Quarterly report pursuant to Section 13 or 15(d)

Derivative Financial Instruments and Hedging Activities (Tables)

v3.5.0.2
Derivative Financial Instruments and Hedging Activities (Tables)
6 Months Ended
Jul. 02, 2016
Outstanding Derivatives on Individual Contract Basis

The following table presents outstanding derivatives on an individual contract basis:

 

     Fair Value of Derivatives
with Unrealized Gains
     Fair Value of Derivatives
with Unrealized Losses
 
In thousands    June 2016      December 2015      June 2015      June 2016     December 2015     June 2015  

Foreign currency exchange contracts designated as hedging instruments

   $ 91,691       $ 105,536       $ 136,265       $ (33,171   $ (27,896   $ (56,786

Foreign currency exchange contracts not designated as hedging instruments

     —           255         400         (280     (136     (43
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Total derivatives

   $ 91,691       $ 105,791       $ 136,665       $ (33,451   $ (28,032   $ (56,829
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 
Derivative Assets and Liabilities Presented in Consolidated Balance Sheet Adjusted from Current Gross

VF records and presents the fair values of all of its derivative assets and liabilities in the Consolidated Balance Sheets on a gross basis, even though they are subject to master netting agreements. However, if VF were to offset and record the asset and liability balances of its forward foreign currency exchange contracts on a net basis in accordance with the terms of its master netting agreements, the amounts presented in the Consolidated Balance Sheets would be adjusted from the current gross presentation to the net amounts as detailed in the following table:

 

     June 2016     December 2015     June 2015  
In thousands    Derivative
Asset
    Derivative
Liability
    Derivative
Asset
    Derivative
Liability
    Derivative
Asset
    Derivative
Liability
 

Gross amounts presented in the Consolidated

            

Balance Sheets

   $ 91,691      $ (33,451   $ 105,791      $ (28,032   $ 136,665      $ (56,829

Gross amounts not offset in the Consolidated

            

Balance Sheets

     (20,145     20,145        (22,213     22,213        (52,154     52,154   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net amounts

   $ 71,546      $ (13,306   $ 83,578      $ (5,819   $ 84,511      $ (4,675
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Derivative Assets and Liabilities Presented in Consolidated Balance Sheet Adjusted from Current Gross

VF records and presents the fair values of all of its derivative assets and liabilities in the Consolidated Balance Sheets on a gross basis, even though they are subject to master netting agreements. However, if VF were to offset and record the asset and liability balances of its forward foreign currency exchange contracts on a net basis in accordance with the terms of its master netting agreements, the amounts presented in the Consolidated Balance Sheets would be adjusted from the current gross presentation to the net amounts as detailed in the following table:

 

     June 2016     December 2015     June 2015  
In thousands    Derivative
Asset
    Derivative
Liability
    Derivative
Asset
    Derivative
Liability
    Derivative
Asset
    Derivative
Liability
 

Gross amounts presented in the Consolidated

            

Balance Sheets

   $ 91,691      $ (33,451   $ 105,791      $ (28,032   $ 136,665      $ (56,829

Gross amounts not offset in the Consolidated

            

Balance Sheets

     (20,145     20,145        (22,213     22,213        (52,154     52,154   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net amounts

   $ 71,546      $ (13,306   $ 83,578      $ (5,819   $ 84,511      $ (4,675
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Derivatives Classified as Current or Noncurrent Based on Maturity Dates

Derivatives are classified as current or noncurrent based on maturity dates, as follows:

 

In thousands    June 2016      December 2015      June 2015  

Other current assets

   $ 78,021       $ 92,796       $ 122,749   

Accrued liabilities

     (27,329      (25,776      (49,522

Other assets

     13,670         12,995         13,916   

Other liabilities

     (6,122      (2,256      (7,307
Effects of Cash Flow Hedging included in Consolidated Statements of Income and Consolidated Statements of Comprehensive Income

The effects of cash flow hedging included in VF’s Consolidated Statements of Income and Consolidated Statements of Comprehensive Income are summarized as follows:

 

In thousands    Gain (Loss) on Derivatives
Recognized in OCI
Three Months Ended June
     Gain (Loss) on Derivatives
Recognized in OCI
Six Months Ended June
 

Cash Flow Hedging Relationships

   2016      2015      2016      2015  

Foreign currency exchange

   $ 39,049       $ (21,576    $ 23,266       $ 46,434   
In thousands    Gain (Loss) Reclassified from
Accumulated OCI into Income
Three Months Ended June
     Gain (Loss) Reclassified from
Accumulated OCI into Income
Six Months Ended June
 

Location of Gain (Loss)

   2016      2015      2016      2015  

Net sales

   $ 2,284       $ (11,790    $ (2,679    $ (28,845

Cost of goods sold

     20,772         22,123         64,609         41,491   

Selling, general and administrative expenses

     (1,535      —           (2,513      —     

Other income (expense), net

     624         6,139         2,127         12,974   

Interest expense

     (1,121      (1,069      (2,225      (2,122
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 21,024       $ 15,403       $ 59,319       $ 23,498   
  

 

 

    

 

 

    

 

 

    

 

 

 
Effects of Fair Value Hedging Included in Consolidated Statements of Income

Following is a summary of these derivatives included in VF’s Consolidated Statements of Income:

 

In thousands

Derivatives Not Designated as Hedges

   Location of Gain (Loss)
on Derivatives
Recognized in Income
   Gain (Loss) on Derivatives
Recognized in Income
Three Months Ended June
    Gain (Loss) on Derivatives
Recognized in Income
Six Months Ended June
 
      2016     2015     2016     2015  

Foreign currency exchange

   Cost of goods sold    $ (769   $ —        $ 735      $ —     

Foreign currency exchange

   Other income (expense), net      199        (1,430     (1,086     (2,461
     

 

 

   

 

 

   

 

 

   

 

 

 

Total

      $ (570   $ (1,430   $ (351   $ (2,461