North Face 2004 Annual Report Download - page 51

In thousands 2004 2003 2002
Coalition sales:
Jeanswear $2,661,946 $ 2,666,815 $ 2,788,486
Outdoor Apparel and Equipment 1,003,851 580,663 508,020
Intimate Apparel 903,552 830,225 839,786
Imagewear 769,552 727,223 751,893
Sportswear 604,879 248,967 –
Other 110,756 153,566 195,338
Consolidated net sales $6,054,536 $ 5,207,459 $ 5,083,523
Coalition profit:
Jeanswear $ 452,160 $ 415,572 $ 472,816
Outdoor Apparel and Equipment 154,256 95,720 71,447
Intimate Apparel 118,733 86,671 97,675
Imagewear 116,123 101,475 85,934
Sportswear 59,745 35,215 –
Other (10,727) (4,770) 1,288
Total coalition profit 890,290 729,883 729,160
Corporate and other expenses (109,234) (81,465) (103,504)
Interest, net (68,936) (49,912) (63,928)
Consolidated income from continuing operations
before income taxes $ 712,120 $ 598,506 $ 561,728
Coalition assets:
Jeanswear $1,075,739 $ 1,002,910 $ 1,052,447
Outdoor Apparel and Equipment 414,343 217,473 147,990
Intimate Apparel 345,292 332,754 331,528
Imagewear 288,537 304,927 310,882
Sportswear 135,394 205,450 –
Other 76,979 111,705 124,391
Total coalition assets 2,336,284 2,175,219 1,967,238
Cash and equivalents 485,507 514,785 496,367
Intangible assets and goodwill 1,671,114 1,019,606 473,355
Deferred income taxes 111,814 208,391 258,589
Corporate assets 399,559 327,551 307,602
Consolidated assets $5,004,278 $ 4,245,552 $ 3,503,151
97vf corporation 2004 Annual Report
From an organizational standpoint, VF’s businesses
are segregated by product categories and brands
within those product categories. For management
and internal reporting purposes, these business
groupings are designated as “coalitions.” These
coalitions, as described below, represent VF’s
reportable business segments:
•Jeanswear: Jeanswear and related products
•Outdoor Apparel and Equipment: Outerwear
and adventure apparel, footwear, daypacks and
bags, and technical equipment
•Intimate Apparel: Women’s intimate apparel
•Imagewear: Occupational apparel, licensed
sports apparel and distributor knitwear
•Sportswear: Fashion sportswear
•Other: Primarily VF Playwear, which was sold
in 2004 (Note C)
Business segment information presented for 2003
and 2002 has been restated to conform with this
organizational structure. In addition, segment profit
in 2003 and 2002 has been restated to include
restructuring charges in the appropriate coalition.
Previously, these expenses had not been included
in the operating results of the business units.
The Vans, Kipling and Napapijri businesses acquired
in 2004 are part of the Outdoor Apparel and
Equipment coalition. The operations of Nautica,
John Varvatos and Earl Jean, acquired in August 2003,
comprise the Sportswear coalition, except that the golf
apparel product line is part of the Imagewear coalition.
Management at each of the coalitions has direct
control over and responsibility for their sales, operating
income and assets, hereinafter termed Coalition Sales,
Coalition Profit and Coalition Assets, respectively.
VF management evaluates operating performance
and makes decisions based on Coalition Sales and
Coalition Profit. Accounting policies used for internal
management reporting at the individual coalitions are
consistent with those stated in Note A, except as
stated below and except that inventories are valued
on a first-in, first-out basis. Common costs such
as information processing, retirement benefits and
insurance are allocated to the coalitions based on
appropriate metrics such as usage or employment.
Corporate costs other than costs directly related
to the coalitions and net interest expense are not
controlled by coalition management and are therefore
excluded from the Coalition Profit performance
measure used for internal management reporting.
These items are separately presented in the reconcili-
ation of Coalition Profit to Consolidated Income
from Continuing Operations before Income Taxes.
Corporate and Other Expenses (presented separately
in the following table) consists of corporate
headquarters expenses that are not allocated to the
coalitions (including compensation and benefits
of corporate management and staff, legal and
professional fees, and administrative and general)
and other expenses related to but not allocated
to the coalitions for internal management reporting
(including development costs for management
information systems, costs of maintaining and
enforcing VF’s trademarks, adjustments for the
last-in, first-out method of inventory valuation
and consolidating adjustments).
Coalition Assets, for internal management purposes,
are those used directly in the operations of each busi-
ness unit, such as accounts receivable, inventories and
property. Corporate assets include investments held
in trusts for deferred compensation and retirement
benefit plans and information systems assets.
tax rate. At the end of 2004, VF had approximately
$375 million of accumulated foreign earnings subject
to repatriation. If VF were to decide to remit some or
all of these earnings during 2005, it would result in an
additional one-time income tax expense ranging up to
$16 million. Management is evaluating its unremitted
foreign earnings and the provisions of the Act.
Financial information for VF’s reportable segments is as follows:
(table continued on next page)
note r – business segment information