Ralph Lauren
Annual Report 2018

Plain-text annual report

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549Form 10-K(Mark One)þANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended March 31, 2018oroTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934Commission File Number: 001-13057RALPH LAUREN CORPORATION(Exact name of registrant as specified in its charter)Delaware 13-2622036(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)650 Madison Avenue, New York, New York 10022(Address of principal executive offices) (Zip Code)(212) 318-7000(Registrant's telephone number, including area code)Securities registered pursuant to Section 12(b) of the Act:Title of Each Class Name of Each Exchange on Which RegisteredClass A Common Stock, $.01 par value New York Stock ExchangeSecurities registered pursuant to Section 12(g) of the Act: NoneIndicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.Yes þ No o Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.Yes o No þ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filingrequirements for the past 90 days.Yes þ No o Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data Filerequired to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorterperiod that the registrant was required to submit and post such files).Yes þ No o Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, andwill not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growthcompany. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.Large accelerated filer þ Accelerated filer oNon-accelerated filer o (Do not check if a smaller reporting company)Smaller reporting company o Emerging growth company oIf an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with anynew or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).Yes o No þ The aggregate market value of the registrant's voting common stock held by non-affiliates of the registrant was $4,868,476,408 as of September 29, 2017, the last businessday of the registrant's most recently completed second fiscal quarter based on the closing price of the common stock on the New York Stock Exchange.At May 18, 2018, 55,673,351 shares of the registrant's Class A common stock, $.01 par value and 25,881,276 shares of the registrant's Class B common stock, $.01 parvalue were outstanding.Part III incorporates information from certain portions of the registrant's definitive proxy statement to be filed with the Securities and Exchange Commission within 120 daysafter the fiscal year ended March 31, 2018. SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTSVarious statements in this Form 10-K or incorporated by reference into this Form 10-K, in future filings by us with the Securities and ExchangeCommission (the "SEC"), in our press releases, and in oral statements made from time to time by us or on our behalf constitute "forward-looking statements"within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on current expectations and are indicatedby words or phrases such as "anticipate," "estimate," "expect," "project," "we believe," "is or remains optimistic," "currently envisions," and similar words orphrases and involve known and unknown risks, uncertainties, and other factors which may cause actual results, performance, or achievements to be materiallydifferent from the future results, performance, or achievements expressed in or implied by such forward-looking statements. These risks, uncertainties, andother factors include, among others:•the loss of key personnel, including Mr. Ralph Lauren, or other changes in our executive and senior management team or to our operatingstructure, and our ability to effectively transfer knowledge during periods of transition;•our ability to successfully implement our long-term growth strategy and achieve anticipated operating enhancements and cost reductions fromour restructuring plans;•the impact to our business resulting from investments and other costs incurred in connection with the execution of our long-term growthstrategy, including restructuring-related charges, which may be dilutive to our earnings in the short term;•our ability to continue to expand or grow our business internationally and the impact of related changes in our customer, channel, andgeographic sales mix as a result;•our ability to open new retail stores, concession shops, and digital commerce sites in an effort to expand our direct-to-consumer presence;•the impact to our business resulting from changes in consumers' ability, willingness, or preferences to purchase premium lifestyle products thatwe offer for sale and our ability to forecast consumer demand, which could result in either a build-up or shortage of inventory;•our ability to continue to maintain our brand image and reputation and protect our trademarks;•our ability to effectively manage inventory levels and the increasing pressure on our margins in a highly promotional retail environment;•the impact to our business resulting from potential costs and obligations related to the early closure of our stores or termination of our long-term, non-cancellable leases;•the impact of economic, political, and other conditions on us, our customers, suppliers, vendors, and lenders;•our ability to secure our facilities and systems and those of our third-party service providers from, among other things, cybersecurity breaches,acts of vandalism, computer viruses, or similar Internet or email events;•our efforts to successfully enhance, upgrade, and/or transition our global information technology systems and digital commerce platform;•a variety of legal, regulatory, tax, political, and economic risks, including risks related to the importation and exportation of products, tariffs,and other trade barriers which our operations are currently subject to, or may become subject to as a result of potential changes in legislation,and other risks associated with our international operations, such as compliance with the Foreign Corrupt Practices Act or violations of otheranti-bribery and corruption laws prohibiting improper payments, and the burdens of complying with a variety of foreign laws and regulations,including tax laws, trade and labor restrictions, and related laws that may reduce the flexibility of our business;•changes in our tax obligations and effective tax rate due to a variety of other factors, including potential additional changes in U.S. or foreigntax laws and regulations, accounting rules, or the mix and level of earnings by jurisdiction in future periods that are not currently known oranticipated;•the impact to our business resulting from the recently enacted U.S. tax legislation commonly referred to as the Tax Cuts and Jobs Act, includingrelated changes to our tax obligations and effective tax rate in future periods, as well as the enactment-related charges that were recorded duringFiscal 2018 on a provisional basis based on a reasonable2 estimate and are subject to change, all of which could differ materially from our current expectations and/or investors' expectations;•the impact to our business resulting from the United Kingdom's decision to exit the European Union and the uncertainty surrounding the termsand conditions of such a withdrawal, as well as the related impact to global stock markets and currency exchange rates;•the impact to our business resulting from increases in the costs of raw materials, transportation, and labor;•our exposure to currency exchange rate fluctuations from both a transactional and translational perspective;•the potential impact to our business resulting from the financial difficulties of certain of our large wholesale customers, which may result inconsolidations, liquidations, restructurings, and other ownership changes in the retail industry, as well as other changes in the competitivemarketplace, including the introduction of new products or pricing changes by our competitors;•the potential impact on our operations and on our suppliers and customers resulting from natural or man-made disasters;•the impact to our business of events of unrest and instability that are currently taking place in certain parts of the world, as well as from anyterrorist action, retaliation, and the threat of further action or retaliation;•our ability to maintain our credit profile and ratings within the financial community;•our ability to access sources of liquidity to provide for our cash needs, including our debt obligations, tax obligations, payment of dividends,capital expenditures, and potential repurchases of our Class A common stock, as well as the ability of our customers, suppliers, vendors, andlenders to access sources of liquidity to provide for their own cash needs;•the potential impact to the trading prices of our securities if our Class A common stock share repurchase activity and/or cash dividend paymentsdiffer from investors' expectations;•our intention to introduce new products or enter into or renew alliances;•changes in the business of, and our relationships with, major department store customers and licensing partners; and•our ability to make certain strategic acquisitions and successfully integrate the acquired businesses into our existing operations.These forward-looking statements are based largely on our expectations and judgments and are subject to a number of risks and uncertainties, many ofwhich are unforeseeable and beyond our control. A detailed discussion of significant risk factors that have the potential to cause our actual results to differmaterially from our expectations is described in Part I of this Form 10-K under the heading of "Risk Factors." We undertake no obligation to publicly updateor revise any forward-looking statements, whether as a result of new information, future events, or otherwise.WEBSITE ACCESS TO COMPANY REPORTS AND OTHER INFORMATIONOur investor website is http://investor.ralphlauren.com. We were incorporated in June 1997 under the laws of the State of Delaware. Our AnnualReports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed with or furnished to the SECpursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 are available at our investor website under the caption "SEC Filings"promptly after we electronically file such materials with or furnish such materials to the SEC. Information relating to corporate governance at Ralph LaurenCorporation, including our Corporate Governance Policies, our Code of Business Conduct and Ethics for all directors, officers, and employees, our Code ofEthics for Principal Executive Officers and Senior Financial Officers, and information concerning our directors, Committees of the Board of Directors,including Committee charters, and transactions involving Ralph Lauren Corporation securities by directors and executive officers are available at ourwebsite under the captions "Corporate Governance" and "SEC Filings." Paper copies of these filings and corporate governance documents are available tostockholders without charge by written request to Investor Relations, Ralph Lauren Corporation, 625 Madison Avenue, New York, New York 10022.3 In this Form 10-K, references to "Ralph Lauren," "ourselves," "we," "our," "us," and the "Company" refer to Ralph Lauren Corporation and itssubsidiaries, unless the context indicates otherwise. Due to the collaborative and ongoing nature of our relationships with our licensees, such licensees aresometimes referred to in this Form 10-K as "licensing alliances." Our fiscal year ends on the Saturday closest to March 31. All references to "Fiscal 2019"represent the 52-week fiscal year ending March 30, 2019. All references to "Fiscal 2018" represent the 52-week fiscal year ended March 31, 2018. Allreferences to "Fiscal 2017" represent the 52-week fiscal year ended April 1, 2017. All references to "Fiscal 2016" represent the 53-week fiscal year endedApril 2, 2016.PART IItem 1.Business.GeneralFounded in 1967 by Mr. Ralph Lauren, we are a global leader in the design, marketing, and distribution of premium lifestyle products, includingapparel, accessories, home furnishings, and other licensed product categories. Our long-standing reputation and distinctive image have been developedacross an expanding number of products, brands, sales channels, and international markets. We believe that our global reach, breadth of product offerings,and multi-channel distribution are unique among luxury and apparel companies.We diversify our business by geography (North America, Europe, and Asia, among other regions) and channels of distribution (wholesale, retail, andlicensing). This allows us to maintain a dynamic balance as our operating results do not depend solely on the performance of any single geographic area orchannel of distribution. Our wholesale sales are made principally to major department stores and specialty stores around the world. We also sell directly toconsumers through our integrated retail channel, which includes our retail stores, concession-based shop-within-shops, and digital commerce operationsaround the world. In addition, we license to unrelated third parties for specified periods the right to operate retail stores and/or to use our various trademarksin connection with the manufacture and sale of designated products, such as certain apparel, eyewear, fragrances, and home furnishings.We organize our business into the following three reportable segments: North America, Europe, and Asia. In addition to these reportable segments, wealso have other non-reportable segments. See "Our Segments" for further discussion of our segment reporting structure.Our global reach is extensive, with merchandise available through our wholesale distribution channels at over 12,000 doors worldwide, the majority inspecialty stores, as well as through the digital commerce sites of many of our wholesale customers. We also sell directly to customers throughout the worldvia our 472 retail stores and 632 concession-based shop-within-shops, as well as through our own digital commerce sites and those of various third-partydigital partners. In addition to our directly-operated stores and shops, our international licensing partners operate 88 Ralph Lauren stores, 54 Ralph Laurenconcession shops, and 136 Club Monaco stores and shops.We continue to invest in our business. Over the past five fiscal years, we have invested approximately $1.723 billion for capital improvements,acquisitions, and ventures, primarily funded through strong operating cash flow. We also continue to return value to our shareholders through our commonstock share repurchases and payment of quarterly cash dividends. Over the past five fiscal years, the cost of shares of Class A common stock repurchasedpursuant to our common stock repurchase program was approximately $1.727 billion and dividends paid amounted to approximately $805 million.We have been controlled by the Lauren family since the founding of our Company. As of March 31, 2018, Mr. R. Lauren, or entities controlled by theLauren family, held approximately 82% of the voting power of the Company's outstanding common stock.4 Objectives and OpportunitiesWe believe that our size and the global scope of our operations provide us with design, sourcing, and distribution synergies across our differentbusinesses. Our core strengths include a portfolio of global premium lifestyle brands, a well-diversified global multi-channel distribution network, aninvestment philosophy supported by a strong balance sheet, and an experienced management team. Despite the various risks and uncertainties associatedwith the current global economic environment, as discussed further in Item 7 — "Management's Discussion and Analysis of Financial Condition and Resultsof Operations — Global Economic Conditions and Industry Trends," we believe our core strengths will allow us to execute our long-term growth strategy.We have developed a long-term growth strategy with the objective of delivering sustainable, profitable growth and long-term value creation forshareholders. Our strategy includes the following key strategic initiatives:•Elevating our brand through improved quality of sales, distribution, and product;•Evolving product, marketing, and shopping experience to increase reach and appeal with new consumers;•Expanding our digital and international presence; and•Working in new ways to drive productivity and agility.Recent DevelopmentsU.S. Tax ReformOn December 22, 2017, President Trump signed into law new tax legislation commonly referred to as the Tax Cuts and Jobs Act (the "TCJA"), whichbecame effective January 1, 2018. The TCJA significantly revised U.S. tax law by, among other provisions, lowering the U.S. federal statutory income tax ratefrom 35% to 21%, creating a territorial tax system that includes a one-time mandatory transition tax on previously deferred foreign earnings, and eliminatingor reducing certain income tax deductions.During Fiscal 2018, we recorded net charges of $221.4 million within our income tax provision in connection with the TCJA, of which $209.3 millionrelated to the mandatory transition tax, which we expect to pay over an eight-year period. These charges, which were recorded on a provisional basis aspermitted by SEC Staff Accounting Bulletin No. 118 ("SAB 118"), negatively impacted our effective tax rate by 4,520 basis points and lowered our dilutedearnings per share by $2.68 during Fiscal 2018. The provisional amounts were based on our present interpretations of the TCJA, current availableinformation, and assumptions about future events, and are subject to further refinement as additional information becomes available and further analyses arecompleted.Despite these enactment-related charges, we expect the TCJA will ultimately benefit our results of operations and financial condition in future periods,primarily due to the lower U.S. federal statutory income tax rate.Additionally, we reevaluated our permanent reinvestment assertion and determined that undistributed foreign earnings that were subject to the one-time mandatory transition tax were no longer considered to be permanently reinvested, effective December 31, 2017. In connection with this decision, werepatriated $252.0 million of cash to the U.S. from certain of our foreign subsidiaries during the fourth quarter of Fiscal 2018, and we repatriated an additional$400.0 million during the first quarter of Fiscal 2019.See Note 10 to the accompanying consolidated financial statements for additional discussion regarding the TCJA.Change in Chief Executive OfficerEffective May 2017, Mr. Stefan Larsson departed as the Company's President and Chief Executive Officer and as a member of our Board of Directors.In connection with Mr. Larsson's departure, we recorded cumulative other charges of $17.0 million, of which $5.6 million and $11.4 million were recordedduring Fiscal 2018 and Fiscal 2017, respectively. We do not expect to incur additional charges related to Mr. Larsson's departure. See Note 9 to ouraccompanying consolidated financial statements for further discussion of the charges recorded in connection with Mr. Larsson's departure.Subsequent to Mr. Larsson's departure, Mr. Patrice Louvet was appointed as the Company's new President and Chief Executive Officer and as a memberof our Board of Directors, effective July 2017.5 Way Forward PlanOn June 2, 2016, our Board of Directors approved a restructuring plan with the objective of delivering sustainable, profitable sales growth and long-term value creation for shareholders (the "Way Forward Plan"). We are refocusing on our core brands and evolving our product, marketing, and shoppingexperience to increase desirability and relevance. We are also evolving our operating model to enable sustainable, profitable sales growth by significantlyimproving quality of sales, reducing supply chain lead times, improving our sourcing, and executing a disciplined multi-channel distribution and expansionstrategy. As part of the Way Forward Plan, we are rightsizing our cost structure and implementing a return on investment-driven financial model to free upresources to invest in the brand and drive high-quality sales. The Way Forward Plan includes strengthening our leadership team and creating a more nimbleorganization by moving from an average of nine to six layers of management. The Way Forward Plan also includes the discontinuance of our Denim &Supply brand and the integration of our denim product offerings into our Polo Ralph Lauren brand. Collectively, these actions, which were substantiallycompleted during Fiscal 2017, resulted in a reduction in workforce and the closure of certain stores and shop-within-shops, as well as gross annualizedexpense savings of approximately $200 million.On March 30, 2017, our Board of Directors approved the following additional restructuring-related activities associated with the Way Forward Plan: (i)the restructuring of our in-house global digital commerce platform which was in development and shifting to a more cost-effective, flexible platform througha new agreement with Salesforce's Commerce Cloud, formerly known as Demandware; (ii) the closure of our Polo store at 711 Fifth Avenue in New York City;and (iii) the further streamlining of the organization and the execution of other key corporate actions in line with the Way Forward Plan. These actions, whichare expected to result in additional expense savings of approximately $140 million, are an important part of our efforts to achieve our stated objective toreturn to sustainable, profitable growth and invest in the future. These additional restructuring-related activities were largely completed during Fiscal 2018and resulted in a further reduction in workforce and the closure of certain corporate office and store locations. The remaining activities, which are primarilylease-related, are expected to be completed during Fiscal 2019.In connection with the Way Forward Plan, we currently expect to incur total estimated charges of approximately $770 million, comprised of cash-related restructuring charges of approximately $450 million and non-cash charges of approximately $320 million. Cumulative charges incurred sinceinception were $669.2 million, of which $102.8 million and $566.4 million were incurred during Fiscal 2018 and Fiscal 2017, respectively, and we expect toincur the remaining charges of approximately $100 million during Fiscal 2019. In addition to these charges, we also incurred an additional non-cash chargeof $155.2 million during Fiscal 2017 associated with the destruction of inventory out of current liquidation channels in line with our Way Forward Plan. SeeNotes 8 and 9 to our accompanying consolidated financial statements for detailed discussions of the charges recorded in connection with the Way ForwardPlan.Our Brands and ProductsOur products, which include apparel, accessories, and fragrance collections for men and women, as well as childrenswear and home furnishings,comprise one of the most widely recognized families of consumer brands. Reflecting a distinctive American perspective, we have been an innovator inaspirational lifestyle branding and believe that, under the direction of internationally renowned designer Mr. Ralph Lauren, we have had a considerableinfluence on the way people dress and the way that fashion is advertised throughout the world.We combine consumer insight with our design, marketing, and imaging skills to offer, along with our licensing alliances, broad lifestyle productcollections with a unified vision:•Apparel — Our apparel products include extensive collections of men's, women's, and children's clothing, which are sold under various brandnames, including Ralph Lauren Collection, Ralph Lauren Purple Label, Polo Ralph Lauren, Double RL, Lauren Ralph Lauren, Polo Golf RalphLauren, Ralph Lauren Golf, RLX Ralph Lauren, Polo Ralph Lauren Children, Chaps, and Club Monaco, among others;•Accessories — Our range of accessories encompasses men's, women's, and children's, including footwear, eyewear, watches, fashion and finejewelry, scarves, hats, gloves, umbrellas, and leather goods, including handbags, luggage, small leather goods, and belts, which are sold underthe Ralph Lauren Collection, Ralph Lauren Purple Label, Double RL, Polo Ralph Lauren, Lauren Ralph Lauren, Polo Ralph Lauren Children,Chaps, and Club Monaco;•Home — Our coordinated home products include bedding and bath products, furniture, fabric and wallpaper, lighting, tabletop, floorcovering,and giftware;6 •Fragrance — Our fragrance offerings capture the essence of Ralph Lauren's men's and women's brands with numerous labels, designed to appealto a variety of audiences. Women's fragrance products are sold under our Ralph Lauren Collection, Woman by Ralph Lauren, RomanceCollection, Ralph Collection, and Big Pony Women's brands. Men's fragrance products are sold under our Polo Blue, Safari, Purple Label, PoloRed, Polo Green, Polo Black, Polo Supreme, Polo Sport, and Big Pony Men's brands; and•Restaurants — Our restaurants translate Ralph Lauren's distinctive vision into places to gather with family and friends to enjoy fine food. Ourrestaurant concepts include The Polo Bar in New York City, RL Restaurant located in Chicago, Ralph's located in Paris, and our Ralph's Coffeeconcept, with locations in London and Hong Kong.Our lifestyle brand image is reinforced by our distribution through our stores and concession-based shop-within-shops, our wholesale channels ofdistribution, our global digital commerce sites, and our Ralph Lauren restaurants. We sell our products under the following key brand platforms:1.Ralph Lauren Luxury — Our Luxury group includes:Ralph Lauren Collection and Ralph Lauren Purple Label. The runway sets the stage for each season's Ralph Lauren Collection designs, whichincludes handmade evening gowns with exquisite detail and refined, hand-tailored suitings. For men, Ralph Lauren Purple Label offers refinedsuitings, custom tailored made-to-measure suits, and sophisticated sportswear, as well as benchmade footwear and made-to-order dress furnishings,accessories, and luggage. Ralph Lauren Collection and Ralph Lauren Purple Label are available in Ralph Lauren stores around the world, an exclusiveselection of the finest specialty stores, and online at our Ralph Lauren digital commerce sites, including RalphLauren.com.Double RL. Founded in 1993 and named after Ralph Lauren and his wife Ricky's "RRL" ranch in Colorado, Double RL offers a mix of selvedgedenim, vintage apparel, sportswear, and accessories, with roots in workwear and military gear. Double RL is available at Double RL stores, at selectRalph Lauren stores, and an exclusive selection of the finest specialty stores around the world, as well as online at our Ralph Lauren digital commercesites, including RalphLauren.com.Ralph Lauren Home. Ralph Lauren Home presents home furnishings and accessories that reflect the style and craftsmanship synonymous withthe name Ralph Lauren. Ralph Lauren Home includes furniture, bed and bath linens, china, crystal, silver, decorative accessories and gifts, as well aslighting, fabric, wallcovering, and floorcovering. Ralph Lauren Home offers exclusive luxury goods at select Ralph Lauren stores, home specialtystores, trade showrooms, and online at our Ralph Lauren digital commerce sites, including RalphLauren.com. The complete world of Ralph LaurenHome can be explored online at RalphLaurenHome.com.Ralph Lauren Watches and Fine Jewelry. We offer a premier collection of timepieces, which embody Ralph Lauren's passion for impeccablequality and exquisite design. We also offer premium collections of fine jewelry, which capture the glamour and craftsmanship of Ralph Lauren's mostluxurious designs. Ralph Lauren watches and fine jewelry are available at select Ralph Lauren stores and flagship locations around the world. Aselection of watches is also available online at RalphLauren.com and the finest watch retailers.2.Polo Ralph Lauren — The Polo Ralph Lauren group includes:Polo Ralph Lauren. Men's Polo combines Ivy League classics and time-honored English haberdashery with downtown styles and all-Americansporting looks in sportswear and tailored clothing. Women's Polo represents the epitome of classic and iconic American style with a modern and cooltwist. Polo's signature aesthetic includes our renowned polo player logo. Men's and Women's Polo apparel and accessories are available in Polo andRalph Lauren stores around the world, better department and specialty stores, and online at our Ralph Lauren digital commerce sites, includingRalphLauren.com.Polo Ralph Lauren Children. Polo Ralph Lauren Children is designed to reflect the timeless heritage and modern spirit of Ralph Lauren'scollections for men and women. Signature classics include iconic polo knit shirts and luxurious cashmere cable-knit sweaters. Polo Ralph LaurenChildren is available in a full range of sizes, from baby to girls 2-16 and boys 2-20. Polo Ralph Lauren Children can be found in select Polo and RalphLauren stores around the world, better department stores, and online at our Ralph Lauren digital commerce sites, including RalphLauren.com, as wellas certain of our retailer partner digital commerce sites.7 Polo Golf Ralph Lauren, Ralph Lauren Golf, and RLX Ralph Lauren. Tested and worn by top-ranked professional golfers, Polo Golf RalphLauren, Ralph Lauren Golf, and RLX Ralph Lauren for men and women define excellence in the world of golf. With a sharpened focus on the needs ofthe modern player but rooted in the rich design tradition of Ralph Lauren, the Golf collections combine state-of-the-art performance wear withluxurious finishing touches. The Polo and RLX Golf collections are available in select Polo stores, exclusive private clubs and resorts, and online atRalphLauren.com.Pink Pony. Established in 2000, the Pink Pony campaign is our worldwide initiative in the fight against cancer. In the U.S., a percentage of salesfrom Pink Pony products benefit the Pink Pony Fund of The Polo Ralph Lauren Foundation, which supports programs for early diagnosis, education,treatment, and research, and is dedicated to bringing patient navigation and quality cancer care to medically underserved communities.Internationally, a network of local cancer charities around the world benefit from the sale of Pink Pony products. Pink Pony consists of dual gendersportswear and accessories. Pink Pony items feature our iconic pink polo player – a symbol of our commitment to the fight against cancer. Pink Pony isavailable at select Polo and Ralph Lauren stores and online at our Ralph Lauren digital commerce sites, including RalphLauren.com. Pink Pony is alsoavailable at select Macy's stores and online at Macys.com.3.Lauren Ralph Lauren — Our Lauren group includes:Lauren Ralph Lauren. Lauren for women combines timeless style with modern femininity in a lifestyle collection of sportswear, denim, anddresses, as well as accessories and footwear at a more accessible price point. Lauren for women is available in select department stores around the worldand on-line at select digital commerce sites, including RalphLauren.com. Lauren for men offers a complete collection of men's tailored clothing,including suits, sport coats, dress shirts, dress pants, tuxedos, topcoats, and ties at a more accessible price point. Lauren for men is available at selectdepartment stores in North America and Europe.Lauren Home. Launched in 2017, the Lauren Home collection includes accessibly-priced, timeless bath and bedding designs, updated with afresh, modern spirit. The collection is built upon an assortment of essentials that is designed to be periodically augmented with trend-relevant colorsand patterns.4.Chaps — Launched in 1978 and celebrating its 40th anniversary, Chaps presents a vision of timeless, all-American style for men, women, children andhome. The complete lifestyle collection offers casual sportswear, workday essentials, tailored clothing, and occasion dresses. Chaps effortless andspirited style is available in over 2,000 doors across the U.S., Canada, Mexico, and China.5.Club Monaco — Founded in 1985, Club Monaco is a celebration of the individual. It designs and markets its own clothing and accessories for a newgeneration of women and men who value versatile, thoughtful design that can take them through every moment of life. Club Monaco apparel andaccessories are available at Club Monaco stores and select department stores in North America and around the world, as well as online atClubMonaco.com and ClubMonaco.ca.Our SegmentsWe organize our business into the following three reportable segments:•North America — Our North America segment, representing approximately 52% of our Fiscal 2018 net revenues, primarily consists of sales ofour Ralph Lauren branded products made through our wholesale and retail businesses in the U.S. and Canada, excluding Club Monaco. In NorthAmerica, our wholesale business is comprised primarily of sales to department stores, and to a lesser extent, specialty stores. Our retail businessin North America is comprised of our Ralph Lauren stores, our factory stores, and our digital commerce site, www.RalphLauren.com.