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 30, 2018
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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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Emerging growth 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 6.
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||
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EX-10.1
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EX-12.1
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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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1
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June 30,
2018 |
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March 31,
2018 |
||||
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(millions)
(unaudited)
|
||||||
ASSETS
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||||||||
Current assets:
|
|
|
|
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||||
Cash and cash equivalents
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$
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532.3
|
|
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$
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1,304.6
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Short-term investments
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1,487.7
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699.4
|
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Accounts receivable, net of allowances of $185.9 million and $222.2 million
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260.0
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|
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421.4
|
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||
Inventories
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890.0
|
|
|
761.3
|
|
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Income tax receivable
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37.3
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|
|
38.0
|
|
||
Prepaid expenses and other current assets
|
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342.8
|
|
|
323.7
|
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Total current assets
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3,550.1
|
|
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3,548.4
|
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||
Property and equipment, net
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1,141.7
|
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1,186.3
|
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||
Deferred tax assets
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70.7
|
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86.6
|
|
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Goodwill
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928.7
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950.5
|
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Intangible assets, net
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181.4
|
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|
188.0
|
|
||
Other non-current assets
|
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162.7
|
|
|
183.5
|
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Total assets
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$
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6,035.3
|
|
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$
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6,143.3
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LIABILITIES AND EQUITY
|
||||||||
Current liabilities:
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|
||||
Short-term debt
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$
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—
|
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$
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10.1
|
|
Current portion of long-term debt
|
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299.0
|
|
|
298.1
|
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||
Accounts payable
|
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202.7
|
|
|
165.6
|
|
||
Income tax payable
|
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45.4
|
|
|
30.0
|
|
||
Accrued expenses and other current liabilities
|
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1,016.6
|
|
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1,083.4
|
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||
Total current liabilities
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1,563.7
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1,587.2
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Long-term debt
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288.0
|
|
|
288.0
|
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||
Income tax payable
|
|
124.8
|
|
|
124.8
|
|
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Non-current liability for unrecognized tax benefits
|
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77.8
|
|
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79.2
|
|
||
Other non-current liabilities
|
|
560.0
|
|
|
606.7
|
|
||
Commitments and contingencies (Note 13)
|
|
|
|
|
||||
Total liabilities
|
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2,614.3
|
|
|
2,685.9
|
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Equity:
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|
|
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|
||||
Class A common stock, par value $.01 per share; 102.8 million and 102.0 million shares issued; 55.2 million and 55.4 million shares outstanding
|
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1.0
|
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1.0
|
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||
Class B common stock, par value $.01 per share; 25.9 million shares issued and outstanding
|
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0.3
|
|
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0.3
|
|
||
Additional paid-in-capital
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2,426.7
|
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|
2,383.4
|
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Retained earnings
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5,805.4
|
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5,752.2
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Treasury stock, Class A, at cost; 47.6 million and 46.6 million shares
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(4,711.0
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)
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(4,581.0
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)
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Accumulated other comprehensive loss
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(101.4
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)
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(98.5
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)
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Total equity
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3,421.0
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3,457.4
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Total liabilities and equity
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$
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6,035.3
|
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$
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6,143.3
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2
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Three Months Ended
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||||||
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June 30,
2018 |
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July 1,
2017 |
||||
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(millions, except per share data)
(unaudited)
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||||||
Net revenues
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$
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1,390.6
|
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$
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1,347.1
|
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Cost of goods sold
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(494.9
|
)
|
|
(495.9
|
)
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Gross profit
|
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895.7
|
|
|
851.2
|
|
||
Selling, general, and administrative expenses
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|
(741.9
|
)
|
|
(714.4
|
)
|
||
Impairment of assets
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|
(1.3
|
)
|
|
(9.7
|
)
|
||
Restructuring and other charges
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(22.4
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)
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|
(36.8
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)
|
||
Total other operating expenses, net
|
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(765.6
|
)
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(760.9
|
)
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Operating income
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130.1
|
|
|
90.3
|
|
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Interest expense
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(4.4
|
)
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|
(5.0
|
)
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Interest income
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9.2
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|
|
2.0
|
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Other expense, net
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(2.0
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)
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(0.5
|
)
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Income before income taxes
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132.9
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|
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86.8
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Income tax provision
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(23.9
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)
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(27.3
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)
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Net income
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$
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109.0
|
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$
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59.5
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Net income per common share:
|
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|
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|
||||
Basic
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$
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1.33
|
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|
$
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0.73
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Diluted
|
|
$
|
1.31
|
|
|
$
|
0.72
|
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Weighted average common shares outstanding:
|
|
|
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|
||||
Basic
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81.9
|
|
|
81.6
|
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||
Diluted
|
|
83.3
|
|
|
82.5
|
|
||
Dividends declared per share
|
|
$
|
0.625
|
|
|
$
|
0.50
|
|
|
3
|
|
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Three Months Ended
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||||||
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June 30,
2018 |
|
July 1,
2017 |
||||
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(millions)
(unaudited)
|
||||||
Net income
|
|
$
|
109.0
|
|
|
$
|
59.5
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
||||
Foreign currency translation gains (losses)
|
|
(30.7
|
)
|
|
56.6
|
|
||
Net gains (losses) on cash flow hedges
|
|
27.7
|
|
|
(22.0
|
)
|
||
Net gains (losses) on defined benefit plans
|
|
0.1
|
|
|
(0.3
|
)
|
||
Other comprehensive income (loss), net of tax
|
|
(2.9
|
)
|
|
34.3
|
|
||
Total comprehensive income
|
|
$
|
106.1
|
|
|
$
|
93.8
|
|
|
4
|
|
|
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Three Months Ended
|
||||||
|
|
June 30,
2018 |
|
July 1,
2017 |
||||
|
|
(millions)
(unaudited)
|
||||||
Cash flows from operating activities:
|
|
|
|
|
||||
Net income
|
|
$
|
109.0
|
|
|
$
|
59.5
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
||||
Depreciation and amortization expense
|
|
70.3
|
|
|
72.9
|
|
||
Deferred income tax expense (benefit)
|
|
7.3
|
|
|
(14.7
|
)
|
||
Non-cash stock-based compensation expense
|
|
21.5
|
|
|
21.6
|
|
||
Non-cash impairment of assets
|
|
1.3
|
|
|
9.7
|
|
||
Non-cash restructuring-related inventory charges
|
|
—
|
|
|
0.7
|
|
||
Other non-cash charges
|
|
5.8
|
|
|
2.0
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
|
||||
Accounts receivable
|
|
153.8
|
|
|
174.0
|
|
||
Inventories
|
|
(147.1
|
)
|
|
(55.4
|
)
|
||
Prepaid expenses and other current assets
|
|
(35.9
|
)
|
|
(4.6
|
)
|
||
Accounts payable and accrued liabilities
|
|
(0.1
|
)
|
|
42.4
|
|
||
Income tax receivables and payables
|
|
19.4
|
|
|
8.7
|
|
||
Deferred income
|
|
(4.8
|
)
|
|
0.6
|
|
||
Other balance sheet changes
|
|
30.1
|
|
|
16.8
|
|
||
Net cash provided by operating activities
|
|
230.6
|
|
|
334.2
|
|
||
Cash flows from investing activities:
|
|
|
|
|
||||
Capital expenditures
|
|
(42.3
|
)
|
|
(41.9
|
)
|
||
Purchases of investments
|
|
(1,250.1
|
)
|
|
(270.4
|
)
|
||
Proceeds from sales and maturities of investments
|
|
469.8
|
|
|
187.4
|
|
||
Acquisitions and ventures
|
|
(4.5
|
)
|
|
(3.6
|
)
|
||
Net cash used in investing activities
|
|
(827.1
|
)
|
|
(128.5
|
)
|
||
Cash flows from financing activities:
|
|
|
|
|
||||
Repayments of short-term debt
|
|
(9.9
|
)
|
|
—
|
|
||
Payments of capital lease obligations
|
|
(5.7
|
)
|
|
(6.2
|
)
|
||
Payments of dividends
|
|
(40.6
|
)
|
|
(40.5
|
)
|
||
Repurchases of common stock, including shares surrendered for tax withholdings
|
|
(130.0
|
)
|
|
(14.4
|
)
|
||
Proceeds from exercise of stock options
|
|
21.8
|
|
|
0.1
|
|
||
Net cash used in financing activities
|
|
(164.4
|
)
|
|
(61.0
|
)
|
||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash
|
|
(18.8
|
)
|
|
19.9
|
|
||
Net increase (decrease) in cash, cash equivalents, and restricted cash
|
|
(779.7
|
)
|
|
164.6
|
|
||
Cash, cash equivalents, and restricted cash at beginning of period
|
|
1,355.5
|
|
|
711.8
|
|
||
Cash, cash equivalents, and restricted cash at end of period
|
|
$
|
575.8
|
|
|
$
|
876.4
|
|
|
5
|
|
1.
|
Description of Business
|
2.
|
Basis of Presentation
|
|
6
|
|
3.
