VF Corporation Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Long-term Debt

Long-term Debt

12 Months Ended

Dec. 31, 2016



	2016		2015
	In thousands
5.95% notes, due 2017	$	249,823	$	249,586
3.50% notes, due 2021	497,128		496,566
0.625% notes, due 2023	889,760		—
6.00% notes, due 2033	292,251		291,948
6.45% notes, due 2037	346,112		345,925
Capital leases	17,795		21,146
Total long-term debt	2,292,869		1,405,171
Less current portion	253,689		3,351
Long-term debt, due beyond one year	$	2,039,180	$	1,401,820

In September 2016, VF issued €850.0 million of 0.625% euro-denominated fixed-rate notes maturing in September 2023. Interest payments are due annually on the 2023 notes and semiannually on all other notes.

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 2016, 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, 2023 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 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, 15 basis points for the 2023 and 2033 notes and 25 basis points for the 2037 notes, plus accrued interest to the redemption date. In addition, the 2021 and 2023 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 2017 and 2037 notes have a principal balance of $250.0 million and $350.0 million, respectively, and are recorded net of unamortized debt issuance costs.

The 2021 notes have a principal balance of $500.0 million and are recorded net of unamortized original issue discount and debt issuance costs. 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 2023 notes have a principal balance of €850.0 million and are recorded net of unamortized original issue discount and debt issuance costs. Interest expense on these notes is recorded at an effective annual interest rate of 0.712% which includes amortization of 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 and debt issuance costs. 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 $42.7 million, less accumulated amortization of $30.3 million at the end of 2016 and $27.4 million at the end of 2015.

The scheduled payments of long-term debt and future minimum lease payments for capital leases at the end of 2016 are summarized as follows:



	Notes and Other		Capital Leases		Total
	In thousands
2017	$	250,000	$	4,504	$	254,504
2018	—		4,504		4,504
2019	—		4,504		4,504
2020	—		4,504		4,504
2021	500,000		1,877		501,877
Thereafter	1,546,495		—		1,546,495
	2,296,495		19,893		2,316,388
Less unamortized debt discount	7,630		—		7,630
Less unamortized debt issuance costs	13,791		—		13,791
Less amounts representing interest	—		2,098		2,098
Total long-term debt	2,275,074		17,795		2,292,869
Less current portion	250,000		3,689		253,689
Long-term debt, due beyond one year	$	2,025,074	$	14,106	$	2,039,180