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 certain Dickies^® occupational workwear products that have historically been sold through the business-to-business channel.

During the three months ended March 2020, the Company determined the Occupational Workwear business met the held-for-sale and discontinued operations accounting criteria and expects to divest this business during Fiscal 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.

The results of the Occupational Workwear business were previously reported in the Work segment. The results of the Occupational Workwear business recorded in the loss from discontinued operations, net of tax line item in the Consolidated Statements of Operations were a loss of $7.9 million and income of $32.0 million for the three months ended June 2020 and June 2019, respectively.

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 its Jeans business, which included the Wrangler^®, Lee^® and Rock & Republic^® brands, as well as the VF Outlet^TM 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 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 Outlet^TMstores 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 loss from discontinued operations, net of tax line item in the Consolidated Statement of Operations were a loss of $48.0 million for the three months ended June 2019, including $59.5 million of separation and related expenses.

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. 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 14, based on the function providing the service.

Summarized Discontinued Operations Financial Information

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


	Three Months Ended June

(In thousands)	2020		2019
Net revenues	$	125,333	$	556,028
Cost of goods sold	101,470		342,954
Selling, general and administrative expenses	33,256		196,466

Interest income, net	293		33
Other income (expense), net	—		(623)
Income (loss) from discontinued operations before income taxes	(9,100)		16,018


Income tax expense (benefit) ^(a)	(1,229)		32,070
Loss from discontinued operations, net of tax	$	(7,871)	$	(16,052)

^(a)Income tax expense for the three months ended June 2019 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)	June 2020		March 2020		June 2019
Cash and equivalents	$	42,986	$	39,752	$	45,198
Accounts receivable, net	64,065		83,650		94,923
Inventories	258,632		294,000		283,619
Other current assets	10,027		6,701		8,168
Property, plant and equipment, net	46,697		44,863		38,571
Intangible assets, net	54,471		54,471		63,404
Goodwill	43,530		43,530		49,630
Operating lease right-of-use assets	39,452		38,941		34,121
Other assets	5,275		5,231		4,534

Total assets of discontinued operations	$	565,135	$	611,139	$	622,168


Accounts payable	$	27,810	$	63,380	$	80,842
Accrued liabilities	31,134		29,699		31,585
Operating lease liabilities	34,462		35,867		32,082
Other liabilities	2,284		2,270		3,442
Deferred income tax liabilities ^(a)	(4,407)		(4,435)		(10,248)
Total liabilities of discontinued operations	$	91,283	$	126,781	$	137,703

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