UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)



þ☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	~~For the quarterly period ended September 29, 2018~~

For the quarterly period ended September 28, 2019



o ☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 001-13057

Ralph Lauren Corporation

(Exact name of registrant as specified in its charter)



Delaware		13-2622036
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
650 Madison Avenue, ~~New York, New York~~		10022
New York,	New York	(Zip Code)
(Address of principal executive offices)

~~(212)~~ (212) 318-7000

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:



Title of Each Class	Trading Symbol(s)	Name of Each Exchange on which Registered
Class A Common Stock, $.01 par value	RL	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ ☑No o☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes þ ☑No o☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.



Large accelerated filer	þ☑	Accelerated filer	o☐
Non-accelerated filer	o☐	Smaller reporting company	o☐
		Emerging growth company	o☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)~~.Yes~~ o . Yes ☐No þ☑

At November ~~2, 2018, 54,556,873~~1, 2019, 49,735,136 shares of the registrant's Class A common stock, $.01 par value, and ~~25,881,276~~24,881,276 shares of the registrant's Class B common stock, $.01 par value, were outstanding.

RALPH LAUREN CORPORATION

INDEX



		Page

PART I. FINANCIAL INFORMATION (Unaudited)
Item 1.	Financial Statements:
	Consolidated Balance Sheets	2
	Consolidated Statements of Operations	3
	Consolidated Statements of Comprehensive Income	4
	Consolidated Statements of Cash Flows	5
	~~Notes to~~ Consolidated ~~Financial~~ Statements of Equity	6
	Notes to Consolidated Financial Statements	8
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	4043
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	6566
Item 4.	Controls and Procedures	6566

PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	6667
Item 1A.	Risk Factors	6667
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	6667
Item 5.	Other Information	68
Item 6.	Exhibits	6769
Signatures		6870

~~EX-31.1~~
~~EX-31.2~~
~~EX-32.1~~
~~EX-32.2~~
~~EX-101~~	~~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~~



	1

RALPH LAUREN CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited)


	September 29, 2018			March 31, 2018			September 28, 2019			March 30, 2019
	(millions) (unaudited)						(millions)
ASSETS
Current assets:
Cash and cash equivalents	$	553.1		$	1,304.6		$	548.1		$	584.1
Short-term investments	1,319.5			699.4			1,041.4			1,403.4
Accounts receivable, net of allowances of $215.9 million and $222.2 million	432.3			421.4
Accounts receivable, net of allowances of $211.1 million and $192.2 million							483.2			398.1
Inventories	994.6			761.3			1,012.5			817.8
Income tax receivable	34.9			38.0			33.6			32.1
Prepaid expenses and other current assets	359.1			323.7			267.9			359.3
Total current assets	3,693.5			3,548.4			3,386.7			3,594.8
Property and equipment, net	1,130.5			1,186.3			1,011.0			1,039.2
Operating lease right-of-use assets							1,567.1			—
Deferred tax assets	67.6			86.6			97.6			67.0
Goodwill	928.6			950.5			913.8			919.6
Intangible assets, net	175.0			188.0			152.3			163.7
Other non-current assets	160.3			183.5			100.0			158.5
Total assets	$	6,155.5		$	6,143.3		$	7,228.5		$	5,942.8
LIABILITIES AND EQUITY
Current liabilities:
Short-term debt	$	—		$	10.1
Current portion of long-term debt	—			298.1			$	297.3		$	—
Accounts payable	202.1			165.6			350.3			202.3
Income tax payable	42.8			30.0			60.1			29.4
Current operating lease liabilities							273.2			—
Accrued expenses and other current liabilities	996.2			1,083.4			755.1			968.4
Total current liabilities	1,241.1			1,587.2			1,736.0			1,200.1
Long-term debt	683.9			288.0			396.1			689.1
Long-term operating lease liabilities							1,651.3			—
Income tax payable	124.8			124.8			132.7			146.7
Non-current liability for unrecognized tax benefits	80.0			79.2			79.7			78.8
Other non-current liabilities	563.7			606.7			319.1			540.9
Commitments and contingencies (Note 13)
Commitments and contingencies (Note 14)
Total liabilities	2,693.5			2,685.9			4,314.9			2,655.6
Equity:
Class A common stock, par value $.01 per share; 102.9 million and 102.0 million shares issued; 54.6 million and 55.4 million shares outstanding	1.0			1.0
Class B common stock, par value $.01 per share; 25.9 million shares issued and outstanding	0.3			0.3
Class A common stock, par value $.01 per share; 104.8 million and 102.9 million shares issued; 49.7 million and 52.2 million shares outstanding							1.0			1.0
Class B common stock, par value $.01 per share; 24.9 million issued and outstanding; 25.9 million shares issued and outstanding							0.3			0.3
Additional paid-in-capital	2,448.0			2,383.4			2,544.6			2,493.8
Retained earnings	5,925.4			5,752.2			6,009.4			5,979.1
Treasury stock, Class A, at cost; 48.3 million and 46.6 million shares	(4,804.9		)	(4,581.0		)
Treasury stock, Class A, at cost; 55.1 million and 50.7 million shares							(5,526.3		)	(5,083.6		)
Accumulated other comprehensive loss	(107.8		)	(98.5		)	(115.4		)	(103.4		)
Total equity	3,462.0			3,457.4			2,913.6			3,287.2
Total liabilities and equity	$	6,155.5		$	6,143.3		$	7,228.5		$	5,942.8

See accompanying notes.



	2

RALPH LAUREN CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	Three Months Ended						Six Months Ended						Three Months Ended						Six Months Ended
	September 29, 2018			September 30, 2017			September 29, 2018			September 30, 2017			September 28, 2019			September 29, 2018			September 28, 2019			September 29, 2018
	(millions, except per share data) (unaudited)												(millions, except per share data)
Net revenues	$	1,690.9		$	1,664.2		$	3,081.5		$	3,011.3		$	1,706.2		$	1,690.9		$	3,135.0		$	3,081.5
Cost of goods sold	(661.6		)	(668.4		)	(1,156.5		)	(1,164.3		)	(657.2		)	(661.6		)	(1,165.2		)	(1,156.5		)
Gross profit	1,029.3			995.8			1,925.0			1,847.0			1,049.0			1,029.3			1,969.8			1,925.0
Selling, general, and administrative expenses	(793.6		)	(772.7		)	(1,535.5		)	(1,487.1		)	(795.3		)	(793.6		)	(1,542.0		)	(1,535.5		)
Impairment of assets	(9.8		)	(11.2		)	(11.1		)	(20.9		)	(6.1		)	(9.8		)	(7.3		)	(11.1		)
Restructuring and other charges	(15.9		)	(18.6		)	(38.3		)	(55.4		)	(14.5		)	(15.9		)	(44.1		)	(38.3		)
Total other operating expenses, net	(819.3		)	(802.5		)	(1,584.9		)	(1,563.4		)	(815.9		)	(819.3		)	(1,593.4		)	(1,584.9		)
Operating income	210.0			193.3			340.1			283.6			233.1			210.0			376.4			340.1
Interest expense	(6.0		)	(4.6		)	(10.4		)	(9.6		)	(4.4		)	(6.0		)	(8.6		)	(10.4		)
Interest income	10.4			2.3			19.6			4.3			9.6			10.4			21.2			19.6
Other income (expense), net	0.4			0.2			(1.6		)	(0.3		)	(1.7		)	0.4			(5.8		)	(1.6		)
Income before income taxes	214.8			191.2			347.7			278.0			236.6			214.8			383.2			347.7
Income tax provision	(44.5		)	(47.4		)	(68.4		)	(74.7		)	(54.5		)	(44.5		)	(84.0		)	(68.4		)
Net income	$	170.3		$	143.8		$	279.3		$	203.3		$	182.1		$	170.3		$	299.2		$	279.3
Net income per common share:
Basic	$	2.09		$	1.76		$	3.42		$	2.49		$	2.37		$	2.09		$	3.86		$	3.42
Diluted	$	2.07		$	1.75		$	3.37		$	2.47		$	2.34		$	2.07		$	3.79		$	3.37
Weighted average common shares outstanding:
Basic	81.3			81.7			81.6			81.6			76.7			81.3			77.4			81.6
Diluted	82.3			82.3			82.8			82.4			77.9			82.3			78.9			82.8
Dividends declared per share	$	0.625		$	0.50		$	1.25		$	1.00		$	0.6875		$	0.625		$	1.375		$	1.25

See accompanying notes.



	3

RALPH LAUREN CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

Three Months Ended Six Months Ended
September 29,
2018 September 30,
2017 September 29,
2018 September 30,
2017

(millions)
(unaudited)
Net income $ 170.3
$ 143.8
$ 279.3
$ 203.3
Other comprehensive income (loss), net of tax:
Foreign currency translation gains (losses) (6.2 ) 31.1
(36.9 ) 87.7
Net gains (losses) on cash flow hedges (0.2 ) (2.3 ) 27.5
(24.3 )
Net gains (losses) on defined benefit plans —
(0.1 ) 0.1
(0.4 )
Other comprehensive income (loss), net of tax (6.4 ) 28.7
(9.3 ) 63.0
Total comprehensive income $ 163.9
$ 172.5
$ 270.0
$ 266.3



	Three Months Ended						Six Months Ended
	September 28, 2019			September 29, 2018			September 28, 2019			September 29, 2018
	(millions)
Net income	$	182.1		$	170.3		$	299.2		$	279.3
Other comprehensive loss, net of tax:
Foreign currency translation losses	(19.9		)	(6.2		)	(15.9		)	(36.9		)
Net gains (losses) on cash flow hedges	13.6			(0.2		)	3.9			27.5
Net gains on defined benefit plans	0.1			—			—			0.1
Other comprehensive loss, net of tax	(6.2		)	(6.4		)	(12.0		)	(9.3		)
Total comprehensive income	$	175.9		$	163.9		$	287.2		$	270.0

See accompanying notes.



	4

RALPH LAUREN CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Six Months Ended						Six Months Ended
	September 29, 2018			September 30, 2017			September 28, 2019			September 29, 2018
	(millions) (unaudited)						(millions)
Cash flows from operating activities:
Net income	$	279.3		$	203.3		$	299.2		$	279.3
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense	140.0			146.7			132.8			140.0
Deferred income tax expense (benefit)	11.2			(25.3		)	(15.4		)	11.2
Non-cash stock-based compensation expense	42.8			39.4			50.8			42.8
Non-cash impairment of assets	11.1			20.9			7.3			11.1
Non-cash restructuring-related inventory charges	—			1.3			1.0			—
Other non-cash charges	6.2			4.4			3.1			6.2
Changes in operating assets and liabilities:
Accounts receivable	(18.7		)	(17.4		)	(91.0		)	(18.7		)
Inventories	(251.8		)	(53.4		)	(203.3		)	(251.8		)
Prepaid expenses and other current assets	(49.8		)	(1.9		)	(47.1		)	(49.8		)
Accounts payable and accrued liabilities	3.4			72.2			47.3			3.4
Income tax receivables and payables	29.5			51.4			17.1			29.5
Deferred income	(11.6		)	3.0			0.9			(11.6		)
Other balance sheet changes	21.4			(7.6		)	1.4			21.4
Net cash provided by operating activities	213.0			437.0			204.1			213.0
Cash flows from investing activities:
Capital expenditures	(93.1		)	(74.7		)	(130.6		)	(93.1		)
Purchases of investments	(1,822.8		)	(426.3		)	(571.6		)	(1,822.8		)
Proceeds from sales and maturities of investments	1,211.4			591.3			976.1			1,211.4
Acquisitions and ventures	(4.5		)	(3.6		)	0.9			(4.5		)
Proceeds from sale of property							20.8			—
Settlement of net investment hedges	(23.8		)	—			—			(23.8		)
Net cash provided by (used in) investing activities	(732.8		)	86.7			295.6			(732.8		)
Cash flows from financing activities:
Repayments of short-term debt	(9.9		)	—			—			(9.9		)
Proceeds from the issuance of long-term debt	398.1			—			—			398.1
Repayments of long-term debt	(300.0		)	—			—			(300.0		)
Payments of capital lease obligations	(10.5		)	(14.2		)
Payments of finance lease obligations							(7.7		)	(10.5		)
Payments of dividends	(91.3		)	(81.1		)	(101.9		)	(91.3		)
Repurchases of common stock, including shares surrendered for tax withholdings	(223.9		)	(14.6		)	(442.7		)	(223.9		)
Proceeds from exercise of stock options	21.8			0.1			—			21.8
Other financing activities	(2.8		)	—			(0.7		)	(2.8		)
Net cash used in financing activities	(218.5		)	(109.8		)	(553.0		)	(218.5		)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	(20.7		)	33.2			(9.9		)	(20.7		)
Net increase (decrease) in cash, cash equivalents, and restricted cash	(759.0		)	447.1
Net decrease in cash, cash equivalents, and restricted cash							(63.2		)	(759.0		)
Cash, cash equivalents, and restricted cash at beginning of period	1,355.5			711.8			626.5			1,355.5
Cash, cash equivalents, and restricted cash at end of period	$	596.5		$	1,158.9		$	563.3		$	596.5

See accompanying notes.



	5

RALPH LAUREN CORPORATION

CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)



	Three Months Ended September 28, 2019
	Common Stock^(a)			Additional Paid-in Capital					Treasury Stock at Cost
	Common Stock^(a)					Retained Earnings			Treasury Stock at Cost							Total Equity
	Shares	Amount				Retained Earnings			Shares	Amount			AOCI^(b)			Total Equity
	(millions)
Balance at June 29, 2019	129.6	$	1.3	$	2,516.8	$	5,878.6		52.4	$	(5,274.7	)	$	(109.2	)	$	3,012.8
Comprehensive income:
Net income						182.1
Other comprehensive loss													(6.2		)
Total comprehensive income																175.9
Dividends declared						(51.3		)								(51.3		)
Repurchases of common stock									2.7	(251.6		)				(251.6		)
Stock-based compensation				27.8												27.8
Shares issued pursuant to stock-based compensation plans	0.1	—		—												—
Balance at September 28, 2019	129.7	$	1.3	$	2,544.6	$	6,009.4		55.1	$	(5,526.3	)	$	(115.4	)	$	2,913.6

	Three Months Ended September 29, 2018
	Common Stock^(a)			Additional Paid-in Capital					Treasury Stock at Cost
	Common Stock^(a)					Retained Earnings			Treasury Stock at Cost							Total Equity
	Shares	Amount				Retained Earnings			Shares	Amount			AOCI^(b)			Total Equity
	(millions)
Balance at June 30, 2018	128.7	$	1.3	$	2,426.7	$	5,805.4		47.5	$	(4,711.0	)	$	(101.4	)	$	3,421.0
Comprehensive income:
Net income						170.3
Other comprehensive loss													(6.4		)
Total comprehensive income																163.9
Dividends declared						(50.3		)								(50.3		)
Repurchases of common stock									0.8	(93.9		)				(93.9		)
Stock-based compensation				21.3												21.3
Shares issued pursuant to stock-based compensation plans	0.1	—		—												—
Balance at September 29, 2018	128.8	$	1.3	$	2,448.0	$	5,925.4		48.3	$	(4,804.9	)	$	(107.8	)	$	3,462.0


^(a)	Includes Class A and Class B common stock. During the three months ended September 28, 2019, 0.5 million shares of Class B common stock were converted into an equal number of shares of Class A common stock pursuant to the terms of the Class B common stock (see Note 15).


^(b)	Accumulated other comprehensive income (loss).



	6

RALPH LAUREN CORPORATION

CONSOLIDATED STATEMENTS OF EQUITY (Continued)

(Unaudited)



	Six Months Ended September 28, 2019
	Common Stock^(a)			Additional Paid-in Capital					Treasury Stock at Cost
						Retained Earnings										Total Equity
	Shares	Amount							Shares	Amount			AOCI^(b)
	(millions)
Balance at March 30, 2019	128.8	$	1.3	$	2,493.8	$	5,979.1		50.7	$	(5,083.6	)	$	(103.4	)	$	3,287.2
Comprehensive income:
Net income						299.2
Other comprehensive loss													(12.0		)
Total comprehensive income																287.2
Dividends declared						(104.4		)								(104.4		)
Repurchases of common stock									4.4	(442.7		)				(442.7		)
Stock-based compensation				50.8												50.8
Shares issued pursuant to stock-based compensation plans	0.9	—		—												—
Cumulative adjustments from adoption of new accounting standards (see Note 4)						(164.5		)								(164.5		)
Balance at September 28, 2019	129.7	$	1.3	$	2,544.6	$	6,009.4		55.1	$	(5,526.3	)	$	(115.4	)	$	2,913.6

	Six Months Ended September 29, 2018
	Common Stock^(a)			Additional Paid-in Capital					Treasury Stock at Cost
						Retained Earnings										Total Equity
	Shares	Amount							Shares	Amount			AOCI^(b)
	(millions)
Balance at March 31, 2018	127.9	$	1.3	$	2,383.4	$	5,752.2		46.6	$	(4,581.0	)	$	(98.5	)	$	3,457.4
Comprehensive income:
Net income						279.3
Other comprehensive loss													(9.3		)
Total comprehensive income																270.0
Dividends declared						(101.0		)								(101.0		)
Repurchases of common stock									1.7	(223.9		)				(223.9		)
Stock-based compensation				42.8												42.8
Shares issued pursuant to stock-based compensation plans	0.9	—		21.8												21.8
Cumulative adjustments from adoption of new accounting standards						(5.1		)								(5.1		)
Balance at September 29, 2018	128.8	$	1.3	$	2,448.0	$	5,925.4		48.3	$	(4,804.9	)	$	(107.8	)	$	3,462.0


^(a)	Includes Class A and Class B common stock. During the six months ended September 28, 2019, 1.0 million shares of Class B common stock were converted into an equal number of shares of Class A common stock pursuant to the terms of the Class B common stock (see Note 15).


^(b)	Accumulated other comprehensive income (loss).

See accompanying notes.



	7

RALPH LAUREN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In millions, except per share data and where otherwise indicated)

(Unaudited)


1.	Description of Business

Ralph Lauren Corporation ("RLC") is a global leader in the design, marketing, and distribution of premium lifestyle products, including apparel, footwear, accessories, home furnishings, fragrances, and ~~other licensed product categories.~~hospitality. RLC's long-standing reputation and distinctive image have been developed across an expanding number of products, brands, sales channels, and international markets. RLC's brand names include Ralph Lauren, Ralph Lauren Collection, Ralph Lauren Purple Label, Polo Ralph Lauren, Double RL, Lauren Ralph Lauren, Polo Ralph Lauren Children, Chaps, and Club Monaco, among others. RLC and its subsidiaries are collectively referred to herein as the "Company," "we," "us," "our," and "ourselves," unless the context indicates otherwise.

The Company diversifies its business by geography (North America, Europe, and Asia, among other regions) and channel of distribution ~~(wholesale, retail,~~(retail, wholesale, and licensing). This allows the Company to maintain a dynamic balance as its operating results do not depend solely on the performance of any single geographic area or channel of distribution. The ~~Company's wholesale sales are made principally to major department stores and specialty stores around the world, as well as to certain unrelated third party-owned stores to which the~~ Company ~~has licensed the right to operate in defined geographic territories using its trademarks. The Company also~~ sells directly to consumers through its integrated retail channel, which includes its retail stores, concession-based shop-within-shops, and digital commerce operations around the world. The Company's wholesale sales are made principally to major department stores and specialty stores around the world, as well as to certain third party-owned stores to which the Company has licensed the right to operate in defined geographic territories using its trademarks. In addition, the Company licenses to ~~unrelated~~ third parties for specified periods the right to access its various trademarks in connection with the licensees' manufacture and sale of designated products, such as certain apparel, eyewear, fragrances, and home furnishings.

The Company organizes its business into the following ~~three~~3 reportable segments: North America, Europe, and Asia. In addition to these reportable segments, the Company also has other non-reportable segments. See Note 1718 for further discussion of the Company's segment reporting structure.


2.	Basis of Presentation

Interim Financial Statements

These interim consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the "SEC") and are unaudited. In the opinion of management, these consolidated financial statements contain all normal and recurring adjustments necessary to present fairly the consolidated financial position, income, comprehensive income, and cash flows of the Company for the interim periods presented. In addition, certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the U.S. ("U.S. GAAP") and the notes thereto have been condensed or omitted from this report as is permitted by the SEC's rules and regulations. However, the Company believes that the disclosures provided herein are adequate to prevent the information presented from being misleading.

This report should be read in conjunction with the Company's Annual Report on Form 10-K filed with the SEC for the fiscal year ended March ~~31, 2018~~30, 2019 (the "Fiscal ~~2018~~2019 10-K").

Basis of Consolidation

These unaudited interim consolidated financial statements present the consolidated financial position, income, comprehensive income, and cash flows of the Company, including all entities in which the Company has a controlling financial interest and is determined to be the primary beneficiary. All significant intercompany balances and transactions have been eliminated in consolidation.

Fiscal Periods

The Company utilizes a 52-53 week fiscal year ending on the Saturday closest to March 31. As such, fiscal year ~~2019~~2020 will end on March ~~30, 2019~~28, 2020 and will be a 52-week period ("Fiscal ~~2019~~2020"). Fiscal year ~~2018~~2019 ended on March ~~31, 2018~~30, 2019 and was also a



	68

RALPH LAUREN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

52-week period ("Fiscal ~~2018"~~2019"). The second quarter of Fiscal ~~2019~~2020 ended on September ~~29, 2018~~28, 2019 and was a 13-week period. The second quarter of Fiscal ~~2018~~2019 ended on September ~~30, 2017~~29, 2018 and was also a 13-week period.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the amounts reported in the financial statements and notes thereto. Actual results could differ materially from those estimates.

Significant estimates inherent in the preparation of the consolidated financial statements include reserves for bad debt, customer returns, discounts, end-of-season markdowns, operational chargebacks, and certain cooperative advertising allowances; the realizability of inventory; reserves for litigation and other contingencies; useful lives and impairments of long-lived tangible and intangible assets; fair value measurements; accounting for income taxes and related uncertain tax positions; valuation of stock-based compensation awards and related ~~estimated~~pre-vesting forfeiture rates; reserves for restructuring activity; and accounting for business combinations, among others.

Reclassifications

Certain reclassifications have been made to ~~the~~ prior ~~period's~~period financial information in order to conform to the current period's ~~presentation.~~presentation, including a change to the Company's segment reporting structure as further described in Note 18.

Seasonality of Business

The Company's business is typically affected by seasonal trends, with higher levels of retail sales in its second and third fiscal quarters and higher wholesale sales in its second and fourth ~~fiscal quarters and higher retail sales in its second and third~~ fiscal quarters. These trends result primarily from the timing of ~~seasonal wholesale shipments and~~ key vacation travel, back-to-school, and holiday shopping periods impacting ~~our~~its retail ~~business.~~business and the timing of seasonal wholesale shipments. As a result of changes in ~~our~~its business, consumer spending patterns, and the macroeconomic environment, historical quarterly operating trends and working capital requirements may not be indicative of ~~our~~the Company's future performance. In addition, fluctuations in sales, operating income, and cash flows in any fiscal quarter may be affected by other events affecting retail sales, such as changes in weather patterns. Accordingly, the Company's operating results and cash flows for the three-month and six-month periods ended September ~~29, 2018~~28, 2019 are not necessarily indicative of the operating results and cash flows that may be expected for the full Fiscal ~~2019.~~2020.


3.	Summary of Significant Accounting Policies

Revenue Recognition

The Company recognizes revenue across all ~~segments~~channels of the business when it satisfies its performance obligations by transferring control of promised products or services to its customers, which occurs either at a point in time or over time, depending on when the customer obtains the ability to direct the use of and obtain substantially all of the remaining benefits from the products or services. The amount of revenue recognized considers terms of sale that create variability in the amount of consideration that the Company ultimately expects to be entitled to in exchange for the products or services, and is subject to an overall constraint that a significant revenue reversal will not occur in future periods. Sales and other related taxes collected from customers and remitted to government authorities are excluded from revenue.

Revenue within the Company's wholesale business is generally recognized upon shipment of products, at which point title passes and risk of loss is transferred to the customer. In certain arrangements where the Company retains the risk of loss during shipment, revenue is recognized upon receipt of products by the customer. Wholesale revenue is recorded net of estimates of returns, discounts, end-of-season markdowns, operational chargebacks, and certain cooperative advertising allowances. Returns and allowances require pre-approval from management and discounts are based on trade terms. Estimates for end-of-season markdown reserves are based on historical trends, actual and forecasted seasonal results, an evaluation of current economic and market conditions, retailer performance, and, in certain cases, contractual terms. Estimates for operational chargebacks are based on actual customer notifications of order fulfillment discrepancies and historical trends. The Company reviews and refines these estimates on at least a quarterly basis. The Company's historical estimates of these amounts have not differed materially from actual results.



	7

~~RALPH LAUREN CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~Revenue within~~ the Company's retail business is recognized when the customer takes physical possession of the products, which occurs either at the point of sale for merchandise purchased at the Company's retail stores and concession-based shop-within-shops, or upon receipt of shipment for merchandise ordered through direct-to-consumer digital commerce sites. Such revenues are recorded net of estimated returns based on historical trends. Payment is due at the point of sale.

Gift cards issued to customers by the Company are recorded as a liability until they are redeemed, at which point revenue is recognized. The Company also estimates and recognizes revenue for gift card balances not expected to ever be redeemed (referred to as "breakage") to the extent that it does not have a legal obligation to remit the value of such unredeemed gift cards to the relevant jurisdiction as unclaimed or abandoned property. Such estimates are based upon historical redemption trends, with breakage income recognized in proportion to the pattern of actual customer redemptions.



	9

RALPH LAUREN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Revenue from the Company's wholesale business is generally recognized upon shipment of products, at which point title passes and risk of loss is transferred to the customer. In certain arrangements where the Company retains the risk of loss during shipment, revenue is recognized upon receipt of products by the customer. Wholesale revenue is recorded net of estimates of returns, discounts, end-of-season markdowns, operational chargebacks, and certain cooperative advertising allowances. Returns and allowances require pre-approval from management and discounts are based on trade terms. Estimates for end-of-season markdown reserves are based on historical trends, actual and forecasted seasonal results, an evaluation of current economic and market conditions, retailer performance, and, in certain cases, contractual terms. Estimates for operational chargebacks are based on actual customer notifications of order fulfillment discrepancies and historical trends. The Company reviews and refines these estimates on at least a quarterly basis. The Company's historical estimates of these amounts have not differed materially from actual results.

Revenue from the Company's licensing arrangements is recognized over time during the period that licensees are provided access to the Company's trademarks (i.e., symbolic intellectual property) and benefit from such access through their sales of licensed products. These arrangements require licensees to pay a sales-based royalty, which for ~~certain~~most arrangements may be subject to a contractually-guaranteed minimum royalty amount. Payments are generally due quarterly and, depending on time of receipt, may be recorded as a liability until recognized as revenue. The Company recognizes revenue for ~~its~~ sales-based royalty arrangements (including those for which the royalty exceeds any contractually-guaranteed minimum royalty amount) as licensed products are sold by the licensee. If a sales-based royalty is not ultimately expected to exceed a contractually-guaranteed minimum royalty amount, the minimum is recognized as revenue ratably over the contractual period. This sales-based output measure of progress and pattern of recognition best represents the value transferred to the licensee over the term of the arrangement, as well as the amount of consideration that the Company is entitled to receive in exchange for providing access to its trademarks. As of September ~~29, 2018,~~28, 2019, contractually-guaranteed minimum royalty amounts expected to be recognized as revenue during future periods were as follows:



	Contractually-Guaranteed Minimum Royalties^(a)
	(millions)
Remainder of Fiscal 2020	$	57.0
Fiscal 2021	116.5
Fiscal 2022	78.4
Fiscal 2023	42.8
Fiscal 2024 and thereafter	25.6
Total	$	320.3

Contractually-Guaranteed
Minimum Royalties^(a)
(millions)
Remainder of Fiscal 2019 $ 53.9
Fiscal 2020 88.5
Fiscal 2021 81.5
Fiscal 2022 and thereafter 65.7
Total $ 289.6


^(a)	Amounts presented do not contemplate anticipated contract renewals or royalties earned in excess of ~~the~~ contractually guaranteed minimums.

See Note 4 for discussion of the Company's adoption of the new revenue recognition accounting standard as of the beginning of the first quarter of Fiscal 2019 and the resulting impact to its consolidated financial statements.

Disaggregated Net Revenues

The following tables disaggregate the Company's net revenues into categories that depict how the nature, amount, timing, and uncertainty of revenues and cash flows are affected by economic factors for the fiscal periods presented:


	Three Months Ended																				Three Months Ended
	September 29, 2018										September 30, 2017										September 28, 2019										September 29, 2018
	North America		Europe		Asia		Other		Total		North America		Europe		Asia		Other		Total		North America		Europe		Asia		Other		Total		North America		Europe		Asia		Other		Total
	(millions)																				(millions)
Sales Channel^(a):
Retail																					$	457.9	$	238.6	$	233.3	$	45.4	$	975.2	$	435.4	$	227.6	$	222.5	$	47.4	$	932.9
Wholesale	$	452.8	$	231.6	$	22.2	$	7.0	$	713.6	$	451.3	$	233.5	$	17.9	$	7.3	$	710.0	423.3		241.6		22.0		1.9		688.8		452.8		237.1		22.2		1.5		713.6
Retail	435.4		227.6		222.5		47.4		932.9		424.3		229.5		198.9		54.6		907.3
Licensing	—		—		—		44.4		44.4		—		—		—		46.9		46.9		—		—		—		42.2		42.2		—		—		—		44.4		44.4
Total	$	888.2	$	459.2	$	244.7	$	98.8	$	1,690.9	$	875.6	$	463.0	$	216.8	$	108.8	$	1,664.2	$	881.2	$	480.2	$	255.3	$	89.5	$	1,706.2	$	888.2	$	464.7	$	244.7	$	93.3	$	1,690.9



	810

RALPH LAUREN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


	Six Months Ended																				Six Months Ended
	September 29, 2018										September 30, 2017										September 28, 2019										September 29, 2018
	North America		Europe		Asia		Other		Total		North America		Europe		Asia		Other		Total		North America		Europe		Asia		Other		Total		North America		Europe		Asia		Other		Total
	(millions)																				(millions)
Sales Channel^(a):
Retail																					$	861.0	$	457.1	$	479.8	$	94.9	$	1,892.8	$	822.9	$	440.2	$	457.9	$	97.3	$	1,818.3
Wholesale	$	762.9	$	369.6	$	34.8	$	12.5	$	1,179.8	$	764.6	$	349.1	$	25.8	$	13.3	$	1,152.8	739.6		383.9		34.1		3.7		1,161.3		762.9		379.8		34.8		2.3		1,179.8
Retail	822.9		440.2		457.9		97.3		1,818.3		820.7		437.4		400.1		111.6		1,769.8
Licensing	—		—		—		83.4		83.4		—		—		—		88.7		88.7		—		—		—		80.9		80.9		—		—		—		83.4		83.4
Total	$	1,585.8	$	809.8	$	492.7	$	193.2	$	3,081.5	$	1,585.3	$	786.5	$	425.9	$	213.6	$	3,011.3	$	1,600.6	$	841.0	$	513.9	$	179.5	$	3,135.0	$	1,585.8	$	820.0	$	492.7	$	183.0	$	3,081.5


^(a)	Net revenues from the Company's ~~wholesale~~retail and ~~retail~~wholesale businesses are recognized at a point in time. Net revenues from the Company's licensing business are recognized over time.

Deferred Income

Deferred income represents cash payments received in advance of the Company's transfer of control of products or services to its customers and is generally comprised of unredeemed gift cards, net of breakage, and advance royalty payments from licensees. The Company's deferred income balances were ~~$20.0~~$15.5 million and ~~$31.7~~$14.8 million as of September ~~29, 2018~~28, 2019 and March ~~31, 2018,~~30, 2019, respectively, and were primarily recorded within accrued expenses and other current liabilities within the consolidated balance sheets. During the three-month and six-month periods ended September ~~29, 2018,~~28, 2019, the Company recognized ~~$1.6~~$1.5 million and ~~$14.9~~$7.2 million, respectively, of net revenues from amounts recorded as deferred income as of March ~~31, 2018.~~30, 2019. The change in deferred income during the six months ended September 29, 2018 also reflected a reduction of $6.1 million related to the Company's initial adoption of ASU 2014-09 (see Note 4). Substantially allmajority of the deferred income balance as of September ~~29, 2018~~28, 2019 is expected to be recognized as revenue within the next twelve months.

Shipping and Handling Costs

~~The costs~~Costs associated with shipping goods to the Company's customers are accounted for as fulfillment activities and reflected as a component of selling, general, and administrative ("SG&A") expenses in the consolidated statements of operations. ~~The costs~~Costs of preparing merchandise for sale, such as picking, packing, warehousing, and order charges ("handling costs"), are also included in SG&A expenses. Shipping and handling costs billed to customers are included in revenue.

A summary of shipping and handling costs for the fiscal periods presented is as follows:



	Three Months Ended				Six Months Ended
	September 28, 2019		September 29, 2018		September 28, 2019		September 29, 2018
	(millions)
Shipping costs	$	12.5	$	10.9	$	22.4	$	19.6
Handling costs	39.5		39.0		75.7		74.7

Three Months Ended Six Months Ended
September 29,
2018 September 30,
2017 September 29,
2018 September 30,
2017
(millions)
Shipping costs $ 10.9
$ 9.4
$ 19.6
$ 16.7
Handling costs 39.0
38.4
74.7
75.6

Net Income per Common Share

Basic net income per common share is computed by dividing net income attributable to common shares by the weighted-average number of common shares outstanding during the period. Weighted-average common shares include shares of the Company's Class A and Class B common stock. Diluted net income per common share adjusts basic net income per common share for the dilutive effects of outstanding stock options, restricted stock units ("RSUs"), and any other potentially dilutive instruments, only in the periods in which such effects are dilutive.



	911

RALPH LAUREN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The weighted-average number of common shares outstanding used to calculate basic net income per common share is reconciled to shares used to calculate diluted net income per common share as follows:



	Three Months Ended		Six Months Ended
	September 28, 2019	September 29, 2018	September 28, 2019	September 29, 2018
	(millions)
Basic shares	76.7	81.3	77.4	81.6
Dilutive effect of stock options and RSUs	1.2	1.0	1.5	1.2
Diluted shares	77.9	82.3	78.9	82.8

Three Months Ended Six Months Ended
September 29,
2018 September 30,
2017 September 29,
2018 September 30,
2017
(millions)
Basic shares 81.3
81.7
81.6
81.6
Dilutive effect of stock options and RSUs 1.0
0.6
1.2
0.8
Diluted shares 82.3
82.3
82.8
82.4

All earnings per share amounts have been calculated using unrounded numbers. Options to purchase shares of the Company's Class A common stock at an exercise price greater than the average market price of the common stock during the reporting period are anti-dilutive and therefore not included in the computation of diluted net income per common share. In addition, the Company has outstanding performance-based and market-based RSUs, which are included in the computation of diluted shares only to the extent that the underlying performance or market conditions (i) have been satisfied as of the end of the reporting period or (ii) would be considered satisfied if the end of the reporting period were the end of the related contingency period and the result would be dilutive. As of September 28, 2019 and September 29, 2018 ~~and~~ ~~September 30, 2017~~, there were 1.1 million and 1.5 million ~~and~~ ~~2.3 million~~, respectively, of additional shares issuable upon exercise of anti-dilutive options and contingent vesting of performance-based RSUs that were excluded from the diluted shares calculations.

Accounts Receivable

In the normal course of business, the Company extends credit to wholesale customers that satisfy defined credit criteria. Payment is generally due within 30 to 120 days and does not include a significant financing component. Accounts receivable is recorded at carrying value, which approximates fair value, and is presented in the Company's consolidated balance sheets net of certain reserves and allowances. These reserves and allowances consist of (i) reserves for returns, discounts, end-of-season markdowns, operational chargebacks, and certain cooperative advertising allowances (see the "Revenue Recognition" section above for further discussion of related accounting policies) and (ii) allowances for doubtful accounts.

A rollforward of the activity in the Company's reserves for returns, discounts, end-of-season markdowns, operational chargebacks, and certain cooperative advertising allowances is presented below:



	Three Months Ended						Six Months Ended
	September 28, 2019			September 29, 2018			September 28, 2019			September 29, 2018
	(millions)
Beginning reserve balance	$	165.5		$	167.2		$	176.5		$	202.5
Amount charged against revenue to increase reserve	168.6			150.5			282.5			250.2
Amount credited against customer accounts to decrease reserve	(135.8		)	(119.2		)	(261.7		)	(249.3		)
Foreign currency translation	(2.8		)	0.2			(1.8		)	(4.7		)
Ending reserve balance	$	195.5		$	198.7		$	195.5		$	198.7

Three Months Ended Six Months Ended
September 29,
2018 September 30,
2017 September 29,
2018 September 30,
2017
(millions)
Beginning reserve balance $ 167.2
$ 199.6
$ 202.5
$ 202.8
Amount charged against revenue to increase reserve 150.5
175.6
250.2
293.3
Amount credited against customer accounts to decrease reserve (119.2 ) (146.2 ) (249.3 ) (272.2 )
Foreign currency translation 0.2
2.5
(4.7 ) 7.6
Ending reserve balance $ 198.7
$ 231.5
$ 198.7
$ 231.5

An allowance for doubtful accounts is determined through an analysis of accounts receivable aging, assessments of collectability based on an evaluation of historical and anticipated trends, the financial condition of the Company's customers, and an evaluation of the impact of economic conditions, among other factors.



