vfc-20220101

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 January 1, 2022

☐ 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)

1551 Wewatta Street

Denver, Colorado 80202

(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
0.250% Senior Notes due 2028	VFC28	New York Stock Exchange
0.625% Senior Notes due 2032	VFC32	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 January 21, 2022, there were 388,901,667 shares of the registrant’s common stock outstanding.

VF CORPORATION

Table of Contents


			PAGE NUMBER
Part I — Financial Information			3
Item 1 — Financial Statements (Unaudited)			3
Consolidated Balance Sheets: December 2021, March 2021 and December 2020			3
Consolidated Statements of Operations: Three and nine months ended December 2021 and December 2020			4
Consolidated Statements of Comprehensive Income : Three and nine months ended December 2021 and December 2020			5
Consolidated Statements of Cash Flows: Nine months ended December 2021 and December 2020			6
Consolidated Statements of Stockholders’ Equity: Three and nine months ended December 2021 and December 2020			8
Notes to Consolidated Financial Statements			10
Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations			29
Item 3 — Quantitative and Qualitative Disclosures about Market Risk			42
Item 4 — Controls and Procedures			42
Part II — Other Information			43
Item 1 — Legal Proceedings			43
Item 1A — Risk Factors			43
Item 2 — Unregistered Sales of Equity Securities and Use of Proceeds			43
Item 6 — Exhibits			44
Signatures			45

Table of Contents

PART I — FINANCIAL INFORMATION


ITEM 1 — FINANCIAL STATEMENTS (UNAUDITED).

VF CORPORATION

Consolidated Balance Sheets

(Unaudited)


(In thousands, except share amounts)	December 2021		March 2021		December 2020
ASSETS
Current assets
Cash and equivalents	$	1,333,839	$	815,750	$	3,254,236
Accounts receivable, less allowance for doubtful accounts of: December 2021 - $33,363; March 2021 - $33,654; December 2020 - $39,622	1,495,859		1,298,020		1,411,565
Inventories	1,287,210		1,061,839		1,075,983
Short-term investments	—		598,806		599,403
Other current assets	483,738		423,877		383,384

Current assets of discontinued operations	—		587,578		560,648
Total current assets	4,600,646		4,785,870		7,285,219
Property, plant and equipment, net	1,049,691		975,876		955,845
Intangible assets, net	3,010,517		3,029,545		1,862,042
Goodwill	2,409,260		2,425,427		1,194,212
Operating lease right-of-use assets	1,302,545		1,474,434		1,476,503
Other assets	1,163,663		1,062,877		970,520

TOTAL ASSETS	$	13,536,322	$	13,754,029	$	13,744,341
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Short-term borrowings	$	106,010	$	11,061	$	299,748
Current portion of long-term debt	500,915		1,023		1,006
Accounts payable	559,716		463,208		412,324
Accrued liabilities	2,057,237		1,609,928		1,664,760

Current liabilities of discontinued operations	—		125,257		120,185
Total current liabilities	3,223,878		2,210,477		2,498,023
Long-term debt	4,646,379		5,709,149		5,786,552
Operating lease liabilities	1,093,013		1,236,461		1,211,655
Other liabilities	919,652		1,541,778		1,109,937

Total liabilities	9,882,922		10,697,865		10,606,167
Commitments and contingencies
Stockholders’ equity
Preferred Stock, par value $1; shares authorized, 25,000,000; no shares outstanding at December 2021, March 2021 or December 2020	—		—		—
Common Stock, stated value $0.25; shares authorized, 1,200,000,000; shares outstanding at December 2021 - 388,885,032; March 2021 - 391,941,477; December 2020 - 390,985,837	97,221		97,985		97,746
Additional paid-in capital	3,884,935		3,777,645		3,735,896
Accumulated other comprehensive income (loss)	(937,457)		(1,009,000)		(995,963)
Retained earnings	608,701		189,534		300,495
Total stockholders’ equity	3,653,400		3,056,164		3,138,174
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	13,536,322	$	13,754,029	$	13,744,341

See notes to consolidated financial statements.

