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

Annual report pursuant to Section 13 and 15(d)

Retirement and Savings Benefit Plans (Tables)

Retirement and Savings Benefit Plans (Tables)

12 Months Ended

Jan. 03, 2015

The components of pension cost for VF’s defined benefit plans were as follows:


	2014			2013			2012
	In thousands
Service cost — benefits earned during the year	$	24,163		$	25,445		$	23,198
Interest cost on projected benefit obligations		81,496			72,003			77,013
Expected return on plan assets		(90,674	)		(94,585	)		(80,619	)
Amortization of deferred amounts:
Net deferred actuarial losses		37,518			85,356			69,744
Deferred prior service costs		5,445			1,270			3,357

Total pension expense	$	57,948		$	89,489		$	92,693

Weighted average actuarial assumptions used to determine pension expense:
Discount rate		4.64	%		3.91	%		4.94	%
Expected long-term return on plan assets		4.73	%		5.70	%		6.38	%
Rate of compensation increase		3.53	%		3.82	%		3.85	%

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:


	2014			2013
	In thousands
Fair value of plan assets, beginning of year	$	1,467,526		$	1,332,211
Actual return on plan assets		189,824			84,882
VF contributions		67,808			117,591
Participant contributions		3,429			2,975
Benefits paid		(88,746	)		(73,308	)
Currency translation		(11,587	)		3,175

Fair value of plan assets, end of year		1,628,254			1,467,526

Projected benefit obligations, beginning of year		1,688,701			1,815,128
Service cost		24,163			25,445
Interest cost		81,496			72,003
Participant contributions		3,429			2,975
Actuarial (gain) loss		306,797			(178,414	)
Benefits paid		(88,746	)		(73,308	)
Plan amendments		263			21,321
Currency translation		(16,156	)		3,551

Projected benefit obligations, end of year		1,999,947			1,688,701

Funded status, end of year	$	(371,693	)	$	(221,175	)

Pension benefits are reported in the balance sheet 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.


	2014			2013
	In thousands
Amounts included in Consolidated Balance Sheets:
Noncurrent assets	$	1,491		$	2,272
Current liabilities (Note J)		(8,880	)		(9,016	)
Noncurrent liabilities (Note L)		(364,304	)		(214,431	)

Funded status	$	(371,693	)	$	(221,175	)

Accumulated other comprehensive (income) loss, pretax:
Net deferred actuarial losses	$	588,847		$	422,932
Deferred prior service costs		21,950			27,594

	$	610,797		$	450,526

Accumulated benefit obligations	$	1,916,070		$	1,610,369

Weighted average actuarial assumptions used to determine pension obligations:
Discount rate		3.47	%		4.63	%
Rate of compensation increase		3.34	%		3.39	%

Fair Value of Investments Held by Pension Plan

The fair value of investments held by VF’s defined benefit plans at December 2014 and 2013, by asset class, is summarized below. See Note T for a description of the three levels of the fair value measurement hierarchy. Level 2 securities generally represent institutional funds measured at their daily net asset value derived from quoted prices of the underlying investments. Level 3 securities represent alternative investments primarily in funds of hedge funds (“FoHFs”), which are comprised of different and independent hedge funds with various investment strategies. The administrators of the FoHFs utilize unobservable inputs to calculate the net asset value of the FoHFs on a monthly basis.


	Total Plan Assets			Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	In thousands
December 2014
Cash equivalents ^(a)	$	65,008		$	3,220		$	61,788	$	—
Equity securities:
Domestic		180,258			—			180,258		—
International		219,259			—			219,259		—
Fixed income securities:
U.S. Treasury and government agencies		16			—			16		—
Corporate and international bonds		986,125			—			986,125		—
Alternative investments ^(b)		132,922			—			—		132,922
Insurance contracts		46,059			—			46,059		—
Commodities ^(c)		(1,393	)		(1,393	)		—		—

	$	1,628,254		$	1,827		$	1,493,505	$	132,922

December 2013
Cash equivalents ^(a)	$	35,082		$	5,322		$	29,760		—
Equity securities:
Domestic		165,550			—			165,550		—
International		213,580			—			213,580		—
Fixed income securities:
U.S. Treasury and government agencies		22			—			22		—
Corporate and international bonds		884,453			—			884,453		—
Alternative investments ^(b)		125,624			—			—		125,624
Insurance contracts		44,720			—			44,720		—
Commodities ^(c)		(1,505	)		(1,505	)		—		—

	$	1,467,526		$	3,817		$	1,338,085	$	125,624

^(a)	Includes cash held by individual investment managers of other asset classes for liquidity purposes. Level 2 includes an institutional fund that invests primarily in short-term U.S. government securities.

^(b)	Represents alternative investments primarily in funds of hedge funds.

^(c)	Consists of derivative commodity futures.

Summary of Changes in Fair Value of Pension Assets

The table below summarizes changes in the fair value of Level 3 pension assets:


	Alternative Investments
	2014		2013
	In thousands
Balance, beginning of year	$	125,624	$	—
Purchase of assets		1,268		122,980
Actual return on assets		6,030		2,644

Balance, end of year	$	132,922	$	125,624

- Definition

Tabular disclosure of one or more of the entity's defined benefit pension plans or one or more other defined benefit postretirement plans, separately for pension plans and other postretirement benefit plans including the entity's schedule of fair value of plan assets for defined benefit or other postretirement plans.

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