	1012

RALPH LAUREN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

A rollforward of the activity in the Company's allowance for doubtful accounts is presented below:


	Three Months Ended						Six Months Ended						Three Months Ended						Six Months Ended
	September 29, 2018			September 30, 2017			September 29, 2018			September 30, 2017			September 28, 2019			September 29, 2018			September 28, 2019			September 29, 2018
	(millions)												(millions)
Beginning reserve balance	$	18.7		$	13.9		$	19.7		$	11.6		$	15.0		$	18.7		$	15.7		$	19.7
Amount recorded to expense to increase (decrease) reserve^(a)	(0.5		)	3.8			(0.5		)	6.3			1.4			(0.5		)	1.5			(0.5		)
Amount written-off against customer accounts to decrease reserve	(1.0		)	(0.7		)	(1.4		)	(1.4		)	(0.4		)	(1.0		)	(1.4		)	(1.4		)
Foreign currency translation	—			0.3			(0.6		)	0.8			(0.4		)	—			(0.2		)	(0.6		)
Ending reserve balance	$	17.2		$	17.3		$	17.2		$	17.3		$	15.6		$	17.2		$	15.6		$	17.2


^(a)	Amounts recorded to bad debt expense are included within SG&A expenses in the consolidated statements of operations.

Concentration of Credit Risk

The Company sells its wholesale merchandise primarily to major department and specialty stores around the world, and extends credit based on an evaluation of each customer's financial capacity and condition, usually without requiring collateral. In the Company's wholesale business, concentration of credit risk is relatively limited due to the large number of customers and their dispersion across many geographic areas. However, the Company has ~~three~~3 key wholesale customers that generate significant sales volume. During Fiscal ~~2018~~2019, the Company's sales to its 3largest wholesale ~~customer, Macy's, Inc. ("Macy's"),~~customers accounted for approximately 8% ~~of total net revenues, and the Company's sales to its~~ ~~three~~ ~~largest wholesale customers, including Macy's, accounted for approximately~~ 19% of total net revenues. Substantially all of the Company's sales to its three largest wholesale customers related to its North America segment. As of September ~~29, 2018~~28, 2019, these ~~three~~3 key wholesale customers constituted approximately ~~34%~~27% of total gross accounts receivable.

Inventories

The Company holds inventory that is sold in its retail stores and digital commerce sites directly to consumers. The Company also holds inventory that is sold through wholesale distribution channels to major department stores and specialty retail stores. ~~The Company also holds retail inventory that is sold in its own stores and digital commerce sites directly to consumers.~~ Substantially all of the Company's inventories are comprised of finished goods, which are stated at the lower of cost or estimated realizable value, with cost determined on a weighted-average cost basis. Inventory held by the Company totaled ~~$994.6 million, $761.3~~$1.013 billion, $817.8 million, and ~~$864.6~~$994.6 million as of September 28, 2019, March 30, 2019, and September 29, 2018, ~~March 31, 2018,~~respectively.

Leases

As discussed in Note 4, the Company adopted a new lease accounting standard as of the beginning of Fiscal 2020.

The Company's lease arrangements primarily relate to real estate, including its retail stores, concession-based shop-within-shops, corporate offices, and ~~September 30, 2017, respectively.~~warehouse facilities, and to a lesser extent, certain equipment and other assets. The Company's leases generally have initial terms ranging from 3 to 15 years and may include renewal or early-termination options, rent escalation clauses, and/or lease incentives in the form of construction allowances and rent abatements. Renewal rent payment terms generally reflect market rates prevailing at the time of renewal. The Company is typically required to make fixed minimum rent payments, variable rent payments based on performance (e.g., percentage-of-sales-based payments), or a combination thereof, directly related to its right to use an underlying leased asset. The Company is also often required to pay for certain other costs that do not relate specifically to its right to use an underlying leased asset, but that are associated with the asset, including real estate taxes, insurance, common area maintenance fees, and/or certain other costs (referred to collectively herein as "non-lease components"), which may be fixed or variable in amount, depending on the terms of the respective lease agreement. The Company's leases do not contain significant residual value guarantees or restrictive covenants.

The Company determines whether an arrangement contains a lease at the arrangement's inception. If a lease is determined to exist, its related term is assessed at lease commencement, once the underlying asset is made available by the lessor for the Company's use. The Company's assessment of the lease term reflects the non-cancellable period of the lease, inclusive of any rent-free periods and/or periods covered by early-termination options for which the Company is reasonably certain of not exercising,



	13

RALPH LAUREN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

as well as periods covered by renewal options for which it is reasonably certain of exercising. The Company also determines lease classification as either operating or finance (formerly referred to as "capital") at lease commencement, which governs the pattern of expense recognition and the presentation thereof reflected in the consolidated statements of operations over the lease term.

For leases with a lease term exceeding 12 months, a lease liability is recorded on the Company's consolidated balance sheet at lease commencement reflecting the present value of its fixed payment obligations over the lease term. A corresponding right-of-use ("ROU") asset equal to the initial lease liability is also recorded, increased by any prepaid rent and/or initial direct costs incurred in connection with execution of the lease, and reduced by any lease incentives received. The Company includes fixed payment obligations related to non-lease components in the measurement of ROU assets and lease liabilities, as it elects to account for lease and non-lease components together as a single lease component. Variable lease payments are not included in the measurement of ROU assets and lease liabilities. ROU assets associated with finance leases are presented separate from those associated with operating leases, and are included within property and equipment, net on the Company's consolidated balance sheet. For purposes of measuring the present value of its fixed payment obligations for a given lease, the Company uses its incremental borrowing rate, determined based on information available at lease commencement, as rates implicit in its leasing arrangements are not readily determinable. The Company's incremental borrowing rate reflects the rate it would pay to borrow on a secured basis, and incorporates the term and economic environment of the lease.

For operating leases, fixed lease payments are recognized as operating lease cost on a straight-line basis over the lease term. For finance leases, the initial ROU asset is depreciated on a straight-line basis over the lease term, along with recognition of interest expense associated with accretion of the lease liability, which is ultimately reduced by the related fixed payments as they are made. For leases with a lease term of 12 months or less (referred to as a "short-term lease"), any fixed lease payments are recognized on a straight-line basis over such term, and are not recognized on the consolidated balance sheet. Variable lease cost, if any, is recognized as incurred for all leases.

ROU assets, along with any other related long-lived assets, are periodically evaluated for impairment (see Note 11). To the extent that an ROU asset and any related long-lived assets are determined to be impaired, they are written down accordingly on a relative carrying amount basis, with the ROU asset written down to an amount no lower than its estimated fair value. Subsequent to the recognition of any such impairment, total remaining lease cost is recognized on a front-loaded basis over the remaining lease term.

See Note 13 for further discussion of the Company's leases.

Derivative Financial Instruments

The Company records all derivative financial instruments on its consolidated balance sheets at fair value. Changes in the fair value of derivative instruments that qualify for hedge accounting are either (i) offset against the changes in fair value of the related hedged assets, liabilities, or firm commitments through earnings or (ii) recognized in equity as a component of accumulated other comprehensive income (loss) ("AOCI") until the hedged item is recognized in earnings, depending on whether the derivative is being used to hedge against changes in fair value or cash flows and net investments, respectively.

Each derivative instrument that qualifies for hedge accounting is expected to be highly effective atin reducing and offsetting the risk associated with the related exposure being hedged. For each derivative instrument that is designated as a hedge, the Company formally documents the related risk management objective and strategy, including identification of the hedging instrument, the hedged item, and the risk exposure, as well as how hedge effectiveness will be assessed ~~prospectively and retrospectively~~ over the instrument's term. To assess hedge effectiveness at the inception of a hedging relationship, the Company generally uses regression analysis, a statistical method, to compare ~~the change~~changes in the fair value of the derivative instrument to changes in the ~~change in~~ fair value or cash flows of the related hedged item. The extent to which a hedging instrument has been and is expected to remain highly effective in achieving offsetting changes in fair value or cash flows is assessed ~~and documented~~ by the Company on at least a quarterly basis.

As a result of its use of derivative instruments, the Company is exposed to the risk that counterparties to such contracts will fail to meet their contractual obligations. To mitigate this counterparty credit risk, the Company has a policy of only entering into



	11

~~RALPH LAUREN CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

contracts with carefully selected financial institutions based upon an evaluation of their credit ratings and certain other factors, adhering to established limits for credit exposure. The Company's established policies and procedures for mitigating credit risk from derivative transactions include ongoing review and assessment of its counterparties' creditworthiness. The Company also enters into master netting arrangements with counterparties, when possible, to further mitigate credit ~~risk associated with its derivative instruments.~~risk. In the event of default or termination (as such terms are defined within the respective master netting arrangement), these arrangements allow the Company



	14

RALPH LAUREN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

to net-settle amounts payable and receivable related to multiple derivative transactions with the same counterparty. The master netting arrangements specify a number of events of default and termination, including, among others, the failure to make timely payments.

The fair values of the Company's derivative instruments are recorded on its consolidated balance sheets on a gross basis. For cash flow reporting purposes, proceeds received or amounts paid upon the settlement of a derivative instrument are classified in the same manner as the related item being hedged, primarily within cash flows from operating activities.

Cash Flow Hedges

~~Forecasted Inventory Transactions~~ ~~— recognized as part of the cost of the inventory being hedged within cost of goods sold when the related inventory is sold to a third party.~~

~~Intercompany Royalties/Settlement of Foreign Currency Balances~~ ~~— recognized within other income (expense), net during the period that the hedged balance is remeasured through earnings, generally through its settlement when the related payment occurs.~~


•	Forecasted Inventory Transactions — recognized as part of the cost of the inventory being hedged within cost of goods sold when the related inventory is sold to a third party.


•	Settlement of Foreign Currency Balances — recognized within other income (expense), net during the period that the hedged balance is remeasured through earnings, generally through its ultimate settlement when the related payment occurs.

If it is determined that a derivative instrument has not been highly effective, and will continue not to be highly effective in hedging the designated exposure, hedge accounting is discontinued and further gains (losses) are immediately recognized in earnings within other income (expense), net. Upon discontinuance of hedge accounting, the cumulative change in fair value of the derivative instrument previously recorded in AOCI is recognized in earnings when the related hedged item affects earnings, consistent with the originally-documented hedging strategy, unless the forecasted transaction is no longer probable of occurring, in which case the accumulated amount is immediately recognized in earnings within other income (expense), net.

~~Hedge~~Hedges of a Net ~~Investment~~Investments in a Foreign ~~Operation~~Operations

The Company periodically uses cross-currency swap contracts and forward foreign currency exchange contracts to reduce risk associated with exchange rate fluctuations on certain of its net investments in foreign subsidiaries. Changes in the fair values of such derivative instruments that are designated as qualifying hedges of net investments in foreign operations are recorded in equity as a component of AOCI in the same manner as foreign currency translation adjustments. In assessing the effectiveness of such hedges, the Company uses a method based on changes in spot rates to measure the impact of foreign currency exchange rate fluctuations on both its foreign subsidiary net investment and the related derivative hedging instrument. Under this method, changes in the fair value of the hedging instrument other than those due to changes in the spot rate are initially recorded in AOCI as a translation adjustment, and are amortized into earnings as interest expense using a systematic and rational method over the instrument's term. Changes in fair value associated with the effective portion (i.e., those due to changes in the spot rate) are recorded in AOCI as a translation adjustment and are released and recognized in earnings only upon the sale or liquidation of the hedged net investment.

Fair Value Hedges

Changes in the fair value of a derivative instrument that is designated as a fair value hedge, along with offsetting changes in the fair value of the related hedged item attributable to the hedged risk, are recorded in earnings. To the extent that the change in the fair value of the hedged item does not fully offset the change in the fair value of the hedging instrument, the resulting net impact is reflected in earnings within the income statement line item associated with the hedged item.



	12

~~RALPH LAUREN CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

Undesignated Hedges

All of the Company's undesignated hedges are entered into to hedge specific economic risks, particularly foreign currency exchange rate risk related to foreign currency-denominated balances. Changes in the fair value of undesignated derivative instruments are immediately recognized in earnings within other income (expense), net.



	15

RALPH LAUREN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

See Note 12 for further discussion of the Company's derivative financial instruments.

Refer to Note 3 of the Fiscal ~~2018~~2019 10-K for a summary of all of the Company's significant accounting policies.


4.	Recently Issued Accounting Standards

Implementation Costs in Cloud Computing Arrangements

In August 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2018-15, "Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract" ("ASU 2018-15"). ASU 2018-15 addresses diversity in practice surrounding the accounting for costs incurred to implement a cloud computing hosting arrangement that is a service contract by establishing a model for capitalizing or expensing such costs, depending on their nature and the stage of the implementation project during which they are incurred. Any capitalized costs are to be amortized over the reasonably certain term of the hosting arrangement and presented in the same line ~~as the service arrangement's fees~~ within the statement of ~~operations.~~operations as the related service arrangement's fees. ASU 2018-15 also requires enhanced qualitative and quantitative disclosures surrounding hosting arrangements that are service contracts. ASU 2018-15 is effective for the Company beginning in its fiscal year ending March 27, 2021 ("Fiscal 2021"), with early adoption permitted, and may be adopted on either a retrospective or prospective basis. ~~The Company is currently in the process of evaluating~~Although the impact ~~that~~of adopting ASU 2018-15 will depend on the composition of its cloud computing arrangements in place at that time, other than the new disclosure requirements, the Company does not currently expect that it will have a material impact on its consolidated financial ~~statements and related disclosures.~~statements.

~~Targeted Improvements to Accounting for Hedging Activities~~Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income

In ~~August 2017,~~February 2018, the FASB issued ASU No. ~~2017-12, "Targeted Improvements to Accounting for Hedging Activities"~~2018-02, "Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income" ("ASU ~~2017-12"~~2018-02"). ~~ASU 2017-12 amends existing hedge~~Existing accounting guidance ~~by better aligning an entity's financial reporting with its risk management activities~~requires the remeasurement of deferred tax assets and by simplifying its application. Among its provisions, ASU 2017-12 eliminates the requirement to separately measure and report ineffectiveness for instruments that qualify for hedge accounting, and generally requires that the entireliabilities resulting from a change in ~~fair value~~tax laws and rates to be presented within net income, including deferred taxes related to items recorded within AOCI. ASU 2018-02 provides an entity with the option to adjust AOCI for the "stranded" tax effect of such ~~instruments ultimately be presented~~remeasurements resulting from the reduction in the ~~same~~U.S. federal statutory income ~~statement line as~~tax rate under the ~~respective hedged item. Additionally, the updated guidance reduces the overall complexity of the hedge accounting model, including easing documentation~~2017 Tax Cuts and ~~effectiveness assessment requirements and modifying the treatment of components excluded from the assessment of hedge effectiveness. The new guidance also broadens the scope of risks eligible~~Jobs Act (the "TCJA") through a reclassification to qualify for hedge accounting and enhances the understandability of hedge results through amended disclosure requirements. ASU 2017-12 is to be applied using a modified retrospective transition approach, except for the amended presentation and disclosure requirements, which are to be applied prospectively.retained earnings.

The Company ~~early-adopted~~adopted ASU ~~2017-12~~2018-02 as of the beginning of the first quarter of Fiscal ~~2019, which resulted~~2020 and elected to reclassify the income tax effect stranded in AOCI related to the TCJA, inclusive of state income tax-related effects, resulting in a ~~cumulative adjustment of~~ ~~$0.7~~$4.9 million~~, net of tax,~~ increase to ~~increase~~ its opening retained earnings balance. ~~Overall,~~The Company generally releases income tax effects from AOCI when the ~~adoption~~corresponding pretax AOCI items are reclassified to earnings.

Measurement of ~~ASU 2017-12 did not have a material impact~~Credit Losses on ~~the Company's consolidated financial statements.~~Financial Instruments

~~Intra-Entity Transfers of Assets Other Than Inventory~~

In ~~October~~June 2016, the FASB issued ASU No. ~~2016-16, "Intra-Entity Transfers~~2016-13, "Measurement of ~~Assets Other Than Inventory"~~Credit Losses on Financial Instruments" ("ASU ~~2016-16"~~2016-13"). ASU ~~2016-16 requires~~2016-13, which was further updated and clarified by the FASB through issuance of additional related ASUs, amends the guidance surrounding measurement and recognition of ~~income tax consequences~~credit losses on financial assets measured at amortized cost, including trade receivables and investments in debt securities, by requiring recognition of an ~~intra-entity transfer~~allowance for credit losses expected to be incurred over an asset's lifetime based on relevant information about past events, current conditions, and supportable forecasts impacting its ultimate collectibility. This "expected loss" model will result in earlier recognition of credit losses than the current "as incurred" model, under which losses are recognized only upon an occurrence of an ~~asset other than inventory when~~event that gives rise to the ~~transfer occurs, rather than when~~incurrence of a probable loss. ASU 2016-13 is effective for the ~~asset has been sold~~Company beginning in its Fiscal 2021, with early adoption permitted, and is to be adopted on a ~~third party.~~modified retrospective basis. The Company ~~adopted~~is currently evaluating the impact that ASU ~~2016-16 as of the beginning of the first quarter of Fiscal 2019 using the modified retrospective method, which resulted in a cumulative adjustment of~~ ~~$0.6 million~~ ~~to reduce~~2016-13 will have on its ~~opening retained earnings balance. Overall, the adoption of ASU 2016-16 did not have a material impact on the Company's~~ consolidated financial ~~statements.~~statements, if any.



	1316

RALPH LAUREN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Leases

In February 2016, the FASB issued ASU No. 2016-02, ~~"Leases" ("~~"Leases." ASU No. 2016-02, along with certain other ASUs that were subsequently issued to clarify and modify certain of its provisions (collectively "ASU 2016-02")~~. ASU 2016-02~~, supersedes historical lease accounting guidance and requires that, among its provisions, a lessee's rights and fixed payment obligations under most leases be recognized as ~~right-of-use~~ROU assets and lease liabilities on its balance sheet, initially measured based on the ~~consolidated~~present value of its fixed payment obligations over the lease term. Under historical guidance, only those leases classified as capital were recognized on a lessee's balance sheet; operating leases were not recognized on the balance sheet. ASU 2016-02 retains a dual model for classifying leases as either ~~financing~~finance (formerly referred to as "capital") or operating, consistent with historical guidance, which governs the pattern of expense recognition ~~to be~~ reflected in the ~~consolidated~~ statement of ~~operations. Variable~~operations over the lease term. Accordingly, recognition of lease expense in the statement of operations will not significantly change. Additionally, variable lease payments based on performance, such as percentage-of-sales-based payments, ~~will~~are not be included in the measurement of ~~right-of-use~~ROU assets and lease ~~liabilities. Rather,~~liabilities and, consistent with ~~current~~historical practice, ~~such amounts will be~~are recognized as an expense in the period incurred.

The Company is currently in the process of evaluating the impact that ASU 2016-02 will have on its consolidated financial statements and related disclosures. The Company's assessment efforts to date have included reviewing the standard's provisions and gathering information to evaluate the landscape of its real estate, personal property, and other arrangements that may meet the definition of a lease. Based on these efforts, the Company currently anticipates that the adoption of ASU 2016-02 will result in a significant increase to its long-term assets and liabilities as, at a minimum, most of its current operating lease commitments will be subject to balance sheet recognition. The standard also requires enhanced quantitative and qualitative lease-related disclosures. ~~Recognition of lease expense in the consolidated statement of operations is not anticipated to significantly change.~~

The Company ~~will adopt~~adopted ASU 2016-02 inas of the beginning of the first quarter of ~~its fiscal year ending March 28,~~Fiscal 2020 ~~("Fiscal 2020")~~ using a modified retrospective approach under which the cumulative effect of initially applying the standard ~~will be~~was recognized as an adjustment to its opening ~~Fiscal 2020~~ retained earnings (discussed further below), with no restatement of prior year amounts. In connection therewith, the Company ~~anticipates it will apply~~applied an optional package of practical expedients intended to ease transition to the standard for existing leases by, among its provisions, ~~allowing the Company to carryforward~~carrying forward its original lease classification conclusions ~~(i.e., financing or operating)~~ without reassessment. Upon adoption of ASU 2016-02, the Company recognized initial ROU asset and lease liability balances of approximately $1.60 billion and $1.75 billion, respectively, on its consolidated balance sheet.

Additionally, in connection with its adoption of ASU 2016-02, the Company recorded an adjustment to reduce its opening retained earnings balance by $131.6 million, net of related income tax benefits, reflecting the impairment of an ROU asset for a certain real estate lease of which, under historical accounting guidance, the Company was previously deemed the owner for accounting purposes (commonly referred to as a "build-to-suit" lease arrangement). Specifically, although the Company no longer generates revenue or other cash flows from its rights underlying the leased asset given it no longer actively uses the space for commercial purposes, the asset was previously not considered impaired under historical accounting guidance as its fair value, assessed from an ownership perspective (and not from that of a lessee), exceeded its carrying value. However, in accordance with and upon transitioning to ASU 2016-02, the Company derecognized the remaining asset and liability balances previously recognized solely as a result of the arrangement's build-to-suit designation, as the related construction activities that originally gave rise to such designation have since ended, and established initial ROU asset and lease liability balances measured based on the Company's remaining fixed payment obligations under the lease. The initial ROU asset was then assessed for impairment based on the aggregate estimated cash flows that could be generated by transferring the lease to a market participant sublessee for the remainder of its term, which were lower than the aggregate remaining lease payments underlying the measurement of the initial ROU asset. Accordingly, the Company ~~is also evaluating~~impaired the initial ROU asset by $175.4 million to its estimated fair value which ~~if any,~~was recorded as a reduction to its opening retained earnings balance, net of ~~certain other expedients it will elect~~related income tax benefits of $43.8 million, upon adoption ~~including the use~~ of ~~hindsight in assessing factors that impact determination of the lease term, such~~ASU 2016-02, as ~~the likelihood that any renewal or purchase options are exercised.~~

~~Revenue from Contracts with Customers~~

In May 2014, the FASB issued ASU No. 2014-09, "Revenue from Contracts with Customers" ("ASU 2014-09"). ASU 2014-09 provides a single, comprehensive accounting model for revenues arising from contracts with customers that supersedes most previously existing revenue recognition guidance, including industry-specific guidance. Under this model, revenue, representing the amount that an entity expects to be entitled to in exchange for providing promised goods or services (i.e., performance obligations), is recognized upon control of promised goods or services transferring to a customer. ASU 2014-09 also requires enhanced qualitative and quantitative revenue-related disclosures. After its original issuance, the FASB issued several additional related ASUs to address implementation concerns and further amend and clarify certain guidance within ASU 2014-09.noted.

The Company ~~adopted ASU 2014-09 as~~also recorded other initial ROU asset impairment adjustments to reduce its opening retained earnings balance upon adoption of the ~~beginning~~standard related to leases of certain underperforming retail locations for which the carrying value of the ~~first quarter~~respective store's initial operating lease ROU asset exceeded its fair value. These impairments totaled $49.7 million and were recorded as adjustments to reduce the Company's opening retained earnings balance by $37.8 million, net of ~~Fiscal 2019 using~~related income tax effects. Leasehold improvements related to these underperforming retail locations were previously fully-impaired prior to the ~~modified retrospective method and applied the standard to all contracts as of the adoption date. The~~ adoption of ASU ~~2014-09 did not have a material impact on~~2016-02.

See Notes 3 and 13 for further discussion of the Company's consolidated financial statements, as the performance obligations underlying its core revenue streams (i.e., its retail and wholesale businesses) and the timing of recognition thereof, remain substantially unchanged. Revenues for these businesses are generated through the sale of finished products, and continue to be recognized at the point in time when merchandise is transferred to the customer and in an amount that considers the impacts of estimated returns, end-of-season markdowns,lease accounting policy and other allowances that are variable in nature. For its licensing business, the Company continues to recognize revenue, including any contractually-guaranteed minimum royalty amounts, over time consistent with historical practice.related disclosures.

The Company's adoption of ASU 2014-09 did have an impact on its accounting for certain ancillary items. Specifically, certain costs associated with the marketing of merchandise to wholesale customers for a particular selling season are now expensed as incurred, rather than deferred and expensed over the course of the season. Additionally, revenue related to gift card breakage is now recognized in proportion to the pattern of actual customer redemptions, rather than when the likelihood of redemption becomes remote. As a result of applying these changes and in order to transition to ASU 2014-09, the Company reduced (i) prepaid expenses and other current assets by $12.1 million related to certain previously deferred wholesale marketing costs and (ii) accrued expenses and other current liabilities by $6.1 million related to outstanding gift cards, which together resulted in a net cumulative adjustment to reduce opening retained earnings by $5.2 million, net of tax, as of the beginning of the first quarter of Fiscal 2019. In addition to these changes, inventory amounts associated with estimated sales returns, which were $19.8 million as of September 29, 2018, are now presented within prepaid expenses and other current assets in the consolidated balance sheet, rather than within inventories. Other than these changes, the Company's adoption of ASU 2014-09 did not have a material impact on its



	1417

RALPH LAUREN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

consolidated balance sheet as of September 29, 2018 or its consolidated statements of operations, comprehensive income, and cash flows for the six months ended September 29, 2018. Prior periods have not been restated and continue to be reported under the accounting standards in effect during those periods.

~~See Note 3 for a detailed discussion regarding the Company's revenue recognition accounting policy.~~


5.	Property and Equipment

Property and equipment, net consists of the following:



	September 28, 2019			March 30, 2019
	(millions)
Land and improvements	$	15.3		$	15.3
Buildings and improvements	312.6			387.8
Furniture and fixtures	629.9			626.4
Machinery and equipment	359.2			350.4
Capitalized software	549.5			534.0
Leasehold improvements	1,182.7			1,169.4
Construction in progress	110.8			58.7
	3,160.0			3,142.0
Less: accumulated depreciation	(2,149.0		)	(2,102.8		)
Property and equipment, net	$	1,011.0		$	1,039.2

September 29,
2018 March 31,
2018
(millions)
Land and improvements $ 16.8
$ 16.8
Buildings and improvements 458.3
460.5
Furniture and fixtures 666.8
671.0
Machinery and equipment 438.9
430.4
Capitalized software 582.0
578.4
Leasehold improvements 1,198.9
1,181.2
Construction in progress 49.7
41.5
3,411.4
3,379.8
Less: accumulated depreciation (2,280.9 ) (2,193.5 )
Property and equipment, net $ 1,130.5
$ 1,186.3

Depreciation expense was $60.7 million and $121.0 million during the three-month and six-month periods ended September 28, 2019, respectively, and $63.9 million and $128.3 million during the three-month and six-month periods ended September 29, 2018, ~~respectively, and $67.8 million and $134.7 million during the three-month and six-month periods ended September 30, 2017,~~ respectively, and is recorded primarily within SG&A expenses in the consolidated statements of operations.


6.	Other Assets and Liabilities

Prepaid expenses and other current assets consist of the following:



	September 28, 2019		March 30, 2019
	(millions)
Other taxes receivable	$	59.2	$	137.9
Non-trade receivables	30.5		30.8
Tenant allowances receivable	24.8		8.2
Derivative financial instruments	23.2		19.8
Inventory return asset	22.1		18.4
Prepaid software maintenance	21.2		19.8
Prepaid occupancy costs	16.1		38.0
Prepaid advertising and marketing	13.9		9.6
Restricted cash	7.1		11.9
Asset held-for-sale^(a)	—		20.8
Other prepaid expenses and current assets	49.8		44.1
Total prepaid expenses and other current assets	$	267.9	$	359.3

September 29,
2018 March 31,
2018
(millions)
Other taxes receivable $ 172.4
$ 171.4
Prepaid rent expense 41.8
37.0
Non-trade receivables 28.2
16.6
Inventory return asset (see Note 4) 19.8
—
Prepaid software maintenance 13.8
8.7
Derivative financial instruments 12.7
12.3
Restricted cash 11.5
15.5
Prepaid advertising and marketing 11.2
6.8
Tenant allowances receivable 9.9
4.3
Other prepaid expenses and current assets 37.8
51.1
Total prepaid expenses and other current assets $ 359.1
$ 323.7

^(a)

Balance as of March 30, 2019 related to the estimated fair value, less costs to sell, of the Company's corporate jet. The jet was sold during the first quarter of Fiscal 2020 with 0 gain or loss recognized on sale. The Company donated the $20.8 million net cash proceeds received from the sale to the Polo Ralph Lauren Foundation, a non-profit, charitable foundation that supports various philanthropic programs.



	1518

RALPH LAUREN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Other non-current assets consist of the following:



	September 28, 2019		March 30, 2019
	(millions)

Derivative financial instruments	$	30.2	$	12.2
Security deposits	27.7		24.5
Restricted cash	8.1		30.5
Non-current investments	—		44.9
Other non-current assets	34.0		46.4
Total other non-current assets	$	100.0	$	158.5

September 29,
2018 March 31,
2018
(millions)
Non-current investments $ 69.9
$ 86.2
Restricted cash 31.9
35.4
Security deposits 24.7
27.3
Other non-current assets 33.8
34.6
Total other non-current assets $ 160.3
$ 183.5

Accrued expenses and other current liabilities consist of the following:



	September 28, 2019		March 30, 2019
	(millions)
Accrued operating expenses	$	191.4	$	235.2
Accrued inventory	171.5		141.0
Accrued payroll and benefits	152.0		232.5
Other taxes payable	66.8		158.3
Accrued capital expenditures	55.3		47.6
Dividends payable	51.3		48.8
Restructuring reserve	31.5		60.4
Deferred income	15.1		14.1
Finance lease obligations	10.7		22.3
Derivative financial instruments	5.2		3.6
Other accrued expenses and current liabilities	4.3		4.6
Total accrued expenses and other current liabilities	$	755.1	$	968.4

September 29,
2018 March 31,
2018
(millions)
Accrued operating expenses $ 230.6
$ 225.8
Other taxes payable 204.6
194.2
Accrued inventory 196.4
174.0
Accrued payroll and benefits 175.8
227.8
Dividends payable 50.3
40.6
Restructuring reserve 48.6
69.6
Accrued capital expenditures 41.2
37.0
Capital lease obligations 21.1
19.5
Deferred income 19.0
30.4
Derivative financial instruments 3.0
60.8
Other accrued expenses and current liabilities 5.6
3.7
Total accrued expenses and other current liabilities $ 996.2
$ 1,083.4

Other non-current liabilities consist of the following:



	September 28, 2019		March 30, 2019
	(millions)
Finance lease obligations	$	196.1	$	212.6
Deferred lease incentives and obligations	62.1		202.7
Accrued benefits and deferred compensation	20.1		26.2
Deferred tax liabilities	13.1		50.2
Restructuring reserve	2.9		11.4
Derivative financial instruments	—		11.9
Other non-current liabilities	24.8		25.9
Total other non-current liabilities	$	319.1	$	540.9

September 29,
2018 March 31,
2018
(millions)
Capital lease obligations $ 223.0
$ 236.4
Deferred rent obligations 203.5
212.2
Deferred tax liabilities 44.3
36.5
Derivative financial instruments 37.1
49.2
Restructuring reserve 13.9
27.9
Other non-current liabilities 41.9
44.5
Total other non-current liabilities $ 563.7
$ 606.7



	1619

RALPH LAUREN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


7.	Impairment of Assets

The Company recorded non-cash impairment charges of $2.3 million and $3.5 million during the three-month and six-month periods ended September 28, 2019, respectively, and $4.5 million and $5.8 million during the three-month and six-month periods ended September 29, 2018, respectively, ~~and $2.1 million and $11.8 million during the three-month and six-month periods ended September 30, 2017, respectively,~~ to ~~write off~~write-down certain ~~fixed~~long-lived assets ~~related to its domestic and international stores, shop-within-shops, and corporate offices~~ in connection with its restructuring plans (see Note 8).

Additionally, the Company recorded non-cash impairment charges of $3.8 million during the three-month and six-month periods ended September 28, 2019 and $5.3 million during the three-month and six-month periods ended September 29, 2018 ~~and $9.1 million during the three-month and six-month periods ended September 30, 2017~~ to ~~write off~~write-down certain ~~fixed~~long-lived assets related to underperforming stores as a result of its ~~on-going~~ongoing store portfolio evaluation.

See Note 11 for further discussion of ~~the non-cash~~these impairment ~~charges recorded by the Company during the fiscal periods presented.~~charges.


8.	Restructuring and Other Charges

A description of significant restructuring and other activities and their related costs is ~~included~~provided below.

Fiscal 2019 Restructuring Plan

On June 4, 2018, the Company's Board of Directors approved a restructuring plan associated with the Company's strategic objective of operating with discipline to drive sustainable growth (the "Fiscal 2019 Restructuring Plan"). The Fiscal 2019 Restructuring Plan includes the following restructuring-related activities: (i) ~~the~~ rightsizing and consolidation of the Company's global distribution network and corporate offices; (ii) targeted severance-related actions; and (iii) closure of certain of its stores and shop-within-shops. Actions associated with the Fiscal 2019 Restructuring Plan were largely completed during Fiscal 2019, with certain activities shifting into Fiscal 2020.

In connection with the Fiscal 2019 Restructuring Plan, the Company expects to incur total estimated charges of approximately ~~$100~~$125 million to $150 million, comprised of cash-related charges of approximately ~~$70~~$90 million to $110 million and non-cash charges of approximately ~~$30~~$35 million to $40 million.

A summary of ~~the~~ charges recorded in connection with the Fiscal 2019 Restructuring Plan during the ~~three-month and six-month~~fiscal periods ~~ended September 29, 2018 is as follows:~~

September 29, 2018
Three Months Ended Six Months Ended
(millions)
Cash-related restructuring charges:
Severance and benefit costs $ 9.0
$ 17.2
Other cash charges 1.6
1.6
Total cash-related restructuring charges 10.6
18.8
Non-cash charges:
Impairment of assets (see Note 7) 4.5
5.8
Total non-cash charges 4.5
5.8
Total charges $ 15.1
$ 24.6



	17

~~RALPH LAUREN CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~A summary of current period activity in the restructuring reserve related to the Fiscal 2019 Restructuring Plan is as follows:~~

Severance and Benefit Costs Other Cash Charges Total
(millions)
Balance at March 31, 2018 $ —
$ —
$ —
Additions charged to expense 17.2
1.6
18.8
Cash payments charged against reserve (5.6 ) (1.6 ) (7.2 )
Balance at September 29, 2018 $ 11.6
$ —
$ 11.6

~~Way Forward Plan~~

On June 2, 2016, the Company's Board of Directors approved a restructuring plan with the objective of delivering sustainable, profitable sales growth and long-term value creation for shareholders (the "Way Forward Plan"). The Company is refocusing on its core brands and evolving its product, marketing, and shopping experience to increase desirability and relevance. It is also evolving its operating model to enable sustainable, profitable sales growth by significantly improving quality of sales, reducing supply chain lead times, improving its sourcing, and executing a disciplined multi-channel distribution and expansion strategy. As part of the Way Forward Plan, the Company is rightsizing its cost structure and implementing a return on investment-driven financial model to free up resources to invest in the brand and drive high-quality sales. The Way Forward Plan included strengthening the Company's leadership team and creating a more nimble organization by moving from an average of nine to six layers of management. The Way Forward Plan also included the discontinuance of the Company's Denim & Supply brand and the integration of its denim product offerings into its Polo Ralph Lauren brand. Collectively, these actions, which were substantially completed during the Company's fiscal year ended April 1, 2017 ("Fiscal 2017"), resulted in a reduction in workforce and the closure of certain stores and shop-within-shops.

On March 30, 2017, the Company's Board of Directors approved the following additional restructuring-related activities associated with the Way Forward Plan: (i) the restructuring of its in-house global digital commerce platform which was in development and shifting to a more cost-effective, flexible platform through a new agreement with Salesforce's Commerce Cloud, formerly known as Demandware; (ii) the closure of its Polo store at 711 Fifth Avenue in New York City; and (iii) the further streamlining of the organization and the execution of other key corporate actions in line with the Company's Way Forward Plan. These actions are an important part of the Company's efforts to achieve its stated objective to return to sustainable, profitable growth and invest in the future. These additional restructuring-related activities were largely completed during Fiscal 2018 and resulted in a further reduction in workforce and the closure of certain corporate office and store locations. The remaining activities, which are primarily lease-related, are expected to be completed during Fiscal 2019.

In connection with the Way Forward Plan, the Company currently expects to incur total estimated charges of approximately $790 million, comprised of cash-related restructuring charges of approximately $490 million and non-cash charges of approximately $300 million. Cumulative charges incurred since inception were $677.5 million and the Company expects the remaining charges of approximately $115 million will be recorded during the remainder of Fiscal 2019. In addition to these charges, the Company also incurred an additional non-cash charge of $155.2 million during Fiscal 2017 associated with the destruction of inventory out of current liquidation channels in line with its Way Forward Plan.



