
Organic	62.3			75.1			5.9			(27.5		)	(0.4		)	115.4			12.7			14.4			(1.7		)	(5.5		)	19.9
Acquisitions	3.8			—			—			—			—			3.8
Dispositions	—			2.4			(0.7		)	—			—			1.7			—			0.9			0.2			—			1.1
Impact of foreign currency	(3.6		)	(3.5		)	(0.2		)	2.1			—			(5.2		)	(1.7		)	(1.7		)	(0.1		)	2.1			(1.4		)
Segment profit — 2018	$	338.0		$	272.9		$	62.5		$	67.8		$	(0.2	)	$	741.0

	Nine Months Ended December
(In millions)	Outdoor			Active			Work			Jeans			Other			Total
Segment profit — 2017	$	464.1		$	656.6		$	125.9		$	292.0		$	(0.9	)	$	1,537.7
Organic	42.9			232.7			11.0			(41.6		)	3.5			248.5
Acquisitions	14.7			—			39.7			—			—			54.4
Dispositions	—			2.4			(0.7		)	—			—			1.7
Impact of foreign currency	(9.1		)	1.4			(0.2		)	2.1			—			(5.8		)
Segment profit — 2018	$	512.6		$	893.1		$	175.7		$	252.5		$	2.6		$	1,836.5
Segment profit — 2019																			$	349.0		$	286.5		$	54.6		$	(2.9	)	$	687.2

3935 VF Corporation Q3 ~~FY19~~FY20 Form 10-Q



	Nine Months Ended December
(In millions)	Outdoor			Active			Work			Other^(a)			Total
Segment profit — 2018	$	512.6		$	893.1		$	156.4		$	3.5		$	1,565.6
Organic	19.3			111.9			(14.1		)	(8.2		)	108.9
Acquisition	(0.2		)	—			—			—			(0.2		)
Dispositions	—			(6.6		)	(0.9		)	—			(7.5		)
Impact of foreign currency	(6.6		)	(16.2		)	(0.6		)	2.7			(20.7		)
Segment profit — 2019	$	525.1		$	982.2		$	140.8		$	(2.0	)	$	1,646.1

^(a)

Included in the Other category for the three and nine months ended December 2019 are results primarily related to the sale of non-VF products. The three and nine months ended December 2018 reflect results primarily from transition services related to the sale of the Nautica^®brand business. Differences in the results as compared to the prior year, other than the impact of foreign currency, are reflected within the "organic" activity.

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


	Three Months Ended December								Nine Months Ended December								Three Months Ended December								Nine Months Ended December

(Dollars in millions)	2018			2017			Percent Change		2018			2017			Percent Change		2019			2018			Percent Change		2019			2018			Percent Change
Segment revenues	$	1,612.6		$	1,456.7		10.7	%	$	3,647.7		$	3,373.9		8.1	%	$	1,659.1		$	1,612.6		2.9	%	$	3,795.7		$	3,647.7		4.1	%
Segment profit	338.0			275.5			22.7	%	512.6			464.1			10.5	%	349.0			338.0			3.3	%	525.1			512.6			2.4	%
Operating margin	21.0		%	18.9		%			14.1		%	13.8		%			21.0		%	21.0		%			13.8		%	14.1		%

The Outdoor segment includes the following brands: The North Face^®, Timberland^®(excluding Timberland PRO^®), ~~Smartwool~~Icebreaker^®, ~~Icebreaker~~Smartwool^® and Altra^®.

Global revenues for Outdoor increased ~~11%~~3% in the three months ended December ~~2018~~2019 compared to ~~2017,~~2018, including a 1% unfavorable impact due to foreign currency. Revenues in the Americas region increased ~~13%~~2%. Revenues in the Europe region increased 5%3%, including a 4%2% unfavorable impact from foreign currency. Revenues in the Asia-Pacific region increased ~~12%~~6%, with a 3% unfavorable impact from foreign currency. Included in these results are revenues from the Icebreaker acquisition of $47.7 million and revenues from the Altra acquisition of $9.9 million. Excluding revenues from Icebreaker and Altra, Outdoor revenues increased 7% in the three months ended December 2018, including a 1% unfavorable impact from foreign currency.

Global revenues for Outdoor increased 8%4% in the nine months ended December ~~2018~~2019 compared to the ~~2017~~2018 period, including a 1%2% unfavorable impact due to foreign currency. Revenues in the Americas region increased 6%, including a 1% unfavorable impact ~~due to~~from foreign currency. Revenues in the Europe region ~~increased 10%~~decreased 1%, including a 1%4% unfavorable impact from foreign currency. Revenues in the Asia-Pacific region increased ~~11%~~6%, ~~with~~including a 1%2% unfavorable impact from foreign currency. Included in these results are revenues from the Icebreaker acquisition of $127.1 million and revenues from the Altra acquisition of $30.9 million. Excluding revenues from Icebreaker and Altra, Outdoor revenues increased 3% in the nine months ended December 2018, including a 1% unfavorable impact from foreign currency.

Global revenues for The North Face^® brand increased ~~14% and 10%~~8% in both the three and nine months ended December ~~2018, respectively,~~2019 compared to the ~~2017~~2018 periods. This includes a 2%1% unfavorable impact from foreign currency in the ~~three~~nine months ended December ~~2018.~~2019. The increase in both periods was due to strong operational growth across all channels and regions, including strong wholesale performance and growth in the direct-to-consumer channel driven by an expanding e-commerce business and comparable store ~~growth and new store openings.~~growth.

Global revenues for the Timberland^®brand (excluding Timberland PRO^®) ~~remained flat~~decreased6% and ~~decreased 1%~~4% in the three and nine months ended December ~~2018,~~2019, respectively, compared to the ~~2017~~2018 periods. The decrease in the three months ended December 2019 reflects overall declines in the wholesale and direct-to-consumer channels and an overall 1% unfavorable impact from foreign currency, which were partially offset by e-commerce growth and increases in China. The decrease in the nine months ended December 2019 was primarily due to an overall decline in the wholesale channel and

an overall 2% unfavorable impact from foreign currency, which were partially offset by e-commerce growth and increases in China.

Global direct-to-consumer revenues for Outdoor increased 3% and 4% in the three and nine months ended December 2019, respectively, compared to the 2018 periods. This includes a 1% unfavorable impact from foreign currency in both the three and nine months ended December 2019. The increase in both periods was primarily due to a growing e-commerce business across all regions. Global wholesale revenues increased 2% and 4% in the three and nine months ended December 2019, respectively, compared to the 2018 periods, driven by global growth in The North Face^® brand in both periods. The changes included a 1% and a 2% unfavorable impact from foreign currency in the three and nine months ended December ~~2018,~~2019, respectively. ~~In the three months ended December 2018,~~

direct-to-consumer revenues increased 1%, including a 2% unfavorable impact from foreign currency, driven by comparable store growth in the Americas region and e-commerce growth across all regions. Global wholesale revenues decreased 1% in the three months ended December 2018 as operational growth in the Americas region was more than offset by declines in the Asia-Pacific and Europe regions and a 2% unfavorable impact from foreign currency. In the nine months ended December 2018, revenues across the direct-to-consumer and wholesale channels decreased 1%, including a 1% unfavorable impact from foreign currency. Declines in the direct-to-consumer channel across the Europe and Asia-Pacific regions were partially offset by comparable store growth in the Americas region and e-commerce growth across all regions.

Global direct-to-consumer revenues for Outdoor increased 7% in both the three and nine months ended December 2018 compared to the 2017 periods. This includes a 2% unfavorable impact from foreign currency in the three months ended December 2018. Excluding revenues from acquisitions, global direct-to-consumer revenues increased 4% and 3% in the three and nine months ended December 2018, respectively, including a 2% unfavorable impact from foreign currency in the three months ended December 2018. The increase was primarily due to a growing e-commerce business across all regions. Wholesale revenues increased 14% and 9% in the three and nine months ended December 2018, respectively, compared to the 2017 periods, driven by global growth in ~~The North Face~~^® brand in both periods and included a 2% and 1% unfavorable impact from foreign currency in the three and nine months ended December 2018, respectively. Excluding revenues from acquisitions, wholesale revenues increased 9% and 4% in the three and nine months ended December 2018, respectively, compared to the 2017 periods, including a 2% unfavorable impact from foreign currency in the three months ended December 2018. The increase in both periods was driven by growth across all regions.

