Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | ||
Jun. 28, 2014 | Aug. 01, 2014 | Aug. 01, 2014 | |
Common stock, Class A | Common stock, Class B | ||
Entity Registrant Name | 'RALPH LAUREN CORP | ' | ' |
Entity Central Index Key | '0001037038 | ' | ' |
Document Type | '10-Q | ' | ' |
Document Period End Date | 28-Jun-14 | ' | ' |
Amendment Flag | 'false | ' | ' |
Document Fiscal Year Focus | '2015 | ' | ' |
Document Fiscal Period Focus | 'Q1 | ' | ' |
Current Fiscal Year End Date | '--03-28 | ' | ' |
Entity Filer Category | 'Large Accelerated Filer | ' | ' |
Entity Common Stock, Shares Outstanding | ' | 61,064,929 | 26,881,276 |
Consolidated_Balance_Sheets_Un
Consolidated Balance Sheets (Unaudited) (USD $) | Jun. 28, 2014 | Mar. 29, 2014 |
In Millions, unless otherwise specified | ||
Current assets: | ' | ' |
Cash and cash equivalents | $711 | $797 |
Short-term investments | 658 | 488 |
Accounts receivable, net of allowances of $261 million and $270 million | 357 | 588 |
Inventories | 1,180 | 1,020 |
Income tax receivable | 61 | 62 |
Deferred Tax Assets, Net of Valuation Allowance | 152 | 150 |
Prepaid expenses and other current assets | 202 | 224 |
Total current assets | 3,321 | 3,329 |
Property and equipment, net | 1,363 | 1,322 |
Deferred Tax Assets, Gross, Noncurrent | 39 | 39 |
Goodwill | 963 | 964 |
Intangible assets, net | 293 | 299 |
Other non-current assets | 151 | 137 |
Total assets | 6,130 | 6,090 |
Current liabilities: | ' | ' |
Accounts payable | 260 | 203 |
Income tax payable | 96 | 77 |
Accrued expenses and other current liabilities | 705 | 690 |
Total current liabilities | 1,061 | 970 |
2.125% Senior Notes, carrying amount | 300 | 300 |
Non-current liability for unrecognized tax benefits | 136 | 132 |
Other non-current liabilities | 661 | 654 |
Commitments and contingencies (Note 14) | ' | ' |
Total liabilities | 2,158 | 2,056 |
Equity: | ' | ' |
Additional paid-in-capital | 2,017 | 1,979 |
Retained earnings | 5,369 | 5,257 |
Treasury stock, Class A, at cost; 37.5 million and 36.2 million shares | -3,528 | -3,317 |
Accumulated other comprehensive income | 113 | 114 |
Total equity | 3,972 | 4,034 |
Total liabilities and equity | 6,130 | 6,090 |
Common stock, Class A | ' | ' |
Equity: | ' | ' |
Common stock | 1 | 1 |
Common stock, Class B | ' | ' |
Equity: | ' | ' |
Common stock | $0 | $0 |
Consolidated_Balance_Sheets_Un1
Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $) | Jun. 28, 2014 | Mar. 29, 2014 |
In Millions, except Per Share data, unless otherwise specified | ||
Accounts Receivable Reserves Allowances Current | $261 | $270 |
Common stock, Class A | ' | ' |
Common stock, par value | $0.01 | $0.01 |
Common stock, shares issued | 98.6 | 98 |
Common stock, shares outstanding | 61.1 | 61.8 |
Treasury stock, shares | 37.5 | 36.2 |
Common stock, Class B | ' | ' |
Common stock, par value | $0.01 | $0.01 |
Common stock, shares issued | 26.9 | 26.9 |
Common stock, shares outstanding | 26.9 | 26.9 |
Consolidated_Statements_of_Inc
Consolidated Statements of Income (Unaudited) (USD $) | 3 Months Ended | |
In Millions, except Per Share data, unless otherwise specified | Jun. 28, 2014 | Jun. 29, 2013 |
Income Statement [Abstract] | ' | ' |
Net sales | $1,668 | $1,614 |
Licensing revenue | 40 | 39 |
Net revenues | 1,708 | 1,653 |
Cost of Goods Sold | -665 | -649 |
Gross profit | 1,043 | 1,004 |
Other costs and expenses: | ' | ' |
Selling, general and administrative expenses(a) | -789 | -735 |
Amortization of intangible assets | -6 | -9 |
Gain on acquisition of Chaps | 0 | 16 |
Restructuring Charges | -4 | 0 |
Total other operating expenses, net | -799 | -728 |
Operating income | 244 | 276 |
Foreign currency gains (losses) | -3 | -6 |
Interest expense | -4 | -5 |
Interest and other income, net | 1 | 2 |
Equity in income (loss) of equity-method investees | -3 | -2 |
Income before provision for income taxes | 235 | 265 |
Provision for income taxes | -73 | -84 |
Net income | 162 | 181 |
Net income per common share: | ' | ' |
Basic | $1.82 | $1.99 |
Diluted | $1.80 | $1.94 |
Weighted average common shares outstanding: | ' | ' |
Basic | 88.9 | 90.8 |
Diluted | 90.2 | 93.1 |
Dividends declared per share | $0.45 | $0.40 |
(a) Includes total depreciation expense of: | ($63) | ($51) |
Consolidated_Statements_of_Com
Consolidated Statements of Comprehensive Income (Unaudited) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Jun. 28, 2014 | Jun. 29, 2013 |
Statement of Comprehensive Income [Abstract] | ' | ' |
Net income | $162 | $181 |
Other comprehensive income (loss), net of tax: | ' | ' |
Foreign currency translation adjustments | -3 | -2 |
Net gains (losses) on derivatives | 2 | -5 |
Net gains (losses) on available-for-sale investments | 0 | -5 |
Other Comprehensive Income (Loss), Net of Tax | -1 | -12 |
Comprehensive income | $161 | $169 |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (Unaudited) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Jun. 28, 2014 | Jun. 29, 2013 |
Cash flows from operating activities: | ' | ' |
Net income | $162 | $181 |
Adjustments to reconcile net income to net cash provided by operating activities: | ' | ' |
Depreciation and amortization expense | 69 | 60 |
Deferred income tax expense (benefit) | -3 | -8 |
Equity in loss of equity-method investees | 3 | 2 |
Non-cash stock-based compensation expense | 23 | 22 |
Gain on acquisition of Chaps | 0 | -16 |
Excess tax benefits from stock-based compensation arrangements | -4 | -17 |
Other non-cash charges (benefits), net | 6 | 1 |
Changes in operating assets and liabilities: | ' | ' |
Accounts receivable | 230 | 131 |
Inventories | -158 | -129 |
Increase (Decrease) in Prepaid Expense and Other Assets | 5 | -12 |
Accounts payable and accrued liabilities | 79 | 4 |
Income tax receivables and payables | 27 | 42 |
Deferred income | -4 | -6 |
Other balance sheet changes, net | -20 | 40 |
Net cash provided by operating activities | 415 | 295 |
Cash flows from investing activities: | ' | ' |
Acquisitions and ventures, net of cash acquired and purchase price settlements | -4 | -32 |
Purchases of investments | -411 | -305 |
Proceeds from sales and maturities of investments | 236 | 298 |
Capital expenditures | -85 | -66 |
Change in restricted cash deposits | 0 | -2 |
Net cash used in investing activities | -264 | -107 |
Cash flows from financing activities: | ' | ' |
Payments of capital lease obligations | -5 | -2 |
Payments of dividends | -40 | -36 |
Repurchases of common stock, including shares surrendered for tax withholdings | -211 | -151 |
Prepayments of Common Stock Repurchases | 0 | -50 |
Proceeds from exercise of stock options | 14 | 5 |
Excess tax benefits from stock-based compensation arrangements | 4 | 17 |
Net cash used in financing activities | -238 | -217 |
Effect of exchange rate changes on cash and cash equivalents | 1 | -5 |
Net decrease in cash and cash equivalents | -86 | -34 |
Cash and cash equivalents at beginning of period | 797 | 974 |
Cash and cash equivalents at end of period | $711 | $940 |
Description_of_Business
Description of Business | 3 Months Ended |
Jun. 28, 2014 | |
Description of Business [Abstract] | ' |
Description of Business | ' |
Description of Business | |
Ralph Lauren Corporation ("RLC") is a global leader in the design, marketing, and distribution of premium lifestyle products, including men's, women's, and children's apparel, accessories, fragrances, and home furnishings. RLC's long-standing reputation and distinctive brands have been consistently developed across an expanding number of products, brands, sales channels, and international markets. RLC's brand names include Ralph Lauren, Ralph Lauren Collection, Purple Label, Black Label, Polo, Polo Ralph Lauren, Blue Label, RRL, RLX Ralph Lauren, Lauren Ralph Lauren, Ralph Lauren Childrenswear, Denim & Supply Ralph Lauren, Chaps, Club Monaco, and American Living, 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 classifies its businesses into three segments: Wholesale, Retail, and Licensing. The Company's wholesale sales are made principally to major department stores and specialty stores around the world. The Company also sells directly to consumers through its integrated retail channel, which includes retail stores around the world; concession-based shop-within-shops located in Asia, Australia, New Zealand, and Europe; and retail e-commerce operations in North America, Europe, and Asia. The Company also licenses to unrelated third parties for specified periods the right to operate retail stores and to use its various trademarks in connection with the manufacture and sale of designated products, such as apparel, eyewear, and fragrances. |
Basis_of_Presentation
Basis of Presentation | 3 Months Ended |
Jun. 28, 2014 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' |
Basis of Presentation | ' |
Basis of Presentation | |
Interim Financial Statements | |
These interim consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC") and are unaudited. In the opinion of management, such 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 footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the U.S. ("U.S. GAAP") 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 29, 2014 (the "Fiscal 2014 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 2015 will end on March 28, 2015 and will be a 52-week period ("Fiscal 2015"). Fiscal year 2014 ended on March 29, 2014 and was also a 52-week period ("Fiscal 2014"). The first quarter of Fiscal 2015 ended on June 28, 2014 and was a 13-week period. The first quarter of Fiscal 2014 ended on June 29, 2013 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 estimates and assumptions that affect the amounts reported in the financial statements and footnotes 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, and operational chargebacks; the realizability of inventory; reserves for litigation and other contingencies; useful lives and impairments of long-lived tangible and intangible assets; accounting for income taxes and related uncertain tax positions; the valuation of stock-based compensation awards and related estimated forfeiture rates; reserves for restructuring; and accounting for business combinations, among others. | |
Reclassifications | |
Certain reclassifications have been made to the prior period's financial information in order to conform to the current period's presentation, including a change in the manner in which the Company allocates certain costs to its reportable segments, as described in Note 22 to the Company's Fiscal 2014 Form 10-K. | |
Seasonality of Business | |
The Company's business is typically affected by seasonal trends, with higher levels of wholesale sales in its second and fourth quarters and higher retail sales in its second and third quarters. These trends result primarily from the timing of seasonal wholesale shipments and key vacation travel, back-to-school, and holiday shopping periods in the Retail segment. 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 period ended June 28, 2014 are not necessarily indicative of the operating results and cash flows that may be expected for the full Fiscal 2015. |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 3 Months Ended | ||||||||
Jun. 28, 2014 | |||||||||
Accounting Policies [Abstract] | ' | ||||||||
Summary of Significant Accounting Policies | ' | ||||||||
Summary of Significant Accounting Policies | |||||||||
Revenue Recognition | |||||||||
Revenue is recognized across all segments of the business when there is persuasive evidence of an arrangement, delivery has occurred, the price has been fixed or is determinable, and collectability is reasonably assured. | |||||||||
Revenue within the Company's Wholesale segment is recognized at the time title passes and risk of loss is transferred to customers. Wholesale revenue is recorded net of estimates of returns, discounts, end-of-season markdown reserves, 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 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 costs have not differed materially from actual results. | |||||||||
Retail store and concession-based shop-within-shop revenue is recognized net of estimated returns at the time of sale to consumers. E-commerce revenue from sales of products ordered through the Company's e-commerce sites is recognized upon delivery of the shipment to its customers. Such revenue is also reduced by an estimate of returns. | |||||||||
Gift cards issued by the Company are recorded as a liability until they are redeemed, at which point revenue is recognized. The Company recognizes income for unredeemed gift cards when the likelihood of redemption by a customer is remote and the Company determines that it does not have a legal obligation to remit the value of the unredeemed gift card to the relevant jurisdiction as unclaimed or abandoned property. | |||||||||
Revenue from licensing arrangements is recognized when earned in accordance with the terms of the underlying agreements, generally based upon the higher of (i) contractually guaranteed minimum royalty levels or (ii) actual sales and royalty data, or estimates thereof, received from the Company's licensees. | |||||||||
The Company accounts for sales taxes and other related taxes on a net basis, excluding such taxes from revenue. | |||||||||
Shipping and Handling Costs | |||||||||
The costs associated with shipping goods to customers are reflected as a component of selling, general, and administrative ("SG&A") expenses in the unaudited interim consolidated statements of income. Shipping costs were approximately $9 million and $8 million during the three-month periods ended June 28, 2014 and June 29, 2013, respectively. The costs of preparing merchandise for sale, such as picking, packing, warehousing, and order charges ("handling costs") are also included in SG&A expenses. Handling costs were approximately $42 million and $39 million during the three-month periods ended June 28, 2014 and June 29, 2013, respectively. Shipping and handling costs billed to customers are included in revenue. | |||||||||
Net Income per Common Share | |||||||||
Basic net income per common share is computed by dividing net income applicable 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 effects of outstanding stock options, restricted stock, restricted stock units ("RSUs"), and any other potentially dilutive instruments, only in the periods in which such effects are dilutive under the treasury stock method. | |||||||||
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 | |||||||||
June 28, | June 29, | ||||||||
2014 | 2013 | ||||||||
(millions) | |||||||||
Basic shares | 88.9 | 90.8 | |||||||
Dilutive effect of stock options, restricted stock, and RSUs | 1.3 | 2.3 | |||||||
Diluted shares | 90.2 | 93.1 | |||||||
All earnings per share amounts have been calculated based on unrounded numbers. Options to purchase shares of the Company's 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 RSUs that are issuable only upon the achievement of certain service and/or performance goals. Performance-based RSUs are included in the computation of diluted shares only to the extent that the underlying performance conditions (and any applicable market condition modifiers) (i) are 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 under the treasury stock method. As of June 28, 2014 and June 29, 2013, there were approximately 1.2 million and 0.5 million, respectively, additional shares issuable upon exercise of anti-dilutive options and contingent vesting of performance-based RSUs, which were excluded from the diluted share calculations. | |||||||||
Accounts Receivable | |||||||||
In the normal course of business, the Company extends credit to wholesale customers that satisfy defined credit criteria. Accounts receivable, net 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 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 | |||||||||
June 28, | June 29, | ||||||||
2014 | 2013 | ||||||||
(millions) | |||||||||
Beginning reserve balance | $ | 254 | $ | 230 | |||||
Amount charged against revenue to increase reserve | 157 | 153 | |||||||
Amount credited against customer accounts to decrease reserve | (165 | ) | (140 | ) | |||||
Foreign currency translation | (1 | ) | 2 | ||||||
Ending reserve balance | $ | 245 | $ | 245 | |||||
An allowance for doubtful accounts is determined through analysis of periodic aging of accounts receivable, 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. The Company's allowance for doubtful accounts was $16 million as of both June 28, 2014 and March 29, 2014. The change in the allowance for doubtful accounts was not material during either of the three-month periods ended June 28, 2014 and June 29, 2013. | |||||||||
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 key wholesale customers that generate significant sales volume. During Fiscal 2014, the Company's sales to its largest wholesale customer, Macy's, Inc. ("Macy's"), accounted for approximately 12% of its total net revenues, and the Company's sales to its three largest wholesale customers (including Macy's) represented approximately 25% of total net revenues during Fiscal 2014. As of June 28, 2014, these three key wholesale customers represented approximately 30% of gross accounts receivable. | |||||||||
Derivative Financial Instruments | |||||||||
The Company records all derivative financial instruments on its consolidated balance sheets at fair value. For derivative instruments that qualify for cash flow hedge accounting, the effective portion of changes in the fair value of these instruments is recognized in equity as a component of accumulated other comprehensive income ("AOCI") until the hedged item is recognized in earnings. | |||||||||
Each derivative instrument entered into by the Company that qualifies for hedge accounting is expected to be highly effective at reducing the risk associated with the 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 term of the instrument. To assess the effectiveness of derivative instruments that are designated as hedges, the Company uses regression analysis, a statistical method, to compare the change in the fair value of the derivative instrument to the change in 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 cash flows is assessed and documented by the Company on at least a quarterly basis. | |||||||||
To the extent that a derivative instrument designated as a cash flow hedge is not considered to be effective, any change in its fair value relating to such ineffectiveness is immediately recognized in earnings within foreign currency gains (losses). 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 recognized in earnings within foreign currency gains (losses). 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 original hedging strategy, unless the forecasted transaction is no longer probable of occurring, in which case the accumulated amount is immediately recognized in earnings within foreign currency gains (losses). | |||||||||
