Annual report pursuant to Section 13 and 15(d)

REPORTABLE SEGMENT INFORMATION

v3.19.1
REPORTABLE SEGMENT INFORMATION
 12 Months Ended
Mar. 30, 2019
Segment Reporting [Abstract]  
REPORTABLE SEGMENT INFORMATION
SEGMENT INFORMATION

In light of recently completed portfolio management actions and organizational realignments, the Company realigned its internal reporting structure in the year ended March 2019 to reflect the organizational changes to better support and assess the operations of the business. The chief operating decision maker allocates resources and assesses performance based on a global brand view which represents VF's operating segments. The operating segments have been evaluated and combined into reportable segments because they have met the similar economic characteristics and qualitative aggregation criteria set forth in the relevant accounting guidance. Based on this assessment, the Company's reportable segments have been identified as: Outdoor, Active, Work and Jeans.
Below is a description of VF's reportable segments and the primary brands included within each:
REPORTABLE SEGMENT
 
PRIMARY BRANDS
Outdoor - Outdoor apparel, footwear and equipment
 
The North Face®
 
 
Timberland® (excluding Timberland PRO®)
 
 
Icebreaker®
 
 
Smartwool®
 
 
Altra®
 
 
 
Active - Active apparel, footwear and accessories
 
Vans®
 
 
Kipling®
 
 
Napapijri®
 
 
Eastpak®
 
 
JanSport®
 
 
Reef®
 
 
Eagle Creek®
 
 
 
Work - Work and work-inspired lifestyle apparel, footwear and occupational apparel
 
Dickies®
 
 
Red Kap®
 
 
Bulwark®
 
 
Timberland PRO®
 
 
VF Solutions®
 
 
Wrangler® RIGGS
 
 
Walls®
 
 
Terra®
 
 
Workrite®
 
 
Kodiak®
 
 
Horace Small®
 
 
 
Jeans - Denim and casual apparel
 
Wrangler® (excluding Wrangler® RIGGS)
 
 
Lee®
 
 
Lee® Riders®
 
 
Rock and Republic®
Other - included in the tables below for purposes of reconciliation of revenues and profit, but it is not considered a reportable segment. Includes sales of non-VF products at VF Outlet™ stores and results from transition services related to the sales of the Nautica® and Reef® brand businesses.

In the tables below, the Company has recast historical financial information to reflect the new reportable segments. The recast historical information has no impact on the Company's previously reported consolidated financial statements.
The results of Williamson-Dickie have been included in the Work segment since the October 2, 2017 acquisition date. The results of Kipling North America, which were previously included in the former Sportswear segment, have been included in the Active segment for all periods presented. The results of Icebreaker and Altra have been included in the Outdoor segment since their acquisition dates of April 3, 2018 and June 1, 2018, respectively.
The results of the Van Moer business have been included in the Work segment through the October 5, 2018 date of sale. The results of the Reef® brand business have been included in the Active segment through the October 26, 2018 date of sale.
The primary financial measures used by management to evaluate the financial results of VF's reportable segments are segment revenues and segment profit. Segment profit comprises the operating income and other income (expense), net line items of each segment.
Accounting policies used for internal management reporting at the individual segments are consistent with those in Note 1, except as stated below. Corporate costs (other than common costs allocated to the segments), impairment charges and net interest expense are not controlled by segment management and therefore are excluded from the measurement of segment profit. Common costs such as information systems processing, retirement benefits and insurance are allocated from corporate costs to the segments based on appropriate metrics such as usage or employment. Corporate costs that are not allocated to the segments 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 segments, while the remaining pension cost components are reported in corporate and other expenses.
Segment assets, for internal management purposes, are those used directly in or resulting from the operations of each business, which are accounts receivable and inventories. Segment assets included in the Other category represent balances related to the VF Outlet™ business, transition services and other corporate activities, and are provided for purposes of reconciliation as the Other category is not considered a reportable segment. Total expenditures for additions to long-lived assets are not disclosed as this information is not regularly provided to the chief operating decision maker at the segment level.
Financial information for VF’s reportable segments is as follows:
 
 
Year Ended March
 
 
Three Months
Ended March
(Transition Period)
 
Year Ended December
(In thousands)
 
2019
 
 
2018
 
2017
 
2016
Segment revenues:
 
 
 
 
 
 
 
 
 
Outdoor
 
$
4,649,024

 
 
$
888,039

 
$
4,208,958

 
$
4,123,372

Active
 
4,721,792

 
 
1,071,598

 
3,791,737

 
3,318,428

Work
 
1,862,017

 
 
442,258

 
1,099,714

 
776,214

Jeans
 
2,491,769

 
 
623,266

 
2,597,623

 
2,690,059

Other
 
124,058

 
 
20,285

 
113,145

 
118,074

Total segment revenues
 
$
13,848,660

 
 
$
3,045,446

 
$
11,811,177

 
$
11,026,147

Segment profit:
 
 
 
 
 
 
 