	18

~~RALPH LAUREN CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~A summary of the charges recorded in connection with the Way Forward Plan during the three-month and six-month periods ended September 29, 2018 and September 30, 2017,~~presented, as well as the cumulative charges recorded since its inception, is as follows:


	Three Months Ended				Six Months Ended						Three Months Ended				Six Months Ended
	September 29, 2018		September 30, 2017		September 29, 2018		September 30, 2017		Cumulative Charges		September 28, 2019		September 29, 2018		September 28, 2019		September 29, 2018		Cumulative Charges
	(millions)										(millions)
Cash-related restructuring charges:
Severance and benefit costs	$	0.3	$	6.2	$	6.5	$	17.9	$	228.2	$	9.0	$	9.0	$	14.9	$	17.2	$	75.1
Lease termination and store closure costs	1.5		5.4		1.6		17.6		122.1		0.2		—		0.5		—		2.3
Other cash charges	—		5.7		0.2		8.4		25.6		0.3		1.6		1.1		1.6		8.5
Total cash-related restructuring charges	1.8		17.3		8.3		43.9		375.9		9.5		10.6		16.5		18.8		85.9
Non-cash charges:
Impairment of assets (see Note 7)	—		2.1		—		11.8		250.6		2.3		4.5		3.5		5.8		13.8
Inventory-related charges^(a)	—		0.6		—		1.3		205.5		0.4		—		1.0		—		7.0
Accelerated stock-based compensation expense^(b)	—		—		—		—		0.7		3.6		—		3.6		—		3.6
Loss on sale of property^(c)											—		—		—		—		11.6
Total non-cash charges	—		2.7		—		13.1		456.8		6.3		4.5		8.1		5.8		36.0
Total charges	$	1.8	$	20.0	$	8.3	$	57.0	$	832.7	$	15.8	$	15.1	$	24.6	$	24.6	$	121.9


^(a)	~~Cumulative inventory-related charges include $155.2 million associated with the destruction of inventory out of current liquidation channels.~~ Inventory-related charges are recorded within cost of goods sold in the consolidated statements of operations.



	20

RALPH LAUREN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


^(b)	Accelerated stock-based compensation, ~~expense,~~ which is recorded within restructuring and other charges in the consolidated statements of operations, was recorded in connection with vesting provisions associated with certain separation agreements.


^(c)	Loss on sale of property, which was recorded within restructuring and other charges in the consolidated statements of operations during the third quarter of Fiscal 2019, was incurred in connection with the sale of one of the Company's distribution centers in North America. Total cash proceeds from the sale were $20.0 million.

A summary of current period activity in the restructuring reserve related to the ~~Way Forward~~Fiscal 2019 Restructuring Plan is as follows:



	Severance and Benefit Costs			Lease Termination and Store Closure Costs			Other Cash Charges			Total
	(millions)
Balance at March 30, 2019	$	41.0		$	0.5		$	0.1		$	41.6
Additions charged to expense	14.9			0.5			1.1			16.5
Cash payments charged against reserve	(27.9		)	(0.5		)	(0.5		)	(28.9		)
Non-cash adjustments^(a)	—			(0.4		)	—			(0.4		)
Balance at September 28, 2019	$	28.0		$	0.1		$	0.7		$	28.8

Severance and Benefit Costs
Lease Termination
and Store
Closure Costs
Other Cash Charges Total
(millions)
Balance at March 31, 2018 $ 37.6
$ 53.5
$ 1.8
$ 92.9
Additions charged to expense 6.5
1.6
0.2
8.3
Cash payments charged against reserve (25.5 ) (25.0 ) (1.2 ) (51.7 )
Non-cash adjustments (0.2 ) 0.2
—
—
Balance at September 29, 2018 $ 18.4
$ 30.3
$ 0.8
$ 49.5


^(a)	Certain lease-related liabilities previously recognized in connection with the Company's closure and cessation of use of real estate locations were reclassified and reflected as reductions of the respective operating lease ROU assets initially recognized upon adoption of ASU 2016-02 (see Note 4).

Other Restructuring Plans

AsThe Company recorded restructuring-related charges of $1.8 million and $8.3 million during the three-month and six-month periods ended September 29, 2018, respectively, related to certain other restructuring plans initiated prior to Fiscal 2019, primarily consisting of (i) severance and benefit costs and (ii) lease termination and store closure costs. Actions associated with these other plans were completed in previous fiscal years.

A summary of current period activity in the ~~remaining~~ restructuring reserve related to the Company's restructuring plan initiated during its fiscal year ended April 2, 2016 ("Fiscal 2016") was $1.4 million, reflecting $3.2 million of cash payments made during the six months ended September 29, 2018. Nothese other ~~activity occurred in connection with this restructuring plan during the six months ended September 29, 2018.~~ plans is as follows:



	Severance and Benefit Costs			Lease Termination and Store Closure Costs			Other Cash Charges			Total
	(millions)
Balance at March 30, 2019	$	6.5		$	23.3		$	0.4		$	30.2
Additions charged to expense	—			—			—			—
Cash payments charged against reserve	(4.1		)	(1.5		)	(0.1		)	(5.7		)
Non-cash adjustments^(a)	—			(18.9		)	—			(18.9		)
Balance at September 28, 2019	$	2.4		$	2.9		$	0.3		$	5.6


^(a)	Certain lease-related liabilities previously recognized in connection with the Company's closure and cessation of use of real estate locations were reclassified and reflected as reductions of the respective operating lease ROU assets initially recognized upon adoption of ASU 2016-02 (see Note 4).

Refer to Note 9 of the Fiscal ~~2018~~2019 10-K for additional discussion regarding ~~this~~these other restructuring ~~plan.~~plans.



	1921

RALPH LAUREN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Other Charges

During the first quarter of Fiscal 2020, the Company recorded other charges of $20.8 million related to the donation of net cash proceeds received from the sale of its corporate jet. This donation was made to the Polo Ralph Lauren Foundation, a non-profit, charitable foundation that supports various philanthropic programs. Additionally, during the three-month and six-month periods ended September 28, 2019, the Company recorded other charges of $1.4 million and $3.2 million, respectively, primarily related to rent and occupancy costs associated with certain previously exited real estate locations for which the related lease agreements have not yet expired.

The Company recorded other charges of $3.5 million ~~during each of the three-month periods ended September 29, 2018 and September 30, 2017~~ and $7.0 million during ~~each of~~ the three-month and six-month periods ended September 29, 2018, ~~and September 30, 2017~~respectively, related to depreciation expense associated with ~~the Company's~~its former Polo store at 711 Fifth Avenue in New York City recorded after the store closed during the first quarter of Fiscal ~~2018 in connection with~~2018. Additionally, during the ~~Way Forward Plan. Although~~first quarter of Fiscal 2019, the Company ~~is no longer generating revenue or has any other economic activity associated with its former Polo store, it continues to incur depreciation expense due to its involvement at the time of construction.~~

~~During the six months ended September 29, 2018, the Company also~~ recorded other charges of $4.2 million primarily related to ~~its~~a customs ~~audit (see Note 13).~~

Additionally, during the six months ended September 30, 2017, the Company recorded other charges of $6.7 million (inclusive of accelerated stock-based compensation expense of $2.1 million), primarily related to the departure of Mr. Stefan Larsson as the Company's President and Chief Executive Officer and as a member of its Board of Directors, effective as of May 1, 2017.audit. Refer to Note 14 of the ~~Form 8-K filed on February 2, 2017~~Fiscal 2019 10-K for additional discussion regarding the ~~departure of Mr. Larsson.~~

These other charges were partially offset by the favorable impact of $2.2 million related to the reversal of reserves associated with the settlement of certain non-income tax issues during the second quarter of Fiscal 2018.Company's customs audit.


9.	Income Taxes

~~U.S.~~Swiss Tax Reform

~~On December 22, 2017, President Trump signed into law new tax legislation commonly referred to as~~In May 2019, a public referendum was held in Switzerland that approved the Federal Act on Tax ~~Cuts~~Reform and ~~Jobs Act~~AHV Financing (the ~~"TCJA"~~"Swiss Tax Act"), which ~~became~~becomes effective January 1, ~~2018.~~2020. The ~~TCJA significantly revised U.S.~~Swiss Tax Act eliminates certain preferential tax ~~law by, among other provisions, lowering~~items at both the ~~U.S.~~ federal ~~statutory income~~and cantonal levels for multinational companies, and provides the cantons with parameters for establishing local tax ~~rate from 35% to 21%, creating a territorial tax system that includes a one-time mandatory transition tax on previously deferred foreign earnings,~~rates and ~~eliminating or reducing certain income tax deductions.~~

ASC Topic 740, "Income Taxes," requires the effects of changes in tax laws to be recognized in the period in which the legislation is enacted. However, due to the complexity and significance of the TCJA's provisions, the SEC staff issued Staff Accounting Bulletin No. 118 ("SAB 118") on December 22, 2017, which allows companies to record the tax effects of the TCJA on a provisional basis based on a reasonable estimate, and then, if necessary, subsequently adjust such amounts during a limited measurement period as more information becomes available. The measurement period ends when a company has obtained, prepared, and analyzed the information necessary to finalize its accounting, but cannot extend beyond one year from enactment.

During the third quarter of Fiscal 2018, the Company recorded charges of $231.3 million within its income tax provision in connection with the TCJA, of which $215.5 million related to the mandatory transition tax and $15.8 million related to the revaluation of the Company's deferred tax assets and liabilities. Subsequently, as a result of finalizing its full Fiscal 2018 operating results, the issuance of new interpretive guidance, and other analyses performed, the Company recorded measurement period adjustments during the fourth quarter of Fiscal 2018, whereby it reversed $6.2 million of the charges related to the mandatory transition tax and $5.5 million related to the revaluation of its deferred taxes. These reversals were partially offset by an incremental charge of $1.8 million related to the expected future remittance of certain previously deferred foreign earnings.regulations.

During the second quarter of Fiscal ~~2019,~~2020, the ~~Company recorded~~Swiss Tax Act was enacted into law, resulting in an ~~additional measurement period~~immaterial adjustment ~~as a result~~associated with the revaluation of the ~~issuance of new interpretive guidance related to stock-based compensation for certain executives, whereby it recorded an income tax benefit and corresponding~~Company's Swiss deferred tax ~~asset of $4.7 million. This measurement period adjustment reduced the Company's~~assets and liabilities and current estimated annual effective tax ~~rate by 220 basis points and 130 basis points~~rate. The Company also expects the tax authorities to issue additional guidance with respect to the implementation of transitional provisions during the ~~three-month and six-month periods ended September 29, 2018, respectively.~~

~~These cumulative net charges were recorded on~~second half of Fiscal 2020, which may have a ~~provisional basis based~~material impact on the Company's present interpretations of the TCJA and are subject to further refinement as additional information becomes available, including potential new or interpretative guidance issued by the FASB or the Internal Revenue Service and other tax agencies, and as further analyses are completed. The Company expects to finalize its accounting for the enactment-related impacts of the TCJA during the third quarter of Fiscal 2019.



	20

~~RALPH LAUREN CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

The Company is also in the process of assessing various international taxation provisions of the TCJA that became effective for the Company beginning in the first quarter of Fiscal 2019, including a minimum tax on global intangible low-taxed income ("GILTI"). The Company has tentatively decided to account for GILTI tax in the period in which it is incurred and therefore has not provided any deferred tax impacts of GILTI in its consolidated financial ~~statements for the six months ended September 29, 2018. The Company will continue to evaluate this policy election during the remainder of Fiscal 2019.~~statements.

Effective Tax Rate

The Company's effective tax rate, which is calculated by dividing each fiscal period's income tax provision by pretax income, was 23.1% and 21.9% during the three-month and six-month periods ended September 28, 2019, respectively, and 20.7% and 19.7% during the three-month and six-month periods ended September 29, 2018, ~~respectively, and 24.8% and 26.9% during~~respectively. The effective tax rates for the three-month and six-month periods ended September ~~30, 2017, respectively.~~28, 2019 were slightly higher than the U.S. federal statutory income tax rate of 21% primarily due to additional income tax reserves largely associated with certain income tax audits. The effective tax rates for the three-month and six-month periods ended September 29, 2018 were slightly lower than the U.S. federal statutory income tax rate of 21%, reflecting the favorable impact of ~~the SAB 118~~a measurement period adjustment recorded ~~during~~in connection with the TCJA, as discussed below.

During the second quarter of Fiscal 2019, the Company recorded a TCJA measurement period adjustment as ~~previously discussed. The~~a result of the issuance of new interpretive guidance related to stock-based compensation for certain executives, whereby it recorded an income tax benefit and corresponding deferred tax asset of $4.7 million. This measurement period adjustment reduced the Company's effective tax ~~rates for~~rate by 220 basis points and 130 basis points during the three-month and six-month periods ended September 30, 2017 were lower than the U.S. federal statutory income tax rate of 35% as a result of the proportion of earnings generated in lower taxed foreign jurisdictions versus the U.S., partially offset by the negative impact of the adoption of ASU No. 2016-09, "Improvements to Employee Share-Based Payment Accounting" ("ASU 2016-09").29, 2018, respectively. Refer to Note 410 of the Fiscal ~~2018~~2019 10-K for further discussion ofregarding the ~~Company's adoption of ASU 2016-09.~~TCJA.



	22

RALPH LAUREN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Uncertain Income Tax Benefits

The Company classifies interest and penalties related to unrecognized tax benefits as part of its income tax provision. The total amount of unrecognized tax benefits, including interest and penalties, was ~~$80.0~~$79.7 million and ~~$79.2~~$78.8 million as of September ~~29, 2018~~28, 2019 and March ~~31, 2018,~~30, 2019, respectively, and is included within non-current liability for unrecognized tax benefits in the consolidated balance sheets.

The total amount of unrecognized tax benefits that, if recognized, would affect the Company's effective tax rate was ~~$70.9~~$71.4 million and ~~$68.4~~$70.7 million as of September ~~29, 2018~~28, 2019 and March ~~31, 2018,~~30, 2019, respectively.

Future Changes in Unrecognized Tax Benefits

The total amount of unrecognized tax benefits relating to the Company's tax positions is subject to change based on future events including, but not limited to, settlements of ongoing tax audits and assessments and the expiration of applicable statutes of limitations. Although the outcomes and timing of such events are highly uncertain, the Company does not anticipate that the balance of gross unrecognized tax benefits, excluding interest and penalties, will change significantly during the next twelve months. However, changes in the occurrence, expected outcomes, and timing of such events could cause the Company's current estimate to change materially in the future.

The Company files a consolidated U.S. federal income tax return, as well as tax returns in various state, local, and foreign jurisdictions. The Company is generally no longer subject to examinations by the relevant tax authorities for years prior to its fiscal year ended ~~April 3, 2010.~~March 30, 2013.



	21

~~RALPH LAUREN CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~


10.	Debt

Debt consists of the following:

September 29,
2018 March 31,
2018
(millions)
$300 million 2.125% Senior Notes^(a)
$ —
$ 298.1
$300 million 2.625% Senior Notes^(b)
288.5
288.0
$400 million 3.750% Senior Notes^(c)
395.4
—
Borrowings outstanding under credit facilities —
10.1
Total debt 683.9
596.2
Less: short-term debt and current portion of long-term debt —
308.2
Long-term debt $ 683.9
$ 288.0



	September 28, 2019		March 30, 2019
	(millions)
$300 million 2.625% Senior Notes^(a)	$	297.3	$	293.4
$400 million 3.750% Senior Notes^(b)	396.1		395.7
Total debt	693.4		689.1
Less: current portion of long-term debt	297.3		—
Long-term debt	$	396.1	$	689.1


^(a)	The carrying value of the 2.125% Senior Notes as of March 31, 2018 reflects adjustments of $1.6 million associated with the Company's related interest rate swap contract (see Note 12), and is also presented net of unamortized debt issuance costs and discount of $0.3 million.

^(b)

The carrying value of the 2.625% Senior Notes as of September ~~29, 2018~~28, 2019 and March ~~31, 2018~~30, 2019 reflects adjustments of ~~$10.6~~$2.3 million and ~~$10.8~~$5.9 million, respectively, associated with the Company's related interest rate swap contract (see Note 12). The carrying value of the 2.625% Senior Notes is also presented net of unamortized debt issuance costs and discount of ~~$0.9~~$0.4 million and ~~$1.2~~$0.7 million as of September ~~29, 2018~~28, 2019 and March ~~31, 2018,~~30, 2019, respectively.


^(c)(b)	The carrying value of the 3.750% Senior Notes is presented net of unamortized debt issuance costs and discount of ~~$4.6~~$3.9 million and $4.3 million as of September ~~29, 2018.~~28, 2019 and March 30, 2019, respectively.

Senior Notes

In August 2015, the Company completed a registered public debt offering and issued $300 million aggregate principal amount of unsecured senior notes due August 18, 2020, which bear interest at a fixed rate of 2.625%, payable semi-annually (the "2.625% Senior Notes"). The 2.625% Senior Notes were issued at a price equal to 99.795% of their principal amount. The proceeds from this offering were used for general corporate purposes.

In August 2018, the Company completed another registered public debt offering and issued an additional $400 million aggregate principal amount of unsecured senior notes due September 15, 2025, which bear interest at a fixed rate of 3.750%, payable semi-annually (the "3.750% Senior Notes"). The 3.750% Senior Notes were issued at a price equal to 99.521% of their principal amount. The proceeds from this offering were used for general corporate purposes, including repayment of the Company's



	23

RALPH LAUREN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

previously outstanding $300 million principal amount of unsecured 2.125% senior notes that matured September 26, 2018 (the "2.125% Senior Notes").

The Company has the option to redeem the 2.625% Senior Notes and 3.750% Senior Notes (collectively, the "Senior Notes"), in whole or in part, at any time at a price equal to accrued and unpaid interest on the redemption date, plus the greater of (i) 100% of the principal amount of the series of Senior Notes to be redeemed or (ii) the sum of the present value of Remaining Scheduled Payments, as defined in the supplemental indentures governing such Senior Notes (together with the indenture governing the Senior Notes, the "Indenture"). The Indenture contains certain covenants that restrict the Company's ability, subject to specified exceptions, to incur certain liens; enter into sale and leaseback transactions; consolidate or merge with another party; or sell, lease, or convey all or substantially all of the Company's property or assets to another party. However, the Indenture does not contain any financial covenants.

Commercial Paper

~~In May 2014, the~~The Company ~~initiated~~has a commercial paper borrowing program ~~(the "Commercial Paper Program")~~ that ~~allowed~~allows it to issue up to ~~$300~~$500 million of unsecured commercial paper notes through private placement using third-party ~~broker-dealers. In May 2015, the Company expanded its Commercial~~broker-dealers (the "Commercial Paper ~~Program to allow for a total issuance of up to $500 million of unsecured commercial paper notes.~~Program").



	22

~~RALPH LAUREN CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

Borrowings under the Commercial Paper Program are supported by the Global Credit Facility, as defined below. Accordingly, the Company does not expect combined borrowings outstanding under the Commercial Paper Program and Global Credit Facility to exceed $500 million. Commercial Paper Program borrowings may be used to support the Company's general working capital and corporate needs. Maturities of commercial paper notes vary, but cannot exceed 397 days from the date of issuance. Commercial paper notes issued under the Commercial Paper Program rank equally with the Company's other forms of unsecured indebtedness. As of September ~~29, 2018,~~28, 2019, there were no0 borrowings outstanding under the Commercial Paper Program.

Revolving Credit Facilities

Global Credit Facility

In ~~February 2015,~~August 2019, the Company terminated its credit facility previously in place and entered into ~~an amended and restated~~a new credit facility ~~(which was further amended in March 2016)~~ that provides for a $500 million senior unsecured revolving line of credit through ~~February 11, 2020~~August 12, 2024 (the "Global Credit Facility") under terms and conditions substantially similar to those previously in effect. The Global Credit Facility is also used to support the issuance of letters of credit and the maintenance of the Commercial Paper Program. Borrowings under the Global Credit Facility may be denominated in U.S. Dollars and other currencies, including Euros, Hong Kong Dollars, and Japanese Yen. The Company has the ability to expand its borrowing availability under the Global Credit Facility to $~~750 million~~1 billion, subject to the agreement of one or more new or existing lenders under the facility to increase their commitments. There are no mandatory reductions in borrowing ability throughout the term of the Global Credit Facility. As of September ~~29, 2018,~~28, 2019, there were no0 borrowings outstanding under the Global Credit Facility and the Company was contingently liable for ~~$10.2~~$9.0 million of outstanding letters of credit.

U.S. Dollar-denominated borrowings under the Global Credit Facility bear interest, at the Company's option, either at (a) a base rate, by reference to the greatest of: (i) the annual prime commercial lending rate of JPMorgan Chase Bank, N.A. in effect from time to time, (ii) the weighted-average overnight Federal funds rate plus 50 basis points, or (iii) the one-month London Interbank Offered Rate ("LIBOR") plus 100 basis points; or (b) LIBOR, adjusted for the Federal Reserve Board's Eurocurrency liabilities maximum reserve percentage, plus a spread of 75 basis points, subject to adjustment based on the Company's credit ratings ("Adjusted LIBOR"). Foreign currency-denominated borrowings bear interest at Adjusted LIBOR.

In addition to paying interest on any outstanding borrowings under the Global Credit Facility, the Company is required to pay a commitment fee to the lenders under the Global Credit Facility with respect to the unutilized commitments. The commitment fee rate of 6.5 basis points under the terms of the Global Credit Facility is subject to adjustment based on the Company's credit ratings.

The Global Credit Facility contains a number of covenants that, among other things, restrict the Company's ability, subject to specified exceptions, to incur additional debt; incur liens; sell or dispose of assets; merge with or acquire other companies; liquidate or dissolve itself; engage in businesses that are not in a related line of business; make loans, advances, or guarantees; engage in transactions with affiliates; and make certain investments. The Global Credit Facility also requires the Company to maintain a maximum ratio of Adjusted Debt to Consolidated EBITDAR (the "leverage ratio") of no greater than ~~3.75~~4.25 as of the date of measurement for the four most recent consecutive fiscal quarters. Adjusted Debt is defined generally as consolidated debt



	24

RALPH LAUREN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

outstanding, including finance lease obligations, plus ~~four times consolidated rent expense for the four most recent consecutive fiscal quarters.~~all operating lease obligations. Consolidated EBITDAR is defined generally as consolidated net income plus (i) income tax expense, (ii) net interest expense, (iii) depreciation and amortization expense, (iv) ~~consolidated rent expense,~~operating lease cost, (v) restructuring and other non-recurring expenses, and (vi) acquisition-related costs. As of September ~~29, 2018~~28, 2019, no Event of Default (as such term is defined pursuant to the Global Credit Facility) has occurred under the Company's Global Credit Facility.

Upon the occurrence of an Event of Default under the Global Credit Facility, the lenders may cease making loans, terminate the Global Credit Facility, and declare all amounts outstanding to be immediately due and payable. The Global Credit Facility specifies a number of events of default (many of which are subject to applicable grace periods), including, among others, the failure to make timely principal, interest, and fee payments or to satisfy the covenants, including the financial covenant described above. Additionally, the Global Credit Facility provides that an Event of Default will occur if Mr. Ralph Lauren, the Company's Executive Chairman and Chief Creative Officer, and entities controlled by the Lauren family fail to maintain a specified minimum percentage of the voting power of the Company's common stock.

Pan-Asia Credit Facilities

Certain of the Company's subsidiaries in Asia have uncommitted credit facilities with regional branches of JPMorgan Chase (the "Banks") in China and South Korea (the "Pan-Asia Credit Facilities"). These credit facilities are subject to annual renewal and may be used to fund general working capital and corporate needs of the Company's operations in the respective countries. Borrowings under the Pan-Asia Credit Facilities are guaranteed by the parent company and are granted at the sole discretion of the Banks, subject to availability of the Banks' funds and satisfaction of certain regulatory requirements. The Pan-Asia Credit Facilities do not contain any financial covenants. The Company's Pan-Asia Credit Facilities by country are as follows:


•	China Credit Facility — provides Ralph Lauren Trading (Shanghai) Co., Ltd. with a revolving line of credit of up to 50 million Chinese Renminbi (approximately $7 million) through April 3, 2020, which is also able to be used to support bank guarantees.


•	South Korea Credit Facility — provides Ralph Lauren (Korea) Ltd. with a revolving line of credit of up to 30 billion South Korean Won (approximately $25 million) through October 30, 2020.

~~China Credit Facility~~ — provides Ralph Lauren Trading (Shanghai) Co., Ltd. with a revolving line of credit of up to 50 million Chinese Renminbi (approximately $7 million) through April 3, 2019, which is also able to be used to support bank guarantees.

~~South Korea Credit Facility~~ — provided Ralph Lauren (Korea) Ltd. with a revolving line of credit of up to 47 billion South Korean Won (approximately $42 million) through October 31, 2018. During the third quarter of Fiscal 2019, the Company renewed the South Korea Credit Facility through October 31, 2019, with a reduced borrowing capacity of up to 30 billion South Korean Won (approximately $27 million).

~~During the first quarter of Fiscal 2019, the Company repaid approximately $10 million in borrowings that were previously outstanding under its Pan-Asia Credit Facilities.~~ As of September ~~29, 2018,~~28, 2019, there were no0 borrowings outstanding under the Pan-Asia Credit Facilities.



	23

~~RALPH LAUREN CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

Refer to Note 11 of the Fiscal ~~2018~~2019 10-K for additional discussion of the terms and conditions of the Company's debt and credit facilities.


11.	Fair Value Measurements

U.S. GAAP establishes a three-level valuation hierarchy for disclosure of fair value measurements. The determination of the applicable level within the hierarchy for a particular asset or liability depends on the inputs used in its valuation as of the measurement date, notably the extent to which the inputs are market-based (observable) or internally-derived (unobservable). A financial instrument's categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels are defined as follows:


•	Level 1 — inputs to the valuation methodology based on quoted prices (unadjusted) for identical assets or liabilities in active markets.

•

Level 2 — inputs to the valuation methodology based on quoted prices for similar assets or liabilities in active markets for substantially the full term of the financial instrument; quoted prices for identical or similar instruments in markets that are not active for substantially the full term of the financial instrument; and model-derived valuations whose inputs or significant value drivers are observable.


•	Level 3 — inputs to the valuation methodology based on unobservable prices or valuation techniques that are significant to the fair value measurement.

~~Level 1~~ ~~— inputs to the valuation methodology based on quoted prices (unadjusted) for identical assets or liabilities in active markets.~~



	25

~~Level 2~~ — inputs to the valuation methodology based on quoted prices for similar assets or liabilities in active markets for substantially the full term of the financial instrument; quoted prices for identical or similar instruments in markets that are not active for substantially the full term of the financial instrument; and model-derived valuations whose inputs or significant value drivers are observable.

RALPH LAUREN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

~~Level 3~~ ~~— inputs to the valuation methodology based on unobservable prices or valuation techniques that are significant to the fair value measurement.~~

The following table summarizes the Company's financial assets and liabilities that are measured and recorded at fair value on a recurring basis, excluding accrued interest components:


	September 29, 2018		March 31, 2018		September 28, 2019		March 30, 2019
	(millions)				(millions)
Investments in commercial paper^(a)(b)	$	286.9	$	234.2	$	218.0	$	290.7
Derivative assets^(a)	13.7		12.3		53.4		32.0
Derivative liabilities^(a)	40.1		110.0		5.2		15.5


^(a)	Based on Level 2 measurements.

^(b)

AsAmount as of September ~~29, 2018, $19.9 million was included within cash and cash equivalents and $267.0 million~~28, 2019 was included within short-term investments in the consolidated balance sheet. As of March ~~31, 2018, $15.0~~30, 2019, $54.7 million was included within cash and cash equivalents and ~~$219.2~~$236.0 million was included within short-term investments in the consolidated balance sheet.

The Company's investments in commercial paper are classified as available-for-sale and recorded at fair value in its consolidated balance sheets using external pricing data, based on interest rates and credit ratings for similar issuances with the same remaining term as the Company's investments. To the extent the Company invests in bonds, such investments are also classified as available-for-sale and recorded at fair value in its consolidated balance sheets based on quoted prices in active markets.

The Company's derivative financial instruments are recorded at fair value in its consolidated balance sheets and are valued using pricing models that are primarily based on market observable external inputs, including spot and forward currency exchange rates, benchmark interest rates, and discount rates consistent with the instrument's tenor, and consider the impact of the Company's own credit risk, if any. Changes in counterparty credit risk are also considered in the valuation of derivative financial instruments.

The Company's cash and cash equivalents, restricted cash, and time deposits are recorded at carrying value, which generally approximates fair value based on Level 1 measurements.

The Company's debt instruments are recorded at their carrying values in its consolidated balance sheets, which may differ from their respective fair values. The fair values of the ~~senior notes~~Senior Notes are estimated based on external pricing data, including available quoted market prices, and with reference to comparable debt instruments with similar interest rates, credit ratings, and trading frequency, among other factors. The fair values of the Company's commercial paper notes and borrowings outstanding under its



	24

~~RALPH LAUREN CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

credit facilities, if any, are estimated using external pricing data, based on interest rates and credit ratings for similar issuances with the same remaining term as the Company's outstanding borrowings. Due to their short-term nature, the fair values of the Company's commercial paper notes and borrowings outstanding under its credit facilities, if any, generally approximate their carrying values.

The following table summarizes the carrying values and the estimated fair values of the Company's debt instruments:


	September 29, 2018				March 31, 2018				September 28, 2019				March 30, 2019
	Carrying Value^(a)		Fair Value^(b)		Carrying Value^(a)		Fair Value^(b)		Carrying Value^(a)		Fair Value^(b)		Carrying Value^(a)		Fair Value^(b)
	(millions)								(millions)
$300 million 2.125% Senior Notes	$	—	$	—	$	298.1	$	299.4
$300 million 2.625% Senior Notes	288.5		296.7		288.0		298.7		$	297.3	$	301.1	$	293.4	$	299.1
$400 million 3.750% Senior Notes	395.4		396.2		—		—		396.1		430.5		395.7		410.0
Borrowings outstanding under credit facilities	—		—		10.1		10.1


^(a)	See Note 10 for discussion of the carrying values of the Company's senior notes.


^(b)	Based on Level 2 measurements.

Unrealized gains or losses resulting from changes in the fair value of the Company's debt instruments do not result in the realization or expenditure of cash, unless the debt is retired prior to its maturity.



	26

RALPH LAUREN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Non-financial Assets and Liabilities

The Company's non-financial assets, which primarily consist of goodwill, other intangible assets, ~~and~~ property and equipment, and lease-related ROU assets, are not required to be measured at fair value on a recurring basis, and instead are reported at carrying ~~value.~~value in its consolidated balance sheet. However, on a periodic basis or whenever events or changes in circumstances indicate that ~~their carrying value~~they may not be fully recoverable (and at least annually for goodwill and indefinite-lived intangible assets), the respective carrying values of non-financial assets are assessed for impairment and, if ~~applicable,~~ultimately considered impaired, are adjusted and written down to ~~and recorded at~~their fair value, ~~considering~~as estimated based on consideration of external market participant assumptions.

During the three-month and six-month periods ended September ~~29, 2018~~28, 2019 and September ~~30, 2017,~~29, 2018, the Company recorded non-cash impairment ~~charges of $11.1 million and $20.9 million, respectively,~~adjustments to ~~fully write off~~reduce the carrying values of certain long-lived assets ~~based upon~~to their ~~assumed~~estimated fair ~~values of zero.~~values. The fair values of these assets were determined based on Level 3 ~~measurements. Inputs to these fair value~~ measurements, the related inputs of which included estimates of the amount and timing of the assets' net future discounted cash flows (including any potential sublease income), based on historical experience and consideration of current trends, market conditions, and ~~market conditions. See Note 7 for further discussion of the~~comparable sales, as applicable.

The following tables summarize non-cash impairment ~~charges~~adjustments recorded by the Company during the fiscal periods presented in order to reduce the carrying values of certain long-lived assets to their estimated fair values as of the assessment date:



	Three Months Ended
	September 28, 2019				September 29, 2018
Long-Lived Asset Category	Fair Value As of Impairment Date		Total Impairments		Fair Value As of Impairment Date		Total Impairments
	(millions)
Property and equipment, net	$	5.5	$	1.7	$	—	$	9.8
Operating lease right-of-use assets	19.2		4.4		N/A		N/A



	Six Months Ended
	September 28, 2019					September 29, 2018
Long-Lived Asset Category	Fair Value As of Impairment Date		Total Impairments			Fair Value As of Impairment Date		Total Impairments
	(millions)
Property and equipment, net	$	5.5	$	2.6		$	—	$	11.1
Operating lease right-of-use assets	112.1		229.8		^(a)	N/A		N/A


^(a)	Includes $225.1 million recorded in connection with the Company's adoption of ASC 2016-02 as of the beginning of Fiscal 2020 which, net of related income tax benefits, reduced its opening retained earnings balance by $169.4 million (see Note 4).

See Note 7 for additional discussion regarding non-cash impairment charges recorded by the Company within the consolidated statements of operations during the fiscal periods presented.

NoNaN impairment charges associated with goodwill ~~impairment charges~~or other intangible assets were recorded during either of the six-month periods ended September ~~29, 2018~~28, 2019 or September ~~30, 2017.~~29, 2018. The Company performed its annual goodwill impairment assessment using a qualitative approach as of the beginning of the second quarter of Fiscal ~~2019.~~2020. In performing the assessment, the Company identified and considered the significance of relevant key factors, events, and circumstances that affected the fair values and/or carrying amounts of its reporting units with allocated goodwill. These factors included external factors such as macroeconomic, industry, and market conditions, as well as entity-specific factors, such as the Company's actual and expected financial performance. Additionally, the results of the Company's most recent quantitative goodwill impairment test indicated that the fair values of these reporting units significantly exceeded their respective carrying values. Based on the results of its qualitative goodwill impairment assessment, the Company concluded that it is not more likely than not that the fair values of its reporting units are less than their respective carrying values and there were no reporting units at risk of impairment.



	2527

RALPH LAUREN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


12.	Financial Instruments

Derivative Financial Instruments

The Company is exposed to changes in foreign currency exchange rates, primarily relating to certain anticipated cash flows and the value of the reported net assets of its international operations, as well as changes in the fair value of its fixed-rate debt obligations attributed to changes in a benchmark interest rate. Consequently, the Company uses derivative financial instruments to manage and mitigate such risks. The Company does not enter into derivative transactions for speculative or trading purposes.

The following table summarizes the Company's outstanding derivative instruments on a gross basis as recorded in its consolidated balance sheets as of September ~~29, 2018~~28, 2019 and March ~~31, 2018~~30, 2019:


	Notional Amounts				Derivative Assets						Derivative Liabilities						Notional Amounts				Derivative Assets						Derivative Liabilities
Derivative Instrument^(a)	September 29, 2018		March 31, 2018		September 29, 2018			March 31, 2018			September 29, 2018			March 31, 2018			September 28, 2019		March 30, 2019		September 28, 2019			March 30, 2019			September 28, 2019			March 30, 2019
					Balance Sheet Line^(b)	Fair Value		Balance Sheet Line^(b)	Fair Value		Balance Sheet Line^(b)	Fair Value		Balance Sheet Line^(b)	Fair Value						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)																(millions)
Designated Hedges:
Designated Hedges:
FC — Cash flow hedges	$	621.3	$	514.5	^(e)	$	12.4	PP	$	1.1	AE	$	2.1	^(f)	$	13.5	$	612.4	$	636.3	^(e)	$	24.6	PP	$	19.5	AE	$	2.8	AE	$	2.3
IRS — Fixed-rate debt	300.0		600.0			—			—		ONCL	10.6		^(g)	12.4		300.0		300.0			—			—		AE	2.3		ONCL	5.9
Net investment hedges^(c)	721.4		1,081.2			—		PP	0.1		ONCL	26.5		^(h)	82.6		676.7		695.3		^(f)	28.5		ONCA	12.2			—		ONCL	6.0
Total Designated Hedges	1,642.7		2,195.7			12.4			1.2			39.2			108.5		1,589.1		1,631.6			53.1			31.7			5.1			14.2
Undesignated Hedges:
Undesignated Hedges:
FC — Undesignated hedges^(d)	202.5		459.2		PP	1.3		PP	11.1		AE	0.9		AE	1.5		201.3		146.6		PP	0.3		PP	0.3		AE	0.1		AE	1.3
Total Hedges	$	1,845.2	$	2,654.9		$	13.7		$	12.3		$	40.1		$	110.0	$	1,790.4	$	1,778.2		$	53.4		$	32.0		$	5.2		$	15.5


^(a)	FC = Forward foreign currency exchange contracts; IRS = Interest rate swap ~~contracts~~contracts.


^(b)	PP = Prepaid expenses and other current assets; AE = Accrued expenses and other current liabilities; ONCA = Other non-current assets; ONCL = Other non-current liabilities.


^(c)	Includes cross-currency swaps ~~and forward foreign currency exchange contracts~~ designated as hedges of the Company's net investment in certain foreign operations.


^(d)	Primarily includes undesignated hedges of foreign currency-denominated intercompany loans and other intercompany balances.


^(e)	$~~11.4~~21.9 million included within prepaid expenses and other current assets and ~~$1.0~~$2.7 million included within other non-current assets.


^(f)	$~~12.9~~1.0 million included within ~~accrued~~prepaid expenses and other current ~~liabilities~~assets and ~~$0.6~~$27.5 million included within other non-current ~~liabilities.~~


^(g)	~~$1.6 million included within accrued expenses and other current liabilities and $10.8 million included within other non-current liabilities.~~


^(h)	~~$44.8 million included within accrued expenses and other current liabilities and $37.8 million included within other non-current liabilities.~~assets.