|
Summary of Significant Accounting Policies
|
|
7
|
|
|
|
Contractually-Guaranteed
Minimum Royalties
|
||
|
|
(millions)
|
||
Remainder of Fiscal 2019
|
|
$
|
87.6
|
|
Fiscal 2020
|
|
81.9
|
|
|
Fiscal 2021
|
|
74.1
|
|
|
Fiscal 2022 and thereafter
|
|
53.0
|
|
|
Total
|
|
$
|
296.6
|
|
|
|
Three Months Ended
|
||||||||||||||||||||||||||||||||||||||
|
|
June 30, 2018
|
|
July 1, 2017
|
||||||||||||||||||||||||||||||||||||
|
|
North America
|
|
Europe
|
|
Asia
|
|
Other
|
|
Total
|
|
North America
|
|
Europe
|
|
Asia
|
|
Other
|
|
Total
|
||||||||||||||||||||
|
|
(millions)
|
||||||||||||||||||||||||||||||||||||||
Sales Channel
(a)
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Wholesale
|
|
$
|
310.1
|
|
|
$
|
138.0
|
|
|
$
|
12.6
|
|
|
$
|
5.5
|
|
|
$
|
466.2
|
|
|
$
|
313.3
|
|
|
$
|
115.6
|
|
|
$
|
7.9
|
|
|
$
|
6.0
|
|
|
$
|
442.8
|
|
Retail
|
|
387.5
|
|
|
212.6
|
|
|
235.4
|
|
|
49.9
|
|
|
885.4
|
|
|
396.4
|
|
|
207.9
|
|
|
201.2
|
|
|
57.0
|
|
|
862.5
|
|
||||||||||
Licensing
|
|
—
|
|
|
—
|
|
|
—
|
|
|
39.0
|
|
|
39.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
41.8
|
|
|
41.8
|
|
||||||||||
Total
|
|
$
|
697.6
|
|
|
$
|
350.6
|
|
|
$
|
248.0
|
|
|
$
|
94.4
|
|
|
$
|
1,390.6
|
|
|
$
|
709.7
|
|
|
$
|
323.5
|
|
|
$
|
209.1
|
|
|
$
|
104.8
|
|
|
$
|
1,347.1
|
|
|
(a)
|
Net revenues from the Company's wholesale and retail businesses are recognized at a point in time. Net revenues from the Company's licensing business are recognized over time.
|
|
8
|
|
|
|
Three Months Ended
|
||||
|
|
June 30,
2018 |
|
July 1,
2017 |
||
|
|
(millions)
|
||||
Basic shares
|
|
81.9
|
|
|
81.6
|
|
Dilutive effect of stock options and RSUs
|
|
1.4
|
|
|
0.9
|
|
Diluted shares
|
|
83.3
|
|
|
82.5
|
|
|
9
|
|
|
|
Three Months Ended
|
||||||
|
|
June 30,
2018 |
|
July 1,
2017 |
||||
|
|
(millions)
|
||||||
Beginning reserve balance
|
|
$
|
202.5
|
|
|
$
|
202.8
|
|
Amount charged against revenue to increase reserve
|
|
99.7
|
|
|
117.7
|
|
||
Amount credited against customer accounts to decrease reserve
|
|
(130.1
|
)
|
|
(126.0
|
)
|
||
Foreign currency translation
|
|
(4.9
|
)
|
|
5.1
|
|
||
Ending reserve balance
|
|
$
|
167.2
|
|
|
$
|
199.6
|
|
|
|
Three Months Ended
|
||||||
|
|
June 30,
2018 |
|
July 1,
2017 |
||||
|
|
(millions)
|
||||||
Beginning reserve balance
|
|
$
|
19.7
|
|
|
$
|
11.6
|
|
Amount recorded to expense to increase reserve
(a)
|
|
—
|
|
|
2.5
|
|
||
Amount written-off against customer accounts to decrease reserve
|
|
(0.4
|
)
|
|
(0.7
|
)
|
||
Foreign currency translation
|
|
(0.6
|
)
|
|
0.5
|
|
||
Ending reserve balance
|
|
$
|
18.7
|
|
|
$
|
13.9
|
|
|
(a)
|
Amounts recorded to bad debt expense are included within SG&A expenses in the consolidated statements of operations.
|
|
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 Royalties/Settlement of Foreign Currency Balances
— recognized within other expense, net during the period that the hedged balance is remeasured through earnings, generally through its settlement when the related payment occurs.
|
|
11
|
|
4.
|
Recently Issued Accounting Standards
|
|
12
|
|
|
13
|
|
5.
|
Property and Equipment
|
|
|
June 30,
2018 |
|
March 31,
2018 |
||||
|
|
(millions)
|
||||||
Land and improvements
|
|
$
|
16.8
|
|
|
$
|
16.8
|
|
Buildings and improvements
|
|
458.8
|
|
|
460.5
|
|
||
Furniture and fixtures
|
|
661.2
|
|
|
671.0
|
|
||
Machinery and equipment
|
|
437.3
|
|
|
430.4
|
|
||
Capitalized software
|
|
578.6
|
|
|
578.4
|
|
||
Leasehold improvements
|
|
1,180.5
|
|
|
1,181.2
|
|
||
Construction in progress
|
|
35.1
|
|
|
41.5
|
|
||
|
|
3,368.3
|
|
|
3,379.8
|
|
||
Less: accumulated depreciation
|
|
(2,226.6
|
)
|
|
(2,193.5
|
)
|
||
Property and equipment, net
|
|
$
|
1,141.7
|
|
|
$
|
1,186.3
|
|
|
14
|
|
6.
|
Other Assets and Liabilities
|
|
|
June 30,
2018 |
|
March 31,
2018 |
||||
|
|
(millions)
|
||||||
Other taxes receivable
|
|
$
|
164.9
|
|
|
$
|
171.4
|
|
Prepaid rent expense
|
|
43.2
|
|
|
37.0
|
|
||
Inventory return asset (see Note 4)
|
|
21.9
|
|
|
—
|
|
||
Prepaid software maintenance
|
|
15.8
|
|
|
8.7
|
|
||
Derivative financial instruments
|
|
14.7
|
|
|
12.3
|
|
||
Prepaid advertising and marketing
|
|
9.0
|
|
|
6.8
|
|
||
Restricted cash
|
|
8.0
|
|
|
15.5
|
|
||
Tenant allowances receivable
|
|
5.6
|
|
|
4.3
|
|
||
Other prepaid expenses and current assets
|
|
59.7
|
|
|
67.7
|
|
||
Total prepaid expenses and other current assets
|
|
$
|
342.8
|
|
|
$
|
323.7
|
|
|
|
June 30,
2018 |
|
March 31,
2018 |
||||
|
|
(millions)
|
||||||
Non-current investments
|
|
$
|
69.5
|
|
|
$
|
86.2
|
|
Restricted cash
|
|
35.5
|
|
|
35.4
|
|
||
Security deposits
|
|
23.4
|
|
|
27.3
|
|
||
Derivative financial instruments
|
|
1.3
|
|
|
—
|
|
||
Other non-current assets
|
|
33.0
|
|
|
34.6
|
|
||
Total other non-current assets
|
|
$
|
162.7
|
|
|
$
|
183.5
|
|
|
|
June 30,
2018 |
|
March 31,
2018 |
||||
|
|
(millions)
|
||||||
Accrued inventory
|
|
$
|
230.1
|
|
|
$
|
174.0
|
|
Accrued operating expenses
|
|
217.5
|
|
|
225.8
|
|
||
Other taxes payable
|
|
200.0
|
|
|
194.2
|
|
||
Accrued payroll and benefits
|
|
146.5
|
|
|
227.8
|
|
||
Restructuring reserve
|
|
59.0
|
|
|
69.6
|
|
||
Dividends payable
|
|
50.7
|
|
|
40.6
|
|
||
Derivative financial instruments
|
|
30.2
|
|
|
60.8
|
|
||
Accrued capital expenditures
|
|
29.1
|
|
|
37.0
|
|
||
Deferred income
|
|
25.5
|
|
|
30.4
|
|
||
Capital lease obligations
|
|
20.0
|
|
|
19.5
|
|
||
Other accrued expenses and current liabilities
|
|
8.0
|
|
|
3.7
|
|
||
Total accrued expenses and other current liabilities
|
|
$
|
1,016.6
|
|
|
$
|
1,083.4
|
|
|
15
|
|
|
|
June 30,
2018 |
|
March 31,
2018 |
||||
|
|
(millions)
|
||||||
Capital lease obligations
|
|
$
|
229.1
|
|
|
$
|
236.4
|
|
Deferred rent obligations
|
|
199.6
|
|
|
212.2
|
|
||
Deferred tax liabilities
|
|
33.3
|
|
|
36.5
|
|
||
Derivative financial instruments
|
|
29.3
|
|
|
49.2
|
|
||
Restructuring reserve
|
|
23.9
|
|
|
27.9
|
|
||
Deferred compensation
|
|
6.8
|
|
|
7.0
|
|
||
Other non-current liabilities
|
|
38.0
|
|
|
37.5
|
|
||
Total other non-current liabilities
|
|
$
|
560.0
|
|
|
$
|
606.7
|
|
7.
|
Impairment of Assets
|
8.
|
Restructuring and Other Charges
|
|
|
Three Months Ended
|
||
|
|
June 30, 2018
|
||
|
|
(millions)
|
||
Cash-related restructuring charges:
|
|
|
||
Severance and benefit costs
|
|
$
|
8.2
|
|
Total cash-related restructuring charges
|
|
8.2
|
|
|
Non-cash charges:
|
|
|
||
Impairment of assets (see Note 7)
|
|
1.3
|
|
|
Total non-cash charges
|
|
1.3
|
|
|
Total charges
|
|
$
|
9.5
|
|
|
16
|
|
|
|
Severance and Benefit Costs
|
|
Total
|
||||
|
|
(millions)
|
||||||
Balance at March 31, 2018
|
|
$
|
—
|
|
|
$
|
—
|
|
Additions charged to expense
|
|
8.2
|
|
|
8.2
|
|
||
Cash payments charged against reserve
|
|
(0.3
|
)
|
|
(0.3
|
)
|
||
Balance at June 30, 2018
|
|
$
|
7.9
|
|
|
$
|
7.9
|
|
|
17
|
|
|
|
Three Months Ended
|
|
|
||||||||
|
|
June 30,
2018 |
|
July 1,
2017 |
|
Cumulative Charges
|
||||||
|
|
(millions)
|
||||||||||
Cash-related restructuring charges:
|
|
|
|
|
|
|
||||||
Severance and benefit costs
|
|
$
|
6.2
|
|
|
$
|
11.7
|
|
|
$
|
227.9
|
|
Lease termination and store closure costs
|
|
0.1
|
|
|
12.2
|
|
|
120.6
|
|
|||
Other cash charges
|
|
0.2
|
|
|
2.7
|
|
|
25.6
|
|
|||
Total cash-related restructuring charges
|
|
6.5
|
|
|
26.6
|
|
|
374.1
|
|
|||
Non-cash charges:
|
|
|
|
|
|
|
||||||
Impairment of assets (see Note 7)
|
|
—
|
|
|
9.7
|
|
|
250.6
|
|
|||
Inventory-related charges
(a)
|
|
—
|
|
|
0.7
|
|
|
205.5
|
|
|||
Accelerated stock-based compensation expense
(b)
|
|
—
|
|
|
—
|
|
|
0.7
|
|
|||
Total non-cash charges
|
|
—
|
|
|
10.4
|
|
|
456.8
|
|
|||
Total charges
|
|
$
|
6.5
|
|
|
$
|
37.0
|
|
|
$
|
830.9
|
|
|
(a)
|
Cumulative inventory-related charges include
$155.2 million
associated with the destruction of inventory out of current liquidation channels. Inventory-related charges are recorded within cost of goods sold in the consolidated statements of operations.
