DISCONTINUED OPERATIONS

6 Months Ended

Sep. 28, 2024

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.

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 $1.5 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 $1.5 billion, subject to post closing adjustments, and recognized an after-tax estimated loss on sale of Supreme of $124.8 million, which is included in the income (loss) from discontinued operations, net of tax line item in the Consolidated Statements of Operations for the three and six months ended September 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.

During the three months ended September 2024, the Company determined that Supreme met the held-for-sale and discontinued operations accounting criteria. Accordingly, beginning in the second quarter of Fiscal 2025, VF 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. The related held-for-sale assets and liabilities have been reported as assets and liabilities of discontinued operations in the Consolidated Balance Sheets. 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 $150.3 million (including an after-tax estimated loss on sale of $124.8 million) and $257.2 million (including an after-tax estimated loss on sale of $124.8 million and goodwill and intangible asset impairment charges of $145.0 million) for the three and six months ended September 2024, respectively, and income of $0.9 million and $6.5 million for the three and six months ended September 2023, respectively.

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. 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 September				Six Months Ended September

(In thousands)	2024		2023		2024		2023
Net revenues	$	101,253	$	114,116	$	239,494	$	232,389
Cost of goods sold	41,688		48,834		93,949		94,469
Selling, general and administrative expenses	50,700		52,894		108,553		104,675
Impairment of goodwill and intangible assets	—		—		145,000		—
Interest expense, net (a)	(16,037)		(14,533)		(30,767)		(28,676)
Other income (expense), net	447		(1,327)		(17)		(1,251)
Income (loss) from discontinued operations before income taxes	(6,725)		(3,472)		(138,792)		3,318
Estimated loss on the sale of discontinued operations before income taxes	(132,538)		—		(132,538)		—
Total income (loss) from discontinued operations before income taxes	(139,263)		(3,472)		(271,330)		3,318
Income tax expense (benefit)	11,068		(4,417)		(14,140)		(3,177)
Income (loss) from discontinued operations, net of tax	$	(150,331)	$	945	$	(257,190)	$	6,495

(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 for each of the periods presented:


(In thousands)	September 2024		March 2024		September 2023
Cash and equivalents	$	20,188	$	18,229	$	14,087
Accounts receivable, net	13,066		10,636		8,273
Inventories	89,779		68,543		75,760
Other current assets	18,910		18,817		15,671
Property, plant and equipment, net	36,166		34,894		30,689
Intangible assets, net	801,000		852,000		852,000
Goodwill	724,800		815,058		815,351
Operating lease right-of-use assets	86,465		75,287		59,119
Other assets	19,157		19,882		28,348
Deferred income tax assets (a)	(86,009)		(87,479)		(89,515)
Allowance to reduce assets to estimated fair value, less costs to sell	(132,538)		—		—
Total assets of discontinued operations	$	1,590,984	$	1,825,867	$	1,809,783


Accounts payable	$	27,665	$	28,651	$	31,244
Accrued liabilities	38,872		51,210		40,923
Operating lease liabilities	78,723		69,554		54,725
Other liabilities	2,531		2,387		10,682

Total liabilities of discontinued operations	$	147,791	$	151,802	$	137,574

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