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þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended June 27, 2015
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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13-2622036
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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650 Madison Avenue,
New York, New York
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10022
(Zip Code)
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(Address of principal executive offices)
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Large accelerated filer
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þ
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Accelerated filer
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o
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Non-accelerated filer
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o
(Do not check if a smaller reporting company)
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Smaller reporting company
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o
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Page
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PART I. FINANCIAL INFORMATION (Unaudited)
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Item 1.
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Financial Statements:
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Item 2.
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Item 3.
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Item 4.
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PART II. OTHER INFORMATION
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Item 1.
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Item 1A.
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Item 2.
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Item 5.
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Item 6.
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EX-10.1
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EX-12.1
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EX-14.1
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EX-31.1
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EX-31.2
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EX-32.1
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EX-32.2
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EX-101
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INSTANCE DOCUMENT
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EX-101
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SCHEMA DOCUMENT
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EX-101
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CALCULATION LINKBASE DOCUMENT
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EX-101
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LABELS LINKBASE DOCUMENT
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EX-101
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PRESENTATION LINKBASE DOCUMENT
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EX-101
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DEFINITION LINKBASE DOCUMENT
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2
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June 27,
2015 |
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March 28,
2015 |
||||
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(millions)
(unaudited)
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||||||
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ASSETS
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||||||||
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Current assets:
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|
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||||
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Cash and cash equivalents
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$
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490
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$
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500
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Short-term investments
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661
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644
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Accounts receivable, net of allowances of $223 million and $251 million
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390
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655
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Inventories
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1,270
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1,042
|
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Income tax receivable
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69
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57
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Deferred tax assets
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146
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145
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Prepaid expenses and other current assets
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278
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281
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Total current assets
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3,304
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3,324
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Property and equipment, net
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1,419
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1,436
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Deferred tax assets
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50
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45
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Goodwill
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901
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903
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Intangible assets, net
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260
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267
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Other non-current assets
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134
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|
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131
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Total assets
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$
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6,068
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$
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6,106
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LIABILITIES AND EQUITY
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||||||||
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Current liabilities:
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Short-term debt
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$
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155
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$
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234
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Accounts payable
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207
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|
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210
|
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Income tax payable
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35
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|
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27
|
|
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Accrued expenses and other current liabilities
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832
|
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715
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Total current liabilities
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1,229
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1,186
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Long-term debt
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297
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298
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Non-current liability for unrecognized tax benefits
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102
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116
|
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Other non-current liabilities
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633
|
|
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615
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Commitments and contingencies (Note 14)
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Total liabilities
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2,261
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2,215
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Equity:
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Class A common stock, par value $.01 per share; 100.7 million and 100.0 million shares issued; 59.8 million and 60.4 million shares outstanding
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1
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1
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Class B common stock, par value $.01 per share; 25.9 million shares issued and outstanding
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—
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—
|
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Additional paid-in-capital
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2,170
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2,117
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Retained earnings
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5,808
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5,787
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Treasury stock, Class A, at cost; 40.9 million and 39.6 million shares
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(4,018
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)
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(3,849
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)
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Accumulated other comprehensive loss
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(154
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)
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(165
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)
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Total equity
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3,807
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3,891
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Total liabilities and equity
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$
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6,068
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$
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6,106
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3
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Three Months Ended
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||||||
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June 27,
2015 |
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June 28,
2014 |
||||
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(millions, except per share data)
(unaudited)
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||||||
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Net sales
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$
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1,577
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$
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1,668
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Licensing revenue
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41
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|
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40
|
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Net revenues
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1,618
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1,708
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Cost of goods sold
(a)
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(652
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)
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(665
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)
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Gross profit
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966
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1,043
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Selling, general, and administrative expenses
(a)
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(822
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)
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(788
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)
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Amortization of intangible assets
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(6
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)
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(6
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)
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Impairment of assets
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(8
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)
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(1
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)
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Restructuring charges
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(34
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)
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(4
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)
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Total other operating expenses, net
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(870
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)
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(799
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)
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Operating income
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96
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244
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Foreign currency losses
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(1
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)
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(3
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)
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Interest expense
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(4
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)
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(4
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)
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Interest and other income, net
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2
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|
|
1
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Equity in losses of equity-method investees
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(3
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)
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(3
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)
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Income before provision for income taxes
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90
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|
|
235
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Provision for income taxes
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(26
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)
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|
(73
|
)
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Net income
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$
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64
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$
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162
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Net income per common share:
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Basic
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$
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0.74
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$
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1.82
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Diluted
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$
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0.73
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$
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1.80
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Weighted average common shares outstanding:
|
|
|
|
|
||||
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Basic
|
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86.5
|
|
|
88.9
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Diluted
|
|
87.5
|
|
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90.2
|
|
||
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Dividends declared per share
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$
|
0.50
|
|
|
$
|
0.45
|
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(a)
Includes total depreciation expense of:
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|
$
|
(68
|
)
|
|
$
|
(63
|
)
|
|
|
4
|
|
|
|
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Three Months Ended
|
||||||
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|
|
June 27,
2015 |
|
June 28,
2014 |
||||
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|
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(millions)
(unaudited)
|
||||||
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Net income
|
|
$
|
64
|
|
|
$
|
162
|
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
||||
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Foreign currency translation gains (losses)
|
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19
|
|
|
(3
|
)
|
||
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Net gains (losses) on cash flow hedges
|
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(8
|
)
|
|
2
|
|
||
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Other comprehensive income (loss), net of tax
|
|
11
|
|
|
(1
|
)
|
||
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Total comprehensive income
|
|
$
|
75
|
|
|
$
|
161
|
|
|
|
5
|
|
|
|
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Three Months Ended
|
||||||
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|
|
June 27,
2015 |
|
June 28,
2014 |
||||
|
|
|
(millions)
(unaudited)
|
||||||
|
Cash flows from operating activities:
|
|
|
|
|
||||
|
Net income
|
|
$
|
64
|
|
|
$
|
162
|
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
||||
|
Depreciation and amortization expense
|
|
74
|
|
|
69
|
|
||
|
Deferred income tax benefit
|
|
(18
|
)
|
|
(3
|
)
|
||
|
Equity in losses of equity-method investees
|
|
3
|
|
|
3
|
|
||
|
Non-cash stock-based compensation expense
|
|
32
|
|
|
23
|
|
||
|
Non-cash impairment of assets
|
|
8
|
|
|
1
|
|
||
|
Excess tax benefits from stock-based compensation arrangements
|
|
(6
|
)
|
|
(4
|
)
|
||
|
Other non-cash charges, net
|
|
1
|
|
|
5
|
|
||
|
Changes in operating assets and liabilities:
|
|
|
|
|
||||
|
Accounts receivable
|
|
265
|
|
|
230
|
|
||
|
Inventories
|
|
(226
|
)
|
|
(158
|
)
|
||
|
Prepaid expenses and other current assets
|
|
12
|
|
|
5
|
|
||
|
Accounts payable and accrued liabilities
|
|
114
|
|
|
79
|
|
||
|
Income tax receivables and payables
|
|
(9
|
)
|
|
27
|
|
||
|
Deferred income
|
|
(3
|
)
|
|
(4
|
)
|
||
|
Other balance sheet changes, net
|
|
21
|
|
|
(20
|
)
|
||
|
Net cash provided by operating activities
|
|
332
|
|
|
415
|
|
||
|
Cash flows from investing activities:
|
|
|
|
|
||||
|
Capital expenditures
|
|
(68
|
)
|
|
(85
|
)
|
||
|
Purchases of investments
|
|
(329
|
)
|
|
(411
|
)
|
||
|
Proceeds from sales and maturities of investments
|
|
325
|
|
|
236
|
|
||
|
Acquisitions and ventures
|
|
(3
|
)
|
|
(4
|
)
|
||
|
Change in restricted cash deposits
|
|
(2
|
)
|
|
—
|
|
||
|
Net cash used in investing activities
|
|
(77
|
)
|
|
(264
|
)
|
||
|
Cash flows from financing activities:
|
|
|
|
|
||||
|
Proceeds from issuance of short-term debt
|
|
1,238
|
|
|
—
|
|
||
|
Repayments of short-term debt
|
|
(1,317
|
)
|
|
—
|
|
||
|
Payments of capital lease obligations
|
|
(5
|
)
|
|
(5
|
)
|
||
|
Payments of dividends
|
|
(43
|
)
|
|
(40
|
)
|
||
|
Repurchases of common stock, including shares surrendered for tax withholdings
|
|
(169
|
)
|
|
(211
|
)
|
||
|
Proceeds from exercises of stock options
|
|
15
|
|
|
14
|
|
||
|
Excess tax benefits from stock-based compensation arrangements
|
|
6
|
|
|
4
|
|
||
|
Net cash used in financing activities
|
|
(275
|
)
|
|
(238
|
)
|
||
|
Effect of exchange rate changes on cash and cash equivalents
|
|
10
|
|
|
1
|
|
||
|
Net decrease in cash and cash equivalents
|
|
(10
|
)
|
|
(86
|
)
|
||
|
Cash and cash equivalents at beginning of period
|
|
500
|
|
|
797
|
|
||
|
Cash and cash equivalents at end of period
|
|
$
|
490
|
|
|
$
|
711
|
|
|
|
6
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|
|
1.
|
Description of Business
|
|
2.
|
Basis of Presentation
|
|
|
7
|
|
|
3.
|
Summary of Significant Accounting Policies
|
|
|
8
|
|
|
|
|
Three Months Ended
|
||||
|
|
|
June 27,
2015 |
|
June 28,
2014 |
||
|
|
|
(millions)
|
||||
|
Basic shares
|
|
86.5
|
|
|
88.9
|
|
|
Dilutive effect of stock options, restricted stock, and RSUs
|
|
1.0
|
|
|
1.3
|
|
|
Diluted shares
|
|
87.5
|
|
|
90.2
|
|
|
|
9
|
|
|
|
|
Three Months Ended
|
||||||
|
|
|
June 27,
2015 |
|
June 28,
2014 |
||||
|
|
|
(millions)
|
||||||
|
Beginning reserve balance
|
|
$
|
240
|
|
|
$
|
254
|
|
|
Amount charged against revenue to increase reserve
|
|
150
|
|
|
157
|
|
||
|
Amount credited against customer accounts to decrease reserve
|
|
(181
|
)
|
|
(165
|
)
|
||
|
Foreign currency translation
|
|
1
|
|
|
(1
|
)
|
||
|
Ending reserve balance
|
|
$
|
210
|
|
|
$
|
245
|
|
|
|
10
|
|
|
•
|
Forecasted Inventory Transactions
— recognized as part of the cost of the inventory being hedged within cost of goods sold when the related inventory is sold to a third party.
|
|
•
|
Intercompany Royalty Payments and Marketing Contributions
— recognized within foreign currency gains (losses) generally in the period in which the related payments or contributions being hedged are received or paid.
|
|
|
11
|
|
|
4.
|
Recently Issued Accounting Standards
|
|
5.
|
Inventories
|
|
|
|
June 27,
2015 |
|
March 28,
2015 |
|
June 28,
2014 |
||||||
|
|
|
(millions)
|
||||||||||
|
Raw materials
|
|
$
|
3
|
|
|
$
|
3
|
|
|
$
|
3
|
|
|
Work-in-process
|
|
1
|
|
|
2
|
|
|
2
|
|
|||
|
Finished goods
|
|
1,266
|
|
|
1,037
|
|
|
1,175
|
|
|||
|
Total inventories
|
|
$
|
1,270
|
|
|
$
|
1,042
|
|
|
$
|
1,180
|
|
|
|
12
|
|
|
6.