|
(b)
|
Accelerated stock-based compensation expense, which is recorded within restructuring and other charges in the consolidated statements of operations, was recorded in connection with vesting provisions associated with certain separation agreements.
|
|
|
Severance and Benefit Costs
|
|
Lease Termination
and Store
Closure Costs
|
|
Other Cash Charges
|
|
Total
|
||||||||
|
|
(millions)
|
||||||||||||||
Balance at March 31, 2018
|
|
$
|
37.6
|
|
|
$
|
53.5
|
|
|
$
|
1.8
|
|
|
$
|
92.9
|
|
Additions charged to expense
|
|
6.2
|
|
|
0.1
|
|
|
0.2
|
|
|
6.5
|
|
||||
Cash payments charged against reserve
|
|
(14.1
|
)
|
|
(10.9
|
)
|
|
(0.5
|
)
|
|
(25.5
|
)
|
||||
Non-cash adjustments
|
|
(0.2
|
)
|
|
(0.1
|
)
|
|
—
|
|
|
(0.3
|
)
|
||||
Balance at June 30, 2018
|
|
$
|
29.5
|
|
|
$
|
42.6
|
|
|
$
|
1.5
|
|
|
$
|
73.6
|
|
|
18
|
|
9.
|
Income Taxes
|
|
19
|
|
10.
|
Debt
|
|
|
June 30,
2018 |
|
March 31,
2018 |
||||
|
|
(millions)
|
||||||
$300 million 2.125% Senior Notes
(a)
|
|
$
|
299.0
|
|
|
$
|
298.1
|
|
$300 million 2.625% Senior Notes
(b)
|
|
288.0
|
|
|
288.0
|
|
||
Borrowings outstanding under credit facilities
|
|
—
|
|
|
10.1
|
|
||
Total debt
|
|
587.0
|
|
|
596.2
|
|
||
Less: short-term debt and current portion of long-term debt
|
|
299.0
|
|
|
308.2
|
|
||
Long-term debt
|
|
$
|
288.0
|
|
|
$
|
288.0
|
|
|
(a)
|
The carrying value of the 2.125% Senior Notes as of
June 30, 2018
and
March 31, 2018
reflects adjustments of
$0.9 million
and
$1.6 million
, respectively, associated with the Company's related interest rate swap contract (see
Note 12
). The carrying value of the 2.125% Senior Notes is also presented net of unamortized debt issuance costs and discount of
$0.1 million
and
$0.3 million
as of
June 30, 2018
and
March 31, 2018
, respectively.
|
|
20
|
|
(b)
|
The carrying value of the 2.625% Senior Notes as of
June 30, 2018
and
March 31, 2018
reflects adjustments of
$11.0 million
and
$10.8 million
, respectively, associated with the Company's related interest rate swap contract (see
Note 12
). The carrying value of the 2.625% Senior Notes is also presented net of unamortized debt issuance costs and discount of
$1.0 million
and
$1.2 million
as of
June 30, 2018
and
March 31, 2018
, respectively.
|
|
21
|
|
•
|
China Credit Facility
— provides Ralph Lauren Trading (Shanghai) Co., Ltd. with a revolving line of credit of up to
50 million
Chinese Renminbi (approximately
$8 million
) through
April 3, 2019
, which is also able to be used to support bank guarantees.
|
•
|
South Korea Credit Facility
— provides Ralph Lauren (Korea) Ltd. with a revolving line of credit of up to
47 billion
South Korean Won (approximately
$42 million
) through
October 31, 2018
.
|
11.
|
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 or 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.
|
|
22
|
|
|
|
June 30,
2018 |
|
March 31,
2018 |
||||
|
|
(millions)
|
||||||
Investments in commercial paper
(a)(b)
|
|
$
|
153.6
|
|
|
$
|
234.2
|
|
Derivative assets
(a)
|
|
16.0
|
|
|
12.3
|
|
||
Derivative liabilities
(a)
|
|
59.5
|
|
|
110.0
|
|
|
(a)
|
Based on Level 2 measurements.
|
(b)
|
Amount as of
June 30, 2018
, was included within short-term investments in the consolidated balance sheet. As of
March 31, 2018
,
$15.0 million
was included within cash and cash equivalents and
$219.2 million
was included within short-term investments in the consolidated balance sheet.
|
|
|
June 30, 2018
|
|
March 31, 2018
|
||||||||||||
|
|
Carrying Value
(a)
|
|
Fair Value
(b)
|
|
Carrying Value
(a)
|
|
Fair Value
(b)
|
||||||||
|
|
(millions)
|
||||||||||||||
$300 million 2.125% Senior Notes
|
|
$
|
299.0
|
|
|
$
|
299.5
|
|
|
$
|
298.1
|
|
|
$
|
299.4
|
|
$300 million 2.625% Senior Notes
|
|
288.0
|
|
|
297.3
|
|
|
288.0
|
|
|
298.7
|
|
||||
Borrowings outstanding under credit facilities
|
|
—
|
|
|
—
|
|
|
10.1
|
|
|
10.1
|
|
|
(a)
|
See
Note 10
for discussion of the carrying values of the Company's Senior Notes.
|
(b)
|
Based on Level 2 measurements.
|
|
23
|
|
12.
|
Financial Instruments
|
|
|
Notional Amounts
|
|
Derivative Assets
|
|
Derivative Liabilities
|
||||||||||||||||||||||||||
Derivative Instrument
(a)
|
|
June 30,
2018 |
|
March 31,
2018 |
|
June 30,
2018 |
|
March 31,
2018 |
|
June 30,
2018 |
|
March 31,
2018 |
||||||||||||||||||||
|
|
|
|
|
|
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 — Cash flow hedges
|
|
$
|
523.6
|
|
|
$
|
514.5
|
|
|
(e)
|
|
$
|
15.1
|
|
|
PP
|
|
$
|
1.1
|
|
|
AE
|
|
$
|
2.4
|
|
|
(f)
|
|
$
|
13.5
|
|
IRS — Fixed-rate debt
|
|
600.0
|
|
|
600.0
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
(g)
|
|
11.9
|
|
|
(h)
|
|
12.4
|
|
||||||
Net investment hedges
(c)
|
|
640.7
|
|
|
1,081.2
|
|
|
|
|
—
|
|
|
PP
|
|
0.1
|
|
|
(i)
|
|
44.5
|
|
|
(j)
|
|
82.6
|
|
||||||
Total Designated Hedges
|
|
1,764.3
|
|
|
2,195.7
|
|
|
|
|
15.1
|
|
|
|
|
1.2
|
|
|
|
|
58.8
|
|
|
|
|
108.5
|
|
||||||
Undesignated Hedges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
FC — Undesignated hedges
(d)
|
|
187.3
|
|
|
459.2
|
|
|
PP
|
|
0.9
|
|
|
PP
|
|
11.1
|
|
|
AE
|
|
0.7
|
|
|
AE
|
|
1.5
|
|
||||||
Total Hedges
|
|
$
|
1,951.6
|
|
|
$
|
2,654.9
|
|
|
|
|
$
|
16.0
|
|
|
|
|
$
|
12.3
|
|
|
|
|
$
|
59.5
|
|
|
|
|
$
|
110.0
|
|
|
(a)
|
FC = Forward foreign currency exchange contracts; IRS = Interest rate swap contracts
|
(b)
|
PP = Prepaid expenses and other current assets; AE = Accrued expenses and other current liabilities.
|
(c)
|
Includes cross-currency swaps and forward foreign currency exchange contracts designated as hedges of the Company's net investment in certain foreign operations.
|
(d)
|
Primarily includes undesignated hedges of foreign currency-denominated intercompany loans and other intercompany balances.
|
(e)
|
$13.8 million
included within prepaid expenses and other current assets and
$1.3 million
included within other non-current assets.
|
|
24
|
|
(f)
|
$12.9 million
included within accrued expenses and other current liabilities and
$0.6 million
included within other non-current liabilities.
|
(g)
|
$0.9 million
included within accrued expenses and other current liabilities and
$11.0 million
included within other non-current liabilities.
|
(h)
|
$1.6 million
included within accrued expenses and other current liabilities and
$10.8 million
included within other non-current liabilities.
|
(i)
|
$26.2 million
included within accrued expenses and other current liabilities and
$18.3 million
included within other non-current liabilities.
|
(j)
|
$44.8 million
included within accrued expenses and other current liabilities and
$37.8 million
included within other non-current liabilities.
