Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 28, 2019 | Oct. 25, 2019 | |
Cover page. | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 28, 2019 | |
Entity Transition Report | false | |
Entity File Number | 001-38854 | |
Entity Registrant Name | KONTOOR BRANDS, INC. | |
Entity Incorporation, State or Country Code | NC | |
Entity Tax Identification Number | 83-2680248 | |
Entity Address, Address Line One | 400 N. Elm Street | |
Entity Address, City or Town | Greensboro | |
Entity Address, State or Province | NC | |
Entity Address, Postal Zip Code | 27401 | |
City Area Code | 336 | |
Local Phone Number | 332-3400 | |
Title of 12(b) Security | Common Stock, No Par Value | |
Trading Symbol | KTB | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 56,944,576 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q3 | |
Entity Central Index Key | 0001760965 | |
Current Fiscal Year End Date | --12-28 |
Combined Balance Sheets (Unaudi
Combined Balance Sheets (Unaudited) - USD ($) $ in Thousands | Sep. 28, 2019 | Dec. 29, 2018 | Sep. 29, 2018 |
Current assets | |||
Cash and equivalents | $ 40,804 | $ 96,776 | $ 93,135 |
Accounts receivable, net of allowance for doubtful accounts of $11,385, $10,549 and $10,314 at September 2019, December 2018 and September 2018, respectively | 302,582 | 252,966 | 318,071 |
Due from former parent, current | 0 | 547,690 | 267,605 |
Notes receivable from former parent | 0 | 517,940 | 546,740 |
Inventories | 545,426 | 473,812 | 540,936 |
Other current assets | 73,162 | 52,014 | 48,906 |
Total current assets | 961,974 | 1,941,198 | 1,815,393 |
Due from former parent, noncurrent | 0 | 611 | 1,100 |
Property, plant and equipment, net | 126,963 | 138,449 | 141,346 |
Operating lease assets | 96,590 | 0 | 0 |
Intangible assets, net | 17,530 | 53,059 | 54,186 |
Goodwill | 212,834 | 214,516 | 214,587 |
Other assets | 169,874 | 110,632 | 116,698 |
TOTAL ASSETS | 1,585,765 | 2,458,465 | 2,343,310 |
Current liabilities | |||
Short-term borrowings | 6,028 | 3,215 | 5,617 |
Current portion of long-term debt | 7,500 | 0 | 0 |
Accounts payable | 149,685 | 134,129 | 163,375 |
Due to former parent, current | 0 | 16,140 | 69,542 |
Notes payable to former parent | 0 | 269,112 | 269,112 |
Accrued liabilities | 190,353 | 194,228 | 178,109 |
Operating lease liabilities, current | 35,992 | 0 | 0 |
Total current liabilities | 389,558 | 616,824 | 685,755 |
Operating lease liabilities, noncurrent | 64,328 | 0 | 0 |
Other liabilities | 95,701 | 118,189 | 112,393 |
Long-term debt, due beyond one year | 980,607 | 0 | 0 |
Commitments and contingencies | |||
Total liabilities | 1,530,194 | 735,013 | 798,148 |
Equity | |||
Common Stock, no par value | 0 | 0 | 0 |
Additional paid-in capital | 142,340 | 0 | 0 |
Former parent investment | 0 | 1,868,634 | 1,689,231 |
Retained earnings | 2,066 | 0 | 0 |
Accumulated other comprehensive loss | (88,835) | (145,182) | (144,069) |
Total equity | 55,571 | 1,723,452 | 1,545,162 |
TOTAL LIABILITIES AND EQUITY | $ 1,585,765 | $ 2,458,465 | $ 2,343,310 |
Combined Balance Sheets (Unau_2
Combined Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands | Sep. 28, 2019 | Dec. 29, 2018 | Sep. 29, 2018 |
Statement of Financial Position [Abstract] | |||
Accounts receivable, allowance for doubtful accounts | $ 11,385 | $ 10,549 | $ 10,314 |
Combined Statements of Income (
Combined Statements of Income (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 28, 2019 | Sep. 29, 2018 | Sep. 28, 2019 | Sep. 29, 2018 | |
Income Statement [Abstract] | ||||
Net revenues | $ 638,138 | $ 704,246 | $ 1,896,228 | $ 2,037,765 |
Costs and operating expenses | ||||
Cost of goods sold | 382,181 | 424,053 | 1,157,383 | 1,203,259 |
Selling, general and administrative expenses | 192,293 | 184,909 | 596,466 | 571,080 |
Non-cash impairment of intangible asset | 32,636 | 0 | 32,636 | 0 |
Total costs and operating expenses | 607,110 | 608,962 | 1,786,485 | 1,774,339 |
Operating income | 31,028 | 95,284 | 109,743 | 263,426 |
Interest income from former parent, net | 0 | 2,104 | 3,762 | 5,415 |
Interest expense | (14,140) | (200) | (21,876) | (981) |
Interest income | 712 | 1,508 | 3,543 | 4,176 |
Other expense, net | (1,456) | (2,084) | (3,797) | (4,522) |
Income before income taxes | 16,144 | 96,612 | 91,375 | 267,514 |
Income taxes | 1,642 | 25,594 | 23,474 | 56,342 |
Net income | $ 14,502 | $ 71,018 | $ 67,901 | $ 211,172 |
Earnings per common share | ||||
Basic (in USD per share) | $ 0.26 | $ 1.25 | $ 1.20 | $ 3.73 |
Diluted (in USD per share) | $ 0.25 | $ 1.25 | $ 1.19 | $ 3.73 |
Weighted average shares outstanding | ||||
Basic (in shares) | 56,694 | 56,648 | 56,663 | 56,648 |
Diluted (in shares) | 57,401 | 56,648 | 56,989 | 56,648 |
Combined Statements of Comprehe
Combined Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 28, 2019 | Sep. 29, 2018 | Sep. 28, 2019 | Sep. 29, 2018 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 14,502 | $ 71,018 | $ 67,901 | $ 211,172 |
Foreign currency translation | ||||
Losses arising during the period | (11,358) | (2,770) | (5,914) | (21,587) |
Defined benefit pension plans | ||||
Losses arising during the period | 297 | 0 | 283 | 0 |
Derivative financial instruments | ||||
Losses arising during the period | (468) | 0 | (2,526) | 0 |
Reclassification to net income for gains realized | (3,618) | 0 | (3,980) | 0 |
Total other comprehensive income (loss), net of related taxes | (15,147) | (2,770) | (12,137) | (21,587) |
Comprehensive income (loss) | $ (645) | $ 68,248 | $ 55,764 | $ 189,585 |
Combined Statements of Cash Flo
Combined Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 28, 2019 | Sep. 29, 2018 | |
OPERATING ACTIVITIES | ||
Net income | $ 67,901 | $ 211,172 |
Adjustments to reconcile net income to cash provided by operating activities: | ||
Depreciation and amortization | 23,020 | 23,669 |
Stock-based compensation | 17,798 | 14,012 |
Provision for doubtful accounts | 5,386 | 4,205 |
Non-cash impairment of intangible asset | 32,636 | 0 |
Other | (8,904) | 3,904 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (52,525) | (82,575) |
Inventories | (79,534) | (114,012) |
Due from former parent | 548,301 | (47,090) |
Accounts payable | 34,831 | (7,480) |
Income taxes | 1,715 | (3,334) |
Accrued liabilities | 14,278 | 35,307 |
Due to former parent | (16,065) | 31,525 |
Other assets and liabilities | (10,457) | (24,134) |
Cash provided by operating activities | 578,381 | 45,169 |
INVESTING ACTIVITIES | ||
Capital expenditures | (11,750) | (17,627) |
Collection of notes receivable from former parent | 517,940 | 1,000 |
Other, net | 729 | 3,647 |
Cash provided (used) by investing activities | 506,919 | (12,980) |
FINANCING ACTIVITIES | ||
Proceeds from issuance of long-term debt | 1,050,000 | 0 |
Payment of debt issuance costs | (12,993) | 0 |
Principal payments of long-term debt | (50,000) | 0 |
Repayment of notes payable to former parent | (269,112) | 0 |
Net transfers to former parent | (1,814,682) | (19,373) |
Dividends paid | (31,763) | 0 |
Proceeds from issuance of Common Stock, net of shares withheld for taxes | (514) | 0 |
Other, net | (10,868) | 1,733 |
Cash used by financing activities | (1,139,932) | (17,640) |
Effect of foreign currency rate changes on cash and cash equivalents | (1,340) | (2,225) |
Net change in cash and cash equivalents | (55,972) | 12,324 |
Cash, cash equivalents and restricted cash – beginning of year | 96,776 | 80,811 |
Cash, cash equivalents and restricted cash – end of period | $ 40,804 | $ 93,135 |
Combined Statements of Equity (
Combined Statements of Equity (Unaudited) - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Former Parent Investment | Retained Earnings | Accumulated Other Comprehensive Loss |
Balance, beginning (in shares) at Dec. 30, 2017 | 0 | |||||
Balance, beginning at Dec. 30, 2017 | $ 1,357,893 | $ 0 | $ 1,480,375 | $ 0 | $ (122,482) | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 79,696 | 79,696 | ||||
Foreign currency translation | 9,701 | 9,701 | ||||
Net transfers to former parent | 113,445 | 113,445 | ||||
Balance, ending at Mar. 31, 2018 | 1,563,782 | 0 | 1,676,563 | 0 | (112,781) | |
Balance, ending (in shares) at Mar. 31, 2018 | 0 | |||||
Balance, beginning (in shares) at Dec. 30, 2017 | 0 | |||||
Balance, beginning at Dec. 30, 2017 | 1,357,893 | 0 | 1,480,375 | 0 | (122,482) | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 211,172 | |||||
Balance, ending at Sep. 29, 2018 | 1,545,162 | 0 | 1,689,231 | 0 | (144,069) | |
Balance, ending (in shares) at Sep. 29, 2018 | 0 | |||||
Balance, beginning (in shares) at Mar. 31, 2018 | 0 | |||||
Balance, beginning at Mar. 31, 2018 | 1,563,782 | 0 | 1,676,563 | 0 | (112,781) | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 60,458 | 60,458 | ||||
Foreign currency translation | (28,518) | (28,518) | ||||
Net transfers to former parent | 171,965 | 171,965 | ||||
Balance, ending at Jun. 30, 2018 | 1,767,687 | 0 | 1,908,986 | 0 | (141,299) | |
Balance, ending (in shares) at Jun. 30, 2018 | 0 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 71,018 | |||||
Foreign currency translation | (2,770) | (2,770) | ||||
Net transfers to former parent | (290,773) | (290,773) | ||||
Balance, ending at Sep. 29, 2018 | 1,545,162 | 0 | 1,689,231 | 0 | (144,069) | |
Balance, ending (in shares) at Sep. 29, 2018 | 0 | |||||
Balance, beginning (in shares) at Dec. 29, 2018 | 0 | |||||
Balance, beginning at Dec. 29, 2018 | 1,723,452 | 0 | 1,868,634 | 0 | (145,182) | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 15,413 | 15,413 | 0 | |||
Foreign currency translation | 758 | 758 | ||||
Net transfers to former parent | (157,928) | (157,928) | ||||
Balance, ending at Mar. 30, 2019 | 1,578,982 | 0 | 1,723,406 | 0 | (144,424) | |
Balance, ending (in shares) at Mar. 30, 2019 | 0 | |||||
Balance, beginning (in shares) at Dec. 29, 2018 | 0 | |||||
Balance, beginning at Dec. 29, 2018 | 1,723,452 | 0 | 1,868,634 | 0 | (145,182) | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 67,901 | |||||
Net transfers to former parent | 68,484 | |||||
Balance, ending at Sep. 28, 2019 | 55,571 | 142,340 | 0 | 2,066 | (88,835) | |
Balance, ending (in shares) at Sep. 28, 2019 | 56,727 | |||||
Balance, beginning (in shares) at Mar. 30, 2019 | 0 | |||||
Balance, beginning at Mar. 30, 2019 | 1,578,982 | 0 | 1,723,406 | 0 | (144,424) | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 37,986 | 16,751 | 21,235 | |||
Stock-based compensation, net | 1,879 | 1,879 | ||||
Foreign currency translation | 4,686 | 4,686 | ||||
Defined benefit pension plans | (14) | (14) | ||||
Derivative financial instruments | (2,420) | (2,420) | ||||
Net transfers to former parent | (1,538,931) | (1,607,415) | 68,484 | |||
Transfer of former parent investment to additional paid-in capital | 132,742 | (132,742) | ||||
Issuance of common stock (in shares) | 56,648 | |||||
Balance, ending at Jun. 29, 2019 | 82,168 | 134,621 | 0 | 21,235 | (73,688) | |
Balance, ending (in shares) at Jun. 29, 2019 | 56,648 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 14,502 | 0 | 14,502 | |||
Stock-based compensation, net (in shares) | 79 | |||||
Stock-based compensation, net | 5,811 | 7,719 | (1,908) | |||
Foreign currency translation | (11,358) | (11,358) | ||||
Defined benefit pension plans | 297 | 297 | ||||
Derivative financial instruments | (4,086) | (4,086) | ||||
Dividends on Common Stock ($0.56 per share) | (31,763) | (31,763) | ||||
Balance, ending at Sep. 28, 2019 | $ 55,571 | $ 142,340 | $ 0 | $ 2,066 | $ (88,835) | |
Balance, ending (in shares) at Sep. 28, 2019 | 56,727 |
Combined Statements of Equity_2
Combined Statements of Equity (Unaudited) Parenthetical | 3 Months Ended |
Sep. 28, 2019$ / shares | |
Statement of Stockholders' Equity [Abstract] | |
Dividends (in USD per share) | $ 0.56 |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 9 Months Ended |
Sep. 28, 2019 | |
Accounting Policies [Abstract] | |
BASIS OF PRESENTATION | BASIS OF PRESENTATION Description of Business Kontoor Brands, Inc. ("Kontoor," the "Company," "we," "us" or "our") is a global denim and casual apparel company headquartered in the United States ("U.S."). The Company designs, produces, procures, markets and distributes apparel primarily under the brand names Wrangler ® and Lee ® . The Company's products are sold in the U.S. through mass merchants, specialty stores, mid-tier and traditional department stores, company-operated stores and online. The Company's products are also sold internationally, primarily in Europe and Asia, through department, specialty, company-operated, concession retail and independently operated partnership stores and online. VF Outlet™ stores carry Wrangler ® and Lee ® branded products, as well as merchandise that is specifically purchased for sale in these stores. Spin-Off Transaction On May 22, 2019, VF Corporation ("VF" or "former parent") completed the spin-off of its Jeanswear business, which included the Wrangler ® , Lee ® and Rock & Republic ® brands, as well as the VF Outlet TM business. The spin-off transaction (the "Separation") was effected through a pro-rata distribution to VF shareholders of one share of Kontoor common stock for every seven shares of VF common stock held on the record date of May 10, 2019. Kontoor began to trade as a standalone public company (NYSE: KTB) on May 23, 2019. The Company incurred $1.05 billion of indebtedness under a newly structured third-party debt issuance, the proceeds of which were used primarily to finance a cash transfer to VF in connection with the Separation. The Company entered into several agreements with VF that govern the relationship of the parties following the Separation, including the Separation and Distribution Agreement, the Tax Matters Agreement, the Transition Services Agreement, the Kontoor Intellectual Property License Agreement, the VF Intellectual Property License Agreement and the Employee Matters Agreement. Under the terms of the Transition Services Agreement, the Company and VF agreed to provide each other certain transitional services including information technology, information management, human resources, employee benefits administration, supply chain, facilities, and other limited finance and accounting-related services for periods up to 18 months, which may be extended subject to the mutual agreement of both parties. The Company has also entered into certain commercial arrangements with VF. Revenues, expenses and operating expense reimbursements under these agreements are recorded within the reportable segments or within the "corporate and other expenses" line item in the reconciliation of segment profit in Note 13 to the Company's financial statements, based on the nature of the arrangements. Fiscal Year The Company operates and reports using a 52/53 week fiscal year ending on the Saturday closest to December 31 of each year. Accordingly, this Form 10-Q presents the third quarter of the Company's fiscal year ending December 28, 2019 ("fiscal 2019"). For presentation purposes herein, all references to periods ended September 2019 , December 2018 and September 2018 correspond to the fiscal periods ended September 28, 2019 , December 29, 2018 and September 29, 2018 , respectively. Basis of Presentation - Unaudited Consolidated and Combined Financial Statements The Company’s financial statements for periods through the Separation date of May 22, 2019 were combined financial statements prepared on a "carve-out" basis as discussed below. The Company’s financial statements for the period from May 23, 2019 through September 28, 2019 were consolidated financial statements based on the reported results of Kontoor Brands, Inc. as a standalone company. The Company’s unaudited consolidated and combined financial statements for all periods presented are referred to throughout this document as “financial statements.” The accompanying unaudited interim financial statements have been prepared in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X and do not include all of the information and notes required by generally accepted accounting principles in the United States of America ("GAAP") for complete financial statements. In the opinion of management, the accompanying financial statements contain all normal and recurring adjustments necessary to fairly state the financial position, results of operations and cash flows of the Company for the interim periods presented. The financial statements may not be indicative of the Company's future performance and do not necessarily reflect what the financial position, results of operations and cash flows would have been had it operated as a standalone company for all periods presented. Additionally, operating results for the three and nine months ended September 2019 are not necessarily indicative of results that may be expected for any other interim period or for fiscal 2019 . The unaudited financial statements should be read in conjunction with the audited combined financial statements for the fiscal year ended December 29, 2018 included in the Company's Registration Statement on Form 10, as amended and filed with the Securities and Exchange Commission ("SEC") on April 30, 2019 ("2018 Form 10"). Basis of Presentation - Prior to the Separation Through the Separation date, the Company's combined financial statements were prepared on a carve-out basis. These accompanying unaudited combined financial statements reflected the historical financial position, results of operations and cash flows of the Company for the periods presented, through the Separation date, as historically managed within VF. The unaudited combined financial statements were derived from the consolidated financial statements and accounting records of VF. The combined statements of income included costs for certain centralized functions and programs provided and administered by VF that were charged directly to the Company. These centralized functions and programs included, but were not limited to, information technology, human resources, accounting shared services, supply chain and insurance. In addition, for purposes of preparing these combined financial statements on a carve-out basis under U.S. GAAP, 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, such as stock-based compensation and pension. Allocations also included the cost of operating VF's corporate headquarters located in Greensboro, North Carolina. Costs were allocated to the Company based on direct usage when identifiable or, when not directly identifiable, on the basis of proportional revenues, cost of goods sold or square footage, as applicable. Management considered the basis on which the expenses were allocated to reasonably reflect the utilization of services provided to, or benefit received by, the Company during the periods presented. However, the allocations may not reflect the expenses that would have been incurred if the Company had been a standalone company for the periods presented. Actual costs that may have been incurred if the Company had been a standalone company would depend on a number of factors, including the organizational structure, whether functions were outsourced or performed by employees, and strategic decisions made in areas such as information technology and infrastructure. The combined financial statements included certain assets and liabilities that were historically held at the VF corporate level but were specifically identifiable or otherwise attributable to the Company. VF's third-party long-term debt and the related interest expense were not allocated to the Company for any of the periods presented as the Company was not the legal obligor of such debt. All intracompany transactions were eliminated. All transactions between the Company and VF were included in these financial statements. For those transactions between the Company and VF that were historically settled in cash, the Company reflected such balances in the balance sheets as "due from former parent" or "due to former parent." The aggregate net effect of transactions between the Company and VF that were not historically settled in cash were reflected in the balance sheets within "former parent investment" and in the statements of cash flows within "net transfers to former parent." |