Operating margin ~~increased 210~~was flat and decreased 30 basis points in the three and nine months ended December ~~2018,~~2019, respectively, compared to the ~~2017 periods primarily due to~~2018 periods. In the three months ended December 2019, increased pricing, leverage of operating expenses on higher ~~revenues. This~~revenues, a mix-shift to higher margin businesses and a favorable net foreign currency transaction impact were offset by relocation costs, higher product costs and increased investments in product innovation, demand creation and technology. The decrease in the nine months ended December 2019 was due to relocation costs, higher product costs and increased investments in product innovation, demand creation and technology. The decline was partially offset by ~~costs~~leverage of operating expenses on higher revenues, increased pricing, a mix-shift to higher margin businesses and a favorable net foreign currency transaction impact. The decrease in the nine months ended December 2019 was also partially offset by a gain of approximately $11 million on the sale of office real estate and related toassets in connection with the relocation of VF's global headquarters and certain brands to Denver, ~~Colorado.~~Colorado during the first quarter.

VF Corporation Q3 ~~FY19~~FY20 Form 10-Q 4036

Active


	Three Months Ended December								Nine Months Ended December								Three Months Ended December								Nine Months Ended December

(Dollars in millions)	2018			2017			Percent Change		2018			2017			Percent Change		2019			2018			Percent Change		2019			2018			Percent Change
Segment revenues	$	1,142.6		$	984.0		16.1	%	$	3,579.5		$	2,982.9		20.0	%	$	1,239.5		$	1,142.6		8.5	%	$	3,885.2		$	3,579.5		8.5	%
Segment profit	272.9			198.9			37.2	%	893.1			656.6			36.0	%	286.5			272.9			5.0	%	982.2			893.1			10.0	%
Operating margin	23.9		%	20.2		%			25.0		%	22.0		%			23.1		%	23.9		%			25.3		%	25.0		%

The Active segment includes the following brands: Vans^®, Kipling^®, Napapijri^®, ~~JanSport~~Eastpak^®,JanSport^®, Reef^®(through the date of sale)~~, Eastpak~~ and Eagle Creek^® ~~and~~ ~~Eagle Creek~~^®.

Global revenues for Active increased ~~16%~~8% in the three months ended December ~~2018,~~2019, compared to the ~~2017~~2018 period, driven by growth across all channels and ~~regions, including a 2% unfavorable impact from foreign currency.~~regions. The ~~direct-to-consumer growth was driven by strong e-commerce and comparable store growth and new store openings. Revenues in the Americas region increased 21%, including~~overall increase includes a 1% unfavorable impact from foreign currency. Revenues in the Americas region increased 8%. Revenues in the Europe region increased 2%5%, including a 3% unfavorable impact from foreign currency. Revenues in the Asia-Pacific region increased ~~21%~~17%, with a 4%2% unfavorable impact from foreign currency. The three months ended December 2019 were negatively impacted by the sale of the Reef^® brand business in October 2018, which resulted in lower revenues of $3.1 million. Excluding the impact of the disposition, revenues in the three months ended December 2019 increased 9% compared to the 2018 period, including a 1% unfavorable impact from foreign currency.

Global revenues for Active increased ~~20%~~9% in the nine months ended December ~~2018,~~2019, compared to the ~~2017~~2018 period, driven by growth across all channels and regions. The ~~direct-to-consumer growth was driven by strong e-commerce and comparable store growth and new store openings. Revenues in the Americas region increased 25%, with~~overall increase includes a 1% unfavorable impact from foreign currency. Revenues in the Americas region increased 9%. Revenues in the Europe region increased ~~10%~~2%, including a ~~1% favorable~~5% unfavorable impact from foreign currency. Revenues in the Asia-Pacific region increased ~~20%.~~

~~Vans~~19%, with a 4% unfavorable impact from foreign currency. The nine months ended December 2019 were negatively impacted by the sale of the Reef^® brand business in October 2018, which resulted in lower revenues of $71.3 million. Excluding the impact of the disposition, revenues in the nine months ended December 2019 increased 11% compared to the 2018 period, including a 2% unfavorable impact from foreign currency.

Vans^® brand global revenues increased ~~25%~~12% and ~~28%~~15% in the three and nine months ended December ~~2018,~~2019, respectively, compared to the ~~2017 periods, including~~2018 periods. These include a 2%1% and 1% 2%unfavorable impact from

foreign currency in the three and nine months ended December ~~2018,~~2019, respectively. The increase in both periods was due to strong operational growth across all channels and regions, including strong wholesale performance and direct-to-consumer growth driven by an expanding e-commerce business, comparable store growth and new store openings.

Global direct-to-consumer revenues for Active grew ~~20%~~10% and ~~24%~~14% in the three and nine months ended December ~~2018,~~2019, respectively, compared to the ~~2017~~2018 periods, including a 1% unfavorable impact from foreign currency in ~~both periods.~~the nine months ended December 2019. Growth in the direct-to-consumer channel ~~for both periods~~ was driven by a growing e-commerce business, comparable store growth and new store openings. Wholesale revenues increased ~~12%~~7% and ~~16%~~4% in the three and nine months ended December ~~2018,~~2019, respectively, driven by global growth in the Vans^® brand in both periods, and included a 1% and a 2%unfavorable impact from foreign currency in the three and nine months ended December ~~2018.~~2019, respectively. Excluding the impact of the Reef^® brand disposition, wholesale revenues increased 7% in both the three and nine months ended December 2019, compared to the 2018 periods. These include a 2% and a 3% unfavorable impact from foreign currency in the three and nine months ended December 2019, respectively.

Operating margin decreased 80 and increased ~~370 and 300~~30 basis points in the three and nine months ended December ~~2018,~~2019, respectively, compared to the ~~2017 periods, reflecting~~2018 periods. The decrease in the three months ended December 2019 reflects increased investments in direct-to-consumer and demand creation, partially offset by leverage of operating expenses on higher revenues, a mix-shift to higher margin businesses and a favorable net foreign currency transaction impact. The increase in the nine months ended December 2019 reflects gross margin expansion driven by a mix-shift to higher margin businesses and products, ~~and~~ leverage of operating expenses on higher ~~revenues.~~revenues and a favorable net foreign currency transaction impact, partially offset by increased investments in direct-to-consumer and demand creation.

4137 VF Corporation Q3 ~~FY19~~FY20 Form 10-Q

Work


	Three Months Ended December								Nine Months Ended December								Three Months Ended December								Nine Months Ended December

(Dollars in millions)	2018			2017			Percent Change		2018			2017			Percent Change		2019			2018			Percent Change		2019			2018			Percent Change
Segment revenues	$	493.6		$	482.8		2.2	%	$	1,409.0		$	899.7		56.6	%	$	480.1		$	471.9		1.7	%	$	1,338.2		$	1,346.8		(0.6	)%
Segment profit	62.5			57.5			8.7	%	175.7			125.9			39.5	%	54.6			56.2			(2.9	)%	140.8			156.4			(10.0	)%
Operating margin	12.7		%	11.9		%			12.5		%	14.0		%			11.4		%	11.9		%			10.5		%	11.6		%

The Work segment ~~consists of occupational apparel and uniform product categories including the~~ ~~Bulwark~~^®~~, RedKap~~^®~~, Timberland PRO~~^®~~, Wrangler~~^® ~~RIGGS~~ ~~and~~ ~~Horace Small~~^® ~~brand industrial businesses, as well as the workwear apparel brands from the Williamson-Dickie acquisition including~~ ~~Dickies~~^®, ~~Workrite~~^®, ~~Walls~~^®, ~~Terra~~^® ~~and~~ ~~Kodiak~~^®~~. The Work segment also~~ includes the ~~results of certain transition services related to the sale of the Licensed Sports Group (the "LSG transition services") that commenced in the second quarter of 2017.~~following brands: Dickies^®, RedKap^®, Bulwark^®,Timberland PRO^®, VF Solutions^®, Walls^®, Terra^®, Workrite^®, Kodiak^®and Horace Small^®.

