VF Corporation Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

INTANGIBLE ASSETS

INTANGIBLE ASSETS

12 Months Ended

Mar. 30, 2019

Goodwill and Intangible Assets Disclosure [Abstract]



(In thousands)	Weighted Average Amortization Period	Amortization Method	Cost		Accumulated Amortization		Net Carrying Amount
March 2019
Amortizable intangible assets:
Customer relationships	17 years	Accelerated	$	341,625	$	143,433	$	198,192
License agreements	19 years	Accelerated	7,536		4,729		2,807
Trademarks	16 years	Straight-line	58,932		12,209		46,723
Other	8 years	Straight-line	8,202		4,170		4,032
Amortizable intangible assets, net							251,754
Indefinite-lived intangible assets:
Trademarks and trade names							1,772,523
Intangible assets, net							$	2,024,277



(In thousands)	Weighted Average Amortization Period	Amortization Method	Cost		Accumulated Amortization		Net Carrying Amount
March 2018
Amortizable intangible assets:
Customer relationships	18 years	Accelerated	$	344,613	$	143,069	$	201,544
License agreements	20 years	Accelerated	20,171		13,915		6,256
Trademarks	16 years	Straight-line	58,932		8,309		50,623
Other	9 years	Straight-line	9,194		4,024		5,170
Amortizable intangible assets, net							263,593
Indefinite-lived intangible assets:
Trademarks and trade names							1,856,517
Intangible assets, net							$	2,120,110



(In thousands)	Weighted Average Amortization Period	Amortization Method	Cost		Accumulated Amortization		Net Carrying Amount
December 2017
Amortizable intangible assets:
Customer relationships	18 years	Accelerated	$	338,209	$	133,994	$	204,215
License agreements	20 years	Accelerated	19,996		13,660		6,336
Trademarks	16 years	Straight-line	58,932		7,333		51,599
Other	9 years	Straight-line	9,001		3,648		5,353
Amortizable intangible assets, net							267,503
Indefinite-lived intangible assets:
Trademarks and trade names							1,822,278
Intangible assets, net							$	2,089,781

Intangible assets decreased during the year ended March 2019 due to the divestiture of the Reef^® brand business and foreign currency fluctuations, which were partially offset by the addition of intangible assets from the Icebreakerand Altra acquisitions.

VF did not record any impairment charges in the year ended March 2019, the three months ended March 2018 or the year ended December 2017. In the year ended December 2016, VF recorded an impairment charge of $40.3 million to write off the remaining trademark asset balance for the lucy^®brand, which was part of the former Outdoor and Action Sports segment. Refer to Note 22 for additional information on the fair value measurements.

Amortization expense (excluding impairment charges) for the year ended March 2019, the three months ended March 2018 and the years ended December 2017 and 2016 was $30.7 million, $7.6 million, $20.0 million and $18.8 million, respectively. Estimated amortization expense for the next five fiscal years is $30.0 million, $28.5 million, $26.8 million, $25.3 million and $24.3 million, respectively.

Rock & Republic^® Impairment Analysis

The Rock & Republic^®brand has an exclusive wholesale distribution and licensing arrangement with Kohl's Corporation that covers all branded apparel, accessories and other merchandise. As of June 30, 2018, VF performed a quantitative impairment analysis of the Rock & Republic^® amortizing trademark intangible asset to determine if the carrying value was recoverable. We determined this testing was necessary based on the expectation that certain customer contract terms would be modified. Management used the income-based relief-from-royalty method and the contractual 4% royalty rate to calculate the pre-tax undiscounted future cash flows. Based on the analysis performed, management concluded that the trademark intangible asset did not require further testing as the undiscounted cash flows exceeded the carrying value of $49.0 million.

It is possible that VF's conclusion regarding the recoverability of the intangible asset could change in future periods as there can be no assurance that the estimates and assumptions used in the analysis as of June 30, 2018 will prove to be accurate predictions of the future.