Quarterly report pursuant to Section 13 or 15(d)

FAIR VALUE MEASUREMENTS

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FAIR VALUE MEASUREMENTS
 3 Months Ended
Jun. 29, 2024
Fair Value Disclosures [Abstract]  
FAIR VALUE MEASUREMENTS FAIR VALUE MEASUREMENTS
Financial assets and financial liabilities measured and reported at fair value are classified in a three-level hierarchy that prioritizes the inputs used in the valuation process. A financial instrument’s categorization within the valuation hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The hierarchy is based on the observability and objectivity of the pricing inputs, as follows:
•Level 1 — Quoted prices in active markets for identical assets or liabilities.
•Level 2 — Significant directly observable data (other than Level 1 quoted prices) or significant indirectly observable
data through corroboration with observable market data. Inputs would normally be (i) quoted prices in active markets for similar assets or liabilities, (ii) quoted prices in inactive markets for identical or similar assets or liabilities, or (iii) information derived from or corroborated by observable market data.
•Level 3 — Prices or valuation techniques that require significant unobservable data inputs. These inputs would normally be VF’s own data and judgments about assumptions that market participants would use in pricing the asset or liability.
Recurring Fair Value Measurements
The following table summarizes financial assets and financial liabilities that are measured and recorded in the consolidated financial statements at fair value on a recurring basis:
  Total Fair Value
Fair Value Measurement Using (a)
(In thousands) Level 1 Level 2 Level 3
June 2024
Financial assets:
Cash equivalents:
Money market funds $ 189,722  $ 189,722  $ —  $ — 
Time deposits 7,897  7,897  —  — 
Derivative financial instruments 41,357  —  41,357  — 
Deferred compensation and other 94,365  94,365  —  — 
Financial liabilities:
Derivative financial instruments 27,578  —  27,578  — 
Deferred compensation 89,570  —  89,570  — 
Total Fair Value
Fair Value Measurement Using (a)
(In thousands) Level 1 Level 2 Level 3
March 2024
Financial assets:
Cash equivalents:
Money market funds $ 171,931  $ 171,931  $ —  $ — 
Time deposits 54,853  54,853  —  — 
Derivative financial instruments 32,548  —  32,548  — 
Deferred compensation and other 95,236  95,236  —  — 
Financial liabilities:
Derivative financial instruments 40,234  —  40,234  — 
Deferred compensation 90,804  —  90,804  — 
(a)There were no transfers among the levels within the fair value hierarchy during the three months ended June 2024 or the year ended March 2024.

VF’s cash equivalents include money market funds and time deposits with maturities within three months of their purchase dates, that approximate fair value based on Level 1 measurements. The fair value of derivative financial instruments, which consist of foreign exchange forward contracts and interest rate swap contracts, is determined based on observable market inputs (Level 2), including spot and forward exchange rates for foreign currencies and interest rate forward curves, and considers the credit risk of the Company and its counterparties. VF’s deferred compensation assets primarily represent investments held within plan trusts as an
economic hedge of the related deferred compensation liabilities. These investments primarily include mutual funds (Level 1) that are valued based on quoted prices in active markets. Liabilities related to VF’s deferred compensation plans are recorded at amounts due to participants, based on the fair value of the participants’ selection of hypothetical investments.
All other significant financial assets and financial liabilities are recorded in the consolidated financial statements at cost, except life insurance contracts which are recorded at cash surrender value. These other financial assets and financial liabilities
include cash held as demand deposits, accounts receivable, short-term borrowings, accounts payable and accrued liabilities. At June 2024 and March 2024, their carrying values approximated their fair values. Additionally, at June 2024 and March 2024, the carrying values of VF’s long-term debt, including the current portion, were $5,690.3 million and $5,703.0 million, respectively, compared with fair values of $5,231.4 million and $5,263.3 million at those respective dates. Fair value for long-term debt is a Level 2 estimate based on quoted market prices or values of comparable borrowings.
Nonrecurring Fair Value Measurements
Supreme Reporting Unit and Indefinite-Lived Intangible Asset Impairment Analysis
During the three months ended June 2024, VF determined that a triggering event had occurred requiring impairment testing of the Supreme reporting unit goodwill and indefinite-lived trademark intangible asset. VF's assessment gave consideration to the ongoing negotiations to sell the Supreme reporting unit. The carrying values of the goodwill and indefinite-lived trademark intangible asset at the testing date were $811.6 million and $852.0 million, respectively. As a result of the impairment testing performed, VF recorded impairment charges of $94.0 million and $51.0 million to the Supreme reporting unit goodwill and indefinite-lived trademark intangible asset, respectively.
The Supreme reporting unit is included in the Active reportable segment.
Management estimated the fair value of the Supreme reporting unit using Company-specific inputs, including estimates of fair value subsequently confirmed by the transaction price discussed in Note 18. The fair value of the Supreme® indefinite-lived trademark intangible asset was estimated using valuation
techniques consistent with those discussed in the Critical Accounting Policies and Estimates section included in Management’s Discussion and Analysis in the Fiscal 2024 Form 10-K.
Management’s revenue forecasts used in the Supreme® indefinite-lived trademark intangible asset valuation considered recent and historical performance, strategic initiatives, industry trends and macroeconomic factors. Assumptions used in the valuation were similar to those that would be used by market participants performing independent valuations of the asset.
Key assumptions developed by management and used in the quantitative analysis of the Supreme® indefinite-lived trademark intangible asset include:
•Financial projections that are comparable to those used in the prior year testing, as the brand is executing on its strategy, with moderate revenue growth throughout the forecast period that reflects the long-term strategy for the business, and terminal growth rates based on the expected long-term growth rate of the business;
•Tax rates based on the statutory rates for the countries in which the related intellectual property is domiciled;
•Royalty rates based on market data as well as active license agreements with similar VF brands; and,
•Market-based discount rates that are slightly higher than prior testing due to overall market conditions.
The valuation models used by management in the impairment testing assumes continued recovery in the brand’s operating results with revenue growth over the projection period. If the brand is unable to achieve the financial projections or if market-based discount rates increase, additional impairment of the reporting unit goodwill and indefinite-lived trademark intangible asset could occur in the future.