Document

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

For the quarterly period ended June 29, 2019

☐ 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)

8505 E. Orchard Road

Greenwood Village, Colorado 80111

(Address of principal executive offices)

(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. Yes ☑ 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). Yes ☑ 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	☑	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 ☐ No ☑

On July 27, 2019, there were 398,176,515 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: June 2019, March 2019 and June 2018	3

Consolidated Statements of Income: Three months ended June 2019 and June 2018	4

Consolidated Statements of Comprehensive Income: Three months ended June 2019 and June 2018	5

Consolidated Statements of Cash Flows: Three months ended June 2019 and June 2018	6

Consolidated Statements of Stockholders’ Equity: Three months ended June 2019 and June 2018	8

Notes to Consolidated Financial Statements	9

Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations	30

Item 3 — Quantitative and Qualitative Disclosures about Market Risk	39

Item 4 — Controls and Procedures	39

Part II — Other Information

Item 1 — Legal Proceedings	40

Item 1A — Risk Factors	40

Item 2 — Unregistered Sales of Equity Securities and Use of Proceeds	40

Item 6 — Exhibits	41

Signatures	42

PART I — FINANCIAL INFORMATION

ITEM 1 — FINANCIAL STATEMENTS (UNAUDITED)

VF CORPORATION

Consolidated Balance Sheets

(Unaudited)



(In thousands, except share amounts)	June 2019			March 2019			June 2018
ASSETS
Current assets
Cash and equivalents	$	606,080		$	445,119		$	392,175
Accounts receivable, less allowance for doubtful accounts of: June 2019 ‑ $20,671; March 2019 - $19,638; June 2018 - $19,135	1,306,270			1,465,855			1,222,938
Inventories	1,665,132			1,432,660			1,521,659
Other current assets	413,373			433,793			401,515
Current assets of discontinued operations	—			896,030			791,860
Total current assets	3,990,855			4,673,457			4,330,147
Property, plant and equipment, net	865,141			915,177			875,338
Intangible assets, net	1,980,921			1,972,364			2,129,013
Goodwill	1,544,132			1,541,314			1,594,986
Operating lease right-of-use assets	1,281,106			—			—
Other assets	739,809			772,755			774,613
Other assets of discontinued operations	—			481,718			487,657
TOTAL ASSETS	$	10,401,964		$	10,356,785		$	10,191,754
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Short-term borrowings	$	67,658		$	659,060		$	1,311,861
Current portion of long-term debt	5,068			5,263			6,189
Accounts payable	588,417			580,867			565,943
Accrued liabilities	1,286,002			1,154,932			864,483
Current liabilities of discontinued operations	—			261,482			247,080
Total current liabilities	1,947,145			2,661,604			2,995,556
Long-term debt	2,126,835			2,115,884			2,156,627
Operating lease liabilities	1,043,664			—			—
Other liabilities	1,132,706			1,232,200			1,260,681
Other liabilities of discontinued operations	—			48,581			47,774
Commitments and contingencies
Total liabilities	6,250,350			6,058,269			6,460,638
Stockholders’ equity
Preferred Stock, par value $1; shares authorized, 25,000,000; no shares outstanding at June 2019, March 2019 or June 2018	—			—			—
Common Stock, stated value $0.25; shares authorized, 1,200,000,000; shares outstanding at June 2019 – 397,922,120; March 2019 – 396,824,662; June 2018 – 395,509,138	99,481			99,206			98,877
Additional paid-in capital	3,988,385			3,921,784			3,688,529
Accumulated other comprehensive income (loss)	(867,386		)	(902,075		)	(882,078		)
Retained earnings	931,134			1,179,601			825,788
Total stockholders’ equity	4,151,614			4,298,516			3,731,116
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	10,401,964		$	10,356,785		$	10,191,754

See notes to consolidated financial statements.

