Annual report pursuant to Section 13 and 15(d)

Long-term Debt

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Long-term Debt
12 Months Ended
Dec. 29, 2012
Long-term Debt

Note K — Long-term Debt

 

     2012      2011  
     In thousands  

Floating rate notes, due 2013

   $ 400,000       $ 400,000   

5.95% notes, due 2017

     250,000         250,000   

3.50% notes, due 2021

     498,629         498,496   

6.00% notes, due 2033

     293,253         293,096   

6.45% notes, due 2037

     350,000         350,000   

Other long-term debt

     10,528         10,702   

Capital leases

     29,629         32,231   
  

 

 

    

 

 

 

Total long-term debt

     1,832,039         1,834,525   

Less current portion

     402,873         2,744   
  

 

 

    

 

 

 

Long-term debt, due beyond one year

   $ 1,429,166       $ 1,831,781   
  

 

 

    

 

 

 

 

 

Interest payments are due quarterly on the floating rate notes and semi-annually on all fixed rate notes. The floating rate notes bear interest at the three-month LIBOR rate plus .75%. This interest rate resets quarterly and was 1.06% at the end of 2012.

All notes, along with any amounts outstanding under the Global Credit Facility (Note I), rank equally as senior unsecured obligations of VF. All notes contain customary covenants and events of default, including limitations on liens and sale-leaseback transactions and a cross-acceleration event of default. The cross-acceleration provision of the 2033 notes is triggered if more than $50.0 million of other debt is in default and has been accelerated by the lenders. For the other notes, the cross-acceleration trigger is $100.0 million. If VF fails in the performance of any covenant under the indentures that govern the respective notes, the trustee or lenders may declare the principal due and payable immediately. At the end of 2012, VF was in compliance with all covenants. None of the long-term debt agreements contain acceleration of maturity clauses based solely on changes in credit ratings. However, if there were a change in control of VF and, as a result of the change in control, the 2013, 2017, 2021 and 2037 notes were rated below investment grade by recognized rating agencies, then VF would be obligated to repurchase those notes at 101% of the aggregate principal amount plus any accrued interest.

The 2013 notes are not redeemable. VF may redeem its other notes, in whole or in part, at a price equal to the greater of (i) 100% of the principal amount, plus accrued interest to the redemption date, or (ii) the sum of the present value of the remaining scheduled payments of principal and interest discounted to the redemption date at an adjusted treasury rate, as defined, plus 20 basis points for the 2017 and 2021 notes and 25 basis points for the 2037 notes, plus accrued interest to the redemption date. In addition, the 2021 notes can be redeemed at 100% of the principal amount plus accrued interest to the redemption date within the three months prior to maturity.

The 2021 notes have a principal balance of $500.0 million and are recorded net of unamortized original issue discount. Interest expense on these notes is recorded at an effective annual interest rate of 4.69%, including amortization of a deferred loss on an interest rate hedging contract (Note U), original issue discount and debt issuance costs.

The 2033 notes have a principal balance of $300.0 million and are recorded net of unamortized original issue discount. Interest expense on these notes is recorded at an effective annual interest rate of 6.19%, including amortization of a deferred gain on an interest rate hedging contract (Note U), original issue discount and debt issuance costs.

Capital leases relate primarily to buildings and improvements (Note E), expire at dates through 2021 and have an effective interest rate of 5.06%.

 

The scheduled payments of long-term debt and future minimum lease payments for capital leases at the end of 2012 are summarized as follows:

 

     Notes and
Other
     Capital
Leases
     Total  
     In thousands  

2013

   $ 400,187       $ 4,123       $ 404,310   

2014

     200         4,123         4,323   

2015

     213         4,123         4,336   

2016

     9,928         4,345         14,273   

2017

     250,000         4,504         254,504   

Thereafter

     1,150,000         15,390         1,165,390   
  

 

 

    

 

 

    

 

 

 
     1,810,528         36,608         1,847,136   

Less unamortized debt discount

     8,118                 8,118   

Less amounts representing interest

             6,979         6,979   
  

 

 

    

 

 

    

 

 

 

Total long-term debt

     1,802,410         29,629         1,832,039   

Less current portion

     400,187         2,686         402,873   
  

 

 

    

 

 

    

 

 

 

Long-term debt, due beyond one year

   $ 1,402,223       $ 26,943       $ 1,429,166