Quarterly report pursuant to Section 13 or 15(d)

Derivative Financial Instruments and Hedging Activities (Tables)

v2.4.0.8
Derivative Financial Instruments and Hedging Activities (Tables)
6 Months Ended
Jun. 28, 2014
Outstanding Derivatives on Individual Contract Basis at Gross Amounts

The following table presents outstanding derivatives on a gross basis by individual contract:

 

     Fair Value of Derivatives with      Fair Value of Derivatives with  
     Unrealized Gains      Unrealized Losses  
     June      December      June      June     December     June  
In thousands    2014      2013      2013      2014     2013     2013  

Foreign currency exchange contracts designated as hedging instruments

   $ 11,635       $ 15,964       $ 41,472       $ (40,191   $ (46,627   $ (10,629

Foreign currency exchange contracts dedesignated as hedging instruments

     —           —           355         —          —          (133

Foreign currency exchange contracts not designated as hedging instruments

     —           124         416         (607     (164     (91
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Total derivatives

   $ 11,635       $ 16,088       $ 42,243       $ (40,798   $ (46,791   $ (10,853
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 
Derivative Assets and Liabilities Presented in Consolidated Balance Sheet Adjusted from Current Gross

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. However, if VF were to offset and record the asset and liability balances of all of its forward foreign currency exchange contracts on a net basis in accordance with the terms of its master netting agreements, the amounts presented in the Consolidated Balance Sheets as of June 2014, December 2013 and June 2013 would be adjusted from the current gross presentation to the net amounts as detailed in the following table:

 

     June 2014     December 2013
    June 2013  
     Derivative     Derivative     Derivative     Derivative     Derivative     Derivative  
In thousands    Asset     Liability     Asset     Liability     Asset     Liability  

Gross amounts presented in the Consolidated Balance Sheets

   $ 11,635      $ (40,798   $ 16,088      $ (46,791   $ 42,243      $ (10,853

Gross amounts not offset in the Consolidated Balance Sheets

     (10,380     10,380        (11,641     11,641        (9,130     9,130   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net amounts

   $ 1,255      $ (30,418   $ 4,447      $ (35,150   $ 33,113      $ (1,723
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Derivative Assets and Liabilities Presented in Consolidated Balance Sheet Adjusted from Current Gross

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. However, if VF were to offset and record the asset and liability balances of all of its forward foreign currency exchange contracts on a net basis in accordance with the terms of its master netting agreements, the amounts presented in the Consolidated Balance Sheets as of June 2014, December 2013 and June 2013 would be adjusted from the current gross presentation to the net amounts as detailed in the following table:

 

     June 2014     December 2013
    June 2013  
     Derivative     Derivative     Derivative     Derivative     Derivative     Derivative  
In thousands    Asset     Liability     Asset     Liability     Asset     Liability  

Gross amounts presented in the Consolidated Balance Sheets

   $ 11,635      $ (40,798   $ 16,088      $ (46,791   $ 42,243      $ (10,853

Gross amounts not offset in the Consolidated Balance Sheets

     (10,380     10,380        (11,641     11,641        (9,130     9,130   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net amounts

   $ 1,255      $ (30,418   $ 4,447      $ (35,150   $ 33,113      $ (1,723
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Derivatives Classified as Current or Noncurrent Based on Maturity Dates

Derivatives are classified as current or noncurrent based on their maturity dates, as follows:

 

     June     December     June  
In thousands    2014     2013     2013  

Other current assets

   $ 7,866      $ 12,699      $ 33,463   

Accrued liabilities (current)

     (34,289     (36,622     (8,685

Other assets (noncurrent)

     3,769        3,389        8,780   

Other liabilities (noncurrent)

     (6,509     (10,169     (2,168
Effects of Cash Flow Hedging included in Consolidated Statements of Income and Consolidated Statements of Comprehensive Income

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 June
    Gain (Loss) on Derivatives
Recognized in OCI
Six Months Ended June
 

Cash Flow Hedging Relationships

   2014     2013     2014     2013  

Foreign currency exchange

   $ (11,461   $ (3,093   $ (7,765   $ 52,400   
In thousands    Gain (Loss) Reclassified from
Accumulated OCI into Income
Three Months Ended June
    Gain (Loss) Reclassified from
Accumulated OCI into Income
Six Months Ended June
 

Location of Gain (Loss)

   2014     2013     2014     2013  

Net sales

   $ (1,542   $ 1,378      $ 118      $ 1,223   

Cost of goods sold

     (4,339     3,683        (9,703     7,541   

Other income (expense), net

     (507     1,209        (1,215     2,301   

Interest expense

     (1,019     (972     (2,023     (1,929
  

 

 

   

 

 

   

 

 

   

 

 

 

Total

   $ (7,407   $ 5,298      $ (12,823   $ 9,136   
  

 

 

   

 

 

   

 

 

   

 

 

 
Effects of Fair Value Hedging Included in Consolidated Statements of Income

Following is a summary of these derivatives included in VF’s Consolidated Statements of Income:

 

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

Derivatives Not Designated as Hedges

   Recognized in Income   2014     2013      2014     2013  

Foreign currency exchange

   Other income (expense), net   $ (4,014   $ 2,729       $ (4,870   $ 3,998