| Components of Pension Cost |
The components of pension cost for ±«ÓãÖ±²¥â€™s defined benefit plans were as follows:
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|
Ìý |
Ìý |
Year Ended March |
Ìý |
Three Months
Ended March
(Transition Period)
|
Ìý |
Year Ended December |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
(In thousands) |
Ìý |
2020 |
Ìý |
Ìý |
2019 |
Ìý |
2018 |
Ìý |
2017 |
Service cost — benefits earned during the period |
Ìý |
$ |
14,476 |
|
Ìý |
Ìý |
$ |
22,352 |
|
Ìý |
$ |
5,912 |
|
Ìý |
$ |
24,890 |
|
Interest cost on projected benefit obligations |
Ìý |
55,575 |
|
Ìý |
Ìý |
63,434 |
|
Ìý |
14,825 |
|
Ìý |
58,989 |
|
Expected return on plan assets |
Ìý |
(91,309 |
) |
Ìý |
Ìý |
(93,409 |
) |
Ìý |
(25,314 |
) |
Ìý |
(94,807 |
) |
Settlement charges |
Ìý |
27,443 |
|
Ìý |
Ìý |
8,856 |
|
Ìý |
— |
|
Ìý |
— |
|
Curtailments |
Ìý |
— |
|
Ìý |
Ìý |
9,530 |
|
Ìý |
— |
|
Ìý |
1,671 |
|
Transfers to Kontoor Brands |
Ìý |
668 |
|
Ìý |
Ìý |
— |
|
Ìý |
— |
|
Ìý |
— |
|
Amortization of deferred amounts: |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Net deferred actuarial losses |
Ìý |
14,848 |
|
Ìý |
Ìý |
28,474 |
|
Ìý |
8,548 |
|
Ìý |
41,440 |
|
Deferred prior service costs |
Ìý |
1,887 |
|
Ìý |
Ìý |
494 |
|
Ìý |
647 |
|
Ìý |
2,646 |
|
Total pension expense |
Ìý |
$ |
23,588 |
|
Ìý |
Ìý |
$ |
39,731 |
|
Ìý |
$ |
4,618 |
|
Ìý |
$ |
34,829 |
|
Weighted average actuarial assumptions used to determine pension expense: |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Discount rate in effect for determining service cost |
Ìý |
1.46 |
% |
Ìý |
Ìý |
3.85 |
% |
Ìý |
3.58 |
% |
Ìý |
4.08 |
% |
Discount rate in effect for determining interest cost |
Ìý |
3.20 |
% |
Ìý |
Ìý |
3.51 |
% |
Ìý |
3.13 |
% |
Ìý |
3.26 |
% |
Expected long-term return on plan assets |
Ìý |
5.40 |
% |
Ìý |
Ìý |
5.58 |
% |
Ìý |
5.72 |
% |
Ìý |
5.72 |
% |
Rate of compensation increase (a)
|
Ìý |
2.74 |
% |
Ìý |
Ìý |
3.73 |
% |
Ìý |
3.73 |
% |
Ìý |
3.78 |
% |
|
| 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 ±«ÓãÖ±²¥â€™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) |
Ìý |
March 2020 |
|
|
March 2019 |
Fair value of plan assets, beginning of period |
Ìý |
$ |
1,751,094 |
|
Ìý |
Ìý |
$ |
1,751,760 |
|
Actual return on plan assets |
Ìý |
173,261 |
|
Ìý |
Ìý |
82,947 |
|
±«ÓãÖ±²¥ contributions |
Ìý |
26,372 |
|
Ìý |
Ìý |
41,581 |
|
Participant contributions |
Ìý |
4,298 |
|
Ìý |
Ìý |
4,136 |
|
Transfer to Kontoor Brands |
Ìý |
(6,697 |
) |
Ìý |
Ìý |
— |
|
Benefits paid |
Ìý |
(233,398 |
) |
Ìý |
Ìý |
(118,513 |
) |
Currency translation |
Ìý |
(2,155 |
) |
Ìý |
Ìý |
(10,817 |
) |
Fair value of plan assets, end of period |
Ìý |
1,712,775 |
|
Ìý |
Ìý |
1,751,094 |
|
Projected benefit obligations, beginning of period |
Ìý |
1,818,931 |
|
Ìý |
Ìý |
1,884,485 |
|
Service cost |
Ìý |
14,476 |
|
Ìý |
Ìý |
22,352 |
|
Interest cost |
Ìý |
55,575 |
|
Ìý |
Ìý |
63,434 |
|
Participant contributions |
Ìý |
4,298 |
|
Ìý |
Ìý |
4,136 |
|
Actuarial loss (gain) |
Ìý |
84,057 |
|
Ìý |
Ìý |
10,653 |
|
Benefits paid |
Ìý |
(233,398 |
) |
Ìý |
Ìý |
(118,513 |
) |
Plan amendments |
Ìý |
655 |
|
Ìý |
Ìý |
715 |
|
Transfer to Kontoor Brands |
Ìý |
(17,279 |
) |
Ìý |
Ìý |
— |
|
Curtailments |
Ìý |
— |
|
Ìý |
Ìý |
(33,826 |
) |
Currency translation |
Ìý |
(539 |
) |
Ìý |
Ìý |
(14,505 |
) |
Projected benefit obligations, end of period |
Ìý |
1,726,776 |
|
Ìý |
Ìý |
1,818,931 |
|
Funded status, end of period |
Ìý |
$ |
(14,001 |
) |
Ìý |
Ìý |
$ |
(67,837 |
) |
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) |
Ìý |
March 2020 |
Ìý |
Ìý |
March 2019 |
Amounts included in Consolidated Balance Sheets: |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Other assets (Note 11) |
Ìý |
$ |
166,955 |
|
Ìý |
Ìý |
$ |
117,405 |
|
Accrued liabilities (Note 13) |
Ìý |
(10,449 |
) |
Ìý |
Ìý |
(10,260 |
) |
Other liabilities (Note 15) |
Ìý |
(170,507 |
) |
Ìý |
Ìý |
(174,982 |
) |
Funded status |
Ìý |
$ |
(14,001 |
) |
Ìý |
Ìý |
$ |
(67,837 |
) |
Accumulated other comprehensive loss, pretax: |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Net deferred actuarial losses |
Ìý |
$ |
357,989 |
|
Ìý |
Ìý |
$ |
399,093 |
|
Net deferred prior service credits |
Ìý |
(733 |
) |
Ìý |
Ìý |
563 |
|
Total accumulated other comprehensive loss, pretax |
Ìý |
$ |
357,256 |