•Europe — Our Europe segment, representing approximately 26% of our Fiscal 2018 net revenues, primarily consists of sales of our RalphLauren branded products made through our wholesale and retail businesses in Europe and the Middle East, excluding Club Monaco. In Europe,our wholesale business is comprised of a varying mix of sales to both department stores and specialty stores, depending on the country. Ourretail business in Europe is comprised of our Ralph Lauren stores, our factory stores, our concession-based shop-within-shops, and our variousdigital commerce sites.•Asia — Our Asia segment, representing approximately 15% of our Fiscal 2018 net revenues, primarily consists of sales of our Ralph Laurenbranded products made through our wholesale and retail businesses in Asia, Australia, and New Zealand. Our retail business in Asia is comprisedof our Ralph Lauren stores, our factory stores, and our8 concession-based shop-within-shops. In addition, we sell our products online through various third-party digital partner commerce sites. In Asia,our wholesale business is comprised primarily of sales to department stores, with related products distributed through shop-within-shops.No operating segments were aggregated to form our reportable segments. In addition to these reportable segments, we also have other non-reportablesegments, representing approximately 7% of our Fiscal 2018 net revenues, which primarily consist of (i) sales of Club Monaco branded products madethrough our retail businesses in the U.S., Canada, and Europe, and our licensing alliances in Europe and Asia, (ii) sales of Ralph Lauren branded productsmade through our wholesale business in Latin America, and (iii) royalty revenues earned through our global licensing alliances, excluding Club Monaco.This segment structure is consistent with how we establish our overall business strategy, allocate resources, and assess performance of our Company.Approximately 45% of our Fiscal 2018 net revenues were earned outside of the U.S. See Note 19 to the accompanying consolidated financialstatements for a summary of net revenues and operating income by segment, as well as net revenues and long-lived assets by geographic location.Our Wholesale BusinessOur wholesale business sells our products globally to leading upscale and certain mid-tier department stores, specialty stores, and golf and pro shops.We have continued to focus on elevating our brand by improving in-store product assortment and presentation, as well as full-price sell-throughs toconsumers. As of the end of Fiscal 2018, our wholesale products were sold through over 12,000 doors worldwide, with the majority in specialty stores. Ourproducts are also increasingly being sold through the digital commerce sites of many of our wholesale customers.The primary product offerings sold through our wholesale channels of distribution include apparel, accessories, and home furnishings. Our luxurybrands, including Ralph Lauren Collection and Ralph Lauren Purple Label, are distributed worldwide through a limited number of premier fashion retailers.In North America, our wholesale business is comprised primarily of sales to department stores, and to a lesser extent, specialty stores. In Europe, our wholesalebusiness is comprised of a varying mix of sales to both department stores and specialty stores, depending on the country. In Asia, our wholesale business iscomprised primarily of sales to department stores, with related products distributed through shop-within-shops. We also distribute our wholesale products tocertain licensed stores operated by our partners in Latin America, Asia, Europe, and the Middle East.We sell the majority of our excess and out-of-season products through secondary distribution channels worldwide, including our retail factory stores.Worldwide Wholesale Distribution ChannelsThe following table presents by segment the number of wholesale doors in our primary channels of distribution as of March 31, 2018 and April 1,2017: March 31, 2018 April 1, 2017North America 6,848 7,018Europe 4,928 5,690Asia 341 187Other non-reportable segments 109 171Total 12,226 13,066We have three key wholesale customers that generate significant sales volume. During Fiscal 2018, sales to our largest wholesale customer, Macy's,Inc. ("Macy's"), accounted for approximately 8% of our total net revenues. Further, during Fiscal 2018, sales to our three largest wholesale customers,including Macy's, accounted for approximately 19% of our total net revenues, as compared to approximately 21% during Fiscal 2017. Substantially all salesto our three largest wholesale customers related to our North America segment.Our products are sold primarily by our own sales forces. Our wholesale business maintains its primary showrooms in New York City. In addition, wemaintain regional showrooms in Bologna, Geneva, London, Madrid, Munich, Panama, Paris, and Stockholm.9 Shop-within-Shops. As a critical element of our distribution to department stores, we and our licensing partners utilize shop-within-shops to enhancebrand recognition, to permit more complete merchandising of our lines by the department stores, and to differentiate the presentation of our products.The following table presents by segment the number of shop-within-shops in our primary channels of distribution as of March 31, 2018 and April 1,2017: March 31, 2018 April 1, 2017North America 16,276 18,979Europe 5,302 6,164Asia 499 339Other non-reportable segments 311 372Total 22,388 25,854The size of our shop-within-shops ranges from approximately 50 to 9,200 square feet. Shop-within-shop fixed assets primarily include items such ascustomized freestanding fixtures, wall cases and components, decorative items, and flooring. We normally share in the cost of building out these shop-within-shops with our wholesale customers.Basic Stock Replenishment Program. Basic products such as knit shirts, chino pants, oxford cloth shirts, select accessories, and home products can beordered by our wholesale customers at any time through our basic stock replenishment program. We generally ship these products within two to five days oforder receipt.Our Retail BusinessOur retail business sells directly to customers throughout the world via our 472 retail stores and 632 concession-based shop-within-shops, totalingapproximately 3.8 million and 0.6 million square feet, respectively, as well as through our own digital commerce sites and those of various third-party digitalpartners. We operate our business using a global omni-channel retailing strategy that seeks to deliver an integrated shopping experience with a consistentmessage of our brands and products to our customers, regardless of whether they are shopping for our products in physical stores or online.Ralph Lauren StoresOur Ralph Lauren stores feature a broad range of apparel, accessories, watch and jewelry, fragrance, and home product assortments in an atmospherereflecting the distinctive attitude and image of the Ralph Lauren, Polo, and Double RL brands, including exclusive merchandise that is not sold indepartment stores. During Fiscal 2018, we opened 14 new Ralph Lauren stores and closed 12 stores. Our Ralph Lauren stores are primarily situated in majorupscale street locations and upscale regional malls, generally in large urban markets.The following table presents the number of Ralph Lauren stores by segment as of March 31, 2018: Ralph Lauren StoresNorth America 41Europe 19Asia 51Total 111Our eight flagship Ralph Lauren regional store locations showcase our iconic styles and products and demonstrate our most refined merchandisingtechniques. In addition to generating sales of our products, our worldwide Ralph Lauren stores establish, reinforce, and capitalize on the image of our brands.Our Ralph Lauren stores range in size from approximately 700 to 37,900 square feet.10 Factory StoresWe extend our reach to additional consumer groups through our 290 factory stores worldwide, which are principally located in major outlet centers.Our worldwide factory stores offer selections of our apparel, accessories, and fragrances. In addition to these product offerings, certain of our factory stores inNorth America offer home furnishings. During Fiscal 2018, we opened 22 new factory stores and closed 10 factory stores.The following table presents the number of factory stores by segment as of March 31, 2018: Factory StoresNorth America 174Europe 62Asia 54Total 290Our factory stores range in size from approximately 1,400 to 28,300 square feet. Factory stores obtain products from our suppliers, our productlicensing partners, and our other retail stores and digital commerce operations, and also serve as a secondary distribution channel for our excess and out-of-season products.Concession-based Shop-within-ShopsThe terms of trade for shop-within-shops are largely conducted on a concession basis, whereby inventory continues to be owned by us (not thedepartment store) until ultimate sale to the end consumer. The salespeople involved in the sales transactions are generally our employees and not those of thedepartment store.The following table presents the number of concession-based shop-within-shops by segment as of March 31, 2018: Concession-basedShop-within-ShopsNorth America 2Europe 25Asia 603Other non-reportable segments 2Total(a) 632 (a)Our concession-based shop-within-shops were located at approximately 295 retail locations.The size of our concession-based shop-within-shops ranges from approximately 100 to 3,300 square feet. We may share in the cost of building outcertain of these shop-within-shops with our department store partners.Club Monaco StoresOur Club Monaco stores feature fashion apparel and accessories for both men and women with clean and contemporary signature styles. During Fiscal2018, we opened one new Club Monaco store and closed nine stores. Our Club Monaco stores range in size from approximately 900 to 17,400 square feet.The following table presents the number of Club Monaco stores by geographic location as of March 31, 2018: Club Monaco StoresNorth America 67Europe 4Total(a) 71 (a)Our Club Monaco business has been aggregated with other non-reportable segments.11 Directly-Operated Digital Commerce WebsitesIn addition to our stores, our retail business sells products online in North America and Europe through our various directly-operated digital commercesites, which include www.RalphLauren.com and www.ClubMonaco.com, among others.Our Ralph Lauren digital commerce sites offer our customers access to a broad array of Ralph Lauren, Polo, and Double RL apparel, accessories, watchand jewelry, fragrance, and home product assortments, and reinforce the luxury image of our brands. While investing in digital commerce operations remainsa primary focus, it is an extension of our investment in the integrated omni-channel strategy used to operate our overall retail business, in which our digitalcommerce operations are interdependent with our physical stores.Our Club Monaco digital commerce sites offer our domestic and Canadian customers access to our global assortment of Club Monaco apparel andaccessories product lines, as well as select online exclusives.In addition to our directly-operated platforms, our retail business in Asia sells products online through various third-party digital partner commercesites.Our Licensing BusinessThrough licensing alliances, we combine our consumer insight, design, and marketing skills with the specific product or geographic competencies ofour licensing partners to create and build new businesses. We generally seek out licensing partners who are leaders in their respective markets, contribute themajority of the product development costs, provide the operational infrastructure required to support the business, and own the inventory. Our licensingbusiness has been aggregated with other non-reportable segments.Product LicensingWe grant our product licensees the right to manufacture and sell at wholesale specified categories of products under one or more of our trademarks.Each product licensing partner pays us royalties based upon its sales of our products, generally subject to a minimum royalty requirement for the right to useour trademarks and design services. In addition, our licensing partners may be required to allocate a portion of their revenues to advertising our products andsharing in the creative costs associated with these products. Larger allocations typically are required in connection with launches of new products or in newterritories. Our license agreements generally have one to five-year terms and may grant the licensees conditional renewal options.We work closely with all of our licensing partners to ensure that their products are developed, marketed, and distributed to reach the intendedconsumer and are presented consistently across product categories to convey the distinctive identity and lifestyle associated with our brands. Virtually allaspects of the design, production quality, packaging, merchandising, distribution, advertising, and promotion of Ralph Lauren products are subject to ourprior approval and continuing oversight. We perform a broader range of services for most of our Ralph Lauren Home licensing partners than we do for ourother licensing partners, including design, operating showrooms, marketing, and advertising.The following table lists our largest licensing agreements as of March 31, 2018. Except as noted in the table, these product licenses cover NorthAmerica only.Category Licensed Products Licensing PartnersMen's Apparel Underwear and Sleepwear Hanesbrands, Inc. (includes Japan) Chaps, Lauren, and Ralph Tailored Clothing Peerless Clothing International, Inc. Beauty Products Fragrances, Cosmetics, Color, and Skin Care L'Oreal S.A. (global) Accessories Eyewear Luxottica Group, S.p.A. (global) Home Bedding and Bath Ichida Co., Ltd. Utility and Blankets Hollander Sleep Products LLC and Ichida Co., Ltd. Fabric and Wallpaper P. Kaufmann, Inc.12 International LicensingWe believe that international markets offer additional opportunities for our iconic designs and lifestyle image. Our international licensing partnersacquire the right to sell, promote, market, and/or distribute various categories of our products in a given geographic area and source products from us, ourproduct licensing partners, and independent sources. The international licensees' rights may include the right to own and operate retail stores. As ofMarch 31, 2018, our international licensing partners operated 88 Ralph Lauren stores, 54 Ralph Lauren concession shops, and 136 Club Monaco stores andshops.Digital EcosystemInvesting in our digital ecosystem remains a primary focus and is a key component of our integrated global omni-channel strategy that spans acrossowned and partnered channels, both physical and digital. Our digital ecosystem is comprised of directly-operated platforms, wholesale partner websites,third-party digital pure players, and social commerce.Our directly-operated digital commerce sites represent our digital flagships, displaying the most elevated expression of our brands. The strategy for ourdigital flagships is to emphasize brand experience, develop digital content that drives deeper consumer engagement and conversion, as well as broaden ouromni-channel service offerings, such as pickup and return in store.Our products are also sold through the digital commerce sites of many of our wholesale customers. We collaborate with our key wholesale partners toleverage consumer insights to extend our reach and improve traffic conversion.We also sell products online through various third-party digital pure-play sites, which have a higher penetration of younger consumers. On many ofthese sites, we have created digital shop-in-shop environments with a consistent brand experience, tailored product stories, and an assortment that is carefullycurated by our merchants. We also partner closely with our pure-play customers on marketing events, as well as optimizing search and other data analysis todrive higher traffic and conversion for our brands.In connection with our digital commerce operations, we engage consumers through various digital and social media platforms, which are supportedthrough our collaboration with influencers who have an authentic connection to our brand.Seasonality of BusinessOur business is typically affected by seasonal trends, with higher levels of wholesale sales in our second and fourth fiscal quarters and higher retailsales in our second and third fiscal quarters. These trends result primarily from the timing of seasonal wholesale shipments and key vacation travel, back-to-school, and holiday shopping periods impacting our retail business. As a result of changes in our business, consumer spending patterns, and themacroeconomic environment, historical quarterly operating trends and working capital requirements may not be indicative of our future performance. Inaddition, fluctuations in sales, operating income, and cash flows in any fiscal quarter may be affected by other events affecting retail sales, such as changes inweather patterns.Working capital requirements vary throughout the year. Working capital requirements typically increase during the first half of the fiscal year asinventory builds to support peak shipping/selling periods and, accordingly, typically decrease during the second half of the fiscal year as inventory isshipped/sold. Cash provided by operating activities is typically higher in the second half of the fiscal year due to reduced working capital requirementsduring that period.Product DesignOur products reflect a timeless and innovative interpretation of American style with a strong international appeal. Our consistent emphasis on new anddistinctive design has been an important contributor to the prominence, strength, and reputation of the Ralph Lauren brands.Our Ralph Lauren products are designed by, and under the direction of, Mr. Ralph Lauren and our design staff. We form design teams around ourbrands and product categories to develop concepts, themes, and products for each brand and category. Through close collaboration with merchandising,sales, and production staff, these teams support all of our businesses in order to gain market information and other valuable input.13 Marketing and AdvertisingOur marketing and advertising programs communicate the themes and images of our brands and are integral to the success of our product offerings.The majority of our advertising program is created and executed by our in-house creative and advertising agency to ensure consistency of presentation,which is complemented by our marketing experts in each region who help to execute our international strategies.We create distinctive image advertising for our brands, conveying the particular message of each one within the context of the overall Ralph Laurenaesthetic. Advertisements generally portray a lifestyle rather than a specific item and include a variety of products offered by ourselves and, in some cases,our licensing partners. Our communication campaigns are increasingly being executed through digital and social media platforms to drive furtherengagement with the younger consumer, with a focus on influencers. In regards to influencers, we believe in investing in long-term relationships with thosewho have an authentic connection to our brand and influence the areas of culture that matter most to our audiences. We also continue to advertise throughprint and outdoor media, and, to a lesser extent, through television and cinema.Our digital advertising programs focus on high impact and innovative digital media outlets, which allow us to convey our key brand messages andlifestyle positioning. We also develop digital editorial initiatives that allow for deeper education and engagement around the Ralph Lauren lifestyle,including the RL Magazine, RL Style Guide, and a wide array of video and social media content. We deploy these marketing and advertising initiativesthrough online, mobile, email, and social media. Our digital commerce sites present the Ralph Lauren lifestyle online, while offering a broad array of ourapparel, accessories, and home product lines.Additionally, we advertise in consumer and trade publications, and participate in cooperative advertising on a shared cost basis with some of our retailand licensing partners. We also provide point-of-sale fixtures and signage to our wholesale customers to enhance the presentation of our products at theirretail locations. In addition, when our licensing partners are required to spend an amount equal to a percentage of their licensed product sales on advertising,we coordinate the advertising placement on their behalf. We believe our investments in shop-within-shop environments and retail stores, including ourglobal flagship locations, contribute to and enhance the themes of our brands to consumers.We also conduct a variety of public relations activities. Each spring and fall, our Ralph Lauren Women's Collection is presented during New YorkFashion Week. We also introduce each of the spring and fall menswear and womenswear collections at press presentations in major cities such as New YorkCity and Milan. These fashion events, in addition to celebrity red carpet dressing moments, model appearances, and events hosted in our stores andrestaurants, including The Polo Bar in New York City, generate extensive domestic and international media and social coverage.We continue to be the official outfitter for all on-court officials at both the Wimbledon and the U.S. Open tennis tournaments. Both tournamentsprovide worldwide exposure for our brand in a relevant lifestyle environment. We also continue to be the exclusive Official Parade Outfitter for the U.S.Olympic and Paralympic Teams, with the right to manufacture, distribute, advertise, promote, and sell products in the U.S. which replicate the Parade Outfitsand associated leisure wear. Most recently, we dressed Team U.S.A. for the 2018 Winter Olympic Games in PyeongChang, South Korea. As part of ourinvolvement with Team U.S.A., we have established a partnership with athletes serving as brand ambassadors and as the faces of our advertising, marketing,and public relations campaigns. Additionally, under our agreement with the United States Golf Association ("USGA"), we continue to be the official appareloutfitter for the USGA and the U.S. Open Championships and serve as the championship's largest on-site apparel supplier.We believe our partnerships with such prestigious global athletic events reinforce our brand's sporting heritage in a truly authentic way and serve toconnect our Company and brands to our consumers through their individual areas of passion.14 Sourcing, Production and QualityWe contract for the manufacture of our products and do not own or operate any production facilities. Over 500 different manufacturers worldwideproduce our apparel, accessories, and home products, with no one manufacturer providing more than 4% of our total production during Fiscal 2018. Wesource both finished products and raw materials. Raw materials include fabric, buttons, and other trim. Finished products consist of manufactured and fullyassembled products ready for shipment to our customers. In Fiscal 2018, over 97% of our products (by dollar value) were produced outside of the U.S.,primarily in Asia, Europe, and Latin America. See "Import Restrictions and Other Government Regulations" and Item 1A — "Risk Factors — Our business issubject to risks associated with importing products and the ability of our manufacturers to produce our goods on time and to our specifications."Most of our businesses must commit to the manufacturing of our garments before we sell finished goods, whether to wholly-owned retail stores or towholesale customers. We also must commit to the purchase of fabric from mills well in advance of our sales. If we overestimate our primary customers'demand for a particular product or the need for a particular fabric or yarn, we primarily sell the excess products or garments made from such fabric or yarn inour factory stores or through other secondary distribution channels.Suppliers operate under the close supervision of our global manufacturing division and buying agents headquartered in Asia, the Americas, the MiddleEast, and Europe. All products are produced according to our specifications and standards. Production and quality control staff in Asia, the Americas, theMiddle East, and Europe monitor manufacturing at supplier facilities in order to correct problems prior to shipment of the final product. Procedures have beenimplemented under our vendor certification and compliance programs so that quality assurance is reviewed early in the production process, allowingmerchandise to be received at the distribution facilities and shipped to customers with minimal interruption.CompetitionCompetition is very strong in the segments of the fashion and consumer product industries in which we operate. We compete with numerous designersand manufacturers of apparel and accessories, fragrances, and home furnishing products, both domestic and international. We also face increasingcompetition from companies selling our product categories through the Internet. Some of our competitors may be significantly larger and have substantiallygreater resources than us. We compete primarily on the basis of fashion, quality, value, and service, which depend on our ability to:•anticipate and respond to changing consumer demands in a timely manner;•create and maintain favorable brand recognition, loyalty, and reputation for quality;•develop and produce innovative, high-quality products that appeal to consumers of varying age groups;•competitively price our products and create an acceptable value proposition for consumers;•provide strong and effective marketing support;•obtain additional points of distribution and sufficient retail floor space, and effectively present our products to consumers;•attract consumer traffic to both retail stores and websites;•source raw materials at cost-effective prices;•anticipate and maintain proper inventory levels; and•ensure product availability and optimize supply chain and distribution efficiencies.See Item 1A — "Risk Factors — We face intense competition worldwide in the markets in which we operate."15 DistributionTo facilitate global distribution, our products are shipped from manufacturers to a network of distribution centers around the world for inspection,sorting, packing, and delivery to our retail locations and digital commerce and wholesale customers. This network includes the following primarydistribution facilities:Facility Location Geographic Region Serviced FacilityOwnershipGreensboro, North Carolina U.S. OwnedN. Pendleton Street, High Point, North Carolina U.S. OwnedNC Highway 66, High Point, North Carolina U.S. LeasedEagle Hill Drive, High Point, North Carolina U.S. LeasedChino Hills, California U.S. Third-partyMiami, Florida U.S. Third-partyToronto, Ontario Canada Third-partyParma, Italy Europe Third-partyYokohama, Japan Japan Third-partyBugok, South Korea South Korea LeasedTuen Mun, Hong Kong Greater China and Southeast Asia(a) Third-partyColón, Panama Latin America Third-party(a) Includes Australia, China, Hong Kong, Macau, Malaysia, New Zealand, the Philippines, Singapore, Taiwan, Thailand, and Vietnam.All facilities are designed to allow for high-density cube storage and value-added services, and utilize unit and carton tracking technology to facilitateprocess control and inventory management. The distribution network is managed through globally integrated information technology systems.Management Information SystemsOur management information systems make the design, marketing, manufacturing, importation, and distribution of our products more efficient byproviding, among other things:•comprehensive order processing;•production and design information;•accounting information; and•an enterprise view of information for our design, marketing, manufacturing, importing, and distribution functions.The point-of-sale registers, in conjunction with other systems in our stores, enable us to track inventory from store receipt to final sale on a real-timebasis. We believe our merchandising and financial systems, coupled with our point-of-sale registers and software programs, allow for efficient stockreplenishment, effective merchandise planning, and real-time inventory and sales accounting.In the U.S. and Europe, we utilize an automated replenishment system to facilitate the processing of basic stock replenishment orders from our retailbusiness and wholesale customers, the movement of goods through distribution channels, and the collection of information for planning and forecastingpurposes. In the U.S. and Europe, we also utilize an automated allocation system to facilitate the flow of inventory for our retail business.16 We are continually improving and upgrading our computer systems and software. For example, as part of a multi-year plan to integrate and upgradeour global systems and processes, we recently completed the migration of our European operations to SAP, the operating and financial reporting informationtechnology system used by our North America operations. We also transitioned our North America digital commerce operations to a third-party cloud-basedplatform during Fiscal 2018, and we have plans to transition our other digital commerce operations during Fiscal 2019 and beyond.See Item 1A — "Risk Factors — A data security or privacy breach could damage our reputation and our relationships with our customers oremployees, expose us to litigation risk, and adversely affect our business," "Risk Factors — Risks and uncertainties associated with the