| Business Segment Information |
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:
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• Outdoor & Action Sports |
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High performance outdoor apparel and footwear, backpacks, handbags and technical equipment |
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• Jeanswear |
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Denim and casual apparel |
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• Imagewear |
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Occupational workwear and athletic apparel |
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• Sportswear |
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Fashion sportswear apparel and accessories |
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• Other |
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Sales of non-VF products at VF Outlet® stores
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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.
Corporate costs (other than common costs allocated 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. Common costs such as information systems processing, retirement benefits and insurance are allocated from corporate costs to the coalitions based on appropriate metrics such as usage or employment. Corporate costs that are not allocated to the coalitions consist of corporate headquarters expenses (including compensation and benefits of corporate management and staff, certain legal and professional fees and administrative and general costs) and other expenses which include 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 the remaining 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:
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2016 |
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2015 |
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2014 |
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In thousands |
Coalition revenues: |
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Outdoor & Action Sports |
$ |
7,533,145 |
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$ |
7,400,446 |
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$ |
7,198,994 |
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Jeanswear |
2,737,701 |
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2,792,244 |
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2,801,754 |
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Imagewear |
1,103,813 |
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1,082,565 |
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1,104,038 |
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Sportswear |
536,302 |
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635,056 |
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650,203 |
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Other |
108,042 |
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122,344 |
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126,741 |
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Total coalition revenues |
$ |
12,019,003 |
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$ |
12,032,655 |
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$ |
11,881,730 |
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Coalition profit: (a)
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Outdoor & Action Sports |
$ |
1,226,208 |
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$ |
1,266,763 |
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$ |
1,312,963 |
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Jeanswear |
491,912 |
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535,385 |
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527,972 |
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Imagewear |
179,793 |
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157,959 |
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164,352 |
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Sportswear |
36,648 |
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78,879 |
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77,972 |
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Other (b)
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(4,403 |
) |
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15,135 |
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(2,600 |
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Total coalition profit |
1,930,158 |
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2,054,121 |
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2,080,659 |
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Impairment of goodwill and intangible assets (c)
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(79,644 |
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— |
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— |
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Corporate and other expenses (d) (e)
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(349,287 |
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(265,166 |
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(287,890 |
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Interest expense, net (f)
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(85,636 |
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(81,620 |
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(79,193 |
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Income from continuing operations before income taxes |
$ |
1,415,591 |
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$ |
1,707,335 |
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$ |
1,713,576 |
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(a) |
Reflects restructuring costs in 2016 totaling $43.3 million as follows: Outdoor and Action Sports - $17.4 million; Jeanswear - $20.4 million; Imagewear - $1.3 million; Sportswear - $2.9 million; and Other - $1.3 million (Note W).
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(b) |
Reflects a $16.6 million gain in 2015 recognized on the sale of a VF Outlet® location.
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(c) |
Represents goodwill and intangible asset impairment charges in 2016 related to the Outdoor & Action Sports coalition (Notes F, G and T). |
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(d) |
Reflects a $50.9 million pension settlement charge (Note M) and $14.8 million in restructuring charges (Note W) in 2016.
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(e) |
Certain corporate overhead costs of $5.8 million, $11.4 million and $12.4 million in 2016, 2015 and 2014, respectively, previously allocated to the Contemporary Brands coalition for segment reporting purposes have been reallocated to continuing operations as discussed in Note B.
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(f) |
Interest expense of $2.3 million and $1.9 million in 2015 and 2014, respectively, previously allocated to the Contemporary Brands coalition for segment reporting purposes has been reallocated to continuing operations as discussed in Note B.
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2016 |
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2015 |
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In thousands |
Coalition assets: |
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Outdoor & Action Sports |
$ |
2,424,830 |
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$ |
2,436,788 |
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Jeanswear |
943,764 |
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951,411 |
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Imagewear |
355,707 |
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366,062 |
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Sportswear |
130,233 |
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140,458 |
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Other |
63,351 |
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63,162 |
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Total coalition assets |
3,917,885 |
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3,957,881 |
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Cash and equivalents |
1,227,862 |
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944,423 |
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Intangible assets and goodwill |
3,576,657 |
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3,737,018 |
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Deferred income taxes |
42,231 |
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39,246 |
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Corporate assets |
974,652 |
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661,767 |
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Assets of discontinued operations |
— |
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299,207 |
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Consolidated assets |
$ |
9,739,287 |
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$ |
9,639,542 |
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2016 |
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2015 |
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2014 |
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In thousands |
Capital expenditures: (a)
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Outdoor & Action Sports |
$ |
114,430 |
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$ |
166,267 |
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$ |
111,020 |
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Jeanswear |
38,802 |
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31,844 |
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31,586 |
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Imagewear |
5,244 |
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6,959 |
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6,356 |
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Sportswear |
4,944 |
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8,771 |
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22,814 |
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Other |
2,390 |
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2,679 |
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2,489 |
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Corporate |
9,311 |
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32,318 |
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49,504 |
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$ |
175,121 |
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$ |
248,838 |
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$ |
223,769 |
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Depreciation and amortization expense: (b)
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Outdoor & Action Sports |
$ |
138,387 |
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$ |
129,986 |
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$ |
131,166 |
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Jeanswear |
47,726 |
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41,823 |
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43,189 |
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Imagewear |
13,013 |
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11,608 |
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11,602 |
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Sportswear |
17,042 |
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15,358 |
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14,334 |
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Other |
3,537 |
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4,510 |
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5,231 |
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Corporate |
57,291 |
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51,117 |
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45,355 |
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$ |
276,996 |
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$ |
254,402 |
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$ |
250,877 |
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(a) |
Excludes $0.7 million, $5.7 million and $10.3 million of capital expenditures related to the Contemporary Brands coalition for 2016, 2015 and 2014, respectively. These amounts are included in capital expenditures in our Consolidated Statements of Cash Flows as we did not segregate cash flows related to discontinued operations (Note B).
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(b) |
Excludes $4.6 million, $17.7 million and $24.0 million of depreciation and amortization related to the Contemporary Brands coalition for 2016, 2015 and 2014, respectively. These amounts are included in depreciation and amortization in our Consolidated Statements of Cash Flows as we did not segregate cash flows related to discontinued operations (Note B).
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Supplemental information (with revenues by geographic area based on the location of the customer) is as follows:
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2016 |
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2015 |
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2014 |
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In thousands |
Total revenues: |
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U.S. |
$ |
7,444,594 |
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$ |
7,631,476 |
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$ |
7,292,051 |
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Foreign, primarily Europe |
4,574,409 |
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4,401,179 |
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4,589,679 |
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$ |
12,019,003 |
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$ |
12,032,655 |
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$ |
11,881,730 |
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Property, plant and equipment: |
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U.S. |
$ |
590,593 |
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$ |
591,981 |
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Foreign, primarily Europe |
349,057 |
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353,510 |
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$ |
939,650 |
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$ |
945,491 |
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No single customer accounted for 10% or more of the Company’s total revenues in 2016, 2015 and 2014.
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