|
|
|
June 30, 2018
|
|
March 31, 2018
|
||||||||||||||||||||
|
|
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
|
|
$
|
16.0
|
|
|
$
|
(4.9
|
)
|
|
$
|
11.1
|
|
|
$
|
12.3
|
|
|
$
|
(10.7
|
)
|
|
$
|
1.6
|
|
Derivative liabilities
|
|
59.5
|
|
|
(4.9
|
)
|
|
54.6
|
|
|
110.0
|
|
|
(10.7
|
)
|
|
99.3
|
|
|
|
Gains (Losses)
Recognized in OCI
|
||||||
|
|
Three Months Ended
|
||||||
|
|
June 30,
2018 |
|
July 1,
2017 |
||||
|
|
(millions)
|
||||||
Designated Hedges:
|
|
|
|
|
||||
FC — Cash flow hedges
|
|
$
|
26.1
|
|
|
$
|
(19.1
|
)
|
Net investment hedges - effective portion
|
|
37.4
|
|
|
(40.3
|
)
|
||
Net investment hedges - portion excluded from assessment of hedge effectiveness
|
|
1.8
|
|
|
—
|
|
||
Total Designated Hedges
|
|
$
|
65.3
|
|
|
$
|
(59.4
|
)
|
|
25
|
|
|
|
Location and Amount of Gains (Losses)
from Cash Flow Hedges Reclassified from AOCI to Earnings
|
||||||||||||||
|
|
Three Months Ended
|
||||||||||||||
|
|
June 30,
2018 |
|
July 1,
2017 |
||||||||||||
|
|
Cost of goods sold
|
|
Other expense, net
|
|
Cost of goods sold
|
|
Other expense, net
|
||||||||
|
|
(millions)
|
||||||||||||||
Total amounts presented in the consolidated statements of operations in which the effects of related cash flow hedges are recorded
|
|
$
|
(494.9
|
)
|
|
$
|
(2.0
|
)
|
|
$
|
(495.9
|
)
|
|
$
|
(0.5
|
)
|
Effects of cash flow hedging:
|
|
|
|
|
|
|
|
|
||||||||
FC — Cash flow hedges
|
|
(6.2
|
)
|
|
1.4
|
|
|
4.0
|
|
|
(0.6
|
)
|
|
|
Gains (Losses) from
Net Investment Hedges
Recognized in Earnings
|
|
Location of Gains (Losses)
Recognized in Earnings |
||||||
|
|
Three Months Ended
|
|
|||||||
|
|
June 30,
2018 |
|
July 1,
2017 |
|
|||||
|
|
(millions)
|
|
|
||||||
Net Investment Hedges
|
|
|
|
|
|
|
||||
Net investment hedges — portion excluded from assessment of hedge effectiveness
(a)
|
|
$
|
4.3
|
|
|
$
|
1.8
|
|
|
Interest expense
|
Total Net Investment Hedges
|
|
$
|
4.3
|
|
|
$
|
1.8
|
|
|
|
|
(a)
|
Amounts recognized in other comprehensive income (loss) ("OCI") related to the effective portion of the Company's net hedges would be recognized in earnings only upon the sale or liquidation of the hedged net investment.
|
|
|
Gains (Losses)
Recognized in Earnings
|
|
Location of Gains (Losses)
Recognized in Earnings
|
||||||
|
|
Three Months Ended
|
|
|||||||
|
|
June 30,
2018 |
|
July 1,
2017 |
|
|||||
|
|
(millions)
|
|
|
||||||
Undesignated Hedges:
|
|
|
|
|
|
|
||||
FC — Undesignated hedges
|
|
$
|
3.1
|
|
|
$
|
2.6
|
|
|
Other expense, net
|
Total Undesignated Hedges
|
|
$
|
3.1
|
|
|
$
|
2.6
|
|
|
|
|
26
|
|
|
|
|
|
Carrying Value of
the Hedged Item
|
|
Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Value of the Hedged Item
|
||||||||||||
Hedged Item
|
|
Balance Sheet Line in which the Hedged Item is Included
|
|
June 30,
2018 |
|
March 31,
2018 |
|
June 30,
2018 |
|
March 31,
2018 |
||||||||
|
|
|
|
(millions)
|
||||||||||||||
$300 million 2.125% Senior Notes
|
|
Current portion of long-term debt
|
|
$
|
299.0
|
|
|
$
|
298.1
|
|
|
$
|
(0.9
|
)
|
|
$
|
(1.6
|
)
|
$300 million 2.625% Senior Notes
|
|
Long-term debt
|
|
288.0
|
|
|
288.0
|
|
|
(11.0
|
)
|
|
(10.8
|
)
|
|
27
|
|
13.
|
Commitments and Contingencies
|
|
28
|
|
14.
|
Equity
|
|
|
Three Months Ended
|
||||||
|
|
June 30,
2018 |
|
July 1,
2017 |
||||
|
|
(millions)
|
||||||
Balance at beginning of period
|
|
$
|
3,457.4
|
|
|
$
|
3,299.6
|
|
Comprehensive income
|
|
106.1
|
|
|
93.8
|
|
||
Dividends declared
|
|
(50.7
|
)
|
|
(40.6
|
)
|
||
Repurchases of common stock, including shares surrendered for tax withholdings
|
|
(130.0
|
)
|
|
(14.4
|
)
|
||
Stock-based compensation
|
|
21.5
|
|
|
21.6
|
|
||
Shares issued pursuant to stock-based compensation arrangements
|
|
21.8
|
|
|
0.1
|
|
||
Cumulative adjustment from adoption of new accounting standards (see Note 4)
|
|
(5.1
|
)
|
|
—
|
|
||
Balance at end of period
|
|
$
|
3,421.0
|
|
|
$
|
3,360.1
|
|
|
|
Three Months Ended
|
||||||
|
|
June 30,
2018 |
|
July 1,
2017 |
||||
|
|
(millions)
|
||||||
Cost of shares repurchased
|
|
$
|
100.0
|
|
|
$
|
—
|
|
Number of shares repurchased
|
|
0.7
|
|
|
0.0
|
|
|
29
|
|
15.
|
Accumulated Other Comprehensive Income (Loss)
|
|
|
Foreign Currency Translation Gains (Losses)
(a)
|
|
Net Unrealized Gains (Losses) on Cash Flow Hedges
(b)
|
|
Net Unrealized Gains (Losses) on Defined
Benefit Plans
(c)
|
|
Total Accumulated Other Comprehensive Income (Loss)
|
||||||||
|
|
(millions)
|
||||||||||||||
Balance at April 1, 2017
|
|
$
|
(206.2
|
)
|
|
$
|
14.6
|
|
|
$
|
(6.8
|
)
|
|
$
|
(198.4
|
)
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
|
||||||||
OCI before reclassifications
|
|
56.6
|
|
|
(18.8
|
)
|
|
(0.5
|
)
|
|
37.3
|
|
||||
Amounts reclassified from AOCI to earnings
|
|
—
|
|
|
(3.2
|
)
|
|
0.2
|
|
|
(3.0
|
)
|
||||
Other comprehensive income (loss), net of tax
|
|
56.6
|
|
|
(22.0
|
)
|
|
(0.3
|
)
|
|
34.3
|
|
||||
Balance at July 1, 2017
|
|
$
|
(149.6
|
)
|
|
$
|
(7.4
|
)
|
|
$
|
(7.1
|
)
|
|
$
|
(164.1
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
Balance at March 31, 2018
|
|
$
|
(79.3
|
)
|
|
$
|
(16.0
|
)
|
|
$
|
(3.2
|
)
|
|
$
|
(98.5
|
)
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
|
||||||||
OCI before reclassifications
|
|
(30.7
|
)
|
|
23.3
|
|
|
0.2
|
|
|
(7.2
|
)
|
||||
Amounts reclassified from AOCI to earnings
|
|
—
|
|
|
4.4
|
|
|
(0.1
|
)
|
|
4.3
|
|
||||
Other comprehensive income (loss), net of tax
|
|
(30.7
|
)
|
|
27.7
|
|
|
0.1
|
|
|
(2.9
|
)
|
||||
Balance at June 30, 2018
|
|
$
|
(110.0
|
)
|
|
$
|
11.7
|
|
|
$
|
(3.1
|
)
|
|
$
|
(101.4
|
)
|
|
(a)
|
OCI before reclassifications to earnings related to foreign currency translation gains (losses) includes an income tax provision of
$4.6 million
for the
three months ended
June 30, 2018
, and includes an income tax benefit of
$12.8 million
for the
three months ended
July 1, 2017
. OCI before reclassifications to earnings for the
three-month periods ended
June 30, 2018
and
July 1, 2017
includes a gain of
$29.8 million
(net of a
$9.4 million
income tax provision) and a loss of
$25.1 million
(net of a
$15.2 million
income tax benefit), respectively, related to changes in the fair values of instruments designated as hedges of the Company's net investment in certain foreign operations (see
Note 12
).
|
(b)
|
OCI before reclassifications to earnings related to net unrealized gains (losses) on cash flow hedges are presented net of an income tax provision of
$2.8 million
and an income tax benefit of
$0.3 million
for the
three-month periods ended
June 30, 2018
and
July 1, 2017
, respectively. The tax effects on amounts reclassified from AOCI to earnings are presented in a table below.
|
(c)
|
Activity is presented net of taxes, which were immaterial for both periods presented.
|
|
|
Three Months Ended
|
|
Location of Gains (Losses)
Reclassified from AOCI
to Earnings
|
||||||
|
|
June 30,
2018 |
|
July 1,
2017 |
|
|||||
|
|
(millions)
|
|
|
||||||
Gains (losses) on cash flow hedges
(a)
:
|
|
|
|
|
|
|
||||
FC
—
Cash flow hedges
|
|
$
|
(6.2
|
)
|
|
$
|
4.0
|
|
|
Cost of goods sold
|
FC
—
Cash flow hedges
|
|
1.4
|
|
|
(0.6
|
)
|
|
Other expense, net
|
||
Tax effect
|
|
0.4
|
|
|
(0.2
|
)
|
|
Income tax provision
|
||
Net of tax
|
|
$
|
(4.4
|
)
|
|
$
|
3.2
|
|
|
|
|
(a)
|
FC = Forward foreign currency exchange contracts.
|
|
30
|
|
16.
|
Stock-based Compensation
|
|
|
Three Months Ended
|
|
||||||
|
|
June 30,
2018 |
|
July 1,
2017 |
|
||||
|
|
(millions)
|
|
||||||
Compensation expense
|
|
$
|
21.5
|
|
|
$
|
21.6
|
|
(a)
|
Income tax benefit
|
|
(3.2
|
)
|
|
(7.9
|
)
|
|
|
(a)
|
The
three months ended
July 1, 2017
includes
$2.1 million
of accelerated stock-based compensation expense recorded within restructuring and other charges in the consolidated statements of operations (see Note 8). All other stock-based compensation expense was recorded within SG&A expenses.
