x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Pennsylvania | 23-1180120 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. employer identification number) |
Large accelerated filer | x | Accelerated filer | ¨ | |||
Non-accelerated filer | ¨ (Do not check if a smaller reporting company) | Smaller reporting company | ¨ | |||
Emerging growth company | ¨ | |||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨ | ||||||
Page No. | |
September 2017 | December 2016 | September 2016 | |||||||||
ASSETS | |||||||||||
Current assets | |||||||||||
Cash and equivalents | $ | 1,546,128 | $ | 1,227,862 | $ | 737,825 | |||||
Accounts receivable, less allowance for doubtful accounts of: September 2017 – $21,469; December 2016 – $20,539; September 2016 – $22,654 | 1,851,430 | 1,161,393 | 1,736,521 | ||||||||
Inventories | 1,909,563 | 1,471,300 | 1,897,546 | ||||||||
Other current assets | 319,991 | 296,698 | 293,904 | ||||||||
Current assets of discontinued operations | 315 | 135,845 | 153,227 | ||||||||
Total current assets | 5,627,427 | 4,293,098 | 4,819,023 | ||||||||
Property, plant and equipment, net | 921,217 | 926,010 | 935,015 | ||||||||
Intangible assets, net | 1,936,522 | 1,797,271 | 1,925,955 | ||||||||
Goodwill | 1,642,873 | 1,708,323 | 1,769,838 | ||||||||
Other assets | 746,882 | 929,190 | 904,742 | ||||||||
Other assets of discontinued operations | — | 85,395 | 88,536 | ||||||||
Total assets | $ | 10,874,921 | $ | 9,739,287 | $ | 10,443,109 | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
Current liabilities | |||||||||||
Short-term borrowings | $ | 1,985,287 | $ | 26,029 | $ | 737,660 | |||||
Current portion of long-term debt | 253,831 | 253,689 | 3,643 | ||||||||
Accounts payable | 554,107 | 642,970 | 550,427 | ||||||||
Accrued liabilities | 1,028,170 | 827,507 | 860,383 | ||||||||
Current liabilities of discontinued operations | — | 35,205 | 25,083 | ||||||||
Total current liabilities | 3,821,395 | 1,785,400 | 2,177,196 | ||||||||
Long-term debt | 2,144,221 | 2,039,180 | 2,347,122 | ||||||||
Other liabilities | 971,885 | 977,076 | 1,049,353 | ||||||||
Other liabilities of discontinued operations | — | (3,290 | ) | (3,339 | ) | ||||||
Commitments and contingencies | |||||||||||
Total liabilities | 6,937,501 | 4,798,366 | 5,570,332 | ||||||||
Stockholders’ equity | |||||||||||
Preferred Stock, par value $1; shares authorized, 25,000,000; no shares outstanding at September 2017, December 2016 or September 2016 | — | — | — | ||||||||
Common Stock, stated value $0.25; shares authorized, 1,200,000,000; shares outstanding at September 2017 – 394,502,698; December 2016 – 414,012,954; September 2016 – 413,682,259 | 98,626 | 103,503 | 103,421 | ||||||||
Additional paid-in capital | 3,456,661 | 3,333,423 | 3,313,077 | ||||||||
Accumulated other comprehensive loss | (914,896 | ) | (1,041,463 | ) | (998,020 | ) | |||||
Retained earnings | 1,297,029 | 2,545,458 | 2,454,299 | ||||||||
Total stockholders’ equity | 3,937,420 | 4,940,921 | 4,872,777 | ||||||||
Total liabilities and stockholders’ equity | $ | 10,874,921 | $ | 9,739,287 | $ | 10,443,109 |
Three Months Ended September | Nine Months Ended September | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Net sales | $ | 3,481,202 | $ | 3,298,484 | $ | 8,370,183 | $ | 8,200,228 | |||||||
Royalty income | 27,616 | 29,232 | 79,893 | 82,371 | |||||||||||
Total revenues | 3,508,818 | 3,327,716 | 8,450,076 | 8,282,599 | |||||||||||
Costs and operating expenses | |||||||||||||||
Cost of goods sold | 1,751,748 | 1,693,071 | 4,225,444 | 4,229,018 | |||||||||||
Selling, general and administrative expenses | 1,168,470 | 1,026,398 | 3,176,536 | 2,939,115 | |||||||||||
Impairment of goodwill | 104,651 | — | 104,651 | — | |||||||||||
Total costs and operating expenses | 3,024,869 | 2,719,469 | 7,506,631 | 7,168,133 | |||||||||||
Operating income | 483,949 | 608,247 | 943,445 | 1,114,466 | |||||||||||
Interest income | 4,571 | 2,215 | 11,672 | 6,459 | |||||||||||
Interest expense | (27,108 | ) | (24,783 | ) | (75,004 | ) | (70,441 | ) | |||||||
Other income (expense), net | (332 | ) | (1,097 | ) | (2,052 | ) | 1,696 | ||||||||
Income from continuing operations before income taxes | 461,080 | 584,582 | 878,061 | 1,052,180 | |||||||||||
Income taxes | 74,316 | 99,358 | 161,753 | 188,528 | |||||||||||
Income from continuing operations | 386,764 | 485,224 | 716,308 | 863,652 | |||||||||||
Income (loss) from discontinued operations, net of tax | (624 | ) | 13,265 | (11,116 | ) | (53,879 | ) | ||||||||
Net income | $ | 386,140 | $ | 498,489 | $ | 705,192 | $ | 809,773 | |||||||
Earnings (loss) per common share - basic | |||||||||||||||
Continuing operations | $ | 0.98 | $ | 1.17 | $ | 1.79 | $ | 2.07 | |||||||
Discontinued operations | — | 0.03 | (0.03 | ) | (0.13 | ) | |||||||||
Total earnings per common share - basic | $ | 0.98 | $ | 1.21 | $ | 1.76 | $ | 1.94 | |||||||
Earnings (loss) per common share - diluted | |||||||||||||||
Continuing operations | $ | 0.97 | $ | 1.16 | $ | 1.77 | $ | 2.04 | |||||||
Discontinued operations | — | 0.03 | (0.03 | ) | (0.13 | ) | |||||||||
Total earnings per common share - diluted | $ | 0.97 | $ | 1.19 | $ | 1.74 | $ | 1.91 | |||||||
Cash dividends per common share | $ | 0.42 | $ | 0.37 | $ | 1.26 | $ | 1.11 |
Three Months Ended September | Nine Months Ended September | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Net income | $ | 386,140 | $ | 498,489 | $ | 705,192 | $ | 809,773 | |||||||
Other comprehensive income (loss) | |||||||||||||||
Foreign currency translation and other | |||||||||||||||
Gains (losses) arising during the period | 53,481 | 4,154 | 188,649 | 48,222 | |||||||||||
Less income tax effect | 11,764 | 508 | 37,966 | (604 | ) | ||||||||||
Defined benefit pension plans | |||||||||||||||
Amortization of net deferred actuarial losses | 10,030 | 16,303 | 31,414 | 48,928 | |||||||||||
Amortization of deferred prior service costs | 643 | 645 | 2,000 | 1,937 | |||||||||||
Current year actuarial gains (losses) and curtailment loss | — | — | 20,996 | — | |||||||||||
Less income tax effect | (3,743 | ) | (6,541 | ) | (19,872 | ) | (19,561 | ) | |||||||
Derivative financial instruments | |||||||||||||||
Gains (losses) arising during the period | (51,147 | ) | 9,571 | (117,580 | ) | 32,837 | |||||||||
Less income tax effect | (679 | ) | (3,675 | ) | 9,744 | (12,506 | ) | ||||||||
Reclassification to net income for (gains) losses realized | (4,609 | ) | (28,458 | ) | (32,419 | ) | (87,777 | ) | |||||||
Less income tax effect | (39 | ) | 10,928 | 5,669 | 33,726 | ||||||||||
Other comprehensive income (loss) | 15,701 | 3,435 | 126,567 | 45,202 | |||||||||||
Comprehensive income | $ | 401,841 | $ | 501,924 | $ | 831,759 | $ | 854,975 |
Nine Months Ended September | |||||||
2017 | 2016 | ||||||
Operating activities | |||||||
Net income | $ | 705,192 | $ | 809,773 | |||
Adjustments to reconcile net income to cash provided by operating activities: | |||||||
Impairment of goodwill | 104,651 | — | |||||
Depreciation and amortization | 207,590 | 205,491 | |||||
Stock-based compensation | 57,709 | 54,933 | |||||
Provision for doubtful accounts | 11,396 | 16,193 | |||||
Pension expense in excess of contributions | 17,601 | 33,866 | |||||
Loss on sale of businesses | 4,936 | 104,357 | |||||
Other, net | 15,187 | 22,466 | |||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | (625,574 | ) | (501,186 | ) | |||
Inventories | (390,419 | ) | (443,115 | ) | |||
Accounts payable | (111,276 | ) | (116,800 | ) | |||
Income taxes | (77,125 | ) | (141,262 | ) | |||
Accrued liabilities | 126,247 | 56,055 | |||||
Other assets and liabilities | (39,432 | ) | (53,574 | ) | |||
Cash provided by operating activities | 6,683 | 47,197 | |||||
Investing activities | |||||||
Proceeds from sale of businesses, net of cash sold | 213,494 | 115,983 | |||||
Capital expenditures | (124,393 | ) | (129,947 | ) | |||
Software purchases | (53,451 | ) | (31,843 | ) | |||
Other, net | (10,558 | ) | (4,997 | ) | |||
Cash provided (used) by investing activities | 25,092 | (50,804 | ) | ||||
Financing activities | |||||||
Net increase in short-term borrowings | 1,959,335 | 287,759 | |||||
Payments on long-term debt | (2,749 | ) | (12,385 | ) | |||
Payment of debt issuance costs | — | (6,772 | ) | ||||
Proceeds from long-term debt | — | 951,782 | |||||
Purchases of treasury stock | (1,200,356 | ) | (1,000,230 | ) | |||
Cash dividends paid | (502,993 | ) | (462,406 | ) | |||
Proceeds from issuance of Common Stock, net of shares withheld for taxes | 48,144 | 40,667 | |||||
Cash provided (used) by financing activities | 301,381 | (201,585 | ) | ||||
Effect of foreign currency rate changes on cash, cash equivalents and restricted cash | (13,914 | ) | 1,018 | ||||
Net change in cash, cash equivalents and restricted cash | 319,242 | (204,174 | ) | ||||
Cash, cash equivalents and restricted cash – beginning of year | 1,231,026 | 946,396 | |||||
Cash, cash equivalents and restricted cash – end of period | $ | 1,550,268 | $ | 742,222 | |||
Balances per Consolidated Balance Sheets: | |||||||
Cash and cash equivalents | $ | 1,546,128 | $ | 737,825 | |||
Other current assets | 3,309 | 3,686 | |||||
Other assets | 831 | 711 | |||||
Total cash, cash equivalents and restricted cash | $ | 1,550,268 | $ | 742,222 |
Additional Paid-in Capital | Accumulated Other Comprehensive Loss | |||||||||||||||||
Common Stock | Retained Earnings | |||||||||||||||||
Shares | Amounts | |||||||||||||||||
Balance, December 2015 | 426,614,274 | $ | 106,654 | $ | 3,192,675 | $ | (1,043,222 | ) | $ | 3,128,731 | ||||||||
Net income | — | — | — | — | 1,074,106 | |||||||||||||
Dividends on Common Stock | — | — | — | — | (635,994 | ) | ||||||||||||
Purchase of treasury stock | (15,932,075 | ) | (3,983 | ) | — | — | (996,485 | ) | ||||||||||
Stock-based compensation, net | 3,330,755 | 832 | 140,748 | — | (24,900 | ) | ||||||||||||
Foreign currency translation and other | — | — | — | (76,410 | ) | — | ||||||||||||
Defined benefit pension plans | — | — | — | 69,498 | — | |||||||||||||
Derivative financial instruments | — | — | — | 8,671 | — | |||||||||||||
Balance, December 2016 | 414,012,954 | 103,503 | 3,333,423 | (1,041,463 | ) | 2,545,458 | ||||||||||||
Adoption of new accounting standard | — | — | — | — | (237,764 | ) | ||||||||||||
Net income | — | — | — | — | 705,192 | |||||||||||||
Dividends on Common Stock | — | — | — | — | (502,993 | ) | ||||||||||||
Purchase of treasury stock | (22,213,162 | ) | (5,553 | ) | — | — | (1,194,803 | ) | ||||||||||
Stock-based compensation, net | 2,702,906 | 676 | 123,238 | — | (18,061 | ) | ||||||||||||
Foreign currency translation and other | — | — | — | 226,615 | — | |||||||||||||
Defined benefit pension plans | — | — | — | 34,538 | — | |||||||||||||
Derivative financial instruments | — | — | — | (134,586 | ) | — | ||||||||||||
Balance, September 2017 | 394,502,698 | $ | 98,626 | $ | 3,456,661 | $ | (914,896 | ) | $ | 1,297,029 |
Three Months Ended September | Nine Months Ended September | ||||||||||||||
In thousands | 2017 | 2016 | 2017 | 2016 | |||||||||||
Revenues | $ | 6,498 | $ | 203,696 | $ | 160,323 | $ | 603,651 | |||||||
Cost of goods sold | 6,580 | 127,876 | 121,172 | 362,215 | |||||||||||
Selling, general and administrative expenses | 1,341 | 51,714 | 36,059 | 173,574 | |||||||||||
Interest expense, net | (1 | ) | (21 | ) | (26 | ) | (183 | ) | |||||||
Other income (expense), net | — | 7 | — | 3 | |||||||||||
Income (loss) from discontinued operations before income taxes | (1,424 | ) | 24,092 | 3,066 | 67,682 | ||||||||||
Gain (loss) on the sale of discontinued operations before income taxes | 411 | (4,439 | ) | (9,506 | ) | (154,275 | ) | ||||||||
Total income (loss) from discontinued operations before income taxes | (1,013 | ) | 19,653 | (6,440 | ) | (86,593 | ) | ||||||||
Income tax (expense) benefit(a) | 389 | (6,388 | ) | (4,676 | ) | 32,714 | |||||||||
Income (loss) from discontinued operations, net of tax | $ | (624 | ) | $ | 13,265 | $ | (11,116 | ) | $ | (53,879 | ) |
(a) | Income tax (expense) benefit for the nine months ended September 2017 includes $8.6 million of deferred tax expense related to GAAP and tax basis differences for LSG. |
In thousands | September 2017 | December 2016 | September 2016 | ||||||||
Accounts receivable, net | $ | — | $ | 36,285 | $ | 48,768 | |||||
Inventories | — | 98,025 | 102,450 | ||||||||
Other current assets | — | 1,535 | 2,009 | ||||||||
Property, plant and equipment, net | 315 | 13,640 | 14,297 | ||||||||
Intangible assets | — | 42,427 | 44,833 | ||||||||
Goodwill | — | 28,636 | 28,636 | ||||||||
Other assets | — | 692 | 770 | ||||||||
Total assets of discontinued operations(a) | $ | 315 | $ | 221,240 | $ | 241,763 | |||||
Accounts payable | $ | — | $ | 21,674 | $ | 15,318 | |||||
Accrued liabilities | — | 13,531 | 9,765 | ||||||||
Other liabilities | — | 791 | 801 | ||||||||
Deferred income tax liabilities(b) | — | (4,081 | ) | (4,140 | ) | ||||||
Total liabilities of discontinued operations(a) | $ | — | $ | 31,915 | $ | 21,744 |
(a) | Amounts at December 2016 and September 2016 have been classified as current and long-term in the Consolidated Balance Sheets. |
(b) | Deferred income tax balances reflect VF’s consolidated netting by jurisdiction. |
In thousands | September 2017 | December 2016 | September 2016 | ||||||||
Finished products | $ | 1,717,516 | $ | 1,278,504 | $ | 1,706,612 | |||||
Work-in-process | 106,120 | 97,725 | 96,727 | ||||||||
Raw materials | 85,927 | 95,071 | 94,207 | ||||||||
Total inventories | $ | 1,909,563 | $ | 1,471,300 | $ | 1,897,546 |
September 2017 | December 2016 | |||||||||||||||||||
In thousands | Weighted Average Amortization Period | Amortization Method | Cost | Accumulated Amortization | Net Carrying Amount | Net Carrying Amount | ||||||||||||||
Amortizable intangible assets: | ||||||||||||||||||||
Customer relationships | 20 years | Accelerated | $ | 265,725 | $ | 134,246 | $ | 131,479 | $ | 128,422 | ||||||||||
License agreements | 28 years | Accelerated | 109,370 | 62,278 | 47,092 | 49,682 | ||||||||||||||
Trademark | 16 years | Straight-line | 58,132 | 6,358 | 51,774 | 54,499 | ||||||||||||||
Other | 9 years | Straight-line | 9,658 | 3,846 | 5,812 | 3,297 | ||||||||||||||
Amortizable intangible assets, net | 236,157 | 235,900 | ||||||||||||||||||
Indefinite-lived intangible assets: | ||||||||||||||||||||
Trademarks and trade names | 1,700,365 | 1,561,371 | ||||||||||||||||||
Intangible assets, net | $ | 1,936,522 | $ | 1,797,271 |
In thousands | Outdoor & Action Sports | Jeanswear | Imagewear | Sportswear | Total | ||||||||||||||
Balance, December 2016 | $ | 1,310,133 | $ | 210,765 | $ | 30,111 | $ | 157,314 | $ | 1,708,323 | |||||||||
Impairment charge | — | — | — | (104,651 | ) | (104,651 | ) | ||||||||||||
Currency translation | 32,260 | 6,941 | — | — | 39,201 | ||||||||||||||
Balance, September 2017 | $ | 1,342,393 | $ | 217,706 | $ | 30,111 | $ | 52,663 | $ | 1,642,873 |
Three Months Ended September | Nine Months Ended September | ||||||||||||||
In thousands | 2017 | 2016 | 2017 | 2016 | |||||||||||
Service cost – benefits earned during the period | $ | 6,202 | $ | 6,478 | $ | 18,733 | $ | 19,434 | |||||||
Interest cost on projected benefit obligations | 14,730 | 16,991 | 44,254 | 51,066 | |||||||||||
Expected return on plan assets | (23,825 | ) | (24,869 | ) | (70,977 | ) | (74,714 | ) | |||||||
Amortization of deferred amounts: | |||||||||||||||
