VF CORPORATION Notes to Consolidated Financial Statements March 2019
## Table 0 ##
(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.
Accumulated benefit obligations at any measurement date are the present value of vested and unvested pension benefits earned, without considering projected future compensation increases.
Projected benefit obligations are the present value of vested and unvested pension benefits earned, considering projected future compensation increases.
Deferred actuarial gains and losses are changes in the amount of either the benefit obligation or the value of plan assets resulting from differences between expected amounts for a year using actuarial assumptions and the actual results for that year.
These amounts are deferred as a component of accumulated OCI and amortized to pension expense in future years.
For the U. S.  qualified plan, amounts in excess of 20% of projected benefit obligations at the beginning of the year are amortized over five years; amounts between (i) 10% of the greater of projected benefit obligations or plan assets, and (ii) 20% of projected benefit obligations are amortized over the expected average life expectancy of all participants; and amounts less than the greater of 10% of projected benefit obligations or plan assets are not amortized.
For the U. S.  nonqualified plan, amounts in excess of 10% of the pension benefit obligations are amortized on a straight-line basis over the expected average life expectancy of all participants.
Deferred prior service costs related to plan amendments are also recorded in accumulated OCI and amortized to pension expense on a straight-line basis over the average remaining years of service for active employees.
The estimated amounts of accumulated OCI to be amortized to pension expense in Fiscal 2020 are $16.0 million of deferred actuarial losses and an insignificant amount of deferred prior service costs.
Management’s investment objectives are to invest plan assets in a diversified portfolio of securities to provide long-term growth, minimize the volatility of the value of plan assets relative to plan liabilities, and to ensure plan assets are sufficient to pay the benefit obligations.
Investment strategies focus on diversification among multiple asset classes, a balance of long-term investment return at an acceptable level of risk and liquidity to meet benefit payments.
The primary objective of the investment strategies is to more closely align plan assets with plan liabilities by utilizing dynamic asset allocation targets dependent upon changes in the plan’s funded ratio, capital market expectations and risk tolerance.
Plan assets are primarily composed of common collective trust funds that invest in liquid securities diversified across equity, fixedincome, real estate and other asset classes.
Fund assets are allocated among independent investment managers who have full discretion to manage their portion of the fund’s assets, subject to strategy and risk guidelines established with each manager.
The overall strategy, the resulting allocations of plan assets and the performance of funds and individual investment managers are continually monitored.
Derivative financial instruments may be used by investment managers for hedging purposes to gain exposure to alternative asset classes through the futures markets.
There are no direct investments in VF debt or equity securities and no significant concentrations of security risk.
The expected long-term rate of return on plan assets was based on an evaluation of the weighted average expected returns for the major asset classes in which the plans have invested.
Expected returns by asset class were developed through analysis of historical market returns, current market conditions, inflation expectations and equity and credit risks.
Inputs from various investment advisors on long-term capital market returns and other variables were also considered where appropriate.
Our current estimate of 14.7 billion tons of proven and probable aggregates reserves reflects an increase of 0.5 billion tons from the estimate at the end of 2009.
Estimates of reserves are of recoverable stone, sand and gravel of suitable quality for economic extraction, based on drilling and studies by our geologists and engineers, recognizing reasonable economic and operating restraints as to maximum depth of overburden and stone excavation, and subject to permit or other restrictions.
Proven, or measured, reserves are those reserves for which the quantity is computed from dimensions revealed by drill data, together with other direct and measurable observations such as outcrops, trenches and quarry faces.
The grade and quality of those reserves are computed from the results of detailed sampling, and the sampling and measurement data are spaced so closely and the geologic character is so well defined that size, shape, depth and mineral content of reserves are well established.
Probable, or indicated, reserves are those reserves for which quantity and grade and quality are computed partly from specific measurements and partly from projections based on reasonable, though not drilled, geologic evidence.
The degree of assurance, although lower than that for proven reserves, is high enough to assume continuity between points of observation.
Reported proven and probable reserves include only quantities that are owned in fee or under lease, and for which all appropriate zoning and permitting have been obtained.
Leases, zoning, permits, reclamation plans and other government or industry regulations often set limits on the areas, depths and lengths of time allowed for mining, stipulate setbacks and slopes that must be left in place, and designate which areas may be used for surface facilities, berms, and overburden or waste storage, among other requirements and restrictions.
Our reserves estimates take into account these factors.
Technical and economic factors also affect the estimates of reported reserves regardless of what might otherwise be considered proven or probable based on a geologic analysis.
For example, excessive overburden or weathered rock, rock quality issues, excessive mining depths, groundwater issues, overlying wetlands, endangered species habitats, and rights of way or easements may effectively limit the quantity of reserves considered proven and probable.
In addition, computations for reserves in-place are adjusted for estimates of unsaleable sizes and materials as well as pit and plant waste.
