North Face 2015 Annual Report Download - page 100
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VF CORPORATION
Notes to Consolidated Financial Statements
December 2015
Activity relating to accrued product warranty claims is summarized as follows:
2015 2014 2013
In thousands
Balance, beginning of year ............................... $62,288 $ 57,139 $ 50,395
Accrual for products sold during the year ................... 16,673 20,971 20,199
Repair or replacement costs incurred ....................... (14,136) (13,660) (13,923)
Currency translation .................................... (1,711) (2,162) 468
Balance, end of year .................................... 63,114 62,288 57,139
Less current portion (Note I) ............................. 13,550 14,467 14,787
Long-term portion ..................................... $49,564 $ 47,821 $ 42,352
Note L — Retirement and Savings Benefit Plans
VF has several retirement and savings benefit plans covering eligible employees. VF retains the right to
curtail or discontinue any of the plans, subject to local regulations.
Defined Benefit Pension Plans
Defined benefit plans provide pension benefits based on participant compensation and years of service. VF
sponsors a noncontributory qualified defined benefit pension plan covering most full-time U.S. employees
employed before 2005 (the “U.S. qualified plan”) and an unfunded supplemental defined benefit pension plan
that provides benefits in excess of limitations imposed by income tax regulations (together, the “U.S. plans”).
The U.S. qualified plan is fully funded at the end of 2015, and VF’s net underfunded status primarily relates to
obligations under the unfunded U.S. nonqualified defined benefit plan. The U.S. plans comprise 93% of VF’s
total defined benefit plan assets and 92% of VF’s total projected benefit obligations at December 2015, and the
remainder relates to non-U.S. defined benefit plans.
The components of pension cost for VF’s defined benefit plans were as follows:
2015 2014 2013
In thousands
Service cost — benefits earned during the year .............. $ 29,223 $ 24,163 $ 25,445
Interest cost on projected benefit obligations ................ 77,620 81,496 72,003
Expected return on plan assets ........................... (111,095) (90,674) (94,585)
Settlement charges .................................... 4,062 — —
Amortization of deferred amounts:
Net deferred actuarial losses .......................... 61,966 37,518 85,356
Deferred prior service costs ........................... 3,038 5,445 1,270
Total pension expense ................................. $ 64,814 $ 57,948 $ 89,489
Weighted average actuarial assumptions used to determine
pension expense:
Discount rate ...................................... 3.93% 4.64% 3.91%
Expected long-term return on plan assets ................ 6.05% 4.73% 5.70%
Rate of compensation increase ......................... 3.91% 3.53% 3.82%
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