|
Property and Equipment
|
|
|
|
June 27,
2015 |
|
March 28,
2015 |
||||
|
|
|
(millions)
|
||||||
|
Land and improvements
|
|
$
|
17
|
|
|
$
|
17
|
|
|
Buildings and improvements
|
|
408
|
|
|
409
|
|
||
|
Furniture and fixtures
|
|
690
|
|
|
686
|
|
||
|
Machinery and equipment
|
|
320
|
|
|
317
|
|
||
|
Capitalized software
|
|
422
|
|
|
402
|
|
||
|
Leasehold improvements
|
|
1,208
|
|
|
1,185
|
|
||
|
Construction in progress
|
|
103
|
|
|
99
|
|
||
|
|
|
3,168
|
|
|
3,115
|
|
||
|
Less: accumulated depreciation
|
|
(1,749
|
)
|
|
(1,679
|
)
|
||
|
Property and equipment, net
|
|
$
|
1,419
|
|
|
$
|
1,436
|
|
|
7.
|
Other Assets and Liabilities
|
|
|
|
June 27,
2015 |
|
March 28,
2015 |
||||
|
|
|
(millions)
|
||||||
|
Other taxes receivable
|
|
$
|
94
|
|
|
$
|
93
|
|
|
Derivative financial instruments
|
|
43
|
|
|
65
|
|
||
|
Prepaid rent expense
|
|
35
|
|
|
31
|
|
||
|
Prepaid samples
|
|
14
|
|
|
12
|
|
||
|
Tenant allowances receivable
|
|
13
|
|
|
14
|
|
||
|
Prepaid advertising and marketing
|
|
12
|
|
|
7
|
|
||
|
Restricted cash
|
|
7
|
|
|
2
|
|
||
|
Other prepaid expenses and current assets
|
|
60
|
|
|
57
|
|
||
|
Total prepaid expenses and other current assets
|
|
$
|
278
|
|
|
$
|
281
|
|
|
|
|
June 27,
2015 |
|
March 28,
2015 |
||||
|
|
|
(millions)
|
||||||
|
Restricted cash
|
|
$
|
33
|
|
|
$
|
36
|
|
|
Security deposits
|
|
31
|
|
|
28
|
|
||
|
Derivative financial instruments
|
|
29
|
|
|
22
|
|
||
|
Other non-current assets
|
|
41
|
|
|
45
|
|
||
|
Total other non-current assets
|
|
$
|
134
|
|
|
$
|
131
|
|
|
|
13
|
|
|
|
|
June 27,
2015 |
|
March 28,
2015 |
||||
|
|
|
(millions)
|
||||||
|
Accrued inventory
|
|
$
|
205
|
|
|
$
|
75
|
|
|
Accrued operating expenses
|
|
194
|
|
|
183
|
|
||
|
Other taxes payable
|
|
119
|
|
|
108
|
|
||
|
Accrued payroll and benefits
|
|
111
|
|
|
162
|
|
||
|
Accrued capital expenditures
|
|
52
|
|
|
62
|
|
||
|
Dividends payable
|
|
43
|
|
|
43
|
|
||
|
Deferred income
|
|
41
|
|
|
38
|
|
||
|
Restructuring reserve
|
|
34
|
|
|
5
|
|
||
|
Capital lease obligations
|
|
19
|
|
|
19
|
|
||
|
Other accrued expenses and current liabilities
|
|
14
|
|
|
20
|
|
||
|
Total accrued expenses and other current liabilities
|
|
$
|
832
|
|
|
$
|
715
|
|
|
|
|
June 27,
2015 |
|
March 28,
2015 |
||||
|
|
|
(millions)
|
||||||
|
Deferred rent obligations
|
|
$
|
238
|
|
|
$
|
219
|
|
|
Capital lease obligations
|
|
222
|
|
|
238
|
|
||
|
Deferred tax liabilities
|
|
87
|
|
|
87
|
|
||
|
Derivative financial instruments
|
|
17
|
|
|
1
|
|
||
|
Deferred income
|
|
15
|
|
|
20
|
|
||
|
Deferred compensation
|
|
9
|
|
|
9
|
|
||
|
Other non-current liabilities
|
|
45
|
|
|
41
|
|
||
|
Total other non-current liabilities
|
|
$
|
633
|
|
|
$
|
615
|
|
|
8.
|
Impairment of Assets
|
|
|
14
|
|
|
9.
|
Restructuring Charges
|
|
|
|
Three Months Ended
|
||
|
|
|
June 27, 2015
|
||
|
|
|
(millions)
|
||
|
Restructuring charges:
|
|
|
||
|
Severance and benefit costs
|
|
$
|
32
|
|
|
Lease termination and store closure costs
|
|
1
|
|
|
|
Other cash charges
|
|
1
|
|
|
|
Total restructuring charges
|
|
34
|
|
|
|
Non-cash charges:
|
|
|
||
|
Impairment of assets
(a)
|
|
8
|
|
|
|
Inventory-related charges
(b)
|
|
3
|
|
|
|
Total non-cash charges
|
|
11
|
|
|
|
Total restructuring and non-cash charges
|
|
$
|
45
|
|
|
|
|
(a)
|
See Note 8 for additional information.
|
|
(b)
|
Inventory-related charges are recorded within cost of goods sold in the unaudited interim consolidated statements of income.
|
|
|
15
|
|
|
|
|
Severance and Benefit Costs
|
|
Lease Termination and Store Closure Costs
|
|
Other Costs
|
|
Total
|
||||||||
|
|
|
(millions)
|
||||||||||||||
|
Balance at March 28, 2015
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Additions charged to expense
|
|
32
|
|
|
1
|
|
|
1
|
|
|
34
|
|
||||
|
Cash payments charged against reserve
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
||||
|
Balance at June 27, 2015
|
|
$
|
29
|
|
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
31
|
|
|
10.
|
Income Taxes
|
|
|
16
|
|
|
11.
|
Debt
|
|
|
|
June 27,
2015 |
|
March 28,
2015 |
||||
|
|
|
(millions)
|
||||||
|
$300 million 2.125% Senior Notes
(a)
|
|
$
|
297
|
|
|
$
|
298
|
|
|
Commercial paper notes
|
|
155
|
|
|
234
|
|
||
|
Total debt
|
|
452
|
|
|
532
|
|
||
|
Less: short-term debt
|
|
155
|
|
|
234
|
|
||
|
Total long-term debt
|
|
$
|
297
|
|
|
$
|
298
|
|
|
|
|
(a)
|
During the first quarter of Fiscal 2016, the Company entered into an interest rate swap contract which it designated as a hedge against changes in the fair value of its fixed-rate Senior Notes (see
Note 13
). Accordingly, the carrying value of the Senior Notes as of
June 27, 2015
reflects an adjustment of
$2 million
for the change in fair value attributable to the benchmark interest rate. The carrying value of the Senior Notes is also net of unamortized debt issuance costs of
$1 million
and
$2 million
as of
June 27, 2015
and
March 28, 2015
, respectively.
|
|
|
17
|
|
|
•
|
China Credit Facility
— provides Ralph Lauren Trading (Shanghai) Co., Ltd. with a revolving line of credit of up to
100 million
Chinese Renminbi (approximately
$16 million
) through
April 7, 2016
, and may also be used to support bank guarantees. As of
June 27, 2015
, bank guarantees supported by this facility were not material.
|
|
•
|
Malaysia Credit Facility
— provides Ralph Lauren (Malaysia) Sdn Bhd with a revolving line of credit of up to
16 million
Malaysian Ringgit (approximately
$4 million
) through
September 30, 2015
.
|
|
•
|
South Korea Credit Facility
— provides Ralph Lauren (Korea) Ltd. with a revolving line of credit of up to
11 billion
South Korean Won (approximately
$10 million
) through
October 31, 2015
.
|
|
|
18
|
|
|
•
|
Taiwan Credit Facility
—
provides Ralph Lauren (Hong Kong) Retail Company Ltd., Taiwan Branch with a revolving line of credit of up to
59 million
New Taiwan Dollars (approximately
$2 million
) through
October 15, 2015
.
|
|
12.
|
Fair Value Measurements
|
|
•
|
Level 1
— inputs to the valuation methodology based on quoted prices (unadjusted) for identical assets or liabilities in active markets.
|
|
•
|
Level 2
— inputs to the valuation methodology based on quoted prices for similar assets and liabilities in active markets for substantially the full term of the financial instrument; quoted prices for identical or similar instruments in markets that are not active for substantially the full term of the financial instrument; and model-derived valuations whose inputs or significant value drivers are observable.
|
|
•
|
Level 3
— inputs to the valuation methodology based on unobservable prices or valuation techniques that are significant to the fair value measurement.
|
|
|
|
June 27,
2015 |
|
March 28,
2015 |
||||
|
|
|
(millions)
|
||||||
|
Financial assets recorded at fair value:
|
|
|
|
|
||||
|
Corporate bonds — non-U.S.
(a)
|
|
$
|
8
|
|
|
$
|
8
|
|
|
Derivative financial instruments
(b)
|
|
72
|
|
|
87
|
|
||
|
Total
|
|
$
|
80
|
|
|
$
|
95
|
|
|
Financial liabilities recorded at fair value:
|
|
|
|
|
||||
|
Derivative financial instruments
(b)
|
|
$
|
28
|
|
|
$
|
19
|
|
|
Total
|
|
$
|
28
|
|
|
$
|
19
|
|
|
|
|
(a)
|
Based on Level 1 measurements.
|
|
(b)
|
Based on Level 2 measurements.
|
|
|
19
|
|
|
|
|
June 27, 2015
|
|
March 28, 2015
|
||||||||||||
|
|
|
Carrying Value
|
|
Fair Value
(a)
|
|
Carrying Value
|
|
Fair Value
(a)
|
||||||||
|
|
|
(millions)
|
||||||||||||||
|
$300 million 2.125% Senior Notes
|
|
$
|
297
|
|
(b)
|
$
|
303
|
|
|
$
|
298
|
|
(b)
|
$
|
304
|
|
|
Commercial paper notes
|
|
155
|
|
|
155
|
|
|
234
|
|
|
234
|
|
||||
|
|
|
(a)
|
Based on Level 2 measurements.
|
|
(b)
|
See
Note 11
for discussion of the carrying value of the Senior Notes as of
June 27, 2015
and
March 28, 2015
.
|
|
|
|
Three Months Ended
|
||||||
|
|
|
June 27,
2015 |
|
June 28,
2014 |
||||
|
|
|
(millions)
|
||||||
|
Aggregate carrying value of long-lived assets written down to fair value
|
|
$
|
8
|
|
|
$
|
1
|
|
|
Impairment charges (see Note 8)
|
|
(8
|
)
|
|
(1
|
)
|
||
|
|
20
|
|
|
13.
