Quarterly report pursuant to Section 13 or 15(d)

REPORTABLE SEGMENT INFORMATION

v3.19.2
REPORTABLE SEGMENT INFORMATION
 6 Months Ended
Jun. 29, 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, we report an "Other" category for purposes of reconciliation of revenues and profit, but the Other category is not
considered a reportable segment. Other includes sales (i) of VF-branded products and third-party branded merchandise at VF Outlet™ stores, (ii) of Rock and Republic® branded apparel, (iii) to VF for products manufactured in our plants and use of our transportation fleet and, (iv) from fulfillment of a transition services agreement associated with 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 of the combined financial statements of our 2018 Form 10, except as noted below.

The Company's statements of income include costs for certain centralized functions and programs provided and administered by VF that are charged directly to VF's businesses, including the Company. These centralized functions and programs include, but are not limited to, information technology, human resources, accounting shared services, supply chain, insurance, and the related benefits. These historical allocations have been included in the measurement of segment profit below.

In addition, for purposes of preparing these financial statements on a "carve-out" basis, we have allocated a portion of VF's total corporate expenses to the Company. These expense allocations include 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 include the cost of operating VF's corporate headquarters located in Greensboro, North Carolina. These additional allocations are reported as corporate and other expenses in the table below.

Corporate and other expenses, 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.

Financial information for the Company's reportable segments is as follows:
 
 
Three Months Ended June
 
 
Six Months Ended June
 
 
 
 
 
 
 
 
 
 
 
 
 





 
 
 
 
 
 
(in thousands)

2019
 
 
2018
 
 
2019
 
 
2018
Segment revenues:
 
 
 
 
 
 
 
 
 
 
 
Wrangler
 
$
363,992

 
 
$
397,745

 
 
$
733,927

 
 
$
762,728

Lee
 
206,908

 
 
217,773

 
 
448,439

 
 
479,734

Other
 
38,846

 
 
48,338

 
 
75,724

 
 
91,057

Total segment revenues
 
$
609,746

 
 
$
663,856

 
 
$
1,258,090

 
 
$
1,333,519

Segment profit:
 
 
 
 
 
 
 
 
 
 
 
Wrangler
 
$
56,980

 
 
$
67,670

 
 
$
80,645

 
 
$
130,616

Lee
 
13,747

 
 
18,065

 
 
31,380

 
 
54,054

Other
 
1,805

 
 
1,363

 
 
(1,280
)
 
 
(387
)
Total segment profit
 
$
72,532

 
 
$
87,098

 
 
$
110,745

 
 
$
184,283

Corporate and other expenses
 
(20,382
)
 
 
(12,605
)
 
 
(34,371
)
 
 
(18,579
)
Interest income from former parent, net
 
1,423

 
 
1,660

 
 
3,762

 
 
3,311

Interest expense
 
(7,638
)
 
 
(416
)
 
 
(7,736
)
 
 
(781
)
Interest income
 
1,408

 
 
1,386

 
 
2,831

 
 
2,668

Income before income taxes
 
$
47,343

 
 
$
77,123

 
 
$
75,231

 
 
$
170,902