The 14.7 billion tons of estimated aggregates reserves reported at the end of 2010 include reserves at inactive and greenfield (undeveloped) sites.
We reported proven and probable reserves of 14.2 billion tons at the end of 2009 using the same basis.
The table below presents, by division, the tons of proven and probable aggregates reserves as of December 31, 2010 and the types of facilities operated.
## Table 1 ##
1 In addition to the facilities included in the table above, we operate 23 recrushed concrete plants which are not dependent on reserves.
Of the 14.7 billion tons of aggregates reserves, 8.3 billion tons or 56% are located on owned land and 6.4 billion tons or 44% are located on leased land.
While some of our leases run until reserves at the leased sites are exhausted, generally our leases have definite expiration dates, which range from 2011 to 2159.
Most of our leases have renewal options to extend them well beyond their current terms at our discretion.
Our long-term debt is unsecured and essentially all such debt agreements contain customary investment-grade type covenants that primarily limit the amount of secured debt we may incur without ratably securing the outstanding debt.
Our debt may be redeemed prior to maturity at the greater of par value and the make-whole value plus accrued and unpaid interest.
There were no material scheduled debt payments during 2014.
However, as described below, we purchased $506,366,000 principal amount of debt through a tender offer in the first quarter of 2014.
Scheduled debt payments during 2013 included $10,000,000 in January to retire the 8.70% medium-term note and $140,444,000 in June to retire the 6.30% notes.
The total scheduled (principal and interest) debt payments, excluding draws, if any, on the line of credit, for the five years subsequent to December 31, 2014 are as follows:
## Table 2 ##
In March 2014, we purchased $506,366,000 principal amount of debt through a tender offer as follows: $374,999,000 of 6.50% notes due in 2016 and $131,367,000 of 6.40% notes due in 2017.
This debt purchase was funded by the sale of our cement and concrete businesses in the Florida area as described in Note 19.
The March 2014 debt purchases cost $579,659,000, including a $71,829,000 premium above the principal amount of the notes and transaction costs of $1,464,000.
The premium primarily reflects the trading prices of the notes relative to par prior to the tender offer commencement.
Additionally, we recognized a net benefit of $344,000 associated with the acceleration of a proportional amount of unamortized discounts, deferred gains, deferred financing costs and amounts accumulated in OCI.
The combined charge of $72,949,000 is presented in the accompanying Consolidated Statement of Comprehensive Income as a component of interest expense for the year ended December 31, 2014.
Additionally, in March 2014, we amended our $500,000,000 line of credit to, among other items, extend the term from March 2018 to March 2019.
The line of credit is secured by accounts receivable and inventory, but will become unsecured upon the achievement of certain credit metrics and/or credit ratings.
The line of credit also contains negative and financial covenants customary for a secured facility.
The negative covenants primarily limit our ability to: (1) incur secured debt, (2) make certain investments, (3) execute acquisitions and divestitures, and (4) make restricted payments, including dividends.
Such limitations currently do not impact our ability to execute our strategic, operating and financial plans, and become less restrictive when the line of credit becomes unsecured as described above.
The line of credit contains two financial covenants: (1) a maximum ratio of debt to EBITDA that declines over time to 3.5:1 and (2) a minimum ratio of EBITDA to net cash interest expense that increases over time to 3.0:1.
As of December 31, 2014, we were in compliance with our long-term debt and line of credit covenants.
Borrowings on our line of credit are classified as short-term due to our intent to repay any borrowings within twelve months.
As of December 31, 2014, our available borrowing capacity was $446,450,000.
Borrowings under the line of credit bear interest at a rate determined at the time of borrowing equal to LIBOR plus a margin ranging from 1.50% to 2.25%, or an alternative rate derived from the lender's prime rate, based on our ratio of debt to EBITDA.
As of December 31, 2014, the applicable margin for LIBOR based borrowings was 1.50%.
Standby letters of credit issued under the line of credit reduce availability and are charged a fee equal to the margin for LIBOR based borrowings plus 0.175%.
We also pay a commitment fee on the daily average unused amount of the line of credit.
This commitment fee ranges from 0.25% to 0.40% based on our ratio of debt to EBITDA.
At December 31, 2014, the commitment fee was 0.25%.
Once the line of credit becomes unsecured, both the LIBOR margin range for borrowings and the commitment fee range will decline.
Each quarter we analyze the likelihood that our deferred tax assets will be realized.
Realization of the deferred tax assets ultimately depends on the existence of sufficient taxable income of the appropriate character in either the carryback or carryforward period.
A valuation allowance is recorded if, based on the weight of all available positive and negative evidence, it is more likely than not (a likelihood of more than 50%) that some portion, or all, of a deferred tax asset will not be realized.
A summary of our deferred tax assets is included in Note 9.
U. S.  income taxes are not provided on foreign earnings when such earnings are indefinitely reinvested offshore.
At least annually, we evaluate our investment strategies for each foreign tax jurisdiction in which we operate to determine whether foreign earnings will be indefinitely reinvested offshore.