	26

~~RALPH LAUREN CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

The Company records and presents the fair values of all of its derivative assets and liabilities in its consolidated balance sheets on a gross basis, even when they are subject to master netting arrangements. However, if the Company were to offset and record the asset and liability balances of all of its derivative instruments on a net basis in accordance with the terms of each of its master netting arrangements, spread across ~~eight~~8 separate counterparties, the amounts presented in the consolidated balance sheets as of September ~~29, 2018~~28, 2019 and March ~~31, 2018~~30, 2019 would be adjusted from the current gross presentation as detailed in the following table:



	September 28, 2019							March 30, 2019
	Gross Amounts Presented in the Balance Sheet		Gross Amounts Not Offset in the Balance Sheet that are Subject to Master Netting Agreements			Net Amount		Gross Amounts Presented in the Balance Sheet		Gross Amounts Not Offset in the Balance Sheet that are Subject to Master Netting Agreements			Net Amount
	(millions)
Derivative assets	$	53.4	$	(4.6	)	$	48.8	$	32.0	$	(4.8	)	$	27.2
Derivative liabilities	5.2		(4.6		)	0.6		15.5		(4.8		)	10.7

September 29, 2018 March 31, 2018
Gross Amounts Presented in the Balance Sheet Gross Amounts Not Offset in the Balance Sheet that are Subject to Master Netting Agreements
Net
Amount
Gross Amounts Presented in the Balance Sheet Gross Amounts Not Offset in the Balance Sheet that are Subject to Master Netting Agreements
Net
Amount
(millions)
Derivative assets $ 13.7
$ (3.9 ) $ 9.8
$ 12.3
$ (10.7 ) $ 1.6
Derivative liabilities 40.1
(3.9 ) 36.2
110.0
(10.7 ) 99.3



	28

RALPH LAUREN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company's master netting arrangements do not require cash collateral to be pledged by the Company or its counterparties. See Note 3 for further discussion of the Company's master netting arrangements.

The following tables summarize the pretax impact of gains and losses from the Company's designated derivative instruments on its consolidated financial statements for the three-month and six-month periods endedSeptember 28, 2019 and September 29, 2018 ~~and~~ ~~September 30, 2017~~:


	Gains (Losses) Recognized in OCI												Gains (Losses) Recognized in OCI
	Three Months Ended						Six Months Ended						Three Months Ended					Six Months Ended
	September 29, 2018			September 30, 2017			September 29, 2018			September 30, 2017			September 28, 2019		September 29, 2018			September 28, 2019		September 29, 2018
	(millions)												(millions)
Designated Hedges:
FC — Cash flow hedges	$	1.3		$	(6.8	)	$	27.4		$	(25.9	)	$	20.0	$	1.3		$	15.6	$	27.4
Net investment hedges — effective portion	2.8			(22.4		)	40.2			(62.7		)	27.1		2.8			17.1		40.2
Net investment hedges — portion excluded from assessment of hedge effectiveness	(8.5		)	—			(6.7		)	—			2.7		(8.5		)	5.2		(6.7		)
Total Designated Hedges	$	(4.4	)	$	(29.2	)	$	60.9		$	(88.6	)	$	49.8	$	(4.4	)	$	37.9	$	60.9

Location and Amount of Gains (Losses)
from Cash Flow Hedges Reclassified from AOCI to Earnings
Three Months Ended Six Months Ended
September 29,
2018 September 30,
2017 September 29,
2018 September 30,
2017
Cost of goods sold Other income (expense), net Cost of goods sold Other income (expense), net Cost of goods sold Other income (expense), net Cost of goods sold Other income (expense), net
(millions)
Total amounts presented in the consolidated statements of operations in which the effects of related cash flow hedges are recorded $ (661.6 ) $ 0.4
$ (668.4 ) $ 0.2
$ (1,156.5 ) $ (1.6 ) $ (1,164.3 ) $ (0.3 )
Effects of cash flow hedging:
FC — Cash flow hedges 0.7
0.7
(2.4 ) (0.4 ) (5.5 ) 2.1
1.6
(1.0 )



	27

~~RALPH LAUREN CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~



	Location and Amount of Gains (Losses) from Cash Flow Hedges Reclassified from AOCI to Earnings
	Three Months Ended											Six Months Ended
	September 28, 2019						September 29, 2018					September 28, 2019						September 29, 2018
	Cost of goods sold			Other income (expense), net			Cost of goods sold			Other income (expense), net		Cost of goods sold			Other income (expense), net			Cost of goods sold			Other income (expense), net
	(millions)
Total amounts presented in the consolidated statements of operations in which the effects of related cash flow hedges are recorded	$	(657.2	)	$	(1.7	)	$	(661.6	)	$	0.4	$	(1,165.2	)	$	(5.8	)	$	(1,156.5	)	$	(1.6	)
Effects of cash flow hedging:
FC — Cash flow hedges	4.4			0.2			0.7			0.7		10.6			0.4			(5.5		)	2.1


	Gains (Losses) from Net Investment Hedges Recognized in Earnings								Location of Gains (Losses) Recognized in Earnings	Gains (Losses) from Net Investment Hedges Recognized in Earnings								Location of Gains (Losses) Recognized in Earnings
	Three Months Ended				Six Months Ended					Three Months Ended				Six Months Ended
	September 29, 2018		September 30, 2017		September 29, 2018		September 30, 2017			September 28, 2019		September 29, 2018		September 28, 2019		September 29, 2018
	(millions)									(millions)
Net Investment Hedges
Net investment hedges — portion excluded from assessment of hedge effectiveness^(a)	$	4.8	$	2.0	$	9.1	$	3.8	Interest expense	$	4.8	$	4.8	$	9.8	$	9.1	Interest expense
Total Net Investment Hedges	$	4.8	$	2.0	$	9.1	$	3.8		$	4.8	$	4.8	$	9.8	$	9.1


^(a)	Amounts recognized in other comprehensive income (loss) ("OCI") related to the effective portion of the Company's net investment hedges would be recognized in earnings only upon the sale or liquidation of the hedged net investment.

As of September ~~29, 2018,~~28, 2019, it is estimated that ~~$11.8~~$24.5 million of pretax net gains on both outstanding and matured derivative instruments designated and qualifying as cash flow hedges deferred in AOCI will be recognized in earnings over the next twelve months. ~~The amounts~~Amounts ultimately recognized in earnings will depend on exchange rates in effect when outstanding derivative instruments are settled.



	29

RALPH LAUREN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table summarizes the pretax impact of gains and losses from the Company's undesignated derivative instruments on its consolidated financial statements for the three-month and six-month periods endedSeptember 28, 2019 and September 29, 2018 ~~and~~ ~~September 30, 2017~~:



	Gains (Losses) Recognized in Earnings								Location of Gains (Losses) Recognized in Earnings
	Three Months Ended				Six Months Ended
	September 28, 2019		September 29, 2018		September 28, 2019		September 29, 2018
	(millions)
Undesignated Hedges:
FC — Undesignated hedges	$	3.2	$	2.6	$	5.1	$	5.7	Other income (expense), net
Total Undesignated Hedges	$	3.2	$	2.6	$	5.1	$	5.7

Gains (Losses)
Recognized in Earnings

Location of Gains (Losses)
Recognized in Earnings
Three Months Ended Six Months Ended
September 29,
2018 September 30,
2017 September 29,
2018 September 30,
2017
(millions)
Undesignated Hedges:
FC — Undesignated hedges $ 2.6
$ (0.5 ) $ 5.7
$ 2.1
Other income (expense), net
Total Undesignated Hedges $ 2.6
$ (0.5 ) $ 5.7
$ 2.1

Risk Management Strategies

Forward Foreign Currency Exchange Contracts

The Company uses forward foreign currency exchange contracts to ~~reduce~~mitigate its risk related to exchange rate fluctuations on inventory transactions made in an entity's non-functional currency, ~~intercompany royalty payments made by certain of its international operations,~~ the settlement of foreign currency-denominated balances, and the translation of certain foreign operations' net assets into U.S. dollars. As part of its overall strategy to manage the level of exposure to the risk of foreign currency exchange rate fluctuations, primarily to changes in the value of the Euro, the Japanese Yen, the South Korean Won, the Australian Dollar, the Canadian Dollar, the British Pound Sterling, the Swiss Franc, the ~~Swedish Krona, the~~ Chinese Renminbi, ~~the New Taiwan Dollar,~~ and the Hong Kong Dollar, the Company hedges a portion of its foreign currency exposures anticipated over a two-year period. In doing so, the Company uses forward foreign currency exchange contracts that generally have maturities of two months to two years to provide continuing coverage throughout the hedging period of the respective exposure.

Interest Rate Swap ~~Contracts~~Contract

During Fiscal 2016, the Company entered into ~~two~~a pay-floating rate, receive-fixed rate interest rate swap ~~contracts~~contract which it designated as ~~hedges~~a hedge against changes in the ~~respective~~ fair ~~values~~value of ~~its fixed-rate 2.125% Senior Notes and~~ its fixed-rate 2.625% Senior Notes attributed to changes in a benchmark interest rate (the "Interest Rate Swaps"). The interest rate swap related to the 2.125% Senior Notes (the "2.125% Interest Rate Swap"), which matured on September 26, 2018 in conjunction with the maturity of the related debt, had a notional amount of $300 million and swapped the fixed interest rate on the 2.125% Senior Notes for a variable interest rate based on the 3-month London Interbank Offered Rate ("LIBOR") plus a fixed spread. The interest rate swap



	28

~~RALPH LAUREN CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~related to the 2.625% Senior Notes (the~~ "2.625% Interest Rate Swap"),. The 2.625% Interest Rate Swap, which matures on August 18, 2020 and ~~also~~ has a notional amount of $300 million, swaps the fixed interest rate on the 2.625% Senior Notes for a variable interest rate based on the 3-month ~~LIBOR~~London Interbank Offered Rate ("LIBOR") plus a fixed spread. Changes in the fair ~~values~~value of the 2.625% Interest Rate ~~Swaps~~Swap were offset by changes in the fair ~~values~~value of the ~~2.125% Senior Notes and~~ 2.625% Senior Notes attributed to changes in the benchmark interest rate, with no resulting net impact reflected in earnings during any of the fiscal periods presented. The following table summarizes the carrying ~~values~~value of the ~~2.125% and~~ 2.625% Senior Notes and the impacts of the related fair value hedging adjustments as of September ~~29, 2018~~28, 2019 and March ~~31, 2018, as applicable:~~30, 2019:

Carrying Value of

the Hedged Item

Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Value of the Hedged Item

Hedged Item

Balance Sheet Line in which the Hedged Item is Included

September 28,
2019

March 30,
2019

September 28,
2019

March 30,
2019

(millions)

$300 million 2.625% Senior Notes

Current portion of long-term debt

297.3

N/A

(2.3

)

N/A

$300 million 2.625% Senior Notes

Long-term debt

N/A

293.4

N/A

(5.9

)

Carrying Value of
the Hedged Item
Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Value of the Hedged Item
Hedged Item Balance Sheet Line in which the Hedged Item is Included September 29,
2018 March 31,
2018 September 29,
2018 March 31,
2018
(millions)
$300 million 2.125% Senior Notes Current portion of long-term debt N/A
$ 298.1
N/A
$ (1.6 )
$300 million 2.625% Senior Notes Long-term debt $ 288.5
288.0
$ (10.6 ) (10.8 )



	30

RALPH LAUREN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Cross-Currency Swap Contracts

During Fiscal 2016, the Company entered into ~~two~~a pay-floating rate, receive-floating rate cross-currency swap ~~contracts,~~contract with a notional ~~amounts~~amount of ~~€280 million and~~ €274 million that ~~were~~was designated as ~~hedges~~a hedge of its net investment in certain of its European subsidiaries. The €280 million notional cross-currency swap, which was settled during the second quarter of Fiscal 2019, swapped the U.S. Dollar-denominated variable interest rate payments based on 3-month LIBOR plus a fixed spread (as paid under the 2.125% Interest Rate Swap discussed above) for Euro-denominated variable interest rate payments based on the 3-month Euro Interbank Offered Rate ("EURIBOR") plus a fixed spread, which, in conjunction with the 2.125% Interest Rate Swap, economically converted the Company's previously-outstanding $300 million fixed-rate 2.125% Senior Notes obligation to a €280 million floating-rate Euro-denominated obligation. Similarly, the €274 million notionalThis cross-currency swap, which matures on August 18, 2020, swaps the U.S. Dollar-denominated variable interest rate payments based on 3-month LIBOR plus a fixed spread (as paid under the 2.625% Interest Rate Swap discussed above) for Euro-denominated variable interest rate payments based on 3-month ~~EURIBOR~~Euro Interbank Offered Rate ("EURIBOR") plus a fixed spread, which, in conjunction with the 2.625% Interest Rate Swap, economically converts the Company's $300 million fixed-rate 2.625% Senior Notes obligation to a €274 million floating-rate Euro-denominated obligation.

Additionally, in August 2018, the Company entered into pay-fixed rate, receive-fixed rate cross-currency swap contracts with an aggregate notional amount of €346 million that were designated as hedges of its net investment in certain of its European subsidiaries. These contracts, which mature on September 15, 2025, swap the U.S. Dollar-denominated fixed interest rate payments on the Company's 3.750% Senior Notes for Euro-denominated 1.29% fixed interest rate payments, thereby economically converting the Company's $400 million fixed-rate 3.750% Senior Notes obligation to a €346 million fixed-rate 1.29% Euro-denominated obligation.

See Note 3 for further discussion of the Company's accounting policies relating to its derivative financial instruments.

Investments

As of September ~~29, 2018,~~28, 2019, the Company's investments were all classified as short-term and consisted of $823.4 million of time deposits and $218.0 million of commercial paper. As of March 30, 2019, the Company's short-term investments consisted of ~~$1.053~~$1.167 billion of time deposits and ~~$267.0~~$236.0 million of commercial paper, and its non-current investments consisted of $69.9 million of time deposits. As of March 31, 2018, the Company's short-term investment consisted of $480.2 million of time deposits and $219.2 million of commercial paper, and its non-current investments consisted of $86.2$44.9 million of time deposits.

No significant realized or unrealized gains or losses on available-for-sale investments or other-than-temporary impairment charges were recorded during any of the fiscal periods presented.

Refer to Note 3 of the Fiscal ~~2018~~2019 10-K for further discussion of the Company's accounting policies relating to its investments.



	2931

RALPH LAUREN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


13.	~~Commitments and Contingencies~~Leases

~~Lease Obligations~~The following table summarizes ROU assets and lease liabilities recorded on the Company's consolidated balance sheet as of September 28, 2019:

During the first quarter of Fiscal 2019, the Company entered into a 16-year lease with optional renewal periods for a new corporate office in New Jersey, which it expects to take possession of during its fiscal year 2020. Additionally, during the third quarter of Fiscal 2019, the Company amended an existing lease agreement for a corporate office in New York City, whereby it expanded the square footage to be leased and extended the lease term through December 31, 2029, with optional renewal periods.



	September 28, 2019		Location Recorded on Balance Sheet
	(millions)
Assets:
Operating leases	$	1,567.1	Operating lease right-of-use assets
Finance leases	176.5		Property and equipment, net
Total lease assets	$	1,743.6
Liabilities:
Operating leases:
Current portion	$	273.2	Current operating lease liabilities
Non-current portion	1,651.3		Long-term operating lease liabilities
Total operating lease liabilities	1,924.5
Finance leases:
Current portion	10.7		Accrued expenses and other current liabilities
Non-current portion	196.1		Other non-current liabilities
Total finance lease liabilities	206.8
Total lease liabilities	$	2,131.3

The following table summarizes the ~~Company's future minimum rental payments relating to these~~composition of net lease ~~agreements:~~cost during the three-month and six-month periods ended September 28, 2019:

Minimum
Lease Payments^(a)
(millions)
Remainder of Fiscal 2019 $ —
Fiscal 2020 10.2
Fiscal 2021 19.4
Fiscal 2022 27.5
Fiscal 2023 27.7
Fiscal 2024 and thereafter 261.8
Total minimum rental payments $ 346.6



	September 28, 2019
	Three Months Ended			Six Months Ended			Location Recorded in Earnings
	(millions)
Operating lease cost	$	81.5		$	160.1		^(a)
Finance lease costs:
Depreciation of leased assets	4.7			8.9			SG&A expenses
Accretion of lease liabilities	2.1			4.0			Interest expense
Variable lease cost	75.7			153.7			^(b)
Short-term lease cost	1.8			3.5			SG&A expenses
Sublease income	(0.8		)	(1.7		)	Restructuring and other charges
Total lease cost	$	165.0		$	328.5

^(a)

~~Excludes future minimum commitments related to~~During the ~~original lease term~~three months ended September 28, 2019, $1.5 million included within cost of goods sold, $76.4 million included within SG&A expenses, and ~~space for~~$3.6 million included within restructuring and other charges. During the ~~corporate office in New York City, which were previously~~six months ended September 28, 2019, $2.3 million included inwithin cost of goods sold, $152.4 million included within SG&A expenses, and $5.4 million included within restructuring and other charges.

^(b)

During the ~~minimum lease payments table in Note 14~~three months ended September 28, 2019, $0.5 million included within cost of goods sold, $74.2 million included within SG&A expenses, and $1.0 million included within restructuring and other charges. During the ~~Fiscal 2018 10-K.~~six months ended September 28, 2019, $2.1 million included within cost of goods sold, $150.1 million included within SG&A expenses, and $1.5 million included within restructuring and other charges.

~~Customs Audit~~

In September 2014, one of the Company's international subsidiaries received a pre-assessment notice from the relevant customs officials concerning the method used to determine the dutiable value of imported inventory. The notice communicated the customs officials' assertion that the Company should have applied an alternative duty method, which could have resulted in up to $46 million in incremental duty and non-creditable value-added tax, including $11 million in interest and penalties. The Company believed that the alternative duty method claimed by the customs officials was not applicable to the Company's facts and circumstances and contested their asserted methodology.

In October 2014, the Company filed an appeal of the pre-assessment notice in accordance with the standard procedures established by the relevant customs authorities. In response to the filing of the Company's appeal of the pre-assessment notice, the review committee instructed the customs officials to reconsider their assertion of the alternative duty method and conduct a re-audit to evaluate the facts and circumstances noted in the pre-assessment notice. In December 2015, the Company received the results of the re-audit conducted and a customs audit assessment notice in the amount of $34.1 million, which the Company recorded within restructuring and other charges in its consolidated statements of operations during the third quarter of Fiscal 2016. Although the Company disagreed with the assessment notice, in order to secure the Company's rights, the Company was required to pay the assessment amount and then subsequently file an appeal with the customs authorities.

In October 2017, the tax tribunal presiding over the Company's appeal instructed the customs officials to reconsider their assertions under the alternative duty method and conduct a second re-audit to evaluate the facts and circumstances noted in the pre-assessment notice. In March 2018, the Company received the results of the second re-audit conducted and a related net refund in the amount of $15.6 million. Additionally, in March 2018 and May 2018, the Company filed voluntary disclosure requests to the relevant customs authorities for certain post-audit periods and made related payments of $40.6 million and $7.1 million, respectively, in order to secure its rights to recover value-added tax of $14.8 million and $3.3 million, respectively. In connection with the re-audit refund received and the non-tax portion of the voluntary disclosure payment made, the Company recorded net charges of $10.2 million and $3.8 million, respectively, within restructuring and other charges in its consolidated statements of operations during the fourth quarter of Fiscal 2018 and first quarter of Fiscal 2019, respectively.



	3032

RALPH LAUREN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

~~Although~~In accordance with lease accounting guidance in effect prior to its adoption of ASU 2016-02, during the ~~Company believes its original filing position was appropriate, in June~~three-month and six-month periods ended September 29, 2018, the Company ~~decided~~recognized rent expense of approximately $110 million and $222 million, respectively, net of insignificant sublease income, related to ~~resolve~~its operating leases, which included contingent rental charges of approximately $45 million and $93 million, respectively. Such amounts do not include expense recognized related to non-lease components.

The following table summarizes certain cash flow information related to the ~~dispute and not further appeal the re-audit decision within the courts~~Company's leases for the ~~periods covered by~~six months ended ended September 28, 2019:



	September 28, 2019
	Six Months Ended
	(millions)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	194.1
Operating cash flows from finance leases	4.0
Financing cash flows from finance leases	7.7

See Note 19 for supplemental non-cash information related to ROU assets obtained in exchange for new lease liabilities.

The following table provides a maturity analysis summary of the ~~re-audit in order~~Company's lease liabilities recorded on the consolidated balance sheet as of September 28, 2019:



	September 28, 2019
	Operating Leases			Finance Leases
	(millions)
Remainder of Fiscal 2020	$	140.4		$	9.0
Fiscal 2021	335.0			18.6
Fiscal 2022	309.8			23.3
Fiscal 2023	277.4			22.5
Fiscal 2024	250.7			22.4
Fiscal 2025 and thereafter	797.1			175.6
Total lease payments	2,110.4			271.4
Less: interest	(185.9		)	(64.6		)
Total lease liabilities	$	1,924.5		$	206.8

Additionally, the Company had approximately $74 million of future payment obligations related to ~~avoid incurring additional management time, costs,~~executed lease agreements for which the related leases had not yet commenced as of September 28, 2019.

The following table summarizes the weighted-average remaining lease terms and ~~uncertainty associated with litigation, as the customs officials' revised methodology results in an incremental annual duty charge that is not material~~weighted-average discount rates related to the ~~Company.~~Company's operating and finance leases recorded on the consolidated balance sheet as of September 28, 2019:

~~Other Matters~~

See Note 3 for discussion of the Company's accounting policies related to its leasing activities.



	33

RALPH LAUREN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


14.	Commitments and Contingencies

The Company is involved, from time to time, in litigation, other legal claims, and proceedings involving matters associated with or incidental to its business, including, among other things, matters involving credit card fraud, trademark and other intellectual property, licensing, importation and exportation of its products, taxation, unclaimed property, and employee relations. The Company believes at present that the resolution of currently pending matters will not individually or in the aggregate have a material adverse effect on its consolidated financial statements. However, the Company's assessment of any current litigation or other legal claims could potentially change in light of the discovery of facts not presently known or determinations by judges, juries, or other finders of fact which are not in accord with management's evaluation of the possible liability or outcome of such litigation or claims.

In the normal course of business, the Company enters into agreements that provide general indemnifications. The Company has not made any significant indemnification payments under such agreements in the past, and does not currently anticipate incurring any material indemnification payments.


~~14.~~15.	Equity

~~Summary~~Class B Common Stock Conversion

During the six months ended September 28, 2019, the Lauren Family, L.L.C., a limited liability company managed by the children of ~~Changes in Equity~~

Mr. Ralph Lauren, converted 1.0 million shares of Class B common stock into an equal number of shares of Class A ~~reconciliation~~common stock pursuant to the terms of the ~~beginning~~security. These conversions occurred in advance of a sales plan providing for the sale of such shares of Class A common stock pursuant to Rule 10b5-1 subject to the conditions set forth therein. These transactions resulted in a reclassification within equity and ~~ending amounts of equity is presented below:~~

Six Months Ended
September 29,
2018 September 30,
2017
(millions)
Balance at beginning of period $ 3,457.4
$ 3,299.6
Comprehensive income 270.0
266.3
Dividends declared (101.0 ) (81.2 )
Repurchases of common stock, including shares surrendered for tax withholdings (223.9 ) (14.6 )
Stock-based compensation 42.8
39.4
Shares issued pursuant to stock-based compensation arrangements 21.8
0.1
Cumulative adjustment from adoption of new accounting standards (see Note 4) (5.1 ) —
Balance at end of period $ 3,462.0
$ 3,509.6
had no effect on the Company's consolidated balance sheet.

Common Stock Repurchase Program

A summary of the Company's repurchases of Class A common stock under its common stock repurchase program is as follows:

Six Months Ended
September 29,
2018 September 30,
2017
(millions)
Cost of shares repurchased $ 192.3
$ —
Number of shares repurchased 1.4
0.0



	31

~~RALPH LAUREN CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~



	Six Months Ended
	September 28, 2019		September 29, 2018
	(millions)
Cost of shares repurchased	$	400.0	$	192.3
Number of shares repurchased	4.0		1.4

On ~~June 4, 2018,~~May 13, 2019, the Company's Board of Directors approved an expansion of the Company's existing common stock repurchase program that allows it to repurchase up to an additional ~~$1.000 billion~~$600 million of Class A Common stock. As of September ~~29, 2018,~~28, 2019, the remaining availability under the Company's Class A common stock repurchase program was approximately ~~$907~~$830 million. Repurchases of shares of Class A common stock are subject to overall business and market conditions.

In addition, during the six-month periods ended September 28, 2019 and September 29, 2018, ~~and September 30, 2017, 0.3~~0.4 million and ~~0.2~~0.3 million shares of Class A common stock, respectively, at a cost of ~~$31.6~~$42.7 million and ~~$14.6~~$31.6 million,, respectively, were surrendered to or withheld by the Company in satisfaction of withholding taxes in connection with the vesting of awards under the Company's ~~1997 Long-Term Stock Incentive Plan, as amended (the "1997 Incentive Plan"), and its Amended and Restated 2010 Long-Term Stock Incentive Plan (the "2010 Incentive Plan").~~long-term stock incentive plans.

Repurchased and surrendered shares are accounted for as treasury stock at cost and held in treasury for future use.

Dividends

Since 2003, the Company has maintained a regular quarterly cash dividend program on its common stock. On ~~June 4, 2018,~~May 13, 2019, the Company's Board of Directors approved an increase to the Company's quarterly cash dividend on its common stock from ~~$0.50~~$0.625 to ~~$0.625~~$0.6875 per share. The second quarter Fiscal ~~2019~~2020 dividend of ~~$0.625~~$0.6875 per share was declared on September ~~14, 2018,~~13, 2019, was payable to stockholders of record at the close of business on September ~~28, 2018,~~27, 2019, and was paid on October ~~12, 2018.~~11, 2019. Dividends paid amounted to ~~$91.3~~$101.9 million and ~~$81.1~~$91.3 million during the six-month periods ended September 28, 2019 and September 29, 2018, ~~and September 30, 2017,~~ respectively.



	34

RALPH LAUREN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


~~15.~~16.	Accumulated Other Comprehensive Income (Loss)

The following table presents OCI activity, net of tax, which is accumulated in equity:


	Foreign Currency Translation Gains (Losses)^(a)			Net Unrealized Gains (Losses) on Cash Flow Hedges^(b)			Net Unrealized Gains (Losses) on Defined Benefit Plans^(c)			Total Accumulated Other Comprehensive Income (Loss)			Foreign Currency Translation Gains (Losses)^(a)			Net Unrealized Gains (Losses) on Cash Flow Hedges^(b)			Net Unrealized Gains (Losses) on Defined Benefit Plans^(c)			Total Accumulated Other Comprehensive Income (Loss)
	(millions)												(millions)
Balance at April 1, 2017	$	(206.2	)	$	14.6		$	(6.8	)	$	(198.4	)
Balance at March 30, 2019													$	(118.5	)	$	20.2		$	(5.1	)	$	(103.4	)
Other comprehensive income (loss), net of tax:
OCI before reclassifications	87.7			(23.9		)	(0.7		)	63.1			(11.0		)	13.8			0.1			2.9
Amounts reclassified from AOCI to earnings	—			(0.4		)	0.3			(0.1		)	(4.9		)	(9.9		)	(0.1		)	(14.9		)
Other comprehensive income (loss), net of tax	87.7			(24.3		)	(0.4		)	63.0			(15.9		)	3.9			—			(12.0		)
Balance at September 30, 2017	$	(118.5	)	$	(9.7	)	$	(7.2	)	$	(135.4	)
Balance at September 28, 2019													$	(134.4	)	$	24.1		$	(5.1	)	$	(115.4	)

Balance at March 31, 2018	$	(79.3	)	$	(16.0	)	$	(3.2	)	$	(98.5	)	$	(79.3	)	$	(16.0	)	$	(3.2	)	$	(98.5	)
Other comprehensive income (loss), net of tax:
OCI before reclassifications	(36.9		)	24.4			0.2			(12.3		)	(36.9		)	24.4			0.2			(12.3		)
Amounts reclassified from AOCI to earnings	—			3.1			(0.1		)	3.0			—			3.1			(0.1		)	3.0
Other comprehensive income (loss), net of tax	(36.9		)	27.5			0.1			(9.3		)	(36.9		)	27.5			0.1			(9.3		)
Balance at September 29, 2018	$	(116.2	)	$	11.5		$	(3.1	)	$	(107.8	)	$	(116.2	)	$	11.5		$	(3.1	)	$	(107.8	)

^(a)

OCI before reclassifications to earnings related to foreign currency translation gains (losses) includes an income tax ~~provision~~provisions of $4.3 million and $3.4 million for the ~~six months~~six-month periods ended September 28, 2019 and September 29, 2018, ~~and includes an income tax benefit of $20.1 million for the six months ended September 30, 2017.~~respectively. OCI before reclassifications to earnings for the six-month periods ended September 28, 2019 and September 29, 2018 includes a gain of $17.0 million (net of a $5.3 million income tax provision) and ~~September 30, 2017 includes~~ a gain of $25.4 million (net of an $8.1 million income tax provision) ~~and a loss of $39.0 million (net of a $23.7 million income tax benefit)~~, respectively, related to changes in the fair values of instruments designated as hedges of the Company's net investment in certain foreign operations (see Note 12). Amounts reclassified from AOCI to earnings related to foreign currency translation gains (losses) for the six months ended September 28, 2019 relate to the reclassification to retained earnings of income tax effects stranded in AOCI (see Note 4).



	32

~~RALPH LAUREN CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

^(b)

OCI before reclassifications to earnings related to net unrealized gains (losses) on cash flow hedges are presented net of an income tax ~~provision~~provisions of ~~$3.0~~$1.8 million and ~~an income tax benefit of $2.0~~$3.0 million for the six-month periods ended September ~~29, 2018~~28, 2019 and September ~~30, 2017,~~29, 2018, respectively. The tax effects on amounts reclassified from AOCI to earnings are presented in a table below.


^(c)	Activity is presented net of taxes, which were immaterial for both periods presented.

The following table presents reclassifications from AOCI to earnings for cash flow hedges, by component:


	Three Months Ended						Six Months Ended						Location of Gains (Losses) Reclassified from AOCI to Earnings	Three Months Ended						Six Months Ended						Location of Gains (Losses) Reclassified from AOCI to Earnings
	September 29, 2018			September 30, 2017			September 29, 2018			September 30, 2017				September 28, 2019			September 29, 2018			September 28, 2019			September 29, 2018
	(millions)													(millions)
Gains (losses) on cash flow hedges^(a):
FC — Cash flow hedges	$	0.7		$	(2.4	)	$	(5.5	)	$	1.6		Cost of goods sold	$	4.4		$	0.7		$	10.6		$	(5.5	)	Cost of goods sold
FC — Cash flow hedges	0.7			(0.4		)	2.1			(1.0		)	Other income (expense), net	0.2			0.7			0.4			2.1			Other income (expense), net
Tax effect	(0.1		)	—			0.3			(0.2		)	Income tax provision	(0.5		)	(0.1		)	(1.1		)	0.3			Income tax provision
Net of tax	$	1.3		$	(2.8	)	$	(3.1	)	$	0.4			$	4.1		$	1.3		$	9.9		$	(3.1	)


^(a)	FC = Forward foreign currency exchange contracts.



	35

RALPH LAUREN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


~~16.~~17.	Stock-based Compensation

On August 1, 2019, the Company's shareholders approved the 2019 Long-Term Stock Incentive Plan (the "2019 Incentive Plan"), which replaced the Company's Amended and Restated 2010 Long-Term Stock Incentive Plan (the "2010 Incentive Plan"). The ~~Company's stock-based compensation awards are currently issued~~2019 Incentive Plan provides for 1.2 million of new shares authorized for issuance to the participants, in addition to the approximately 3.0 million shares that remained available for issuance under the 2010 Incentive Plan ~~which was approved by its stockholders on~~as of August ~~5, 2010. However,~~1, 2019. In addition, any ~~prior~~outstanding awards ~~granted~~ under the ~~1997~~2010 Incentive Plan ~~remain subject to~~or the ~~terms of that plan. Any awards~~Company's 1997 Long-Term Stock Incentive Plan (the "1997 Incentive Plan") that expire, are forfeited, or are surrendered to the Company in satisfaction of taxes, ~~are~~will become available for issuance under the 2019 Incentive Plan. The 2019 Incentive Plan became effective August 1, 2019 and no further grants will be made under the 2010 Incentive Plan. Outstanding awards issued prior to August 1, 2019 will continue to remain subject to the terms of the 2010 Incentive Plan or 1997 Incentive Plan, as applicable. Stock-based compensation awards that may be made under the 2019 Incentive Plan include, but are not limited to, (i) stock options, (ii) restricted stock, and (iii) RSUs.

Refer to Note 17 of the Fiscal ~~2018~~2019 10-K for a detailed description of the Company's stock-based compensation awards, including information related to vesting terms, service, performance and ~~performance~~market conditions, and payout ~~percentages (also refer to "Performance-based RSUs~~" below for information related to payout percentages for certain performance-based RSUs granted during the second quarter of Fiscal 2019). Additionally, during the second quarter of Fiscal 2019, in lieu of granting certain performance-based RSUs to its senior executives and other key employees, the Company granted a new type of award for which vesting is dependent on a market condition based on total shareholder return ("TSR"). Refer to "~~Market-based RSUs" below for a detailed description.~~percentages.

Impact on Results

A summary of total stock-based compensation expense and the related income tax benefits recognized during the three-month and six-month periods ended September ~~29, 2018~~28, 2019 and September ~~30, 2017~~29, 2018 is as follows:



	Three Months Ended							Six Months Ended
	September 28, 2019				September 29, 2018			September 28, 2019				September 29, 2018
	(millions)
Compensation expense	$	27.8		^(a)	$	21.3		$	50.8		^(a)	$	42.8
Income tax benefit	(4.1		)		(3.3		)	(7.7		)		(6.5		)

Three Months Ended Six Months Ended
September 29,
2018 September 30,
2017 September 29,
2018 September 30,
2017
(millions)
Compensation expense $ 21.3
$ 17.8
$ 42.8
$ 39.4
^(a)
Income tax benefit (3.3 ) (6.7 ) (6.5 ) (14.6 )


^(a)	~~The six months ended September 30, 2017 includes $2.1~~Includes $3.6 million of accelerated stock-based compensation expense recorded within restructuring and other charges in the consolidated statements of operations during the second quarter of Fiscal 2020 (see Note 8). All other stock-based compensation expense was recorded within SG&A expenses.



	33

~~RALPH LAUREN CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

The Company issues its annual grants of stock-based compensation awards in the first half of each fiscal year. Due to the timing of the annual grants and other factors, including the timing and magnitude of forfeiture and performance goal achievement adjustments, as well as changes to the size and composition of the eligible employee population, stock-based compensation expense recognized during any given fiscal period is not indicative of the level of compensation expense expected to be incurred in future periods.

Stock Options

A summary of stock option activity under all plans during the six months endedSeptember ~~29, 2018~~28, 2019 is as follows:



	Number of Options
	(thousands)
Options outstanding at March ~~31, 2018~~30, 2019	~~1,151~~834
Granted	—
Exercised	~~(162~~—	)
Cancelled/Forfeited	(~~134~~263	)
Options outstanding at September ~~29, 2018~~28, 2019	~~855~~571



	36

RALPH LAUREN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Restricted Stock Awards and Service-based RSUs

~~The fair values of restricted~~Restricted stock awards were granted to non-employee directors are determined based on the fair value of the Company's Class A common stock on the date of grant. No such awards were granted during the six-month periods ended September 29, 2018 and September 30, 2017.prior to Fiscal 2019. Effective beginning Fiscal 2019, non-employee directors are now granted service-based ~~RSUs.~~RSUs in lieu of restricted shares.

The fair values of service-based RSUs granted to certain of the Company's senior executives and other employees, as well as non-employee directors, are based on the fair value of the Company's Class A common stock on the date of grant, adjusted to reflect the absence of dividends for any awards for which dividend equivalent amounts do not ~~entitled to~~ accrue ~~dividend equivalents~~ while ~~outstanding.~~outstanding and unvested. The weighted-average grant date fair values of service-based RSU awards granted were ~~$114.27~~$102.65 and ~~$72.70~~$114.27 per share during the six-month periods ended September 28, 2019 and September 29, 2018, ~~and September 30, 2017,~~ respectively.

A summary of restricted stock and service-based RSU activity during the six months ended September ~~29, 2018~~28, 2019 is as follows:



	Number of Shares/Units
	Restricted Stock		Service-based RSUs
	(thousands)
Unvested at March 30, 2019	10		1,112
Granted	—		517
Vested	(6	)	(437	)
Forfeited	—		(53	)
Unvested at September 28, 2019	4		1,139

Number of Shares
Restricted Stock Service-based RSUs
(thousands)
Nonvested at March 31, 2018 19
1,072
Granted —
560
Vested (9 ) (412 )
Forfeited —
(95 )
Nonvested at September 29, 2018 10
1,125

Performance-based RSUs

The fair values of the Company's performance-based RSUs granted to its senior executives and other key employees are based on the fair value of the Company's Class A common stock on the date of grant, adjusted to reflect the absence of dividends for any awards for which dividend equivalent amounts do not ~~entitled to~~ accrue ~~dividend equivalents~~ while ~~outstanding.~~outstanding and unvested. The weighted-average grant date fair values of performance-based RSUs granted were ~~$129.78~~$83.16 and ~~$69.40~~$129.78 per share during the ~~six-month periods~~six months ended September 28, 2019 and September 29, 2018, ~~and September 30, 2017,~~ respectively.