RECENTLY ADOPTED AND ISSUED ACC
RECENTLY ADOPTED AND ISSUED ACCOUNTING STANDARDS | 9 Months Ended |
Sep. 28, 2019 | |
Accounting Changes and Error Corrections [Abstract] | |
RECENTLY ADOPTED AND ISSUED ACCOUNTING STANDARDS | RECENTLY ADOPTED AND ISSUED ACCOUNTING STANDARDS Recently Adopted Accounting Standards In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update (“ASU”) 2016-02, “Leases (Topic 842),” an update that requires entities to record most leased assets and liabilities on the balance sheet, and also retains a dual model approach for assessing lease classification and recognizing expense. The FASB subsequently issued updates to provide clarification on specific topics, including adoption guidance, practical expedients and interim transition disclosure requirements. This guidance was adopted by the Company during the first quarter of fiscal 2019 utilizing the optional transition method, which resulted in the recognition of operating lease right-of-use assets, operating lease liabilities and a $2.7 million cumulative effect adjustment to the fiscal 2019 beginning retained earnings in the Company's balance sheet. The adoption of these standards did not have a significant impact on the Company's statement of income and statement of cash flows. Refer to Note 3 to the Company's financial statements for additional information. In August 2017, the FASB issued ASU 2017-12, "Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities," an update that amends and simplifies certain aspects of hedge accounting rules to better portray the economic results of risk management activities in the financial statements. The FASB has subsequently issued updates to the standard to provide additional guidance on specific topics. This guidance was adopted by the Company during the first quarter of fiscal 2019 and did not have a significant impact on the Company's financial statements. In February 2018, the FASB issued ASU 2018-02, " Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, " an update that addresses the effect of the change in the U.S. federal corporate income tax rate due to the enactment of the Tax Cuts and Jobs Act (the "Tax Act") on items within accumulated other comprehensive income (loss). This guidance was adopted by the Company during the first quarter of fiscal 2019 and did not have a significant impact on the Company's financial statements. In July 2018, the FASB issued ASU 2018-09, "Codification Improvements," an update that provides technical corrections, clarifications and other improvements across a variety of accounting topics. The transition and effective date guidance is based on the facts and circumstances of each update, many of which became effective for the Company during the first quarter of fiscal 2019. The adoption of this guidance did not have a significant impact on the Company's financial statements. Recently Issued Accounting Standards In June 2016, the FASB issued ASU 2016-13, "Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments," which amends the impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses on certain types of financial instruments, including trade receivables. This guidance will be effective for the Company beginning in the first quarter of fiscal 2020. The Company is currently evaluating the impact that adoption of this guidance will have on its financial statements, which is not expected to be significant. In August 2018, the FASB issued ASU 2018-13, "Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement," an update that modifies the disclosure requirements for fair value measurements by removing, modifying or adding certain disclosures. This guidance will be effective for the Company beginning in the first quarter of fiscal 2020. The Company is currently evaluating the impact that adoption of this guidance will have on its financial statement disclosures, which is not expected to be significant. In August 2018, the FASB issued ASU 2018-14, "Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans," an update that modifies the disclosure requirements for employers who sponsor defined benefit pension or other postretirement plans. This guidance will be effective for the Company beginning in the first quarter of fiscal 2020. The Company is currently evaluating the impact that adoption of this guidance will have on its financial statement disclosures, which is not expected to be significant. In August 2018, the FASB issued ASU 2018-15, "Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract," |
LEASES
LEASES | 9 Months Ended |
Sep. 28, 2019 | |
Leases [Abstract] | |
LEASES | LEASES The Company enters into operating leases for offices, operational facilities, retail locations, vehicles and other assets that expire at various dates through 2031. Leases for real estate typically have initial terms ranging from 2 to 15 years, generally with renewal options. Leases for equipment typically have initial terms ranging from 3 to 7 years. Most leases have fixed rentals, with many of the real estate leases requiring additional payments for real estate taxes and occupancy-related costs. These lease terms may include optional renewals, terminations or purchases, which are considered in the Company’s assessments when such options are reasonably certain to be exercised. For retail real estate leases, the Company does not typically include renewal options in the underlying lease term. For non-retail real estate leases, when renewal options are reasonably certain to be exercised, the Company includes the renewal options in the underlying lease term, up to a maximum of ten years. Renewals for all other leases are determined on a lease-by-lease basis. Upon adoption of ASU 2016-02, the Company elected the package of practical expedients permitted under the new lease standard, which allowed the Company to carry forward its historical assessment of whether a contract contained a lease, how the lease was classified, and if initial direct costs could be capitalized. The Company elected to combine non-lease components with the related lease components for real estate, vehicles and other significant asset arrangements. The Company elected to aggregate the combined items as a single lease component for accounting purposes. Lastly, for leases with a lease term of 12 months or less for all classes of underlying assets, the Company elected not to recognize a right-of-use asset and related lease liability. Certain of the Company’s leases contain fixed, indexed, or market-based escalation clauses which impact future payments. Certain arrangements contain variable payment provisions, such as payments based on sales volumes or amounts and mileage, or excess mileage. The Company’s leases typically contain customary covenants and restrictions. The Company determines whether a contract is a lease at inception. This typically requires more judgment in storage and service arrangements where the Company must determine whether its rights to specific physical or production capacity may represent substantially all of the available capacity. The Company measures right-of-use assets and related lease liabilities based on the present value of remaining lease payments, including in-substance fixed payments, the current payment amount when payments depend on an index or rate (e.g., inflation adjustments, market renewals), and the amount the Company believes is probable to be paid to the lessor under residual value guarantees, when applicable. Lease contracts may include fixed payments for non-lease components, such as maintenance, which are included in the measurement of lease liabilities for certain asset classes based on the Company’s election to combine lease and non-lease components. As applicable borrowing rates are not typically implied within our lease arrangements, the Company discounts lease payments based on its estimated incremental borrowing rate at lease commencement, or modification, which is based on the Company’s estimated credit rating, the lease term at commencement and the contract currency of the lease arrangement. The following table presents the lease-related assets and liabilities recorded in the Company's balance sheet: (in thousands) September 2019 Assets Operating lease assets, noncurrent $ 96,590 Total lease assets $ 96,590 Liabilities Operating lease liabilities, current $ 35,992 Operating lease liabilities, noncurrent 64,328 Total lease liabilities $ 100,320 Weighted-average remaining lease term (in years) Operating leases 4.14 Weighted-average discount rate Operating leases 2.73 % Lease costs The following table presents certain information related to the lease costs for operating leases: (in thousands) Three Months Ended September 2019 Nine Months Ended September 2019 Operating lease cost $ 9,924 $ 28,880 Short-term lease cost (excluding leases of one month or less) 877 2,383 Variable lease cost 873 4,424 Total lease costs $ 11,674 $ 35,687 Rent expense associated with operating leases for the three and nine months ended September 2018 totaled approximately $10.6 million and $31.8 million , respectively. Other information The following table presents supplemental cash flow and non-cash information related to leases: (in thousands) Nine Months Ended September 2019 Cash paid for amounts included in the measurement of lease liabilities - operating cash flows $ 34,486 Right-of-use assets obtained in exchange for new operating leases - non-cash activity $ 38,939 The following table presents maturities of operating lease liabilities as of September 2019 : (in thousands) Lease Obligations 2019 (excluding the nine months ended September 2019) $ 11,185 2020 36,656 2021 23,796 2022 12,980 2023 9,639 Thereafter 13,013 Total future minimum lease payments 107,269 Less: amounts related to imputed interest (6,949 ) Present value of future minimum lease payments 100,320 Less: operating lease liabilities, current (35,992 ) Operating lease liabilities, noncurrent $ 64,328 As of September 2019 , the Company has entered into approximately $1.1 million of operating lease arrangements, on an undiscounted basis, that have not yet commenced. The Company continuously monitors and may negotiate contract amendments that include extensions or modifications to existing leases. The following table presents the future minimum lease payments during the noncancelable lease terms as of December 2018 , prior to the adoption of ASU 2016-02: (in thousands) December 2018 2019 $ 33,562 2020 29,246 2021 17,810 2022 7,932 2023 4,353 Thereafter 4,582 Total future minimum lease payments $ 97,485 |
REVENUES
REVENUES | 9 Months Ended |
Sep. 28, 2019 | |
Revenue from Contract with Customer [Abstract] | |
REVENUES | REVENUES The Company recognizes revenue when performance obligations under the terms of a contract with the customer are satisfied based on the transfer of control of promised goods or services. The transfer of control typically occurs at a point in time based on consideration of when the customer has (i) an obligation to pay for, (ii) physical possession of, (iii) legal title to, (iv) risks and rewards of ownership of and (v) accepted the goods or services. The timing of revenue recognition within the wholesale channels occurs either on shipment or delivery of goods based on contractual terms with the customer. The timing of revenue recognition in the direct-to-consumer channels generally occurs at the point of sale within Company-operated or concession retail stores and either on shipment or delivery of goods for e-commerce transactions based on contractual terms with the customer. For finished products shipped directly to customers from our suppliers, the Company’s promise to the customer is a performance obligation to provide the specified goods and the Company has discretion in establishing pricing; therefore, the Company is the principal in the arrangement and revenue is recognized on a gross basis at the transaction price. The duration of contractual arrangements with our customers in the wholesale and direct-to-consumer channels is typically less than one year. Payment terms with customers are generally between 30 and 60 days. The Company does not adjust the promised amount of consideration for the effects of a significant financing component as it is expected, at contract inception, that the period between the transfer of the promised good or service to the customer and the customer payment for the good or service will be one year or less. The amount of revenue recognized in the wholesale and direct-to-consumer channels reflects the expected consideration to be received for providing the goods or services to the customer, which includes estimates for variable consideration. Variable consideration includes allowances for trade terms, sales incentive programs, discounts, markdowns, chargebacks and product returns. Estimates of variable consideration are determined at contract inception and reassessed at each reporting date, at a minimum, to reflect any changes in facts and circumstances. The Company utilizes the expected value method in determining its estimates of variable consideration, based on evaluations of specific product and customer circumstances, historical and anticipated trends and current economic conditions. Revenue from the sale of gift cards is deferred and recorded as a contract liability until the gift card is redeemed by the customer, factoring in breakage as appropriate, which considers whether the Company has a legal obligation to remit the value of the unredeemed gift card to any jurisdiction under unclaimed property regulations. The VF Outlet™ stores maintain customer loyalty programs where customers earn rewards from qualifying purchases, which are redeemable for discounts on future purchases or other rewards. For its customer loyalty programs, the Company estimates the standalone selling price of the loyalty rewards and allocates a portion of the consideration for the sale of products to the loyalty points earned. The deferred amount is recorded as a contract liability, and is recognized as revenue when the points are redeemed or when the likelihood of redemption is remote. The Company has elected to treat all shipping and handling activities as fulfillment costs and recognize the costs as "selling, general and administrative expenses" at the time the related revenue is recognized. Shipping and handling costs billed to customers are included in "net revenues." Sales taxes and value added taxes collected from customers and remitted directly to governmental authorities are excluded from the transaction price. The Company has licensing agreements for its symbolic intellectual property, most of which include minimum guaranteed royalties. Royalty income is recognized as earned over the respective license term based on the greater of minimum guarantees or the licensees’ sales of licensed products at rates specified in the licensing contracts. Royalty income related to the minimum guarantees is recognized using a measure of progress with variable amounts recognized only when the cumulative earned royalty exceeds the minimum guarantees. As of September 2019 , the Company expects to recognize $36.8 million of fixed consideration related to the future minimum guarantees in effect under its licensing agreements and expects such amounts to be recognized over time through December 2024 . The variable consideration is not disclosed as a remaining performance obligation as the licensing arrangements qualify for the sales-based royalty exemption. The Company has applied the practical expedient to recognize incremental costs of obtaining a contract as an expense when incurred if the amortization period of the asset that otherwise would have been recognized is one year or less. Performance Obligations Disclosure is required for the aggregate transaction price allocated to performance obligations that are unsatisfied at the end of a reporting period, unless the optional practical expedients are applicable. The Company elected the practical expedients that do not require disclosure of the transaction price allocated to remaining performance obligations for (i) variable consideration related to sales-based royalty arrangements and (ii) contracts with an original expected duration of one year or less. As of September 2019 , there were no arrangements with transaction price allocated to remaining performance obligations other than (i) contracts for which the Company has applied the practical expedients discussed above and (ii) fixed consideration related to future minimum guarantees. For the three and nine months ended September 2019 , revenue recognized from performance obligations satisfied, or partially satisfied, in prior periods was not material. Contract Balances Accounts receivable represent the Company's unconditional right to receive consideration from a customer and are recorded at net invoiced amounts, less an estimated allowance for doubtful accounts. Contract assets are rights to consideration in exchange for goods or services that have been transferred to a customer when that right is conditional on something other than the passage of time. Once the Company has an unconditional right to consideration under a contract, amounts are invoiced and contract assets are reclassified to "accounts receivable." The Company's primary contract assets relate to sales-based royalty arrangements. Contract liabilities are recorded when a customer pays consideration, or the Company has a right to an amount of consideration that is unconditional, before the transfer of a good or service to the customer, and thus represent the Company's obligation to transfer the good or service to the customer at a future date. The Company's primary contract liabilities relate to gift cards, loyalty programs and sales-based royalty arrangements. The following table presents information about accounts receivable, contract assets and contract liabilities recorded in the Company's balance sheets: (in thousands) September 2019 December 2018 September 2018 Accounts receivable, net $ 302,582 $ 252,966 $ 318,071 Contract assets (a) 3,429 2,841 2,372 Contract liabilities (b) 2,514 2,311 3,446 (a) Included within "other current assets" in the Company's balance sheets. (b) Included within "accrued liabilities" in the Company's balance sheets. For the three and nine months ended September 2019 , the Company recognized revenue of $0.2 million and $1.7 million , respectively, that was previously included in contract liabilities as of December 2018 . For the three and nine months ended September 2018 , the Company recognized revenue of $0.1 million and $1.7 million , respectively, that was previously included in contract liabilities as of December 30, 2017 . The changes in the contract asset and contract liability balances primarily result from the timing differences between the Company's satisfaction of performance obligations and the customer's payment. Disaggregation of Revenue The following tables present revenues disaggregated by channel and geography, which provides a meaningful depiction of how the nature, timing and uncertainty of revenues are affected by economic factors. Revenues from licensing arrangements have been included within the U.S. or Non-U.S. Wholesale channels, based on the respective region covered by the agreement. Branded Direct-to-Consumer revenues include the distribution of our products via concession retail locations internationally, Wrangler ® and Lee ® branded full-price stores globally and Company-owned outlet stores globally. The Branded Direct-to-Consumer channel also includes our branded products sold in U.S.-based VF Outlet™ stores and our products that are marketed and distributed online via www.wrangler.com and www.lee.com. The Other channel includes sales of (i) VF-branded products and third-party branded merchandise at VF Outlet ™ stores, (ii) products manufactured in our plants sold to VF and VF’s use of our transportation fleet and (iii) services in fulfilling a transition services agreement related to VF's sale of its Nautica ® brand business in mid-2018. Three Months Ended September 2019 (in thousands) Wrangler Lee Other Total Channel revenues U.S. Wholesale $ 283,616 $ 93,931 $ 5,970 $ 383,517 Non-U.S. Wholesale 60,523 99,386 340 160,249 Branded Direct-To-Consumer 23,067 38,904 9 61,980 Other — — 32,392 32,392 Total $ 367,206 $ 232,221 $ 38,711 $ 638,138 Geographic revenues U.S. $ 302,819 $ 115,700 $ 38,263 $ 456,782 International 64,387 116,521 448 181,356 Total $ 367,206 $ 232,221 $ 38,711 $ 638,138 Three Months Ended September 2018 (in thousands) Wrangler Lee Other Total Channel revenues U.S. Wholesale $ 298,747 $ 104,138 $ 6,551 $ 409,436 Non-U.S. Wholesale 71,381 107,424 — 178,805 Branded Direct-To-Consumer 25,485 39,948 45 65,478 Other — — 50,527 50,527 Total $ 395,613 $ 251,510 $ 57,123 $ 704,246 Geographic revenues U.S. $ 316,910 $ 126,778 $ 57,123 $ 500,811 International 78,703 124,732 — 203,435 Total $ 395,613 $ 251,510 $ 57,123 $ 704,246 Nine Months Ended September 2019 (in thousands) Wrangler Lee Other Total Channel revenues U.S. Wholesale $ 859,481 $ 303,547 $ 17,405 $ 1,180,433 Non-U.S. Wholesale 169,747 257,127 973 427,847 Branded Direct-To-Consumer 71,905 119,986 23 191,914 Other — — 96,034 96,034 Total $ 1,101,133 $ 680,660 $ 114,435 $ 1,896,228 Geographic revenues U.S. $ 914,519 $ 365,615 $ 113,143 $ 1,393,277 International 186,614 315,045 1,292 502,951 Total $ 1,101,133 $ 680,660 $ 114,435 $ 1,896,228 Nine Months Ended September 2018 (in thousands) Wrangler Lee Other Total Channel revenues U.S. Wholesale $ 873,755 $ 315,071 $ 21,209 $ 1,210,035 Non-U.S. Wholesale 207,011 288,361 26 495,398 Branded Direct-To-Consumer 77,575 127,812 72 205,459 Other — — 126,873 126,873 Total $ 1,158,341 $ 731,244 $ 148,180 $ 2,037,765 Geographic revenues U.S. $ 925,716 $ 378,397 $ 148,154 $ 1,452,267 International 232,625 352,847 26 585,498 Total $ 1,158,341 $ 731,244 $ 148,180 $ 2,037,765 |