implementation ofinformation systems may negatively impact our business," and "Risk Factors — Our business could suffer if our computer systems and websites are disruptedor cease to operate effectively."Wholesale Credit ControlWe manage our own credit function. We sell our merchandise principally to major department stores and extend credit based on an evaluation of thewholesale customer's financial capacity and condition, usually without requiring collateral. We monitor credit levels and the financial condition of ourwholesale customers on a continuing basis to minimize credit risk. We do not factor or underwrite our accounts receivables, or maintain credit insurance tomanage the risk of bad debts. In North America, collection and deduction transactional activities are provided through a third-party service provider. SeeItem 1A — "Risk Factors — A substantial portion of our revenue is derived from a limited number of large wholesale customers. Our business could beadversely affected as a result of consolidations, liquidations, restructurings, other ownership changes in the retail industry, and/or any financial instabilityof our large wholesale customers."Wholesale BacklogWe generally receive wholesale orders approximately three to five months prior to the time the products are delivered to customers, with the exceptionof orders received through our basic stock replenishment program, which ship within two to five days of order receipt. Our wholesale orders are generallysubject to broad cancellation rights.The following table presents our wholesale backlog by segment as of March 31, 2018 and April 1, 2017: March 31, 2018 April 1, 2017 (billions)North America $0.6 $0.8Europe 0.4 0.4Total $1.0 $1.2We expect that substantially all of our backlog orders as of March 31, 2018 will be filled within the next fiscal year.The size of our order backlog depends upon a number of factors, including the timing of the market weeks for our particular lines during which asignificant percentage of our orders are received and the timing of shipments, which varies from year-to-year with consideration for holidays, consumertrends, concept plans, and the basic stock replenishment program's usage. As a consequence, a comparison of the size of our order backlog from period-to-period may not be meaningful, nor may it be indicative of eventual shipments.TrademarksWe own the RALPH LAUREN, POLO, POLO BY RALPH LAUREN DESIGN, and the famous polo player astride a horse trademarks in the U.S. andapproximately 120 countries worldwide. Other trademarks that we own include:•PURPLE LABEL;•DOUBLE RL;•RRL;17 •RLX;•LAUREN RALPH LAUREN;•PINK PONY;•LAUREN;•RALPH;•CHAPS;•CLUB MONACO; and•Various other trademarks, including those pertaining to fragrances and cosmetics.Mr. Ralph Lauren has the royalty-free right to use as trademarks RALPH LAUREN, DOUBLE RL, and RRL in perpetuity in connection with, amongother things, beef and living animals. The trademarks DOUBLE RL and RRL are currently used by the Double RL Company, an entity wholly owned byMr. R. Lauren. In addition, Mr. R. Lauren has the right to engage in personal projects involving film or theatrical productions (not including or relating to ourbusiness) through RRL Productions, Inc., a company wholly owned by Mr. R. Lauren. Any activity by these companies has no impact on us.Our trademarks are the subject of registrations and pending applications throughout the world for use on a variety of items of apparel, apparel-relatedproducts, home furnishings, restaurant and café services, online services and online publications, and beauty products, as well as in connection with retailservices, and we continue to expand our worldwide usage and registration of related trademarks. In general, trademarks remain valid and enforceable as longas the marks are used in connection with the related products and services and the required registration renewals are filed. We regard the license to use thetrademarks and our other proprietary rights in and to the trademarks as extremely valuable assets in marketing our products and, on a worldwide basis,vigorously seek to protect them against infringement. As a result of the appeal of our trademarks, our products have been the object of counterfeiting. Whilewe have a broad enforcement program which has been generally effective in protecting our intellectual property rights and limiting the sale of counterfeitproducts in the U.S. and in most major markets abroad, we face greater challenges with respect to enforcing our rights against trademark infringement incertain parts of Asia.In markets outside of the U.S., our rights to some or all of our trademarks may not be clearly established. In the course of our international expansion,we have experienced conflicts with various third parties who have acquired ownership rights in certain trademarks, including POLO and/or a representationof a Polo Player Design, which impede our use and registration of our principal trademarks. While such conflicts are common and may arise again from timeto time as we continue our international expansion, we have, in general, successfully resolved such conflicts in the past through both legal action andnegotiated settlements with third-party owners of the conflicting marks (see Item 1A — "Risk Factors — Our trademarks and other intellectual propertyrights may not be adequately protected outside the U.S." and Item 3 — "Legal Proceedings" for further discussion). Although we have not suffered anymaterial restraints or restrictions on doing business in desirable markets in the past, we cannot assure that significant impediments will not arise in the futureas we expand product offerings and introduce trademarks to new markets.Import Restrictions and Other Government RegulationsVirtually all of our merchandise imported into the Americas, Europe, Asia, Australia, and New Zealand is subject to duties. In addition, most of thecountries to which we ship could impose safeguard quotas and duties to protect their local industries from import surges that threaten to create marketdisruption. The U.S. and other countries may also unilaterally impose additional duties in response to a particular product being imported (from China orother countries) at unfairly traded prices in such increased quantities that would cause (or threaten) injury to the relevant domestic industry (generally knownas "anti-dumping" actions). If dumping is suspected in the U.S., the U.S. government may self-initiate a dumping case on behalf of the U.S. textile industrywhich could significantly affect our costs. Furthermore, additional duties, generally known as countervailing duties, can also be imposed by theU.S. government to offset subsidies provided by a foreign government to foreign manufacturers if the importation of such subsidized merchandise injures orthreatens to injure a U.S. industry.In addition, each of the countries in which our products are sold has laws and regulations covering imports. Because the U.S. and the other countries inwhich our products are manufactured and sold may, from time to time, impose new duties, tariffs, surcharges, or other import controls or restrictions, includingthe imposition of a "safeguard quota," or adjust presently prevailing duty or tariff rates or levels, we maintain a program of intensive monitoring of importrestrictions and opportunities. We seek to18 minimize our potential exposure to import-related risks through, among other measures, adjustments in product design and fabrication, shifts of productionamong countries and manufacturers, and through geographical diversification of our sources of supply.As almost all of our products are manufactured by foreign suppliers, the enactment of new legislation or the administration of current internationaltrade regulations or executive action affecting textile agreements, or changes in sourcing patterns could adversely affect our operations. See Item 1A — "RiskFactors — Our ability to conduct business globally may be affected by a variety of legal, regulatory, political, and economic risks" and "RiskFactors — Our business is subject to risks associated with importing products and the ability of our manufacturers to produce our goods on time and to ourspecifications."We are also subject to other international trade agreements, such as the North American Free Trade Agreement, the Central American Free TradeAgreement, the U.S.-Peru Free Trade Agreement, the U.S.-Jordan Free Trade Agreement, the U.S.-Korea Free Trade Agreement and other special tradepreference programs. A portion of our imported products are eligible for certain of these duty-advantaged programs. Apparel and other products sold by us areunder the jurisdiction of multiple governmental agencies, including, in the U.S., the Federal Trade Commission, the U.S. Fish and Wildlife Service, theEnvironmental Protection Agency, and the Consumer Products Safety Commission.Our products are also subject to regulation in the U.S. and other countries, including the U.S. Consumer Product Safety Improvement Act, which relateprincipally to product labeling, licensing requirements, and consumer product safety requirements and regulatory testing, particularly with respect toproducts used by children. Any failure to comply with such requirements could result in significant penalties and require us to recall products, which couldhave a material adverse effect on our business or operating results. We believe that we are in substantial compliance with these regulations, as well asapplicable federal, state, local, and foreign rules and regulations governing the discharge of materials hazardous to the environment. We do not anticipateany significant capital expenditures for environmental control matters either in the next fiscal year or in the near future. Our licensed products, licensingpartners, buying/sourcing agents, and the vendors and factories with which we contract for the manufacture and distribution of our products are also subjectto regulation. Our agreements require our licensing partners, buying/sourcing agents, vendors, and factories to operate in compliance with all applicable lawsand regulations, and we are not aware of any violations which could reasonably be expected to have a material adverse effect on our business or operatingresults.We are also subject to disclosure and reporting requirements, established under existing or new federal or state laws, such as the requirements toidentify the origin and existence of certain "conflict minerals" under the Dodd-Frank Wall Street Reform and Consumer Protection Act, and disclosures ofspecific actions to eradicate abusive labor practices in our supply chain under the California Transparency in Supply Chains Act. While we require oursuppliers to operate in compliance with all applicable laws and our operating guidelines which promote ethical and socially responsible business practices,any violation of labor, environmental, health, and safety or other laws, or any divergence by an independent supplier's labor practices from generallyaccepted industry standards, could damage our reputation, disrupt our sourcing capabilities, and increase the cost of doing business, adversely affecting ourresults of operations. See Item 1A — "Risk Factors — Our business could suffer if we fail to comply with labor laws or if one of our manufacturers fails touse acceptable labor or environmental practices."Although we have not suffered any material restriction from doing business in desirable markets in the past, we cannot assure that significantimpediments will not arise in the future as we expand product offerings and introduce additional trademarks to new markets.EmployeesAs of March 31, 2018, we had approximately 23,500 employees, comprised of approximately 12,800 full-time and approximately 10,700 part-timeemployees. Approximately 13,500 of our employees are located in the U.S. and approximately 10,000 are located in foreign countries. Approximately 25 ofour U.S. production employees in the womenswear business are members of Workers United (which was previously known as UNITE HERE) under anindustry association collective bargaining agreement, which our womenswear subsidiary has adopted. We consider our relations with both our union andnon-union employees to be good.19 Executive OfficersThe following are our current executive officers and their principal recent business experience:Ralph Lauren Age 78 Mr. Ralph Lauren founded our business in 1967 and, for five decades, has cultivated theiconography of America into a global lifestyle brand. He has been our Executive Chairman andChief Creative Officer since November 2015, and a director of the Company since prior to ourinitial public offering in 1997. He had previously been our Chairman and Chief ExecutiveOfficer since prior to our initial public offering in 1997 until November 2015. In addition, hewas previously a member of our Advisory Board or the Board of Directors of our predecessorssince their organization. Patrice Louvet Age 53 Mr. Louvet has served as our President and Chief Executive Officer, and a director of theCompany since July 2017. Prior to joining the Company, he served as the Group President,Global Beauty, of Procter & Gamble Co. ("P&G") since February 2015. Prior to that role, Mr.Louvet held successively senior leadership positions at P&G, including the roles of GroupPresident, Global Grooming (Gillette), and President of P&G's Global Prestige Business. Beforehe joined P&G, he served as a Naval Officer, Admiral Aide de Camp in the French Navy from1987 to 1989. Mr. Louvet graduated from École Supérieure de Commerce de Paris and receivedhis M.B.A. from the University of Illinois. He has served as a member of the board of directorsof Bacardi Limited since July 2012. Valérie Hermann Age 55 Ms. Hermann has been our President, Global Brands since September 2016, with responsibilityfor all aspects of the development of our global brand groups, including Ralph Lauren Luxury,Polo Ralph Lauren, Lauren, Chaps, and Ralph Lauren Home. She served as our Global BrandPresident of Luxury, Women's Collections, and World of Accessories from May 2016 throughSeptember 2016, and was our President of Luxury Collections from April 2014 through April2016. Ms. Hermann was President and Chief Executive Officer of Reed Krakoff Co. from April2011 through March 2014. From 2005 to 2011, she served as Chief Executive Officer of SaintLaurent Paris. Prior to that, Ms. Hermann held various positions at LVMH Moët HennessyLouis Vuitton, including Director of Women's Ready to Wear at Dior. David Lauren Age 46 Mr. David Lauren is our Chief Innovation Officer, Strategic Advisor to the CEO, and ViceChairman of the Board. He has served as our Chief Innovation Officer and Vice Chairman ofthe Board since October 2016. From November 2010 to October 2016, he served as ourExecutive Vice President of Global Advertising, Marketing and Communications. Prior to that,he served in numerous leadership roles at the Company with responsibility for advertising,marketing, and communications. He has been a director of the Company since August 2013.Mr. D. Lauren oversees the Company's innovation processes and capabilities to drive its brandstrength and financial performance across all channels. He has been instrumental in growingthe Company's global digital commerce business and pioneering our technology initiatives. Heserves on the board of trustees of the Ralph Lauren Center for Cancer Care and Prevention andthe board of directors of The National Museum of American History. Mr. D. Lauren is also theHead of The Polo Ralph Lauren Foundation. Before joining the Company in 2000, he wasEditor-In-Chief and President of Swing, a general interest publication for Generation X. Mr. D.Lauren is the son of Mr. R. Lauren. Jane Hamilton Nielsen Age 54 Ms. Nielsen has been our Chief Financial Officer since September 2016. She served as ChiefFinancial Officer of Coach, Inc. from September 2011 to August 2016. From 2009 to 2011, shewas Senior Vice President and Chief Financial Officer of PepsiCo Beverages Americas and theGlobal Nutrition Group, divisions of PepsiCo, Inc., with responsibility for all financialmanagement including financial reporting, performance management, capital allocation, andstrategic planning. Prior to that, Ms. Nielsen held various senior roles in finance at PepsiCo,Inc. and Pepsi Bottling Group starting in 1996. She also serves on the board of directors ofPinnacle Foods Inc. Ms. Nielsen received her M.B.A. from the Harvard Business School andB.A. from Smith College.20 Item 1A.Risk FactorsThere are risks associated with an investment in our securities. The following risk factors should be read carefully in connection with evaluating ourbusiness and the forward-looking statements contained in this Annual Report on Form 10-K. Any of the following risk factors could materially adverselyaffect our business, our prospects, our results of operations, our financial condition, our liquidity, the trading price of our securities, and/or the actualoutcome of matters as to which forward-looking statements are made in this report. Additional risks and uncertainties not currently known to us or that wecurrently view as immaterial may also materially adversely affect our business, results of operations, and financial condition in future periods or ifcircumstances change.The loss of the services of Mr. Ralph Lauren, members of our executive management team, or other key personnel could have a material adverse effecton our business.Mr. Ralph Lauren's leadership in the design and marketing areas of our business has been a critical element of our success since the inception of ourCompany. Mr. R. Lauren is instrumental to, and closely identified with, our brand that bears his name. Our ability to maintain our brand image and leveragethe goodwill associated with Mr. R. Lauren's name may be damaged if we were to lose his services. The death or disability of Mr. R. Lauren or other extendedor permanent loss of his services, or any negative market or industry perception with respect to him or arising from his loss, could have a material adverseeffect on our business, results of operations, and financial condition.We also depend on the service and management experience of other key executive officers and other members of senior management who havesubstantial experience and expertise in our industry and our business and have made significant contributions to our growth and success. Competition in ourindustry to attract and retain these employees is intense and is influenced by our reputation, our ability to offer competitive compensation and benefits, andeconomic conditions, among other factors. The loss of the services of any of our key executive officers or other members of senior management, or one ormore of our other key personnel, or the concurrent loss of several of these individuals or any negative public perception with respect to these individuals,could also have a material adverse effect on our business, results of operations, and financial condition.We are not protected by a material amount of key-man or similar life insurance covering our executive officers, including Mr. R. Lauren, or othermembers of senior management. We have entered into employment agreements with certain of our executive officers, but competition for experiencedexecutives in our industry is intense and the non-compete period with respect to certain of our executive officers could, in some circumstances in the event oftheir termination of employment with our Company, end prior to the employment term set forth in their employment agreements.Recent changes in our executive and senior management team, including the departure of Mr. Stefan Larsson and the appointment of Mr. PatriceLouvet, may be disruptive to, or cause uncertainty in, our business.Effective May 2017, Mr. Stefan Larsson departed as the Company's President and CEO and as a member of our Board of Directors. Subsequent to Mr.Larsson's departure, Mr. Patrice Louvet was appointed as the Company's new President and CEO and as a member of our Board of Directors, effective July2017. Our ability to continue to execute our growth strategy may be adversely affected or delayed by the uncertainty associated with this transition. Inaddition to Mr. Larsson's departure, certain other members of our executive and senior management team have departed in recent years, and we mayimplement other management and organizational changes in connection with our growth strategy. Any changes in our executive and senior managementteam may be disruptive to, or cause uncertainty in, our business and future strategic direction. The departure of certain key individuals and the failure toensure a smooth transition and effective transfer of knowledge involving senior employees could hinder or delay our strategic planning and execution, aswell as adversely affect our ability to attract and retain other experienced and talented employees. Any such disruption or uncertainty could have a materialadverse impact on our business, results of operations, and financial condition. Further, such disruption may hinder our ability to maintain an effective systemof internal controls and compliance with the requirements under the Sarbanes-Oxley Act of 2002.We cannot assure the successful implementation of our growth strategy.We have developed a long-term growth strategy with the objective of delivering sustainable, profitable growth and long-term value creation forshareholders, as described in Item 1 — "Business — Objectives and Opportunities." Our ability to successfully execute our growth strategy is subject tovarious risks and uncertainties, as described within this "Risk Factors" section of our Form 10-K.21 Although we believe that our growth strategy will lead to long-term growth in revenue and profitability, there can be no assurance regarding thetiming of or extent to which we will realize the anticipated benefits, if at all. Our failure to realize the anticipated benefits, which may be due to our inabilityto execute the various elements of our growth strategy, changes in consumer preferences, competition, economic conditions, and other risks described herein,could have a material adverse effect on our business, results of operations, and financial condition. Our failure could also result in the implementation ofadditional restructuring-related activities, which may be dilutive to our earnings in the short term.Achievement of our growth strategy may require investment in new capabilities, distribution channels, and technologies. These investments may resultin short-term costs without accompanying current revenues and, therefore, may be dilutive to our earnings in the short term. There can be no assuranceregarding the timing of or extent to which we will realize the anticipated benefits of these investments and other costs, if at all.We may not fully realize the expected cost savings and/or operating efficiencies from our restructuring plans.We have implemented restructuring plans to support key strategic initiatives, such as the Way Forward Plan, as described inItem 1 — "Business — Recent Developments." Although designed to deliver long-term sustainable growth, restructuring plans present significant potentialrisks that may impair our ability to achieve anticipated operating enhancements and/or cost reductions, or otherwise harm our business, including:•higher than anticipated costs in implementing planned workforce reductions, particularly in highly regulated locations outside the U.S.;•higher than anticipated lease termination and store closure costs (see "Our business is subject to risks associated with leasing real estate andother assets under long-term, non-cancellable leases");•failure to meet operational targets or customer requirements due to the loss of employees or inadequate transfer of knowledge;•failure to maintain adequate controls and procedures while executing, and subsequent to completing, our restructuring plans;•diversion of management attention and resources from ongoing business activities and/or a decrease in employee morale;•attrition beyond any planned reduction in workforce; and•damage to our reputation and brand image due to our restructuring-related activities, including the closure of certain of our stores.If we are not successful in implementing and managing our restructuring plans, we may not be able to achieve targeted operating enhancements, salesgrowth, and/or cost reductions, which could adversely impact our business, results of operations, and financial condition. Our failure to achieve targetedresults could also lead to the implementation of additional restructuring-related activities, which may be dilutive to our earnings in the short term.We may not be successful in the expansion of our multi-channel distribution network.Implementation of our growth strategy involves the continuation and expansion of our multi-channel distribution network, including withininternational markets such as China, which is subject to many factors, including, but not limited to, our ability to:•identify new or underpenetrated markets where our products and brand will be accepted by consumers;•attract customers, particularly in new markets;•identify desirable freestanding and department store locations, the availability of which may be out of our control;•negotiate acceptable lease terms, including desired tenant improvement allowances;•efficiently and cost effectively build-out stores and shop-within-shop locations;•source sufficient inventory levels to meet the needs of the new stores and shop-within-shops;22 •hire, train, and retain competent store personnel; and•integrate new stores and shop-within-shops into our existing systems and operations.Any of these challenges could delay or otherwise prevent us from successfully executing our distribution expansion strategy. There can be noassurance that our new stores and shop-within-shops will be successful and profitable or if the capital costs associated with the build-out of such newlocations will be recovered. Further, entry into new markets may bring us into competition with new or existing competitors that have a more establishedmarket presence than us or other competitive advantages. Other risks related to our international expansion plans include general economic conditions inspecific countries or markets, changes in diplomatic and trade relationships, political instability, and foreign government regulation, among other risksdescribed herein. If our expansion plans are unsuccessful or do not deliver an appropriate return on our investments, our business, results of operations, andfinancial condition could be adversely affected.The success of our business also depends on our ability to continue to maintain, enhance, and expand our digital footprint and capabilities. Consumersare increasingly shopping online using computers, smartphones, tablets, and other devices. Any failure on our part, or on the part of our third party digitalpartners, to provide attractive, reliable, secure, and user-friendly digital commerce platforms could negatively impact our customers' shopping experienceresulting in reduced website traffic, diminished loyalty to our brands, and lost sales. In addition, as we continue to expand and increase the global presence ofour digital commerce business, sales from our brick and mortar stores and wholesale channels of distribution in areas where digital commerce sites areintroduced may decline due to changes in consumer shopping habits and cannibalization.The success of our business depends on our ability to respond to constantly changing fashion and retail trends and consumer demands in a timelymanner, develop products that resonate with our existing customers and attract new customers, and provide a seamless shopping experience to ourcustomers.The industries in which we operate have historically been subject to rapidly changing fashion trends and consumer preferences. Our success dependsin large part on our ability to originate and define fashion product and home product trends, as well as to anticipate, gauge, and react to changing consumerdemands in a timely manner. Our products must appeal to a broad range of consumers worldwide whose preferences cannot be predicted with certainty andare subject to rapid change, influenced by fashion trends, current economic conditions, and weather conditions, among other factors. This issue is furthercompounded by the increasing use of digital and social media by consumers and the speed by which information and opinions are shared across the globe.We cannot assure that we will be able to continue to develop appealing styles or successfully meet constantly changing consumer demands in the future. Inaddition, we cannot assure that any new products or brands that we introduce will be successfully received by consumers. Any failure on our part toanticipate, identify, and respond effectively to changing consumer demands and fashion trends could adversely affect retail and consumer acceptance of ourproducts and leave us with a substantial amount of unsold inventory or missed opportunities. Conversely, if we underestimate consumer demand for ourproducts or if manufacturers fail to supply quality products in a timely manner, we may experience inventory shortages. Any of these outcomes could have amaterial adverse effect on our business, results of operations, and financial condition. For a discussion of risks related to our inventory management, see "Ourprofitability may decline if we are unable to effectively manage inventory or as a result of increasing pressure on margins."Our marketing and advertising programs are integral to the success of our product offerings and on our ability to attract new customers and retainexisting customers. Our communication campaigns are increasingly being executed through digital and social media platforms to drive further engagementwith the younger consumer, with a focus on influencers. However, we cannot assure that our marketing and advertising programs will be successful or appealto consumers.The success of our business also depends on our ability to continue to develop and maintain a reliable omni-channel experience for our customers. Ourbusiness has evolved from an in-store experience to a shopping experience through multiple technologies, including computers, smartphones, tablets, andother devices, as our customers have become increasingly technologically savvy. We are increasingly using digital and social media platforms to interactwith customers and as a means to enhance their shopping experience. If we are unable to develop and continuously improve our customer-facingtechnologies, we may not be able to provide a convenient and consistent experience to our customers regardless of the sales channel. This could negativelyaffect our ability to compete with other retailers and result in diminished loyalty to our brands, which could adversely impact our business, results ofoperations, and financial condition.We have also implemented, and expect to continue to implement, new store design concepts as part of our growth strategy. There can be no assurancethat any of our new store designs will resonate with customers or otherwise achieve the desired sales and profitability measures necessary to recover ourinitial capital investments. If we are unable to