| Components of Pension Cost |
The components of pension cost for VF’s defined benefit plans were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016 |
|
2015 |
|
2014 |
|
In thousands |
Service cost — benefits earned during the year |
$ |
25,839 |
|
|
$ |
29,223 |
|
|
$ |
24,163 |
|
Interest cost on projected benefit obligations |
68,020 |
|
|
77,620 |
|
|
81,496 |
|
Expected return on plan assets |
(99,540 |
) |
|
(111,095 |
) |
|
(90,674 |
) |
Settlement charges |
50,922 |
|
|
4,062 |
|
|
— |
|
Amortization of deferred amounts: |
|
|
|
|
|
Net deferred actuarial losses |
65,212 |
|
|
61,966 |
|
|
37,518 |
|
Deferred prior service costs |
2,584 |
|
|
3,038 |
|
|
5,445 |
|
Total pension expense |
$ |
113,037 |
|
|
$ |
64,814 |
|
|
$ |
57,948 |
|
Weighted average actuarial assumptions used to determine pension expense: |
|
|
|
|
|
Discount rate in effect for determining service cost |
4.54 |
% |
|
3.93 |
% |
|
4.64 |
% |
Discount rate in effect for determining interest cost |
3.56 |
% |
|
3.93 |
% |
|
4.64 |
% |
Expected long-term return on plan assets |
5.81 |
% |
|
6.05 |
% |
|
4.73 |
% |
Rate of compensation increase |
3.90 |
% |
|
3.91 |
% |
|
3.53 |
% |
|
| 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:
|
|
|
|
|
|
|
|
|
|
2016 |
|
2015 |
|
In thousands |
Fair value of plan assets, beginning of year |
$ |
1,755,374 |
|
|
$ |
1,628,254 |
|
Actual return on plan assets |
191,219 |
|
|
(56,624 |
) |
VF contributions |
24,031 |
|
|
273,520 |
|
Participant contributions |
3,644 |
|
|
3,483 |
|
Benefits paid |
(286,271 |
) |
|
(87,994 |
) |
Currency translation |
(14,700 |
) |
|
(5,265 |
) |
Fair value of plan assets, end of year |
1,673,297 |
|
|
1,755,374 |
|
Projected benefit obligations, beginning of year |
1,912,015 |
|
|
1,999,947 |
|
Service cost |
25,839 |
|
|
29,223 |
|
Interest cost |
68,020 |
|
|
77,620 |
|
Participant contributions |
3,644 |
|
|
3,483 |
|
Actuarial loss (gain) |
100,242 |
|
|
(101,387 |
) |
Benefits paid |
(286,271 |
) |
|
(87,994 |
) |
Plan amendments |
— |
|
|
(1,510 |
) |
Currency translation |
(15,162 |
) |
|
(7,367 |
) |
Projected benefit obligations, end of year |
1,808,327 |
|
|
1,912,015 |
|
Funded status, end of year |
$ |
(135,030 |
) |
|
$ |
(156,641 |
) |
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.
|
|
|
|
|
|
|
|
|
|
2016 |
|
2015 |
|
In thousands |
Amounts included in Consolidated Balance Sheets: |
|
|
|
Noncurrent assets (Note H) |
$ |
41,281 |
|
|
$ |
9,273 |
|
Current liabilities (Note J) |
(10,669 |
) |
|
(8,480 |
) |
Noncurrent liabilities (Note L) |
(165,642 |
) |
|
(157,434 |
) |
Funded status |
$ |
(135,030 |
) |
|
$ |
(156,641 |
) |
Accumulated other comprehensive loss, pre-tax: |
|
|
|
Net deferred actuarial losses |
$ |
476,071 |
|
|
$ |
586,828 |
|
Deferred prior service costs |
14,883 |
|
|
17,459 |
|
Total accumulated other comprehensive loss, pre-tax |
$ |
490,954 |
|
|
$ |
604,287 |
|
Accumulated benefit obligations |
$ |
1,717,786 |
|
|
$ |
1,827,521 |
|
Weighted average actuarial assumptions used to determine pension obligations: |
|
|
|
Discount rate |
3.87 |
% |
|
4.29 |
% |
Rate of compensation increase |
3.78 |
% |
|
3.90 |
% |
|
| Fair Value of Investments Held by Pension Plan |
The fair value of investments held by VF’s defined benefit plans at December 2016 and 2015, by asset class, is summarized below. Refer to Note T for a description of the three levels of the fair value measurement hierarchy.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Plan
Assets
|
|
Fair Value Measurements |
|
Level 1 |
|
Level 2 |
|
Level 3 |
|
In thousands |
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Plan
Assets
|
|
Fair Value Measurements |
|
Level 1 |
|
Level 2 |
|
Level 3 |
|
In thousands |
December 2015 |
|
|
|
|
|
|
|
Plan assets |
|
|
|
|
|
|
|
Cash equivalents |
$ |
2,790 |
|
|
$ |
2,790 |
|
|
$ |
— |
|
|
$ |
— |
|
Fixed income securities: |
|
|
|
|
|
|
|
U.S. Treasury and government agencies |
11 |
|
|
— |
|
|
11 |
|
|
— |
|
Insurance contracts |
50,856 |
|
|
— |
|
|
50,856 |
|
|
— |
|
Commodities |
(439 |
) |
|
(439 |
) |
|
— |
|
|
— |
|
Total plan assets in the fair value hierarchy |
53,218 |
|
|
$ |
2,351 |
|
|
$ |
50,867 |
|
|
$ |
— |
|
Plan assets measured at net asset value |
|
|
|
|
|
|
|
Cash equivalents |
23,538 |
|
|
|
|
|
|
|
Equity securities: |
|
|
|
|
|
|
|
Domestic |
107,190 |
|
|
|
|
|
|
|
International |
179,256 |
|
|
|
|
|
|
|
Fixed income securities: |
|
|
|
|
|
|
|
Corporate and international bonds |
1,232,691 |
|
|
|
|
|
|
|
Alternative investments |
159,481 |
|
|
|
|
|
|
|
Total plan assets measured at net asset value |
1,702,156 |
|
|
|
|
|
|
|
Total plan assets |
$ |
1,755,374 |
|
|
|
|
|
|
|
|