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þ
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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|
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For the quarterly period ended December 29, 2012
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¨
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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.)
|
|
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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|
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Large accelerated filer
|
þ
|
Accelerated filer
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¨
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Non-accelerated filer
|
¨
(Do not check if a smaller reporting company)
|
Smaller reporting company
|
¨
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Page
|
|
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PART I. FINANCIAL INFORMATION (Unaudited)
|
||
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Item 1.
|
Financial Statements:
|
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|
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||
|
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||
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||
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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
|
||
|
Item 1.
|
||
|
Item 1A.
|
||
|
Item 2.
|
||
|
Item 6.
|
||
|
EX-10.1
|
|
|
|
EX-10.2
|
|
|
|
EX-31.1
|
|
|
|
EX-31.2
|
|
|
|
EX-32.1
|
|
|
|
EX-32.2
|
|
|
|
|
INSTANCE DOCUMENT
|
|
|
EX-101
|
SCHEMA DOCUMENT
|
|
|
EX-101
|
CALCULATION LINKBASE DOCUMENT
|
|
|
EX-101
|
LABELS LINKBASE DOCUMENT
|
|
|
EX-101
|
PRESENTATION LINKBASE DOCUMENT
|
|
|
EX-101
|
DEFINITION LINKBASE DOCUMENT
|
|
|
|
|
December 29,
2012 |
|
March 31,
2012 |
||||
|
|
|
(millions)
(unaudited)
|
||||||
|
ASSETS
|
|
|
|
|
||||
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Current assets:
|
|
|
|
|
||||
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Cash and cash equivalents
|
|
$
|
999.1
|
|
|
$
|
671.6
|
|
|
Short-term investments
|
|
313.2
|
|
|
515.7
|
|
||
|
Accounts receivable, net of allowances of $263.6 million and $262.7 million
|
|
383.9
|
|
|
547.2
|
|
||
|
Inventories
|
|
981.1
|
|
|
841.6
|
|
||
|
Income tax receivable
|
|
18.9
|
|
|
17.2
|
|
||
|
Deferred tax assets
|
|
125.9
|
|
|
125.6
|
|
||
|
Prepaid expenses and other
|
|
179.9
|
|
|
181.0
|
|
||
|
Total current assets
|
|
3,002.0
|
|
|
2,899.9
|
|
||
|
Non-current investments
|
|
89.0
|
|
|
99.9
|
|
||
|
Property and equipment, net
|
|
926.4
|
|
|
884.1
|
|
||
|
Deferred tax assets
|
|
16.2
|
|
|
39.8
|
|
||
|
Goodwill
|
|
993.1
|
|
|
1,004.0
|
|
||
|
Intangible assets, net
|
|
339.8
|
|
|
359.0
|
|
||
|
Other assets
|
|
122.7
|
|
|
129.7
|
|
||
|
Total assets
|
|
$
|
5,489.2
|
|
|
$
|
5,416.4
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
||||
|
Current liabilities:
|
|
|
|
|
||||
|
Current portion of long-term debt
|
|
$
|
274.1
|
|
|
$
|
—
|
|
|
Accounts payable
|
|
146.2
|
|
|
180.6
|
|
||
|
Income tax payable
|
|
89.3
|
|
|
71.9
|
|
||
|
Accrued expenses and other
|
|
682.0
|
|
|
693.7
|
|
||
|
Total current liabilities
|
|
1,191.6
|
|
|
946.2
|
|
||
|
Long-term debt
|
|
—
|
|
|
274.4
|
|
||
|
Non-current liability for unrecognized tax benefits
|
|
155.6
|
|
|
168.0
|
|
||
|
Other non-current liabilities
|
|
372.3
|
|
|
375.3
|
|
||
|
Commitments and contingencies (Note 14)
|
|
|
|
|
||||
|
Total liabilities
|
|
1,719.5
|
|
|
1,763.9
|
|
||
|
Equity:
|
|
|
|
|
||||
|
Class A common stock, par value $.01 per share; 93.4 million and 91.1 million shares issued; 60.8 million and 61.9 million shares outstanding
|
|
0.9
|
|
|
0.9
|
|
||
|
Class B common stock, par value $.01 per share; 29.9 million and 30.8 million shares issued and outstanding
|
|
0.3
|
|
|
0.3
|
|
||
|
Additional paid-in-capital
|
|
1,760.2
|
|
|
1,624.0
|
|
||
|
Retained earnings
|
|
4,555.9
|
|
|
4,042.4
|
|
||
|
Treasury stock, Class A, at cost (32.6 million and 29.2 million shares)
|
|
(2,708.4
|
)
|
|
(2,211.7
|
)
|
||
|
Accumulated other comprehensive income
|
|
160.8
|
|
|
196.6
|
|
||
|
Total equity
|
|
3,769.7
|
|
|
3,652.5
|
|
||
|
Total liabilities and equity
|
|
$
|
5,489.2
|
|
|
$
|
5,416.4
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
|
December 29,
2012 |
|
December 31,
2011 |
|
December 29,
2012 |
|
December 31,
2011 |
||||||||
|
|
|
(millions, except per share data)
(unaudited)
|
||||||||||||||
|
Net sales
|
|
$
|
1,795.9
|
|
|
$
|
1,756.0
|
|
|
$
|
5,162.7
|
|
|
$
|
5,099.3
|
|
|
Licensing revenue
|
|
50.2
|
|
|
49.6
|
|
|
138.8
|
|
|
137.3
|
|
||||
|
Net revenues
|
|
1,846.1
|
|
|
1,805.6
|
|
|
5,301.5
|
|
|
5,236.6
|
|
||||
|
Cost of goods sold
(a)
|
|
(752.0
|
)
|
|
(774.0
|
)
|
|
(2,120.0
|
)
|
|
(2,164.9
|
)
|
||||
|
Gross profit
|
|
1,094.1
|
|
|
1,031.6
|
|
|
3,181.5
|
|
|
3,071.7
|
|
||||
|
Other costs and expenses:
|
|
|
|
|
|
|
|
|
||||||||
|
Selling, general and administrative expenses
(a)
|
|
(768.9
|
)
|
|
(750.7
|
)
|
|
(2,200.7
|
)
|
|
(2,142.4
|
)
|
||||
|
Amortization of intangible assets
|
|
(6.8
|
)
|
|
(7.2
|
)
|
|
(20.3
|
)
|
|
(21.8
|
)
|
||||
|
Impairment of assets
|
|
(11.4
|
)
|
|
(2.0
|
)
|
|
(12.4
|
)
|
|
(2.2
|
)
|
||||
|
Restructuring charges
|
|
(2.6
|
)
|
|
(1.6
|
)
|
|
(3.4
|
)
|
|
(2.3
|
)
|
||||
|
Total other costs and expenses
|
|
(789.7
|
)
|
|
(761.5
|
)
|
|
(2,236.8
|
)
|
|
(2,168.7
|
)
|
||||
|
Operating income
|
|
304.4
|
|
|
270.1
|
|
|
944.7
|
|
|
903.0
|
|
||||
|
Foreign currency gains (losses)
|
|
(3.9
|
)
|
|
(2.2
|
)
|
|
(7.0
|
)
|
|
(4.2
|
)
|
||||
|
Interest expense
|
|
(5.6
|
)
|
|
(6.3
|
)
|
|
(16.5
|
)
|
|
(18.8
|
)
|
||||
|
Interest and other income, net
|
|
1.5
|
|
|
2.7
|
|
|
4.1
|
|
|
9.3
|
|
||||
|
Equity in income (loss) of equity-method investees
|
|
(1.8
|
)
|
|
(2.2
|
)
|
|
(4.6
|
)
|
|
(5.2
|
)
|
||||
|
Income before provision for income taxes
|
|
294.6
|
|
|
262.1
|
|
|
920.7
|
|
|
884.1
|
|
||||
|
Provision for income taxes
|
|
(78.9
|
)
|
|
(93.1
|
)
|
|
(297.9
|
)
|
|
(297.5
|
)
|
||||
|
Net income attributable to RLC
|
|
$
|
215.7
|
|
|
$
|
169.0
|
|
|
$
|
622.8
|
|
|
$
|
586.6
|
|
|
Net income per common share attributable to RLC:
|
|
|
|
|
|
|
|
|
||||||||
|
Basic
|
|
$
|
2.37
|
|
|
$
|
1.83
|
|
|
$
|
6.80
|
|
|
$
|
6.32
|
|
|
Diluted
|
|
$
|
2.31
|
|
|
$
|
1.78
|
|
|
$
|
6.63
|
|
|
$
|
6.14
|
|
|
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
|
||||||||
|
Basic
|
|
91.1
|
|
|
92.2
|
|
|
91.6
|
|
|
92.8
|
|
||||
|
Diluted
|
|
93.3
|
|
|
94.9
|
|
|
93.9
|
|
|
95.6
|
|
||||
|
Dividends declared per share
|
|
$
|
0.40
|
|
|
$
|
0.20
|
|
|
$
|
1.20
|
|
|
$
|
0.60
|
|
|
(a)
Includes total depreciation expense of:
|
|
$
|
(53.8
|
)
|
|
$
|
(49.6
|
)
|
|
$
|
(153.7
|
)
|
|
$
|
(146.4
|
)
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
|
December 29,
2012 |
|
December 31,
2011 |
|
December 29,
2012 |
|
December 31,
2011 |
||||||||
|
|
|
(millions)
(unaudited)
|
||||||||||||||
|
Net income attributable to RLC
|
|
$
|
215.7
|
|
|
$
|
169.0
|
|
|
$
|
622.8
|
|
|
$
|
586.6
|
|
|
Other comprehensive income, net of tax:
|
|
|
|
|
|
|
|
|
||||||||
|
Foreign currency translation adjustments
|
|
(25.0
|
)
|
|
(52.1
|
)
|
|
(24.1
|
)
|
|
(45.4
|
)
|
||||
|
Net realized and unrealized gains (losses) on derivatives
|
|
(11.2
|
)
|
|
11.8
|
|
|
(14.5
|
)
|
|
37.2
|
|
||||
|
Net realized and unrealized gains (losses) on available-for-sale investments
|
|
—
|
|
|
—
|
|
|
3.6
|
|
|
(0.1
|
)
|
||||
|
Net realized and unrealized gains (losses) on defined benefit plans