|
Financial Instruments
|
|
|
|
Notional Amounts
|
|
Derivative Assets
|
|
Derivative Liabilities
|
||||||||||||||||||||||||||
|
Derivative Instrument
(a)
|
|
June 27,
2015 |
|
March 28,
2015 |
|
June 27,
2015 |
|
March 28,
2015 |
|
June 27,
2015 |
|
March 28,
2015 |
||||||||||||||||||||
|
|
|
|
|
|
|
Balance
Sheet
Line
(b)
|
|
Fair
Value
|
|
Balance
Sheet
Line
(b)
|
|
Fair
Value
|
|
Balance
Sheet
Line
(b)
|
|
Fair
Value
|
|
Balance
Sheet
Line
(b)
|
|
Fair
Value
|
||||||||||||
|
|
|
(millions)
|
||||||||||||||||||||||||||||||
|
Designated Hedges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
FC — Inventory purchases
|
|
$
|
578
|
|
|
$
|
587
|
|
|
(c)
|
|
$
|
36
|
|
|
PP
|
|
$
|
49
|
|
|
AE
|
|
$
|
8
|
|
|
AE
|
|
$
|
9
|
|
|
FC — Other
(d)
|
|
101
|
|
|
118
|
|
|
PP
|
|
5
|
|
|
PP
|
|
5
|
|
|
—
|
|
—
|
|
|
AE
|
|
1
|
|
||||||
|
IRS — Senior Notes
|
|
300
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
ONCL
|
|
2
|
|
|
—
|
|
—
|
|
||||||
|
CCS — NI
|
|
313
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
ONCL
|
|
12
|
|
|
—
|
|
—
|
|
||||||
|
Total Designated Hedges
|
|
$
|
1,292
|
|
|
$
|
705
|
|
|
|
|
$
|
41
|
|
|
|
|
$
|
54
|
|
|
|
|
$
|
22
|
|
|
|
|
$
|
10
|
|
|
Undesignated Hedges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
FC — Other
(e)
|
|
$
|
546
|
|
|
$
|
464
|
|
|
(f)
|
|
$
|
31
|
|
|
(g)
|
|
$
|
33
|
|
|
(h)
|
|
$
|
6
|
|
|
(i)
|
|
$
|
9
|
|
|
Total Hedges
|
|
$
|
1,838
|
|
|
$
|
1,169
|
|
|
|
|
$
|
72
|
|
|
|
|
$
|
87
|
|
|
|
|
$
|
28
|
|
|
|
|
$
|
19
|
|
|
|
|
(a)
|
FC = Forward foreign currency exchange contracts; IRS = Interest rate swap contract; Senior Notes = $300 million 2.125% senior notes; CCS = Cross-currency swap contract; NI = Net investment hedge.
|
|
(b)
|
PP = Prepaid expenses and other current assets; AE = Accrued expenses and other current liabilities; ONCL = Other non-current liabilities.
|
|
(c)
|
$35 million
included within prepaid expenses and other current assets and
$1 million
included within other non-current assets.
|
|
(d)
|
Primarily includes designated hedges of foreign currency-denominated intercompany royalty payments and other operational exposures.
|
|
(e)
|
Primarily includes undesignated hedges of foreign currency-denominated intercompany loans.
|
|
(f)
|
$3 million
included within prepaid expenses and other current assets and
$28 million
included within other non-current assets.
|
|
(g)
|
$11 million
included within prepaid expenses and other current assets and
$22 million
included within other non-current assets.
|
|
(h)
|
$3 million
included within accrued expenses and other current liabilities and
$3 million
included within other non-current liabilities.
|
|
(i)
|
$8 million
included within accrued expenses and other current liabilities and
$1 million
included within other non-current liabilities.
|
|
|
21
|
|
|
|
|
June 27, 2015
|
|
March 28, 2015
|
||||||||||||||||||||
|
Derivative Instrument
|
|
Gross Amounts Presented in the Balance Sheet
|
|
Gross Amounts Not Offset in the Balance Sheet that are Subject to Master Netting Agreements
|
|
Net
Amount
|
|
Gross Amounts Presented in the Balance Sheet
|
|
Gross Amounts Not Offset in the Balance Sheet that are Subject to Master Netting Agreements
|
|
Net
Amount
|
||||||||||||
|
|
|
(millions)
|
||||||||||||||||||||||
|
Derivative assets
|
|
$
|
72
|
|
|
$
|
(24
|
)
|
|
$
|
48
|
|
|
$
|
87
|
|
|
$
|
(14
|
)
|
|
$
|
73
|
|
|
Derivative liabilities
|
|
$
|
28
|
|
|
$
|
(24
|
)
|
|
$
|
4
|
|
|
$
|
19
|
|
|
$
|
(14
|
)
|
|
$
|
5
|
|
|
|
|
Gains (Losses)
Recognized in OCI
|
|
Gains (Losses) Reclassified from AOCI to Earnings
|
|
Location of Gains (Losses)
Reclassified from AOCI to Earnings
|
||||||||||||
|
|
|
Three Months Ended
|
|
Three Months Ended
|
|
|||||||||||||
|
Derivative Instrument
|
|
June 27,
2015 |
|
June 28,
2014 |
|
June 27,
2015 |
|
June 28,
2014 |
|
|||||||||
|
|
|
|
|
(millions)
|
|
|
|
|
||||||||||
|
Designated Cash Flow Hedges:
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
FC — Inventory purchases
|
|
$
|
(2
|
)
|
|
$
|
1
|
|
|
$
|
7
|
|
|
$
|
(1
|
)
|
|
Cost of goods sold
|
|
FC — Other
|
|
1
|
|
|
(2
|
)
|
|
—
|
|
|
(2
|
)
|
|
Foreign currency gains (losses)
|
||||
|
|
|
$
|
(1
|
)
|
|
$
|
(1
|
)
|
|
$
|
7
|
|
|
$
|
(3
|
)
|
|
|
|
Designated Hedge of Net Investment:
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
CCS
|
|
$
|
(12
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
(a)
|
|
Total Designated Hedges
|
|
$
|
(13
|
)
|
|
$
|
(1
|
)
|
|
$
|
7
|
|
|
$
|
(3
|
)
|
|
|
|
|
|
(a)
|
Amounts are to be recognized in earnings only upon the sale or liquidation of the hedged net investment.
|
|
|
22
|
|
|
|
|
Gains (Losses)
Recognized in Earnings
|
|
Location of Gains (Losses)
Recognized in Earnings
|
||||||
|
|
|
Three Months Ended
|
|
|||||||
|
Derivative Instrument
|
|
June 27,
2015 |
|
June 28,
2014 |
|
|||||
|
|
|
(millions)
|
|
|
||||||
|
Undesignated Hedges:
|
|
|
|
|
|
|
||||
|
FC — Other
|
|
$
|
4
|
|
|
$
|
(2
|
)
|
|
Foreign currency gains (losses)
|
|
Total Undesignated Hedges
|
|
$
|
4
|
|
|
$
|
(2
|
)
|
|
|
|
|
23
|
|
|
14.
|
Commitments and Contingencies
|
|
|
24
|
|
|
15.
|
Equity
|
|
|
|
Three Months Ended
|
||||||
|
|
|
June 27,
2015 |
|
June 28,
2014 |
||||
|
|
|
(millions)
|
||||||
|
Balance at beginning of period
|
|
$
|
3,891
|
|
|
$
|
4,034
|
|
|
Comprehensive income
|
|
75
|
|
|
161
|
|
||
|
Dividends declared
|
|
(43
|
)
|
|
(39
|
)
|
||
|
Repurchases of common stock, including shares surrendered for tax withholdings
|
|
(169
|
)
|
|
(211
|
)
|
||
|
Stock-based compensation
|
|
32
|
|
|
23
|
|
||
|
Shares issued and tax benefits recognized pursuant to stock-based compensation arrangements
|
|
21
|
|
|
18
|
|
||
|
Conversion of stock-based compensation awards
|
|
—
|
|
|
(14
|
)
|
||
|
Balance at end of period
|
|
$
|
3,807
|
|
|
$
|
3,972
|
|
|
|
|
Three Months Ended
|
||||||
|
|
|
June 27,
2015 |
|
June 28,
2014 |
||||
|
|
|
(millions)
|
||||||
|
Cost of shares repurchased
|
|
$
|
150
|
|
|
$
|
180
|
|
|
Number of shares repurchased
|
|
1.1
|
|
|
1.2
|
|
||
|
|
25
|
|
|
16.
|
Accumulated Other Comprehensive Income
|
|
|
|
Foreign Currency Translation Gains
(Losses)
(a)
|
|
Net Unrealized Gains (Losses) on Cash Flow Hedges
|
|
Net Unrealized Losses on Defined
Benefit Plans
|
|
Total Accumulated Other Comprehensive Income (Loss)
|
||||||||
|
|
|
(millions)
|
||||||||||||||
|
Balance at March 29, 2014
|
|
$
|
125
|
|
|
$
|
(4
|
)
|
|
$
|
(7
|
)
|
|
$
|
114
|
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
|
||||||||
|
OCI before reclassifications
(b)
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
||||
|
Amounts reclassified from AOCI to earnings
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
||||
|
Other comprehensive income (loss), net of tax
|
|
(3
|
)
|
|
2
|
|
|
—
|
|
|
(1
|
)
|
||||
|
Balance at June 28, 2014
|
|
$
|
122
|
|
|
$
|
(2
|
)
|
|
$
|
(7
|
)
|
|
$
|
113
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Balance at March 28, 2015
|
|
$
|
(193
|
)
|
|
$
|
43
|
|
|
$
|
(15
|
)
|
|
$
|
(165
|
)
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
|
||||||||
|
OCI before reclassifications
(b)
|
|
19
|
|
|
(1
|
)
|
|
—
|
|
|
18
|
|
||||
|
Amounts reclassified from AOCI to earnings
|
|
—
|
|
|
(7
|
)
|
|
—
|
|
|
(7
|
)
|
||||
|
Other comprehensive income (loss), net of tax
|
|
19
|
|
|
(8
|
)
|
|
—
|
|
|
11
|
|
||||
|
Balance at June 27, 2015
|
|
$
|
(174
|
)
|
|
$
|
35
|
|
|
$
|
(15
|
)
|
|
$
|
(154
|
)
|
|
|
26
|
|
|
|
|
(a)
|
Includes losses of
$7 million
(net of a
$5 million
income tax benefit) during the three months ended June 27, 2015 related to the effective portion of changes in the fair value of the Cross-Currency Swap designated as a hedge of the Company's net investment in certain of its European subsidiaries (see
Note 13
).
|
|
(b)
|
Amounts are presented net of taxes. Foreign currency translation gains (losses) reflect a
$4 million
income tax benefit for the three months ended June 27, 2015. The tax effects relating to all other components of OCI before reclassification are immaterial for the periods presented.
|
|
|
|
Three Months Ended
|
|
|
||||||
|
|
|
June 27,
2015 |
|
June 28,
2014 |
|
Location of Gains (Losses)
Reclassified from AOCI
to Earnings
|
||||
|
|
|
(millions)
|
|
|
||||||
|
Gains (losses) on cash flow hedges
(a)
:
|
|
|
|
|
|
|
||||
|
FC
—
Inventory purchases
|
|
$
|
7
|
|
|
$
|
(1
|
)
|
|
Cost of goods sold
|
|
FC
—
Other
|
|
—
|
|
|
(2
|
)
|
|
Foreign currency gains (losses)
|
||
|
Tax effect
|
|
—
|
|
|
1
|
|
|
Provision for income taxes
|
||
|
Net of tax
|
|
$
|
7
|
|
|
$
|
(2
|
)
|
|
|
|
|
|
(a)
|
FC = Forward foreign currency exchange contracts.
|
|
17.
