UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):February 4, 2004
POLO RALPH LAUREN CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 001-13057 13-2622036
- ------------------------------- ---------------- -----------------
(State or other jurisdiction of (Commission File (IRS Employer
incorporation) Number) Identification No.)
650 MADISON AVENUE, NEW YORK, NEW YORK 10022
- -------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 318-7000
--------------
NOT APPLICABLE
-------------------------------------------------------------
(Former name or former address, if changed since last report)
2
ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On February 4, 2004, the Registrant reported its results of operations
for its fiscal quarter ended December 27, 2003. A copy of the press release
issued by the Registrant concerning the foregoing results is furnished herewith
as Exhibit 99.1 and is incorporated herein by reference.
The information in this Form 8-K, including the accompanying exhibit,
is being furnished under Item 12 and shall not be deemed to be "filed" for the
purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange
Act"), or otherwise subject to the liability of such section, nor shall such
information be deemed incorporated by reference in any filing under the
Securities Act of 1933 or the Exchange Act, regardless of the general
incorporation language of such filing, except as shall be expressly set forth by
specific reference in such filing.
3
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
POLO RALPH LAUREN CORPORATION
By: /s/ Gerald M. Chaney
---------------------------------------
Name: Gerald M. Chaney
Title: Senior Vice President of Finance
and Chief Financial Officer
Date: February 4, 2004
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
99.1 Press Release of Polo Ralph Lauren Corporation, dated February
4, 2004.
EXHIBIT 99.1
------------
Investor Contact: Denise Gillen 212-318-7516
Media Contact: Nancy Murray 212-813-7862
POLO RALPH LAUREN REPORTS THIRD QUARTER FISCAL 2004 RESULTS
Results Driven by 8.8% Retail Comps; 290 Basis Point Gain in Retail Operating
Margins Initial Outlook for Fiscal 2005 EPS in Range of $2.35 to $2.45
New York, NY (February 4, 2004) - Polo Ralph Lauren Corporation (NYSE: RL) today
reported net income under Generally Accepted Accounting Principles ("GAAP") of
$35.4 million, or $0.35 per diluted share, for the third quarter of Fiscal 2004
ended December 27, 2003, compared to net income of $42.8 million, or $0.43 per
diluted share, for the third quarter of Fiscal 2003.
Adjusted net income was $47.7 million, or $0.47 per diluted share, for the third
quarter of Fiscal 2004 compared to adjusted net income of $47.1 million, or
$0.47 per diluted share, for the third quarter of Fiscal 2003. The results are
adjusted to exclude restructuring charges and foreign currency gains and losses
resulting from certain balance sheet transactions. The Company believes that
these adjusted results provide a meaningful comparison of its ongoing
operational and financial results. For a full analysis of the adjustments,
please refer to the table reconciliation of GAAP results to adjusted results.
"Our success continues to be driven by our own specialty stores and in better
department stores, which have the right mix of products, strong customer service
and a clear point of view. We know that at the core of our success is the
ability to attract customers through exciting products, strong merchandising and
dramatic advertising and marketing," said Ralph Lauren, Chairman and Chief
Executive Officer.
Commenting on the outlook, Mr. Lauren said "We are very excited about the future
of our Company and feel that the upcoming year is one where we are ready to
deliver a higher profit level as a result of our past years' efforts."
"We are very pleased to report such a strong quarter and believe that these
results continue to demonstrate our ability to execute on our multi-year
initiatives on many fronts. Our retail business had a terrific quarter and our
year-to-date retail sales reflect improved performance in all our retail
formats," said Roger Farah, President and Chief Operating Officer. "In addition,
the consolidation in Europe is on track for completion this year and we have
initiated important new programs in our wholesale business to better control the
distribution and presentation of the brands. During this pivotal year, we took
on the direct responsibility for the operations of the Lauren brand, and in just
eight months built an entire organization, designed, manufactured and brought to
market two complete collections with improvements in fabric and details, created
an advertising and marketing campaign, constructed a warehouse system that is
currently shipping out the first season on schedule, and prepared our Fall
collection for market in March."