|
Ìý |
Ìý |
$ |
399,656 |
|
Accumulated benefit obligations |
Ìý |
$ |
1,703,224 |
|
Ìý |
Ìý |
$ |
1,778,910 |
|
Weighted average actuarial assumptions used to determine pension obligations: |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Discount rate |
Ìý |
3.18 |
% |
Ìý |
Ìý |
3.68 |
% |
Rate of compensation increase (a)
|
Ìý |
2.22 |
% |
Ìý |
Ìý |
2.74 |
% |
The amounts reported in the table above for the prior period have not been segregated between continuing and discontinued operations. The March 2019 balances include $11.0 million of pension liabilities related to the Jeans business, which were transferred in connection with the spin-off.
(a)Ìý
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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| Fair Value of Investments Held by Pension Plan |
The fair value of investments held by ±«ÓãÖ±²¥â€™s defined benefit plans at March 2020 and March 2019, 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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|
Ìý |
Total Plan
Assets
|
Ìý |
Fair Value Measurements |
Ìý |
(In thousands) |
Level 1 |
Ìý |
Level 2 |
Ìý |
LevelÌý3 |
Ìý |
March 2020 |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Plan assets |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Cash equivalents |
$ |
9,421 |
|
Ìý |
$ |
9,421 |
|
Ìý |
$ |
— |
|
Ìý |
$ |
— |
|
Ìý |
Fixed income securities: |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
U.S. Treasury and government agencies |
6 |
|
Ìý |
— |
|
Ìý |
6 |
|
Ìý |
— |
|
Ìý |
Insurance contracts |
76,161 |
|
Ìý |
— |
|
Ìý |
76,161 |
|
Ìý |
— |
|
Ìý |
Commodities |
3,878 |
|
Ìý |
3,878 |
|
Ìý |
— |
|
Ìý |
— |
|
Ìý |
Total plan assets in the fair value hierarchy |
89,466 |
|
Ìý |
$ |
13,299 |
|
Ìý |
$ |
76,167 |
|
Ìý |
$ |
— |
|
Ìý |
Plan assets measured at net asset value |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Cash equivalents |
54,745 |
|
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Equity securities: |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Domestic |
70,503 |
|
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
International |
71,365 |
|
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Fixed income securities: |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Corporate and international bonds |
1,293,768 |
|
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Alternative investments |
132,928 |
|
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Total plan assets measured at net asset value |
1,623,309 |
|
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Total plan assets |
$ |
1,712,775 |
|
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ìý |
Total Plan
Assets
|
Ìý |
Fair Value Measurements |
(In thousands) |
Level 1 |
Ìý |
Level 2 |
Ìý |
LevelÌý3 |
March 2019 |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Plan assets |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Cash equivalents |
$ |
3,023 |
|
Ìý |
$ |
3,023 |
|
Ìý |
$ |
— |
|
Ìý |
$ |
— |
|
Fixed income securities: |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
U.S. Treasury and government agencies |
7 |
|
Ìý |
— |
|
Ìý |
7 |
|
Ìý |
— |
|
Insurance contracts |
71,521 |
|
Ìý |
— |
|
Ìý |
71,521 |
|
Ìý |
— |
|
Commodities |
(347 |
) |
Ìý |
(347 |
) |
Ìý |
— |
|
Ìý |
— |
|
Total plan assets in the fair value hierarchy |
74,204 |
|
Ìý |
$ |
2,676 |
|
Ìý |
$ |
71,528 |
|
Ìý |
$ |
— |
|
Plan assets measured at net asset value |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Cash equivalents |
36,349 |
|
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Equity securities: |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Domestic |
82,659 |
|
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
International |
97,766 |
|
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Fixed income securities: |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Corporate and international bonds |
1,309,123 |
|
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Alternative investments |
150,993 |
|
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Total plan assets measured at net asset value |
1,676,890 |
|
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Total plan assets |
$ |
1,751,094 |
|
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
Ìý |
|