|
Stock-based Compensation
|
|
|
27
|
|
|
|
|
Three Months Ended
|
||||||
|
|
|
June 27,
2015 |
|
June 28,
2014 |
||||
|
|
|
(millions)
|
||||||
|
Compensation expense
|
|
$
|
32
|
|
|
$
|
23
|
|
|
Income tax benefit
|
|
$
|
(12
|
)
|
|
$
|
(8
|
)
|
|
|
|
Number of Options
|
|
|
|
|
(thousands)
|
|
|
Options outstanding at March 28, 2015
|
|
3,225
|
|
|
Granted
|
|
—
|
|
|
Exercised
|
|
(306
|
)
|
|
Cancelled/Forfeited
|
|
(55
|
)
|
|
Options outstanding at June 27, 2015
|
|
2,864
|
|
|
|
28
|
|
|
|
|
Number of Shares
|
||||
|
|
|
Restricted Stock
|
|
Service-based RSUs
|
||
|
|
|
(thousands)
|
||||
|
Nonvested at March 28, 2015
|
|
5
|
|
|
47
|
|
|
Granted
|
|
8
|
|
|
429
|
|
|
Vested
|
|
(3
|
)
|
|
(8
|
)
|
|
Forfeited
|
|
(1
|
)
|
|
(10
|
)
|
|
Nonvested at June 27, 2015
|
|
9
|
|
|
458
|
|
|
|
|
Number of Shares
|
||||
|
|
|
Performance-based
RSUs — without
TSR Modifier
|
|
Performance-based
RSUs — with
TSR Modifier
|
||
|
|
|
(thousands)
|
||||
|
Nonvested at March 28, 2015
|
|
697
|
|
|
214
|
|
|
Granted
|
|
304
|
|
|
—
|
|
|
Change due to performance/market condition achievement
|
|
(8
|
)
|
|
(20
|
)
|
|
Vested
|
|
(293
|
)
|
|
(50
|
)
|
|
Forfeited
|
|
(21
|
)
|
|
—
|
|
|
Nonvested at June 27, 2015
|
|
679
|
|
|
144
|
|
|
18.
|
Segment Information
|
|
|
29
|
|
|
|
|
Three Months Ended
|
||||||
|
|
|
June 27,
2015 |
|
June 28,
2014 |
||||
|
|
|
(millions)
|
||||||
|
Net revenues:
|
|
|
|
|
||||
|
Wholesale
|
|
$
|
642
|
|
|
$
|
708
|
|
|
Retail
|
|
935
|
|
|
960
|
|
||
|
Licensing
|
|
41
|
|
|
40
|
|
||
|
Total net revenues
|
|
$
|
1,618
|
|
|
$
|
1,708
|
|
|
|
|
Three Months Ended
|
||||||
|
|
|
June 27,
2015 |
|
June 28,
2014 |
||||
|
|
|
(millions)
|
||||||
|
Operating income:
|
|
|
|
|
||||
|
Wholesale
(a)
|
|
$
|
137
|
|
|
$
|
180
|
|
|
Retail
(b)
|
|
110
|
|
|
168
|
|
||
|
Licensing
|
|
36
|
|
|
36
|
|
||
|
|
|
283
|
|
|
384
|
|
||
|
Unallocated corporate expenses
|
|
(153
|
)
|
|
(136
|
)
|
||
|
Unallocated restructuring charges
(c)
|
|
(34
|
)
|
|
(4
|
)
|
||
|
Total operating income
|
|
$
|
96
|
|
|
$
|
244
|
|
|
|
|
(a)
|
During the three-month period ended
June 27, 2015
, the Company recorded non-cash impairment charges of
$3 million
, primarily to write off certain fixed assets related to its shop-within-shops in connection with the Global Reorganization Plan. During the three-month period ended
June 28, 2014
, the Company recorded non-cash impairment charges of
$1 million
, primarily to write off certain fixed assets related its European operations. See Notes 8 and 9 for additional information.
|
|
(b)
|
During the three-month period ended
June 27, 2015
, the Company recorded non-cash impairment charges of
$5 million
, primarily to write off certain fixed assets related to its stores and concession-based shop-within-shops in connection with the Global Reorganization Plan. See Notes 8 and 9 for additional information.
|
|
(c)
|
The
three-month periods ended
June 27, 2015
and
June 28, 2014
included certain unallocated restructuring charges (see
Note 9
), which are detailed below:
|
|
|
|
|
Three Months Ended
|
||||||
|
|
|
|
June 27,
2015 |
|
June 28,
2014 |
||||
|
|
|
|
(millions)
|
||||||
|
|
Unallocated restructuring charges:
|
|
|
|
|
||||
|
|
Wholesale-related
|
|
$
|
(8
|
)
|
|
$
|
(2
|
)
|
|
|
Retail-related
|
|
(11
|
)
|
|
(2
|
)
|
||
|
|
Licensing-related
|
|
(1
|
)
|
|
—
|
|
||
|
|
Corporate operations-related
|
|
(14
|
)
|
|
—
|
|
||
|
|
Total unallocated restructuring charges
|
|
$
|
(34
|
)
|
|
$
|
(4
|
)
|
|
|
30
|
|
|
|
|
Three Months Ended
|
||||||
|
|
|
June 27,
2015 |
|
June 28,
2014 |
||||
|
|
|
(millions)
|
||||||
|
Depreciation and amortization:
|
|
|
|
|
||||
|
Wholesale
|
|
$
|
15
|
|
|
$
|
17
|
|
|
Retail
|
|
39
|
|
|
34
|
|
||
|
Unallocated corporate expenses
|
|
20
|
|
|
18
|
|
||
|
Total depreciation and amortization
|
|
$
|
74
|
|
|
$
|
69
|
|
|
|
|
Three Months Ended
|
||||||
|
|
|
June 27,
2015 |
|
June 28,
2014 |
||||
|
|
|
(millions)
|
||||||
|
Net revenues
(a)
:
|
|
|
|
|
||||
|
The Americas
(b)
|
|
$
|
1,079
|
|
|
$
|
1,139
|
|
|
Europe
(c)
|
|
333
|
|
|
360
|
|
||
|
Asia
(d)
|
|
206
|
|
|
209
|
|
||
|
Total net revenues
|
|
$
|
1,618
|
|
|
$
|
1,708
|
|
|
|
|
(a)
|
Net revenues for certain of the Company's licensed operations are included within the geographic location of the reporting subsidiary which holds the respective license.
|
|
(b)
|
Includes the U.S., Canada, and Latin America. Net revenues earned in the U.S. during the
three-month periods ended
June 27, 2015
and
June 28, 2014
were
$1.029 billion
and
$1.084 billion
, respectively.
|
|
(c)
|
Includes the Middle East.
|
|
(d)
|
Includes Australia and New Zealand.
|
|
19.
|
Additional Financial Information
|
|
|
|
Three Months Ended
|
||||||
|
|
|
June 27,
2015 |
|
June 28,
2014 |
||||
|
|
|
(millions)
|
||||||
|
Cash paid for interest
|
|
$
|
2
|
|
|
$
|
2
|
|
|
Cash paid for income taxes
|
|
$
|
43
|
|
|
$
|
50
|
|
|
|
31
|
|
|
|
32
|
|
|
Item 2.
|
Management's Discussion and Analysis of Financial Condition and Results of Operations.
|
|
•
|
the loss of key personnel, including Mr. Ralph Lauren;
|
|
•
|
our ability to achieve anticipated operating enhancements and/or cost reductions from our restructuring plans, including our transition to a global brand-based operating structure;
|
|
•
|
our ability to successfully implement our anticipated growth strategies and to capitalize on our repositioning initiatives in certain regions and merchandise categories;
|
|
•
|
our exposure to currency exchange rate fluctuations from both a transactional and translational perspective, and risks associated with increases in the costs of raw materials, transportation, and labor;
|
|
•
|
our ability to secure our facilities and systems and those of our third-party service providers from, among other things, cybersecurity breaches, acts of vandalism, computer viruses, or similar Internet or email events;
|
|
•
|
our ability to continue to maintain our brand image and reputation and protect our trademarks;
|
|
•
|
the impact of global economic conditions on us, our customers, our suppliers, and our vendors and on our ability and their ability to access sources of liquidity;
|
|
•
|
the impact of the volatile state of the global economy or consumer preferences on purchases of premium lifestyle products that we offer for sale and our ability to forecast consumer demand, which could result in a build-up of inventory;
|
|
•
|
changes in the competitive marketplace, including the introduction of new products or pricing changes by our competitors, and consolidations, liquidations, restructurings, and other ownership changes in the retail industry;
|
|
•
|
a variety of legal, regulatory, tax, political, and economic risks, including risks related to the importation and exportation of products, tariffs, and other trade barriers which our international operations are subject to and other risks associated with our international operations, such as compliance with the Foreign Corrupt Practices Act or violations of other anti-bribery and corruption laws prohibiting improper payments, and the burdens of complying with a variety of foreign laws and regulations, including tax laws, trade and labor restrictions, and related laws that may reduce the flexibility of our business;
|
|
•
|
the impact to our business of events of unrest and instability that are currently taking place in certain parts of the world, as well as from any terrorist action, retaliation, and the threat of further action or retaliation;
|
|
•
|
our ability to continue to expand or grow our business internationally and the impact of related changes in our customer, channel, and geographic sales mix as a result;
|
|
•
|
changes to our effective tax rates;
|
|
•
|
changes in our relationships with department store customers and licensing partners;
|
|
•
|
our efforts to improve the efficiency of our distribution system and to continue to enhance and upgrade our global information technology systems and our global e-commerce platform;
|
|
•
|
our intention to introduce new products or enter into or renew alliances and exclusive relationships;
|
|
|
33
|
|
|
•
|
our ability to access sources of liquidity to provide for our cash needs, including our debt obligations, payment of dividends, capital expenditures, and potential repurchases of our Class A common stock;
|
|
•
|
our ability to open new retail stores, concession shops, and e-commerce sites in an effort to expand our direct-to-consumer presence;
|
|
•
|
our ability to make certain strategic acquisitions and successfully integrate the acquired businesses into our existing operations;
|
|
•
|
the impact to our business resulting from potential costs and obligations related to the early termination of our long-term, non-cancellable leases;
|
|
•
|
the potential impact to the trading prices of our securities if our Class A common stock share repurchase activity and/or cash dividend rate differs from investors' expectations;
|
|
•
|
our ability to maintain our credit profile and ratings within the financial community; and
|
|
•
|
the potential impact on our operations and on our customers resulting from natural or man-made disasters.
|
|
•
|
Overview.
This section provides a general description of our business, current trends and outlook, and a summary of our financial performance for the
three-month period ended
June 27, 2015
. In addition, this section includes a discussion of recent developments and transactions affecting comparability that we believe are important in understanding our results of operations and financial condition, and in anticipating future trends.
|
|
•
|
Results of operations.
This section provides an analysis of our results of operations for the
three-month period ended
June 27, 2015
compared to the
three-month period ended
June 28, 2014
.
|
|
•
|
Financial condition and liquidity.
This section provides a discussion of our financial condition and liquidity as of
June 27, 2015
, which includes (i) an analysis of our financial condition compared to the prior fiscal year-end; (ii) an analysis of changes in our cash flows for the
three-month period ended
June 27, 2015
compared to the
three-month period ended
June 28, 2014
; (iii) an analysis of our liquidity, including common stock repurchases, payments of dividends, our outstanding debt and covenant compliance, and the availability under our credit facilities and our commercial paper borrowing program; and (iv) any material changes in our contractual and other obligations since
March 28, 2015
.
|
|
•
|
Market risk management.
This section discusses any significant changes in our risk exposures related to foreign currency exchange rates, interest rates, and our investments since
March 28, 2015
.
|
|
|
34
|
|
|
•
|
Critical accounting policies.
This section discusses any significant changes in our critical accounting policies since
March 28, 2015
. Critical accounting policies typically require significant judgment and estimation on the part of management in their application. In addition, all of our significant accounting policies, including our critical accounting policies, are summarized in Note 3 of the Fiscal
2015
10-K.
|
|
•
|
Recently issued accounting standards.