Net deferred actuarial losses | 10,030 | 16,303 | 31,414 | 48,928 | |||||||||||
Deferred prior service costs | 643 | 645 | 2,000 | 1,937 | |||||||||||
Net periodic pension cost | $ | 7,780 | $ | 15,548 | $ | 25,424 | $ | 46,651 |
In thousands, except share amounts | September 2017 | December 2016 | September 2016 | ||||||||
Shares held for deferred compensation plans | 320,615 | 439,667 | 450,067 | ||||||||
Cost of shares held for deferred compensation plans | $ | 3,973 | $ | 5,464 | $ | 5,434 |
In thousands | September 2017 | December 2016 | September 2016 | ||||||||
Foreign currency translation and other | $ | (567,964 | ) | $ | (794,579 | ) | $ | (670,551 | ) | ||
Defined benefit pension plans | (268,159 | ) | (302,697 | ) | (340,891 | ) | |||||
Derivative financial instruments | (78,773 | ) | 55,813 | 13,422 | |||||||
Accumulated other comprehensive loss | $ | (914,896 | ) | $ | (1,041,463 | ) | $ | (998,020 | ) |
Three Months Ended September 2017 | |||||||||||||||
In thousands | Foreign Currency Translation and Other | Defined Benefit Pension Plans | Derivative Financial Instruments | Total | |||||||||||
Balance, June 2017 | $ | (633,209 | ) | $ | (275,089 | ) | $ | (22,299 | ) | $ | (930,597 | ) | |||
Other comprehensive income (loss) before reclassifications | 65,245 | — | (51,826 | ) | 13,419 | ||||||||||
Amounts reclassified from accumulated other comprehensive income (loss) | — | 6,930 | (4,648 | ) | 2,282 | ||||||||||
Net other comprehensive income (loss) | 65,245 | 6,930 | (56,474 | ) | 15,701 | ||||||||||
Balance, September 2017 | $ | (567,964 | ) | $ | (268,159 | ) | $ | (78,773 | ) | $ | (914,896 | ) |
Three Months Ended September 2016 | |||||||||||||||
In thousands | Foreign Currency Translation and Other | Defined Benefit Pension Plans | Derivative Financial Instruments | Total | |||||||||||
Balance, June 2016 | $ | (675,213 | ) | $ | (351,298 | ) | $ | 25,056 | $ | (1,001,455 | ) | ||||
Other comprehensive income (loss) before reclassifications | 4,662 | — | 5,896 | 10,558 | |||||||||||
Amounts reclassified from accumulated other comprehensive income (loss) | — | 10,407 | (17,530 | ) | (7,123 | ) | |||||||||
Net other comprehensive income (loss) | 4,662 | 10,407 | (11,634 | ) | 3,435 | ||||||||||
Balance, September 2016 | $ | (670,551 | ) | $ | (340,891 | ) | $ | 13,422 | $ | (998,020 | ) |
Nine Months Ended September 2017 | |||||||||||||||
In thousands | Foreign Currency Translation and Other | Defined Benefit Pension Plans | Derivative Financial Instruments | Total | |||||||||||
Balance, December 2016 | $ | (794,579 | ) | $ | (302,697 | ) | $ | 55,813 | $ | (1,041,463 | ) | ||||
Other comprehensive income (loss) before reclassifications | 226,615 | 12,253 | (107,836 | ) | 131,032 | ||||||||||
Amounts reclassified from accumulated other comprehensive income (loss) | — | 22,285 | (26,750 | ) | (4,465 | ) | |||||||||
Net other comprehensive income (loss) | 226,615 | 34,538 | (134,586 | ) | 126,567 | ||||||||||
Balance, September 2017 | $ | (567,964 | ) | $ | (268,159 | ) | $ | (78,773 | ) | $ | (914,896 | ) |
Nine Months Ended September 2016 | |||||||||||||||
In thousands | Foreign Currency Translation and Other | Defined Benefit Pension Plans | Derivative Financial Instruments | Total | |||||||||||
Balance, December 2015 | $ | (718,169 | ) | $ | (372,195 | ) | $ | 47,142 | $ | (1,043,222 | ) | ||||
Other comprehensive income (loss) before reclassifications | 47,618 | — | 20,331 | 67,949 | |||||||||||
Amounts reclassified from accumulated other comprehensive income (loss) | — | 31,304 | (54,051 | ) | (22,747 | ) | |||||||||
Net other comprehensive income (loss) | 47,618 | 31,304 | (33,720 | ) | 45,202 | ||||||||||
Balance, September 2016 | $ | (670,551 | ) | $ | (340,891 | ) | $ | 13,422 | $ | (998,020 | ) |
In thousands | Affected Line Item in the Consolidated Statements of Income | Three Months Ended September | Nine Months Ended September | |||||||||||||||
Details About Accumulated Other Comprehensive Income (Loss) Components | ||||||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||||
Amortization of defined benefit pension plans: | ||||||||||||||||||
Net deferred actuarial losses | (a) | $ | (10,030 | ) | $ | (16,303 | ) | $ | (31,414 | ) | $ | (48,928 | ) | |||||
Deferred prior service costs | (a) | (643 | ) | (645 | ) | (2,000 | ) | (1,937 | ) | |||||||||
Pension curtailment loss | Income (loss) from discontinued operations, net of tax | — | — | (1,105 | ) | — | ||||||||||||
Total before tax | (10,673 | ) | (16,948 | ) | (34,519 | ) | (50,865 | ) | ||||||||||
Tax benefit | 3,743 | 6,541 | 12,234 | 19,561 | ||||||||||||||
Net of tax | (6,930 | ) | (10,407 | ) | (22,285 | ) | (31,304 | ) | ||||||||||
Gains (losses) on derivative financial instruments: | ||||||||||||||||||
Foreign exchange contracts | Net sales | 11,614 | 14,676 | 25,074 | 11,997 | |||||||||||||
Foreign exchange contracts | Cost of goods sold | (4,164 | ) | 15,485 | 12,763 | 80,094 | ||||||||||||
Foreign exchange contracts | Selling, general and administrative expenses | (882 | ) | (1,098 | ) | (1,212 | ) | (3,611 | ) | |||||||||
Foreign exchange contracts | Other income (expense), net | (774 | ) | 526 | (688 | ) | 2,653 | |||||||||||
Interest rate contracts | Interest expense | (1,185 | ) | (1,131 | ) | (3,518 | ) | (3,356 | ) | |||||||||
Total before tax | 4,609 | 28,458 | 32,419 | 87,777 | ||||||||||||||
Tax benefit (expense) | 39 | (10,928 | ) | (5,669 | ) | (33,726 | ) | |||||||||||
Net of tax | 4,648 | 17,530 | 26,750 | 54,051 | ||||||||||||||
Total reclassifications for the period | Net of tax | $ | (2,282 | ) | $ | 7,123 | $ | 4,465 | $ | 22,747 |
(a) | These accumulated OCI components are included in the computation of net periodic pension cost (refer to Note H for additional details). |
2017 | |
Expected volatility | 23% to 30% |
Weighted average expected volatility | 24% |
Expected term (in years) | 6.3 to 7.7 |
Weighted average dividend yield | 2.8% |
Risk-free interest rate | 0.7% to 2.4% |
Weighted average fair value at date of grant | $9.90 |
Three Months Ended September | Nine Months Ended September | ||||||||||||||
In thousands | 2017 | 2016 | 2017 | 2016 | |||||||||||
Coalition revenues: | |||||||||||||||
Outdoor & Action Sports | $ | 2,502,590 | $ | 2,326,436 | $ | 5,647,587 | $ | 5,378,272 | |||||||
Jeanswear | 697,701 | 701,416 | 1,945,950 | 2,041,186 | |||||||||||
Imagewear | 138,885 | 127,992 | 423,859 | 404,633 | |||||||||||
Sportswear | 140,272 | 140,705 | 352,848 | 373,977 | |||||||||||
Other | 29,370 | 31,167 | 79,832 | 84,531 | |||||||||||
Total coalition revenues | $ | 3,508,818 | $ | 3,327,716 | $ | 8,450,076 | $ | 8,282,599 | |||||||
Coalition profit: (a) | |||||||||||||||
Outdoor & Action Sports | $ | 524,489 | $ | 491,015 | $ | 877,206 | $ | 842,378 | |||||||
Jeanswear | 121,218 | 142,427 | 323,994 | 388,564 | |||||||||||
Imagewear | 22,377 | 23,981 | 72,349 | 74,497 | |||||||||||
Sportswear | 17,488 | 15,080 | 27,764 | 26,156 | |||||||||||
Other | (737 | ) | (341 | ) | (3,225 | ) | (3,523 | ) | |||||||
Total coalition profit | 684,835 | 672,162 | 1,298,088 | 1,328,072 | |||||||||||
Impairment of goodwill (b) | (104,651 | ) | — | (104,651 | ) | — | |||||||||
Corporate and other expenses (a) | (96,567 | ) | (65,012 | ) | (252,044 | ) | (211,910 | ) | |||||||
Interest expense, net | (22,537 | ) | (22,568 | ) | (63,332 | ) | (63,982 | ) | |||||||
Income from continuing operations before income taxes | $ | 461,080 | $ | 584,582 | $ | 878,061 | $ | 1,052,180 |
(a) | Certain corporate overhead and other costs of $6.0 million and $18.2 million for the three and nine-month periods ended September 2016, respectively, previously allocated to the Imagewear and Outdoor & Action Sports coalitions for segment reporting purposes, have been reallocated to continuing operations as discussed in Note C. |
(b) | Represents goodwill impairment charge in 2017 related to the Sportswear coalition as discussed in Notes G and N. The impairment charge was excluded from the profit of the Sportswear coalition since it is not part of the ongoing operations of the business. |
Three Months Ended September | Nine Months Ended September | ||||||||||||||
In thousands, except per share amounts | 2017 | 2016 | 2017 | 2016 | |||||||||||
Earnings per share – basic: | |||||||||||||||
Income from continuing operations | $ | 386,764 | $ | 485,224 | $ | 716,308 | $ | 863,652 | |||||||
Weighted average common shares outstanding | 393,258 | 413,461 | 400,771 | 417,067 | |||||||||||
Earnings per share from continuing operations | $ | 0.98 | $ | 1.17 | $ | 1.79 | $ | 2.07 | |||||||
Earnings per share – diluted: | |||||||||||||||
Income from continuing operations | $ | 386,764 | $ | 485,224 | $ | 716,308 | $ | 863,652 | |||||||
Weighted average common shares outstanding | 393,258 | 413,461 | 400,771 | 417,067 | |||||||||||
Incremental shares from stock options and other dilutive securities | 4,126 | 5,779 | 3,848 | 6,410 | |||||||||||
Adjusted weighted average common shares outstanding | 397,384 | 419,240 | 404,619 | 423,477 | |||||||||||
Earnings per share from continuing operations | $ | 0.97 | $ | 1.16 | $ | 1.77 | $ | 2.04 |
• | 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. |
Total Fair Value | Fair Value Measurement Using (a) | ||||||||||||||
In thousands | Level 1 | Level 2 | Level 3 | ||||||||||||
September 2017 | |||||||||||||||
Financial assets: | |||||||||||||||
Cash equivalents: | |||||||||||||||
Money market funds | $ | 405,045 | $ | 405,045 | $ | — | $ | — | |||||||
Time deposits | 8,307 | 8,307 | — | — | |||||||||||
Derivative financial instruments | 26,658 | — | 26,658 | — | |||||||||||
Investment securities | 202,721 | 189,744 | 12,977 | — | |||||||||||
Financial liabilities: | |||||||||||||||
Derivative financial instruments | 89,212 | — | 89,212 | — | |||||||||||
Deferred compensation | 233,151 | — | 233,151 | — | |||||||||||
December 2016 | |||||||||||||||
Financial assets: | |||||||||||||||
Cash equivalents: | |||||||||||||||
Money market funds | $ | 840,842 | $ | 840,842 | $ | — | $ | — | |||||||
Time deposits | 14,774 | 14,774 | — | — | |||||||||||
Derivative financial instruments | 103,340 | — | 103,340 | — | |||||||||||
Investment securities | 196,738 | 179,673 | 17,065 | — | |||||||||||
Financial liabilities: | |||||||||||||||
Derivative financial instruments | 25,574 | — | 25,574 | — | |||||||||||
Deferred compensation | 232,214 | — | 232,214 | — |
(a) | There were no transfers among the levels within the fair value hierarchy during the first nine months of 2017 or the year ended December 2016. |
• | Near-term revenue declines with later-term improvements over the projection period. |
• | Improved profitability over the projection period, trending consistent with revenues. |
• | Royalty rates based on active license agreements of the brand. |
• | Market-based discount rates. |
Fair Value of Derivatives with Unrealized Gains | Fair Value of Derivatives with Unrealized Losses | ||||||||||||||||||||||
In thousands | September 2017 | December 2016 | September 2016 | September 2017 | December 2016 | September 2016 | |||||||||||||||||
Foreign currency exchange contracts designated as hedging instruments | $ | 26,451 | $ | 103,340 | $ | 75,497 | $ | (88,593 | ) | $ | (25,292 | ) | $ | (31,996 | ) | ||||||||
Foreign currency exchange contracts not designated as hedging instruments | 207 | — | — | (619 | ) | (282 | ) | (185 | ) | ||||||||||||||
Total derivatives | $ | 26,658 | $ | 103,340 | $ | 75,497 | $ | (89,212 | ) | $ | (25,574 | ) | $ | (32,181 | ) |
September 2017 | December 2016 | September 2016 | |||||||||||||||||||||
In thousands | Derivative Asset | Derivative Liability | Derivative Asset | Derivative Liability | Derivative Asset | Derivative Liability | |||||||||||||||||
Gross amounts presented in the Consolidated Balance Sheets | $ | 26,658 | $ | (89,212 | ) | $ | 103,340 | $ | (25,574 | ) | $ | 75,497 | $ | (32,181 | ) | ||||||||
Gross amounts not offset in the Consolidated Balance Sheets | (26,001 | ) | 26,001 | (22,341 | ) | 22,341 | (19,328 | ) | 19,328 | ||||||||||||||
Net amounts | $ | 657 | $ | (63,211 | ) | $ | 80,999 | $ | (3,233 | ) | $ | 56,169 | $ | (12,853 | ) |
In thousands | September 2017 | December 2016 | September 2016 | ||||||||
Other current assets | $ | 23,387 | $ | 84,519 | $ | 66,231 | |||||
Accrued liabilities | (75,266 | ) | (18,574 | ) | (28,852 | ) | |||||
Other assets | 3,271 | 18,821 | 9,266 | ||||||||
Other liabilities | (13,946 | ) | (7,000 | ) | (3,329 | ) |
In thousands | Gain (Loss) on Derivatives Recognized in OCI Three Months Ended September | Gain (Loss) on Derivatives Recognized in OCI Nine Months Ended September | |||||||||||||
Cash Flow Hedging Relationships | 2017 | 2016 | 2017 | 2016 | |||||||||||
Foreign currency exchange | $ | (51,147 | ) | $ | 9,571 | $ | (117,580 | ) | $ | 32,837 |
In thousands | Gain (Loss) Reclassified from Accumulated OCI into Income Three Months Ended September | Gain (Loss) Reclassified from Accumulated OCI into Income Nine Months Ended September | |||||||||||||
Location of Gain (Loss) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Net sales | $ | 11,614 | $ | 14,676 | $ | 25,074 | $ | 11,997 | |||||||
Cost of goods sold | (4,164 | ) | 15,485 | 12,763 | 80,094 | ||||||||||
Selling, general and administrative expenses | (882 | ) | (1,098 | ) | (1,212 | ) | (3,611 | ) | |||||||
Other income (expense), net | (774 | ) | 526 | (688 | ) | 2,653 | |||||||||
Interest expense | (1,185 | ) | (1,131 | ) | (3,518 | ) | (3,356 | ) | |||||||
Total | $ | 4,609 | $ | 28,458 | $ | 32,419 | $ | 87,777 |
In thousands Derivatives Not Designated as Hedges | Location of Gain (Loss) on Derivatives Recognized in Income | Gain (Loss) on Derivatives Recognized in Income Three Months Ended September | Gain (Loss) on Derivatives Recognized in Income Nine Months Ended September | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||||
Foreign currency exchange | Cost of goods sold | $ | (927 | ) | $ | (510 | ) | $ | (294 | ) | $ | 225 | ||||||
Foreign currency exchange | Other income (expense), net | (339 | ) | (110 | ) | (2,078 | ) | (1,196 | ) | |||||||||
Total | $ | (1,266 | ) | $ | (620 | ) | $ | (2,372 | ) | $ | (971 | ) |
In thousands | Severance | Other | Total | ||||||||
Amounts recorded in accrued liabilities at December 2016 | $ | 52,720 | $ | 878 | $ | 53,598 | |||||
Cash payments | (24,515 | ) | (878 | ) | (25,393 | ) | |||||
Adjustments to accruals | (3,001 | ) | — | (3,001 | ) | ||||||
Currency translation | 824 | — | 824 | ||||||||
Amounts recorded in accrued liabilities at September 2017 | $ | 26,028 | $ | — | $ | 26,028 |
• | Revenues were up 5% to $3.5 billion compared to the third quarter of 2016, including a 1% favorable impact from foreign currency. |
• | Outdoor & Action Sports coalition revenues increased 8% to $2.5 billion compared to the third quarter of 2016, including a 2% favorable impact from foreign currency. |
• | Direct-to-consumer revenues were up 18% over the 2016 quarter, including a favorable 1% impact from foreign currency, and accounted for 27% of total revenues in the quarter. E-commerce revenues increased 38% in the quarter. |
• | International revenues increased 13% compared to the 2016 quarter, including a 3% favorable impact from foreign currency, and represented 44% of total revenues in the quarter. |
• | Gross margin increased 100 basis points in the third quarter to 50.1%, including 80 basis points of negative impact from changes in foreign currency. |