As a result of the use of derivative instruments, the Company is exposed to the risk that the 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 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 the creditworthiness of counterparties. The Company also enters into master netting arrangements with counterparties, when possible, to mitigate credit risk associated with its derivative instruments. In the event of default or termination (as such terms are defined within the respective master netting arrangement), these arrangements allow the Company 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, the Company classifies proceeds received or amounts paid upon the settlement of a derivative instrument in the same manner as the related item being hedged, primarily within cash from operating activities. | |||||||||
Forward Foreign Currency Exchange Contracts | |||||||||
The Company primarily enters into forward foreign currency exchange contracts as hedges to reduce its risks related to exchange rate fluctuations on inventory purchases, intercompany royalty payments made by certain of its international operations, intercompany contributions made to fund certain marketing efforts of its international operations, and other foreign currency-denominated operational cash flows. To the extent forward foreign currency exchange contracts designated as cash flow hedges are highly effective in offsetting changes in the value of the hedged items, the related gains (losses) are initially deferred in equity as a component of AOCI and subsequently recognized in the consolidated statements of income as follows: | |||||||||
• | Forecasted Inventory Purchases — Recognized as part of the cost of the inventory purchases being hedged within cost of goods sold when the related inventory is sold to a third party. | ||||||||
• | Intercompany Royalty Payments and Marketing Contributions — Recognized within foreign currency gains (losses) generally in the period in which the related payments or contributions being hedged are received or paid. | ||||||||
Undesignated Hedges | |||||||||
All of the Company's undesignated hedges are entered into to hedge specific economic risks, particularly foreign currency exchange rate risk. Changes in the fair value of undesignated derivative instruments are immediately recognized in earnings within foreign currency gains (losses). | |||||||||
See Note 13 for further discussion of the Company's derivative financial instruments. | |||||||||
Refer to Note 3 in the Fiscal 2014 10-K for a summary of all of the Company's significant accounting policies. |
Recently_Issued_Accounting_Sta
Recently Issued Accounting Standards | 3 Months Ended |
Jun. 28, 2014 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | ' |
Recently Issued Accounting Standards | ' |
Recently Issued Accounting Standards | |
Revenue from Contracts with Customers | |
In May 2014, the Financial Accounting Standards Board ("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 of the existing revenue recognition guidance, including industry-specific guidance. Under this model, revenue is recognized at an amount that an entity expects to be entitled to upon transferring control of goods or services to a customer, as opposed to when risks and rewards transfer to a customer under existing revenue recognition guidance. ASU 2014-09 is effective for the Company beginning in its fiscal year 2018, and may be applied retrospectively to all prior periods presented or through a cumulative adjustment to the opening retained earnings balance in the year of adoption. The Company is currently in the process of evaluating the impact of ASU 2014-09 on its consolidated financial statements. | |
Proposed Amendments to Current Accounting Standards | |
The FASB is currently working on amendments to existing accounting standards governing a number of areas including, but not limited to, accounting for leases. In May 2013, the FASB issued an exposure draft, "Leases" (the "Exposure Draft"), which would replace the existing guidance in ASC topic 840, "Leases." Under the Exposure Draft, among other changes in practice, a lessee's rights and obligations under most leases, including existing and new arrangements, would be recognized as assets and liabilities on the consolidated balance sheet. The comment period for the Exposure Draft ended in September 2013. The FASB is currently redeliberating certain portions of the proposal to determine next steps. If and when effective, this proposed standard will likely have a significant impact on the Company's consolidated financial statements. However, as the standard-setting process is still ongoing, the Company is unable at this time to determine the impact this proposed change in accounting would have on its consolidated financial statements. |
Acquisitions_Acquisition
Acquisitions Acquisition | 3 Months Ended | ||||
Jun. 28, 2014 | |||||
Business Combinations [Abstract] | ' | ||||
Business Combination Disclosure [Text Block] | ' | ||||
5 | Acquisitions | ||||
Chaps Menswear License Acquisition | |||||
On April 10, 2013, in connection with the transition of the North American Chaps-branded men's sportswear business ("Chaps Menswear Business") from a licensed to a wholly-owned operation, the Company entered into an agreement with The Warnaco Group, Inc. ("Warnaco"), a subsidiary of PVH Corp. ("PVH"), to acquire certain net assets in exchange for an aggregate payment of approximately $18 million (the "Chaps Menswear License Acquisition"). Warnaco was the Company's licensee for the Chaps Menswear Business. The Company funded the Chaps Menswear License Acquisition during the first quarter of Fiscal 2014 with available cash on-hand. | |||||
The Company accounted for the Chaps Menswear License Acquisition as a business combination during the first quarter of Fiscal 2014. The acquisition cost was allocated to the assets acquired and liabilities assumed based on an assessment of their respective fair values, as follows (in millions): | |||||
Assets acquired: | |||||
Inventory | $ | 30 | |||
Accounts receivable | 19 | ||||
Licensed trademark intangible asset | 9 | ||||
Total assets acquired | 58 | ||||
Liabilities assumed: | |||||
Accounts payable | (22 | ) | |||
Other net liabilities | (2 | ) | |||
Total net liabilities assumed | (24 | ) | |||
Fair value of net assets acquired | 34 | ||||
Consideration paid | 18 | ||||
Gain on acquisition(a) | $ | 16 | |||
(a) | Represents the difference between the acquisition date fair value of net assets acquired and the contractually-defined purchase price under the Company's license agreement with Warnaco, which granted the Company the right to early-terminate the license upon PVH's acquisition of Warnaco in February 2013. | ||||
The licensed trademark intangible asset was valued using the excess earnings method, discounting the estimated after-tax cash flows associated with the Chaps-branded men's sportswear licensed trademark as of the acquisition date, factoring in market participant-based operating and cash flow assumptions. The reacquired licensed trademark intangible asset was amortized over a nine-month period through December 31, 2013, representing the remaining term of the prior license agreement that was terminated in connection with this acquisition. | |||||
The operating results of the Chaps Menswear Business have been consolidated into the Company's operating results beginning on April 10, 2013. Transaction costs of $3 million were expensed as incurred and classified within SG&A expenses in the consolidated statement of income during the three months ended June 29, 2013. | |||||
Australia and New Zealand Licensed Operations Acquisition | |||||
On July 1, 2013, in connection with the transition of the Ralph Lauren-branded apparel and accessories business in Australia and New Zealand (the "Australia and New Zealand Business") from a licensed to a wholly-owned operation, the Company acquired certain net assets from Oroton Group/PRL Australia ("Oroton") in exchange for an aggregate payment of approximately $15 million. The Company funded this acquisition with available cash on-hand and accounted for it as a business combination during the second quarter of Fiscal 2014, with the operating results of the Australia and New Zealand Business consolidated into the Company's operating results beginning on July 1, 2013. See Note 5 to the Company's Fiscal 2014 Form 10-K for the allocation of the purchase price and other information related to this acquisition. |
Inventories
Inventories | 3 Months Ended | ||||||||||||
Jun. 28, 2014 | |||||||||||||
Inventory Disclosure [Abstract] | ' | ||||||||||||
Inventories | ' | ||||||||||||
Inventories | |||||||||||||
Inventories consist of the following: | |||||||||||||
June 28, | March 29, | June 29, | |||||||||||
2014 | 2014 | 2013 | |||||||||||
(millions) | |||||||||||||
Raw materials | $ | 3 | $ | 3 | $ | 5 | |||||||
Work-in-process | 2 | 2 | 2 | ||||||||||
Finished goods | 1,175 | 1,015 | 1,046 | ||||||||||
Total inventories | $ | 1,180 | $ | 1,020 | $ | 1,053 | |||||||
Property_and_Equipment
Property and Equipment | 3 Months Ended | ||||||||
Jun. 28, 2014 | |||||||||
Property, Plant and Equipment [Abstract] | ' | ||||||||
Property and Equipment | ' | ||||||||
Property and Equipment | |||||||||
Property and equipment, net consists of the following: | |||||||||
June 28, | March 29, | ||||||||
2014 | 2014 | ||||||||
(millions) | |||||||||
Land and improvements | $ | 17 | $ | 17 | |||||
Buildings and improvements | 185 | 183 | |||||||
Furniture and fixtures | 676 | 661 | |||||||
Machinery and equipment | 293 | 245 | |||||||
Capitalized software | 372 | 366 | |||||||
Leasehold improvements | 1,078 | 1,064 | |||||||
Construction in progress | 326 | 312 | |||||||
2,947 | 2,848 | ||||||||
Less: accumulated depreciation | (1,584 | ) | (1,526 | ) | |||||
Property and equipment, net | $ | 1,363 | $ | 1,322 | |||||
Other_Current_and_NonCurrent_L
Other Current and Non-Current Liabilities | 3 Months Ended | ||||||||
Jun. 28, 2014 | |||||||||
Other Liabilities Disclosure [Abstract] | ' | ||||||||
Other Current and Non-Current Liabilities | ' | ||||||||
Other Current and Non-Current Liabilities | |||||||||
Accrued expenses and other current liabilities consist of the following: | |||||||||
June 28, | March 29, | ||||||||
2014 | 2014 | ||||||||
(millions) | |||||||||
Accrued operating expenses | $ | 182 | $ | 183 | |||||
Accrued inventory | 155 | 84 | |||||||
Accrued payroll and benefits | 127 | 190 | |||||||
Other taxes payable | 87 | 76 | |||||||
Deferred income | 42 | 41 | |||||||
Dividends payable | 39 | 40 | |||||||
Accrued capital expenditures | 38 | 45 | |||||||
Capital lease obligations | 18 | 16 | |||||||
Other accrued expenses and current liabilities | 17 | 15 | |||||||
Total accrued expenses and other current liabilities | $ | 705 | $ | 690 | |||||
Other non-current liabilities consist of the following: | |||||||||
June 28, | March 29, | ||||||||
2014 | 2014 | ||||||||
(millions) | |||||||||
Capital lease obligations | $ | 256 | $ | 255 | |||||
Deferred rent obligations | 224 | 224 | |||||||
Deferred tax liabilities | 78 | 81 | |||||||
Deferred compensation | 43 | 29 | |||||||
Deferred income | 35 | 39 | |||||||
Other non-current liabilities | 25 | 26 | |||||||
Total other non-current liabilities | $ | 661 | $ | 654 | |||||
Restructuring
Restructuring | 3 Months Ended |
Jun. 28, 2014 | |
Restructuring and Related Activities [Abstract] | ' |
Restructuring | ' |
Restructuring and Other Charges | |
A description of significant restructuring and other activities and related costs is included below. | |
Fiscal 2015 | |
During the three months ended June 28, 2014, the Company recorded $4 million in restructuring charges, primarily related to severance and benefit costs associated with the Company's retail and wholesale operations. The related restructuring liability is expected to be paid by the end of fiscal year 2016. | |
Fiscal 2014 | |
During Fiscal 2014, the Company recorded approximately $8 million in restructuring charges, primarily related to severance and benefit costs associated with restructuring of its corporate operations, $6 million of which remained payable as of March 29, 2014. As of June 28, 2014, the remaining restructuring liability related to these charges was $4 million, which is expected to be paid by the end of fiscal year 2015. |
Income_Taxes
Income Taxes | 3 Months Ended | ||||||||
Jun. 28, 2014 | |||||||||
Income Tax Disclosure [Abstract] | ' | ||||||||
Income Taxes | ' | ||||||||
Income Taxes | |||||||||
Effective Tax Rate | |||||||||
The Company's effective tax rate, which is calculated by dividing the provision for income taxes by pretax income, was 31.1% and 31.7% during the three-month periods ended June 28, 2014 and June 29, 2013, respectively. The Company's effective tax rate differs from the statutory rate due to the effect of state and local taxes, tax rates in foreign jurisdictions, and certain nondeductible expenses. The effective tax rate in both periods was lower than the U.S. federal statutory income tax rate of 35% principally as a result of the effect of earnings generated in lower taxed foreign jurisdictions. In addition, the effective tax rate for the three months ended June 28, 2014 was favorably impacted by an income tax benefit resulting from the legal entity restructuring of certain of the Company's foreign operations during Fiscal 2015, partially offset by additional tax reserves associated with the conclusion of tax examinations. | |||||||||
Uncertain Income Tax Benefits | |||||||||
Reconciliations of the beginning and ending amounts of unrecognized tax benefits, excluding interest and penalties, for the three-month periods ended June 28, 2014 and June 29, 2013 are presented below: | |||||||||
Three Months Ended | |||||||||
June 28, | June 29, | ||||||||
2014 | 2013 | ||||||||
(millions) | |||||||||
Unrecognized tax benefits beginning balance | $ | 83 | $ | 100 | |||||
Additions related to current period tax positions | 1 | 1 | |||||||
Additions related to prior period tax positions | 4 | 1 | |||||||
Reductions related to prior period tax positions | (1 | ) | (2 | ) | |||||
Reductions related to settlements with taxing authorities | (1 | ) | — | ||||||
Changes related to foreign currency translation | — | 1 | |||||||
Unrecognized tax benefits ending balance | $ | 86 | $ | 101 | |||||
The Company classifies interest and penalties related to unrecognized tax benefits as part of its provision for income taxes. Reconciliations of the beginning and ending amounts of accrued interest and penalties related to unrecognized tax benefits for the three-month periods ended June 28, 2014 and June 29, 2013 are presented below: | |||||||||
Three Months Ended | |||||||||
June 28, | June 29, | ||||||||
2014 | 2013 | ||||||||
(millions) | |||||||||
Accrued interest and penalties beginning balance | $ | 49 | $ | 50 | |||||
Net additions charged to expense | 2 | 1 | |||||||
Reductions related to prior period tax positions | (1 | ) | (1 | ) | |||||
Accrued interest and penalties ending balance | $ | 50 | $ | 50 | |||||
The total amount of unrecognized tax benefits, including interest and penalties, was $136 million and $132 million as of June 28, 2014 and March 29, 2014, 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 $89 million and $86 million as of June 28, 2014 and March 29, 2014, 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, the 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 fiscal year 2006. |
Debt
Debt | 3 Months Ended | |
Jun. 28, 2014 | ||
Debt Disclosure [Abstract] | ' | |
Debt | ' | |
Debt | ||
Senior Notes | ||
In September 2013, the Company completed a registered public debt offering and issued $300 million aggregate principal amount of unsecured senior notes due September 26, 2018 (the "Senior Notes") at a price equal to 99.896% of their principal amount. The Senior Notes bear interest at a fixed rate of 2.125%, payable semi-annually. The proceeds from this offering were used for general corporate purposes, including the repayment of the Company's €209 million principal amount previously outstanding of 4.5% Euro-denominated notes (the "Euro Debt"), which matured on October 4, 2013. | ||
The Company has the option to redeem the Senior Notes, in whole or in part, at any time at a price equal to accrued interest on the redemption date, plus the greater of (i) 100% of the principal amount of Senior Notes to be redeemed or (ii) the sum of the present value of Remaining Scheduled Payments, as defined in 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 Company initiated a commercial paper borrowing program (the "Commercial Paper Program") that allows it to issue up to $300 million of unsecured commercial paper notes through private placement using third-party broker-dealers. Borrowings under the Commercial Paper Program are supported by the Global Credit Facility, as defined below, and may be used for the Company's general working capital and corporate needs. Maturities of commercial paper notes will vary depending upon needs, but cannot exceed 397 days from the date of issuance. Commercial paper issued under the Commercial Paper Program will rank equally with the Company's other unsecured indebtedness. As of June 28, 2014, there were no borrowings under the Company's Commercial Paper Program. | ||
Revolving Credit Facilities | ||
Global Credit Facility | ||
The Company has a credit facility that provides for a $500 million senior unsecured revolving line of credit through March 2016, which may also be used to support the issuance of letters of credit and the maintenance of the Commercial Paper Program (the "Global Credit Facility"). 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, 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 June 28, 2014, there were no borrowings outstanding under the Global Credit Facility and the Company was contingently liable for $9 million of outstanding letters of credit. | ||
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 as of the date of measurement for the four most recent consecutive fiscal quarters. Adjusted Debt is defined generally as consolidated debt outstanding plus eight times consolidated rent expense for the last four consecutive fiscal quarters. Consolidated EBITDAR is defined generally as consolidated net income plus (i) income tax expense, (ii) net interest expense, (iii) depreciation and amortization expense, and (iv) consolidated rent expense. As of June 28, 2014, no Event of Default (as such term is defined pursuant to the Global Credit Facility) has occurred under the Company's Global Credit Facility. | ||
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, Malaysia, South Korea, and Taiwan (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 100 million Chinese Renminbi (approximately $16 million) through April 8, 2015, and may also be used to support bank guarantees. As of June 28, 2014, bank guarantees of 12 million Chinese Renminbi (approximately $2 million) were supported by this facility. | |
