| Components of Pension Cost |
The components of pension cost for VF’s defined benefit plans were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands) |
|
2017 |
|
|
2016 |
|
2015 |
Service cost — benefits earned during the year |
|
$ |
24,890 |
|
|
|
$ |
25,839 |
|
|
$ |
29,223 |
|
Interest cost on projected benefit obligations |
|
58,989 |
|
|
|
68,020 |
|
|
77,620 |
|
Expected return on plan assets |
|
(94,807 |
) |
|
|
(99,540 |
) |
|
(111,095 |
) |
Settlement charges |
|
— |
|
|
|
50,922 |
|
|
4,062 |
|
Curtailments |
|
1,671 |
|
|
|
— |
|
|
— |
|
Amortization of deferred amounts: |
|
|
|
|
|
|
|
Net deferred actuarial losses |
|
41,440 |
|
|
|
65,212 |
|
|
61,966 |
|
Deferred prior service costs |
|
2,646 |
|
|
|
2,584 |
|
|
3,038 |
|
Total pension expense |
|
$ |
34,829 |
|
|
|
$ |
113,037 |
|
|
$ |
64,814 |
|
Weighted average actuarial assumptions used to determine pension expense: |
|
|
|
|
|
|
|
Discount rate in effect for determining service cost |
|
4.08 |
% |
|
|
4.54 |
% |
|
3.93 |
% |
Discount rate in effect for determining interest cost |
|
3.26 |
% |
|
|
3.56 |
% |
|
3.93 |
% |
Expected long-term return on plan assets |
|
5.72 |
% |
|
|
5.81 |
% |
|
6.05 |
% |
Rate of compensation increase |
|
3.78 |
% |
|
|
3.90 |
% |
|
3.91 |
% |
|
| Reconciliation of Changes in Fair Value of Defined Benefit Plan Assets and Projected Benefit Obligations |
The following provides a reconciliation of the changes in fair value of VF’s defined benefit plan assets and projected benefit obligations for each year, and the funded status at the end of each year:
|
|
|
|
|
|
|
|
|
|
|
(In thousands) |
|
2017 |
|
|
2016 |
Fair value of plan assets, beginning of year |
|
$ |
1,673,297 |
|
|
|
$ |
1,755,374 |
|
Actual return on plan assets |
|
204,017 |
|
|
|
191,219 |
|
VF contributions |
|
9,807 |
|
|
|
24,031 |
|
Participant contributions |
|
4,011 |
|
|
|
3,644 |
|
Benefits paid |
|
(93,900 |
) |
|
|
(286,271 |
) |
Currency translation |
|
12,417 |
|
|
|
(14,700 |
) |
Fair value of plan assets, end of year |
|
1,809,649 |
|
|
|
1,673,297 |
|
Projected benefit obligations, beginning of year |
|
1,808,327 |
|
|
|
1,912,015 |
|
Service cost |
|
24,890 |
|
|
|
25,839 |
|
Interest cost |
|
58,989 |
|
|
|
68,020 |
|
Participant contributions |
|
4,011 |
|
|
|
3,644 |
|
Actuarial loss |
|
131,040 |
|
|
|
100,242 |
|
Benefits paid |
|
(93,900 |
) |
|
|
(286,271 |
) |
Curtailments |
|
(5,664 |
) |
|
|
— |
|
Currency translation |
|
16,128 |
|
|
|
(15,162 |
) |
Projected benefit obligations, end of year |
|
1,943,821 |
|
|
|
1,808,327 |
|
Funded status, end of year |
|
$ |
(134,172 |
) |
|
|
$ |
(135,030 |
) |
Pension benefits are reported in the Consolidated Balance Sheets as a net asset or liability based on the overfunded or underfunded status of the defined benefit plans, assessed on a plan-by-plan basis.