• | Earnings per share decreased 16% to $0.97 from $1.16 in the 2016 quarter, due primarily to a $104.7 million goodwill impairment charge, which negatively impacted earnings per share by 20%, and a 4% unfavorable impact from foreign currency. |
In millions | Third Quarter | Nine Months | |||||
Total revenues — 2016 | $ | 3,327.7 | $ | 8,282.6 | |||
Operations | 146.2 | 181.3 | |||||
Impact of foreign currency | 34.9 | (13.8 | ) | ||||
Total revenues — 2017 | $ | 3,508.8 | $ | 8,450.1 |
Third Quarter | Nine Months | ||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||
Gross margin (total revenues less cost of goods sold) | 50.1 | % | 49.1 | % | 50.0 | % | 48.9 | % | |||
Selling, general and administrative expenses | 33.3 | 30.8 | 37.6 | 35.5 | |||||||
Impairment of goodwill | 3.0 | — | 1.2 | — | |||||||
Operating income | 13.8 | % | 18.3 | % | 11.2 | % | 13.5 | % |
Third Quarter | |||||||||||||||||||||||
In millions | Outdoor & Action Sports | Jeanswear | Imagewear | Sportswear | Other | Total | |||||||||||||||||
Revenues — 2016 | $ | 2,326.4 | $ | 701.4 | $ | 128.0 | $ | 140.7 | $ | 31.2 | $ | 3,327.7 | |||||||||||
Operations | 147.0 | (9.2 | ) | 10.7 | (0.4 | ) | (1.9 | ) | 146.2 | ||||||||||||||
Impact of foreign currency | 29.2 | 5.5 | 0.2 | — | — | 34.9 | |||||||||||||||||
Revenues — 2017 | $ | 2,502.6 | $ | 697.7 | $ | 138.9 | $ | 140.3 | $ | 29.3 | $ | 3,508.8 |
Nine Months | |||||||||||||||||||||||
In millions | Outdoor & Action Sports | Jeanswear | Imagewear | Sportswear | Other | Total | |||||||||||||||||
Revenues — 2016 | $ | 5,378.3 | $ | 2,041.2 | $ | 404.6 | $ | 374.0 | $ | 84.5 | $ | 8,282.6 | |||||||||||
Operations | 277.6 | (89.6 | ) | 19.2 | (21.2 | ) | (4.7 | ) | 181.3 | ||||||||||||||
Impact of foreign currency | (8.3 | ) | (5.6 | ) | 0.1 | — | — | (13.8 | ) | ||||||||||||||
Revenues — 2017 | $ | 5,647.6 | $ | 1,946.0 | $ | 423.9 | $ | 352.8 | $ | 79.8 | $ | 8,450.1 |
Third Quarter | |||||||||||||||||||||||
In millions | Outdoor & Action Sports | Jeanswear | Imagewear | Sportswear | Other | Total | |||||||||||||||||
Profit — 2016 | $ | 491.0 | $ | 142.4 | $ | 24.0 | $ | 15.1 | $ | (0.3 | ) | $ | 672.2 | ||||||||||
Operations | 56.4 | (23.0 | ) | (2.4 | ) | 2.4 | (0.5 | ) | 32.9 | ||||||||||||||
Impact of foreign currency | (22.9 | ) | 1.8 | 0.8 | — | — | (20.3 | ) | |||||||||||||||
Profit — 2017 | $ | 524.5 | $ | 121.2 | $ | 22.4 | $ | 17.5 | $ | (0.8 | ) | $ | 684.8 |
Nine Months | |||||||||||||||||||||||
In millions | Outdoor & Action Sports | Jeanswear | Imagewear | Sportswear | Other | Total | |||||||||||||||||
Profit — 2016 | $ | 842.4 | $ | 388.6 | $ | 74.5 | $ | 26.2 | $ | (3.6 | ) | $ | 1,328.1 | ||||||||||
Operations | 87.9 | (65.0 | ) | (3.2 | ) | 1.6 | 0.4 | 21.7 | |||||||||||||||
Impact of foreign currency | (53.1 | ) | 0.4 | 1.0 | — | — | (51.7 | ) | |||||||||||||||
Profit — 2017 | $ | 877.2 | $ | 324.0 | $ | 72.3 | $ | 27.8 | $ | (3.2 | ) | $ | 1,298.1 |
Third Quarter | Nine Months | ||||||||||||||||||||
Dollars in millions | 2017 | 2016 | Percent Change | 2017 | 2016 | Percent Change | |||||||||||||||
Coalition revenues | $ | 2,502.6 | $ | 2,326.4 | 7.6 | % | $ | 5,647.6 | $ | 5,378.3 | 5.0 | % | |||||||||
Coalition profit | 524.5 | 491.0 | 6.8 | % | 877.2 | 842.4 | 4.1 | % | |||||||||||||
Operating margin | 21.0 | % | 21.1 | % | 15.5 | % | 15.7 | % |
Third Quarter | Nine Months | ||||||||||||||||||||
Dollars in millions | 2017 | 2016 | Percent Change | 2017 | 2016 | Percent Change | |||||||||||||||
Coalition revenues | $ | 697.7 | $ | 701.4 | (0.5 | )% | $ | 1,946.0 | $ | 2,041.2 | (4.7 | )% | |||||||||
Coalition profit | 121.2 | 142.4 | (14.9 | )% | 324.0 | 388.6 | (16.6 | )% | |||||||||||||
Operating margin | 17.4 | % | 20.3 | % | 16.6 | % | 19.0 | % |
Third Quarter | Nine Months | ||||||||||||||||||||
Dollars in millions | 2017 | 2016 | Percent Change | 2017 | 2016 | Percent Change | |||||||||||||||
Coalition revenues | $ | 138.9 | $ | 128.0 | 8.5 | % | $ | 423.9 | $ | 404.6 | 4.8 | % | |||||||||
Coalition profit | 22.4 | 24.0 | (6.7 | )% | 72.3 | 74.5 | (2.9 | )% | |||||||||||||
Operating margin | 16.1 | % | 18.7 | % | 17.1 | % | 18.4 | % |
Third Quarter | Nine Months | ||||||||||||||||||||
Dollars in millions | 2017 | 2016 | Percent Change | 2017 | 2016 | Percent Change | |||||||||||||||
Coalition revenues | $ | 140.3 | $ | 140.7 | (0.3 | )% | $ | 352.8 | $ | 374.0 | (5.6 | )% | |||||||||
Coalition profit | 17.5 | 15.1 | 16.0 | % | 27.8 | 26.2 | 6.1 | % | |||||||||||||
Operating margin | 12.5 | % | 10.7 | % | 7.9 | % | 7.0 | % |
Third Quarter | Nine Months | ||||||||||||||||||||
Dollars in millions | 2017 | 2016 | Percent Change | 2017 | 2016 | Percent Change | |||||||||||||||
Coalition revenues | $ | 29.3 | $ | 31.2 | (5.8 | )% | $ | 79.8 | $ | 84.5 | (5.6 | )% | |||||||||
Coalition loss | (0.8 | ) | (0.3 | ) | (116.1 | )% | (3.2 | ) | (3.6 | ) | 8.5 | % | |||||||||
Operating margin | (2.5 | )% | (1.1 | )% | (4.0 | )% | (4.2 | )% |
Third Quarter | Nine Months | ||||||||||||||||||||
Dollars in millions | 2017 | 2016 | Percent Change | 2017 | 2016 | Percent Change | |||||||||||||||
Impairment of goodwill | $ | 104.7 | $ | — | 100.0 | % | $ | 104.7 | $ | — | 100.0 | % | |||||||||
Corporate and other expenses | 96.6 | 65.0 | 48.5 | % | 252.0 | 211.9 | 18.9 | % | |||||||||||||
Interest expense, net | 22.5 | 22.6 | (0.1 | )% | 63.3 | 64.0 | (1.0 | )% |
• | Increase in accounts receivable — due to the seasonality of the business. |
• | Increase in inventories — due to the seasonality of the business. |
• | Increase in intangible assets — driven by the impact of foreign currency fluctuations. |
• | Decrease in other assets — primarily due to the cumulative-effect adjustment to retained earnings of a deferred charge upon the early adoption of the accounting standards update regarding intra-entity asset transfers. |
• | Increase in short-term borrowings — due to commercial paper borrowings needed to prepare to fund the Williamson-Dickie transaction which closed on October 2, 2017, and to support general corporate purposes and share repurchases. |
• | Decrease in accounts payable — driven by the timing of inventory purchases and payments to vendors. |
• | Increase in accrued liabilities — primarily due to higher accrued compensation, and the timing of payments for other accruals. |
• | Increase in long-term debt — due to foreign currency fluctuations of euro-denominated bonds. |
• | Increase in accounts receivable — due to foreign currency fluctuations and timing of collections from customers. |
• | Decrease in goodwill — driven by goodwill impairment charges for the Nautica® brand reporting unit recorded in the third quarter of 2017 and the lucy® brand reporting unit recorded in the fourth quarter of 2016. Refer to Notes G and N to the consolidated financial statements for additional information regarding the Nautica® reporting unit. |
• | Decrease in other assets — primarily due to the cumulative-effect adjustment to retained earnings of a deferred charge upon the early adoption of the accounting standards update regarding intra-entity asset transfers. |
• | Increase in short-term borrowings — due to commercial paper borrowings needed to prepare to fund the Williamson-Dickie transaction which closed on October 2, 2017, and to support general corporate purposes and share repurchases. |
• | Increase in the current portion of long-term debt — due to $250.0 million of long-term notes due in the fourth quarter of 2017. |
• | Increase in accrued liabilities — primarily due to higher accrued compensation, and the timing of payments for other accruals. |
• | Decrease in long-term debt — due to $250.0 million of long-term notes due in the fourth quarter of 2017, partially offset by foreign currency fluctuations of euro-denominated bonds. |
• | Decrease in other liabilities — primarily due to lower deferred income taxes. |
September | December | September | |||||||||
Dollars in millions | 2017 | 2016 | 2016 | ||||||||
Working capital | $ | 1,805.7 | $ | 2,407.1 | $ | 2,513.7 | |||||
Current ratio | 1.5 to 1 | 2.4 to 1 | 2.2 to 1 | ||||||||
Debt to total capital | 52.7 | % | 31.9 | % | 38.8 | % |
Nine Months | |||||||
In thousands | 2017 | 2016 | |||||
Cash provided by operating activities | $ | 6,683 | $ | 47,197 | |||
Cash provided (used) by investing activities | 25,092 | (50,804 | ) | ||||
Cash provided (used) by financing activities | 301,381 | (201,585 | ) |
• | Inventory purchase obligations decreased by approximately $220.5 million at the end of September 2017 due to the timing of purchase commitments and the removal of commitments related to the licensing business. |
(c) | Issuer purchases of equity securities: |
Third Quarter 2017 | Total Number of Shares Purchased (1) | Weighted Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Programs (1) | Dollar Value of Shares that May Yet be Purchased Under the Program | |||||||||
July 2 – July 29, 2017 | — | $ | — | — | 4,237,993,373 | ||||||||
July 30 – August 26, 2017 | — | — | — | 4,237,993,373 | |||||||||
August 27 – September 30, 2017 | 840 | 62.69 | 840 | 4,237,940,717 | |||||||||
Total | 840 | 840 |
(1) | Includes 840 shares of Common Stock that were purchased during the quarter in connection with VF’s deferred compensation plans. |
2004 Mid-Term Incentive Plan, a subplan under the 1996 Stock Compensation Plan, as amended and restated as of October 18, 2017 | ||
Certification of Steven E. Rendle, Chairman, Chief Executive Officer and President, pursuant to 15 U.S.C. Section 10A, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | ||
Certification of Scott A. Roe, Vice President and Chief Financial Officer, pursuant to 15 U.S.C. Section 10A, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | ||
Certification of Steven E. Rendle, Chairman, Chief Executive Officer and President, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | ||
Certification of Scott A. Roe, Vice President and Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | ||
101.INS | XBRL Instance Document | |
101.SCH | XBRL Taxonomy Extension Schema Document | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |
V.F. CORPORATION | |||
(Registrant) | |||
By: | /s/ Scott A. Roe | ||
Scott A. Roe | |||
Vice President and Chief Financial Officer (Chief Financial Officer) | |||
Date: November 2, 2017 | By: | /s/ Bryan H. McNeill | |
Bryan H. McNeill | |||
Vice President—Controller (Chief Accounting Officer) |
(A) | In no event may the number of PRSUs that may be potentially earnable by any one Participant in all Performance Cycles that begin in any one calendar year exceed the applicable annual per-person limitation set forth in Section 5.3 of the 1996 Plan; and |
(B) | The maximum percentage of the number of Target PRSUs that may be earned shall be 225% of the number of Target PRSUs, unless the Committee specifies a lesser percentage. |
(i) | Regular Cash Dividends. At the time of settlement of PRSUs under Section 8 or 9, the Administrator shall determine the aggregate amount of regular cash dividends that would have been payable to the Participant, based on record dates for dividends since the beginning of the Performance Cycle (or, if later, the date of the Participant's Designation of Participation), if the earned PRSUs then to be settled had been outstanding shares of Common Stock at such record date (without compounding of dividends but adjusted to account for splits and other |
(ii) | Common Stock Dividends and Splits. If the Company declares and pays a dividend or distribution on Common Stock in the form of additional shares of Common Stock, or there occurs a forward split of Common Stock, then the number of PRSUs credited to each Participant's Account and potentially earnable hereunder as of the payment date for such dividend or distribution or forward split shall be automatically adjusted by multiplying the number of PRSUs credited to the Account or potentially earnable as of the record date for such dividend or distribution or split by the number of additional shares of Common Stock actually paid as a dividend or distribution or issued in such split in respect of each outstanding share of Common Stock. |
(iii) | Adjustments. If the Company declares and pays a dividend or distribution on Common Stock that is not a regular cash dividend and not in the form of additional shares of Common Stock, or if there occurs any other event referred to in Article XI of the 1996 Plan, the Committee may determine to adjust the number of PRSUs credited to each Participant's Account and potentially earnable hereunder, in order to prevent dilution or enlargement of Participants' rights with respect to PRSUs. |
(i) | Retirement. |
(ii) | Death or Disability. |
(iii) | Involuntary Termination By the Company Not for Cause Prior to a Change in Control. If Termination of Employment is an involuntary separation by the Company not for Cause prior to a Change in Control, the Participant shall be entitled to receive settlement of a Pro Rata Portion of the total number of PRSUs the Participant is deemed to have earned in accordance with this Section 8(a)(iii), with the Proration Date (used to calculate the Pro Rata Portion) being the earlier of (A) the last day of the payroll period with respect to which a severance payment in the nature of salary continuation has been made and (B) the last day of the Performance Cycle. If no severance payments are to be made, the applicable Proration Date shall be the date of Termination of Employment. In all cases under this Section 8(a)(iii), PRSUs relating to any Performance Cycle beginning in 2009 or later or, with respect to the 2008-2010 Performance Cycle, as to which the Participant has been designated a participant after July 1, 2008, in which the Participant has not participated for twelve months as of the date of Termination of Employment (i.e., Termination occurs within 12 months after the Participant's Designation of Participation) will not be earnable and will be cancelled as of the date of Termination of Employment. The settlement of PRSUs shall occur promptly (and in any event not later than the Settlement Deadline) following completion of the applicable Performance Cycle. Performance for any open Performance Cycle shall be deemed to be the performance achieved for the full Performance Cycle. Any deferral election filed by the Participant shall have no effect on the settlement of the PRSUs. |
(iv) | At or Following a Change in Control, Involuntary Termination By the Company Not for Cause or by Participant for Good Reason. If Termination of Employment occurs at or after a Change in Control and is an involuntary separation by the Company not for Cause or a Termination by the Participant for Good Reason, the Participant shall be entitled to receive settlement of the total number of PRSUs the Participant is deemed to have earned in accordance with this Section 8(a)(iv), promptly (and in any event within 30 days) following the date of Termination of Employment. The amount of the settlement shall assume that the Participant has remained with the Company through the completion of each open Performance Cycle and that the performance achieved by the Company for each such Performance Cycle is the average of the performance achieved for the completed year(s) in such Performance Cycle if greater than 100% (i.e., the performance required to earn at least the Target PRSUs), or, if such average is less than 100%, the performance achieved shall be deemed to be the average of the actual performance for the completed year(s) in such Performance Cycle (if any) together with performance for years not yet complete being deemed to be 100% of target performance. Any deferral election filed by the Participant shall have no effect on the settlement of the PRSUs. |