3 VF Corporation Q1 FY20 Form 10-Q

VF CORPORATION

Consolidated Statements of Income

(Unaudited)



	Three Months Ended June

(In thousands, except per share amounts)	2019			2018
Net revenues	$	2,271,479		$	2,137,135
Costs and operating expenses
Cost of goods sold	1,036,114			1,005,289
Selling, general and administrative expenses	1,102,073			1,018,747
Total costs and operating expenses	2,138,187			2,024,036
Operating income	133,292			113,099
Interest income	7,129			2,146
Interest expense	(22,127		)	(26,999		)
Other income (expense), net	5,598			(19,425		)
Income from continuing operations before income taxes	123,892			68,821
Income taxes	26,643			7,457
Income from continuing operations	97,249			61,364
Income (loss) from discontinued operations, net of tax	(48,028		)	98,994
Net income	$	49,221		$	160,358
Earnings (loss) per common share - basic
Continuing operations	$	0.25		$	0.16
Discontinued operations	(0.12		)	0.25
Total earnings per common share - basic	$	0.12		$	0.41
Earnings (loss) per common share - diluted
Continuing operations	$	0.24		$	0.15
Discontinued operations	(0.12		)	0.25
Total earnings per common share - diluted	$	0.12		$	0.40
Weighted average shares outstanding
Basic	396,727			394,165
Diluted	401,914			399,548

See notes to consolidated financial statements.

VF Corporation Q1 FY20 Form 10-Q 4

VF CORPORATION

Consolidated Statements of Comprehensive Income

(Unaudited)



	Three Months Ended June

(In thousands)	2019			2018
Net income	$	49,221		$	160,358
Other comprehensive income (loss)
Foreign currency translation and other
Gains (losses) arising during the period	12,829			(161,158		)
Income tax effect	2,943			(13,712		)
Defined benefit pension plans
Current period actuarial gains (losses)	—			53,940
Amortization of net deferred actuarial losses	4,019			8,822
Amortization of deferred prior service costs	13			669
Reclassification of net actuarial loss from settlement charge	—			6,842
Reclassification of deferred prior service cost due to curtailments	—			9,483
Income tax effect	(1,708		)	(20,655		)
Derivative financial instruments
Gains arising during the period	14,774			94,629
Income tax effect	(3,874		)	(11,358		)
Reclassification to net income for (gains) losses realized	(10,495		)	16,317
Income tax effect	2,756			(1,867		)
Other comprehensive income (loss)	21,257			(18,048		)
Comprehensive income	$	70,478		$	142,310

See notes to consolidated financial statements.

5 VF Corporation Q1 FY20 Form 10-Q

VF CORPORATION

Consolidated Statements of Cash Flows

(Unaudited)



	Three Months Ended June

(In thousands)	2019			2018
OPERATING ACTIVITIES
Net income	$	49,221		$	160,358
Income (loss) from discontinued operations, net of tax	(48,028		)	98,994
Income from continuing operations, net of tax	97,249			61,364
Adjustments to reconcile net income to cash (used) provided by operating activities:
Depreciation and amortization, including operating lease right-of-use assets	159,178			52,896
Stock-based compensation	33,469			24,960
Provision for doubtful accounts	2,161			2,448
Pension expense (less than) in excess of contributions	(2,837		)	2,537
Other, net	12,685			6,206
Changes in operating assets and liabilities:
Accounts receivable	164,266			(27,309		)
Inventories	(228,120		)	(139,170		)
Accounts payable	7,148			79,518
Income taxes	7,867			(73,558		)
Accrued liabilities	(233,610		)	107,262
Operating lease right-of-use assets and liabilities	(102,586		)	—
Other assets and liabilities	3,738			2,183
Cash (used) provided by operating activities - continuing operations	(79,392		)	99,337
Cash provided by operating activities - discontinued operations	13,212			177,807
Cash (used) provided by operating activities	(66,180		)	277,144
INVESTING ACTIVITIES
Business acquisitions, net of cash received	—			(321,395		)
Proceeds from sale of businesses, net of cash sold	—			288,273
Capital expenditures	(46,270		)	(62,484		)
Software purchases	(14,512		)	(21,514		)
Other, net	62,478			5,373
Cash provided (used) by investing activities - continuing operations	1,696			(111,747		)
Cash used by investing activities - discontinued operations	(2,327		)	(17,483		)
Cash used by investing activities	(631		)	(129,230		)
FINANCING ACTIVITIES
Net decrease in short-term borrowings	(585,477		)	(214,383		)
Payments on long-term debt	(1,479		)	(1,557		)
Cash dividends paid	(202,538		)	(181,517		)
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	7,199			53,500
Cash provided (used) by financing activities	123,853			(343,957		)
Effect of foreign currency rate changes on cash, cash equivalents and restricted cash	5,078			(19,998		)
Net change in cash, cash equivalents and restricted cash	62,120			(216,041		)
Cash, cash equivalents and restricted cash – beginning of year	556,587			689,190
Cash, cash equivalents and restricted cash – end of period	$	618,707		$	473,149

Continued on next page.