|
|
|
Number of Options
|
|
|
|
(thousands)
|
|
Options outstanding at March 31, 2018
|
|
1,151
|
|
Granted
|
|
—
|
|
Exercised
|
|
(162
|
)
|
Cancelled/Forfeited
|
|
(82
|
)
|
Options outstanding at June 30, 2018
|
|
907
|
|
|
31
|
|
|
|
Number of Shares
|
||||
|
|
Restricted Stock
|
|
Service-based RSUs
|
||
|
|
(thousands)
|
||||
Nonvested at March 31, 2018
|
|
19
|
|
|
1,072
|
|
Granted
|
|
—
|
|
|
370
|
|
Vested
|
|
(9
|
)
|
|
(387
|
)
|
Forfeited
|
|
—
|
|
|
(62
|
)
|
Nonvested at June 30, 2018
|
|
10
|
|
|
993
|
|
|
|
Number of Performance-based
RSUs
|
|
|
|
(thousands)
|
|
Nonvested at March 31, 2018
|
|
1,157
|
|
Granted
|
|
—
|
|
Change due to performance condition achievement
|
|
(29
|
)
|
Vested
|
|
(232
|
)
|
Forfeited
|
|
(18
|
)
|
Nonvested at June 30, 2018
|
|
878
|
|
17.
|
Segment Information
|
•
|
North America
— The North America segment primarily consists of sales of Ralph Lauren branded apparel, accessories, home furnishings, and related products made through the Company's wholesale and retail businesses in the U.S. and Canada, excluding Club Monaco. In North America, the Company's wholesale business is comprised primarily of sales to department stores, and to a lesser extent, specialty stores. The Company's retail business in North America is comprised of its Ralph Lauren stores, its factory stores, and its digital commerce site, www.RalphLauren.com.
|
•
|
Europe
— The Europe segment primarily consists of sales of Ralph Lauren branded apparel, accessories, home furnishings, and related products made through the Company's wholesale and retail businesses in Europe and the Middle East, excluding Club Monaco. In Europe, the Company's wholesale business is comprised of a varying mix of sales to both department stores and specialty stores, depending on the country. The Company's retail business in Europe is comprised of its Ralph Lauren stores, its factory stores, its concession-based shop-within-shops, and its various digital commerce sites.
|
|
32
|
|
•
|
Asia
— The Asia segment primarily consists of sales of Ralph Lauren branded apparel, accessories, home furnishings, and related products made through the Company's wholesale and retail businesses in Asia, Australia, and New Zealand. The Company's retail business in Asia is comprised of its Ralph Lauren stores, its factory stores, and its concession-based shop-within-shops. In addition, the Company sells its products online through various third-party digital partner commerce sites. In Asia, the Company's wholesale business is comprised primarily of sales to department stores, with related products distributed through shop-within-shops.
|
|
|
Three Months Ended
|
||||||
|
|
June 30,
2018 |
|
July 1,
2017 |
||||
|
|
(millions)
|
||||||
Net revenues:
|
|
|
|
|
||||
North America
|
|
$
|
697.6
|
|
|
$
|
709.7
|
|
Europe
|
|
350.6
|
|
|
323.5
|
|
||
Asia
|
|
248.0
|
|
|
209.1
|
|
||
Other non-reportable segments
|
|
94.4
|
|
|
104.8
|
|
||
Total net revenues
|
|
$
|
1,390.6
|
|
|
$
|
1,347.1
|
|
|
|
Three Months Ended
|
||||||
|
|
June 30,
2018 |
|
July 1,
2017 |
||||
|
|
(millions)
|
||||||
Operating income
(a)
:
|
|
|
|
|
||||
North America
|
|
$
|
159.9
|
|
|
$
|
150.5
|
|
Europe
|
|
73.9
|
|
|
67.1
|
|
||
Asia
|
|
42.7
|
|
|
30.2
|
|
||
Other non-reportable segments
|
|
30.8
|
|
|
33.0
|
|
||
|
|
307.3
|
|
|
280.8
|
|
||
Unallocated corporate expenses
|
|
(154.8
|
)
|
|
(153.7
|
)
|
||
Unallocated restructuring and other charges
(b)
|
|
(22.4
|
)
|
|
(36.8
|
)
|
||
Total operating income
|
|
$
|
130.1
|
|
|
$
|
90.3
|
|
|
33
|
|
|
(a)
|
Segment operating income and unallocated corporate expenses during the
three-month periods ended
June 30, 2018
and
July 1, 2017
included certain restructuring-related inventory charges (see
Note 8
) and asset impairment charges (see
Note 7
), which are detailed below:
|
|
|
|
Three Months Ended
|
||||||
|
|
|
June 30,
2018 |
|
July 1,
2017 |
||||
|
|
|
(millions)
|
||||||
|
Restructuring-related inventory charges:
|
|
|
|
|
||||
|
North America
|
|
$
|
—
|
|
|
$
|
(0.7
|
)
|
|
Total restructuring-related inventory charges
|
|
$
|
—
|
|
|
$
|
(0.7
|
)
|
|
|
|
Three Months Ended
|
||||||
|
|
|
June 30,
2018 |
|
July 1,
2017 |
||||
|
|
|
(millions)
|
||||||
|
Asset impairment charges:
|
|
|
|
|
||||
|
North America
|
|
$
|
—
|
|
|
$
|
(0.6
|
)
|
|
Europe
|
|
(0.2
|
)
|
|
(1.2
|
)
|
||
|
Asia
|
|
(0.2
|
)
|
|
(0.1
|
)
|
||
|
Other non-reportable segments
|
|
(0.8
|
)
|
|
(0.1
|
)
|
||
|
Unallocated corporate expenses
|
|
(0.1
|
)
|
|
(7.7
|
)
|
||
|
Total asset impairment charges
|
|
$
|
(1.3
|
)
|
|
$
|
(9.7
|
)
|
(b)
|
The
three-month periods ended
June 30, 2018
and
July 1, 2017
included certain unallocated restructuring and other charges (see
Note 8
), which are detailed below:
|
|
|
|
Three Months Ended
|
||||||
|
|
|
June 30,
2018 |
|
July 1,
2017 |
||||
|
|
|
(millions)
|
||||||
|
Unallocated restructuring and other charges:
|
|
|
|
|
||||
|
North America-related
|
|
$
|
(2.9
|
)
|
|
$
|
(12.0
|
)
|
|
Europe-related
|
|
(5.0
|
)
|
|
(0.1
|
)
|
||
|
Asia-related
|
|
(0.1
|
)
|
|
3.3
|
|
||
|
Other non-reportable segment-related
|
|
(0.8
|
)
|
|
(4.8
|
)
|
||
|
Corporate-related
|
|
(5.9
|
)
|
|
(13.0
|
)
|
||
|
Unallocated restructuring charges
|
|
(14.7
|
)
|
|
(26.6
|
)
|
||
|
Other charges (see Note 8)
|
|
(7.7
|
)
|
|
(10.2
|
)
|
||
|
Total unallocated restructuring and other charges
|
|
$
|
(22.4
|
)
|
|
$
|
(36.8
|
)
|
|
34
|
|
|
|
Three Months Ended
|
||||||
|
|
June 30,
2018 |
|
July 1,
2017 |
||||
|
|
(millions)
|
||||||
Depreciation and amortization:
|
|
|
|
|
||||
North America
|
|
$
|
19.8
|
|
|
$
|
21.0
|
|
Europe
|
|
8.3
|
|
|
8.0
|
|
||
Asia
|
|
12.6
|
|
|
11.5
|
|
||
Other non-reportable segments
|
|
2.0
|
|
|
2.8
|
|
||
Unallocated corporate expenses
|
|
24.1
|
|
|
26.1
|
|
||
Unallocated restructuring and other charges (see Note 8)
|
|
3.5
|
|
|
3.5
|
|
||
Total depreciation and amortization
|
|
$
|
70.3
|
|
|
$
|
72.9
|
|
|
(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 30, 2018
and
July 1, 2017
were
$738.9 million
and
$764.6 million
, respectively.
|
(c)
|
Includes the Middle East.
|
(d)
|
Includes Australia and New Zealand.
|
|
35
|
|
18.
|
Additional Financial Information
|
|
|
June 30,
2018 |
|
March 31,
2018 |
||||
|
|
(millions)
|
||||||
Cash and cash equivalents
|
|
$
|
532.3
|
|
|
$
|
1,304.6
|
|
Restricted cash included within prepaid expenses and other current assets
|
|
8.0
|
|
|
15.5
|
|
||
Restricted cash included within other non-current assets
|
|
35.5
|
|
|
35.4
|
|
||
Total cash, cash equivalents, and restricted cash
|
|
$
|
575.8
|
|
|
$
|
1,355.5
|
|
|
|
Three Months Ended
|
||||||
|
|
June 30,
2018 |
|
July 1,
2017 |
||||
|
|
(millions)
|
||||||
Cash paid for interest
|
|
$
|
3.0
|
|
|
$
|
2.6
|
|
Cash paid for income taxes
|
|
3.3
|
|
|
20.8
|
|
|
36
|
|
Item 2.
|
Management's Discussion and Analysis of Financial Condition and Results of Operations.