successfully develop new store designs, or if customers are not receptive to the design layout or visualmerchandising, our business, results of operations, and23 financial condition could be adversely affected. In addition, the failure of new store designs to achieve acceptable results could lead to our decision to close astore prior to the lease expiration date. For additional discussion of risks related to the early termination of our leases, see "Our business is subject to risksassociated with leasing real estate and other assets under long-term, non-cancellable leases."The success of our business depends on our ability to retain the value and reputation of our brands.Our success depends on the value and reputation of our brands and our ability to consistently anticipate, identify, and respond to customers' demands,preferences, and fashion trends in the design, pricing, and production of our products, including the preference for certain products to be manufactured in theU.S. As the Ralph Lauren name is integral to our business, any negative publicity regarding Mr. R. Lauren or our Company, especially through social mediawhich accelerates and increases the potential scope of negative publicity, could negatively impact the image of our brands with our customers and result indiminished loyalty to our brands, even if the subject of such publicity is unverified or inaccurate. Additionally, our failure to comply with ethical, social,product safety, labor, health, environmental or other standards and regulations could damage the reputation of our brands and lead to adverse consumeractions, as well as expose us to government enforcement action and/or private litigation. Even if we react appropriately to negative publicity, our customers'perception of our brand image and our reputation could be negatively impacted. Any failure on our part to retain the value and reputation of brands couldadversely impact our business, results of operations, and financial condition.We face intense competition worldwide in the markets in which we operate.We face increasing competition from companies selling apparel, accessories, home, and other of our product categories through the Internet. Althoughwe sell our products through the Internet, increased competition and promotional activity in the worldwide apparel, accessory, and home product industriesfrom Internet-based competitors could reduce our sales, prices, and margins and adversely affect our business, results of operations, and financial condition.We also face intense competition from other domestic and foreign fashion-oriented apparel, footwear, accessory, and casual apparel producers that sellproducts through brick and mortar stores and wholesale and licensing channels. We compete with these companies primarily on the basis of:•anticipating and responding in a timely fashion to changing consumer demands and shopping preferences, including the increasing shift todigital brand engagement, social media communications, and online shopping;•creating and maintaining favorable brand recognition, loyalty, and a reputation for quality;•developing and producing innovative, high-quality products in sizes, colors, and styles that appeal to consumers of varying age groups;•competitively pricing our products and creating an acceptable value proposition for consumers;•providing strong and effective marketing support;•obtaining sufficient retail floor space and effective presentation of our products at retail stores;•attracting consumer traffic to both retail stores and websites;•sourcing raw materials at cost-effective prices;•anticipating and maintaining proper inventory levels;•ensuring product availability and optimizing supply chain and distribution efficiencies with third-party manufacturers and retailers;•recruiting and retaining key employees;•maintaining and growing market share; and•protecting our intellectual property.Some of our competitors may be significantly larger and more diversified and may have greater financial, marketing, and distribution resources, moredesirable store locations, and/or greater digital commerce presence than us, among other competitive advantages. Such competitive advantages may enablethem to better withstand unfavorable economic conditions, compete more effectively on the basis of price and production, and/or more quickly respond torapidly changing fashion trends and consumer24 demands than us. In addition, technological advances and the retail industry's low barriers to entry allow for the introduction of new competitors andproducts at a rapid pace.Any increased competition, or our failure to adequately address any of these competitive factors, could result in reduced market share or sales, whichcould adversely affect our business, results of operations, and financial condition.Our profitability may decline if we are unable to effectively manage inventory or as a result of increasing pressure on margins.We have implemented key strategic initiatives designed to optimize our inventory levels and improve the efficiency and responsiveness of our supplychain. Although we have shortened lead times for the design, sourcing, and production of certain of our product lines, we expect to continue to place orderswith our vendors for the majority of our products in advance of the related selling season. As a result, we are vulnerable to changes in consumer preferencesand demand and pricing shifts. Our failure to continue to shorten lead times or to correctly anticipate consumer preferences and demand could result in thebuild-up of excess inventory. If that occurs, we may be forced to rely on less preferred distribution channels, markdowns, promotional sales, destruction, ordonations to dispose of excess, slow-moving inventory, which may negatively impact our overall profitability and/or impair the image of our brands.Conversely, if we underestimate consumer demand for our products or if manufacturers fail to supply quality products in a timely manner, we may experienceinventory shortages, which may negatively impact customer relationships, diminish brand loyalty, and result in lost sales. Any of these outcomes could havea material adverse effect on our business, results of operations, and financial condition.Additionally, our industry is subject to significant pricing pressure caused by many factors, including intense competition and a highly promotionalretail environment, consolidation in the retail industry, pressure from retailers to reduce the costs of products, and changes in consumer spending patterns.Although we have reduced our promotional activity in connection with our quality of sales initiatives, these factors may cause us to reduce our sales prices toretailers and consumers, which could cause our gross margin to decline if we are unable to appropriately manage inventory levels and/or otherwise offsetprice reductions with comparable reductions in our costs. If our sales prices decline and we fail to sufficiently reduce our product costs or operating expenses,our profitability will decline. This could have a material adverse effect on our business, results of operations, and financial condition. In addition, changes inour customer, channel, and geographic sales mix could have a negative impact on our profitability.Our business is subject to risks associated with leasing real estate and other assets under long-term, non-cancellable leases.We generally operate most of our retail stores and corporate facilities under long-term, non-cancellable leasing arrangements. Our retail store leasestypically require us to make minimum rental payments, and often contingent rental payments based upon sales. In addition, our leases generally require us topay our proportionate share of the cost of insurance, taxes, maintenance, and utilities. We generally cannot cancel our leases at our option. If we decide toclose a store, or if we decide to downsize, consolidate, or relocate any of our corporate facilities, we may be required to record an impairment charge and/orexit costs associated with the disposal of the store or corporate facility. In addition, we may remain obligated under the applicable lease for, among otherthings, payment of the base rent for the remaining lease term, even after the space is exited. Such costs and obligations related to the early closure of ourstores or termination of our leases, such as the recent closing of our Polo store at 711 Fifth Avenue in New York City, could have a material adverse effect onour business, results of operations, and financial condition. In addition, as each of our leases naturally expires, we may be unable to negotiate renewals, eitheron commercially acceptable terms or at all, which could lead store closures resulting in lost sales.Economic, political, and other conditions may adversely affect the level of consumer purchases of discretionary items and luxury retail products,including our products.The industries in which we operate are cyclical. Many economic and other factors outside of our control affect the level of consumer spending in theapparel, cosmetic, fragrance, accessory, jewelry, watch, and home product industries, including, among others:•actual and perceived economic conditions;•employment levels and wage rates;•stock market performance;•inflation;•interest rates;25 •foreign currency exchange rates;•the housing market;•consumer debt levels;•the availability of consumer credit;•commodity prices, including fuel and energy costs;•taxation;•consumer confidence in future economic conditions;•general domestic and international political conditions;•the threat, outbreak, or escalation of terrorism, military conflicts, or other hostilities; and•weather conditions.Consumer purchases of discretionary items and luxury retail products, including our products, tend to decline during recessionary periods and at othertimes when disposable income is lower. Unfavorable economic conditions and other factors may also reduce consumers' willingness and ability to travel tomajor cities and vacation destinations in which our stores are located. Further, consumers may prefer to spend more of their discretionary income on"experiences," such as dining and entertainment, over consumer goods. A downturn or an uncertain outlook in the economies in which we, or our wholesaleand licensing partners, sell our products may materially adversely affect our business, results of operations, and financial condition. SeeItem 7 — "Management's Discussion and Analysis of Financial Condition and Results of Operations — Global Economic Conditions and Industry Trends"for further discussion.A data security or privacy breach could damage our reputation and our relationships with our customers or employees, expose us to litigation risk, andadversely affect our business.We are dependent on information technology systems and networks, including the Internet, for a significant portion of our direct-to-consumer sales,including our digital commerce operations and retail business credit card transaction authorization and processing. We are also responsible for storing datarelating to our customers and employees and rely on third parties for the operation of our digital commerce websites and for the various social media toolsand websites we use as part of our marketing strategy. In our normal course of business, we often collect, retain, and transmit certain sensitive and confidentialcustomer information, including credit card information, over public networks. There is significant concern by consumers, employees, and lawmakers alikeover the security of personal information transmitted over the Internet, consumer identity theft, and user privacy, as cyber-criminals are becomingincreasingly more sophisticated in their attempts to gain unauthorized access to computer systems and confidential or sensitive data.We have a longstanding information security risk program committed to regular risk management practices surrounding the protection of confidentialdata. This program includes various technical controls, including security monitoring, data leakage protection, network segmentation and access controlsaround the computer resources that house confidential or sensitive data. We have also implemented employee awareness training programs around phishing,malware, and other cyber risks. We continually evaluate the security environment surrounding the handling and control of our critical data, especially theprivate data we receive from our customers, employees and partners, and have instituted additional measures to help protect us from system intrusion or databreaches. Additionally, we have purchased network security and cyber liability insurance in order to provide a level of financial protection, should a databreach occur.Despite the security measures we currently have in place, our facilities and systems and those of our third-party service providers may be vulnerable tosecurity breaches, acts of vandalism, phishing attacks, computer viruses, misplaced or lost data, programming and/or human errors, or other Internet or emailevents. The increased use of smartphones, tablets, and other devices may also heighten these and other operational risks. The retail industry in particularcontinues to be the target of many cyber-attacks, which are becoming increasingly more difficult to anticipate and prevent due to their rapidly evolvingnature. The technology we use to protect our systems from being breached or compromised could become outdated as a result of advances in computercapabilities or other technological developments. Additionally, measures we implement to protect our computer systems against cyber-attacks may makethem harder to use or reduce the speed at which they operate, which in turn could negatively impact our customers' shopping experience resulting in reducedwebsite traffic, diminished loyalty to our brands, and lost sales.26 Any perceived or actual electronic or physical security breach involving the misappropriation, loss, or other unauthorized disclosure of confidential orpersonally identifiable information, including penetration of our network security, whether by us or by a third party, could disrupt our business, severelydamage our reputation and our relationships with our customers or employees, expose us to risks of litigation, significant fines and penalties, and liability,and result in deterioration in our customers' and employees' confidence in us, and adversely affect our business, results of operations, and financial condition.Since we do not control third-party service providers and cannot guarantee that no electronic or physical computer break-ins and security breaches will occurin the future, any perceived or actual unauthorized disclosure of personally identifiable information regarding our employees, customers or website visitorscould harm our reputation and credibility, result in lost sales, impair our ability to attract website visitors, and/or reduce our ability to attract and retainemployees and customers. As these threats develop and grow, we may find it necessary to make significant further investments to protect data and ourinfrastructure, including the implementation of new computer systems or upgrades to existing systems, deployment of additional personnel and protection-related technologies, engagement of third-party consultants, and training of employees. In addition, as the regulatory environment relating to informationsecurity and privacy is becoming increasingly more demanding, we may also incur significant costs in complying with the various applicable state, federal,and foreign laws regarding protection of, and unauthorized disclosure of, personal information.Risks and uncertainties associated with the implementation of information systems may negatively impact our business.We are continually improving and upgrading our computer systems and software. For example, as part of a multi-year plan to integrate and upgradeour global systems and processes, we recently completed the migration of our European operations to SAP, the operating and financial reporting informationtechnology system used by our North America operations. We also transitioned our North America digital commerce operations to a third-party cloud-basedplatform during Fiscal 2018, and we have plans to transition our other digital commerce operations during Fiscal 2019 and beyond.Implementation of new information systems, such as the global operating and financial reporting system recently implemented, or the transition to anew digital commerce platform, involves risks and uncertainties. Any disruptions, delays, or deficiencies in the design, implementation, or transition of suchsystems could result in increased costs, disruptions in the sourcing, sale, and shipment of our product, delays in the collection of cash from our customers,and/or adversely affect our ability to accurately report our financial results in a timely manner, all of which could materially adversely affect our business,results of operations, and financial condition. For additional discussion of risks related to our information systems, see "Our business could suffer if ourcomputer systems and websites are disrupted or cease to operate effectively."Our business could suffer if our computer systems and websites are disrupted or cease to operate effectively.We are dependent on our computer systems to record and process transactions and manage and operate our business, including in designing,marketing, manufacturing, importing, tracking, and distributing our products, processing payments, accounting for and reporting financial results, andmanaging our employees and employee benefit programs. We also utilize an automated replenishment system to facilitate the processing of basicreplenishment orders from our retail business and our wholesale customers, the movement of goods through distribution channels, and the collection ofinformation for planning and forecasting. In addition, we have digital commerce and other informational Internet websites in North America, Europe, andAsia, including Australia and New Zealand, and have plans for additional digital commerce sites in the future. Given the complexity of our business and thesignificant number of transactions that we engage in on a daily basis, it is imperative that we maintain uninterrupted operation of our computer hardware andsoftware systems. Despite our preventative efforts, our systems are vulnerable to damage or interruption from, among other things, security breaches,computer viruses, technical malfunctions, inadequate system capacity, power outages, natural disasters, and usage errors by our employees or third-partyconsultants. If our information technology systems become damaged or otherwise cease to function properly, we may have to make significant investments torepair or replace them. Additionally, confidential or sensitive data related to our customers or employees could be lost or compromised. Any materialdisruptions in our information technology systems could have a material adverse effect on our business, results of operations, and financial condition.Our ability to conduct business globally may be affected by a variety of legal, regulatory, political, and economic risks.Our ability to capitalize on growth in new international markets and to maintain our current level of operations in our existing markets is subject tocertain risks associated with operating in various locations around the globe. These include, but are not limited to:•complying with a variety of U.S. and foreign laws and regulations, including, but not limited to, trade, labor, and product safety tradingrestrictions, as well as the Foreign Corrupt Practices Act, which prohibits U.S. companies from making improper payments to foreign officials forthe purpose of obtaining or retaining business, and similar27 foreign country laws, such as the U.K. Bribery Act, which prohibits U.K. and related companies from any form of bribery;•adapting to local customs and culture;•unexpected changes in laws, judicial processes, or regulatory requirements;•the imposition of additional duties, tariffs, taxes, and other charges or other barriers to trade;•changes in diplomatic and trade relationships;•political instability and terrorist attacks; and•general economic fluctuations in specific countries or markets.Changes in regulatory, geopolitical, social, economic, or monetary policies and other factors may have a material adverse effect on our business in thefuture, or may require us to exit a particular market or significantly modify our current business practices. For example, there are growing concerns regardingtrade relations between the U.S. and China, as both countries recently indicated their intention to impose significant tariffs on the importation of certainproduct categories. Although the U.S. has not proposed new tariffs on apparel-related imports, it had indicated that it was considering expanding the productcategories that would be subject to new tariffs. As approximately one-third of our products are sourced from China, the U.S.'s imposition of new tariffs onapparel or other goods imported from China could have a material adverse effect on our cost of sales and profitability. Although we are actively reviewingoptions to mitigate this risk, including diverting production to other countries, there can be no assurance that we will be able to offset any increased coststhrough pricing actions or other means. For a discussion of risks associated with the importation of products, see "Our business is subject to risks associatedwith importing products and the ability of our manufacturers to produce our goods on time and to our specifications."Our business could also be impacted by changes to the tax laws and regulations in the countries where we operate. For example, the Organisation forEconomic Co-operation and Development, which represents a coalition of member countries, is supporting changes to numerous long-standing tax principlesthrough its Base Erosion and Profit Shifting project, which is focused on a number of issues, including the shifting of profits among affiliated entities locatedin different tax jurisdictions. Taxing authorities of certain foreign jurisdictions may also decide to modify existing tax laws in response to the recentlyenacted U.S. tax legislation commonly referred to as the TCJA, as described in Item 1 — "Business — Recent Developments." We cannot predict which, if any,of these items will be enacted into law or the resulting impact any such enactment will have on our consolidated financial statements. However, if newlegislation were enacted, it could have a material adverse effect on our business, results of operations, and financial condition. For a discussion of risksrelated to the TCJA, see "The impact to our business of recently enacted U.S. tax legislation could differ materially from our current estimates."Additionally, in June 2016, voters in the United Kingdom approved an advisory referendum to withdraw from the European Union, commonly referredto as "Brexit." Subsequently, in March 2017, the United Kingdom's government invoked Article 50 of the Treaty on European Union, which formallytriggered the two-year negotiation process to exit the European Union. Negotiations to determine the United Kingdom's future relationship with theEuropean Union, including terms of trade, are complex and there can be no assurance regarding the terms or timing of any such arrangements. A withdrawalcould significantly disrupt the free movement of goods, services, and people between the United Kingdom and the European Union, and result in increasedlegal and regulatory complexities, as well as potential higher costs of conducting business in Europe. The uncertainty surrounding the terms of the UnitedKingdom's withdrawal and its consequences could adversely impact consumer and investor confidence, and the level of consumer purchases of discretionaryitems and luxury retail products, including our products. Any of these effects, among others, could materially adversely affect our business, results ofoperations, and financial condition. Brexit has also contributed to significant volatility and uncertainty in global stock markets and currency exchange rates,and such volatility could continue to occur as the negotiation process progresses. For a discussion of risks related to currency exchange fluctuations, see "Ourbusiness is exposed to domestic and foreign currency fluctuations."Our business is subject to risks associated with importing products and the ability of our manufacturers to produce our goods on time and to ourspecifications.We do not own or operate any manufacturing facilities and depend exclusively on independent third parties for the manufacture of our products. Ourproducts are manufactured to our specifications through arrangements with over 500 foreign manufacturers in various countries. In Fiscal 2018, over 97% ofour products (by dollar value) were produced outside of the U.S., primarily in Asia, Europe, and Latin America. Risks inherent in importing our productsinclude:28 •changes in social, political, and economic conditions or terrorist acts that could result in the disruption of trade from the countries in which ourmanufacturers or suppliers are located;•the imposition of additional regulations, quotas, or safeguards relating to imports or exports, and costs of complying with such regulations andother laws relating to the identification and reporting of the sources of minerals used in our products;•the imposition of additional duties, tariffs, taxes, and other charges on imports or exports;•unfavorable changes in the availability, cost, or quality of raw materials and commodities;•increases in the cost of labor, travel, and transportation;•disruptions of shipping and international trade caused by natural and man-made disasters, labor strikes, or other unforeseen events;•heightened terrorism-related security concerns, which could subject imported or exported goods to additional, more frequent, or more thoroughinspections, leading to delays in the delivery of cargo;•decreased scrutiny by customs officials for counterfeit goods, leading to lost sales, increased costs for our anti-counterfeiting measures, anddamage to the reputation of our brands;•pandemic and epidemic diseases, which could result in closed factories, reduced workforces, scarcity of raw materials, and scrutiny orembargoing of goods produced in infected areas;•the imposition of anti-dumping or countervailing duty proceedings resulting in the potential assessment of special duties; and•the imposition of sanctions in the form of additional duties either by the U.S. or its trading partners to remedy perceived illegal actions bynational governments.Any one of these factors could have a material adverse effect on our business, results of operations, and financial condition. For a discussion of risksrelated to the potential imposition of additional regulations and laws, see "Our ability to conduct business globally may be affected by a variety of legal,regulatory, political, and economic risks."In addition, the inability of a manufacturer to ship orders of our products in a timely manner or to meet our strict quality standards could cause us tomiss the delivery date requirements of our customers for those items, which could result in cancellation of orders, refusal to accept deliveries, or a substantialreduction in purchase prices, any of which could have a material adverse effect on our business, results of operations, and financial condition. Prices of rawmaterials used to manufacture our products may also fluctuate, and increases in prices of such raw materials could have a material adverse effect on our cost ofsales. Furthermore, the cost of labor at many of our third-party manufacturers has been increasing significantly and, as the middle class in developingcountries such as China continues to grow, it is unlikely that such cost pressure will abate. The cost of transportation remains significant as well, and it islikely that such cost will fluctuate significantly if oil prices remain volatile. We may not be able to offset such increases in raw materials, freight, or laborcosts through pricing actions or other means.Fluctuations in our tax obligations and effective tax rate may result in volatility of our operating results.We are subject to income taxes in many U.S. and certain foreign jurisdictions, with the applicable tax rates varying by jurisdiction. We record taxexpense based on our estimates of future payments, which include reserves for uncertain tax positions in multiple tax jurisdictions. At any one time, multipletax years are subject to audit by various taxing authorities. The results of these audits and negotiations with taxing authorities may affect the ultimatesettlement of these issues. As a result, we expect that throughout the year there could be ongoing variability in our quarterly tax rates as events occur andexposures are evaluated. Our effective tax rate in a given financial statement period may also be materially impacted by changes in the mix and level ofearnings by jurisdiction or by changes to existing accounting rules. For example, Accounting Standards Update ("ASU") No. 2016-09, "Improvements toEmployee Share-Based Payment Accounting" ("ASU 2016-09"), which became effective for our Company during the first quarter of Fiscal 2018, has resultedin, and is expected to continue to result in, increased volatility in the provision of income taxes. See Note 4 to the accompanying consolidated financialstatements for further discussion of ASU 2016-09.In addition, the tax laws and regulations in the countries where we operate may change, such as the recently enacted U.S. tax legislation commonlyreferred to as the TCJA, or there may be changes in interpretation and enforcement of existing tax laws, which could materially affect our income tax expensein our consolidated financial statements. For a discussion of risks related29 to the potential imposition of additional regulations and laws, see "Our ability to conduct business globally may be affected by a variety of legal, regulatory,political, and economic risks" and "The impact to our business of recently enacted U.S. tax legislation could differ materially from our current estimates."The impact to our business of recently enacted U.S. tax legislation could differ materially from our current estimates.On December 22, 2017, President Trump signed into law new tax legislation commonly referred to as the TCJA, as described inItem 1 — "Business — Recent Developments." The TCJA is complex and widely considered to be the most significant overhaul to the U.S. federal tax codesince 1986.Although we expect the TCJA will ultimately benefit our results of operations and financial condition in future periods, primarily due to it reducingthe U.S. federal statutory income tax rate from 35% to 21%, its enactment resulted in the recognition of net charges of $221.4 million within our income taxprovision during Fiscal 2018. These charges were recorded on a provisional basis, as permitted by SAB 118, based on our present interpretations of the TCJA,current available information, and assumptions about future events. Although we believe these provisional amounts represent a reasonable estimate of theultimate enactment-related impact the TCJA will have on our consolidated