Annual report pursuant to Section 13 and 15(d)

BUSINESS SEGMENT INFORMATION

v3.20.4
BUSINESS SEGMENT INFORMATION
 12 Months Ended
Jan. 02, 2021
Segment Reporting [Abstract]  
BUSINESS SEGMENT INFORMATION BUSINESS SEGMENT INFORMATION
The Company has two reportable segments:
•Wrangler — Wrangler® branded denim, apparel and accessories.
•Lee — Lee® branded denim, apparel and accessories.
The chief operating decision maker allocates resources and assesses performance based on a global brand view which determines the Company's operating segments. Operating segments are the basis for the Company's reportable segments.
In addition, we report an "Other" category in order to reconcile segment revenues and segment profit to the Company's operating results, but the Other category is not considered a reportable segment based on evaluation of aggregation criteria. Other includes sales of third-party branded merchandise at VF Outlet™ stores, sales and licensing of Rock & Republic® branded apparel, and sales of products manufactured for third-parties. During 2020, the Company decided to discontinue the sale of third-party branded merchandise in all VF Outlet™ stores in conjunction with our decision to exit certain of those stores. Sales of Wrangler® and Lee® branded products at VF Outlet™ stores are not included in Other and are reported in the respective segments discussed above. Prior to 2020, the Other category also included transactions with VF for pre-Separation activities, none of which continued in 2020. These transactions included sales of VF-branded products at VF Outlet™ stores, as well as sales to VF for products manufactured in our plants, use of our transportation fleet and fulfillment of a transition services agreement related to VF’s sale of its Nautica® brand business in mid-2018.
Accounting policies utilized for internal management reporting at the individual segments are consistent with those included in Note 1 to the Company's financial statements, except as noted below.
After the Separation, as a standalone public company, the Company has allocated costs for certain centralized functions and programs to the Wrangler and Lee segments based on appropriate metrics such as usage or production of net revenues. These centralized functions and programs include, but are not limited to, information technology, human resources, supply chain, insurance and related benefit costs associated with those functions. Refer to Note 1 to the Company's financial statements for information on the allocation process applied to prepare the financial statements on a carve-out basis of accounting through the Separation date in 2019.
Corporate and other expenses, intangible asset impairment charges, and interest income and 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 and income before income taxes:
Year Ended December
(In thousands) 2020 2019 2018
Segment revenues:
Wrangler $ 1,349,414  $ 1,518,112  $ 1,602,206 
Lee 687,620  882,276  960,243 
Total reportable segment revenues 2,037,034  2,400,388  2,562,449 
Other revenues 60,805  148,451  201,549 
Total net revenues $ 2,097,839  $ 2,548,839  $ 2,763,998 
Segment profit:
Wrangler $ 244,892  $ 215,008  $ 265,981 
Lee 37,912  68,214  92,756 
Total reportable segment profit $ 282,804  $ 283,222  $ 358,737 
Non-cash impairment of intangible asset (1)
—  (32,636) — 
Corporate and other expenses (143,065) (90,117) (30,916)
Interest income from former parent, net —  3,762  7,738 
Interest expense (49,992) (35,787) (1,173)
Interest income 1,608  3,931  5,740 
(Loss) profit related to other revenues (18,419) 2,819  (48)
Income before income taxes $ 72,936  $ 135,194  $ 340,078 

(1) Represents an impairment charge recorded during the third quarter of 2019 related to the Rock & Republic® trademark. See Note 7 to the Company's financial statements.
For internal management purposes, segment assets 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 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.
The following table presents assets for the Company's reportable segments and a reconciliation to total asset balances:
(In thousands) December 2020 December 2019
Segment assets:
Wrangler $ 320,087  $ 378,041 
Lee 221,217  238,763 
Total reportable segment assets 541,304  616,804 
Other accounts receivable and inventories 30,825  69,756 
Total accounts receivable and inventories $ 572,129  $ 686,560 
Cash and equivalents 248,138  106,808 
Prepaid expenses and other current assets 81,413  84,235 
Property, plant and equipment, net 118,897  132,192 
Operating lease assets 60,443  86,582 
Goodwill and intangible assets 229,383  230,129 
Deferred income tax assets 85,221  79,551 
Other assets 150,192  111,099 
Total assets $ 1,545,816  $ 1,517,156 
The following table presents supplemental information of net revenues by geographic area based on the location of the customer:
Year Ended December
(In thousands) 2020 2019 2018
Revenues:
U.S. $ 1,642,152  $ 1,909,947  $ 2,014,657 
International 455,687  638,892  749,341 
Total $ 2,097,839  $ 2,548,839  $ 2,763,998 
One customer accounted for 38%, 34% and 32% of the Company's total net revenues in 2020, 2019 and 2018, respectively. Sales to this customer are included in both the Wrangler and Lee reportable segments.
The following table presents property, plant and equipment, net by geographic area based on physical location:
(In thousands) December 2020 December 2019
Property, plant and equipment, net:
U.S. $ 69,481  $ 74,084 
International 49,416  58,108 
Total $ 118,897  $ 132,192