Annual report pursuant to Section 13 and 15(d)


12 Months Ended
Jan. 01, 2022
Segment Reporting [Abstract]  
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 primarily includes other revenue sources, including sales and licensing of Rock & Republic® apparel. Other also included sales of third-party branded merchandise at VF Outlet stores through the first quarter of 2021. During 2020, the Company discontinued the sale of third-party branded merchandise in all VF Outlet stores, exited certain VF Outlet stores and converted all remaining locations to Lee Wrangler OutletTM and Lee Wrangler Clearance CenterTM retail stores. Prior to 2020, the Other category also included transactions with VF for pre-Separation activities, which 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) 2021 2020 2019
Segment revenues:
Wrangler $ 1,575,231  $ 1,349,414  $ 1,518,112 
Lee 887,052  687,620  882,276 
Total reportable segment revenues 2,462,283  2,037,034  2,400,388 
Other revenues 13,633  60,805  148,451 
Total net revenues $ 2,475,916  $ 2,097,839  $ 2,548,839 
Segment profit:
Wrangler $ 294,153  $ 244,892  $ 215,008 
Lee 128,305  37,912  68,214 
Total reportable segment profit $ 422,458  $ 282,804  $ 283,222 
Non-cash impairment of intangible asset (1)
—  —  (32,636)
Corporate and other expenses (140,960) (143,065) (90,117)
Interest income from former parent, net —  —  3,762 
Interest expense (38,900) (49,992) (35,787)
Interest income 1,480  1,608  3,931 
Profit (loss) related to other revenues 522  (18,419) 2,819 
Income before income taxes $ 244,600  $ 72,936  $ 135,194 
(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 other brands and corporate activities, as well as the VF Outlet business in 2020 and 2019, and are provided for purposes of reconciliation as the "Other" category is not considered a reportable segment. Total expenditures for 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 2021 December 2020
Segment assets:
Wrangler $ 394,709  $ 320,087 
Lee 247,573  221,217 
Total reportable segment assets 642,282  541,304 
Other accounts receivable and inventories 10,475  30,825 
Total accounts receivable and inventories $ 652,757  $ 572,129 
Cash and cash equivalents 185,322  248,138 
Prepaid expenses and other current assets 72,579  81,413 
Property, plant and equipment, net 105,155  118,897 
Operating lease assets 54,950  60,443 
Goodwill and intangible assets 226,851  229,383 
Deferred income tax assets 74,876  85,221 
Other assets 160,534  150,192 
Total assets $ 1,533,024  $ 1,545,816 
The following table presents supplemental information of net revenues by geographic area based on the location of the customer:
Year Ended December
(In thousands) 2021 2020 2019
U.S. $ 1,868,909  $ 1,642,152  $ 1,909,947 
International 607,007  455,687  638,892 
Total $ 2,475,916  $ 2,097,839  $ 2,548,839 
One customer accounted for 34%, 38% and 34% of the Company's total net revenues in 2021, 2020 and 2019, respectively. Sales to this customer are included in both the Wrangler® and Lee® reportable segments.
The following table presents "property, plant and equipment, net" recorded in the Company's balance sheets by geographic area based on physical location:
(In thousands) December 2021 December 2020
Property, plant and equipment, net:
U.S. $ 63,951  $ 69,481 
International 41,204  49,416 
Total $ 105,155  $ 118,897