3 VF Corporation Q3 FY22 Form 10-Q

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VF CORPORATION

Consolidated Statements of Operations

(Unaudited)


	Three Months Ended December				Nine Months Ended December

(In thousands, except per share amounts)	2021		2020		2021		2020
Net revenues	$	3,624,384	$	2,971,541	$	9,017,176	$	6,656,158
Costs and operating expenses
Cost of goods sold	1,592,604		1,345,024		4,027,601		3,134,381
Selling, general and administrative expenses	1,353,338		1,214,518		3,549,763		3,036,639

Total costs and operating expenses	2,945,942		2,559,542		7,577,364		6,171,020
Operating income	678,442		411,999		1,439,812		485,138
Interest income	606		2,539		4,266		7,028
Interest expense	(33,994)		(34,315)		(104,799)		(97,684)
Loss on debt extinguishment	(3,645)		—		(3,645)		—
Other income (expense), net	(95)		6,484		16,495		(27,059)
Income from continuing operations before income taxes	641,314		386,707		1,352,129		367,423
Income tax expense	123,513		59,048		216,303		74,260
Income from continuing operations	517,801		327,659		1,135,826		293,163
Income from discontinued operations, net of tax	—		19,581		170,273		25,186
Net income	$	517,801	$	347,240	$	1,306,099	$	318,349
Earnings per common share - basic
Continuing operations	$	1.33	$	0.84	$	2.90	$	0.75
Discontinued operations	—		0.05		0.44		0.06
Total earnings per common share - basic	$	1.33	$	0.89	$	3.34	$	0.82
Earnings per common share - diluted
Continuing operations	$	1.32	$	0.83	$	2.89	$	0.75
Discontinued operations	—		0.05		0.43		0.06
Total earnings per common share - diluted	$	1.32	$	0.88	$	3.32	$	0.81
Weighted average shares outstanding
Basic	390,430		389,872		391,187		389,262
Diluted	392,495		392,851		393,547		391,607

See notes to consolidated financial statements.

VF Corporation Q3 FY22 Form 10-Q 4

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VF CORPORATION

Consolidated Statements of Comprehensive Income

(Unaudited)


	Three Months Ended December				Nine Months Ended December

(In thousands)	2021		2020		2021		2020
Net income	$	517,801	$	347,240	$	1,306,099	$	318,349
Other comprehensive income (loss)
Foreign currency translation and other
Gains (losses) arising during the period	(15,757)		9,495		5,100		(20,134)
Reclassification of foreign currency translation losses	—		—		—		42,364
Income tax effect	(9,954)		26,779		(17,758)		51,616
Defined benefit pension plans
Current period actuarial gains (losses)	514		(4,636)		(3,938)		(13,489)
Amortization of net deferred actuarial losses	2,858		3,020		8,569		8,781
Amortization of deferred prior service credits	(117)		(19)		(352)		(53)
Reclassification of net actuarial loss from settlement charge	5,660		544		6,684		1,116


Income tax effect	(2,251)		429		(2,187)		1,151
Derivative financial instruments
Gains (losses) arising during the period	14,185		(82,491)		43,983		(129,817)
Income tax effect	(2,224)		14,118		(8,010)		22,845
Reclassification of net (gains) losses realized	12,439		(4,271)		45,984		(35,930)
Income tax effect	(1,976)		727		(6,532)		6,545
Other comprehensive income (loss)	3,377		(36,305)		71,543		(65,005)
Comprehensive income	$	521,178	$	310,935	$	1,377,642	$	253,344

See notes to consolidated financial statements.