|
|
(0.5
|
)
|
|
(0.4
|
)
|
|
(0.8
|
)
|
|
(0.8
|
)
|
||||
|
Other comprehensive income, net of tax
|
|
(36.7
|
)
|
|
(40.7
|
)
|
|
(35.8
|
)
|
|
(9.1
|
)
|
||||
|
Total comprehensive income attributable to RLC
|
|
$
|
179.0
|
|
|
$
|
128.3
|
|
|
$
|
587.0
|
|
|
$
|
577.5
|
|
|
|
|
Nine Months Ended
|
||||||
|
|
|
December 29,
2012 |
|
December 31,
2011 |
||||
|
|
|
(millions)
(unaudited)
|
||||||
|
Cash flows from operating activities:
|
|
|
|
|
||||
|
Net income
|
|
$
|
622.8
|
|
|
$
|
586.6
|
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
||||
|
Depreciation and amortization expense
|
|
174.0
|
|
|
168.2
|
|
||
|
Deferred income tax expense (benefit)
|
|
(23.2
|
)
|
|
(21.5
|
)
|
||
|
Equity in loss of equity-method investees, net of dividends received
|
|
4.6
|
|
|
5.2
|
|
||
|
Non-cash stock-based compensation expense
|
|
65.1
|
|
|
55.2
|
|
||
|
Excess tax benefits from stock-based compensation arrangements
|
|
(32.9
|
)
|
|
(25.5
|
)
|
||
|
Other non-cash charges (benefits), net
|
|
11.7
|
|
|
5.9
|
|
||
|
Changes in operating assets and liabilities:
|
|
|
|
|
||||
|
Accounts receivable
|
|
166.1
|
|
|
(8.6
|
)
|
||
|
Inventories
|
|
(138.0
|
)
|
|
(203.1
|
)
|
||
|
Accounts payable and accrued liabilities
|
|
(2.0
|
)
|
|
0.5
|
|
||
|
Income tax receivables and payables
|
|
37.3
|
|
|
208.0
|
|
||
|
Deferred income
|
|
(21.8
|
)
|
|
(12.0
|
)
|
||
|
Other balance sheet changes
|
|
33.6
|
|
|
25.3
|
|
||
|
Net cash provided by operating activities
|
|
897.3
|
|
|
784.2
|
|
||
|
Cash flows from investing activities:
|
|
|
|
|
||||
|
Acquisitions and ventures, net of cash acquired and purchase price settlements
|
|
(18.0
|
)
|
|
(10.1
|
)
|
||
|
Purchases of investments
|
|
(751.9
|
)
|
|
(1,070.0
|
)
|
||
|
Proceeds from sales and maturities of investments
|
|
950.7
|
|
|
1,248.4
|
|
||
|
Capital expenditures
|
|
(195.0
|
)
|
|
(160.1
|
)
|
||
|
Change in restricted cash deposits
|
|
7.0
|
|
|
1.0
|
|
||
|
Net cash provided by (used in) investing activities
|
|
(7.2
|
)
|
|
9.2
|
|
||
|
Cash flows from financing activities:
|
|
|
|
|
||||
|
Proceeds from credit facilities
|
|
—
|
|
|
107.7
|
|
||
|
Repayments of borrowings on credit facilities
|
|
—
|
|
|
(107.7
|
)
|
||
|
Payments of capital lease obligations
|
|
(7.6
|
)
|
|
(5.6
|
)
|
||
|
Payments of dividends
|
|
(127.8
|
)
|
|
(55.8
|
)
|
||
|
Repurchases of common stock, including shares surrendered for tax withholdings
|
|
(496.7
|
)
|
|
(419.4
|
)
|
||
|
Proceeds from exercise of stock options
|
|
38.2
|
|
|
41.6
|
|
||
|
Excess tax benefits from stock-based compensation arrangements
|
|
32.9
|
|
|
25.5
|
|
||
|
Payment on interest rate swap termination
|
|
—
|
|
|
(7.6
|
)
|
||
|
Other financing activities
|
|
(1.5
|
)
|
|
0.2
|
|
||
|
Net cash used in financing activities
|
|
(562.5
|
)
|
|
(421.1
|
)
|
||
|
Effect of exchange rate changes on cash and cash equivalents
|
|
(0.1
|
)
|
|
(9.5
|
)
|
||
|
Net increase in cash and cash equivalents
|
|
327.5
|
|
|
362.8
|
|
||
|
Cash and cash equivalents at beginning of period
|
|
671.6
|
|
|
453.0
|
|
||
|
Cash and cash equivalents at end of period
|
|
$
|
999.1
|
|
|
$
|
815.8
|
|
|
1.
|
Description of Business
|
|
2.
|
Basis of Presentation
|
|
3.
|
Summary of Significant Accounting Policies
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||
|
|
|
December 29,
2012 |
|
December 31,
2011 |
|
December 29,
2012 |
|
December 31,
2011 |
||||
|
|
|
(millions)
|
||||||||||
|
Basic
|
|
91.1
|
|
|
92.2
|
|
|
91.6
|
|
|
92.8
|
|
|
Dilutive effect of stock options, restricted stock and restricted stock units
|
|
2.2
|
|
|
2.7
|
|
|
2.3
|
|
|
2.8
|
|
|
Diluted shares
|
|
93.3
|
|
|
94.9
|
|
|
93.9
|
|
|
95.6
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
|
December 29,
2012 |
|
December 31,
2011 |
|
December 29,
2012 |
|
December 31,
2011 |
||||||||
|
|
|
(millions)
|
||||||||||||||
|
Beginning reserve balance
|
|
$
|
251.1
|
|
|
$
|
231.0
|
|
|
$
|
246.7
|
|
|
$
|
213.2
|
|
|
Amount charged against revenue to increase reserve
|
|
179.4
|
|
|
162.1
|
|
|
508.7
|
|
|
444.2
|
|
||||
|
Amount credited against customer accounts to decrease reserve
|
|
(184.0
|
)
|
|
(162.7
|
)
|
|
(507.4
|
)
|
|
(424.4
|
)
|
||||
|
Foreign currency translation
|
|
0.1
|
|
|
(4.5
|
)
|
|
(1.4
|
)
|
|
(7.1
|
)
|
||||
|
Ending reserve balance
|
|
$
|
246.6
|
|
|
$
|
225.9
|
|
|
$
|
246.6
|
|
|
$
|
225.9
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
|
December 29,
2012 |
|
December 31,
2011 |
|
December 29,
2012 |
|
December 31,
2011 |
||||||||
|
|
|
(millions)
|
||||||||||||||
|
Beginning reserve balance
|
|
$
|
16.5
|
|
|
$
|
17.2
|
|
|
$
|
16.0
|
|
|
$
|
17.7
|
|
|
Amount recorded to expense to increase reserve
(a)
|
|
1.0
|
|
|
1.1
|
|
|
2.8
|
|
|
2.0
|
|
||||
|
Amount written off against customer accounts to decrease reserve
|
|
(0.6
|
)
|
|
(1.2
|
)
|
|
(1.7
|
)
|
|
(2.3
|
)
|
||||
|
Foreign currency translation
|
|
0.1
|
|
|
(0.5
|
)
|
|
(0.1
|
)
|
|
(0.8
|
)
|
||||
|
Ending reserve balance
|
|
$
|
17.0
|
|
|
$
|
16.6
|
|
|
$
|
17.0
|
|
|
$
|
16.6
|
|
|
|
|
(a)
|
Amounts recorded to bad debt expense are included within SG&A expenses in the unaudited interim consolidated statements of operations.
|
|
•
|
Forecasted Inventory Purchases
— Recognized as part of the cost of the inventory purchases being hedged within cost of goods sold when the related inventory is sold.
|
|
•
|
Intercompany Royalty Payments and Marketing Contributions
— Recognized within foreign currency gains (losses) generally in the period in which the related royalties or marketing contributions being hedged are received or paid.
|
|
•
|
Interest Payments on Euro Debt
— Recognized within foreign currency gains (losses) in the period in which the recorded liability impacts earnings due to foreign currency exchange remeasurement.
|
|
4.
|
Recently Issued Accounting Standards
|
|
5.
|
Inventories
|
|
|
|
December 29,
2012 |
|
March 31,
2012 |
|
December 31,
2011 |
||||||
|
|
|
(millions)
|
||||||||||
|
Raw materials
|
|
$
|
4.5
|
|
|
$
|
5.1
|
|
|
$
|
6.8
|
|
|
Work-in-process
|
|
2.1
|
|
|
1.1
|
|
|
0.8
|
|
|||
|
Finished goods
|
|
974.5
|
|
|
835.4
|
|
|
887.1
|
|
|||
|
Total inventories
|
|
$
|
981.1
|
|
|
$
|
841.6
|
|
|
$
|
894.7
|
|
|
6.
|
Property and Equipment
|
|
|
|
December 29,
2012 |
|
March 31,
2012 |
||||
|
|
|
(millions)
|
||||||
|
Land and improvements
|
|
$
|
9.9
|
|
|
$
|
9.9
|
|
|
Buildings and improvements
|
|
114.5
|
|
|
115.9
|
|
||
|
Furniture and fixtures
|
|
615.6
|
|
|
561.8
|
|
||
|
Machinery and equipment
|
|
182.4
|
|
|
157.4
|
|
||
|
Capitalized software
|
|
245.7
|
|
|
213.6
|
|
||
|
Leasehold improvements
|
|
962.2
|
|
|
915.0
|
|
||
|
Construction in progress
|
|
108.7
|
|
|
84.9
|
|
||
|
|
|
2,239.0
|
|
|
2,058.5
|
|
||
|
Less: accumulated depreciation
|
|
(1,312.6
|
)
|
|
(1,174.4
|
)
|
||
|
Property and equipment, net
|
|
$
|
926.4
|
|
|
$
|
884.1
|
|
|
7.
|
Accrued Expenses and Other Current Liabilities
|
|
|
|
December 29,
2012 |
|
March 31,
2012 |
||||
|
|
|
(millions)
|
||||||
|
Accrued operating expenses
|
|
$
|
189.5
|
|
|
$
|
175.7
|
|
|
Accrued payroll and benefits
|
|
158.3
|
|
|
227.7
|
|
||
|
Accrued inventory
|
|
151.5
|
|
|
108.0
|
|
||
|
Accrued capital expenditures
|
|
56.5
|
|
|
45.4
|
|
||
|
Deferred income
|
|
43.9
|
|
|
50.3
|
|
||
|
Other taxes payable
|
|
65.8
|
|
|
47.1
|
|
||
|
Other accrued expenses and current liabilities
|
|
16.5
|
|
|
39.5
|
|
||
|
Total accrued expenses and other current liabilities
|
|
$
|
682.0
|
|
|
$
|
693.7
|
|
|
8.
|
Impairments of Assets
|
|
9.
|
Restructuring
|
|
10.