RECENT ACHIEVEMENTS
o Delivered mid-teens sales comps in the third quarter at Ralph Lauren
stores, low-twenties retail sales comps at Club Monaco stores, and
mid-single digit sales comps in outlet stores, with a 290 basis point
improvement in margins.
o Continued strategy to expand Ralph Lauren specialty retail stores in
appropriate locations by opening a new 3,500 square foot store in New
Canaan, CT, offering a selection of apparel for men and women as well
as childrenswear.
o Presented the Summer 2004 Lauren by Ralph Lauren line in November 2003.
The Spring and Summer lines were well received by the retail buyers and
we continue to expect revenues of approximately $400 million with
mid-teen margins in Fiscal 2005, the line's first full-year of
operations. Our Greensboro distribution center has begun to handle the
Lauren line and delivery of Spring 2004 merchandise was on schedule to
department stores beginning in January.
o Continued strategy to further develop growth opportunities in Asia by
strengthening the global management team through the addition of
Andreas Kurz as Division President of International Licensing to manage
Polo's licensed businesses in that part of the world.
o Launched international local-language web sites for France, Germany,
Italy, Spain, United Kingdom, Chile, Japan and Australia with features
such as store locators and fashion show viewings.
o Paid down short-term debt in the first half of the fiscal year and
ended the third quarter with $53.0 million in cash net of debt.
THIRD QUARTER FISCAL 2004 INCOME STATEMENT REVIEW
NET REVENUES Net revenues were $645.4 million for the third quarter, an increase
of 1.0%, compared to $639.2 million in the comparable year-ago quarter. Revenues
were driven by double-digit percent increases in retail sales and licensing
royalties, which were partially offset by a decrease in the wholesale business,
primarily in the secondary off-price market. Retail sales comps rose 8.8%,
driven by positive comps in all of the Company's retail formats.
GROSS PROFIT For the third quarter, gross profit was $333.0 million, an increase
of 8.1%, compared to $307.9 million in the third quarter of Fiscal 2003,
benefiting primarily from strong retail sales performance and increased
licensing royalties, partially offset by a decrease in the men's wholesale
business. Gross margin for the third quarter was 51.6% of net revenues compared
to 48.2% of net revenues in the comparable year-ago quarter, an improvement of
340 basis points.
SG&A EXPENSES Total SG&A expenses in the third quarter were $256.6 million, an
increase of $26.2 million or 11.4%, compared to $230.4 million in the third
quarter of Fiscal 2003. The increase was driven primarily by the start-up costs
associated with the operations of the Lauren line, the change in business mix as
a result of increased retail sales, and the consolidation of expenses of the
Japanese master license.
STORE COUNT
At quarter end, the Company operated 265 stores compared to 251 stores at the
third quarter end last year. For the period ended December 27, 2003, the
company's retail group consisted of 55 Ralph Lauren stores, 62 Club Monaco
stores, 117 Polo Outlet stores, 22 Polo Jeans Co. Outlet stores, and nine Club
Monaco outlet stores. During the third quarter the Company opened one store and
closed one.
RESTRUCTURING CHARGE AND FOREIGN CURRENCY GAINS AND LOSSES
Third quarter Fiscal 2004 results include a pre-tax $15.9 million restructuring
charge. Approximately $12.2 million of the restructuring charge is related to an
adjustment to the reserve for lease termination costs primarily associated with
two Club Monaco properties, which were included in the Company's 2001
Operational Plan. The reserve was adjusted in the third quarter Fiscal 2004
because of market factors less favorable than estimated. Approximately $3.7
million of the restructuring charge is related to operational consolidation
efforts in Europe associated with severance and contract termination costs.
Third quarter Fiscal 2003 results include a pre-tax $8.0 million restructuring
charge for operational consolidation efforts in Europe associated with severance
and contract termination costs included in the Company's 2003 Restructuring
Plan.
Third quarter Fiscal 2004 results include $3.6 million in foreign currency
losses primarily related to transaction losses on unhedged inventory purchases
in Europe. Third quarter Fiscal 2003 results include $1.3 million in foreign
currency gains primarily related to Japanese forward contracts entered into in
November 2002.
