DISCONTINUED OPERATIONS

9 Months Ended

Dec. 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 $1.500 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.