(v) | Termination by the Company for Cause or Voluntary Termination by the Participant. If Termination of Employment is either by the Company for Cause or voluntary by the Participant (excluding a Termination for Good Reason following a Change in Control and excluding a Retirement), PRSUs relating to each Performance Cycle which has not yet ended will cease to be earnable and will be canceled. |
(i) | Authority to adopt such rules for the administration of the Plan as the Administrator considers desirable, provided they do not conflict with the Plan; and |
(ii) | Authority under Section 9(b) to impose restrictions or limitations on Participant deferrals under the Plan, including in order to promote cost-effective administration of the Plan; no restriction or limitation on deferrals shall be deemed to conflict with the Plan. |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
November 2, 2017 | /s/ Steven E. Rendle |
Steven E. Rendle | |
Chairman, Chief Executive Officer and President |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
November 2, 2017 | /s/ Scott A. Roe |
Scott A. Roe | |
Vice President and Chief Financial Officer |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. |
November 2, 2017 | /s/ Steven E. Rendle |
Steven E. Rendle | |
Chairman, Chief Executive Officer and President |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. |
November 2, 2017 | /s/ Scott A. Roe |
Scott A. Roe | |
Vice President and Chief Financial Officer |
Document and Entity Information - shares |
9 Months Ended | |
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Sep. 30, 2017 |
Oct. 28, 2017 |
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Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2017 | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus | Q3 | |
Trading Symbol | VFC | |
Entity Registrant Name | V F CORP | |
Entity Central Index Key | 0000103379 | |
Current Fiscal Year End Date | --12-30 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 395,149,073 |
Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Dec. 31, 2016 |
Oct. 01, 2016 |
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Statement of Financial Position [Abstract] | |||
Accounts receivable, allowance for doubtful accounts | $ 21,469 | $ 20,539 | $ 22,654 |
Preferred Stock, par value (in USD per share) | $ 1 | $ 1 | $ 1 |
Preferred Stock, shares authorized (in shares) | 25,000,000 | 25,000,000 | 25,000,000 |
Preferred Stock, shares outstanding (in shares) | 0 | 0 | 0 |
Common Stock, stated value (in USD per share) | $ 0.25 | $ 0.25 | $ 0.25 |
Common Stock, shares authorized (in shares) | 1,200,000,000 | 1,200,000,000 | 1,200,000,000 |
Common Stock, shares outstanding (in shares) | 394,502,698 | 414,012,954 | 413,682,259 |
Consolidated Statements of Income (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
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Sep. 30, 2017 |
Oct. 01, 2016 |
Sep. 30, 2017 |
Oct. 01, 2016 |
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Income Statement [Abstract] | ||||
Net sales | $ 3,481,202 | $ 3,298,484 | $ 8,370,183 | $ 8,200,228 |
Royalty income | 27,616 | 29,232 | 79,893 | 82,371 |
Total revenues | 3,508,818 | 3,327,716 | 8,450,076 | 8,282,599 |
Costs and operating expenses | ||||
Cost of goods sold | 1,751,748 | 1,693,071 | 4,225,444 | 4,229,018 |
Selling, general and administrative expenses | 1,168,470 | 1,026,398 | 3,176,536 | 2,939,115 |
Impairment of goodwill | 104,651 | 0 | 104,651 | 0 |
Total costs and operating expenses | 3,024,869 | 2,719,469 | 7,506,631 | 7,168,133 |
Operating income | 483,949 | 608,247 | 943,445 | 1,114,466 |
Interest income | 4,571 | 2,215 | 11,672 | 6,459 |
Interest expense | (27,108) | (24,783) | (75,004) | (70,441) |
Other income (expense), net | (332) | (1,097) | (2,052) | 1,696 |
Income from continuing operations before income taxes | 461,080 | 584,582 | 878,061 | 1,052,180 |
Income taxes | 74,316 | 99,358 | 161,753 | 188,528 |
Income from continuing operations | 386,764 | 485,224 | 716,308 | 863,652 |
Income (loss) from discontinued operations, net of tax | (624) | 13,265 | (11,116) | (53,879) |
Net income | $ 386,140 | $ 498,489 | $ 705,192 | $ 809,773 |
Earnings (loss) per common share - basic | ||||
Continuing operations (in USD per share) | $ 0.98 | $ 1.17 | $ 1.79 | $ 2.07 |
Discontinued operations (in USD per share) | 0.00 | 0.03 | (0.03) | (0.13) |
Total earnings per common share - basic (in USD per share) | 0.98 | 1.21 | 1.76 | 1.94 |
Earnings (loss) per common share - diluted | ||||
Continuing operations (in USD per share) | 0.97 | 1.16 | 1.77 | 2.04 |
Discontinued operations (in USD per share) | 0.00 | 0.03 | (0.03) | (0.13) |
Total earnings per common share - diluted (in USD per share) | 0.97 | 1.19 | 1.74 | 1.91 |
Cash dividends per common share (in USD per share) | $ 0.42 | $ 0.37 | $ 1.26 | $ 1.11 |
Basis of Presentation |
9 Months Ended |
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Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation VF Corporation (together with its subsidiaries, collectively known as “VF” or “the Company”) uses a 52/53 week fiscal year ending on the Saturday closest to December 31 of each year. For presentation purposes herein, all references to periods ended September 2017, December 2016 and September 2016 relate to the fiscal periods ended on September 30, 2017, December 31, 2016 and October 1, 2016, respectively. During the first quarter of 2017, the Company approved a change in fiscal year end to the Saturday closest to March 31 from the Saturday closest to December 31. Accordingly, the Company’s 2017 fiscal year will end as planned on December 30, 2017, followed by a three-month transition period from December 31, 2017 through March 31, 2018. The Company’s next fiscal year will run from April 1, 2018 through March 30, 2019 (“fiscal 2019”). On April 28, 2017, VF completed the sale of its Licensed Sports Group (“LSG”) business. As a result, VF reported the operating results for this business in the income (loss) from discontinued operations, net of tax line item in the Consolidated Statements of Income for all periods presented. In addition, the related assets and liabilities have been reported as assets and liabilities of discontinued operations in the Consolidated Balance Sheets through the date of sale. In conjunction with the LSG divestiture, VF executed its plan to entirely exit the licensing business and has included the JanSport® brand collegiate business as discontinued operations in our Consolidated Statements of Income and Consolidated Balance Sheets for all periods presented. In addition, VF completed the sale of its Contemporary Brands coalition on August 26, 2016, and has reported the operating results for this business in the income (loss) from discontinued operations, net of tax line item in the Consolidated Statements of Income for the three and nine months ended September 2016. Unless otherwise noted, discussion within these notes to the consolidated financial statements relates to continuing operations. Refer to Note C for additional information on discontinued operations. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X and do not include all of the information and notes required by generally accepted accounting principles in the United States of America (“GAAP”) for complete financial statements. Similarly, the December 2016 condensed consolidated balance sheet was derived from audited financial statements but does not include all disclosures required by GAAP. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all normal and recurring adjustments necessary to fairly state the consolidated financial position, results of operations and cash flows of VF for the interim periods presented. Operating results for the three and nine months ended September 2017 are not necessarily indicative of results that may be expected for any other interim period or for the year ending December 30, 2017. For further information, refer to the consolidated financial statements and notes included in VF’s Annual Report on Form 10-K for the year ended December 2016 (“2016 Form 10-K”). |
Acquisition |
9 Months Ended |
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Sep. 30, 2017 | |
Business Combinations [Abstract] | |
Acquisition | Acquisition On August 11, 2017, VF entered into a definitive merger agreement to acquire 100% of the outstanding shares of Williamson-Dickie Mfg. Co. (“Williamson-Dickie”). The acquisition was completed on October 2, 2017 for $800.7 million in cash, subject to working capital and other adjustments. The purchase price was primarily funded with short-term borrowings. Williamson-Dickie is a privately held company based in Ft. Worth, TX, and is one of the largest companies in the workwear sector with a portfolio of brands including Dickies®, Workrite®, Kodiak®, Terra® and Walls®. The Company believes the acquisition brings together complementary assets and capabilities, and creates a workwear business that will now serve an even broader set of consumers and industries around the world. The Company is still in the process of aligning accounting policies and valuing the assets acquired and liabilities assumed, and as such, certain disclosures regarding this transaction have not been included herein. The Company recognized $4.9 million of transaction and deal-related expenses in the three and nine months ended September 2017. |
Discontinued Operations |
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Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Discontinued Operations | Discontinued Operations The Company continuously assesses the composition of our portfolio to ensure it is aligned with our strategic objectives and positioned to maximize growth and return to our shareholders. Divestiture of the Licensing Business On April 28, 2017, VF completed the sale of LSG to Fanatics, Inc. The Company received net proceeds of $213.5 million and recorded an after-tax loss on sale of $4.1 million, which is included in the income (loss) from discontinued operations, net of tax line item in the Consolidated Statements of Income for the first nine months of 2017. The final adjustment to the after-tax loss on sale was $0.3 million in the third quarter of 2017. LSG included the Majestic® brand, which supplied apparel and fanware through licensing agreements with U.S. and international professional sports leagues and teams, and was previously included within our Imagewear coalition. Under the terms of the transition services agreement, the Company is providing certain support services for periods ranging from three to 24 months from the closing date of the transaction. Revenue and expense items associated with the transition services are primarily recorded in the Imagewear coalition. Beginning in the first quarter of 2017, VF reported the results of LSG in the income (loss) from discontinued operations, net of tax line item in the Consolidated Statements of Income; accordingly, the results have been excluded from continuing operations and segment results for all periods presented. The LSG results, including the loss on sale, recorded in the income (loss) from discontinued operations, net of tax line item were income of $0.3 million and losses of $4.6 million for the third quarter and first nine months of 2017, respectively, and income of $18.1 million and $45.1 million for the third quarter and first nine months of 2016, respectively. Prior to the sale, the related assets and liabilities of LSG were reported as assets and liabilities of discontinued operations in the Consolidated Balance Sheets. In conjunction with the LSG divestiture, VF executed its plan to entirely exit all of its licensing businesses, and has classified the assets of the JanSport® brand collegiate business as held-for-sale in VF’s Consolidated Balance Sheets for all periods presented. The assets of the JanSport® brand collegiate business are recorded at their fair value of $0.3 million at September 2017. Management determined that the expected sale of the JanSport® brand collegiate business met the criteria for presentation as discontinued operations in the first quarter of 2017. Accordingly, the results of the JanSport® brand collegiate business have been presented as discontinued operations in VF’s Consolidated Statements of Income beginning in the first quarter of 2017, and thus have been excluded from continuing operations and segment results for all periods presented. The JanSport® brand collegiate results, including the estimated loss on sale, recorded in the income (loss) from discontinued operations, net of tax line item were losses of $0.9 million and $6.5 million for the third quarter and first nine months of 2017, respectively, and losses of $0.3 million and $0.6 million for the third quarter and first nine months of 2016, respectively. The JanSport® brand collegiate business was previously included within our Outdoor & Action Sports coalition. Certain corporate overhead and other costs previously allocated to the licensing business for segment reporting purposes do not qualify for classification within discontinued operations and have been reallocated to continuing operations. Divestiture of the Contemporary Brands Coalition On August 26, 2016, VF completed the sale of its Contemporary Brands coalition to Delta Galil Industries, Ltd. for $116.9 million. The Contemporary Brands coalition included the businesses of the 7 For All Mankind®, Splendid® and Ella Moss® brands (the “Businesses”) and was previously disclosed as a separate reportable segment of VF. The transaction resulted in an after-tax loss on sale of $104.4 million which was included in the income (loss) from discontinued operations, net of tax line item in the Consolidated Statements of Income for the first nine months of 2016. The after-tax loss on sale included in the income (loss) from discontinued operations, net of tax line item for the third quarter of 2016 was $3.8 million. VF reported the results of the Businesses as discontinued operations for the third quarter and first nine months of 2016 and excluded them from continuing operations and segment results. The results of the Businesses, including the loss on sale, recorded in the income (loss) from discontinued operations, net of tax line item for the third quarter and first nine months of 2016 were losses of $4.5 million and $98.4 million, respectively. VF provided certain support services under transition services agreements and completed these services during the third quarter of 2017. These services did not have a material impact on VF’s Consolidated Statement of Income for the nine months ended September 2017. Summarized Discontinued Operations Financial Information The following table summarizes the major line items included in the income (loss) from discontinued operations for the divestitures of the licensing business and Contemporary Brands coalition:
The following table summarizes the carrying amounts of major classes of assets and liabilities of discontinued operations for each of the periods presented.