	34

~~RALPH LAUREN CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

Additionally, beginning with awards granted in the second quarter of Fiscal 2019, the number of shares that may be earned for performance-based RSUs subject to cliff vesting ranges between 0% (if the specified threshold performance level is not attained) and 200% (if performance meets or exceeds the maximum achievement level) of the awards originally granted. For such awards granted in recent years prior to Fiscal 2019, the payout percentages range from 0% to 150%.

A summary of performance-based RSU activity during the six months ended September ~~29, 2018~~28, 2019 is as follows:



	Number of Performance-based RSUs
	(thousands)
~~Nonvested~~Unvested at March ~~31, 2018~~30, 2019	~~1,157~~1,011
Granted	~~154~~289
Change due to performance condition achievement	~~(29~~123	)
Vested	(~~232~~482	)
Forfeited	(206	)
~~Nonvested~~Unvested at September ~~29, 2018~~28, 2019	~~1,030~~935

Market-based RSUs

~~During the second quarter of Fiscal 2019, the~~The Company ~~granted cliff vesting RSU awards~~grants market-based RSUs, which are based on TSR performance, to its senior executives and other key employees, which, in addition to being subject to continuing employment requirements, are also subject to a market condition based on TSR performance. The number of shares that vest upon the completion of a three-year period of time is determined by comparing the Company's TSR relative to that of a pre-established peer group over the related three-year performance period. Depending on the Company's level of achievement, the number of shares that ultimately vest may range from 0% to 200% of the awards originally granted.

~~The weighted-average grant date fair value of TSR awards granted during the six months ended September 29, 2018 was $177.13 per share.~~employees. The Company estimates the fair value of its TSR awards on the date of grant using a Monte Carlo simulation, ~~valuation model. This pricing model uses~~which models multiple ~~simulations~~stock price paths of the Company's Class A common stock and that of its peer group to evaluate ~~the probability of the Company achieving various stock price levels to~~and determine its ultimate expected relative TSR performance ranking, ~~relative~~adjusted to reflect the ~~peer group. Compensation expense, net~~absence of ~~estimated forfeitures, is recorded regardless~~dividends for any awards for which dividend equivalent amounts do not accrue while outstanding and unvested.



	37

RALPH LAUREN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The weighted-average grant date fair values of ~~whether~~market-based RSUs granted were $90.59 and $177.13 per share during the ~~market condition is ultimately satisfied.~~six months ended September 28, 2019 and September 29, 2018, respectively. The assumptions used to estimate the fair value of TSR awards granted during the six months ended September 28, 2019 and September 29, 2018 were as follows:



	Six Months Ended
	September 28, 2019		September 29, 2018
Expected term (years)	2.6		2.6
Expected volatility	31.4	%	33.5	%
Expected dividend yield	3.2	%	1.9	%
Risk-free interest rate	1.4	%	2.6	%



	~~Six Months Ended~~
	~~September 29,~~ ~~2018~~
~~Expected term (years)~~	~~2.6~~
~~Expected volatility~~	~~33.5~~	%
~~Expected dividend yield~~	~~1.9~~	%
~~Risk-free interest rate~~	~~2.6~~	%

A summary of market-based RSU activity during the six months ended September ~~29, 2018~~28, 2019 is as follows:



	Number of Market-based RSUs
	(thousands)
~~Nonvested~~Unvested at March ~~31, 2018~~30, 2019	—76
Granted	80159
Change due to market condition achievement	—
Vested	—
Forfeited	—(1	)
~~Nonvested~~Unvested at September ~~29, 2018~~28, 2019	80234


18.	Segment Information

The Company has 3 reportable segments based on its business activities and organization:

•

North America — The North America segment primarily consists of sales of Ralph Lauren branded apparel, footwear, accessories, home furnishings, and related products made through the Company's retail and wholesale businesses in the U.S. and Canada, excluding Club Monaco. In North America, the Company's retail business is primarily comprised of its Ralph Lauren stores, its factory stores, and its digital commerce site, www.RalphLauren.com. The Company's wholesale business in North America is comprised primarily of sales to department stores, and to a lesser extent, specialty stores.

•

Europe — The Europe segment primarily consists of sales of Ralph Lauren branded apparel, footwear, accessories, home furnishings, and related products made through the Company's retail and wholesale businesses in Europe, the Middle East, and Latin America, excluding Club Monaco. In Europe, the Company's retail business is primarily comprised of its Ralph Lauren stores, its factory stores, its concession-based shop-within-shops, and its various digital commerce sites. The Company's wholesale business in Europe is comprised of a varying mix of sales to both department stores and specialty stores, depending on the country.

•

Asia — The Asia segment primarily consists of sales of Ralph Lauren branded apparel, footwear, accessories, home furnishings, and related products made through the Company's retail and wholesale businesses in Asia, Australia, and New Zealand. The Company's retail business in Asia is primarily comprised of its Ralph Lauren stores, its factory stores, its concession-based shop-within-shops, and its digital commerce site, www.RalphLauren.cn, which launched in September 2018. In addition, the Company sells its products online through various third-party digital partner commerce sites. In Asia, the Company's wholesale business is comprised primarily of sales to department stores, with related products distributed through shop-within-shops.



	3538

RALPH LAUREN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


~~17.~~	~~Segment Information~~

~~The Company has three reportable segments based on its business activities and organization:~~

~~North America~~ — The North America segment primarily consists of sales of Ralph Lauren branded apparel, accessories, home furnishings, and related products made through the Company's wholesale and retail businesses in the U.S. and Canada, excluding Club Monaco. In North America, the Company's wholesale business is comprised primarily of sales to department stores, and to a lesser extent, specialty stores. The Company's retail business in North America is comprised of its Ralph Lauren stores, its factory stores, and its digital commerce site, www.RalphLauren.com.

~~Europe~~ — The Europe segment primarily consists of sales of Ralph Lauren branded apparel, accessories, home furnishings, and related products made through the Company's wholesale and retail businesses in Europe and the Middle East, excluding Club Monaco. In Europe, the Company's wholesale business is comprised of a varying mix of sales to both department stores and specialty stores, depending on the country. The Company's retail business in Europe is comprised of its Ralph Lauren stores, its factory stores, its concession-based shop-within-shops, and its various digital commerce sites.

~~Asia~~ — The Asia segment primarily consists of sales of Ralph Lauren branded apparel, accessories, home furnishings, and related products made through the Company's wholesale and retail businesses in Asia, Australia, and New Zealand. The Company's retail business in Asia is comprised of its Ralph Lauren stores, its factory stores, its concession-based shop-within-shops, and its digital commerce site, www.RalphLauren.cn, which launched in September 2018. In addition, the Company sells its products online through various third-party digital partner commerce sites. In Asia, the Company's wholesale business is comprised primarily of sales to department stores, with related products distributed through shop-within-shops.

No operating segments were aggregated to form the Company's reportable segments. In addition to these reportable segments, the Company also has other non-reportable segments, which primarily consist of (i) sales of Club Monaco branded products made through its retail and wholesale businesses in the U.S., Canada, and Europe, and its licensing alliances in Europe and Asia, ~~(ii) sales of Ralph Lauren branded products made through its wholesale business in Latin America,~~ and ~~(iii)~~(ii) royalty revenues earned through its global licensing alliances, excluding Club Monaco.

The Company's segment reporting structure is consistent with how it establishes its overall business strategy, allocates resources, and assesses performance of its business. The accounting policies of the Company's segments are consistent with those described in Notes 2 and 3 of the Fiscal ~~2018~~2019 10-K. Sales and transfers between segments are generally recorded at cost and treated as transfers of inventory. All intercompany revenues are eliminated in consolidation and are not reviewed when evaluating segment performance. Each segment's performance is evaluated based upon net revenues and operating income before restructuring-related charges, impairment of assets, and certain other one-time items, if any. Certain corporate overhead expenses related to global functions, most notably the Company's executive office, information technology, finance and accounting, human resources, and legal departments, largely remain at corporate. Additionally, other costs that cannot be allocated to the segments based on specific usage are also maintained at corporate, including corporate advertising and marketing expenses, depreciation and amortization of corporate assets, and other general and administrative expenses resulting from corporate-level activities and projects.

Effective beginning in the first quarter of Fiscal 2020, operating results related to the Company's business in Latin America are included within its Europe segment due to a change in the way in which the Company manages this business. Previously, such results were included within the Company's other non-reportable segments. All prior period segment information has been recast to reflect this change on a comparative basis.

Net revenues and operating income for each of the Company's segments are as follows:



	Three Months Ended				Six Months Ended
	September 28, 2019		September 29, 2018		September 28, 2019		September 29, 2018
	(millions)
Net revenues:
North America	$	881.2	$	888.2	$	1,600.6	$	1,585.8
Europe	480.2		464.7		841.0		820.0
Asia	255.3		244.7		513.9		492.7
Other non-reportable segments	89.5		93.3		179.5		183.0
Total net revenues	$	1,706.2	$	1,690.9	$	3,135.0	$	3,081.5

Three Months Ended Six Months Ended
September 29,
2018 September 30,
2017 September 29,
2018 September 30,
2017
(millions)
Net revenues:
North America $ 888.2
$ 875.6
$ 1,585.8
$ 1,585.3
Europe 459.2
463.0
809.8
786.5
Asia 244.7
216.8
492.7
425.9
Other non-reportable segments 98.8
108.8
193.2
213.6
Total net revenues $ 1,690.9
$ 1,664.2
$ 3,081.5
$ 3,011.3



	Three Months Ended						Six Months Ended
	September 28, 2019			September 29, 2018			September 28, 2019			September 29, 2018
	(millions)
Operating income^(a):
North America	$	199.9		$	209.8		$	357.8		$	369.7
Europe	140.6			127.9			220.0			201.6
Asia	40.9			32.7			89.0			75.4
Other non-reportable segments	22.8			23.2			55.7			54.2
	404.2			393.6			722.5			700.9
Unallocated corporate expenses	(156.6		)	(167.7		)	(302.0		)	(322.5		)
Unallocated restructuring and other charges^(b)	(14.5		)	(15.9		)	(44.1		)	(38.3		)
Total operating income	$	233.1		$	210.0		$	376.4		$	340.1



	3639

RALPH LAUREN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Three Months Ended Six Months Ended
September 29,
2018 September 30,
2017 September 29,
2018 September 30,
2017
(millions)
Operating income^(a):

North America $ 209.8
$ 202.2
$ 369.7
$ 352.7
Europe 126.6
125.5
200.5
192.6
Asia 32.7
26.5
75.4
56.7
Other non-reportable segments 24.5
26.8
55.3
59.8
393.6
381.0
700.9
661.8
Unallocated corporate expenses (167.7 ) (169.1 ) (322.5 ) (322.8 )
Unallocated restructuring and other charges^(b)
(15.9 ) (18.6 ) (38.3 ) (55.4 )
Total operating income $ 210.0
$ 193.3
$ 340.1
$ 283.6


^(a)	Segment operating income and unallocated corporate expenses during the three-month and six-month periods ended September ~~29, 2018~~28, 2019 and September ~~30, 2017~~29, 2018 included certain restructuring-related inventory charges (see Note 8) and asset impairment charges (see Note 7), which are detailed below:

Three Months Ended Six Months Ended
September 29,
2018 September 30,
2017 September 29,
2018 September 30,
2017
(millions)
Restructuring-related inventory charges:
North America $ —
$ (0.1 ) $ —
$ (0.8 )
Europe —
(0.1 ) —
(0.1 )
Other non-reportable segments —
(0.4 ) —
(0.4 )
Total restructuring-related inventory charges $ —
$ (0.6 ) $ —
$ (1.3 )



	Three Months Ended					Six Months Ended
	September 28, 2019			September 29, 2018		September 28, 2019			September 29, 2018
	(millions)
Restructuring-related inventory charges:
Europe	$	—		$	—	$	(0.1	)	$	—
Asia	(0.4		)	—		(0.9		)	—
Total restructuring-related inventory charges	$	(0.4	)	$	—	$	(1.0	)	$	—



	Three Months Ended						Six Months Ended
	September 28, 2019			September 29, 2018			September 28, 2019			September 29, 2018
	(millions)
Asset impairment charges:
North America	$	—		$	(0.3	)	$	—		$	(0.3	)
Europe	—			(0.5		)	—			(1.5		)
Asia	—			(3.5		)	—			(3.7		)
Other non-reportable segments	(3.8		)	(5.3		)	(3.8		)	(5.3		)
Unallocated corporate expenses	(2.3		)	(0.2		)	(3.5		)	(0.3		)
Total asset impairment charges	$	(6.1	)	$	(9.8	)	$	(7.3	)	$	(11.1	)

Three Months Ended Six Months Ended
September 29,
2018 September 30,
2017 September 29,
2018 September 30,
2017
(millions)
Asset impairment charges:
North America $ (0.3 ) $ (0.3 ) $ (0.3 ) $ (0.9 )
Europe —
—
(0.2 ) (1.2 )
Asia (3.5 ) (0.8 ) (3.7 ) (0.9 )
Other non-reportable segments (5.8 ) (8.5 ) (6.6 ) (8.6 )
Unallocated corporate expenses (0.2 ) (1.6 ) (0.3 ) (9.3 )
Total asset impairment charges $ (9.8 ) $ (11.2 ) $ (11.1 ) $ (20.9 )



	37

~~RALPH LAUREN CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~


^(b)	The three-month and six-month periods ended September ~~29, 2018~~28, 2019 and September ~~30, 2017~~29, 2018 included certain unallocated restructuring and other charges (see Note 8), which are detailed below:



	Three Months Ended						Six Months Ended
	September 28, 2019			September 29, 2018			September 28, 2019			September 29, 2018
	(millions)
Unallocated restructuring and other charges:
North America-related	$	—		$	(0.6	)	$	(0.7	)	$	(3.5	)
Europe-related	(1.3		)	(4.0		)	(3.1		)	(9.0		)
Asia-related	(0.3		)	0.3			(0.8		)	0.2
Other non-reportable segment-related	(0.7		)	(0.4		)	(0.7		)	(1.2		)
Corporate-related	(10.8		)	(7.7		)	(14.8		)	(13.6		)
Unallocated restructuring charges	(13.1		)	(12.4		)	(20.1		)	(27.1		)
Other charges (see Note 8)	(1.4		)	(3.5		)	(24.0		)	(11.2		)
Total unallocated restructuring and other charges	$	(14.5	)	$	(15.9	)	$	(44.1	)	$	(38.3	)

Three Months Ended Six Months Ended
September 29,
2018 September 30,
2017 September 29,
2018 September 30,
2017
(millions)
Unallocated restructuring and other charges:
North America-related $ (0.6 ) $ (1.2 ) $ (3.5 ) $ (13.2 )
Europe-related (2.4 ) (5.0 ) (7.4 ) (5.1 )
Asia-related 0.3
(2.4 ) 0.2
0.9
Other non-reportable segment-related (2.0 ) (2.0 ) (2.8 ) (6.8 )
Corporate-related (7.7 ) (6.7 ) (13.6 ) (19.7 )
Unallocated restructuring charges (12.4 ) (17.3 ) (27.1 ) (43.9 )
Other charges (see Note 8) (3.5 ) (1.3 ) (11.2 ) (11.5 )
Total unallocated restructuring and other charges $ (15.9 ) $ (18.6 ) $ (38.3 ) $ (55.4 )



	40

RALPH LAUREN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Depreciation and amortization expense for the Company's segments is as follows:



	Three Months Ended				Six Months Ended
	September 28, 2019		September 29, 2018		September 28, 2019		September 29, 2018
	(millions)
Depreciation and amortization:
North America	$	18.6	$	20.3	$	37.5	$	40.1
Europe	7.7		8.1		15.3		16.5
Asia	14.7		12.0		29.7		24.6
Other non-reportable segments	1.5		1.9		2.8		3.8
Unallocated corporate expenses	24.1		23.9		47.5		48.0
Unallocated restructuring and other charges (see Note 8)	—		3.5		—		7.0
Total depreciation and amortization	$	66.6	$	69.7	$	132.8	$	140.0

Three Months Ended Six Months Ended
September 29,
2018 September 30,
2017 September 29,
2018 September 30,
2017
(millions)
Depreciation and amortization:
North America $ 20.3
$ 20.6
$ 40.1
$ 41.6
Europe 8.1
8.6
16.4
16.6
Asia 12.0
12.1
24.6
23.6
Other non-reportable segments 1.9
2.8
3.9
5.6
Unallocated corporate expenses 23.9
26.2
48.0
52.3
Unallocated restructuring and other charges (see Note 8) 3.5
3.5
7.0
7.0
Total depreciation and amortization $ 69.7
$ 73.8
$ 140.0
$ 146.7

Net revenues by geographic location of the reporting subsidiary are as follows:


	Three Months Ended				Six Months Ended				Three Months Ended				Six Months Ended
	September 29, 2018		September 30, 2017		September 29, 2018		September 30, 2017		September 28, 2019		September 29, 2018		September 28, 2019		September 29, 2018
	(millions)								(millions)
Net revenues^(a):
The Americas^(b)	$	984.2	$	980.8	$	1,773.6	$	1,792.3	$	972.6	$	984.2	$	1,783.0	$	1,773.6
Europe^(c)	461.6		466.1		814.4		792.3		478.0		461.6		837.5		814.4
Asia^(d)	245.1		217.3		493.5		426.7		255.6		245.1		514.5		493.5
Total net revenues	$	1,690.9	$	1,664.2	$	3,081.5	$	3,011.3	$	1,706.2	$	1,690.9	$	3,135.0	$	3,081.5


^(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.



	38

~~RALPH LAUREN CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

^(b)

Includes the U.S., Canada, and Latin America. Net revenues earned in the U.S. during the three-month and six-month periods ended September ~~29, 2018~~28, 2019 were $911.1 million and $1.671 billion, respectively, and $923.3 million and $1.662 ~~billion, respectively, and $917.9 million and $1.683~~ billion during the three-month and six-month periods ended September ~~30, 2017, respectively.~~29, 2018.


^(c)	Includes the Middle East.


^(d)	Includes Australia and New Zealand.



	41

RALPH LAUREN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


~~18.~~19.	Additional Financial Information

Reconciliation of Cash, Cash Equivalents, and Restricted Cash

A reconciliation of cash, cash equivalents, and restricted cash as of September ~~29, 2018~~28, 2019 and March ~~31, 2018~~30, 2019 from the consolidated balance sheets to the consolidated statements of cash flows is as follows:



	September 28, 2019		March 30, 2019
	(millions)
Cash and cash equivalents	$	548.1	$	584.1
Restricted cash included within prepaid expenses and other current assets	7.1		11.9
Restricted cash included within other non-current assets	8.1		30.5
Total cash, cash equivalents, and restricted cash	$	563.3	$	626.5

September 29,
2018 March 31,
2018
(millions)
Cash and cash equivalents $ 553.1
$ 1,304.6
Restricted cash included within prepaid expenses and other current assets 11.5
15.5
Restricted cash included within other non-current assets 31.9
35.4
Total cash, cash equivalents, and restricted cash $ 596.5
$ 1,355.5

~~Amounts included in restricted~~Restricted cash ~~relate~~relates to cash ~~placed~~held in escrow with certain banks as collateral, primarily to secure guarantees in connection with certain international tax matters and real estate leases.

Cash Interest and Taxes

Cash paid for interest and income taxes is as follows:



	Three Months Ended				Six Months Ended
	September 28, 2019		September 29, 2018		September 28, 2019		September 29, 2018
	(millions)
Cash paid for interest	$	5.4	$	5.1	$	7.8	$	8.1
Cash paid for income taxes	59.8		27.3		82.1		30.6

Three Months Ended Six Months Ended
September 29,
2018 September 30,
2017 September 29,
2018 September 30,
2017
(millions)
Cash paid for interest $ 5.1
$ 3.0
$ 8.1
$ 5.6
Cash paid for income taxes 27.3
7.5
30.6
28.3

Non-cash Transactions

Operating and finance lease ROU assets recorded in connection with the recognition of new lease liabilities were $263.6 million and $64.0 million, respectively, during the six months ended September 28, 2019.

Non-cash investing activities also included capital expenditures incurred but not yet paid of ~~$41.2~~$55.3 million and ~~$37.5~~$41.2 million for the six-month periods ended September 28, 2019 and September 29, 2018, ~~and September 30, 2017,~~ respectively. ~~Additionally,~~

Non-cash financing activities included the ~~Company recorded capital lease assets and corresponding capital lease obligations~~conversion of ~~$2.3~~1.0 million ~~within its consolidated balance sheet~~shares of Class B common stock into an equal number of shares of Class A common stock during the six months ended September ~~30, 2017.~~28, 2019, as discussed in Note 15.

There were no other significant non-cash investing or financing activities for any of the fiscal periods presented.



	3942


Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations.

Special Note Regarding Forward-Looking Statements

Various statements in this Form 10-Q, or incorporated by reference into this Form 10-Q, in future filings by us with the Securities and Exchange Commission (the "SEC"), in our press releases, and in oral statements made from time to time by us or on our behalf constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on current expectations and are indicated by words or phrases such as "anticipate," "estimate," "expect," "project," "we believe," "is or remains optimistic," "currently envisions," and similar words or phrases and involve known and unknown risks, uncertainties, and other factors which may cause actual results, performance, or achievements to be materially different from the future results, performance, or achievements expressed in or implied by such forward-looking statements. These risks, uncertainties, and other factors include, among others:

the loss of key personnel, including Mr. Ralph Lauren, or other changes in our executive and senior management team or to our operating structure, and our ability to effectively transfer knowledge during periods of transition;

our ability to successfully implement our long-term growth ~~strategy and achieve anticipated operating enhancements and cost reductions from our restructuring plans;~~

the impact to our business resulting from investments and other costs incurred in connection with the execution of our long-term growth strategy, including restructuring-related charges, which may be dilutive to our earnings in the short term;strategy;

our ability to continue to expand orand grow our business internationally and the impact of related changes in our customer, channel, and geographic sales mix as a ~~result;~~result, as well as our ability to accelerate growth in certain product categories;

our ability to open new retail stores and concession shops, as well as enhance and expand our digital ~~commerce sites~~footprint and capabilities, all in an effort to expand our direct-to-consumer presence;

~~the impact to our business resulting from changes in consumers' ability, willingness, or preferences to purchase premium lifestyle products that we offer for sale and~~ our ability to ~~forecast~~respond to constantly changing fashion and retail trends and consumer ~~demand, which could result~~demands in ~~either~~ a ~~build-up or shortage of inventory;~~

timely manner, develop products that resonate with our ~~ability~~existing customers and attract new customers, and execute marketing and advertising programs that appeal to ~~continue to maintain our brand image and reputation and protect our trademarks;~~consumers;

our ability to effectively manage inventory levels and the increasing pressure on our margins in a highly promotional retail environment;

our ability to continue to maintain our brand image and reputation and protect our trademarks;

our ability to competitively price our products and create an acceptable value proposition for consumers;

the impact to our business resulting from changes in consumers' ability, willingness, or preferences to purchase discretionary items and luxury retail products, which tends to decline during recessionary periods, and our ability to accurately forecast consumer demand, the failure of which could result in either a build-up or shortage of inventory;

our ability to achieve anticipated operating enhancements and cost reductions from our restructuring plans, as well as the impact to our business resulting from restructuring-related charges, which may be dilutive to our earnings in the short term;

the impact to our business resulting from potential costs and obligations related to the early closure of our stores or termination of our long-term, non-cancellable leases;

~~the impact of economic, political, and other conditions on us, our customers, suppliers, vendors, and lenders;~~

our ability to secure our facilities and systems and those of our third-party service providers from, among other things, cybersecurity breaches, acts of vandalism, computer viruses, or similar Internet or email events;

~~our efforts to successfully enhance, upgrade, and/or transition our global information technology systems and digital commerce platform;~~

the potential impact to our business resulting from the imposition of additional duties, tariffs, taxes, and other charges or barriers to trade, including those resulting from current trade developments with China;

a variety of legal, regulatory, tax, political, and economic risks, including risks related to the importation and exportation of products which our operations are currently subject to, or may become subject to as a result of potential changes in legislation, and other risks associated with our international operations, such as compliance with the Foreign Corrupt Practices Act or violations of other anti-bribery and corruption laws prohibiting improper payments, and the burdens of complying with a variety of foreign laws and regulations, including tax laws, trade and labor restrictions, and related laws that may reduce the flexibility of our business;

~~changes in our tax obligations and effective tax rate due to a variety of other factors, including~~the potential ~~additional changes in U.S. or foreign tax laws and regulations, accounting rules, or the mix and level of earnings by jurisdiction in future periods that are not currently known or anticipated;~~



	40

~~the~~ impact to our business resulting from the ~~recently enacted U.S. tax legislation commonly referred~~imposition of additional duties, tariffs, taxes, and other charges or barriers to astrade, including those resulting from current trade developments with China and the ~~Tax Cuts and Jobs Act, including~~ related ~~changes~~impact to ~~our tax obligations and effective tax rate in future periods,~~global stock markets, as well as ~~the enactment-related charges that were recorded on a provisional basis based on a reasonable estimate and are subject~~our ability to ~~change, all of which could differ materially from our current expectations and/or investors' expectations;~~implement mitigating sourcing strategies;

the impact to our business resulting from the United Kingdom's decision to exit the European Union and the uncertainty surrounding the terms and conditions of such a withdrawal, as well as the related impact to global stock markets and currency exchange rates;



	43

the impact to our business resulting from increases in the costs of raw materials, transportation, and labor, including ~~healthcare-related~~wages, healthcare, and other benefit-related costs;

our efforts to successfully enhance, upgrade, and/or transition our global information technology systems and digital commerce platforms;

changes in our tax obligations and effective tax rate due to a variety of other factors, including potential changes in U.S. or foreign tax laws and regulations, accounting rules, or the mix and level of earnings by jurisdiction in future periods that are not currently known or anticipated;

our exposure to currency exchange rate fluctuations from both a transactional and translational perspective;

the potential impact to our business resulting from the financial difficulties of certain of our large wholesale customers, which may result in consolidations, liquidations, restructurings, and other ownership changes in the retail industry, as well as other changes in the competitive marketplace, including the introduction of new products or pricing changes by our competitors;

the impact of economic, political, and other conditions on us, our customers, suppliers, vendors, and lenders, including business disruptions in Hong Kong resulting from ongoing protests and political unrest;

the potential impact to our business if any of our distribution centers were to become inoperable or inaccessible;

the potential impact on our operations and on our suppliers and customers resulting from natural or man-made disasters;

the impact to our business of events of unrest and instability that are currently taking place in certain parts of the world, as well as from any terrorist action, retaliation, and the threat of further action or retaliation;

~~our ability to maintain our credit profile and ratings within the financial community;~~

our ability to access sources of liquidity to provide for our cash needs, including our debt obligations, tax obligations, payment of dividends, capital expenditures, and potential repurchases of our Class A common stock, as well as the ability of our customers, suppliers, vendors, and lenders to access sources of liquidity to provide for their own cash needs;

the potential impact to the trading prices of our securities if our Class A common stock share repurchase activity and/or cash dividend payments differ from investors' expectations;

our ability to maintain our credit profile and ratings within the financial community;

our intention to introduce new products or brands, or enter into or renew alliances;

changes in the business of, and our relationships with, major department store customers and licensing partners;

our ability to achieve our goals regarding environmental, social, and governance practices; and

our ability to make certain strategic acquisitions and successfully integrate the acquired businesses into our existing operations.

These forward-looking statements are based largely on our expectations and judgments and are subject to a number of risks and uncertainties, many of which are unforeseeable and beyond our control. A detailed discussion of significant risk factors that have the potential to cause our actual results to differ materially from our expectations is included in our Annual Report on Form 10-K for the fiscal year ended March ~~31, 2018~~30, 2019 (the "Fiscal ~~2018~~2019 10-K"). There are no material changes to such risk factors, nor have we identified any previously undisclosed risks that could materially adversely affect our business, operating results, and/or financial condition, as set forth in Part II, Item 1A — "Risk Factors" of this Form 10-Q. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

In this Form 10-Q, references to "Ralph Lauren," "ourselves," "we," "our," "us," and the "Company" refer to Ralph Lauren Corporation and its subsidiaries, unless the context indicates otherwise. We utilize a 52-53 week fiscal year ending on the Saturday closest to March 31. As such, fiscal year ~~2019~~2020 will end on March ~~30, 2019~~28, 2020 and will be a 52-week period ("Fiscal ~~2019"~~2020"). Fiscal year ~~2018~~2019 ended on March ~~31, 2018~~30, 2019 and was also a 52-week period ("Fiscal ~~2018"~~2019"). The second quarter of Fiscal ~~2019~~2020 ended on~~September 29, 2018~~ ~~and was a 13-week period. The~~ ~~second quarter~~ ~~of Fiscal 2018 ended on~~ ~~September 30, 2017~~ ~~and was also a 13-week period.~~



	4144

September 28, 2019 and was a 13-week period. The second quarter of Fiscal 2019 ended on September 29, 2018 and was also a 13-week period.

INTRODUCTION

Management's discussion and analysis of financial condition and results of operations ("MD&A") is provided as a supplement to the accompanying consolidated financial statements and notes thereto to help provide an understanding of our results of operations, financial condition, and liquidity. MD&A is organized as follows:

~~Overview.~~ This section provides a general description of our business, global economic conditions and industry trends, and a summary of our financial performance for the three-month and six-month periods ended September 29, 2018. In addition, this section includes a discussion of recent developments and transactions affecting comparability that we believe are important in understanding our results of operations and financial condition, and in anticipating future trends.

~~Results of operations.~~ This section provides an analysis of our results of operations for the three-month and six-month periods ended September 29, 2018 as compared to the three-month and six-month periods ended September 30, 2017.

~~Financial condition and liquidity.~~ ~~This section provides a discussion of our financial condition and liquidity as of~~ ~~September 29, 2018~~, which includes (i) an analysis of our financial condition as compared to the prior fiscal year-end; (ii) an analysis of changes in our cash flows for the six months ended September 29, 2018 as compared to the six months ended September 30, 2017; (iii) an analysis of our liquidity, including the availability under our commercial paper borrowing program and credit facilities, common stock repurchases, payments of dividends, and our outstanding debt and covenant compliance; and (iv) a description of any material changes in our contractual and other obligations since March 31, 2018.

~~Market risk management.~~ ~~This section discusses any significant changes in our risk exposures related to foreign currency exchange rates, interest rates, and our investments since March 31, 2018.~~

~~Critical accounting policies.~~ This section discusses any significant changes in our critical accounting policies since March 31, 2018. Critical accounting policies typically require significant judgment and estimation on the part of management in their application. In addition, all of our significant accounting policies, including our critical accounting policies, are summarized in Note 3 of the Fiscal ~~2018~~ ~~10-K.~~

~~Recently issued accounting standards.~~ ~~This section discusses the potential impact on our reported results of operations and financial condition of certain accounting standards that have been recently issued or proposed.~~

•

Overview. This section provides a general description of our business, global economic conditions and industry trends, and a summary of our financial performance for the three-month and six-month periods ended September 28, 2019. 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 six-month periods ended September 28, 2019 as compared to the three-month and six-month periods ended September 29, 2018.

•

Financial condition and liquidity. This section provides a discussion of our financial condition and liquidity as of September 28, 2019, which includes (i) an analysis of our financial condition as compared to the prior fiscal year-end; (ii) an analysis of changes in our cash flows for the six months ended September 28, 2019 as compared to the six months ended September 29, 2018; (iii) an analysis of our liquidity, including the availability under our commercial paper borrowing program and credit facilities, common stock repurchases, payments of dividends, and our outstanding debt and covenant compliance; and (iv) a description of any material changes in our contractual and other obligations since March 30, 2019.


•	Market risk management. This section discusses any significant changes in our risk exposures related to foreign currency exchange rates, interest rates, and our investments since March 30, 2019.

•

Critical accounting policies. This section discusses any significant changes in our critical accounting policies since March 30, 2019. Critical accounting policies typically require significant judgment and estimation on the part of management in their application. In addition, all of our significant accounting policies, including our critical accounting policies, are summarized in Note 3 of the Fiscal 2019 10-K.


•	Recently issued accounting standards. This section discusses the potential impact on our reported results of operations and financial condition of certain accounting standards that have been recently issued or proposed.

OVERVIEW

Our Business

Our Company is a global leader in the design, marketing, and distribution of premium lifestyle products, including apparel, footwear, accessories, home furnishings, fragrances, and ~~other licensed product categories.~~hospitality. Our long-standing reputation and distinctive image have been developed across an expanding number of products, brands, sales channels, and international markets. Our brand names include Ralph Lauren, Ralph Lauren Collection, Ralph Lauren Purple Label, Polo Ralph Lauren, Double RL, Lauren Ralph Lauren, Polo Ralph Lauren Children, Chaps, and Club Monaco, among others.

We diversify our business by geography (North America, Europe, and Asia, among other regions) and channel of distribution ~~(wholesale, retail,~~(retail, wholesale, and licensing). This allows us to maintain a dynamic balance as our operating results do not depend solely on the performance of any single geographic area or channel of distribution. Our wholesale sales are made principally to major department stores and specialty stores around the world, as well as to certain unrelated third party-owned stores to which we have licensed the right to operate in defined geographic territories using our trademarks. We ~~also~~ sell directly to consumers through our integrated retail channel, which includes our retail stores, concession-based shop-within-shops, and digital commerce operations around the world. Our wholesale sales are made principally to major department stores and specialty stores around the world, as well as to certain third party-owned stores to which we have licensed the right to operate in defined geographic territories using our trademarks. In addition, we license to ~~unrelated~~ third parties for specified periods the right to access our various trademarks in connection with the licensees' manufacture and sale of designated products, such as certain apparel, eyewear, fragrances, and home furnishings.



	4245

We organize our business into the following three reportable segments:

•

North America — Our North America segment, representing approximately 51% of our Fiscal 2019 net revenues, primarily consists of sales of our Ralph Lauren branded products made through our retail and wholesale businesses in the U.S. and Canada, excluding Club Monaco. In North America, our retail business is primarily comprised of our Ralph Lauren stores, our factory stores, and our digital commerce site, www.RalphLauren.com. Our wholesale business in North America is comprised primarily of sales to department stores, and to a lesser extent, specialty stores.

•

Europe — Our Europe segment, representing approximately 26% of our Fiscal 2019 net revenues, primarily consists of sales of our Ralph Lauren branded products made through our retail and wholesale businesses in Europe, the Middle East, and Latin America, excluding Club Monaco. In Europe, our retail business is primarily comprised of our Ralph Lauren stores, our factory stores, our concession-based shop-within-shops, and our various digital commerce sites. Our wholesale business in Europe is comprised of a varying mix of sales to both department stores and specialty stores, depending on the country.

•

Asia — Our Asia segment, representing approximately 17% of our Fiscal 2019 net revenues, primarily consists of sales of our Ralph Lauren branded products made through our retail and wholesale businesses in Asia, Australia, and New Zealand. Our retail business in Asia is primarily comprised of our Ralph Lauren stores, our factory stores, our concession-based shop-within-shops, and our digital commerce site, www.RalphLauren.cn, which launched in September 2018. In addition, we sell our products online through various third-party digital partner commerce sites. In Asia, our wholesale business is comprised primarily of sales to department stores, with related products distributed through shop-within-shops.

~~North America~~ ~~— Our North America segment, representing approximately 52% of~~No operating segments were aggregated to form our Fiscal 2018 net revenues, primarily consists of sales of our Ralph Lauren branded products made through our wholesale and retail businesses in the U.S. and Canada, excluding Club Monaco. In North America, our wholesale business is comprised primarily of sales to department stores, and to a lesser extent, specialty stores. Our retail business in North America is comprised of our Ralph Lauren stores, our factory stores, and our digital commerce site, www.RalphLauren.com.

~~Europe~~ — Our Europe segment, representing approximately 26% of our Fiscal 2018 net revenues, primarily consists of sales of our Ralph Lauren branded products made through our wholesale and retail businesses in Europe and the Middle East, excluding Club Monaco. In Europe, our wholesale business is comprised of a varying mix of sales to both department stores and specialty stores, depending on the country. Our retail business in Europe is comprised of our Ralph Lauren stores, our factory stores, our concession-based shop-within-shops, and our various digital commerce sites.

~~Asia~~ — Our Asia segment, representing approximately 15% of our Fiscal 2018 net revenues, primarily consists of sales of our Ralph Lauren branded products made through our wholesale and retail businesses in Asia, Australia, and New Zealand. Our retail business in Asia is comprised of our Ralph Lauren stores, our factory stores, our concession-based shop-within-shops, and our digital commerce site, www.RalphLauren.cn, which launched in September 2018. In addition, we sell our products through various third-party digital partner commerce sites. In Asia, our wholesale business is comprised primarily of sales to department stores, with related products distributed through shop-within-shops.

reportable segments. In addition to these reportable segments, we also have other non-reportable segments, representing approximately 7%6% of our Fiscal ~~2018~~2019 net revenues, which primarily consist of (i) sales of Club Monaco branded products made through our retail and wholesale businesses in the U.S., Canada, and Europe, and our licensing alliances in Europe and Asia, ~~(ii) sales of Ralph Lauren branded products made through our wholesale business in Latin America,~~ and ~~(iii)~~(ii) royalty revenues earned through our global licensing alliances, excluding Club Monaco.