|
•
|
the loss of key personnel, including Mr. Ralph Lauren, or other changes in our executive and senior management team or to our operating structure, and our ability to effectively transfer knowledge during periods of transition;
|
•
|
our ability to successfully implement our long-term growth strategy and achieve anticipated operating enhancements and cost reductions from our restructuring plans;
|
•
|
the impact to our business resulting from investments and other costs incurred in connection with the execution of our long-term growth strategy, including restructuring-related charges, which may be dilutive to our earnings in the short term;
|
•
|
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;
|
•
|
our ability to open new retail stores, concession shops, and digital commerce sites in an effort to expand our direct-to-consumer presence;
|
•
|
the impact to our business resulting from changes in consumers' ability, willingness, or preferences to purchase premium lifestyle products that we offer for sale and our ability to forecast consumer demand, which could result in either a build-up or shortage of inventory;
|
•
|
our ability to continue to maintain our brand image and reputation and protect our trademarks;
|
•
|
our ability to effectively manage inventory levels and the increasing pressure on our margins in a highly promotional retail environment;
|
•
|
the impact to our business resulting from potential costs and obligations related to the early closure of our stores or termination of our long-term, non-cancellable leases;
|
•
|
the impact of economic, political, and other conditions on us, our customers, suppliers, vendors, and lenders;
|
•
|
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 efforts to successfully enhance, upgrade, and/or transition our global information technology systems and digital commerce platform;
|
•
|
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 operations are currently subject to, or may become subject to as a result of potential changes in legislation, 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;
|
•
|
changes in our tax obligations and effective tax rate due to a variety of other factors, including potential additional changes in U.S. or foreign tax laws and regulations, accounting rules, or the mix and level of earnings by jurisdiction in future periods that are not currently known or anticipated;
|
|
37
|
|
•
|
the impact to our business resulting from the recently enacted U.S. tax legislation commonly referred to as the Tax Cuts and Jobs Act, including related changes to our tax obligations and effective tax rate in future periods, as well as the enactment-related charges that were recorded during Fiscal 2018 on a provisional basis based on a reasonable estimate and are subject to change, all of which could differ materially from our current expectations and/or investors' expectations;
|
•
|
the impact to our business resulting from the United Kingdom's decision to exit the European Union and the uncertainty surrounding the terms and conditions of such a withdrawal, as well as the related impact to global stock markets and currency exchange rates;
|
•
|
the impact to our business resulting from increases in the costs of raw materials, transportation, and labor;
|
•
|
our exposure to currency exchange rate fluctuations from both a transactional and translational perspective;
|
•
|
the potential impact to our business resulting from the financial difficulties of certain of our large wholesale customers, which may result in consolidations, liquidations, restructurings, and other ownership changes in the retail industry, as well as other changes in the competitive marketplace, including the introduction of new products or pricing changes by our competitors;
|
•
|
the potential impact on our operations and on our suppliers and customers resulting from natural or man-made disasters;
|
•
|
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 maintain our credit profile and ratings within the financial community;
|
•
|
our ability to access sources of liquidity to provide for our cash needs, including our debt obligations, tax obligations, payment of dividends, capital expenditures, and potential repurchases of our Class A common stock, as well as the ability of our customers, suppliers, vendors, and lenders to access sources of liquidity to provide for their own cash needs;
|
•
|
the potential impact to the trading prices of our securities if our Class A common stock share repurchase activity and/or cash dividend payments differ from investors' expectations;
|
•
|
our intention to introduce new products or enter into or renew alliances;
|
•
|
changes in the business of, and our relationships with, major department store customers and licensing partners; and
|
•
|
our ability to make certain strategic acquisitions and successfully integrate the acquired businesses into our existing operations.
|
|
38
|
|
•
|
Overview.
This section provides a general description of our business, global economic conditions and industry trends, and a summary of our financial performance for the
three-month period ended
June 30, 2018
. 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 30, 2018
as compared to the
three-month period ended
July 1, 2017
.
|
•
|
Financial condition and liquidity.
This section provides a discussion of our financial condition and liquidity as of
June 30, 2018
, which includes (i) an analysis of our financial condition as compared to the prior fiscal year-end; (ii) an analysis of changes in our cash flows for the
three months ended
June 30, 2018
as compared to the
three months ended
July 1, 2017
; (iii) an analysis of our liquidity, including the availability under our commercial paper borrowing program and credit facilities, common stock repurchases, payments of dividends, and our outstanding debt and covenant compliance; and (iv) a description of any material changes in our contractual and other obligations since
March 31, 2018
.
|
•
|
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 31, 2018
.
|
•
|
Critical accounting policies.
This section discusses any significant changes in our critical accounting policies since
March 31, 2018
. 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
2018
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.
|
|
39
|
|
•
|
North America
— Our North America segment, representing approximately 52% of our Fiscal
2018
net revenues, primarily consists of sales of our Ralph Lauren branded products made through our wholesale and retail businesses in the U.S. and Canada, excluding Club Monaco. In North America, our wholesale business is comprised primarily of sales to department stores, and to a lesser extent, specialty stores. Our retail business in North America is comprised of our Ralph Lauren stores, our factory stores, and our digital commerce site, www.RalphLauren.com.
|
•
|
Europe
— Our Europe segment, representing approximately 26% of our Fiscal
2018
net revenues, primarily consists of sales of our Ralph Lauren branded products made through our wholesale and retail businesses in Europe and the Middle East, excluding Club Monaco. In Europe, our wholesale business is comprised of a varying mix of sales to both department stores and specialty stores, depending on the country. Our retail business in Europe is comprised of our Ralph Lauren stores, our factory stores, our concession-based shop-within-shops, and our various digital commerce sites.
|
•
|
Asia
— Our Asia segment, representing approximately 15% of our Fiscal
2018
net revenues, primarily consists of sales of our Ralph Lauren branded products made through our wholesale and retail businesses in Asia, Australia, and New Zealand. Our retail business in Asia is comprised of Ralph Lauren stores, our factory stores, and our concession-based shop-within-shops. In addition, we sell our products through various third-party digital partner commerce sites. In Asia, our wholesale business is comprised primarily of sales to department stores, with related products distributed through shop-within-shops.
|
|
40
|
|
|
41
|
|
|
42
|
|
|
|
Three Months Ended
|
||||||
|
|
June 30,
2018 |
|
July 1,
2017 |
||||
|
|
(millions)
|
||||||
Impairment of assets (see Note 7)
|
|
$
|
(1.3
|
)
|
|
$
|
(9.7
|
)
|
Restructuring and other charges (see Note 8)
|
|
(22.4
|
)
|
|
(36.8
|
)
|
||
Restructuring-related inventory charges (see Note 8)
(a)
|
|
—
|
|
|
(0.7
|
)
|
||
Total charges
|
|
$
|
(23.7
|
)
|
|
$
|
(47.2
|
)
|
|
(a)
|
Non-cash restructuring-related inventory charges are recorded within cost of goods sold in the consolidated statements of operations.
|
|
43
|
|
|
44
|
|
|
|
Three Months Ended
|
|
|
|
|
|||||||||
|
|
June 30,
2018 |
|
July 1,
2017 |
|
$
Change
|
|
% / bps
Change
|
|||||||
|
|
(millions, except per share data)
|
|
|
|||||||||||
Net revenues
|
|
$
|
1,390.6
|
|
|
$
|
1,347.1
|
|
|
$
|
43.5
|
|
|
3.2
|
%
|
Cost of goods sold
|
|
(494.9
|
)
|
|
(495.9
|
)
|
|
1.0
|
|
|
(0.2
|
%)
|
|||
Gross profit
|
|
895.7
|
|
|
851.2
|
|
|
44.5
|
|
|
5.2
|
%
|
|||
Gross profit as % of net revenues
|
|
64.4
|
%
|
|
63.2
|
%
|
|
|
|
120 bps
|
|
||||
Selling, general, and administrative expenses
|
|
(741.9
|
)
|
|
(714.4
|
)
|
|
(27.5
|
)
|
|
3.8
|
%
|
|||
SG&A expenses as % of net revenues
|
|
53.3
|
%
|
|
53.0
|
%
|
|
|
|
30 bps
|
|
||||
Impairment of assets
|
|
(1.3
|
)
|
|
(9.7
|
)
|
|
8.4
|
|
|
(86.9
|
%)
|
|||
Restructuring and other charges
|
|
(22.4
|
)
|
|
(36.8
|
)
|
|
14.4
|
|
|
(38.8
|
%)
|
|||
Operating income
|
|
130.1
|
|
|
90.3
|
|
|
39.8
|
|
|
44.0
|
%
|
|||
Operating income as % of net revenues
|
|
9.4
|
%
|
|
6.7
|
%
|
|
|
|
270 bps
|
|
||||
Interest expense
|
|
(4.4
|
)
|
|
(5.0
|
)
|
|
0.6
|
|
|
(14.0
|
%)
|
|||
Interest income
|
|
9.2
|
|
|
2.0
|
|
|
7.2
|
|
|
NM
|
|
|||
Other expense, net
|
|
(2.0
|
)
|
|
(0.5
|
)
|
|
(1.5
|
)
|
|
NM
|
|
|||
Income before income taxes
|
|
132.9
|
|
|
86.8
|
|
|
46.1
|
|
|
53.2
|
%
|
|||
Income tax provision
|
|
(23.9
|
)
|
|
(27.3
|
)
|
|
3.4
|
|
|
(12.2
|
%)
|
|||
Effective tax rate
(a)
|
|
18.0
|
%
|
|
31.4
|
%
|
|
|
|
(1,340 bps)
|
|
||||
Net income
|
|
$
|
109.0
|
|
|
$
|
59.5
|
|
|
$
|
49.5
|
|
|
83.2
|
%
|
Net income per common share:
|
|
|
|
|
|
|
|
|
|||||||
Basic
|
|
$
|
1.33
|
|
|
$
|
0.73
|
|
|
$
|
0.60
|
|
|
82.2
|
%
|
Diluted
|
|
$
|
1.31
|
|
|
$
|
0.72
|
|
|
$
|
0.59
|
|
|
81.9
|
%
|
|
(a)
|
Effective tax rate is calculated by dividing the income tax provision by income before income taxes.