The cash flows related to discontinued operations have not been segregated, and are included in the Consolidated Statements of Cash Flows. There were no significant capital expenditures and operating noncash items for any periods presented. Depreciation and amortization expense was $3.0 million and $10.9 million for the nine months ended September 2017 and 2016, respectively. |
Sale of Accounts Receivable |
9 Months Ended |
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Sep. 30, 2017 | |
Receivables [Abstract] | |
Sale of Accounts Receivable | Sale of Accounts Receivable VF has an agreement with a financial institution to sell selected trade accounts receivable on a recurring, nonrecourse basis. Under the agreement, up to $367.5 million of VF’s accounts receivable may be sold to the financial institution and remain outstanding at any point in time. VF removes the accounts receivable from the Consolidated Balance Sheets at the time of sale. VF does not retain any interests in the sold accounts receivable but continues to service and collect outstanding accounts receivable on behalf of the financial institution. During the first nine months of 2017, VF sold total accounts receivable of $871.6 million. As of September 2017, December 2016 and September 2016, $191.4 million, $209.5 million and $212.3 million, respectively, of the sold accounts receivable had been removed from the Consolidated Balance Sheets but remained outstanding with the financial institution. The funding fee charged by the financial institution is included in the other income (expense), net line item in the Consolidated Statements of Income, and was $0.8 million and $2.7 million for the third quarter and first nine months of 2017, respectively, and $0.8 million and $2.5 million for the third quarter and first nine months of 2016, respectively. Net proceeds of this program are classified in operating activities in the Consolidated Statements of Cash Flows. |
Inventories |
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Inventories | Inventories
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Intangible Assets |
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Intangible Assets | Intangible Assets
Amortization expense for the third quarter and first nine months of 2017 was $5.6 million and $16.3 million, respectively. Based on the carrying amounts of amortizable intangible assets noted above, estimated amortization expense for the next five 12-month periods beginning in 2017 is $21.9 million, $21.9 million, $21.3 million, $20.4 million and $19.4 million, respectively. |
Goodwill |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill | Goodwill Changes in goodwill are summarized by business segment as follows:
During the third quarter of 2017, VF performed an interim impairment analysis of the Nautica® reporting unit and recorded an impairment charge of $104.7 million. Nautica® is part of the Sportswear coalition. Refer to Note N for additional information on fair value measurements. As of September 2017, accumulated impairment charges for the Outdoor & Action Sports and Sportswear coalitions were $82.7 million and $163.2 million, respectively. As of December 2016, accumulated impairment charges for the Outdoor & Action Sports and Sportswear coalitions were $82.7 million and $58.5 million, respectively. |
Pension Plans |
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Compensation and Retirement Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pension Plans | Pension Plans The components of pension cost for VF’s defined benefit plans were as follows:
VF contributed $7.8 million to its defined benefit plans during the first nine months of 2017, and intends to make approximately $7.2 million of additional contributions during the remainder of 2017. In conjunction with the sale of the licensing business, the Company recognized a $1.1 million pension curtailment loss in the income (loss) from discontinued operations, net of tax line item in the Consolidated Statement of Income in the first nine months of 2017. |
Capital and Accumulated Other Comprehensive Loss |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Capital and Accumulated Other Comprehensive Loss | Capital and Accumulated Other Comprehensive Loss During the first nine months of 2017, the Company purchased 22.2 million shares of Common Stock in open market transactions for $1.2 billion under its share repurchase program authorized by VF’s Board of Directors. These transactions were treated as treasury stock transactions. Common Stock outstanding is net of shares held in treasury which are, in substance, retired. During the first nine months of 2017, VF restored 22.3 million treasury shares to an unissued status, after which they were no longer recognized as shares held in treasury. There were no shares held in treasury at the end of September 2017 or December 2016, and 2,600 shares held in treasury at the end of September 2016. The excess of the cost of treasury shares acquired over the $0.25 per share stated value of Common Stock is deducted from retained earnings. VF Common Stock is also held by the Company’s deferred compensation plans and is treated as treasury shares for financial reporting purposes. During the first nine months of 2017, the Company purchased 6,540 shares of Common Stock in open market transactions for $0.4 million. Balances related to shares held for deferred compensation plans were as follows:
Accumulated Other Comprehensive Loss Comprehensive income consists of net income and specified components of other comprehensive income (“OCI”), which relates to changes in assets and liabilities that are not included in net income under GAAP but are instead deferred and accumulated within a separate component of stockholders’ equity in the balance sheet. VF’s comprehensive income is presented in the Consolidated Statements of Comprehensive Income. The deferred components of OCI are reported, net of related income taxes, in accumulated OCI in stockholders’ equity, as follows:
The changes in accumulated OCI, net of related taxes, are as follows:
Reclassifications out of accumulated OCI are as follows:
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Stock-based Compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||
Stock-based Compensation | Stock-based Compensation During the first nine months of 2017, VF granted stock options to employees and nonemployee members of VF’s Board of Directors to purchase 3,508,940 shares of its Common Stock at a weighted average exercise price of $53.68 per share. The exercise price of each option granted was equal to the fair market value of VF Common Stock on the date of grant. Employee stock options vest in equal annual installments over three years. Stock options granted to nonemployee members of VF’s Board of Directors become exercisable one year from the date of grant. The grant date fair value of each option award is calculated using a lattice option-pricing valuation model, which incorporates a range of assumptions for inputs as follows:
Also during the first nine months of 2017, VF granted 615,937 performance-based restricted stock units (“RSU”) to employees that enable them to receive shares of VF Common Stock at the end of a three-year period. Each performance-based RSU has a potential final payout ranging from zero to two shares of VF Common Stock. The number of shares earned by participants, if any, is based on achievement of a three-year baseline profitability goal and annually established performance goals set by the Compensation Committee of the Board of Directors. Shares are issued to participants in the year following the conclusion of each three-year performance period. The weighted average fair market value of VF Common Stock at the date the units were granted was $53.69 per share. The actual number of performance-based RSUs earned may also be adjusted upward or downward by 25% of the target award, based on how VF’s total shareholder return (“TSR”) over the three-year period compares to the TSR for companies included in the Standard & Poor’s 500 Index. The grant date fair value of the TSR-based adjustment related to the 2017 performance-based RSU grants was determined using a Monte Carlo simulation technique that incorporates option-pricing model inputs, and was $2.67 per share. VF granted 17,964 nonperformance-based RSUs to nonemployee members of the Board of Directors during the first quarter of 2017. These units vest upon grant and will be settled in shares of VF Common Stock one year from the date of grant. The fair market value of VF Common Stock at the date the units were granted was $53.47 per share. VF granted 186,447 nonperformance-based RSUs to certain key employees in international jurisdictions during the first nine months of 2017. These units vest over periods of up to four years from the date of grant and each unit entitles the holder to one share of VF Common Stock. The weighted average fair market value of VF Common Stock at the date the units were granted was $57.70. VF granted 385,915 restricted shares of VF Common Stock to certain members of management during the first nine months of 2017. These shares vest over periods of up to five years from the date of grant. The weighted average fair market value of VF Common Stock at the date the shares were granted was $55.74 per share. |
Income Taxes |
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Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The effective income tax rate for the first nine months of 2017 was 18.4% compared to 17.9% in the first nine months of 2016. The first nine months of 2017 included a net discrete tax benefit of $14.4 million, which included a $12.5 million tax benefit related to stock compensation, $4.1 million of net tax benefits related to the realization of previously unrecognized tax benefits and interest, and $1.9 million of discrete tax expense related to the effects of tax rate changes. The $14.4 million net discrete tax benefit in 2017 reduced the effective income tax rate by 1.6%. The first nine months of 2016 included a net discrete tax benefit of $40.3 million, which included a $26.3 million tax benefit related to the early adoption of the accounting standards update on stock compensation, $15.6 million of net tax benefits related to the realization of previously unrecognized tax benefits and interest, and $4.1 million of discrete tax expense related to the effects of tax rate changes. The $40.3 million net discrete tax benefit in 2016 reduced the effective income tax rate by 3.8%. Without discrete items, the effective income tax rate for the first nine months of 2017 decreased by 1.7% compared with the 2016 period primarily due to a higher percentage of income in lower tax rate jurisdictions and the impact of early adopting the accounting standards update regarding intra-entity asset transfers, partially offset by the impact of goodwill impairment recorded in the quarter. VF files a consolidated U.S. federal income tax return, as well as separate and combined income tax returns in numerous state and international jurisdictions. In the U.S., the Internal Revenue Service (“IRS”) examinations for tax years through 2012 have been effectively settled. The examination of Timberland’s 2011 tax return is ongoing. The IRS has proposed material adjustments to Timberland’s 2011 tax return that would significantly impact the timing of cash tax payments and assessment of interest charges. The Company has formally disagreed with the proposed adjustments. During 2015, VF filed a petition to the U.S. Tax Court to begin the process of resolving this matter, but it has not yet reached a resolution. In addition, VF is currently subject to examination by various state and international tax authorities. Management regularly assesses the potential outcomes of both ongoing and future examinations for the current and prior years, and has concluded that VF’s provision for income taxes is adequate. The outcome of any one examination is not expected to have a material impact on VF’s consolidated financial statements. Management believes that some of these audits and negotiations will conclude during the next 12 months. VF was granted a ruling which lowered the effective income tax rate on taxable earnings for years 2010 through 2014 under Belgium’s excess profit tax regime. In February 2015, the European Union Commission (“EU”) opened a state aid investigation into Belgium’s rulings. On January 11, 2016, the EU announced its decision that these rulings were illegal and ordered that tax benefits granted under these rulings should be collected from the affected companies, including VF. On March 22, 2016, the Belgium government filed an appeal seeking annulment of the EU decision. Additionally, on June 21, 2016, VF Europe BVBA filed its own application for annulment of the EU decision. Both of the listed requests for annulment remain open and unresolved. On December 22, 2016, Belgium adopted a law which entitled the Belgium tax authorities to issue tax assessments, and demand timely payments from companies which benefited from the excess profits regime. On January 10, 2017, VF Europe BVBA received an assessment for €31.9 million tax and interest related to excess profits benefits received in prior years. VF Europe BVBA remitted €31.9 million ($33.9 million) on January 13, 2017, which was recorded as an income tax receivable based on the expected success of the aforementioned requests for annulment. If this matter is adversely resolved, these amounts will not be collected by VF. During the first nine months of 2017, the amount of net unrecognized tax benefits and associated interest increased by $2.6 million to $153.1 million. Management believes that it is reasonably possible that the amount of unrecognized income tax benefits and interest may decrease during the next 12 months by approximately $19.1 million related to the completion of examinations and other settlements with tax authorities and the expiration of statutes of limitations, of which $16.9 million would reduce income tax expense. |
Business Segment Information |
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Business Segment Information | Business Segment Information VF’s businesses are grouped into product categories, and by brands within those product categories, for internal financial reporting used by management. These groupings of businesses within VF are referred to as “coalitions” and are the basis for VF’s reportable segments. Financial information for VF’s reportable segments is as follows:
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | Earnings Per Share
Outstanding options to purchase 4.9 million and 8.6 million shares of Common Stock were excluded from the calculations of diluted earnings per share for the three and nine-month periods ended September 2017, respectively, and options to purchase 5.2 million and 5.3 million shares were excluded from the calculations of diluted earnings per share for the three and nine-month periods ended September 2016, respectively, because the effect of their inclusion would have been antidilutive to those periods. In addition, 1.1 million shares of performance-based RSUs were excluded from the calculations of diluted earnings per share for both the three and nine-month periods ended September 2017, and 1.0 million shares of performance-based RSUs were excluded from the calculations of diluted earnings per share for both the three and nine-month periods ended September 2016 because these units were not considered to be contingent outstanding shares in those periods. |
Fair Value Measurements |
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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:
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:
VF’s cash equivalents include money market funds and short-term time deposits that approximate fair value based on Level 1 measurements. The fair value of derivative financial instruments, which consist of forward foreign currency exchange contracts, is determined based on observable market inputs (Level 2), including spot and forward exchange rates for foreign currencies, and considers the credit risk of the Company and its counterparties. Investment securities are held in VF’s deferred compensation plans as an economic hedge of the related deferred compensation liabilities. These investments are classified as trading securities and primarily include mutual funds (Level 1) that are valued based on quoted prices in active markets and a separately managed fixed-income fund (Level 2) with underlying investments that are valued based on quoted prices for similar assets in active markets or quoted prices in inactive markets for identical assets. 