SECONDARY OFFERING OF COMMON STOCK
The Company expects to file a registration statement with the SEC later this
month to conduct a secondary offering of up to 10.6 million shares of common
stock owned by investment funds managed by Goldman, Sachs & Co. Neither the
Company, Mr. Ralph Lauren, nor any of his related entities will be converting or
selling any shares in the offering or receiving any proceeds from the offering.
This press release shall not constitute an offer to sell or the solicitation of
an offer to buy any securities. Please refer to the separate announcement issued
today by the Company.
EARNINGS OUTLOOK
The Company reiterated its previous guidance that adjusted earnings per share
for the fourth quarter of Fiscal 2004 is expected to be in the range of $0.75 to
$0.80 compared to $0.77 for the fourth quarter of Fiscal 2003. These projected
results include approximately $0.04 loss per share associated with Lauren
start-up costs and the loss of licensing revenues associated with the Lauren,
Ralph and Canadian license royalties. Adjusted earnings per share exclude
restructuring charges and foreign currency gains and losses resulting from
certain balance sheet transactions.
For Fiscal 2005, earnings per share are expected to be in the range of $2.35 to
$2.45, excluding any foreign currency gains and losses resulting from certain
balance sheet transactions. The Company expects high single-digit percent
consolidated revenue growth to drive approximately 150 basis points improvement
in operating margins. Revenues are expected to reflect mid-teen percent growth
in wholesale and mid-single digit percent growth in retail, partially offset by
a slight decrease in licensing revenue as a result of the elimination of the
Lauren, Ralph and Canadian license royalties.
CONFERENCE CALL
As previously announced, the Company will host a conference call today, February
4, 2004 at 9:00 A.M. Eastern to discuss the quarter results. To access the
conference call, listeners should dial in by 8:45 A.M. Eastern today and request
to be connected to the Polo Ralph Lauren Third Quarter 2004 conference call. The
dial-in number is 1-973-317-5319. Alternatively, individuals are invited to
listen to a live online broadcast of the conference call by accessing Polo's
website at HTTP://INVESTOR.POLO.COM.
A telephone replay of the call will be available from 11:00 A.M. Eastern,
Wednesday, November 5, 2003 through 5:00 P.M. Eastern, Friday, February 6, 2004
by dialing 1-973-709-2089 and entering pass code 325220. An online archive of
the broadcast will be available by accessing Polo's website at
HTTP://INVESTOR.POLO.COM.
Polo Ralph Lauren Corporation is a leader in the design, marketing and
distribution of premium lifestyle products in four categories: apparel, home,
accessories and fragrances. For more than 35 years, Polo's reputation and
distinctive image have been consistently developed across an expanding number of
products, brands and international markets. The Company's brand names, which
include "Polo", "Polo by Ralph Lauren", "Ralph Lauren Purple Label", "Polo
Sport", "Ralph Lauren", "Blue Label", "Lauren", "Polo Jeans Co.", "RL", "Chaps",
and "Club Monaco" among others, constitute one of the world's most widely
recognized families of consumer brands. For more information, go to
HTTP://INVESTOR.POLO.COM.
