VF Corporation Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

LEASES

LEASES

12 Months Ended

Mar. 28, 2020

The assets and liabilities related to operating and finance leases were as follows:



(In thousands)	Location in Consolidated Balance Sheet	March 2020
Assets:
Operating lease assets	Operating lease right-of-use assets	$	1,273,514
Finance lease assets	Property, plant and equipment, net	18,260
Total lease assets		$	1,291,774

Liabilities:
Current
Operating lease liabilities	Accrued liabilities	$	352,578
Finance lease liabilities	Current portion of long-term debt	1,018
Noncurrent
Operating lease liabilities	Operating lease liabilities	1,020,651
Finance lease liabilities	Long-term debt	22,755
Total lease liabilities		$	1,397,002

The components of lease costs were as follows:



(In thousands)	Year Ended March 2020
Operating lease cost	$	420,175
Finance lease cost – amortization of right-of-use assets	3,700
Finance lease cost – interest on lease liabilities	1,018
Short-term lease cost	3,696
Variable lease cost	109,935
Impairment	10,728
Gain recognized from sale-leaseback transactions	(11,329		)
Total lease cost	$	537,923

Supplemental cash flow information related to leases was as follows:



(In thousands)	Year Ended March 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows – operating leases	$	391,344
Operating cash flows – finance leases	1,018
Financing cash flows – finance leases	4,890
Right-of-use assets obtained in exchange for lease liabilities:
Operating leases ^(a)	478,879
Finance leases	—


^(a)	Excludes amounts recorded upon adoption of ASC 842.

Lease terms and discount rates were as follows:



	March 2020
Weighted average remaining lease term:
Operating leases	5.23 years
Finance leases	16.51 years

Weighted average discount rate:
Operating leases	2.23	%
Finance leases	2.71	%

Maturities of operating and finance lease liabilities for the next five fiscal years and thereafter as of March 2020 were as follows:



(In thousands)	Operating Leases		Finance Leases		Total
2021	$	377,563	$	1,663	$	379,226
2022	319,804		1,536		321,340
2023	244,412		1,626		246,038
2024	167,055		1,550		168,605
2025	109,448		1,691		111,139
Thereafter	252,153		21,805		273,958
Total lease payments	1,470,435		29,871		1,500,306
Less: present value adjustment	97,206		6,098		103,304
Present value of lease liabilities	$	1,373,229	$	23,773	$	1,397,002

The Company excluded approximately $319.6 million of leases (undiscounted basis) that have not yet commenced, relating primarily to distribution centers. These leases will commence beginning in Fiscal 2021 with lease terms of 2 to 15 years.

Future minimum lease payments under operating leases with noncancelable lease terms in excess of one year from continuing operations as of March 2019, prior to the adoption of ASC 842, were as follows:



(In thousands)	Operating Leases
2020	$	317,506
2022	285,226
2023	210,647
2024	153,154
2025	99,376
Thereafter	247,743
Total lease payments	$	1,313,652

Rent expense recorded under ASC 840 was included in the Consolidated Statements of Income as follows:



	Year Ended March		Three Months Ended March (Transition Period)		Year Ended December

(In thousands)	2019		2018		2017
Minimum rent expense	$	349,173	$	85,354	$	314,862
Contingent rent expense	34,209		6,678		23,954
Rent expense	$	383,382	$	92,032	$	338,816