Global Work revenues increased 2% ~~and 57%~~ in the ~~three and nine months ended December 2018, respectively, compared to the 2017 periods. The~~ three months ended December ~~2018 included a 1% unfavorable impact from foreign currency. Included in~~2019, compared to the ~~results for the nine months ended December~~ 2018 ~~were revenues from the Williamson-Dickie acquisition of $471.9 million through the one-year anniversary of the acquisition which, if excluded, resulted in a 4% increase in Work revenues during the~~ period. The revenue increase ~~in both periods~~ was primarily due to growth in the ~~Timberland PRO~~Dickies^®~~, Wrangler~~^® ~~RIGGS, Bulwark~~^® brand and~~Red Kap~~^®,~~brands,~~ an overall increase in the direct-to-consumer channel driven by e-commerce growth, which was partially offset by ~~a decline in LSG transition services revenues. Revenues~~declines in the ~~three months ended December 2018 also increased due to growth~~RedKap^®and Bulwark^®brands.

Global Work revenues decreased 1% in the~~Dickies~~^® ~~brand. The three and~~ nine months ended December 2019, including a 1% unfavorable impact from foreign currency, compared to the 2018 period. The nine months ended December 2019 were ~~also~~ negatively impacted by the sale of the Van Moer business in October 2018, which resulted

in lower revenues of ~~$10.9~~$25.0 million. Excluding the impact of ~~acquisitions~~the disposition, revenues in the nine months ended December 2019 increased 1%, compared to the 2018 period, including a 1% unfavorable impact from foreign currency. The revenue increase was due to growth in the Dickies^®, Timberland PRO^® and ~~divestitures,~~VF Solutions^®brands and an overall increase in the direct-to-consumer channel driven by e-commerce growth. The increase was partially offset by declines in the RedKap^®and Bulwark^®brands.

Dickies^® brand global revenues increased 13% and 3% in the three and nine months ended December ~~2018 increased 5%,~~2019, respectively, compared to the ~~2017 periods.~~2018 periods, including a 1% unfavorable impact from foreign currency in the nine months ended December 2019. The increase in the three months ended December 2019 was primarily due to

growth in the Asia-Pacific region, specifically in China, and the Americas region and reflects strong performance in the wholesale and direct-to-consumer channels. The increase in the nine months ended December 2019 was primarily due to growth in the Asia-Pacific region, specifically in China, and reflects increases in the wholesale and direct-to-consumer channels.

Operating margin ~~increased 80 basis points~~decreased 50 and ~~decreased 150~~110 basis points in the three and nine months ended December 2018 compared to the 2017 period. Excluding amounts related to the acquisition, integration and operating results of Williamson-Dickie through the one-year anniversary of the acquisition, operating margin increased 50 basis points in the nine months ended December 2018. The increase in both periods reflected gross margin expansion driven by a mix-shift to higher margin businesses and pricing, partially offset by higher product costs.

~~Jeans~~

Three Months Ended December Nine Months Ended December

(Dollars in millions) 2018 2017 Percent
Change 2018 2017 Percent
Change
Segment revenues $ 657.9
$ 692.5
(5.0 )% $ 1,894.5
$ 1,963.3
(3.5 )%
Segment profit 67.8
93.2
(27.2 )% 252.5
292.0
(13.5 )%
Operating margin 10.3 % 13.5 % 13.3 % 14.9 %

~~The Jeans segment consists of the global jeans businesses, led by the~~ ~~Wrangler~~^®~~(excluding~~ ~~Wrangler~~^®~~RIGGS) and~~ ~~Lee~~^® ~~brands.~~

~~Global Jeans revenues decreased 5% and 4% in the three and nine months ended December 2018,~~2019, respectively, compared to the ~~2017~~2018 periods. The decrease in both periods ~~was driven by~~reflects certain higher product costs, increased investments in direct-to-consumer and demand creation and declines in the wholesale channel and a 2% unfavorable impact from foreign currency. Revenues in the Americas region decreased 6% and 3% in the three and nine months ended December 2018, respectively, driven by declines in the wholesale channel and a 2% and 1% unfavorable impact from foreign currency in the three and nine months ended December 2018, respectively. The wholesale channel revenues in both periodsoccupational work businesses. These decreases were negatively impacted by a U.S. customer bankruptcy. Revenues in the Asia-Pacific region increased 2% and decreased 1% in the three and nine months ended December 2018, respectively, including a 6% and 2% unfavorable impact from foreign currency in the respective periods. The increase in the three months ended December 2018 was primarily due to growth in both the wholesale and direct-to-consumer channels. The decrease in the nine months ended December 2018 was primarily due to declines in the wholesale channel. Revenues in the Europe region decreased 6% in both the three and nine months ended December 2018 due to declines in the wholesale and direct-to-consumer channels. The three months ended December 2018 included a 4% unfavorable impact from foreign currency.

~~Global revenues for the~~ ~~Wrangler~~^® ~~brand (excluding~~ ~~Wrangler~~^®~~RIGGS~~) decreased 3% and 2% in the three and nine months ended December 2018, respectively, primarily due to declines in the wholesale channel in both periods. The three and nine months ended December 2018 included a 2% and 1% unfavorable impact from foreign currencies, respectively. Global revenues for the ~~Lee~~^® brand decreased 9% and 6% in the three and nine months ended December 2018, respectively, primarily due to declines in the wholesale channel in both periods. The three and nine months ended December 2018 included a 2% and 1% unfavorable impact from foreign currencies, respectively. The wholesale channel revenues of both brands for both periods were negatively impacted by a U.S. customer bankruptcy.

Operating margin decreased 320 and 160 basis points in the three and nine months ended December 2018, respectively, compared to the 2017 periods. The decrease in both periods was primarily due to higher product costs, business mix, expenses related to the separation of businesses and lower leverage of operating expenses due to decreased revenues, partially offset by increased ~~pricing.~~

~~VF Corporation Q3 FY19 Form 10-Q~~ 42

~~Other~~

Three Months Ended December Nine Months Ended December

(Dollars in millions) 2018 2017 Percent
Change 2018 2017 Percent
Change
Segment revenues $ 33.5
$ 33.3
0.7 % $ 105.0
$ 91.0
15.4 %
Segment profit (loss) (0.2 ) 0.2
*
2.6
(0.9 ) *
Operating margin (0.5 )% 0.6 %
2.4 % (1.0 )%

*Calculation not meaningful

~~VF Outlet~~^® ~~stores in~~pricing and lower transaction and deal-related costs from the ~~U.S. sell both VF and non-VF products. Revenues and profits of VF products sold in these stores are reported as part~~acquisition of the ~~operating results~~Williamson-Dickie business.

On January 21, 2020, VF announced that it is considering the divestiture of the ~~applicable segment, while revenues and profits~~occupational portion of ~~non-VF products are reported in this “other” category. Also included in this category are results from transition services related to the sales~~its Work segment. The occupational portion of the ~~Nautica~~Work segment is comprised primarily of the following brands and businesses: Red Kap^®, VF Solutions^®, Bulwark^®, Workrite^®, Walls^®, Terra^®, Kodiak^®, Work Authority^®and ~~Reef~~Horace Small^®. Revenues associated with these brands ~~that commenced in~~and businesses represent approximately 50% of the ~~three months ended June 2018 and December 2018, respectively.~~total Work segment.

Reconciliation of Segment Profit to Income Before Income Taxes

There are two types of costs necessary to reconcile total segment profit, as discussed in the preceding paragraphs, to consolidated income from continuing operations before income taxes. These costs are (i) corporate and other expenses, discussed below, and (ii) interest expense, net, which was discussed in the “Consolidated Statements of Income” section.


