Annual report pursuant to Section 13 and 15(d)

DISCONTINUED OPERATIONS AND OTHER DIVESTITURES

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DISCONTINUED OPERATIONS AND OTHER DIVESTITURES
 12 Months Ended
Apr. 03, 2021
Discontinued Operations and Disposal Groups [Abstract]  
DISCONTINUED OPERATIONS AND OTHER DIVESTITURES DISCONTINUED OPERATIONS AND OTHER DIVESTITURES
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.
Discontinued Operations

Occupational Workwear Business
On January 21, 2020, VF announced its decision to explore the divestiture of its Occupational Workwear business. The Occupational Workwear business is 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 includes 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, which continued to be met as of April 3, 2021. 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. The related held-for-sale assets and liabilities have
been reported as assets and liabilities of discontinued operations in the Consolidated Balance Sheets. Refer to Note 27 for additional information related to the divestiture.
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 $53.0 million, $91.2 million (including goodwill and intangible asset impairment charges of $11.1 million) and $119.0 million for the years ended March 2021, 2020 and 2019, respectively.
During the year ended March 2020, management performed quantitative impairment analysis over the Kodiak and Terra reporting unit goodwill and the indefinite-lived trademark intangible assets. Based on the analysis, management recorded a goodwill impairment charge of $6.1 million and an impairment charge of $5.0 million on the indefinite-lived intangible assets.
Certain corporate overhead costs and segment costs previously allocated to the Occupational Workwear business for segment reporting purposes did not qualify for classification within discontinued operations and have been reallocated to continuing operations.
Jeans Business
On May 22, 2019, VF completed the spin-off of its Jeans business, which included the Wrangler®, Lee® and Rock & Republic® brands, as well as the VF OutletTM business, into an independent, publicly traded company now operating under the name Kontoor Brands, Inc. ("Kontoor Brands") and trading under the symbol "KTB" on the New York Stock Exchange. The spin-off was effected through a distribution to VF shareholders of one share of Kontoor Brands common stock for every seven shares of VF common stock held on the record date of May 10, 2019. Accordingly, the Company has reported the results of the Jeans business and the related cash flows as discontinued operations in the Consolidated Statements of Operations and Consolidated Statements of Cash Flows, respectively.
In connection with the spin-off, Kontoor Brands entered into a credit agreement with respect to $1.55 billion in senior secured credit facilities consisting of a senior secured five-year $750.0 million term loan A facility, a senior secured seven-year $300.0 million term loan B facility and a five-year $500.0 million senior secured revolving credit facility (collectively, the "Kontoor Credit Facilities"). Prior to the effective date of the spin-off, Kontoor Brands incurred $1.05 billion of indebtedness under the Kontoor Credit Facilities, which was primarily used to fund a transfer of $906.1 million to VF and its subsidiaries, net of $126.8 million of cash received from VF. As a result of the spin-off, VF divested net assets of $54.9 million, including the indebtedness under the Kontoor Credit Facilities. Also included in the net assets divested was $75.3 million of net accumulated other comprehensive losses attributable to the Jeans business, primarily related to foreign currency translation.
The results of the Wrangler®, Lee® and Rock & Republic® brands were previously reported in the former Jeans segment, the results of the Wrangler® RIGGS brand were previously reported in the Work segment, and the results of the non-VF products sold in VF OutletTM stores were previously reported in the Other
category included in the reconciliation of segment revenues and segment profit. The results of the Jeans business recorded in the income from discontinued operations, net of tax line item in the Consolidated Statements of Operations were a loss of $40.9 million and income of $269.6 million in the years ended March 2020 and 2019, respectively.
Certain corporate overhead costs and segment costs previously allocated to the Jeans business for segment reporting purposes did not qualify for classification within discontinued operations and have been reallocated to continuing operations. The results of the Jeans business reported as discontinued operations include $59.5 million of separation and related expenses during the year ended March 2020.
In connection with the spin-off of the Jeans business, the Company entered into several agreements with Kontoor Brands that govern the relationship of the parties following the spin-off including the Separation and Distribution Agreement, the Tax Matters Agreement, the Transition Services Agreement, the VF Intellectual Property License Agreement and the Employee Matters Agreement. Under the terms of the Transition Services Agreement, the Company and Kontoor Brands agreed to provide each other certain transitional services including information technology, information management, human resources, employee benefits administration, supply chain, facilities, and other limited finance and accounting related services for periods up to 24 months. VF and Kontoor Brands have agreed to continue certain services on commercial terms, primarily related to information technology services, for various periods but no longer than through May 31, 2022. Payments and operating expense reimbursements for transition services are recorded within the reportable segments or within the corporate and other expenses line item, in the reconciliation of segment profit in Note 20, based on the function providing the service.
Nautica® Brand Business

