Kontoor Brands Inc
For the period ended Dec 30, 2023. Filed Feb 28, 2024.
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FY2023 · Filed Feb 28, 2024
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Capital and Accumulated Other Comprehensive Loss
NOTE 16 —CAPITAL AND ACCUMULATED OTHER COMPREHENSIVE LOSS
Common Stock
On August 5, 2021, the Company's Board of Directors approved a share repurchase program (the "2021 Repurchase Program") which authorized the repurchase of up to $200.0 million of the Company's outstanding Common Stock through open market or privately negotiated transactions. On December 11, 2023, the Company announced that its Board of Directors approved a new share repurchase program ("the 2023 Repurchase Program") which authorized the repurchase of up to $300.0 million of the Company's outstanding Common Stock through open market or privately negotiated transactions. The 2023 Repurchase Program replaced all remaining shares under the 2021 Repurchase Program and does not have an expiration date but may be suspended, modified or terminated at any time without prior notice.
The timing and amount of repurchases are determined by the Company's management based on its evaluation of market conditions, continued compliance with its debt covenants and other factors. All shares reacquired in connection with the Company's repurchase programs are treated as authorized and unissued shares upon repurchase.
During the years ended December 2023, December 2022 and December 2021, the Company repurchased 0.6 million,1.5 million and 1.4 million shares of Common Stock, respectively, for $30.1 million, $62.5 million and $75.5 million, respectively, including commissions, under the 2021 Repurchase Program. All of the $300.0 million authorized for repurchase under the 2023 Repurchase Program remained available for repurchase as of December 2023.
Accumulated Other Comprehensive Loss
The Company's comprehensive income consists of net income and specified components of OCI, which relate to changes in assets and liabilities that are not included in net income but are instead deferred and accumulated within a separate component of equity in the Company's balance sheets. The Company's comprehensive income is presented in the Company's statements of comprehensive income.
The following table presents deferred components of AOCL in equity, net of related taxes:
| (In thousands) | December 2023 | December 2022 | December 2021 |
|---|---|---|---|
| Foreign currency translation | $(91,057) | $(107,462) | $(93,125) |
| Defined benefit pension plans | 2,913 | 2,243 | (2,177) |
| Derivative financial instruments | 20,293 | 25,554 | 2,546 |
| Accumulated other comprehensive loss | $(67,851) | $(79,665) | $(92,756) |
72 Kontoor Brands, Inc. 2023 Form 10-K
The following table presents changes in AOCL and related tax impact:
| (In thousands) | Foreign Currency Translation | Defined Benefit Pension Plans | Derivative Financial Instruments | Total |
|---|---|---|---|---|
| Balance, December 2020 | $(80,178) | $(1,889) | $(12,740) | $(94,807) |
| Other comprehensive income (loss) due to gains (losses) arising before reclassifications | (12,947) | (399) | 11,138 | (2,208) |
| Reclassifications to net income of previously deferred (gains) losses | — | 15 | 8,835 | 8,850 |
| Net other comprehensive income (loss) | (12,947) | (384) | 19,973 | 6,642 |
| Income taxes | — | 96 | (4,687) | (4,591) |
| Balance, December 2021 | $(93,125) | $(2,177) | $2,546 | $(92,756) |
| Other comprehensive income (loss) due to gains (losses) arising before reclassifications | (14,337) | 8,438 | 40,628 | 34,729 |
| Reclassifications to net income of previously deferred (gains) losses | — | (2,549) | (12,422) | (14,971) |
| Net other comprehensive income (loss) | (14,337) | 5,889 | 28,206 | 19,758 |
| Income taxes | — | (1,469) | (5,198) | (6,667) |
| Balance, December 2022 | $(107,462) | $2,243 | $25,554 | $(79,665) |
| Other comprehensive income (loss) due to gains (losses) arising before reclassifications | 16,405 | 1,077 | 24,419 | 41,901 |
| Reclassifications to net income of previously deferred (gains) losses | — | (187) | (33,829) | (34,016) |
| Net other comprehensive income (loss) | 16,405 | 890 | (9,410) | 7,885 |
| Income taxes | — | (220) | 4,149 | 3,929 |
| Balance, December 2023 | $(91,057) | $2,913 | $20,293 | $(67,851) |
The following table presents reclassifications out of AOCL:
| (In thousands) | Year Ended December | |||
|---|---|---|---|---|
| Details About Accumulated Other Comprehensive Loss Reclassifications | Affected Line Item in the Financial Statements | 2023 | 2022 | 2021 |
| Defined benefit pension plans: | ||||
| Net change in deferred losses during the period | Selling, general and administrative expenses | $187 | $(32) | $(15) |
| Pension curtailment gains | Other expense, net | $— | $2,581 | $— |
| Total before tax | 187 | 2,549 | (15) | |
| Income taxes | Income taxes | (47) | (637) | 3 |
| Net of tax | 140 | 1,912 | (12) | |
| Gains (losses) on derivative financial instruments: | ||||
| Foreign currency exchange contracts | Net revenues | $(219) | $(1,093) | $204 |
| Foreign currency exchange contracts | Cost of goods sold | 23,588 | 13,531 | (2,271) |
| Foreign currency exchange contracts | Other expense, net | 527 | 245 | (749) |
| Interest rate swap agreements | Interest expense | 9,933 | (261) | (6,019) |
| Total before tax | 33,829 | 12,422 | (8,835) | |
| Income taxes | Income taxes | (3,541) | (924) | 2,724 |
| Net of tax | 30,288 | 11,498 | (6,111) | |
| Total reclassifications for the period, net of tax | $30,428 | $13,410 | $(6,123) | |
Kontoor Brands, Inc. 2023 Form 10-K 73
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