SALE OF ACCOUNTS RECEIVABLE
SALE OF ACCOUNTS RECEIVABLE | 9 Months Ended |
Sep. 28, 2019 | |
Receivables [Abstract] | |
SALE OF ACCOUNTS RECEIVABLE | SALE OF ACCOUNTS RECEIVABLE On April 1, 2019, the Company entered into an agreement with a financial institution to sell selected trade accounts receivable on a recurring, nonrecourse basis. Under this agreement, up to $377.5 million of the Company’s trade accounts receivable may be sold to the financial institution and remain outstanding at any point in time. The Company removes the sold balances from "accounts receivable" in its balance sheet at the time of sale. The Company does not retain any interests in the sold accounts receivable but continues to service and collect outstanding accounts receivable on behalf of the financial institution. Prior to April 1, 2019, the Company had a separate agreement with VF, pursuant to which the Company’s trade accounts receivable were sold as part of VF’s agreement with a financial institution. Under this agreement, the Company did not retain any interests in the sold accounts receivable but continued to service and collect outstanding accounts receivable on behalf of VF. Prior to the Separation, the amount due from VF for these sales was separately reflected in the Company's balance sheets within "due from former parent." Refer to Note 16 to the Company's financial statements for additional information. During the nine months ended September 2019 and 2018 , the Company sold total trade accounts receivable of $758.0 million and $777.3 million , respectively. As of September 2019 , $172.1 million of the sold accounts receivable had been removed from the Company's balance sheets but remained outstanding with the financial institution. As of December 2018 and September 2018 , $544.9 million and $263.5 million , respectively, of the sold trade accounts receivable had been removed from "accounts receivable" and reflected in the Company's balance sheets within "due from former parent." The funding fees charged by the financial institution for these programs are reflected in the Company's statements of income within "other expense, net" and were $1.2 million and $4.1 million for the three and nine months ended September 2019 , respectively, and $1.2 million and $3.6 million for the three and nine months ended September 2018 |
INVENTORIES
INVENTORIES | 9 Months Ended |
Sep. 28, 2019 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | INVENTORIES (in thousands) September 2019 December 2018 September 2018 Finished products $ 480,492 $ 396,345 $ 454,601 Work-in-process 26,493 37,466 45,986 Raw materials 38,441 40,001 40,349 Total inventories $ 545,426 $ 473,812 $ 540,936 |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 9 Months Ended |
Sep. 28, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS | INTANGIBLE ASSETS September 2019 December 2018 (in thousands) Weighted Average Amortization Period Amortization Method Cost Accumulated Amortization Net Carrying Amount Net Carrying Amount Finite-lived intangible assets: Trademarks 16 years Straight-line $ 58,132 $ 45,828 $ 12,304 $ 47,232 Customer relationships 15 years Accelerated 10,517 9,706 811 1,213 Finite-lived intangible assets, net 13,115 48,445 Indefinite-lived intangible assets: Trademarks and trade names 4,415 4,614 Intangible assets, net $ 17,530 $ 53,059 During the third quarter of fiscal 2019, the Company determined that the exclusive domestic wholesale distribution and licensing agreement of the Rock & Republic ® brand would not be extended. This was considered a triggering event that required management to perform a quantitative impairment analysis of the Rock & Republic ® trademark intangible asset. Based on this analysis, the Company recorded a $32.6 million non-cash impairment charge which was reflected within "non-cash impairment of intangible asset" in the Company's statement of income during the three months ended September 2019. The Company did not incur any impairment charges during fiscal 2018. Refer to Note 14 to the Company's financial statements for additional information on the related fair value measurements. Amortization expense (excluding impairment charges) was $0.6 million and $2.6 million for the three and nine months ended September 2019 . Amortization expense was $1.1 million and $3.2 million for the three and nine months ended September 2018 . Estimated amortization expense for the next five years beginning in fiscal 2019 is $3.0 million (including the nine months ended September 2019 ), $1.4 million , $1.2 million , $1.1 million and $1.0 million , respectively. |
SHORT-TERM BORROWINGS AND LONG-
SHORT-TERM BORROWINGS AND LONG-TERM DEBT | 9 Months Ended |
Sep. 28, 2019 | |
Debt Disclosure [Abstract] | |
Short-term Borrowings and Long-term Debt | SHORT-TERM BORROWINGS AND LONG-TERM DEBT Credit Facilities On May 17, 2019, the Company entered into a $1.55 billion senior secured credit facility under which it incurred $1.05 billion of indebtedness, the proceeds of which were used primarily to finance a cash transfer to VF in connection with the Separation. This facility consists of a five -year $750.0 million term loan A facility (“Term Loan A”), a seven -year $300.0 million term loan B facility (“Term Loan B”) and a five -year $500.0 million revolving credit facility (the “Revolving Credit Facility”) (collectively, the “Credit Facilities”) with the lenders and agents party thereto. The Credit Facilities contain certain affirmative and negative covenants customary for financings of this type, including maintenance of a consolidated earnings before interest, taxes, depreciation and amortization to consolidated debt and interest ratios. If the Company fails to comply with any covenants, the lenders may terminate their obligation to make advances and declare any outstanding obligations to be immediately due and payable. As of September 2019 , the Company was in compliance with all covenants. Short-term Borrowings (in thousands) September 2019 December 2018 September 2018 Revolving Credit Facility $ — $ — $ — International borrowing arrangements 6,028 3,215 5,617 Short-term borrowings $ 6,028 $ 3,215 $ 5,617 The Revolving Credit Facility may be used to borrow funds in both U.S. dollar and certain non-U.S. dollar currencies, and has a $75.0 million letter of credit sublimit. The Revolving Credit Facility had $1.3 million of outstanding standby letters of credit issued on behalf of the Company as of September 2019 , leaving $498.7 million available for borrowing against this facility. The Company expects to utilize the borrowing capacity under the Revolving Credit Facility from time to time to provide working capital and funds for general corporate purposes. Borrowings under the Revolving Credit Facility are priced at a credit spread of 175 basis points over the appropriate LIBOR benchmark for each currency, or 75 basis points over the base rate for each currency, at the Company's election. The Company is also required to pay a facility fee to the lenders, currently equal to 30 basis points of the undrawn amount of the facility. The credit spread and facility fee are subject to adjustments based on the Company's credit ratings. The Company has $47.5 million of international lines of credit with various banks, which are uncommitted and may be terminated at any time by either the Company or the banks. Total outstanding balances under these arrangements were $6.0 million , $3.2 million and $5.6 million at September 2019 , December 2018 and September 2018 , respectively. Long-term Debt (in thousands) September 2019 Term Loan A $ 694,833 Term Loan B 293,274 Total long-term debt 988,107 Less: current portion (7,500 ) Long-term debt, due beyond one year $ 980,607 The interest rate per annum applicable to Term Loan A is either 75 basis points over the base rate or 175 basis points over the applicable LIBOR benchmark, at the Company's election. Additionally, the interest rate per annum applicable to Term Loan B is either a base rate plus a margin of 3.25% or LIBOR plus a margin of 4.25% , at the Company's election. The LIBOR rate for both loans is subject to a "floor" of 0.0% . Interest payments are due quarterly on both Term Loan A and Term Loan B. Term Loan A had an outstanding principal amount of $700.0 million at September 2019 and is recorded net of unamortized debt issuance costs. Interest expense on this facility is recorded at an effective annual interest rate of 4.1% , including the amortization of debt issuance costs and the impact of the Company’s interest rate swap agreements. Term Loan B had an outstanding principal amount of $300.0 million at September 2019 and is recorded net of unamortized original issue discount and debt issuance costs. Interest expense on this facility is recorded at an effective annual interest rate of 6.8% , including the amortization of original issue discount, debt issuance costs and the impact of the Company’s interest rate swap agreements. |
PENSION PLANS
PENSION PLANS | 9 Months Ended |
Sep. 28, 2019 | |
Retirement Benefits [Abstract] | |
PENSION PLANS | PENSION PLANS Prior to the Separation, certain Company employees participated in U.S. and international defined benefit pension plans sponsored by VF (the "Shared Plans"), which included participants of other VF operations. The Company accounted for its participation in the Shared Plans as a multi-employer benefit plan. Accordingly, net pension costs specifically related to Company employees were reflected in the Company's statements of income and the Company did not record an asset or liability in relation to the funded or unfunded status of the Shared Plans. At the Separation, approximately $11.0 million of net pension obligations related to international employees were transferred to the Company, along with $1.1 million of related other comprehensive loss. The following table presents net pension costs recognized by the Company related to the Shared Plans through the Separation date and related to the transferred obligations subsequent to the Separation: Three Months Ended September Nine Months Ended September (in thousands) 2019 2018 2019 2018 Service cost $ 360 $ 1,718 $ 1,377 $ 4,785 Non-service components — (1,301 ) (3,166 ) (3,662 ) Curtailment losses — — — 3,502 Settlement losses — 594 — 661 Net pension (benefit) costs $ 360 $ 1,011 $ (1,789 ) $ 5,286 The service cost component of net pension costs is reflected in the Company's statements of income within "cost of goods sold" and "selling, general and administrative expenses." All other components of net pension cost are reflected in the Company's statements of income within "selling, general and administrative expenses." |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE LOSS | 9 Months Ended |
Sep. 28, 2019 | |
Equity [Abstract] | |
ACCUMULATED OTHER COMPREHENSIVE LOSS | ACCUMULATED OTHER COMPREHENSIVE LOSS The Company's comprehensive income consists of net income and specified components of other comprehensive loss (“OCL”), which relate to changes in assets and liabilities that are not included in net income but are instead deferred and accumulated within a separate component of equity in the Company's balance sheets. The Company's comprehensive income is presented in the Company's statements of comprehensive income. The following table presents deferred components of accumulated OCL in equity, net of related taxes: (in thousands) September 2019 December 2018 September 2018 Foreign currency translation $ (93,199 ) $ (145,182 ) $ (144,069 ) Defined benefit pension plans (775 ) — — Derivative financial instruments 5,139 — — Accumulated other comprehensive income (loss) $ (88,835 ) $ (145,182 ) $ (144,069 ) The following tables present changes in accumulated OCL, net of related taxes: Three Months Ended September 2019 Foreign Currency Translation Defined Benefit Pension Plans Derivative Financial Instruments (in thousands) Total Balance, June 2019 $ (81,841 ) $ (1,072 ) $ 9,225 $ (73,688 ) Other comprehensive income (loss) before reclassifications (11,358 ) 297 (468 ) (11,529 ) Amounts reclassified from accumulated other comprehensive income (loss) — — (3,618 ) (3,618 ) Net other comprehensive income (loss) (11,358 ) 297 (4,086 ) (15,147 ) Balance, September 2019 $ (93,199 ) $ (775 ) $ 5,139 $ (88,835 ) Three Months Ended September 2018 Foreign Currency Translation Defined Benefit Pension Plans Derivative Financial Instruments (in thousands) Total Balance, June 2018 $ (141,299 ) $ — $ — $ (141,299 ) Other comprehensive income (loss) before reclassifications (2,770 ) — — (2,770 ) Net other comprehensive income (loss) (2,770 ) — — (2,770 ) Balance, September 2018 $ (144,069 ) $ — $ — $ (144,069 ) Nine Months Ended September 2019 Foreign Currency Translation Defined Benefit Pension Plans Derivative Financial Instruments (in thousands) Total Balance, December 2018 $ (145,182 ) $ — $ — $ (145,182 ) Other comprehensive income (loss) before reclassifications (5,914 ) 283 (2,526 ) (8,157 ) Amounts reclassified from accumulated other comprehensive income (loss) — — (3,980 ) (3,980 ) Net other comprehensive income (loss) (5,914 ) 283 (6,506 ) (12,137 ) Net transfers to former parent 57,897 (1,058 ) 11,645 68,484 Balance, September 2019 $ (93,199 ) $ (775 ) $ 5,139 $ (88,835 ) Nine Months Ended September 2018 Foreign Currency Translation Defined Benefit Pension Plans Derivative Financial Instruments (in thousands) Total Balance, December 2017 $ (122,482 ) $ — $ — $ (122,482 ) Other comprehensive income (loss) before reclassifications (21,587 ) — — (21,587 ) Net other comprehensive income (loss) (21,587 ) — — (21,587 ) Balance, September 2018 $ (144,069 ) $ — $ — $ (144,069 ) The following table presents reclassifications out of accumulated OCL: Three Months Ended September Nine Months Ended September (in thousands) Details About Component of Accumulated Other Comprehensive Income (Loss) Affected Line Item in the Financial Statements 2019 2018 2019 2018 Gains (losses) on derivative financial instruments: Foreign currency exchange contracts Net revenues $ (379 ) $ — $ (475 ) $ — Foreign currency exchange contracts Cost of goods sold 3,486 — 3,901 — Foreign currency exchange contracts Other expense, net 328 — 371 — Interest rate swap agreements Interest expense 642 — 642 — Total before tax 4,077 — 4,439 — Tax expense Income taxes (459 ) — (459 ) — Total reclassifications for the period, net of tax $ 3,618 $ — $ 3,980 $ — |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 9 Months Ended |