• | Malaysia Credit Facility — provides Ralph Lauren (Malaysia) Sdn Bhd with a revolving line of credit of up to 16 million Malaysian Ringgit (approximately $5 million) through September 17, 2014. | |
• | South Korea Credit Facility — provides Ralph Lauren (Korea) Ltd. with a revolving line of credit of up to 11 billion South Korean Won (approximately $11 million) through October 31, 2014. | |
• | Taiwan Credit Facility — provides Ralph Lauren (Hong Kong) Retail Company Limited, Taiwan Branch with a revolving line of credit of up to 59 million New Taiwan Dollars (approximately $2 million) through October 15, 2014. | |
As of June 28, 2014, there were no borrowings outstanding under any of the Pan-Asia Credit Facilities. | ||
Refer to Note 14 of the Fiscal 2014 10-K for additional disclosure of the terms and conditions of the Company's debt and credit facilities. |
Fair_Value_Measurements
Fair Value Measurements | 3 Months Ended | ||||||||||||||||
Jun. 28, 2014 | |||||||||||||||||
Fair Value Disclosures [Abstract] | ' | ||||||||||||||||
Fair Value Measurements | ' | ||||||||||||||||
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 and liabilities in active markets for substantially the full term of the financial instrument; quoted prices for identical or similar instruments in markets that are not active for substantially the full term of the financial instrument; and model-derived valuations whose inputs or significant value drivers are observable. | ||||||||||||||||
• | Level 3 — inputs to the valuation methodology based on unobservable prices or valuation techniques that are significant to the fair value measurement. | ||||||||||||||||
The following table summarizes the Company's financial assets and liabilities that are measured and recorded at fair value on a recurring basis: | |||||||||||||||||
June 28, | March 29, | ||||||||||||||||
2014 | 2014 | ||||||||||||||||
(millions) | |||||||||||||||||
Financial assets recorded at fair value: | |||||||||||||||||
Government bonds(a) | $ | — | $ | 1 | |||||||||||||
Auction rate securities(b) | 2 | 2 | |||||||||||||||
Derivative financial instruments(b) | 7 | 8 | |||||||||||||||
Total | $ | 9 | $ | 11 | |||||||||||||
Financial liabilities recorded at fair value: | |||||||||||||||||
Derivative financial instruments(b) | $ | 8 | $ | 7 | |||||||||||||
Total | $ | 8 | $ | 7 | |||||||||||||
(a) | Based on Level 1 measurements. | ||||||||||||||||
(b) | Based on Level 2 measurements. | ||||||||||||||||
To the extent the Company invests in bonds, such investments are classified as available-for-sale and recorded at fair value in its consolidated balance sheets based upon quoted prices in active markets. | |||||||||||||||||
The Company's auction rate securities are classified as available-for-sale and recorded at fair value within other non-current assets in its consolidated balance sheets. Third-party pricing institutions may value auction rate securities at par, which may not necessarily reflect prices that would be obtained if sold in the current market. When quoted market prices are unobservable, fair value is estimated based on a number of known factors and external pricing data, including known maturity dates, the coupon rate based upon the most recent reset market clearing rate, the price/yield representing the average rate of recent successfully traded securities, and the total principal balance of each security. | |||||||||||||||||
The Company's derivative financial instruments are recorded at fair value in its consolidated balance sheets on a gross basis and are valued using a pricing model, which is primarily based on market observable external inputs, including forward and spot exchange rates for foreign currencies, and considers 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 approximates fair value based on Level 1 measurements. | |||||||||||||||||
The Company's debt is recorded at carrying value in its consolidated balance sheets, which may differ from its fair value. The carrying value of the Senior Notes is adjusted for any unamortized discount, which is not material. The fair value of the Senior Notes is estimated based on external pricing data, including available quoted market prices, and of comparable debt instruments with similar interest rates, credit ratings, and trading frequency, among other factors. | |||||||||||||||||
The following table summarizes the carrying values and the estimated fair values of the Company's Senior Notes: | |||||||||||||||||
28-Jun-14 | 29-Mar-14 | ||||||||||||||||
Carrying | Fair | Carrying | Fair | ||||||||||||||
Value | Value(a) | Value | Value(a) | ||||||||||||||
(millions) | |||||||||||||||||
2.125% Senior Notes | $ | 300 | $ | 303 | $ | 300 | $ | 300 | |||||||||
(a) | Based on Level 2 measurements. | ||||||||||||||||
Unrealized gains or losses on the Company's debt do not result in the realization or expenditure of cash, unless the debt is retired prior to its maturity. | |||||||||||||||||
Non-financial Assets and Liabilities | |||||||||||||||||
The Company's non-financial assets, which primarily consist of goodwill, other intangible assets, and property and equipment, are not required to be measured at fair value on a recurring basis and are reported at carrying value. However, on a periodic basis or whenever events or changes in circumstances indicate that their carrying value may not be fully recoverable (and at least annually for goodwill and indefinite-lived intangible assets), non-financial instruments are assessed for impairment and, if applicable, written-down to and recorded at fair value, considering external market participant assumptions. There were no material impairment charges recorded during either of the three-month periods ended June 28, 2014 and June 29, 2013. |
Financial_Instruments
Financial Instruments | 3 Months Ended | ||||||||||||||||||||||||||||||||
Jun. 28, 2014 | |||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ' | ||||||||||||||||||||||||||||||||
Financial Instruments | ' | ||||||||||||||||||||||||||||||||
Financial Instruments | |||||||||||||||||||||||||||||||||
Derivative Financial Instruments | |||||||||||||||||||||||||||||||||
The Company is exposed to changes in foreign currency exchange rates, primarily relating to certain anticipated cash flows of its international operations. Consequently, the Company uses derivative financial instruments to manage 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 the consolidated balance sheets as of June 28, 2014 and March 29, 2014: | |||||||||||||||||||||||||||||||||
Notional Amounts | Derivative Assets | Derivative Liabilities | |||||||||||||||||||||||||||||||
Derivative Instrument(a) | June 28, | March 29, | June 28, | March 29, | June 28, | March 29, | |||||||||||||||||||||||||||
2014 | 2014 | 2014 | 2014 | 2014 | 2014 | ||||||||||||||||||||||||||||
Balance | Fair | Balance | Fair | Balance | Fair | Balance | Fair | ||||||||||||||||||||||||||
Sheet | Value | Sheet | Value | Sheet | Value | Sheet | Value | ||||||||||||||||||||||||||
Line(b) | Line(b) | Line(b) | Line(b) | ||||||||||||||||||||||||||||||
(millions) | |||||||||||||||||||||||||||||||||
Designated Hedges: | |||||||||||||||||||||||||||||||||
FC — Inventory purchases | $ | 501 | $ | 476 | (c) | $ | 4 | (d) | $ | 2 | AE | $ | 4 | AE | $ | 5 | |||||||||||||||||
FC — Other(e) | 210 | 223 | — | — | — | — | AE | 3 | AE | 2 | |||||||||||||||||||||||
Total Designated Hedges | $ | 711 | $ | 699 | $ | 4 | $ | 2 | $ | 7 | $ | 7 | |||||||||||||||||||||
Undesignated Hedges: | |||||||||||||||||||||||||||||||||
FC — Other(f) | $ | 274 | $ | 280 | PP | $ | 3 | (g) | $ | 6 | ONCL | $ | 1 | — | $ | — | |||||||||||||||||
Total Hedges | $ | 985 | $ | 979 | $ | 7 | $ | 8 | $ | 8 | $ | 7 | |||||||||||||||||||||
(a) | FC =orward foreign currency exchange contracts. | ||||||||||||||||||||||||||||||||
(b) | PP =repaid expenses and other current assets; AE =ccrued expenses and other current liabilities; ONCL =ther non-current liabilities. | ||||||||||||||||||||||||||||||||
(c) | $2 million included within prepaid expenses and other current assets and $2 million included within other non-current assets. | ||||||||||||||||||||||||||||||||
(d) | $1 million included within prepaid expenses and other current assets and $1 million included within other non-current assets. | ||||||||||||||||||||||||||||||||
(e) | Primarily designated hedges of foreign currency-denominated intercompany royalty payments, marketing contributions, and other net operational exposures. | ||||||||||||||||||||||||||||||||
(f) | Primarily undesignated hedges of foreign currency-denominated intercompany loans. | ||||||||||||||||||||||||||||||||
(g) | $2 million included within prepaid expenses and other current assets and $4 million included within other non-current assets. | ||||||||||||||||||||||||||||||||
The Company records and presents the fair values of all of its derivative assets and liabilities in the consolidated balance sheets on a gross basis, even though 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 forward foreign currency exchange contracts on a net basis in accordance with the terms of each of its master netting arrangements, spread across eight separate counterparties, the amounts presented in the consolidated balance sheets as of June 28, 2014 and March 29, 2014 would be adjusted from the current gross presentation as detailed in the following table: | |||||||||||||||||||||||||||||||||
28-Jun-14 | 29-Mar-14 | ||||||||||||||||||||||||||||||||
Derivative Instrument | Gross Amounts Presented in the Consolidated Balance Sheet | Gross Amounts not Offset in the Balance Sheet that are Subject to Master Netting Agreements | Net | Gross Amounts Presented in the Consolidated Balance Sheet | Gross Amounts not Offset in the Balance Sheet that are Subject to Master Netting Agreements | Net | |||||||||||||||||||||||||||
Amount | Amount | ||||||||||||||||||||||||||||||||
(millions) | |||||||||||||||||||||||||||||||||
FC — Derivative assets | $ | 7 | $ | (2 | ) | $ | 5 | $ | 8 | $ | (1 | ) | $ | 7 | |||||||||||||||||||
FC — Derivative liabilities | $ | 8 | $ | (2 | ) | $ | 6 | $ | 7 | $ | (1 | ) | $ | 6 | |||||||||||||||||||
The Company's master netting arrangements do not require cash collateral to be pledged by the Company or its counterparties. Refer to Note 3 for further discussion of the Company's master netting arrangements. | |||||||||||||||||||||||||||||||||
The following table summarizes the pretax impact of the effective portion of gains and losses from the Company's derivative instruments on its unaudited interim consolidated financial statements for the three-month periods ended June 28, 2014 and June 29, 2013: | |||||||||||||||||||||||||||||||||
Gains (Losses) | Gains (Losses) Reclassified from AOCI to Earnings | Location of Gains (Losses) Reclassified from | |||||||||||||||||||||||||||||||
Recognized in OCI | AOCI to Earnings | ||||||||||||||||||||||||||||||||
Three Months Ended | Three Months Ended | ||||||||||||||||||||||||||||||||
Derivative Instrument | June 28, | June 29, | June 28, | June 29, | |||||||||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||||||||||||||||
(millions) | |||||||||||||||||||||||||||||||||
Designated Cash Flow Hedges: | |||||||||||||||||||||||||||||||||
FC — Inventory purchases | $ | 1 | $ | (1 | ) | $ | (1 | ) | $ | 5 | Cost of goods sold | ||||||||||||||||||||||
FC — Other | (2 | ) | — | (2 | ) | — | Foreign currency gains (losses) | ||||||||||||||||||||||||||
$ | (1 | ) | $ | (1 | ) | $ | (3 | ) | $ | 5 | |||||||||||||||||||||||
Designated Hedge of Net Investment: | |||||||||||||||||||||||||||||||||
Euro Debt(a) | $ | — | $ | (1 | ) | $ | — | $ | — | ||||||||||||||||||||||||
Total Designated Hedges | $ | (1 | ) | $ | (2 | ) | $ | (3 | ) | $ | 5 | ||||||||||||||||||||||
(a) | Amount recognized in OCI relates to remeasurement of the Euro Debt, which was repaid in October 2013, and would be recognized in earnings only upon the sale or liquidation of the hedged net investment. | ||||||||||||||||||||||||||||||||
During the three months ended June 29, 2013, the Company also recorded a foreign currency gain of $2 million associated with the discontinuance of certain cash flow hedges, as the related forecasted transactions were no longer probable of occurring. | |||||||||||||||||||||||||||||||||
As of June 28, 2014, it is expected that approximately $4 million of net losses deferred in AOCI related to derivative financial instruments will be recognized in earnings over the next twelve months. No material gains or losses relating to ineffective hedges were recognized during any of the fiscal periods presented. | |||||||||||||||||||||||||||||||||
The following table summarizes the impact of gains and losses from the Company's undesignated hedge contracts on its unaudited interim consolidated financial statements for the three-month periods ended June 28, 2014 and June 29, 2013: | |||||||||||||||||||||||||||||||||
Gains (Losses) | Location of Gains (Losses) | ||||||||||||||||||||||||||||||||
Recognized in Earnings | Recognized in Earnings | ||||||||||||||||||||||||||||||||
Three Months Ended | |||||||||||||||||||||||||||||||||
Derivative Instrument | June 28, | June 29, | |||||||||||||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||||||||||||||
(millions) | |||||||||||||||||||||||||||||||||
Undesignated Hedges: | |||||||||||||||||||||||||||||||||
FC — Other | $ | (2 | ) | $ | 8 | Foreign currency gains (losses) | |||||||||||||||||||||||||||
Total Undesignated Hedges | $ | (2 | ) | $ | 8 | ||||||||||||||||||||||||||||
Risk Management Strategies | |||||||||||||||||||||||||||||||||
The Company primarily enters into forward foreign currency exchange contracts as hedges to reduce its risk from exchange rate fluctuations on inventory purchases made in an entity's non-functional currency, intercompany royalty payments made by certain of its international operations, intercompany contributions to fund certain marketing efforts of its international operations, and other foreign currency-denominated operational cash flows. 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, 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 foreign currency exchange forward contracts that generally have maturities of two months to two years to provide continuing coverage throughout the hedging period. | |||||||||||||||||||||||||||||||||
See Note 3 for further discussion of the Company's accounting policies relating to its derivative financial instruments. | |||||||||||||||||||||||||||||||||
Investments | |||||||||||||||||||||||||||||||||
The following table summarizes the Company's short-term and non-current investments recorded in the consolidated balance sheets as of June 28, 2014 and March 29, 2014: | |||||||||||||||||||||||||||||||||
28-Jun-14 | 29-Mar-14 | ||||||||||||||||||||||||||||||||
Type of Investment | Short-term | Non-current | Total | Short-term | Non-current | Total | |||||||||||||||||||||||||||
(millions) | |||||||||||||||||||||||||||||||||
Available-for-Sale: | |||||||||||||||||||||||||||||||||
Government bonds | $ | — | $ | — | $ | — | $ | 1 | $ | — | $ | 1 | |||||||||||||||||||||
Auction rate securities(a) | — | 2 | 2 | — | 2 | 2 | |||||||||||||||||||||||||||
Total available-for-sale investments | $ | — | $ | 2 | $ | 2 | $ | 1 | $ | 2 | $ | 3 | |||||||||||||||||||||
Other: | |||||||||||||||||||||||||||||||||
Time deposits | $ | 658 | $ | — | $ | 658 | $ | 487 | $ | — | $ | 487 | |||||||||||||||||||||
Total Investments | $ | 658 | $ | 2 | $ | 660 | $ | 488 | $ | 2 | $ | 490 | |||||||||||||||||||||
(a) | Auction rate securities have characteristics similar to short-term investments. However, the Company has recorded these securities within other non-current assets in its consolidated balance sheets as current market conditions call into question its ability to redeem these investments for cash within the next twelve months. | ||||||||||||||||||||||||||||||||
No significant realized or unrealized gains or losses on available-for-sale investments or other-than-temporary impairment charges were recorded during either of the three-month periods ended June 28, 2014 and June 29, 2013. Refer to Note 16 for further detail. | |||||||||||||||||||||||||||||||||
See Note 3 to the Fiscal 2014 10-K for further discussion of the Company's accounting policies relating to its investments. |
Commitments_and_Contingencies
Commitments and Contingencies | 3 Months Ended |
Jun. 28, 2014 | |
Commitments and Contingencies Disclosure [Abstract] | ' |
Commitments and Contingencies | ' |
Commitments and Contingencies | |
Lease Obligations | |
During the three months ended June 28, 2014, the Company entered into a lease for a new domestic distribution facility in North Carolina to support its future business growth. The initial lease term is approximately 15 years, with optional renewal periods and a purchase option. The Company's total commitment relating to this lease is approximately $56 million, with minimum lease payments of approximately $2 million due in fiscal year 2016, $3 million due each year from fiscal year 2017 through 2019, and aggregate minimum lease payments of $45 million for fiscal years 2020 through 2031. The Company expects to take possession of this property in the second quarter of fiscal year 2016. | |
Wathne Imports Litigation | |
On August 19, 2005, Wathne Imports, Ltd. ("Wathne"), the Company's then domestic licensee for luggage and handbags, filed a complaint in the U.S. District Court in the Southern District of New York against the Company and Mr. Ralph Lauren, its Chairman and Chief Executive Officer, asserting, among other things, federal trademark law violations, breach of contract, breach of obligations of good faith and fair dealing, fraud, and negligent misrepresentation. The complaint originally sought, among other relief, injunctive relief, compensatory damages in excess of $250 million, and punitive damages of not less than $750 million. On September 13, 2005, Wathne withdrew this complaint from the U.S. District Court and filed a complaint in the Supreme Court of the State of New York, New York County, making substantially the same allegations and claims (excluding the federal trademark claims), and seeking similar relief. On February 1, 2006, the Court granted the Company's motion to dismiss all of the causes of action, including the cause of action against Mr. Lauren, except for breach of contract related claims, and denied Wathne's motion for a preliminary injunction. Following some discovery, the Company moved for summary judgment on the remaining claims and Wathne cross-moved for partial summary judgment. In an April 11, 2008 Decision and Order, the Court granted the Company's summary judgment motion to dismiss most of the claims against the Company, and denied Wathne's cross-motion for summary judgment. Wathne appealed the dismissal of its claims to the Appellate Division of the Supreme Court. Following a hearing on May 19, 2009, the Appellate Division issued a Decision and Order on June 9, 2009 which, in large part, affirmed the lower Court's ruling. Since then, Wathne has made various attempts to expand the scope of its claim and the damages sought by making various motions and pursuing several intermediate appeals. | |