|
|
|
% Change
|
|
Digital commerce comparable store sales
|
|
(1
|
%)
|
Comparable store sales excluding digital commerce
|
|
(3
|
%)
|
Total comparable store sales
|
|
(3
|
%)
|
|
45
|
|
|
|
June 30,
2018 |
|
July 1,
2017 |
||
Freestanding Stores:
|
|
|
|
|
||
North America
|
|
220
|
|
|
216
|
|
Europe
|
|
83
|
|
|
82
|
|
Asia
|
|
107
|
|
|
90
|
|
Other non-reportable segments
|
|
74
|
|
|
79
|
|
Total freestanding stores
|
|
484
|
|
|
467
|
|
|
|
|
|
|
||
Concession Shops:
|
|
|
|
|
||
North America
|
|
2
|
|
|
1
|
|
Europe
|
|
25
|
|
|
31
|
|
Asia
|
|
604
|
|
|
591
|
|
Other non-reportable segments
|
|
2
|
|
|
2
|
|
Total concession shops
|
|
633
|
|
|
625
|
|
Total stores
|
|
1,117
|
|
|
1,092
|
|
|
|
Three Months Ended
|
|
$ Change
|
|
Foreign Exchange Impact
|
|
$ Change
|
|
% Change
|
||||||||||||||||
|
|
June 30,
2018 |
|
July 1,
2017 |
|
As
Reported
|
|
|
Constant
Currency
|
|
As
Reported
|
|
Constant
Currency
|
|||||||||||||
|
|
(millions)
|
|
|
|
|
||||||||||||||||||||
Net Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
North America
|
|
$
|
697.6
|
|
|
$
|
709.7
|
|
|
$
|
(12.1
|
)
|
|
$
|
0.8
|
|
|
$
|
(12.9
|
)
|
|
(1.7
|
%)
|
|
(1.8
|
%)
|
Europe
|
|
350.6
|
|
|
323.5
|
|
|
27.1
|
|
|
22.2
|
|
|
4.9
|
|
|
8.4
|
%
|
|
1.5
|
%
|
|||||
Asia
|
|
248.0
|
|
|
209.1
|
|
|
38.9
|
|
|
5.4
|
|
|
33.5
|
|
|
18.6
|
%
|
|
16.0
|
%
|
|||||
Other non-reportable segments
|
|
94.4
|
|
|
104.8
|
|
|
(10.4
|
)
|
|
0.2
|
|
|
(10.6
|
)
|
|
(10.0
|
%)
|
|
(10.1
|
%)
|
|||||
Total net revenues
|
|
$
|
1,390.6
|
|
|
$
|
1,347.1
|
|
|
$
|
43.5
|
|
|
$
|
28.6
|
|
|
$
|
14.9
|
|
|
3.2
|
%
|
|
1.1
|
%
|
•
|
an $8.9 million net decrease related to our North America retail business, inclusive of net favorable foreign currency effects of $0.3 million. On a constant currency basis, net revenues decreased by $9.2 million driven by a decline of $11.4 million in comparable store sales, partially offset by an increase of $2.2 million in non-comparable store sales. The decline in comparable store sales was primarily driven by the timing of Easter, which benefited the fourth quarter of Fiscal 2018. Excluding the impact of Easter timing, comparable store sales were approximately flat as compared to the prior fiscal year period. The following table summarizes the percentage change in comparable store sales related to our North America retail business:
|
|
46
|
|
|
|
% Change
|
|
Digital commerce comparable store sales
|
|
(2
|
%)
|
Comparable store sales excluding digital commerce
|
|
(3
|
%)
|
Total comparable store sales
|
|
(3
|
%)
|
•
|
a $3.2 million net decrease related to our North America wholesale business, largely driven by a strategic reduction of shipments and points of distribution in connection with our long-term growth strategy, partially offset by a shift in timing of certain shipments from the fourth quarter of Fiscal 2018 into the first quarter of Fiscal 2019.
|
•
|
a $22.4 million net increase related to our Europe wholesale business, primarily driven by a shift in the timing of certain shipments that occurred during the prior fiscal year period and net favorable foreign currency effects of $7.2 million; and
|
•
|
a $4.7 million net increase related to our Europe retail business, inclusive of net favorable foreign currency effects of $15.0 million. On a constant currency basis, net revenues decreased by $10.3 million driven by a decline of $15.6 million in comparable store sales largely attributable to assortment and inventory challenges, partially offset by an increase of $5.3 million in non-comparable store sales. The following table summarizes the percentage change in comparable store sales related to our Europe retail business:
|
|
|
% Change
|
|
Digital commerce comparable store sales
|
|
2
|
%
|
Comparable store sales excluding digital commerce
|
|
(9
|
%)
|
Total comparable store sales
|
|
(8
|
%)
|
•
|
a $34.2 million net increase related to our Asia retail business, inclusive of net favorable foreign currency effects of $5.2 million. On a constant currency basis, net revenues increased by $29.0 million, reflecting increases of $17.6 million in non-comparable store sales driven by new store openings and $11.4 million in comparable store sales. The following table summarizes the percentage change in comparable store sales related to our Asia retail business:
|
|
|
% Change
|
|
Digital commerce comparable store sales
|
|
46
|
%
|
Comparable store sales excluding digital commerce
|
|
6
|
%
|
Total comparable store sales
|
|
6
|
%
|
•
|
a $4.7 million net increase related to our Asia wholesale business, primarily driven by our expansion in Japan.
|
|
47
|
|
|
|
Three Months Ended June 30, 2018
Compared to
Three Months Ended July 1, 2017 |
||
|
|
(millions)
|
||
SG&A expense category:
|
|
|
||
Selling-related expenses
|
|
$
|
11.3
|
|
Marketing and advertising expenses
|
|
7.6
|
|
|
Rent and occupancy expenses
|
|
6.9
|
|
|
Consulting fees
|
|
5.6
|
|
|
Other
|
|
(3.9
|
)
|
|
Total change in SG&A expenses
|
|
$
|
27.5
|
|
|
48
|
|
|
|
Three Months Ended
|
|
|
|
|
||||||||||||
|
June 30, 2018
|
|
July 1, 2017
|
|
|
|
|
|||||||||||
|
Operating
Income |
|
Operating
Margin |
|
Operating
Income |
|
Operating
Margin |
|
$
Change |
|
Margin
Change |
|||||||
|
(millions)
|
|
|
|
(millions)
|
|
|
|
(millions)
|
|
|
|||||||
Segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
North America
|
|
$
|
159.9
|
|
|
22.9%
|
|
$
|
150.5
|
|
|
21.2%
|
|
$
|
9.4
|
|
|
170 bps
|
Europe
|
|
73.9
|
|
|
21.1%
|
|
67.1
|
|
|
20.7%
|
|
6.8
|
|
|
40 bps
|
|||
Asia
|
|
42.7
|
|
|
17.2%
|
|
30.2
|
|
|
14.4%
|
|
12.5
|
|
|
280 bps
|
|||
Other non-reportable segments
|
|
30.8
|
|
|
32.7%
|
|
33.0
|
|
|
31.5%
|
|
(2.2
|
)
|
|
120 bps
|
|||
|
|
307.3
|
|
|
|
|
280.8
|
|
|
|
|
26.5
|
|
|
|
|||
Unallocated corporate expenses
|
|
(154.8
|
)
|
|
|
|
(153.7
|
)
|
|
|
|
(1.1
|
)
|
|
|
|||
Unallocated restructuring and other charges
|
|
(22.4
|
)
|
|
|
|
(36.8
|
)
|
|
|
|
14.4
|
|
|
|
|||
Total operating income
|
|
$
|
130.1
|
|
|
9.4%
|
|
$
|
90.3
|
|
|
6.7%
|
|
$
|
39.8
|
|
|
270 bps
|
|
49
|
|
|
|
June 30,
2018 |
|
March 31,
2018 |
|
$
Change |
||||||
|
|
(millions)
|
||||||||||
Cash and cash equivalents
|
|
$
|
532.3
|
|
|
$
|
1,304.6
|
|
|
$
|
(772.3
|
)
|
Short-term investments
|
|
1,487.7
|
|
|
699.4
|
|
|
788.3
|
|
|||
Non-current investments
(a)
|
|
69.5
|
|
|
86.2
|
|
|
(16.7
|
)
|
|||
Short-term debt
(b)
|
|
—
|
|
|
(10.1
|
)
|
|
10.1
|
|
|||
Current portion of long-term debt
(b)
|
|
(299.0
|
)
|
|
(298.1
|
)
|
|
(0.9
|
)
|
|||
Long-term debt
(b)
|
|
(288.0
|
)
|
|
(288.0
|
)
|
|
—
|
|
|||
Net cash and investments
(c)
|
|
$
|
1,502.5
|
|
|
$
|
1,494.0
|
|
|
$
|
8.5
|
|
Equity
|
|
$
|
3,421.0
|
|
|
$
|
3,457.4
|
|
|
$
|
(36.4
|
)
|
|
(a)
|
Recorded within other non-current assets in our consolidated balance sheets.
|
(b)
|
See
Note 10
to the accompanying consolidated financial statements for discussion of the carrying values of our debt.
|
(c)
|
"Net cash and investments" is defined as cash and cash equivalents, plus short-term and non-current investments, less total debt.
|
|
50
|
|
|
|
Three Months Ended
|
|
|
||||||||
|
|
June 30,
2018 |
|
July 1,
2017 |
|
$
Change |
||||||
|
|
(millions)
|
||||||||||
Net cash provided by operating activities
|
|
$
|
230.6
|
|
|
$
|
334.2
|
|
|
$
|
(103.6
|
)
|
Net cash used in investing activities
|
|
(827.1
|
)
|
|
(128.5
|
)
|
|
(698.6
|
)
|
|||
Net cash used in financing activities
|
|
(164.4
|
)
|
|
(61.0
|
)
|
|
(103.4
|
)
|
|||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash
|
|
(18.8
|
)
|
|
19.9
|
|
|
(38.7
|
)
|
|||
Net increase (decrease) in cash, cash equivalents, and restricted cash
|
|
$
|
(779.7
|
)
|
|
$
|
164.6
|
|
|
$
|
(944.3
|
)
|
•
|
a year-over-year increase in our inventory levels to support our revenue growth, as well as the timing of certain inventory receipts;
|
•
|
an unfavorable change related to accrued expenses and other current liabilities largely driven by fluctuations associated with our derivative instruments; and
|
•
|
an unfavorable change related to our prepaid expenses and other current assets, largely driven by the timing of cash payments.
