POLO RALPH LAUREN CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
March 28,
2009 March 29,
2008 March 31,
2007
Fiscal Years Ended
(millions, except per share data)
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,823.7 $ 4,670.7 $ 4,059.1
Licensing revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 195.2 209.4 236.3
Net revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,018.9 4,880.1 4,295.4
Cost of goods sold(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,288.2) (2,242.0) (1,959.2)
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,730.7 2,638.1 2,336.2
Other costs and expenses:
Selling, general and administrative expenses(a) . . . . . . . . . . . . . . . . . . . . (2,036.0) (1,932.5) (1,663.4)
Amortization of intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (20.2) (47.2) (15.6)
Impairments of assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (55.4) (5.0) —
Restructuring charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (23.6) — (4.6)
Total other costs and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,135.2) (1,984.7) (1,683.6)
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 595.5 653.4 652.6
Foreign currency gains (losses) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.6 (6.4) (1.5)
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (26.6) (25.7) (21.6)
Interest and other income, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.0 24.7 26.1
Equity in income (loss) of equity-method investees . . . . . . . . . . . . . . . . . (5.0) (1.8) 3.0
Minority interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (2.1) (15.3)
Income before provision for income taxes . . . . . . . . . . . . . . . . . . . . . . 587.5 642.1 643.3
Provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (181.5) (222.3) (242.4)
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 406.0 $ 419.8 $ 400.9
Net income per common share:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4.09 $ 4.10 $ 3.84
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4.01 $ 3.99 $ 3.73
Weighted average common shares outstanding:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99.2 102.3 104.4
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101.3 105.2 107.6
Dividends declared per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.20 $ 0.20 $ 0.20
(a)
Includes total depreciation expense of: . . . . . . . . . . . . . . . . . . . . . . . . $ (164.2) $ (154.1) $ (129.1)
POLO RALPH LAUREN CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
March 28,
2009 March 29,
2008 March 31,
2007
Fiscal Years Ended
(millions)
Cash flows from operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 406.0 $ 419.8 $ 400.9
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 184.4 201.3 144.7
Deferred income tax expense (benefit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (35.1) (7.7) (112.4)
Minority interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 2.1 15.3
Equity in loss (income) of equity-method investees, net of dividends received . . . . . 5.0 1.8 (1.0)
Non-cash stock-based compensation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49.7 70.7 43.6
Non-cash impairments of assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55.4 5.0 —
Non-cash provision for bad debt expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.9 2.6 1.9
Loss on disposal of property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 3.3
Non-cash foreign currency (gains) losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3 (1.3) 6.2
Non-cash restructuring charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.6 — 1.1
Non-cash litigation-related charges (reversals of excess reserves) . . . . . . . . . . . . . . 5.6 (4.1) 3.0
Changes in operating assets and liabilities:
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1 10.0 26.4
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (10.5) 81.8 (32.2)
Accounts payable and accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55.2 (10.8) 38.7
Deferred income liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (25.7) (2.7) 202.6
Other balance sheet changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65.3 (73.1) 54.0
Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 774.2 695.4 796.1
Cash flows from investing activities:
Acquisitions and ventures, net of cash acquired and purchase price settlements . . . . (46.3) (188.7) (176.1)
Purchases of investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (623.1) (96.8) —
Proceeds from sales and maturities of investments . . . . . . . . . . . . . . . . . . . . . . . . . 369.5 12.7 —
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (185.0) (217.1) (184.0)
Change in restricted cash deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26.9 (15.1) (74.5)
Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (458.0) (505.0) (434.6)
Cash flows from financing activities:
Proceeds from issuance of debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 168.9 380.0
Repayment of debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (196.8) — (291.6)
Debt issuance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (0.3) (2.6)
Payments of capital lease obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6.7) (7.7) (5.0)
Payments of dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (19.9) (20.5) (20.9)
Distributions to minority interest holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — (4.5)
Repurchases of common stock, including shares surrendered for tax withholdings . . . (169.8) (475.4) (231.3)
Proceeds from exercise of stock options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29.0 40.1 51.4
Termination of interest rate swap agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — (4.4)
Excess tax benefits from stock-based compensation arrangements . . . . . . . . . . . . . . 12.1 34.4 33.7
Net cash used in financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (352.1) (260.5) (95.2)
Effect of exchange rate changes on cash and cash equivalents . . . . . . . . . . . . . . . . . . (34.4) 57.7 11.9
Net increase (decrease) in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . (70.3) (12.4) 278.2
Cash and cash equivalents at beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . . . 551.5 563.9 285.7
Cash and cash equivalents at end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 481.2 $ 551.5 $ 563.9
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