At this time, Wathne's principle remaining claim is that the Company required that Wathne discontinue the use of the Polo Sport brand on handbags in violation of its contract. A trial date has not been scheduled and the Company intends to continue to contest the remaining claims and dispute any alleged damages in this lawsuit vigorously. Management does not expect that the ultimate resolution of this matter will have a material adverse effect on the Company's consolidated financial statements. | |
Other Matters | |
The Company is otherwise 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, 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 the 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. |
Equity
Equity | 3 Months Ended | |||||||||
Jun. 28, 2014 | ||||||||||
Equity [Abstract] | ' | |||||||||
Equity | ' | |||||||||
Equity | ||||||||||
Summary of Changes in Equity | ||||||||||
A reconciliation of the beginning and ending amounts of equity is presented below: | ||||||||||
Three Months Ended | ||||||||||
June 28, | June 29, | |||||||||
2014 | 2013 | |||||||||
(millions) | ||||||||||
Balance at beginning of period | $ | 4,034 | $ | 3,785 | ||||||
Comprehensive income | 161 | 169 | ||||||||
Dividends declared | (39 | ) | (36 | ) | ||||||
Repurchases of common stock, including shares surrendered for tax withholdings | (211 | ) | (201 | ) | ||||||
Stock-based compensation | 23 | 22 | ||||||||
Shares issued and tax benefits recognized pursuant to stock-based compensation arrangements | 18 | 22 | ||||||||
Conversion of stock-based compensation awards | (14 | ) | — | |||||||
Balance at end of period | $ | 3,972 | $ | 3,761 | ||||||
Common Stock Repurchase Program | ||||||||||
A summary of the Company's repurchases of Class A common stock under its common stock repurchase program is presented below: | ||||||||||
Three Months Ended | ||||||||||
June 28, | June 29, | |||||||||
2014 | 2013 | |||||||||
(millions) | ||||||||||
Cost of shares repurchased | $ | 180 | $ | 150 | (a) | |||||
Number of shares repurchased | 1.2 | 0.9 | (a) | |||||||
(a) | Includes a $50 million payment made in March 2013 under a share repurchase program with a third-party financial institution, in exchange for the right to receive shares of the Company's Class A common stock at the conclusion of the 93-day repurchase term. The related 0.3 million shares were delivered to the Company during the three months ended June 29, 2013, based on the volume-weighted average market price of the Company's Class A common stock over the 93-day repurchase term, less a discount. Further, in June 2013, the Company prepaid an additional $50 million under a separate share repurchase program with a third-party financial institution, in exchange for the right to receive shares of its Class A common stock at the conclusion of a repurchase term of up to 93 days based on the volume-weighted average market price of its Class A common stock over such term, less a discount. Such prepayment has not been included in the table above. | |||||||||
As of June 28, 2014, the remaining availability under the Company's Class A common stock repurchase program was approximately $400 million. Repurchases of shares of Class A common stock are subject to overall business and market conditions. | ||||||||||
In addition, during the three-month periods ended June 28, 2014 and June 29, 2013, 0.2 million and 0.3 million shares of Class A common stock, respectively, at a cost of $31 million and $51 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"). | ||||||||||
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 November 5, 2013, the Company's Board of Directors approved an increase to the Company's quarterly cash dividend on its common stock from $0.40 per share to $0.45 per share. The first quarter Fiscal 2015 dividend of $0.45 per share was declared on June 12, 2014, was payable to stockholders of record at the close of business on June 27, 2014, and was paid on July 11, 2014. Dividends paid amounted to $40 million and $36 million during the three-month periods ended June 28, 2014 and June 29, 2013, respectively. | ||||||||||
Conversion of Stock-based Compensation Awards | ||||||||||
During the three months ended June 28, 2014, the Company converted certain fully-vested and expensed stock-based compensation awards to a cash contribution into a deferred compensation account. The Company recorded the excess of these awards' then current redemption value over their original grant-date fair value to retained earnings, with a corresponding increase to other non-current liabilities in the consolidated balance sheet. |
Accumulated_Other_Comprehensiv
Accumulated Other Comprehensive Income | 3 Months Ended | ||||||||||||||||||||
Jun. 28, 2014 | |||||||||||||||||||||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | ' | ||||||||||||||||||||
Comprehensive Income (Loss) Note [Text Block] | ' | ||||||||||||||||||||
Accumulated Other Comprehensive Income | |||||||||||||||||||||
The following table presents the components of other comprehensive income (loss), net of tax, accumulated in equity: | |||||||||||||||||||||
Foreign Currency Translation Gains (Losses) | Net Unrealized Gains (Losses) on Derivative Financial Instruments | Net Unrealized Gains (Losses) on Available-for-Sale Investments | Net Unrealized Losses on Defined Benefit Plans | Total Accumulated Other Comprehensive Income (Loss) | |||||||||||||||||
(millions) | |||||||||||||||||||||
Balance at March 30, 2013 | $ | 73 | $ | 23 | $ | 5 | $ | (7 | ) | $ | 94 | ||||||||||
Other comprehensive loss, net of tax: | |||||||||||||||||||||
OCI before reclassifications(a) | (2 | ) | (1 | ) | (4 | ) | — | (7 | ) | ||||||||||||
Amounts reclassified from AOCI to earnings | — | (4 | ) | (1 | ) | — | (5 | ) | |||||||||||||
Other comprehensive loss, net of tax | (2 | ) | (5 | ) | (5 | ) | — | (12 | ) | ||||||||||||
Balance at June 29, 2013 | $ | 71 | $ | 18 | $ | — | $ | (7 | ) | $ | 82 | ||||||||||
Balance at March 29, 2014 | $ | 125 | $ | (4 | ) | $ | — | $ | (7 | ) | $ | 114 | |||||||||
Other comprehensive income (loss), net of tax: | |||||||||||||||||||||
OCI before reclassifications(a) | (3 | ) | — | — | — | (3 | ) | ||||||||||||||
Amounts reclassified from AOCI to earnings | — | 2 | — | — | 2 | ||||||||||||||||
Other comprehensive income (loss), net of tax | (3 | ) | 2 | — | — | (1 | ) | ||||||||||||||
Balance at June 28, 2014 | $ | 122 | $ | (2 | ) | $ | — | $ | (7 | ) | $ | 113 | |||||||||
(a) | Amounts are net of taxes, which are immaterial. | ||||||||||||||||||||
The following table presents reclassifications from AOCI to earnings, by component: | |||||||||||||||||||||
Three Months Ended | |||||||||||||||||||||
June 28, | June 29, | Location of Gains (Losses) | |||||||||||||||||||
2014 | 2013 | Reclassified from AOCI to Earnings | |||||||||||||||||||
(millions) | |||||||||||||||||||||
Gains (losses) on derivative financial instruments(a): | |||||||||||||||||||||
FC — Inventory purchases | $ | (1 | ) | $ | 5 | Cost of goods sold | |||||||||||||||
FC — Other | (2 | ) | — | Foreign currency losses | |||||||||||||||||
Tax effect | 1 | (1 | ) | Provision for income taxes | |||||||||||||||||
Net of tax | $ | (2 | ) | $ | 4 | ||||||||||||||||
(a) | FC =orward foreign currency exchange contracts. |
Stockbased_Compensation
Stock-based Compensation | 3 Months Ended | ||||||||
Jun. 28, 2014 | |||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | ||||||||
Stock-based Compensation | ' | ||||||||
Stock-based Compensation | |||||||||
The Company's stock-based compensation awards are currently issued under the 2010 Incentive Plan, which was approved by its stockholders on August 5, 2010. However, any prior awards granted under the 1997 Incentive Plan remain subject to the terms of that plan. Any awards that expire, are forfeited, or are surrendered to the Company in satisfaction of taxes are available for issuance under the 2010 Incentive Plan. | |||||||||
Refer to Note 20 in the Fiscal 2014 10-K for a detailed description of the Company's stock-based compensation awards, including information related to vesting terms, service and performance conditions, and payout percentages. | |||||||||
Impact on Results | |||||||||
A summary of the total compensation expense recorded within SG&A expenses and the associated income tax benefits recognized related to stock-based compensation arrangements is as follows: | |||||||||
Three Months Ended | |||||||||
June 28, | June 29, | ||||||||
2014 | 2013 | ||||||||
(millions) | |||||||||
Compensation expense | $ | 23 | $ | 22 | |||||
Income tax benefit | $ | (8 | ) | $ | (8 | ) | |||
The Company issues its annual grants of stock-based compensation awards in the first half of the fiscal year. Due to the timing of the annual grants and other factors, stock-based compensation expense recognized during the three-month period ended June 28, 2014 is not indicative of the level of compensation expense expected to be incurred for the full Fiscal 2015. | |||||||||
Stock Options | |||||||||
A summary of stock option activity under all plans for the three months ended June 28, 2014 is as follows: | |||||||||
Number of Options | |||||||||
(thousands) | |||||||||
Options outstanding at March 29, 2014 | 3,026 | ||||||||
Granted | 15 | ||||||||
Exercised | (164 | ) | |||||||
Cancelled/Forfeited | (19 | ) | |||||||
Options outstanding at June 28, 2014 | 2,858 | ||||||||
Service-based RSUs and Restricted Stock Awards | |||||||||
The fair values of restricted stock awards 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. The weighted-average grant date fair values of restricted stock awards granted, which entitle holders to receive cash dividends in connection with the payments of dividends on the Company's Class A common stock, were $162.36 and $164.76 per share during the three-month periods ended June 28, 2014 and June 29, 2013, respectively. | |||||||||
A summary of restricted stock and service-based RSU activity during the three months ended June 28, 2014 is as follows: | |||||||||
Number of Shares | |||||||||
Restricted Stock | Service-based RSUs | ||||||||
(thousands) | |||||||||
Nonvested at March 29, 2014 | 5 | 7 | |||||||
Granted | 3 | 12 | |||||||
Vested | (3 | ) | — | ||||||
Nonvested at June 28, 2014 | 5 | 19 | |||||||
Performance-based RSUs | |||||||||
The fair value of the Company's performance-based RSUs that are not subject to a market condition in the form of a total shareholder return ("TSR") modifier is 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 those securities that are not entitled to dividend equivalents. The fair value of the Company's performance-based RSUs with a TSR modifier is determined on the date of grant using a Monte Carlo simulation valuation model. This pricing model uses multiple simulations to evaluate the probability of the Company achieving various stock price levels to determine its expected TSR performance ranking. The weighted average assumptions used to estimate the fair value of performance-based RSUs with a TSR modifier granted during the three-month periods ended June 28, 2014 and June 29, 2013 were as follows: | |||||||||
Three Months Ended | |||||||||
June 28, | June 29, | ||||||||
2014 | 2013 | ||||||||
Expected term (years) | 3 | 3 | |||||||
Expected volatility | 29.8 | % | 33.1 | % | |||||
Expected dividend yield | 1.09 | % | 0.96 | % | |||||
Risk-free interest rate | 0.9 | % | 0.4 | % | |||||
Weighted-average grant date fair value per share | $169.47 | $171.07 | |||||||
The weighted-average grant date fair values of performance-based RSUs that do not contain a TSR modifier granted during the three-month periods ended June 28, 2014 and June 29, 2013 were $158.00 and $164.49 per share, respectively. | |||||||||
A summary of performance-based RSU activity during the three months ended June 28, 2014 is as follows: | |||||||||
Number of Shares | |||||||||
Performance-based | Performance-based | ||||||||
RSUs — without | RSUs — with | ||||||||
TSR Modifier | TSR Modifier | ||||||||
(thousands) | |||||||||
Nonvested at March 29, 2014 | 798 | 145 | |||||||
Granted | 138 | 79 | |||||||
Change due to performance/market condition achievement | 83 | — | |||||||
Vested | (422 | ) | — | ||||||
Forfeited | (14 | ) | (8 | ) | |||||
Nonvested at June 28, 2014 | 583 | 216 | |||||||
Segment_Information
Segment Information | 3 Months Ended | ||||||||
Jun. 28, 2014 | |||||||||
Segment Reporting [Abstract] | ' | ||||||||
Segment Information | ' | ||||||||
Segment Information | |||||||||
The Company has three reportable segments based on its business activities and organization: Wholesale, Retail, and Licensing. These segments offer a variety of products through different channels of distribution. The Wholesale segment consists of women's, men's, and children's apparel, accessories, home furnishings, and related products which are sold to major department stores, specialty stores, golf and pro shops, and the Company's owned, licensed, and franchised retail stores in the U.S. and overseas. The Retail segment consists of the Company's integrated worldwide retail operations, which sell products through its retail stores, its concession-based shop-within-shops, and its e-commerce sites, which are purchased from the Company's licensees, suppliers, and Wholesale segment. The Licensing segment generates revenues from royalties earned on the sale of the Company's apparel, home, and other products internationally and domestically through licensing alliances. The licensing agreements grant the licensees rights to use the Company's various trademarks in connection with the manufacture and sale of designated products in specified geographical areas for specified periods. | |||||||||
The accounting policies of the Company's segments are consistent with those described in Notes 2 and 3 to the Company's consolidated financial statements included in the Fiscal 2014 10-K. Sales and transfers between segments are generally recorded at cost and treated as transfers of inventory. All intercompany revenues, including such sales between segments, are eliminated in consolidation and are not reviewed when evaluating segment performance. Each segment's performance is evaluated based upon operating income before restructuring charges and certain other one-time items, such as legal charges, if any. Certain corporate overhead expenses related to global functions (including expenses for senior management, overall brand-related expenses, and certain other corporate-related expenses) remain at corporate, while others are allocated to the segments based upon specific usage or other allocation methods, as appropriate. | |||||||||
During the fourth quarter of Fiscal 2014, the Company changed the manner in which it allocates certain costs to its reportable segments. All prior period segment information has been recast and is presented below on a comparable basis. See Note 22 to the Company's Fiscal 2014 Form 10-K for further discussion. | |||||||||
Net revenues and operating income for each of the Company's reportable segments are as follows: | |||||||||
Three Months Ended | |||||||||
June 28, | June 29, | ||||||||
2014 | 2013 | ||||||||
(millions) | |||||||||
Net revenues: | |||||||||
Wholesale | $ | 708 | $ | 735 | |||||
Retail | 960 | 879 | |||||||
Licensing | 40 | 39 | |||||||
Total net revenues | $ | 1,708 | $ | 1,653 | |||||
Three Months Ended | |||||||||
June 28, | June 29, | ||||||||
2014 | 2013 | ||||||||
(millions) | |||||||||
Operating income: | |||||||||
Wholesale | $ | 180 | $ | 207 | |||||
Retail | 168 | 165 | |||||||
Licensing | 36 | 35 | |||||||
384 | 407 | ||||||||
Unallocated corporate expenses | (136 | ) | (147 | ) | |||||
Gain on acquisition of Chaps(a) | — | 16 | |||||||
Unallocated restructuring and other charges(b) | (4 | ) | — | ||||||
Total operating income | $ | 244 | $ | 276 | |||||
(a) | See Note 5 for further discussion of the gain on acquisition of Chaps. | ||||||||
(b) | The three-month period ended June 28, 2014 included certain unallocated restructuring charges, $2 million of which related to the Company's wholesale operations and $2 million to its retail operations (see Note 9). | ||||||||
Depreciation and amortization expense for the Company's segments is as follows: | |||||||||
Three Months Ended | |||||||||
June 28, | June 29, | ||||||||
2014 | 2013 | ||||||||
(millions) | |||||||||
Depreciation and amortization: | |||||||||
Wholesale | $ | 17 | $ | 16 | |||||
Retail | 34 | 29 | |||||||
Unallocated corporate expenses | 18 | 15 | |||||||
Total depreciation and amortization | $ | 69 | $ | 60 | |||||
Net revenues by geographic location of the reporting subsidiary are as follows: | |||||||||
Three Months Ended | |||||||||
June 28, | June 29, | ||||||||
2014 | 2013 | ||||||||
(millions) | |||||||||
Net revenues(a): | |||||||||
The Americas(b) | $ | 1,139 | $ | 1,154 | |||||
Europe | 360 | 310 | |||||||
Asia(c) | 209 | 189 | |||||||
Total net revenues | $ | 1,708 | $ | 1,653 | |||||
(a) | Net revenues for certain of the Company's licensed operations are included within the geographic location of the reporting subsidiary which holds the respective license. | ||||||||
(b) | Includes the U.S., Canada, and Latin America. Net revenues earned in the U.S. during the three-month periods ended June 28, 2014 and June 29, 2013 were $1.084 billion and $1.105 billion, respectively. | ||||||||
(c) | Also includes Australia and New Zealand. |
Additional_Financial_Informati
Additional Financial Information | 3 Months Ended | ||||||||
Jun. 28, 2014 | |||||||||
Supplemental Cash Flow Information [Abstract] | ' | ||||||||
Additional Financial Information | ' | ||||||||
Additional Financial Information | |||||||||
Cash Interest and Taxes | |||||||||
Three Months Ended | |||||||||
June 28, | June 29, | ||||||||
2014 | 2013 | ||||||||
(millions) | |||||||||
Cash paid for interest | $ | 2 | $ | 1 | |||||
Cash paid for income taxes | $ | 50 | $ | 36 | |||||
Non-cash Transactions | |||||||||
Significant non-cash investing activities included the capitalization of fixed assets and recognition of related obligations in the net amount of $38 million and $48 million for the three months ended June 28, 2014 and June 29, 2013, respectively. In addition, non-cash investing activities for the three months ended June 28, 2014 included the capitalization of a fixed asset, for which a $19 million non-binding advance payment was made during Fiscal 2014 and recorded within prepaid expenses and other current assets as of March 29, 2014. | |||||||||
Significant non-cash activities during the three months ended June 29, 2013 also included the $16 million gain recorded in connection with the Chaps Menswear License Acquisition in April 2013 (See Note 5). | |||||||||
There were no other significant non-cash investing or financing activities for the periods presented. |
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Policies) | 3 Months Ended | |