|
Income Taxes
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
|
December 29,
2012 |
|
December 31,
2011 |
|
December 29,
2012 |
|
December 31,
2011 |
||||||||
|
|
|
(millions)
|
||||||||||||||
|
Unrecognized tax benefits beginning balance
|
|
$
|
129.5
|
|
|
$
|
124.8
|
|
|
$
|
129.0
|
|
|
$
|
125.0
|
|
|
Additions related to current period tax positions
|
|
0.7
|
|
|
0.7
|
|
|
2.3
|
|
|
2.6
|
|
||||
|
Additions related to prior period tax positions
|
|
7.5
|
|
|
3.1
|
|
|
9.1
|
|
|
3.3
|
|
||||
|
Reductions related to prior period tax positions
|
|
(23.7
|
)
|
|
(0.3
|
)
|
|
(25.2
|
)
|
|
(1.0
|
)
|
||||
|
Reductions related to settlements with taxing authorities
|
|
(10.4
|
)
|
|
—
|
|
|
(10.4
|
)
|
|
—
|
|
||||
|
Additions (reductions) related to foreign currency translation
|
|
1.1
|
|
|
(2.3
|
)
|
|
(0.1
|
)
|
|
(3.9
|
)
|
||||
|
Unrecognized tax benefits ending balance
|
|
$
|
104.7
|
|
|
$
|
126.0
|
|
|
$
|
104.7
|
|
|
$
|
126.0
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
|
December 29,
2012 |
|
December 31,
2011 |
|
December 29,
2012 |
|
December 31,
2011 |
||||||||
|
|
|
(millions)
|
||||||||||||||
|
Accrued interest and penalties beginning balance
|
|
$
|
57.0
|
|
|
$
|
35.4
|
|
|
$
|
39.0
|
|
|
$
|
31.4
|
|
|
Net additions charged to expense
|
|
1.6
|
|
|
1.8
|
|
|
21.6
|
|
(a)
|
5.9
|
|
||||
|
Reductions related to prior period tax positions
|
|
(7.2
|
)
|
|
—
|
|
|
(9.3
|
)
|
|
—
|
|
||||
|
Reductions related to settlements with taxing authorities
|
|
(1.2
|
)
|
|
—
|
|
|
(1.2
|
)
|
|
—
|
|
||||
|
Additions (reductions) related to foreign currency translation
|
|
0.7
|
|
|
(0.4
|
)
|
|
0.8
|
|
|
(0.5
|
)
|
||||
|
Accrued interest and penalties ending balance
|
|
$
|
50.9
|
|
|
$
|
36.8
|
|
|
$
|
50.9
|
|
|
$
|
36.8
|
|
|
|
|
(a)
|
Includes a reserve of
$16.8 million
for an interest assessment on a prior year withholding tax. No underlying tax exposure exists. The interest assessed was not material to the Company’s consolidated financial statements in any prior or current fiscal period, and is not expected to be material for the full Fiscal
2013
.
|
|
11.
|
Debt
|
|
•
|
Chinese Credit Facility
- During the first quarter of Fiscal 2013, Ralph Lauren Trading (Shanghai) Co., Ltd. entered into a new facility that provides for a revolving line of credit of up to
100 million
Chinese Renminbi (approximately
$16 million
) through
April 10, 2013
. The Chinese Credit Facility may also be used to support bank guarantees. Borrowings bear interest at either (i) at least
95%
of the short-term interest rate published by the People's Bank of China or (ii) a rate based on the Bank's cost of funds, as determined by JPMorgan Chase Bank (China) Company Limited, Shanghai Branch at its discretion based on prevailing market conditions.
|
|
•
|
Malaysia Credit Facility
- During the third quarter of Fiscal 2013, Ralph Lauren (Malaysia) Sdn Bhd entered into a revolving line of credit of up to
15.9 million
Malaysian Ringgit (approximately
$5 million
) through
September 13, 2013
. Borrowings bear interest at an annual rate based on JPMorgan Chase Bank Berhad's cost of funds, as determined at its discretion based on prevailing market conditions, plus
1.125%
.
|
|
•
|
South Korea Credit Facility
- During the third quarter of Fiscal 2013, Ralph Lauren (Korea) Ltd. entered into a revolving line of credit of up to
11.3 billion
South Korean Won (approximately
$11 million
) through
October 31, 2013
. Borrowings bear interest at an annual rate based on (i) at least the
91
-day South Korea Certificate of Deposit rate plus
1.125%
or (ii) a rate determined by JPMorgan Chase Bank, N.A., Seoul Branch based on its cost of funds, as determined at its discretion based on prevailing market conditions.
|
|
•
|
Taiwan Credit Facility
-
During the third quarter of Fiscal 2013, Ralph Lauren (Hong Kong) Retail Company Limited, Taiwan Branch entered into a revolving line of credit of up to
59.0 million
New Taiwan Dollars (approximately
$2 million
) through
October 23, 2013
. Borrowings bear interest at an annual rate based on JPMorgan Chase Bank, N.A., Taipei Branch's cost of funds, as determined at its discretion based on prevailing market conditions, plus
1.125%
.
|
|
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.
|
|
|
|
December 29,
2012 |
|
March 31,
2012 |
||||
|
|
|
(millions)
|
||||||
|
Financial assets recorded at fair value
(a)
:
|
|
|
|
|
||||
|
Government bonds — U.S.
|
|
$
|
22.9
|
|
|
$
|
59.4
|
|
|
Government bonds — non-U.S.
|
|
113.0
|
|
|
96.0
|
|
||
|
Corporate bonds — non-U.S.
|
|
87.8
|
|
|
99.0
|
|
||
|
Variable rate municipal securities — U.S.
|
|
18.5
|
|
|
69.2
|
|
||
|
Auction rate securities
|
|
2.3
|
|
|
2.3
|
|
||
|
Other securities
|
|
—
|
|
|
0.5
|
|
||
|
Derivative financial instruments
|
|
15.0
|
|
|
32.5
|
|
||
|
Total
|
|
$
|
259.5
|
|
|
$
|
358.9
|
|
|
Financial liabilities recorded at fair value
(b)
:
|
|
|
|
|
||||
|
Derivative financial instruments
|
|
$
|
8.2
|
|
|
$
|
2.6
|
|
|
Total
|
|
$
|
8.2
|
|
|
$
|
2.6
|
|
|
|
|
(a)
|
Based on Level 1 measurements, except for auction rate securities and derivative financial instruments, which are based on Level 2 measurements.
|
|
(b)
|
Based on Level 2 measurements.
|
|
|
|
December 29, 2012
|
|
March 31, 2012
|
||||||||||||
|
|
|
Carrying
Value
|
|
Fair
Value
(a)
|
|
Carrying
Value
|
|
Fair
Value
(a)
|
||||||||
|
|
|
(millions)
|
||||||||||||||
|
Euro Debt
|
|
$
|
274.1
|
|
|
$
|
284.0
|
|
|
$
|
274.4
|
|
|
$
|
289.4
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
|
December 29,
2012 |
|
December 31,
2011 |
|
December 29,
2012 |
|
December 31,
2011 |
||||||||
|
|
|
(millions)
|
||||||||||||||
|
Aggregate carrying value of long-lived assets written down to fair value
|
|
$
|
11.4
|
|
|
$
|
2.0
|
|
|
$
|
12.4
|
|
|
$
|
3.2
|
|
|
Impairment charge
|
|
(11.4
|
)
|
(a)
|
(2.0
|
)
|
|
(12.4
|
)
|
(a)
|
(2.2
|
)
|
||||
|
|
|
13.
|
Financial Instruments
|
|
|
|
Notional Amounts
|
|
Derivative Assets
|
|
Derivative Liabilities
|
|
||||||||||||||||||||||||||
|
Derivative Instrument
(a)
|
|
December 29, 2012
|
|
March 31, 2012
|
|
December 29, 2012
|
|
March 31, 2012
|
|
December 29, 2012
|
|
March 31, 2012
|
|
||||||||||||||||||||
|
|
|
|
|
|
|
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
|
|
$
|
340.3
|
|
|
$
|
482.2
|
|
|
(c)
|
|
$
|
11.8
|
|
|
PP
|
|
$
|
26.6
|
|
|
AE
|
|
$
|
(4.6
|
)
|
|
AE
|
|
$
|
(1.4
|
)
|
|
|
FC — I/C royalty payments
|
|
47.6
|
|
|
70.0
|
|
|
PP
|
|
1.4
|
|
|
PP
|
|
4.8
|
|
|
AE
|
|
(2.0
|
)
|
|
—
|
|
—
|
|
|
||||||
|
FC — Interest payments
|
|
—
|
|
|
12.6
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
AE
|
|
—
|
|
(d)
|
||||||
|
FC — Other
|
|
14.1
|
|
|
8.3
|
|
|
PP
|
|
0.5
|
|
|
—
|
|
—
|
|
|
AE
|
|
(0.1
|
)
|
|
AE
|
|
(0.3
|
)
|
|
||||||
|
NI — Euro Debt
|
|
274.1
|
|
|
274.4
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
STD
|
|
(284.0
|
)
|
(e)
|
LTD
|
|
(289.4
|
)
|
(e)
|
||||||
|
Total Designated Hedges
|
|
$
|
676.1
|
|
|
$
|
847.5
|
|
|
|
|
$
|
13.7
|
|
|
|
|
$
|
31.4
|
|
|
|
|
$
|
(290.7
|
)
|
|
|
|
$
|
(291.1
|
)
|
|
|
Undesignated Hedges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
FC — Other
(f)
|
|
$
|
142.2
|
|
|
$
|
158.1
|
|
|
(g)
|
|
$
|
1.3
|
|
|
(h)
|
|
$
|
1.1
|
|
|
(i)
|
|
$
|
(1.5
|
)
|
|
(j)
|
|
$
|
(0.9
|
)
|
|
|
Total Hedges
|
|
$
|
818.3
|
|
|
$
|
1,005.6
|
|
|
|
|
$
|
15.0
|
|
|
|
|
$
|
32.5
|
|
|
|
|
$
|
(292.2
|
)
|
|
|
|
$
|
(292.0
|
)
|
|
|
|
|
(a)
|
FC = Forward exchange contracts for the sale or purchase of foreign currencies; NI = Net Investment Hedge; Euro Debt = Euro-denominated
4.5%
notes due
October 4, 2013
.
|
|
(b)
|
PP = Prepaid expenses and other; OA = Other assets; AE = Accrued expenses and other; ONCL = Other non-current liabilities; STD = Current portion of long-term debt; LTD = Long-term debt.
|
|
(c)
|
$11.3 million
included within PP and
$0.5 million
included within OA.
|
|
(d)
|
The fair value of the interest payment-related derivative instrument was
less than $0.1 million
as of
March 31, 2012
.
|
|
(e)
|
The Company’s Euro Debt is reported at carrying value in the Company’s consolidated balance sheets. The carrying value of the Euro Debt was
$274.1 million
as of
December 29, 2012
and
$274.4 million
as of
March 31, 2012
.
|
|
(f)
|
Primarily related to undesignated hedges of foreign currency-denominated revenues, intercompany loans, and other net operational exposures.
