North Face 2000 Annual Report Download - page 31

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Note H Other Liabilities
In thousands 2000 1999
Deferred compensation $192,768 $179,321
Other 21,822 14,792
$214,590 $194,113
Note I Benefit Plans
The Company sponsors a noncontributory defined benefit pension
plan covering substantially all full-time domestic employees and a
nonqualified supplemental defined benefit pension plan covering
key employees. The effect of the pension plans on income is as
follows:
In thousands 2000 1999 1998
Service cost – benefits earned
during the year $ 20,863 $ 22,174 $ 20,391
Interest cost on projected
benefit obligation 47,630 41,166 38,584
Expected return on plan assets (57,945) (50,692) (45,270)
Amortization of:
Transition asset – – (3,068)
Prior service cost 6,352 5,359 5,667
Actuarial (gain) loss (2,156) (831) 610
Pension expense $ 14,744 $ 17,176 $ 16,914
The following provides a reconciliation of the changes in fair
value of the pension plans’ assets and benefit obligations, based on a
September 30 valuation date, plus the funded status at the end of
each year:
In thousands 2000 1999
Fair value of plan assets, beginning of year $ 667,295 $553,591
Actual return on plan assets 80,443 112,848
Company contributions 1,445 24,000
Acquired company plan 5,647 –
Benefits paid (26,441) (23,144)
Fair value of plan assets, end of year 728,389 667,295
Benefit obligations, beginning of year 585,850 591,726
Service cost 20,863 22,174
Interest cost 47,630 41,166
Plan amendments 19,277 –
Acquired company plan 4,917 –
Actuarial (gain) loss (28,274) (44,831)
Benefits paid (26,441) (24,385)
Benefit obligations, end of year 623,822 585,850
Funded status, end of year 104,567 81,445
Unrecognized net actuarial (gain) loss (137,164) (88,095)
Unrecognized prior service cost 43,729 29,911
Pension asset, net $ 11,132 $ 23,261
Amount included in:
Other Assets $ 42,516 $ 47,633
Other Liabilities (31,384) (24,372)
$ 11,132 $ 23,261
For the unfunded supplemental defined benefit pension plan,
the projected benefit obligation and the accumulated benefit
obligation were $50.5 million and $39.3 million, respectively, at the
end of 2000 and $50.2 million and $37.6 million, respectively, at
the end of 1999. To support these benefit liabilities, the Company
has purchased life insurance contracts and marketable securities.
These investments are held in irrevocable trusts and are included
in Other Assets. The cash value of life insurance and the market
value of other investments was $25.3 million in 2000 and $27.9 mil-
lion in 1999.
The projected benefit obligation was determined using an
assumed discount rate of 8.0% in 2000, 7.8% in 1999 and 6.8%
in 1998. The assumption for compensation increases was 4.0% in
each year, and the assumption for return on plan assets was 8.8%
in each year.
The Company sponsors an Employee Stock Ownership Plan
(ESOP) as part of a 401(k) savings plan covering most domestic
salaried employees. Contributions made by the Company to the
401(k) plan are based on a specified percentage of employee con-
tributions. Cash contributions by the Company were $7.2 million
in 2000, $6.9 million in 1999 and $6.5 million in 1998. Plan
expense was $4.7 million in 2000, $5.2 million in 1999 and
$5.5 million in 1998, after giving effect to dividends on the Series
B Preferred Stock of $3.3 million in 2000, $3.5 million in 1999
and $3.7 million in 1998.
The Company also sponsors other savings and retirement plans
for certain domestic and foreign employees. Expense for these plans
totaled $5.2 million in 2000, $6.2 million in 1999 and $6.5 million
in 1998.
Note J Capital
Common shares outstanding are net of shares held in treasury, and
in substance retired, of 25,139,897 in 2000, 21,136,952 in 1999
and 17,134,370 in 1998. In addition, 311,608 shares of VF
Common Stock at the end of 2000, 306,698 shares at the end of
1999 and 232,899 shares at the end of 1998 are held in trust for
deferred compensation plans. These shares are treated for financial
accounting purposes as treasury shares at a cost of $10.6 million,
$10.5 million and $7.0 million, respectively at the end of the last
three years.
There are 25,000,000 authorized shares of Preferred Stock,
$1 par value. As of December 30, 2000, 2,000,000 shares are
designated as Series A Preferred Stock, of which none has been
issued. In addition, 2,105,263 shares are designated as 6.75%
Series B Preferred Stock, which were purchased by the ESOP.
There were 1,570,301 shares of Series B Preferred Stock out-
standing at December 30, 2000, 1,669,444 outstanding at January
1, 2000, and 1,760,119 outstanding at January 2, 1999, after share
redemptions.