Jun. 28, 2014 | ||
Accounting Policies [Abstract] | ' | |
Basis of Consolidation | ' | |
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 Year | ' | |
Fiscal Periods | ||
The Company utilizes a 52-53 week fiscal year ending on the Saturday closest to March 31. As such, fiscal year 2015 will end on March 28, 2015 and will be a 52-week period ("Fiscal 2015"). Fiscal year 2014 ended on March 29, 2014 and was also a 52-week period ("Fiscal 2014"). The first quarter of Fiscal 2015 ended on June 28, 2014 and was a 13-week period. The first quarter of Fiscal 2014 ended on June 29, 2013 and was also a 13-week period. | ||
Use of Estimates | ' | |
Use of Estimates | ||
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and footnotes 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, and operational chargebacks; the realizability of inventory; reserves for litigation and other contingencies; useful lives and impairments of long-lived tangible and intangible assets; accounting for income taxes and related uncertain tax positions; the valuation of stock-based compensation awards and related estimated forfeiture rates; reserves for restructuring; and accounting for business combinations, among others. | ||
Reclassifications | ' | |
Reclassifications | ||
Certain reclassifications have been made to the prior period's financial information in order to conform to the current period's presentation, including a change in the manner in which the Company allocates certain costs to its reportable segments, as described in Note 22 to the Company's Fiscal 2014 Form 10-K. | ||
Revenue Recognition | ' | |
Revenue Recognition | ||
Revenue is recognized across all segments of the business when there is persuasive evidence of an arrangement, delivery has occurred, the price has been fixed or is determinable, and collectability is reasonably assured. | ||
Revenue within the Company's Wholesale segment is recognized at the time title passes and risk of loss is transferred to customers. Wholesale revenue is recorded net of estimates of returns, discounts, end-of-season markdown reserves, 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 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 costs have not differed materially from actual results. | ||
Retail store and concession-based shop-within-shop revenue is recognized net of estimated returns at the time of sale to consumers. E-commerce revenue from sales of products ordered through the Company's e-commerce sites is recognized upon delivery of the shipment to its customers. Such revenue is also reduced by an estimate of returns. | ||
Gift cards issued by the Company are recorded as a liability until they are redeemed, at which point revenue is recognized. The Company recognizes income for unredeemed gift cards when the likelihood of redemption by a customer is remote and the Company determines that it does not have a legal obligation to remit the value of the unredeemed gift card to the relevant jurisdiction as unclaimed or abandoned property. | ||
Revenue from licensing arrangements is recognized when earned in accordance with the terms of the underlying agreements, generally based upon the higher of (i) contractually guaranteed minimum royalty levels or (ii) actual sales and royalty data, or estimates thereof, received from the Company's licensees. | ||
The Company accounts for sales taxes and other related taxes on a net basis, excluding such taxes from revenue. | ||
Shipping and Handling Costs | ' | |
Shipping and Handling Costs | ||
The costs associated with shipping goods to customers are reflected as a component of selling, general, and administrative ("SG&A") expenses in the unaudited interim consolidated statements of income. Shipping costs were approximately $9 million and $8 million during the three-month periods ended June 28, 2014 and June 29, 2013, respectively. The costs of preparing merchandise for sale, such as picking, packing, warehousing, and order charges ("handling costs") are also included in SG&A expenses. Handling costs were approximately $42 million and $39 million during the three-month periods ended June 28, 2014 and June 29, 2013, respectively. Shipping and handling costs billed to customers are included in revenue. | ||
Net Income Per Common Share | ' | |
Net Income per Common Share | ||
Basic net income per common share is computed by dividing net income applicable 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 effects of outstanding stock options, restricted stock, restricted stock units ("RSUs"), and any other potentially dilutive instruments, only in the periods in which such effects are dilutive under the treasury stock method. | ||
All earnings per share amounts have been calculated based on unrounded numbers. Options to purchase shares of the Company's 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 RSUs that are issuable only upon the achievement of certain service and/or performance goals. Performance-based RSUs are included in the computation of diluted shares only to the extent that the underlying performance conditions (and any applicable market condition modifiers) (i) are 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 under the treasury stock method. | ||
Accounts Receivable | ' | |
An allowance for doubtful accounts is determined through analysis of periodic aging of accounts receivable, 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. | ||
Accounts Receivable | ||
In the normal course of business, the Company extends credit to wholesale customers that satisfy defined credit criteria. Accounts receivable, net 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 Revenue Recognition section above for further discussion of related accounting policies) and (ii) allowances for doubtful accounts. | ||
Derivative Financial Instruments | ' | |
Derivative Financial Instruments | ||
The Company records all derivative financial instruments on its consolidated balance sheets at fair value. For derivative instruments that qualify for cash flow hedge accounting, the effective portion of changes in the fair value of these instruments is recognized in equity as a component of accumulated other comprehensive income ("AOCI") until the hedged item is recognized in earnings. | ||
Each derivative instrument entered into by the Company that qualifies for hedge accounting is expected to be highly effective at reducing the risk associated with the 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 term of the instrument. To assess the effectiveness of derivative instruments that are designated as hedges, the Company uses regression analysis, a statistical method, to compare the change in the fair value of the derivative instrument to the change in 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 cash flows is assessed and documented by the Company on at least a quarterly basis. | ||
To the extent that a derivative instrument designated as a cash flow hedge is not considered to be effective, any change in its fair value relating to such ineffectiveness is immediately recognized in earnings within foreign currency gains (losses). 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 recognized in earnings within foreign currency gains (losses). 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 original hedging strategy, unless the forecasted transaction is no longer probable of occurring, in which case the accumulated amount is immediately recognized in earnings within foreign currency gains (losses). | ||
As a result of the use of derivative instruments, the Company is exposed to the risk that the 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 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 the creditworthiness of counterparties. The Company also enters into master netting arrangements with counterparties, when possible, to mitigate credit risk associated with its derivative instruments. In the event of default or termination (as such terms are defined within the respective master netting arrangement), these arrangements allow the Company 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, the Company classifies proceeds received or amounts paid upon the settlement of a derivative instrument in the same manner as the related item being hedged, primarily within cash from operating activities. | ||
Forward Foreign Currency Exchange Contracts | ||
The Company primarily enters into forward foreign currency exchange contracts as hedges to reduce its risks related to exchange rate fluctuations on inventory purchases, intercompany royalty payments made by certain of its international operations, intercompany contributions made to fund certain marketing efforts of its international operations, and other foreign currency-denominated operational cash flows. To the extent forward foreign currency exchange contracts designated as cash flow hedges are highly effective in offsetting changes in the value of the hedged items, the related gains (losses) are initially deferred in equity as a component of AOCI and subsequently recognized in the consolidated statements of income as follows: | ||
• | Forecasted Inventory Purchases — Recognized as part of the cost of the inventory purchases being hedged within cost of goods sold when the related inventory is sold to a third party. | |
• | Intercompany Royalty Payments and Marketing Contributions — Recognized within foreign currency gains (losses) generally in the period in which the related payments or contributions being hedged are received or paid. | |
Undesignated Hedges | ||
All of the Company's undesignated hedges are entered into to hedge specific economic risks, particularly foreign currency exchange rate risk. Changes in the fair value of undesignated derivative instruments are immediately recognized in earnings within foreign currency gains (losses). |
Summary_of_Significant_Account2
Summary of Significant Accounting Policies (Tables) | 3 Months Ended | ||||||||
Jun. 28, 2014 | |||||||||
Summary of Significant Accounting Policies (Tables) [Abstract] | ' | ||||||||
Summary of Basic and Diluted shares | ' | ||||||||
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 | |||||||||
June 28, | June 29, | ||||||||
2014 | 2013 | ||||||||
(millions) | |||||||||
Basic shares | 88.9 | 90.8 | |||||||
Dilutive effect of stock options, restricted stock, and RSUs | 1.3 | 2.3 | |||||||
Diluted shares | 90.2 | 93.1 | |||||||
Sales Returns and Allowances [Member] | ' | ||||||||
Summary of Significant Accounting Policies (Tables) [Abstract] | ' | ||||||||
Rollforward of activity in the Company's allowance for doubtful accounts and its aggregate reserves for returns, discounts, end-of-season markdowns and operational chargebacks | ' | ||||||||
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 | |||||||||
June 28, | June 29, | ||||||||
2014 | 2013 | ||||||||
(millions) | |||||||||
Beginning reserve balance | $ | 254 | $ | 230 | |||||
Amount charged against revenue to increase reserve | 157 | 153 | |||||||
Amount credited against customer accounts to decrease reserve | (165 | ) | (140 | ) | |||||
Foreign currency translation | (1 | ) | 2 | ||||||
Ending reserve balance | $ | 245 | $ | 245 | |||||
Acquisitions_Acquisition_Table
Acquisitions Acquisition (Tables) | 3 Months Ended | ||||
Jun. 28, 2014 | |||||
Business Combinations [Abstract] | ' | ||||
Schedule of Business Acquisitions, by Acquisition [Table Text Block] | ' | ||||
The acquisition cost was allocated to the assets acquired and liabilities assumed based on an assessment of their respective fair values, as follows (in millions): | |||||
Assets acquired: | |||||
Inventory | $ | 30 | |||
Accounts receivable | 19 | ||||
Licensed trademark intangible asset | 9 | ||||
Total assets acquired | 58 | ||||
Liabilities assumed: | |||||
Accounts payable | (22 | ) | |||
Other net liabilities | (2 | ) | |||
Total net liabilities assumed | (24 | ) | |||
Fair value of net assets acquired | 34 | ||||
Consideration paid | 18 | ||||
Gain on acquisition(a) | $ | 16 | |||
(a) | Represents the difference between the acquisition date fair value of net assets acquired and the contractually-defined purchase price under the Company's license agreement with Warnaco, which granted the Company the right to early-terminate the license upon PVH's acquisition of Warnaco in February 2013. |
Inventories_Tables
Inventories (Tables) | 3 Months Ended | ||||||||||||
Jun. 28, 2014 | |||||||||||||
Inventory Disclosure [Abstract] | ' | ||||||||||||
Inventory | ' | ||||||||||||
Inventories consist of the following: | |||||||||||||
June 28, | March 29, | June 29, | |||||||||||
2014 | 2014 | 2013 | |||||||||||
(millions) | |||||||||||||
Raw materials | $ | 3 | $ | 3 | $ | 5 | |||||||
Work-in-process | 2 | 2 | 2 | ||||||||||
Finished goods | 1,175 | 1,015 | 1,046 | ||||||||||
Total inventories | $ | 1,180 | $ | 1,020 | $ | 1,053 | |||||||
Property_and_Equipment_Tables
Property and Equipment (Tables) | 3 Months Ended | ||||||||
Jun. 28, 2014 | |||||||||
Property, Plant and Equipment [Abstract] | ' | ||||||||
Property and equipment, net | ' | ||||||||
Property and equipment, net consists of the following: | |||||||||
June 28, | March 29, | ||||||||
2014 | 2014 | ||||||||
(millions) | |||||||||
Land and improvements | $ | 17 | $ | 17 | |||||
Buildings and improvements | 185 | 183 | |||||||
Furniture and fixtures | 676 | 661 | |||||||
Machinery and equipment | 293 | 245 | |||||||
Capitalized software | 372 | 366 | |||||||
Leasehold improvements | 1,078 | 1,064 | |||||||
Construction in progress | 326 | 312 | |||||||
2,947 | 2,848 | ||||||||
Less: accumulated depreciation | (1,584 | ) | (1,526 | ) | |||||
Property and equipment, net | $ | 1,363 | $ | 1,322 | |||||
Other_Current_and_NonCurrent_L1
Other Current and Non-Current Liabilities (Tables) | 3 Months Ended | ||||||||
Jun. 28, 2014 | |||||||||
Other Liabilities Disclosure [Abstract] | ' | ||||||||
Schedule of Accrued and Other Current Liabilities | ' | ||||||||
Accrued expenses and other current liabilities consist of the following: | |||||||||
June 28, | March 29, | ||||||||
2014 | 2014 | ||||||||
(millions) | |||||||||
Accrued operating expenses | $ | 182 | $ | 183 | |||||
Accrued inventory | 155 | 84 | |||||||
Accrued payroll and benefits | 127 | 190 | |||||||
Other taxes payable | 87 | 76 | |||||||
Deferred income | 42 | 41 | |||||||
Dividends payable | 39 | 40 | |||||||
Accrued capital expenditures | 38 | 45 | |||||||
Capital lease obligations | 18 | 16 | |||||||
Other accrued expenses and current liabilities | 17 | 15 | |||||||
Total accrued expenses and other current liabilities | $ | 705 | $ | 690 | |||||
Schedule of Non-Current Liabilities | ' | ||||||||
Other non-current liabilities consist of the following: | |||||||||
June 28, | March 29, | ||||||||
2014 | 2014 | ||||||||
(millions) | |||||||||
Capital lease obligations | $ | 256 | $ | 255 | |||||
Deferred rent obligations | 224 | 224 | |||||||
Deferred tax liabilities | 78 | 81 | |||||||
Deferred compensation | 43 | 29 | |||||||
Deferred income | 35 | 39 | |||||||
Other non-current liabilities | 25 | 26 | |||||||
Total other non-current liabilities | $ | 661 | $ | 654 | |||||
Income_Taxes_Tables
Income Taxes (Tables) | 3 Months Ended | ||||||||
Jun. 28, 2014 | |||||||||
Income Tax Disclosure [Abstract] | ' | ||||||||
Reconciliation of unrecognized tax benefits, excluding interest and penalties | ' | ||||||||
Reconciliations of the beginning and ending amounts of unrecognized tax benefits, excluding interest and penalties, for the three-month periods ended June 28, 2014 and June 29, 2013 are presented below: | |||||||||
Three Months Ended | |||||||||
June 28, | June 29, | ||||||||
2014 | 2013 | ||||||||
(millions) | |||||||||
Unrecognized tax benefits beginning balance | $ | 83 | $ | 100 | |||||
Additions related to current period tax positions | 1 | 1 | |||||||
Additions related to prior period tax positions | 4 | 1 | |||||||
Reductions related to prior period tax positions | (1 | ) | (2 | ) | |||||
Reductions related to settlements with taxing authorities | (1 | ) | — | ||||||
Changes related to foreign currency translation | — | 1 | |||||||
Unrecognized tax benefits ending balance | $ | 86 | $ | 101 | |||||
Reconciliation of accrued interest and penalties related to unrecognized tax benefits | ' | ||||||||
Reconciliations of the beginning and ending amounts of accrued interest and penalties related to unrecognized tax benefits for the three-month periods ended June 28, 2014 and June 29, 2013 are presented below: | |||||||||
Three Months Ended | |||||||||
June 28, | June 29, | ||||||||
2014 | 2013 | ||||||||
(millions) | |||||||||
Accrued interest and penalties beginning balance | $ | 49 | $ | 50 | |||||
Net additions charged to expense | 2 | 1 | |||||||
Reductions related to prior period tax positions | (1 | ) | (1 | ) | |||||
Accrued interest and penalties ending balance | $ | 50 | $ | 50 | |||||
Fair_Value_Measurements_Tables
Fair Value Measurements (Tables) | 3 Months Ended | ||||||||||||||||
Jun. 28, 2014 | |||||||||||||||||
Fair Value Disclosures [Abstract] | ' | ||||||||||||||||
Fair value of financial assets and liabilities measured and recorded at fair value on recurring basis | ' | ||||||||||||||||
The following table summarizes the Company's financial assets and liabilities that are measured and recorded at fair value on a recurring basis: | |||||||||||||||||
June 28, | March 29, | ||||||||||||||||
2014 | 2014 | ||||||||||||||||
(millions) | |||||||||||||||||
Financial assets recorded at fair value: | |||||||||||||||||
Government bonds(a) | $ | — | $ | 1 | |||||||||||||
Auction rate securities(b) | 2 | 2 | |||||||||||||||
Derivative financial instruments(b) | 7 | 8 | |||||||||||||||
Total | $ | 9 | $ | 11 | |||||||||||||
Financial liabilities recorded at fair value: | |||||||||||||||||
Derivative financial instruments(b) | $ | 8 | $ | 7 | |||||||||||||
Total | $ | 8 | $ | 7 | |||||||||||||
(a) | Based on Level 1 measurements. | ||||||||||||||||
(b) | Based on Level 2 measurements. | ||||||||||||||||
Carrying value and the estimated fair value of the Company's Euro debt | ' | ||||||||||||||||
The following table summarizes the carrying values and the estimated fair values of the Company's Senior Notes: | |||||||||||||||||
28-Jun-14 | 29-Mar-14 | ||||||||||||||||
Carrying | Fair | Carrying | Fair | ||||||||||||||
Value | Value(a) | Value | Value(a) | ||||||||||||||
(millions) | |||||||||||||||||
2.125% Senior Notes | $ | 300 | $ | 303 | $ | 300 | $ | 300 | |||||||||
(a) | Based on Level 2 measurements. |
Financial_Instruments_Tables
Financial Instruments (Tables) | 3 Months Ended | ||||||||||||||||||||||||||||||||
Jun. 28, 2014 | |||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ' | ||||||||||||||||||||||||||||||||
Company's outstanding derivative instruments on a gross basis as recorded on its consolidated balance sheets | ' | ||||||||||||||||||||||||||||||||
The following table summarizes the Company's outstanding derivative instruments on a gross basis as recorded in the consolidated balance sheets as of June 28, 2014 and March 29, 2014: | |||||||||||||||||||||||||||||||||
