Kontoor Brands Inc

NOTE 11 —SHORT-TERM BORROWINGS AND LONG-TERM DEBT

Short-term Borrowings

At December 2024 and December 2023, the Company had $19.2 million and $24.1 million, respectively, of international lines of credit with various banks, which are uncommitted and may be terminated at any time by either the Company or the banks. There wereno outstanding balances under these arrangements at December 2024 and December 2023.

Long-term Debt

The following table presents the components of "long-term debt" recorded in the Company's balance sheets:

Credit Facilities

The Company is party to a senior secured Credit Agreement, as amended and restated on November 18, 2021 (the "Credit Agreement"), which provides for (i) afive-year $400.0 million term loan A facility (“Term Loan A”) and (ii) afive-year $500.0 million revolving credit facility (the “Revolving Credit Facility”), collectively referred to as “Credit Facilities,” with the lenders and agents party thereto.

Term Loan A requires quarterly repayments of $5.0 million, with the remaining principal of $335.0 million due at maturity in November 2026. During the year ended December 2024, the Company repaid a total of $45.0 million of the principal outstanding on Term Loan A, including a $25.0 million voluntary early repayment which eliminated future required quarterly repayments until June 2026. Term Loan A had an outstanding principal amount of $345.0 million and $390.0 million at December 2024 and December 2023, respectively, which is reported net of unamortized deferred financing costs. As of December 2024, interest expense on Term Loan A was being recorded at an effective annual interest rate of 5.6%, including the amortization of deferred financing costs and the impact of the Company’s interest rate swap agreements.

The Revolving Credit Facility may be used to borrow funds in both U.S. dollar and certain non-U.S. dollar currencies, and has a $75.0 million letter of credit sublimit. As of December 2024, the Company hadno outstanding borrowings under the Revolving Credit Facility and $6.5 million of outstanding standby letters of credit issued on behalf of the Company, leaving $493.5 million available for borrowing against this facility.

The interest rate per annum applicable to borrowings under the Credit Facilities is an interest rate benchmark elected by the Company based on the currency and term of the borrowing plus an applicable margin, as defined therein.

The Credit Agreement contains certain affirmative and negative covenants customary for financings of this type that, among other things, limit the ability of the Company and its subsidiaries to incur additional indebtedness or liens, to dispose of assets, to make certain fundamental changes, to designate subsidiaries as unrestricted, to make certain investments, to prepay certain indebtedness and to pay dividends, or to make other distributions or redemptions/repurchases, in respect of the Company and its subsidiaries’ equity interests. In addition, the Credit Agreement contains financial covenants which require compliance with (i) a total leverage ratio not to exceed 4.50 to 1.00 as of the last day of any test period, with an allowance for up totwo elections to increase the limit to 5.00 to 1.00 in connection with certain material acquisitions, and (ii) a consolidated interest coverage ratio as of the last day of any test period to be no less than 3.00 to 1.00. The Credit Agreement also contains events of default customary for financings of this type, including certain customary change of control events. As of December 2024, the Company was in compliance with all covenants under the Credit Agreement and expects to maintain compliance with the applicable covenants for at least one year from the issuance of these financial statements.

64 Kontoor Brands, Inc. 2024 Form 10-K

Senior Notes

On November 18, 2021, the Company entered into an indenture (the “Indenture”) by and among the Company and certain subsidiaries of the Company named as guarantors therein (the "Guarantors"), pursuant to which it issued $400.0 million of unsecured senior notes due 2029 bearing interest at a fixed rate of 4.125% per annum (the “Notes”) through a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and outside the United States to non-U.S. persons pursuant to Regulation S under the Securities Act. Interest on the Notes is payable in cash in arrears on May 15 and November 15 of each year.

The Notes had an outstanding principal amount of $400.0 million at both December 2024 and December 2023, which is reported net of unamortized deferred financing costs. As of December 2024, interest expense on the Notes was being recorded at an effective annual interest rate of 4.3%, including the amortization of deferred financing costs.

The Notes are guaranteed on a senior unsecured basis by the Company’s existing and future domestic subsidiaries (other than certain excluded subsidiaries) that are borrowers under or guarantors of the Credit Facilities or certain other indebtedness. The Notes rank pari passu in right of payment with all existing and future senior indebtedness of the Company and the Guarantors and are effectively subordinated to all of the Company’s and the Guarantors’ existing and future secured indebtedness, to the extent of the value of the collateral securing such indebtedness.

The Notes mature in November 2029. Prior to maturity, the Company may redeem all or a portion of the Notes at the redemption prices set forth in the Indenture. In addition, in connection with any tender offer for the Notes, including a change of control offer, if holders of not less than 90% in aggregate principal amount of the Notes validly tender their Notes, the Company or a third party in lieu of the Company would have the right to redeem all Notes that remain outstanding following such tender at a redemption price equal to the price offered to each other holder of the Notes (excluding any early tender or incentive fee) in such tender offer (including a change of control offer) plus, to the extent not included in the tender offer payment (or payment pursuant to the change of control offer), accrued and unpaid interest to, but excluding, the date of redemption.

