Quarterly report pursuant to Section 13 or 15(d)

DISCONTINUED OPERATIONS

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DISCONTINUED OPERATIONS
 9 Months Ended
Dec. 26, 2020
Discontinued Operations and Disposal Groups [Abstract]  
DISCONTINUED OPERATIONS DISCONTINUED OPERATIONS
The Company continuously assesses the composition of its portfolio to ensure it is aligned with its strategic objectives and positioned to maximize growth and return to shareholders.
Occupational Workwear Business
On January 21, 2020, VF announced its decision to explore the divestiture of its Occupational Workwear business. The Occupational Workwear business is 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 includes certain Dickies® occupational workwear products that have historically been sold through the business-to-business channel.
During the three months ended March 2020, the Company determined the Occupational Workwear business met the held-for-sale and discontinued operations accounting criteria. Accordingly, the Company has reported the results of the Occupational Workwear business and the related cash flows as
discontinued operations in the Consolidated Statements of Operations and Consolidated Statements of Cash Flows, respectively. The related held-for-sale assets and liabilities have been reported as assets and liabilities of discontinued operations in the Consolidated Balance Sheets.
The results of the Occupational Workwear business were previously reported in the Work segment. The results of the Occupational Workwear business recorded in the income from discontinued operations, net of tax line item in the Consolidated Statements of Operations were income of $19.6 million and $25.2 million for the three and nine months ended December 2020, respectively, and $31.1 million and $86.8 million for the three and nine months ended December 2019, respectively.
Certain corporate overhead costs and segment costs previously allocated to the Occupational Workwear business for segment reporting purposes did not qualify for classification within discontinued operations and have been reallocated to continuing operations.
Jeans Business
On May 22, 2019, VF completed the spin-off its Jeans business, which included the Wrangler®, Lee® and Rock & Republic® brands, as well as the VF OutletTM business, into an independent, publicly traded company now operating under the name Kontoor Brands, Inc. ("Kontoor Brands") and trading under the symbol "KTB" on the New York Stock Exchange. The spin-off was effected through a distribution to VF shareholders of one share of Kontoor Brands common stock for every seven shares of VF common stock held on the record date of May 10, 2019. Accordingly, the Company has reported the results of the Jeans business and the related cash flows as discontinued operations in the Consolidated Statements of Operations and Consolidated Statements of Cash Flows, respectively.
In connection with the spin-off, Kontoor Brands entered into a credit agreement with respect to $1.55 billion in senior secured credit facilities consisting of a senior secured five-year $750.0 million term loan A facility, a senior secured seven-year $300.0 million term loan B facility and a five-year $500.0 million senior secured revolving credit facility (collectively, the "Kontoor Credit Facilities"). Prior to the effective date of the spin-off, Kontoor Brands incurred $1.05 billion of indebtedness under the Kontoor Credit Facilities, which was primarily used to fund a transfer of $906.1 million to VF and its subsidiaries, net of $126.8 million of cash received from VF. As a result of the spin-off, VF divested net assets of $54.9 million, including the indebtedness under the Kontoor Credit Facilities. Also included in the net assets divested was $75.3 million of net accumulated other comprehensive losses attributable to the Jeans business, primarily related to foreign currency translation.
The results of the Wrangler®, Lee® and Rock & Republic® brands were previously reported in the Jeans segment, the results of
the Wrangler® RIGGS brand were previously reported in the Work segment, and the results of the non-VF products sold in VF OutletTM stores were previously reported in the Other category included in the reconciliation of segment revenues and segment profit. The results of the Jeans business recorded in the income from discontinued operations, net of tax line item in the Consolidated Statement of Operations were income of $12.3 million and a loss of $35.8 million for the three and nine months ended December 2019, respectively, including $59.5 million of separation and related expenses during the nine months ended December 2019.
In connection with the spin-off of the Jeans business, the Company entered into several agreements with Kontoor Brands that govern the relationship of the parties following the spin-off including the Separation and Distribution Agreement, the Tax Matters Agreement, the Transition Services Agreement, the VF Intellectual Property License Agreement and the Employee Matters Agreement. Under the terms of the Transition Services Agreement, the Company and Kontoor Brands agreed to provide each other certain transitional services including information technology, information management, human resources, employee benefits administration, supply chain, facilities, and other limited finance and accounting related services for periods up to 24 months. VF and Kontoor Brands have agreed to continue certain services on commercial terms, primarily related to information technology services, for various periods but no longer than through May 31, 2022. Payments and operating expense reimbursements for transition services are recorded within the reportable segments or within the corporate and other expenses line item, in the reconciliation of segment profit in Note 15, based on the function providing the service.
Summarized Discontinued Operations Financial Information
The following table summarizes the major line items for the Occupational Workwear business and the Jeans business that are included in the income from discontinued operations, net of tax line item in the Consolidated Statements of Operations:
  Three Months Ended December Nine Months Ended December
(In thousands) 2020 2019 2020 2019
Net revenues
 $ 176,464  $ 229,023  $ 464,107  $ 998,561 
Cost of goods sold
 115,801  148,810  330,418  632,754 
Selling, general and administrative expenses
 35,576  41,450  103,743  279,933 
Interest income, net
 68  523  541  1,115 
Other income (expense), net
 22  (8) 101  (672)
Income from discontinued operations before income taxes
 25,177  39,278  30,588  86,317 
Income tax expense (benefit) (a)
5,596  (4,143) 5,402  35,324 
Income from discontinued operations, net of tax
 $ 19,581  $ 43,421  $ 25,186  $ 50,993 
(a)Income tax benefit for the three months ended December 2019 reflects a return to accrual adjustment to the previously recorded tax expense related to the Jeans business. Income tax expense for the nine months ended December 2019 includes additional tax expense on nondeductible transaction costs and uncertain tax positions related to the Jeans business.
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) December 2020 March 2020 December 2019
Cash and equivalents
 $ 18,771  $ 39,752  $ 43,922 
Accounts receivable, net
 91,554  83,650  101,835 
Inventories
 242,204  294,000  310,510 
Other current assets
 12,802  6,701  8,137 
Property, plant and equipment, net
 48,605  44,863  41,566 
Intangible assets, net
 54,472  54,471  60,443 
Goodwill
 43,530  43,530  49,630 
Operating lease right-of-use assets
 42,930  38,941  39,565 
Other assets
 5,780  5,231  5,098 
Total assets of discontinued operations
 $ 560,648  $ 611,139  $ 660,706 
Accounts payable
 $ 50,434  $ 63,380  $ 67,244 
Accrued liabilities
 34,470  29,699  33,812 
Operating lease liabilities
 33,073  35,867  38,310 
Other liabilities
 6,303  2,270  2,651 
Deferred income tax liabilities (a)
(4,095) (4,435) (10,247)
Total liabilities of discontinued operations
 $ 120,185  $ 126,781  $ 131,770 
(a)Deferred income tax balances reflect VF's consolidated netting by jurisdiction