Annual report pursuant to Section 13 and 15(d)

Business Segment Information

v2.4.0.8
Business Segment Information
 12 Months Ended
Dec. 28, 2013
Business Segment Information

Note Q — Business Segment Information

VF’s businesses are grouped into product categories, and by brands within those product categories, for internal financial reporting used by management. These groupings of businesses within VF are referred to as “coalitions” and are the basis for VF’s reportable business segments, as described below:

• Outdoor & Action Sports

 Activity based apparel and footwear, backpacks, bags, and technical equipment

• Jeanswear

 Jeanswear and related products

• Imagewear

 Occupational apparel and licensed athletic apparel

• Sportswear

 Fashion sportswear

• Contemporary Brands

 Premium lifestyle apparel

• Other

 Primarily sales of non-VF products at VF Outlet® stores

Management at each of the coalitions has direct control over and responsibility for its revenues, operating income and assets, hereinafter termed “coalition revenues,” “coalition profit” and “coalition assets,” respectively. VF management evaluates operating performance and makes investment and other decisions based on coalition revenues and coalition profit. Accounting policies used for internal management reporting at the individual coalitions are consistent with those in Note A, except as stated below. Common costs such as information systems processing, retirement benefits and insurance are allocated to the coalitions based on appropriate metrics such as usage or employment.

Corporate costs (other than allocated costs directly related to the coalitions), impairment charges and net interest expense are not controlled by coalition management and therefore are excluded from the measurement of coalition profit. Corporate and other expenses consists of corporate headquarters expenses that are not allocated to the coalitions (including compensation and benefits of corporate management and staff, certain legal and professional fees, and administrative and general) and other expenses related to but not allocated to the coalitions for internal management reporting (including a portion of defined benefit pension costs, development costs for management information systems, costs of registering, maintaining and enforcing certain of VF’s trademarks, and miscellaneous consolidated costs). Defined benefit pension plans in the U.S. are centrally managed. The current year service cost component of pension cost is allocated to the coalitions, while other pension cost components are reported in corporate and other expenses.

Coalition assets, for internal management purposes, are those used directly in or resulting from the operations of each business unit, such as accounts receivable, inventories and property, plant and equipment. Corporate assets primarily include corporate facilities, investments held in trust for deferred compensation plans and information systems.

Financial information for VF’s reportable segments is as follows:

2013 2012 2011
In thousands

Coalition revenues:

Outdoor & Action Sports (a)

 $ 6,379,167 $ 5,866,071 $ 4,561,998

Jeanswear

 2,810,994 2,789,293 2,731,770

Imagewear

 1,065,952 1,075,677 1,025,214

Sportswear

 624,693 577,317 543,515

Contemporary Brands (b)

 415,053 445,960 485,142

Other

 123,789 125,537 111,593

Total revenues

 $ 11,419,648 $ 10,879,855 $ 9,459,232

Coalition profit:

Outdoor & Action Sports (c)

 $ 1,106,384 $ 1,019,425 $ 828,228

Jeanswear

 544,882 466,960 413,187

Imagewear

 152,203 145,053 145,655

Sportswear

 88,157 72,978 56,312

Contemporary Brands (b)

 38,825 49,182 35,860

Other

 (562 ) (232 ) (1,024 )

Total coalition profit

 1,929,889 1,753,366 1,478,218

Corporate and other expenses (c)

 (286,767 ) (241,239 ) (240,675 )

Interest expense, net

 (80,632 ) (90,252 ) (72,800 )

Income before income taxes

 $ 1,562,490 $ 1,421,875 $ 1,164,743

(a)

Includes operating results of The Timberland Company since its acquisition date of September 13, 2011.

(b)

Excludes operating results of John Varvatos Enterprises, Inc. since its disposition date of April 30, 2012.

(c)

Includes expenses related to the acquisition of Timberland as follows:

2013—$10.7 million reported in Outdoor & Action Sports

2012—$30.8 million reported in Outdoor & Action Sports ($22.1 million) and Corporate ($8.7 million)

2011—$33.5 million reported in Outdoor & Action Sports ($23.7 million) and Corporate ($9.8 million)

2013 2012 2011
In thousands

Coalition assets:

Outdoor & Action Sports

 $ 2,133,447 $ 1,944,822 $ 1,762,774

Jeanswear

 943,011 870,302 898,733

Imagewear

 334,864 341,588 356,782

Sportswear

 156,107 131,393 128,823

Contemporary Brands

 187,116 172,564 195,528

Other

 74,043 66,774 63,262

Total coalition assets

 3,828,588 3,527,443 3,405,902

Cash and equivalents

 776,403 597,461 341,228

Intangible assets and goodwill

 4,981,951 4,926,815 4,981,923

Deferred income taxes

 185,858 167,685 136,021

Corporate assets

 542,643 413,617 448,052

Consolidated assets

 $ 10,315,443 $ 9,633,021 $ 9,313,126

Capital expenditures:

Outdoor & Action Sports

 $ 139,428 $ 155,522 $ 90,381

Jeanswear

 49,763 67,239 21,076

Imagewear

 3,793 4,967 5,318

Sportswear

 6,074 5,279 5,902

Contemporary Brands

 13,679 6,766 16,534

Other

 3,953 5,418 5,370

Corporate

 54,463 6,749 26,313

$ 271,153 $ 251,940 $ 170,894

Depreciation and amortization expense:

Outdoor & Action Sports

 $ 122,385 $ 114,483 $ 83,559

Jeanswear

 41,742 39,520 41,207

Imagewear

 11,481 11,733 11,513

Sportswear

 12,195 11,639 12,072

Contemporary Brands

 24,309 24,915 26,590

Other

 4,608 5,517 4,122

Corporate

 36,553 30,149 19,672

$ 253,273 $ 237,956 $ 198,735

Supplemental information (with revenues by geographic area based on the location of the customer) is as follows:

2013 2012 2011
In thousands

Total revenues:

U.S.

 $ 7,124,781 $ 6,903,269 $ 6,220,933

Foreign, primarily Europe

 4,294,867 3,976,586 3,238,299

$ 11,419,648 $ 10,879,855 $ 9,459,232

Property, plant and equipment:

U.S.

 $ 549,420 $ 513,282 $ 521,838

Foreign, primarily Europe

 383,372 314,936 215,613

$ 932,792 $ 828,218 $ 737,451

No single customer accounted for 10% or more of the Company’s total revenues in 2013, 2012 and 2011.