|
|
|
|
|
|
|
|
|
|
|
(In thousands) |
|
2017 |
|
|
2016 |
Amounts included in Consolidated Balance Sheets: |
|
|
|
|
|
Other assets (Note I) |
|
$ |
82,296 |
|
|
|
$ |
41,281 |
|
Accrued liabilities (Note K) |
|
(27,277 |
) |
|
|
(10,669 |
) |
Other liabilities (Note M) |
|
(189,191 |
) |
|
|
(165,642 |
) |
Funded status |
|
$ |
(134,172 |
) |
|
|
$ |
(135,030 |
) |
Accumulated other comprehensive loss, pretax: |
|
|
|
|
|
Net deferred actuarial losses |
|
$ |
454,463 |
|
|
|
$ |
476,071 |
|
Deferred prior service costs |
|
10,533 |
|
|
|
14,883 |
|
Total accumulated other comprehensive loss, pretax |
|
$ |
464,996 |
|
|
|
$ |
490,954 |
|
Accumulated benefit obligations |
|
$ |
1,837,776 |
|
|
|
$ |
1,717,786 |
|
Weighted average actuarial assumptions used to determine pension obligations: |
|
|
|
|
|
Discount rate |
|
3.46 |
% |
|
|
3.87 |
% |
Rate of compensation increase |
|
3.73 |
% |
|
|
3.78 |
% |
|
| Fair Value of Investments Held by Pension Plan |
The fair value of investments held by VF’s defined benefit plans at December 2017 and 2016, by asset class, is summarized below. Refer to Note U for a description of the three levels of the fair value measurement hierarchy.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Plan
Assets
|
|
Fair Value Measurements |
(In thousands) |
Level 1 |
|
Level 2 |
|
Level 3 |
December 2017 |
|
|
|
|
|
|
|
Plan assets |
|
|
|
|
|
|
|
Cash equivalents |
$ |
8,191 |
|
|
$ |
8,191 |
|
|
$ |
— |
|
|
$ |
— |
|
Fixed income securities: |
|
|
|
|
|
|
|
U.S. Treasury and government agencies |
8 |
|
|
— |
|
|
8 |
|
|
— |
|
Insurance contracts |
69,448 |
|
|
— |
|
|
69,448 |
|
|
— |
|
Commodities |
(372 |
) |
|
(372 |
) |
|
— |
|
|
— |
|
Total plan assets in the fair value hierarchy |
77,275 |
|
|
$ |
7,819 |
|
|
$ |
69,456 |
|
|
$ |
— |
|
Plan assets measured at net asset value |
|
|
|
|
|
|
|
Cash equivalents |
36,313 |
|
|
|
|
|
|
|
Equity securities: |
|
|
|
|
|
|
|
Domestic |
152,154 |
|
|
|
|
|
|
|
International |
173,608 |
|
|
|
|
|
|
|
Fixed income securities: |
|
|
|
|
|
|
|
Corporate and international bonds |
1,215,558 |
|
|
|
|
|
|
|
Alternative investments |
154,741 |
|
|
|
|
|
|
|
Total plan assets measured at net asset value |
1,732,374 |
|
|
|
|
|
|
|
Total plan assets |
$ |
1,809,649 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Plan
Assets
|
|
Fair Value Measurements |
(In thousands) |
Level 1 |
|
Level 2 |
|
Level 3 |
December 2016 |
|
|
|
|
|
|
|
Plan assets |
|
|
|
|
|
|
|
Cash equivalents |
$ |
2,896 |
|
|
$ |
2,896 |
|
|
$ |
— |
|
|
$ |
— |
|
Fixed income securities: |
|
|
|
|
|
|
|
U.S. Treasury and government agencies |
10 |
|
|
— |
|
|
10 |
|
|
— |
|
Insurance contracts |
63,013 |
|
|
— |
|
|
63,013 |
|
|
— |
|
Commodities |
506 |
|
|
506 |
|
|
— |
|
|
— |
|
Total plan assets in the fair value hierarchy |
66,425 |
|
|
$ |
3,402 |
|
|
$ |
63,023 |
|
|
$ |
— |
|
Plan assets measured at net asset value |
|
|
|
|
|
|
|
Cash equivalents |
27,486 |
|
|
|
|
|
|
|
Equity securities: |
|
|
|
|
|
|
|
Domestic |
134,254 |
|
|
|
|
|
|
|
International |
142,772 |
|
|
|
|
|
|
|
Fixed income securities: |
|
|
|
|
|
|
|
Corporate and international bonds |
1,140,894 |
|
|
|
|
|
|
|
Alternative investments |
161,466 |
|
|
|
|
|
|
|
Total plan assets measured at net asset value |
1,606,872 |
|
|
|
|
|
|
|
Total plan assets |
$ |
1,673,297 |
|
|
|
|
|
|
|
|