|
|
(g)
|
$0.8 million
included within PP and
$0.5 million
included within OA.
|
|
(h)
|
$0.7 million
included within PP and
$0.4 million
included within OA.
|
|
(i)
|
$1.1 million
included within AE and
$0.4 million
included within ONCL.
|
|
(j)
|
$0.8 million
included within AE and
$0.1 million
included within ONCL.
|
|
|
|
Gains (Losses) Recognized in OCI
(b)
|
||||||||||||||
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
Derivative Instrument
(a)
|
|
December 29,
2012 |
|
December 31,
2011 |
|
December 29,
2012 |
|
December 31,
2011 |
||||||||
|
|
|
|
|
(millions)
|
|
|
||||||||||
|
Designated Cash Flow Hedges:
|
|
|
|
|
|
|
|
|
||||||||
|
FC — Inventory purchases
|
|
$
|
(10.9
|
)
|
|
$
|
11.3
|
|
|
$
|
(14.2
|
)
|
|
$
|
35.1
|
|
|
FC — I/C royalty payments
|
|
0.4
|
|
|
1.3
|
|
|
(5.5
|
)
|
|
5.4
|
|
||||
|
FC — Interest payments
|
|
0.4
|
|
|
(0.1
|
)
|
|
—
|
|
|
(0.5
|
)
|
||||
|
FC — Other
|
|
0.5
|
|
|
—
|
|
|
1.1
|
|
|
(1.0
|
)
|
||||
|
|
|
$
|
(9.6
|
)
|
|
$
|
12.5
|
|
|
$
|
(18.6
|
)
|
|
$
|
39.0
|
|
|
Designated Hedge of Net Investment:
|
|
|
|
|
|
|
|
|
||||||||
|
Euro Debt
|
|
$
|
(7.4
|
)
|
|
$
|
8.9
|
|
|
$
|
2.7
|
|
|
$
|
24.3
|
|
|
Total Designated Hedges
|
|
$
|
(17.0
|
)
|
|
$
|
21.4
|
|
|
$
|
(15.9
|
)
|
|
$
|
63.3
|
|
|
|
|
Gains (Losses) Reclassified from AOCI
(b)
to Earnings
|
|
Location of Gains (Losses) Reclassified from AOCI
(b)
to Earnings
|
||||||||||||||
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|||||||||||||
|
Derivative Instrument
(a)
|
|
December 29,
2012 |
|
December 31,
2011 |
|
December 29,
2012 |
|
December 31,
2011 |
|
|||||||||
|
|
|
(millions)
|
|
|
||||||||||||||
|
Designated Cash Flow Hedges:
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
FC — Inventory purchases
|
|
$
|
11.4
|
|
|
$
|
(3.2
|
)
|
|
$
|
22.2
|
|
|
$
|
(2.3
|
)
|
|
Cost of goods sold
|
|
FC — I/C royalty payments
|
|
0.6
|
|
|
(0.4
|
)
|
|
3.1
|
|
|
(3.9
|
)
|
|
Foreign currency gains (losses)
|
||||
|
FC — Interest payments
|
|
(0.2
|
)
|
|
(0.3
|
)
|
|
(0.3
|
)
|
|
(0.7
|
)
|
|
Foreign currency gains (losses)
|
||||
|
FC — Other
|
|
—
|
|
|
(0.3
|
)
|
|
(0.5
|
)
|
|
0.6
|
|
|
Foreign currency gains (losses)
|
||||
|
Total Designated Hedges
|
|
$
|
11.8
|
|
|
$
|
(4.2
|
)
|
|
$
|
24.5
|
|
|
$
|
(6.3
|
)
|
|
|
|
|
|
Gains (Losses) Recognized in Earnings
|
|
Location of Gains (Losses)
Recognized in Earnings
|
||||||||||||||
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|||||||||||||
|
Derivative Instrument
(a)
|
|
December 29,
2012 |
|
December 31,
2011 |
|
December 29,
2012 |
|
December 31,
2011 |
|
|||||||||
|
|
|
(millions)
|
|
|
||||||||||||||
|
Undesignated Hedges:
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
FC — Other
(c)
|
|
$
|
0.9
|
|
|
$
|
(0.7
|
)
|
|
$
|
(4.0
|
)
|
|
$
|
1.9
|
|
|
Foreign currency gains (losses)
|
|
Total Undesignated Hedges
|
|
$
|
0.9
|
|
|
$
|
(0.7
|
)
|
|
$
|
(4.0
|
)
|
|
$
|
1.9
|
|
|
|
|
|
|
(a)
|
FC = Forward exchange contracts for the sale or purchase of foreign currencies; Euro Debt = Euro-denominated
4.5%
notes due
October 4, 2013
.
|
|
(b)
|
AOCI, including the respective fiscal period’s OCI, is classified as a component of total equity.
|
|
(c)
|
Primarily related to undesignated hedges of foreign currency-denominated revenues, intercompany loans, and other net operational exposures.
|
|
|
|
December 29, 2012
|
|
March 31, 2012
|
||||||||||||||||||||
|
Type of Investment
|
|
Short-term
< 1 year
|
|
Non-current
1 - 3 years
|
|
Total
|
|
Short-term
< 1 year
|
|
Non-current
1 - 3 years
|
|
Total
|
||||||||||||
|
|
|
|
|
|
|
(millions)
|
|
|
|
|
||||||||||||||
|
Held-to-Maturity:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Government bonds — U.S.
|
|
$
|
0.6
|
|
|
$
|
—
|
|
|
$
|
0.6
|
|
|
$
|
3.2
|
|
|
$
|
—
|
|
|
$
|
3.2
|
|
|
Total held-to-maturity investments
|
|
$
|
0.6
|
|
|
$
|
—
|
|
|
$
|
0.6
|
|
|
$
|
3.2
|
|
|
$
|
—
|
|
|
$
|
3.2
|
|
|
Available-for-Sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Government bonds — U.S.
|
|
$
|
13.2
|
|
|
$
|
9.7
|
|
|
$
|
22.9
|
|
|
$
|
52.1
|
|
|
$
|
7.3
|
|
|
$
|
59.4
|
|
|
Government bonds — non-U.S.
|
|
83.1
|
|
|
29.9
|
|
|
113.0
|
|
|
40.4
|
|
|
55.6
|
|
|
96.0
|
|
||||||
|
Corporate bonds — non-U.S.
|
|
40.7
|
|
|
47.1
|
|
|
87.8
|
|
|
64.8
|
|
|
34.2
|
|
|
99.0
|
|
||||||
|
Variable rate municipal securities — U.S.
|
|
18.5
|
|
|
—
|
|
|
18.5
|
|
|
69.2
|
|
|
—
|
|
|
69.2
|
|
||||||
|
Auction rate securities
|
|
—
|
|
|
2.3
|
|
|
2.3
|
|
|
—
|
|
|
2.3
|
|
|
2.3
|
|
||||||
|
Other securities
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.5
|
|
|
0.5
|
|
||||||
|
Total available-for-sale investments
|
|
$
|
155.5
|
|
|
$
|
89.0
|
|
|
$
|
244.5
|
|
|
$
|
226.5
|
|
|
$
|
99.9
|
|
|
$
|
326.4
|
|
|
Other:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Time deposits
|
|
$
|
157.1
|
|
|
$
|
—
|
|
|
$
|
157.1
|
|
|
$
|
286.0
|
|
|
$
|
—
|
|
|
$
|
286.0
|
|
|
Total Investments
|
|
$
|
313.2
|
|
|
$
|
89.0
|
|
|
$
|
402.2
|
|
|
$
|
515.7
|
|
|
$
|
99.9
|
|
|
$
|
615.6
|
|
|
14.
|
Commitments and Contingencies
|
|
15.
|
Equity
|
|
|
|
Nine Months Ended
|
||||||
|
|
|
December 29,
2012 |
|
December 31,
2011 |
||||
|
|
|
(millions)
|
||||||
|
Balance at beginning of period
|
|
$
|
3,652.5
|
|
|
$
|
3,304.7
|
|
|
Comprehensive income
|
|
587.0
|
|
|
577.5
|
|
||
|
Cash dividends declared
|
|
(109.3
|
)
|
|
(55.4
|
)
|
||
|
Repurchases of common stock
|
|
(496.7
|
)
|
|
(419.4
|
)
|
||
|
Shares issued and equity grants made pursuant to stock-based compensation plans
|
|
136.2
|
|
|
122.3
|
|
||
|
Balance at end of period
|
|
$
|
3,769.7
|
|
|
$
|
3,529.7
|
|
|
16.
|
Stock-based Compensation
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
|
December 29,
2012 |
|
December 31,
2011 |
|
December 29,
2012 |
|
December 31,
2011 |
||||||||
|
|
|
(millions)
|
||||||||||||||
|
Compensation expense
|
|
$
|
22.3
|
|
|
$
|
21.2
|
|
|
$
|
65.1
|
|
|
$
|
55.2
|
|
|
Income tax benefit
|
|
$
|
(7.6
|
)
|
|
$
|
(7.3
|
)
|
|
$
|
(21.9
|
)
|
|
$
|
(19.2
|
)
|
|
|
|
Nine Months Ended
|
||||
|
|
|
December 29,
2012 |
|
December 31,
2011 |
||
|
Expected term (years)
|
|
4.6
|
|
|
4.7
|
|
|
Expected volatility
|
|
44.4
|
%
|
|
44.7
|
%
|
|
Expected dividend yield
|
|
1.05
|
%
|
|
0.73
|
%
|
|
Risk-free interest rate
|
|
0.6
|
%
|
|
1.3
|
%
|
|
Weighted-average option grant date fair value
|
|
$47.90
|
|
|
$49.06
|
|
|
|
|
Number of
Shares
|
|
|
|
|
(thousands)
|
|
|
Options outstanding at March 31, 2012
|
|
3,178
|
|
|
Granted
|
|
625
|
|
|
Exercised
|
|
(613
|
)
|
|
Cancelled/Forfeited
|
|
(49
|
)
|
|
Options outstanding at December 29, 2012
|
|
3,141
|
|
|
|
|
Restricted
Stock
|
|
Service-
based RSUs
|
||
|
|
|
Number of
Shares
|
|
Number of
Shares
|
||
|
|
|
(thousands)
|
||||
|
Nonvested at March 31, 2012
|
|
8
|
|
|
235
|
|
|
Granted
|
|
2
|
|
|
9
|
|
|
Vested
|
|
(5
|
)
|
|
(105
|
)
|
|
Forfeited
|
|
—
|
|
|
—
|
|
|
Nonvested at December 29, 2012
|
|
5
|
|
|
139
|
|
|
|
|
Number of
Shares
|
|
|
|
|
(thousands)
|
|
|
Nonvested at March 31, 2012
|
|
1,302
|
|
|
Granted
|
|
351
|
|
|
Change due to performance condition achievement
|
|
164
|
|
|
Vested
|
|
(754
|
)
|
|
Forfeited
|
|
(40
|
)
|
|
Nonvested at December 29, 2012
|
|
1,023
|
|
|
|
|
Nine Months Ended
|
|
|
|
|
December 29,
2012 |
|
|
Expected term (years)
|
|
3.0
|
|
|
Expected volatility
|
|
34.0
|
%
|
|
Expected dividend yield
|
|
1.13
|
%
|
|
Risk-free interest rate
|
|
0.3
|
%
|
|
Weighted-average grant date fair value
|
|
$136.16
|
|
|
|
|
Number of
Shares
|
|
|
|
|
(thousands)
|
|
|
Nonvested at March 31, 2012
|
|
—
|
|
|
Granted
|
|
73
|
|
|
Change due to performance or market conditions achievement
|
|
—
|
|
|
Vested
|
|
—
|
|
|
Forfeited
|
|
—
|
|
|
Nonvested at December 29, 2012
|
|
73
|
|
|
17.
