Business Segments

12 Months Ended

Dec. 29, 2012

Business Segments

9. BUSINESS SEGMENTS

The acquisition of PLG resulted in two new operating segments comprised of PLG wholesale and PLG retail. PLG’s wholesale operations are included in the branded footwear, apparel and licensing reportable segment as a fourth operating group. PLG retail along with the Company’s Wolverine retail operating group are aggregated into the Company’s consumer-direct reportable segment.

Further, the Company now identifies four operating groups within the branded footwear, apparel and licensing reportable segment, which is engaged in designing, manufacturing, sourcing, marketing, licensing and distributing branded footwear, apparel and accessories. Revenue from this segment is derived from the sale of branded footwear, apparel and accessories to third-party customers and royalty income from the licensing of the Company’s trademarks and brand names to third-party licensees and distributors. The Outdoor, Heritage, Lifestyle, and Performance + Lifestyle Wholesale operating groups, which are aggregated into the branded footwear, apparel and licensing reportable segment, all source, market and distribute products in a similar manner.

Retail operations across the entire portfolio are collectively reported within the consumer-direct reportable segment, consisting of both brick-and-mortar retail locations and eCommerce websites. PLG retail along with the Company’s Wolverine retail segment are aggregated into the Company’s consumer-direct reportable segment. At December 29, 2012, the Company owned and operated 444 brick-and-mortar retail stores in the U.S., Canada and the United Kingdom and operated 63 consumer-direct websites.

The other business unit in the following tables consist of the Company’s, leather marketing and pigskin procurement operations. Substantially all of the assets of the pigskin procurement operations were sold to a third-party buyer on December 29, 2010.

The Company measures segment profits as earnings before income taxes. The accounting policies used to determine profitability and total assets of the branded footwear, apparel and licensing segment, consumer-direct segment and the other business unit are the same as disclosed in Note 1.

Business segment information is as follows:

	2012
	Branded Footwear, Apparel and Licensing		Consumer- direct		Other Businesses		Corporate			Consolidated
Revenue	$	1,419,064	$	183,926	$	37,848	$	–		$	1,640,838
Intersegment revenue		87,393		–		4,042		–			91,435
Interest expense – net		–		–		–		19,229			19,229
Depreciation expense		5,452		6,121		30		9,570			21,173
Earnings (loss) before income taxes		223,219		10,443		2,866		(142,350	)		94,178
Total assets		2,201,906		220,114		10,941		181,473			2,614,434
Additions to property, plant and equipment		4,957		4,102		36		5,847			14,942

	2011
	Branded Footwear, Apparel and Licensing		Consumer- direct		Other Businesses		Corporate			Consolidated
Revenue	$	1,274,069	$	101,959	$	33,040	$	–		$	1,409,068
Intersegment revenue		53,500		–		2,178		–			55,678
Interest expense – net		–		–		–		1,025			1,025
Depreciation expense		6,260		3,397		10		5,203			14,870
Earnings (loss) before income taxes		203,959		6,076		3,422		(44,547	)		168,910
Total assets		663,388		64,847		6,389		117,028			851,652
Additions to property, plant and equipment		7,517		7,132		150		4,598			19,397

	2010
	Branded Footwear, Apparel and Licensing		Consumer- direct		Other Businesses		Corporate			Consolidated
Revenue	$	1,117,644	$	87,100	$	43,773	$	–		$	1,248,517
Intersegment revenue		44,721		–		2,789		–			47,510
Interest expense – net		–		–		–		387			387
Depreciation expense		6,067		3,270		103		5,069			14,509
Earnings (loss) before income taxes		174,563		6,637		3,923		(41,396	)		143,226
Total assets		599,354		38,185		3,795		145,241			786,575
Additions to property, plant and equipment		8,282		4,329		–		3,759			16,370

Geographic information, based on shipping destination, related to revenue from external customers included in the consolidated statements of operations is as follows:

		2012		2011		2010
United States	$	1,079,867	$	841,988	$	768,594
Foreign:
Europe		310,140		336,949		218,542
Canada		112,598		113,970		103,374
Other		138,234		116,161		158,007
Total from foreign territories		560,971		567,080		479,923
	$	1,640,838	$	1,409,068	$	1,248,517

The location of the Company’s long-lived assets (primarily property, plant and equipment) is as follows:

	2012		2011
United States	$	136,752	$	71,418
Foreign countries		14,185		8,917
	$	150,937	$	80,335

The Company does not believe that it is dependent upon any single customer because no customer accounts for more than 10% of consolidated revenue.

The Company sources approximately 95% (based on pairs) of its footwear products from third-party suppliers located primarily in the Asia Pacific region. The remainder is produced at Company-owned manufacturing facilities in the U.S. and the Dominican Republic. All apparel and accessories are sourced from third-party suppliers. While changes in suppliers could cause delays in manufacturing and a possible loss of sales, management believes that other suppliers could provide similar products on comparable terms.

Subsequent to the end of fiscal 2012, the Company realigned its branded wholesale operating groups, reducing the number of operating groups within the branded wholesale footwear, apparel and licensing reportable segment from four to three.