Notional Amounts | Derivative Assets | Derivative Liabilities | |||||||||||||||||||||||||||||||
Derivative Instrument(a) | June 28, | March 29, | June 28, | March 29, | June 28, | March 29, | |||||||||||||||||||||||||||
2014 | 2014 | 2014 | 2014 | 2014 | 2014 | ||||||||||||||||||||||||||||
Balance | Fair | Balance | Fair | Balance | Fair | Balance | Fair | ||||||||||||||||||||||||||
Sheet | Value | Sheet | Value | Sheet | Value | Sheet | Value | ||||||||||||||||||||||||||
Line(b) | Line(b) | Line(b) | Line(b) | ||||||||||||||||||||||||||||||
(millions) | |||||||||||||||||||||||||||||||||
Designated Hedges: | |||||||||||||||||||||||||||||||||
FC — Inventory purchases | $ | 501 | $ | 476 | (c) | $ | 4 | (d) | $ | 2 | AE | $ | 4 | AE | $ | 5 | |||||||||||||||||
FC — Other(e) | 210 | 223 | — | — | — | — | AE | 3 | AE | 2 | |||||||||||||||||||||||
Total Designated Hedges | $ | 711 | $ | 699 | $ | 4 | $ | 2 | $ | 7 | $ | 7 | |||||||||||||||||||||
Undesignated Hedges: | |||||||||||||||||||||||||||||||||
FC — Other(f) | $ | 274 | $ | 280 | PP | $ | 3 | (g) | $ | 6 | ONCL | $ | 1 | — | $ | — | |||||||||||||||||
Total Hedges | $ | 985 | $ | 979 | $ | 7 | $ | 8 | $ | 8 | $ | 7 | |||||||||||||||||||||
(a) | FC =orward foreign currency exchange contracts. | ||||||||||||||||||||||||||||||||
(b) | PP =repaid expenses and other current assets; AE =ccrued expenses and other current liabilities; ONCL =ther non-current liabilities. | ||||||||||||||||||||||||||||||||
(c) | $2 million included within prepaid expenses and other current assets and $2 million included within other non-current assets. | ||||||||||||||||||||||||||||||||
(d) | $1 million included within prepaid expenses and other current assets and $1 million included within other non-current assets. | ||||||||||||||||||||||||||||||||
(e) | Primarily designated hedges of foreign currency-denominated intercompany royalty payments, marketing contributions, and other net operational exposures. | ||||||||||||||||||||||||||||||||
(f) | Primarily undesignated hedges of foreign currency-denominated intercompany loans. | ||||||||||||||||||||||||||||||||
(g) | $2 million included within prepaid expenses and other current assets and $4 million included within other non-current assets. | ||||||||||||||||||||||||||||||||
Offsetting Assets | ' | ||||||||||||||||||||||||||||||||
The Company records and presents the fair values of all of its derivative assets and liabilities in the consolidated balance sheets on a gross basis, even though 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 forward foreign currency exchange contracts on a net basis in accordance with the terms of each of its master netting arrangements, spread across eight separate counterparties, the amounts presented in the consolidated balance sheets as of June 28, 2014 and March 29, 2014 would be adjusted from the current gross presentation as detailed in the following table: | |||||||||||||||||||||||||||||||||
28-Jun-14 | 29-Mar-14 | ||||||||||||||||||||||||||||||||
Derivative Instrument | Gross Amounts Presented in the Consolidated Balance Sheet | Gross Amounts not Offset in the Balance Sheet that are Subject to Master Netting Agreements | Net | Gross Amounts Presented in the Consolidated Balance Sheet | Gross Amounts not Offset in the Balance Sheet that are Subject to Master Netting Agreements | Net | |||||||||||||||||||||||||||
Amount | Amount | ||||||||||||||||||||||||||||||||
(millions) | |||||||||||||||||||||||||||||||||
FC — Derivative assets | $ | 7 | $ | (2 | ) | $ | 5 | $ | 8 | $ | (1 | ) | $ | 7 | |||||||||||||||||||
FC — Derivative liabilities | $ | 8 | $ | (2 | ) | $ | 6 | $ | 7 | $ | (1 | ) | $ | 6 | |||||||||||||||||||
Gains (losses) recognized in AOCI and gains (losses) reclassified from AOCI to Earnings | ' | ||||||||||||||||||||||||||||||||
The following table summarizes the pretax impact of the effective portion of gains and losses from the Company's derivative instruments on its unaudited interim consolidated financial statements for the three-month periods ended June 28, 2014 and June 29, 2013: | |||||||||||||||||||||||||||||||||
Gains (Losses) | Gains (Losses) Reclassified from AOCI to Earnings | Location of Gains (Losses) Reclassified from | |||||||||||||||||||||||||||||||
Recognized in OCI | AOCI to Earnings | ||||||||||||||||||||||||||||||||
Three Months Ended | Three Months Ended | ||||||||||||||||||||||||||||||||
Derivative Instrument | June 28, | June 29, | June 28, | June 29, | |||||||||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||||||||||||||||
(millions) | |||||||||||||||||||||||||||||||||
Designated Cash Flow Hedges: | |||||||||||||||||||||||||||||||||
FC — Inventory purchases | $ | 1 | $ | (1 | ) | $ | (1 | ) | $ | 5 | Cost of goods sold | ||||||||||||||||||||||
FC — Other | (2 | ) | — | (2 | ) | — | Foreign currency gains (losses) | ||||||||||||||||||||||||||
$ | (1 | ) | $ | (1 | ) | $ | (3 | ) | $ | 5 | |||||||||||||||||||||||
Designated Hedge of Net Investment: | |||||||||||||||||||||||||||||||||
Euro Debt(a) | $ | — | $ | (1 | ) | $ | — | $ | — | ||||||||||||||||||||||||
Total Designated Hedges | $ | (1 | ) | $ | (2 | ) | $ | (3 | ) | $ | 5 | ||||||||||||||||||||||
(a) | Amount recognized in OCI relates to remeasurement of the Euro Debt, which was repaid in October 2013, and would be recognized in earnings only upon the sale or liquidation of the hedged net investment. | ||||||||||||||||||||||||||||||||
Derivative gains (losses) recognized in earnings | ' | ||||||||||||||||||||||||||||||||
The following table summarizes the impact of gains and losses from the Company's undesignated hedge contracts on its unaudited interim consolidated financial statements for the three-month periods ended June 28, 2014 and June 29, 2013: | |||||||||||||||||||||||||||||||||
Gains (Losses) | Location of Gains (Losses) | ||||||||||||||||||||||||||||||||
Recognized in Earnings | Recognized in Earnings | ||||||||||||||||||||||||||||||||
Three Months Ended | |||||||||||||||||||||||||||||||||
Derivative Instrument | June 28, | June 29, | |||||||||||||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||||||||||||||
(millions) | |||||||||||||||||||||||||||||||||
Undesignated Hedges: | |||||||||||||||||||||||||||||||||
FC — Other | $ | (2 | ) | $ | 8 | Foreign currency gains (losses) | |||||||||||||||||||||||||||
Total Undesignated Hedges | $ | (2 | ) | $ | 8 | ||||||||||||||||||||||||||||
Company's short-term and non-current investments recorded in the consolidated balance sheets | ' | ||||||||||||||||||||||||||||||||
The following table summarizes the Company's short-term and non-current investments recorded in the consolidated balance sheets as of June 28, 2014 and March 29, 2014: | |||||||||||||||||||||||||||||||||
28-Jun-14 | 29-Mar-14 | ||||||||||||||||||||||||||||||||
Type of Investment | Short-term | Non-current | Total | Short-term | Non-current | Total | |||||||||||||||||||||||||||
(millions) | |||||||||||||||||||||||||||||||||
Available-for-Sale: | |||||||||||||||||||||||||||||||||
Government bonds | $ | — | $ | — | $ | — | $ | 1 | $ | — | $ | 1 | |||||||||||||||||||||
Auction rate securities(a) | — | 2 | 2 | — | 2 | 2 | |||||||||||||||||||||||||||
Total available-for-sale investments | $ | — | $ | 2 | $ | 2 | $ | 1 | $ | 2 | $ | 3 | |||||||||||||||||||||
Other: | |||||||||||||||||||||||||||||||||
Time deposits | $ | 658 | $ | — | $ | 658 | $ | 487 | $ | — | $ | 487 | |||||||||||||||||||||
Total Investments | $ | 658 | $ | 2 | $ | 660 | $ | 488 | $ | 2 | $ | 490 | |||||||||||||||||||||
(a) | Auction rate securities have characteristics similar to short-term investments. However, the Company has recorded these securities within other non-current assets in its consolidated balance sheets as current market conditions call into question its ability to redeem these investments for cash within the next twelve months. |
Equity_Tables
Equity (Tables) | 3 Months Ended | |||||||||
Jun. 28, 2014 | ||||||||||
Equity [Abstract] | ' | |||||||||
Summary of Changes in Equity | ' | |||||||||
A reconciliation of the beginning and ending amounts of equity is presented below: | ||||||||||
Three Months Ended | ||||||||||
June 28, | June 29, | |||||||||
2014 | 2013 | |||||||||
(millions) | ||||||||||
Balance at beginning of period | $ | 4,034 | $ | 3,785 | ||||||
Comprehensive income | 161 | 169 | ||||||||
Dividends declared | (39 | ) | (36 | ) | ||||||
Repurchases of common stock, including shares surrendered for tax withholdings | (211 | ) | (201 | ) | ||||||
Stock-based compensation | 23 | 22 | ||||||||
Shares issued and tax benefits recognized pursuant to stock-based compensation arrangements | 18 | 22 | ||||||||
Conversion of stock-based compensation awards | (14 | ) | — | |||||||
Balance at end of period | $ | 3,972 | $ | 3,761 | ||||||
Summary of Repurchased Common Stock | ' | |||||||||
A summary of the Company's repurchases of Class A common stock under its common stock repurchase program is presented below: | ||||||||||
Three Months Ended | ||||||||||
June 28, | June 29, | |||||||||
2014 | 2013 | |||||||||
(millions) | ||||||||||
Cost of shares repurchased | $ | 180 | $ | 150 | (a) | |||||
Number of shares repurchased | 1.2 | 0.9 | (a) | |||||||
(a) | Includes a $50 million payment made in March 2013 under a share repurchase program with a third-party financial institution, in exchange for the right to receive shares of the Company's Class A common stock at the conclusion of the 93-day repurchase term. The related 0.3 million shares were delivered to the Company during the three months ended June 29, 2013, based on the volume-weighted average market price of the Company's Class A common stock over the 93-day repurchase term, less a discount. Further, in June 2013, the Company prepaid an additional $50 million under a separate share repurchase program with a third-party financial institution, in exchange for the right to receive shares of its Class A common stock at the conclusion of a repurchase term of up to 93 days based on the volume-weighted average market price of its Class A common stock over such term, less a discount. Such prepayment has not been included in the table above. |
Accumulated_Other_Comrehensive
Accumulated Other Comrehensive Income (Tables) | 3 Months Ended | ||||||||||||||||||||
Jun. 28, 2014 | |||||||||||||||||||||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | ' | ||||||||||||||||||||
Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block] | ' | ||||||||||||||||||||
The following table presents the components of other comprehensive income (loss), net of tax, accumulated in equity: | |||||||||||||||||||||
Foreign Currency Translation Gains (Losses) | Net Unrealized Gains (Losses) on Derivative Financial Instruments | Net Unrealized Gains (Losses) on Available-for-Sale Investments | Net Unrealized Losses on Defined Benefit Plans | Total Accumulated Other Comprehensive Income (Loss) | |||||||||||||||||
(millions) | |||||||||||||||||||||
Balance at March 30, 2013 | $ | 73 | $ | 23 | $ | 5 | $ | (7 | ) | $ | 94 | ||||||||||
Other comprehensive loss, net of tax: | |||||||||||||||||||||
OCI before reclassifications(a) | (2 | ) | (1 | ) | (4 | ) | — | (7 | ) | ||||||||||||
Amounts reclassified from AOCI to earnings | — | (4 | ) | (1 | ) | — | (5 | ) | |||||||||||||
Other comprehensive loss, net of tax | (2 | ) | (5 | ) | (5 | ) | — | (12 | ) | ||||||||||||
Balance at June 29, 2013 | $ | 71 | $ | 18 | $ | — | $ | (7 | ) | $ | 82 | ||||||||||
Balance at March 29, 2014 | $ | 125 | $ | (4 | ) | $ | — | $ | (7 | ) | $ | 114 | |||||||||
Other comprehensive income (loss), net of tax: | |||||||||||||||||||||
OCI before reclassifications(a) | (3 | ) | — | — | — | (3 | ) | ||||||||||||||
Amounts reclassified from AOCI to earnings | — | 2 | — | — | 2 | ||||||||||||||||
Other comprehensive income (loss), net of tax | (3 | ) | 2 | — | — | (1 | ) | ||||||||||||||
Balance at June 28, 2014 | $ | 122 | $ | (2 | ) | $ | — | $ | (7 | ) | $ | 113 | |||||||||
(a) | Amounts are net of taxes, which are immaterial. | ||||||||||||||||||||
Reclassification out of Accumulated Other Comprehensive Income [Table Text Block] | ' | ||||||||||||||||||||
The following table presents reclassifications from AOCI to earnings, by component: | |||||||||||||||||||||
Three Months Ended | |||||||||||||||||||||
June 28, | June 29, | Location of Gains (Losses) | |||||||||||||||||||
2014 | 2013 | Reclassified from AOCI to Earnings | |||||||||||||||||||
(millions) | |||||||||||||||||||||
Gains (losses) on derivative financial instruments(a): | |||||||||||||||||||||
FC — Inventory purchases | $ | (1 | ) | $ | 5 | Cost of goods sold | |||||||||||||||
FC — Other | (2 | ) | — | Foreign currency losses | |||||||||||||||||
Tax effect | 1 | (1 | ) | Provision for income taxes | |||||||||||||||||
Net of tax | $ | (2 | ) | $ | 4 | ||||||||||||||||
(a) | FC =orward foreign currency exchange contracts. |
Stockbased_Compensation_Tables
Stock-based Compensation (Tables) | 3 Months Ended | ||||||||
Jun. 28, 2014 | |||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | ||||||||
Summary of the total compensation expense and the associated income tax benefits recognized related to stock-based compensation arrangements | ' | ||||||||
A summary of the total compensation expense recorded within SG&A expenses and the associated income tax benefits recognized related to stock-based compensation arrangements is as follows: | |||||||||
Three Months Ended | |||||||||
June 28, | June 29, | ||||||||
2014 | 2013 | ||||||||
(millions) | |||||||||
Compensation expense | $ | 23 | $ | 22 | |||||
Income tax benefit | $ | (8 | ) | $ | (8 | ) | |||
Summary of the stock option activity under all plans | ' | ||||||||
A summary of stock option activity under all plans for the three months ended June 28, 2014 is as follows: | |||||||||
Number of Options | |||||||||
(thousands) | |||||||||
Options outstanding at March 29, 2014 | 3,026 | ||||||||
Granted | 15 | ||||||||
Exercised | (164 | ) | |||||||
Cancelled/Forfeited | (19 | ) | |||||||
Options outstanding at June 28, 2014 | 2,858 | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ||||||||
Schedule of Share Based Payment Award Performance Stock Units With Market Condition Valuation Assumptions [Table Text Block] | ' | ||||||||
The weighted average assumptions used to estimate the fair value of performance-based RSUs with a TSR modifier granted during the three-month periods ended June 28, 2014 and June 29, 2013 were as follows: | |||||||||
Three Months Ended | |||||||||
June 28, | June 29, | ||||||||
2014 | 2013 | ||||||||
Expected term (years) | 3 | 3 | |||||||
Expected volatility | 29.8 | % | 33.1 | % | |||||
Expected dividend yield | 1.09 | % | 0.96 | % | |||||
Risk-free interest rate | 0.9 | % | 0.4 | % | |||||
Weighted-average grant date fair value per share | $169.47 | $171.07 | |||||||
Restricted Stock And Service Based Restricted Stock Units [Member] | ' | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ||||||||
Summary of restricted stock and restricted stock unit activity | ' | ||||||||
A summary of restricted stock and service-based RSU activity during the three months ended June 28, 2014 is as follows: | |||||||||
Number of Shares | |||||||||
Restricted Stock | Service-based RSUs | ||||||||
(thousands) | |||||||||
Nonvested at March 29, 2014 | 5 | 7 | |||||||
Granted | 3 | 12 | |||||||
Vested | (3 | ) | — | ||||||
Nonvested at June 28, 2014 | 5 | 19 | |||||||
Performance Shares [Member] | ' | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ||||||||
Summary of restricted stock and restricted stock unit activity | ' | ||||||||
A summary of performance-based RSU activity during the three months ended June 28, 2014 is as follows: | |||||||||
Number of Shares | |||||||||
Performance-based | Performance-based | ||||||||
RSUs — without | RSUs — with | ||||||||
TSR Modifier | TSR Modifier | ||||||||
(thousands) | |||||||||
Nonvested at March 29, 2014 | 798 | 145 | |||||||
Granted | 138 | 79 | |||||||
Change due to performance/market condition achievement | 83 | — | |||||||
Vested | (422 | ) | — | ||||||
Forfeited | (14 | ) | (8 | ) | |||||
Nonvested at June 28, 2014 | 583 | 216 | |||||||
Segment_Information_Tables
Segment Information (Tables) | 3 Months Ended | ||||||||
Jun. 28, 2014 | |||||||||
Segment Reporting [Abstract] | ' | ||||||||
Net revenues by segment | ' | ||||||||
Net revenues and operating income for each of the Company's reportable segments are as follows: | |||||||||
Three Months Ended | |||||||||
June 28, | June 29, | ||||||||
2014 | 2013 | ||||||||
(millions) | |||||||||
Net revenues: | |||||||||
Wholesale | $ | 708 | $ | 735 | |||||
Retail | 960 | 879 | |||||||
Licensing | 40 | 39 | |||||||
Total net revenues | $ | 1,708 | $ | 1,653 | |||||
Net operating income by segment | ' | ||||||||
Three Months Ended | |||||||||
June 28, | June 29, | ||||||||
2014 | 2013 | ||||||||
(millions) | |||||||||
Operating income: | |||||||||
Wholesale | $ | 180 | $ | 207 | |||||
Retail | 168 | 165 | |||||||
Licensing | 36 | 35 | |||||||
384 | 407 | ||||||||
Unallocated corporate expenses | (136 | ) | (147 | ) | |||||
Gain on acquisition of Chaps(a) | — | 16 | |||||||
Unallocated restructuring and other charges(b) | (4 | ) | — | ||||||
Total operating income | $ | 244 | $ | 276 | |||||
(a) | See Note 5 for further discussion of the gain on acquisition of Chaps. | ||||||||
(b) | The three-month period ended June 28, 2014 included certain unallocated restructuring charges, $2 million of which related to the Company's wholesale operations and $2 million to its retail operations (see Note 9). | ||||||||
Depreciation and amortization by segment | ' | ||||||||
Depreciation and amortization expense for the Company's segments is as follows: | |||||||||
Three Months Ended | |||||||||
June 28, | June 29, | ||||||||
2014 | 2013 | ||||||||
(millions) | |||||||||
Depreciation and amortization: | |||||||||
Wholesale | $ | 17 | $ | 16 | |||||
Retail | 34 | 29 | |||||||
Unallocated corporate expenses | 18 | 15 | |||||||
Total depreciation and amortization | $ | 69 | $ | 60 | |||||
Net revenues by geographic location | ' | ||||||||
Net revenues by geographic location of the reporting subsidiary are as follows: | |||||||||
Three Months Ended | |||||||||
June 28, | June 29, | ||||||||
2014 | 2013 | ||||||||
(millions) | |||||||||
Net revenues(a): | |||||||||
The Americas(b) | $ | 1,139 | $ | 1,154 | |||||
Europe | 360 | 310 | |||||||
Asia(c) | 209 | 189 | |||||||
Total net revenues | $ | 1,708 | $ | 1,653 | |||||
(a) | Net revenues for certain of the Company's licensed operations are included within the geographic location of the reporting subsidiary which holds the respective license. | ||||||||
(b) | Includes the U.S., Canada, and Latin America. Net revenues earned in the U.S. during the three-month periods ended June 28, 2014 and June 29, 2013 were $1.084 billion and $1.105 billion, respectively. | ||||||||
(c) | Also includes Australia and New Zealand. |
Additional_Financial_Informati1
