Annual report pursuant to Section 13 and 15(d)

RETIREMENT AND SAVINGS BENEFIT PLANS (Tables)

v3.21.1
RETIREMENT AND SAVINGS BENEFIT PLANS (Tables)
12 Months Ended
Apr. 03, 2021
Retirement Benefits [Abstract]  
Components of Pension Cost and Income
The components of pension cost (income) for VF’s defined benefit plans were as follows:
Year Ended March
(In thousands) 2021 2020 2019
Service cost — benefits earned during the period $ 15,747  $ 14,476  $ 22,352 
Interest cost on projected benefit obligations 47,316  55,575  63,434 
Expected return on plan assets (83,107) (91,309) (93,409)
Settlement charges 1,584  27,443  8,856 
Curtailments 920  —  9,530 
Transfers to Kontoor Brands —  668  — 
Amortization of deferred amounts:
Net deferred actuarial losses 11,911  14,848  28,474 
Deferred prior service costs (credits) (81) 1,887  494 
Net periodic pension cost (income) $ (5,710) $ 23,588  $ 39,731 
Weighted average actuarial assumptions used to determine pension expense:
Discount rate in effect for determining service cost 1.32  % 1.46  % 3.85  %
Discount rate in effect for determining interest cost 2.82  % 3.20  % 3.51  %
Expected long-term return on plan assets 4.97  % 5.40  % 5.58  %
Rate of compensation increase (a)
2.04  % 2.74  % 3.73  %
(a)Rate of compensation increase is calculated as the weighted average rate of compensation increase for active plans. Frozen plans are excluded from the calculation.
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 period, and the funded status at the end of each period:
(In thousands) March 2021 March 2020
Fair value of plan assets, beginning of period $ 1,712,775  $ 1,751,094 
Actual return on plan assets 110,467  173,261 
VF contributions 17,714  26,372 
Participant contributions 4,434  4,298 
Transfer to Kontoor Brands —  (6,697)
Benefits paid (101,753) (233,398)
Currency translation 11,777  (2,155)
Fair value of plan assets, end of period 1,755,414  1,712,775 
Projected benefit obligations, beginning of period 1,726,776  1,818,931 
Service cost 15,747  14,476 
Interest cost 47,316  55,575 
Participant contributions 4,434  4,298 
Actuarial loss 40,264  84,057 
Benefits paid (101,753) (233,398)
Plan amendments (3,098) 655 
Transfer to Kontoor Brands —  (17,279)
Curtailments (729) — 
Currency translation 12,753  (539)
Projected benefit obligations, end of period (a)
1,741,710  1,726,776 
Funded status, end of period $ 13,704  $ (14,001)
(a)The changes in projected benefit obligations in the years ended March 2021 and 2020 were driven by actuarial losses primarily as a result of decreases in discount rates. The change in projected benefit obligations in the year ended March 2020 was also driven by a lump-sum distribution of approximately $130.0 million related to the U.S. qualified plan.
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) March 2021 March 2020
Amounts included in Consolidated Balance Sheets:
Other assets (Note 11) $ 197,484  $ 166,955 
Accrued liabilities (Note 13) (17,030) (10,449)
Other liabilities (Note 15) (166,750) (170,507)
Funded status $ 13,704  $ (14,001)
Accumulated other comprehensive loss, pretax:
Net deferred actuarial losses $ 358,916  $ 357,989 
Net deferred prior service credits (4,588) (733)
Total accumulated other comprehensive loss, pretax $ 354,328  $ 357,256 
Accumulated benefit obligations $ 1,710,678  $ 1,703,224 
Weighted average actuarial assumptions used to determine pension obligations:
Discount rate 2.94% 3.18%
Rate of compensation increase (a)
2.30% 2.22%
(a)Rate of compensation increase is calculated as the weighted average rate of compensation increase for active plans. Frozen plans are excluded from the calculation.
Components of Pension Plans with an Accumulated Benefit Obligation and Projected Benefit Obligation in Excess of Plan Assets
The following provides information for VF's defined benefit plans with projected benefit obligations and accumulated benefit obligations in excess of plan assets:
(In thousands) March 2021 March 2020
Projected benefit obligations $ 268,277  $ 257,117 
Accumulated benefit obligations 237,245  235,833 
Fair value of plan assets 84,497  76,161 
Fair Value of Investments Held by Pension Plan
The fair value of investments held by VF’s defined benefit plans at March 2021 and March 2020, by asset class, is summarized below. Refer to Note 23 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
March 2021
Plan assets
Cash equivalents $ 7,410  $ 7,410  $ —  $ — 
Fixed income securities:
U.S. Treasury and government agencies —  — 
Insurance contracts 84,497  —  84,497  — 
Futures contracts (4,452) (4,452) —  — 
Total plan assets in the fair value hierarchy 87,460  $ 2,958  $ 84,502  $  
Plan assets measured at net asset value
Cash equivalents 78,191 
Equity securities:
Domestic 96,509 
International 88,488 
Fixed income securities:
Corporate and international bonds 1,240,551 
Alternative investments 164,215 
Total plan assets measured at net asset value 1,667,954 
Total plan assets $ 1,755,414 

  Total Plan
Assets
Fair Value Measurements
(In thousands) Level 1 Level 2 Level 3
March 2020
Plan assets
Cash equivalents $ 9,421  $ 9,421  $ —  $ — 
Fixed income securities:
U.S. Treasury and government agencies —  — 
Insurance contracts 76,161  —  76,161  — 
Futures contracts 3,878  3,878  —  — 
Total plan assets in the fair value hierarchy 89,466  $ 13,299  $ 76,167  $  
Plan assets measured at net asset value
Cash equivalents 54,745 
Equity securities:
Domestic 70,503 
International 71,365 
Fixed income securities:
Corporate and international bonds 1,293,768 
Alternative investments 132,928 
Total plan assets measured at net asset value 1,623,309 
Total plan assets $ 1,712,775