| Schedule of Components of Pension Cost and Income |
The components of pension cost (income) for VF’s defined benefit plans were as follows:
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Year Ended March |
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| (In thousands) |
|
2023 |
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|
2022 |
|
2021 |
| Service cost — benefits earned during the period |
|
$ |
10,632 |
|
|
|
$ |
14,288 |
|
|
$ |
15,747 |
|
| Interest cost on projected benefit obligations |
|
44,732 |
|
|
|
37,534 |
|
|
47,316 |
|
| Expected return on plan assets |
|
(63,157) |
|
|
|
(77,432) |
|
|
(83,107) |
|
| Settlement charges |
|
93,731 |
|
|
|
7,466 |
|
|
1,584 |
|
| Curtailments |
|
— |
|
|
|
— |
|
|
920 |
|
| Amortization of deferred amounts: |
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|
|
|
| Net deferred actuarial losses |
|
16,395 |
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|
11,310 |
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|
11,911 |
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| Deferred prior service credits |
|
(453) |
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|
(440) |
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|
(81) |
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| Net periodic pension cost (income) |
|
$ |
101,880
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|
$ |
(7,274) |
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|
$ |
(5,710) |
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| Weighted average actuarial assumptions used to determine pension cost (income): |
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| Discount rate in effect for determining service cost |
|
1.42 |
% |
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|
0.46 |
% |
|
1.32 |
% |
| Discount rate in effect for determining interest cost |
|
4.09 |
% |
|
|
2.16 |
% |
|
2.82 |
% |
| Expected long-term return on plan assets |
|
5.24 |
% |
|
|
4.53 |
% |
|
4.97 |
% |
Rate of compensation increase (a)
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|
1.95 |
% |
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|
2.01 |
% |
|
2.04 |
% |
(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.
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| Schedule of 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:
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| (In thousands) |
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March 2023 |
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March 2022 |
| Fair value of plan assets, beginning of period |
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$ |
1,643,435 |
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$ |
1,755,414 |
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| Actual return on plan assets |
|
(146,068) |
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|
|
(26,855) |
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| VF contributions |
|
22,683 |
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|
|
34,035 |
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| Participant contributions |
|
5,035 |
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|
5,026 |
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| Settlement |
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(328,412) |
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|
|
— |
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| Benefits paid |
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(79,865) |
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(118,389) |
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| Currency translation |
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(5,098) |
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(5,796) |
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| Fair value of plan assets, end of period |
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1,111,710 |
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|
1,643,435 |
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| Projected benefit obligations, beginning of period |
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1,557,715 |
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|
1,741,710 |
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| Service cost |
|
10,632 |
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|
14,288 |
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| Interest cost |
|
44,732 |
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|
37,534 |
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| Participant contributions |
|
5,035 |
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|
|
5,026 |
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| Actuarial gain |
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(183,536) |
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|
(117,214) |
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| Settlement |
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(328,412) |
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|
— |
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| Benefits paid |
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(79,865) |
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(118,389) |
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| Plan amendments |
|
(478) |
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— |
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| Currency translation |
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(4,490) |
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|
(5,240) |
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Projected benefit obligations, end of period (a)
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|
1,021,333 |
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|
1,557,715 |
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| Funded status, end of period |
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$ |
90,377
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$ |
85,720
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(a)The change in projected benefit obligations in the years ended March 2023 and 2022 were driven by actuarial gains, primarily as a result of changes in discount rates. The change in projected benefit obligations in the year ended March 2023 was also driven by the purchase of an irrevocable group annuity contract relating to approximately $330.0 million of the U.S. qualified defined benefit pension plan obligations.
Pension benefits are reported in the Consolidated Balance Sheets as a net asset or liability based on the overfunded or underfunded status of the defined benefit plans, assessed on a plan-by-plan basis.