5 VF Corporation Q3 FY22 Form 10-Q

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VF CORPORATION

Consolidated Statements of Cash Flows

(Unaudited)


	Nine Months Ended December

(In thousands)	2021		2020
OPERATING ACTIVITIES
Net income	$	1,306,099	$	318,349
Income from discontinued operations, net of tax	170,273		25,186
Income from continuing operations, net of tax	1,135,826		293,163
Adjustments to reconcile net income to cash provided by operating activities:

Depreciation and amortization	199,652		204,580
Reduction in the carrying amount of right-of-use assets	309,588		309,579
Stock-based compensation	65,833		46,109
Provision for doubtful accounts	3,143		22,494
Pension expense less than contributions	(27,514)		(12,111)


Loss on extinguishment of debt	3,645		—
Other, net	(291,054)		(83)
Changes in operating assets and liabilities:
Accounts receivable	(214,644)		(46,835)
Inventories	(237,285)		266,713
Accounts payable	99,565		(6,696)
Income taxes	219,097		(18,235)
Accrued liabilities	250,170		248,679
Operating lease right-of-use assets and liabilities	(342,322)		(254,544)
Other assets and liabilities	(382,410)		31,464
Cash provided by operating activities - continuing operations	791,290		1,084,277
Cash provided by operating activities - discontinued operations	6,090		57,779
Cash provided by operating activities	797,380		1,142,056
INVESTING ACTIVITIES
Business acquisitions, net of cash received	3,760		—
Proceeds from sale of businesses, net of cash sold	616,529		—
Purchases of short-term investments	—		(800,000)
Proceeds from sale and maturities of short-term investments	598,806		200,000
Capital expenditures	(214,220)		(152,446)
Software purchases	(63,758)		(51,964)
Other, net	12,819		(9,116)
Cash provided (used) by investing activities - continuing operations	953,936		(813,526)
Cash used by investing activities - discontinued operations	(525)		(3,171)
Cash provided (used) by investing activities	953,411		(816,697)
FINANCING ACTIVITIES
Net increase (decrease) in short-term borrowings	94,958		(929,074)
Payments on long-term debt	(503,943)		(1,152)
Payment of debt issuance costs	(2,415)		(21,438)
Proceeds from long-term debt	—		2,996,090
Share repurchases	(299,999)		—
Cash dividends paid	(579,194)		(564,904)

Proceeds from issuance of Common Stock, net of payments for tax withholdings	32,929		45,867

Cash provided (used) by financing activities	(1,257,664)		1,525,389
Effect of foreign currency rate changes on cash, cash equivalents and restricted cash	(9,339)		12,513
Net change in cash, cash equivalents and restricted cash	483,788		1,863,261
Cash, cash equivalents and restricted cash – beginning of year	851,205		1,411,322
Cash, cash equivalents and restricted cash – end of period	$	1,334,993	$	3,274,583

Continued on next page.

See notes to consolidated financial statements.

VF Corporation Q3 FY22 Form 10-Q 6

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VF CORPORATION

Consolidated Statements of Cash Flows

(Unaudited)


	Nine Months Ended December

(In thousands)	2021		2020
Balances per Consolidated Balance Sheets:
Cash and cash equivalents	$	1,333,839	$	3,254,236
Other current assets	1,124		1,104

Current assets of discontinued operations	—		18,771
Other assets	30		472
Total cash, cash equivalents and restricted cash	$	1,334,993	$	3,274,583

See notes to consolidated financial statements.

7 VF Corporation Q3 FY22 Form 10-Q

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VF CORPORATION

Consolidated Statements of Stockholders’ Equity

(Unaudited)


	Three Months Ended December 2021
				Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Retained Earnings
	Common Stock
(In thousands, except share amounts)	Shares	Amounts								Total
Balance, September 2021	392,758,016	$	98,190	$	3,854,687	$	(940,834)	$	586,438	$	3,598,481