 
 
Outdoor
 
$
544,425

 
 
$
44,673

 
$
537,543

 
$
594,485

Active
 
1,125,709

 
 
237,620

 
805,843

 
628,163

Work
 
220,670

 
 
40,024

 
163,585

 
137,301

Jeans
 
300,502

 
 
103,805

 
406,524

 
479,179

Other
 
457

 
 
(3,074
)
 
(3,090
)
 
(4,809
)
Total segment profit
 
2,191,763

 
 
423,048

 
1,910,405

 
1,834,319

Impairment of goodwill and intangible assets (a)
 
—

 
 
—

 
—

 
(79,644
)
Corporate and other expenses (b) (c)
 
(578,934
)
 
 
(107,750
)
 
(408,030
)
 
(384,413
)
Interest expense, net
 
(85,425
)
 
 
(21,165
)
 
(85,880
)
 
(85,546
)
Income from continuing operations before income taxes
 
$
1,527,404

 
 
$
294,133

 
$
1,416,495

 
$
1,284,716

(a) 
Represents goodwill and intangible asset impairment charges in 2016 related to the Outdoor segment (lucy® brand discussed in Notes 8, 9 and 22). The impairment charges were excluded from the profit of the Outdoor segment since they are not part of the ongoing operations of the business.
(b) 
Reflects a $50.9 million pension settlement charge in 2016 (Note 15).
(c) 
Certain corporate overhead and other costs of, $16.6 million and $44.3 million during the years ended December 2017 and 2016, respectively, previously allocated to the former Sportswear, Imagewear, Outdoor & Action Sports and Contemporary Brands segments for segment reporting purposes, have been reallocated to continuing operations as discussed in Note 4.
 
 
March
 
 
March
 
December
(In thousands)
 
2019
 
 
2018
 
2017
Segment assets:
 
 
 
 
 
 
 
Outdoor
 
$
1,108,274

 
 
$
924,870

 
$
1,082,264

Active
 
981,033

 
 
873,737

 
686,991

Work
 
742,329

 
 
669,641

 
657,025

Jeans
 
720,620

 
 
710,481

 
629,648

Other
 
99,570

 
 
91,299

 
80,667

Total segment assets
 
3,651,826

 
 
3,270,028

 
3,136,595

Cash and equivalents
 
543,011

 
 
680,762

 
563,483

Property, plant and equipment, net
 
1,057,268

 
 
1,011,617

 
1,014,638

Intangible assets and goodwill
 
3,779,161

 
 
3,813,329

 
3,782,425

Other assets
 
1,325,519

 
 
1,161,994

 
1,080,661

Assets of discontinued operations
 
—

 
 
373,580

 
380,700

Consolidated assets
 
$
10,356,785

 
 
$
10,311,310

 
$
9,958,502


 
 
Year Ended March
 
 
Three Months
Ended March
(Transition Period)
 
Year Ended December
(In thousands)
 
2019
 
 
2018
 
2017
 
2016
Depreciation and amortization expense: (a)
 
 
 
 
 
 
 
 
 
Outdoor
 
$
82,259

 
 
$
16,998

 
$
86,838

 
$
83,070

Active
 
73,395

 
 
18,953

 
70,219

 
66,031

Work
 
34,446

 
 
10,149

 
12,926

 
5,051

Jeans
 
38,505

 
 
8,710

 
35,586

 
39,237

Other
 
2,542

 
 
609

 
3,560

 
3,537

Corporate
 
69,858

 
 
15,501

 
68,016

 
57,290

 
 
$
301,005

 
 
$
70,920

 
$
277,145

 
$
254,216

(a) 
Excludes $0.6 million, $14.0 million and $27.4 million of depreciation and amortization related to discontinued operations in the three months ended March 2018 and the years ended December 2017 and 2016, 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 4).
Supplemental information (with revenues by geographic area based on the origin of the shipment) is as follows:
 
 
Year Ended March
 
 
Three Months
Ended March
(Transition Period)
 
Year Ended December
(In thousands)
 
2019
 
 
2018
 
2017
 
2016
Total revenues:
 
 
 
 
 
 
 
 
 
U.S.
 
$
8,126,280

 
 
$
1,643,991

 
$
6,923,749

 
$
6,669,026

Foreign, primarily Europe
 
5,722,380

 
 
1,401,455

 
4,887,428

 
4,357,121

 
 
$
13,848,660

 
 
$
3,045,446

 
$
11,811,177

 
$
11,026,147

Property, plant and equipment:
 
 
 
 
 
 
 
 
 
U.S.
 
$
644,839

 
 
$
605,487

 
$
607,437

 
 
Foreign, primarily Europe
 
412,429

 
 
406,130

 
407,201

 
 
 
 
$
1,057,268

 
 
$
1,011,617

 
$
1,014,638

 



No single customer accounted for 10% or more of the Company’s total revenues in the year ended March 2019, the three months ended March 2018 and the years ended December 2017 and 2016.