CERTAIN STATEMENTS INCLUDING, WITHOUT LIMITATION, THE STATEMENTS MADE BY RALPH
LAUREN AND ROGER FARAH AND THE STATEMENTS RELATING TO THE EARNINGS OUTLOOK
CONTAINED HEREIN CONSTITUTE "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF
THE U.S. PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. SUCH FORWARD-LOOKING
STATEMENTS ARE BASED ON CURRENT EXPECTATIONS AND INVOLVE CERTAIN RISKS AND
UNCERTAINTIES. ACTUAL RESULTS MIGHT DIFFER MATERIALLY FROM THOSE PROJECTED IN
THE FORWARD-LOOKING STATEMENTS. AMONG THE FACTORS THAT COULD CAUSE ACTUAL
RESULTS TO MATERIALLY DIFFER ARE THE FOLLOWING: RISKS ASSOCIATED WITH
IMPLEMENTING THE COMPANY'S PLANS TO ENHANCE ITS WORLDWIDE LUXURY RETAIL
BUSINESS, INVENTORY MANAGEMENT PROGRAM AND OPERATING EFFICIENCY INITIATIVES;
RISKS ASSOCIATED WITH THE START-UP OF THE LAUREN LINE; RISKS ASSOCIATED WITH
CHANGES IN THE COMPETITIVE MARKETPLACE, INCLUDING THE INTRODUCTION OF NEW
PRODUCTS OR PRICING CHANGES BY THE COMPANY'S COMPETITORS; CHANGES IN GLOBAL
ECONOMIC AND POLITICAL CONDITIONS; RISKS ASSOCIATED WITH THE COMPANY'S
DEPENDENCE ON SALES TO A LIMITED NUMBER OF LARGE DEPARTMENT STORE CUSTOMERS,
INCLUDING RISKS RELATED TO EXTENDING CREDIT TO CUSTOMERS; RISKS ASSOCIATED WITH
THE COMPANY'S DEPENDENCE ON ITS LICENSING PARTNERS FOR A SUBSTANTIAL PORTION OF
ITS NET INCOME AND RISKS ASSOCIATED WITH A LACK OF OPERATIONAL AND FINANCIAL
CONTROL OVER LICENSED BUSINESSES; RISKS ASSOCIATED WITH A GENERAL ECONOMIC
DOWNTURN AND OTHER EVENTS LEADING TO A REDUCTION IN DISCRETIONARY CONSUMER
SPENDING; RISKS ASSOCIATED WITH FINANCIAL DISTRESS OF LICENSEES, INCLUDING THE
IMPACT OF OUR NET INCOME AND BUSINESS OF ONE OR MORE LICENSEES REORGANIZATION;
RISKS ASSOCIATED WITH CHANGES IN SOCIAL, POLITICAL, ECONOMIC AND OTHER
CONDITIONS AFFECTING FOREIGN OPERATIONS OR SOURCING AND THE POSSIBLE ADVERSE
IMPACT OF CHANGES IN IMPORT RESTRICTIONS; RISKS RELATED TO FLUCTUATIONS IN
FOREIGN CURRENCY AFFECTING OUR FOREIGN SUBSIDIARIES; FOREIGN LICENSEES' RESULTS
OF OPERATIONS AND THE RELATIVE PRICES AT WHICH WE AND OUR FOREIGN COMPETITORS
SELL PRODUCTS IN THE SAME MARKET AND OUR OPERATING AND MANUFACTURING COSTS
OUTSIDE OF THE UNITED STATES; RISKS ASSOCIATED WITH OUR CONTROL BY LAUREN FAMILY
MEMBERS AND THE ANTI-TAKEOVER EFFECT OF MULTIPLE CLASSES OF STOCK; RISKS
ASSOCIATED WITH CONSOLIDATIONS, RESTRUCTURINGS AND OTHER OWNERSHIP CHANGES IN
THE RETAIL INDUSTRY; RISKS ASSOCIATED WITH COMPETITION IN THE SEGMENTS OF THE
FASHION AND CONSUMER PRODUCT INDUSTRIES IN WHICH THE COMPANY OPERATES, INCLUDING
THE COMPANY'S ABILITY TO SHAPE, STIMULATE AND RESPOND TO CHANGING CONSUMER
TASTES AND DEMANDS BY PRODUCING ATTRACTIVE PRODUCTS, BRANDS AND MARKETING, AND
ITS ABILITY TO REMAIN COMPETITIVE IN THE AREAS OF QUALITY AND PRICE; RISKS
ASSOCIATED WITH UNCERTAINTY RELATING TO THE COMPANY'S ABILITY TO IMPLEMENT ITS
GROWTH STRATEGIES; RISKS ASSOCIATED WITH THE COMPANY'S ENTRY INTO NEW MARKETS
EITHER THROUGH INTERNAL DEVELOPMENT ACTIVITIES OR THROUGH ACQUISITION; RISKS
ASSOCIATED WITH THE POSSIBLE ADVERSE IMPACT OF THE COMPANY'S UNAFFILIATED
MANUFACTURERS INABILITY TO MANUFACTURE IN A TIMELY MANNER, TO MEET QUALITY
STANDARDS OR TO USE ACCEPTABLE LABOR PRACTICES AND OTHER FACTORS DETAILED IN THE
FILINGS MADE BY THE COMPANY WITH THE SECURITIES AND EXCHANGE COMMISSION. THE
COMPANY UNDERTAKES NO OBLIGATION TO PUBLICLY UPDATE OR REVISE ANY
FORWARD-LOOKING STATEMENTS, WHETHER AS A RESULT OF NEW INFORMATION, FUTURE
EVENTS, OR OTHERWISE.