See notes to consolidated financial statements.

VF Corporation Q1 FY20 Form 10-Q 6

VF CORPORATION

Consolidated Statements of Cash Flows

(Unaudited)



	Three Months Ended June

(In thousands)	2019		2018
Balances per Consolidated Balance Sheets:
Cash and cash equivalents	$	606,080	$	392,175
Other current assets	3,909		4,067
Current and other assets of discontinued operations	—		75,759
Other assets	8,718		1,148
Total cash, cash equivalents and restricted cash	$	618,707	$	473,149

See notes to consolidated financial statements.

7 VF Corporation Q1 FY20 Form 10-Q

VF CORPORATION

Consolidated Statements of Stockholders’ Equity

(Unaudited)



	Three Months Ended June 2019
				Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)			Retained Earnings
	Common Stock
(In thousands, except share amounts)	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	—	—		—		—			49,221			49,221
Dividends on Common Stock ($0.51 per share)	—	—		—		—			(202,538		)	(202,538		)
Stock-based compensation, net	1,097,458	275		66,601		—			(24,312		)	42,564
Foreign currency translation and other	—	—		—		15,772			—			15,772
Defined benefit pension plans	—	—		—		2,324			—			2,324
Derivative financial instruments	—	—		—		3,161			—			3,161
Spin-off of Jeans Business	—	—		—		75,293			(130,208		)	(54,915		)
Balance, June 2019	397,922,120	$	99,481	$	3,988,385	$	(867,386	)	$	931,134		$	4,151,614

	Three Months Ended June 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
Adoption of new accounting standard, ASU 2014-09	—	—		—		—			1,956			1,956
Net income	—	—		—		—			160,358			160,358
Dividends on Common Stock ($0.46 per share)	—	—		—		—			(181,517		)	(181,517		)
Stock-based compensation, net	1,196,068	299		81,105		—			(1,133		)	80,271
Foreign currency translation and other	—	—		—		(174,870		)	—			(174,870		)
Defined benefit pension plans	—	—		—		59,101			—			59,101
Derivative financial instruments	—	—		—		97,721			—			97,721
Balance, June 2018	395,509,138	$	98,877	$	3,688,529	$	(882,078	)	$	825,788		$	3,731,116

See notes to consolidated financial statements.

VF Corporation Q1 FY20 Form 10-Q 8

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”) uses a 52/53 week fiscal year ending on the Saturday closest to March 31 of each year. The Company's current fiscal year runs from March 31, 2019 through March 28, 2020 ("Fiscal 2020"). Accordingly, this Form 10-Q presents our first quarter of Fiscal 2020. For presentation purposes herein, all references to periods ended June 2019 and June 2018 relate to the fiscal periods ended on June 29, 2019 and June 30, 2018, respectively. References to March 2019 relate to information as of March 30, 2019.

On May 22, 2019, VF completed the spin-off of 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. 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 for all periods presented. In addition, the related assets and liabilities have been reported as assets and liabilities of discontinued operations in the Consolidated Balance Sheets, through the date the spin-off was completed.

Additionally, the Nautica^®brand business has been reported as discontinued operations in our Consolidated Statements of Income, and the related held-for-sale assets and liabilities have been presented as assets and liabilities of discontinued operations in the Consolidated Balance Sheets, through the date of sale. These changes have been applied to all periods presented.

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 months ended June 2019 are not necessarily indicative of results that may be expected for any other interim period or for Fiscal 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 March 30, 2019 (“Fiscal 2019 Form 10-K”).

NOTE 2 — RECENTLY ADOPTED AND ISSUED ACCOUNTING STANDARDS

Recently Adopted Accounting Standards

In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-02, “Leases (Topic 842)”, a new accounting standard on leasing. The FASB subsequently issued updates to the standard to provide additional clarification on specific topics, including permitted transition methods. Collectively, the guidance is referred to as FASB Accounting Standards Codification ("ASC") 842. This standard requires companies to record most leased assets and liabilities on the balance sheet, and also retains a dual model approach for assessing lease classification and recognizing expense. The Company adopted this standard on March 31, 2019, utilizing the modified retrospective method and has recognized the cumulative effect of initially applying the new standard in retained earnings. 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 842 resulted in a net decrease of $2.5 million in the retained earnings line item of the Consolidated Balance Sheet as of March 31, 2019. The adoption of ASC 842 also resulted in the recognition of operating lease right-of-use assets and operating lease liabilities within the Consolidated Balance Sheet. Refer to Note 10 for additional lease disclosures.