This section discusses the potential impact on our reported results of operations and financial condition of certain accounting standards that have been recently issued or proposed.
|
|
|
35
|
|
|
|
36
|
|
|
•
|
pretax asset impairment and restructuring charges recorded during the periods presented. A summary of the effect of these items on pretax income for each fiscal period is summarized below (references to "Notes" are to the notes to the accompanying unaudited interim consolidated financial statements):
|
|
|
|
Three Months Ended
|
||||||
|
|
|
June 27,
2015 |
|
June 28,
2014 |
||||
|
|
|
(millions)
|
||||||
|
Impairment of assets (see Note 8)
|
|
$
|
(8
|
)
|
|
$
|
(1
|
)
|
|
Restructuring charges (see Note 9)
|
|
(34
|
)
|
|
(4
|
)
|
||
|
|
37
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|||||||||
|
|
|
June 27,
2015 |
|
June 28,
2014 |
|
$
Change
|
|
% / bps
Change
|
|||||||
|
|
|
(millions, except per share data)
|
|
|
|||||||||||
|
Net revenues
|
|
$
|
1,618
|
|
|
$
|
1,708
|
|
|
$
|
(90
|
)
|
|
(5.3
|
%)
|
|
Cost of goods sold
(a)
|
|
(652
|
)
|
|
(665
|
)
|
|
13
|
|
|
(2.0
|
%)
|
|||
|
Gross profit
|
|
966
|
|
|
1,043
|
|
|
(77
|
)
|
|
(7.4
|
%)
|
|||
|
Gross profit as % of net revenues
|
|
59.7
|
%
|
|
61.0
|
%
|
|
|
|
(130 bps)
|
|
||||
|
Selling, general, and administrative expenses
(a)
|
|
(822
|
)
|
|
(788
|
)
|
|
(34
|
)
|
|
4.2
|
%
|
|||
|
SG&A expenses as % of net revenues
|
|
50.7
|
%
|
|
46.1
|
%
|
|
|
|
460 bps
|
|
||||
|
Amortization of intangible assets
|
|
(6
|
)
|
|
(6
|
)
|
|
—
|
|
|
NM
|
|
|||
|
Impairment of assets
|
|
(8
|
)
|
|
(1
|
)
|
|
(7
|
)
|
|
NM
|
|
|||
|
Restructuring charges
|
|
(34
|
)
|
|
(4
|
)
|
|
(30
|
)
|
|
NM
|
|
|||
|
Operating income
|
|
96
|
|
|
244
|
|
|
(148
|
)
|
|
(60.5
|
%)
|
|||
|
Operating income as % of net revenues
|
|
6.0
|
%
|
|
14.3
|
%
|
|
|
|
(830 bps)
|
|
||||
|
Foreign currency losses
|
|
(1
|
)
|
|
(3
|
)
|
|
2
|
|
|
(59.5
|
%)
|
|||
|
Interest expense
|
|
(4
|
)
|
|
(4
|
)
|
|
—
|
|
|
NM
|
|
|||
|
Interest and other income, net
|
|
2
|
|
|
1
|
|
|
1
|
|
|
(7.2
|
%)
|
|||
|
Equity in losses of equity-method investees
|
|
(3
|
)
|
|
(3
|
)
|
|
—
|
|
|
NM
|
|
|||
|
Income before provision for income taxes
|
|
90
|
|
|
235
|
|
|
(145
|
)
|
|
(61.7
|
%)
|
|||
|
Provision for income taxes
|
|
(26
|
)
|
|
(73
|
)
|
|
47
|
|
|
(64.3
|
%)
|
|||
|
Effective tax rate
(b)
|
|
29.0
|
%
|
|
31.1
|
%
|
|
|
|
(210 bps)
|
|
||||
|
Net income
|
|
$
|
64
|
|
|
$
|
162
|
|
|
$
|
(98
|
)
|
|
(60.6
|
%)
|
|
Net income per common share:
|
|
|
|
|
|
|
|
|
|||||||
|
Basic
|
|
$
|
0.74
|
|
|
$
|
1.82
|
|
|
$
|
(1.08
|
)
|
|
(59.3
|
%)
|
|
Diluted
|
|
$
|
0.73
|
|
|
$
|
1.80
|
|
|
$
|
(1.07
|
)
|
|
(59.4
|
%)
|
|
|
|
(a)
|
Includes total depreciation expense of
$68 million
and
$63 million
for the
three-month periods ended
June 27, 2015
and
June 28, 2014
, respectively.
|
|
(b)
|
Effective tax rate is calculated by dividing the provision for income taxes by income before provision for income taxes.
|
|
|
38
|
|
|
|
|
Three Months Ended
|
|
|
|
% Change
|
||||||||||||
|
|
|
June 27,
2015 |
|
June 28,
2014 |
|
$
Change
|
|
As
Reported
|
|
Constant
Currency
|
||||||||
|
|
|
(millions)
|
|
|
|
|
||||||||||||
|
Net Revenues:
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Wholesale
|
|
$
|
642
|
|
|
$
|
708
|
|
|
$
|
(66
|
)
|
|
(9.3
|
%)
|
|
(5.7
|
%)
|
|
Retail
|
|
935
|
|
|
960
|
|
|
(25
|
)
|
|
(2.7
|
%)
|
|
3.2
|
%
|
|||
|
Licensing
|
|
41
|
|
|
40
|
|
|
1
|
|
|
2.7
|
%
|
|
6.0
|
%
|
|||
|
Total net revenues
|
|
$
|
1,618
|
|
|
$
|
1,708
|
|
|
$
|
(90
|
)
|
|
(5.3
|
%)
|
|
(0.4
|
%)
|
|
•
|
a $63 million net decrease related to our business in the Americas, reflecting lower sales across all of our major apparel and accessories businesses, largely driven by the acceleration in the timing of certain shipments which occurred during the fourth quarter of Fiscal 2015. The net decrease related to our business in the Americas also reflected net unfavorable foreign currency effects of $2 million due to the weakening of the Canadian Dollar against the U.S. Dollar; and
|
|
•
|
a $4 million net decrease related to our European business, primarily reflecting net unfavorable foreign currency effects of $22 million, partially offset by increased sales across all of our major apparel and accessories businesses. On a constant currency basis, net revenues related to our European business increased by $18 million, or 14.9%.
|
|
•
|
a $62 million, or 8%, net decline in consolidated comparable store sales, including net unfavorable foreign currency effects of $46 million. Our total comparable store sales decreased by $16 million, or 2%, on a constant currency basis, primarily driven by lower sales from certain retail stores and concession shops, partially offset by an increase from our Ralph Lauren e-commerce operations. Comparable store sales related to our e-commerce operations was approximately flat on a reported basis and increased by approximately 2% on a constant currency basis over the related prior period, and had a favorable impact on our total comparable store sales of approximately flat up to 1% on both a reported and constant currency basis. Our consolidated comparable store sales excluding e-commerce declined between approximately 8% and 9% on a reported basis and declined between approximately 2% and 3% on a constant currency basis.
|
|
|
39
|
|
|
•
|
a $37 million, or a 27%, net increase in non-comparable store sales, including net unfavorable foreign currency effects of $11 million. On a constant currency basis, non-comparable store sales increased by $48 million, or 34%, primarily driven by new global store openings and the expansion of our e-commerce operations within the past twelve months, which more than offset the impact of store closings.
|
|
|
|
June 27,
2015 |
|
June 28,
2014 |
||
|
Stores:
|
|
|
|
|
||
|
Freestanding stores
|
|
467
|
|
|
436
|
|
|
Concession shops
|
|
558
|
|
|
503
|
|
|
Total stores
|
|
1,025
|
|
|
939
|
|
|
|
|
|
|
|
||
|
E-commerce Sites:
|
|
|
|
|
||
|
North American sites
(a)
|
|
3
|
|
|
3
|
|
|
European sites
(b)
|
|
3
|
|
|
3
|
|
|
Asian sites
(c)
|
|
4
|
|
|
3
|
|
|
Total e-commerce sites
|
|
10
|
|
|
9
|
|
|
|
|
(a)
|
Includes www.RalphLauren.com and www.ClubMonaco.com (servicing the U.S.) and www.ClubMonaco.ca (servicing Canada).
|
|
(b)
|
Includes www.RalphLauren.co.uk (servicing the United Kingdom), www.RalphLauren.fr (servicing Belgium, France, Italy, Luxembourg, the Netherlands, Portugal, and Spain), and www.RalphLauren.de (servicing Austria, Denmark, Estonia, Finland, Germany, Latvia, Slovakia, and Sweden).
|
|
(c)
|
Includes www.RalphLauren.co.jp (servicing Japan), www.RalphLauren.co.kr (servicing South Korea), www.RalphLauren.asia (servicing Hong Kong, Macau, Malaysia, and Singapore), and www.RalphLauren.com.au, which was launched during the third quarter of Fiscal 2015 (servicing Australia and New Zealand).
|
|
|
40
|
|
|
|
|
Three Months Ended June 27, 2015 Compared to
Three Months Ended June 28, 2014
|
||
|
|
|
(millions)
|
||
|
SG&A expense category:
|
|
|
||
|
Compensation-related expenses
(a)
|
|
$
|
14
|
|
|
Consulting fees
|
|
12
|
|
|
|
Depreciation expense
|
|
5
|
|
|
|
Other
|
|
3
|
|
|
|
Total change in SG&A expenses
|
|
$
|
34
|
|
|
|
|
(a)
|
Includes a
$9 million
increase in stock-based compensation expense, primarily related to the introduction of new vesting provisions for certain awards granted to retirement-eligible employees beginning in Fiscal 2016 (see
Note 17
to the accompanying unaudited interim consolidated financial statements).
|
|
|
41
|
|
|
|
|
Three Months Ended
|
|
|
|
|
||||||||||||
|
|
June 27, 2015
|
|
June 28, 2014
|
|
|
|
|
|||||||||||
|
|
Operating
Income
|
|
Operating
Margin
|
|
Operating
Income
|
|
Operating
Margin
|
|
$
Change
|
|
Margin
Change
|
|||||||
|
|
(millions)
|
|
|
|
(millions)
|
|
|
|
(millions)
|
|
|
|||||||
|
Segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Wholesale
|
|
$
|
137
|
|
|
21.3%
|
|
$
|
180
|
|
|
25.5%
|
|
$
|
(43
|
)
|
|
(420 bps)
|
|
Retail
|
|
110
|
|
|
11.8%
|
|
168
|
|
|
17.5%
|
|
(58
|
)
|
|
(570 bps)
|
|||
|
Licensing
|
|
36
|
|
|
88.6%
|
|
36
|
|
|
90.2%
|
|
—
|
|
|
(160 bps)
|
|||
|
|
|
283
|
|
|
|
|
384
|
|
|
|
|
(101
|
)
|
|
|
|||
|
Unallocated corporate expenses
|
|
(153
|
)
|
|
|
|
(136
|
)
|
|
|
|
(17
|
)
|
|
|
|||
|
Unallocated restructuring charges
|
|
(34
|
)
|
|
|
|
(4
|
)
|
|
|
|
(30
|
)
|
|
|
|||
|
Total operating income
|
|
$
|
96
|
|
|
6.0%
|
|
$
|
244
|
|
|
14.3%
|
|
$
|
(148
|
)
|
|
(830 bps)
|
|
|
42
|
|
|
|
|
June 27,
2015 |
|
March 28,
2015 |
|
$
Change |
||||||
|
|
|
(millions)
|
||||||||||
|
Cash and cash equivalents
|
|
$
|
490
|
|
|
$
|
500
|
|
|
$
|
(10
|
)
|
|
Short-term investments
|
|
661
|
|
|
644
|
|
|
17
|
|
|||
|
Non-current investments
(a)
|
|
8
|
|
|
8
|
|
|
—
|
|
|||
|
Short-term debt
|
|
(155
|
)
|
|
(234
|
)
|
|
79
|
|
|||
|
Long-term debt
(b)
|
|
(297
|
)
|
|
(298
|
)
|
|
1
|
|
|||
|
Net cash and investments
(c)
|
|
$
|
707
|
|
|
$
|
620
|
|
|
$
|
87
|
|
|
Equity
|
|
$
|
3,807
|
|
|
$
|
3,891
|
|
|
$
|
(84
|
)
|
|
|
|
(a)
|
Recorded within other non-current assets in our consolidated balance sheets.