Sep. 28, 2019 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION Pursuant to the Kontoor Brands, Inc. 2019 Stock Compensation Plan (the “2019 Plan”), the Company is authorized to grant equity-based awards to officers, key employees and nonemployee members of the Company’s Board of Directors. The 2019 Plan also allows for the issuance of replacement grants related to the conversion of VF awards held by former employees of VF. Substantially all awards are classified as equity awards, which are accounted for within stockholders’ equity in the Company's balance sheet. Compensation cost for all awards expected to vest is recognized over the shorter of the requisite service period or the vesting period. Awards that do not vest are forfeited. Prior to the Separation, certain Company employees participated in the VF amended and restated 1996 Stock Compensation Plan. At the Separation date, certain VF share-based awards held by Company employees were converted to options, restricted stock units (“RSUs”), performance-based RSUs and restricted stock awards for approximately 2.4 million shares of the Company’s common stock. Additionally, certain awards were retained by VF to be settled in accordance with their original terms. The Company is reporting the expense related to all awards granted prior to the Separation over the remaining vesting periods of the awards. During the third quarter of fiscal 2019, the Company granted additional awards under the 2019 Plan, including performance-based RSUs for approximately 422,000 shares granted to employees, time-based RSUs for approximately 334,000 shares granted to employees and RSUs for approximately 30,000 shares granted to nonemployee members of the Board of Directors. The weighted average fair market value of the Company’s common stock at the dates the awards were granted was $32.26 per share. Each performance-based RSU entitles the employee to a potential final payout ranging from 0% to 200% of one share of Kontoor common stock. The number of shares earned by participants, if any, is based on achievement of annually established performance goals set by the Talent and Compensation Committee of the Board of Directors. Shares earned will be issued to participants following the conclusion of the fiscal 2021 performance period. Each time-based employee RSU entitles the employee to one share of Kontoor common stock and generally vests over a three -year period. Each RSU granted to a nonemployee member of the Board of Directors vests upon grant and will be settled in one share of Kontoor common stock one year |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 28, 2019 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES Prior to the Separation, the Company's operations were historically included in VF’s U.S. combined federal and state income tax returns. For the periods prior to the Separation, the income tax expense and deferred tax balances presented in these interim financial statements were calculated on a carve-out basis, which applied the accounting guidance as if the Company filed its own tax returns in each jurisdiction and included tax losses and tax credits that may not reflect tax positions taken by VF. Certain tax attributes reported by the Company on a carve-out basis were not transferred to the Company as part of the Separation. These attributes primarily related to losses in certain Central America and South America ("CASA") jurisdictions. During the third quarter of 2019, the Company recorded a $32.6 million non-cash impairment charge related to the Rock & Republic ® trademark intangible asset that resulted in a tax benefit of $7.4 million . The effective income tax rate for the nine months ended September 2019 was 25.7% compared to 21.1% in the 2018 period. Effective with the Separation, the Company established a corporate legal entity structure that is subject to U.S. corporate income tax on a standalone basis. Tax expense for the nine -month period is based on five months of combined financial statements prepared on a carve-out basis using VF information and four months of the consolidated results of the Company on a standalone basis. The nine months ended September 2019 included a net discrete tax expense of $1.1 million , comprised of $3.4 million of tax benefit related to stock compensation and $4.5 million of tax expense primarily related to an increase in unrecognized tax benefits and interest. The $1.1 million net discrete tax expense in the nine months ended September 2019 increased the effective income tax rate by 1.2% . The effective tax rate for the nine months ended September 2018 included a net discrete tax benefit of $1.8 million , which included $4.6 million of net tax benefits related to the realization of previously unrecognized tax benefits and interest, $2.9 million of tax benefit related to stock compensation, and $5.7 million of net tax expense related to adjustments to provisional amounts recorded in 2017 under the Tax Act. The $1.8 million net discrete tax benefit in the 2018 period decreased the effective income tax rate by 0.6% . Without discrete items, the effective income tax rate increased by 2.8% for the nine months ended September 2019 compared to the 2018 period primarily due to losses incurred in the periods prior to the Separation for certain CASA jurisdictions for which no related tax benefit was recognized. The Company will file a consolidated U.S. federal income tax return, as well as separate and combined income tax returns in numerous state and international jurisdictions. The Company has not filed its initial consolidated U.S. federal income tax return; therefore, there are no open IRS examinations. However, the Company is currently subject to examination by various U.S. state and international tax authorities where existing legal entities were transferred to the Company as part of the Separation. Management regularly assesses the potential outcomes of both ongoing and future examinations for the current and prior years and has concluded that the Company’s provision for income taxes is adequate. Management does not anticipate that ongoing audits or negotiations will conclude during the next 12 months. During the nine months ended September 2019 , the amount of net unrecognized tax benefits and associated interest decreased by $38.8 million to $12.5 million . The decrease in net unrecognized tax benefits was primarily related to reserves that were presented in the prior periods on a carve-out basis but were not transferred to the Company as part of the Separation. Management believes that it is reasonably possible that the amount of unrecognized income tax benefits and interest may decrease during the next 12 months by approximately $0.6 million related to the completion of examinations and other settlements with tax authorities and the expiration of statutes of limitations, which would reduce income tax expense. The Company accounts for interest and penalties related to unrecognized tax benefits as a component of tax expense. |
REPORTABLE SEGMENT INFORMATION
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. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 9 Months Ended |
Sep. 28, 2019 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS Certain assets and liabilities measured and reported at fair value are classified in a three-level hierarchy that prioritizes the inputs used in the valuation process. Categorization within the valuation hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The hierarchy is based on the observability and objectivity of the pricing inputs, as follows: • Level 1 — Quoted prices in active markets for identical assets or liabilities. • Level 2 — Significant directly observable data (other than Level 1 quoted prices) or significant indirectly observable data through corroboration with observable market data. Inputs would normally be (i) quoted prices in active markets for similar assets or liabilities, (ii) quoted prices in inactive markets for identical or similar assets or liabilities or (iii) information derived from or corroborated by observable market data. • Level 3 — Prices or valuation techniques that require significant unobservable data inputs. These inputs would normally be the Company's own data and judgments about assumptions that market participants would use in pricing the asset or liability. Recurring Fair Value Measurements The following table presents financial assets and financial liabilities that are measured and recorded in the Company's financial statements at fair value on a recurring basis: Fair Value Measurement Using (in thousands) Total Fair Value Level 1 Level 2 Level 3 September 2019 Financial assets: Cash equivalents: Money market funds $ 4,825 $ 4,825 $ — $ — Time deposits 1,404 1,404 — — Derivative financial instruments 3,504 — 3,504 — Investment securities 57,180 53,900 3,280 — Financial liabilities: Derivative financial instruments 7,574 — 7,574 — Deferred compensation 57,271 — 57,271 — Fair Value Measurement Using (in thousands) Total Fair Value Level 1 Level 2 Level 3 December 2018 Financial assets: Cash equivalents: Money market funds $ 21,687 $ 21,687 $ — $ — Time deposits 2,518 2,518 — — Investment securities 46,666 46,666 — — Financial liabilities: Deferred compensation 46,666 — 46,666 — The Company's cash equivalents include money market funds and short-term time deposits that approximate fair value based on Level 1 measurements. The fair value of derivative financial instruments, which consist of foreign currency exchange forward contracts and interest rate swap agreements, is determined based on observable market inputs (Level 2). Investment securities are held in the Company's deferred compensation plans as an economic hedge of the related deferred compensation liabilities. These investments are primarily comprised of mutual funds (Level 1) that are valued based on quoted prices in active markets and a separately managed fixed-income fund (Level 2) with underlying investments that are valued based on quoted prices for similar assets in active markets or quoted prices in inactive markets for identical assets. Liabilities related to the Company's deferred compensation plans are recorded at amounts due to participants, based on the fair value of the participants’ selection of hypothetical investments (Level 2). Additionally, at September 2019 , the carrying value of the Company's long-term debt, inclusive of the current portion, was $988.1 million compared to a fair value of $984.4 million . The fair value of long-term debt is a Level 2 estimate based on quoted market prices or values of comparable borrowings. All other financial assets and financial liabilities are recorded in the Company's financial statements at cost. These other financial assets and financial liabilities include cash held as demand deposits, accounts receivable, due from former parent, notes receivable from former parent, short-term borrowings, accounts payable, due to former parent, notes payable to former parent and accrued liabilities. At September 2019 and December 2018 , their carrying values approximated fair value due to the short-term nature of these instruments. The Company did not transfer any assets or liabilities among the levels of the fair value hierarchy during the nine months ended September 2019 or the fiscal year ended December 2018 . Nonrecurring Fair Value Measurements Certain non-financial assets, primarily property, plant and equipment, operating lease assets, goodwill and intangible assets, are not required to be measured at fair value on a recurring basis and are reported at carrying value. However, these assets are required to be assessed for impairment when events or circumstances indicate that carrying value may not be recoverable, and at least annually for goodwill and indefinite-lived intangible assets. In the event that an impairment is required, the asset is adjusted to fair value, using market-based assumptions. During the third quarter of fiscal 2019, the Company determined that the exclusive domestic wholesale distribution and licensing agreement of the Rock & Republic ® brand would not be extended. This was considered a triggering event that required management to perform a quantitative impairment analysis of the Rock & Republic ® finite-lived trademark intangible asset. Based on this analysis, the Company recorded a $32.6 million non-cash impairment charge which was reflected within "non-cash impairment of intangible asset" in the Company's statement of income during the three months ended September 2019. Key assumptions utilized within the quantitative impairment analysis included (1) long-term growth in revenues resulting from projected expansion across multiple distribution channels, including licensing arrangements within international markets, (2) royalty rates based on historical arrangements as well as known royalty rates of comparable owned and third-party brands and (3) market-based discount rates. The fair value of the Rock & Republic ® trademark intangible asset was estimated using the relief-from-royalty method as described within the 2018 Form 10. It is possible that the Company's conclusions regarding fair value of the Rock & Republic ® trademark intangible asset could change in future periods. There can be no assurance that the estimates and assumptions used in the Company's intangible asset impairment testing performed in the third quarter of fiscal 2019 will prove to be accurate predictions of the future. For example, variations in the Company's assumptions related to discount rates, comparable company market approach inputs, business performance and execution of planned growth strategies could impact future conclusions. |
RESTRUCTURING
RESTRUCTURING | 9 Months Ended |
Sep. 28, 2019 | |
Restructuring and Related Activities [Abstract] | |
RESTRUCTURING | RESTRUCTURING T he Company typically incurs restructuring charges related to cost optimization of business activities. Of the $24.6 million of restructuring charges recognized during the nine months ended September 2019 , the Company recognized $13.8 million within "selling, general and administrative expenses" and $10.8 million within "cost of goods sold" in the statements of income. The Company incurred incremental costs of $1.6 million related to the previously approved initiatives during the nine months ended September 2019 . All of the $5.8 million total restructuring accrual reported in the Company's balance sheet at September 2019 is expected to be paid out within the next 12 months and is classified within "accrued liabilities." The following table presents components of the restructuring charges for previously approved initiatives: (in thousands) Three Months Ended September 2019 Nine Months Ended September 2019 Severance and employee-related benefits $ — $ 14,903 Asset impairments — 1,596 Inventory write-downs — 4,403 Other — 3,660 Total restructuring charges $ — $ 24,562 The following table presents restructuring costs by business segment for previously approved initiatives: (in thousands) Three Months Ended September 2019 Nine Months Ended September 2019 Wrangler $ — $ 17,613 Lee — 6,685 Other — 264 Total $ — $ 24,562 The following table presents activity in the restructuring accrual for the nine -month period ended September 2019 : (in thousands) Severance Other Total Accrual at December 2018 $ 23,249 $ — $ 23,249 Charges 14,903 3,660 18,563 Cash payments (27,573 ) (839 ) (28,412 ) Adjustments to accruals 1,641 — 1,641 Currency translation (58 ) (197 ) (255 ) Adjustment at Separation (6,384 ) (2,624 ) (9,008 ) Accrual at September 2019 $ 5,778 $ — $ 5,778 |
TRANSACTIONS WITH FORMER PARENT
TRANSACTIONS WITH FORMER PARENT | 9 Months Ended |
Sep. 28, 2019 | |
Related Party Transactions [Abstract] | |
TRANSACTIONS WITH FORMER PARENT | TRANSACTIONS WITH FORMER PARENT Prior to the Separation, the Company's financial statements were prepared on a carve-out basis and were derived from the consolidated financial statements and accounting records of VF. The following discussion summarizes activity between the Company and VF. Allocation of General Corporate Expenses Prior to the Separation, the Company's statements of income included expenses for certain centralized functions and other programs provided and administered by VF that were charged directly to the Company. In addition, for purposes of preparing these financial statements on a carve-out basis, the Company was allocated a portion of VF's total corporate expenses. See Note 1 to the Company's combined financial statements in the 2018 Form 10 for a discussion of the methodology used to allocate corporate-related costs for purposes of preparing these financial statements on a carve-out basis. Sales and Purchases To and From Former Parent The Compa ny's sales to VF were $14.1 million during the first five months of fiscal 2019 through the Separation date, and $15.0 million and $40.6 million for the three and nine months ended September 2018 , respectively, which are included within "net revenues" in the Company's statements of income. The Company's cost of goods sold includes items purchased from VF totaling $0.5 million for the first five months of fiscal 2019 through the Separation date, and $0.6 million and $1.8 million for the three and nine months ended September 2018 , respectively. At September 2019 , December 2018 and September 2018 , the aggregate amount of inventories purchased from VF that remained on the Company's balance sheets was approximately $0.5 million , $0.8 million and $1.1 million , respectively. Notes To and From Former Parent All notes to and from former parent were settled in connection with the Separation. At December 2018 and September 2018 , the Company had notes receivable from former parent of $517.9 million and $546.7 million , respectively, with VF as the counterparty. The weighted-average interest rate for these notes was approxim ately 3.4% at both December 2018 and September 2018 . At both December 2018 and September 2018 , the Co mpany had notes payable to former parent of $269.1 million , with VF as the counterparty. The weighted-average interest rate for these notes was approximatel y 3.4% a t both December 2018 and September 2018 . The Company recorded net interest income related to these notes of $3.8 million for the first five months of fiscal 2019 through the Separation date, and $2.1 million and $5.4 million for the three and nine months ended September 2018 , respectively, which is reflected within "interest income from former parent, net" in the Company's statements of income. Due To and From Former Parent All amounts due to and from former parent were settled in connection with the Separation. Balances that were due to and from former parent were generated by (i) the sale of trade accounts receivable to VF, as discussed in Note 5 to the Company's financial statements , (ii) hedging agreements with VF, and (iii) sourcing payable to VF. Prior to the Separation, the Company did not enter into derivative contracts with external counterparties. However, VF entered into derivative contracts with external counterparties to hedge certain foreign currency transactions with exposure to the euro, Mexican peso, Polish zloty, Canadian dollar, and other currencies. The Company entered into offsetting internal contracts with VF with maturities up to 20 months, and cash settled with VF on any asset or liability that arose under these contracts. The following table presents components of due from former parent, current: (in thousands) December 2018 September 2018 Sale of trade accounts receivable $ 544,858 $ 263,498 Hedging agreements with VF 2,832 4,107 $ 547,690 $ 267,605 As discussed in Note 5 to the financial statements, the Company sold certain of its trade accounts receivable to VF, who then sold them to a financial institution and periodically remitted cash back to the Company. The following table presents components of due from former parent, noncurrent: (in thousands) December 2018 September 2018 Hedging agreements with VF $ 611 $ 1,100 The following table presents components of due to former parent, current: (in thousands) December 2018 September 2018 Sourcing payable $ 16,140 $ 69,542 Net Transfers To and From VF Net transfers to and from VF are included within "former parent investment" in the statements of equity. The following table presents components of the transfers to and from VF : Nine Months Ended September (in thousands) 2019 (a) 2018 General financing activities $ (723,155 ) $ (127,627 ) Corporate allocations 47,903 82,477 Stock-based compensation expense 9,582 14,012 Pension (benefit) costs (2,246 ) 5,286 Purchases from parent 3,193 1,961 Sales to parent (13,988 ) (40,566 ) Other income tax 10,863 53,378 Transition tax related to the Tax Act 3,937 5,716 Cash dividend to former parent (1,032,948 ) — Total net transfers to former parent $ (1,696,859 ) $ (5,363 ) (a) Activity reflected through the Separation date. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 9 Months Ended |
Sep. 28, 2019 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | EARNINGS PER SHARE The computation of basic and diluted earnings per share ("EPS") is based on net income divided by the basic weighted average number of common shares and diluted weighted average number of common shares outstanding, respectively. On May 22, 2019, the Separation from VF was effected through a pro-rata distribution of one share of the Company's common stock for every seven shares of VF common stock held at the close of business on the record date of May 10, 2019. As a result, on May 23, 2019, the Company had 56,647,561 shares of common stock outstanding. This share amount was utilized for the calculation of basic and diluted earnings per share for all periods presented through the Separation date. After the Separation date, actual outstanding shares are used to calculate both basic and diluted weighted average number of common shares outstanding. The following table presents the computation of basic and diluted EPS: Three Months Ended September Nine Months Ended September (in thousands, except per share amounts) 2019 2018 2019 2018 Net income $ 14,502 $ 71,018 $ 67,901 $ 211,172 Basic weighted average shares outstanding 56,694 56,648 56,663 56,648 Dilutive effect of stock-based awards 707 — 326 — Diluted weighted average shares outstanding 57,401 56,648 56,989 56,648 Earnings per share: Basic earnings per share $ 0.26 $ 1.25 $ 1.20 $ 3.73 Diluted earnings per share 0.25 1.25 1.19 3.73 Anti-dilutive stock-based awards excluded from diluted calculation 323 — 164 — A total of 0.5 million shares of performance-based RSUs were excluded from the calculation of diluted earnings per share for both the three and nine-month periods ended September 2019 as the units were not considered to be contingent outstanding shares. |
