Quarterly report pursuant to Section 13 or 15(d)

Capital and Accumulated Other Comprehensive Income (Loss)

v3.5.0.2
Capital and Accumulated Other Comprehensive Income (Loss)
9 Months Ended
Oct. 01, 2016
Capital and Accumulated Other Comprehensive Income (Loss)

Note J – Capital and Accumulated Other Comprehensive Income (Loss)

During the first nine months of 2016, the Company purchased 15.9 million shares of Common Stock in open market transactions for $1.0 billion 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 first nine months of 2016, VF restored 16.0 million treasury shares to an unissued status, after which they were no longer recognized as shares held in treasury. There were 2,600 shares held in treasury at the end of September 2016, no shares held in treasury at the end of December 2015, and 1,900 shares held in treasury at the end of September 2015. 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.

VF Common Stock is also held by the Company’s deferred compensation plans and is treated as treasury shares for financial reporting purposes. During the first nine months of 2016, the Company purchased 4,000 shares of Common Stock in open market transactions for $0.2 million. Balances related to shares held for deferred compensation plans were as follows:

 

In thousands, except share amounts    September 2016      December 2015      September 2015  

Shares held for deferred compensation plans

     450,067         562,649         560,049   

Cost of shares held for deferred compensation plans

   $ 5,434       $ 6,823       $ 6,651   

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    September 2016      December 2015      September 2015  

Foreign currency translation and other

   $ (670,551    $ (718,169    $ (585,275

Defined benefit pension plans

     (340,891      (372,195      (348,537

Derivative financial instruments

     13,422         47,142         35,037   
  

 

 

    

 

 

    

 

 

 

Accumulated other comprehensive income (loss)

   $ (998,020    $ (1,043,222    $ (898,775
  

 

 

    

 

 

    

 

 

 

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

 

     Three Months Ended September 2016  
In thousands    Foreign
Currency
Translation
and Other
    Defined
Benefit
Pension Plans
    Derivative
Financial
Instruments
    Total  

Balance, June 2016

   $ (675,213   $ (351,298   $ 25,056      $ (1,001,455
  

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive income (loss) before

    reclassification

     4,662        —          5,896        10,558   

Amounts reclassified from accumulated other

    comprehensive income (loss)

     —          10,407        (17,530     (7,123
  

 

 

   

 

 

   

 

 

   

 

 

 

Net other comprehensive income (loss)

     4,662        10,407        (11,634     3,435   
  

 

 

   

 

 

   

 

 

   

 

 

 

Balance, September 2016

   $ (670,551   $ (340,891   $ 13,422      $ (998,020
  

 

 

   

 

 

   

 

 

   

 

 

 

 

     Three Months Ended September 2015  
In thousands    Foreign
Currency
Translation
and Other
    Defined
Benefit
Pension Plans
    Derivative
Financial
Instruments
    Total  

Balance, June 2015

   $ (599,297   $ (360,125   $ 45,796      $ (913,626
  

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive income (loss) before

    reclassification

     14,022        —          3,456        17,478   

Amounts reclassified from accumulated other

    comprehensive income (loss)

     —          11,588        (14,215     (2,627
  

 

 

   

 

 

   

 

 

   

 

 

 

Net other comprehensive income (loss)

     14,022        11,588        (10,759     14,851   
  

 

 

   

 

 

   

 

 

   

 

 

 

Balance, September 2015

   $ (585,275   $ (348,537   $ 35,037      $ (898,775
  

 

 

   

 

 

   

 

 

   

 

 

 

 

     Nine Months Ended September 2016  
In thousands    Foreign
Currency
Translation
and Other
    Defined
Benefit
Pension Plans
    Derivative
Financial
Instruments
    Total  

Balance, December 2015

   $ (718,169   $ (372,195   $ 47,142      $ (1,043,222
  

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive income (loss) before

    reclassification

     47,618        —          20,331        67,949   

Amounts reclassified from accumulated other

    comprehensive income (loss)

     —          31,304        (54,051     (22,747
  

 

 

   

 

 

   

 

 

   

 

 

 

Net other comprehensive income (loss)

     47,618        31,304        (33,720     45,202   
  

 

 

   

 

 

   

 

 

   

 

 

 

Balance, September 2016

   $ (670,551   $ (340,891   $ 13,422      $ (998,020
  

 

 

   

 

 

   

 

 

   

 

 

 

 

     Nine Months Ended September 2015  
In thousands    Foreign
Currency
Translation
and Other
    Defined
Benefit
Pension Plans
    Derivative
Financial
Instruments
    Marketable
Securities
    Total  

Balance, December 2014

   $ (356,941   $ (377,134   $ 31,389      $ 414      $ (702,272
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive income (loss) before

    reclassification

     (228,334     —          31,925        300        (196,109

Amounts reclassified from accumulated other comprehensive income (loss)

     —          28,597        (28,277     (714     (394
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net other comprehensive income (loss)

     (228,334     28,597        3,648        (414     (196,503
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance, September 2015

   $ (585,275   $ (348,537   $ 35,037      $ —        $ (898,775
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Reclassifications out of accumulated OCI are as follows:

 

In thousands  

Affected Line Item in the

Consolidated Statements

of Income

  Three Months Ended September     Nine Months Ended September  
Details About Accumulated Other      

Comprehensive Income (Loss) Components

    2016     2015     2016     2015  

Amortization of defined benefit pension plans:

         

Net deferred actuarial losses

  (a)   $ (16,303   $ (15,493   $ (48,928   $ (46,485

Deferred prior service costs

  (a)     (645     (760     (1,937     (2,281

Pension settlement charges

  Selling, general and administrative expenses     —          (2,400     —          (3,992
   

 

 

   

 

 

   

 

 

   

 

 

 
  Total before tax     (16,948     (18,653     (50,865     (52,758
  Tax benefit     6,541        7,065        19,561        24,161   
   

 

 

   

 

 

   

 

 

   

 

 

 
  Net of tax     (10,407     (11,588     (31,304     (28,597
   

 

 

   

 

 

   

 

 

   

 

 

 

Gains (losses) on derivative financial instruments:

         

Foreign exchange contracts

  Net sales     14,676        (22,434     11,997        (51,279

Foreign exchange contracts

  Cost of goods sold     15,485        39,142        80,094        80,633   

Foreign exchange contracts

  Selling, general and administrative expenses     (1,098     —          (3,611     —     

Foreign exchange contracts

  Other income (expense), net     526        7,541        2,653        20,515   

Interest rate contracts

  Interest expense     (1,131     (1,078     (3,356     (3,200
   

 

 

   

 

 

   

 

 

   

 

 

 
  Total before tax     28,458        23,171        87,777        46,669   
  Tax expense     (10,928     (8,956     (33,726     (18,392
   

 

 

   

 

 

   

 

 

   

 

 

 
  Net of tax     17,530        14,215        54,051        28,277   

Gains (losses) on sales of marketable securities

  Other income (expense), net     —          —          —          1,177   
  Tax expense     —          —          —          (463
   

 

 

   

 

 

   

 

 

   

 

 

 
  Net of tax     —          —          —          714   
   

 

 

   

 

 

   

 

 

   

 

 

 

Total reclassifications for the period

  Net of tax   $ 7,123      $ 2,627      $ 22,747      $ 394   
   

 

 

   

 

 

   

 

 

   

 

 

 

 

(a) These accumulated OCI components are included in the computation of net periodic pension cost (see Note I for additional details).