|
|
(b)
|
During the first quarter of Fiscal 2016, we entered into an interest rate swap contract which we designated as a hedge against changes in the fair value of our fixed-rate Senior Notes (see
Note 13
to the accompanying unaudited interim consolidated financial statements). Accordingly, the carrying value of the Senior Notes as of
June 27, 2015
reflects an adjustment of
$2 million
for the change in fair value attributable to the benchmark interest rate. The carrying value of the Senior Notes is also net of unamortized debt issuance costs of
$1 million
and
$2 million
as of
June 27, 2015
and
March 28, 2015
, respectively.
|
|
(c)
|
"Net cash and investments" is defined as cash and cash equivalents, plus short-term and non-current investments, less total debt.
|
|
|
43
|
|
|
|
|
Three Months Ended
|
|
|
||||||||
|
|
|
June 27,
2015 |
|
June 28,
2014 |
|
$
Change |
||||||
|
|
|
(millions)
|
||||||||||
|
Net cash provided by operating activities
|
|
$
|
332
|
|
|
$
|
415
|
|
|
$
|
(83
|
)
|
|
Net cash used in investing activities
|
|
(77
|
)
|
|
(264
|
)
|
|
187
|
|
|||
|
Net cash used in financing activities
|
|
(275
|
)
|
|
(238
|
)
|
|
(37
|
)
|
|||
|
Effect of exchange rate changes on cash and cash equivalents
|
|
10
|
|
|
1
|
|
|
9
|
|
|||
|
Net decrease in cash and cash equivalents
|
|
$
|
(10
|
)
|
|
$
|
(86
|
)
|
|
$
|
76
|
|
|
•
|
a
$171 million
decline in cash used to purchase investments, less proceeds from sales and maturities of investments. During the
three months ended June 27, 2015
, we made net investment purchases of
$4 million
, as compared to net investment purchases of
$175 million
during the
three months ended June 28, 2014
; and
|
|
•
|
a
$17 million
decline in capital expenditures. During the
three months ended June 27, 2015
, we spent
$68 million
on capital expenditures, as compared to
$85 million
during the
three months ended June 28, 2014
. Our capital expenditures during the
three months ended June 27, 2015
primarily related to our global retail store expansion, department store renovations, enhancements to our global information technology systems, and further development of our infrastructure.
|
|
•
|
a
$79 million
increase in repayments of debt, less proceeds from debt issuances, related to our Commercial Paper Program (as defined within "
Commercial Paper
" below); and
|
|
•
|
a
$3 million
increase in cash used to pay dividends. During the
three months ended June 27, 2015
, we used
$43 million
to pay dividends, as compared to
$40 million
during the
three months ended June 28, 2014
.
|
|
|
44
|
|
|
•
|
a
$42 million
decline in cash used to repurchase shares of our Class A common stock. During the
three months ended June 27, 2015
, we used
$150 million
to repurchase shares of Class A common stock pursuant to our common stock repurchase program, and an additional
$19 million
in shares of Class A common stock were surrendered or withheld in satisfaction of withholding taxes in connection with the vesting of awards under our 1997 Long-Term Stock Incentive Plan, as amended (the "1997 Incentive Plan") and our Amended and Restated 2010 Long-Term Stock Incentive Plan (the "2010 Incentive Plan"). On a comparative basis, during the
three months ended June 28, 2014
, we used
$180 million
to repurchase shares of Class A common stock pursuant to our common stock repurchase program, and an additional
$31 million
in shares of Class A common stock were surrendered or withheld for taxes.
|
|
|
|
Three Months Ended
|
||||||
|
|
|
June 27,
2015 |
|
June 28,
2014 |
||||
|
|
|
(millions)
|
||||||
|
Cost of shares repurchased
|
|
$
|
150
|
|
|
$
|
180
|
|
|
Number of shares repurchased
|
|
1.1
|
|
|
1.2
|
|
||
|
|
45
|
|
|
|
46
|
|
|
|
47
|
|
|
|
48
|
|
|
Item 3.
|
Quantitative and Qualitative Disclosures about Market Risk.
|
|
Item 4.
|
Controls and Procedures.
|
|
|
49
|
|
|
|
50
|
|
|
Item 1.
|
Legal Proceedings.
|
|
Item 1A.
|
Risk Factors.
|
|
|
51
|
|
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds.
|
|
(a)
|
Sales of Unregistered Securities
|
|
(b)
|
Not Applicable
|
|
(c)
|
Stock Repurchases
|
|
|
Total Number of Shares Purchased
|
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
|
Approximate Dollar Value of Shares That May Yet be Purchased Under the Plans or Programs
(a)
|
||||||
|
|
|
|
|
|
|
|
(millions)
|
||||||
|
March 29, 2015 to April 25, 2015
|
1,738
|
|
(b)
|
$
|
139.74
|
|
|
—
|
|
|
$
|
80
|
|
|
April 26, 2015 to May 23, 2015
|
378,709
|
|
|
132.03
|
|
|
378,709
|
|
|
530
|
|
||
|
May 24, 2015 to June 27, 2015
|
897,766
|
|
(c)
|
133.04
|
|
|
748,878
|
|
|
430
|
|
||
|
|
1,278,213
|
|
|
|
|
1,127,587
|
|
|
|
||||
|
|
|
(a)
|
On May 12, 2015, the Company's Board of Directors approved an expansion of the program that allows it to repurchase up to an additional $500 million of Class A common stock. Repurchases of shares of Class A common stock are subject to overall business and market conditions.
|
|
(b)
|
Represents shares surrendered to or withheld by the Company in satisfaction of withholding taxes in connection with the vesting of awards issued under the 2010 Long-Term Stock Incentive Plan.
|
|
(c)
|
Includes approximately 0.2 million shares surrendered to or withheld by the Company in satisfaction of withholding taxes in connection with the vesting of awards issued under the incentive plans referenced above.
|
|
Item 5.
|
Other Information.
|
|
|
52
|
|
|
Item 6.
|
Exhibits.
|
|
3.1
|
Amended and Restated Certificate of Incorporation of the Company (filed as Exhibit 3.1 to the Company's Registration Statement on Form S-1 (File No. 333-24733)).
|
|
3.2
|
Certificate of Amendment to the Amended and Restated Certificate of Incorporation of the Company (filed as Exhibit 3.1 to the Form 8-K filed August 16, 2011).
|
|
3.3
|
Third Amended and Restated By-laws of the Company (filed as Exhibit 3.1 to the Form 8-K dated February 4, 2014).
|
|
10.1*
|
Form of Restricted Stock Unit Award Agreement under the Amended and Restated 2010 Long-Term Stock Incentive Plan†
|
|
12.1*
|
Computation of Ratio of Earnings to Fixed Charges.
|
|
14.1*
|
Code of Business Conduct and Ethics of the Company, as amended and restated on August 6, 2015.
|
|
31.1*
|
Certification of Ralph Lauren, Chairman and Chief Executive Officer, pursuant to 17 CFR 240.13a-14(a).
|
|
31.2*
|
Certification of Robert L. Madore, Senior Vice President and Chief Financial Officer, pursuant to 17 CFR 240.13a-14(a).
|
|
32.1*
|
Certification of Ralph Lauren, Chairman and Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
32.2*
|
Certification of Robert L. Madore, Senior Vice President and Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
101*
|
Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Consolidated Balance Sheets at June 27, 2015 and March 28, 2015, (ii) the Consolidated Statements of Income for the three-month periods ended June 27, 2015 and June 28, 2014, (iii) the Consolidated Statements of Comprehensive Income for the three-month periods ended June 27, 2015 and June 28, 2014, (iv) the Consolidated Statements of Cash Flows for the three-month periods ended June 27, 2015 and June 28, 2014, and (v) the Notes to the Consolidated Financial Statements.
|
|
|
|
|
53
|
|
|
|
|
RALPH LAUREN CORPORATION
|
|
|
|
|
|
|
By:
|
/
S
/ ROBERT L. MADORE
|
|
|
|
Robert L. Madore
|
|
|
|
Senior Vice President and Chief Financial Officer
|
|
|
|
(Principal Financial and Accounting Officer)
|
|
|
|
|
|
Date: August 6, 2015
|
|
|
|
|
54
|
|
|
1.
|
Grant of the Restricted Stock Units
. Subject to the terms and conditions of the Plan and the additional terms and conditions set forth in this Agreement as well as the Appendices to this Agreement, the Company hereby grants to the Participant a Restricted Stock Unit Award consisting of [
Number of Share Units
] Restricted Stock Units ("RSUs"). The RSUs shall vest and become non-forfeitable in accordance with Section 2 hereof.
|
|
2.
|
Vesting
.
|
|
(a)
|
Subject to the Participant's continued service as an Employee of the Company, the RSUs shall vest and become non-forfeitable with respect to one-third (1/3) of the RSUs initially granted hereunder on each of (i) the first anniversary of the Grant Date, (ii) the second anniversary of the Grant Date, and (iii) the third anniversary of the Grant Date.
|
|
(b)
|
Once vested, the RSUs shall be paid to Participant in Shares as soon as administratively practicable, but not later than thirty (30) days, after their applicable vesting date.
|
|
|
|
|
|
|
|
|
|
|
1
|
|
|
(c)
|
Notwithstanding the foregoing, in the event the above vesting schedule results in the vesting of any fractional Shares, such fractional Shares shall not be deemed vested hereunder but shall instead only vest and become non-forfeitable when such fractional Shares aggregate whole Shares.
|
|
(d)
|
If the Participant's service as an Employee of the Company is terminated for any reason other than due to the Participant's death or Disability, or due to Participant's Retirement (as defined below), the RSUs shall, to the extent not then vested, be forfeited by the Participant without consideration.
|
|
(e)
|
In the event that Participant's employment is terminated by reason of death, Disability or Retirement of the Participant within the first year following the Grant Date of this Agreement, Participant shall be entitled to vest in the RSUs that would have otherwise vested had service continued through the first anniversary of the Grant Date, with such RSUs vesting on that date. All RSUs that do not vest in accordance with the preceding sentence shall be forfeited and cancelled automatically at the time of the Participant's death, Disability or Retirement. In the event that Participant's employment is terminated by reason of death, Disability or Retirement after the first year following the Grant Date of this Agreement, Participant shall be entitled to vest in all remaining unvested RSUs on the same dates they would have vested had Participant's employment continued through such dates.
