Annual report pursuant to Section 13 and 15(d)

Long-term Debt

v2.4.0.8
Long-term Debt
12 Months Ended
Dec. 28, 2013
Long-term Debt

Note K — Long-term Debt

2013 2012
In thousands

Floating rate notes, due 2013

$ $ 400,000

5.95% notes, due 2017

250,000 250,000

3.50% notes, due 2021

498,765 498,629

6.00% notes, due 2033

293,422 293,253

6.45% notes, due 2037

350,000 350,000

Other long-term debt

10,341 10,528

Capital leases

29,468 29,629

Total long-term debt

1,431,996 1,832,039

Less current portion

5,167 402,873

Long-term debt, due beyond one year

$ 1,426,829 $ 1,429,166

Interest payments are due semi-annually on all fixed rate notes. The floating rate notes accrued interest at the three-month LIBOR rate plus .75%, and were repaid during the third quarter of 2013.

All notes, along with any amounts outstanding under the Global Credit Facility (Note I), rank equally as senior unsecured obligations of VF. All notes contain customary covenants and events of default, including limitations on liens and sale-leaseback transactions and a cross-acceleration event of default. The cross-acceleration provision of the 2033 notes is triggered if more than $50.0 million of other debt is in default and has been accelerated by the lenders. For the other notes, the cross-acceleration trigger is $100.0 million. If VF fails in the performance of any covenant under the indentures that govern the respective notes, the trustee or lenders may declare the principal due and payable immediately. At the end of 2013, VF was in compliance with all covenants. None of the long-term debt agreements contain acceleration of maturity clauses based solely on changes in credit ratings. However, if there were a change in control of VF and, as a result of the change in control, the 2017, 2021 and 2037 notes were rated below investment grade by recognized rating agencies, then VF would be obligated to repurchase those notes at 101% of the aggregate principal amount plus any accrued interest.

VF may redeem its fixed rate notes, in whole or in part, at a price equal to the greater of (i) 100% of the principal amount, plus accrued interest to the redemption date, or (ii) the sum of the present value of the remaining scheduled payments of principal and interest discounted to the redemption date at an adjusted treasury rate, as defined, plus 20 basis points for the 2017 and 2021 notes and 25 basis points for the 2037 notes, plus accrued interest to the redemption date. In addition, the 2021 notes can be redeemed at 100% of the principal amount plus accrued interest to the redemption date within the three months prior to maturity.

The 2021 notes have a principal balance of $500.0 million and are recorded net of unamortized original issue discount. Interest expense on these notes is recorded at an effective annual interest rate of 4.69%, including amortization of a deferred loss on an interest rate hedging contract (Note U), original issue discount and debt issuance costs.

The 2033 notes have a principal balance of $300.0 million and are recorded net of unamortized original issue discount. Interest expense on these notes is recorded at an effective annual interest rate of 6.19%, including amortization of a deferred gain on an interest rate hedging contract (Note U), original issue discount and debt issuance costs.

Capital leases relate primarily to buildings and improvements (Note E), expire at dates through 2021 and have an effective interest rate of 5.06%. Assets under capital leases are included in property, plant and equipment at a cost of $47.6 million, less accumulated amortization of $24.1 million at the end of 2013, and at a cost of $42.7 million, less accumulated amortization of $18.9 million at the end of 2012.

The scheduled payments of long-term debt and future minimum lease payments for capital leases at the end of 2013 are summarized as follows:

Notes and
Other
Capital
Leases
Total
In thousands

2014

$ 200 $ 6,265 $ 6,465

2015

213 4,506 4,719

2016

4,345 4,345

2017

250,000 4,504 254,504

2018

4,504 4,504

Thereafter

1,159,928 10,886 1,170,814

1,410,341 35,010 1,445,351

Less unamortized debt discount

7,813 7,813

Less amounts representing interest

5,542 5,542

Total long-term debt

1,402,528 29,468 1,431,996

Less current portion

200 4,967 5,167

Long-term debt, due beyond one year

$ 1,402,328 $ 24,501 $ 1,426,829