financial statements, the amounts could be adjusted materially as additionalinformation becomes available and further analyses are completed. The impact of the TCJA to our business in future periods is also subject to a variety offactors beyond our control including, but not limited to, (i) potential amendments to the TCJA; (ii) potential changes to state, local, and foreign tax laws inresponse to the TCJA; and (iii) potential new or interpretative guidance issued by the Financial Accounting Standards Board or the Internal Revenue Serviceand other tax agencies. Any of these factors could cause our actual results to differ materially from our current expectations and/or investors' expectations andthere can be no assurance that the TCJA will ultimately benefit our business, results of operations, and financial condition in future periods.Our business is exposed to domestic and foreign currency fluctuations.Our business is exposed to foreign currency exchange risk. Specifically, changes in exchange rates between the U.S. dollar and other currenciesimpact our financial results from a transactional perspective, as our foreign operations generally purchase inventory in U.S. dollars, as is common for mostapparel companies. Given that we source most of our products overseas, the cost of these products may be affected by changes in the value of the relevantcurrencies. Changes in currency exchange rates may also impact consumers' willingness or ability to travel abroad and/or purchase our products whiletraveling, as well as affect the U.S. Dollar value of the foreign currency denominated prices at which our international businesses sell products. Additionally,the operating results and financial position of our international subsidiaries are exposed to foreign exchange rate fluctuations as their financial results aretranslated from the respective local currency into U.S. Dollars during the financial statement consolidation process. The foreign currencies to which we areexposed to from a transactional and translational perspective primarily include the Euro, the Japanese Yen, the South Korean Won, the Australian Dollar, theCanadian Dollar, the British Pound Sterling, the Swiss Franc, the Swedish Krona, the Chinese Renminbi, the New Taiwan Dollar, and the Hong Kong Dollar.The expansion of our international business increases our exposure to foreign currency exchange risk.Although we hedge certain exposures to changes in foreign currency exchange rates arising in the ordinary course of business, we cannot fullyanticipate all of our currency exposures and therefore foreign currency fluctuations may have a material adverse impact on our business, results of operations,and financial condition. In addition, factors that could impact the effectiveness of our hedging activities include the volatility of currency markets, theaccuracy of forecasted transactions, and the availability of hedging instruments. As such, our hedging activities may not completely mitigate the impact offoreign currency fluctuations on our results of operations. See Item 7 — "Management's Discussion and Analysis of Financial Condition and Results ofOperations — Market Risk Management."A substantial portion of our revenue is derived from a limited number of large wholesale customers. Our business could be adversely affected as a resultof consolidations, liquidations, restructurings, other ownership changes in the retail industry, and/or any financial instability of our large wholesalecustomers.Several of our department store customers, including some under common ownership, account for a significant portion of our wholesale net sales. Asubstantial portion of sales of our licensed products by our domestic licensing partners are also made to our largest department store customers. During Fiscal2018, sales to our largest wholesale customer, Macy's, accounted for approximately 8% of total net revenues. Further, sales to our three largest wholesalecustomers, including Macy's, accounted for approximately 19% of total net revenues for Fiscal 2018, and constituted approximately 29% of our total grosstrade accounts receivable outstanding as of March 31, 2018. Substantially all sales to our three largest wholesale customers related to our North Americasegment.30 We typically do not enter into long-term agreements with our customers. Instead, we enter into a number of purchase order commitments with ourcustomers for each of our product lines every season. A decision by the controlling owner of a group of stores or any other significant customer, whethermotivated by competitive conditions, financial difficulties, or otherwise, to decrease or eliminate the amount of merchandise purchased from us or ourlicensing partners or to change their manner of doing business with us or our licensing partners or their new strategic and operational initiatives, includingtheir continued focus on further development of their "private label" initiatives, could have a material adverse effect on our business, results of operations,and financial condition.In addition, as a result of unfavorable economic conditions, certain of our large wholesale customers, particularly those located in the U.S., have beenhighly promotional in recent years and have aggressively marked down their merchandise, including our products. Such promotional activity couldnegatively impact our brand image and/or lead to requests from those customers for increased markdown allowances at the end of the season, which couldhave a material adverse effect on our business, results of operations, and financial condition. In response and in connection with our growth plan, we began tostrategically reduce shipments to certain of our customers during Fiscal 2018.The department store sector has also experienced numerous consolidations, restructurings, reorganizations, and other ownership changes in recentyears. Any such actions in the future could result in a reduction in the number of stores that carry our products, and the stores that remain open may purchasefewer of our products and/or reduce the retail floor space designated to our brands. There can be no assurance that consolidations, restructurings,reorganizations, or other ownership changes in the department store sector will not have a material adverse effect on our business, results of operations, andfinancial condition.We sell our wholesale merchandise primarily to major department stores across North America, Europe, Asia, Australia, and Latin America, and extendcredit based on an evaluation of each wholesale customer's financial condition, usually without requiring collateral. However, the financial difficulties of awholesale customer could cause us to limit or eliminate our business with that customer. We may also assume more credit risk relating to that customer'sreceivables. Our inability to collect on our trade accounts receivable from any one of these customers could have a material adverse effect on our business,results of operations, and financial condition. See Item 1 — "Business — Wholesale Credit Control."Economic conditions could have a negative impact on our major customers, suppliers, vendors, and lenders, which in turn could materially adverselyaffect our business.Although we believe that our cash provided by operations and available borrowing capacity under our credit facilities and commercial paperborrowing program will provide us with sufficient liquidity, the impact of economic conditions on our major customers, suppliers, vendors, and lenders andtheir ability to access global capital markets cannot be predicted. The inability of major manufacturers to ship our products could impair our ability to meetthe delivery date requirements of our customers. Deterioration in global financial markets could affect our ability to access sources of liquidity to provide forour future cash needs, increase the cost of any future financing, or cause our lenders to be unable to meet their funding commitments under our creditfacilities. A disruption in the ability of our significant customers to access liquidity could cause serious disruptions or an overall deterioration of theirbusinesses which could lead to a significant reduction in their future orders of our products and the inability or failure on their part to meet their paymentobligations to us, any of which could have a material adverse effect on our business, results of operations, and financial condition.Our business could suffer if we need to replace manufacturers or distribution centers.We do not own or operate any manufacturing facilities and depend exclusively on independent third parties for the manufacture of our products. Wecompete with other companies for the production capacity of our manufacturers. Some of these competitors have greater financial and other resources than wehave, and thus may have an advantage in securing production capacity. If we experience a significant increase in demand, or if an existing manufacturer ofours must be replaced, we may have to expand our third-party manufacturing capacity. We cannot guarantee that this additional capacity will be availablewhen required on terms that are acceptable to us. See Item 1 — "Business — Sourcing, Production and Quality." We enter into a number of purchase ordercommitments each season specifying a time for delivery, method of payment, design and quality specifications, and other standard industry provisions, butdo not have long-term contracts with any manufacturer. None of the manufacturers we use produce our products exclusively.In addition, we rely on a number of owned and independently-operated distribution facilities around the world to warehouse and ship products to ourcustomers and perform other related logistic services. Our ability to meet the needs of our customers depends on the proper operation of these distributioncenters. If any of our distribution centers were closed or were to become inoperable or inaccessible for any reason, we could experience a substantial loss ofinventory, disruption of deliveries to our customers and our retail stores, increased costs, and longer lead times associated with the distribution of productsduring the period31 that would be required to reopen or replace the facility. These disruptions could have a material adverse effect on our business, results of operations, andfinancial condition.Our business could be adversely affected by natural disasters and other catastrophic events in the locations in which we or our customers or suppliersoperate.We have operations, including retail, distribution, and warehousing operations, in locations subject to natural disasters, such as severe weather,geological events, and epidemic diseases, and other catastrophic events, such as terrorist attacks and military conflict, any of which could disrupt ouroperations. In addition, our customers and suppliers also have operations in these locations and could experience similar disruptions. The occurrence ofnatural disasters or other catastrophic events may result in sudden disruptions in the business operations of the local economies affected, as well as of theregional and global economies. In addition, our business can be affected by unseasonable weather conditions, such as extended periods of unseasonablywarm temperatures in the winter or unseasonably cold temperatures in the summer. Any of these events could result in decreased demand for our products anddisruptions in our sales channels and manufacturing and distribution networks, which could have a material adverse effect on our business, results ofoperations, and financial condition.Our trademarks and other intellectual property rights may not be adequately protected outside the U.S.We believe that our trademarks, intellectual property, and other proprietary rights are extremely important to our success and our competitive position.We devote substantial resources to the establishment and protection of our trademarks and anti-counterfeiting activities worldwide. However, significantcounterfeiting and imitation of our products continues to exist. In the course of our international expansion we have experienced conflicts with various thirdparties that have acquired or claimed ownership rights to some of our key trademarks that include Polo and/or a representation of a polo player astride ahorse, or otherwise have contested our rights to our trademarks. We have resolved certain of these conflicts through both legal action and negotiatedsettlements. We cannot guarantee that the actions we have taken to establish and protect our trademarks and other proprietary rights will be adequate toprevent counterfeiting, lost business, or brand dilution, any of which may have a material adverse effect on our business. We expect to continue to devotesubstantial resources to challenge brands arising from imitation of our products. Also, there can be no assurance that others will not assert rights in, orownership of, trademarks and other proprietary rights of ours or that we will be able to successfully resolve these types of conflicts to our satisfaction or at all.In addition, the laws of certain foreign countries do not protect trademarks or other proprietary rights to the same extent as do the laws of the U.S. and, as aresult, our intellectual property may be more vulnerable and difficult to protect in such countries. See Item 1 — "Business — Trademarks," and Item 3 —"Legal Proceedings."Our business could suffer if we fail to comply with labor laws or if one of our manufacturers fails to use acceptable labor or environmental practices.We are subject to labor laws governing relationships with employees, including minimum wage requirements, overtime, working conditions, andcitizenship requirements. Compliance with these laws may lead to increased costs and operational complexity and may increase our exposure togovernmental investigations or litigation.In addition, we require our licensing partners and independent manufacturers to operate in compliance with applicable laws and regulations. While ourinternal and vendor operating guidelines promote ethical business practices and our employees periodically visit and monitor the operations of ourindependent manufacturers, we do not control these manufacturers or their labor practices. The violation of labor, environmental, or other laws by anindependent manufacturer used by us or one of our licensing partners, or the divergence of an independent manufacturer's or licensing partner's labor orenvironmental practices from those generally accepted as ethical or appropriate in the U.S., could interrupt or otherwise disrupt the shipment of finishedproducts to us or damage our reputation. Any of these events, in turn, could have a material adverse effect on our business, results of operations, and financialcondition.Certain legal proceedings, regulatory matters, and accounting changes could adversely affect our business.We are involved in certain legal proceedings and regulatory matters and are subject from time to time to various claims involving alleged breach ofcontract claims, intellectual property and other related claims, escheatment and unclaimed property, credit card fraud, security breaches in certain of our retailstore information systems, employment issues, consumer matters, and other litigation. Certain of these lawsuits and claims, if decided adversely to us orsettled by us, could result in material liability to our Company or have a negative impact on our reputation or relations with our employees, customers,licensees, or other third parties. In addition, regardless of the outcome of any litigation or regulatory proceedings, such proceedings could result insubstantial costs and may require our Company to devote substantial time and resources to defend itself. Further, changes in governmental regulations bothin the U.S. and in other countries where we conduct business operations could have an adverse impact on our32 business, results of operations, and financial condition. See Item 3 — "Legal Proceedings" for further discussion of our Company's legal matters.In addition, we are subject to changes in accounting rules and interpretations issued by the Financial Accounting Standards Board and otherregulatory agencies. If and when effective, such changes to accounting standards could have a material impact on our consolidated financial statements. SeeNote 4 to the accompanying consolidated financial statements for a description of certain recently issued or proposed accounting standards.The trading prices of our securities periodically may rise or fall based on the accuracy of predictions of our earnings or other financial performance,including our ability to return value to shareholders.Our business planning process is designed to maximize our long-term strength, growth, and profitability, and not to achieve an earnings target in anyparticular fiscal quarter. We believe that this longer-term focus is in the best interests of our Company and our stockholders. At the same time, however, werecognize that, from time to time, it may be helpful to provide investors with guidance as to our quarterly and annual forecast of net sales and earnings. Whilewe generally expect to provide updates to our guidance when we report our results each fiscal quarter, we do not have any responsibility to update any of ourforward-looking statements at such times or otherwise. In addition, any longer-term guidance that we provide is based on goals that we believe, at the timeguidance is given, are reasonably attainable. However, such long-range targets are more difficult to predict than our current quarter and full fiscal yearexpectations. If, or when, we announce actual results that differ from those that have been predicted by us, outside analysts, or others, the market price of oursecurities could be adversely affected. Investors who rely on these predictions when making investment decisions with respect to our securities do so at theirown risk. We take no responsibility for any losses suffered as a result of such changes in the prices of our securities.In addition, we periodically return value to shareholders through our payment of quarterly cash dividends and common stock share repurchases.Investors may have an expectation that we will continue to pay quarterly cash dividends, further increase our cash dividend rate, and/or repurchase sharesavailable under our Class A common stock repurchase program. Our ability to pay quarterly cash dividends and repurchase our Class A common stock willdepend on our ability to generate sufficient cash flows from operations in the future. This ability may be subject to certain economic, financial, competitive,and other factors that are beyond our control. Further, our Board of Directors may, at its discretion, elect to suspend or otherwise alter these programs at anytime. The market price of our securities could be adversely affected if our cash dividend payments and/or Class A common stock share repurchase activitydiffer from investors' expectations.The voting shares of our Company's stock are concentrated in one majority stockholder.As of March 31, 2018, Mr. Ralph Lauren, or entities controlled by the Lauren family, held approximately 82% of the voting power of the outstandingcommon stock of our Company. In addition, Mr. R. Lauren serves as our Executive Chairman and Chief Creative Officer, Mr. R. Lauren's son, Mr. DavidLauren, serves as our Chief Innovation Officer, Strategic Advisor to the CEO, and Vice Chairman of the Board of Directors, and we employ other members ofthe Lauren family. From time to time, we may have other business dealings with Mr. R. Lauren, members of the Lauren family, or entities affiliated withMr. R. Lauren or the Lauren family. As a result of his stock ownership and position in our Company, Mr. R. Lauren has the ability to exercise significantcontrol over our business, including, without limitation, (i) the election of our Class B common stock directors, voting separately as a class and (ii) any actionrequiring the approval of our stockholders, including the adoption of amendments to our certificate of incorporation and the approval of mergers or sales ofall or substantially all of our assets.We rely on our licensing partners to preserve the value of our licenses. Failure to maintain licensing partners could harm our business.The risks associated with our own products also apply to our licensed products in addition to any number of possible risks specific to a licensingpartner's business, including risks associated with a particular licensing partner's ability to:•obtain capital;•execute its business plans;•manage its labor relations;•maintain relationships with its suppliers and customers; and•manage its credit and bankruptcy risks effectively.33 Although a number of our license agreements prohibit our licensing partners from entering into licensing arrangements with our competitors, ourlicensing partners generally are not precluded from offering, under other non-competitor brands, the types of products covered by their license agreementswith us. A substantial portion of sales of our products by our domestic licensing partners are also made to our largest customers. While we have significantcontrol over our licensing partners' products and advertising, we rely on our licensing partners for, among other things, operational and financial control overtheir businesses. Changes in management, reduced sales of licensed products, poor execution, or financial difficulties with respect to any of our licensingpartners could adversely affect our revenues, both directly from reduced licensing revenue received and indirectly from reduced sales of our other products.Although we believe that we could replace our existing licensing partners in most circumstances, if necessary, our inability to do so for any period oftime could adversely affect our revenues, both directly from reduced licensing revenue received and indirectly from reduced sales of our other products. SeeItem 1 — "Business — Our Licensing Business."Item 1B.Unresolved Staff Comments.Not applicable.Item 2.Properties.We lease space for our retail stores, showrooms, warehouses, and offices in various domestic and international locations. We do not own any realproperty except for our distribution facility and an adjacent parcel of land in Greensboro, North Carolina; our retail digital commerce call center anddistribution facility in High Point, North Carolina; and our retail stores in Southampton and Easthampton, New York, and Nantucket, Massachusetts.We believe that our existing facilities are well maintained, in good operating condition, and are adequate for our present level of operations.The following table sets forth information relating to our key properties as of March 31, 2018:Location Use ApproximateSquare Feet Greensboro, NC Wholesale and retail distribution facility 1,300,000NC Highway 66, High Point, NC Wholesale and retail distribution facility 847,000N. Pendleton Street, High Point, NC Retail digital commerce call center and distribution facility 805,000625 Madison Avenue, NYC Corporate offices and showrooms 362,000Eagle Hill Drive, High Point, NC Wholesale distribution facility 343,000650 Madison Avenue, NYC Executive and corporate offices, design studio, and showrooms 270,000Lyndhurst, NJ Corporate and retail administrative offices 178,000601 West 26th Street, NYC Corporate offices 137,800Geneva, Switzerland European corporate offices 107,0007th Avenue, NYC Corporate offices, design studio, and Women's showrooms 104,000Manhattan Place, Hong Kong Asia sourcing offices 46,000Gateway Office, Hong Kong Asia corporate offices 37,500888 Madison Avenue, NYC Retail flagship store 37,900N. Michigan Avenue, Chicago Retail flagship store 37,500New Bond Street, London, UK Retail flagship store 31,500867 Madison Avenue, NYC Retail flagship store 27,700Paris, France Retail flagship store 25,700Tokyo, Japan Retail flagship store 25,000N. Rodeo Drive, Beverly Hills Retail flagship store 19,400Regent Street, London, UK Retail flagship store 19,00034 As of March 31, 2018, we directly operated 472 retail stores, totaling approximately 3.8 million square feet. We anticipate that we will be able toextend our retail store leases, as well as those leases for our non-retail facilities, which expire in the near future on satisfactory terms or relocate to desirablealternate locations. We generally lease our freestanding retail stores for initial periods ranging from 5 to 15 years, with renewal options. See Item 1A — "RiskFactors — Our business is subject to risks associated with leasing real estate and other assets under long-term, non-cancellable leases."Item 3.Legal Proceedings.We are involved, from time to time, in litigation, other legal claims, and proceedings involving matters associated with or incidental to our business,including, among other things, matters involving credit card fraud, trademark and other intellectual property, licensing, importation and exportation ofproducts, taxation, unclaimed property, and employee relations. We believe at present that the resolution of currently pending matters will not individuallyor in the aggregate have a material adverse effect on our consolidated financial statements. However, our assessment of any litigation or other legal claimscould 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 inaccord with management's evaluation of the possible liability or outcome of such litigation or claims.Item 4.Mine Safety Disclosures.Not applicable.35 PART IIItem 5.Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.Our Class A common stock is traded on the New York Stock Exchange ("NYSE") under the symbol "RL." The following table sets forth the high andlow sales prices per share of our Class A common stock, as reported on the NYSE Composite Tape, and the cash dividends per common share declared foreach quarterly period in our two most recent fiscal years: Market Price ofClass ACommon Stock DividendsDeclared perCommon Share High Low Fiscal 2018: First Quarter $84.47 $66.06 $0.50Second Quarter 92.55 70.36 0.50Third Quarter 105.52 83.26 0.50Fourth Quarter 119.33 100.09 0.50Fiscal 2017: First Quarter $98.50 $83.66 $0.50Second Quarter 109.85 87.26 0.50Third Quarter 114.00 89.24 0.50Fourth Quarter 93.05 75.62 0.50Since 2003, we have maintained, and intend to continue to maintain, a regular quarterly cash dividend program on our common stock. However, anydecision to declare and pay dividends in the future will be made at the discretion of our Board of Directors and will depend on our results of operations, cashrequirements, financial condition, and other factors that the Board of Directors may deem relevant.As of May 18, 2018, there were 694 holders of record of our Class A common stock and 6 holders of record of our Class B common stock. All of ouroutstanding shares of Class B common stock are owned by Mr. Ralph Lauren, Executive Chairman and Chief Creative Officer, and entities controlled by theLauren family. Shares of our Class B common stock may be converted immediately into Class A common stock on a one-for-one basis by the holder. There isno cash or other consideration paid by the holder converting the shares and, accordingly, there is no cash or other consideration received by the Company.The shares of Class A common stock issued by the Company in such conversions are exempt from registration pursuant to Section 3(a)(9) of the SecuritiesAct of 1933, as amended. No shares of our Class B common stock were converted into Class A common stock during the fiscal quarter ended March 31, 2018.The following table sets forth repurchases of shares of our Class A common stock during the fiscal quarter ended March 31, 2018: Total Numberof SharesPurchased(a) AveragePricePaid perShare Total Number ofShares Purchased asPart of PubliclyAnnounced Plans orPrograms Approximate DollarValue of SharesThat May Yet BePurchased Under thePlans or Programs(b) (millions)December 31, 2017 to January 27, 2018 — $— — $100January 28, 2018 to February 24, 2018 639 116.20 — 100February 25, 2018 to March 31, 2018 7,098 108.46 — 100 7,737 — (a) Represents shares surrendered to or withheld by the Company in satisfaction of withholding taxes in connection with the vesting of awards issuedunder its long-term stock incentive plans.(b) Repurchases of shares of Class A common stock are subject to overall business and market conditions.36 The following graph compares the cumulative total stockholder return (stock price appreciation plus dividends) on our Class A common stock to thecumulative total return of the Standard & Poor's 500 Index and a peer group index of companies that we believe are closest to ours (the "Peer Group") for theperiod from March 30, 2013, the last day of our 2013 fiscal year, through March 31, 2018, the last day of our 2018 fiscal year. Our Peer Group consists ofBurberry Group PLC, Compagnie Financière Richemont SA, The Estée Lauder Companies Inc., Hermes International, Kering, Luxottica Group, LVMH, PVHCorp., Tapestry, Inc., Tiffany & Co., Tod's S.p.A., and V.F. Corporation. All calculations for foreign companies in our Peer Group are performed using thelocal foreign issue of such companies. The returns are calculated by assuming a $100 investment on March 30, 2013 in Class A common stock or March 31,2013 in an index, with all dividends reinvested.COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURNAmong Ralph Lauren Corporation, the S&P 500 Index, and a Peer GroupItem 6.Selected Financial DataSee the "Index to Consolidated Financial Statements and Supplementary Information," and specifically "Selected Financial Information" appearingat the end of this Annual Report on Form 10-K. This selected financial data should be read in conjunction with Item 7 — "Management's Discussion andAnalysis of Financial Condition and Results of Operations" and Item 8 — "Financial Statements and Supplementary Data" included in this Annual Reporton Form 10-K. Historical results may not be indicative of future results.37 Item 7.Management's Discussion and Analysis of Financial Condition and Results of Operations.The following management's discussion and analysis of financial condition and results of operations ("MD&A") should be read together with ouraudited consolidated financial statements and notes thereto, which are included in this Annual Report on Form 10-K. We utilize a 52-53 week fiscal yearending on the Saturday closest to March 31. As such, Fiscal 2018 ended on March 31, 2018 and was a 52-week period; Fiscal 2017 ended on April 1, 2017and was a 52-week period; Fiscal 2016 ended on April 2, 2016 and was a 53-week period; and Fiscal 2019 will end on March 30, 2019 and will be a 52-weekperiod.INTRODUCTIONMD&A is provided as a supplement to the accompanying consolidated financial statements and notes thereto to help provide an understanding of ourresults of operations, financial condition, and liquidity. MD&A is organized as follows:•Overview. This section provides a general description of our business, global economic conditions and industry trends, and a summary of ourfinancial performance for Fiscal 2018. In addition, this section includes a discussion of recent developments and transactions affectingcomparability that we believe are important in understanding our results of operations and financial condition, and in anticipating future trends.