|
|
(f)
|
For purposes of this Agreement, "Retirement" shall mean Participant's termination of employment for any reason (other than for Misconduct as defined in Appendix A to this Agreement) after: (a) Participant has attained age 55 and completed at least seven (7) years of continuous service as an employee of the Company or an Affiliate; or (b) Participant has attained age 65. Notwithstanding the foregoing, if the Company determines, in its sole discretion, that Participant has violated any of the Obligations in Appendix A to this Agreement, the Participant shall not be deemed to be eligible for Retirement and all RSUs that have not been settled shall be forfeited effective as of the date that the violation first occurred.
|
|
3.
|
Rights as a Stockholder
. Neither the Participant or any person claiming under or through the Participant will have any of the rights or privileges of a stockholder of the Company in respect of any RSUs unless and until the RSUs have vested and been issued as Shares in accordance with the Plan, recorded on the records of the Company or its transfer agents or registrars, and delivered to the Participant. After such vesting, issuance,
|
|
|
|
|
|
|
|
|
|
|
2
|
|
|
4.
|
No Right to Continued Employment
. Participant understands and agrees that this Agreement does not impact in any way the right of the Company to terminate or change the terms of the employment of Participant at any time for any reason whatsoever, with or without good cause provided in accordance with applicable local law. Participant understands and agrees that, unless contrary to applicable local law or there is an employment contract in place providing otherwise, his or her employment is "at-will," and that either the Company or Participant may terminate Participant's employment at any time and for any reason subject to applicable local law.
|
|
5.
|
No Advice Regarding Grant
. The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Participant's participation in the Plan, or his or her acquisition or sale of the underlying RSUs. The Participant is hereby advised to consult with his or her own personal tax, legal and financial advisors regarding the Participant's participation in the Plan before taking any action related to the Plan.
|
|
6.
|
Compliance with Section 409A
. The parties acknowledge and agree that, to the extent applicable, this Agreement shall be interpreted in accordance with, and the parties agree to use their best efforts to achieve timely compliance with, Section 409A of the Code and the Department of Treasury Regulations and other interpretive guidance issued thereunder ("Section 409A"), including without limitation any such regulations or other guidance that may be issued after the Grant Date. Notwithstanding any provision of this Agreement to the contrary, in the event that the Company determines that anything provided hereunder may be subject to Section 409A, the Company reserves the right (without any obligation to do so or to indemnify the Participant for failure to do so) to adopt such limited amendments to this Agreement and appropriate policies and procedures, including amendments and policies with retroactive effect, that the Company reasonably determines are necessary or appropriate to (a) exempt the RSU Award under this Agreement from Section 409A and/or preserve the intended tax treatment of the RSU Award provided with respect to this Agreement or (b) comply with the requirements of Section 409A. Notwithstanding any provision in this Agreement to the contrary, if and to the extent that any amount payable hereunder constitutes deferred compensation (or may be nonqualified deferred compensation) under Section 409A and such deferral is required to comply with the requirements of Section 409A (and not exempt therefrom), then: (a) to the extent required by Section 409A any references to termination of employment (or similar references) shall be deemed a reference to a "separation from service" within the meaning of Section 1.409A-1(h) of the Department of Treasury
|
|
|
|
|
|
|
|
|
|
|
3
|
|
|
7.
|
Notices
. Any notice necessary under this Agreement shall be addressed to the Company in care of its Secretary at the principal executive office of the Company and to the Participant at the address appearing in the records of the Company with respect to such Participant or to either party at such other address as either party hereto may hereafter designate in writing to the other. Any such notice shall be deemed effective upon receipt thereof by the addressee.
|
|
8.
|
Appendices
.
Appendix A
attached hereto, entitled "Post-Employment Obligations," and
Appendix B
attached hereto, entitled "Terms and Conditions for Non-U.S. Participants," are fully incorporated into, and form a part of, this Agreement.
|
|
9.
|
Withholding
. As authorized by Section 14(d) of the Plan, when Shares are distributed after vesting, a portion of the Shares may be withheld to satisfy tax withholding requirements, and the net Shares shall then be delivered.
|
|
10.
|
Choice of Law
. This Agreement, including its Appendices, shall be governed by, and construed in accordance with, the laws of the State of New York without regard to principles of conflict of laws. For purposes of litigating any dispute that arises directly or indirectly from the relationship of the parties evidenced by this grant or the Agreement, the parties hereby submit to and consent to the exclusive jurisdiction of the State of New York and agree that such litigation shall be conducted only in the courts of New York County, New York, or the federal courts of the United States for the Southern District of New York, and no other courts.
|
|
|
|
|
|
|
|
|
|
|
4
|
|
|
11.
|
Non-U.S. Participants
. Notwithstanding any provision of the Plan to the contrary, to comply with securities, exchange control, labor, tax, or other applicable laws, rules or regulations in countries outside of the United States in which the Company and its Subsidiaries operate or have Employees, Consultants, or directors, and/or for the purpose of taking advantage of tax favorable treatment for RSU Awards granted to Participants in such countries, the Committee, in its sole discretion, shall have the power and authority to (i) amend or modify the terms and conditions of any RSU Awards granted to a Participant; (ii) establish, adopt, interpret, or revise any rules and procedures to the extent such actions may be necessary or advisable, including adoption of rules or procedures applicable to particular Subsidiaries or Participants residing in particular locations; and (iii) take any action, before or after an RSU Award is made, that it deems advisable to obtain approval or comply with any necessary local governmental regulatory exemptions or approvals. Without limiting the generality of the foregoing, the Committee is specifically authorized to adopt rules or procedures with provisions that limit or modify rights on eligibility to receive RSU Awards under the Plan or on termination of service, available methods of vesting or settlement of a RSU Award, payment of tax-related items, the shifting of employer tax liability to the Participant, tax withholding procedures, restrictions on the sale of shares of Class A Common Stock of the Company, and the handling of stock certificates or other indicia of ownership. Notwithstanding the foregoing, the Committee may not take actions hereunder, and no RSU Awards shall be granted, that would violate the U.S. Securities Act of 1933, as amended, the Exchange Act, the Code, any securities law or governing statute.
|
|
12.
|
Exchange Rates
. Neither the Company nor any Subsidiary shall be liable to a Participant for any foreign exchange rate fluctuation between the Participant's local currency and the U.S. Dollar that may affect the value of the Participant's RSU Award or of any amounts due to the Participant pursuant to the vesting or other settlement of the RSU Award or, if applicable, the subsequent sale of Shares acquired upon vesting.
|
|
13.
|
RSU Award Subject to Plan
. By accepting this Agreement and the Award evidenced hereby, the Participant agrees and acknowledges that the Participant has received and read a copy of the Plan, that the Plan forms a part of this Agreement, and that if there is a conflict between this Agreement and either the Plan or the provision under which the Plan is administered and governed by the Committee, the Plan and/or the determination of the Committee will govern, as applicable. This Agreement is qualified in its entirety based on the determinations, interpretations and other decisions made within the sole discretion of the Committee.
|
|
|
|
|
|
|
|
|
|
|
5
|
|
|
14.
|
Conflict with any Employment Contract
. If Participant has entered into an authorized, written employment contract with the Company, the terms of that authorized, written employment contract shall prevail over any conflicting provisions in this Agreement.
|
|
15.
|
Acknowledgments
. By participating in the Plan, the Participant understands and agrees that:
|
|
a)
|
the Plan is established voluntarily by the Company, is discretionary in nature and may be modified, amended, suspended or terminated by the Company at any time, to the extent permitted by the Plan;
|
|
b)
|
the grant of RSU Awards is voluntary and occasional and does not create any contractual or other right to receive future RSU Awards, or benefits in lieu of these awards, even if RSU Awards have been granted in the past;
|
|
c)
|
all decisions with respect to future RSU Awards, if any, will be at the sole discretion of the Committee;
|
|
d)
|
the Participant is subject to the Company's Securities Trading Policy;
|
|
e)
|
the Participant is voluntarily participating in the Plan;
|
|
f)
|
any RSU Awards and the Company's Class A Common Stock subject to awards, and the income and value of same, are not part of the Participant's normal or expected compensation for purposes of calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, holiday pay, long-service awards, pension or retirement or welfare benefits or similar payments, if any; and
|
|
g)
|
no claim or entitlement to compensation or damages shall arise from the forfeiture of a RSU Award (either in whole or in part) resulting from the Participant's termination of employment or service.
|
|
|
|
|
|
|
|
|
|
|
6
|
|
|
Confidentiality
|
You will at all times during and after your employment with the Company faithfully hold the Company's Confidential Information (as defined below) in the strictest confidence, and you will use your best efforts and highest diligence to guard against its disclosure to anyone other than as required in the performance of your duties in good faith to the Company. You will not use Confidential Information for your personal benefit or for the benefit of any competitor or other person. "Confidential Information" means certain proprietary techniques and confidential information as described below, which have great value to the Company's business and which you acknowledge is and shall be the sole and exclusive property of the Company. Confidential Information includes all proprietary information that has or could have commercial value or other utility in the business in which the Company is engaged or contemplates engaging, and all proprietary information the unauthorized disclosure of which could be detrimental to the interests of the Company. By way of example and without limitation, Confidential Information includes any and all information developed, obtained or owned by the Company and/or its subsidiaries, affiliates or licensees concerning trade secrets, techniques, know-how (including designs, plans, procedures, processes and research records), software, computer programs, marketing data and plans, business plans, strategies, forecasts, unpublished financial information, orders, agreements and other forms of documents, price and cost information, merchandising opportunities, expansion plans, designs, store plans, budgets, projections, customer, supplier and subcontractor identities, characteristics and agreements, and salary, staffing and employment information. Upon termination of your employment with the Company, regardless of the reason for such termination, you will return to the Company all documents and other materials of any kind that contain Confidential Information. You understand that nothing in this Appendix A or otherwise in this Agreement shall be construed to prohibit you from reporting possible violations of law or regulation to any governmental agency or regulatory body or making other
|
|
|
|
|
|
|
|
|
|
|
1
|
|
|
Non-Compete
|
You covenant and agree that during your period of employment, and for a period of six (6) months following the termination of your employment if such termination is voluntarily initiated by you for any reason, or if such termination is initiated by the Company because of your Misconduct, as that term is defined in the Addendum below, you shall not provide any labor, work, services or assistance (whether as an officer, director, employee, partner, agent, owner, independent contractor, consultant, stockholder or otherwise) to a "Competing Business." For purposes hereof, "Competing Business" shall mean any business engaged in the designing, marketing or distribution of premium lifestyle products, including but not limited to apparel, home, accessories and fragrance products, which competes in any material respects with the Company or any of its subsidiaries, affiliates or licensees. Nothing in this Non-Compete prohibits you from owning, solely as an investment, securities of any entity which are traded on a national securities exchange if you are not a controlling person of, or a member of a group that controls such entity, and you do not, directly or indirectly, own 5% or more of any class of securities of such entity.
|
|
Non-Solicit
|
You covenant and agree that during your period of employment, other than in the course of performing your duties in good faith, and for a period of one (1) year following the termination of your employment for any reason whatsoever hereunder, you shall not directly or indirectly solicit or influence any other employee of the Company, or any of its subsidiaries, affiliates or licensees, to terminate such employee's employment with the Company, or any of its subsidiaries, affiliates or licensees, as the case may be. As used herein, "solicit" shall include, without limitation, requesting, encouraging, enticing, assisting, or causing, directly or indirectly.
|
|
|
|
|
|
|
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
3
|
|
|
i.
|
an act of fraud, embezzlement, theft, breach of fiduciary duty, dishonesty, or any other misconduct or any violation of law (other than a traffic violation) committed by you; or
|
|
ii.
|
any action by you causing damage to or misappropriation of Company assets; or
|
|
iii.
