SHORT-TERM BORROWINGS |
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| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SHORT-TERM BORROWINGS | SHORT-TERM BORROWINGS
VF maintains a $2.25 billion senior unsecured revolving line of credit (the “Global Credit Facility”) that expires December 2023. VF may request an unlimited number of one year extensions so long as each extension does not cause the remaining life of the Global Credit Facility to exceed five years, subject to stated terms and conditions. The Global Credit Facility may be used to borrow funds in both U.S. dollar and certain non-U.S. dollar currencies, and has a $50.0 million letter of credit sublimit. In addition, the Global Credit Facility supports VF’s U.S. commercial paper program for short-term, seasonal working capital requirements and general corporate purposes, including share repurchases and acquisitions. Borrowings under the Global Credit Facility are priced at a credit spread of 91.0 basis points over the appropriate LIBOR benchmark for each currency. VF is also required to pay a facility fee to the lenders, currently equal to 9.0 basis points of the committed amount of the facility. The credit spread and facility fee are subject to adjustment based on VF’s credit ratings.
The Global Credit Facility contains certain restrictive covenants, which include maintenance of a consolidated indebtedness to consolidated capitalization ratio. In April 2020, VF entered into Amendment No. 1 to its Global Credit Facility (the “Amendment”). The Amendment provides for (i) an increase in VF’s consolidated indebtedness to consolidated capitalization ratio financial covenant to 0.70 to 1.00 (from 0.60 to 1.00) through the last day of the fiscal quarter ending March 31, 2022, (ii) calculation of consolidated indebtedness (and, thereby consolidated capitalization) net of unrestricted cash of VF and its subsidiaries and (iii) testing of such financial covenant solely as of the last day of each fiscal quarter during such period. In addition, the Amendment requires VF and its subsidiaries to maintain minimum liquidity in the form of unrestricted cash and
unused financing commitments of not less than $750.0 million at all times during such period. As of March 2021, VF was in compliance with all covenants.
In March 2020, VF elected to draw down $1.0 billion from the Global Credit Facility, and in April 2020 VF drew down an additional $1.0 billion, to strengthen the Company's cash position and support general working capital needs in Fiscal 2021, which was an action taken by the Company in response to the COVID-19 pandemic. The borrowings in March 2020 and April 2020 had an interest rate of 1.81% and 2.13%, respectively, and were repaid in April 2020 with proceeds from the issuance of senior unsecured notes. Refer to Note 14 for additional information.
VF’s commercial paper program allows for borrowings of up to $2.25 billion to the extent it has borrowing capacity under the Global Credit Facility. As of March 2021, there were no commercial paper borrowings. Outstanding commercial paper borrowings totaled $215.0 million at March 2020, and had a weighted average interest rate of 1.4%. The Global Credit Facility also had $24.1 million and $18.4 million of outstanding standby letters of credit issued on behalf of VF as of March 2021 and 2020, respectively, leaving $2.2 billion and $1.0 billion as of March 2021 and 2020, respectively, available for borrowing against this facility. VF has $63.9 million of international lines of credit with various banks, which are uncommitted and may be terminated at any time by either VF or the banks. Total outstanding balances under these arrangements were $11.1 million and $13.8 million at March 2021 and 2020, respectively. Borrowings under these arrangements had a weighted average interest rate of 11.0% and 16.3% at March 2021 and 2020, respectively.
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