•Results of operations. This section provides an analysis of our results of operations for Fiscal 2018 and Fiscal 2017 as compared to therespective prior fiscal year.•Financial condition and liquidity. This section provides a discussion of our financial condition and liquidity as of March 31, 2018, whichincludes (i) an analysis of our financial condition as compared to the prior fiscal year-end; (ii) an analysis of changes in our cash flows for Fiscal2018 and Fiscal 2017 as compared to the respective prior fiscal year; (iii) an analysis of our liquidity, including the availability under ourcommercial paper borrowing program and credit facilities, common stock repurchases, payments of dividends, and our outstanding debt andcovenant compliance; and (iv) a summary of our contractual and other obligations as of March 31, 2018.•Market risk management. This section discusses how we manage our risk exposures related to foreign currency exchange rates, interest rates,and our investments as of March 31, 2018.•Critical accounting policies. This section discusses accounting policies considered to be important to our results of operations and financialcondition, which typically require significant judgment and estimation on the part of management in their application. In addition, all of oursignificant accounting policies, including our critical accounting policies, are summarized in Note 3 to the accompanying consolidatedfinancial statements.•Recently issued accounting standards. This section discusses the potential impact on our reported results of operations and financialcondition of certain accounting standards that have been recently issued or proposed.OVERVIEWOur BusinessOur Company is a global leader in the design, marketing, and distribution of premium lifestyle products, including apparel, accessories, homefurnishings, and other licensed product categories. Our long-standing reputation and distinctive image have been developed across an expanding number ofproducts, brands, sales channels, and international markets. Our brand names include Ralph Lauren, Ralph Lauren Collection, Ralph Lauren Purple Label,Polo Ralph Lauren, Double RL, Lauren Ralph Lauren, Polo Ralph Lauren Children, Chaps, and Club Monaco, among others.We diversify our business by geography (North America, Europe, and Asia, among other regions) and channels of distribution (wholesale, retail, andlicensing). This allows us to maintain a dynamic balance as our operating results do not depend solely on the performance of any single geographic area orchannel of distribution. Our wholesale sales are made principally to major department stores and specialty stores around the world. We also sell directly toconsumers through our integrated retail channel, which includes our retail stores, concession-based shop-within-shops, and digital commerce operationsaround the world. In addition, we license to unrelated third parties for specified periods the right to operate retail stores and/or to use our various trademarksin connection with the manufacture and sale of designated products, such as certain apparel, eyewear, fragrances, and home furnishings.38 We organize our business into the following three reportable segments:•North America — Our North America segment, representing approximately 52% of our Fiscal 2018 net revenues, primarily consists of sales ofour Ralph Lauren branded products made through our wholesale and retail businesses in the U.S. and Canada, excluding Club Monaco. In NorthAmerica, our wholesale business is comprised primarily of sales to department stores, and to a lesser extent, specialty stores. Our retail businessin North America is comprised of our Ralph Lauren stores, our factory stores, and our digital commerce site, www.RalphLauren.com.•Europe — Our Europe segment, representing approximately 26% of our Fiscal 2018 net revenues, primarily consists of sales of our RalphLauren branded products made through our wholesale and retail businesses in Europe and the Middle East, excluding Club Monaco. In Europe,our wholesale business is comprised of a varying mix of sales to both department stores and specialty stores, depending on the country. Ourretail business in Europe is comprised of our Ralph Lauren stores, our factory stores, our concession-based shop-within-shops, and our variousdigital commerce sites.•Asia — Our Asia segment, representing approximately 15% of our Fiscal 2018 net revenues, primarily consists of sales of our Ralph Laurenbranded products made through our wholesale and retail businesses in Asia, Australia, and New Zealand. Our retail business in Asia is comprisedof our Ralph Lauren stores, our factory stores, and our concession-based shop-within-shops. In addition, we sell our products through variousthird-party digital partner commerce sites. In Asia, our wholesale business is comprised primarily of sales to department stores, with relatedproducts distributed through shop-within-shops.In addition to these reportable segments, we also have other non-reportable segments, representing approximately 7% of our Fiscal 2018 net revenues,which primarily consist of (i) sales of Club Monaco branded products made through our retail businesses in the U.S., Canada, and Europe, and our licensingalliances in Europe and Asia, (ii) sales of Ralph Lauren branded products made through our wholesale business in Latin America, and (iii) royalty revenuesearned through our global licensing alliances, excluding Club Monaco.Approximately 45% of our Fiscal 2018 net revenues were earned outside of the U.S. See Note 19 to the accompanying consolidated financialstatements for further discussion of our segment reporting structure.Our business is typically affected by seasonal trends, with higher levels of wholesale sales in our second and fourth fiscal quarters and higher retailsales in our second and third fiscal quarters. These trends result primarily from the timing of seasonal wholesale shipments and key vacation travel, back-to-school, and holiday shopping periods impacting our retail business.Global Economic Conditions and Industry TrendsThe global economy and our industry are impacted by many different influences. Most recently, the U.S. enacted new tax legislation known as theTCJA (as defined within "Recent Developments"), which is intended to stimulate economic growth and capital investment in the U.S. by, among its otherprovisions, lowering tax rates for both corporations and individuals alike. Certain other worldwide events, including political unrest, acts of terrorism,monetary policy changes, and currency and commodity price changes, increase volatility in the global economy. In addition, the current domestic andinternational political environment, including potential changes to other U.S. policies related to global trade, immigration, and healthcare, have also resultedin uncertainty surrounding the future state of the global economy. As our international business continues to grow, and because the majority of our productsare produced outside of the U.S., major changes in global tax policies or trade relations could have a material adverse effect on our business or operatingresults. Our results also have been, and are expected to continue to be, impacted by foreign exchange rate fluctuations.In addition, the retail landscape in which we operate is evolving, with consumers continuing to diversify the channels in which they transact andshifting their shopping preference from physical stores to online. This, along with other factors, has resulted in many retailers, including certain of our largewholesale customers, becoming highly promotional and aggressively marking down their merchandise in an attempt to offset declines in physical storetraffic. The retail industry, particularly in the U.S., has also experienced numerous bankruptcies, restructurings, and ownership changes in recent years.Certain of our operations, including our North America wholesale business, have been negatively impacted by these dynamics. The continuation of theseindustry trends could further impact consumer spending and consumption behavior in our industry, which could have a material adverse effect on ourbusiness or operating results. Additionally, changes in economic conditions, including those that may result from the TCJA, can further impact consumerdiscretionary income levels and spending. While we are optimistic that the TCJA will stimulate economic growth, it is still too early to determine theresulting impact on consumer spending and consumption behavior.39 We have implemented various operating strategies globally to help address many of these current challenges, and continue to build a foundation forlong-term profitable growth centered around strengthening our consumer-facing areas of product, stores, and marketing across channels and driving a moreefficient operating model. In connection with these strategies, we are taking deliberate actions to ensure promotional consistency across channels andenhance the overall brand and shopping experience, including reducing shipments to better align with underlying demand and lower inventory levels.Additionally, we are optimizing our wholesale distribution channel, and closed approximately 25% of our underperforming U.S. department store points ofdistribution during Fiscal 2018. Further, in October 2017, we began to shift to a more cost-effective and flexible platform for our directly operated digitalbusinesses, which is expected to deliver a more brand-enhancing and consistent customer experience across our global digital ecosystem. See ourrestructuring activities as described within "Recent Developments" below for further discussion. Although the investments that we are making in our businessand our quality of sales initiatives may create operating profit pressure in the near-term, we expect that these initiatives will create longer-term shareholdervalue.We will continue to monitor these conditions and trends and evaluate and adjust our operating strategies and foreign currency and cost managementopportunities to help mitigate the related impact on our results of operations, while remaining focused on the long-term growth of our business andprotecting the value of our brand.For a detailed discussion of significant risk factors that have the potential to cause our actual results to differ materially from our expectations, see PartI, Item 1A — "Risk Factors" included in this Annual Report on Form 10-K.Summary of Financial PerformanceOperating ResultsIn Fiscal 2018, we reported net revenues of $6.182 billion, net income of $162.8 million, and net income per diluted share of $1.97, as compared to netrevenues of $6.653 billion, a net loss of $99.3 million, and net loss per diluted share of $1.20 in Fiscal 2017. The comparability of our operating results hasbeen affected by TCJA enactment-related charges recorded during Fiscal 2018, as well as restructuring-related charges, impairment of assets, and certain othercharges recorded during both Fiscal 2018 and Fiscal 2017, as discussed further below.During Fiscal 2018, net revenues declined 7.1% on a reported basis and 8.4% on a constant currency basis, as defined within "Transactions and TrendsAffecting Comparability of Results of Operations and Financial Condition" below. The decline in reported net revenues during Fiscal 2018 was primarilydue to lower sales from our North America segment driven by the impact of our quality of distribution and sales initiatives, including lower levels ofpromotional activity and a strategic reduction in shipments, as well as brand discontinuances and lower consumer demand.Our gross profit as a percentage of net revenues increased by 580 basis points to 60.7% during Fiscal 2018, primarily driven by lower non-cashinventory-related charges recorded in connection with the Way Forward Plan, lower levels of promotional activity in connection with our long-term growthstrategy, favorable geographic and channel mix, and lower sourcing costs.Selling, general, and administrative ("SG&A") expenses as a percentage of net revenues increased by 240 basis points to 50.1% during Fiscal 2018,primarily due to operating deleverage on lower net revenues and the unfavorable impact attributable to geographic and channel mix, as a greater portion ofour revenue was generated by our international retail businesses (which typically carry higher operating expense margins). These increases were largely offsetby our operational discipline and cost savings associated with our restructuring activities.Net income increased by $262.1 million to $162.8 million in Fiscal 2018 as compared to Fiscal 2017, primarily due to a $590.5 million increase inoperating income, partially offset by a $332.0 million increase in our income tax provision largely driven by TCJA enactment-related charges.Net income per diluted share increased by $3.17 to $1.97 per share in Fiscal 2018 as compared to Fiscal 2017, due to higher net income and lowerweighted-average diluted shares outstanding during Fiscal 2018.Net income during Fiscal 2018 reflected TCJA enactment-related charges of $221.4 million, or $2.68 per diluted share. Our operating results duringFiscal 2018 and Fiscal 2017 were also negatively impacted by restructuring-related charges, impairment of assets, and certain other charges totaling $165.6million and $770.3 million, respectively, which had an after-tax effect of reducing net income by $113.3 million, or $1.38 per diluted share, and $592.1million, or $7.10 per diluted share, respectively. In addition, our net loss during Fiscal 2017 reflected the favorable impact of $15.9 million, or $0.19 perdiluted share, related to the reversal of an income tax reserve resulting from a change in tax law that impacted an interest assessment on a prior yearwithholding tax.40 Financial Condition and LiquidityWe ended Fiscal 2018 in a net cash and investments position (cash and cash equivalents plus short-term and non-current investments, less total debt)of $1.494 billion, compared to $786.2 million as of the end of Fiscal 2017. The increase in our net cash and investments position was primarily due to ouroperating cash flows of $975.1 million, partially offset by our use of cash to invest in our business through $161.6 million in capital expenditures and tomake cash dividend payments of $162.4 million.We generated $975.1 million of cash from operations during Fiscal 2018, compared to $952.6 million during Fiscal 2017. The increase in ouroperating cash flows was due to a net favorable change related to our operating assets and liabilities, including our working capital, as compared to the priorfiscal year, partially offset by a decline in net income before non-cash charges.Our equity increased to $3.457 billion as of March 31, 2018, compared to $3.300 billion as of April 1, 2017, primarily due to our comprehensiveincome and the net impact of stock-based compensation arrangements, partially offset by our dividends declared during Fiscal 2018.Recent DevelopmentsU.S. Tax ReformOn December 22, 2017, President Trump signed into law new tax legislation commonly referred to as the Tax Cuts and Jobs Act (the "TCJA"), whichbecame effective January 1, 2018. The TCJA significantly revised U.S. tax law by, among other provisions, lowering the U.S. federal statutory income tax ratefrom 35% to 21%, creating a territorial tax system that includes a one-time mandatory transition tax on previously deferred foreign earnings, and eliminatingor reducing certain income tax deductions.During Fiscal 2018, we recorded net charges of $221.4 million within our income tax provision in connection with the TCJA, of which $209.3 millionrelated to the mandatory transition tax, which we expect to pay over an eight-year period. These charges, which were recorded on a provisional basis aspermitted by SEC Staff Accounting Bulletin No. 118 ("SAB 118"), negatively impacted our effective tax rate by 4,520 basis points and lowered our dilutedearnings per share by $2.68 during Fiscal 2018. The provisional amounts were based on our present interpretations of the TCJA, current availableinformation, and assumptions about future events, and are subject to further refinement as additional information becomes available and further analyses arecompleted.Despite these enactment-related charges, we expect the TCJA will ultimately benefit our results of operations and financial condition in future periods,primarily due to the lower U.S. federal statutory income tax rate.Additionally, we reevaluated our permanent reinvestment assertion and determined that undistributed foreign earnings that were subject to the one-time mandatory transition tax were no longer considered to be permanently reinvested, effective December 31, 2017. In connection with this decision, werepatriated $252.0 million of cash to the U.S. from certain of our foreign subsidiaries during the fourth quarter of Fiscal 2018, and we repatriated an additional$400.0 million during the first quarter of Fiscal 2019.See Note 10 to the accompanying consolidated financial statements for additional discussion regarding the TCJA.Change in Chief Executive OfficerEffective May 2017, Mr. Stefan Larsson departed as the Company's President and Chief Executive Officer and as a member of our Board of Directors.In connection with Mr. Larsson's departure, we recorded cumulative other charges of $17.0 million, of which $5.6 million and $11.4 million were recordedduring Fiscal 2018 and Fiscal 2017, respectively. We do not expect to incur additional charges related to Mr. Larsson's departure. See Note 9 to ouraccompanying consolidated financial statements for further discussion of the charges recorded in connection with Mr. Larsson's departure.Subsequent to Mr. Larsson's departure, Mr. Patrice Louvet was appointed as the Company's new President and Chief Executive Officer and as a memberof our Board of Directors, effective July 2017.41 Way Forward PlanOn June 2, 2016, our Board of Directors approved a restructuring plan with the objective of delivering sustainable, profitable sales growth and long-term value creation for shareholders (the "Way Forward Plan"). We are refocusing on our core brands and evolving our product, marketing, and shoppingexperience to increase desirability and relevance. We are also evolving our operating model to enable sustainable, profitable sales growth by significantlyimproving quality of sales, reducing supply chain lead times, improving our sourcing, and executing a disciplined multi-channel distribution and expansionstrategy. As part of the Way Forward Plan, we are rightsizing our cost structure and implementing a return on investment-driven financial model to free upresources to invest in the brand and drive high-quality sales. The Way Forward Plan includes strengthening our leadership team and creating a more nimbleorganization by moving from an average of nine to six layers of management. The Way Forward Plan also includes the discontinuance of our Denim &Supply brand and the integration of our denim product offerings into our Polo Ralph Lauren brand. Collectively, these actions, which were substantiallycompleted during Fiscal 2017, resulted in a reduction in workforce and the closure of certain stores and shop-within-shops, as well as gross annualizedexpense savings of approximately $200 million.On March 30, 2017, our Board of Directors approved the following additional restructuring-related activities associated with the Way Forward Plan: (i)the restructuring of our in-house global digital commerce platform which was in development and shifting to a more cost-effective, flexible platform througha new agreement with Salesforce's Commerce Cloud, formerly known as Demandware; (ii) the closure of our Polo store at 711 Fifth Avenue in New York City;and (iii) the further streamlining of the organization and the execution of other key corporate actions in line with the Way Forward Plan. These actions, whichare expected to result in additional expense savings of approximately $140 million, are an important part of our efforts to achieve our stated objective toreturn to sustainable, profitable growth and invest in the future. These additional restructuring-related activities were largely completed during Fiscal 2018and resulted in a further reduction in workforce and the closure of certain corporate office and store locations. The remaining activities, which are primarilylease-related, are expected to be completed during Fiscal 2019.In connection with the Way Forward Plan, we currently expect to incur total estimated charges of approximately $770 million, comprised of cash-related restructuring charges of approximately $450 million and non-cash charges of approximately $320 million. Cumulative charges incurred sinceinception were $669.2 million, of which $102.8 million and $566.4 million were incurred during Fiscal 2018 and Fiscal 2017, respectively, and we expect toincur the remaining charges of approximately $100 million during Fiscal 2019. In addition to these charges, we also incurred an additional non-cash chargeof $155.2 million during Fiscal 2017 associated with the destruction of inventory out of current liquidation channels in line with our Way Forward Plan. SeeNotes 8 and 9 to our accompanying consolidated financial statements for detailed discussions of the charges recorded in connection with the Way ForwardPlan.Global Reorganization PlanOn May 12, 2015, our Board of Directors approved a reorganization and restructuring plan comprised of the following major actions: (i) thereorganization of the Company's operating structure in order to streamline our business processes to better align our cost structure with our long-term growthstrategy; (ii) a strategic store and shop-within-shop performance review conducted by region and brand; (iii) a targeted corporate functional area review; and(iv) the consolidation of certain of our luxury lines (collectively, the "Global Reorganization Plan"). The Global Reorganization Plan has resulted in areduction in workforce and the closure of certain stores and shop-within-shops. Actions associated with the Global Reorganization Plan were substantiallycompleted during Fiscal 2016 and resulted in improved operational efficiencies by reducing annual operating expenses by approximately $125 million.Since its inception, we have recorded total cumulative charges of $147.4 million in connection with the Global Reorganization Plan, of which $4.9million and $142.5 million were recorded during Fiscal 2017 and Fiscal 2016, respectively. Actions associated with the Global Reorganization Plan werecompleted by the end of the first quarter of Fiscal 2017 and no additional charges are expected to be incurred in relation to this plan. See Notes 8 and 9 to ouraccompanying consolidated financial statements for detailed discussions of the charges recorded in connection with the Global Reorganization Plan.42 Transactions and Trends Affecting Comparability of Results of Operations and Financial ConditionThe comparability of our operating results for the three fiscal years presented herein has been affected by certain events, including:•charges incurred in connection with our restructuring plans, as well as certain other asset impairments and other charges, as summarized below(references to "Notes" are to the notes to the accompanying consolidated financial statements): Fiscal Years Ended March 31, 2018 April 1, 2017 April 2, 2016 (millions)Impairment of assets (see Note 8) $(50.0) $(253.8) $(48.8)Restructuring and other charges (see Note 9) (108.0) (318.6) (142.6)Restructuring-related inventory charges (see Note 9)(a) (7.6) (197.9) (20.4)Total charges $(165.6) $(770.3) $(211.8) (a) Non-cash restructuring-related inventory charges are recorded within cost of goods sold in the consolidated statements of operations.•TCJA enactment-related charges of $221.4 million recorded within the income tax provision in the consolidated statements of operationsduring Fiscal 2018;•the reversal of an income tax reserve resulting from a change in tax law that impacted an interest assessment on a prior year withholding tax,which favorably impacted our income tax benefit by $15.9 million during Fiscal 2017; and•the inclusion of the 53rd week in Fiscal 2016, which resulted in incremental net revenues of $72.2 million and net income of $8.3 million.Since we are a global company, the comparability of our operating results reported in U.S. Dollars is also affected by foreign currency exchange ratefluctuations because the underlying currencies in which we transact change in value over time compared to the U.S. Dollar. These rate fluctuations can havea significant effect on our reported results. As such, in addition to financial measures prepared in accordance with accounting principles generally acceptedin the U.S. ("U.S. GAAP"), our discussions often contain references to constant currency measures, which are calculated by translating the current-year andprior-year reported amounts into comparable amounts using a single foreign exchange rate for each currency. We present constant currency financialinformation, which is a non-U.S. GAAP financial measure, as a supplement to our reported operating results. We use constant currency information toprovide a framework to assess how our businesses performed excluding the effects of foreign currency exchange rate fluctuations. We believe thisinformation is useful to investors to facilitate comparisons of operating results and better identify trends in our businesses. The constant currencyperformance measures should be viewed in addition to, and not in lieu of or superior to, our operating performance measures calculated in accordance withU.S. GAAP. Reconciliations between this non-U.S. GAAP financial measure and the most directly comparable U.S. GAAP measure are included in the"Results of Operations" section where applicable.Our discussion also includes reference to comparable store sales. Comparable store sales refer to the growth of sales in stores that are open for at leastone full fiscal year. Sales for stores that are closed during a fiscal year are excluded from the calculation of comparable store sales. Sales for stores that areeither relocated, enlarged (as defined by gross square footage expansion of 25% or greater), or generally closed for 30 or more consecutive days forrenovation are also excluded from the calculation of comparable store sales until such stores have been in their new location or in their newly renovated statefor at least one full fiscal year. Sales from our digital commerce sites are included within comparable store sales for those geographies that have been servicedby the related site for at least one full fiscal year. Sales for digital commerce sites that are shut down during a fiscal year are excluded from the calculation ofcomparable store sales. We use an integrated omni-channel strategy to operate our retail business, in which our digital commerce operations areinterdependent with our physical stores. All comparable store sales metrics were calculated on a 52-week basis.Our "Results of Operations" discussion that follows includes the significant changes in operating results arising from these items affectingcomparability. However, unusual items or transactions may occur in any period. Accordingly, investors and other financial statement users should considerthe types of events and transactions that have affected operating trends.43 RESULTS OF OPERATIONSFiscal 2018 Compared to Fiscal 2017The following table summarizes our results of operations and expresses the percentage relationship to net revenues of certain financial statementcaptions. All percentages shown in the below table and the discussion that follows have been calculated using unrounded numbers. Fiscal Years Ended March 31, 2018 April 1, 2017 $Change % / bpsChange (millions, except per share data) Net revenues $6,182.3 $6,652.8 $(470.5) (7.1%)Cost of goods sold (2,430.6) (3,001.7) 571.1 (19.0%)Gross profit 3,751.7 3,651.1 100.6 2.8%Gross profit as % of net revenues 60.7% 54.9% 580 bpsSelling, general, and administrative expenses (3,095.5) (3,171.0) 75.5 (2.4%)SG&A expenses as % of net revenues 50.1% 47.7% 240 bpsImpairment of assets (50.0) (253.8) 203.8 (80.3%)Restructuring and other charges (108.0) (318.6) 210.6 (66.1%)Operating income (loss) 498.2 (92.3) 590.5 NMOperating income (loss) as % of net revenues 8.1% (1.4%) 950 bpsInterest expense (18.2) (12.4) (5.8) 46.8%Interest income 12.3 7.3 5.0 69.0%Other expense, net (3.1) (7.5) 4.4 (57.9%)Income (loss) before income taxes 489.2 (104.9) 594.1 NMIncome tax benefit (provision) (326.4) 5.6 (332.0) NMEffective tax rate(a) 66.7% 5.3 % 6,140 bpsNet income (loss) $162.8 $(99.3) $262.1 NMNet income (loss) per common share: Basic $1.99 $(1.20) $3.19 NM Diluted $1.97 $(1.20) $3.17 NM (a) Effective tax rate is calculated by dividing the income tax benefit (provision) by income (loss) before income taxes.NM Not meaningful.Net Revenues. Net revenues decreased by $470.5 million, or 7.1%, to $6.182 billion in Fiscal 2018 as compared to Fiscal 2017, including netfavorable foreign currency effects of $86.5 million. On a constant currency basis, net revenues decreased by $557.0 million, or 8.4%.The following table summarizes the percentage change in our Fiscal 2018 consolidated comparable store sales as compared to the prior fiscal year onboth a reported and constant currency basis: AsReported ConstantCurrencyDigital commerce comparable store sales (15%) (16%)Comparable store sales excluding digital commerce (2%) (3%)Total comparable store sales (4%) (5%)44 Our global average store count increased by two stores and concession shops during Fiscal 2018 compared with the prior fiscal year, primarily due tonew openings in Asia, largely offset by global closures primarily associated with the Way Forward Plan. The following table details our retail store presenceby segment as of the periods presented: March 31, 2018 April 1, 2017Freestanding Stores: North America 215 216Europe 81 82Asia 105 89Other non-reportable segments 71 79Total freestanding stores 472 466 Concession Shops: North America 2 1Europe 25 31Asia 603 586Other non-reportable segments 2 2Total concession shops 632 620Total stores 1,104 1,086In addition to our stores, we sell products online in North America and Europe through our various digital commerce sites, which includewww.RalphLauren.com and www.ClubMonaco.com, among others. In Asia, we sell products online through various third-party digital partner commercesites.Net revenues for our segments, as well as a discussion of the changes in each reportable segment's net revenues from the prior fiscal year, are providedbelow: Fiscal Years Ended $ Change ForeignExchangeImpact $ Change % Change March 31, 2018 April 1, 2017 AsReported ConstantCurrency AsReported ConstantCurrency (millions) Net Revenues: North America $3,231.0 $3,783.0 $(552.0) $3.0 $(555.0) (14.6%) (14.7%)Europe 1,585.0 1,543.4 41.6 81.2 (39.6) 2.7% (2.6%)Asia 933.7 882.5 51.2 1.9 49.3 5.8% 5.6%Other non-reportable segments 432.6 443.9 (11.3) 0.4 (11.7) (2.5%) (2.6%)Total net revenues $6,182.3 $6,652.8 $(470.5) $86.5 $(557.0) (7.1%) (8.4%)North America net revenues — Net revenues decreased by $552.0 million, or 14.6%, during Fiscal 2018 as compared to Fiscal 2017, including netfavorable foreign currency effects of $3.0 million. On a constant currency basis, net revenues decreased by $555.0 million, or 14.7%.The $552.0 million net decline in North America net revenues was driven by:•a $435.0 million net decrease related to our North America wholesale business, largely driven by a strategic reduction of shipments (includingwithin the off-price channel) and points of distribution in connection with our long-term growth strategy, the impact of brand discontinuances,and the continued challenging department store traffic trends;•a $115.0 million net decrease in comparable store sales, primarily driven by lower sales from our Ralph Lauren digital commerce operations andcertain of our retail stores due in part to a decline in traffic, as well as lower levels of promotional activity and a planned reduction in inventoryin connection with our long-term growth strategy. The following table summarizes the percentage change in comparable store sales related toour North America retail business on both a reported and constant currency basis:45  AsReported ConstantCurrencyDigital commerce comparable store sales (22%) (22%)Comparable store sales excluding digital commerce (3%) (3%)Total comparable store sales (7%) (7%)•a $2.0 million net decrease in non-comparable store sales.Europe net revenues — Net revenues increased by $41.6 million, or 2.7%, during Fiscal 2018 as compared to Fiscal 2017, including net favorableforeign currency effects of $81.2 million. On a constant currency basis, net revenues decreased by $39.6 million, or 2.6%.The $41.6 million net increase in Europe net revenues was driven by:•a $43.5 million net increase in non-comparable store sales, primarily driven by new store openings and net favorable foreign currency effects of$10.1 million; and•a $15.2 million net increase related to our Europe wholesale business, largely driven by net favorable foreign currency effects of $45.1 million,partially offset by the impact of brand discontinuances and a strategic reduction of shipments within the off-price channel in connection withour long-term growth strategy.These increases were partially offset by:•a $17.1 million net decrease in comparable store sales, including net favorable foreign currency effects of $26.0 million. Our comparable storesales decreased by $43.1 million on a constant currency basis, primarily driven by lower sales from certain of our retail stores due in part tolower levels of promotional activity and a planned reduction in inventory in connection with our long-term growth strategy. The followingtable summarizes the percentage change in comparable store sales related to our Europe retail business on both a reported and constant currencybasis: AsReported ConstantCurrencyDigital commerce comparable store sales 4% (2%)Comparable store sales excluding digital commerce (4%) (8%)Total comparable store sales (3%) (7%)Asia net revenues — Net revenues increased by $51.2 million, or 5.8%, during Fiscal 2018 as compared to Fiscal 2017, including net favorable foreigncurrency effects of $1.9 million. On a constant currency basis, net revenues increased by $49.3 million, or 5.6%.The $51.2 million net increase in Asia net revenues was driven by:•a $21.4 million net increase in non-comparable store sales, primarily driven by new store openings;•an $18.3 million net increase in comparable store sales, including net favorable foreign currency effects of $1.0 million. Our comparable storesales increased by $17.3 million on a constant currency basis, primarily driven by higher sales from certain of our retail locations due in part toimproved conversion, partially offset by the impact of lower levels of promotional activity in connection with our long-term growth strategy.The following table summarizes the percentage change in comparable store sales related to our Asia retail business on both a reported andconstant currency basis: AsReported ConstantCurrencyTotal comparable store sales(a) 3% 3% (a) Comparable store sales for our Asia segment were comprised primarily of sales made through our stores and concession shops.