|
your wrongful disclosure of Confidential Information of the Company or any of its affiliates; or
|
|
iv.
|
your engagement in any competitive activity which would constitute a breach of your duty of loyalty to the Company; or
|
|
v.
|
your breach of any employment policy of the Company, including, but not limited to, conduct relating to falsification of business records, violation of the Company's code of business conduct & ethics, harassment, creation of a hostile work environment, excessive absenteeism, insubordination, violation of the Company's policy on drug & alcohol use, or violent acts or threats of violence; or
|
|
vi.
|
the commission of any act by you, whether or not performed in the workplace, which subjects or, if publicly known, would be likely to subject the Company to public ridicule or embarrassment, or would likely be detrimental or damaging to the Company's reputation, goodwill, or relationships with its customers, suppliers, vendors, licensees or employees.
|
|
|
|
|
|
|
|
|
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
|
(a)
|
the Plan is established voluntarily by the Company, is discretionary in nature and may be modified, amended, suspended or terminated by the Company at any time, to the extent permitted by the Plan;
|
|
(b)
|
the grant of Awards is voluntary and occasional and does not create any contractual or other right to receive future Awards, or benefits in lieu of Awards, even if Awards have been granted in the past;
|
|
(c)
|
all decisions with respect to future Awards, if any, will be at the sole discretion of the Compensation & Organizational Development Committee of the Board of Directors (the "
Committee"
);
|
|
(d)
|
Participant's participation in the Plan shall not create a right to further employment or service with the Employer and shall not interfere with the ability of the Employer to terminate Participant's employment or service relationship at any time with or without cause;
|
|
(e)
|
Participant is voluntarily participating in the Plan;
|
|
(f)
|
any Awards and the Shares subject to Awards, and the income and value of same, are not intended to replace any pension rights or compensation;
|
|
(g)
|
unless otherwise agreed with the Company, the Awards and Shares subject to the Awards, and the income and value of same, are not granted as consideration for, or in connection with, any service Participant may provide as a director of a Subsidiary or Affiliate;
|
|
(h)
|
any Awards and the Shares subject to Awards, and the income and value of same, are not part of normal or expected compensation or salary for any purpose, including, but not limited to, calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, long-service awards, pension or retirement benefits or similar payments;
|
|
(i)
|
an Award grant will not be interpreted to form an employment or service contract or relationship with the Company or any Subsidiary or Affiliate;
|
|
(j)
|
the future value of the underlying Shares is unknown, indeterminable and cannot be predicted with certainty;
|
|
(k)
|
neither the Company, the Employer nor any other Subsidiary or Affiliate shall be liable for any foreign exchange rate fluctuation between Participant's local currency and the United States Dollar that may affect the value of an Award or of any proceeds due to Participant pursuant to the vesting of an Award or the sale of Shares;
|
|
(l)
|
no claim or entitlement to compensation or damages shall arise from forfeiture of an Award resulting from Participant's termination of employment or service (for any reason whatsoever and whether or not later found to be invalid or in breach of employment laws in the jurisdiction
|
|
|
|
|
|
|
|
|
|
|
2
|
|
|
(m)
|
unless otherwise provided in the Plan or by the Committee in its discretion, an Award does not create any entitlement to have the Award or any benefits thereunder transferred to, or assumed by, another company nor exchanged, cashed out or substituted for, in connection with any corporate transaction affecting the Shares.
|
|
|
|
|
|
|
|
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
5
|
|
|
|
|
|
|
|
|
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
8
|
|
|
|
|
|
|
|
|
|
|
|
9
|
|
|
|
|
|
|
|
|
|
|
|
10
|
|
|
|
|
|
|
|
|
|
|
|
11
|
|
|
|
|
|
|
|
|
|
|
|
12
|
|
|
|
|
|
|
|
|
|
|
|
13
|
|
|
|
|
|
|
|
|
|
|
|
14
|
|
|
|
|
|
|
|
|
|
|
|
15
|
|
|
|
|
|
|
|
|
|
|
|
16
|
|
|
|
|
Three Months Ended
|
|
Fiscal Years Ended
|
||||||||||||||||||||
|
|
|
June 27, 2015
|
|
March 28, 2015
|
|
March 29, 2014
|
|
March 30, 2013
|
|
March 31, 2012
|
|
April 2, 2011
|
||||||||||||
|
|
|
(millions)
|
||||||||||||||||||||||
|
Earnings, as defined:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Income before provision for income taxes
|
|
$
|
90
|
|
|
$
|
987
|
|
|
$
|
1,096
|
|
|
$
|
1,089
|
|
|
$
|
1,015
|
|
|
$
|
825
|
|
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Equity in losses of equity-method investees
|
|
3
|
|
|
11
|
|
|
9
|
|
|
10
|
|
|
9
|
|
|
8
|
|
||||||
|
Fixed charges
|
|
42
|
|
|
172
|
|
|
170
|
|
|
162
|
|
|
164
|
|
|
124
|
|
||||||
|
Subtract:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Income attributable to noncontrolling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
||||||
|
Earnings available to cover fixed charges
|
|
$
|
135
|
|
|
$
|
1,170
|
|
|
$
|
1,275
|
|
|
$
|
1,260
|
|
|
$
|
1,188
|
|
|
$
|
957
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Fixed Charges:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Interest expense
|
|
$
|
4
|
|
|
$
|
17
|
|
|
$
|
19
|
|
|
$
|
19
|
|
|
$
|
22
|
|
|
$
|
18
|
|
|
Interest component of rent expense
|
|
38
|
|
|
155
|
|
|
151
|
|
|
143
|
|
|
142
|
|
|
106
|
|
||||||
|
Total fixed charges
|
|
$
|
42
|
|
|
$
|
172
|
|
|
$
|
170
|
|
|
$
|
162
|
|
|
$
|
164
|
|
|
$
|
124
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Ratio of earnings to fixed charges
(a)
|
|
3.2
|
|
|
6.8
|
|
|
7.5
|
|
|
7.8
|
|
|
7.3
|
|
|
7.7
|
|
||||||
|
|
|
(a)
|
All ratios shown in the above table have been calculated using unrounded numbers.
|
|
•
|
Agreeing or consulting with competitors on prices or production, i.e. “price fixing”
|
|
•
|
Agreeing with competitors regarding bids to be submitted during auction, i.e. “bid rigging”
|
|
•
|
Agreeing with competitors not to deal with certain vendors, suppliers, or customers, i.e. “group boycotting”
|
|
•
|
Agreeing with competitors to split territories or customers, i.e. “territory or customer allocation”
|
|
•
|
Accepting special favors, cash, gifts, discounts, services or anything else of non-nominal value (usually valued at more than $200) as a result of your position with the Company from any person or organization with whom the Company has a current or potential business relationship
|
|
•
|
Competing with the Company for the purchase or sale of property, services or other interests
|
|
•
|
Acquiring an interest in a transaction involving the Company, a customer or supplier (excluding routine investments in publicly traded companies unless an employee’s judgment might be affected by such investment)
|
|
•
|
Directing business to a supplier owned or managed by, or which employs, an immediate family member, other relative or friend
|
|
•
|
Receiving a personal loan or guarantee of an obligation as a result of your position with the Company
|
|
•
|
Working in any capacity for a competitor, supplier, customer or vendor while an employee of the Company or participating in any activity that competes with or diverts income opportunities away from the Company
|
|
•
|
Designs for products, advertising and promotional materials and store environments
|
|
•
|
Business and marketing analyses, plans, strategies and methods
|
|
•
|
Financial, sales and pricing information
|
|
•
|
Product and services information, know-how, formulas, processes, systems and technologies
|
|
•
|
Client books, records and databases
|
|
•
|
Techniques and programs for finding, analyzing and distributing data or information
|
|
•
|
E-mail or physical addresses
|
|
•
|
Telephone numbers
|
|
•
|
Credit card, bank account, or other financial information
|
|
•
|
Social Security numbers or other government-issued identification information
|
|
•
|
Employee medical information maintained by the Company in accordance with applicable law
|
|
•
|
Any other personally identifiable information
|
|
•
|
Criminal conduct
|
|
•
|
Fraud or deliberate error in the preparation, evaluation, review or audit of any of our financial statements
|
|
•
|
Fraud, misappropriation or other questionable practices related to the preparation or maintenance of our financial records
|
|
•
|
Misrepresentations or false statements to or by a senior officer or outside accountant regarding a matter contained in our financial records, financial reports or audit reports
|
|
•
|
Deviations from full and fair reporting of our financial condition
|
|
•
|
Failure to comply with, or efforts to circumvent, our internal compliance policies or internal controls
|
|
If you have a question about…
|
…you should…
|
|||
|
Anti-bribery and corruption laws
|
Contact
: Legal Department
Review
: Anti-Bribery and Corruption Policy
|
|||
|
Boycott requests
|
Contact
: Legal and Customs Compliance Departments
|
|||
|
Competition laws
|
Contact
: Legal Department
|
|||
|
Conflicts of interest
|
Contact
: Legal Department
|
|||
|
Data privacy or confidential information
|
Contact
: Legal Department or Global IT Service Desk
Review
: Information Security and Privacy Policies
|
|||
|
Discrimination or harassment
|
Contact
: Human Resources or Fair Employment Practice Departments
|
|||
|
Giving or receiving gifts
|
Contact
: Legal Department
Review
: Gift Giving and Receiving Policy
|
|||
|
International trade laws
|
Contact
: Legal and Customs Compliance Departments
|
|||
|
Political activities
|
Contact
: Legal Department
Review
: Donations and Charitable Contributions Policy
|
|||
|
Securities trading
|
Contact
: RLTrading@RalphLauren.com
Review
: Securities Trading Policy; FAQ on employee stock trading
|
|||
|
Trademark, copyright, or other intellectual property issues
|
Contact
: Legal Department
|
|||
|
Concerns or potential violations of the Code
|
If your question or concern is related to:
|
|
||
|
|
Conduct of the CEO, a senior or financial officer or a member of the Board
|
Contact
: General Counsel
|
|
|
|
|
Accounting, internal controls or auditing matters
|
Contact
: General Counsel, CEO, or Chairman of the Audit Committee
|
|
|
|
|
Any other potential violation of the Code
|
Contact
: Your supervisor or appropriate personnel designated under the relevant Company policies or procedures*
*However,
if appropriate or necessary
in your judgment, you may also contact the Legal Department, or the General Counsel, CEO, or Chairman of the Audit Committee
|
|
|
|
If you receive inquiries from…
|
…you should…
|
|
Media or press
|
Contact
: Corporate Communications Department
Review
: Media Policy
|
|
Anyone asking about the Company’s financial performance
|
Contact
: Legal and Investor Relations Departments
Review
: Regulation FD Policy
|
|
Any government agency or legal counsel
|
Contact
: Legal Department
|
|
|
/s/ RALPH LAUREN
|
|
|
Ralph Lauren
|
|
|
Chairman of the Board and Chief Executive Officer
|
|
|
(Principal Executive Officer)
|
|
|
|
|
Date: August 6, 2015
|
|
|
|
/s/ ROBERT L. MADORE
|
|
|
Robert L. Madore
|
|
|
Senior Vice President and Chief Financial Officer
|
|
|
(Principal Financial and Accounting Officer)
|
|
|
|
|
Date: August 6, 2015
|
|
|
|
/s/ RALPH LAUREN
|
|
|
Ralph Lauren
|
|
|
|
|
August 6, 2015
|
|
|
|
/s/ ROBERT L. MADORE
|
|
|
Robert L. Madore
|
|
|
|
|
August 6, 2015
|
|