|
Segment Information
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
|
December 29,
2012 |
|
December 31,
2011 |
|
December 29,
2012 |
|
December 31,
2011 |
||||||||
|
|
|
(millions)
|
||||||||||||||
|
Net revenues:
|
|
|
|
|
|
|
|
|
||||||||
|
Wholesale
|
|
$
|
733.9
|
|
|
$
|
750.0
|
|
|
$
|
2,342.5
|
|
|
$
|
2,418.5
|
|
|
Retail
|
|
1,062.0
|
|
|
1,006.0
|
|
|
2,820.2
|
|
|
2,680.8
|
|
||||
|
Licensing
|
|
50.2
|
|
|
49.6
|
|
|
138.8
|
|
|
137.3
|
|
||||
|
Total net revenues
|
|
$
|
1,846.1
|
|
|
$
|
1,805.6
|
|
|
$
|
5,301.5
|
|
|
$
|
5,236.6
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
|
December 29,
2012 |
|
December 31,
2011 |
|
December 29,
2012 |
|
December 31,
2011 |
||||||||
|
|
|
(millions)
|
||||||||||||||
|
Operating income:
|
|
|
|
|
|
|
|
|
||||||||
|
Wholesale
(a)
|
|
$
|
144.9
|
|
|
$
|
112.6
|
|
|
$
|
531.3
|
|
|
$
|
503.9
|
|
|
Retail
(b)
|
|
201.2
|
|
|
193.3
|
|
|
537.2
|
|
|
510.3
|
|
||||
|
Licensing
(c)
|
|
37.0
|
|
|
35.9
|
|
|
101.3
|
|
|
99.2
|
|
||||
|
|
|
383.1
|
|
|
341.8
|
|
|
1,169.8
|
|
|
1,113.4
|
|
||||
|
Unallocated corporate expenses
|
|
(76.1
|
)
|
|
(70.1
|
)
|
|
(221.7
|
)
|
|
(208.1
|
)
|
||||
|
Unallocated restructuring charges, net
(d)
|
|
(2.6
|
)
|
|
(1.6
|
)
|
|
(3.4
|
)
|
|
(2.3
|
)
|
||||
|
Total operating income
|
|
$
|
304.4
|
|
|
$
|
270.1
|
|
|
$
|
944.7
|
|
|
$
|
903.0
|
|
|
|
|
(a)
|
During the three-month and nine-month periods ended December 31, 2011, the Company recorded non-cash asset impairment charges of
$0.4 million
related to the write off of long-lived assets due to the termination of a wholesale selling relationship.
|
|
(b)
|
During the three-month and nine-month periods ended December 29, 2012, the Company recorded non-cash asset impairment charges of
$9.7 million
and
$10.7 million
, respectively, to write down certain long-lived assets within its Retail segment, primarily in connection with the Rugby Closure Plan. During the three-month and nine-month periods ended December 31, 2011, the Company recorded asset impairment charges of
$1.6 million
and
$1.8 million
, respectively, primarily to reduce the carrying value of the long-lived assets of certain underperforming European retail stores to their estimated fair values.
|
|
(c)
|
During the three-month and nine-month periods ended December 29, 2012, the Company recorded non-cash asset impairment charges of
$1.7 million
related to the write-off of certain intangible assets in connection with the Rugby Closure Plan.
|
|
(d)
|
The fiscal periods presented included certain unallocated restructuring charges (See
Note 9
), which are detailed below:
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
|
December 29,
2012 |
|
December 31,
2011 |
|
December 29,
2012 |
|
December 31,
2011 |
||||||||
|
|
|
(millions)
|
||||||||||||||
|
Restructuring reversals (charges), net:
|
|
|
|
|
|
|
|
|
||||||||
|
Wholesale-related
|
|
$
|
(0.1
|
)
|
|
$
|
(0.8
|
)
|
|
$
|
0.3
|
|
|
$
|
(0.9
|
)
|
|
Retail-related
|
|
(1.8
|
)
|
|
(0.6
|
)
|
|
(2.8
|
)
|
|
(1.1
|
)
|
||||
|
Corporate operations-related
|
|
(0.7
|
)
|
|
(0.2
|
)
|
|
(0.9
|
)
|
|
(0.3
|
)
|
||||
|
Unallocated restructuring charges, net
|
|
$
|
(2.6
|
)
|
|
$
|
(1.6
|
)
|
|
$
|
(3.4
|
)
|
|
$
|
(2.3
|
)
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
|
December 29,
2012 |
|
December 31,
2011 |
|
December 29,
2012 |
|
December 31,
2011 |
||||||||
|
|
|
(millions)
|
||||||||||||||
|
Depreciation and amortization:
|
|
|
|
|
|
|
|
|
||||||||
|
Wholesale
|
|
$
|
17.9
|
|
|
$
|
16.7
|
|
|
$
|
51.9
|
|
|
$
|
48.5
|
|
|
Retail
|
|
30.9
|
|
|
29.6
|
|
|
86.7
|
|
|
86.1
|
|
||||
|
Licensing
|
|
0.3
|
|
|
0.2
|
|
|
0.8
|
|
|
0.8
|
|
||||
|
Unallocated corporate expenses
|
|
11.5
|
|
|
10.3
|
|
|
34.6
|
|
|
32.8
|
|
||||
|
Total depreciation and amortization
|
|
$
|
60.6
|
|
|
$
|
56.8
|
|
|
$
|
174.0
|
|
|
$
|
168.2
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
|
December 29,
2012 |
|
December 31,
2011 |
|
December 29,
2012 |
|
December 31,
2011 |
||||||||
|
|
|
(millions)
|
||||||||||||||
|
Net revenues:
|
|
|
|
|
|
|
|
|
||||||||
|
The Americas
(a)
|
|
$
|
1,260.8
|
|
|
$
|
1,213.2
|
|
|
$
|
3,557.3
|
|
|
$
|
3,376.3
|
|
|
Europe
(a)
|
|
352.3
|
|
|
333.4
|
|
|
1,062.8
|
|
|
1,116.7
|
|
||||
|
Asia
|
|
233.0
|
|
|
259.0
|
|
|
681.4
|
|
|
743.6
|
|
||||
|
Total net revenues
|
|
$
|
1,846.1
|
|
|
$
|
1,805.6
|
|
|
$
|
5,301.5
|
|
|
$
|
5,236.6
|
|
|
|
|
(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.
|
|
18.
|
Additional Financial Information
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
|
December 29,
2012 |
|
December 31,
2011 |
|
December 29,
2012 |
|
December 31,
2011 |
||||||||
|
|
|
(millions)
|
||||||||||||||
|
Cash paid for interest
|
|
$
|
14.4
|
|
|
$
|
14.4
|
|
|
$
|
17.1
|
|
|
$
|
21.5
|
|
|
Cash paid for income taxes
|
|
$
|
32.6
|
|
|
$
|
69.8
|
|
|
$
|
239.5
|
|
|
$
|
95.1
|
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
|
|
•
|
the loss of key personnel, including Mr. Ralph Lauren;
|
|
•
|
the impact of global economic conditions, including the ongoing sovereign debt crisis and credit downgrades, on us, our customers, our suppliers and our vendors, and on our ability and their ability to access sources of liquidity;
|
|
•
|
our ability to successfully implement our anticipated growth strategies and capitalize on our repositioning initiatives in certain merchandise categories;
|
|
•
|
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 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 improve the efficiency of our distribution system and to continue to enhance and upgrade our global information technology systems;
|
|
•
|
our ability to make certain strategic acquisitions of certain selected licenses held by our licensees and successfully integrate acquired businesses, including our operations in Asia and South America;
|
|
•
|
our exposure to domestic and foreign currency fluctuations and risks associated with raw materials, transportation and labor costs;
|
|
•
|
the impact of fluctuations in the U.S. or global economy on consumer purchases of premium lifestyle products that we offer for sale and our ability to forecast consumer demand;
|
|
•
|
our ability to open new retail stores, concession shops and e-commerce websites, and expand our direct-to-consumer presence;
|
|
•
|
our intention to introduce new products or enter into or renew alliances and exclusive relationships;
|
|
•
|
our ability to access sources of liquidity to provide for our cash needs, including debt obligations, and continue to pay dividends and repurchase Class A common stock;
|
|
•
|
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;
|
|
•
|
changes to our anticipated effective tax rates in future years;
|
|
•
|
our ability to continue to maintain our brand image and reputation and protect our trademarks;
|
|
•
|
changes in our relationships with department store customers and licensing partners;
|
|
•
|
our ability to maintain our credit profile and ratings with the financial community;
|
|
•
|
the potential impact on our operations and customers resulting from natural or man-made disasters;
|
|
•
|
the impact to our business of events that are currently taking place in the Middle East, as well as from any terrorist action, retaliation and the threat of further action or retaliation; and
|
|
•
|
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, to which our international operations are subject and other risks associated with our international operations, such as violations of 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.
|
|
•
|
Overview.
This section provides a general description of our business, global economic developments, and a summary of our financial performance for the
three-month and nine-month periods ended
December 29, 2012
. 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 and nine-month periods ended
December 29, 2012
and
December 31, 2011
.
|
|
•
|
Financial condition and liquidity.
This section provides an analysis of our cash flows for the
nine-month periods ended
December 29, 2012
and
December 31, 2011
, as well as a discussion of our financial condition and liquidity as of
December 29, 2012
as compared to the end of Fiscal 2012. The discussion of our financial condition and liquidity includes (i) a discussion of our financial position compared to the end of Fiscal 2012, (ii) the available financial capacity under our credit facilities, (iii) a summary of our key debt compliance measures, and (iv) any material changes in our financial condition and contractual obligations since the end of Fiscal 2012.
|
|
•
|
Market risk management.
