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

Quarterly report pursuant to Section 13 or 15(d)

INTANGIBLE ASSETS

INTANGIBLE ASSETS

3 Months Ended

Jun. 30, 2018

Goodwill and Intangible Assets Disclosure [Abstract]



			June 2018						March 2018
(In thousands)	Weighted Average Amortization Period	Amortization Method	Cost		Accumulated Amortization		Net Carrying Amount		Net Carrying Amount
Amortizable intangible assets:
Customer relationships	17 years	Accelerated	$	370,718	$	143,481	$	227,237	$	201,544
License agreements	20 years	Accelerated	19,798		13,894		5,904		6,256
Trademarks	16 years	Straight-line	58,932		9,283		49,649		50,623
Other	8 years	Straight-line	9,287		4,191		5,096		5,170
Amortizable intangible assets, net							287,886		263,593
Indefinite-lived intangible assets:
Trademarks and trade names							1,896,390		1,856,517
Intangible assets, net							$	2,184,276	$	2,120,110

Intangible assets increased during the three months ended June 2018 due to the addition of intangible assets from the Icebreakerand Altra acquisitions, which was partially offset by the impact of foreign currency fluctuations.

Amortization expense for the three months ended June 2018 was $7.9 million. Based on the carrying amounts of amortizable intangible assets noted above, estimated amortization expense for the next five years beginning in Fiscal 2019 is $33.5 million, $32.8 million, $31.2 million, $29.2 million and $27.6 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 does 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.