Quarterly report pursuant to Section 13 or 15(d)

FAIR VALUE MEASUREMENTS

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FAIR VALUE MEASUREMENTS
 9 Months Ended
Dec. 28, 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
December 2024
Financial assets:
Cash equivalents:
Money market funds $ 539,061  $ 539,061  $ —  $ — 
Time deposits 37,709  37,709  —  — 
Derivative financial instruments 91,685  —  91,685  — 
Deferred compensation and other 87,789  87,789  —  — 
Financial liabilities:
Derivative financial instruments 26,828  —  26,828  — 
Deferred compensation 84,329  —  84,329  — 
Contingent consulting fees 21,951  —  —  21,951 
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 nine months ended December 2024 or the year ended March 2024.
The following table presents the change in fair value of the contingent consulting fees designated as Level 3:
(In thousands) Contingent Consulting Fees
Balance, September 2024 $ 13,563 
Change in fair value 8,388 
Balance, December 2024 $ 21,951 
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 (through their settlement in the three months ended December 2024), 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.
During the second quarter of Fiscal 2025, VF entered into a contract with a consulting firm to support Reinvent, VF's transformation program. The contract includes contingent fees tied to increases in VF's stock price. These fees are accounted for under Accounting Standards Codification Topic 718 — Stock Compensation ("ASC 718") as a liability award to a non-employee. Accordingly, VF has utilized the Monte Carlo valuation model (Level 3) to estimate the fair value of the award at its inception, and will adjust such fair value on a quarterly basis over the measurement period, which concludes on June 30, 2027. Changes in the fair value are recognized in the SG&A expenses line item in the Consolidated Statements of Operations over the relevant service period. The valuation includes the effects of market conditions that are based upon VF's stock price
performance relative to stock price targets and a minimum payout dependent on the Standard & Poor's 500 Index return and VF's TSR versus that of peer companies over the measurement period. As of December 2024, the total fair value of the contingent fees was $36.2 million, with $8.4 million and $22.0 million recognized in the three and nine months ended December 2024, respectively.
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 December 2024 and March 2024, their carrying values approximated their fair values. Additionally, at December 2024 and March 2024, the carrying values of VF’s long-term debt, including the current portion, were $4,635.1 million and $5,703.0 million, respectively, compared with fair values of $4,315.2 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
Dickies Indefinite-Lived Intangible Asset Impairment Analysis
During the three months ended December 2024, management determined that the continued downturn in the Dickies financial results and projections, combined with expectations of a slower recovery than previously anticipated, was a triggering event that required management to perform a quantitative impairment analysis of the Dickies indefinite-lived trademark intangible asset. The carrying value of the indefinite-lived trademark intangible asset at the November 23, 2024 testing date was $290.0 million. As a result of the impairment testing performed, VF recorded an impairment charge of $51.0 million to write down the Dickies indefinite-lived trademark intangible asset to its estimated fair value.
The Dickies® brand, acquired in 2017, sells authentic, functional, durable and affordable workwear and has expanded to include work-inspired, casual-use products. Products are sold globally through mass merchants, specialty stores, independent distributors and licensees, independently-operated partnership stores, concession retail stores, VF-operated stores, on websites with strategic digital partners and online at www.dickies.com. The Dickies® brand is included in the Work reportable segment.
The fair value of the Dickies 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 Dickies 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 business.
Key assumptions developed by management and used in the quantitative analysis of the Dickies indefinite-lived trademark intangible asset include:
•Revenue projections, including a base year that considered recent actual results lower than previous internal forecasts, continued weakness in certain key accounts and markets, slower recovery from the recent downturn, a return to moderate revenue growth by the end of the projection period that reflects the long-term strategy for the business, and a terminal growth rate 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;
•A reduced royalty rate based on market data and current performance of the brand as well as active license agreements for the Dickies® brand and similar VF brands; and
•Market-based discount rates.
The valuation model used by management in the impairment testing assumes an extended recovery period from the recent downturn in the brand's operating results and a return to moderate revenue growth by the end of the projection period. If the brand is unable to achieve the financial projections, royalty rates decrease, or if market-based discount rates increase, additional impairment of the indefinite-lived trademark intangible asset could occur in the future.