Effective beginning in the first quarter of Fiscal 2020, operating results related to our business in Latin America are included within our Europe segment due to a change in the way in which we manage this business. Previously, such results were included within our other non-reportable segments. All prior period segment information has been recast to reflect this change on a comparative basis.

Approximately ~~45%~~46% of our Fiscal ~~2018~~2019 net revenues were earned outside of the U.S. See Note 1718 to the accompanying consolidated financial statements for a summary of net revenues and operating income by segment, as well as net revenues by geographic location.

Our business is typically affected by seasonal trends, with higher levels of retail sales in our second and third fiscal quarters and higher wholesale sales in our second and fourth ~~fiscal quarters and higher retail sales in our second and third~~ fiscal quarters. These trends result primarily from the timing of ~~seasonal wholesale shipments and~~ key vacation travel, back-to-school, and holiday shopping periods impacting our retail ~~business.~~business and the timing of seasonal wholesale shipments. In addition, fluctuations in net sales, operating income, and cash flows in any fiscal quarter may be affected by other events impacting retail sales, such as changes in weather patterns. Accordingly, our operating results and cash flows for the three-month and six-month periods endedSeptember ~~29, 2018~~28, 2019 are not necessarily indicative of the operating results and cash flows that may be expected for the full Fiscal ~~2019~~2020.

Global Economic Conditions and Industry Trends

The global economy and our industry are impacted by many different influences. The current domestic and international political environment has resulted in uncertainty surrounding the future state of the global economy, including volatile international trade ~~relations. Most recently, the~~relations and political unrest. The U.S. and China have imposed significant new tariffs on each other related to the importation of certain product categories, and additional tariffs have been proposed. More recently, escalating protests in Hong Kong have resulted in a significant decline in local retail traffic and tourism and forced temporary store closures. There are also ~~growing~~ concerns regarding the terms and conditions of the United Kingdom's withdrawal from the European Union, commonly referred to as "Brexit." Negotiations to determine the United Kingdom's future relationship with the European Union, including terms of trade and movement of people, have been ~~complex and it~~complex. It is not clear at this time what, if any, agreements will be reached by the current ~~March 29, 2019 deadline.~~January 31, 2020 deadline and the resulting impact on consumer sentiment. As our international business continues to grow and because the majority of our products are produced outside of the U.S., major changes in global trade and diplomatic relations as well as any resulting anti-American sentiment could have a material adverse effect on our business or operating results. Certain



	46

other worldwide events, including ~~political unrest,~~ acts of terrorism, taxation or monetary policy changes, fluctuations in commodity prices, and rising healthcare costs, also increase volatility in the global economy. ~~For example, the U.S. recently enacted new tax legislation known as the TCJA (as defined in "Recent Developments" below), which is intended to stimulate economic growth and capital investment in the U.S.~~ In addition, our results have been, and are expected to continue to be, impacted by foreign exchange rate fluctuations.



	43

The retail landscape in which we operate is also evolving, with consumers continuing to diversify the channels in which they transact and shifting their shopping preference from physical stores to online. This along with other factors has resulted in many retailers, including certain of our large wholesale customers, becoming highly promotional and aggressively marking down their merchandise on a periodic basis in an attempt to offset declines in physical store traffic. The retail industry ~~particularly in the U.S.,~~ has also experienced numerous bankruptcies, restructurings, and ownership changes in recent ~~years.~~years, particularly in the U.S. which continues to experience challenging department store traffic trends. Certain of our operations, ~~including~~notably our North America wholesale business, have been negatively impacted by these dynamics. The continuation of these industry trends could further impact consumer spending and consumption behavior in our industry, which could have a material adverse effect on our business or operating results. Additionally, changes in economic conditions, including a recession or the fear of a recession, may further impact consumer discretionary income levels and spending.

We have implemented various operating strategies globally to help address many of these current challenges, and continue to build a foundation for long-term profitable growth centered around strengthening our consumer-facing areas of product, stores, and marketing across channels and driving a more efficient operating model. In connection with these strategies, we are taking deliberate actions to ensure promotional consistency across channels and enhance the overall brand and shopping experience, including better aligning shipments and inventory levels with underlying demand. Investing in our digital ecosystem remains a primary focus and is a key component of our integrated global omni-channel strategy. Most recently, in September 2018, we launched our digital flagship in China, featuring our signature online shopping experience. In addition, in June 2018, we shifted our European digital commerce operations to the third-party cloud-based platform used by our North America operations, which is delivering a more brand-enhancing and consistent customer experience across our global digital ecosystem. We also remain committed to optimizing our wholesale distribution channel and enhancing our department store consumer experience. Although the investments that we are making in our business and our quality of sales initiatives may create operating profit pressure in the near-term, we expect that these initiatives will create longer-term shareholder value. Further, in response to the recent trade developments between the U.S. and China, we are actively reviewing and acting upon options to mitigate our exposure into the ~~event any~~ resulting tariffs, ~~impact our product categories,~~ including diverting production to and sourcing from other ~~countries.~~countries, driving productivity within our existing supplier base, and taking pricing actions. We are also closely monitoring the latest developments regarding Brexit and are assessing risks and opportunities and developing strategies to mitigate our exposure in the event of a "hard" Brexit ~~(e.g.~~(i.e., if the United Kingdom exits the European Union without having a final withdrawal agreement in place).

We will continue to monitor these conditions and trends and evaluate and adjust our operating strategies and foreign currency and cost management opportunities to help mitigate the related impact on our results of operations, while remaining focused on the long-term growth of our business and protecting and elevating the value of our brand.

For a detailed discussion of significant risk factors that have the potential to cause our actual results to differ materially from our expectations, see Part I, Item 1A — "Risk Factors" in our Fiscal ~~2018~~2019 10-K.

Summary of Financial Performance

Operating Results

During the three months ended September ~~29, 2018,~~28, 2019, we reported net revenues of $1.706 billion, net income of $182.1 million, and net income per diluted share of $2.34, as compared to net revenues of $1.691 billion, net income of $170.3 million, and net income per diluted share of $2.07 ~~as compared to~~during the three months ended September 29, 2018. During the six months ended September 28, 2019, we reported net revenues of ~~$1.664~~$3.135 billion, net income of ~~$143.8~~$299.2 million, and net income per diluted share of ~~$1.75 during the three months ended September 30, 2017. During the six months ended September 29, 2018, we reported~~$3.79, as compared to net revenues of ~~$3.082~~$3.081 billion, net income of $279.3 million, and net income per diluted share of $3.37 ~~as compared to net revenues of $3.011 billion, net income of $203.3 million, and net income per diluted share of $2.47~~ during the six months ended September ~~30, 2017.~~29, 2018. The comparability of our operating results has been affected by restructuring-related charges, impairment of assets, and certain other charges, as discussed further below.

Our operating performance for the three-month and six-month periods ended September ~~29, 2018~~28, 2019 reflected revenue growth of ~~1.6%~~0.9% and ~~2.3%~~1.7%, respectively, on a reported basis, and ~~2.1%~~2.2% and ~~1.7%~~3.4%, respectively, on a constant currency basis, as defined within "Transactions and Trends Affecting Comparability of Results of Operations and Financial Condition"below. The ~~increase~~increases in ~~reported~~ net revenues ~~was primarily~~on both a reported and constant currency basis were largely driven by our Europe and Asia ~~business, which had revenue growth of 12.8% and 15.7% for the three-month and six-month periods ended September 29, 2018, respectively, largely due to new store openings.~~businesses.

Our gross profit as a percentage of net revenues increased by ~~110~~60 basis points to ~~60.9%~~61.5% during the three months ended September ~~29, 2018,~~28, 2019, and by ~~120~~30 basis points to ~~62.5%~~62.8% during the six months ended September ~~29, 2018.~~28, 2019. These increases were primarily driven by favorable geographic and product mix and improved ~~pricing and lower levels of promotional activity in connection with our long-term growth strategy, as well as favorable product and geographic mix.~~pricing.



	4447

Selling, general, and administrative ("SG&A") expenses as a percentage of net revenues ~~increased~~declined by 5030 basis points to ~~46.9%~~46.6% during the three months ended September ~~29, 2018,~~28, 2019, and by 4060 basis ~~point~~points to ~~49.8%~~49.2% during the six months ended September ~~29, 2018.~~28, 2019. These ~~increases~~improvements were primarily ~~due to our increased~~driven by decreases in corporate expenses and marketing investment, as well as operating leverage on higher net revenues, partially offset by new store expansion and the unfavorable impact attributable to geographic and channel ~~mix, partially offset by our operational discipline.~~mix.

Net income increased by ~~$26.5~~$11.8 million to ~~$170.3~~$182.1 million during the three months ended September ~~29, 2018~~28, 2019 as compared to the three months ended September ~~30, 2017,~~29, 2018, primarily due to a ~~$16.7~~$23.1 million increase in operating income, ~~and higher interest~~partially offset by a $10.0 million increase in our income ~~of $8.1 million.~~tax provision. Net income increased by ~~$76.0~~$19.9 million to ~~$279.3~~$299.2 million during the six months ended September ~~29, 2018~~28, 2019 as compared to the six months ended September 30, 2017, primarily due to a $56.5 million increase in operating income and higher interest income of $15.3 million. Net income per diluted share increased by $0.32 to $2.07 per share during the three months ended September 29, 2018, and by $0.90 to $3.37 per share during the six months ended September 29, 2018, primarily due to a $36.3 million increase in operating income, partially offset by a $15.6 million increase in our income tax provision. Net income per diluted share increased by $0.27 to $2.34 per share during the three months ended September 28, 2019, and by $0.42 to $3.79 per share during the six months ended September 28, 2019, both due to the higher ~~levels~~level of net ~~income.~~income and lower weighted-average diluted shares outstanding.

Our operating results during the three-month periods ended September ~~29, 2018~~28, 2019 and September ~~30, 2017~~29, 2018 were negatively impacted by restructuring-related charges, impairment of assets, and certain other charges totaling ~~$25.7~~$21.0 million and ~~$30.4~~$25.7 million, respectively, which had an after-tax effect of reducing net income by ~~$20.6~~$16.3 million, or ~~$0.25~~$0.21 per diluted share, and ~~$20.3~~$20.6 million or ~~$0.24~~$0.25 per diluted share, respectively. Our operating results during the six-month periods ended September ~~29, 2018~~28, 2019 and September ~~30, 2017~~29, 2018 were negatively impacted by restructuring-related charges, impairment of assets, and certain other charges totaling ~~$49.4~~$52.4 million and ~~$77.6~~$49.4 million, respectively, which had an after-tax effect of reducing net income by ~~$39.5~~$40.7 million, or ~~$0.48~~$0.52 per diluted share, and ~~$51.9~~$39.5 million, or ~~$0.63~~$0.48 per diluted share, respectively. Additionally, during the second quarter of Fiscal ~~2018,~~2019, we recorded a measurement period adjustment of $4.7 million within our income tax provision in connection with tax legislation commonly referred to as the ~~TCJA,~~Tax Cuts and Jobs Act (the "TCJA"), which increased our net income per diluted share by $0.06 during each of the three-month and six-month periods ended September 29, 2018.

Financial Condition and Liquidity

We ended the second quarter of Fiscal ~~2019~~2020 in a net cash and investments position (cash and cash equivalents plus short-term and non-current investments, less total debt) of ~~$1.259 billion,~~$896.1 million, as compared to ~~$1.494~~$1.343 billion as of the end of Fiscal ~~2018.~~2019. The decline in our net cash and investments position at September ~~29, 2018~~28, 2019 as compared to March ~~31, 2018~~30, 2019 was primarily due to our use of cash to support Class A common stock repurchases of ~~$223.9~~$442.7 million, including withholdings in satisfaction of tax obligations for stock-based compensation awards, to invest in our business through ~~$93.1~~$130.6 million in capital expenditures, and to make dividend payments of ~~$91.3~~$101.9 million, partially offset by our operating cash flows of ~~$213.0~~$204.1 million.

We generated ~~$213.0~~$204.1 million of cash from operations during the six months ended September ~~29, 2018,~~28, 2019, compared to ~~$437.0~~$213.0 million during the six months ended September ~~30, 2017.~~29, 2018. The decline in cash provided by operating activities was due to a decrease in net ~~unfavorable~~income before non-cash charges, partially offset by a net favorable change related to our operating assets and liabilities, including our working capital, as compared to the prior fiscal year ~~period, partially offset by an increase in net income before non-cash charges.~~period.

Our equity ~~increased slightly~~decreased to ~~$3.462~~$2.914 billion as of September ~~29, 2018~~28, 2019 compared to ~~$3.457~~$3.287 billion as of March ~~31, 2018,~~30, 2019, primarily due to our share repurchase activity, cumulative adjustments from our adoption of new accounting standards, and dividends declared, partially offset by our comprehensive income and the impact of stock-based compensation arrangements ~~offset by our share repurchase activity and dividends declared~~ during the six months ended September ~~29, 2018.~~28, 2019.

Recent Developments

Fiscal 2019 Restructuring Plan

On June 4, 2018, our Board of Directors approved a restructuring plan associated with our strategic objective of operating with discipline to drive sustainable growth (the "Fiscal 2019 Restructuring Plan"). The Fiscal 2019 Restructuring Plan includes the following restructuring-related activities: (i) ~~the~~ rightsizing and consolidation of our global distribution network and corporate offices; (ii) targeted severance-related actions; and (iii) closure of certain of our stores and shop-within-shops. ~~When substantially completed by~~Actions associated with the ~~end of~~ Fiscal 2019 ~~these~~Restructuring Plan were largely completed during Fiscal 2019, with certain activities shifting into Fiscal 2020. Total actions associated with the Fiscal 2019 Restructuring Plan are expected to result in gross annualized expense savings of approximately $60 million to $80 million.



	48

In connection with the Fiscal 2019 Restructuring Plan, we expect to incur total estimated charges of approximately ~~$100~~$125 million to $150 million, comprised of cash-related charges of approximately ~~$70~~$90 million to $110 million and non-cash charges of approximately ~~$30~~$35 million to $40 million. Cumulative charges incurred since inception were ~~$24.6~~approximately $122 million. See Note 8 to our accompanying consolidated financial statements for detailed discussions of the charges recorded in connection with the Fiscal 2019 Restructuring Plan.



	45

~~U.S. Tax Reform~~

On December 22, 2017, President Trump signed into law new tax legislation commonly referred to as the Tax Cuts and Jobs Act (the "TCJA"), which became effective January 1, 2018. The TCJA significantly revised U.S. tax law by, among other provisions, lowering the U.S. federal statutory income tax rate from 35% to 21%, creating a territorial tax system that includes a one-time mandatory transition tax on previously deferred foreign earnings, and eliminating or reducing certain income tax deductions.

During the second half of Fiscal 2018, we recorded net charges of $221.4 million within our income tax provision in connection with the TCJA, of which $209.3 million related to the mandatory transition tax. Subsequently, during the second quarter of Fiscal 2019, we recorded a measurement period adjustment of $4.7 million within our income tax provision, which reduced our effective tax rate by 220 basis points and 130 basis points during the three-month and six-month periods ended September 29, 2018, respectively.

These cumulative net charges were recorded on a provisional basis as permitted by SEC Staff Accounting Bulletin No. 118 ("SAB 118"). The provisional amounts were based on our present interpretations of the TCJA and are subject to further refinement as additional information becomes available and further analyses are completed. We expect to finalize our accounting for the enactment-related impacts of the TCJA during the third quarter of Fiscal 2019.

Additionally, we reevaluated our permanent reinvestment assertion and determined that undistributed foreign earnings that were subject to the one-time mandatory transition tax were no longer considered to be permanently reinvested, effective December 31, 2017. In connection with this decision, we repatriated $252 million of cash to the U.S. from certain of our foreign subsidiaries during the fourth quarter of Fiscal 2018, and we repatriated an additional $400 million and $179 million during the first and second quarters of Fiscal 2019, respectively, all of which relate to earnings previously taxed under the TCJA.

~~See Note 9 to the accompanying consolidated financial statements for additional discussion.~~

~~Way Forward Plan~~

On June 2, 2016, our Board of Directors approved a restructuring plan with the objective of delivering sustainable, profitable sales growth and long-term value creation for shareholders (the "Way Forward Plan"). We are refocusing on our core brands and evolving our product, marketing, and shopping experience to increase desirability and relevance. We are also evolving our operating model to enable sustainable, profitable sales growth by significantly improving quality of sales, reducing supply chain lead times, improving our sourcing, and executing a disciplined multi-channel distribution and expansion strategy. As part of the Way Forward Plan, we are rightsizing our cost structure and implementing a return on investment-driven financial model to free up resources to invest in the brand and drive high-quality sales. The Way Forward Plan included strengthening our leadership team and creating a more nimble organization by moving from an average of nine to six layers of management. The Way Forward Plan also included the discontinuance of our Denim & Supply brand and the integration of our denim product offerings into our Polo Ralph Lauren brand. Collectively, these actions, which were substantially completed during our fiscal year ended April 1, 2017 ("Fiscal 2017"), resulted in a reduction in workforce and the closure of certain stores and shop-within-shops, as well as gross annualized expense savings of approximately $200 million.

On March 30, 2017, our Board of Directors approved the following additional restructuring-related activities associated with the Way Forward Plan: (i) the restructuring of our in-house global digital commerce platform which was in development and shifting to a more cost-effective, flexible platform through a new agreement with Salesforce's Commerce Cloud, formerly known as Demandware; (ii) the closure of our Polo store at 711 Fifth Avenue in New York City; and (iii) the further streamlining of the organization and the execution of other key corporate actions in line with the Way Forward Plan. These actions, which are expected to result in additional gross annualized expense savings of approximately $140 million, are an important part of our efforts to achieve our stated objective to return to sustainable, profitable growth and invest in the future. These additional restructuring-related activities were largely completed during Fiscal 2018 and resulted in a further reduction in workforce and the closure of certain corporate office and store locations. The remaining activities, which are primarily lease-related, are expected to be completed during Fiscal 2019.

In connection with the Way Forward Plan, we currently expect to incur total estimated charges of approximately $790 million, comprised of cash-related restructuring charges of approximately $490 million and non-cash charges of approximately $300 million. Cumulative charges incurred since inception were $677.5 million and we expect the remaining charges of approximately $115 million will be recorded during the remainder of Fiscal 2019. In addition to these charges, we also incurred an additional non-cash charge of $155.2 million during Fiscal 2017 associated with the destruction of inventory out of current



	46

liquidation channels in line with our Way Forward Plan. See Note 8 to our accompanying consolidated financial statements for detailed discussions of the charges recorded in connection with the Way Forward Plan.

Transactions and Trends Affecting Comparability of Results of Operations and Financial Condition

The comparability of our operating results for the three-month and six-month periods endedSeptember 28, 2019 and September 29, 2018 ~~and~~ ~~September 30, 2017~~ has been affected by certain events, including restructuring-related charges, impairment of assets, and certain other charges, as summarized below (references to "Notes" are to the notes to the accompanying consolidated financial statements):

Three Months Ended Six Months Ended
September 29,
2018 September 30,
2017 September 29,
2018 September 30,
2017
(millions)
Impairment of assets (see Note 7) $ (9.8 ) $ (11.2 ) $ (11.1 ) $ (20.9 )
Restructuring and other charges (see Note 8) (15.9 ) (18.6 ) (38.3 ) (55.4 )
Restructuring-related inventory charges (see Note 8)^(a)
—
(0.6 ) —
(1.3 )
Total charges $ (25.7 ) $ (30.4 ) $ (49.4 ) $ (77.6 )



	Three Months Ended						Six Months Ended
	September 28, 2019			September 29, 2018			September 28, 2019			September 29, 2018
	(millions)
Impairment of assets (see Note 7)	$	(6.1	)	$	(9.8	)	$	(7.3	)	$	(11.1	)
Restructuring and other charges (see Note 8)	(14.5		)	(15.9		)	(44.1		)	(38.3		)
Restructuring-related inventory charges (see Note 8)^(a)	(0.4		)	—			(1.0		)	—
Total charges	$	(21.0	)	$	(25.7	)	$	(52.4	)	$	(49.4	)


^(a)	Non-cash restructuring-related inventory charges are recorded within cost of goods sold in the consolidated statements of operations.

Additionally, during the second quarter of Fiscal 2019, we recorded a measurement period adjustment of $4.7 million within our income tax provision in connection with the TCJA, which reduced our effective tax rate by 220 basis points and 130 basis points points during the three-month and six-month periods ended September 29, 2018, respectively. See Note 9 to the accompanying consolidated financial statements for further ~~discussion regarding the TCJA.~~discussion.

Since we are a global company, the comparability of our operating results reported in U.S. Dollars is also affected by foreign currency exchange rate fluctuations because the underlying currencies in which we transact change in value over time compared to the U.S. Dollar. These rate fluctuations can have a significant effect on our reported results. As such, in addition to financial measures prepared in accordance with accounting principles generally accepted in the U.S. ("U.S. GAAP"), our discussions often contain references to constant currency measures, which are calculated by translating the current-year and prior-year reported amounts into comparable amounts using a single foreign exchange rate for each currency. We present constant currency financial information, which is a non-U.S. GAAP financial measure, as a supplement to our reported operating results. We use constant currency information to provide a framework for assessing how our businesses performed excluding the effects of foreign currency exchange rate fluctuations. We believe this information is useful to investors for facilitating comparisons of operating results and better identifying trends in our businesses. The constant currency performance measures should be viewed in addition to, and not in lieu of or superior to, our operating performance measures calculated in accordance with U.S. GAAP. Reconciliations between this non-U.S. GAAP financial measure and the most directly comparable U.S. GAAP measure are included in the "Results of Operations" section where applicable.

Our discussion also includes reference to comparable store sales. Effective beginning the first quarter of our Fiscal 2019, we changed our definition of comparable store sales to provide a more relevant measure of performance and align with general retail industry practice. Under the new definition, comparableComparable store sales refer to the change in sales of our stores that have been open for at least 13 full fiscal months. Sales from our digital commerce sites are also included within comparable sales for those geographies that have been serviced by the related site for at least 13 full fiscal months. Sales for stores or digital commerce sites that are closed or shut down during the year are excluded from the calculation of comparable store sales. Sales for stores that are either relocated, enlarged (as defined by gross square footage expansion of 25% or greater), or generally closed for 30 or more consecutive days for renovation are also excluded from the calculation of comparable store sales until such stores have been operating in their new location or in their newly renovated state for at least 13 full fiscal months. All comparable store sales metrics are calculated on a constant currency basis. ~~Our previous definition of comparable store sales required a store or digital commerce site to be operational for one full fiscal year to be considered comparable and included in the calculation.~~

Our "Results of Operations" discussion that follows includes the significant changes in operating results arising from these items affecting comparability. However, unusual items or transactions may occur in any period. Accordingly, investors and other financial statement users should consider the types of events and transactions that have affected operating trends.



	4749

RESULTS OF OPERATIONS

Three Months Ended September ~~29, 2018~~28, 2019 Compared to Three Months Ended September ~~30, 2017~~29, 2018

The following table summarizes our results of operations and expresses the percentage relationship to net revenues of certain financial statement captions. All percentages shown in the below table and the discussion that follows have been calculated using unrounded numbers.


	Three Months Ended											Three Months Ended
	September 29, 2018			September 30, 2017			$ Change			% / bps Change		September 28, 2019			September 29, 2018			$ Change			% / bps Change
	(millions, except per share data)											(millions, except per share data)
Net revenues	$	1,690.9		$	1,664.2		$	26.7		1.6	%	$	1,706.2		$	1,690.9		$	15.3		0.9	%
Cost of goods sold	(661.6		)	(668.4		)	6.8			(1.0	%)	(657.2		)	(661.6		)	4.4			(0.7	%)
Gross profit	1,029.3			995.8			33.5			3.4	%	1,049.0			1,029.3			19.7			1.9	%
Gross profit as % of net revenues	60.9		%	59.8		%				110 bps		61.5		%	60.9		%				60 bps
Selling, general, and administrative expenses	(793.6		)	(772.7		)	(20.9		)	2.7	%	(795.3		)	(793.6		)	(1.7		)	0.2	%
SG&A expenses as % of net revenues	46.9		%	46.4		%				50 bps		46.6		%	46.9		%				(30 bps)
Impairment of assets	(9.8		)	(11.2		)	1.4			(12.8	%)	(6.1		)	(9.8		)	3.7			(37.3	%)
Restructuring and other charges	(15.9		)	(18.6		)	2.7			(14.6	%)	(14.5		)	(15.9		)	1.4			(8.8	%)
Operating income	210.0			193.3			16.7			8.7	%	233.1			210.0			23.1			11.0	%
Operating income as % of net revenues	12.4		%	11.6		%				80 bps		13.7		%	12.4		%				130 bps
Interest expense	(6.0		)	(4.6		)	(1.4		)	33.3	%	(4.4		)	(6.0		)	1.6			(28.0	%)
Interest income	10.4			2.3			8.1			NM		9.6			10.4			(0.8		)	(8.0	%)
Other income, net	0.4			0.2			0.2			78.4	%
Other income (expense), net												(1.7		)	0.4			(2.1		)	NM
Income before income taxes	214.8			191.2			23.6			12.3	%	236.6			214.8			21.8			10.2	%
Income tax provision	(44.5		)	(47.4		)	2.9			(6.1	%)	(54.5		)	(44.5		)	(10.0		)	22.7	%
Effective tax rate^(a)	20.7		%	24.8		%				(410 bps)		23.1		%	20.7		%				240 bps
Net income	$	170.3		$	143.8		$	26.5		18.4	%	$	182.1		$	170.3		$	11.8		6.9	%
Net income per common share:
Basic	$	2.09		$	1.76		$	0.33		18.8	%	$	2.37		$	2.09		$	0.28		13.4	%
Diluted	$	2.07		$	1.75		$	0.32		18.3	%	$	2.34		$	2.07		$	0.27		13.0	%


^(a)	Effective tax rate is calculated by dividing the income tax provision by income before income taxes.

NM Not meaningful.

Net Revenues. Net revenues increased by ~~$26.7~~$15.3 million, or ~~1.6%~~0.9%, to ~~$1.691~~$1.706 billion during the three months ended September ~~29, 2018~~28, 2019 as compared to the three months ended September ~~30, 2017,~~29, 2018, including net unfavorable foreign currency effects of ~~$8.9~~$22.2 million. On a constant currency basis, net revenues increased by ~~$35.6~~$37.5 million, or ~~2.1%~~2.2%.

The following table summarizes the percentage change in our consolidated comparable store sales for the three months ended September ~~29, 2018~~28, 2019 as compared to the prior fiscal year period:



	% Change
Digital commerce comparable store sales	74	%
Comparable store sales excluding digital commerce	(1	%)
Total comparable store sales	—2	%



	4850

Our global average store count increased by 3050 stores and concession shops during the three months ended September ~~29, 2018~~28, 2019 compared with the three months ended September ~~30, 2017,~~29, 2018, largely driven by new openings in ~~Asia.~~Asia and Europe. The following table details our retail store presence by segment as of the periods presented:


	September 29, 2018	September 30, 2017	September 28, 2019	September 29, 2018
Freestanding Stores:
North America	221	215	225	221
Europe	83	83	94	83
Asia	108	93	123	108
Other non-reportable segments	75	78	75	75
Total freestanding stores	487	469	517	487

Concession Shops:
North America	2	2	3	2
Europe	25	25	29	25
Asia	606	593	616	606
Other non-reportable segments	5	2	5	5
Total concession shops	638	622	653	638
Total stores	1,125	1,091	1,170	1,125

In addition to our stores, we sell products online in North America and Europe through our various digital commerce sites, which include www.RalphLauren.com and www.ClubMonaco.com, among others. In Asia, we sell products online through our digital commerce site, www.RalphLauren.cn, which launched in September 2018, as well as through various third-party digital partner commerce sites.

Net revenues for our segments, as well as a discussion of the changes in each reportable segment's net revenues from the comparable prior fiscal year period, are provided below:


	Three Months Ended				$ Change			Foreign Exchange Impact				$ Change				% Change						Three Months Ended						$ Change			Foreign Exchange Impact				$ Change				% Change
	September 29, 2018		September 30, 2017		As Reported						Constant Currency				As Reported			Constant Currency			September 28, 2019			September 29, 2018			As Reported				Foreign Exchange Impact			Constant Currency				As Reported			Constant Currency
	(millions)																					(millions)
Net Revenues:								Foreign Exchange Impact
North America	$	888.2	$	875.6	$	12.6		$	(1.6	)		$	14.2			1.4	%		1.6	%		$	881.2		$	888.2		$	(7.0	)	$	(0.3	)		$	(6.7	)		(0.8	%)		(0.7	%)
Europe	459.2		463.0		(3.8		)	(4.4		)		0.6				(0.8	%)		0.1	%		480.2			464.7			15.5			(21.1		)		36.6				3.3	%		7.9	%
Asia	244.7		216.8		27.9			(2.8		)		30.7				12.8	%		14.1	%		255.3			244.7			10.6			(0.6		)		11.2				4.3	%		4.6	%
Other non-reportable segments	98.8		108.8		(10.0		)	(0.1		)		(9.9		)		(9.1	%)		(9.1	%)		89.5			93.3			(3.8		)	(0.2		)		(3.6		)		(4.0	%)		(3.9	%)
Total net revenues	$	1,690.9	$	1,664.2	$	26.7		$	(8.9	)		$	35.6			1.6	%		2.1	%		$	1,706.2		$	1,690.9		$	15.3		$	(22.2	)		$	37.5			0.9	%		2.2	%

North America net revenues — Net revenues ~~increased~~decreased by ~~$12.6~~$7.0 million, or ~~1.4%~~0.8%, during the three months ended September ~~29, 2018~~28, 2019 as compared to the three months ended September ~~30, 2017,~~29, 2018, including net unfavorable foreign currency effects of ~~$1.6~~$0.3 million. On a constant currency basis, net revenues ~~increased~~decreased by ~~$14.2~~$6.7 million, or ~~1.6%~~0.7%.

The ~~$12.6~~$7.0 million net ~~increase~~decline in North America net revenues was driven by a $29.4 million net decrease related to our North America wholesale business, largely driven by weaker demand and the continued challenging department store traffic trends, as well as a strategic reduction in points of distribution.

This decrease was partially offset by:

~~an $11.1~~a $22.4 million net increase related to our North America retail business, inclusive of net unfavorable foreign currency effects of ~~$0.8~~$0.1 million. On a constant currency basis, net revenues increased by ~~$11.9~~$22.5 million driven by increases of ~~$8.3~~$15.2 million in non-comparable store sales and ~~$3.6~~$7.3 million in comparable store sales. ~~The increase in comparable store sales was driven by our Ralph Lauren digital commerce operations.~~ The following table summarizes the percentage change in comparable store sales related to our North America retail business:



	4951



	% Change
Digital commerce comparable store sales	92	%
Comparable store sales excluding digital commerce	(12	%)
Total comparable store sales	12	%

a $1.5 million net increase related to our North America wholesale business, largely attributable to a shift in the timing of certain shipments, partially offset by net unfavorable foreign currency effects $0.8 million.

Europe net revenues — Net revenues ~~decreased~~increased by ~~$3.8~~$15.5 million, or ~~0.8%~~3.3%, during the three months ended September ~~29, 2018~~28, 2019 as compared to the three months ended September ~~30, 2017,~~29, 2018, including net unfavorable foreign currency effects of ~~$4.4~~$21.1 million. On a constant currency basis, net revenues ~~were approximately flat as compared to the prior fiscal year period.~~increased by $36.6 million, or 7.9%.

The ~~$3.8~~$15.5 million net ~~decline~~increase in Europe net revenues was driven by:

~~a $1.9~~an $11.0 million net decrease related to our Europe wholesale business, primarily driven by net unfavorable foreign currency effects of $2.5 million and a shift in the timing of certain shipments, partially offset by higher sales due to stronger demand; and

~~a $1.9 million net decrease~~increase related to our Europe retail business, inclusive of net unfavorable foreign currency effects of ~~$1.9~~$9.7 million. On a constant currency basis, net revenues ~~were flat, reflecting a $7.9~~increased by $20.7 million ~~decline~~driven by increases of $14.0 million in ~~comparable~~non-comparable store sales ~~largely attributable to assortment~~ and ~~inventory challenges and a decline~~$6.7 million in ~~traffic, offset by a $7.9 million increase in non-comparable~~comparable store sales. The following table summarizes the percentage change in comparable store sales related to our Europe retail business:



	% Change
Digital commerce comparable store sales	—13	%
Comparable store sales excluding digital commerce	(42	%)
Total comparable store sales	(43	%)

a $4.5 million net increase related to our Europe wholesale business driven by stronger demand, partially offset by net unfavorable foreign currency effects of $11.4 million.

Asia net revenues — Net revenues increased by ~~$27.9~~$10.6 million, or ~~12.8%~~4.3%, during the three months ended September ~~29, 2018~~28, 2019 as compared to the three months ended September ~~30, 2017,~~29, 2018, including net unfavorable foreign currency effects of ~~$2.8~~$0.6 million. On a constant currency basis, net revenues increased by ~~$30.7~~$11.2 million, or ~~14.1%~~4.6%.

The ~~$27.9~~$10.6 million net increase in Asia net revenues was driven by:

a ~~$23.5~~$10.8 million net increase related to our Asia retail business, inclusive of net unfavorable foreign currency effects of ~~$2.2~~$0.5 million. On a constant currency basis, net revenues increased by ~~$25.7~~$11.3 million, reflecting increases of ~~$15.8~~$9.0 million in non-comparable store sales ~~driven by new store openings~~ and ~~$9.9~~$2.3 million in comparable store sales. The following table summarizes the percentage change in comparable store sales related to our Asia retail business:



	% Change
Digital commerce comparable store sales	6612	%
Comparable store sales excluding digital commerce	51	%
Total comparable store sales	61	%

~~a $4.4 million net increase related to our Asia wholesale business, primarily driven by our expansion in Australia, Southeast Asia, and Japan.~~

Gross Profit. Gross profit increased by ~~$33.5~~$19.7 million, or ~~3.4%~~1.9%, to ~~$1.029~~$1.049 billion for the three months ended September ~~29, 2018.~~28, 2019. The increase in gross profit included a net unfavorable foreign currency effect of $17.1 million. Gross profit as a percentage of net revenues increased to 61.5% for the three months ended September 28, 2019 from 60.9% for the three months ended September 29, ~~2018 from 59.8% for the three months ended September 30, 2017.~~2018. The ~~110~~60 basis point increase was primarily driven by ~~improved pricing and lower levels of promotional activity in connection with our long-term growth strategy, as well as~~ favorable product and geographic ~~mix.~~mix and improved pricing.

Gross profit as a percentage of net revenues is dependent upon a variety of factors, including changes in the relative sales mix among distribution channels, changes in the mix of products sold, the timing and level of promotional activities, foreign currency exchange rates, and fluctuations in material costs. These factors, among others, may cause gross profit as a percentage of net revenues to fluctuate from period to period.



	5052

Selling, General, and Administrative Expenses. SG&A expenses include compensation and benefits, advertising and marketing, rent and occupancy, distribution, information technology, legal, depreciation and amortization, bad debt, and other selling and administrative costs. SG&A expenses increased slightly by ~~$20.9~~$1.7 million, or ~~2.7%~~0.2%, to ~~$793.6~~$795.3 million for the three months ended September ~~29, 2018.~~28, 2019. This increase included a net favorable foreign currency effect of ~~$3.7~~$8.1 million. SG&A expenses as a percentage of net revenues ~~increased~~declined to 46.6% for the three months ended September 28, 2019 from 46.9% for the three months ended September 29, ~~2018 from 46.4% for the three months ended September~~2018. The 30 ~~2017. The 50~~ basis point ~~increase~~improvement was primarily due to ~~our increased~~decreases in corporate expenses and marketing investment and operating leverage on higher net revenues, partially offset by new store expansion and the unfavorable impact attributable to geographic and channel mix, as a greater portion of our revenue was generated by our ~~international~~ retail businesses (which typically carry higher operating expense margins).

The ~~$20.9~~$1.7 million net increase in SG&A expenses was driven by:


	Three Months Ended September 29, 2018 Compared to Three Months Ended September 30, 2017			Three Months Ended September 28, 2019 Compared to Three Months Ended September 29, 2018
	(millions)			(millions)
SG&A expense category:
Rent and occupancy costs				$	3.5
Selling-related expenses				2.8
Shipping and handling costs				2.1
Compensation-related expenses				1.9
Marketing and advertising expenses	$	20.0		(7.6		)
Compensation-related expenses	4.6
Selling-related expenses	4.0
Depreciation and amortization expense	(4.0		)
Consulting fees				(1.6		)
Other	(3.7		)	0.6
Total change in SG&A expenses	$	20.9		$	1.7

During the remainder of Fiscal ~~2019,~~2020, we continue to expect to spend on key strategic initiatives including marketing, digital, expanding and renovating our global retail stores and concession shops, and investing in productivity-enhancing infrastructure. We expect to make these investments while continuing to manage our cost base with ~~discipline.~~discipline, including the consolidation of our corporate office footprint.