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. All other 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 September 2017 and December 2016, their carrying values approximated their fair values. Additionally, at September 2017 and December 2016, the carrying values of VF’s long-term debt, including the current portion, were $2,398.1 million and $2,292.9 million, respectively, compared with fair values of $2,614.6 million and $2,486.6 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 Certain non-financial assets, primarily property, plant and equipment, goodwill and intangible assets, are not required to be measured at fair value on a recurring basis and are reported at carrying value. However, these assets are required to be assessed for impairment whenever events or circumstances indicate that their carrying value may not be fully recoverable, and at least annually for goodwill and indefinite-lived intangible assets. In the event an impairment is required, the asset is adjusted to estimated fair value, using market-based assumptions. The Company recorded $8.6 million of fixed asset impairments in the third quarter and first nine months of 2017, and the charges are recorded in the selling, general and administrative expenses line item in the Consolidated Statements of Income. There were no significant impairment charges related to property, plant and equipment in the third quarter and first nine months of 2016. Subsequent to our annual impairment testing completed in the fourth quarter of 2016, the Company continued to monitor the actual performance of the Nautica® brand reporting unit and determined that there were no triggering events in the first and second quarters of fiscal 2017. On August 26, 2017, management commenced a strategic assessment of the Nautica® brand which was considered a triggering event for the reporting unit and trademark intangible asset. The Nautica® brand was acquired in 2003 and sells sportswear in the U.S. through department stores, specialty stores, VF-operated stores and online. It also has significant global licensing arrangements. The Nautica® brand is part of the Sportswear coalition and represents substantially all of the coalition’s goodwill value. As part of the 2009 annual impairment analysis,VF recorded an impairment charge of $58.5 million to write the goodwill down to its estimated fair value. The remaining book values of the goodwill and trademark intangible asset at the 2017 testing date were $153.7 million and $217.4 million, respectively. The impairment testing of goodwill and the trademark intangible asset utilized significant unobservable inputs (Level 3) to determine the estimated fair value. As a result of the interim impairment testing performed, VF recognized a goodwill impairment charge of $104.7 million in the Consolidated Statements of Income for the three and nine months ended September 2017. VF early adopted the recently issued accounting guidance that simplifies the subsequent measurement of goodwill and calculated the impairment charge as the difference between the carrying value of the reporting unit and the estimated fair value. The estimated fair value of the trademark intangible asset exceeded its carrying value by a substantial amount and thus the asset was not impaired. The estimated fair value of the Nautica® reporting unit for goodwill impairment testing was determined using a combination of two valuation methods: an income approach and a market approach. The income approach was based on projected future (debt-free) cash flows that were discounted to present value and assumed a terminal growth value. The discount rate was based on the reporting unit’s weighted average cost of capital (“WACC”) that takes market participant assumptions into consideration. For the market approach, management used both the guideline company and similar transaction methods. The guideline company method analyzed market multiples of revenues and earnings before interest, taxes, depreciation and amortization (“EBITDA”) for a group of comparable public companies. The market multiples used in the valuation were based on the relative strengths and weaknesses of the reporting unit compared to the selected guideline companies. Under the similar transactions method, valuation multiples were calculated utilizing actual transaction prices and revenue/EBITDA data from target companies deemed similar to the reporting unit. Management used the income-based relief-from-royalty method to value the Nautica® trademark intangible asset. Under this method, revenues expected to be generated by the trademark were multiplied by a selected royalty rate. The royalty rate was selected based on consideration of i) royalty rates included in active license agreements, ii) royalty rates received by market participants in the apparel industry, and iii) the current performance of the reporting unit. The estimated after-tax royalty revenue stream was then discounted to present value using the reporting unit’s WACC plus a spread that factors in the risk of the intangible asset. Management’s revenue and profitability forecasts used in the Nautica® reporting unit and intangible asset valuations considered recent and historical Nautica® performance, strategic initiatives for the Nautica® reporting unit and industry trends. Assumptions used in the valuations were similar to those that would be used by market participants performing independent valuations of these businesses. Key assumptions developed by VF management and used in the quantitative analysis include:
It is possible VF’s conclusions regarding impairment of the Nautica® reporting unit goodwill or trademark intangible asset could change in future periods. There can be no assurance the estimates and assumptions used in our goodwill and intangible asset impairment testing performed in the third quarter of 2017 will prove to be accurate predictions of the future. For example, variations in our assumptions related to discount rates, comparable company market approach inputs, business performance and execution of planned growth strategies could impact future conclusions. A future impairment charge for goodwill or intangible assets could have a material effect on VF’s consolidated financial position and results of operations. |
Derivative Financial Instruments and Hedging Activities |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Financial Instruments and Hedging Activities | Derivative Financial Instruments and Hedging Activities Summary of Derivative Financial Instruments All of VF’s outstanding derivative financial instruments are forward foreign currency exchange contracts. Although derivatives meet the criteria for hedge accounting at the inception of the hedging relationship, a limited number of derivative contracts intended to hedge assets and liabilities are not designated as hedges for accounting purposes. The notional amounts of outstanding derivative contracts were $2.4 billion at September 2017, and $2.2 billion at both December 2016 and September 2016, consisting primarily of contracts hedging exposures to the euro, British pound, Canadian dollar, Swiss franc, Mexican peso, Swedish krona, Japanese yen, Polish zloty and Turkish lira. Derivative contracts have maturities up to 20 months. The following table presents outstanding derivatives on an individual contract basis:
VF records and presents the fair values of all of its derivative assets and liabilities in the Consolidated Balance Sheets on a gross basis, even though they are subject to master netting agreements. If VF were to offset and record the asset and liability balances of its forward foreign currency exchange contracts on a net basis in accordance with the terms of its master netting agreements, the amounts presented in the Consolidated Balance Sheets would be adjusted from the current gross presentation to the net amounts as detailed in the following table:
Derivatives are classified as current or noncurrent based on maturity dates, as follows:
Cash Flow Hedges VF uses derivative contracts primarily to hedge a portion of the exchange risk for its forecasted sales, purchases, production costs, operating costs and intercompany royalties. The effects of cash flow hedging included in VF’s Consolidated Statements of Income and Consolidated Statements of Comprehensive Income are summarized as follows:
Derivative Contracts Not Designated as Hedges VF uses derivative contracts to manage foreign currency exchange risk on third-party accounts receivable and payable, as well as intercompany borrowings. These contracts are not designated as hedges and are recorded at fair value in the Consolidated Balance Sheets. Changes in the fair values of these instruments are recognized directly in earnings. Gains or losses on these contracts largely offset the net transaction gains or losses on the related assets and liabilities. Following is a summary of these derivatives included in VF’s Consolidated Statements of Income:
Other Derivative Information There were no significant amounts recognized in earnings for the ineffective portion of any hedging relationships during the three and nine-month periods ended September 2017 and September 2016. At September 2017, accumulated OCI included $42.8 million of pre-tax net deferred losses for foreign currency exchange contracts that are expected to be reclassified to earnings during the next 12 months. The amounts ultimately reclassified to earnings will depend on exchange rates in effect when outstanding derivative contracts are settled. VF entered into interest rate swap derivative contracts in 2011 and 2003 to hedge the interest rate risk for issuance of long-term debt due in 2021 and 2033, respectively. In each case, the contracts were terminated concurrent with the issuance of the debt, and the realized gain or loss was deferred in accumulated OCI. The remaining pre-tax net deferred loss in accumulated OCI was $19.2 million at September 2017, which will be reclassified into interest expense in the Consolidated Statements of Income over the remaining terms of the associated debt instruments. VF reclassified $1.2 million and $3.5 million of net deferred losses from accumulated OCI into interest expense for the three and nine-month periods ended September 2017, respectively, and $1.1 million and $3.4 million for the three and nine-month periods ended September 2016, respectively. VF expects to reclassify $4.9 million to interest expense during the next 12 months. Net Investment Hedge The Company has designated its €850.0 million of euro-denominated fixed-rate notes as a net investment hedge of VF’s investment in certain foreign operations. Because this debt qualified as a nonderivative hedging instrument, foreign currency transaction gains or losses of the debt are deferred in the foreign currency translation and other component of accumulated OCI as an offset to the foreign currency translation adjustments on the hedged investments. The net investment hedge was initiated in September 2016 and there were no significant amounts recognized in accumulated OCI during the third quarter of 2016. During the three and nine-month periods ended September 2017, the Company recognized an after-tax loss of $20.4 million and $65.5 million, respectively, in OCI related to the net investment hedge. Any amounts deferred in accumulated OCI will remain until the hedged investment is sold or substantially liquidated. The Company recorded no ineffectiveness from its net investment hedge during the three and nine-month periods ended September 2017 and the three and nine-month periods ended September 2016. |
Recently Adopted and Issued Accounting Standards |
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Accounting Changes and Error Corrections [Abstract] | |
Recently Adopted and Issued Accounting Standards | Recently Adopted and Issued Accounting Standards Recently Adopted Accounting Standards In July 2015, the FASB issued an update to their accounting guidance related to inventory that changes the measurement principle from lower of cost or market to lower of cost or net realizable value. This guidance became effective in the first quarter of 2017, but did not impact VF’s consolidated financial statements. In March 2016, the FASB issued an update to their accounting guidance on equity method accounting. The guidance eliminates the requirement to retroactively apply the equity method when an entity obtains significant influence over a previously held investment. This guidance became effective in the first quarter of 2017, but did not impact VF’s consolidated financial statements. In March 2016, the FASB issued an update to their accounting guidance on derivative financial instruments when there is a change in the counterparty to a derivative contract (novation). The new guidance clarifies that the novation of a derivative contract that has been designated as a hedging instrument does not, in and of itself, require dedesignation of that hedging relationship, provided that all other hedge accounting criteria continue to be met. This guidance became effective in the first quarter of 2017, but did not impact VF’s consolidated financial statements. In March 2016, the FASB issued an update to their accounting guidance on derivative financial instruments that clarifies the steps required to determine bifurcation of an embedded derivative. This guidance became effective in the first quarter of 2017, but did not impact VF’s consolidated financial statements. In October 2016, the FASB issued an update to their accounting guidance on the recognition of current and deferred income taxes for intra-entity asset transfers. The new guidance requires an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. The Company early adopted this guidance in the first quarter of 2017 using the modified retrospective method, which requires a cumulative adjustment to retained earnings as of the beginning of the period of adoption. The cumulative adjustment to the January 1, 2017 Consolidated Balance Sheet was a reduction in both the other assets and retained earnings line items of $237.8 million. In October 2016, the FASB issued an update to their accounting guidance that changes how a single decision maker will consider its indirect interests when performing the primary beneficiary analysis under the variable interest entity model. This guidance became effective in the first quarter of 2017, but did not impact VF’s consolidated financial statements. In November 2016, the FASB issued an update that requires restricted cash and restricted cash equivalents to be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period amounts shown on the statements of cash flows. The Company early adopted this guidance in the first quarter of 2017 on a retrospective basis and the Consolidated Statements of Cash Flows included herein reflect $4.1 million and $4.4 million of restricted cash for September 2017 and September 2016, respectively. The Company’s restricted cash is generally held as collateral for certain transactions. In January 2017, the FASB issued an update that simplifies the subsequent measurement of goodwill by eliminating the second step from the quantitative goodwill impairment test. The single quantitative step test requires companies to compare the fair value of a reporting unit with its carrying amount and record an impairment charge for the amount that the carrying amount exceeds the fair value, up to the total amount of goodwill allocated to that reporting unit. VF will continue to have the option of first performing a qualitative assessment to determine whether it is necessary to complete the quantitative goodwill impairment test. The Company early adopted this guidance in the third quarter of 2017 by applying the single quantitative step test to our interim goodwill impairment analysis and recorded an impairment charge of $104.7 million. Recently Issued Accounting Standards In May 2014, the FASB issued a new accounting standard on revenue recognition that outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. The FASB has subsequently issued updates to the standard to provide additional clarification on specific topics. The standard prescribes a five-step approach to revenue recognition: (1) identify the contracts with the customer; (2) identify the separate performance obligations in the contracts; (3) determine the transaction price; (4) allocate the transaction price to separate performance obligations; and (5) recognize revenue when, or as, each performance obligation is satisfied. This guidance will be effective for VF in the first quarter of fiscal 2019 with early adoption permitted. A cross-functional implementation team has completed VF’s impact analysis and is commencing the disclosure assessment phase of the project. The new guidance is not expected to have a material impact on VF’s significant revenue streams within the wholesale, direct-to-consumer and royalty channels. VF is in the process of concluding on the impact on less significant revenue streams within those channels. The Company expects to adopt the new standard utilizing the modified retrospective method in the first quarter of fiscal 2019. In January 2016, the FASB issued an update to their accounting guidance related to the recognition and measurement of certain financial instruments. This guidance affects the accounting for equity investments, financial liabilities under the fair value option and the presentation and disclosure requirements for financial instruments. This guidance will be effective for VF in the first quarter of fiscal 2019 with early adoption permitted. The Company does not expect the adoption of this accounting guidance to have a significant impact on VF’s consolidated financial statements. In February 2016, the FASB issued a new accounting standard on leasing. This new standard will require companies to record most leased assets and liabilities on the balance sheet, and also retains a dual model approach for assessing lease classification and recognizing expense. The Company has formed a cross-functional implementation team to address the standard and has started the design and assessment phase of the project. This guidance will be effective for VF in the first quarter of fiscal 2020 with early adoption permitted. The standard requires use of the modified retrospective transition approach. Given the Company’s significant number of leases, VF expects this standard will have a material impact on VF’s Consolidated Balance Sheets but does not expect it to have a material impact on the Consolidated Statements of Income. The Company expects to adopt the new standard in the first quarter of fiscal 2020. In March 2016, the FASB issued an update to their accounting guidance on extinguishments of financial liabilities that exempts prepaid stored-value products, or gift cards, from the existing guidance. The updated guidance requires that gift card liabilities be subject to breakage accounting, consistent with the new revenue recognition standard discussed above. This guidance will be effective for VF in the first quarter of fiscal 2019 with early adoption permitted. The Company does not expect the adoption of this accounting guidance to have a significant impact on VF’s consolidated financial statements. In June 2016, the FASB issued an update to their accounting guidance on the measurement of credit losses on financial instruments, which amends the impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses on certain types of financial instruments, including trade receivables. This guidance will be effective for VF in the first quarter of fiscal 2021 with early adoption permitted. The Company is evaluating the impact that adopting this guidance will have on VF’s consolidated financial statements. In August 2016, the FASB issued an update to their accounting guidance addressing how certain cash receipts and cash payments are presented and classified in the statement of cash flows. This guidance will be effective for VF in the first quarter of fiscal 2019 with early adoption permitted. The Company does not expect the adoption of this guidance to have a significant impact on VF’s consolidated financial statements. In January 2017, the FASB issued an update that provides a more narrow framework to be used in evaluating whether a set of assets and activities constitutes a business. This guidance will be effective for VF in the first quarter of fiscal 2019 with early adoption permitted. The Company will apply this guidance to any transactions after adoption but does not expect it to have a significant impact on VF’s consolidated financial statements. In March 2017, the FASB issued an update which requires employers to disaggregate the service cost component from other components of net periodic benefit costs and to disclose the amounts of net periodic benefit costs that are included in each income statement line item. The standard requires employers to report the service cost component in the same line item as other compensation costs and to report the other components of net periodic benefit costs (which include interest cost, expected return on plan assets, amortization of prior service costs or credits and actuarial gains and losses) separately and outside of operating income. The amendments in this update specify that only the service cost component is eligible for capitalization, which is consistent with VF’s current practice. The presentation change in the Consolidated Statements of Income will be applied on a retrospective basis. This guidance will be effective for VF beginning in the first quarter of fiscal 2019. Upon adoption, VF will reclassify the other components of net periodic benefit costs from the selling, general and administrative expenses line item in the Consolidated Statements of Income. Except for the reclassification within the Consolidated Statements of Income noted above, the Company does not expect the adoption of this accounting guidance to have a significant impact on VF’s consolidated financial statements. In May 2017, the FASB issued an update that amends the scope of modification accounting for share-based payment arrangements. This update provides guidance on the types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting. This guidance will be effective for VF beginning in the first quarter of fiscal 2019 with early adoption permitted. The guidance is required to be applied prospectively to an award modified on or after the adoption date. The Company will apply this guidance to any future changes made to the terms or conditions of share-based payment awards after adoption but does not expect it to have a significant impact on VF’s consolidated financial statements. In August 2017, the FASB issued an update that amends and simplifies certain aspects of hedge accounting rules to better portray the economic results of risk management activities in the financial statements. This guidance will be effective for VF in the first quarter of fiscal 2020 with early adoption permitted. The Company is evaluating the impact that adopting this guidance will have on VF’s consolidated financial statements. |