Additional Financial Information (Tables) | 3 Months Ended | ||||||||
Jun. 28, 2014 | |||||||||
Supplemental Cash Flow Information [Abstract] | ' | ||||||||
Cash Interest and Taxes | ' | ||||||||
Three Months Ended | |||||||||
June 28, | June 29, | ||||||||
2014 | 2013 | ||||||||
(millions) | |||||||||
Cash paid for interest | $ | 2 | $ | 1 | |||||
Cash paid for income taxes | $ | 50 | $ | 36 | |||||
Description_of_Business_Detail
Description of Business (Details) | 3 Months Ended |
Jun. 28, 2014 | |
Segment | |
Description of Business [Abstract] | ' |
Number of reportable segments | 3 |
Summary_of_Significant_Account3
Summary of Significant Accounting Policies (Details) | 3 Months Ended | |
In Millions, unless otherwise specified | Jun. 28, 2014 | Jun. 29, 2013 |
Summary of basic and diluted shares | ' | ' |
Basic | 88.9 | 90.8 |
Dilutive effect of stock options, restricted stock and restricted stock units | 1.3 | 2.3 |
Diluted shares | 90.2 | 93.1 |
Summary of Significant Accounting Policies (Textual) [Abstract] | ' | ' |
Additional shares issuable upon the exercise of options and performance-based restricted stock units that were excluded from computation of earnings per share | 1.2 | 0.5 |
Summary_of_Significant_Account4
Summary of Significant Accounting Policies (Details 1) (USD $) | 3 Months Ended | |||
In Millions, unless otherwise specified | Jun. 28, 2014 | Jun. 29, 2013 | Jun. 28, 2014 | Mar. 29, 2014 |
Sales Returns and Allowances [Member] | Sales Returns and Allowances [Member] | Allowance for Doubtful Accounts [Member] | Allowance for Doubtful Accounts [Member] | |
Rollforward of activity in the Company's allowance for doubtful accounts and its aggregate reserves for returns, discounts, end-of-season markdowns and operational chargebacks | ' | ' | ' | ' |
Beginning reserve balance | $254 | $230 | $16 | $16 |
Amount charged against revenue to increase reserve | 157 | 153 | ' | ' |
Amount credited against customer accounts to decrease reserve | -165 | -140 | ' | ' |
Foreign currency translation | -1 | 2 | ' | ' |
Ending reserve balance | $245 | $245 | $16 | $16 |
Summary_of_Significant_Account5
Summary of Significant Accounting Policies (Details Textual) (USD $) | 3 Months Ended | 12 Months Ended | 3 Months Ended | 12 Months Ended | |
In Millions, unless otherwise specified | Jun. 28, 2014 | Jun. 29, 2013 | Mar. 29, 2014 | Jun. 28, 2014 | Mar. 29, 2014 |
Customer | Sales Revenue, Goods, Net [Member] | Accounts Receivable [Member] | Customer Concentration Risk [Member] | ||
Sales Revenue, Goods, Net [Member] | |||||
Summary of Significant Accounting Policies (Textual) [Abstract] | ' | ' | ' | ' | ' |
Shipping costs | $9 | $8 | ' | ' | ' |
Handling costs | $42 | $39 | ' | ' | ' |
Number Of Key Department Store Customers | 3 | ' | ' | ' | ' |
Contribution of Key Wholesale Customers | ' | ' | 25.00% | 30.00% | 12.00% |
Acquisitions_Acquisition_Detai
Acquisitions Acquisition (Details) (USD $) | 3 Months Ended | |||
In Millions, unless otherwise specified | Jun. 28, 2014 | Jun. 29, 2013 | Jun. 29, 2013 | Apr. 10, 2013 |
Chaps Menswear License Acquisition [Member] | Chaps Menswear License Acquisition [Member] | |||
Business Acquisition [Line Items] | ' | ' | ' | ' |
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Inventory | ' | ' | ' | $30 |
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets, Receivables | ' | ' | ' | 19 |
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill | ' | ' | ' | 9 |
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Assets | ' | ' | ' | 58 |
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Liabilities, Accounts Payable | ' | ' | ' | -22 |
Business combinations, recognized identifiable assets acquired and liabilities assumed, other liabilities, net | ' | ' | ' | -2 |
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Liabilities | ' | ' | ' | -24 |
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net | ' | ' | ' | 34 |
Payments to Acquire Businesses, Gross | ' | ' | 18 | ' |
Gain on acquisition of Chaps | $0 | $16 | ' | ' |
Acquisitions_Acquisition_Detai1
Acquisitions Acquisition (Details Textuals) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Jun. 29, 2013 | Sep. 28, 2013 |
Chaps Menswear License Acquisition [Member] | Australia and New Zealand Licensed Operations Acquisition [Member] | |
Business Acquisition [Line Items] | ' | ' |
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | '9 months | ' |
Payments to Acquire Businesses, Gross | $18 | $15 |
Business Acquisition, Transaction Costs | $3 | ' |
Inventories_Details
Inventories (Details) (USD $) | Jun. 28, 2014 | Mar. 29, 2014 | Jun. 29, 2013 |
In Millions, unless otherwise specified | |||
Inventories | ' | ' | ' |
Raw materials | $3 | $3 | $5 |
Work-in-process | 2 | 2 | 2 |
Finished goods | 1,175 | 1,015 | 1,046 |
Total inventories | $1,180 | $1,020 | $1,053 |
Property_and_Equipment_Details
Property and Equipment (Details) (USD $) | Jun. 28, 2014 | Mar. 29, 2014 |
In Millions, unless otherwise specified | ||
Property and equipment, net | ' | ' |
Land and improvements | $17 | $17 |
Buildings and improvements | 185 | 183 |
Furniture and fixtures | 676 | 661 |
Machinery and equipment | 293 | 245 |
Capitalized software | 372 | 366 |
Leasehold improvements | 1,078 | 1,064 |
Construction in progress | 326 | 312 |
Property plant and equipment, gross | 2,947 | 2,848 |
Less: accumulated depreciation | -1,584 | -1,526 |
Property and equipment, net | $1,363 | $1,322 |
Other_Current_and_NonCurrent_L2
Other Current and Non-Current Liabilities (Details) (USD $) | Jun. 28, 2014 | Mar. 29, 2014 |
In Millions, unless otherwise specified | ||
Accrued Expenses and Other Current Liabilities | ' | ' |
Accrued operating expenses | $182 | $183 |
Accrued inventory | 155 | 84 |
Accrued payroll and benefits | 127 | 190 |
Other taxes payable | 87 | 76 |
Deferred income | 42 | 41 |
Dividends payable | 39 | 40 |
Accrued capital expenditures | 38 | 45 |
Capital lease obligations | 18 | 16 |
Other accrued expenses and current liabilities | 17 | 15 |
Total accrued expenses and other current liabilities | 705 | 690 |
Other Non-Current Liabilities | ' | ' |
Capital lease obligations | 256 | 255 |
Deferred rent obligations | 224 | 224 |
Deferred tax liabilities | 78 | 81 |
Deferred compensation | 43 | 29 |
Deferred income | 35 | 39 |
Other non-current liabilities | 25 | 26 |
Total other non-current liabilities | $661 | $654 |
Restructuring_Restructuring_De
Restructuring Restructuring (Details Textual) (USD $) | 3 Months Ended | 12 Months Ended | |
In Millions, unless otherwise specified | Jun. 28, 2014 | Jun. 29, 2013 | Mar. 29, 2014 |
Restructuring Cost and Reserve [Line Items] | ' | ' | ' |
Restructuring Charges | $4 | $0 | $8 |
Fiscal 2014 Restructuring Plan [Member] | ' | ' | ' |
Restructuring Cost and Reserve [Line Items] | ' | ' | ' |
Restructuring Reserve | $4 | ' | $6 |
Income_Taxes_Details
Income Taxes (Details) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Jun. 28, 2014 | Jun. 29, 2013 |
Reconciliation of unrecognized tax benefits, excluding interest and penalties | ' | ' |
Unrecognized tax benefits beginning balance | $83 | $100 |
Additions related to current period tax positions | 1 | 1 |
Additions related to prior period tax positions | 4 | 1 |
Reductions related to prior period tax positions | -1 | -2 |
Reductions related to settlements with taxing authorities | -1 | 0 |
Additions (reductions) related to foreign currency translation | 0 | 1 |
Unrecognized tax benefits ending balance | 86 | 101 |
Reconciliation of accrued interest and penalties related to unrecognized tax benefits | ' | ' |
Accrued interest and penalties beginning balance | 49 | 50 |
Net additions charged to expense | 2 | 1 |
Reductions related to prior period tax positions | -1 | -1 |
Accrued interest and penalties ending balance | $50 | $50 |
Income_Taxes_Details_Textual
Income Taxes (Details Textual) (USD $) | 3 Months Ended | ||
In Millions, unless otherwise specified | Jun. 28, 2014 | Jun. 29, 2013 | Mar. 29, 2014 |
Income Tax Disclosure [Abstract] | ' | ' | ' |
Effective Income Tax Rate Reconciliation, Percent | 31.10% | 31.70% | ' |
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 35.00% | 35.00% | ' |
Non-current liability for unrecognized tax benefits | $136 | ' | $132 |
Unrecognized tax benefits that, if recognized, would affect the effective tax rate | $89 | ' | $86 |
Debt_Details_Textual
Debt (Details Textual) | 3 Months Ended | 12 Months Ended | |
In Millions, unless otherwise specified | Jun. 28, 2014 | Mar. 29, 2014 | Oct. 03, 2013 |
Senior Notes [Member] | Euro Debt [Member] | Euro Debt [Member] | |
USD ($) | EUR (€) | ||
Debt Instrument [Line Items] | ' | ' | ' |
Debt Instrument, Face Amount | $300 | ' | € 209 |
Debt Instrument, Maturity Date | 26-Sep-18 | 4-Oct-13 | ' |
Long-term debt, net of discount | 99.90% | ' | ' |
Debt Instrument, Interest Rate, Stated Percentage | 2.13% | ' | 4.50% |
Debt Instrument, Redemption Price, Percentage | 100.00% | ' | ' |
Debt Instrument, Restrictive Covenants | 'The Indenture contains certain covenants that restrict the Company's ability, subject to specified exceptions, to incur certain liens; enter into sale and leaseback transactions; consolidate or merge with another party; or sell, lease, or convey all or substantially all of the Company's property or assets to another party. However, the Indenture does not contain any financial covenants. | ' | ' |
Debt_Details_Textual_1
Debt (Details Textual 1) | Jun. 28, 2014 | Jun. 28, 2014 | Jun. 28, 2014 | Jun. 28, 2014 | Jun. 28, 2014 | Jun. 28, 2014 | Jun. 28, 2014 | Jun. 28, 2014 | Jun. 28, 2014 | Jun. 28, 2014 | Jun. 28, 2014 | Jun. 28, 2014 | Jun. 28, 2014 |
USD ($) | Global Credit Facility [Member] | Commercial Paper [Member] | Chinese Credit Facility [Member] | Chinese Credit Facility [Member] | Malaysia Credit Facility [Member] | Malaysia Credit Facility [Member] | South Korea Credit Facility [Member] | South Korea Credit Facility [Member] | Taiwan Credit Facility [Member] | Taiwan Credit Facility [Member] | Pan-Asia Credit Facilities [Member] | Global Credit Facility [Member] | |
USD ($) | USD ($) | USD ($) | CNY | USD ($) | MYR | USD ($) | KRW | USD ($) | TWD | USD ($) | Quarter | ||
Credit Facilities (Textual) [Abstract] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Maximum borrowing capacity | ' | $750,000,000 | $300,000,000 | $16,000,000 | 100,000,000 | $5,000,000 | 16,000,000 | $11,000,000 | 11,000,000,000 | $2,000,000 | 59,000,000 | ' | ' |
Debt Instrument, Term | ' | ' | '397 days | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Commercial Paper | 0 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Borrowing capacity under unsecured revolving line of credit | ' | 500,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Line of credit facility, expiration date | ' | 1-Mar-16 | ' | 8-Apr-15 | 8-Apr-15 | 17-Sep-14 | 17-Sep-14 | 31-Oct-14 | 31-Oct-14 | 15-Oct-14 | 15-Oct-14 | ' | ' |
Borrowings outstanding under revolving credit facilities | ' | 0 | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0 | ' |
Line of credit facility, contingent liability for outstanding LOCs | ' | 9,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Credit facility covenant terms | ' | '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 as of the date of measurement for the four most recent consecutive fiscal quarters. Adjusted Debt is defined generally as consolidated debt outstanding plus eight times consolidated rent expense for the last four consecutive fiscal quarters. Consolidated EBITDAR is defined generally as consolidated net income plus (i)B income tax expense, (ii)B net interest expense, (iii)B depreciation and amortization expense, and (iv)B consolidated rent expense. | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Credit Facility covenant compliance | ' | 'no Event of Default (as such term is defined pursuant to the Global Credit Facility) has occurred under the Company's Global Credit Facility | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Bank guarantees | ' | ' | ' | $2,000,000 | 12,000,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Maximum Ratio Of Adjusted Debt To Consolidated EBITDAR As Of Date Of Measurement For Four Consecutive Quarters | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 3.75 |
Leverage Ratio Number Of Consecutive Fiscal Quarters Used | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 4 |
Leverage Ratio Rent Expense Multiplier | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 8 |
Fair_Value_Measurements_Detail
Fair Value Measurements (Details) (USD $) | Jun. 28, 2014 | Mar. 29, 2014 |
In Millions, unless otherwise specified | ||
Financial assets recorded at fair value: | ' | ' |
Derivative Asset, Fair Value | $7 | $8 |
Assets, Fair Value Disclosure, Recurring | 9 | 11 |
Financial liabilities recorded at fair value: | ' | ' |
Derivative Liability, Fair Value | 8 | 7 |
Liabilities, Fair Value Disclosure, Recurring | 8 | 7 |
Fair Value, Inputs, Level 2 [Member] | ' | ' |
Financial assets recorded at fair value: | ' | ' |
Derivative Asset, Fair Value | 7 | 8 |
Financial liabilities recorded at fair value: | ' | ' |
Derivative Liability, Fair Value | 8 | 7 |
Government Bonds [Member] | Fair Value, Inputs, Level 1 [Member] | ' | ' |
Financial assets recorded at fair value: | ' | ' |
Investments recorded at fair value | 0 | 1 |
Auction Rate Securities [Member] | Fair Value, Inputs, Level 2 [Member] | ' | ' |
Financial assets recorded at fair value: | ' | ' |
Investments recorded at fair value | $2 | $2 |
Fair_Value_Measurements_Detail1
Fair Value Measurements (Details 1) (USD $) | Jun. 28, 2014 | Mar. 29, 2014 |
In Millions, unless otherwise specified | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
2.125% Senior Notes, carrying amount | $300 | $300 |
Fair Value, Inputs, Level 2 [Member] | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
2.125% Senior Notes, Fair Value | $303 | $300 |
Financial_Instruments_Details
Financial Instruments (Details) (USD $) | Jun. 28, 2014 | Mar. 29, 2014 |
In Millions, unless otherwise specified | ||
Notional Amounts of Derivative Financial Instruments | ' | ' |
Notional amount of hedges | $985 | $979 |
Derivative Assets | ' | ' |
Derivative Asset, Fair Value | 7 | 8 |
Derivative Liabilities | ' | ' |
Derivative Liability, Fair Value | 8 | 7 |
FC- Inventory purchases [Member] | Other Current Assets [Member] | ' | ' |
Derivative Assets | ' | ' |
Foreign Currency Cash Flow Hedge Asset at Fair Value | 2 | 1 |
FC- Inventory purchases [Member] | Other Noncurrent Assets [Member] | ' | ' |
Derivative Assets | ' | ' |
Foreign Currency Cash Flow Hedge Asset at Fair Value | 2 | 1 |
Designated [Member] | ' | ' |
Notional Amounts of Derivative Financial Instruments | ' | ' |
Notional amount of hedges | 711 | 699 |
Derivative Assets | ' | ' |
Derivative Asset, Fair Value | 4 | 2 |
Derivative Liabilities | ' | ' |
Derivative Liability, Fair Value | 7 | 7 |
Designated [Member] | FC- Inventory purchases [Member] | ' | ' |
Notional Amounts of Derivative Financial Instruments | ' | ' |
Notional amount of hedges | 501 | 476 |
Derivative Assets | ' | ' |
Foreign Currency Cash Flow Hedge Asset at Fair Value | 4 | 2 |
Designated [Member] | FC- Inventory purchases [Member] | Accrued expenses and other [Member] | ' | ' |
Derivative Liabilities | ' | ' |
Foreign Currency Cash Flow Hedge Liability at Fair Value | 4 | 5 |
Designated [Member] | FC-Other [Member] | ' | ' |
Notional Amounts of Derivative Financial Instruments | ' | ' |
Notional amount of hedges | 210 | 223 |
Derivative Assets | ' | ' |
Foreign Currency Cash Flow Hedge Asset at Fair Value | 0 | 0 |
Designated [Member] | FC-Other [Member] | Accrued expenses and other [Member] | ' | ' |
Derivative Liabilities | ' | ' |
Foreign Currency Cash Flow Hedge Liability at Fair Value | 3 | 2 |
Undesignated [Member] | ' | ' |
Notional Amounts of Derivative Financial Instruments | ' | ' |
Notional amount of hedges | 274 | 280 |
Derivative Assets | ' | ' |
Derivative Asset, Fair Value | ' | 6 |
Derivative Liabilities | ' | ' |
Derivative Liability, Fair Value | ' | 0 |
Undesignated [Member] | Other Current Assets [Member] | ' | ' |
Derivative Assets | ' | ' |
Derivative Asset, Fair Value | 3 | 2 |
Undesignated [Member] | Other Noncurrent Assets [Member] | ' | ' |
Derivative Assets | ' | ' |
Derivative Asset, Fair Value | ' | 4 |
Undesignated [Member] | Other Noncurrent Liabilities [Member] | ' | ' |
Derivative Liabilities | ' | ' |
Derivative Liability, Fair Value | $1 | ' |
Financial_Instruments_Details_
Financial Instruments (Details 1) (USD $) | Jun. 28, 2014 | Mar. 29, 2014 |
In Millions, unless otherwise specified | ||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ' | ' |
Derivative asset, gross amount in the balance sheet | $7 | $8 |
Gross amount of derivatives assets subject to master netting arrangements not offset | -2 | -1 |
Derivative asset, net basis | 5 | 7 |
Derivative liability, gross amount in the balance sheet | 8 | 7 |
Gross amount of derivative liabilities subject to master netting arrangements not offset | -2 | -1 |
Derivative liability, net basis | $6 | $6 |
Financial_Instruments_Details_1
Financial Instruments (Details 2) (USD $) | 3 Months Ended | |||
In Millions, unless otherwise specified | Jun. 28, 2014 | Jun. 29, 2013 | ||
Reclassification of hedge gain (loss) from accumulated OCI into income | ' | ' | ||
Cost of Goods Sold | ($665) | ($649) | ||
Foreign currency gains (losses) | -3 | -6 | ||
Reclassification out of Accumulated Other Comprehensive Income [Member] | ' | ' | ||
Reclassification of hedge gain (loss) from accumulated OCI into income | ' | ' | ||
Net income | -3 | 5 | ||
Designated as Hedging Instrument [Member] | ' | ' | ||
Total gain (loss) recognized in OCI on derivative instruments | ' | ' | ||
Gain (Loss) Recognized In Other Comprehensive Income | -1 | -2 | ||
Designated as Hedging Instrument [Member] | Designated Cash Flow Hedge [Member] | ' | ' | ||
Total gain (loss) recognized in OCI on derivative instruments | ' | ' | ||
Gain (Loss) Recognized In Other Comprehensive Income | -1 | -1 | ||
Designated as Hedging Instrument [Member] | Net Investment Hedging [Member] | ' | ' | ||
Total gain (loss) recognized in OCI on derivative instruments | ' | ' | ||
Gain (Loss) Recognized In Other Comprehensive Income | 0 | [1] | -1 | [1] |
Designated as Hedging Instrument [Member] | FC- Inventory purchases [Member] | Designated Cash Flow Hedge [Member] | ' | ' | ||
Total gain (loss) recognized in OCI on derivative instruments | ' | ' | ||
Gain (Loss) Recognized In Other Comprehensive Income | 1 | -1 | ||
Designated as Hedging Instrument [Member] | FC-Other [Member] | Designated Cash Flow Hedge [Member] | ' | ' | ||
Total gain (loss) recognized in OCI on derivative instruments | ' | ' | ||
Gain (Loss) Recognized In Other Comprehensive Income | -2 | 0 | ||
Net Investment Hedging [Member] | Reclassification out of Accumulated Other Comprehensive Income [Member] | ' | ' | ||
Reclassification of hedge gain (loss) from accumulated OCI into income | ' | ' | ||