Attached are the Consolidated Statements of Income and Net Revenues and Income
from Operations for the three-month and nine-month periods ended December 27,
2003 and December 28, 2002 and the Consolidated Balance Sheets as of December
27, 2003 and December 28, 2002.
# # # #
Tables Follow
POLO RALPH LAUREN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share and per share data)
(Unaudited)
THREE MONTHS ENDED
-------------------------------------
DECEMBER 27, DECEMBER 28,
2003 2002
------------- -------------
Wholesale Net Sales $ 219,147 $ 268,251
Retail Net Sales 358,984 315,052
----------- ----------
NET SALES 578,131 583,303
Licensing Revenue 67,234 55,867
----------- ----------
NET REVENUES 645,365 639,170
Cost of Goods Sold 312,363 331,260
----------- ----------
GROSS PROFIT 333,002 307,910
Depreciation and Amortization 18,602 20,904
Other SG&A Expenses 238,012 209,487
Restructuring Charge 15,930 8,000
----------- ----------
TOTAL SG&A EXPENSES 272,544 238,391
Income From Operations 60,458 69,519
Foreign Currency (Gains) Losses 3,552 (1,262)
Interest Expense, net 2,510 3,359
----------- ----------
Income Before Income Taxes and Other (Income) Expense 54,396 67,422
Provision for Income Taxes 19,854 24,610
----------- ----------
Income after Tax 34,542 42,812
Other (Income) Expense, net (A) (816) --
----------- ----------
NET INCOME $ 35,358 $ 42,812
=========== ==========
NET INCOME PER SHARE - BASIC $ 0.36 $ 0.44
=========== ==========
NET INCOME PER SHARE - DILUTED $ 0.35 $ 0.43
=========== ==========
Weighted Average Shares Outstanding - Basic 99,072,000 98,412,000
=========== ==========
Weighted Average Shares & Share Equivalents Outstanding - Diluted 101,291,000 99,311,000
=========== ==========
DIVIDENDS DECLARED PER SHARE $ 0.05 $ --
=========== ==========
(A) Includes Equity Investment Income of $1,027 net of Minority Interest
Expense of $211, related to our Japanese businesses.
POLO RALPH LAUREN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share and per share data)
(Unaudited)
The following is a reconciliation of Net Income to Net Income Before
Restructuring Charge and Foreign Currency (Gains) Losses:
THREE MONTHS ENDED
-------------------------------------
DECEMBER 27, DECEMBER 28,
2003 2002
------------- -------------
Net Income $ 35,358 $ 42,812
Other (Income) Expense, net (816) --
Provision for Income Taxes 19,854 24,610
----------- ----------
Income before Income Taxes and Other (Income) Expense 54,396 67,422
Restructuring Charge (B) 15,930 8,000
Foreign Currency (Gains) Losses (C) 3,552 (1,262)
----------- ----------
Income Before Income Taxes, Other (Income) Expense, Restructuring
Charge and Foreign Currency (Gains) Losses 73,878 74,160
Provision for Income Taxes 26,965 27,068
Other (Income) Expense, net (816) --
----------- ----------
Net Income Before Restructuring Charge and Foreign
Currency (Gains) Losses $ 47,729 $ 47,092
=========== ==========
NET INCOME PER SHARE BEFORE RESTRUCTURING CHARGE
AND FOREIGN CURRENCY (GAINS) LOSSES - BASIC $ 0.48 $ 0.48
=========== ==========
NET INCOME PER SHARE BEFORE RESTRUCTURING CHARGE
AND FOREIGN CURRENCY (GAINS) LOSSES - DILUTED $ 0.47 $ 0.47
=========== ==========
(B) Third quarter Fiscal 2004 results include a pre-tax $15.9 million
restructuring charge. Approximately $12.2 million of the restructuring charge is
related to an adjustment to the reserve for lease termination costs included in
the Company's 2001 Operational Plan primarily associated with two Club Monaco
properties. The reserve was adjusted in the third quarter Fiscal 2004 because of
less favorable market factors. Approximately $3.7 million of the restructuring
charge is related to operational consolidation efforts in Europe associated with
severance and contract termination costs. Third quarter Fiscal 2003 results
include a pre-tax $8.0 million restructuring charge for operational
consolidation efforts in Europe associated with severance and contract
termination costs included in the Company's 2003 Restructuring Plan.