DERIVATIVE FINANCIAL INSTRUMENT
DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES | 9 Months Ended |
Sep. 28, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES | DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES Summary of Derivative Financial Instruments On April 24, 2019, the Company began entering into derivative contracts with external counterparties to hedge certain foreign currency transactions. The notional amount of all outstanding foreign currency exchange contracts was $320.5 million at September 2019 , consisting primarily of contracts hedging exposures to the Mexican peso, euro, Canadian dollar, British pound, Polish zloty and Swedish krona. Foreign currency exchange contracts have maturities up to 20 months . On July 24, 2019, the Company entered into "floating to fixed" derivative agreements to mitigate exposure to volatility in LIBOR rates on the Company's future interest payments. The notional amount of the interest rate swap agreements was $475.0 million at September 2019 . Because these interest rate swap agreements meet the criteria for hedge accounting, all related gains and losses are accumulated within OCL and are being amortized through April 18, 2024. The Company's outstanding derivative financial instruments met the criteria for hedge accounting at the inception of the hedging relationship, although a limited number of foreign currency exchange contracts intended to hedge assets and liabilities are not designated as hedges for accounting purposes. The following table presents outstanding derivatives on an individual contract basis: September 2019 (in thousands) Fair Value of Derivatives with Unrealized Gains Fair Value of Derivatives with Unrealized Losses Derivatives designated as hedging instruments: Foreign currency exchange contracts $ 3,463 $ (2,603 ) Interest rate swap agreements — (4,861 ) Derivatives not designated as hedging instruments: Foreign currency exchange contracts 41 (110 ) Total derivatives $ 3,504 $ (7,574 ) The Company records and presents the fair value of all of its derivative assets and liabilities in the Company's balance sheets on a gross basis, even though certain of the derivative contracts are subject to master netting agreements. If the Company were to offset and record the asset and liability balances of its derivative contracts on a net basis in accordance with the terms of its master netting agreements, the amounts presented in the Company's balance sheets would be adjusted from the current gross presentation to the net amounts. The following table presents a reconciliation of gross to net amounts for derivative asset and liability balances: September 2019 (in thousands) Derivative Asset Derivative Liability Gross amounts presented in the balance sheet $ 3,504 $ (7,574 ) Gross amounts not offset in the balance sheet (507 ) 507 Net amounts $ 2,997 $ (7,067 ) The following table presents classification of derivatives as current or noncurrent based on maturity dates: (in thousands) September 2019 Derivative financial instruments: Other current assets $ 2,900 Accrued liabilities (2,376 ) Other assets 604 Other liabilities (5,198 ) Cash Flow Hedges The Company uses foreign currency exchange contracts primarily to hedge a portion of the exchange risk for its forecasted sales, purchases, intercompany service fees and royalties. The Company uses interest rate swap agreements to partially hedge the interest rate risk associated with the volatility of monthly LIBOR rate movements. The following tables present the effects of cash flow hedges included in the Company's statements of income and statements of comprehensive income: Three Months Ended September 2019 Nine Months Ended September 2019 (in thousands) Cash Flow Hedging Relationships Gain (Loss) on Derivatives Recognized in OCL Gain (Loss) on Derivatives Recognized in OCL Foreign currency exchange contracts $ 3,926 $ 1,868 Interest rate swap agreements (4,220 ) (4,220 ) Total $ (294 ) $ (2,352 ) Three Months Ended September 2019 Nine Months Ended September 2019 (in thousands) Location of Gain (Loss) Gain (Loss) Reclassified from Accumulated OCL into Income Gain (Loss) Reclassified from Accumulated OCL into Income Net sales $ (379 ) $ (475 ) Cost of goods sold 3,486 3,901 Other income (expense), net 328 371 Interest expense 642 642 Total $ 4,077 $ 4,439 Derivative Contracts Not Designated as Hedges The Company uses derivative contracts to manage foreign currency exchange risk on third-party accounts receivable and accounts payable. These contracts are not designated as hedges and are recorded at fair value in the Company's balance sheets. Changes in the fair values of these instruments are recognized directly in earnings. Gains or losses on these contracts largely offset the net transaction gains or losses on the related assets and liabilities. The following table presents a summary of these derivatives included in the Company's statements of income: Three Months Ended Nine Months Ended (in thousands) September 2019 September 2019 Derivatives Not Designated as Hedges Location of Gain (Loss) on Derivatives Recognized in Income Gain (Loss) on Derivatives Gain (Loss) on Derivatives Foreign currency exchange contracts Cost of goods sold $ 72 $ 15 $ 72 $ 15 Other Derivative Information There were no significant amounts recognized in earnings for the ineffective portion of any hedging relationships during the three or nine months ended September 2019 . In connection with the Separation, VF transferred to the Company $11.6 million of unrecognized gains on foreign currency exchange contracts related to the Jeanswear business. These gains were deferred in accumulated OCL and are being reclassified to earnings as the Company recognizes the underlying transactions in revenue. At September 2019 , accumulated OCL included $8.1 million |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 28, 2019 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENT Dividend On October 22, 2019 , the Board of Directors declared a quarterly dividend of $0.56 per share of the Company's common stock. The cash dividend will be payable on December 20, 2019 , to shareholders of record at the close of business on December 10, 2019 . |
BASIS OF PRESENTATION (Policies
BASIS OF PRESENTATION (Policies) | 9 Months Ended |
Sep. 28, 2019 | |
Accounting Policies [Abstract] | |
New Accounting Pronouncements, Policy | Recently Adopted Accounting Standards In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update (“ASU”) 2016-02, “Leases (Topic 842),” an update that requires entities to record most leased assets and liabilities on the balance sheet, and also retains a dual model approach for assessing lease classification and recognizing expense. The FASB subsequently issued updates to provide clarification on specific topics, including adoption guidance, practical expedients and interim transition disclosure requirements. This guidance was adopted by the Company during the first quarter of fiscal 2019 utilizing the optional transition method, which resulted in the recognition of operating lease right-of-use assets, operating lease liabilities and a $2.7 million cumulative effect adjustment to the fiscal 2019 beginning retained earnings in the Company's balance sheet. The adoption of these standards did not have a significant impact on the Company's statement of income and statement of cash flows. Refer to Note 3 to the Company's financial statements for additional information. In August 2017, the FASB issued ASU 2017-12, "Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities," an update that amends and simplifies certain aspects of hedge accounting rules to better portray the economic results of risk management activities in the financial statements. The FASB has subsequently issued updates to the standard to provide additional guidance on specific topics. This guidance was adopted by the Company during the first quarter of fiscal 2019 and did not have a significant impact on the Company's financial statements. In February 2018, the FASB issued ASU 2018-02, " Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, " an update that addresses the effect of the change in the U.S. federal corporate income tax rate due to the enactment of the Tax Cuts and Jobs Act (the "Tax Act") on items within accumulated other comprehensive income (loss). This guidance was adopted by the Company during the first quarter of fiscal 2019 and did not have a significant impact on the Company's financial statements. In July 2018, the FASB issued ASU 2018-09, "Codification Improvements," an update that provides technical corrections, clarifications and other improvements across a variety of accounting topics. The transition and effective date guidance is based on the facts and circumstances of each update, many of which became effective for the Company during the first quarter of fiscal 2019. The adoption of this guidance did not have a significant impact on the Company's financial statements. Recently Issued Accounting Standards In June 2016, the FASB issued ASU 2016-13, "Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments," which amends the impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses on certain types of financial instruments, including trade receivables. This guidance will be effective for the Company beginning in the first quarter of fiscal 2020. The Company is currently evaluating the impact that adoption of this guidance will have on its financial statements, which is not expected to be significant. In August 2018, the FASB issued ASU 2018-13, "Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement," an update that modifies the disclosure requirements for fair value measurements by removing, modifying or adding certain disclosures. This guidance will be effective for the Company beginning in the first quarter of fiscal 2020. The Company is currently evaluating the impact that adoption of this guidance will have on its financial statement disclosures, which is not expected to be significant. In August 2018, the FASB issued ASU 2018-14, "Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans," an update that modifies the disclosure requirements for employers who sponsor defined benefit pension or other postretirement plans. This guidance will be effective for the Company beginning in the first quarter of fiscal 2020. The Company is currently evaluating the impact that adoption of this guidance will have on its financial statement disclosures, which is not expected to be significant. In August 2018, the FASB issued ASU 2018-15, "Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract," |
Fair Value Measurement, Policy | Certain assets and liabilities measured and reported at fair value are classified in a three-level hierarchy that prioritizes the inputs used in the valuation process. Categorization within the valuation hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The hierarchy is based on the observability and objectivity of the pricing inputs, as follows: • Level 1 — Quoted prices in active markets for identical assets or liabilities. • Level 2 — Significant directly observable data (other than Level 1 quoted prices) or significant indirectly observable data through corroboration with observable market data. Inputs would normally be (i) quoted prices in active markets for similar assets or liabilities, (ii) quoted prices in inactive markets for identical or similar assets or liabilities or (iii) information derived from or corroborated by observable market data. • Level 3 — Prices or valuation techniques that require significant unobservable data inputs. These inputs would normally be the Company's own data and judgments about assumptions that market participants would use in pricing the asset or liability. |
Leases, Policy | The Company enters into operating leases for offices, operational facilities, retail locations, vehicles and other assets that expire at various dates through 2031. Leases for real estate typically have initial terms ranging from 2 to 15 years, generally with renewal options. Leases for equipment typically have initial terms ranging from 3 to 7 years. Most leases have fixed rentals, with many of the real estate leases requiring additional payments for real estate taxes and occupancy-related costs. These lease terms may include optional renewals, terminations or purchases, which are considered in the Company’s assessments when such options are reasonably certain to be exercised. For retail real estate leases, the Company does not typically include renewal options in the underlying lease term. For non-retail real estate leases, when renewal options are reasonably certain to be exercised, the Company includes the renewal options in the underlying lease term, up to a maximum of ten years. Renewals for all other leases are determined on a lease-by-lease basis. Upon adoption of ASU 2016-02, the Company elected the package of practical expedients permitted under the new lease standard, which allowed the Company to carry forward its historical assessment of whether a contract contained a lease, how the lease was classified, and if initial direct costs could be capitalized. The Company elected to combine non-lease components with the related lease components for real estate, vehicles and other significant asset arrangements. The Company elected to aggregate the combined items as a single lease component for accounting purposes. Lastly, for leases with a lease term of 12 months or less for all classes of underlying assets, the Company elected not to recognize a right-of-use asset and related lease liability. Certain of the Company’s leases contain fixed, indexed, or market-based escalation clauses which impact future payments. Certain arrangements contain variable payment provisions, such as payments based on sales volumes or amounts and mileage, or excess mileage. The Company’s leases typically contain customary covenants and restrictions. The Company determines whether a contract is a lease at inception. This typically requires more judgment in storage and service arrangements where the Company must determine whether its rights to specific physical or production capacity may represent substantially all of the available capacity. The Company measures right-of-use assets and related lease liabilities based on the present value of remaining lease payments, including in-substance fixed payments, the current payment amount when payments depend on an index or rate (e.g., inflation adjustments, market renewals), and the amount the Company believes is probable to be paid to the lessor under residual value guarantees, when applicable. Lease contracts may include fixed payments for non-lease components, such as maintenance, which are included in the measurement of lease liabilities for certain asset classes based on the Company’s election to combine lease and non-lease components. As applicable borrowing rates are not typically implied within our lease arrangements, the Company discounts lease payments based on its estimated incremental borrowing rate at lease commencement, or modification, which is based on the Company’s estimated credit rating, the lease term at commencement and the contract currency of the lease arrangement. |
Revenue, Policy | The Company recognizes revenue when performance obligations under the terms of a contract with the customer are satisfied based on the transfer of control of promised goods or services. The transfer of control typically occurs at a point in time based on consideration of when the customer has (i) an obligation to pay for, (ii) physical possession of, (iii) legal title to, (iv) risks and rewards of ownership of and (v) accepted the goods or services. The timing of revenue recognition within the wholesale channels occurs either on shipment or delivery of goods based on contractual terms with the customer. The timing of revenue recognition in the direct-to-consumer channels generally occurs at the point of sale within Company-operated or concession retail stores and either on shipment or delivery of goods for e-commerce transactions based on contractual terms with the customer. For finished products shipped directly to customers from our suppliers, the Company’s promise to the customer is a performance obligation to provide the specified goods and the Company has discretion in establishing pricing; therefore, the Company is the principal in the arrangement and revenue is recognized on a gross basis at the transaction price. The duration of contractual arrangements with our customers in the wholesale and direct-to-consumer channels is typically less than one year. Payment terms with customers are generally between 30 and 60 days. The Company does not adjust the promised amount of consideration for the effects of a significant financing component as it is expected, at contract inception, that the period between the transfer of the promised good or service to the customer and the customer payment for the good or service will be one year or less. The amount of revenue recognized in the wholesale and direct-to-consumer channels reflects the expected consideration to be received for providing the goods or services to the customer, which includes estimates for variable consideration. Variable consideration includes allowances for trade terms, sales incentive programs, discounts, markdowns, chargebacks and product returns. Estimates of variable consideration are determined at contract inception and reassessed at each reporting date, at a minimum, to reflect any changes in facts and circumstances. The Company utilizes the expected value method in determining its estimates of variable consideration, based on evaluations of specific product and customer circumstances, historical and anticipated trends and current economic conditions. Revenue from the sale of gift cards is deferred and recorded as a contract liability until the gift card is redeemed by the customer, factoring in breakage as appropriate, which considers whether the Company has a legal obligation to remit the value of the unredeemed gift card to any jurisdiction under unclaimed property regulations. The VF Outlet™ stores maintain customer loyalty programs where customers earn rewards from qualifying purchases, which are redeemable for discounts on future purchases or other rewards. For its customer loyalty programs, the Company estimates the standalone selling price of the loyalty rewards and allocates a portion of the consideration for the sale of products to the loyalty points earned. The deferred amount is recorded as a contract liability, and is recognized as revenue when the points are redeemed or when the likelihood of redemption is remote. The Company has elected to treat all shipping and handling activities as fulfillment costs and recognize the costs as "selling, general and administrative expenses" at the time the related revenue is recognized. Shipping and handling costs billed to customers are included in "net revenues." Sales taxes and value added taxes collected from customers and remitted directly to governmental authorities are excluded from the transaction price. The Company has licensing agreements for its symbolic intellectual property, most of which include minimum guaranteed royalties. Royalty income is recognized as earned over the respective license term based on the greater of minimum guarantees or the licensees’ sales of licensed products at rates specified in the licensing contracts. Royalty income related to the minimum guarantees is recognized using a measure of progress with variable amounts recognized only when the cumulative earned royalty exceeds the minimum guarantees. As of September 2019 , the Company expects to recognize $36.8 million of fixed consideration related to the future minimum guarantees in effect under its licensing agreements and expects such amounts to be recognized over time through December 2024 . The variable consideration is not disclosed as a remaining performance obligation as the licensing arrangements qualify for the sales-based royalty exemption. The Company has applied the practical expedient to recognize incremental costs of obtaining a contract as an expense when incurred if the amortization period of the asset that otherwise would have been recognized is one year or less. Performance Obligations Disclosure is required for the aggregate transaction price allocated to performance obligations that are unsatisfied at the end of a reporting period, unless the optional practical expedients are applicable. The Company elected the practical expedients that do not require disclosure of the transaction price allocated to remaining performance obligations for (i) variable consideration related to sales-based royalty arrangements and (ii) contracts with an original expected duration of one year or less. |
