VF Corporation Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

DISCONTINUED OPERATIONS

DISCONTINUED OPERATIONS

9 Months Ended

Jan. 01, 2022

Discontinued Operations and Disposal Groups [Abstract]

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 was 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 included the license of certain Dickies® occupational workwear products that have historically been sold through the business-to-business channel. As of March 28, 2020, 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, through the date of sale. The related held-for-sale assets and liabilities have been reported as assets and liabilities of discontinued operations in the Consolidated Balance Sheets, through the date of sale.

On June 28, 2021, VF completed the sale of the Occupational Workwear business. The Company received proceeds of $616.5 million, net of cash sold, resulting in an estimated after-tax gain on sale of $145.6 million, which is included in the income from discontinued operations, net of tax line item in the Consolidated Statement of Operations for the nine months ended December 2021, and is subject to working capital and other adjustments.

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 $170.3 million (including an estimated after-tax gain on sale of $145.6 million) for the nine months ended December 2021, and income of $19.6 million and $25.2 million for the three and nine months ended December 2020, respectively.

Under the terms of a transition services agreement, the Company will provide certain support services for periods generally up to 12 months from the closing date of the transaction.

Summarized Discontinued Operations Financial Information

The following table summarizes the major line items for the Occupational Workwear 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)	2021		2020		2021		2020
Net revenues	$	—	$	176,464	$	181,424	$	464,107
Cost of goods sold	—		115,801		117,193		330,418
Selling, general and administrative expenses	—		35,576		38,735		103,743

Interest income, net	—		68		194		541
Other income (expense), net	—		22		6		101
Income from discontinued operations before income taxes	—		25,177		25,696		30,588
Gain on the sale of discontinued operations before income taxes	—		—		133,571		—
Total income from discontinued operations before income taxes	—		25,177		159,267		30,588
Income tax expense (benefit) (a)	—		5,596		(11,006)		5,402
Income from discontinued operations, net of tax	$	—	$	19,581	$	170,273	$	25,186

(a)Income tax benefit for the nine months ended December 2021 includes $12.0 million of deferred tax benefit related to capital and other losses realized upon the sale of the Occupational Workwear business.

The following table summarizes the carrying amounts of major classes of assets and liabilities of discontinued operations as of March 2021 and December 2020.


(In thousands)	March 2021		December 2020
Cash and equivalents	$	34,132	$	18,771
Accounts receivable, net	103,835		91,554
Inventories	245,227		242,204
Other current assets	8,208		12,802
Property, plant and equipment, net	49,394		48,605
Intangible assets, net	54,471		54,472
Goodwill	43,530		43,530
Operating lease right-of-use assets	43,220		42,930
Other assets	5,561		5,780

Total assets of discontinued operations	$	587,578	$	560,648


Accounts payable	$	59,965	$	50,434
Accrued liabilities	38,956		34,470
Operating lease liabilities	31,301		33,073
Other liabilities	3,863		6,303
Deferred income tax liabilities (a)	(8,828)		(4,095)
Total liabilities of discontinued operations	$	125,257	$	120,185

(a)Deferred income tax balances reflect VF's consolidated netting by jurisdiction.