Quarterly report pursuant to Section 13 or 15(d)

PENSION PLANS

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PENSION PLANS
 3 Months Ended
Jul. 02, 2022
Retirement Benefits [Abstract]  
PENSION PLANS PENSION PLANS
The components of pension cost (income) for VF’s defined benefit plans were as follows:
  Three Months Ended June
(In thousands) 2022 2021
Service cost – benefits earned during the period $ 2,646  $ 3,613 
Interest cost on projected benefit obligations 12,631  9,475 
Expected return on plan assets (18,860) (19,385)
Settlement charges 91,761  948 
Amortization of deferred amounts:
Net deferred actuarial losses 3,721  2,840 
Deferred prior service credits (112) (118)
Net periodic pension cost (income) $ 91,787  $ (2,627)
The amounts reported in these disclosures have not been segregated between continuing and discontinued operations.
VF has reported the service cost component of net periodic pension cost (income) in operating income and the other components, which include interest cost, expected return on plan assets, settlement charges and amortization of deferred actuarial losses and prior service credits, in the other income (expense), net line item in the Consolidated Statements of Operations.
VF contributed $2.5 million to its defined benefit plans during the three months ended June 2022, and intends to make approximately $19.1 million of contributions during the remainder of Fiscal 2023.
During the three months ended June 2022, VF entered into an agreement with The Prudential Insurance Company of America (“Prudential”) to purchase an irrevocable group annuity contract relating to approximately $330 million of the U.S. qualified defined benefit pension plan obligations. The transaction closed on June 30, 2022 and was funded entirely by existing assets of the plan. Under the group annuity contract, Prudential assumed responsibility for benefit payments and annuity administration
for approximately 17,700 retirees and beneficiaries. The transaction will not change the amount or timing of monthly retirement benefit payments. VF recorded a $91.8 million settlement charge in the other income (expense), net line item in the Consolidated Statement of Operations during the three months ended June 2022 to recognize the related deferred actuarial losses in accumulated other comprehensive income (“OCI”). Actuarial assumptions used in the interim valuation were reviewed and revised as appropriate. The discount rate used to determine the pension obligation as of June 2022 was 4.93%.
Additionally, VF recorded a $0.9 million settlement charge in the other income (expense), net line item in the Consolidated Statement of Operations for the three months ended June 2021. The settlement charge related to the recognition of deferred actuarial losses resulting from lump sum payments of retirement benefits in the supplemental defined benefit pension plan.