Quarterly report pursuant to Section 13 or 15(d)

Discontinued Operations

v3.5.0.2
Discontinued Operations
 9 Months Ended
Oct. 01, 2016
Discontinued Operations

Note B – Discontinued Operations

On August 26, 2016, VF completed the sale of its Contemporary Brands coalition to Delta Galil Industries, Ltd. for $116.9 million. The Contemporary Brands coalition included the businesses of the 7 For All Mankind®, Splendid®, and Ella Moss® brands (the “Businesses”) and was previously disclosed as a separate reportable segment of VF.

The transaction resulted in an after-tax loss on sale of $104.4 million which is included in the income (loss) from discontinued operations line in the Consolidated Statements of Income for the first nine months of 2016. The after-tax loss on sale included in income (loss) from discontinued operations for the third quarter of 2016 was $3.8 million.

Beginning in the second quarter of 2016, VF has reported the results of the Businesses in the income (loss) from discontinued operations line item in the Consolidated Statements of Income and excluded them from continuing operations and segment results. Prior to the sale, the assets and liabilities of the Businesses were recorded in the assets of discontinued operations and liabilities of discontinued operations line items, respectively, in the Consolidated Balance Sheets.

Certain corporate overhead costs and interest expense previously allocated to the Contemporary Brands coalition for segment reporting purposes did not qualify for classification within discontinued operations and have been reallocated to continuing operations. In addition, goodwill and intangible asset impairment charges related to the Contemporary Brands coalition, previously excluded from the calculation of coalition profit, were reallocated to discontinued operations. These changes were applied to all periods presented.

VF will provide certain support services under transition services agreements for a limited period of time.

 

The following table summarizes the major line items included in the income (loss) from discontinued operations for each of the periods presented.

 

     Three Months Ended September      Nine Months Ended September  
In thousands    2016      2015      2016      2015  

Revenues

    $ 43,186       $ 83,194       $ 187,821       $ 257,605   

Cost of goods sold

      20,199         39,169         85,303         117,172   

Selling, general and administrative expenses

      26,062         40,660         99,295         126,535   

Interest income (expense), net

      (1 )       (161 )       (109 )       (483 ) 

Other income (expense), net

      7         (2 )       3         1   
  

 

 

     

 

 

     

 

 

     

 

 

  

Pre-tax income (loss) from discontinued operations

      (3,069 )       3,202         3,117         13,416   

Pre-tax loss on the disposal of discontinued operations

      (4,439 )       —           (154,275 )       —     
  

 

 

     

 

 

     

 

 

     

 

 

  

Total pre-tax income (loss) from discontinued operations

      (7,508 )       3,202         (151,158 )       13,416   

Income tax benefit (expense)

      2,963         (973 )       52,737         (2,634 ) 
  

 

 

     

 

 

     

 

 

     

 

 

  

Income (loss) from discontinued operations

    $ (4,545 )     $ 2,229       $ (98,421 )     $ 10,782   
  

 

 

     

 

 

     

 

 

     

 

 

  

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    September
2016		      December
2015		      September
2015		  

Accounts receivable, net

    $ —         $ 29,596       $ 29,857   

Inventories

      —           56,634         66,336   

Other current assets, including cash and equivalents

      —           2,946         4,170   

Property, plant and equipment

      —           42,668         46,490   

Intangible assets

      —           164,008         308,471   

Other assets

      —           3,355         3,291   
  

 

 

     

 

 

     

 

 

  

Total assets of discontinued operations(a)

    $ —         $ 299,207       $ 458,615   
  

 

 

     

 

 

     

 

 

  

Current portion of long-term debt

    $ —         $ 9,928       $ 9,983   

Accounts payable

      —           8,988         8,920   

Accrued liabilities

      —           7,102         8,001   

Other liabilities

      —           10,915         11,246   
  

 

 

     

 

 

     

 

 

  

Total liabilities of discontinued operations(a)

    $ —         $ 36,933       $ 38,150   
  

 

 

     

 

 

     

 

 

  

 

(a) Amounts at December 2015 and September 2015 have been classified as current and long-term in the Consolidated Balance Sheets.

Because the cash flows of the Businesses were not material for any of the periods presented, we have not segregated them in our Consolidated Statements of Cash Flows.