Foreign currency gains (losses) | 0 | [1] | 0 | [1] |
Cash Flow Hedging [Member] | Reclassification out of Accumulated Other Comprehensive Income [Member] | ' | ' | ||
Reclassification of hedge gain (loss) from accumulated OCI into income | ' | ' | ||
Net income | -3 | 5 | ||
Cost of Goods Sold | -1 | [2] | 5 | [2] |
Foreign currency gains (losses) | -2 | [2] | 0 | [2] |
Cash Flow Hedging [Member] | Reclassification out of Accumulated Other Comprehensive Income [Member] | FC- Inventory purchases [Member] | ' | ' | ||
Reclassification of hedge gain (loss) from accumulated OCI into income | ' | ' | ||
Cost of Goods Sold | -1 | 5 | ||
Cash Flow Hedging [Member] | Reclassification out of Accumulated Other Comprehensive Income [Member] | FC-Other [Member] | ' | ' | ||
Reclassification of hedge gain (loss) from accumulated OCI into income | ' | ' | ||
Foreign currency gains (losses) | ($2) | $0 | ||
[1] | Amount recognized in OCI relates to remeasurement of the Euro Debt, which was repaid in October 2013, and would be recognized in earnings only upon the sale or liquidation of the hedged net investment. | |||
[2] | FC =orward foreign currency exchange contracts. |
Financial_Instruments_Details_2
Financial Instruments (Details 3) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Jun. 28, 2014 | Jun. 29, 2013 |
Derivative Instruments, Gain (Loss) [Line Items] | ' | ' |
Gain (Loss) on Foreign Currency Derivative Instruments Not Designated as Hedging Instruments | ($2) | $8 |
FC-Other [Member] | ' | ' |
Derivative Instruments, Gain (Loss) [Line Items] | ' | ' |
Gain (Loss) on Foreign Currency Derivative Instruments Not Designated as Hedging Instruments | ($2) | $8 |
Financial_Instruments_Details_3
Financial Instruments (Details 4) (USD $) | Jun. 28, 2014 | Mar. 29, 2014 | ||
In Millions, unless otherwise specified | ||||
Available-for-Sale: | ' | ' | ||
Available-for-sale Securities, Current | $0 | $1 | ||
Available-for-sale Securities, Noncurrent | 2 | 2 | ||
Available-for-sale Other Securities, Total | 2 | 3 | ||
Other: | ' | ' | ||
Time deposits, Short term | 658 | 487 | ||
Time deposits, Noncurrent | 0 | 0 | ||
Time deposits, Total | 658 | 487 | ||
Total: | ' | ' | ||
Total Investments, Short-term | 658 | 488 | ||
Total Investments, Noncurrent | 2 | 2 | ||
Total Investments | 660 | 490 | ||
Government Bonds [Member] | ' | ' | ||
Available-for-Sale: | ' | ' | ||
Available-for-sale Debt Securities, Short term | 0 | 1 | ||
Available-for-sale Securities, Debt Securities, Noncurrent | 0 | 0 | ||
Available-for-sale Debt Securities, Total | 0 | 1 | ||
Auction Rate Securities [Member] | ' | ' | ||
Available-for-Sale: | ' | ' | ||
Available-for-sale Debt Securities, Short term | 0 | [1] | 0 | [1] |
Available-for-sale Securities, Debt Securities, Noncurrent | 2 | [1] | 2 | [1] |
Available-for-sale Debt Securities, Total | $2 | [1] | $2 | [1] |
[1] | Auction rate securities have characteristics similar to short-term investments. However, the Company has recorded these securities within other non-current assets in its consolidated balance sheets as current market conditions call into question its ability to redeem these investments for cash within the next twelve months. |
Financial_Instruments_Details_4
Financial Instruments (Details Textual) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Jun. 28, 2014 | Jun. 29, 2013 |
counterparty | ||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ' | ' |
Number of counterparties to master netting arrangements | 8 | ' |
Gain on Discontinuation of Cash Flow Hedge Due to Forecasted Transaction Probable of Not Occurring | ' | $2 |
Net gains (losses) deferred in AOCI for derivative financial instruments expected to be recognized in the earnings over the next 12 months | 4 | ' |
Derivative Instruments, Gain (Loss) Recognized in Income, Ineffective Portion and Amount Excluded from Effectiveness Testing, Net | $0 | ' |
Maximum length of time hedged in cash flow hedge | '2 years | ' |
Foreign currency exchange forward contracts maturities, minimum | '2 months | ' |
Foreign currency exchange forward contract maturities, maximum | '2 years | ' |
Commitments_and_Contingencies_
Commitments and Contingencies (Details) (USD $) | 3 Months Ended |
In Millions, unless otherwise specified | Jun. 28, 2014 |
Other Commitments [Abstract] | ' |
Lessee leasing arrangements, term of contract | 'P15Y |
Future minimum lease payments | $56 |
Future minimum lease payments, due in two years | 2 |
Future minimum lease payments, due in three years | 3 |
Future minimum lease payments, due in four years | 3 |
Future minimum lease payments, due in five years | 3 |
Future minimum lease payments, due thereafter | 45 |
Compensatory Damages [Member] | ' |
Loss Contingency, Information about Litigation Matters [Abstract] | ' |
Loss Contingency, Damages Sought, Value | 250 |
Punitive Damages [Member] | ' |
Loss Contingency, Information about Litigation Matters [Abstract] | ' |
Loss Contingency, Damages Sought, Value | $750 |
Equity_Details
Equity (Details) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Jun. 28, 2014 | Jun. 29, 2013 |
Increase Decrease In Stockholders Equity [Roll Forward] | ' | ' |
Beginning Balance | $4,034 | $3,785 |
Comprehensive income | 161 | 169 |
Dividends declared | -39 | -36 |
Repurchases of common stock | -211 | -201 |
Stock-based compensation | 23 | 22 |
Shares issued and equity grants made pursuant to stock-based compensation plans | 18 | 22 |
Conversion of stock-based compensation awards | -14 | 0 |
Ending Balance | $3,972 | $3,761 |
Equity_Equity_Details_1
Equity Equity (Details 1) (USD $) | 3 Months Ended | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||||
In Millions, unless otherwise specified | Jun. 28, 2014 | Jun. 29, 2013 | Jun. 28, 2014 | Jun. 29, 2013 | Jun. 29, 2013 | Mar. 30, 2013 | Jun. 29, 2013 | Sep. 28, 2013 | |
General repurchase program [Member] | General repurchase program [Member] | Prepaid Repurchase Program [Member] | Prepaid Repurchase Program [Member] | Prepaid Repurchase Program [Member] | Prepaid Repurchase Program [Member] | ||||
Equity, Class of Treasury Stock [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | |
Repurchases of common stock | $211 | $201 | $180 | $150 | [1] | ' | ' | ' | ' |
Repurchases of common stock, shares | ' | ' | 1.2 | 0.9 | [1] | ' | ' | 0.3 | ' |
Stock Repurchase Program, Period in Force | ' | ' | ' | ' | ' | ' | '93 days | '93 days | |
Payments for Repurchase of Common Stock | $211 | $151 | ' | ' | $50 | $50 | ' | ' | |
[1] | Includes a $50 million payment made in March 2013 under a share repurchase program with a third-party financial institution, in exchange for the right to receive shares of the Company's Class A common stock at the conclusion of the 93-day repurchase term. The related 0.3 million shares were delivered to the Company during the three months ended June 29, 2013, based on the volume-weighted average market price of the Company's Class A common stock over the 93-day repurchase term, less a discount. Further, in June 2013, the Company prepaid an additional $50 million under a separate share repurchase program with a third-party financial institution, in exchange for the right to receive shares of its Class A common stock at the conclusion of a repurchase term of up to 93 days based on the volume-weighted average market price of its Class A common stock over such term, less a discount. Such prepayment has not been included in the table above. |
Equity_Details_Textual
Equity (Details Textual) (USD $) | 0 Months Ended | 3 Months Ended | ||
In Millions, except Per Share data, unless otherwise specified | Nov. 05, 2013 | Nov. 03, 2013 | Jun. 28, 2014 | Jun. 29, 2013 |
Treasury Stock Repurchases (Textual) [Abstract] | ' | ' | ' | ' |
Stock Repurchase Program, Remaining Available Amount | ' | ' | $400 | ' |
Treasury Stock, Value, Acquired, Cost Method | ' | ' | 211 | 201 |
Dividends (Textual) [Abstract] | ' | ' | ' | ' |
Dividends declared per share | $0.45 | $0.40 | $0.45 | $0.40 |
Dividends paid | ' | ' | 40 | 36 |
Withholding in satisfaction of taxes on vested equity award [Member] | ' | ' | ' | ' |
Treasury Stock Repurchases (Textual) [Abstract] | ' | ' | ' | ' |
Repurchases of common stock, shares | ' | ' | 0.2 | 0.3 |
Treasury Stock, Value, Acquired, Cost Method | ' | ' | $31 | $51 |
Accumulated_Other_Comprehensiv1
Accumulated Other Comprehensive Income (Details) (USD $) | 3 Months Ended | |||
In Millions, unless otherwise specified | Jun. 28, 2014 | Jun. 29, 2013 | ||
Accumulated Other Comprehensive Income (Loss), Net Of Tax [Roll Forward] | ' | ' | ||
Beginning balance | $114 | $94 | ||
OCI before reclassifications | -3 | [1] | -7 | [1] |
Amounts reclassified from AOCI to earnings | 2 | -5 | ||
Other comprehensive income (loss), net of tax | -1 | -12 | ||
Ending balance | 113 | 82 | ||
Foreign Currency Translation Gains (Losses) [Member] | ' | ' | ||
Accumulated Other Comprehensive Income (Loss), Net Of Tax [Roll Forward] | ' | ' | ||
Beginning balance | 125 | 73 | ||
OCI before reclassifications | -3 | [1] | -2 | [1] |
Amounts reclassified from AOCI to earnings | 0 | 0 | ||
Other comprehensive income (loss), net of tax | -3 | -2 | ||
Ending balance | 122 | 71 | ||
Net Unrealized Gains (Losses) on Derivative Financial Instruments [Member] | ' | ' | ||
Accumulated Other Comprehensive Income (Loss), Net Of Tax [Roll Forward] | ' | ' | ||
Beginning balance | -4 | 23 | ||
OCI before reclassifications | 0 | [1] | -1 | [1] |
Amounts reclassified from AOCI to earnings | 2 | -4 | ||
Other comprehensive income (loss), net of tax | 2 | -5 | ||
Ending balance | -2 | 18 | ||
Net Unrealized Gains (Losses) on Available-for-Sale Investments [Member] | ' | ' | ||
Accumulated Other Comprehensive Income (Loss), Net Of Tax [Roll Forward] | ' | ' | ||
Beginning balance | 0 | 5 | ||
OCI before reclassifications | 0 | [1] | -4 | [1] |
Amounts reclassified from AOCI to earnings | 0 | -1 | ||
Other comprehensive income (loss), net of tax | 0 | -5 | ||
Ending balance | 0 | 0 | ||
Net Unrealized Gains (Losses) on Defined Benefit Plans [Member] | ' | ' | ||
Accumulated Other Comprehensive Income (Loss), Net Of Tax [Roll Forward] | ' | ' | ||
Beginning balance | -7 | -7 | ||
OCI before reclassifications | 0 | [1] | 0 | [1] |
Amounts reclassified from AOCI to earnings | 0 | 0 | ||
Other comprehensive income (loss), net of tax | 0 | 0 | ||
Ending balance | ($7) | ($7) | ||
[1] | Amounts are net of taxes, which are immaterial. |
Accumulated_Other_Comprehensiv2
Accumulated Other Comprehensive Income (Details 1) (USD $) | 3 Months Ended | |||
In Millions, unless otherwise specified | Jun. 28, 2014 | Jun. 29, 2013 | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items] | ' | ' | ||
Cost of Goods Sold | ($665) | ($649) | ||
Foreign Currency Transaction Gain (Loss), before Tax | -3 | -6 | ||
Provision for income taxes | -73 | -84 | ||
Net income | 162 | 181 | ||
Cash Flow Hedging [Member] | Reclassification out of Accumulated Other Comprehensive Income [Member] | ' | ' | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items] | ' | ' | ||
Cost of Goods Sold | -1 | [1] | 5 | [1] |
Foreign Currency Transaction Gain (Loss), before Tax | -2 | [1] | 0 | [1] |
Provision for income taxes | 1 | -1 | ||
Net income | ($2) | $4 | ||
[1] | FC =orward foreign currency exchange contracts. |
Stockbased_Compensation_Detail
Stock-based Compensation (Details) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Jun. 28, 2014 | Jun. 29, 2013 |
Summary of the total compensation expense recorded within SG&A expenses and the associated income tax benefits recognized related to stock-based compensation arrangements | ' | ' |
Compensation expense | $23 | $22 |
Income tax benefit | ($8) | ($8) |
Stockbased_Compensation_Detail1
Stock-based Compensation (Details 1) | 3 Months Ended |
In Thousands, unless otherwise specified | Jun. 28, 2014 |
Summary of the stock option activity | ' |
Options beginning outstanding | 3,026 |
Granted | 15 |
Exercised | -164 |
Cancelled/Forfeited | -19 |
Options ending outstanding | 2,858 |
Stockbased_Compensation_Detail2
Stock-based Compensation (Details 2) | 3 Months Ended |
In Thousands, unless otherwise specified | Jun. 28, 2014 |
Restricted Stock [Member] | ' |
Summary of restricted stock and service-based RSU activity | ' |
Nonvested beginning balance | 5 |
Granted | 3 |
Vested | -3 |
Nonvested ending balance | 5 |
Service-Based Restricted Stock Units [Member] | ' |
Summary of restricted stock and service-based RSU activity | ' |
Nonvested beginning balance | 7 |
Granted | 12 |
Vested | 0 |
Nonvested ending balance | 19 |
Stockbased_Compensation_Detail3
Stock-based Compensation (Details 3) (Performance-based RSUs - with TSR Modifier [Member], USD $) | 3 Months Ended | |
Jun. 28, 2014 | Jun. 29, 2013 | |
Performance-based RSUs - with TSR Modifier [Member] | ' | ' |
Weighted average assumptions used to determine the fair values of performance-based RSUs with a TSR modifier | ' | ' |
Expected term | '3 years | '3 years |
Expected volatility | 29.80% | 33.10% |
Expected dividend yield | 1.09% | 0.96% |
Risk-free interest rate | 0.90% | 0.40% |
Weighted-average grant date fair value | $169.47 | $171.07 |
Stockbased_Compensation_Detail4
Stock-based Compensation (Details 4) | 3 Months Ended |
In Thousands, unless otherwise specified | Jun. 28, 2014 |
Performance Shares [Member] | ' |
Summary of the performance-based RSU activity | ' |
Nonvested beginning balance | 798 |
Granted | 138 |
Change due to performance or market conditions achievement | 83 |
Vested | -422 |
Forfeited | -14 |
Nonvested ending balance | 583 |
Performance Based Restricted Stock Units With Tsr Modifier [Member] | ' |
Summary of the performance-based RSU activity | ' |
Nonvested beginning balance | 145 |
Granted | 79 |
Change due to performance or market conditions achievement | 0 |
Vested | 0 |
Forfeited | -8 |
Nonvested ending balance | 216 |
Stockbased_Compensation_Detail5
Stock-based Compensation (Details Textual) (USD $) | 3 Months Ended | |
Jun. 28, 2014 | Jun. 29, 2013 | |
Restricted Stock [Member] | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Weighted average grant date fair value of equity awards other than options | $162.36 | $164.76 |
Performance Shares [Member] | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Weighted average grant date fair value of equity awards other than options | $158 | $164.49 |
Segment_Information_Details
Segment Information (Details) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Jun. 28, 2014 | Jun. 29, 2013 |
Net revenues by segment | ' | ' |
Sales revenue | $1,668 | $1,614 |
Licensing revenue | 40 | 39 |
Total net revenues | 1,708 | 1,653 |
Wholesale [Member] | ' | ' |
Net revenues by segment | ' | ' |
Sales revenue | 708 | 735 |
Retail [Member] | ' | ' |
Net revenues by segment | ' | ' |
Sales revenue | 960 | 879 |
Licensing [Member] | ' | ' |
Net revenues by segment | ' | ' |
Licensing revenue | $40 | $39 |
Segment_Information_Details_1
Segment Information (Details 1) (USD $) | 3 Months Ended | |||
In Millions, unless otherwise specified | Jun. 28, 2014 | Jun. 29, 2013 | ||
Operating income by segment | ' | ' | ||
Operating income | $244 | $276 | ||
Unallocated corporate expenses | -799 | -728 | ||
Gain on acquisition of Chaps | 0 | 16 | ||
Wholesale [Member] | ' | ' | ||
Operating income by segment | ' | ' | ||
Operating income | 180 | 207 | ||
Retail [Member] | ' | ' | ||
Operating income by segment | ' | ' | ||
Operating income | 168 | 165 | ||
Licensing [Member] | ' | ' | ||
Operating income by segment | ' | ' | ||
Operating income | 36 | 35 | ||
Operating Segments [Member] | ' | ' | ||
Operating income by segment | ' | ' | ||
Operating income | 384 | 407 | ||
Unallocated amount to segment [Member] | ' | ' | ||
Operating income by segment | ' | ' | ||
Unallocated corporate expenses | -136 | -147 | ||
Gain on acquisition of Chaps | 0 | 16 | [1] | |
Restructuring and other charges | -4 | [2] | 0 | |
Wholesale-Related [Member] | Unallocated amount to segment [Member] | ' | ' | ||
Operating income by segment | ' | ' | ||
Restructuring and other charges | -2 | ' | ||
Retail-Related [Member] | Unallocated amount to segment [Member] | ' | ' | ||
Operating income by segment | ' | ' | ||
Restructuring and other charges | ($2) | ' | ||
[1] | See Note 5 for further discussion of the gain on acquisition of Chaps. | |||
[2] | The three-month period ended JuneB 28, 2014 included certain unallocated restructuring charges, $2 million of which related to the Company's wholesale operations and $2 million to its retail operations (see Note 9). |
Segment_Information_Details_2
Segment Information (Details 2) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Jun. 28, 2014 | Jun. 29, 2013 |
Segment Reporting Information [Line Items] | ' | ' |
Depreciation and amortization | $69 | $60 |
Wholesale Segment [Member] | ' | ' |
Segment Reporting Information [Line Items] | ' | ' |
Depreciation and amortization | 17 | 16 |
Retail Segment [Member] | ' | ' |
Segment Reporting Information [Line Items] | ' | ' |
Depreciation and amortization | 34 | 29 |
Unallocated corporate expenses [Member] | ' | ' |
Segment Reporting Information [Line Items] | ' | ' |
Depreciation and amortization | $18 | $15 |
Segment_Information_Details_3
Segment Information (Details 3) (USD $) | 3 Months Ended | |||
In Millions, unless otherwise specified | Jun. 28, 2014 | Jun. 29, 2013 | ||
Revenues from External Customers [Line Items] | ' | ' | ||
Net revenues | $1,708 | $1,653 | ||
Americas [Member] | ' | ' | ||
Revenues from External Customers [Line Items] | ' | ' | ||
Net revenues | 1,139 | [1],[2] | 1,154 | [1],[2] |
Europe [Member] | ' | ' | ||
Revenues from External Customers [Line Items] | ' | ' | ||
Net revenues | 360 | [1] | 310 | [1] |
Asia [Member] | ' | ' | ||
Revenues from External Customers [Line Items] | ' | ' | ||
Net revenues | 209 | [1],[3] | 189 | [1],[3] |
U.S. [Member] | ' | ' | ||
Revenues from External Customers [Line Items] | ' | ' | ||
Net revenues | $1,084 | $1,105 | ||
[1] | 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 | |||
[2] | Includes the U.S., Canada, and Latin America. Net revenues earned in the U.S. during the three-month periods ended JuneB 28, 2014 and JuneB 29, 2013 were $1.084 billion and $1.105 billion, respectively. | |||
[3] | Also includes Australia and New Zealand. |
Segment_Information_Details_Te
Segment Information (Details Textual) | 3 Months Ended |
Jun. 28, 2014 | |
Segment | |
Segment Reporting [Abstract] | ' |
Number of reportable segments | 3 |
Additional_Financial_Informati2
Additional Financial Information (Details) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Jun. 28, 2014 | Jun. 29, 2013 |
Cash Interest and Taxes | ' | ' |
Cash paid for interest | $2 | $1 |
Cash paid for income taxes | 50 | 36 |
Additional Financial Information (Textual) [Abstract] | ' | ' |
Capitalization of fixed assets and recognition of related obligations, net | 38 | 48 |
Noncash capital expenditure | 19 | ' |
Gain on acquisition of Chaps | $0 | $16 |