VF Corporation Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

PENSION PLANS

PENSION PLANS

9 Months Ended

Dec. 29, 2018

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



	Three Months Ended December						Nine Months Ended December

(In thousands)	2018			2017			2018			2017
Service cost – benefits earned during the period	$	6,097		$	6,157		$	17,882		$	18,474
Interest cost on projected benefit obligations	15,807			14,735			47,638			44,174
Expected return on plan assets	(23,185		)	(23,830		)	(70,216		)	(71,452		)
Pension settlement charges	662			—			8,846			—
Pension curtailment losses	—			1,671			9,483			1,671
Amortization of deferred amounts:
Net deferred actuarial losses	6,676			10,026			22,153			30,058
Deferred prior service costs (credits)	(58		)	646			552			1,934
Net periodic pension cost	$	5,999		$	9,405		$	36,338		$	24,859

The amounts reported in these disclosures have not been segregated between continuing and discontinued operations.

On April 1, 2018, VF adopted ASU No. 2017-07, "Compensation—Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost", which requires the Company to disaggregate the service cost component from other components of net periodic pension cost. Accordingly, in the Consolidated Statements of Income, VF has reported the service cost component within operating income and the other components of net periodic pension cost (which include interest cost, expected return on plan assets, amortization of prior service costs or credits and deferred actuarial gains and losses) in the other income (expense), net line item.

VF contributed $33.4 million to its defined benefit plans during the nine months ended December 2018, and intends to make approximately $6.7 million of contributions during the remainder of Fiscal 2019.

In the first quarter of Fiscal 2019, VF approved a freeze of all future benefit accruals under the U.S. qualified defined benefit pension plan and the supplemental defined benefit pension plan, effective December 31, 2018. Accordingly, the Company recognized a $9.5 million pension curtailment loss in the other income (expense), net line item in the Consolidated Statement of Income for the three months ended June 2018. Actuarial valuations were obtained as of June 30, 2018.

Additionally, VF reported $0.7 million and $8.8 million in settlement charges in the other income (expense), net line item in the Consolidated Statements of Income for the three and nine months ended December 2018, respectively, related to the recognition of deferred actuarial losses resulting from lump sum payments of retirement benefits in the supplemental defined benefit pension plan. Actuarial valuations were obtained as of April 30, 2018, September 29, 2018 and December 29, 2018.

Actuarial assumptions used in the interim valuations were reviewed and revised as appropriate. The discount rates used to determine pension obligations were as follows:



	December 29, 2018		September 29, 2018		June 30, 2018		April 30, 2018
U.S. qualified defined benefit pension plan	N/A		N/A		4.25	%	N/A
Supplemental defined benefit pension plan	4.36	%	4.29	%	4.24	%	4.22	%