	Three Months Ended December						Nine Months Ended December						Three Months Ended December						Nine Months Ended December

(Dollars in millions)	2018		2017		Percent Change		2018		2017		Percent Change		2019		2018		Percent Change		2019		2018		Percent Change
Corporate and other expenses	$	150.9	$	142.6	5.8	%	$	411.5	$	324.9	26.6	%	$	130.6	$	147.8	(11.6	)%	$	373.3	$	439.2	(15.0	)%
Interest expense, net	23.8		22.5		5.8	%	73.2		65.7		11.5	%	16.8		25.2		(33.3	)%	47.6		76.9		(38.0	)%

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. ~~Corporate~~The decrease in the three and ~~other expenses included the estimated loss~~nine months ended December 2019 was driven by losses on sale ~~of the~~ ~~Reef~~^® ~~brand business~~ of $4.5 million and $14.4 million, respectively, related to the divestiture of the Reef^® brand that were recorded in the three and nine months ended December 2018, ~~respectively. The nine months ended December 2018 also included~~and a ~~loss on sale of~~ $22.4 million loss related to the divestiture of the Van

Moer ~~business.~~business that was recorded in the nine months ended December 2018. The ~~increase~~decrease in both periods was also attributed to corporate overhead and other costs previously allocated to the former Jeans segment that have been reallocated

to "Corporate and other expenses" in the three and nine-month periods ended December 2018. Certain of these costs in the three and nine-month periods ended December 2019 have been offset by reimbursements from Kontoor Brands related to transition services. The decrease in the three and nine months ended December 2019 was also due to ~~higher compensation~~lower charitable contributions compared to the 2018 periods. The decrease was also attributed to lower transaction and deal related costs in the three and ~~investments in our key strategic initiatives, including expenses~~nine months ended December 2019 compared to the 2018 periods. The decrease was partially offset by increased costs related to the ~~acquisition, integration~~relocation of our global headquarters and ~~separation of businesses. Certain corporate overhead costs previously allocated~~certain brands to Denver, Colorado and higher pension settlement charges in ~~2017 to~~ the ~~former Sportswear~~three and ~~Outdoor & Action Sports segments for segment reporting purposes have been reallocated to continuing operations as discussed in Note 5 to the consolidated financial statements.~~nine months ended December 2019.

VF Corporation Q3 FY20 Form 10-Q 38

International Operations

International revenues increased 8% and 5% in the three and nine months ended December 2019, respectively, compared to the 2018 periods. Foreign currency negatively impacted international revenue growth by 1% and 3% in the three and nine months ended December 2019, respectively. Revenues in Europe increased 4% and remained flat in the three and nine months ended December 2019, respectively, including a 2% and a 4% unfavorable impact from foreign currency in the three and nine months ended December 2019, respectively. In the Asia-Pacific region, revenues increased 14% and 13% in the three and nine months ended December 2018, respectively, compared to the 2017 periods. Foreign currency negatively impacted international revenue growth by 4% and 2% in the three and nine months ended December 2018, respectively. Revenues in Europe increased 2% and 11% in the three and nine months ended December 2018, respectively, reflecting operational growth in both periods. Foreign currency negatively impacted revenues in Europe by 3% in the three months ended December 2018. In the Asia-Pacific region, revenues increased 14% and 18% in the three and nine months ended December 2018,2019, respectively, driven by growth in China. Foreign currency negatively impacted revenues in the Asia-Pacific region

by 1% and 3% in the three and nine months ended December ~~2018.~~2019,

respectively. Revenues in the Americas (non-U.S.) region increased 3%9% in both the three and ~~14%~~nine months ended December 2019, including a 2% unfavorable impact from foreign currencies in the nine months ended December 2019. Excluding the impact of dispositions, international revenues increased 8% and 6% in the three and nine months ended December ~~2018,~~2019, respectively, ~~reflecting operational growth, partially offset by an 8%~~including a 2% and 7%a 4% unfavorable impact from foreign ~~currencies~~currency in the three and nine months ended December ~~2018, respectively. International revenue growth in the three and nine months ended December 2018 included a 2 percent and 7 percent contribution from acquisitions,~~2019, respectively. International revenues were ~~38%~~42% and ~~39%~~41% of total revenues in the three-month periods ended December ~~2018~~2019 and ~~2017,~~2018, respectively, and ~~40%~~43% and ~~41%~~44% of total revenues in the nine-month periods ended December 2019 and 2018, ~~and 2017,~~ respectively.

Direct-to-Consumer Operations

Direct-to-consumer revenues ~~grew~~increased 7% and 10% ~~and 16%~~ in the three and nine months ended December ~~2018,~~2019, respectively, reflecting growth in all regions. Foreign currency negatively impacted direct-to-consumer revenue growth by 2%1% in the ~~three~~nine months ended December ~~2018.~~2019. The increase in direct-to-consumer revenues for both periods was due to an expanding e-commerce business, which grew 16% and 17% in the three and nine months ended December 2019, respectively. The e-commerce growth includes a 1% and a 2% unfavorable impact from foreign currency in the three and nine months ended December 2019, respectively. The increase in direct-

to-consumer revenues for both periods was also due to comparable store growth for locations

open at least twelve months at each reporting date, and ~~an expanding e-commerce business, which grew~~ 24% and 36% in the three and nine months ended December 2018, respectively. The e-commerce growth includes a 2% unfavorable impact from foreign currency in the three months ended December 2018. Acquisitions contributed 1 percent and 4 percent to the direct-to-consumer

43 ~~VF Corporation Q3 FY19 Form 10-Q~~

~~revenue growth and 3 percent and 10 percent to the e-commerce revenue growth in the three and nine months ended December 2018, respectively.~~new store openings. There were ~~1,552~~1,438 VF-owned retail stores at December ~~2018, including 34 Icebreaker and Altra stores~~2019 compared to ~~1,518~~1,420 at December ~~2017. Direct-to-consumer~~

~~revenues were 40% of total revenues for the three-month period ended December 2018 compared to 39% in the 2017 period.~~2018. Direct-to-consumer revenues were ~~33%~~ 46% and 45%of total revenues in ~~both~~the three-month periods ended December 2019 and 2018, respectively. Direct-to-consumer revenues were 39% and 37% of total revenues in the nine-month periods ended December 2019 and 2018, ~~and 2017.~~respectively.

39 VF Corporation Q3 FY20 Form 10-Q

ANALYSIS OF FINANCIAL CONDITION

Consolidated Balance Sheets

The following discussion refers to significant changes in balances at December ~~2018~~2019 compared to March ~~2018:~~2019:

~~Increase in accounts receivable~~ ~~— primarily due to the reclassification of certain allowances to accrued liabilities due to the adoption of Financial Accounting Standards Board Accounting Standards Codification Topic 606,~~ ~~Revenue from Contracts with Customers~~ ~~("ASC 606"), higher wholesale shipments and the timing of cash collections.~~

~~Increase in other current assets~~ ~~— primarily due to the reclassification of the right of return asset from inventories due to the adoption of ASC 606 and an increase in derivative assets.~~

~~Decrease in short-term borrowings~~ ~~— due to net repayment of commercial paper borrowings.~~

~~Increase in accounts payable~~ ~~— driven by the timing of inventory purchases and payments to vendors.~~

~~Increase in accrued liabilities~~ — primarily due to the reclassification of certain allowances from accounts receivable due to the adoption of ASC 606 and higher accrued compensation, partially offset by a decrease in derivative liabilities and accrued income taxes.


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


•	Increase in inventories — primarily due to the seasonality of the business, including mixed results during the 2019 holiday season, primarily impacting the Americas region, and higher inventory levels in the occupational work businesses.


•	Decrease in other current assets — due to lower prepaid expenses and a decrease in derivative assets.


•	Increase in operating lease right-of-use assets — due to amounts recorded in connection with the adoption of Financial Accounting Standards Board Accounting Standards Codification Topic 842, Leases ("ASC 842").


•	Increase in other assets — primarily due to an increase in deferred tax assets due to the enactment of certain provisions of the Swiss Tax Act.