•an $11.5 million net increase related to our Asia wholesale business, largely driven by our expansion in Japan.46 Gross Profit. Gross profit increased by $100.6 million, or 2.8%, to $3.752 billion in Fiscal 2018. Gross profit during Fiscal 2018 and Fiscal 2017reflected non-cash inventory-related charges of $7.6 million and $197.9 million, respectively, recorded in connection with the Way Forward Plan. Theincrease in gross profit also included a net favorable foreign currency effect of $64.2 million. Gross profit as a percentage of net revenues increased to 60.7%in Fiscal 2018 from 54.9% in Fiscal 2017. The 580 basis point increase was primarily driven by the lower non-cash inventory-related charges recorded inconnection with the Way Forward Plan during Fiscal 2018 as compared to Fiscal 2017, lower levels of promotional activity in connection with our long-termgrowth strategy, favorable geographic and channel mix, and lower sourcing costs.Gross profit as a percentage of net revenues is dependent upon a variety of factors, including changes in the relative sales mix among distributionchannels, changes in the mix of products sold, the timing and level of promotional activities, foreign currency exchange rates, and fluctuations in materialcosts. These factors, among others, may cause gross profit as a percentage of net revenues to fluctuate from year to year.Selling, General, and Administrative Expenses. SG&A expenses include compensation and benefits, advertising and marketing, rent and occupancy,distribution, information technology, legal, depreciation and amortization, bad debt, and other selling and administrative costs. SG&A expenses decreasedby $75.5 million, or 2.4%, to $3.096 billion in Fiscal 2018. This decrease included a net unfavorable foreign currency effect of $31.8 million. SG&Aexpenses as a percentage of net revenues increased to 50.1% in Fiscal 2018 from 47.7% in Fiscal 2017. The 240 basis point increase was primarily due tooperating deleverage on lower net revenues, as previously discussed, and the unfavorable impact attributable to geographic and channel mix, as a greaterportion of our revenue was generated by our international retail businesses (which typically carry higher operating expense margins). These increases werepartially offset by our operational discipline and cost savings associated with our restructuring activities.The $75.5 million net decline in SG&A expenses was driven by: Fiscal 2018Compared toFiscal 2017 (millions)SG&A expense category: Depreciation and amortization expense $(26.1)Shipping and handling costs (18.4)Compensation-related expenses (16.4)Non-income tax related expenses (9.4)Selling-related expenses (8.3)Rent and occupancy expenses (6.9)Marketing and advertising expenses 21.3Other (11.3)Total decline in SG&A expenses $(75.5)In Fiscal 2019, we remain committed to spending on key strategic initiatives including marketing, digital, expanding and renovating our global retailstores and concession shops, and investing in productivity-enhancing infrastructure. We expect to make these investments while continuing to manage ourcost base with discipline.Impairment of Assets. During Fiscal 2018, we recorded non-cash impairment charges of $41.2 million to write off certain fixed assets related to ourdomestic and international stores, shop-within-shops, and corporate offices. Additionally, as a result of a change in the planned usage of a certain intangibleasset, we recorded a non-cash impairment charge of $8.8 million during Fiscal 2018 to reduce the value of the intangible asset to its estimated fair value.During Fiscal 2017, we recorded non-cash impairment charges of $248.6 million to write off certain fixed assets related to our domestic and internationalstores, shop-within-shops, and corporate offices, as well as our in-house global digital commerce platform which was in development. Additionally, as a resultof the realignment of our segment reporting structure, we recorded a non-cash goodwill impairment charge of $5.2 million during Fiscal 2017. See Note 8 tothe accompanying consolidated financial statements.Restructuring and Other Charges. During Fiscal 2018 and Fiscal 2017, we recorded restructuring charges of $79.2 million and $294.0 million,respectively, in connection with our restructuring plans, consisting of severance and benefits costs, lease termination and store closure costs, other cashcharges, and non-cash accelerated stock-based compensation expense. In addition, during Fiscal 2018, we recorded net other charges of $28.8 millionprimarily related to depreciation expense associated with our47 former Polo store at 711 Fifth Avenue in New York City, our pending customs audit, the departure of Mr. Stefan Larsson, and the reversal of reservesassociated with the settlement of certain non-income tax issues. During Fiscal 2017, we recorded other charges of $24.6 million related to the anticipatedsettlement of certain non-income tax issues and the departure of Mr. Stefan Larsson. See Note 9 to the accompanying consolidated financial statements.Operating Income (Loss). During Fiscal 2018, we reported operating income of $498.2 million, as compared to an operating loss of $92.3 millionduring Fiscal 2017. Our operating results during Fiscal 2018 and Fiscal 2017 were negatively impacted by restructuring-related charges, impairment of assets,and certain other charges totaling $165.6 million and $770.3 million, respectively, as previously discussed. The $590.5 million increase in operating incomealso included a net favorable foreign currency effect of $32.4 million. Operating income as a percentage of net revenues was 8.1% during Fiscal 2018,reflecting a 950 basis point increase from the prior fiscal year. The overall increase in operating income as a percentage of net revenues was primarily drivenby the net decline in restructuring-related charges, impairment of assets, and certain other charges and the increase in our gross profit margin, partially offsetby the increase in SG&A expenses as a percentage of net revenues, all as previously discussed.Operating income (loss) and margin for our segments, as well as a discussion of the changes in each reportable segment's operating margin from theprior fiscal year, are provided below: Fiscal Years Ended March 31, 2018 April 1, 2017 OperatingIncome(Loss) OperatingMargin OperatingIncome(Loss) OperatingMargin $Change MarginChange (millions) (millions) (millions) Segment: North America $677.6 21.0% $666.8 17.6% $10.8 340 bpsEurope 356.7 22.5% 305.2 19.8% 51.5 270 bpsAsia 137.2 14.7% (86.3) (9.8%) 223.5 2,450 bpsOther non-reportable segments 107.5 24.9% 81.0 18.2% 26.5 670 bps 1,279.0 966.7 312.3 Unallocated corporate expenses (672.8) (740.4) 67.6 Unallocated restructuring and other charges (108.0) (318.6) 210.6 Total operating income (loss) $498.2 8.1% $(92.3) (1.4%) $590.5 950 bpsNorth America operating margin improved by 340 basis points, primarily due to the favorable impact of 100 basis points related to our retail business,largely driven by the increase in our gross profit margin. The increase also reflected the favorable impact of 240 basis points related to lower non-cashcharges recorded in connection with the Way Forward Plan during Fiscal 2018 as compared to the prior fiscal year. Our wholesale business did not have ameaningful impact on the change in our North America operating margin, as the improved gross margin was offset by operating expense deleverage on lowernet revenues.Europe operating margin improved by 270 basis points, primarily due to the favorable impact of 130 basis points related to lower non-cash chargesrecorded in connection with the Way Forward Plan during Fiscal 2018 as compared to the prior fiscal year, as well as the favorable impact of 120 basis pointsrelated to our retail business, largely driven by the increase in our gross profit margin, partially offset by an increase in SG&A expenses as a percentage of netrevenues. The increase also reflected favorable foreign currency effects of 20 basis points. Our wholesale business did not have a meaningful impact on thechange in our Europe operating margin.Asia operating margin improved by 2,450 basis points, primarily due to the favorable impact of 2,000 basis points related to lower non-cash chargesrecorded in connection with the Way Forward Plan during Fiscal 2018 as compared to the prior fiscal year. The increase also reflected the favorable impact of350 basis points related to our retail business, largely driven by the increase in our gross profit margin and a decline in SG&A expenses as a percentage of netrevenues. The improvement also reflected favorable foreign currency effects of 140 basis points. These increases in operating margin were partially offset by a40 basis point decline related to our wholesale business.48 Unallocated corporate expenses decreased by $67.6 million to $672.8 million in Fiscal 2018, primarily due to lower impairment of asset charges of$96.3 million, lower non-income tax related expenses of $9.4 million, and lower other expenses of $10.7 million, partially offset by lower intercompanysourcing commission income of $31.9 million (which is offset at the segment level and eliminates in consolidation), higher consulting fees of $8.7 million,and higher compensation-related expenses of $8.2 million.Unallocated restructuring and other charges decreased by $210.6 million to $108.0 million in Fiscal 2018, as previously discussed above and inNote 9 to the accompanying consolidated financial statements.Non-operating Expense, Net. Non-operating expense, net is comprised of interest expense, interest income, and other expense, net, which includesforeign currency gains (losses), equity in losses from our equity-method investees, and other non-operating expenses. Non-operating expense, net, decreasedby $3.6 million to $9.0 million in Fiscal 2018 from $12.6 million in Fiscal 2017. The decline in non-operating expense, net, was driven by:•a $5.0 million increase in interest income driven by the increase in our cash, cash equivalents, and investments as compared to the prior fiscalyear; and•a $3.4 million increase in foreign currency gains, largely related to the net favorable revaluation and settlement of foreign currency-denominated intercompany receivables and payables, inclusive of the impact of forward foreign currency exchange contracts, as compared tothe prior fiscal year (foreign currency gains (losses) do not result from the translation of the operating results of our foreign subsidiaries to U.S.Dollars).These declines in non-operating expense were partially offset by:•a $5.8 million increase in interest expense driven by the less favorable impact of our swap contracts during Fiscal 2018 as compared to the priorfiscal year. See Note 13 to the accompanying consolidated financial statements for further discussion of our swap contracts.Income Tax Benefit (Provision). The income tax benefit (provision) represents federal, foreign, state and local income taxes. During Fiscal 2018, wereported an income tax provision of $326.4 million and an effective tax rate of 66.7%, as compared to an income tax benefit of $5.6 million and an effectivetax rate of 5.3% during Fiscal 2017. The $332.0 million increase in the income tax provision was primarily due to enactment-related charges of $221.4million recorded during Fiscal 2018 in connection with the TCJA (as discussed within "Recent Developments"), which negatively impacted our effective taxrate by 4,520 basis points, as well as the increase in pretax income. The 66.7% effective tax rate for Fiscal 2018 was higher than our blended statutory tax rateof 31.5% primarily due to TCJA enactment-related charges, the adoption of Accounting Standards Update No. 2016-09, "Improvements to Employee Share-Based Payment Accounting" ("ASU 2016-09"), and the unfavorable impact of additional income tax reserves associated with certain income tax audits,partially offset by the tax impacts of earnings in lower taxed foreign jurisdictions versus the U.S. and tax benefits associated with adjustments recorded ondeferred tax assets and provision to tax return adjustments. See Note 4 to the accompanying consolidated financial statements for additional informationrelating to our adoption of ASU 2016-09. The 5.3% effective tax rate for Fiscal 2017 was lower than the statutory tax rate of 35.0% primarily due to the taximpact of earnings in lower taxed foreign jurisdictions versus the U.S., valuation allowances and adjustments recorded on deferred tax assets, and income taxreserves largely associated with an income tax settlement and certain income tax audits, partially offset by the reversal of an income tax reserve resulting froma change in tax law that impacted an interest assessment on a prior year withholding tax. Our effective tax rate will change from period to period based onvarious factors including, but not limited to, the geographic mix of earnings, the timing and amount of foreign dividends, enacted tax legislation, state andlocal taxes, tax audit findings and settlements, and the interaction of various global tax strategies.Net Income (Loss). During Fiscal 2018, we reported net income of $162.8 million, as compared to a net loss of $99.3 million during Fiscal 2017. The$262.1 million increase in net income was primarily due to the $590.5 million increase in operating income, partially offset by the $332.0 million increase inour income tax provision, as previously discussed. Net income in Fiscal 2018 reflected TCJA enactment-related charges of $221.4 million. Our operatingresults during Fiscal 2018 and Fiscal 2017 were also negatively impacted by restructuring-related charges, impairment of assets, and certain other chargestotaling $165.6 million and $770.3 million, respectively, which had an after-tax effect of reducing net income by $113.3 million and $592.1 million,respectively. In addition, our net loss during Fiscal 2017 reflected the favorable impact of $15.9 million related to the reversal of an income tax reserveresulting from a change in tax law that impacted an interest assessment on a prior year withholding tax.49 Net Income (Loss) per Diluted Share. During Fiscal 2018, we reported net income per diluted share of $1.97, as compared to a net loss per dilutedshare of $1.20 during Fiscal 2017. The $3.17 per share increase was due to the higher level of net income, as previously discussed, and lower weighted-average diluted shares outstanding during Fiscal 2018, driven by the weighted-average impact of our share repurchases during Fiscal 2017. Net income perdiluted share during Fiscal 2018 was negatively impacted by $2.68 per share as a result of TCJA enactment-related charges. Net income (loss) per dilutedshare during Fiscal 2018 and Fiscal 2017 were also negatively impacted by $1.38 per share and $7.10 per share, respectively, as a result of restructuring-related charges, impairment of assets, and certain other charges. In addition, our net loss per diluted share during Fiscal 2017 reflected the favorable impact of$0.19 per share related to the reversal of an income tax reserve resulting from a change in tax law that impacted an interest assessment on a prior yearwithholding tax.Fiscal 2017 Compared to Fiscal 2016The following table summarizes our results of operations and expresses the percentage relationship to net revenues of certain financial statementcaptions. All percentages shown in the below table and the discussion that follows have been calculated using unrounded numbers. Fiscal Years Ended April 1, 2017 April 2, 2016 $Change % / bpsChange (millions, except per share data) Net revenues $6,652.8 $7,405.2 $(752.4) (10.2%)Cost of goods sold (3,001.7) (3,218.5) 216.8 (6.7%)Gross profit 3,651.1 4,186.7 (535.6) (12.8%)Gross profit as % of net revenues 54.9% 56.5% (160 bps)Selling, general, and administrative expenses (3,171.0) (3,412.5) 241.5 (7.1%)SG&A expenses as % of net revenues 47.7% 46.1% 160 bpsImpairment of assets (253.8) (48.8) (205.0) NMRestructuring and other charges (318.6) (142.6) (176.0) 123.4%Operating income (loss) (92.3) 582.8 (675.1) (115.8%)Operating income (loss) as % of net revenues (1.4%) 7.9% (930 bps)Interest expense (12.4) (21.0) 8.6 (41.0%)Interest income 7.3 6.3 1.0 14.9%Other expense, net (7.5) (16.3) 8.8 (53.9%)Income (loss) before income taxes (104.9) 551.8 (656.7) (119.0%)Income tax benefit (provision) 5.6 (155.4) 161.0 (103.6%)Effective tax rate(a) 5.3% 28.2% (2,290 bps)Net income (loss) $(99.3) $396.4 $(495.7) (125.1%)Net income (loss) per common share: Basic $(1.20) $4.65 $(5.85) (125.8%) Diluted $(1.20) $4.62 $(5.82) (126.0%) (a) Effective tax rate is calculated by dividing the income tax benefit (provision) by income (loss) before income taxes.NM Not meaningful.Net Revenues. Net revenues decreased by $752.4 million, or 10.2%, to $6.653 billion in Fiscal 2017. This decrease reflected net unfavorable foreigncurrency effects of $21.2 million, as well as the absence of the 53rd week, which resulted in incremental net revenues of $72.2 million during the prior fiscalyear. On a constant currency basis, net revenues decreased by $731.2 million, or 9.9%.50 The following table summarizes the percentage change in our Fiscal 2017 consolidated comparable store sales as compared to the prior fiscal year onboth a reported and constant currency basis: AsReported ConstantCurrencyDigital commerce comparable store sales (10%) (10%)Comparable store sales excluding digital commerce (7%) (7%)Total comparable store sales (7%) (7%)Our global average store count increased by 44 stores and concession shops during Fiscal 2017 compared with the prior fiscal year, due to new globalstore openings, primarily in Asia, partially offset by store closures, primarily associated with our Way Forward Plan. The following table details our retailstore presence by segment as of the periods presented: April 1, 2017 April 2, 2016Freestanding Stores: North America 216 224Europe 82 87Asia 89 105Other non-reportable segments 79 77Total freestanding stores 466 493 Concession Shops: North America 1 2Europe 31 34Asia 586 545Other non-reportable segments 2 2Total concession shops 620 583Total stores 1,086 1,076In addition to our stores, we sold products online in North America and Europe through our various digital commerce sites, which includewww.RalphLauren.com and www.ClubMonaco.com, among others. In Asia, we sell products online through various third-party digital partner commercesites.Net revenues for our segments, as well as a discussion of the changes in each reportable segment's net revenues from the prior fiscal year, are providedbelow: Fiscal Years Ended $ Change ForeignExchangeImpact $ Change % Change April 1, 2017 April 2, 2016 AsReported ConstantCurrency AsReported ConstantCurrency (millions) Net Revenues: North America $3,783.0 $4,479.6 $(696.6) $(0.4) $(696.2) (15.6%) (15.5%)Europe 1,543.4 1,561.7 (18.3) (64.3) 46.0 (1.2%) 2.9%Asia 882.5 892.4 (9.9) 43.6 (53.5) (1.1%) (6.0%)Other non-reportable segments 443.9 471.5 (27.6) (0.1) (27.5) (5.8%) (5.8%)Total net revenues $6,652.8 $7,405.2 $(752.4) $(21.2) $(731.2) (10.2%) (9.9%)North America net revenues — Net revenues decreased by $696.6 million, or 15.6%, during Fiscal 2017 as compared to Fiscal 2016. This decreasereflected net unfavorable foreign currency effects of $0.4 million, as well as the absence of the 53rd week, which resulted in incremental net revenues of $38.2million during the prior fiscal year. On a constant currency basis, net revenues decreased by $696.2 million, or 15.5%.51 The $696.6 million net decline in North America net revenues was driven by:•a $510.3 million net decrease related to our North America wholesale business, reflecting lower sales across all of our major apparel andaccessories businesses, due in part to a strategic reduction of shipments in connection with our long-term growth strategy and a decline indepartment store traffic, which contributed to a more competitive retail environment. This decrease also reflected the absence of the 53rd week,which resulted in incremental net revenues of $10.0 million during the prior fiscal year;•a $165.5 million net decrease in comparable store sales, primarily driven by lower sales from certain of our retail stores and Ralph Lauren digitalcommerce operations due in part to a decline in traffic. The following table summarizes our comparable store sales percentages on both areported and constant currency basis related to our North America retail business: AsReported ConstantCurrencyDigital commerce comparable store sales (15%) (15%)Comparable store sales excluding digital commerce (8%) (8%)Total comparable store sales (10%) (10%)•a $20.8 million net decrease in non-comparable store sales, primarily driven by the absence of the 53rd week, which resulted in incremental netrevenues of $28.2 million during the prior fiscal year, partially offset by new store openings during Fiscal 2017.Europe net revenues — Net revenues decreased by $18.3 million, or 1.2%, during Fiscal 2017 as compared to Fiscal 2016. This decrease reflected netunfavorable foreign currency effects of $64.3 million, as well as the absence of the 53rd week, which resulted in incremental net revenues of $14.3 millionduring the prior fiscal year. On a constant currency basis, net revenues increased by $46.0 million, or 2.9%.The $18.3 million net decline in Europe net revenues was driven by:•a $57.1 million net decrease in comparable store sales, including net unfavorable foreign currency effects of $26.9 million. Our comparablestore sales decreased by $30.2 million on a constant currency basis, primarily driven by lower sales from certain retail stores due in part to adecline in traffic, as well as lower levels of promotional activity in connection with our long-term growth strategy, partially offset by highersales from our Ralph Lauren digital commerce operations. The following table summarizes our comparable store sales percentages on both areported and constant currency basis related to our Europe retail business: AsReported ConstantCurrencyDigital commerce comparable store sales 7% 11%Comparable store sales excluding digital commerce (10%) (6%)Total comparable store sales (8%) (4%)This decline was partially offset by:•a $25.4 million net increase related to our Europe wholesale business, reflecting increased sales across all of our major apparel and accessoriesbusinesses. This increase was net of unfavorable foreign currency effects of $23.0 million; and•a $13.4 million net increase in non-comparable store sales, primarily driven by new store openings during Fiscal 2017, partially offset by netunfavorable foreign currency effects of $14.4 million and the absence of the 53rd week, which resulted in incremental net revenues of $14.3million during the prior fiscal year.Asia net revenues — Net revenues decreased by $9.9 million, or 1.1%, during Fiscal 2017 as compared to Fiscal 2016, reflecting the absence of the53rd week, which resulted in incremental net revenues of $15.4 million during the prior fiscal year. This decrease is inclusive of net favorable foreigncurrency effects of $43.6 million. On a constant currency basis, net revenues decreased by $53.5 million, or 6.0%.52 The $9.9 million net decline in Asia net revenues was driven by:•a $17.1 million net decrease in non-comparable store sales, primarily driven by the absence of the 53rd week, which resulted in incremental netrevenues of $15.4 million during the prior fiscal year, as well as lower sales from certain of our stores and concession shops due in part to adecline in traffic, lower levels of promotional activity in connection with our long-term growth strategy, and the strategic closure of certain ofour locations, partially offset by net favorable foreign currency effects of $11.1 million and new store openings during Fiscal 2017; and•a $5.1 million net decrease related to our Asia wholesale business, primarily driven by lower sales in Greater China and Southeast Asia, partiallyoffset by net favorable foreign currency effects of $3.4 million.These declines were partially offset by:•a $12.3 million net increase in comparable store sales, including net favorable foreign currency effects of $29.1 million. Our comparable storesales decreased by $16.8 million on a constant currency basis, primarily driven by lower sales from certain of our stores and concession shopsdue in part to a decline in traffic, and lower levels of promotional activity in connection with our long-term growth strategy. The following tablesummarizes our comparable store sales percentage on both a reported and constant currency basis related to our Asia retail business: AsReported ConstantCurrencyTotal comparable store sales(a) 2% (3%) (a) Comparable store sales for our Asia segment were comprised solely of sales made through our stores and concession shops.Gross Profit. Gross profit decreased by $535.6 million, or 12.8%, to $3.651 billion in Fiscal 2017. Gross profit during Fiscal 2017 and Fiscal 2016reflected non-cash inventory-related charges of $197.9 million and $20.4 million, respectively, recorded in connection with our restructuring plans. Grossprofit as a percentage of net revenues declined by 160 basis points to 54.9% in Fiscal 2017 from 56.5% in Fiscal 2016. This decline was primarily driven bythe higher non-cash inventory-related charges recorded in connection with our restructuring plans during Fiscal 2017 as compared to the comparable prioryear period and net unfavorable foreign currency effects, partially offset by increased profitability driven by favorable geographic and channel mix and ourquality of sales initiatives, including lower levels of promotional activity within our international businesses.Selling, General, and Administrative Expenses. SG&A expenses decreased by $241.5 million, or 7.1%, to $3.171 billion in Fiscal 2017. Thisdecrease included a net unfavorable foreign currency effect of $5.3 million. SG&A expenses as a percentage of net revenues increased by 160 basis points to47.7% in Fiscal 2017 from 46.1% in Fiscal 2016. This increase was primarily due to operating deleverage on lower net revenues, as previously discussed, andthe continued investment in, and expansion of, our retail businesses (which typically carry higher operating expense margins) through new store andconcession shop openings (as previously discussed); investments in our facilities and infrastructure; and investments in new business initiatives. Theseincreases were partially offset by our operational discipline and cost savings associated with our restructuring activities.The $241.5 million decline in SG&A expenses was driven by: Fiscal 2017Compared toFiscal 2016 (millions)SG&A expense category: Compensation-related expenses $(108.8)Marketing and advertising expenses (60.1)Consulting fees (23.0)Rent and occupancy expenses (19.3)Shipping and handling costs (12.9)Other (17.4)Total decline in SG&A expenses $(241.5)53 Impairment of Assets. During Fiscal 2017, we recorded non-cash impairment charges of $248.6 million to write off certain fixed assets related to ourdomestic and international stores, shop-within-shops, and corporate offices, as well as our in-house global digital commerce platform which was indevelopment. Additionally, as a result of the realignment of our segment reporting structure, we recorded a non-cash goodwill impairment charge of $5.2million during Fiscal 