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

9 VF Corporation Q1 FY20 Form 10-Q

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 standard to provide additional guidance on specific topics. This guidance became effective for VF in the first quarter of Fiscal 2020, but did not impact 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 Cuts and Jobs Act ("Tax Act") on items within accumulated other comprehensive income (loss). The guidance became effective for VF in the first quarter of Fiscal 2020. The Company elected to reclassify the income tax effects of the 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 results of operations or cash flows.

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. This guidance became effective for VF in the first quarter of Fiscal 2020, but did not impact 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 became effective for VF in the first quarter of Fiscal 2020. The guidance did not impact VF's consolidated financial statements.

Recently Issued Accounting Standards

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 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 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 the impact that adopting this guidance will have 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 Company is evaluating the impact that adopting this guidance will have on VF's disclosures.

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 is evaluating the impact that adopting this guidance will have on VF's consolidated financial statements.

VF Corporation Q1 FY20 Form 10-Q 10

NOTE 3 — REVENUES

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



(In thousands)	June 2019		March 2019		June 2018
Accounts receivable, net	$	1,306,270	$	1,465,855	$	1,222,938
Contract assets^(a)	1,576		2,569		1,543
Contract liabilities ^(b)	44,364		30,181		27,105


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


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

For the three months ended June 2019, the Company recognized $24.7 million of revenue that was included in the contract liability balance during the period. 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 months ended June 2019, revenue recognized from performance obligations satisfied, or partially satisfied, in prior periods was not material.

As of June 2019, the Company expects to recognize $85.0 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 June 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 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 June 2019
(In thousands)	Outdoor		Active		Work		Other		Total
Channel revenues
Wholesale	$	341,756	$	660,142	$	377,548	$	2,808	$	1,382,254
Direct-to-consumer	266,342		565,887		40,852		3,454		876,535
Royalty	2,522		6,097		4,071		—		12,690
Total	$	610,620	$	1,232,126	$	422,471	$	6,262	$	2,271,479

Geographic revenues
United States	$	303,052	$	711,205	$	346,160	$	—	$	1,360,417
International	307,568		520,921		76,311		6,262		911,062
Total	$	610,620	$	1,232,126	$	422,471	$	6,262	$	2,271,479



	Three Months Ended June 2018
(In thousands)	Outdoor		Active		Work		Other		Total
Channel revenues
Wholesale	$	309,776	$	654,848	$	381,364	$	8,305	$	1,354,293
Direct-to-consumer	255,964		475,536		36,838		—		768,338
Royalty	2,860		6,553		5,091		—		14,504
Total	$	568,600	$	1,136,937	$	423,293	$	8,305	$	2,137,135

Geographic revenues
United States	$	262,856	$	644,105	$	331,099	$	8,305	$	1,246,365
International	305,744		492,832		92,194		—		890,770
Total	$	568,600	$	1,136,937	$	423,293	$	8,305	$	2,137,135

11 VF Corporation Q1 FY20 Form 10-Q

NOTE 4 — ACQUISITIONS

Icebreaker

On April 3, 2018, VF acquired 100% of the stock of Icebreaker Holdings Limited ("Icebreaker") for NZ$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) for 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 finalized during the three months ended 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 position VF as a global leader in the Merino wool and natural fiber categories.

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

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 valued at $70.1 million. Amortizable intangible assets have been 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 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 months ended June 2018 and the remainder was recognized prior to Fiscal 2019. In addition, the Company recognized a $9.9 million gain on derivatives used to hedge the purchase price of Icebreaker in the other income (expense), net line item in the Consolidated Statements of Income, of which $0.3 million was recognized during the three months ended June 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 Q1 FY20 Form 10-Q 12

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 decreased $0.1 million during the year ended 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. 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.

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

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 valued at $46.4 million. Amortizable intangible assets have been 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.