(C) For the three months ended December 27, 2003, the foreign currency
losses primarily relate to transaction losses on unhedged inventory purchases in
Europe resulting from the variability in the value of the Euro compared to the
US dollar. In the prior period, the Foreign Currency gains primarily related to
Japanese forward contracts, which we entered into in November 2002.
POLO RALPH LAUREN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share and per share data)
(Unaudited)
NINE MONTHS ENDED
-------------------------------------
DECEMBER 27, DECEMBER 28,
2003 2002
------------- -------------
Wholesale Net Sales $ 716,877 $ 765,694
Retail Net Sales 910,584 806,029
----------- ----------
NET SALES 1,627,461 1,571,723
Licensing Revenue 203,412 175,286
----------- ----------
NET REVENUES 1,830,873 1,747,009
Cost of Goods Sold 898,553 885,229
----------- ----------
GROSS PROFIT 932,320 861,780
Depreciation and Amortization 59,103 57,350
Other SG&A Expenses 708,350 624,575
Restructuring Charge 15,930 8,000
----------- ----------
TOTAL SG&A EXPENSES 783,383 689,925
Income From Operations 148,937 171,855
Foreign Currency (Gains) Losses (531) 2,490
Interest Expense, net 7,624 10,285
----------- ----------
Income Before Income Taxes and Other (Income) Expense 141,844 159,080
Provision for Income Taxes 51,773 58,064
----------- ----------
Income after Tax 90,071 101,016
Other (Income) Expense, net (A) (4,352) --
----------- ----------
NET INCOME $ 94,423 $ 101,016
=========== ==========
NET INCOME PER SHARE - BASIC $ 0.96 $ 1.03
=========== ==========
NET INCOME PER SHARE - DILUTED $ 0.94 $ 1.02
=========== ==========
Weighted Average Shares Outstanding - Basic 98,718,000 98,291,000
=========== ==========
Weighted Average Shares & Share Equivalents Outstanding - Diluted 100,403,000 99,368,000
=========== ==========
DIVIDENDS DECLARED PER SHARE $ 0.15 $ --
=========== ==========
(A) Includes Equity Investment Income of $5,477 net of Minority Interest
Expense of $1,125, related to our Japanese businesses.
POLO RALPH LAUREN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share and per share data)
(Unaudited)
The following is a reconciliation of Net Income to Net Income Before
Restructuring Charge and Foreign Currency (Gains) Losses:
NINE MONTHS ENDED
-------------------------------------
DECEMBER 27, DECEMBER 28,
2003 2002
------------- -------------
Net Income $ 94,423 $ 101,016
Other (Income) Expense, net (4,352) --
Provision for Income Taxes 51,773 58,064
----------- ----------
Income before Income Taxes and Other (Income) Expense 141,844 159,080
Restructuring Charge (B) 15,930 8,000
Foreign Currency (Gains) Losses (C) (531) 2,490
----------- ----------
Income Before Income Taxes, Other (Income) Expense, Restructuring
Charge and Foreign Currency (Gains) Losses 157,243 169,570
Provision for Income Taxes 57,394 61,893
Other (Income) Expense, net (4,352) --
----------- ----------
Net Income Before Restructuring Charge and Foreign Currency
(Gains) Losses $ 104,201 $ 107,677
=========== ==========
NET INCOME PER SHARE BEFORE RESTRUCTURING CHARGE
AND FOREIGN CURRENCY (GAINS) LOSSES - BASIC $ 1.06 $ 1.10
=========== ==========
NET INCOME PER SHARE BEFORE RESTRUCTURING CHARGE
AND FOREIGN CURRENCY (GAINS) LOSSES - DILUTED $ 1.04 $ 1.08
=========== ==========
(B) Results for the nine months ended December 27, 2003 include a pre-tax
$15.9 million restructuring charge. Approximately $12.2 million of the
restructuring charge is related to an adjustment to the reserve for lease
termination costs included in the Company's 2001 Operational Plan primarily
associated with two Club Monaco properties. The reserve was adjusted in the
third quarter Fiscal 2004 because of less favorable market factors.