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| (In thousands) |
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March 2023 |
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March 2022 |
| Amounts included in Consolidated Balance Sheets: |
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| Other assets (Note 11) |
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$ |
183,929 |
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$ |
213,820 |
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| Accrued liabilities (Note 13) |
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(20,727) |
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(16,927) |
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| Other liabilities (Note 15) |
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(72,825) |
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(111,173) |
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| Funded status |
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$ |
90,377 |
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$ |
85,720
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| Accumulated other comprehensive loss, pretax: |
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| Net deferred actuarial losses |
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$ |
241,864 |
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$ |
326,929 |
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| Net deferred prior service credits |
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(4,286) |
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|
(4,204) |
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| Total accumulated other comprehensive loss, pretax |
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$ |
237,578 |
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$ |
322,725
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| Accumulated benefit obligations |
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$ |
1,005,159 |
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|
$ |
1,539,593
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| Weighted average actuarial assumptions used to determine pension obligations: |
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| Discount rate |
|
4.89 |
% |
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|
3.65 |
% |
Rate of compensation increase (a)
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2.15 |
% |
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|
1.95 |
% |
(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.
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| Schedule of 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:
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| (In thousands) |
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March 2023 |
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March 2022 |
| Projected benefit obligations |
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$ |
186,532 |
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$ |
213,002 |
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| Accumulated benefit obligations |
|
170,357 |
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|
194,879 |
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| Fair value of plan assets |
|
92,980 |
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|
84,902 |
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The net amount of projected benefit obligations and plan assets for underfunded defined benefit plans was $93.6 million and $128.1 million as of March 2023 and 2022, respectively, and was reported in accrued liabilities and other liabilities in the Consolidated Balance Sheets.
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| Schedule of Fair Value of Investments Held by Pension Plan |
The fair value of investments held by VF’s defined benefit plans at March 2023 and March 2022, by asset class, is summarized below. Refer to Note 23 for a description of the three levels of the fair value measurement hierarchy.
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Total Plan
Assets |
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Fair Value Measurements |
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| (In thousands) |
Level 1 |
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Level 2 |
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Level 3 |
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| March 2023 |
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| Plan assets |
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| Cash equivalents |
$ |
983 |
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|
$ |
983 |
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|
$ |
— |
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|
$ |
— |
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| Fixed income securities: |
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| U.S. Treasury and government agencies |
3 |
|
|
— |
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|
3 |
|
|
— |
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| Insurance contracts |
97,429 |
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|
— |
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|
97,429 |
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|
— |
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| Futures contracts |
6,649 |
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|
6,649 |
|
|
— |
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|
— |
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| Total plan assets in the fair value hierarchy |
105,064
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|
$ |
7,632
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|
|
$ |
97,432
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|
$ |
—
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| Plan assets measured at net asset value |
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|
|
|
|
|
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| Cash equivalents |
118,114 |
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| Equity securities: |
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| Domestic |
34,957 |
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| International |
51,577 |
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| Fixed income securities: |
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| Corporate and international bonds |
734,455 |
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| Alternative investments |
67,543 |
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| Total plan assets measured at net asset value |
1,006,646 |
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| Total plan assets |
$ |
1,111,710
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| |
Total Plan
Assets |
|
Fair Value Measurements |
| (In thousands) |
Level 1 |
|
Level 2 |
|
Level 3 |
| March 2022 |
|
|
|
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| Plan assets |
|
|
|
|
|
|
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| Cash equivalents |
$ |
5,761 |
|
|
$ |
5,761 |
|
|
$ |
— |
|
|
$ |
— |
|
| Fixed income securities: |
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| U.S. Treasury and government agencies |
4 |
|
|
— |
|
|
4 |
|
|
— |
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| Insurance contracts |
88,574 |
|
|
— |
|
|
88,574 |
|
|
— |
|
| Futures contracts |
(2,812) |
|
|
(2,812) |
|
|
— |
|
|
— |
|
| Total plan assets in the fair value hierarchy |
91,527
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|
$ |
2,949
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|
|
$ |
88,578
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|
|
$ |
—
|
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| Plan assets measured at net asset value |
|
|
|
|
|
|
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| Cash equivalents |
73,849 |
|
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|
|
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| Equity securities: |
|
|
|
|
|
|
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| Domestic |
94,844 |
|
|
|
|
|
|
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| International |
77,468 |
|
|
|
|
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| Fixed income securities: |
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| Corporate and international bonds |
1,177,421 |
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|
|
|
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| Alternative investments |
128,326 |
|
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|
|
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|
|
| Total plan assets measured at net asset value |
1,551,908 |
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| Total plan assets |
$ |
1,643,435
|
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