This section discusses any significant changes in our interest rate, foreign currency and investment risk exposures, the types of derivative instruments used to hedge those exposures, and/or underlying market conditions since the end of Fiscal 2012.
|
|
•
|
Critical accounting policies.
This section discusses any significant changes in our accounting policies since the end of Fiscal 2012. Significant changes include those considered to be important to our financial condition and results of operations and which 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 to our audited consolidated financial statements as included in our Fiscal 2012 10-K.
|
|
•
|
Recently issued accounting standards.
This section discusses the potential impact to our consolidated financial statements of certain accounting standards that have been recently issued or proposed.
|
|
•
|
certain pretax charges related to asset impairments and restructurings during fiscal periods presented, including $12.9 million in charges associated with the Rugby Closure Plan, as detailed below;
|
|
•
|
an income tax benefit of $15.4 million recognized during the three-months ended December 29, 2012 in connection with the settlement of a tax examination for the taxable years ended March 29, 2008 through April 3, 2010, recorded within our provision for income taxes. During the nine-months ended December 29, 2012, this benefit was more than offset by the inclusion of a reserve of $15.5 million for an interest assessment on a prior year withholding tax;
|
|
•
|
the restructuring plan initiated in May 2011 to reposition and upgrade our existing distribution network and merchandising operations in the Asia-Pacific region, which includes mainland China, Macau, Hong Kong, Taiwan, Malaysia, Singapore, Japan and South Korea (the “Asia-Pacific Restructuring Plan”). This plan included the closure of approximately 95 owned and licensed stores and concession shops in the Greater China and Southeast Asia region that do not support the new merchandising strategy, primarily during the fourth quarter of Fiscal 2012; and
|
|
•
|
the discontinuance of the majority of products sold under the American Living brand effective for the Fall 2012 selling season (see “
Recent Developments
”).
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
|
December 29,
2012 |
|
December 31,
2011 |
|
December 29,
2012 |
|
December 31,
2011 |
||||||||
|
|
|
(millions)
|
||||||||||||||
|
Impairments of assets (see Note 8)
|
|
$
|
(11.4
|
)
|
|
$
|
(2.0
|
)
|
|
$
|
(12.4
|
)
|
|
$
|
(2.2
|
)
|
|
Restructuring charges (see Note 9)
|
|
(2.6
|
)
|
|
(1.6
|
)
|
|
(3.4
|
)
|
|
(2.3
|
)
|
||||
|
|
|
$
|
(14.0
|
)
|
|
$
|
(3.6
|
)
|
|
$
|
(15.8
|
)
|
|
$
|
(4.5
|
)
|
|
•
|
During the third quarter, we broadened our e-commerce presence in Europe by expanding our existing retail site in France to service customers in Italy, Greece, Spain and Portugal.
|
|
•
|
During the second quarter, we expanded our global e-commerce presence by launching a new retail site for our
Ralph Lauren
business in Japan located at www.RalphLauren.co.jp.
|
|
•
|
During the first quarter, we broadened our e-commerce presence in North America by launching a new retail site for our
Club Monaco
business in Canada located at www.ClubMonaco.ca.
|
|
|
|
Three Months Ended
|
|
|
|
|
||||||||
|
|
|
December 29,
2012 |
|
December 31,
2011 |
|
$
Change
|
|
% / bps
Change
|
||||||
|
|
|
(millions, except per share data)
|
|
|
||||||||||
|
Net revenues
|
|
$
|
1,846.1
|
|
|
$
|
1,805.6
|
|
|
$
|
40.5
|
|
|
2.2%
|
|
Cost of goods sold
(a)
|
|
(752.0
|
)
|
|
(774.0
|
)
|
|
22.0
|
|
|
(2.8%)
|
|||
|
Gross profit
|
|
1,094.1
|
|
|
1,031.6
|
|
|
62.5
|
|
|
6.1%
|
|||
|
Gross profit as % of net revenues
|
|
59.3
|
%
|
|
57.1
|
%
|
|
|
|
220 bps
|
||||
|
Selling, general and administrative expenses
(a)
|
|
(768.9
|
)
|
|
(750.7
|
)
|
|
(18.2
|
)
|
|
2.4%
|
|||
|
SG&A expenses as % of net revenues
|
|
41.6
|
%
|
|
41.6
|
%
|
|
|
|
-
|
||||
|
Amortization of intangible assets
|
|
(6.8
|
)
|
|
(7.2
|
)
|
|
0.4
|
|
|
(5.6%)
|
|||
|
Impairment of assets
|
|
(11.4
|
)
|
|
(2.0
|
)
|
|
(9.4
|
)
|
|
NM
|
|||
|
Restructuring charges
|
|
(2.6
|
)
|
|
(1.6
|
)
|
|
(1.0
|
)
|
|
62.5%
|
|||
|
Operating income
|
|
304.4
|
|
|
270.1
|
|
|
34.3
|
|
|
12.7%
|
|||
|
Operating income as % of net revenues
|
|
16.5
|
%
|
|
15.0
|
%
|
|
|
|
150 bps
|
||||
|
Foreign currency gains (losses)
|
|
(3.9
|
)
|
|
(2.2
|
)
|
|
(1.7
|
)
|
|
77.3%
|
|||
|
Interest expense
|
|
(5.6
|
)
|
|
(6.3
|
)
|
|
0.7
|
|
|
(11.1%)
|
|||
|
Interest and other income, net
|
|
1.5
|
|
|
2.7
|
|
|
(1.2
|
)
|
|
(44.4%)
|
|||
|
Equity in income (loss) of equity-method investees
|
|
(1.8
|
)
|
|
(2.2
|
)
|
|
0.4
|
|
|
(18.2%)
|
|||
|
Income before provision for income taxes
|
|
294.6
|
|
|
262.1
|
|
|
32.5
|
|
|
12.4%
|
|||
|
Provision for income taxes
|
|
(78.9
|
)
|
|
(93.1
|
)
|
|
14.2
|
|
|
(15.3%)
|
|||
|
Effective tax rate
(b)
|
|
26.8
|
%
|
|
35.5
|
%
|
|
|
|
(870 bps)
|
||||
|
Net income attributable to RLC
|
|
$
|
215.7
|
|
|
$
|
169.0
|
|
|
$
|
46.7
|
|
|
27.6%
|
|
Net income per common share attributable to RLC:
|
|
|
|
|
|
|
|
|
||||||
|
Basic
|
|
$
|
2.37
|
|
|
$
|
1.83
|
|
|
$
|
0.54
|
|
|
29.5%
|
|
Diluted
|
|
$
|
2.31
|
|
|
$
|
1.78
|
|
|
$
|
0.53
|
|
|
29.8%
|
|
|
|
(a)
|
Includes total depreciation expense of
$53.8 million
and
$49.6 million
for the three-month periods ended
December 29, 2012
and
December 31, 2011
, respectively.
|
|
(b)
|
Effective tax rate is calculated by dividing the provision for income taxes by income before provision for income taxes.
|
|
|
|
Three Months Ended
|
|
|
|
|
||||||||
|
|
|
December 29,
2012 |
|
December 31,
2011 |
|
$
Change
|
|
%
Change
|
||||||
|
|
|
|
|
(millions)
|
|
|
|
|
||||||
|
Net Revenues:
|
|
|
|
|
|
|
|
|
||||||
|
Wholesale
|
|
$
|
733.9
|
|
|
$
|
750.0
|
|
|
$
|
(16.1
|
)
|
|
(2.1%)
|
|
Retail
|
|
1,062.0
|
|
|
1,006.0
|
|
|
56.0
|
|
|
5.6%
|
|||
|
Licensing
|
|
50.2
|
|
|
49.6
|
|
|
0.6
|
|
|
1.2%
|
|||
|
Total net revenues
|
|
$
|
1,846.1
|
|
|
$
|
1,805.6
|
|
|
$
|
40.5
|
|
|
2.2%
|
|
•
|
a $7 million net decrease in revenues due to net unfavorable foreign currency effects primarily related to the weakening of the Euro and the Yen against the U.S. Dollar during the
third quarter
of Fiscal
2013
, compared to the related prior fiscal year period;
|
|
•
|
a $7 million net decrease related to our Japanese businesses on a constant currency basis, primarily due to the effect of a business model shift to the retail concessions-based channel; and
|
|
•
|
a $5 million net decrease related to our European businesses on a constant currency basis driven by reduced shipments across our womenswear and childrenswear product lines reflecting the challenging European retail environment and continued softening in the specialty store business, particularly in Southern Europe. These decreases were partially offset by increased sales from our accessories product lines (including footwear), driven by new product offerings and an increased department store presence.
|
|
•
|
a $4 million net increase related to our businesses in the Americas, primarily driven by higher menswear and womenswear revenues due in part to increased presence at department store locations (including our business in Canada and our recently transitioned business in Panama), partially offset by the discontinuance of the majority of the product categories sold under the
American Living
brand sold to JCPenney and lower revenues from our childrenswear business.
|
|
•
|
a $30 million, or 4%, aggregate net increase in consolidated comparable store sales, primarily driven by increases from our European and North American factory stores and our Ralph Lauren e-commerce operations, partially offset by decreases in concession shops in Asia and the unfavorable impact of Hurricane Sandy on our affected retail stores in North America. Our consolidated comparable store sales included a net aggregate unfavorable foreign currency effect of approximately $3 million, primarily due to the weakening of the Japanese Yen, partially offset by the strengthening of the South Korean Won against the U.S. Dollar during the third quarter of Fiscal 2013 as compared to the third quarter of Fiscal 2012; and
|
|
•
|
a $26 million, or 16%, aggregate net increase in non-comparable store sales driven by a number of new brick and mortar store openings over the past twelve months, as well as the growth of our e-commerce operations through our recently launched Ralph Lauren e-commerce sites in Germany and Japan and
Club Monaco
e-commerce sites in North America, which more than offset the impact of store closings in the Asia-Pacific region due to our network repositioning initiative.
|
|
|
|
December 29,
2012 |
|
|
Brick and Mortar Stores:
|
|
|
|
|
Freestanding stores
|
|
399
|
|
|
Concession shops
|
|
508
|
|
|
Total brick and mortar stores
|
|
907
|
|
|
|
|
|
|
|
E-commerce Sites:
|
|
|
|
|
North American sites
(a)
|
|
4
|
|
|
European sites
(b)
|
|
3
|
|
|
Asian site
(c)
|
|
1
|
|
|
Total e-commerce sites
|
|
8
|
|
|
|
|
(a)
|
Servicing the U.S. and Canada.
|
|
(b)
|
Servicing Austria, Belgium, France, Germany, Greece, Italy, Luxembourg, the Netherlands, Portugal, Spain, and the United Kingdom.
|
|
(c)
|
Servicing Japan.