Impairment of Assets. During the three-month periods ended September ~~29, 2018~~28, 2019 and September ~~30, 2017,~~29, 2018, we recorded non-cash impairment charges of ~~$9.8~~$6.1 million and ~~$11.2~~$9.8 million, respectively, to ~~write off~~write-down certain ~~fixed assets related to our domestic and international stores, shop-within-shops, and corporate offices.~~long-lived assets. See Note 7 to the accompanying consolidated financial statements.

Restructuring and Other Charges. During the three-month periods ended September ~~29, 2018~~28, 2019 and September ~~30, 2017,~~29, 2018, we recorded restructuring charges of ~~$12.4~~$13.1 million and ~~$17.3~~$12.4 million, respectively, in connection with our restructuring plans, primarily consisting of severance and benefit ~~costs, lease termination and store closure costs, and other cash charges.~~costs. Additionally, during the three months ended September 28, 2019, we recorded other charges of $1.4 million primarily related to rent and occupancy costs associated with certain previously exited real estate locations for which the related lease agreements have not yet expired. During the three months ended September 29, 2018, we recorded other charges of $3.5 million related to depreciation expense associated with our former Polo store at 711 Fifth Avenue in New York City. During the three months ended September 30, 2017, we recorded net other charges of $1.3 million primarily related to depreciation expense associated with our former Polo store at 711 Fifth Avenue and the reversal of reserves associated with the settlement of certain non-income tax issues. See Note 8 to the accompanying consolidated financial statements.

Operating Income. Operating income increased by ~~$16.7~~$23.1 million, or ~~8.7%~~11.0%, to ~~$210.0~~$233.1 million for the three months ended September ~~29, 2018.~~28, 2019. Our operating results during the three-month periods ended September 28, 2019 and September 29, 2018 ~~and September 30, 2017~~ were negatively impacted by restructuring-related charges, impairment of assets, and certain other charges totaling ~~$25.7~~$21.0 million and ~~$30.4~~$25.7 million, respectively, as previously discussed. The increase in operating income also included a net ~~favorable~~unfavorable foreign currency effect of ~~$4.1~~$9.0 million. Operating income as a percentage of net revenues increased to 13.7% for the three months ended September 28, 2019 from 12.4% for the three months ended September 29, ~~2018 from 11.6% for the three months ended September 30, 2017.~~2018. The 80130 basis point increase was primarily driven by the increase in our gross ~~profit~~ margin and the ~~net~~ decline ~~in restructuring-related charges, impairment of assets, and certain other charges, partially offset by the increase~~ in SG&A expenses as a percentage of net revenues, ~~all~~both as previously discussed.



	5153

Operating income and margin for our segments, as well as a discussion of the changes in each reportable segment's operating margin from the comparable prior fiscal year period, are provided below:


	Three Months Ended												Three Months Ended
	September 29, 2018				September 30, 2017								September 28, 2019				September 29, 2018
	Operating Income			Operating Margin	Operating Income			Operating Margin	$ Change			Margin Change	Operating Income			Operating Margin	Operating Income			Operating Margin	$ Change			Margin Change
	(millions)				(millions)				(millions)				(millions)				(millions)				(millions)
Segment:
North America	$	209.8		23.6%	$	202.2		23.1%	$	7.6		50 bps	$	199.9		22.7%	$	209.8		23.6%	$	(9.9	)	(90 bps)
Europe	126.6			27.6%	125.5			27.1%	1.1			50 bps	140.6			29.3%	127.9			27.5%	12.7			180 bps
Asia	32.7			13.4%	26.5			12.2%	6.2			120 bps	40.9			16.0%	32.7			13.4%	8.2			260 bps
Other non-reportable segments	24.5			24.8%	26.8			24.6%	(2.3		)	20 bps	22.8			25.5%	23.2			24.9%	(0.4		)	60 bps
	393.6				381.0				12.6				404.2				393.6				10.6
Unallocated corporate expenses	(167.7		)		(169.1		)		1.4				(156.6		)		(167.7		)		11.1
Unallocated restructuring and other charges	(15.9		)		(18.6		)		2.7				(14.5		)		(15.9		)		1.4
Total operating income	$	210.0		12.4%	$	193.3		11.6%	$	16.7		80 bps	$	233.1		13.7%	$	210.0		12.4%	$	23.1		130 bps

North America operating margin ~~improved~~declined by 5090 basis points, primarily due to the ~~favorable~~unfavorable impact of ~~130~~approximately 90 basis points related to our wholesale business, largely driven by a decline in SG&A expenses as a percentage of net revenues and an increase in our gross profit margin. This increase in operating margin was partially offset by an 80 basis point decline primarily related to our retail business, largely driven by an increase in SG&A expenses as a percentage of net revenues ~~partially offset by an increase~~and a decline in our gross ~~profit~~ margin.

~~Europe~~ The decline in operating margin ~~improved by 50~~ also reflected the unfavorable impact of approximately 20 basis points ~~primarily due~~attributable to ~~the favorable impact of 160 basis points related to foreign currency effects. Excluding foreign currency effects,~~channel mix. Partially offsetting these declines in our operating margin ~~reflected declines of 80~~was an approximate 20 basis ~~points related to our wholesale business and 30 basis points~~point increase related to our retail business, ~~both largely driven by an increase in SG&A expenses as a percentage of net revenues, partially offset by an increase in our gross profit margin.~~

~~Asia operating margin~~ ~~improved by 120 basis points, primarily due to the favorable impacts of 130 basis points related to our retail business and 100 basis points related to our wholesale business, both~~ largely driven by a decline in SG&A expenses as a percentage of net revenues.

Europe operating margin improved by 180 basis points, primarily due to the favorable impact of 230 basis points related to our retail business, largely driven by an increase in our gross margin and a decline in SG&A expenses as a percentage of net revenues. Partially offsetting this increase in our operating margin was unfavorable foreign currency effects of 50 basis points.

Asia operating margin improved by 260 basis points, primarily due to the favorable impacts of approximately 130 basis points related to our retail business and 30 basis points related to our wholesale business, both largely driven by an increase in our gross margin, partially offset by an increase in SG&A expenses as a percentage of net revenues. The increase in operating margin also reflected the favorable impact of 40120 basis points related to ~~channel mix. These increases in operating margin were partially offset by 100 basis points related to higher~~lower non-cash charges recorded in connection with our restructuring plans during the three months ended September ~~29, 2018~~28, 2019 as compared to the prior fiscal year ~~period, and unfavorable foreign currency effects of 50~~period. Partially offsetting these increases in our operating margin was an approximate 20 basis ~~points.~~point decline attributable to channel mix.

Unallocated corporate expenses decreased by ~~$1.4~~$11.1 million to ~~$167.7~~$156.6 million during the three months ended September ~~29, 2018~~28, 2019. The decline in unallocated corporate expenses was primarily due to lower compensation-related expenses of ~~$4.4 million, lower depreciation and amortization of $2.3~~$10.5 million and lower ~~other~~marketing and advertising expenses of ~~$2.5~~$7.2 million, partially offset by higher ~~marketing~~impairment of asset charges of $2.1 million and ~~advertising~~higher other expenses of ~~$7.8~~$4.5 million.

Unallocated restructuring and other charges decreased by ~~$2.7~~$1.4 million to ~~$15.9~~$14.5 million during the three months ended September ~~29, 2018,~~28, 2019, as previously discussed above and in Note 8 to the accompanying consolidated financial statements.

Non-operating Income (Expense), Net. Non-operating income (expense), net is comprised of interest expense, interest income, and other income (expense), net, which includes foreign currency gains (losses), equity in income (losses) from our equity-method investees, and other non-operating expenses. During the three months ended September ~~29, 2018,~~28, 2019, we reported non-operating income, net, of ~~$4.8~~$3.5 million, as compared to ~~non-operating expense, net, of $2.1~~$4.8 million ~~for~~during the three months ended September 30, 2017. The $6.9 million improvement was primarily driven by higher interest income of $8.1 million due to the increased balance of our investment portfolio, as well as a favorable shift to higher interest rate environments attributable to recent cash repatriations from our foreign subsidiaries.29, 2018.



	5254

Income Tax Provision. The income tax provision represents federal, foreign, state and local income taxes. The income tax provision ~~decreased~~and effective tax rate for the three months ended September 28, 2019 were $54.5 million and 23.1%, respectively, as compared to $44.5 million and 20.7%, respectively, for the three months ended September 29, ~~2018, from $47.4~~2018. The $10.0 million ~~for the three months ended September 30, 2017. The $2.9 million decrease~~increase in the ~~provision for~~ income ~~taxes~~tax provision was primarily ~~due to the 410 basis point decline in our effective tax rate, partially offset~~driven by the increase in pretax ~~income. The decline~~income, as well as the absence of a $4.7 million measurement period adjustment recorded during the second quarter of Fiscal 2019 in ~~our effective tax rate was primarily due~~connection with the TCJA. This measurement period adjustment had a favorable impact of 220 basis points to ~~a net favorable change related to tax effects of stock-based compensation award settlements. Our~~our effective tax rate during the three months ended September 29, ~~2018 also reflected~~2018. The remaining 20 basis point increase in our effective tax rate during the ~~favorable impact of 220 basis points related~~three months ended September 28, 2019 as compared to ~~a $4.7 million measurement~~the prior fiscal year period ~~adjustment recorded in connection~~was primarily driven by additional income tax reserves largely associated with ~~the TCJA.~~certain income tax audits. Our effective tax rate will change from period to period based on various factors including, but not limited to, the geographic mix of earnings, the timing and amount of foreign dividends, enacted tax legislation, state and local taxes, tax audit findings and settlements, and the interaction of various global tax strategies. Also see Note 9 to the accompanying consolidated financial statements for discussion regarding Swiss tax reform, which may have a material impact on our consolidated financial statements in the future.

Net Income. Net income increased to $182.1 million for the three months ended September 28, 2019, from $170.3 million for the three months ended September 29, ~~2018, from $143.8 million for the three months ended September 30, 2017.~~2018. The ~~$26.5~~$11.8 million increase in net income was primarily due to the increase in operating income, ~~and higher interest~~partially offset by the increase in our income tax provision, both as previously discussed. Our operating results during the three-month periods ended September ~~29, 2018~~28, 2019 and September ~~30, 2017~~29, 2018 were negatively impacted by restructuring-related charges, impairment of assets, and certain other charges totaling ~~$25.7~~$21.0 million and ~~$30.4~~$25.7 million, respectively, which had an after-tax effect of reducing net income by ~~$20.6~~$16.3 million and ~~$20.3~~$20.6 million, respectively. Net income during the three months ended September 29, 2018 also reflected the favorable impact of $4.7 million related to a measurement period adjustment recorded in connection with the TCJA, as previously discussed.

Net Income per Diluted Share. Net income per diluted share increased to $2.34 for the three months ended September 28, 2019, from $2.07 for the three months ended September 29, ~~2018, from $1.75 for the three months ended September 30, 2017.~~2018. The ~~$0.32~~$0.27 per share increase was due to the higher level of net income, as previously ~~discussed.~~discussed, and lower weighted-average diluted shares outstanding during the three months ended September 28, 2019 driven by our share repurchases during the last twelve months. Net income per diluted share for the three-month periods ended September ~~29, 2018~~28, 2019 and September ~~30, 2017~~29, 2018 were negatively impacted by ~~$0.25~~$0.21 per share and ~~$0.24~~$0.25 per share, respectively, as a result of restructuring-related charges, impairment of assets, and certain other charges, as previously discussed. Net income per diluted share for the three months ended September 29, 2018 also reflected the favorable impact of $0.06 per share related to a measurement period adjustment recorded in connection with the TCJA, as previously discussed.



	5355

Six Months Ended September ~~29, 2018~~28, 2019 Compared to Six Months Ended September ~~30, 2017~~29, 2018


	Six Months Ended											Six Months Ended
	September 29, 2018			September 30, 2017			$ Change			% / bps Change		September 28, 2019			September 29, 2018			$ Change			% / bps Change
	(millions, except per share data)											(millions, except per share data)
Net revenues	$	3,081.5		$	3,011.3		$	70.2		2.3	%	$	3,135.0		$	3,081.5		$	53.5		1.7	%
Cost of goods sold	(1,156.5		)	(1,164.3		)	7.8			(0.7	%)	(1,165.2		)	(1,156.5		)	(8.7		)	0.8	%
Gross profit	1,925.0			1,847.0			78.0			4.2	%	1,969.8			1,925.0			44.8			2.3	%
Gross profit as % of net revenues	62.5		%	61.3		%				120 bps		62.8		%	62.5		%				30 bps
Selling, general, and administrative expenses	(1,535.5		)	(1,487.1		)	(48.4		)	3.3	%	(1,542.0		)	(1,535.5		)	(6.5		)	0.4	%
SG&A expenses as % of net revenues	49.8		%	49.4		%				40 bps		49.2		%	49.8		%				(60 bps)
Impairment of assets	(11.1		)	(20.9		)	9.8			(47.2	%)	(7.3		)	(11.1		)	3.8			(33.8	%)
Restructuring and other charges	(38.3		)	(55.4		)	17.1			(30.7	%)	(44.1		)	(38.3		)	(5.8		)	14.9	%
Operating income	340.1			283.6			56.5			19.9	%	376.4			340.1			36.3			10.7	%
Operating income as % of net revenues	11.0		%	9.4		%				160 bps		12.0		%	11.0		%				100 bps
Interest expense	(10.4		)	(9.6		)	(0.8		)	8.4	%	(8.6		)	(10.4		)	1.8			(17.5	%)
Interest income	19.6			4.3			15.3			NM		21.2			19.6			1.6			8.2	%
Other expense, net	(1.6		)	(0.3		)	(1.3		)	NM		(5.8		)	(1.6		)	(4.2		)	264.9	%
Income before income taxes	347.7			278.0			69.7			25.1	%	383.2			347.7			35.5			10.2	%
Income tax provision	(68.4		)	(74.7		)	6.3			(8.3	%)	(84.0		)	(68.4		)	(15.6		)	22.8	%
Effective tax rate^(a)	19.7		%	26.9		%				(720 bps)		21.9		%	19.7		%				220 bps
Net income	$	279.3		$	203.3		$	76.0		37.4	%	$	299.2		$	279.3		$	19.9		7.1	%
Net income per common share:
Basic	$	3.42		$	2.49		$	0.93		37.3	%	$	3.86		$	3.42		$	0.44		12.9	%
Diluted	$	3.37		$	2.47		$	0.90		36.4	%	$	3.79		$	3.37		$	0.42		12.5	%


^(a)	Effective tax rate is calculated by dividing the income tax provision by income before income taxes.

~~NM Not meaningful.~~

Net Revenues. Net revenues increased by ~~$70.2~~$53.5 million, or ~~2.3%~~1.7%, to ~~$3.082~~$3.135 billion during the six months ended September ~~29, 2018~~28, 2019 as compared to the six months ended September ~~30, 2017,~~29, 2018, including net ~~favorable~~unfavorable foreign currency effects of ~~$19.7~~$51.9 million. On a constant currency basis, net revenues increased by ~~$50.5~~$105.4 million, or ~~1.7%~~3.4%.

The following table summarizes the percentage change in our consolidated comparable store sales for the six months ended September ~~29, 2018~~28, 2019 as compared to the prior fiscal year period:



	% Change
Digital commerce comparable store sales	34	%
Comparable store sales excluding digital commerce	(2	%)
Total comparable store sales	(12	%)

Our global average store count increased by 2651 stores and concession shops during the six months ended September ~~29, 2018~~28, 2019 compared with the six months ended September ~~30, 2017,~~29, 2018, largely driven by new openings in ~~Asia.~~Asia and Europe.



	5456

Net revenues for our segments, as well as a discussion of the changes in each reportable segment's net revenues from the comparable prior fiscal year period, are provided below:


	Six Months Ended				$ Change			Foreign Exchange Impact				$ Change				% Change						Six Months Ended						$ Change			Foreign Exchange Impact				$ Change				% Change
	September 29, 2018		September 30, 2017		As Reported						Constant Currency				As Reported			Constant Currency			September 28, 2019			September 29, 2018			As Reported				Foreign Exchange Impact			Constant Currency				As Reported			Constant Currency
	(millions)																					(millions)
Net Revenues:								Foreign Exchange Impact
North America	$	1,585.8	$	1,585.3	$	0.5		$	(0.8	)		$	1.3			—	%		0.1	%		$	1,600.6		$	1,585.8		$	14.8		$	(1.4	)		$	16.2			0.9	%		1.0	%
Europe	809.8		786.5		23.3			17.8				5.5				3.0	%		0.7	%		841.0			820.0			21.0			(40.9		)		61.9				2.6	%		7.5	%
Asia	492.7		425.9		66.8			2.6				64.2				15.7	%		15.1	%		513.9			492.7			21.2			(9.3		)		30.5				4.3	%		6.2	%
Other non-reportable segments	193.2		213.6		(20.4		)	0.1				(20.5		)		(9.6	%)		(9.6	%)		179.5			183.0			(3.5		)	(0.3		)		(3.2		)		(1.9	%)		(1.7	%)
Total net revenues	$	3,081.5	$	3,011.3	$	70.2		$	19.7			$	50.5			2.3	%		1.7	%		$	3,135.0		$	3,081.5		$	53.5		$	(51.9	)		$	105.4			1.7	%		3.4	%

North America net revenues — Net revenues increased ~~sightly~~ by ~~$0.5~~$14.8 million, or 0.9%, during the six months ended September ~~29, 2018~~28, 2019 as compared to the six months ended September ~~30, 2017,~~29, 2018, including net unfavorable foreign currency effects of ~~$0.8~~$1.4 million. On a constant currency basis, net revenues increased by ~~$1.3~~$16.2 million, or ~~0.1%~~1.0%.

The ~~$0.5~~$14.8 million net increase in North America net revenues was driven by:

a ~~$2.2~~$38.1 million net increase related to our North America retail business, inclusive of net unfavorable foreign currency effects of ~~$0.5~~$0.7 million. On a constant currency basis, net revenues increased by ~~$2.7~~$38.8 million driven by ~~an increase~~increases of ~~$10.5~~$29.7 million in non-comparable store sales ~~partially offset by a decline of $7.8~~and $9.1 million in comparable store sales. The decline in comparable store sales was primarily driven by the timing of Easter, which benefited the fourth quarter of Fiscal 2018. Excluding the impact of Easter timing, comparable store sales were approximately flat as compared to the prior fiscal year period. The following table summarizes the percentage change in comparable store sales related to our North America retail business:



	% Change
Digital commerce comparable store sales	41	%
Comparable store sales excluding digital commerce	(21	%)
Total comparable store sales	(1	%)

This increase was partially offset by a ~~$1.7~~$23.3 million ~~net~~ decrease related to our North America wholesale business, largely driven by weaker demand and the continued challenging department store traffic trends, as well as a strategic reduction ~~of shipments and~~in points of ~~distribution in connection with our long-term growth strategy, partially offset by a shift in timing of certain shipments.~~distribution.

Europe net revenues — Net revenues increased by ~~$23.3~~$21.0 million, or ~~3.0%~~2.6%, during the six months ended September ~~29, 2018~~28, 2019 as compared to the six months ended September ~~30, 2017,~~29, 2018, including net ~~favorable~~unfavorable foreign currency effects of ~~$17.8~~$40.9 million. On a constant currency basis, net revenues increased by ~~$5.5~~$61.9 million, or ~~0.7%~~7.5%.

The ~~$23.3~~$21.0 million net increase in Europe net revenues was driven by:

a $20.5 million net increase related to our Europe wholesale business, primarily driven by higher sales due to stronger demand and a shift in the timing of certain shipments, as well as net favorable foreign currency effects of $4.7 million; and

~~a $2.8~~$16.9 million net increase related to our Europe retail business, inclusive of net ~~favorable~~unfavorable foreign currency effects of ~~$13.1~~$21.6 million. On a constant currency basis, net revenues ~~decreased~~increased by ~~$10.3~~$38.5 million driven by ~~a decline~~increases of ~~$23.5~~$24.4 million in ~~comparable~~non-comparable store sales ~~largely attributable to assortment~~ and ~~inventory challenges and a decline in traffic, partially offset by an increase of $13.2~~$14.1 million in ~~non-comparable~~comparable store sales. The following table summarizes the percentage change in comparable store sales related to our Europe retail business:



	55



	% Change
Digital commerce comparable store sales	118	%
Comparable store sales excluding digital commerce	(72	%)
Total comparable store sales	(64	%)

a $4.1 million increase related to our Europe wholesale business driven by stronger demand, partially offset by net unfavorable foreign currency effects of $19.3 million.

Asia net revenues — Net revenues increased by ~~$66.8~~$21.2 million, or ~~15.7%~~4.3%, during the six months ended September ~~29, 2018~~28, 2019 as compared to the six months ended September ~~30, 2017,~~29, 2018, including net ~~favorable~~unfavorable foreign currency effects of ~~$2.6~~$9.3 million. On a constant currency basis, net revenues increased by ~~$64.2~~$30.5 million, or ~~15.1%~~6.2%.



	57

The ~~$66.8~~$21.2 million net increase in Asia net revenues was driven by:

a ~~$57.7~~$21.8 million net increase related to our Asia retail business, inclusive of net ~~favorable~~unfavorable foreign currency effects of ~~$3.0~~$8.8 million. On a constant currency basis, net revenues increased by ~~$54.7~~$30.6 million, reflecting increases of ~~$33.4~~$18.3 million in non-comparable store sales ~~driven by new store openings~~ and ~~$21.3~~$12.3 million in comparable store sales. The following table summarizes the percentage change in comparable store sales related to our Asia retail business:



	% Change
Digital commerce comparable store sales	5719	%
Comparable store sales excluding digital commerce	53	%
Total comparable store sales	63	%

This increase was partially offset by a ~~$9.1~~slight decrease of $0.6 million ~~net increase~~ related to our Asia wholesale business ~~primarily driven by our expansion in Japan, South Korea, Australia, and Southeast Asia.~~largely due to net unfavorable foreign currency effects.

Gross Profit. Gross profit increased by ~~$78.0~~$44.8 million, or ~~4.2%~~2.3%, to ~~$1.925~~$1.970 billion for the six months ended September ~~29, 2018.~~28, 2019. The increase in gross profit included a net ~~favorable~~unfavorable foreign currency effect of ~~$20.5~~$34.7 million. Gross profit as a percentage of net revenues increased to 62.8% for the six months ended September 28, 2019 from 62.5% for the six months ended September 29, ~~2018 from 61.3% for the six months ended September~~2018. The 30 ~~2017. The 120~~ basis point increase was primarily driven by favorable geographic and product mix and improved pricing, ~~and lower levels of promotional activity in connection with our long-term growth strategy, as well as favorable product and geographic mix.~~partially offset by higher inventory reserves.

Selling, General, and Administrative Expenses. SG&A expenses increased by ~~$48.4~~$6.5 million, or ~~3.3%~~0.4%, to ~~$1.536~~$1.542 billion for the six months ended September ~~29, 2018.~~28, 2019. This increase included a net ~~unfavorable~~favorable foreign currency effect of ~~$10.9~~$22.3 million. SG&A expenses as a percentage of net revenues ~~increased~~declined to 49.2% for the six months ended September 28, 2019 from 49.8% for the six months ended September 29, ~~2018 from 49.4% for the six months ended September 30, 2017.~~2018. The 4060 basis point ~~increase~~improvement was primarily due to ~~our increased marketing investment~~a decrease in corporate expenses and operating leverage on higher net revenues, partially offset by new store expansion and the unfavorable impact attributable to geographic and channel mix, as a greater portion of our revenue was generated by our ~~international~~ retail businesses (which typically carry higher operating expense margins).

The ~~$48.4~~$6.5 million net increase in SG&A expenses was driven by:


	Six Months Ended September 29, 2018 Compared to Six Months Ended September 30, 2017			Six Months Ended September 28, 2019 Compared to Six Months Ended September 29, 2018
	(millions)			(millions)
SG&A expense category:
Marketing and advertising expenses	$	27.6
Selling-related expenses	15.3
Compensation-related expenses				$	5.2
Rent and occupancy expenses				4.0
Shipping and handling costs				3.8
Consulting fees	8.9			(6.0		)
Compensation-related expenses	8.0
Depreciation and amortization expense	(6.6		)
Other	(4.8		)	(0.5		)
Total change in SG&A expenses	$	48.4		$	6.5



	56

Impairment of Assets. During the six-month periods ended September ~~29, 2018~~28, 2019 and September ~~30, 2017,~~29, 2018, we recorded non-cash impairment charges of ~~$11.1~~$7.3 million and ~~$20.9~~$11.1 million, respectively, to ~~write off~~write-down certain ~~fixed assets related to our domestic and international stores, shop-within-shops, and corporate offices.~~long-lived assets. See Note 7 to the accompanying consolidated financial statements.

Restructuring and Other Charges. During the six-month periods ended September ~~29, 2018~~28, 2019 and September ~~30, 2017,~~29, 2018, we recorded restructuring charges of ~~$27.1~~$20.1 million and ~~$43.9~~$27.1 million, respectively, in connection with our restructuring plans, primarily consisting of severance and benefit costs. Additionally, during the six months ended September 28, 2019, we recorded other charges of $24.0 million primarily related to the charitable donation of the net cash proceeds received from the sale of our corporate jet, and rent and occupancy costs associated with certain previously exited real estate locations for which the related lease ~~termination and store closure costs, and other cash charges. In addition, during~~agreements have not yet expired. During the six months ended September 29, 2018, we recorded other charges of $11.2 million primarily related to depreciation expense associated with our former Polo store at 711 Fifth Avenue ~~in New York City~~ and ~~our~~a customs audit. During the six months ended September 30, 2017, we recorded net other charges of $11.5 million primarily related to depreciation expense associated with our former Polo store at 711 Fifth Avenue, the departure of Mr. Stefan Larsson, and the reversal of reserves associated with the settlement of certain non-income tax issues. See Note 8 to the accompanying consolidated financial statements.



	58

Operating Income. Operating income increased by ~~$56.5~~$36.3 million, or ~~19.9%~~10.7%, to ~~$340.1~~$376.4 million for the six months ended September ~~29, 2018.~~28, 2019. Our operating results during the six-month periods ended September 28, 2019 and September 29, 2018 ~~and September 30, 2017~~ were negatively impacted by restructuring-related charges, impairment of assets, and certain other charges totaling ~~$49.4~~$52.4 million and ~~$77.6~~$49.4 million, respectively, as previously discussed. The increase in operating income also included a net ~~favorable~~unfavorable foreign currency effect of ~~$9.6~~$12.4 million. Operating income as a percentage of net revenues increased to 12.0% for the six months ended September 28, 2019 from 11.0% for the six months ended September 29, ~~2018 from 9.4% for the six months ended September 30, 2017.~~2018. The ~~160~~100 basis point increase was primarily driven by the ~~net decline in restructuring-related charges, impairment of assets, and certain other charges and the~~ increase in our gross ~~profit~~ margin ~~partially offset by~~and the ~~increase~~decline in SG&A expenses as a percentage of net revenues, ~~all~~both as previously discussed.

Operating income and margin for our segments, as well as a discussion of the changes in each reportable segment's operating margin from the comparable prior fiscal year period, are provided below:


	Six Months Ended												Six Months Ended
	September 29, 2018				September 30, 2017								September 28, 2019				September 29, 2018
	Operating Income			Operating Margin	Operating Income			Operating Margin	$ Change			Margin Change	Operating Income			Operating Margin	Operating Income			Operating Margin	$ Change			Margin Change
	(millions)				(millions)				(millions)				(millions)				(millions)				(millions)
Segment:
North America	$	369.7		23.3%	$	352.7		22.2%	$	17.0		110 bps	$	357.8		22.4%	$	369.7		23.3%	$	(11.9	)	(90 bps)
Europe	200.5			24.8%	192.6			24.5%	7.9			30 bps	220.0			26.2%	201.6			24.6%	18.4			160 bps
Asia	75.4			15.3%	56.7			13.3%	18.7			200 bps	89.0			17.3%	75.4			15.3%	13.6			200 bps
Other non-reportable segments	55.3			28.6%	59.8			28.0%	(4.5		)	60 bps	55.7			31.0%	54.2			29.7%	1.5			130 bps
	700.9				661.8				39.1				722.5				700.9				21.6
Unallocated corporate expenses	(322.5		)		(322.8		)		0.3				(302.0		)		(322.5		)		20.5
Unallocated restructuring and other charges	(38.3		)		(55.4		)		17.1				(44.1		)		(38.3		)		(5.8		)
Total operating income	$	340.1		11.0%	$	283.6		9.4%	$	56.5		160 bps	$	376.4		12.0%	$	340.1		11.0%	$	36.3		100 bps

North America operating margin declined by 90 basis points, primarily due to the unfavorable impacts of approximately 60 basis points related to our wholesale business and 30 basis points related to our retail business, both largely driven by a decline in our gross margin.

Europe operating marginimproved by ~~110~~160 basis points, primarily due to the favorable impact of ~~120~~approximately 180 basis points related to our ~~wholesale~~retail business, largely driven by an increase in our gross margin and a decline in SG&A expenses as a percentage of net ~~revenues and an~~revenues. The increase in ~~our gross profit margin. Our retail business did not have a meaningful impact on the change in our North America~~ operating margin ~~as an increase in SG&A expenses as a percentage of net revenues was largely offset by an increase in our gross margin.~~

~~Europe operating margin~~ ~~improved by 30 basis points, primarily due to~~also reflected the favorable impacts of 9020 basis points related to foreign currency effects and 20 basis points related to lower non-cash charges recorded in connection with our restructuring plans during the six months ended September ~~29, 2018~~28, 2019 as compared to the prior fiscal year period. ~~Excluding~~Partially offsetting these increases in our operating margin was an approximate 60 basis point decline related to our wholesale business, largely driven by a decline in our gross margin.

Asia operating margin improved by 200 basis points, primarily due to the favorable impact of ~~these items, operating margin reflected a decline of 80~~approximately 160 basis points related to our retail business, largely driven by an increase in ~~SG&A expenses as a percentage of net revenues.~~

~~Asia operating~~our gross margin, ~~improved~~ partially offset by ~~200 basis points, primarily due to the favorable impacts of 160 basis points related to our retail business and 90 basis points related to our wholesale business, both largely driven by a decline~~an increase in SG&A expenses as a percentage of net revenues. The increase in operating margin also reflected the favorable impact of ~~30 basis points related to channel mix. These increases in operating margin were partially offset by~~ 60 basis points related to ~~higher~~lower non-cash charges recorded in connection



	57

with our restructuring plans during the six months ended September ~~29, 2018~~28, 2019 as compared to the prior fiscal year ~~period, and~~period. These increases in operating margin were partially offset by the unfavorable ~~foreign currency effects~~impact of 20 basis ~~points.~~points related to foreign currency effects.

Unallocated corporate expenses decreased ~~slightly~~ by ~~$0.3~~$20.5 million to ~~$322.5~~$302.0 million during the six months ended September ~~29, 2018.~~28, 2019. The decline in unallocated corporate expenses was primarily due to lower compensation-related expenses of $17.6 million, lower consulting fees of $6.6 million, and lower marketing and advertising expenses of $5.5 million, partially offset by higher impairment of asset charges of ~~$9.0~~$3.2 million, ~~lower compensation-related expenses~~higher rent and occupancy costs of ~~$7.9 million, lower depreciation and amortization of $4.3~~$2.3 million, and ~~lower~~higher other expenses of ~~$2.7 million, partially offset by higher consulting fees of $12.4 million and higher marketing and advertising expenses of $11.2~~$3.7 million.

Unallocated restructuring and other charges ~~decreased~~increased by ~~$17.1~~$5.8 million to ~~$38.3~~$44.1 million during the six months ended September ~~29, 2018,~~28, 2019, as previously discussed above and in Note 8 to the accompanying consolidated financial statements.

Non-operating Income (Expense), Net. During the six months ended September ~~29, 2018,~~28, 2019, we reported non-operating income, net, of ~~$7.6~~$6.8 million, as compared to ~~non-operating expense, net, of $5.6~~$7.6 million during the six months ended September 29, 2018.



	59

Income Tax Provision. The income tax provision and effective tax rate for the six months ended September ~~30, 2017. The $13.2~~28, 2019 were $84.0 million ~~improvement was primarily driven by higher interest income of $15.3 million due to the increased balance of our investment portfolio,~~and 21.9%, respectively, as ~~well as a favorable shift to higher interest rate environments attributable to recent cash repatriations from our foreign subsidiaries.~~

~~Income Tax Provision.~~ ~~The income tax provision decreased~~compared to $68.4 million and 19.7%, respectively, for the six months ended September 29, ~~2018, from $74.7~~2018. The $15.6 million ~~for the six months ended September 30, 2017. The $6.3 million decrease~~increase in the ~~provision for~~ income ~~taxes~~tax provision was primarily ~~due to the 720 basis point decline in our effective tax rate, partially offset~~driven by the increase in pretax ~~income. The decline~~income, as well as the absence of a $4.7 million measurement period adjustment recorded during the second quarter of Fiscal 2019 in ~~our effective tax rate was primarily due~~connection with the TCJA. This measurement period adjustment had a favorable impact of 130 basis points to ~~a net favorable change related to tax effects of stock-based compensation award settlements. Our~~our effective tax rate during the six months ended September 29, ~~2018 also reflected~~2018. The remaining 90 basis point increase in our effective tax rate during the ~~favorable~~six months ended September 28, 2019 as compared to the prior fiscal year period was primarily driven by additional income tax reserves largely associated with certain income tax audits and the absence of a discrete item that favorably impacted our prior year effective tax rate. Also see Note 9 to the accompanying consolidated financial statements for discussion regarding Swiss tax reform, which may have a material impact ~~of 130 basis points related to a $4.7 million measurement period adjustment recorded~~on our consolidated financial statements in ~~connection with~~ the ~~TCJA.~~future.

Net Income. Net income increased to $299.2 million for the six months ended September 28, 2019, from $279.3 million for the six months ended September 29, ~~2018, from $203.3 million for the six months ended September 30, 2017.~~2018. The ~~$76.0~~$19.9 million increase in net income was primarily due to the increase in operating income, ~~and higher interest~~partially offset by the increase in our income tax provision, both as previously discussed. Our operating results during the six-month periods ended September 28, 2019 and September 29, 2018 ~~and September 30, 2017~~ were ~~also~~ negatively impacted by restructuring-related charges, impairment of assets, and certain other charges totaling ~~$49.4~~$52.4 million and ~~$77.6~~$49.4 million, respectively, which had an after-tax effect of reducing net income by ~~$39.5~~$40.7 million and ~~$51.9~~$39.5 million, respectively. Net income during the six months ended September 29, 2018 also reflected the favorable impact of $4.7 million related to a measurement period adjustment recorded in connection with the TCJA, as previously discussed.

Net Income per Diluted Share. Net income per diluted share increased to $3.79 for the six months ended September 28, 2019, from $3.37 for the six months ended September 29, ~~2018, from $2.47 for the six months ended September 30, 2017.~~2018. The ~~$0.90~~$0.42 per share increase was due to the higher level of net income, as previously ~~discussed.~~discussed, and lower weighted-average diluted shares outstanding during the six months ended September 28, 2019 driven by our share repurchases during the last twelve months. Net income per diluted share for the six-month periods ended September 28, 2019 and September 29, 2018 ~~and September 30, 2017~~ were ~~also~~ negatively impacted by ~~$0.48~~$0.52 per share and ~~$0.63~~$0.48 per share, respectively, as a result of restructuring-related charges, impairment of assets, and certain other charges, as previously discussed. Net income per diluted share for the six months ended September 29, 2018 also reflected the favorable impact of $0.06 per share related to a measurement period adjustment recorded in connection with the TCJA, as previously discussed.



	58

FINANCIAL CONDITION AND LIQUIDITY

Financial Condition

The following table presents our financial condition as of September ~~29, 2018~~28, 2019 and March ~~31, 2018~~30, 2019:


	September 29, 2018			March 31, 2018			$ Change			September 28, 2019			March 30, 2019			$ Change
	(millions)									(millions)
Cash and cash equivalents	$	553.1		$	1,304.6		$	(751.5	)	$	548.1		$	584.1		$	(36.0	)
Short-term investments	1,319.5			699.4			620.1			1,041.4			1,403.4			(362.0		)
Non-current investments^(a)	69.9			86.2			(16.3		)	—			44.9			(44.9		)
Short-term debt^(b)	—			(10.1		)	10.1
Current portion of long-term debt^(b)	—			(298.1		)	298.1			(297.3		)	—			(297.3		)
Long-term debt^(b)	(683.9		)	(288.0		)	(395.9		)	(396.1		)	(689.1		)	293.0
Net cash and investments^(c)	$	1,258.6		$	1,494.0		$	(235.4	)	$	896.1		$	1,343.3		$	(447.2	)
Equity	$	3,462.0		$	3,457.4		$	4.6		$	2,913.6		$	3,287.2		$	(373.6	)


^(a)	Recorded within other non-current assets in our consolidated balance sheets.


^(b)	See Note 10 to the accompanying consolidated financial statements for discussion of the carrying values of our debt.


^(c)	"Net cash and investments" is defined as cash and cash equivalents, plus short-term and non-current investments, less total debt.