During the three months ended December 2017, the Company reached the strategic decision to exit the Nautica® brand business, and determined that it met the held-for-sale and discontinued operations accounting criteria. Accordingly, the Company has reported the results of the Nautica® brand business and the related cash flows as discontinued operations in the Consolidated Statements of Operations and Consolidated Statements of Cash Flows, respectively.
On April 30, 2018, VF completed the sale of the Nautica® brand business. The Company received proceeds of $285.8 million, net of cash sold, resulting in a final after-tax loss on sale of $38.2 million, which includes a decrease of $5.4 million in the estimated loss on sale included in the income from discontinued operations, net of tax line item in the Consolidated Statement of Operations for the year ended March 2019.
The results of the Nautica® brand's North America business were previously reported in the former Sportswear segment, and the results of the Asia business were previously reported in the former Outdoor & Action Sports segment. The results of the Nautica® brand business recorded in the income from discontinued operations, net of tax line item in the Consolidated Statement of Operations were income of $0.8 million (including a $5.4 million decrease in the estimated loss on sale) for the year ended March 2019.
Summarized Discontinued Operations Financial Information
The following table summarizes the major line items included for the Occupational Workwear business, the Jeans business and the Nautica® brand business that are included in the income from discontinued operations, net of tax line item in the Consolidated Statements of Operations:
Year Ended March
(In thousands) 2021 2020 2019
Net revenues $ 671,574  $ 1,199,524  $ 3,603,686 
Cost of goods sold 471,652  773,418  2,185,861 
Selling, general and administrative expenses 143,259  320,462  937,351 
Impairment of goodwill and intangible assets —  11,100  — 
Interest income, net 312  1,601  7,305 
Other income (expense), net 365  (687) (3,600)
Income from discontinued operations before income taxes 57,340  95,458  484,179 
Gain on the sale of discontinued operations before income taxes —  —  4,589 
Total income from discontinued operations before income taxes 57,340  95,458  488,768 
Income tax expense (a)
4,377  45,155  99,402 
Income from discontinued operations, net of tax $ 52,963  $ 50,303  $ 389,366 
(a)Income tax expense for the year ended March 2020 includes additional tax expense on nondeductible transaction costs and uncertain tax positions related to the Jeans business.
The following table summarizes the carrying amounts of major classes of assets and liabilities of discontinued operations for each of the periods presented:
(In thousands) March 2021 March 2020
Cash and equivalents $ 34,132  $ 39,752 
Accounts receivable, net 103,835  83,650 
Inventories 245,227  294,000 
Other current assets 8,208  6,701 
Property, plant and equipment, net 49,394  44,863 
Intangible assets, net 54,471  54,471 
Goodwill 43,530  43,530 
Operating lease right-of-use assets 43,220  38,941 
Other assets 5,561  5,231 
Total assets of discontinued operations $ 587,578  $ 611,139 
Accounts payable $ 59,965  $ 63,380 
Accrued liabilities 38,956  29,699 
Operating lease liabilities 31,301  35,867 
Other liabilities 3,863  2,270 
Deferred income tax liabilities (a)
(8,828) (4,435)
Total liabilities of discontinued operations $ 125,257  $ 126,781 
(a)Deferred income tax balances reflect VF's consolidated netting by jurisdiction.
Other Divestitures
Reef® Brand Business
During the three months ended September 29, 2018, the Company reached the decision to sell the Reef® brand business, which was included in the Active segment.
VF signed a definitive agreement for the sale of the Reef® brand business on October 2, 2018, and completed the transaction on October 26, 2018. VF received cash proceeds of $139.4 million, and recorded a $14.4 million final loss on sale, which was included in the other income (expense), net line item in the Consolidated Statement of Operations for the year ended March 2019.
Van Moer Business
During the three months ended September 29, 2018, the Company reached the decision to sell the Van Moer business, which was acquired in connection with the Williamson-Dickie business and included in the Work segment.
VF completed the sale of the Van Moer business on October 5, 2018, and received cash proceeds of €7.0 million ($8.1 million). VF recorded a $22.4 million final loss on sale, which was included in the other income (expense), net line item in the Consolidated Statement of Operations for the year ended March 2019.