LEASES (Tables)
LEASES (Tables) | 9 Months Ended |
Sep. 28, 2019 | |
Leases [Abstract] | |
Schedule of Supplemental Balance Sheet Information | The following table presents the lease-related assets and liabilities recorded in the Company's balance sheet: (in thousands) September 2019 Assets Operating lease assets, noncurrent $ 96,590 Total lease assets $ 96,590 Liabilities Operating lease liabilities, current $ 35,992 Operating lease liabilities, noncurrent 64,328 Total lease liabilities $ 100,320 Weighted-average remaining lease term (in years) Operating leases 4.14 Weighted-average discount rate Operating leases 2.73 % |
Schedule of Lease Costs | The following table presents certain information related to the lease costs for operating leases: (in thousands) Three Months Ended September 2019 Nine Months Ended September 2019 Operating lease cost $ 9,924 $ 28,880 Short-term lease cost (excluding leases of one month or less) 877 2,383 Variable lease cost 873 4,424 Total lease costs $ 11,674 $ 35,687 The following table presents supplemental cash flow and non-cash information related to leases: (in thousands) Nine Months Ended September 2019 Cash paid for amounts included in the measurement of lease liabilities - operating cash flows $ 34,486 Right-of-use assets obtained in exchange for new operating leases - non-cash activity $ 38,939 |
Schedule of Maturities of Operating Leases | The following table presents maturities of operating lease liabilities as of September 2019 : (in thousands) Lease Obligations 2019 (excluding the nine months ended September 2019) $ 11,185 2020 36,656 2021 23,796 2022 12,980 2023 9,639 Thereafter 13,013 Total future minimum lease payments 107,269 Less: amounts related to imputed interest (6,949 ) Present value of future minimum lease payments 100,320 Less: operating lease liabilities, current (35,992 ) Operating lease liabilities, noncurrent $ 64,328 |
Schedule of Future Minimum Rental Payments Under Previous Accounting Standard | The following table presents the future minimum lease payments during the noncancelable lease terms as of December 2018 , prior to the adoption of ASU 2016-02: (in thousands) December 2018 2019 $ 33,562 2020 29,246 2021 17,810 2022 7,932 2023 4,353 Thereafter 4,582 Total future minimum lease payments $ 97,485 |
REVENUES (Tables)
REVENUES (Tables) | 9 Months Ended |
Sep. 28, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Contract with Customer, Asset and Liability | The following table presents information about accounts receivable, contract assets and contract liabilities recorded in the Company's balance sheets: (in thousands) September 2019 December 2018 September 2018 Accounts receivable, net $ 302,582 $ 252,966 $ 318,071 Contract assets (a) 3,429 2,841 2,372 Contract liabilities (b) 2,514 2,311 3,446 (a) Included within "other current assets" in the Company's balance sheets. (b) Included within "accrued liabilities" in the Company's balance sheets. |
Disaggregation of Revenue | The following tables present revenues disaggregated by channel and geography, which provides a meaningful depiction of how the nature, timing and uncertainty of revenues are affected by economic factors. Revenues from licensing arrangements have been included within the U.S. or Non-U.S. Wholesale channels, based on the respective region covered by the agreement. Branded Direct-to-Consumer revenues include the distribution of our products via concession retail locations internationally, Wrangler ® and Lee ® branded full-price stores globally and Company-owned outlet stores globally. The Branded Direct-to-Consumer channel also includes our branded products sold in U.S.-based VF Outlet™ stores and our products that are marketed and distributed online via www.wrangler.com and www.lee.com. The Other channel includes sales of (i) VF-branded products and third-party branded merchandise at VF Outlet ™ stores, (ii) products manufactured in our plants sold to VF and VF’s use of our transportation fleet and (iii) services in fulfilling a transition services agreement related to VF's sale of its Nautica ® brand business in mid-2018. Three Months Ended September 2019 (in thousands) Wrangler Lee Other Total Channel revenues U.S. Wholesale $ 283,616 $ 93,931 $ 5,970 $ 383,517 Non-U.S. Wholesale 60,523 99,386 340 160,249 Branded Direct-To-Consumer 23,067 38,904 9 61,980 Other — — 32,392 32,392 Total $ 367,206 $ 232,221 $ 38,711 $ 638,138 Geographic revenues U.S. $ 302,819 $ 115,700 $ 38,263 $ 456,782 International 64,387 116,521 448 181,356 Total $ 367,206 $ 232,221 $ 38,711 $ 638,138 Three Months Ended September 2018 (in thousands) Wrangler Lee Other Total Channel revenues U.S. Wholesale $ 298,747 $ 104,138 $ 6,551 $ 409,436 Non-U.S. Wholesale 71,381 107,424 — 178,805 Branded Direct-To-Consumer 25,485 39,948 45 65,478 Other — — 50,527 50,527 Total $ 395,613 $ 251,510 $ 57,123 $ 704,246 Geographic revenues U.S. $ 316,910 $ 126,778 $ 57,123 $ 500,811 International 78,703 124,732 — 203,435 Total $ 395,613 $ 251,510 $ 57,123 $ 704,246 Nine Months Ended September 2019 (in thousands) Wrangler Lee Other Total Channel revenues U.S. Wholesale $ 859,481 $ 303,547 $ 17,405 $ 1,180,433 Non-U.S. Wholesale 169,747 257,127 973 427,847 Branded Direct-To-Consumer 71,905 119,986 23 191,914 Other — — 96,034 96,034 Total $ 1,101,133 $ 680,660 $ 114,435 $ 1,896,228 Geographic revenues U.S. $ 914,519 $ 365,615 $ 113,143 $ 1,393,277 International 186,614 315,045 1,292 502,951 Total $ 1,101,133 $ 680,660 $ 114,435 $ 1,896,228 Nine Months Ended September 2018 (in thousands) Wrangler Lee Other Total Channel revenues U.S. Wholesale $ 873,755 $ 315,071 $ 21,209 $ 1,210,035 Non-U.S. Wholesale 207,011 288,361 26 495,398 Branded Direct-To-Consumer 77,575 127,812 72 205,459 Other — — 126,873 126,873 Total $ 1,158,341 $ 731,244 $ 148,180 $ 2,037,765 Geographic revenues U.S. $ 925,716 $ 378,397 $ 148,154 $ 1,452,267 International 232,625 352,847 26 585,498 Total $ 1,158,341 $ 731,244 $ 148,180 $ 2,037,765 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 9 Months Ended |
Sep. 28, 2019 | |
Inventory Disclosure [Abstract] | |
Inventories | (in thousands) September 2019 December 2018 September 2018 Finished products $ 480,492 $ 396,345 $ 454,601 Work-in-process 26,493 37,466 45,986 Raw materials 38,441 40,001 40,349 Total inventories $ 545,426 $ 473,812 $ 540,936 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 9 Months Ended |
Sep. 28, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Finite Lived Intangible Assets | September 2019 December 2018 (in thousands) Weighted Average Amortization Period Amortization Method Cost Accumulated Amortization Net Carrying Amount Net Carrying Amount Finite-lived intangible assets: Trademarks 16 years Straight-line $ 58,132 $ 45,828 $ 12,304 $ 47,232 Customer relationships 15 years Accelerated 10,517 9,706 811 1,213 Finite-lived intangible assets, net 13,115 48,445 Indefinite-lived intangible assets: Trademarks and trade names 4,415 4,614 Intangible assets, net $ 17,530 $ 53,059 |
Indefinite Lived Intangible Assets | September 2019 December 2018 (in thousands) Weighted Average Amortization Period Amortization Method Cost Accumulated Amortization Net Carrying Amount Net Carrying Amount Finite-lived intangible assets: Trademarks 16 years Straight-line $ 58,132 $ 45,828 $ 12,304 $ 47,232 Customer relationships 15 years Accelerated 10,517 9,706 811 1,213 Finite-lived intangible assets, net 13,115 48,445 Indefinite-lived intangible assets: Trademarks and trade names 4,415 4,614 Intangible assets, net $ 17,530 $ 53,059 |
SHORT-TERM BORROWINGS AND LON_2
SHORT-TERM BORROWINGS AND LONG-TERM DEBT (Tables) | 9 Months Ended |
Sep. 28, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of Short-term Debt | (in thousands) September 2019 December 2018 September 2018 Revolving Credit Facility $ — $ — $ — International borrowing arrangements 6,028 3,215 5,617 Short-term borrowings $ 6,028 $ 3,215 $ 5,617 |
Schedule of Long-term Debt Instruments | Long-term Debt (in thousands) September 2019 Term Loan A $ 694,833 Term Loan B 293,274 Total long-term debt 988,107 Less: current portion (7,500 ) Long-term debt, due beyond one year $ 980,607 |
PENSION PLANS (Tables)
PENSION PLANS (Tables) | 9 Months Ended |
Sep. 28, 2019 | |
Retirement Benefits [Abstract] | |
Components of Pension Cost | The following table presents net pension costs recognized by the Company related to the Shared Plans through the Separation date and related to the transferred obligations subsequent to the Separation: Three Months Ended September Nine Months Ended September (in thousands) 2019 2018 2019 2018 Service cost $ 360 $ 1,718 $ 1,377 $ 4,785 Non-service components — (1,301 ) (3,166 ) (3,662 ) Curtailment losses — — — 3,502 Settlement losses — 594 — 661 Net pension (benefit) costs $ 360 $ 1,011 $ (1,789 ) $ 5,286 |
ACCUMULATED OTHER COMPREHENSI_2
ACCUMULATED OTHER COMPREHENSIVE LOSS (Tables) | 9 Months Ended |
Sep. 28, 2019 | |
Equity [Abstract] | |
Deferred Components of OCI Reported, Net of Related Income Taxes, in Accumulated OCI in Stockholders' Equity and Changes in Accumulated OCI | The following tables present changes in accumulated OCL, net of related taxes: Three Months Ended September 2019 Foreign Currency Translation Defined Benefit Pension Plans Derivative Financial Instruments (in thousands) Total Balance, June 2019 $ (81,841 ) $ (1,072 ) $ 9,225 $ (73,688 ) Other comprehensive income (loss) before reclassifications (11,358 ) 297 (468 ) (11,529 ) Amounts reclassified from accumulated other comprehensive income (loss) — — (3,618 ) (3,618 ) Net other comprehensive income (loss) (11,358 ) 297 (4,086 ) (15,147 ) Balance, September 2019 $ (93,199 ) $ (775 ) $ 5,139 $ (88,835 ) Three Months Ended September 2018 Foreign Currency Translation Defined Benefit Pension Plans Derivative Financial Instruments (in thousands) Total Balance, June 2018 $ (141,299 ) $ — $ — $ (141,299 ) Other comprehensive income (loss) before reclassifications (2,770 ) — — (2,770 ) Net other comprehensive income (loss) (2,770 ) — — (2,770 ) Balance, September 2018 $ (144,069 ) $ — $ — $ (144,069 ) Nine Months Ended September 2019 Foreign Currency Translation Defined Benefit Pension Plans Derivative Financial Instruments (in thousands) Total Balance, December 2018 $ (145,182 ) $ — $ — $ (145,182 ) Other comprehensive income (loss) before reclassifications (5,914 ) 283 (2,526 ) (8,157 ) Amounts reclassified from accumulated other comprehensive income (loss) — — (3,980 ) (3,980 ) Net other comprehensive income (loss) (5,914 ) 283 (6,506 ) (12,137 ) Net transfers to former parent 57,897 (1,058 ) 11,645 68,484 Balance, September 2019 $ (93,199 ) $ (775 ) $ 5,139 $ (88,835 ) Nine Months Ended September 2018 Foreign Currency Translation Defined Benefit Pension Plans Derivative Financial Instruments (in thousands) Total Balance, December 2017 $ (122,482 ) $ — $ — $ (122,482 ) Other comprehensive income (loss) before reclassifications (21,587 ) — — (21,587 ) Net other comprehensive income (loss) (21,587 ) — — (21,587 ) Balance, September 2018 $ (144,069 ) $ — $ — $ (144,069 ) The following table presents deferred components of accumulated OCL in equity, net of related taxes: (in thousands) September 2019 December 2018 September 2018 Foreign currency translation $ (93,199 ) $ (145,182 ) $ (144,069 ) Defined benefit pension plans (775 ) — — Derivative financial instruments 5,139 — — Accumulated other comprehensive income (loss) $ (88,835 ) $ (145,182 ) $ (144,069 ) |
Reclassification out of Accumulated Other Comprehensive Income [Table Text Block] | The following table presents reclassifications out of accumulated OCL: Three Months Ended September Nine Months Ended September (in thousands) Details About Component of Accumulated Other Comprehensive Income (Loss) Affected Line Item in the Financial Statements 2019 2018 2019 2018 Gains (losses) on derivative financial instruments: Foreign currency exchange contracts Net revenues $ (379 ) $ — $ (475 ) $ — Foreign currency exchange contracts Cost of goods sold 3,486 — 3,901 — Foreign currency exchange contracts Other expense, net 328 — 371 — Interest rate swap agreements Interest expense 642 — 642 — Total before tax 4,077 — 4,439 — Tax expense Income taxes (459 ) — (459 ) — Total reclassifications for the period, net of tax $ 3,618 $ — $ 3,980 $ — |
REPORTABLE SEGMENT INFORMATION
REPORTABLE SEGMENT INFORMATION (Tables) | 9 Months Ended |
Sep. 28, 2019 | |
Segment Reporting [Abstract] | |
Financial Information for Reportable Segments | 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. |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 9 Months Ended |
Sep. 28, 2019 | |
Fair Value Disclosures [Abstract] | |
Classes of Financial Assets and Financial Liabilities Measured and Recorded at Fair Value on Recurring Basis | The following table presents financial assets and financial liabilities that are measured and recorded in the Company's financial statements at fair value on a recurring basis: Fair Value Measurement Using (in thousands) Total Fair Value Level 1 Level 2 Level 3 September 2019 Financial assets: Cash equivalents: Money market funds $ 4,825 $ 4,825 $ — $ — Time deposits 1,404 1,404 — — Derivative financial instruments 3,504 — 3,504 — Investment securities 57,180 53,900 3,280 — Financial liabilities: Derivative financial instruments 7,574 — 7,574 — Deferred compensation 57,271 — 57,271 — Fair Value Measurement Using (in thousands) Total Fair Value Level 1 Level 2 Level 3 December 2018 Financial assets: Cash equivalents: Money market funds $ 21,687 $ 21,687 $ — $ — Time deposits 2,518 2,518 — — Investment securities 46,666 46,666 — — Financial liabilities: Deferred compensation 46,666 — 46,666 — |
RESTRUCTURING (Tables)
RESTRUCTURING (Tables) | 9 Months Ended |
Sep. 28, 2019 | |
Restructuring and Related Activities [Abstract] | |
Restructuring and Related Costs | The following table presents components of the restructuring charges for previously approved initiatives: (in thousands) Three Months Ended September 2019 Nine Months Ended September 2019 Severance and employee-related benefits $ — $ 14,903 Asset impairments — 1,596 Inventory write-downs — 4,403 Other — 3,660 Total restructuring charges $ — $ 24,562 The following table presents restructuring costs by business segment for previously approved initiatives: (in thousands) Three Months Ended September 2019 Nine Months Ended September 2019 Wrangler $ — $ 17,613 Lee — 6,685 Other — 264 Total $ — $ 24,562 |
Activity in Restructuring | The following table presents activity in the restructuring accrual for the nine -month period ended September 2019 : (in thousands) Severance Other Total Accrual at December 2018 $ 23,249 $ — $ 23,249 Charges 14,903 3,660 18,563 Cash payments (27,573 ) (839 ) (28,412 ) Adjustments to accruals 1,641 — 1,641 Currency translation (58 ) (197 ) (255 ) Adjustment at Separation (6,384 ) (2,624 ) (9,008 ) Accrual at September 2019 $ 5,778 $ — $ 5,778 |
TRANSACTIONS WITH FORMER PARE_2
TRANSACTIONS WITH FORMER PARENT (Tables) | 9 Months Ended |
Sep. 28, 2019 | |
Related Party Transactions [Abstract] | |
Schedule of Related Party Transactions | The following table presents components of due from former parent, noncurrent: (in thousands) December 2018 September 2018 Hedging agreements with VF $ 611 $ 1,100 The following table presents components of due to former parent, current: (in thousands) December 2018 September 2018 Sourcing payable $ 16,140 $ 69,542 The following table presents components of the transfers to and from VF : Nine Months Ended September (in thousands) 2019 (a) 2018 General financing activities $ (723,155 ) $ (127,627 ) Corporate allocations 47,903 82,477 Stock-based compensation expense 9,582 14,012 Pension (benefit) costs (2,246 ) 5,286 Purchases from parent 3,193 1,961 Sales to parent (13,988 ) (40,566 ) Other income tax 10,863 53,378 Transition tax related to the Tax Act 3,937 5,716 Cash dividend to former parent (1,032,948 ) — Total net transfers to former parent $ (1,696,859 ) $ (5,363 ) (a) Activity reflected through the Separation date. The following table presents components of due from former parent, current: (in thousands) December 2018 September 2018 Sale of trade accounts receivable $ 544,858 $ 263,498 Hedging agreements with VF 2,832 4,107 $ 547,690 $ 267,605 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 9 Months Ended |
Sep. 28, 2019 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share | The following table presents the computation of basic and diluted EPS: Three Months Ended September Nine Months Ended September (in thousands, except per share amounts) 2019 2018 2019 2018 Net income $ 14,502 $ 71,018 $ 67,901 $ 211,172 Basic weighted average shares outstanding 56,694 56,648 56,663 56,648 Dilutive effect of stock-based awards 707 — 326 — Diluted weighted average shares outstanding 57,401 56,648 56,989 56,648 Earnings per share: Basic earnings per share $ 0.26 $ 1.25 $ 1.20 $ 3.73 Diluted earnings per share 0.25 1.25 1.19 3.73 Anti-dilutive stock-based awards excluded from diluted calculation 323 — 164 — |
DERIVATIVE FINANCIAL INSTRUME_2
DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES (Tables) | 9 Months Ended |
Sep. 28, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Derivative Instruments | The following table presents outstanding derivatives on an individual contract basis: September 2019 (in thousands) Fair Value of Derivatives with Unrealized Gains Fair Value of Derivatives with Unrealized Losses Derivatives designated as hedging instruments: Foreign currency exchange contracts $ 3,463 $ (2,603 ) Interest rate swap agreements — (4,861 ) Derivatives not designated as hedging instruments: Foreign currency exchange contracts 41 (110 ) Total derivatives $ 3,504 $ (7,574 ) The following table presents a reconciliation of gross to net amounts for derivative asset and liability balances: September 2019 (in thousands) Derivative Asset Derivative Liability Gross amounts presented in the balance sheet $ 3,504 $ (7,574 ) Gross amounts not offset in the balance sheet (507 ) 507 Net amounts $ 2,997 $ (7,067 ) The following table presents classification of derivatives as current or noncurrent based on maturity dates: (in thousands) September 2019 Derivative financial instruments: Other current assets $ 2,900 Accrued liabilities (2,376 ) Other assets 604 Other liabilities (5,198 ) |