	60

The decrease in our net cash and investments position at September ~~29, 2018~~28, 2019 as compared to March ~~31, 2018~~30, 2019 was primarily due to our use of cash to support Class A common stock repurchases of ~~$223.9~~$442.7 million, including withholdings in satisfaction of tax obligations for stock-based compensation awards, to invest in our business through ~~$93.1~~$130.6 million in capital expenditures, and to make dividend payments of ~~$91.3~~$101.9 million, partially offset by our operating cash flows of ~~$213.0~~$204.1 million.

The ~~slight increase~~decrease in equity was primarily attributable to our share repurchase activity, cumulative adjustments from our adoption of new accounting standards, and dividends declared, partially offset by our comprehensive income and the impact of stock-based compensation arrangements ~~offset by our share repurchase activity and dividends declared~~ during the six months ended September ~~29, 2018.~~28, 2019.

Cash Flows

The following table details our cash flows for the six-month periods ended September ~~29, 2018~~28, 2019 and September ~~30, 2017:~~29, 2018:


	Six Months Ended									Six Months Ended
	September 29, 2018			September 30, 2017			$ Change			September 28, 2019			September 29, 2018			$ Change
	(millions)									(millions)
Net cash provided by operating activities	$	213.0		$	437.0		$	(224.0	)	$	204.1		$	213.0		$	(8.9	)
Net cash provided by (used in) investing activities	(732.8		)	86.7			(819.5		)	295.6			(732.8		)	1,028.4
Net cash used in financing activities	(218.5		)	(109.8		)	(108.7		)	(553.0		)	(218.5		)	(334.5		)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	(20.7		)	33.2			(53.9		)	(9.9		)	(20.7		)	10.8
Net increase (decrease) in cash, cash equivalents, and restricted cash	$	(759.0	)	$	447.1		$	(1,206.1	)
Net decrease in cash, cash equivalents, and restricted cash										$	(63.2	)	$	(759.0	)	$	695.8



	59

Net Cash Provided by Operating Activities. Net cash provided by operating activities decreased to $204.1 million during the six months ended September 28, 2019, as compared to $213.0 million during the six months ended September 29, ~~2018, as compared to $437.0 million during the six months ended September 30, 2017.~~2018. The ~~$224.0~~$8.9 million net decline in cash provided by operating activities was due to a decrease in net ~~unfavorable~~income before non-cash charges, partially offset by a net favorable change related to our operating assets and liabilities, including our working capital, as compared to the prior fiscal year ~~period, partially offset by an increase in net income before non-cash charges.~~period. The net ~~unfavorable~~favorable change related to our operating assets and liabilities, including our working capital, was primarily driven by:

a ~~year-over-year increase in~~favorable change related to our inventory ~~levels largely~~ due to the timing of ~~certain~~ inventory ~~receipts, as well as to support our revenue growth;~~receipts; and

~~an unfavorable~~a favorable change related to ~~accrued expenses~~our accounts payable and ~~other current~~accrued liabilities, largely driven by fluctuations associated with our derivative ~~instruments;~~instruments.

These increases related to our operating assets and liabilities were partially offset by:

an unfavorable change related to our ~~prepaid expenses and other current assets,~~accounts receivable, largely driven by the timing of cash ~~payments.~~receipts.

Net Cash Provided by (Used in) Investing Activities. Net cash provided by investing activities was $295.6 million during the six months ended September 28, 2019, as compared to net cash used in investing activities ~~was~~of $732.8 million during the six months ended September 29, ~~2018, as compared to~~2018. The $1.028 billion net increase in cash provided by investing activities ~~of $86.7 million during the six months ended September 30, 2017. The $819.5 million net increase in cash used in investing activities~~ was primarily driven by:

a ~~$776.4 million~~$1.016 billion increase in ~~purchases of investments, less~~ proceeds from sales and maturities of investments, less purchases of investments. During the six months ended September ~~29, 2018,~~28, 2019, we ~~made net investment purchases of $611.4 million, as compared to receiving~~received net proceeds from sales and maturities of investments of ~~$165.0~~$404.5 million, as compared to making net investment purchases of $611.4 million during the six months ended September ~~30, 2017;~~29, 2018;

a $23.8 million ~~increase~~decrease in payments to settle net investment hedges; and

net cash proceeds of $20.8 million received from the sale of our corporate jet during the six months ended September 28, 2019. These proceeds were donated to the Polo Ralph Lauren Foundation, which is reflected within cash flows from operating activities for the six months ended September 28, 2019.

an ~~$18.4~~



	61

These increases in cash provided by investing activities were partially offset by:

a $37.5 million increase in capital expenditures. During the six months ended September ~~29, 2018,~~28, 2019, we spent ~~$93.1~~$130.6 million on capital expenditures, as compared to ~~$74.7~~$93.1 million during the six months ended September ~~30, 2017.~~29, 2018. Our capital expenditures during the six months ended September ~~29, 2018~~28, 2019 primarily related to new store openings, retail and department store renovations, ~~and~~ enhancements to our information technology ~~systems.~~

systems, and the consolidation of our corporate office footprint.

Net Cash Used in Financing Activities. Net cash used in financing activities was $553.0 million during the six months ended September 28, 2019, as compared to $218.5 million during the six months ended September 29, ~~2018, as compared to $109.8 million during the six months ended September 30, 2017.~~2018. The ~~$108.7~~$334.5 million net increase in cash used in financing activities was primarily driven by:

a ~~$209.3~~$218.8 million increase in cash used to repurchase shares of our Class A common stock. During the six months ended September 28, 2019, we used $400.0 million to repurchase shares of Class A common stock pursuant to our common stock repurchase program, and an additional $42.7 million in shares of Class A common stock were surrendered or withheld in satisfaction of withholding taxes in connection with the vesting of awards under our long-term stock incentive plans. On a comparative basis, during the six months ended September 29, 2018, we used $192.3 million to repurchase shares of Class A common stock pursuant to our common stock repurchase program, and an additional $31.6 million in shares of Class A common stock were surrendered or withheld in satisfaction of withholding taxes in connection with the vesting of awards under our long-term stock incentive plans. On a comparative basis, during the six months ended September 30, 2017, $14.6 million in shares of Class A common stock were surrendered or withheld for ~~taxes.~~

~~This increase in cash used in financing activities was partially offset by:~~taxes;

an $88.2 million increase in cash proceeds from the issuance of debt, less debt repayments. During the six months ended September 28, 2019, we did not issue or repay any debt. On a comparative basis, during the six months ended September 29, 2018, we received $398.1 million in proceeds from our issuance of 3.750% unsecured senior notes in August 2018, a portion of which was used to repay $300.0 million of our 2.125% unsecured senior notes that matured in September 2018. Additionally, during the six months ended September 29, 2018, we repaid $9.9 million of borrowings previously outstanding under our credit ~~facilities. On a comparative basis, during the six months ended September 30, 2017, we did not issue or repay any debt; and~~facilities;

a ~~$21.7~~$21.8 million ~~increase~~decrease in proceeds from exercise of stock ~~options.~~options; and

a $10.6 million increase in payments of dividends, driven by an increase to the quarterly cash dividend per share. Dividends paid amounted to $101.9 million and $91.3 million during the six-month periods ended September 28, 2019 and September 29, 2018, respectively.

Sources of Liquidity

Our primary sources of liquidity are the cash flows generated from our operations, our available cash and cash equivalents and short-term investments, availability under our credit facilities ~~our issuances of~~and commercial paper ~~notes,~~program, and other available financing options.



	60

During the six months ended September ~~29, 2018,~~28, 2019, we generated ~~$213.0~~$204.1 million of net cash flows from our operations. As of September ~~29, 2018,~~28, 2019, we had ~~$1.873~~$1.590 billion in cash, cash equivalents, and short-term investments, of which ~~$600.5~~$712.1 million were held by our subsidiaries domiciled outside the U.S. We are not dependent on foreign cash to fund our domestic operations. ~~Given recent changes to the taxation of undistributed foreign earnings in connection with the TCJA (as discussed within "Recent Developments"), we have reevaluated our permanent reinvestment assertion and determined that undistributed~~Undistributed foreign earnings that were subject to the ~~TCJA's~~Tax Cuts and Jobs Act's one-time mandatory transition tax ~~were no longer~~as of December 31, 2017 are not considered to be permanently reinvested ~~effective December 31, 2017. In connection with this decision, we~~and may be repatriated ~~$252 million of cash~~ to the U.S. ~~from certain of our foreign subsidiaries during~~in the ~~fourth quarter of Fiscal 2018, and we repatriated an~~future with minimal or no additional ~~$400 million and $179 million during the first and second quarters of Fiscal 2019, respectively, all of which relate~~U.S. taxation. We intend to ~~earnings previously taxed under the TCJA. The mandatory transition tax does not apply to~~permanently reinvest undistributed foreign earnings generated after December 31, 2017 ~~and therefore we intend~~that were not subject to ~~permanently reinvest any such earnings.~~the one-time mandatory transition tax. However, if our plans change and we choose to repatriate post-2017 earnings to the U.S. in the future, we would be subject to applicable U.S. and foreign taxes.

The following table presents our total availability, borrowings outstanding, and remaining availability under our credit facilities and Commercial Paper Program as of September ~~29, 2018:~~28, 2019:


	September 29, 2018							September 28, 2019
Description^(a)	Total Availability		Borrowings Outstanding			Remaining Availability		Total Availability		Borrowings Outstanding			Remaining Availability
	(millions)							(millions)
Global Credit Facility and Commercial Paper Program^(b)	$	500	$	10	^(c)	$	490	$	500	$	9	^(c)	$	491
Pan-Asia Credit Facilities^(d)	49		—			49		32		—			32



	62


^(a)	As defined in Note 10 to the accompanying consolidated financial statements.


^(b)	Borrowings under the Commercial Paper Program are supported by the Global Credit Facility. Accordingly, we do not expect combined borrowings outstanding under the Commercial Paper Program and the Global Credit Facility to exceed $500 million.


^(c)	Represents outstanding letters of credit for which we were contingently liable under the Global Credit Facility as of September ~~29, 2018.~~

^(d)

During the third quarter of Fiscal 2019, we renewed the South Korea Credit Facility with a reduced borrowing capacity of up to 30 billion South Korean Won (approximately $27 million). Accordingly, our total availability under the Pan-Asia Credit Facilities was reduced to approximately $34 million during the third quarter of Fiscal28, 2019. ~~See Note 10 to the accompanying consolidated financial statements.~~

We believe that our Global Credit Facility is adequately diversified with no undue concentration in any one financial institution. In particular, as of September ~~29, 2018,~~28, 2019, there were ~~nine~~eight financial institutions participating in the Global Credit Facility, with no one participant maintaining a maximum commitment percentage in excess of 20%. Borrowings under the Pan-Asia Credit Facilities are guaranteed by the parent company and are granted at the sole discretion of the participating regional branches of JPMorgan Chase (the "Banks"), subject to availability of the Banks' funds and satisfaction of certain regulatory requirements. We have no reason to believe that the participating institutions will be unable to fulfill their obligations to provide financing in accordance with the terms of the Global Credit Facility and the Pan-Asia Credit Facilities in the event of our election to draw funds in the foreseeable future.

Our sources of liquidity are used to fund our ongoing cash requirements, including working capital requirements, global retail store and digital commerce expansion, construction and renovation of shop-within-shops, investment in infrastructure, including technology, acquisitions, joint ventures, payment of dividends, debt repayments, Class A common stock repurchases, settlement of contingent liabilities (including uncertain tax positions), and other corporate activities, including our restructuring actions. We believe that our existing sources of cash, the availability under our credit facilities, and our ability to access capital markets will be sufficient to support our operating, capital, and debt service requirements for the foreseeable future, the ongoing development of our businesses, and our plans for further business expansion.

See Note 10 to the accompanying consolidated financial statements and Note 11 of the Fiscal ~~2018~~2019 10-K for detailed disclosure of the terms and conditions of our credit facilities.



	61

Common Stock Repurchase Program

On ~~June 4, 2018,~~May 13, 2019, our Board of Directors approved an expansion of our existing common stock repurchase program that allows us to repurchase up to an additional ~~$1.000 billion~~$600 million of Class A Common stock. As of September ~~29, 2018,~~28, 2019, the remaining availability under our Class A common stock repurchase program was approximately ~~$907~~$830 million. Repurchases of shares of Class A common stock are subject to overall business and market conditions.

See Note 1415 to the accompanying consolidated financial statements for additional information relating to our Class A common stock repurchase program.

Dividends

Since 2003, we have maintained a regular quarterly cash dividend program on our common stock. On ~~June 4, 2018~~May 13, 2019 our Board of Directors approved an increase to the quarterly cash dividend on our common stock from ~~$0.50~~$0.625 to ~~$0.625~~$0.6875 per share.

We intend to continue to pay regular quarterly dividends on our outstanding common stock. However, any decision to declare and pay dividends in the future will be made at the discretion of our Board of Directors and will depend on our results of operations, cash requirements, financial condition, and other factors that the Board of Directors may deem relevant.

See Note 1415 to the accompanying consolidated financial statements for additional information relating to our quarterly cash dividend program.

Debt and Covenant Compliance

In August 2015, we completed a registered public debt offering and issued $300 million aggregate principal amount of unsecured senior notes due August 18, 2020, which bear interest at a fixed rate of 2.625%, payable semi-annually (the "2.625% Senior Notes"). In August 2018, we completed another registered public debt offering and issued an additional $400 million aggregate principal amount of unsecured senior notes due September 15, 2025, which bear interest at a fixed rate of 3.750%, payable semi-annually (the "3.750% Senior Notes").



	63

The indenture and supplemental indentures governing the 2.625% Senior Notes and 3.750% Senior Notes (as supplemented, the "Indenture") contain certain covenants that restrict our ability, subject to specified exceptions, to incur certain liens; enter into sale and leaseback transactions; consolidate or merge with another party; or sell, lease, or convey all or substantially all of our property or assets to another party. However, the Indenture does not contain any financial covenants.

The Global Credit Facility contains a number of covenants, as described in Note 10 to the accompanying consolidated financial statements. As of September ~~29, 2018,~~28, 2019, no Event of Default (as such term is defined pursuant to the Global Credit Facility) has occurred under our Global Credit Facility. The Pan-Asia Credit Facilities do not contain any financial covenants.

See Note 10 to the accompanying consolidated financial statements and Note 11 of the Fiscal ~~2018~~2019 10-K for additional information relating to our debt and covenant compliance.

Contractual and Other Obligations

~~During the first quarter of~~There have been no material changes to our contractual and other obligations as disclosed in our Fiscal 2019 ~~we entered into a 16-year lease with optional renewal periods for a new corporate office~~10-K, other than those which occur in ~~New Jersey, which we expect to take possession~~the ordinary course of during our fiscal year 2020. Additionally, during the third quarter of Fiscal 2019, we amended an existing lease agreement for a corporate office in New York City, whereby we expanded the square footage to be leased and extended the lease term through December 31, 2029, with optional renewal periods. The following table summarizes our future minimum rental payments relating to these lease agreements:

Remainder of
Fiscal 2019

Fiscal
2020-2021

Fiscal
2022-2023

Fiscal 2024
and Thereafter
Total
(millions)
Minimum lease payments^(a)
$ —
$ 29.6
$ 55.2
$ 261.8
$ 346.6


^(a)	Excludes future minimum rental payments related to the original lease term and space for the corporate office in New York City, which were included in the minimum lease payments disclosed in the Fiscal 2018 10-K, as referenced below.

business. Refer to the"Financial Condition and Liquidity — Contractual and Other Obligations"section of the MD&A in our Fiscal ~~2018~~2019 10-K for detailed disclosure of our ~~other commitments~~contractual and ~~contractual~~other obligations as of March ~~31, 2018.~~30, 2019.



	62

MARKET RISK MANAGEMENT

As discussed in Note 13 of the Fiscal ~~2018~~2019 10-K and Note 12 to the accompanying consolidated financial statements, we are exposed to a variety of risks, including changes in foreign currency exchange rates relating to foreign currency-denominated balances, certain anticipated cash flows from our international operations, and possible declines in the value of reported net assets of our foreign operations, as well as changes in the fair value of our fixed-rate debt obligations relating to changes in interest rates. Consequently, at times, in the normal course of business, we employ established policies and procedures, including the use of derivative financial instruments, to manage such risks. We do not enter into derivative transactions for speculative or trading purposes.

As a result of the use of derivative instruments, we are exposed to the risk that counterparties to our contracts will fail to meet their contractual obligations. To mitigate this counterparty credit risk, we have a policy of only entering into contracts with carefully selected financial institutions based upon an evaluation of their credit ratings and certain other factors, adhering to established limits for credit exposure. Our established policies and procedures for mitigating credit risk from derivative transactions include ongoing review and assessment of the creditworthiness of our counterparties. We also enter into master netting arrangements with counterparties, when possible, to further mitigate credit ~~risk associated with our derivative instruments.~~risk. As a result of the above considerations, we do not believe that we are exposed to any undue concentration of counterparty risk with respect to our derivative contracts as of September ~~29, 2018.~~28, 2019. However, we do have in aggregate ~~$9.2~~$50.3 million of derivative instruments in net asset positions with ~~five~~eight creditworthy financial institutions.

Foreign Currency Risk Management

We manage our exposure to changes in foreign currency exchange rates through the use of forward foreign currency exchange and cross-currency swap contracts. See Note 12 to the accompanying consolidated financial statements for a summary of the notional amounts and fair values of our forward foreign currency exchange and cross-currency swap contracts outstanding as of September ~~29, 2018~~28, 2019.

Forward Foreign Currency Exchange Contracts

We enter into forward foreign currency exchange contracts as hedges to ~~reduce~~mitigate our risk related to exchange rate fluctuations on inventory transactions made in an entity's non-functional currency, ~~intercompany royalty payments made by certain of our international operations,~~ the settlement of foreign currency-denominated balances, and the translation of certain foreign operations' net assets into U.S. Dollars. As part of our overall strategy to manage the level of exposure to the risk of foreign currency exchange rate fluctuations, primarily to changes in the value of the Euro, the Japanese Yen, the South Korean Won, the Australian Dollar, the Canadian Dollar, the British Pound Sterling, the Swiss Franc, the ~~Swedish Krona, the~~ Chinese Renminbi, ~~the New Taiwan Dollar,~~ and the Hong Kong Dollar, we hedge a portion of our foreign currency exposures anticipated over a two-year period. In doing so, we use forward foreign currency exchange contracts that generally have maturities of two months to two years to provide continuing coverage throughout the hedging period of the respective exposure.



	64

Our foreign exchange risk management activities are governed by our Company's established policies and procedures. These policies and procedures provide a framework that allows for the management of currency exposures while ensuring the activities are conducted within our established guidelines. Our policies include guidelines for the organizational structure of our risk management function and for internal controls over foreign exchange risk management activities, including, but not limited to, authorization levels, transaction limits, and credit quality controls, as well as various measurements for monitoring compliance. We monitor foreign exchange risk using different techniques, including a periodic review of market values and sensitivity analyses.

Cross-Currency Swap Contracts

During our fiscal year ended April 2, 2016 ("Fiscal 2016"), we entered into ~~two~~a pay-floating rate, receive-floating rate cross-currency ~~swaps,~~swap with a notional ~~amounts~~amount of ~~€280 million and~~ €274 million which we designated as ~~hedges~~a hedge of our net investment in certain of our European subsidiaries. ~~The €280 million notional~~This cross-currency swap, which ~~was settled during the second quarter of Fiscal 2019, swapped~~matures on August 18, 2020, swaps the U.S. Dollar-denominated variable interest rate payments based on the 3-month London Interbank Offered Rate ("LIBOR") plus a fixed spread (as paid under the ~~2.125%~~2.625% Interest Rate Swap discussed below) for Euro-denominated variable interest rate payments based on the 3-month Euro Interbank Offered Rate ("EURIBOR") plus a fixed spread, which, in conjunction with the 2.125% Interest Rate Swap, economically converted our previously-outstanding $300 million fixed-rate 2.125% Senior Notes obligation to a €280 million floating-rate Euro-denominated obligation. Similarly, the €274 million notional cross-currency swap, which matures on August 18, 2020, swaps the U.S. Dollar-denominated variable interest rate payments based on 3-month LIBOR plus a fixed spread (as paid under the 2.625% Interest Rate Swap discussed above) for Euro-denominated variable interest rate payments based on 3-month EURIBOR plus a fixed spread, which, in conjunction with the



	63

2.625% Interest Rate Swap, economically converts our $300 million fixed-rate 2.625% Senior Notes obligation to a €274 million floating-rate Euro-denominated obligation.

Additionally, in August 2018, we entered into pay-fixed rate, receive-fixed rate cross-currency swap contracts with an aggregate notional amount of €346 million which we designated as hedges of our net investment in certain of our European subsidiaries. These contracts, which mature on September 15, 2025, swap the U.S. Dollar-denominated fixed interest rate payments on our 3.750% Senior Notes for Euro-denominated 1.29% fixed interest rate payments, thereby economically converting our $400 million fixed-rate 3.750% Senior Notes obligation to a €346 million fixed-rate 1.29% Euro-denominated obligation.

See Note 3 to the accompanying consolidated financial statements for further discussion of our foreign currency exposures, and the types of derivative instruments used to hedge those exposures.

Interest Rate Risk Management

During Fiscal 2016, we entered into ~~two~~a pay-floating rate, receive-fixed rate interest rate swap ~~contracts~~contract which we designated as ~~hedges~~a hedge against changes in the ~~respective~~ fair ~~values~~value of ~~our fixed-rate 2.125% Senior Notes and~~ our fixed-rate 2.625% Senior Notes attributed to changes in the benchmark interest ~~rate. The interest~~ rate swap related to the 2.125% Senior Notes (the "2.125% Interest Rate Swap"), which matured on September 26, 2018 in conjunction with the maturity of the related debt, had a notional amount of $300 million and swapped the fixed interest rate on the 2.125% Senior Notes for a variable interest rate based on 3-month LIBOR plus a fixed spread. The interest rate swap related to the 2.625% Senior Notes (the "2.625% Interest Rate Swap"),. The 2.625% Interest Rate Swap, which matures on August 18, 2020 and ~~also~~ has a notional amount of $300 million, swaps the fixed interest rate on the 2.625% Senior Notes for a variable interest rate based on 3-month LIBOR plus a fixed spread.

Investment Risk Management

As of September ~~29, 2018,~~28, 2019, we had cash and cash equivalents on-hand of ~~$553.1~~$548.1 million, consisting of deposits in interest bearing accounts, investments in money market deposit accounts, and investments in time deposits and commercial paper with original maturities of 90 days or less. Our other significant investments included ~~$1.320~~$1.041 billion of short-term investments, consisting of investments in time deposits and commercial paper with original maturities greater than 90 days; ~~$43.4~~and $15.2 million of restricted cash ~~placed~~held in escrow with certain banks as collateral, primarily to secure guarantees in connection with certain international tax matters and real estate ~~leases; and $69.9 million of investments with maturities greater than one year, consisting of time deposits.~~leases.

We actively monitor our exposure to changes in the fair value of our global investment portfolio in accordance with our established policies and procedures, which include monitoring both general and issuer-specific economic conditions, as discussed further below. Our investment objectives include capital preservation, maintaining adequate liquidity, diversification to minimize liquidity and credit risk, and achievement of maximum returns within the guidelines set forth in our investment policy. See Note 12 to the accompanying consolidated financial statements for further detail of the composition of our investment portfolio as of September ~~29, 2018~~28, 2019.

We evaluate investments held in unrealized loss positions, if any, for other-than-temporary impairment on a quarterly basis. This evaluation involves a variety of considerations, including assessments of risks and uncertainties associated with general economic conditions and distinct conditions affecting specific issuers. We consider the following factors: (i) the length of time and the extent to which the fair value has been below cost, (ii) the financial condition, credit worthiness, and near-term prospects of the issuer, (iii) the length of time to maturity, (iv) anticipated future economic conditions and market forecasts, (v) our intent and ability to retain our investment for a period of time sufficient to allow for recovery of market value, and (vi) an assessment of whether it is more likely than not that we will be required to sell our investment before recovery of market value. No material



	65

realized or unrealized gains or losses on available-for-sale investments or other-than-temporary impairment charges were recorded in any of the fiscal periods presented.



	64

CRITICAL ACCOUNTING POLICIES

Our significant accounting policies are described in Note 3 of the Fiscal ~~2018~~2019 10-K. Our estimates are often based on complex judgments, assessments of probability, and assumptions that management believes to be reasonable, but that are inherently uncertain and unpredictable. It is also possible that other professionals, applying reasonable judgment to the same set of facts and circumstances, could develop and support a range of alternative estimated amounts. For a complete discussion of our critical accounting policies, ~~see~~refer to the "Critical Accounting Policies" section of the MD&A in our Fiscal ~~2018~~2019 10-K.

There have been no significant changes in the application of our critical accounting policies since March ~~31, 2018.~~30, 2019, other than those related to our adoption of Accounting Standards Update ("ASU") No. 2016-02, "Leases" ("ASU 2016-02") as of the beginning of the first quarter of Fiscal 2020, as described in Note 3 to the accompanying consolidated financial statements.

Goodwill Impairment Assessment

We performed our annual goodwill impairment assessment using a qualitative approach as of the beginning of the second quarter of Fiscal ~~2019.~~2020. In performing the assessment, we identified and considered the significance of relevant key factors, events, and circumstances that affected the fair values and/or carrying amounts of our reporting units with allocated goodwill. These factors included external factors such as macroeconomic, industry, and market conditions, as well as entity-specific factors, such as our actual and expected financial performance. Additionally, the results of our most recent quantitative goodwill impairment test indicated that the fair values of these reporting units significantly exceeded their respective carrying values. Based on the results of our qualitative goodwill impairment assessment, we concluded that it is not more likely than not that the fair values of our reporting units are less than their respective carrying values, and there were no reporting units at risk of impairment.

RECENTLY ISSUED ACCOUNTING STANDARDS

See Note 4 to the accompanying consolidated financial statements for a description of certain recently issued or proposed accounting standards which have impacted our consolidated financial statements, or may impact our consolidated financial statements in future reporting periods.


Item 3.	Quantitative and Qualitative Disclosures about Market Risk.

For a discussion of the Company's exposure to market risk, see "Market Risk Management" presented in Part I, Item 2 — MD&A of this Form 10-Q and incorporated herein by reference.


Item 4.	Controls and Procedures.

We maintain disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosures.

We carried out an evaluation based on criteria established in the Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework) under the supervision and with the participation of management, including our principal executive and principal financial officers, of the effectiveness of the design and operation of the Company's disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934. Based on that evaluation, our principal executive and principal financial officers have concluded that the Company's disclosure controls and procedures were effective at the reasonable assurance level as of September ~~29, 2018.~~

~~There~~28, 2019. Except as discussed below, there has been no change in the Company's internal control over financial reporting during the fiscal quarter ended September ~~29, 2018~~28, 2019 that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.



	6566

Leases

In connection with our adoption of ASU 2016-02 as of the beginning of the first quarter of Fiscal 2020, changes were made to certain lease-related processes and control activities, including information systems, in order to monitor and maintain appropriate controls over financial reporting. Management will continue to evaluate and monitor our internal controls as our lease-related processes and procedures evolve.

See Note 4 to the accompanying consolidated financial statements for additional discussion regarding our adoption of ASU 2016-02.

Implementation and Reconfiguration of Financial Reporting Systems

In connection with our initiative to integrate and upgrade our global systems and processes, we migrated our Asia operations to a new financial reporting information technology system, Microsoft AX Dynamics 365, during the first quarter of Fiscal 2020. In addition to this system implementation, during the first quarter of Fiscal 2020, we began reconfiguring the financial reporting information technology system used by our Europe operations, SAP, in order to utilize enhanced financial reporting functionality.

As a result of these actions, we expect to experience certain changes to our processes and procedures which, in turn, will result in changes to our internal control over financial reporting. While we expect these system changes to strengthen our internal financial controls by automating certain manual processes and standardizing business processes and reporting across our organization, management will continue to evaluate and monitor our internal controls as processes and procedures in each of the affected areas evolve. For a discussion of risks related to the implementation of new systems, see Item 1A — "Risk Factors — Our business could suffer if our computer systems and websites are disrupted or cease to operate effectively" in the Fiscal 2019 10-K.

PART II. OTHER INFORMATION


Item 1.	Legal Proceedings.

Reference is made to the information disclosed under Item 3 — "Legal Proceedings" in the Fiscal ~~2018~~2019 10-K.


Item 1A.	Risk Factors.

Reference is made to the information disclosed under Part I, Item 1A — "Risk Factors" in the Fiscal ~~2018~~2019 10-K, which contains a detailed discussion of certain risk factors that could materially adversely affect the Company's business, operating results, and/or financial condition. There are no material changes to the risk factors previously disclosed, nor has the Company identified any previously undisclosed risks that could materially adversely affect the Company's business, operating results, and/or financial condition.


Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.


(a)	Sales of Unregistered Securities

Shares of the Company's Class B Common Stock may be converted immediately into Class A Common Stock on a one-for-one basis by the holder. There is no cash or other consideration paid by the holder converting the shares and, accordingly, there is no cash or other consideration received by the Company. The shares of Class A Common Stock issued by the Company in such conversions are exempt from registration pursuant to Section 3(a)(9) of the Securities Act of 1933, as amended.



	67

During the fiscal quarter ended September 28, 2019, the stockholder set forth in the table below converted shares of ~~the Company's~~ Class B ~~common stock were converted~~Common Stock into Class A ~~common stock during~~Common on the ~~three months ended September 29, 2018.~~date set forth below:



Stockholder That Converted Class B Common Stock to Class A Common Stock	Date of Conversion	Number of Shares Converted/ Received

Lauren Family, L.L.C.	August 15, 2019	500,004


(b)	Not Applicable


(c)	Stock Repurchases

The following table sets forth the repurchases of shares of the Company's Class A common stock during the three months ended September ~~29, 2018:~~28, 2019:

Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
Approximate Dollar Value of Shares That May Yet be Purchased Under the Plans or Programs^(a)
(millions)
July 1, 2018 to July 28, 2018 794
^(b)
$ 127.50
—
$ 1,000
July 29, 2018 to August 25, 2018 244,556
^(c)
129.75
243,806
968
August 26, 2018 to September 29, 2018 471,928
^(d)
131.74
460,660
907
717,278
704,466



	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares That May Yet be Purchased Under the Plans or Programs^(a)
						(millions)
June 30, 2019 to July 27, 2019	730	^(b)	$	113.98	—	$	1,080
July 28, 2019 to August 24, 2019	1,292,106	^(c)	94.06		1,276,112	960
August 25, 2019 to September 28, 2019	1,367,953	^(d)	95.21		1,363,583	830
	2,660,789				2,639,695


^(a)	~~On June 4, 2018, the Company's Board of Directors approved an expansion of the program that allows it to repurchase up to an additional $1.000 billion of Class A common stock.~~ Repurchases of shares of Class A common stock are subject to overall business and market conditions.


^(b)	Represents shares surrendered to or withheld by the Company in satisfaction of withholding taxes in connection with the vesting of awards issued under its long-term stock incentive plans.


^(c)	Includes ~~750~~15,994 shares surrendered to or withheld by the Company in satisfaction of withholding taxes in connection with the vesting of awards issued under its long-term stock incentive plans.


^(d)	Includes ~~11,268~~4,370 shares surrendered to or withheld by the Company in satisfaction of withholding taxes in connection with the vesting of awards issued under its long-term stock incentive plans.


Item 5.	Other Information.

Amendment to the Employment Separation Agreement and Release of Valérie Hermann

As previously reported on the Company's Current Report on Form 8-K, filed July 19, 2019, Ms. Valérie Hermann, the Company's Brand Group President, departed the Company, effective as of September 30, 2019. Pursuant to the Employment Separation Agreement and Release entered into by Ms. Hermann and the Company in connection with her separation of employment (the "Hermann Agreement"), it was agreed that Ms. Hermann would have certain expenses paid for by the Company. The Company and Ms. Hermann have entered into Amendment No. 1 to the Hermann Agreement (the "Hermann Amendment") to reduce such amount to reflect the recent estimated amount of such expenses and to provide that the reduced amount be paid in a lump sum.

The foregoing description of the Hermann Amendment is qualified in its entirety by the Hermann Amendment, which is attached hereto as Exhibit 10.1.



	6668


Item 6.	Exhibits.



3.1	Amended and Restated Certificate of Incorporation of the Company (filed as Exhibit 3.1 to the Company's Registration Statement on Form S-1/A (File No. 333-24733) filed June 10, 1997).
3.2	Certificate of Amendment to the Amended and Restated Certificate of Incorporation of the Company (filed as Exhibit 3.1 to the Form 8-K filed August 16, 2011).
3.3	Fourth Amended and Restated By-Laws of the Company (filed as Exhibit 3.3 to the Form 10-Q filed on August 10, 2017).
~~4.1~~10.1*	~~Third Supplemental Indenture, dated~~Amendment No. 1 to the Employment Separation Agreement and Release, effective as of ~~August 9, 2018, by~~November 6, 2019, between the Company and ~~between Ralph Lauren Corporation and Wells Fargo Bank, National Association (filed as Exhibit 4.2 to the Form 8-K filed on August 9, 2018)~~Valérie Hermann†.
~~10.1~~10.2*	Performance Share Unit Award Overview containing the standard terms of performance share unit awards under the 2019 Long-Term Stock Incentive Plan†.
10.3*	One-time Fiscal 2020 Performance Share Unit - Award Notification containing the standard terms of the one-time Fiscal 2020 performance share unit awards under the 2019 Long-Term Stock Incentive Plan†.
10.4*	Restricted Stock Unit Overview containing the standard terms of restricted stock unit awards under the 2019 Long-Term Stock Incentive Plan†.
10.5*	Form of Non-Employee Director Restricted Stock Unit Award Agreement under the ~~Amended and Restated 2010~~2019 Long-Term Stock Incentive Plan† ~~(filed as Exhibit 10.1 to the Form 10-Q filed on August 3, 2018)~~.
31.1*	Certification of Principal Executive Officer pursuant to 17 CFR 240.13a-14(a).
31.2*	Certification of Principal Financial Officer pursuant to 17 CFR 240.13a-14(a).
32.1*	Certification of Principal 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 Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101101.INS	XBRL Instance Document - the instance document does not appear in the Interactive ~~data files pursuant to Rule 405 of Regulation S-T: (i)~~Data File because its XBRL tags are embedded within the Consolidated Balance Sheets at September 29, 2018 and March 31, 2018, (ii) the Consolidated Statements of Operations for the three-month and six-month periods ended September 29, 2018 and September 30, 2017, (iii) the Consolidated Statements of Comprehensive Income for the three-month and six-month periods ended September 29, 2018 and September 30, 2017, (iv) the Consolidated Statements of Cash Flows for the six-month periods ended September 29, 2018 and September 30, 2017, and (v) the Notes to the Consolidated Financial Statements.Inline XBRL document.
101.SCH*	XBRL Taxonomy Extension Schema Document.
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB*	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document.

Exhibits 32.1 and 32.2 shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that Section. Such exhibits shall not be deemed incorporated by reference into any filing under the Securities Act of 1933 or Securities Exchange Act of 1934.



*	Filed herewith.
†	Management contract or compensatory plan or arrangement.



	6769

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 thereunto duly authorized.



		RALPH LAUREN CORPORATION

	By:	/S/ JANE HAMILTON NIELSEN
		Jane Hamilton Nielsen
		Chief Operating Officer and Chief Financial Officer
		(Principal Financial and Accounting Officer)

Date: November ~~8, 2018~~7, 2019



	6870



	Contractually-Guaranteed Minimum Royalties^(a)
	(millions)
Remainder of Fiscal 2019	$	53.9
Fiscal 2020	88.5
Fiscal 2021	81.5
Fiscal 2022 and thereafter	65.7
Total	$	289.6



		Carrying Value of the Hedged Item				Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Value of the Hedged Item
Hedged Item	Balance Sheet Line in which the Hedged Item is Included	September 29, 2018		March 31, 2018		September 29, 2018			March 31, 2018
		(millions)
$300 million 2.125% Senior Notes	Current portion of long-term debt	N/A		$	298.1	N/A			$	(1.6	)
$300 million 2.625% Senior Notes	Long-term debt	$	288.5	288.0		$	(10.6	)	(10.8		)



	Minimum Lease Payments^(a)
	(millions)
Remainder of Fiscal 2019	$	—
Fiscal 2020	10.2
Fiscal 2021	19.4
Fiscal 2022	27.5
Fiscal 2023	27.7
Fiscal 2024 and thereafter	261.8
Total minimum rental payments	$	346.6



	Number of Shares
	Restricted Stock		Service-based RSUs
	(thousands)
Nonvested at March 31, 2018	19		1,072
Granted	—		560
Vested	(9	)	(412	)
Forfeited	—		(95	)
Nonvested at September 29, 2018	10		1,125



	Remainder of Fiscal 2019		Fiscal 2020-2021		Fiscal 2022-2023		Fiscal 2024 and Thereafter		Total
	(millions)
Minimum lease payments^(a)	$	—	$	29.6	$	55.2	$	261.8	$	346.6

September 28, 2019

Operating
Leases

Finance
Leases

Weighted-average remaining lease term (years)

Weighted-average discount rate