Annual report pursuant to Section 13 and 15(d)

Business Segment Information

v2.4.1.9
Business Segment Information
 12 Months Ended
Jan. 03, 2015
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 segments, as described below:

 

•  Outdoor & Action Sports

    High performance outdoor apparel and footwear, backpacks, bags and technical equipment

•  Jeanswear

    Denim and casual apparel

•  Imagewear

    Occupational workwear and athletic apparel

•  Sportswear

    Fashion sportswear apparel and accessories

•  Contemporary Brands

    Premium denim and 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:

 

      2014      2013      2012  
     In thousands  

Coalition revenues:

         

Outdoor & Action Sports

    $ 7,198,994       $ 6,379,167       $ 5,866,071   

Jeanswear

      2,801,754         2,810,994         2,789,293   

Imagewear

      1,104,038         1,065,952         1,075,677   

Sportswear

      650,203         624,693         577,317   

Contemporary Brands (a)

      400,431         415,053         445,960   

Other

      126,741         123,789         125,537   
  

 

 

     

 

 

     

 

 

  

Total coalition revenues

    $ 12,282,161       $ 11,419,648       $ 10,879,855   
  

 

 

     

 

 

     

 

 

  

Coalition profit:

         

Outdoor & Action Sports (b)

    $ 1,312,963       $ 1,106,384       $ 1,019,425   

Jeanswear

      527,972         544,882         466,960   

Imagewear

      164,352         152,203         145,053   

Sportswear

      77,972         88,157         72,978   

Contemporary Brands (a)

      23,420         38,825         49,182   

Other

      (2,600 )       (562 )       (232 ) 
  

 

 

     

 

 

     

 

 

  

Total coalition profit

      2,104,079         1,929,889         1,753,366   

Impairment of goodwill and intangible assets (c)

      (396,362 )       —         —   

Corporate and other expenses (b)

      (275,537 )       (286,767 )       (241,239 ) 

Interest expense, net

      (79,814 )       (80,632 )       (90,252 ) 
  

 

 

     

 

 

     

 

 

  

Income before income taxes

    $ 1,352,366       $ 1,562,490       $ 1,421,875   
  

 

 

     

 

 

     

 

 

  

 

(a) 

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

 

(b) 

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)

 

(c) 

Reflects impairment charges related to the Contemporary Brands coalition. See Notes F, G and T for additional information.

 

      2014      2013      2012  
     In thousands  

Coalition assets:

         

Outdoor & Action Sports

    $ 2,211,232       $ 2,133,447       $ 1,944,822   

Jeanswear

      904,933         943,011         870,302   

Imagewear

      349,254         334,864         341,588   

Sportswear

      147,091         156,107         131,393   

Contemporary Brands

      172,687         187,116         172,564   

Other

      63,549         74,043         66,774   
  

 

 

     

 

 

     

 

 

  

Total coalition assets

      3,848,746         3,828,588         3,527,443   

Cash and equivalents

      971,895         776,403         597,461   

Intangible assets and goodwill

      4,258,508         4,981,951         4,926,815   

Deferred income taxes

      174,537         185,858         167,685   

Corporate assets

      726,454         542,643         413,617   
  

 

 

     

 

 

     

 

 

  

Consolidated assets

    $ 9,980,140       $ 10,315,443       $ 9,633,021   
  

 

 

     

 

 

     

 

 

  

Capital expenditures:

         

Outdoor & Action Sports

    $ 111,020       $ 139,428       $ 155,522   

Jeanswear

      31,586         49,763         67,239   

Imagewear

      6,356         3,793         4,967   

Sportswear

      22,814         6,074         5,279   

Contemporary Brands

      10,308         13,679         6,766   

Other

      2,489         3,953         5,418   

Corporate

      49,504         54,463         6,749   
  

 

 

     

 

 

     

 

 

  
   $ 234,077       $ 271,153       $ 251,940   
  

 

 

     

 

 

     

 

 

  

Depreciation and amortization expense:

         

Outdoor & Action Sports

    $ 131,166       $ 122,385       $ 114,483   

Jeanswear

      43,189         41,742         39,520   

Imagewear

      11,602         11,481         11,733   

Sportswear

      14,334         12,195         11,639   

Contemporary Brands

      24,006         24,309         24,915   

Other

      5,231         4,608         5,517   

Corporate

      45,355         36,553         30,149   
  

 

 

     

 

 

     

 

 

  
   $ 274,883       $ 253,273       $ 237,956   
  

 

 

     

 

 

     

 

 

  

 

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

 

      2014      2013      2012  
     In thousands  

Total revenues:

         

U.S.

    $ 7,574,546       $ 7,124,781       $ 6,903,269   

Foreign, primarily Europe

      4,707,615         4,294,867         3,976,586   
  

 

 

     

 

 

     

 

 

  
   $ 12,282,161       $ 11,419,648       $ 10,879,855   
  

 

 

     

 

 

     

 

 

  

Property, plant and equipment:

         

U.S.

    $ 577,669       $ 549,420       $ 513,282   

Foreign, primarily Europe

      364,512         383,372         314,936   
  

 

 

     

 

 

     

 

 

  
   $ 942,181       $ 932,792       $ 828,218   
  

 

 

     

 

 

     

 

 

  

No single customer accounted for 10% or more of the Company’s total revenues in 2014, 2013 and 2012.