Annual report pursuant to Section 13 and 15(d)

Business Segment Information

v2.4.0.6
Business Segment Information
12 Months Ended
Dec. 29, 2012
Business Segment Information

Note Q — Business Segment Information

VF’s businesses are grouped by 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, adjustments for the LIFO method of inventory valuation (prior to 2011) and miscellaneous consolidated costs). Defined benefit pension plans in the United States are centrally managed. The current year service cost component of pension cost is allocated to the coalitions, while other 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:

 

     2012     2011     2010  
     In thousands  

Coalition revenues:

      

Outdoor & Action Sports

   $ 5,866,071      $ 4,561,998      $ 3,204,657   

Jeanswear

     2,789,293        2,731,770        2,537,591   

Imagewear

     1,075,677        1,025,214        909,402   

Sportswear

     577,317        543,515        497,773   

Contemporary Brands

     445,960        485,142        438,741   

Other

     125,537        111,593        114,425   
  

 

 

   

 

 

   

 

 

 

Total revenues

   $ 10,879,855      $ 9,459,232      $ 7,702,589   
  

 

 

   

 

 

   

 

 

 

Coalition profit:

      

Outdoor & Action Sports(a)

   $ 1,019,425      $ 828,228      $ 636,720   

Jeanswear

     466,960        413,187        431,942   

Imagewear

     145,053        145,655        111,174   

Sportswear

     72,978        56,312        52,354   

Contemporary Brands

     49,182        35,860        14,046   

Other

     (232     (1,024     (61
  

 

 

   

 

 

   

 

 

 

Total coalition profit

     1,753,366        1,478,218        1,246,175   

Impairment of goodwill and trademarks(b)

                   (201,738

Corporate and other expenses(a)

     (241,239     (240,675     (218,823

Interest, net

     (90,252     (72,800     (75,402
  

 

 

   

 

 

   

 

 

 

Income before income taxes

   $ 1,421,875      $ 1,164,743      $ 750,212   
  

 

 

   

 

 

   

 

 

 

 

(a) 

2012 amounts included $30.8 million of expenses related to the acquisition of Timberland, reported in: Outdoor & Action Sports — $22.1 million and Corporate — $8.7 million. 2011 related amounts included $33.5 million of expenses reported in: Outdoor & Action Sports — $23.7 million and Corporate — $9.8 million.

 

(b) 

Goodwill and trademark impairment charges totaling $201.7 million in 2010 related to Contemporary Brands. See Notes G and T.

 

     2012      2011      2010  
     In thousands  

Coalition assets:

        

Outdoor & Action Sports

   $ 1,944,822       $ 1,762,774       $ 954,441   

Jeanswear

     870,302         898,733         841,865   

Imagewear

     341,588         356,782         319,179   

Sportswear

     131,393         128,823         127,567   

Contemporary Brands

     172,564         195,528         181,399   

Other

     66,774         63,262         61,065   
  

 

 

    

 

 

    

 

 

 

Total coalition assets

     3,527,443         3,405,902         2,485,516   

Cash and equivalents

     597,461         341,228         792,239   

Intangible assets and goodwill

     4,926,815         4,981,923         2,657,563   

Deferred income taxes

     167,685         136,021         106,743   

Corporate assets

     413,617         448,052         415,495   
  

 

 

    

 

 

    

 

 

 

Consolidated assets

   $ 9,633,021       $ 9,313,126       $ 6,457,556   
  

 

 

    

 

 

    

 

 

 

Capital expenditures:

        

Outdoor & Action Sports

   $ 155,522       $ 90,381       $ 49,658   

Jeanswear

     67,239         21,076         19,906   

Imagewear

     4,967         5,318         2,843   

Sportswear

     5,279         5,902         3,770   

Contemporary Brands

     6,766         16,534         10,975   

Other

     5,418         5,370         5,627   

Corporate

     6,749         26,313         18,861   
  

 

 

    

 

 

    

 

 

 
   $ 251,940       $ 170,894       $ 111,640   
  

 

 

    

 

 

    

 

 

 

Depreciation and amortization expense:

        

Outdoor & Action Sports

   $ 114,483       $ 83,559       $ 62,563   

Jeanswear

     39,520         41,207         34,304   

Imagewear

     11,733         11,513         12,055   

Sportswear

     11,639         12,072         12,155   

Contemporary Brands

     24,915         26,590         32,864   

Other

     5,517         4,122         3,638   

Corporate

     30,149         19,672         15,817   
  

 

 

    

 

 

    

 

 

 
   $ 237,956       $ 198,735       $ 173,396   
  

 

 

    

 

 

    

 

 

 

 

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

 

     2012      2011      2010  
     In thousands  

Total revenues:

        

United States

   $ 6,903,269       $ 6,220,933       $ 5,411,533   

Foreign, primarily Europe

     3,976,586         3,238,299         2,291,056   
  

 

 

    

 

 

    

 

 

 
   $ 10,879,855       $ 9,459,232       $ 7,702,589   
  

 

 

    

 

 

    

 

 

 

Property, plant and equipment:

        

United States

   $ 513,282       $ 521,838       $ 446,718   

Foreign, primarily Europe

     314,936         215,613         156,190   
  

 

 

    

 

 

    

 

 

 
   $ 828,218       $ 737,451       $ 602,908   
  

 

 

    

 

 

    

 

 

 

Sales to Wal-Mart Stores, Inc., primarily by the Jeanswear Coalition, comprised 8% of total revenues in 2012, 9% in 2011 and 10% in 2010.