Approximately $3.7 million of the restructuring charge is related to operational
consolidation efforts in Europe associated with severance and contract
termination costs. Results for the nine months ended December 28, 2002 include a
pre-tax $8.0 million restructuring charge for operational consolidation efforts
in Europe associated with severance and contract termination costs included in
the Company's 2003 Restructuring Plan.
(C) For the nine months ended December 27, 2003, the foreign currency gains
primarily relate to transaction gains on unhedged inventory purchases and
royalty payments in Europe resulting from increases in the value of the Euro
compared to the US dollar. In the prior period, the Foreign Currency losses
primarily related to transaction losses on the unhedged portion of our Euro debt
which resulted from increases in the Eurodollar rate until we entered into the
cross currency swap in June 2002. This loss was partially offset by gains on
Japanese forward contracts, which we entered into in November 2002.
POLO RALPH LAUREN CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
DECEMBER 27, DECEMBER 28,
2003 2002
------------- -------------
ASSETS
Current assets
Cash and cash equivalents $ 337,703 $ 441,584
Accounts receivable, net of allowances 292,248 262,559
Inventories 422,248 340,077
Deferred tax assets 31,078 8,901
Prepaid expenses and other 88,017 64,078
----------- ----------
1,171,294 1,117,199
Property and equipment, net 372,721 343,539
Deferred tax assets 58,583 66,356
Goodwill, net 335,646 295,378
Intangibles, net 17,950 --
Other assets 174,964 81,355
----------- ----------
$ 2,131,158 $1,903,827
=========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Short-term bank borrowings $ 0 $ 105,752
Accounts payable 167,322 144,946
Income taxes payable 54,846 67,298
Accrued expenses and other 256,836 150,931
----------- ----------
479,004 468,927
Long-term debt 284,746 238,127
Other noncurrent liabilities 76,383 75,705
Stockholders' equity
Common Stock 1,044 1,028
Additional paid-in-capital 538,089 503,002
Retained earnings 855,890 703,140
Treasury Stock, Class A, at cost (4,145,800 and 3,894,532 shares) (78,975) (73,713)
Accumulated other comprehensive income (loss) (8,981) (5,737)
Unearned compensation (16,042) (6,652)
----------- ----------
TOTAL STOCKHOLDERS' EQUITY 1,291,025 1,121,068
----------- ----------
$ 2,131,158 $1,903,827
=========== ==========
POLO RALPH LAUREN CORPORATION AND SUBSIDIARIES
NET REVENUES AND INCOME FROM OPERATIONS
(In thousands)
(Unaudited)
The net revenues and income from operations for the three and nine months ended
December 27, 2003 and December 28, 2002 for each segment were as follows:
THREE MONTHS ENDED NINE MONTHS ENDED
----------------------------- -----------------------------
DECEMBER 27, DECEMBER 28, DECEMBER 27, DECEMBER 28,
2003 2002 2003 2002
------------ ------------ ------------ ------------
Net revenues:
Wholesale $ 219,147 $ 268,251 $ 716,877 $ 765,694
Retail 358,984 315,052 910,584 806,029
Licensing 67,234 55,867 203,412 175,286
---------- ---------- ---------- ----------
$ 645,365 $ 639,170 1,830,873 1,747,009
========== ========== ========== ==========
INCOME (LOSS) FROM OPERATIONS:
Wholesale $ (3,330) $ 18,065 $ (8,921) $ 31,904
Retail 45,411 30,703 77,731 59,883
Licensing 34,307 28,751 96,057 88,068
---------- ---------- ---------- ----------
$ 76,388 $ 77,519 $ 164,867 $ 179,855
Less: Unallocated Restructuring Charge 15,930 8,000 15,930 8,000
---------- ---------- ---------- ----------
60,458 69,519 148,937 171,855
========== ========== ========== ==========
