VF is organized by groupings of brands and businesses represented by its reportable segments for financial reporting purposes. The three reportable segments are Outdoor, Active and Work.
Unless otherwise noted, amounts, percentages and discussion for all periods included below reflect the results of operations and financial condition from VF's continuing operations.
operational in accordance with local government guidelines while maintaining enhanced health and safety protocols.
VF has taken actions to advance its Enterprise Protection Strategy in response to the COVID-19 pandemic.
At March 2022, VF had approximately $1.3 billion of cash and equivalents. Additionally, VF had approximately $1.9 billion available for borrowing against the Global Credit Facility, subject to certain restrictions.
HIGHLIGHTS OF THE YEAR ENDED MARCH 2022
•Outdoor segment revenues increased 29% to $5.3 billion compared to the year ended March 2021, including a 1% favorable impact from foreign currency.
•Work segment revenues increased 20% to $1.1 billion compared to the year ended March 2021, including a 1% favorable impact from foreign currency.
•Cash flows provided by operating activities were $858.2 million in the year ended March 2022.
•VF repurchased $350.0 million of its Common Stock and paid $773.2 million in cash dividends, returning $1.1 billion to stockholders.
ANALYSIS OF RESULTS OF OPERATIONS
The following table presents a summary of the changes in net revenues for the year ended March 2022 compared to the year ended March 2021:
Year Ended March 2022 Compared to Year Ended March 2021
Additional details on revenues are provided in the section titled "Information by Reportable Segment".
The following table presents the percentage relationship to net revenues for components of the Consolidated Statements of Operations:
Year Ended March 2022 Compared to Year Ended March 2021
In Fiscal 2022, operating margin increased to 13.8% from 6.6% in Fiscal 2021, primarily due to the items described above.
Refer to additional discussion in the "Information by Reportable Segment" section below.
Refer to Note 20 to the consolidated financial statements for a summary of results of operations by segment, along with a reconciliation of segment profit to income before income taxes.
Year Ended March 2022 Compared to Year Ended March 2021
(a) The global Timberland brand includes Timberland®, reported within the Outdoor segment and Timberland PRO®, reported within the Work segment.
Note: Amounts may not sum due to rounding.
The following sections discuss the changes in revenues and profitability by segment. For purposes of this analysis, royalty revenues have been included in the wholesale channel for all periods.
The Outdoor segment includes the following brands: The North Face®, Timberland®, Smartwool®, Icebreaker® and Altra®.
Year Ended March 2022 Compared to Year Ended March 2021
Global revenues for The North Face® brand increased 33% in Fiscal 2022, including a 1% favorable impact from foreign currency. The overall revenue growth reflects increases in all regions and channels compared to the prior year. The overall growth was led by the Europe region, which increased 40% in Fiscal 2022.
Global revenues for the Timberland® brand increased 20% in Fiscal 2022. The increase was driven by recovery from the negative impact of COVID-19 on the prior year. The overall growth was led by an increase of 41% in the United States, and an increase of 19% in the Europe region, including a 1%
The Active segment includes the following brands: Vans®, Supreme®, Napapijri®, Kipling®, Eastpak® and JanSport®.
Year Ended March 2022 Compared to Year Ended March 2021
The Work segment includes the following brands: Dickies® and Timberland PRO®.
Year Ended March 2022 Compared to Year Ended March 2021
Reconciliation of Segment Profit to Consolidated Income Before Income Taxes
Information Systems and Shared Services
utilization of those services. Costs to develop new software and related applications are generally not allocated to the segments.
activities, the most significant of which is related to VF's centrally-managed U.S. defined benefit pension plans.
The following discussion refers to significant changes in balances for continuing operations at March 2022 compared to March 2021:
•Increase in accounts receivable - primarily due to higher wholesale shipments driven by recovery from the negative impact of COVID-19 on the comparative period.
•Increase in inventories - primarily due to recovery from the negative impact of COVID-19 on the comparative period.
•Decrease in short-term investments - due to the sale of short-term investments.
•Increase in short-term borrowings - due to an increase in commercial paper borrowings.
•Increase in the current portion of long-term debt - due to the reclassification of $500.0 million of long-term notes due in April 2022.
The decrease in the current ratio at March 2022 compared to March 2021 was primarily due to a net increase in current liabilities driven by a higher current portion of long-term debt, higher short-term borrowings and higher accrued liabilities, as discussed in the "Balance Sheets" section above.
an increase in stockholders' equity, which was driven by net income in the period, partially offset by payments of dividends and share repurchases.
In summary, our cash flows from continuing operations were as follows:
Cash provided (used) by financing activities (1,268.8) 1,052.9
Cash Provided by Operating Activities
Cash Provided (Used) by Investing Activities
Cash Provided (Used) by Financing Activities
Revolving Credit Facility and Short-term Borrowings
In December 2021, VF completed an early redemption of $500.0 million in aggregate principal amount of its outstanding 2.050% Senior Notes due April 2022. The redemption price was equal to the sum of the present value of the remaining scheduled payments of principal and interest discounted to the redemption date at 38.7 basis points, which resulted in a make-whole premium of $3.2 million.
Following is a summary of VF's material contractual obligations and commercial commitments at the end of March 2022 that will require the use of funds:
VF had other financial commitments and contingent obligations at the end of Fiscal 2022 that are not included in the above table but may require the use of funds under certain circumstances:
•Purchase orders for goods or services in the ordinary course of business are not included in the above table because they represent authorizations to purchase rather than binding commitments.
VF does not participate in transactions with unconsolidated entities or financial partnerships established to facilitate off-balance sheet arrangements or other limited purposes.
Defined benefit pension plan risks
Foreign currency exchange rate risks
VF is exposed to credit-related losses in the event of nonperformance by counterparties to derivative hedging instruments. To manage this risk, we have established counterparty credit guidelines and only enter into derivative transactions with financial institutions that have 'A minus/A3'
Deferred compensation and related investment security risks
VF believes the following accounting policies involve the most significant management estimates, assumptions and judgments used in preparation of the consolidated financial statements or are the most sensitive to change from outside factors. The application of these critical accounting policies and estimates is discussed with the Audit Committee of the Board of Directors.
During the measurement period, which is up to one year from the acquisition date, adjustments to the assets acquired and liabilities assumed may be recorded, with the corresponding offset to goodwill.
Refer to Note 3 to the consolidated financial statements for additional information related to the Supreme acquisition.
Long-Lived Assets, Including Intangible Assets and Goodwill
Indefinite-Lived Intangible Assets and Goodwill
•A terminal growth rate for years beyond the forecast period. The terminal growth rate is selected based on consideration of growth rates used in the forecast period, historical performance of the reporting unit and economic conditions.
Supreme Reporting Unit and Indefinite-Lived Intangible Asset Impairment Analysis
Key assumptions developed by management and used in the quantitative analysis of the Supreme reporting unit and indefinite-lived trademark intangible asset include:
•Royalty rates based on market data as well as active license agreements with similar VF brands, which are
consistent with the business combination valuation assumptions; and,
Other Reporting Units - Qualitative Impairment Analysis
Management's Use of Estimates and Assumptions
in discount rates), (iii) business conditions or strategies for a specific reporting unit change from current assumptions, including loss of major customers, (iv) investors require higher rates of return on equity investments in the marketplace, or (v) enterprise values of comparable publicly traded companies, or actual sales transactions of comparable companies, were to decline, resulting in lower multiples of revenues and EBITDA.
Recently Issued and Adopted Accounting Standards
Refer to Note 1 to the consolidated financial statements for discussion of recently issued and adopted accounting standards.
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