Quarterly report pursuant to Section 13 or 15(d)

Capital and Accumulated Other Comprehensive Income (Loss)

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Capital and Accumulated Other Comprehensive Income (Loss)
 9 Months Ended
Oct. 03, 2015
Capital and Accumulated Other Comprehensive Income (Loss)

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

During the first nine months of 2015, the Company purchased 10.0 million shares of Common Stock in open market transactions for $730.1 million 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 2015, VF restored 10.1 million treasury shares to an unissued status, after which they were no longer recognized as shares held in treasury. There were 1,900 shares held in treasury at the end of September 2015, and no shares held in treasury at the end of December 2014 or September 2014. 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 2015, the Company purchased 25,700 shares of Common Stock in open market transactions for $1.8 million. Balances related to shares held for deferred compensation plans are as follows:

 

                                               
     September      December      September  
In millions, except share amounts    2015      2014      2014  

Shares held for deferred compensation plans

      560,049         637,504         640,404   

Cost of shares held for deferred compensation plans

    $ 6.7       $ 7.7       $ 7.6   

Accumulated Other Comprehensive Income (Loss)

Comprehensive income consists of net income and specified components of other comprehensive income (“OCI”). OCI consists of 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 other comprehensive income (loss) in stockholders’ equity, as follows:

 

                                               
     September      December      September  
In thousands    2015      2014      2014  

Foreign currency translation

    $ (585,275 )     $ (356,941 )     $ (161,259 ) 

Defined benefit pension plans

      (348,537 )       (377,134 )       (257,962 ) 

Derivative financial instruments

      35,037         31,389         324   

Marketable securities

      —           414         662   
  

 

 

     

 

 

     

 

 

  

Accumulated other comprehensive income (loss)

    $ (898,775 )     $ (702,272 )     $ (418,235 ) 
  

 

 

     

 

 

     

 

 

  

 

The changes in accumulated other comprehensive income (loss), net of related taxes, are as follows:

 

     Three Months Ended September 2015  
In thousands    Foreign
Currency
Translation 		    Defined
Benefit
Pension Plans 		    Derivative
Financial
Instruments 		    Marketable
Securities 		    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 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
     Three Months Ended September 2014  
In thousands    Foreign
Currency
Translation 		    Defined
Benefit
Pension Plans 		    Derivative
Financial
Instruments 		    Marketable
Securities 		    Total  

Balance, June 2014

    $ 70,525      $ (264,187 )    $ (38,684 )    $ 134      $ (232,212 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Other comprehensive income (loss) before reclassification

      (231,784 )      —          31,171        528        (200,085 ) 

Amounts reclassified from accumulated other comprehensive income (loss)

      —          6,225        7,837        —          14,062   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net other comprehensive income (loss)

      (231,784 )      6,225        39,008        528        (186,023 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Balance, September 2014

    $ (161,259 )    $ (257,962 )    $ 324      $ 662      $ (418,235 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
     Nine Months Ended September 2015  
In thousands    Foreign
Currency
Translation 		    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 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
     Nine Months Ended September 2014  
In thousands    Foreign
Currency
Translation 		    Defined
Benefit
Pension Plans 		    Derivative
Financial
Instruments 		    Marketable
Securities 		    Total  

Balance, December 2013

    $ 106,647      $ (277,451 )    $ (41,754 )    $ 838      $ (211,720 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Other comprehensive income (loss) before reclassifications

      (267,906 )      —          26,457        (176 )      (241,625 ) 

Amounts reclassified from accumulated other comprehensive income (loss)

      —          19,489        15,621        —          35,110   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net other comprehensive income (loss)

      (267,906 )      19,489        42,078        (176 )      (206,515 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Balance, September 2014

    $ (161,259 )    $ (257,962 )    $ 324      $ 662      $ (418,235 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

Reclassifications out of accumulated other comprehensive income (loss) are as follows:

 

In thousands   

Affected Line Item in the

Consolidated Statements

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

Comprehensive Income (Loss) Components

   

of Income

    2015     2014     2015     2014  

Amortization of defined benefit pension plans:

            

Net deferred actuarial losses

            (a)    $ (15,493 )    $ (9,385 )    $ (46,485 )    $ (28,158 ) 

Deferred prior service costs

            (a)      (760 )      (1,361 )      (2,281 )      (4,085 ) 

Pension settlement charges

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

 

 

    

 

 

    

 

 

    

 

 

  
  

Total before tax

      (18,653 )      (10,746 )      (52,758 )      (32,243 ) 
  

Tax benefit

      7,065        4,521        24,161        12,754   
     

 

 

    

 

 

    

 

 

    

 

 

  
  

Net of tax

      (11,588 )      (6,225 )      (28,597 )      (19,489 ) 
     

 

 

    

 

 

    

 

 

    

 

 

  

Gains (losses) on derivative financial instruments

            

Foreign exchange contracts

    Net sales      (22,434 )      (7,657 )      (51,279 )      (7,539 ) 

Foreign exchange contracts

    Cost of goods sold      39,142        (3,496 )      80,633        (13,199 ) 

Foreign exchange contracts

    Other income (expense), net      7,541        (730 )      20,515        (1,945 ) 

Interest rate contracts

    Interest expense      (1,078 )      (1,028 )      (3,200 )      (3,051 ) 
     

 

 

    

 

 

    

 

 

    

 

 

  
  

Total before tax

      23,171        (12,911 )      46,669        (25,734 ) 
  

Tax benefit (expense)

      (8,956 )      5,074        (18,392 )      10,113   
     

 

 

    

 

 

    

 

 

    

 

 

  
  

Net of tax

      14,215        (7,837 )      28,277        (15,621 ) 
     

 

 

    

 

 

    

 

 

    

 

 

  

Gains (losses) on sale of marketable securities

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

Tax expense

      —          —          (463 )      —     
     

 

 

    

 

 

    

 

 

    

 

 

  
  

Net of tax

      —          —          714        —     
     

 

 

    

 

 

    

 

 

    

 

 

  

Total reclassifications for the period

    Net of tax    $ 2,627      $ (14,062 )    $ 394      $ (35,110 ) 
     

 

 

    

 

 

    

 

 

    

 

 

  

 

(a)  These accumulated other comprehensive income (loss) components are included in the computation of net periodic pension cost (see Note G for additional details).