Restructuring |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring | Restructuring In the fourth quarter of 2016, VF leadership approved restructuring charges related to cost alignment initiatives, and recognized $58.1 million of restructuring charges. The Company did not recognize additional costs associated with these actions in the first nine months of 2017 and does not expect to recognize significant additional costs relating to these actions for the remainder of 2017. The Company expects a substantial amount of the restructuring activities to be completed by the end of 2017. The activity in the restructuring accrual for the nine-month period ended September 2017 is as follows:
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Subsequent Events |
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Sep. 30, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events On October 2, 2017, VF completed the acquisition of Williamson-Dickie for $800.7 million in cash, subject to working capital and other adjustments. Refer to Note B for additional information. On October 19, 2017, VF’s Board of Directors declared a quarterly cash dividend of $0.46 per share, payable on December 18, 2017 to stockholders of record on December 8, 2017. On November 1, 2017, VF repaid $250.0 million of 5.95% fixed-rate notes in accordance with the terms of the notes. On November 1, 2017, VF entered into a definitive agreement to acquire 100% of the stock of Icebreaker Holdings, Ltd., a privately held company based in Auckland, New Zealand. The transaction is expected to close in April 2018, and the purchase price is not material to VF. |
Basis of Presentation (Policies) |
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Sep. 30, 2017 | |||||||||||||
Accounting Policies [Abstract] | |||||||||||||
Basis of Presentation | VF Corporation (together with its subsidiaries, collectively known as “VF” or “the Company”) uses a 52/53 week fiscal year ending on the Saturday closest to December 31 of each year. For presentation purposes herein, all references to periods ended September 2017, December 2016 and September 2016 relate to the fiscal periods ended on September 30, 2017, December 31, 2016 and October 1, 2016, respectively. During the first quarter of 2017, the Company approved a change in fiscal year end to the Saturday closest to March 31 from the Saturday closest to December 31. Accordingly, the Company’s 2017 fiscal year will end as planned on December 30, 2017, followed by a three-month transition period from December 31, 2017 through March 31, 2018. The Company’s next fiscal year will run from April 1, 2018 through March 30, 2019 (“fiscal 2019”). On April 28, 2017, VF completed the sale of its Licensed Sports Group (“LSG”) business. As a result, VF reported the operating results for this business in the income (loss) from discontinued operations, net of tax line item in the Consolidated Statements of Income for all periods presented. In addition, the related assets and liabilities have been reported as assets and liabilities of discontinued operations in the Consolidated Balance Sheets through the date of sale. In conjunction with the LSG divestiture, VF executed its plan to entirely exit the licensing business and has included the JanSport® brand collegiate business as discontinued operations in our Consolidated Statements of Income and Consolidated Balance Sheets for all periods presented. In addition, VF completed the sale of its Contemporary Brands coalition on August 26, 2016, and has reported the operating results for this business in the income (loss) from discontinued operations, net of tax line item in the Consolidated Statements of Income for the three and nine months ended September 2016. Unless otherwise noted, discussion within these notes to the consolidated financial statements relates to continuing operations. Refer to Note C for additional information on discontinued operations. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X and do not include all of the information and notes required by generally accepted accounting principles in the United States of America (“GAAP”) for complete financial statements. Similarly, the December 2016 condensed consolidated balance sheet was derived from audited financial statements but does not include all disclosures required by GAAP. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all normal and recurring adjustments necessary to fairly state the consolidated financial position, results of operations and cash flows of VF for the interim periods presented. Operating results for the three and nine months ended September 2017 are not necessarily indicative of results that may be expected for any other interim period or for the year ending December 30, 2017. For further information, refer to the consolidated financial statements and notes included in VF’s Annual Report on Form 10-K for the year ended December 2016 (“2016 Form 10-K”). |
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Fair Value Measurement | 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:
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Recently Adopted Accounting Standards and Recently Issued Accounting Standards | Recently Adopted Accounting Standards In July 2015, the FASB issued an update to their accounting guidance related to inventory that changes the measurement principle from lower of cost or market to lower of cost or net realizable value. This guidance became effective in the first quarter of 2017, but did not impact VF’s consolidated financial statements. In March 2016, the FASB issued an update to their accounting guidance on equity method accounting. The guidance eliminates the requirement to retroactively apply the equity method when an entity obtains significant influence over a previously held investment. This guidance became effective in the first quarter of 2017, but did not impact VF’s consolidated financial statements. In March 2016, the FASB issued an update to their accounting guidance on derivative financial instruments when there is a change in the counterparty to a derivative contract (novation). The new guidance clarifies that the novation of a derivative contract that has been designated as a hedging instrument does not, in and of itself, require dedesignation of that hedging relationship, provided that all other hedge accounting criteria continue to be met. This guidance became effective in the first quarter of 2017, but did not impact VF’s consolidated financial statements. In March 2016, the FASB issued an update to their accounting guidance on derivative financial instruments that clarifies the steps required to determine bifurcation of an embedded derivative. This guidance became effective in the first quarter of 2017, but did not impact VF’s consolidated financial statements. In October 2016, the FASB issued an update to their accounting guidance on the recognition of current and deferred income taxes for intra-entity asset transfers. The new guidance requires an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. The Company early adopted this guidance in the first quarter of 2017 using the modified retrospective method, which requires a cumulative adjustment to retained earnings as of the beginning of the period of adoption. The cumulative adjustment to the January 1, 2017 Consolidated Balance Sheet was a reduction in both the other assets and retained earnings line items of $237.8 million. In October 2016, the FASB issued an update to their accounting guidance that changes how a single decision maker will consider its indirect interests when performing the primary beneficiary analysis under the variable interest entity model. This guidance became effective in the first quarter of 2017, but did not impact VF’s consolidated financial statements. In November 2016, the FASB issued an update that requires restricted cash and restricted cash equivalents to be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period amounts shown on the statements of cash flows. The Company early adopted this guidance in the first quarter of 2017 on a retrospective basis and the Consolidated Statements of Cash Flows included herein reflect $4.1 million and $4.4 million of restricted cash for September 2017 and September 2016, respectively. The Company’s restricted cash is generally held as collateral for certain transactions. In January 2017, the FASB issued an update that simplifies the subsequent measurement of goodwill by eliminating the second step from the quantitative goodwill impairment test. The single quantitative step test requires companies to compare the fair value of a reporting unit with its carrying amount and record an impairment charge for the amount that the carrying amount exceeds the fair value, up to the total amount of goodwill allocated to that reporting unit. VF will continue to have the option of first performing a qualitative assessment to determine whether it is necessary to complete the quantitative goodwill impairment test. The Company early adopted this guidance in the third quarter of 2017 by applying the single quantitative step test to our interim goodwill impairment analysis and recorded an impairment charge of $104.7 million. Recently Issued Accounting Standards In May 2014, the FASB issued a new accounting standard on revenue recognition that outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. The FASB has subsequently issued updates to the standard to provide additional clarification on specific topics. The standard prescribes a five-step approach to revenue recognition: (1) identify the contracts with the customer; (2) identify the separate performance obligations in the contracts; (3) determine the transaction price; (4) allocate the transaction price to separate performance obligations; and (5) recognize revenue when, or as, each performance obligation is satisfied. This guidance will be effective for VF in the first quarter of fiscal 2019 with early adoption permitted. A cross-functional implementation team has completed VF’s impact analysis and is commencing the disclosure assessment phase of the project. The new guidance is not expected to have a material impact on VF’s significant revenue streams within the wholesale, direct-to-consumer and royalty channels. VF is in the process of concluding on the impact on less significant revenue streams within those channels. The Company expects to adopt the new standard utilizing the modified retrospective method in the first quarter of fiscal 2019. In January 2016, the FASB issued an update to their accounting guidance related to the recognition and measurement of certain financial instruments. This guidance affects the accounting for equity investments, financial liabilities under the fair value option and the presentation and disclosure requirements for financial instruments. This guidance will be effective for VF in the first quarter of fiscal 2019 with early adoption permitted. The Company does not expect the adoption of this accounting guidance to have a significant impact on VF’s consolidated financial statements. In February 2016, the FASB issued a new accounting standard on leasing. This new standard will require companies to record most leased assets and liabilities on the balance sheet, and also retains a dual model approach for assessing lease classification and recognizing expense. The Company has formed a cross-functional implementation team to address the standard and has started the design and assessment phase of the project. This guidance will be effective for VF in the first quarter of fiscal 2020 with early adoption permitted. The standard requires use of the modified retrospective transition approach. Given the Company’s significant number of leases, VF expects this standard will have a material impact on VF’s Consolidated Balance Sheets but does not expect it to have a material impact on the Consolidated Statements of Income. The Company expects to adopt the new standard in the first quarter of fiscal 2020. In March 2016, the FASB issued an update to their accounting guidance on extinguishments of financial liabilities that exempts prepaid stored-value products, or gift cards, from the existing guidance. The updated guidance requires that gift card liabilities be subject to breakage accounting, consistent with the new revenue recognition standard discussed above. This guidance will be effective for VF in the first quarter of fiscal 2019 with early adoption permitted. The Company does not expect the adoption of this accounting guidance to have a significant impact on VF’s consolidated financial statements. In June 2016, the FASB issued an update to their accounting guidance on the measurement of credit losses on financial instruments, which amends the impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses on certain types of financial instruments, including trade receivables. This guidance will be effective for VF in the first quarter of fiscal 2021 with early adoption permitted. The Company is evaluating the impact that adopting this guidance will have on VF’s consolidated financial statements. In August 2016, the FASB issued an update to their accounting guidance addressing how certain cash receipts and cash payments are presented and classified in the statement of cash flows. This guidance will be effective for VF in the first quarter of fiscal 2019 with early adoption permitted. The Company does not expect the adoption of this guidance to have a significant impact on VF’s consolidated financial statements. In January 2017, the FASB issued an update that provides a more narrow framework to be used in evaluating whether a set of assets and activities constitutes a business. This guidance will be effective for VF in the first quarter of fiscal 2019 with early adoption permitted. The Company will apply this guidance to any transactions after adoption but does not expect it to have a significant impact on VF’s consolidated financial statements. In March 2017, the FASB issued an update which requires employers to disaggregate the service cost component from other components of net periodic benefit costs and to disclose the amounts of net periodic benefit costs that are included in each income statement line item. The standard requires employers to report the service cost component in the same line item as other compensation costs and to report the other components of net periodic benefit costs (which include interest cost, expected return on plan assets, amortization of prior service costs or credits and actuarial gains and losses) separately and outside of operating income. The amendments in this update specify that only the service cost component is eligible for capitalization, which is consistent with VF’s current practice. The presentation change in the Consolidated Statements of Income will be applied on a retrospective basis. This guidance will be effective for VF beginning in the first quarter of fiscal 2019. Upon adoption, VF will reclassify the other components of net periodic benefit costs from the selling, general and administrative expenses line item in the Consolidated Statements of Income. Except for the reclassification within the Consolidated Statements of Income noted above, the Company does not expect the adoption of this accounting guidance to have a significant impact on VF’s consolidated financial statements. In May 2017, the FASB issued an update that amends the scope of modification accounting for share-based payment arrangements. This update provides guidance on the types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting. This guidance will be effective for VF beginning in the first quarter of fiscal 2019 with early adoption permitted. The guidance is required to be applied prospectively to an award modified on or after the adoption date. The Company will apply this guidance to any future changes made to the terms or conditions of share-based payment awards after adoption but does not expect it to have a significant impact on VF’s consolidated financial statements. In August 2017, the FASB issued an update that amends and simplifies certain aspects of hedge accounting rules to better portray the economic results of risk management activities in the financial statements. This guidance will be effective for VF in the first quarter of fiscal 2020 with early adoption permitted. The Company is evaluating the impact that adopting this guidance will have on VF’s consolidated financial statements. |
Discontinued Operations (Tables) |
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Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Discontinued Operations Presented in Financial Statements | The following table summarizes the major line items included in the income (loss) from discontinued operations for the divestitures of the licensing business and Contemporary Brands coalition:
The following table summarizes the carrying amounts of major classes of assets and liabilities of discontinued operations for each of the periods presented.