|
|
•
|
increased compensation-related costs of approximately $8 million primarily related to higher salaries associated with the increase in retail sales and higher incentive-based compensation costs;
|
|
•
|
increased depreciation expense of approximately $4 million primarily associated with our business growth;
|
|
•
|
increased rent and occupancy-related costs of approximately $3 million to support our business growth; and
|
|
•
|
higher selling costs of approximately $2 million to support our retail business growth.
|
|
|
|
Three Months Ended
|
|
|
|
|
||||||||||||
|
|
December 29, 2012
|
|
December 31, 2011
|
|
|
|
|
|||||||||||
|
|
Operating
Income
|
|
Operating
Margin
|
|
Operating
Income
|
|
Operating
Margin
|
|
$
Change
|
|
Margin
Change
|
|||||||
|
|
(millions)
|
|
|
|
(millions)
|
|
|
|
(millions)
|
|
|
|||||||
|
Segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Wholesale
|
|
$
|
144.9
|
|
|
19.7%
|
|
$
|
112.6
|
|
|
15.0%
|
|
$
|
32.3
|
|
|
470 bps
|
|
Retail
|
|
201.2
|
|
|
18.9%
|
|
193.3
|
|
|
19.2%
|
|
7.9
|
|
|
(30 bps)
|
|||
|
Licensing
|
|
37.0
|
|
|
73.7%
|
|
35.9
|
|
|
72.4%
|
|
1.1
|
|
|
130 bps
|
|||
|
|
|
383.1
|
|
|
|
|
341.8
|
|
|
|
|
41.3
|
|
|
|
|||
|
Unallocated corporate expenses
|
|
(76.1
|
)
|
|
|
|
(70.1
|
)
|
|
|
|
(6.0
|
)
|
|
|
|||
|
Unallocated restructuring charges, net
|
|
(2.6
|
)
|
|
|
|
(1.6
|
)
|
|
|
|
(1.0
|
)
|
|
|
|||
|
Total operating income
|
|
$
|
304.4
|
|
|
16.5%
|
|
$
|
270.1
|
|
|
15.0%
|
|
$
|
34.3
|
|
|
150 bps
|
|
|
|
Nine Months Ended
|
|
|
|
|
|||||||||
|
|
|
December 29,
2012 |
|
December 31,
2011 |
|
$
Change
|
|
% / bps
Change
|
|||||||
|
|
|
(millions, except per share data)
|
|
|
|||||||||||
|
Net revenues
|
|
$
|
5,301.5
|
|
|
$
|
5,236.6
|
|
|
$
|
64.9
|
|
|
1.2
|
%
|
|
Cost of goods sold
(a)
|
|
(2,120.0
|
)
|
|
(2,164.9
|
)
|
|
44.9
|
|
|
(2.1
|
%)
|
|||
|
Gross profit
|
|
3,181.5
|
|
|
3,071.7
|
|
|
109.8
|
|
|
3.6
|
%
|
|||
|
Gross profit as % of net revenues
|
|
60.0
|
%
|
|
58.7
|
%
|
|
|
|
130 bps
|
|
||||
|
Selling, general and administrative expenses
(a)
|
|
(2,200.7
|
)
|
|
(2,142.4
|
)
|
|
(58.3
|
)
|
|
2.7
|
%
|
|||
|
SG&A expenses as % of net revenues
|
|
41.5
|
%
|
|
40.9
|
%
|
|
|
|
60 bps
|
|
||||
|
Amortization of intangible assets
|
|
(20.3
|
)
|
|
(21.8
|
)
|
|
1.5
|
|
|
(6.9
|
%)
|
|||
|
Impairment of assets
|
|
(12.4
|
)
|
|
(2.2
|
)
|
|
(10.2
|
)
|
|
NM
|
|
|||
|
Restructuring charges
|
|
(3.4
|
)
|
|
(2.3
|
)
|
|
(1.1
|
)
|
|
47.8
|
%
|
|||
|
Operating income
|
|
944.7
|
|
|
903.0
|
|
|
41.7
|
|
|
4.6
|
%
|
|||
|
Operating income as % of net revenues
|
|
17.8
|
%
|
|
17.2
|
%
|
|
|
|
60 bps
|
|
||||
|
Foreign currency gains (losses)
|
|
(7.0
|
)
|
|
(4.2
|
)
|
|
(2.8
|
)
|
|
66.7
|
%
|
|||
|
Interest expense
|
|
(16.5
|
)
|
|
(18.8
|
)
|
|
2.3
|
|
|
(12.2
|
%)
|
|||
|
Interest and other income, net
|
|
4.1
|
|
|
9.3
|
|
|
(5.2
|
)
|
|
(55.9
|
%)
|
|||
|
Equity in income (loss) of equity-method investees
|
|
(4.6
|
)
|
|
(5.2
|
)
|
|
0.6
|
|
|
(11.5
|
%)
|
|||
|
Income before provision for income taxes
|
|
920.7
|
|
|
884.1
|
|
|
36.6
|
|
|
4.1
|
%
|
|||
|
Provision for income taxes
|
|
(297.9
|
)
|
|
(297.5
|
)
|
|
(0.4
|
)
|
|
0.1
|
%
|
|||
|
Effective tax rate
(b)
|
|
32.4
|
%
|
|
33.7
|
%
|
|
|
|
(130 bps)
|
|
||||
|
Net income attributable to RLC
|
|
$
|
622.8
|
|
|
$
|
586.6
|
|
|
$
|
36.2
|
|
|
6.2
|
%
|
|
Net income per common share attributable to RLC:
|
|
|
|
|
|
|
|
|
|||||||
|
Basic
|
|
$
|
6.80
|
|
|
$
|
6.32
|
|
|
$
|
0.48
|
|
|
7.6
|
%
|
|
Diluted
|
|
$
|
6.63
|
|
|
$
|
6.14
|
|
|
$
|
0.49
|
|
|
8.0
|
%
|
|
|
|
(a)
|
Includes total depreciation expense of
$153.7 million
and
$146.4 million
for the nine-month periods ended
December 29, 2012
and
December 31, 2011
, respectively.
|
|
(b)
|
Effective tax rate is calculated by dividing the provision for income taxes by income before provision for income taxes.
|
|
|
|
Nine Months Ended
|
|
|
|
|
|||||||||
|
|
|
December 29,
2012 |
|
December 31,
2011 |
|
$
Change
|
|
%
Change
|
|||||||
|
|
|
|
|
|
|
|
|
|
|||||||
|
Net Revenues:
|
|
|
|
|
|
|
|
|
|||||||
|
Wholesale
|
|
$
|
2,342.5
|
|
|
$
|
2,418.5
|
|
|
$
|
(76.0
|
)
|
|
(3.1
|
%)
|
|
Retail
|
|
2,820.2
|
|
|
2,680.8
|
|
|
139.4
|
|
|
5.2
|
%
|
|||
|
Licensing
|
|
138.8
|
|
|
137.3
|
|
|
1.5
|
|
|
1.1
|
%
|
|||
|
Total net revenues
|
|
$
|
5,301.5
|
|
|
$
|
5,236.6
|
|
|
$
|
64.9
|
|
|
1.2
|
%
|
|
•
|
a $61 million net decrease related to our European businesses on a constant currency basis driven by reduced shipments across our core menswear, womenswear and childrenswear product lines due to timing and also reflecting the challenging European retail environment and softness in the specialty store business, particularly in Southern Europe. These decreases were partially offset by increased sales from our accessories product lines (including footwear), driven by new product offerings and an increased department store presence;
|
|
•
|
a $50 million net decrease in revenues due to net unfavorable foreign currency effects primarily related to the weakening of the Euro against the U.S. Dollar during the
nine months ended
December 29, 2012
, compared to the related prior fiscal year period;
|
|
•
|
a $16 million net decrease related to our Japanese businesses on a constant currency basis, primarily due to the effect of a business model shift to the retail concessions-based channel; and
|
|
•
|
a $7 million net decrease related to our businesses in the Greater China and Southeast Asia region on a constant currency basis, primarily due to the elimination of certain third-party distribution in connection with our repositioning efforts in the region as part of the Asia-Pacific Restructuring Plan, largely during the fourth quarter of Fiscal 2012.
|
|
•
|
a $58 million net increase related to our businesses in the Americas reflecting higher menswear and womenswear revenues, due in part to an increased presence at department store locations (including our business in Canada and our recently transitioned business in Panama) and additional product line offerings (including the
Denim & Supply Ralph Lauren
product line launched during the second quarter of Fiscal 2012), partially offset by declines due to the discontinuance of the majority of the product categories sold under the
American Living
brand sold to JCPenney. The revenue increase was also due to incremental Home product revenues related to our assumption of control over the distribution of the previously licensed bedding and bath business on May 1, 2011, which was partially offset by lower revenues from our childrenswear product line.
|
|
•
|
a $66 million, or a 3%, aggregate net increase in consolidated comparable store sales, primarily driven by increases from our North American and European factory stores and our Ralph Lauren e-commerce operations, partially offset by decreases in comparable store sales from our North American and European Ralph Lauren brick and mortar stores and concession shops in Asia. Our consolidated comparable store sales included a net aggregate unfavorable foreign currency effect of approximately $30 million, primarily due to the weakening of the Euro, the Japanese Yen, and the South Korean Won against the U.S. Dollar during the
nine months ended
December 29, 2012
as compared to the related prior fiscal year period. Excluding the effect of foreign currency, our consolidated comparable store sales increased by 4% during the
nine months ended
December 29, 2012
as compared to the
nine months ended
December 31, 2011
; and
|
|
•
|
a $73 million, or an 18%, aggregate net increase in non-comparable store sales driven by a number of new brick and mortar store openings over the past twelve months and the growth of our e-commerce operations through our recently launched Ralph Lauren e-commerce sites in Germany and Japan and
Club Monaco
e-commerce sites in North America, which more than offset the impact of store closings in the Asia-Pacific region due to our network repositioning initiative. This increase is net of an aggregate unfavorable foreign currency effect of approximately $7 million, which was attributable to the weakening of the Euro against the U.S. Dollar during the
nine months ended
December 29, 2012
as compared to the related prior fiscal year period.
|
|
•
|
increased compensation-related costs of approximately $22 million primarily related to higher salaries associated with the increase in retail sales and higher stock-based compensation costs;
|
|
•
|
increased brand-related marketing, advertising and promotional costs of approximately $9 million;
|
|
•
|
higher selling costs of approximately $8 million to support our retail business growth;
|
|
•
|
higher shipping, warehousing and distribution expenses of approximately $6 million to support increased sales;
|
|
•
|
increased depreciation expense of approximately $7 million primarily associated with our business expansion; and
|
|
•
|
increased rent and occupancy-related costs of approximately $3 million to support our business growth.
