Quarterly report pursuant to Section 13 or 15(d)

DISCONTINUED OPERATIONS

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DISCONTINUED OPERATIONS
 9 Months Ended
Dec. 28, 2024
Discontinued Operations and Disposal Groups [Abstract]  
DISCONTINUED OPERATIONS DISCONTINUED OPERATIONS
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.
Supreme
On July 16, 2024, VF entered into a Purchase Agreement with EssilorLuxottica S.A. to sell Supreme for an aggregate base purchase price of $1.500 billion, subject to customary adjustments for cash, indebtedness, working capital and transaction expenses as more fully set forth in the Purchase Agreement. On October 1, 2024, VF completed the sale of Supreme. VF received proceeds of $1.486 billion, net of cash sold and subject to post-closing adjustments, resulting in an estimated after-tax loss on sale of $127.5 million, which is included in the income (loss) from discontinued operations, net of tax line item in the Consolidated Statement of Operations for the nine months ended December 2024. An increase in the estimated after-tax loss on sale of $2.7 million was included in the income (loss) from discontinued operations, net of tax line item in the Consolidated Statements of Operations for the three months ended December 2024. VF used a portion of the net cash proceeds to prepay $1.0 billion of its delayed draw Term Loan ("DDTL") pursuant to the terms of the DDTL Agreement, as amended, which required repayment within ten business days of VF’s receipt of the net cash proceeds from the sale of Supreme, and to repay $450.0 million of commercial paper borrowings upon maturity during the three months ended December 2024.
During the second quarter of Fiscal 2025, the Company determined that Supreme met the held-for-sale and discontinued operations accounting criteria. Accordingly, the Company has reported the results of Supreme 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. These changes have been applied to all periods presented.
The results of Supreme were previously reported in the Active segment. The results of Supreme recorded in the income (loss) from discontinued operations, net of tax line item in the Consolidated Statements of Operations were losses of $1.3 million (including a $2.7 million increase to the estimated after-tax loss on sale) and $258.5 million (including the estimated after-tax loss on sale of $127.5 million and goodwill and intangible asset impairment charges of $145.0 million) for the three and nine months ended December 2024, respectively, and income of $49.3 million and $55.8 million for the three and nine months ended December 2023, respectively.
During the first quarter of Fiscal 2025, VF determined that a triggering event had occurred requiring impairment testing of the Supreme reporting unit goodwill and indefinite-lived trademark intangible asset. 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.
Under the terms of a transition services agreement, the Company will provide certain post-closing accounting, tax, treasury, digital technology, supply chain and human resource services on a transitional basis for periods generally up to 12 months from the closing date of the transaction. Under the terms of a secondment agreement, certain employees associated with the Supreme business will remain employees of VF and work exclusively in support of Supreme, and at Supreme's expense, through the end of Fiscal 2025.
Certain corporate overhead costs and segment costs previously allocated to the Supreme brand for segment reporting purposes did not qualify for classification within discontinued operations and have been allocated to continuing operations. In addition, interest expense and the related interest rate swap impact for the DDTL were reallocated to discontinued operations due to the requirement within the DDTL Agreement, as amended, that the DDTL be prepaid upon the receipt of the net cash proceeds from the sale of Supreme.
Summarized Discontinued Operations Financial Information
The following table summarizes the major line items for Supreme that are included in the income (loss) from discontinued operations, net of tax line item in the Consolidated Statements of Operations:
  Three Months Ended December Nine Months Ended December
(In thousands) 2024 2023 2024 2023
Net revenues $ 5,030  $ 180,089  $ 244,524  $ 412,478 
Cost of goods sold 1,571  66,683  95,520  161,152 
Selling, general and administrative expenses 1,438  54,396  109,991  159,071 
Impairment of goodwill and intangible assets —  —  145,000  — 
Interest expense, net (a)
—  (14,242) (30,767) (42,918)
Other income (expense), net —  1,025  (17) (226)
Income (loss) from discontinued operations before income taxes 2,021  45,793  (136,771) 49,111 
Estimated loss on the sale of discontinued operations before income taxes (2,656) —  (135,194) — 
Total income (loss) from discontinued operations before income taxes (635) 45,793  (271,965) 49,111 
Income tax expense (benefit) 694  (3,491) (13,446) (6,668)
Income (loss) from discontinued operations, net of tax $ (1,329) $ 49,284  $ (258,519) $ 55,779 
(a)As noted above, interest expense and the related interest rate swap impact for the DDTL were reallocated to discontinued operations.
The following table summarizes the carrying amounts of major classes of assets and liabilities of discontinued operations as of March 2024 and December 2023.
(In thousands) March 2024 December 2023
Cash and equivalents $ 18,229  $ 12,069 
Accounts receivable, net 10,636  8,176 
Inventories 68,543  53,997 
Other current assets 18,817  23,106 
Property, plant and equipment, net 34,894  31,983 
Intangible assets, net 852,000  852,000 
Goodwill 815,058  819,652 
Operating lease right-of-use assets 75,287  71,408 
Other assets 19,882  20,271 
Deferred income tax assets (a)
(87,479) (89,260)
Total assets of discontinued operations $ 1,825,867  $ 1,803,402 
Accounts payable $ 28,651  $ 24,375 
Accrued liabilities 51,210  55,276 
Operating lease liabilities 69,554  65,648 
Other liabilities 2,387  2,533 
Total liabilities of discontinued operations $ 151,802  $ 147,832 
(a)Deferred income tax balances reflect VF’s consolidated netting by jurisdiction.