Net income	—	—		—		—		517,801		517,801
Dividends on Common Stock ($0.50 per share)	—	—		—		—		(194,767)		(194,767)
Share repurchases	(4,029,722)	(1,007)		—		—		(298,992)		(299,999)
Stock-based compensation, net	156,738	38		30,248		—		(1,779)		28,507
Foreign currency translation and other	—	—		—		(25,711)		—		(25,711)
Defined benefit pension plans	—	—		—		6,664		—		6,664
Derivative financial instruments	—	—		—		22,424		—		22,424

Balance, December 2021	388,885,032	$	97,221	$	3,884,935	$	(937,457)	$	608,701	$	3,653,400

	Three Months Ended December 2020
				Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Retained Earnings
	Common Stock
(In thousands, except share amounts)	Shares	Amounts								Total
Balance, September 2020	389,964,718	$	97,491	$	3,852,358	$	(959,658)	$	(44,953)	$	2,945,238


Net income	—	—		—		—		347,240		347,240
Dividends on Common Stock ($0.49 per share)	—	—		(191,266)		—		—		(191,266)

Stock-based compensation, net	1,021,119	255		74,804		—		(1,792)		73,267
Foreign currency translation and other	—	—		—		36,274		—		36,274
Defined benefit pension plans	—	—		—		(662)		—		(662)
Derivative financial instruments	—	—		—		(71,917)		—		(71,917)

Balance, December 2020	390,985,837	$	97,746	$	3,735,896	$	(995,963)	$	300,495	$	3,138,174

Continued on next page.

See notes to consolidated financial statements.

VF Corporation Q3 FY22 Form 10-Q 8

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VF CORPORATION

Consolidated Statements of Stockholders’ Equity

(Unaudited)


	Nine Months Ended December 2021
				Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Retained Earnings
	Common Stock
(In thousands, except share amounts)	Shares	Amounts								Total
Balance, March 2021	391,941,477	$	97,985	$	3,777,645	$	(1,009,000)	$	189,534	$	3,056,164


Net income	—	—		—		—		1,306,099		1,306,099
Dividends on Common Stock ($1.48 per share)	—	—		(2,597)		—		(576,597)		(579,194)
Share repurchases	(4,029,722)	(1,007)		—		—		(298,992)		(299,999)
Stock-based compensation, net	973,277	243		109,887		—		(11,343)		98,787
Foreign currency translation and other	—	—		—		(12,658)		—		(12,658)
Defined benefit pension plans	—	—		—		8,776		—		8,776
Derivative financial instruments	—	—		—		75,425		—		75,425

Balance, December 2021	388,885,032	$	97,221	$	3,884,935	$	(937,457)	$	608,701	$	3,653,400

	Nine Months Ended December 2020
				Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Retained Earnings
	Common Stock
(In thousands, except share amounts)	Shares	Amounts								Total
Balance, March 2020	388,812,158	$	97,203	$	4,183,780	$	(930,958)	$	7,309	$	3,357,334


Net income	—	—		—		—		318,349		318,349
Dividends on Common Stock ($1.45 per share)	—	—		(564,904)		—		—		(564,904)

Stock-based compensation, net	2,173,679	543		117,020		—		(25,163)		92,400
Foreign currency translation and other	—	—		—		73,846		—		73,846
Defined benefit pension plans	—	—		—		(2,494)		—		(2,494)
Derivative financial instruments	—	—		—		(136,357)		—		(136,357)

Balance, December 2020	390,985,837	$	97,746	$	3,735,896	$	(995,963)	$	300,495	$	3,138,174

See notes to consolidated financial statements.