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Inventories (Tables) |
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Inventories |
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Intangible Assets (Tables) |
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Indefinite Lived Intangible Assets |
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Goodwill (Tables) |
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Changes in Goodwill | Changes in goodwill are summarized by business segment as follows:
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Pension Plans (Tables) |
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Components of Pension Cost | The components of pension cost for VF’s defined benefit plans were as follows:
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Capital and Accumulated Other Comprehensive Loss (Tables) |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares Held for Deferred Compensation Plans | During the first nine months of 2017, the Company purchased 6,540 shares of Common Stock in open market transactions for $0.4 million. Balances related to shares held for deferred compensation plans were as follows:
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Deferred Components of OCI Reported, Net of Related Income Taxes, in Accumulated OCI in Stockholders' Equity and Changes in Accumulated OCI | The changes in accumulated OCI, net of related taxes, are as follows:
The deferred components of OCI are reported, net of related income taxes, in accumulated OCI in stockholders’ equity, as follows:
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Reclassifications Out of Accumulated OCI | Reclassifications out of accumulated OCI are as follows:
|
Stock-based Compensation (Tables) |
9 Months Ended | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2017 | |||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||
Schedule of Assumption Used and Resulting Weighted Average Fair Value of Stock Option Granted | The grant date fair value of each option award is calculated using a lattice option-pricing valuation model, which incorporates a range of assumptions for inputs as follows:
|
Business Segment Information (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Information for Reportable Segments | Financial information for VF’s reportable segments is as follows:
|
Earnings Per Share (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share Basic and Diluted |
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Fair Value Measurements (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Classes of Financial Assets and Financial Liabilities Measured and Recorded at Fair Value on Recurring Basis | 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:
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Derivative Financial Instruments and Hedging Activities (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Outstanding Derivatives on Individual Contract Basis | The following table presents outstanding derivatives on an individual contract basis:
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Derivative Assets and Liabilities Presented in Consolidated Balance Sheet Adjusted from Current Gross | VF records and presents the fair values of all of its derivative assets and liabilities in the Consolidated Balance Sheets on a gross basis, even though they are subject to master netting agreements. If VF were to offset and record the asset and liability balances of its forward foreign currency exchange contracts on a net basis in accordance with the terms of its master netting agreements, the amounts presented in the Consolidated Balance Sheets would be adjusted from the current gross presentation to the net amounts as detailed in the following table:
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Derivative Assets and Liabilities Presented in Consolidated Balance Sheet Adjusted from Current Gross | VF records and presents the fair values of all of its derivative assets and liabilities in the Consolidated Balance Sheets on a gross basis, even though they are subject to master netting agreements. If VF were to offset and record the asset and liability balances of its forward foreign currency exchange contracts on a net basis in accordance with the terms of its master netting agreements, the amounts presented in the Consolidated Balance Sheets would be adjusted from the current gross presentation to the net amounts as detailed in the following table:
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Derivatives Classified as Current or Noncurrent Based on Maturity Dates | Derivatives are classified as current or noncurrent based on maturity dates, as follows:
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Effects of Cash Flow Hedging included in Consolidated Statements of Income and Consolidated Statements of Comprehensive Income | The effects of cash flow hedging included in VF’s Consolidated Statements of Income and Consolidated Statements of Comprehensive Income are summarized as follows:
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Effects of Fair Value Hedging Included in Consolidated Statements of Income | Following is a summary of these derivatives included in VF’s Consolidated Statements of Income:
|
Restructuring (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Activity in Restructuring Accrual | The activity in the restructuring accrual for the nine-month period ended September 2017 is as follows:
|
Acquisition (Details) - Williamson-Dickie Mfg. Co. - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |
---|---|---|---|
Oct. 02, 2017 |
Sep. 30, 2017 |
Sep. 30, 2017 |
|
Business Acquisition [Line Items] | |||
Acquisition related costs | $ 4.9 | $ 4.9 | |
Subsequent Event | |||
Business Acquisition [Line Items] | |||
Business acquisition, percentage acquired | 100.00% | ||
Payments to acquire businesses | $ 800.7 |
Sale of Accounts Receivable - Additional Information (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2017 |
Oct. 01, 2016 |
Sep. 30, 2017 |
Oct. 01, 2016 |
Dec. 31, 2016 |
|
Receivables [Abstract] | |||||
Maximum amount of accounts receivable sold at any point in time (up to) | $ 367.5 | $ 367.5 | $ 367.5 | $ 367.5 | |
Sale of accounts receivable | 871.6 | ||||
Accounts receivable removed related to sale of accounts receivable | 191.4 | 212.3 | 191.4 | 212.3 | $ 209.5 |
Funding fee | $ 0.8 | $ 0.8 | $ 2.7 | $ 2.5 |
Inventories (Details) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Dec. 31, 2016 |
Oct. 01, 2016 |
---|---|---|---|
Inventory Disclosure [Abstract] | |||
Finished products | $ 1,717,516 | $ 1,278,504 | $ 1,706,612 |
Work-in-process | 106,120 | 97,725 | 96,727 |
Raw materials | 85,927 | 95,071 | 94,207 |
Total inventories | $ 1,909,563 | $ 1,471,300 | $ 1,897,546 |
Intangible Assets - Additional Information (Details) $ in Millions |
3 Months Ended | 9 Months Ended |
---|---|---|
Sep. 30, 2017
USD ($)
|
Sep. 30, 2017
USD ($)
|
|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization of intangible assets | $ 5.6 | $ 16.3 |
Estimated amortization expense, 2017 | 21.9 | 21.9 |
Estimated amortization expense, 2018 | 21.9 | 21.9 |
Estimated amortization expense, 2019 | 21.3 | 21.3 |
Estimated amortization expense, 2020 | 20.4 | 20.4 |
Estimated amortization expense, 2021 | $ 19.4 | $ 19.4 |
Goodwill - Additional Information (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|---|
Sep. 30, 2017 |
Oct. 01, 2016 |
Sep. 30, 2017 |
Oct. 01, 2016 |
Jan. 02, 2010 |
Dec. 31, 2016 |
|
Goodwill [Line Items] | ||||||
Impairment charge | $ 104,651 | $ 0 | $ 104,651 | $ 0 | ||
Sportswear | ||||||
Goodwill [Line Items] | ||||||
Impairment charge | 104,651 | |||||
Accumulated impairment charges | 163,200 | 163,200 | $ 58,500 | |||
Outdoor & Action Sports | ||||||
Goodwill [Line Items] | ||||||
Impairment charge | 0 | |||||
Accumulated impairment charges | 82,700 | 82,700 | $ 82,700 | |||
Nautica | Sportswear | ||||||
Goodwill [Line Items] | ||||||
Impairment charge | $ 104,700 | $ 104,700 | $ 58,500 |
Pension Plans - Components of Pension Cost (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Oct. 01, 2016 |
Sep. 30, 2017 |
Oct. 01, 2016 |
|
Compensation and Retirement Disclosure [Abstract] | ||||
Service cost – benefits earned during the period | $ 6,202 | $ 6,478 | $ 18,733 | $ 19,434 |
Interest cost on projected benefit obligations | 14,730 | 16,991 | 44,254 | 51,066 |
Expected return on plan assets | (23,825) | (24,869) | (70,977) | (74,714) |
Amortization of deferred amounts: | ||||
Net deferred actuarial losses | 10,030 | 16,303 | 31,414 | 48,928 |
Deferred prior service costs | 643 | 645 | 2,000 | 1,937 |
Net periodic pension cost | $ 7,780 | $ 15,548 | $ 25,424 | $ 46,651 |
Pension Plans - Additional Information (Details) $ in Millions |
9 Months Ended |
---|---|
Sep. 30, 2017
USD ($)
| |
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |
Defined benefit pension plan contributed | $ 7.8 |
Defined benefit pension plan additional contributions to make during the remainder of the year | 7.2 |
Discontinued Operations, Disposed of by Sale | Licensing Business | |
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |
Pension curtailment | $ 1.1 |
Capital and Accumulated Other Comprehensive Loss - Additional Information (Details) - USD ($) $ / shares in Units, $ in Millions |
9 Months Ended | ||
---|---|---|---|
Sep. 30, 2017 |
Dec. 31, 2016 |
Oct. 01, 2016 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Common Stock, shares, purchased (in shares) | 22,200,000 | ||
Common Stock, value, purchased | $ 1,200.0 | ||
Treasury shares restored as unissued status (in shares) | 22,300,000 | ||
Treasury shares (in shares) | 0 | 0 | 2,600 |
Common Stock, stated value (in USD per share) | $ 0.25 | $ 0.25 | $ 0.25 |
Deferred Compensation | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Common Stock, shares, purchased (in shares) | 6,540 | ||
Common Stock held in trust for deferred compensation plan | $ 0.4 |
Capital and Accumulated Other Comprehensive Loss - Shares Held for Deferred Compensation Plans (Details) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Dec. 31, 2016 |
Oct. 01, 2016 |
---|---|---|---|
Equity [Abstract] | |||
Shares held for deferred compensation plans (in shares) | 320,615 | 439,667 | 450,067 |
Cost of shares held for deferred compensation plans | $ 3,973 | $ 5,464 | $ 5,434 |
Stock-based Compensation - Schedule of Assumption Used and Resulting Weighted Average Fair Value of Stock Option Granted (Details) |
9 Months Ended |
---|---|
Sep. 30, 2017
$ / shares
| |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected volatility, minimum | 23.00% |
Expected volatility, maximum | 30.00% |
Weighted average expected volatility | 24.00% |
Weighted average dividend yield | 2.80% |
Risk-free interest rate, minimum | 0.70% |
Risk-free interest rate, maximum | 2.40% |
Weighted average fair value at date of grant (in USD per share) | $ 9.90 |
Minimum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected term (in years) | 6 years 3 months 18 days |
Maximum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected term (in years) | 7 years 8 months 12 days |
Earnings Per Share - Schedule of Earnings Per Share Basic and Diluted (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Oct. 01, 2016 |
Sep. 30, 2017 |
Oct. 01, 2016 |
|
Earnings per share – basic: | ||||
Income from continuing operations | $ 386,764 | $ 485,224 | $ 716,308 | $ 863,652 |
Weighted average common shares outstanding (in shares) | 393,258 | 413,461 | 400,771 | 417,067 |
Earnings per share from continuing operations (in USD per share) | $ 0.98 | $ 1.17 | $ 1.79 | $ 2.07 |
Earnings per share – diluted: | ||||
Income from continuing operations | $ 386,764 | $ 485,224 | $ 716,308 | $ 863,652 |
Weighted average common shares outstanding (in shares) | 393,258 | 413,461 | 400,771 | 417,067 |
Incremental shares from stock options and other dilutive securities (in shares) | 4,126 | 5,779 | 3,848 | 6,410 |
Adjusted weighted average common shares outstanding (in shares) | 397,384 | 419,240 | 404,619 | 423,477 |
Earnings per share from continuing operations (in USD per share) | $ 0.97 | $ 1.16 | $ 1.77 | $ 2.04 |
Earnings Per Share - Additional Information (Details) - shares shares in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Oct. 01, 2016 |
Sep. 30, 2017 |
Oct. 01, 2016 |
|
Employees And Non Employees Stock Option | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Stock options excluded from computation of earnings per share | 4.9 | 5.2 | 8.6 | 5.3 |
Performance-Based Restricted Stock Units | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Stock options excluded from computation of earnings per share | 1.1 | 1.0 | 1.1 | 1.0 |
Fair Value Measurements - Classes of Financial Assets and Financial Liabilities Measured and Recorded at Fair Value on Recurring Basis (Details) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Dec. 31, 2016 |
Oct. 01, 2016 |
---|---|---|---|
Cash equivalents: | |||
Money market funds | $ 405,045 | $ 840,842 | |
Time deposits | 8,307 | 14,774 | |
Derivative financial instruments | 26,658 | 103,340 | $ 75,497 |
Investment securities | 202,721 | 196,738 | |
Financial liabilities: | |||
Derivative financial instruments | 89,212 | 25,574 | $ 32,181 |
Deferred compensation | 233,151 | 232,214 | |
Level 1 | |||
Cash equivalents: | |||
Money market funds | 405,045 | 840,842 | |
Time deposits | 8,307 | 14,774 | |
Investment securities | 189,744 | 179,673 | |
Level 2 | |||
Cash equivalents: | |||
Derivative financial instruments | 26,658 | 103,340 | |
Investment securities | 12,977 | 17,065 | |
Financial liabilities: | |||
Derivative financial instruments | 89,212 | 25,574 | |
Deferred compensation | $ 233,151 | $ 232,214 |
Derivative Financial Instruments and Hedging Activities - Outstanding Derivatives on Individual Contract Basis at Gross Amounts (Details) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Dec. 31, 2016 |
Oct. 01, 2016 |
---|---|---|---|
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Fair Value of Derivatives with Unrealized Gains | $ 26,658 | $ 103,340 | $ 75,497 |
Fair Value of Derivatives with Unrealized Losses | (89,212) | (25,574) | (32,181) |
Foreign currency exchange contracts designated as hedging instruments | |||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Fair Value of Derivatives with Unrealized Gains | 26,451 | 103,340 | 75,497 |
Fair Value of Derivatives with Unrealized Losses | (88,593) | (25,292) | (31,996) |
Foreign currency exchange contracts not designated as hedging instruments | |||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Fair Value of Derivatives with Unrealized Gains | 207 | 0 | 0 |
Fair Value of Derivatives with Unrealized Losses | $ (619) | $ (282) | $ (185) |
Derivative Financial Instruments and Hedging Activities - Fair Value of Derivative Assets and Liabilities in Balance Sheet (Details) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Dec. 31, 2016 |
Oct. 01, 2016 |
---|---|---|---|
Derivative Asset | |||
Gross amounts presented in the Consolidated Balance Sheets | $ 26,658 | $ 103,340 | $ 75,497 |
Gross amounts not offset in the Consolidated Balance Sheets | (26,001) | (22,341) | (19,328) |
Net amounts | 657 | 80,999 | 56,169 |
Derivative Liability | |||
Gross amounts presented in the Consolidated Balance Sheets | (89,212) | (25,574) | (32,181) |
Gross amounts not offset in the Consolidated Balance Sheets | 26,001 | 22,341 | 19,328 |
Net amounts | $ (63,211) | $ (3,233) | $ (12,853) |
Derivative Financial Instruments and Hedging Activities - Derivatives Classified as Current or Noncurrent Based on Maturity Dates (Details) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Dec. 31, 2016 |
Oct. 01, 2016 |
---|---|---|---|
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||
Other current assets | $ 23,387 | $ 84,519 | $ 66,231 |
Accrued liabilities | (75,266) | (18,574) | (28,852) |
Other assets | 3,271 | 18,821 | 9,266 |
Other liabilities | $ (13,946) | $ (7,000) | $ (3,329) |
Derivative Financial Instruments and Hedging Activities - Hedges Included in Consolidated Statements of Income (Details) - Foreign currency exchange contracts not designated as hedging instruments - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Oct. 01, 2016 |
Sep. 30, 2017 |
Oct. 01, 2016 |
|
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain (Loss) on Derivatives Recognized in Income | $ (1,266) | $ (620) | $ (2,372) | $ (971) |
Cost of goods sold | Foreign currency exchange | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain (Loss) on Derivatives Recognized in Income | (927) | (510) | (294) | 225 |
Other income (expense), net | Foreign currency exchange | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain (Loss) on Derivatives Recognized in Income | $ (339) | $ (110) | $ (2,078) | $ (1,196) |
Restructuring - Additional Information (Details) $ in Millions |
3 Months Ended |
---|---|
Dec. 31, 2016
USD ($)
| |
Restructuring and Related Activities [Abstract] | |
Restructuring charges | $ 58.1 |
Restructuring - Activity in Restructuring Accrual (Details) $ in Thousands |
9 Months Ended |
---|---|
Sep. 30, 2017
USD ($)
| |
Restructuring Reserve [Roll Forward] | |
Amounts recorded in accrued liabilities, beginning | $ 53,598 |
Cash payments | (25,393) |
Adjustments to accruals | (3,001) |
Currency translation | 824 |
Amounts recorded in accrued liabilities. ending | 26,028 |
Severance | |
Restructuring Reserve [Roll Forward] | |
Amounts recorded in accrued liabilities, beginning | 52,720 |
Cash payments | (24,515) |
Adjustments to accruals | (3,001) |
Currency translation | 824 |
Amounts recorded in accrued liabilities. ending | 26,028 |
Other | |
Restructuring Reserve [Roll Forward] | |
Amounts recorded in accrued liabilities, beginning | 878 |
Cash payments | (878) |
Adjustments to accruals | 0 |
Currency translation | 0 |
Amounts recorded in accrued liabilities. ending | $ 0 |
Subsequent Events - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands |
9 Months Ended | |||||
---|---|---|---|---|---|---|
Nov. 01, 2017 |
Oct. 02, 2017 |
Sep. 30, 2017 |
Oct. 01, 2016 |
Apr. 30, 2018 |
Oct. 19, 2017 |
|
Subsequent Event [Line Items] | ||||||
Payments on long-term debt | $ 2,749 | $ 12,385 | ||||
Subsequent Event | Dividend Declared | ||||||
Subsequent Event [Line Items] | ||||||
Cash dividend (in USD per share) | $ 0.46 | |||||
Williamson-Dickie Mfg. Co. | Subsequent Event | ||||||
Subsequent Event [Line Items] | ||||||
Payments to acquire businesses | $ 800,700 | |||||
Business acquisition, percentage acquired | 100.00% | |||||
Notes Payable to Banks | Subsequent Event | ||||||
Subsequent Event [Line Items] | ||||||
Payments on long-term debt | $ 250,000 | |||||
Notes, stated percentage | 5.95% | |||||
Scenario, Forecast | Icebreaker Holdings, Ltd | ||||||
Subsequent Event [Line Items] | ||||||
Business acquisition, percentage acquired | 100.00% |
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