Schedule of Cash Flow Hedging Instruments, Statements of Financial Performance and Financial Position, Location | The following tables present the effects of cash flow hedges included in the Company's statements of income and statements of comprehensive income: Three Months Ended September 2019 Nine Months Ended September 2019 (in thousands) Cash Flow Hedging Relationships Gain (Loss) on Derivatives Recognized in OCL Gain (Loss) on Derivatives Recognized in OCL Foreign currency exchange contracts $ 3,926 $ 1,868 Interest rate swap agreements (4,220 ) (4,220 ) Total $ (294 ) $ (2,352 ) Three Months Ended September 2019 Nine Months Ended September 2019 (in thousands) Location of Gain (Loss) Gain (Loss) Reclassified from Accumulated OCL into Income Gain (Loss) Reclassified from Accumulated OCL into Income Net sales $ (379 ) $ (475 ) Cost of goods sold 3,486 3,901 Other income (expense), net 328 371 Interest expense 642 642 Total $ 4,077 $ 4,439 |
Derivatives Not Designated as Hedging Instruments | The following table presents a summary of these derivatives included in the Company's statements of income: Three Months Ended Nine Months Ended (in thousands) September 2019 September 2019 Derivatives Not Designated as Hedges Location of Gain (Loss) on Derivatives Recognized in Income Gain (Loss) on Derivatives Gain (Loss) on Derivatives Foreign currency exchange contracts Cost of goods sold $ 72 $ 15 $ 72 $ 15 |
BASIS OF PRESENTATION (Details)
BASIS OF PRESENTATION (Details) $ in Thousands | May 22, 2019 | May 17, 2019USD ($) | Sep. 28, 2019USD ($) | Sep. 29, 2018USD ($) |
Accounting Policies [Abstract] | ||||
Spinoff transaction, conversion ratio | 0.1428571429 | |||
Transfer to related party | $ (1,050,000) | $ 1,696,859 | $ 5,363 |
RECENTLY ADOPTED AND ISSUED A_2
RECENTLY ADOPTED AND ISSUED ACCOUNTING STANDARDS - (Details) - USD ($) $ in Thousands | Dec. 30, 2018 | Dec. 31, 2017 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Adoption of new accounting standard | $ 2,713 | $ (3,047) |
Former Parent Investment | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Adoption of new accounting standard | $ 2,713 | $ (3,047) |
LEASES - Additional Information
LEASES - Additional Information (Details) - USD ($) $ in Millions | Sep. 29, 2019 | Sep. 29, 2018 | Sep. 29, 2018 | Sep. 28, 2019 |
Lessee, Lease, Description [Line Items] | ||||
Short term lease, excluded from recognition | 12 months | |||
Rent expense | $ 10.6 | $ 31.8 | ||
Lease not yet commenced | $ 1.1 | |||
Real Estate | Minimum | ||||
Lessee, Lease, Description [Line Items] | ||||
Term of contract | 2 years | |||
Real Estate | Maximum | ||||
Lessee, Lease, Description [Line Items] | ||||
Term of contract | 15 years | |||
Equipment | Minimum | ||||
Lessee, Lease, Description [Line Items] | ||||
Term of contract | 3 years | |||
Equipment | Maximum | ||||
Lessee, Lease, Description [Line Items] | ||||
Term of contract | 7 years |
LEASES - Supplemental Balance S
LEASES - Supplemental Balance Sheet Information (Details) - USD ($) $ in Thousands | Sep. 28, 2019 | Dec. 29, 2018 | Sep. 29, 2018 |
Assets | |||
Operating lease assets, noncurrent | $ 96,590 | $ 0 | $ 0 |
Liabilities | |||
Operating lease liabilities, current | 35,992 | 0 | 0 |
Operating lease liabilities, noncurrent | 64,328 | $ 0 | $ 0 |
Total lease liabilities | $ 100,320 | ||
Weighted-average remaining lease term (in years) | |||
Operating leases | 4 years 1 month 20 days | ||
Weighted-average discount rate | |||
Operating leases | 2.73% |
LEASES - Lease Costs (Details)
LEASES - Lease Costs (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 28, 2019 | Sep. 28, 2019 | |
Leases [Abstract] | ||
Operating lease cost | $ 9,924 | $ 28,880 |
Short-term lease cost (excluding leases of one month or less) | 877 | 2,383 |
Variable lease cost | 873 | 4,424 |
Total lease costs | $ 11,674 | 35,687 |
Cash paid for amounts included in the measurement of lease liabilities - operating cash flows | 34,486 | |
Right-of-use assets obtained in exchange for new operating leases - non-cash activity | $ 38,939 |
LEASES - Maturities of Operatin
LEASES - Maturities of Operating Leases (Details) - USD ($) $ in Thousands | Sep. 28, 2019 | Dec. 29, 2018 | Sep. 29, 2018 |
Leases [Abstract] | |||
2019 (excluding the nine months ended September 2019) | $ 11,185 | ||
2020 | 36,656 | ||
2021 | 23,796 | ||
2022 | 12,980 | ||
2023 | 9,639 | ||
Thereafter | 13,013 | ||
Total future minimum lease payments | 107,269 | ||
Less: amounts related to imputed interest | (6,949) | ||
Total lease liabilities | 100,320 | ||
Less: operating lease liabilities, current | (35,992) | $ 0 | $ 0 |
Operating lease liabilities, noncurrent | $ 64,328 | $ 0 | $ 0 |
LEASES - Future Minimum Rental
LEASES - Future Minimum Rental Payments Under Previous Accounting Standard (Details) $ in Thousands | Dec. 29, 2018USD ($) |
Leases [Abstract] | |
2019 | $ 33,562 |
2020 | 29,246 |
2021 | 17,810 |
2022 | 7,932 |
2023 | 4,353 |
Thereafter | 4,582 |
Total future minimum lease payments | $ 97,485 |
REVENUES - Remaining Performanc
REVENUES - Remaining Performance Obligation (Details) - Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-09-29 $ in Millions | Sep. 28, 2019USD ($) |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation | $ 36.8 |
Expected timing of satisfaction | 9 years 3 months |
REVENUES - Contract Assets and
REVENUES - Contract Assets and Liabilities (Details) - USD ($) $ in Thousands | Sep. 28, 2019 | Dec. 29, 2018 | Sep. 29, 2018 |
Revenue from Contract with Customer [Abstract] | |||
Accounts receivable, net | $ 302,582 | $ 252,966 | $ 318,071 |
Contract assets | 3,429 | 2,841 | 2,372 |
Contract liabilities | $ 2,514 | $ 2,311 | $ 3,446 |
REVENUES - Additional Informati
REVENUES - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 28, 2019 | Sep. 29, 2018 | Sep. 28, 2019 | Sep. 29, 2018 | |
Revenue from Contract with Customer [Abstract] | ||||
Contract with customer, liability, revenue recognized | $ 0.2 | $ 0.1 | $ 1.7 | $ 1.7 |
REVENUES - Disaggregation of Re
REVENUES - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 28, 2019 | Sep. 29, 2018 | Sep. 28, 2019 | Sep. 29, 2018 | |
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 638,138 | $ 704,246 | $ 1,896,228 | $ 2,037,765 |
U.S. | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 456,782 | 500,811 | 1,393,277 | 1,452,267 |
International | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 181,356 | 203,435 | 502,951 | 585,498 |
Wholesale | U.S. | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 383,517 | 409,436 | 1,180,433 | 1,210,035 |
Wholesale | International | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 160,249 | 178,805 | 427,847 | 495,398 |
Branded Direct-To-Consumer | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 61,980 | 65,478 | 191,914 | 205,459 |
Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 32,392 | 50,527 | 96,034 | 126,873 |
Operating Segments | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 638,138 | 704,246 | 1,896,228 | 2,037,765 |
Operating Segments | Wrangler | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 367,206 | 395,613 | 1,101,133 | 1,158,341 |
Operating Segments | Wrangler | U.S. | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 302,819 | 316,910 | 914,519 | 925,716 |
Operating Segments | Wrangler | International | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 64,387 | 78,703 | 186,614 | 232,625 |
Operating Segments | Wrangler | Wholesale | U.S. | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 283,616 | 298,747 | 859,481 | 873,755 |
Operating Segments | Wrangler | Wholesale | International | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 60,523 | 71,381 | 169,747 | 207,011 |
Operating Segments | Wrangler | Branded Direct-To-Consumer | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 23,067 | 25,485 | 71,905 | 77,575 |
Operating Segments | Wrangler | Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 0 | 0 | 0 | 0 |
Operating Segments | Lee | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 232,221 | 251,510 | 680,660 | 731,244 |
Operating Segments | Lee | U.S. | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 115,700 | 126,778 | 365,615 | 378,397 |
Operating Segments | Lee | International | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 116,521 | 124,732 | 315,045 | 352,847 |
Operating Segments | Lee | Wholesale | U.S. | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 93,931 | 104,138 | 303,547 | 315,071 |
Operating Segments | Lee | Wholesale | International | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 99,386 | 107,424 | 257,127 | 288,361 |
Operating Segments | Lee | Branded Direct-To-Consumer | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 38,904 | 39,948 | 119,986 | 127,812 |
Operating Segments | Lee | Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 0 | 0 | 0 | 0 |
Operating Segments | Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 38,711 | 57,123 | 114,435 | 148,180 |
Other | Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 38,711 | 57,123 | 114,435 | 148,180 |
Other | Other | U.S. | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 38,263 | 57,123 | 113,143 | 148,154 |
Other | Other | International | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 448 | 0 | 1,292 | 26 |
Other | Other | Wholesale | U.S. | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 5,970 | 6,551 | 17,405 | 21,209 |
Other | Other | Wholesale | International | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 340 | 0 | 973 | 26 |
Other | Other | Branded Direct-To-Consumer | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 9 | 45 | 23 | 72 |
Other | Other | Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 32,392 | $ 50,527 | $ 96,034 | $ 126,873 |
SALE OF ACCOUNTS RECEIVABLE (De
SALE OF ACCOUNTS RECEIVABLE (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 28, 2019 | Sep. 29, 2018 | Sep. 28, 2019 | Sep. 29, 2018 | Dec. 29, 2018 | |
Receivables [Abstract] | |||||
Maximum amount of accounts receivable sold at any point in time (up to) | $ 377.5 | $ 377.5 | |||
Sale of accounts receivable | 758 | $ 777.3 | |||
Accounts receivable removed related to sale of accounts receivable | 172.1 | $ 263.5 | 172.1 | 263.5 | $ 544.9 |
Funding fee | $ 1.2 | $ 1.2 | $ 4.1 | $ 3.6 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) $ in Thousands | Sep. 28, 2019 | Dec. 29, 2018 | Sep. 29, 2018 |
Inventory Disclosure [Abstract] | |||
Finished products | $ 480,492 | $ 396,345 | $ 454,601 |
Work-in-process | 26,493 | 37,466 | 45,986 |
Raw materials | 38,441 | 40,001 | 40,349 |
Total inventories | $ 545,426 | $ 473,812 | $ 540,936 |
INTANGIBLE ASSETS - Schedule of
INTANGIBLE ASSETS - Schedule of Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Sep. 28, 2019 | Dec. 29, 2018 | Sep. 29, 2018 | |
Finite-lived intangible assets: | |||
Net Carrying Amount | $ 13,115 | $ 48,445 | |
Indefinite-lived intangible assets: | |||
Trademarks and trade names | 4,415 | 4,614 | |
Intangible assets, net | $ 17,530 | 53,059 | $ 54,186 |
Trademarks | |||
Finite-lived intangible assets: | |||
Weighted Average Amortization Period | 16 years | ||
Cost | $ 58,132 | ||
Accumulated Amortization | 45,828 | ||
Net Carrying Amount | $ 12,304 | 47,232 | |
Customer relationships | |||
Finite-lived intangible assets: | |||
Weighted Average Amortization Period | 15 years | ||
Cost | $ 10,517 | ||
Accumulated Amortization | 9,706 | ||
Net Carrying Amount | $ 811 | $ 1,213 |
INTANGIBLE ASSETS - Additional
INTANGIBLE ASSETS - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 28, 2019 | Sep. 29, 2018 | Sep. 28, 2019 | Sep. 29, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Non-cash impairment of intangible asset | $ 32,636 | $ 0 | $ 32,636 | $ 0 |
Amortization of intangible assets | 600 | $ 1,100 | 2,600 | $ 3,200 |
Estimated amortization expense, remaining 2019 | 3,000 | 3,000 | ||
Estimated amortization expense, 2020 | 1,400 | 1,400 | ||
Estimated amortization expense, 2021 | 1,200 | 1,200 | ||
Estimated amortization expense, 2022 | 1,100 | 1,100 | ||
Estimated amortization expense, 2023 | $ 1,000 | $ 1,000 |
SHORT-TERM BORROWINGS AND LON_3
SHORT-TERM BORROWINGS AND LONG-TERM DEBT - Additional Information (Details) - USD ($) | May 17, 2019 | Sep. 28, 2019 | Sep. 29, 2018 | Dec. 29, 2018 |
Short-term Debt [Line Items] | ||||
Proceeds from issuance of long-term debt | $ 1,050,000,000 | $ 1,050,000,000 | $ 0 | |
Line of credit facility, amount outstanding | 1,550,000,000 | |||
Short-term borrowings | $ 6,028,000 | 5,617,000 | $ 3,215,000 | |
Commitment fee | 0.075% | |||
Commitment fee percentage | 0.30% | |||
Revolving Credit Facility | ||||
Short-term Debt [Line Items] | ||||
Maximum borrowing capacity | $ 500,000,000 | |||
Debt instrument, term | 5 years | |||
Remaining borrowing capacity | $ 498,700,000 | |||
Short-term borrowings | 0 | 0 | 0 | |
Letter of Credit | ||||
Short-term Debt [Line Items] | ||||
Maximum borrowing capacity | 75,000,000 | |||
Long-term line of credit | 1,300,000 | |||
International borrowing arrangements | ||||
Short-term Debt [Line Items] | ||||
Maximum borrowing capacity | 47,500,000 | |||
Short-term borrowings | 6,028,000 | $ 5,617,000 | $ 3,215,000 | |
Term Loan A facility | Term Loan | ||||
Short-term Debt [Line Items] | ||||
Maximum borrowing capacity | $ 750,000,000 | |||
Debt instrument, term | 5 years | |||
Long-term debt | $ 700,000,000 | |||
Effective annual interest rate | 4.10% | |||
Term Loan B facility | Term Loan | ||||
Short-term Debt [Line Items] | ||||
Maximum borrowing capacity | $ 300,000,000 | |||
Debt instrument, term | 7 years | |||
Long-term debt | $ 300,000,000 | |||
Effective annual interest rate | 6.80% | |||
Base Rate | Term Loan A facility | Term Loan | ||||
Short-term Debt [Line Items] | ||||
Basis spread | 1.75% | |||
Base Rate | Term Loan B facility | Term Loan | ||||
Short-term Debt [Line Items] | ||||
Basis spread | 3.25% | |||
London Interbank Offered Rate (LIBOR) | ||||
Short-term Debt [Line Items] | ||||
Basis spread | 1.75% | |||
London Interbank Offered Rate (LIBOR) | Term Loan A facility | Term Loan | ||||
Short-term Debt [Line Items] | ||||
Basis spread | 0.75% | |||
London Interbank Offered Rate (LIBOR) | Term Loan B facility | Term Loan | ||||
Short-term Debt [Line Items] | ||||
Basis spread | 4.25% | |||
Minimum | London Interbank Offered Rate (LIBOR) | ||||
Short-term Debt [Line Items] | ||||
Basis spread | 0.00% |
SHORT-TERM BORROWINGS AND LON_4
SHORT-TERM BORROWINGS AND LONG-TERM DEBT - Long-term Debt (Details) - USD ($) $ in Thousands | Sep. 28, 2019 | Dec. 29, 2018 | Sep. 29, 2018 |
Debt Instrument [Line Items] | |||
Total long-term debt | $ 988,107 | ||
Less current portion | (7,500) | $ 0 | $ 0 |
Long-term debt, due beyond one year | 980,607 | $ 0 | $ 0 |
Term Loan A facility | Term Loan | |||
Debt Instrument [Line Items] | |||
Total long-term debt | 694,833 | ||
Term Loan B facility | Term Loan | |||
Debt Instrument [Line Items] | |||
Total long-term debt | $ 293,274 |
PENSION PLANS - Components of P
PENSION PLANS - Components of Pension Cost (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 28, 2019 | Sep. 29, 2018 | Sep. 28, 2019 | Sep. 29, 2018 | |
Retirement Benefits [Abstract] | ||||
Service cost | $ 360 | $ 1,718 | $ 1,377 | $ 4,785 |
Non-service components | 0 | (1,301) | (3,166) | (3,662) |
Curtailment losses | 0 | 0 | 3,502 | |
Settlement losses | 0 | 594 | 661 | |
Net pension (benefit) costs | $ 360 | $ 1,011 | $ (1,789) | $ 5,286 |
PENSION PLANS - Additional Info
PENSION PLANS - Additional Information (Details) $ in Millions | May 17, 2019USD ($) |
Compensation Related Costs [Abstract] | |
Increase in obligation | $ 11 |
Prior Service cost, OCI | $ 1.1 |
ACCUMULATED OTHER COMPREHENSI_3
ACCUMULATED OTHER COMPREHENSIVE LOSS - Deferred Components of OCI Reported, Net of Related Income Taxes, in Accumulated OCI in Stockholders' Equity (Details) - USD ($) $ in Thousands | Sep. 28, 2019 | Dec. 29, 2018 | Sep. 29, 2018 | Jun. 30, 2018 |
Equity [Abstract] | ||||
Foreign currency translation | $ (93,199) | $ (145,182) | $ (144,069) | |
Defined benefit pension plans | (775) | 0 | $ 0 | |
Derivative financial instruments | 5,139 | 0 | 0 | |
Accumulated other comprehensive income (loss) | $ (88,835) | $ (145,182) | $ (144,069) |
ACCUMULATED OTHER COMPREHENSI_4
ACCUMULATED OTHER COMPREHENSIVE LOSS - Changes in Accumulated OCI, Net of Related Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 28, 2019 | Jun. 29, 2019 | Mar. 30, 2019 | Sep. 29, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Sep. 28, 2019 | Sep. 29, 2018 | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||||||
Balance, beginning | $ 82,168 | $ 1,578,982 | $ 1,723,452 | $ 1,767,687 | $ 1,563,782 | $ 1,357,893 | $ 1,723,452 | $ 1,357,893 |
Other comprehensive income (loss) before reclassifications | (11,529) | (2,770) | (8,157) | (21,587) | ||||
Amounts reclassified from accumulated other comprehensive income (loss) | (3,618) | 0 | (3,980) | 0 | ||||
Net other comprehensive income (loss) | (15,147) | (2,770) | (12,137) | (21,587) | ||||
Net transfers to former parent | (1,538,931) | (157,928) | (290,773) | 171,965 | 113,445 | |||
Balance, ending | 55,571 | 82,168 | 1,578,982 | 1,545,162 | 1,767,687 | 1,563,782 | 55,571 | 1,545,162 |
Foreign Currency Translation | ||||||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||||||
Balance, beginning | (81,841) | (145,182) | (141,299) | (141,299) | (122,482) | (145,182) | (122,482) | |
Other comprehensive income (loss) before reclassifications | (11,358) | (2,770) | (5,914) | (21,587) | ||||
Amounts reclassified from accumulated other comprehensive income (loss) | 0 | 0 | ||||||
Net other comprehensive income (loss) | (11,358) | (2,770) | (5,914) | (21,587) | ||||
Net transfers to former parent | 57,897 | |||||||
Balance, ending | (93,199) | (81,841) | (144,069) | (141,299) | (141,299) | (93,199) | (144,069) | |
Defined Benefit Pension Plans | ||||||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||||||
Balance, beginning | (1,072) | 0 | 0 | 0 | 0 | 0 | ||
Other comprehensive income (loss) before reclassifications | 297 | 0 | 283 | 0 | ||||
Amounts reclassified from accumulated other comprehensive income (loss) | 0 | 0 | ||||||
Net other comprehensive income (loss) | 297 | 0 | 283 | 0 | ||||
Net transfers to former parent | (1,058) | |||||||
Balance, ending | (775) | (1,072) | 0 | 0 | (775) | 0 | ||
Derivative Financial Instruments | ||||||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||||||
Balance, beginning | 9,225 | 0 | 0 | 0 | 0 | 0 | ||
Other comprehensive income (loss) before reclassifications | (468) | 0 | (2,526) | 0 | ||||
Amounts reclassified from accumulated other comprehensive income (loss) | (3,618) | (3,980) | ||||||
Net other comprehensive income (loss) | (4,086) | 0 | (6,506) | 0 | ||||
Net transfers to former parent | 11,645 | |||||||
Balance, ending | 5,139 | 9,225 | 0 | 0 | 5,139 | 0 | ||
Accumulated Other Comprehensive Loss | ||||||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||||||
Balance, beginning | (73,688) | (144,424) | (145,182) | (141,299) | (112,781) | (122,482) | (145,182) | (122,482) |
Net transfers to former parent | 68,484 | 68,484 | ||||||
Balance, ending | $ (88,835) | $ (73,688) | $ (144,424) | $ (144,069) | $ (141,299) | $ (112,781) | $ (88,835) | $ (144,069) |
ACCUMULATED OTHER COMPREHENSI_5
ACCUMULATED OTHER COMPREHENSIVE LOSS - Reclassification Out of Accumulated OCI (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 28, 2019 | Sep. 29, 2018 | Sep. 28, 2019 | Sep. 29, 2018 | |
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||
Net revenues | $ 638,138 | $ 704,246 | $ 1,896,228 | $ 2,037,765 |
Other expense, net | (1,456) | (2,084) | (3,797) | (4,522) |
Total before tax | 16,144 | 96,612 | 91,375 | 267,514 |
Income taxes | (1,642) | (25,594) | (23,474) | (56,342) |
Total reclassifications for the period, net of tax | 3,618 | 0 | 3,980 | 0 |