•	Decrease in short-term borrowings — due to net repayment of commercial paper borrowings including the use of funds provided by the cash received from Kontoor Brands.


•	Decrease in accounts payable — due to the timing of payments to vendors.


•	Increase in accrued liabilities — primarily due to amounts recorded for operating lease liabilities in connection with the adoption of ASC 842.


•	Increase in operating lease liabilities — due to amounts recorded for operating lease liabilities in connection with the adoption of ASC 842.


•	Decrease in other liabilities — primarily due to the reclassification of deferred rent credits from other liabilities to operating lease right-of-use assets in connection with the adoption of ASC 842.

The following discussion refers to significant changes in balances at December ~~2018~~2019 compared to December ~~2017:~~2018:

~~Increase in accounts receivable~~ ~~— primarily due to the reclassification of certain allowances to accrued liabilities due to the adoption of ASC 606, higher wholesale shipments and the timing of cash collections.~~

~~Increase in inventories~~ — driven by organic growth in the business and additional inventory related to the Icebreaker and Altra acquisitions, partially offset by the reclassification of the right of return asset to other current assets due to the adoption of ASC 606.

~~Increase in other current assets~~ ~~— primarily due to the reclassification of the right of return asset from inventories due to the adoption of ASC 606, an increase in derivative assets and higher levels of prepaid expenses.~~

~~Decrease in short-term borrowings~~ ~~— due to net repayment of commercial paper borrowings.~~

~~Decrease in accounts payable~~ ~~— driven by the timing of inventory purchases and payments to vendors.~~


•	Increase in inventories — driven by growth in the business, higher inventory levels in the occupational work businesses and mixed results during the 2019 holiday season, primarily impacting the Americas region.


•	Increase in operating lease right-of-use assets — due to amounts recorded in connection with the adoption of ASC 842.


•	Increasein other assets — primarily due to an increase in deferred tax assets due to the enactment of certain provisions of the Swiss Tax Act.


•	Decreasein short-term borrowings — due to net repayment of commercial paper borrowings including the use of funds provided by the cash received from Kontoor Brands.


•	Decrease in accounts payable — driven by the timing of payments to vendors.


•	Increase in accrued liabilities — primarily due to amounts recorded for the current portion of operating lease liabilities in connection with the adoption of ASC 842.


•	Increase in operating lease liabilities — due to amounts recorded for operating lease liabilities in connection with the adoption of ASC 842.


•	Decrease in other liabilities — primarily due to the reclassification of deferred rent credits from other liabilities to operating lease right-of-use assets in connection with the adoption of ASC 842.

Liquidity and Capital Resources

The financial condition of VF is reflected in the following:


	December	March	December	December	March	December
(Dollars in millions)	2018	2018	2017	2019	2019	2018
Working capital	$2,049.0	$1,256.9	$1,354.0	$2,193.6	$1,377.3	$1,479.6
Current ratio	1.8 to 1	1.4 to 1	1.5 to 1	2.1 to 1	1.6 to 1	1.6 to 1
Debt to total capital	39.6%	50.4%	44.0%	43.6%	39.3%	39.6%

The increase in the current ratio at December ~~2018~~2019 compared to both March 2019 and December 2018 was primarily due to a net decrease in current liabilities driven by lower short-term borrowings and a net increase in current assets driven by higher inventory balances, as discussed in the "Consolidated Balance Sheets" section above and higher cash balances due to cash received from Kontoor Brands, as discussed in the "Cash Used by Financing Activities" section below. The increase in the current ratio at December 2019 compared to March 2019 was also due to higher accounts receivable balances, as discussed in the "Consolidated Balance Sheets" section above. ~~The increase~~Both comparisons were negatively impacted by the recording of the current portion

of operating lease liabilities in accrued liabilities in the ~~current ratio at~~ December ~~2018 compared to December 2017 was primarily due to a net increase~~2019 period in ~~current assets driven by higher accounts receivable and inventories balances, as discussed in~~connection with the ~~"Consolidated Balance Sheets" section above.~~adoption of ASC 842.

For the ratio of debt to total capital, debt is defined as short-term and long-term borrowings, ~~and total~~in addition to operating lease liabilities, beginning in the Fiscal 2020 periods. Total capital is defined as debt plus stockholders’ equity. The ~~decrease~~increase in the debt to total capital ratio at December ~~2018~~2019 compared to both March ~~2018~~2019 and December ~~2017~~2018 was attributed to the increase in operating lease liabilities, partially offset by the decrease in short-term borrowing, as discussed in the "Consolidated Balance Sheets" section above, and increases in stockholders' equity ~~which was~~in both periods. The increase

VF Corporation Q3 FY20 Form 10-Q 40

in stockholders' equity in both periods was driven by net income and stock-based compensation activity, partially offset by payments of dividends and purchases of treasury stock. ~~The decrease in~~Excluding the operating lease liabilities, the debt to total capital ratio atwas 32.2% as of December ~~2018 compared to March 2018 was also due to the decrease in short-term borrowings, as discussed in the "Consolidated Balance Sheets" section above.~~2019.

VF’s primary source of liquidity is the strong 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 Corporation Q3 FY19 Form 10-Q~~ 44

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


	Nine Months Ended September						Nine Months Ended December

(In thousands)	2018			2017			2019			2018
Cash provided by operating activities	$	1,436,663		$	1,684,822		$	828,413		$	1,111,726
Cash used by investing activities	(148,546		)	(707,914		)	(171,629		)	(129,095		)
Cash used by financing activities	(1,437,727		)	(1,016,528		)	(622,122		)	(1,437,727		)

The cash flows related to discontinued operations and held-for-sale assets and liabilities have not been segregated, and remain included in the major classes of assets and liabilities within the Consolidated Statements of Cash Flows. Accordingly, the information in the table above and cash flow discussion below include the results of continuing and discontinued operations.

Cash Provided by Operating Activities

Cash flow related to operating activities is dependent on net income, adjustments to net income and changes in working capital. The decrease in cash provided by operating activities in the nine months ended December ~~2018~~2019 compared to December ~~2017~~2018 is primarily due to an increase in net cash usage for working capital, partially offset by higher net income in the nine months ended December ~~2018.~~2019. The increase in net cash usage for working capital includes timing differences related to VF's annual bonus payouts and timing of payments for transaction and deal-related costs, relocation and other strategic business decisions.

Cash Used by Investing Activities

The ~~decrease~~increase in cash used by investing activities in the nine months ended December ~~2018~~2019 related primarily to $430.3 million of proceeds from the sale of businesses, net of cash sold in the nine months ended December 2018, partially offset by $320.4 million of net cash paid for acquisitions in the nine months ended December 2018 ~~compared with $740.5~~and $63.7 million ~~of net cash paid for acquisitions during the same period in 2017. Investing activities also included $430.3 million of proceeds received~~ from the sale of ~~businesses~~office real estate and related assets in connection with the relocation of VF's global headquarters and certain brands to Denver, Colorado in the nine months ended December ~~2018, which is $215.3 million higher than the proceeds received from the sale of businesses during the same period in 2017.~~2019. Capital expenditures increased ~~$66.6~~$6.0 million compared to the ~~2017~~2018 period.

Cash Used by Financing Activities

The ~~increase~~decrease in cash used by financing activities during the nine months ended December ~~2018~~2019 was primarily due to $906.1 million of cash received from Kontoor Brands, net of cash transferred, and a ~~$1.3 billion net~~ decrease in cash ~~generated by~~used for short-term borrowings, ~~driven~~partially offset by ~~lower net borrowings~~a $349.3 million increase in treasury stock purchases during the nine months ended December ~~2018 compared to~~2019.

