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

Quarterly report pursuant to Section 13 or 15(d)

DISCONTINUED OPERATIONS

DISCONTINUED OPERATIONS

6 Months Ended

Oct. 02, 2021

Discontinued Operations and Disposal Groups [Abstract]

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.

Occupational Workwear Business

On January 21, 2020, VF announced its decision to explore the divestiture of its Occupational Workwear business. The Occupational Workwear business was 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 included 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. 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, through the date of sale. The related held-for-sale assets and liabilities have been reported as assets and liabilities of discontinued operations in the Consolidated Balance Sheets, through the date of sale.

On June 28, 2021, VF completed the sale of the Occupational Workwear business. The Company received proceeds of $616.5 million, net of cash sold, resulting in an estimated after-tax gain on sale of $145.6 million, which is included in the income from discontinued operations, net of tax line item in the Consolidated Statement of Operations for the six months ended September 2021, and is subject to working capital and other adjustments.

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 $170.3 million (including an estimated after-tax gain on sale of $145.6 million) for the six months ended September 2021, and income of $13.5 million and $5.6 million for the three and six months ended September 2020, respectively.

Under the terms of a transition services agreement, the Company will provide certain support services for periods generally up to 12 months from the closing date of the transaction.

Summarized Discontinued Operations Financial Information

The following table summarizes the major line items for the Occupational Workwear business that are included in the income from discontinued operations, net of tax line item in the Consolidated Statements of Operations:


	Three Months Ended September				Six Months Ended September

(In thousands)	2021		2020		2021		2020
Net revenues	$	—	$	162,310	$	181,424	$	287,643
Cost of goods sold	—		113,147		117,193		214,617
Selling, general and administrative expenses	—		34,911		38,735		68,167

Interest income, net	—		180		194		473
Other income (expense), net	—		79		6		79
Income from discontinued operations before income taxes	—		14,511		25,696		5,411
Gain on the sale of discontinued operations before income taxes	—		—		133,571		—
Total income from discontinued operations before income taxes	—		14,511		159,267		5,411
Income tax expense (benefit) (a)	—		1,035		(11,006)		(194)
Income from discontinued operations, net of tax	$	—	$	13,476	$	170,273	$	5,605

(a)Income tax benefit for the six months ended September 2021 includes $12.0 million of deferred tax benefit related to capital and other losses realized upon the sale of the Occupational Workwear business.

The following table summarizes the carrying amounts of major classes of assets and liabilities of discontinued operations as of March 2021 and September 2020.


(In thousands)	March 2021		September 2020
Cash and equivalents	$	34,132	$	26,846
Accounts receivable, net	103,835		82,520
Inventories	245,227		241,519
Other current assets	8,208		7,773
Property, plant and equipment, net	49,394		47,964
Intangible assets, net	54,471		54,471
Goodwill	43,530		43,530
Operating lease right-of-use assets	43,220		42,445
Other assets	5,561		5,609

Total assets of discontinued operations	$	587,578	$	552,677


Accounts payable	$	59,965	$	46,493
Accrued liabilities	38,956		32,322
Operating lease liabilities	31,301		34,688
Other liabilities	3,863		5,177
Deferred income tax liabilities (a)	(8,828)		(4,324)
Total liabilities of discontinued operations	$	125,257	$	114,356

(a)Deferred income tax balances reflect VF's consolidated netting by jurisdiction.