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RELATED PARTY TRANSACTIONS | RELATED PARTY TRANSACTIONS The combined financial statements have been prepared on a standalone basis and are derived from the consolidated financial statements and accounting records of VF. The following discussion summarizes activity between the Company and VF (and its affiliates that were not part of the spin-off transaction) referred to hereafter as VF.
Allocation of General Corporate Expenses
The combined statements of income include expenses for certain centralized functions and other programs provided and administered by VF that were charged directly to the Company. In addition, for purposes of preparing these combined financial statements on a carve-out basis, we have allocated a portion of VF's total corporate expenses to the Company. See Note 1 in the 2018 Form 10 for a discussion of the methodology used to allocate corporate-related costs for purposes of preparing these financial statements on a carve-out basis.
Related Party Sales and Purchases
During the three months ended March 2019 and 2018, the Company's sales to VF totaled $10.6 million and $13.5 million, respectively, which are included in "net revenues" in the combined statements of income. The Company's cost of goods sold includes items purchased from VF totaling $0.3 million and $0.8 million during the three months ended March 2019 and 2018, respectively. At March 2019, December 2018 and March 2018, the aggregate amount of inventories purchased from VF that remained on the Company's combined balance sheets were $1.2 million, $0.8 million and $1.9 million, respectively.
Related Party Notes
At March 2019, December 2018 and March 2018, the Company had related party notes receivable of $517.9 million, $517.9 million and $546.7 million, respectively, with VF as the counterparty. These notes are short-term and are recorded in the combined balance sheets in "related party notes receivable". The weighted-average interest rate for these notes was approximately 3.7%, 3.4% and 2.4% at March 2019, December 2018 and March 2018, respectively.
At March 2019, December 2018 and March 2018, the Company had related party notes payable of $241.9 million, $269.1 million and $269.1 million, respectively, with VF as the counterparty. These notes are short-term and are recorded within the combined balance
sheets in "related party notes payable". The weighted-average interest rate for these notes was approximately 3.7%, 3.4% and 2.3% at March 2019, December 2018 and March 2018, respectively.
The Company recorded net interest income related to these notes of $2.3 million and $1.7 million during the three months ended March 2019 and 2018, respectively, which is reflected in "related party interest income, net" within the combined statements of income.
Due To and From Related Parties
Balances in due to and from related parties are generated by (i) the sale of trade accounts receivable to VF, as discussed in Note 5 to the combined financial statements, (ii) hedging agreements with VF, and (iii) sourcing payable to VF.
During the periods presented, the Company did not enter into derivative contracts with external counterparties. However, VF entered into derivative contracts with external counterparties to hedge certain foreign currency transactions with exposure to the euro, Mexican peso, Polish zloty, Canadian dollar, and other currencies. The Company entered into offsetting internal contracts with VF with maturities up to 20 months, and cash settled with VF on any asset or liability that arose under these contracts.
Due from related parties, current consists of the following:
As discussed in Note 5 to the combined financial statements, the Company sold certain of its trade accounts receivable to VF, who then sold them to a financial institution and periodically remitted cash back to the Company.
Due from related parties, noncurrent consists of the following:
Due to related parties, current consists of the following:
Net Transfers To and From VF
Net transfers to and from VF are included in "parent company investment" within the combined statements of equity. The components of the transfers to and from VF are as follows:
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