|
•
|
a
$115.6 million
increase in cash used to repurchase shares of our Class A common stock. During the
three months ended June 30, 2018
, we used
$100.0 million
to repurchase shares of Class A common stock pursuant to our common stock repurchase program, and an additional
$30.0 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 long-term stock incentive plans. On a comparative basis, during the
three months ended July 1, 2017
,
$14.4 million
in shares of Class A common stock were surrendered or withheld for taxes; and
|
•
|
a
$9.9 million
increase in cash used to repay debt. During the
three months ended June 30, 2018
, we repaid $9.9 million of borrowings previously outstanding under our credit facilities. On a comparative basis, during the
three months ended July 1, 2017
, we did not issue or repay any debt.
|
•
|
a
$21.7 million
increase in proceeds from exercise of stock options.
|
|
51
|
|
|
|
June 30, 2018
|
||||||||||
Description
(a)
|
|
Total
Availability
|
|
Borrowings
Outstanding
|
|
Remaining
Availability
|
||||||
|
|
(millions)
|
||||||||||
Global Credit Facility and Commercial Paper Program
(b)
|
|
$
|
500
|
|
|
$
|
10
|
|
(c)
|
$
|
490
|
|
Pan-Asia Credit Facilities
|
|
50
|
|
|
—
|
|
|
50
|
|
|
(a)
|
As defined in
Note 10
to the accompanying consolidated financial statements.
|
(b)
|
Borrowings under the Commercial Paper Program are supported by the Global Credit Facility. Accordingly, we do not expect combined borrowings outstanding under the Commercial Paper Program and the Global Credit Facility to exceed $500 million.
|
(c)
|
Represents outstanding letters of credit for which we were contingently liable under the Global Credit Facility as of
June 30, 2018
.
|
|
52
|
|
|
53
|
|
|
54
|
|
Item 3.
|
Quantitative and Qualitative Disclosures about Market Risk.
|
|
55
|
|
Item 4.
|
Controls and Procedures.
|
Item 1.
|
Legal Proceedings.
|
Item 1A.
|
Risk Factors.
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds.
|
(a)
|
Sales of Unregistered Securities
|
(b)
|
Not Applicable
|
|
56
|
|
(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)
|
||||||
April 1, 2018 to April 28, 2018
|
3,105
|
|
(b)
|
$
|
111.63
|
|
|
—
|
|
|
$
|
100
|
|
April 29, 2018 to May 26, 2018
|
135,269
|
|
(b)
|
110.65
|
|
|
—
|
|
|
100
|
|
||
May 27, 2018 to June 30, 2018
|
823,818
|
|
(c)
|
139.58
|
|
|
714,152
|
|
|
1,000
|
|
||
|
962,192
|
|
|
|
|
714,152
|
|
|
|
|
(a)
|
On
June 4, 2018
, the Company's Board of Directors approved an expansion of the program that allows it to repurchase up to an additional
$1.000 billion
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 its long-term stock incentive plans.
|
(c)
|
Includes 109,666 shares surrendered to or withheld by the Company in satisfaction of withholding taxes in connection with the vesting of awards issued under its long-term stock incentive plans.
|
Item 6.
|
Exhibits.
|
3.1
|
|
3.2
|
|
3.3
|
|
10.1*
|
|
12.1*
|
|
31.1*
|
|
31.2*
|
|
32.1*
|
|
32.2*
|
|
101*
|
Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Consolidated Balance Sheets at June 30, 2018 and March 31, 2018, (ii) the Consolidated Statements of Operations for the three-month periods ended June 30, 2018 and July 1, 2017, (iii) the Consolidated Statements of Comprehensive Income for the three-month periods ended June 30, 2018 and July 1, 2017, (iv) the Consolidated Statements of Cash Flows for the three-month periods ended June 30, 2018 and July 1, 2017, and (v) the Notes to the Consolidated Financial Statements.
|
|
*
|
Filed herewith.
|
†
|
Management contract or compensatory plan or arrangement.
|
|
57
|
|
|
|
RALPH LAUREN CORPORATION
|
|
|
|
|
By:
|
/
S
/ JANE HAMILTON NIELSEN
|
|
|
Jane Hamilton Nielsen
|
|
|
Chief Financial Officer
|
|
|
(Principal Financial and Accounting Officer)
|
|
|
|
Date: August 3, 2018
|
|
|
|
58
|
|
(a)
|
Subject to the Participant's continued service as an Outside Director of the Company, the RSUs shall fully vest and become non-forfeitable on the first 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.
|
(c)
|
Notwithstanding the foregoing, in the event the above vesting schedule results in the vesting of any fractional Shares, such fractional Shares shall be payable in cash.
|
(d)
|
The RSUs shall be settled exclusively in Class A Common Stock of the Company.
|
(e)
|
If the Participant’s service as an Outside Director of the Company is terminated for any reason other than due to the Participant’s death or Disability, the RSUs shall, to the extent not then vested, be forfeited by the Participant without consideration. In the event of the death or disability of the Participant, unvested RSUs shall continue to vest according to the original vesting schedule.
|
(f)
|
Notwithstanding any other provision of this Agreement to the contrary, in the event of a Change of Control (as defined in the Plan), the RSUs shall, to the extent not then vested and not previously forfeited, immediately become fully vested as contemplated by Section 13 of the Plan.
|
(a)
|
The Participant shall be entitled to receive dividend equivalents on the RSUs in the event of an issuance of any cash or stock dividend on the Shares of the Company (a “Dividend”). The Participant shall be credited with an additional number of RSUs (each, a “Dividend RSU”), determined as follows:
|
i.
|
in the event of a cash dividend, equal to the quotient obtained by dividing: (a) the product of (i) the number of RSUs that the Participant holds at the time of the record date for such Dividend multiplied by (ii) the amount of the Dividend per Share, divided by (b) the fair market value per Share on the payment date for such Dividend; and
|
ii.
|
in the event of a stock dividend, equal to the number of Shares (including fractions thereof) issued with respect to each Share, multiplied by the number of RSUs.
|
(b)
|
Once credited, each Dividend RSU shall be treated as a RSU hereunder and shall be subject to the same terms and conditions as the RSU from which such Dividend RSU is derived, including, but not limited to, the applicable vesting schedule and rights to Dividend RSUs with respect to future Dividends.
|
a)
|
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;
|
b)
|
the grant of RSUs is voluntary and occasional and does not create any contractual or other right to receive future RSUs, or benefits in lieu of these awards, even if RSUs have been granted in the past;
|
c)
|
the Participant is subject to the Company’s Securities Trading Policy; and
|
d)
|
no claim or entitlement to compensation or damages shall arise from the forfeiture of the RSUs (either in whole or in part) resulting from the Participant’s termination of service, other than due to the Participant’s death or Disability.
|
|
RALPH LAUREN CORPORATION
|
|
||
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
|
|
NAME
|
|
|
|
|
TITLE
|
|
|
|
NAME
|
|
|
|
Three Months Ended
|
|
Fiscal Years Ended
(a)
|
||||||||||||||||||||
|
|
June 30,
2018 |
|
March 31, 2018
|
|
April 1, 2017
|
|
April 2, 2016
|
|
March 28, 2015
|
|
March 29, 2014
|
||||||||||||
|
|
(millions)
|
||||||||||||||||||||||
Earnings, as defined:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Income (loss) before income taxes
|
|
$
|
132.9
|
|
|
$
|
489.2
|
|
|
$
|
(104.9
|
)
|
|
$
|
551.8
|
|
|
$
|
987.4
|
|
|
$
|
1,095.8
|
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Equity in losses (income) of equity-method investees
|
|
(0.5
|
)
|
|
4.5
|
|
|
5.2
|
|
|
10.9
|
|
|
11.5
|
|
|
9.4
|
|
||||||
Fixed charges
|
|
41.8
|
|
|
165.9
|
|
|
165.9
|
|
|
178.4
|
|
|
172.0
|
|
|
170.2
|
|
||||||
Earnings available to cover fixed charges
|
|
$
|
174.2
|
|
|
$
|
659.6
|
|
|
$
|
66.2
|
|
|
$
|
741.1
|
|
|
$
|
1,170.9
|
|
|
$
|
1,275.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fixed Charges:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest expense
|
|
$
|
4.4
|
|
|
$
|
18.2
|
|
|
$
|
12.4
|
|
|
$
|
21.0
|
|
|
$
|
16.7
|
|
|
$
|
18.7
|
|
Interest component of rent expense
|
|
37.4
|
|
|
147.7
|
|
|
153.5
|
|
|
157.4
|
|
|
155.3
|
|
|
151.5
|
|
||||||
Total fixed charges
|
|
$
|
41.8
|
|
|
$
|
165.9
|
|
|
$
|
165.9
|
|
|
$
|
178.4
|
|
|
$
|
172.0
|
|
|
$
|
170.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Ratio of earnings to fixed charges
(b)
|
|
4.2
|
|
|
4.0
|
|
|
0.4
|
|
|
4.2
|
|
|
6.8
|
|
|
7.5
|
|
|
(a)
|
The fiscal year ended April 2, 2016 consisted of 53 weeks. All other fiscal years presented consisted of 52 weeks.
|
(b)
|
All ratios have been calculated using unrounded numbers.
|
|
/s/ PATRICE LOUVET
|
|
Patrice Louvet
|
|
President and Chief Executive Officer
|
|
(Principal Executive Officer)
|
|
|
Date: August 3, 2018
|
|
|
/s/ JANE HAMILTON NIELSEN
|
|
Jane Hamilton Nielsen
|
|
Chief Financial Officer
|
|
(Principal Financial and Accounting Officer)
|
|
|
Date: August 3, 2018
|
|
|
/s/ PATRICE LOUVET
|
|
Patrice Louvet
|
|
|
August 3, 2018
|
|
|
/s/ JANE HAMILTON NIELSEN
|
|
Jane Hamilton Nielsen
|
|
|
August 3, 2018
|
|