During the ~~same period~~nine months ended December 2019, VF purchased 5.8 million shares of its Common Stock in ~~2017, partially offset~~open market transactions at a total cost of $500.0 million (average price per share of $85.61) under the share repurchase program authorized by ~~a $611.4 million decrease in treasury stock purchases and a $248.7 million decrease in payments on long-term debt.~~

VF's Board of Directors. During the nine months ended December 2018, VF purchased 1.9 million shares of its Common Stock in open market transactions at a total cost of $150.7 million (average price per share of $80.62) under the share repurchase program authorized by VF's Board of Directors in 2017. During the nine months ended December 2017, VF purchased 14.0 million shares of its Common Stock in open market transactions at a total cost of $762.1 million (average price per share of $54.46).

As of the end of December ~~2018,~~2019, the Company had ~~$3.8~~$3.3 billion remaining for future repurchases under its share repurchase program. From December 30, 2019 to February 3, 2020, the Company repurchased approximately 1.9 million shares of

Common Stock in open market transactions for $160.5 million (average price per share of $83.59). VF's current intent is to repurchase up to $500.0 million of Common Stock in open market transactions during the fourth quarter of Fiscal 2020. The repurchases are at the Company's discretion and are subject to change based on circumstances. VF will continue to evaluate its use of capital, giving first priority to business acquisitions and then to direct shareholder return in the form of dividends and share repurchases.

VF relies on continued strong cash generation to finance its ongoing operations. In addition, VF has significant liquidity from its available cash balances and credit facilities. ~~In December 2018,~~ VF ~~entered into~~maintains a $2.25 billion senior unsecured revolving line of credit (the “Global Credit Facility”) that expires December 2023. ~~The Global Credit Facility replaced VF's $2.25 billion revolving facility which was scheduled to expire in April 2020.~~ 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. The Global Credit Facility may be used to borrow funds in both U.S. dollar and certain non-U.S. dollar currencies, and has a $50.0 million letter of credit sublimit. In addition, the Global Credit Facility supports VF’s U.S. commercial paper program for short-term, seasonal working capital requirements and general corporate purposes, including share repurchases and acquisitions. Outstanding short-term balances may vary from period to period depending on the level of corporate requirements.

VF has a commercial paper program that allows for borrowings of up to $2.25 billion to the extent that it has borrowing capacity under the Global Credit Facility. Commercial paper borrowings and standby letters of credit issued as of December ~~2018~~2019 were ~~$670.0~~$40.0 million and ~~$15.3~~$14.8 million, respectively, leaving approximately ~~$1.6~~$2.2 billion available for borrowing against the Global Credit Facility at December ~~2018.~~2019.

VF has ~~$181.0~~$186.0 million of international lines of credit with various banks, which are uncommitted and may be terminated at any time by either VF or the banks. Total outstanding balances under these arrangements were ~~$7.9~~$16.0 million at December ~~2018.~~2019.

VF’s ~~favorable~~ credit agency ratings allow for access to additional liquidity at competitive rates. At the end of December ~~2018,~~2019, VF’s long-term debt ratings were ~~‘A’~~‘A’ by Standard & Poor’s Ratings Services and ~~‘A3’~~‘A3’ by Moody’s Investors Service, and commercial paper ratings by those rating agencies were ~~‘A-1’~~‘A-1’ and ~~‘Prime-2’~~‘Prime-2’, respectively.

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

41 VF Corporation Q3 FY20 Form 10-Q

However, if there were a change in control of VF and, as a result of the change in control, the 2021, 2023 and 2037 notes were rated below investment grade by recognized rating agencies, VF would be obligated to repurchase the notes at 101% of the aggregate principal amount, plus any accrued and unpaid interest.

On February 3, 2020, VF announced the commencement of cash tender offers for any and all of its $300.0 million aggregate principal amount of outstanding 6.00% notes due 2033 and $350.0 million aggregate principal amount of outstanding 6.45% notes due 2037. Additionally, VF issued a notice of redemption for its $500.0 million aggregate principal amount of outstanding 3.50% notes due 2021.

Management’s Discussion and Analysis in the ~~2017~~Fiscal 2019 Form 10-K provided a table summarizing VF’s contractual obligations and commercial commitments at the end of ~~2017~~Fiscal 2019 that would require the use of funds. As of December ~~2018,~~2019, there have been no material changes in the amounts disclosed in the ~~2017~~Fiscal 2019 Form 10-K, except as noted below:

Contractual obligations and commercial commitments at the end of Fiscal 2019 included approximately $349 million

of inventory obligations related to the Jeans business, which is now classified as discontinued operations.

Inventory purchase obligations ~~increased~~decreased by approximately ~~$230 million at~~ ~~December 2018~~ ~~due to increases in product demand, timing of purchases and the impact of acquisitions.~~

~~Future minimum lease payments increased by approximately $250~~$600 million at the end of December ~~2018~~,2019 primarily due to ~~new office leases.~~

45 ~~VF Corporation Q3 FY19 Form 10-Q~~

~~In addition,~~ the ~~Company entered into a 10-year power purchase agreement to procure electricity generated from renewable energy sources to meet a portion~~timing of the electricity needs for certain facilities in Mexico. The contract has a total purchase commitment of $44.4 million over the contract term and requires delivery of electricity to commence no later than March 2020.sourcing activities.


•	In addition to operating lease liabilities recorded in VF's Consolidated Balance Sheet, the Company has entered into approximately $295 million of leases that have not yet commenced, primarily related to certain distribution center facilities.

Management believes that VF’s cash balances and funds provided by operating activities, as well as its Global Credit Facility,

additional borrowing capacity and access to capital markets, taken as a whole, provide (i) adequate liquidity to meet all of its current and long-term obligations when due, (ii) adequate liquidity to fund capital expenditures and to maintain the planned dividend payout rate, and (iii) flexibility to meet investment opportunities, including acquisitions, that may arise.

Recent Accounting Pronouncements

Refer to Note 2 to VF’s consolidated financial statements for information on recently issued and adopted accounting ~~standards, including reclassifications made to 2017 amounts.~~standards.

Critical Accounting Policies and Estimates

Management has chosen accounting policies it considers to be appropriate to accurately and fairly report VF’s operating results and financial position in conformity with generally accepted accounting principles in the United States of America. Our critical accounting policies are applied in a consistent manner. Significant accounting policies are summarized in Note A1 to the consolidated financial statements included in the ~~2017~~Fiscal 2019 Form 10-K.

The application of these accounting policies requires management to 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, and may retain outside consultants to assist in the evaluation. If actual results ultimately differ from previous estimates, the revisions are included in results of operations in the period in which the actual amounts become known.

The accounting policies that involve the most significant estimates, assumptions and management judgments used in preparation of the consolidated financial statements, or are the most sensitive to change from outside factors, are discussed in Management’s Discussion and Analysis in the ~~2017~~Fiscal 2019 Form 10-K.

Except as it relates to VF's adoption of ASC 842 as disclosed in Note 2 and Note 310 to VF's consolidated financial statements, ~~pertaining to adoption of new accounting pronouncements,~~ there have been no material changes in VF's accounting policies.

The following discussion provides additional detail of critical accounting estimates during the nine months ended December 2019.

Timberland Reporting Unit and Indefinite-Lived Intangible Asset Impairment Analysis

During the three months ended September 28, 2019 ("September 2019"), management determined that the recent downturn in the historical financial results, combined with a downward revision to the forecast included in VF's updated strategic growth plan, was a triggering event that required management to perform a quantitative impairment analysis of both the Timberland reporting unit goodwill, which includes the Timberland^®brand, and the Timberlandindefinite-lived trademark intangible asset, which includes both the Timberland^®and Timberland PRO^®brands. Based on the analysis, management concluded both the goodwill and indefinite-lived intangible asset were not impaired. For goodwill, the estimated fair value of the reporting unit exceeded the carrying value by 27%. The estimated fair value of the indefinite-lived trademark intangible asset exceeded its carrying value by a significant amount. The carrying values of the goodwill and indefinite-lived trademark intangible asset at the August 24, 2019 testing date were $733.5 million and $1,010.1 million, respectively. The Timberland reporting unit is included in the Outdoor reportable segment.

The fair values of the Timberland reporting unit and indefinite-lived trademark intangible asset were 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 2019 Form 10-K.