9 VF Corporation Q3 FY22 Form 10-Q

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VF CORPORATION

Notes to Consolidated Financial Statements

(Unaudited)


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS		PAGE NUMBER

NOTE 1	Basis of Presentation	11
NOTE 2	Recently Adopted and Issued Accounting Standards	11
NOTE 3	Revenues	12
NOTE 4	Acquisition	14
NOTE 5	Discontinued Operations	15
NOTE 6	Inventories	16
NOTE 7	Intangible Assets	17
NOTE 8	Goodwill	17
NOTE 9	Leases	17
NOTE 10	Short-term Borrowings and Long-term Debt	18
NOTE 11	Pension Plans	18
NOTE 12	Capital and Accumulated Other Comprehensive Income (Loss)	19
NOTE 13	Stock-based Compensation	21
NOTE 14	Income Taxes	22
NOTE 15	Reportable Segment Information	23
NOTE 16	Earnings Per Share	23
NOTE 17	Fair Value Measurements	24
NOTE 18	Derivative Financial Instruments and Hedging Activities	25
NOTE 19	Restructuring	27
NOTE 20	Contingencies	28
NOTE 21	Subsequent Event	28

VF Corporation Q3 FY22 Form 10-Q 10

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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 April 4, 2021 through April 2, 2022 ("Fiscal 2022"). Accordingly, this Form 10-Q presents our third quarter of Fiscal 2022. For presentation purposes herein, all references to periods ended December 2021 and December 2020 relate to the fiscal periods ended on January 1, 2022 and December 26, 2020, respectively. References to March 2021 relate to information as of April 3, 2021.

On June 28, 2021, VF completed the sale of its Occupational Workwear business. The Occupational Workwear business was comprised primarily of the following brands and businesses: Red Kap®, VF Solutions®, Bulwark®, Workrite®, Walls®, Terra®, Kodiak®, Work Authority® and Horace Small®. The business also included the license of certain Dickies® occupational workwear products that have historically been sold through the business-to-business channel. The results of the Occupational Workwear business and the related cash flows have been reported as discontinued operations in the Consolidated Statements of Operations and Consolidated Statements of Cash Flows, respectively, through the date of sale. The related held-for-sale assets and liabilities have been reported 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 interim 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 2022 presentation.

The accompanying unaudited interim consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X and do not include all of the information and notes required by generally accepted accounting principles in the United States of America (“GAAP”) for complete financial statements. Similarly, the March 2021 consolidated balance sheet data was derived from audited financial statements but does not include all disclosures required by GAAP. In the opinion of management, the accompanying unaudited interim consolidated financial statements contain all normal and recurring adjustments necessary to fairly state the consolidated financial position, results of operations and cash flows of VF for the interim periods presented. Operating results for the three and nine months ended December 2021 are not necessarily indicative of results that may be expected for any other interim period or for Fiscal 2022. 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 April 3, 2021 (“Fiscal 2021 Form 10-K”).

In preparing the interim consolidated financial statements, management makes estimates and assumptions that affect amounts reported in the interim consolidated financial statements and accompanying notes. The duration and severity of the novel coronavirus ("COVID-19") pandemic, which is subject to uncertainty, continues to impact VF's business. Management's estimates and assumptions have contemplated both current and expected impacts related to COVID-19 based on available information. Actual results may differ from those estimates.

NOTE 2 — RECENTLY ADOPTED AND ISSUED ACCOUNTING STANDARDS

Recently Adopted Accounting Standards

In December 2019, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("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 became effective for VF in the first quarter of Fiscal 2022, but did not have a material impact on VF's consolidated financial statements.

Recently Issued Accounting Standards

In March 2020 and January 2021, the FASB issued ASU No. 2020-04, "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting" and ASU No. 2021-01, "Reference Rate Reform (Topic 848): Scope", respectively. This guidance provides optional expedients and

exceptions for applying GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The optional guidance is provided to ease the potential burden of accounting for reference rate reform. The guidance is effective and can be adopted no later than December 31, 2022. The Company is evaluating the impact that adopting this guidance would have on VF's consolidated financial statements.

In November 2021, the FASB issued ASU No. 2021-10, "Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance", an update that requires annual disclosures about government assistance, including the types of assistance and the effect on the financial statements. The guidance will be effective for VF in Fiscal 2023 with early adoption permitted. The Company is evaluating the impact th