We recognize a tax benefit associated with a tax position when, in our judgment, it is more likely than not that the position will be sustained based upon the technical merits of the position.
For a tax position that meets the more likely than not recognition threshold, we measure the income tax benefit as the largest amount that we judge to have a greater than 50% likelihood of being realized.
A liability is established for the unrecognized portion of any tax position.
Our liability for unrecognized tax benefits is adjusted periodically due to changing circumstances, such as the progress of tax audits, case law developments and new or emerging legislation.
The years open to tax examinations vary by jurisdiction.
While it is often difficult to predict the final outcome or the timing of resolution of any particular tax matter, we believe our liability for unrecognized tax benefits is appropriate.
We consider a tax position to be resolved at the earlier of the issue being “effectively settled,” settlement of an examination, or the expiration of the statute of limitations.
Upon resolution of a tax position, any liability for unrecognized tax benefits will be released.
Our liability for unrecognized tax benefits is generally presented as noncurrent.
However, if we anticipate paying cash within one year to settle an uncertain tax position, the liability is presented as current.
We classify interest and penalties associated with our liability for unrecognized tax benefits as income tax expense.
Our largest permanent item in computing both our taxable income and effective tax rate is the deduction allowed for statutory depletion.
The impact of statutory depletion on the effective tax rate is presented in Note 9.
The deduction for statutory depletion does not necessarily change proportionately to changes in pretax earnings.
COMPREHENSIVE INCOME We report comprehensive income in our Consolidated Statements of Comprehensive Income and Consolidated Statements of Equity.
Comprehensive income comprises two subsets: net earnings and other comprehensive income (OCI).
OCI includes fair value adjustments to cash flow hedges, actuarial gains or losses and prior service costs related to pension and postretirement benefit plans.
For additional information about comprehensive income see Note 14.
EARNINGS PER SHARE (EPS) Earnings per share are computed by dividing net earnings by the weighted-average common shares outstanding (basic EPS) or weighted-average common shares outstanding assuming dilution (diluted EPS), as set forth below:

<table><tr><td><i>in thousands</i></td><td>2010</td><td>2009</td><td>2008</td></tr><tr><td> Accumulated Other Comprehensive Loss</td><td></td><td></td><td></td></tr><tr><td>Cash flow hedges</td><td>-$39,137</td><td>-$49,365</td><td>-$56,519</td></tr><tr><td>Pension and postretirement plans</td><td>-138,202</td><td>-144,993</td><td>-128,763</td></tr><tr><td>Total</td><td>-$177,339</td><td>-$194,358</td><td>-$185,282</td></tr></table>
<table><tr><td></td><td rowspan="2"><i>Reserves </i> <i>(billions of tons)</i></td><td colspan="3"><i>Number of Aggregates Operating Facilities<sup>1</sup></i></td></tr><tr><td></td><td><i>Stone</i></td><td><i>Sand and Gravel</i></td><td><i>Sales Yards</i></td></tr><tr><td> By Division:</td><td></td><td></td><td></td><td></td></tr><tr><td>Florida Rock</td><td>0.5</td><td>5</td><td>11</td><td>8</td></tr><tr><td>Mideast</td><td>3.8</td><td>36</td><td>2</td><td>23</td></tr><tr><td>Midsouth</td><td>2.1</td><td>41</td><td>1</td><td>0</td></tr><tr><td>Midwest</td><td>2.0</td><td>17</td><td>4</td><td>4</td></tr><tr><td>Southeast</td><td>2.6</td><td>34</td><td>0</td><td>3</td></tr><tr><td>Southern and Gulf Coast</td><td>2.0</td><td>23</td><td>1</td><td>27</td></tr><tr><td>Southwest</td><td>0.8</td><td>13</td><td>1</td><td>12</td></tr><tr><td>Western</td><td>0.9</td><td>3</td><td>23</td><td>4</td></tr><tr><td> Total</td><td> 14.7</td><td> 172</td><td> 43</td><td> 81</td></tr></table>
<table><tr><td>in thousands</td><td>Total</td><td>Principal</td><td>Interest</td></tr><tr><td>Debt Payments (excluding the line of credit)</td><td></td><td></td><td></td></tr><tr><td>2015</td><td>$ 304,162</td><td>$ 150,137</td><td>$ 154,025</td></tr><tr><td>2016</td><td>263,975</td><td>125,131</td><td>138,844</td></tr><tr><td>2017</td><td>349,482</td><td>218,771</td><td>130,711</td></tr><tr><td>2018</td><td>752,732</td><td>650,022</td><td>102,710</td></tr><tr><td>2019</td><td>62,794</td><td>23</td><td>62,771</td></tr></table>

Question: Does the value ofFlorida Rock for Reserves greater than that in Stone