Management's revenue and profitability forecasts used in the Timberland reporting unit and indefinite-lived trademark intangible asset valuations considered historical performance, strategic initiatives and industry trends. Assumptions used in the valuations were similar to those that would be used by market participants performing independent valuations of the business.

VF Corporation Q3 FY20 Form 10-Q 42

Key assumptions developed by management and used in the quantitative analysis of the Timberland reporting unit and indefinite-lived trademark intangible asset include:

Financial projections and future cash flows, including terminal growth rates based on the expected long-term growth rate of the brand;

Royalty rates based on market data as well as active license agreements of the brand; and,

Market-based discount rates.

The valuation model used by management in the impairment testing assumes recovery from the recent downturn in the brand's operating results and the return to growth rates and profitability more in-line with historical operating trends. If the brand is unable to achieve the financial projections, an impairment could occur in the future.

Management's estimates were based on information available as of the date of our assessment. 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 of the Timberland reporting unit goodwill or indefinite-lived trademark intangible asset could change in future periods. There can be no assurance the estimates and assumptions, particularly our long-term financial projections, used in our impairment testing during the three months ended September 2019 will prove to be accurate predictions of the future. For example, variations in our assumptions related to brand

performance and execution of planned growth strategies, discount rates, or comparable company market approach inputs could impact future conclusions. A future impairment charge of the Timberland reporting unit goodwill or indefinite-lived trademark intangible asset could have a material effect on VF's consolidated financial position and results of operations.

Management performed a sensitivity analysis on the impairment model used to test the Timberland reporting unit goodwill. In doing so, management determined that individual changes of a 100 basis point decrease in the compound annual growth rate for revenues, a 100 basis point decrease in the compound annual growth rate for earnings before interest, tax, depreciation and amortization ("EBITDA"), or a 100 basis point increase in the discount rate used in the discounted cash flow model did not cause the estimated fair value of the reporting unit to decline below its carrying value.

The Company owns a broad, diverse portfolio of other brands and businesses for which material amounts of goodwill and intangible assets have been recorded in the Consolidated Balance Sheets. Management continuously evaluates the current and future performance of VF's brands and businesses, as well as other relevant factors, in assessing the recoverability of these ~~policies.~~assets. There can be no assurances that the estimates and assumptions used in our long-term financial projections, among other factors, will prove to be accurate predictions of the future. As such, a future impairment charge of goodwill or intangible assets could occur, and if so, could have a material effect on VF's consolidated financial position and results of operations.

Cautionary Statement on Forward-looking Statements

From time to time, VF may make oral or written statements, including statements in this quarterly report that constitute “forward-looking statements” within the meaning of the federal securities laws. These include statements concerning plans, objectives, projections and expectations relating to VF’s operations or economic performance and assumptions related thereto. Forward-looking statements are made based on management’s expectations and beliefs concerning future events impacting VF and therefore involve a number of risks and uncertainties. Forward-looking statements are not guarantees, and actual results could differ materially from those expressed or implied in the forward-looking statements.

Potential risks and uncertainties that could cause the actual results of operations or financial condition of VF to differ materially from those expressed or implied by forward-looking statements in this release include, but are not limited to: risks associated with the ~~proposed~~ spin-off of our Jeanswear business completed on May 22, 2019, including the risk that ~~the spin-off~~VF will not be consummated within the anticipated time period or at all; the risk of disruption to our business in connection with the proposed spin-off and that we could lose revenue as a result of such disruption; the risk that the companies resulting from the spin-off do not realize all of the expected benefits of the spin-off; the risk that the spin-off will not be tax-free for U.S. federal income tax purposes; and the risk that there will be a loss of synergies from separating the businesses that could negatively impact the balance sheet, profit margins or earnings of ~~both businesses; and the risk that the combined value~~

~~of the common stock of the two publicly-traded companies will not be equal to or greater than the value of VF Corporation common stock had the spin-off not occurred.~~VF. There are also risks associated with the relocation of our global headquarters and a number of brands to the metro Denver area, including the risk of significant disruption to our operations, the temporary diversion of management resources and loss of key employees who have substantial experience and expertise in our business, the risk that we may encounter difficulties retaining employees who elect to transfer and attracting new talent in the Denver area to replace our employees who are unwilling to relocate, the risk that the relocation may involve significant additional costs to us and that the expected benefits of the move may not be fully realized. Other risks include foreign currency

fluctuations; the level of consumer demand for apparel, footwear and accessories; disruption to VF’s distribution system; ~~VF's reliance on a small number of large customers;~~ the financial strength of VF's customers; fluctuations in the price, availability and quality of raw materials and contracted products; disruption and volatility in the global capital and credit markets; VF's response to changing fashion trends, evolving consumer preferences and changing patterns of consumer behavior, intense competition from online retailers, manufacturing and product innovation; increasing pressure on margins; VF's ability to implement its business strategy; VF's ability to grow its international and direct-to-consumer businesses; VF’s and its vendors’ ability to maintain the strength and security of information technology systems; the risk that VF's facilities and systems and those of our third-party service providers may be vulnerable to and

~~VF Corporation Q3 FY19 Form 10-Q~~ 46

unable to anticipate or detect data security breaches and data or financial loss; VF's ability to properly collect, use, manage and secure consumer and employee data; stability of VF's manufacturing facilities and foreign suppliers; continued use by VF's suppliers of ethical business practices; VF’s ability to accurately forecast demand for products; continuity of members of VF’s management; VF's ability to protect trademarks and other intellectual property rights; possible goodwill and other asset impairment; maintenance by VF’s licensees and distributors of the value of VF’s brands; VF's ability to execute and integrate

acquisitions; changes in tax laws and liabilities; legal, regulatory, political and economic risks; the risk of economic uncertainty associated with the ~~pending~~ exit of the United Kingdom from the European Union ("Brexit") or any other similar referendums that may be held; and adverse or unexpected weather conditions. More information on potential factors that could affect VF’s financial results is included from time to time in VF’s public reports filed with the Securities and Exchange Commission, including VF’s Annual Report on Form 10-K.

43 VF Corporation Q3 FY20 Form 10-Q

ITEM 3 — QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET ~~RISK~~RISK.

There have been no significant changes in VF’s market risk exposures from what was disclosed in Item 7A in the ~~2017~~Fiscal 2019 Form ~~10-K.~~10‑K.

ITEM 4 — CONTROLS AND ~~PROCEDURES~~PROCEDURES.

Disclosure controls and procedures:

Under the supervision of the Chief Executive Officer and Chief Financial Officer, a Disclosure Committee comprising various members of management has evaluated the effectiveness of the disclosure controls and procedures at VF and its subsidiaries as of the end of the period covered by this quarterly report (the “Evaluation Date”). Based on this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded as of the Evaluation Date that such controls and procedures were effective.

Changes in internal control over financial reporting:

There have been no changes during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, ~~VF’s~~VF's internal control over financial reporting.

47VF Corporation Q3 ~~FY19~~FY20 Form 10-Q44

PART II — OTHER INFORMATION

ITEM 1 — LEGAL ~~PROCEEDINGS~~PROCEEDINGS.

Information on VF’s legal proceedings is set forth under Part I, Item 3, “Legal Proceedings,” in the ~~2017~~Fiscal 2019 Form 10-K. There have been no material changes to the legal proceedings from those described in the ~~2017~~Fiscal 2019 Form 10-K.

ITEM 1A — RISK ~~FACTORS~~FACTORS.

You should carefully consider the risk factors set forth under Part I, Item 1A, “Risk Factors,” in the ~~2017~~Fiscal 2019 Form ~~10-K, as amended or supplemented in our subsequently filed Quarterly Reports on Form 10-Q under Part II, Item 1A, “Risk Factors.” Other than as so amended or supplemented, there~~10-K. There have been no material changes to the risk factors from those disclosed in the ~~2017~~Fiscal 2019 Form ~~10-K.~~10‑K.

ITEM 2 — UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF ~~PROCEEDS~~PROCEEDS.