Derivative Financial Instruments | ||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||
Total reclassifications for the period, net of tax | 3,618 | 3,980 | ||
Derivative Financial Instruments | Reclassification out of Accumulated Other Comprehensive Income | ||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||
Total before tax | 4,077 | 0 | 4,439 | 0 |
Income taxes | (459) | 0 | (459) | 0 |
Foreign currency exchange contracts | Derivative Financial Instruments | Reclassification out of Accumulated Other Comprehensive Income | ||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||
Net revenues | (379) | 0 | (475) | 0 |
Cost of goods sold | 3,486 | 0 | 3,901 | 0 |
Other expense, net | 328 | 0 | 371 | 0 |
Interest rate swap agreements | Derivative Financial Instruments | Reclassification out of Accumulated Other Comprehensive Income | ||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||
Interest expense | $ 642 | $ 0 | $ 642 | $ 0 |
STOCK-BASED COMPENSATION - Addi
STOCK-BASED COMPENSATION - Additional Information (Details) shares in Thousands | May 17, 2019shares | Sep. 28, 2019$ / sharesshares |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Shares converted in period (in shares) | 2,400 | |
Fair market value (in USD per share) | $ / shares | $ 32.26 | |
Minimum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Payout percentage | 0.00% | |
Maximum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Payout percentage | 200.00% | |
Performance Based Restricted Stock Units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Grants in Period (in shares) | 422 | |
Time Based Restricted Stock Units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Grants in Period (in shares) | 334 | |
RSU conversion ratio | 1 | |
Vesting period | 3 years | |
Nonemployee, Board of Directors | Restricted Stock Units (RSUs) | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Grants in Period (in shares) | 30 | |
RSU conversion ratio | 1 | |
Vesting period | 1 year |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 28, 2019 | Sep. 29, 2018 | Sep. 28, 2019 | Sep. 29, 2018 | |
Income Tax Disclosure [Abstract] | ||||
Non-cash impairment of intangible asset | $ 32,636 | $ 0 | $ 32,636 | $ 0 |
Impairment of intangible asset, tax benefit | 7,400 | |||
Effective income tax rate | 25.70% | 21.10% | ||
Net discrete tax benefits | $ 1,100 | $ 1,800 | ||
Tax benefit related stock compensation | 3,400 | 2,900 | ||
Tax cuts and jobs act of 2017, adjustment expense | (5,700) | |||
Realization of unrecognized net tax benefit (expense) | $ 4,500 | $ 4,600 | ||
Tax increase (reduction) due to discrete items | 1.20% | (0.60%) | ||
Change in effective income tax rate without discrete items | 2.80% | |||
Decrease in unrecognized tax benefits and associated interest | $ 38,800 | |||
Net unrecognized tax benefits and interest, if recognized, would reduce the annual effective tax rate | 12,500 | 12,500 | ||
Possible decrease in unrecognized income tax benefits | $ 600 | $ 600 |
REPORTABLE SEGMENT INFORMATIO_2
REPORTABLE SEGMENT INFORMATION (Details) - USD ($) $ in Thousands | 3 Months Ended | 5 Months Ended | 9 Months Ended | ||
Sep. 28, 2019 | Sep. 29, 2018 | May 30, 2019 | Sep. 28, 2019 | Sep. 29, 2018 | |
Segment Reporting Information [Line Items] | |||||
Total segment revenues | $ 638,138 | $ 704,246 | $ 1,896,228 | $ 2,037,765 | |
Operating income | 31,028 | 95,284 | 109,743 | 263,426 | |
Non-cash impairment of intangible asset | (32,636) | 0 | (32,636) | 0 | |
Interest income from former parent, net | 0 | 2,104 | $ 3,800 | 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 | |
Operating Segments | |||||
Segment Reporting Information [Line Items] | |||||
Total segment revenues | 638,138 | 704,246 | 1,896,228 | 2,037,765 | |
Operating income | 92,069 | 99,872 | 202,814 | 284,156 | |
Operating Segments | Wrangler | |||||
Segment Reporting Information [Line Items] | |||||
Total segment revenues | 367,206 | 395,613 | 1,101,133 | 1,158,341 | |
Operating income | 61,070 | 65,104 | 141,715 | 195,720 | |
Operating Segments | Lee | |||||
Segment Reporting Information [Line Items] | |||||
Total segment revenues | 232,221 | 251,510 | 680,660 | 731,244 | |
Operating income | 30,156 | 36,107 | 61,536 | 90,161 | |
Operating Segments | Other | |||||
Segment Reporting Information [Line Items] | |||||
Total segment revenues | 38,711 | 57,123 | 114,435 | 148,180 | |
Operating income | 843 | (1,339) | (437) | (1,725) | |
Corporate and other expenses | |||||
Segment Reporting Information [Line Items] | |||||
Corporate and other expenses | (29,861) | (6,672) | (64,232) | (25,252) | |
Interest income from former parent, net | 0 | 2,104 | 3,762 | 5,415 | |
Other | Other | |||||
Segment Reporting Information [Line Items] | |||||
Total segment revenues | $ 38,711 | $ 57,123 | $ 114,435 | $ 148,180 |
FAIR VALUE MEASUREMENTS - Measu
FAIR VALUE MEASUREMENTS - Measured on Recurring Basis (Details) - USD ($) $ in Thousands | Sep. 28, 2019 | Dec. 29, 2018 |
Financial assets: | ||
Money market funds | $ 4,825 | $ 21,687 |
Time deposits | 1,404 | 2,518 |
Derivative financial instruments | 3,504 | |
Investment securities | 57,180 | 46,666 |
Financial liabilities: | ||
Derivative financial instruments | 7,574 | |
Deferred compensation | 57,271 | 46,666 |
Level 1 | ||
Financial assets: | ||
Money market funds | 4,825 | 21,687 |
Time deposits | 1,404 | 2,518 |
Derivative financial instruments | 0 | |
Investment securities | 53,900 | 46,666 |
Financial liabilities: | ||
Derivative financial instruments | 0 | |
Deferred compensation | 0 | 0 |
Level 2 | ||
Financial assets: | ||
Money market funds | 0 | 0 |
Time deposits | 0 | 0 |
Derivative financial instruments | 3,504 | |
Investment securities | 3,280 | 0 |
Financial liabilities: | ||
Derivative financial instruments | 7,574 | |
Deferred compensation | 57,271 | 46,666 |
Level 3 | ||
Financial assets: | ||
Money market funds | 0 | 0 |
Time deposits | 0 | 0 |
Derivative financial instruments | 0 | |
Investment securities | 0 | 0 |
Financial liabilities: | ||
Derivative financial instruments | 0 | |
Deferred compensation | $ 0 | $ 0 |
FAIR VALUE MEASUREMENTS - Addit
FAIR VALUE MEASUREMENTS - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 28, 2019 | Sep. 29, 2018 | Sep. 28, 2019 | Sep. 29, 2018 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Long-term debt | $ 988,107 | $ 988,107 | ||
Non-cash impairment of intangible asset | 32,636 | $ 0 | 32,636 | $ 0 |
Level 2 | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Debt, fair value | $ 984,400 | $ 984,400 |
RESTRUCTURING - Additional Info
RESTRUCTURING - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Sep. 28, 2019 | Sep. 28, 2019 | Dec. 29, 2018 | |
Restructuring Cost and Reserve [Line Items] | |||
Restructuring charges | $ 0 | $ 24,562 | |
Asset impairments | 0 | 1,596 | |
Restructuring reserve | $ 5,778 | 5,778 | $ 23,249 |
Selling, general and administrative expenses | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring charges | 13,800 | ||
Cost of goods sold | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring charges | $ 10,800 |
RESTRUCTURING - Restructuring c
RESTRUCTURING - Restructuring costs (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 28, 2019 | Sep. 28, 2019 | |
Restructuring and Related Activities [Abstract] | ||
Severance and employee-related benefits | $ 0 | $ 14,903 |
Asset impairments | 0 | 1,596 |
Inventory write-downs | 0 | 4,403 |
Other | 0 | 3,660 |
Total restructuring charges | $ 0 | $ 24,562 |
RESTRUCTURING - Restructuring_2
RESTRUCTURING - Restructuring costs by business segment (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 28, 2019 | Sep. 28, 2019 | |
Restructuring Cost and Reserve [Line Items] | ||
Restructuring charges | $ 0 | $ 24,562 |
Operating Segments | Wrangler | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring charges | 0 | 17,613 |
Operating Segments | Lee | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring charges | 0 | 6,685 |
Operating Segments | Other | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring charges | $ 0 | $ 264 |
RESTRUCTURING - Activity in res
RESTRUCTURING - Activity in restructuring accrual (Details) $ in Thousands | 9 Months Ended |
Sep. 28, 2019USD ($) | |
Restructuring Reserve [Roll Forward] | |
Amounts recorded in accrued liabilities, beginning | $ 23,249 |
Charges | 18,563 |
Cash payments | (28,412) |
Adjustments to accruals | 1,641 |
Currency translation | (255) |
Adjustment at Separation | (9,008) |
Amounts recorded in accrued liabilities. ending | 5,778 |
Severance | |
Restructuring Reserve [Roll Forward] | |
Amounts recorded in accrued liabilities, beginning | 23,249 |
Charges | 14,903 |
Cash payments | (27,573) |
Adjustments to accruals | 1,641 |
Currency translation | (58) |
Adjustment at Separation | (6,384) |
Amounts recorded in accrued liabilities. ending | 5,778 |
Other | |
Restructuring Reserve [Roll Forward] | |
Amounts recorded in accrued liabilities, beginning | 0 |
Charges | 3,660 |
Cash payments | (839) |
Adjustments to accruals | 0 |
Currency translation | (197) |
Adjustment at Separation | (2,624) |
Amounts recorded in accrued liabilities. ending | $ 0 |
TRANSACTIONS WITH FORMER PARE_3
TRANSACTIONS WITH FORMER PARENT - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 5 Months Ended | 9 Months Ended | |||
Sep. 28, 2019 | Sep. 29, 2018 | May 30, 2019 | Sep. 28, 2019 | Sep. 29, 2018 | Dec. 29, 2018 | |
Related Party Transactions [Abstract] | ||||||
Sales to related party | $ 15,000 | $ 14,100 | $ 40,600 | |||
Related party transaction, cost of goods sold | 600 | 500 | 1,800 | |||
Related party transaction, remaining inventory purchased from related party | $ 500 | 1,100 | $ 500 | 1,100 | $ 800 | |
Notes receivable from former parent | 0 | $ 546,740 | 0 | $ 546,740 | $ 517,940 | |
Related party transaction, weighted average note receivable rate | 3.40% | 3.40% | 3.40% | |||
Notes payable to former parent | 0 | $ 269,112 | 0 | $ 269,112 | $ 269,112 | |
Related party transaction, weighted average note payable rate | 3.40% | 3.40% | 3.40% | |||
Interest income from former parent, net | $ 0 | $ 2,104 | $ 3,800 | $ 3,762 | $ 5,415 |
TRANSACTIONS WITH FORMER PARE_4
TRANSACTIONS WITH FORMER PARENT - Due from related parties, current (Details) - USD ($) $ in Thousands | Sep. 28, 2019 | Dec. 29, 2018 | Sep. 29, 2018 |
Related Party Transaction [Line Items] | |||
Due from former parent, current | $ 0 | $ 547,690 | $ 267,605 |
Sale of trade accounts receivable | |||
Related Party Transaction [Line Items] | |||
Due from former parent, current | 544,858 | 263,498 | |
Hedging agreements with VF | |||
Related Party Transaction [Line Items] | |||
Due from former parent, current | $ 2,832 | $ 4,107 |
TRANSACTIONS WITH FORMER PARE_5
TRANSACTIONS WITH FORMER PARENT - Due from related parties, noncurrent (Details) - USD ($) $ in Thousands | Sep. 28, 2019 | Dec. 29, 2018 | Sep. 29, 2018 |
Related Party Transaction [Line Items] | |||
Due from former parent, noncurrent | $ 0 | $ 611 | $ 1,100 |
Hedging agreements with VF | |||
Related Party Transaction [Line Items] | |||
Due from former parent, noncurrent | $ 611 | $ 1,100 |
TRANSACTIONS WITH FORMER PARE_6
TRANSACTIONS WITH FORMER PARENT - Due to related parties, current (Details) - USD ($) $ in Thousands | Sep. 28, 2019 | Dec. 29, 2018 | Sep. 29, 2018 |
Related Party Transaction [Line Items] | |||
Due to former parent, current | $ 0 | $ 16,140 | $ 69,542 |
Sourcing payable | |||
Related Party Transaction [Line Items] | |||
Due to former parent, current | $ 16,140 | $ 69,542 |
TRANSACTIONS WITH FORMER PARE_7
TRANSACTIONS WITH FORMER PARENT - Net Transfers To and From VF (Details) - USD ($) $ in Thousands | May 17, 2019 | Sep. 28, 2019 | Sep. 29, 2018 |
Related Party Transaction [Line Items] | |||
Transfer (To) From Related Party | $ 1,050,000 | $ (1,696,859) | $ (5,363) |
General financing activities | |||
Related Party Transaction [Line Items] | |||
Transfer (To) From Related Party | (723,155) | (127,627) | |
Corporate allocations | |||
Related Party Transaction [Line Items] | |||
Transfer (To) From Related Party | 47,903 | 82,477 | |
Stock-based compensation expense | |||
Related Party Transaction [Line Items] | |||
Transfer (To) From Related Party | 9,582 | 14,012 | |
Pension (benefit) costs | |||
Related Party Transaction [Line Items] | |||
Transfer (To) From Related Party | (2,246) | 5,286 | |
Purchases from parent | |||
Related Party Transaction [Line Items] | |||
Transfer (To) From Related Party | 3,193 | 1,961 | |
Sales to parent | |||
Related Party Transaction [Line Items] | |||
Transfer (To) From Related Party | (13,988) | (40,566) | |
Other income tax | |||
Related Party Transaction [Line Items] | |||
Transfer (To) From Related Party | 10,863 | 53,378 | |
Transition tax related to the Tax Act | |||
Related Party Transaction [Line Items] | |||
Transfer (To) From Related Party | 3,937 | 5,716 | |
Cash dividend to former parent | |||
Related Party Transaction [Line Items] | |||
Transfer (To) From Related Party | $ (1,032,948) | $ 0 |
EARNINGS PER SHARE - Additional
EARNINGS PER SHARE - Additional Information (Details) - shares | May 22, 2019 | Sep. 28, 2019 | Sep. 29, 2018 | Sep. 28, 2019 | Sep. 29, 2018 |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||
Weighted average number of shares outstanding - basic and diluted (in shares) | 56,647,561 | ||||
Anti-dilutive stock-based awards excluded from diluted calculation (in USD per share) | 323,000 | 0 | 164,000 | 0 | |
Performance Based Restricted Stock Units | |||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||
Anti-dilutive stock-based awards excluded from diluted calculation (in USD per share) | 500,000 | 500,000 |
EARNINGS PER SHARE - Earnings p
EARNINGS PER SHARE - Earnings per share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 28, 2019 | Jun. 29, 2019 | Mar. 30, 2019 | Sep. 29, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Sep. 28, 2019 | Sep. 29, 2018 | |
Earnings Per Share [Abstract] | ||||||||
Net income | $ 14,502 | $ 37,986 | $ 15,413 | $ 71,018 | $ 60,458 | $ 79,696 | $ 67,901 | $ 211,172 |
Basic weighted average shares outstanding (in shares) | 56,694 | 56,648 | 56,663 | 56,648 | ||||
Dilutive effect of stock-based awards (in shares) | 707 | 0 | 326 | 0 | ||||
Diluted weighted average shares outstanding (in shares) | 57,401 | 56,648 | 56,989 | 56,648 | ||||
Anti-dilutive stock-based awards excluded from diluted calculation (in USD per share) | 323 | 0 | 164 | 0 | ||||
Earnings per share: | ||||||||
Basic earnings per share (in USD per share) | $ 0.26 | $ 1.25 | $ 1.20 | $ 3.73 | ||||
Diluted earnings per share (in USD per share) | $ 0.25 | $ 1.25 | $ 1.19 | $ 3.73 |
DERIVATIVE FINANCIAL INSTRUME_3
DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES - Additional information (Details) - USD ($) $ in Thousands | May 17, 2019 | Sep. 28, 2019 |
Derivative [Line Items] | ||
Derivative financial instruments | $ 7,574 | |
Cash flow hedge gain (loss) to be reclassified during next 12 months | $ 8,100 | |
Foreign currency exchange contracts | ||
Derivative [Line Items] | ||
Term of contract (up to) | 20 months | |
Derivative instruments, estimated net amount to be transferred | $ 11,600 | |
Derivative, Notional Amounts | $ 320,500 | |
Interest rate swap contracts | ||
Derivative [Line Items] | ||
Derivative, Notional Amounts | $ 475,000 |
DERIVATIVE FINANCIAL INSTRUME_4
DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES - Outstanding derivatives on an individual contract basis (Details) $ in Thousands | Sep. 28, 2019USD ($) |
Fair Value of Derivatives with Unrealized Gains | |
Foreign currency exchange contracts | $ 3,504 |
Fair Value of Derivatives with Unrealized Losses | |
Foreign currency exchange contracts | (7,574) |
Designated as Hedging Instrument | Foreign currency exchange contracts | |
Fair Value of Derivatives with Unrealized Gains | |
Foreign currency exchange contracts | 3,463 |
Fair Value of Derivatives with Unrealized Losses | |
Foreign currency exchange contracts | (2,603) |
Designated as Hedging Instrument | Interest rate swap contracts | |
Fair Value of Derivatives with Unrealized Gains | |
Foreign currency exchange contracts | 0 |
Fair Value of Derivatives with Unrealized Losses | |
Foreign currency exchange contracts | (4,861) |
Not Designated as Hedging Instrument | Foreign currency exchange contracts | |
Fair Value of Derivatives with Unrealized Gains | |
Derivatives not designated as hedging instruments: | 41 |
Fair Value of Derivatives with Unrealized Losses | |
Derivatives not designated as hedging instruments: | $ (110) |
DERIVATIVE FINANCIAL INSTRUME_5
DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES - Balance sheet (Details) $ in Thousands | Sep. 28, 2019USD ($) |
Derivative Asset | |
Gross amounts presented in the balance sheet | $ 3,504 |
Gross amounts not offset in the balance sheet | (507) |
Derivative Asset | 2,997 |
Derivative Liability | |
Gross amounts presented in the balance sheet | (7,574) |
Gross amounts not offset in the balance sheet | 507 |
Derivative Liability | $ (7,067) |
DERIVATIVE FINANCIAL INSTRUME_6
DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES - Derivatives are classified as current or noncurrent (Details) $ in Thousands | Sep. 28, 2019USD ($) |
Derivatives, Fair Value [Line Items] | |
Derivative asset | $ 3,504 |
Derivative financial instruments | 7,574 |
Other current assets | |
Derivatives, Fair Value [Line Items] | |
Derivative asset | 2,900 |
Accrued liabilities | |
Derivatives, Fair Value [Line Items] | |
Derivative financial instruments | (2,376) |
Other assets | |
Derivatives, Fair Value [Line Items] | |
Derivative asset | 604 |
Other liabilities | |
Derivatives, Fair Value [Line Items] | |
Derivative financial instruments | $ (5,198) |
DERIVATIVE FINANCIAL INSTRUME_7
DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES - Cash flows hedges (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 28, 2019 | Sep. 28, 2019 | |
Derivative [Line Items] | ||
Gain (Loss) on Derivatives Recognized in OCI | $ (294) | $ (2,352) |
Foreign currency exchange contracts | ||
Derivative [Line Items] | ||
Gain (Loss) on Derivatives Recognized in OCI | 3,926 | 1,868 |
Interest rate swap contracts | ||
Derivative [Line Items] | ||
Gain (Loss) on Derivatives Recognized in OCI | $ (4,220) | $ (4,220) |
DERIVATIVE FINANCIAL INSTRUME_8
DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES - Location of gain (loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 28, 2019 | Sep. 28, 2019 | |
Derivative [Line Items] | ||
Gain (Loss) Reclassified from Accumulated OCI into Income | $ 4,077 | $ 4,439 |
Net sales | ||
Derivative [Line Items] | ||
Gain (Loss) Reclassified from Accumulated OCI into Income | (379) | (475) |
Cost of goods sold | ||
Derivative [Line Items] | ||
Gain (Loss) Reclassified from Accumulated OCI into Income | 3,486 | 3,901 |
Other income (expense), net | ||
Derivative [Line Items] | ||
Gain (Loss) Reclassified from Accumulated OCI into Income | 328 | 371 |
Interest expense | ||
Derivative [Line Items] | ||
Gain (Loss) Reclassified from Accumulated OCI into Income | $ 642 | $ 642 |
DERIVATIVE FINANCIAL INSTRUME_9
DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES - Derivative contracts not designated as hedges (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 28, 2019 | Sep. 28, 2019 | |
Derivative [Line Items] | ||
Foreign currency exchange contracts | $ 72 | $ 15 |
Cost of goods sold | ||
Derivative [Line Items] | ||
Foreign currency exchange contracts | $ 72 | $ 15 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - $ / shares | Oct. 22, 2019 | Sep. 28, 2019 |
Subsequent Event [Line Items] | ||
Dividends (in USD per share) | $ 0.56 | |
Subsequent Event | ||
Subsequent Event [Line Items] | ||
Dividends (in USD per share) | $ 0.56 |