|
|
|
|
Nine Months Ended
|
|
|
|
|
||||||||||||
|
|
December 29, 2012
|
|
December 31, 2011
|
|
|
|
|
|||||||||||
|
|
Operating
Income
|
|
Operating
Margin
|
|
Operating
Income
|
|
Operating
Margin
|
|
$
Change
|
|
Margin
Change
|
|||||||
|
|
(millions)
|
|
|
|
(millions)
|
|
|
|
(millions)
|
|
|
|||||||
|
Segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Wholesale
|
|
$
|
531.3
|
|
|
22.7%
|
|
$
|
503.9
|
|
|
20.8%
|
|
$
|
27.4
|
|
|
190 bps
|
|
Retail
|
|
537.2
|
|
|
19.0%
|
|
510.3
|
|
|
19.0%
|
|
26.9
|
|
|
0 bps
|
|||
|
Licensing
|
|
101.3
|
|
|
73.0%
|
|
99.2
|
|
|
72.3%
|
|
2.1
|
|
|
70 bps
|
|||
|
|
|
1,169.8
|
|
|
|
|
1,113.4
|
|
|
|
|
56.4
|
|
|
|
|||
|
Unallocated corporate expenses
|
|
(221.7
|
)
|
|
|
|
(208.1
|
)
|
|
|
|
(13.6
|
)
|
|
|
|||
|
Unallocated restructuring charges, net
|
|
(3.4
|
)
|
|
|
|
(2.3
|
)
|
|
|
|
(1.1
|
)
|
|
|
|||
|
Total operating income
|
|
$
|
944.7
|
|
|
17.8%
|
|
$
|
903.0
|
|
|
17.2%
|
|
$
|
41.7
|
|
|
60 bps
|
|
|
|
December 29,
2012 |
|
March 31,
2012 |
|
$
Change |
||||||
|
|
|
(millions)
|
||||||||||
|
Cash and cash equivalents
|
|
$
|
999.1
|
|
|
$
|
671.6
|
|
|
$
|
327.5
|
|
|
Short-term investments
|
|
313.2
|
|
|
515.7
|
|
|
(202.5
|
)
|
|||
|
Non-current investments
|
|
89.0
|
|
|
99.9
|
|
|
(10.9
|
)
|
|||
|
Current portion of long-term debt
|
|
(274.1
|
)
|
|
—
|
|
|
(274.1
|
)
|
|||
|
Long-term debt
|
|
—
|
|
|
(274.4
|
)
|
|
274.4
|
|
|||
|
Net cash and investments
(a)
|
|
$
|
1,127.2
|
|
|
$
|
1,012.8
|
|
|
$
|
114.4
|
|
|
Equity
|
|
$
|
3,769.7
|
|
|
$
|
3,652.5
|
|
|
$
|
117.2
|
|
|
|
|
(a)
|
“Net cash and investments” is defined as cash and cash equivalents plus short-term and non-current investments, less total debt.
|
|
|
|
Nine Months Ended
|
|
|
||||||||
|
|
|
December 29,
2012 |
|
December 31,
2011 |
|
$
Change |
||||||
|
|
|
(millions)
|
||||||||||
|
Net cash provided by operating activities
|
|
$
|
897.3
|
|
|
$
|
784.2
|
|
|
$
|
113.1
|
|
|
Net cash provided by (used in) investing activities
|
|
(7.2
|
)
|
|
9.2
|
|
|
(16.4
|
)
|
|||
|
Net cash used in financing activities
|
|
(562.5
|
)
|
|
(421.1
|
)
|
|
(141.4
|
)
|
|||
|
Effect of exchange rate changes on cash and cash equivalents
|
|
(0.1
|
)
|
|
(9.5
|
)
|
|
9.4
|
|
|||
|
Net increase in cash and cash equivalents
|
|
$
|
327.5
|
|
|
$
|
362.8
|
|
|
$
|
(35.3
|
)
|
|
•
|
an increase related to accounts receivable primarily due to higher cash collections during the nine months ended December 29, 2012;
|
|
•
|
an increase related to inventories primarily attributable to the timing of inventory receipts; and
|
|
•
|
an increase in net income before depreciation, amortization, stock-based compensation and other non-cash items.
|
|
•
|
a decrease related to income taxes due to the timing of income tax payments.
|
|
•
|
an increase in cash used in connection with capital expenditures. During the
nine months ended December 29, 2012
, we spent
$195.0 million
for capital expenditures as compared to
$160.1 million
during the
nine months ended December 31, 2011
. Our capital expenditures were primarily associated with global retail store expansion, store renovations, investments in our facilities and enhancements to our global information technology systems.
|
|
•
|
an increase in proceeds from sales and maturities of investments, less cash used to purchase investments. During the
nine months ended December 29, 2012
, we received
$950.7 million
of proceeds from sales and maturities of investments and used
$751.9 million
to purchase investments. On a comparative basis, during the
nine months ended December 31, 2011
, we received
$1.248 billion
of proceeds from sales and maturities of investments and used
$1.070 billion
to purchase investments.
|
|
•
|
an increase in cash used in connection with repurchases of our Class A common stock. During the
nine months ended December 29, 2012
,
3.0 million
shares of Class A common stock at a cost of
$450.0 million
were repurchased pursuant to our common stock repurchase program and
0.4 million
shares of Class A common stock at a cost of
$46.7 million
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 2010 Long-Term Stock Incentive Plan (the “2010 Incentive Plan”). On a comparative basis, during the
nine months ended December 31, 2011
,
3.2 million
shares of Class A common stock at a cost of
$395.1 million
were repurchased pursuant to our common stock repurchase program and
0.2 million
shares of Class A common stock at a cost of
$24.3 million
were surrendered or withheld for taxes; and
|
|
•
|
an increase in cash used to pay dividends. During the
nine months ended December 29, 2012
, we used
$127.8 million
to pay dividends as compared to
$55.8 million
during the
nine months ended December 31, 2011
.
|
|
•
|
Chinese Credit Facility
- During the first quarter of Fiscal 2013, Ralph Lauren Trading (Shanghai) Co., Ltd. entered into a new facility that provides for a revolving line of credit of up to
100 million
Chinese Renminbi (approximately
$16 million
) through
April 10, 2013
. The Chinese Credit Facility may also be used to support bank guarantees. Borrowings bear interest at either (i) at least
95%
of the short-term interest rate published by the People's Bank of China or (ii) a rate based on the Bank's cost of funds, as determined by JPMorgan Chase Bank (China) Company Limited, Shanghai Branch at its discretion based on prevailing market conditions.
|
|
•
|
Malaysia Credit Facility
- During the third quarter of Fiscal 2013, Ralph Lauren (Malaysia) Sdn Bhd entered into a revolving line of credit of up to
15.9 million
Malaysian Ringgit (approximately
$5 million
) through
September 13, 2013
. Borrowings bear interest at an annual rate based on JPMorgan Chase Bank Berhad's cost of funds, as determined at its discretion based on prevailing market conditions, plus
1.125%
.
|
|
•
|
South Korea Credit Facility
- During the third quarter of Fiscal 2013, Ralph Lauren (Korea) Ltd. entered into a revolving line of credit of up to
11.3 billion
South Korean Won (approximately
$11 million
) through
October 31, 2013
. Borrowings bear interest at an annual rate based on (i) at least the 91-day South Korea Certificate of Deposit rate plus
1.125%
or (ii) a rate determined by JPMorgan Chase Bank, N.A., Seoul Branch based on its cost of funds, as determined at its discretion based on prevailing market conditions.
|
|
•
|
Taiwan Credit Facility
-
During the third quarter of Fiscal 2013, Ralph Lauren (Hong Kong) Retail Company Limited, Taiwan Branch entered into a revolving line of credit of up to
59.0 million
New Taiwan Dollars (approximately
$2 million
) through
October 23, 2013
. Borrowings bear interest at an annual rate based on JPMorgan Chase Bank, N.A., Taipei Branch's cost of funds, as determined at its discretion based on prevailing market conditions, plus
1.125%
.
|
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk.
|
|
Item 4.
|
Controls and Procedures.
|
|
Item 1.
|
Legal Proceedings.
|
|
Item 1A.
|
Risk Factors.
|
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds.
|
|
(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
(1)
|
||||||
|
|
|
|
|
|
|
|
(millions)
|
||||||
|
September 30, 2012 to October 27, 2012
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
777
|
|
|
October 28, 2012 to December 1, 2012
|
970,687
|
|
|
154.52
|
|
|
970,687
|
|
|
627
|
|
||
|
December 2, 2012 to December 29, 2012
|
—
|
|
|
—
|
|
|
—
|
|
|
627
|
|
||
|
|
970,687
|
|
|
|
|
970,687
|
|
|
|
||||
|
|
|
(1)
|
On August 9, 2012, the Company’s Board of Directors approved an expansion of the Company’s existing common stock repurchase program that will allow it to repurchase up to an additional $500 million of Class A common stock.
|
|
Item 6.
|
Exhibits.
|
|
31.1
|
Certification of Ralph Lauren, Chairman and Chief Executive Officer, pursuant to 17 CFR 240.13a-14(a).
|
|
31.2
|
Certification of Christopher H. Peterson, Senior Vice President and Chief Financial Officer, pursuant to 17 CFR 240.13a-14(a).
|
|
32.1
|
Certification of Ralph Lauren, Chairman and Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
32.2
|
Certification of Christopher H. Peterson, Senior Vice President and Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
101
|
Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Consolidated Balance Sheets at December 29, 2012 and March 31, 2012, (ii) the Consolidated Statements of Operations for the three-month and nine-month periods ended December 29, 2012 and December 31, 2011, (iii) the Consolidated Statements of Comprehensive Income for the three-month and nine-month periods ended December 29, 2012 and December 31, 2011, (iv) the Consolidated Statements of Cash Flows for the nine-month periods ended December 29, 2012 and December 31, 2011 and (v) the Notes to Consolidated Financial Statements.
|
|
|
|
RALPH LAUREN CORPORATION
|
|
|
|
|
|
|
By:
|
/
S
/ CHRISTOPHER H. PETERSON
|
|
|
|
Christopher H. Peterson
|
|
|
|
Senior Vice President and Chief Financial Officer
|
|
|
|
(Principal Financial and Accounting Officer)
|
|
Date: February 6, 2013
|
|
|
No information found
* THE VALUE IS THE MARKET VALUE AS OF THE LAST DAY OF THE QUARTER FOR WHICH THE 13F WAS FILED.
| FUND | NUMBER OF SHARES | VALUE ($) | PUT OR CALL |
|---|
| DIRECTORS | AGE | BIO | OTHER DIRECTOR MEMBERSHIPS |
|---|
No information found
No Customers Found
Price
Yield
| Owner | Position | Direct Shares | Indirect Shares |
|---|