(c)	Issuer purchases of equity securities:

The following table sets forth VF's repurchases of our Common Stock during the fiscal quarter ended December ~~29, 2018~~28, 2019 under the share repurchase program authorized by VF’s Board of Directors in 2017.

Third Quarter 2019
Total
Number of
Shares
Purchased ⁽¹⁾

Weighted
Average
Price Paid
per Share

Total Number of
Shares Purchased
as Part of Publicly
Announced Programs ⁽¹⁾

Dollar Value
of Shares that May
Yet be Purchased
Under the Program
September 30 - October 27, 2018 351,500
$ 78.47
351,500
$ 3,959,595,548
October 28 - November 24, 2018 1,511,834
81.08
1,511,834
3,837,011,506
November 25 - December 29, 2018 390
74.19
390
3,836,982,574
Total 1,863,724
1,863,724



Third Quarter Fiscal 2020	Total Number of Shares Purchased	Weighted Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Programs	Dollar Value of Shares that May Yet be Purchased Under the Program
September 29 - October 26, 2019	—	$	—	—	$	3,836,982,574
October 27 - November 23, 2019	5,168,698	85.37		5,168,698	3,395,709,327
November 24 - December 28, 2019	671,852	87.42		671,852	3,336,979,318
Total	5,840,550			5,840,550


⁽¹⁾	~~Includes 2,470 shares of Common Stock that were purchased during the quarter in connection with VF's deferred compensation plans.~~

VF will continue to evaluate future share repurchases, considering funding required for business acquisitions, VF’s Common Stock price and levels of stock option exercises.

45VF Corporation Q3 ~~FY19~~FY20 Form 10-Q48

ITEM 6 — ~~EXHIBITS~~EXHIBITS.



10.1		~~Five-Year Revolving Credit Agreement by~~Executive Deferred Savings Plan II, as amended and ~~among V.F. Corporation, VF Investments S.A.R.L., VF Enterprises S.A.R.L., VF Europe B.V.B.A. and VF International SAGL,~~restated as borrowers, lenders named therein, JPMorgan Chase Bank, N.A., as Administrative Agent, JPMorgan Chase Bank, N.A., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Barclays Bank PLC, HSBC Securities (USA) Inc., U.S. Bank National Association and Wells Fargo Securities LLC, as Joint-Lead Arrangers and Joint Bookrunners, Bank of America, N.A., Barclays Bank PLC, HSBC Bank USA, National Association, U.S. Bank National Association and Wells Fargo Bank, N.A., as Co-Syndication Agents, and Citibank, N.A., ING Bank N.V., Dublin Branch, PNC Bank National Association and TD Bank, N.A., as Co-Documentation Agents, dated December 17, 2018.
		January 1, 2020
31.1		Certification of Steven E. Rendle, Chairman, President and Chief Executive Officer, pursuant to 15 U.S.C. Section 10A, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2		Certification of Scott A. Roe, Executive Vice President and Chief Financial Officer, pursuant to 15 U.S.C. Section 10A, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1		Certification of Steven E. Rendle, Chairman, President and Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2		Certification of Scott A. Roe, Executive Vice President and Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS		XBRL Instance Document
	- the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document
104		Cover Page Interactive Data File - the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

49VF Corporation Q3 ~~FY19~~FY20 Form 10-Q46

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



	V.F. CORPORATION
	(Registrant)

	By:	/s/ Scott A. Roe
		Scott A. Roe
		Executive Vice President and Chief Financial Officer (Principal Financial Officer)

Date: February 4, ~~2019~~2020	By:	/s/ Bryan H. McNeill
		Bryan H. McNeill
		Vice President, Controller and Chief Accounting Officer (Principal Accounting Officer)

47VF Corporation Q3 ~~FY19~~FY20 Form 10-Q50



Condensed Consolidated Balance Sheet
	December 2018
(In thousands)	As Reported		Impact of Adoption			Balances without Adoption of ASC 606
ASSETS
Cash and equivalents	$	535,312	$	—		$	535,312
Accounts receivable, net	1,774,460		(223,546		)	1,550,914
Inventories	1,866,075		71,909			1,937,984
Other current assets	436,244		(64,794		)	371,450
Total current assets	4,612,091		(216,431		)	4,395,660
Property, plant and equipment, net	1,041,640		—			1,041,640
Goodwill and intangible assets, net	3,812,121		—			3,812,121
Other assets	818,458		345			818,803
TOTAL ASSETS	$	10,284,310	$	(216,086	)	$	10,068,224
LIABILITIES AND STOCKHOLDERS' EQUITY
Short-term borrowings and current portion of long-term debt	$	683,467	$	—		$	683,467
Accounts payable	645,678		—			645,678
Accrued liabilities	1,233,902		(204,407		)	1,029,495
Total current liabilities	2,563,047		(204,407		)	2,358,640
Long-term debt	2,135,240		—			2,135,240
Other liabilities	1,285,399		(1,545		)	1,283,854
Total liabilities	5,983,686		(205,952		)	5,777,734
Total stockholders' equity	4,300,624		(10,134		)	4,290,490
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	10,284,310	$	(216,086	)	$	10,068,224



(In thousands)	October 2, 2017
Cash and equivalents	$	60,172
Accounts receivable	146,403
Inventories	251,778
Other current assets	8,447
Property, plant and equipment	105,119
Intangible assets	397,755
Other assets	9,665
Total assets acquired	979,339

Short-term borrowings	17,565
Accounts payable	88,052
Other current liabilities	109,964
Deferred income tax liabilities	15,160
Other noncurrent liabilities	33,066
Total liabilities assumed	263,807

Net assets acquired	715,532
Goodwill	82,863
Purchase price	$	798,395



(In thousands)	Three Months Ended December 2017 (unaudited)			Nine Months Ended December 2017 (unaudited)
Net revenues	$	3,649,283		$	9,766,005
Income (loss) from continuing operations	(61,494		)	544,094
Earnings (loss) per common share from continuing operations
Basic	$	(0.16	)	$	1.38
Diluted	(0.15		)	1.36



	December 29, 2018		September 29, 2018		June 30, 2018		April 30, 2018
U.S. qualified defined benefit pension plan	N/A		N/A		4.25	%	N/A
Supplemental defined benefit pension plan	4.36	%	4.29	%	4.24	%	4.22	%



(In thousands)	Gain (Loss) Reclassified from Accumulated OCI into Income Three Months Ended December						Gain (Loss) Reclassified from Accumulated OCI into Income Nine Months Ended December

Location of Gain (Loss)	2018			2017			2018			2017
Net sales	$	772		$	8,567		$	6,244		$	27,228
Cost of goods sold	(4,570		)	(12,153		)	(31,146		)	(10,664		)
Selling, general and administrative expenses	(1,020		)	(2,398		)	(5,240		)	(3,523		)
Other income (expense), net	690			(1,163		)	(1,673		)	(1,900		)
Interest expense	(1,263		)	(1,205		)	(3,739		)	(3,565		)
Total	$	(5,391	)	$	(8,352	)	$	(35,554	)	$	7,576



(In thousands)	Location of Gain (Loss) on Derivatives Recognized in Income	Gain (Loss) on Derivatives Recognized in Income Three Months Ended December						Gain (Loss) on Derivatives Recognized in Income Nine Months Ended December

Derivatives Not Designated as Hedges		2018			2017			2018			2017
Foreign currency exchange	Cost of goods sold	$	(1,565	)	$	(1,635	)	$	(2,195	)	$	(2,203	)
Foreign currency exchange	Other income (expense), net	(35		)	3,106			634			1,497
Total		$	(1,600	)	$	1,471		$	(1,561	)	$	(706	)



Third Quarter 2019	Total Number of Shares Purchased ⁽¹⁾	Weighted Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Programs ⁽¹⁾	Dollar Value of Shares that May Yet be Purchased Under the Program
September 30 - October 27, 2018	351,500	$	78.47	351,500	$	3,959,595,548
October 28 - November 24, 2018	1,511,834	81.08		1,511,834	3,837,011,506
November 25 - December 29, 2018	390	74.19		390	3,836,982,574
Total	1,863,724			1,863,724