Quarterly report pursuant to Section 13 or 15(d)

REPORTABLE SEGMENT INFORMATION

v3.19.3
REPORTABLE SEGMENT INFORMATION
 9 Months Ended
Sep. 28, 2019
Segment Reporting [Abstract]  
REPORTABLE SEGMENT INFORMATION REPORTABLE SEGMENT INFORMATION
The chief operating decision maker allocates resources and assesses performance based on a global brand view which determines the Company's operating segments. These operating segments are the basis for the Company's reportable segments, as described below:
•
Wrangler — Wrangler® branded denim, apparel and accessories.
•
Lee — Lee® branded denim, apparel and accessories.
In addition, the Company reports an "Other" category for purposes of reconciliation to consolidated revenues and profit, but the Other category is not considered a reportable segment. Other includes sales of (i) VF-branded products and third-party branded merchandise at VF Outlet™ stores, (ii) Rock & Republic® branded apparel, (iii) products manufactured in our plants sold to VF and VF’s use of our transportation fleet and (iv) services in fulfilling a transition services agreement related to VF's sale of its Nautica® brand business in mid-2018. Sales of Wrangler® and Lee® branded products at VF Outlet™ stores are not included in Other and are reported in the respective segments above.
Accounting policies utilized for internal management reporting at the individual segments are consistent with those included in Note 1 to the combined financial statements included in the Company's 2018 Form 10, except as noted below.
Through the date of the Separation, the Company's statements of income included costs for certain centralized functions and programs provided and administered by VF that were charged directly to VF's businesses, including the Company. These centralized functions and programs included, but were not limited to, information technology, human resources, accounting shared services, supply chain, insurance and the related benefits. These historical allocations were included in the measurement of segment profit below. In addition, for purposes of preparing these financial statements on a carve-out basis, a portion of VF's total corporate expenses were allocated to the Company. These expense allocations included the cost of corporate functions and resources provided by or administered by VF including, but not limited to, executive management, finance, accounting, legal, human resources and related benefit costs associated with such functions. Allocations also included the cost of operating VF's corporate headquarters located in Greensboro, North Carolina. These additional allocations were reported as "corporate and other expenses" in the table below.
After the Separation, as a standalone public company, the Company has allocated costs for certain centralized functions and programs to the Lee® and Wrangler® segments based on appropriate metrics such as usage or production of revenues. These centralized functions and programs include, but are not limited to, information technology, human resources, supply chain, insurance and the related benefits.
Corporate and other expenses, impairment charges, net interest income from former parent, interest income, and interest expense are not controlled by segment management and therefore are excluded from the measurement of segment profit.
The following table presents financial information for the Company's reportable segments:
 
 
Three Months Ended September
 
 
Nine Months Ended September
 
 
 
 
 
 
 
 
 
 
 
 
(in thousands)

2019
 
 
2018
 
 
2019
 
 
2018
Segment revenues:
 
 
 
 
 
 
 
 
 
 
 
Wrangler
 
$
367,206

 
 
$
395,613

 
 
$
1,101,133

 
 
$
1,158,341

Lee
 
232,221

 
 
251,510

 
 
680,660

 
 
731,244

Other
 
38,711

 
 
57,123

 
 
114,435

 
 
148,180

Total segment revenues
 
$
638,138

 
 
$
704,246

 
 
$
1,896,228

 
 
$
2,037,765

Segment profit:
 
 
 
 
 
 
 
 
 
 
 
Wrangler
 
$
61,070

 
 
$
65,104

 
 
$
141,715

 
 
$
195,720

Lee
 
30,156

 
 
36,107

 
 
61,536

 
 
90,161

Other
 
843

 
 
(1,339
)
 
 
(437
)
 
 
(1,725
)
Total segment profit
 
$
92,069

 
 
$
99,872

 
 
$
202,814

 
 
$
284,156

Non-cash impairment of intangible asset (1)
 
(32,636
)
 
 
—

 
 
(32,636
)
 
 
—

Corporate and other expenses
 
(29,861
)
 
 
(6,672
)
 
 
(64,232
)
 
 
(25,252
)
Interest income from former parent, net
 
—

 
 
2,104

 
 
3,762

 
 
5,415

Interest expense
 
(14,140
)
 
 
(200
)
 
 
(21,876
)
 
 
(981
)
Interest income
 
712

 
 
1,508

 
 
3,543

 
 
4,176

Income before income taxes
 
$
16,144

 
 
$
96,612

 
 
$
91,375

 
 
$
267,514



(1) Represents an impairment charge in the third quarter of fiscal 2019 related to the Rock & Republic® trademark. The impairment charge was excluded from segment profit as it is not considered a component of ongoing business operations.