The Indenture governing the Notes contains customary negative covenants for financings of this type that, among other things, limit the ability of the Company and its restricted subsidiaries to incur additional indebtedness or issue certain preferred shares, pay dividends, redeem stock or make other distributions, make certain investments, sell or transfer certain assets, create liens, consolidate, merge, sell or otherwise dispose of all or substantially all of the Company’s assets, enter into certain transactions with affiliates and designate subsidiaries as unrestricted subsidiaries. The Indenture does not contain any financial covenants. As of December 2024, the Company was in compliance with the covenants of the Indenture.

The following table presents scheduled payments of long-term debt as of December 2024 for the next five years and thereafter:

Kontoor Brands, Inc. 2024 Form 10-K 65

NOTE 12 —ACCRUED AND OTHER CURRENT LIABILITIES AND OTHER LIABILITIES

The following table presents components of "accrued and other current liabilities" recorded in the Company's balance sheets:

The following table presents components of "other liabilities" recorded in the Company's balance sheets:

NOTE 13 —RETIREMENT AND SAVINGS BENEFIT PLANS

Pension Plan

The Company sponsors a defined benefit pension plan for certain international employees. The Company uses a December 31 measurement date for the pension plan. Net pension costs and obligations are developed utilizing actuarial valuations. Inherent in these valuations are key assumptions, including discount rates, salary growth, long-term return on plan assets, retirement rates, mortality rates and other factors. The Company's selection of assumptions is based on historical trends and known economic and market conditions at the time of valuation, as well as independent studies of trends performed by actuaries. However, actual results may differ substantially from the estimates that were based on the critical assumptions.

66 Kontoor Brands, Inc. 2024 Form 10-K

The following tables present key components of pension costs, amounts recorded in the balance sheets and related key assumptions:

Net pension costs are reflected in the Company's statements of operations primarily within "selling, general and administrative expenses." The Company also recognized a $2.6 million pension curtailment gain within "other expense, net" in the Company's statements of operations for the year ended December 2022 attributable to employee restructuring in Europe as discussed in Note 22 to the Company's financial statements in this Form 10-K. Plan assets are invested in group insurance contracts, the fair values of which are provided by the insurance companies (Level 2). Refer to Note 14 to the Company's financial statements in this Form 10-K for a description of the three levels of the fair value hierarchy.

Other Retirement and Savings Plans

The Company sponsors a nonqualified retirement savings plan for employees whose contributions to a 401(k) plan would be limited by provisions of the Internal Revenue Code. This plan allows participants to defer a portion of their compensation and to receive matching contributions for a portion of the deferred amounts. Participants earn a return on their deferred compensation based on their selection of a hypothetical portfolio of publicly traded mutual funds. Changes in the fair value of the participants’ hypothetical investments are recorded as an adjustment to deferred compensation liabilities. Deferred compensation, including accumulated earnings, is distributable in cash at participant-specified dates upon retirement, death, disability or termination of employment. At December 2024, the liability to the Company’s participants was $49.0 million, of which $6.1 million was recorded in "accrued and other current liabilities" (Note 12) and $42.9 million was recorded in "other liabilities" (Note 12). At December 2023, the liability to the Company’s participants was $46.3 million, of which $6.3 million was recorded in "accrued and other current liabilities" (Note 12) and $40.0 million was recorded in "other liabilities" (Note 12). The Company also sponsors a similar nonqualified plan that permits nonemployee members of the Board of Directors to defer their Board compensation. At December 2024 and December 2023, the Company's liability for this plan was $4.4 million and $2.9 million, respectively, all of which was recorded in "other liabilities" (Note 12).

The Company has purchased publicly traded mutual funds in the same amounts as the participant-directed hypothetical investments underlying the employee deferred compensation liabilities. These investment securities and earnings thereon are intended to provide a source of funds to meet the deferred compensation obligations, and serve as an economic hedge of the financial impact of changes in deferred compensation liabilities. They are held in an irrevocable trust but are subject to claims of creditors in the event of the Company's insolvency. At December 2024, the fair value of these investments was $49.0 million, of which $6.1 million was recorded in "prepaid expenses and other current assets" and $42.9 million was recorded in "other assets" (Note 9). At December 2023, the fair value of these investments was $46.3 million, of which $6.3 million was recorded in "prepaid expenses and other current assets" and $40.0 million was recorded in "other assets" (Note 9).

Kontoor Brands, Inc. 2024 Form 10-K 67

The Company sponsors 401(k) plans as well as other foreign retirement and savings plans. The Company’s expense under these plans was $10.0 million in 2024, $9.8 million in 2023 and $9.3 million in 2022.