2017. During Fiscal 2016, we recorded non-cash impairment charges of $48.8 million, primarily to write off certain fixed assets relatedto our domestic and international stores and shop-within-shops. See Note 8 to the accompanying consolidated financial statements.Restructuring and Other Charges. During Fiscal 2017 and Fiscal 2016, we recorded restructuring charges of $294.0 million and $94.9 million,respectively, in connection with our restructuring plans, consisting of severance and benefits costs, lease termination and store closure costs, other cashcharges, and non-cash accelerated stock-based compensation expense. In addition, during Fiscal 2017, we recorded other charges of $24.6 million related tothe anticipated settlement of certain non-income tax issues and the departure of Mr. Stefan Larsson. During Fiscal 2016, we recorded other charges of $47.7million primarily related to our pending customs audit and the settlement of certain litigation claims. See Note 9 to the accompanying consolidated financialstatements.Operating Income (Loss). During Fiscal 2017, we reported an operating loss of $92.3 million, as compared to operating income of $582.8 millionduring Fiscal 2016. Our operating results during Fiscal 2017 and Fiscal 2016 were negatively impacted by restructuring-related charges, impairment of assets,and certain other charges totaling $770.3 million and $211.8 million, respectively, as previously discussed. The $675.1 million decline in operating incomealso included a net unfavorable foreign currency effect of $67.4 million. Operating loss as a percentage of net revenues was 1.4% during Fiscal 2017,reflecting a 930 basis point decline from the prior fiscal year. The overall decline in operating income as a percentage of net revenues was primarily driven bythe decline in our gross profit margin and the increase in restructuring-related charges, impairment of assets, and certain other charges, as well as the increasein SG&A expenses as a percentage of net revenues, all as previously discussed.Operating income (loss) and margin for our segments, as well as a discussion of the changes in each reportable segment's operating margin from theprior fiscal year, are provided below: Fiscal Years Ended April 1, 2017 April 2, 2016 OperatingIncome(Loss) OperatingMargin OperatingIncome(Loss) OperatingMargin $Change MarginChange (millions) (millions) (millions) Segment: North America $666.8 17.6% $941.3 21.0% $(274.5) (340 bps)Europe 305.2 19.8% 281.0 18.0% 24.2 180 bpsAsia (86.3) (9.8%) (1.2) (0.1%) (85.1) (970 bps)Other non-reportable segments 81.0 18.2% 119.3 25.3% (38.3) (710 bps) 966.7 1,340.4 (373.7) Unallocated corporate expenses (740.4) (615.0) (125.4) Unallocated restructuring and other charges (318.6) (142.6) (176.0) Total operating income (loss) $(92.3) (1.4%) $582.8 7.9% $(675.1) (930 bps)North America operating margin declined by 340 basis points, primarily due to the unfavorable impact of 200 basis points related to higher non-cashcharges recorded in connection with our restructuring plans during Fiscal 2017 as compared to the prior fiscal year. Our lower operating margin also reflecteda 70 basis point decline related to our wholesale business, largely driven by the impact of a more competitive retail environment, and a 40 basis point declinerelated to our retail business, largely driven by an increase in SG&A expenses as a percentage of net revenues. The remaining 30 basis point decline wasattributable to other factors, including unfavorable channel mix.Europe operating margin increased by 180 basis points, primarily due to the favorable impact of 360 basis points and 240 basis points related to ourwholesale and retail businesses, respectively, largely driven by the increase in our gross margin attributable to lower levels of promotional activity inconnection with our long-term growth strategy. Our wholesale business also benefited from a decline in SG&A expenses as a percentage of net revenues.These increases in operating margin were partially offset by unfavorable foreign currency effects of 340 basis points, as well as an 80 basis point declineattributable to higher non-cash charges recorded in connection with our restructuring plans during Fiscal 2017 as compared to the prior fiscal year.54 Asia operating margin declined by 970 basis points, primarily due to the unfavorable impact of 1,720 basis points related to higher non-cash chargesrecorded in connection with our restructuring plans during Fiscal 2017 as compared to the prior fiscal year. This decline in operating margin was partiallyoffset by the favorable impact of 690 basis points related to our retail business, largely driven by a decline in SG&A expenses as a percentage of net revenues,lower levels of promotional activity in connection with our long-term growth strategy, and the strategic closure of certain of our locations. Our operatingmargin also reflected the favorable impact of 60 basis points related to our wholesale business.Unallocated corporate expenses increased by $125.4 million, primarily due to higher non-cash impairment charges of $117.0 million, higherdepreciation and amortization expense of $13.5 million, higher non-income tax related charges of $9.3 million, and higher other operating expenses of $37.4million. These increases were partially offset by a decline in compensation-related expenses of $33.4 million and a decline in consulting fees of $18.4million.Unallocated restructuring and other charges increased by $176.0 million to $318.6 million in Fiscal 2017, as previously discussed above and in Note9 to the accompanying consolidated financial statements.Non-operating Expense, Net. Non-operating expense, net, decreased by $18.4 million to $12.6 million in Fiscal 2017 from $31.0 million in Fiscal2016. The decline in non-operating expense was driven by:•an $8.6 million decrease in interest expense driven by the net favorable impact of our swap contracts entered into during Fiscal 2016, partiallyoffset by the inclusion of twelve months of interest expense during Fiscal 2017 related to the 2.625% unsecured senior notes issued in August2015, as compared to approximately seven months of interest expense during the prior year period. See Note 13 to the accompanyingconsolidated financial statements for further discussion of our swap contracts;•a $5.7 million decrease in equity in losses of equity-method investees, primarily related to our share in losses from our joint venture, the RalphLauren Watch and Jewelry Company Sárl, which is accounted for under the equity method of accounting; and•a $4.9 million decrease in foreign currency losses, largely related to the net favorable revaluation and settlement of foreign currency-denominated intercompany receivables and payables, inclusive of the impact of forward foreign currency exchange contracts, as compared tothe prior fiscal year (foreign currency gains (losses) do not result from the translation of the operating results of our foreign subsidiaries to U.S.Dollars).Income Tax Benefit (Provision). During Fiscal 2017, we reported an income tax benefit of $5.6 million, as compared to an income tax provision of$155.4 million during Fiscal 2016. The $161.0 million decrease in the income tax provision was largely driven by lower pretax income resulting in a pretaxloss in Fiscal 2017. The 5.3% effective tax rate for Fiscal 2017 was lower than the statutory tax rate primarily due to the tax impact of earnings in lower taxedforeign jurisdictions versus the U.S., valuation allowances and adjustments recorded on deferred tax assets, and income tax reserves largely associated with anincome tax settlement and certain income tax audits, partially offset by the reversal of an income tax reserve resulting from a change in tax law that impactedan interest assessment on a prior year withholding tax. The 28.2% effective tax rate for Fiscal 2016 was lower than the statutory tax rate primarily due to thetax impact of earnings in lower taxed foreign jurisdictions versus the U.S. and a change to the assessment period associated with certain tax liabilities,partially offset by the reversal of certain deferred tax assets that were determined to not be realizable.Net Income (Loss). During Fiscal 2017, we reported a net loss of $99.3 million, as compared to net income of $396.4 million during Fiscal 2016. The$495.7 million decrease in net income was primarily due to the decline in operating income, partially offset by the reduction in our income tax provision, aspreviously discussed. Our operating results during Fiscal 2017 and Fiscal 2016 were negatively impacted by restructuring-related charges, impairment ofassets, and certain other charges totaling $770.3 million and $211.8 million, respectively, which had an after-tax effect of reducing net income by $592.1million and $150.1 million, respectively. In addition, our net loss during Fiscal 2017 reflected unfavorable foreign currency impacts of $63.6 million,partially offset by the favorable impact of $15.9 million related to the reversal of an income tax reserve resulting from a change in tax law that impacted aninterest assessment on a prior year withholding tax, as previously discussed. Our net income during Fiscal 2016 reflected the favorable impact of theinclusion of the 53rd week, which increased net income by $8.3 million.Net Income (Loss) per Diluted Share. During Fiscal 2017, we reported a net loss per diluted share of $1.20, as compared to net income per dilutedshare of $4.62 during Fiscal 2016. The $5.82 per share decline was due to lower net income, as previously discussed, and lower weighted-average dilutedshares outstanding during Fiscal 2017, driven by our share repurchases during Fiscal 2017. Net income (loss) per diluted share during Fiscal 2017 and Fiscal2016 was negatively impacted by $7.10 per share and $1.74 per share, respectively, as a result of restructuring-related charges, impairment of assets, andcertain other charges, as55 previously discussed. In addition, our net loss per diluted share during Fiscal 2017 reflected unfavorable foreign currency impacts of $0.77 per share,partially offset by the favorable impact of $0.19 per share related to the reversal of an income tax reserve resulting from a change in tax law that impacted aninterest assessment on a prior year withholding tax, as previously discussed. Net income per diluted share during Fiscal 2016 reflected the favorable impact ofthe inclusion of the 53rd week, which increased net income per diluted share by $0.10 per share.FINANCIAL CONDITION AND LIQUIDITYFinancial Condition The following table presents our financial condition as of March 31, 2018 and April 1, 2017. March 31, 2018 April 1, 2017 $Change (millions)Cash and cash equivalents $1,304.6 $668.3 $636.3Short-term investments 699.4 684.7 14.7Non-current investments(a) 86.2 21.4 64.8Short-term debt(b) (10.1) — (10.1)Current portion of long-term debt(b) (298.1) — (298.1)Long-term debt(b) (288.0) (588.2) 300.2Net cash and investments(c) $1,494.0 $786.2 $707.8Equity $3,457.4 $3,299.6 $157.8 (a) Recorded within other non-current assets in our consolidated balance sheets.(b) See Note 11 to the accompanying consolidated financial statements for discussion of the carrying values of our debt.(c) "Net cash and investments" is defined as cash and cash equivalents, plus short-term and non-current investments, less total debt.The increase in our net cash and investments position at March 31, 2018 as compared to April 1, 2017 was primarily due to our operating cash flows of$975.1 million, partially offset by our use of cash to invest in our business through $161.6 million in capital expenditures and to make dividend payments of$162.4 million.The increase in equity was primarily attributable to our comprehensive income and the net impact of stock-based compensation arrangements,partially offset by our dividends declared during Fiscal 2018.Cash FlowsFiscal 2018 Compared to Fiscal 2017 Fiscal Years Ended March 31, 2018 April 1, 2017 $Change (millions)Net cash provided by operating activities $975.1 $952.6 $22.5Net cash used in investing activities (189.1) (208.1) 19.0Net cash used in financing activities (197.5) (518.4) 320.9Effect of exchange rate changes on cash, cash equivalents, and restricted cash 55.2 (16.4) 71.6Net increase in cash, cash equivalents, and restricted cash $643.7 $209.7 $434.056 Net Cash Provided by Operating Activities. Net cash provided by operating activities increased to $975.1 million during Fiscal 2018, from $952.6million during Fiscal 2017. The $22.5 million net increase in cash provided by operating activities was due to a net favorable change related to our operatingassets and liabilities, including our working capital, as compared to the prior fiscal year, partially offset by a decline in net income before non-cash charges.The decline in net income before non-cash charges reflected a net charge of $209.3 million recorded during Fiscal 2018 in connection with the TCJA's one-time mandatory transition tax. This charge, which is expected to be paid over an eight-year period net of foreign tax credits and other federal income taxactivity (see "Contractual and Other Obligations" below), did not impact our cash flows from operating activities during Fiscal 2018 as reflected in theoffsetting net favorable change in our income taxes payable and deferred taxes. Excluding the impact of this enactment-related charge, the net increaserelated to our operating assets and liabilities, including working capital, was primarily due to:•favorable changes in our (i) other income tax receivables and payables (excluding the impact of the one-time mandatory transition tax) and (ii)deferred income, both largely driven by the timing of cash collections and payments.These increases related to our operating assets and liabilities were partially offset by:•a less favorable change related to our inventory in Fiscal 2018 as compared to Fiscal 2017, largely driven by the timing of our inventorymanagement initiatives and the timing of inventory receipts; and•unfavorable changes in our (i) accounts payable and accrued liabilities and (ii) accounts receivable, largely driven by the timing of cashpayments and collections, respectively.Net Cash Used in Investing Activities. Net cash used in investing activities was $189.1 million during Fiscal 2018, as compared to $208.1 millionduring Fiscal 2017. The $19.0 million net decrease in cash used in investing activities was primarily driven by:•a $122.4 million decline in capital expenditures. During Fiscal 2018, we spent $161.6 million on capital expenditures, as compared to $284.0million during Fiscal 2017. Our capital expenditures during Fiscal 2018 primarily related to our global retail and department store renovations,new store openings, and the continued enhancements to our global information technology systems.This decrease in cash used in investing activities was partially offset by:•a $104.9 million increase in purchases of investments, less proceeds from sales and maturities of investments. During Fiscal 2018, we made netinvestment purchases of $22.9 million, as compared to receiving net proceeds from sales and maturities of investments of $82.0 million duringFiscal 2017.In Fiscal 2019, we expect to spend approximately $275 million in capital expenditures, primarily on consumer-facing initiatives that havedemonstrated a proof of concept and healthy rates of return, including our global store fleet and digital ecosystem.Net Cash Used in Financing Activities. Net cash used in financing activities was $197.5 million during Fiscal 2018, as compared to $518.4 millionduring Fiscal 2017. The $320.9 million net decrease in cash used in financing activities was primarily driven by:•a $198.1 million decline in cash used to repurchase shares of our Class A common stock. During Fiscal 2018, $17.1 million in shares of Class Acommon stock were surrendered or withheld in satisfaction of withholding taxes in connection with the vesting of awards under our long-termstock incentive plans. On a comparative basis, during Fiscal 2017, we used $200.0 million to repurchase shares of Class A common stockpursuant to our common stock repurchase program, and an additional $15.2 million in shares of Class A common stock were surrendered orwithheld for taxes; and•a $126.2 million decline in cash used to repay debt, less proceeds from debt issuances. During Fiscal 2018, we received $10.1 million inborrowings under our credit facilities. During Fiscal 2017, we made $90.0 million in net repayments related to our commercial paper noteissuances and repayments and repaid $26.1 million of borrowings previously outstanding under our credit facilities.57 Fiscal 2017 Compared to Fiscal 2016 Fiscal Years Ended April 1, 2017 April 2, 2016 $Change (millions)Net cash provided by operating activities $952.6 $1,016.7 $(64.1)Net cash used in investing activities (208.1) (576.3) 368.2Net cash used in financing activities (518.4) (483.0) (35.4)Effect of exchange rate changes on cash, cash equivalents, and restricted cash (16.4) 7.2 (23.6)Net increase (decrease) in cash, cash equivalents, and restricted cash $209.7 $(35.4) $245.1Net Cash Provided by Operating Activities. Net cash provided by operating activities decreased to $952.6 million during Fiscal 2017, from $1.017billion during Fiscal 2016. The $64.1 million net decrease in cash provided by operating activities was due to a decline in net income before non-cashcharges, partially offset by a net favorable change related to our operating assets and liabilities, including our working capital. The net increase related to ourworking capital was primarily driven by:•a decline in our inventory levels, largely driven by our inventory management initiatives, lower sourcing costs, and the timing of inventoryreceipts.This increase related to our working capital was partially offset by:•an unfavorable change in our accounts receivable, largely driven by the timing of cash collections; and•an unfavorable change in our prepaid expenses and other current assets, largely driven by the timing of payments.Net Cash Used in Investing Activities. Net cash used in investing activities was $208.1 million during Fiscal 2017, as compared to $576.3 millionduring Fiscal 2016. The $368.2 million net decrease in cash used in investing activities was primarily driven by:•a $224.3 million increase in proceeds from sales and maturities of investments, less cash used to purchase investments. During Fiscal 2017, wereceived net proceeds from sales and maturities of investments of $82.0 million, as compared to making net investment purchases of $142.3million during Fiscal 2016; and•a $133.7 million decline in capital expenditures. During Fiscal 2017, we spent $284.0 million on capital expenditures, as compared to $417.7million during Fiscal 2016. Our capital expenditures during Fiscal 2017 primarily related to our global retail store openings, department storerenovations, enhancements to our global information technology systems, and further development of our infrastructure.Net Cash Used in Financing Activities. Net cash used in financing activities was $518.4 million during Fiscal 2017, as compared to $483.0 millionduring Fiscal 2016. The $35.4 million net increase in cash used in financing activities was primarily driven by:•a $296.8 million increase in cash used to repay debt, less proceeds from debt issuances. During Fiscal 2017, we made $90.0 million in netrepayments related to our commercial paper note issuances and repayments and repaid $26.1 million of borrowings previously outstandingunder our credit facilities. During Fiscal 2016, we received net proceeds of $299.4 million from the issuance of our 2.625% unsecured seniornotes and $26.1 million in borrowings under our credit facilities, which were partially offset by net repayments of $144.8 million related to ourcommercial paper note issuances and repayments; and•a $28.2 million decline in proceeds from the exercise of stock options.These increases in cash used in financing activities were partially offset by:•a $285.2 million decrease in cash used to repurchase shares of our Class A common stock. During Fiscal 2017, we used $200.0 million torepurchase shares of Class A common stock pursuant to our common stock repurchase program, and an additional $15.2 million in shares ofClass A common stock were surrendered or withheld in satisfaction of58 withholding taxes in connection with the vesting of awards under our long-term stock incentive plans. On a comparative basis, during Fiscal2016, we used $479.9 million to repurchase shares of Class A common stock pursuant to our common stock repurchase program, and anadditional $20.5 million in shares of Class A common stock were surrendered or withheld for taxes.Sources of LiquidityOur primary sources of liquidity are the cash flows generated from our operations, our available cash and cash equivalents and short-term investments,availability under our credit facilities, our issuances of commercial paper notes, and other available financing options.During Fiscal 2018, we generated $975.1 million of net cash flows from our operations. As of March 31, 2018, we had $2.004 billion in cash, cashequivalents, and short-term investments, of which $1.064 billion were held by our subsidiaries domiciled outside the U.S. We are not dependent on foreigncash to fund our domestic operations. Given recent changes to the taxation of undistributed foreign earnings in connection with the TCJA (as discussedwithin "Recent Developments"), we have reevaluated our permanent reinvestment assertion and determined that undistributed foreign earnings that weresubject to the TCJA's one-time mandatory transition tax were no longer considered to be permanently reinvested, effective December 31, 2017. In connectionwith this decision, we repatriated $252.0 million of cash to the U.S. from certain of our foreign subsidiaries during the fourth quarter of Fiscal 2018, and werepatriated an additional $400.0 million during the first quarter of Fiscal 2019. In addition, we recorded a deferred tax liability of $7.1 million for theexpected future remittance of previously taxed foreign earnings. The mandatory transition tax does not apply to undistributed foreign earnings generatedafter December 31, 2017, and therefore we intend to permanently reinvest any such earnings. However, if our plans change and we choose to repatriate post-2017 earnings to the U.S. in the future, we would be subject to applicable U.S. and foreign taxes.The following table presents our total availability, borrowings outstanding, and remaining availability under our credit facilities and CommercialPaper Program as of March 31, 2018: March 31, 2018Description(a) TotalAvailability BorrowingsOutstanding RemainingAvailability (millions)Global Credit Facility and Commercial Paper Program(b) $500 $8(c) $492Pan-Asia Credit Facilities 52 10 42 (a) As defined in Note 11 to the accompanying consolidated financial statements.(b) Borrowings under the Commercial Paper Program are supported by the Global Credit Facility. Accordingly, we do not expect combinedborrowings outstanding under the Commercial Paper Program and the Global Credit Facility to exceed $500 million.(c) Represents outstanding letters of credit for which we were contingently liable under the Global Credit Facility as of March 31, 2018.We believe that the Global Credit Facility is adequately diversified with no undue concentration in any one financial institution. In particular, as ofMarch 31, 2018, there were nine financial institutions participating in the Global Credit Facility, with no one participant maintaining a maximumcommitment percentage in excess of 20%. Borrowings under the Pan-Asia Credit Facilities are guaranteed by the parent company and are granted at the solediscretion of the participating regional branches of JPMorgan Chase (the "Banks"), subject to availability of the Banks' funds and satisfaction of certainregulatory requirements. We have no reason to believe that the participating institutions will be unable to fulfill their obligations to provide financing inaccordance with the terms of the Global Credit Facility and the Pan-Asia Credit Facilities in the event of our election to draw funds in the foreseeable future.Our sources of liquidity are used to fund our ongoing cash requirements, including working capital requirements, global retail store and digitalcommerce expansion, construction and renovation of shop-within-shops, investment in infrastructure, including technology, acquisitions, joint ventures,payment of dividends, debt repayments, Class A common stock repurchases, settlement of contingent liabilities (including uncertain tax positions), and othercorporate activities, including our restructuring actions. We believe that our existing sources of cash, the availability under our credit facilities, and ourability to access capital markets will be sufficient to support our operating, capital, and debt service requirements for the foreseeable future, the ongoingdevelopment of our businesses, and our plans for further business expansion.59 See Note 11 to the accompanying consolidated financial statements for additional information relating to our credit facilities.Common Stock Repurchase ProgramAs of March 31, 2018, the remaining availability under our Class A common stock repurchase program was approximately $100 million. Repurchasesof shares of Class A common stock are subject to overall business and market conditions.See Note 15 to the accompanying consolidated financial statements for additional information relating to our Class A common stock repurchaseprogram.DividendsSince 2003, we have maintained, and intend to continue to maintain, a regular quarterly cash dividend program on our common stock. However, anydecision to declare and pay dividends in the future will be made at the discretion of our Board of Directors and will depend on our results of operations, cashrequirements, financial condition, and other factors that the Board of Directors may deem relevant.See Note 15 to the accompanying consolidated financial statements for additional information relating to our quarterly cash dividend program.Debt and Covenant ComplianceIn September 2013, we completed a registered public debt offering and issued $300 million aggregate principal amount of unsecured senior notes dueSeptember 26, 2018, which bear interest at a fixed rate of 2.125%, payable semi-annually (the "2.125% Senior Notes"). In August 2015, we completed asecond registered public debt offering and issued an additional $300 million aggregate principal amount of unsecured senior notes due August 18, 2020,which bear interest at a fixed rate of 2.625%, payable semi-annually (the "2.625% Senior Notes").The indenture and supplemental indentures governing the 2.125% Senior Notes and 2.625% Senior Notes (as supplemented, the "Indenture") containcertain covenants that restrict our ability, subject to specified exceptions, to incur certain liens; enter into sale and leaseback transactions; consolidate ormerge with another party; or sell, lease, or convey all or substantially all of our property or assets to another party. However, the Indenture does not containany financial covenants.The Global Credit Facility contains a number of covenants, as described in Note 11 to the accompanying consolidated financial statements. As ofMarch 31, 2018, no Event of Default (as such term is defined pursuant to the Global Credit Facility) has occurred under our Global Credit Facility. The Pan-Asia Credit Facilities do not contain any financial covenants.See Note 11 to the accompanying consolidated financial statements for additional information relating to our debt and covenant compliance.60 Contractual and Other ObligationsFirm CommitmentsThe following table summarizes certain of our aggregate contractual obligations as of March 31, 2018, and the estimated timing and effect that suchobligations are expected to have on our liquidity and cash flows in future periods. We expect to fund these firm commitments with operating cash flowsgenerated in the normal course of business and, if necessary, through availability under our credit facilities or other accessible sources of financing. Fiscal2019 Fiscal2020-2021 Fiscal2022-2023 Fiscal2024 andThereafter Total (millions)Senior Notes $300.0 $300.0 $— $— $600.0Interest payments on Senior Notes 11.1 11.8 — — 22.9Operating leases 343.8 580.7 419.2 504.5 1,848.2Capital leases 29.6 62.4 58.3 78.5 228.8Inventory purchase commitments 741.7 — — — 741.7Mandatory transition tax payments 23.0 23.2 30.8 70.8 147.8Other commitments 40.6 55.4 11.0 — 107.0Total $1,489.8 $1,033.5 $519.3 $653.8 $3,696.4The following is a description of our material, firmly committed obligations as of March 31, 2018:•Senior Notes represent the principal amount of our outstanding 2.125% Senior Notes and 2.625% Senior Notes. Amounts do not include anyfair value adjustments, call premiums, unamortized debt issuance costs, or interest payments (see below);•Interest payments on Senior Notes represent the semi-annual contractual interest payments due on our 2.125% Senior Notes and 2.625% SeniorNotes. Amounts do not include the impact of potential cash flows underlying our swap contracts entered into during Fiscal 2016 (see Note 13 tothe accompanying consolidated financial statements for discussion of our swap contracts);•Lease obligations represent the minimum rental payments due under noncancelable leases for our real estate and operating equipment. Inaddition to such amounts, we are normally required to pay taxes, insurance, and certain occupancy costs relating to our leased real estateproperties, which are not included in the table above. Approximately 75% of these lease obligations relate to our retail operations. Informationhas been presented separately for operating and capital leases;•Inventory purchase commitments represent our legally-binding agreements to purchase fixed or minimum quantities of goods at determinableprices;•Mandatory transition tax payments represent our tax obligation incurred in connection with the deemed repatriation of previously deferredforeign earnings pursuant to the TCJA (see Note 10 to the accompanying consolidated financial statements for discussion of the TCJA). Theexpected mandatory transition tax payments have been presented net of foreign tax credits and other federal income tax activity of $61.5million, which we expect to utilize to partially reduce this tax obligation; and•Other commitments primarily represent our legally-binding obligations under sponsorship, licensing, and other marketing and advertisingagreements; distribution-related agreements; information technology-related service agreements; and pension-related obligations.Excluded from the above contractual obligations table is the non-current liability for unrecognized tax benefits of $79.2 million as of March 31, 2018,as we cannot make a reliable estimate of the period in which the liability will be settled, if ever. The above table also excludes the following: (i) other thanthe current portion of long-term debt, capital lease obligations, and mandatory transition tax payments, amounts recorded in current liabilities in ourconsolidated balance sheet as of March 31, 2018, including $10.1 million in borrowings outstanding under our Pan-Asia Credit Facilities, which will be paidwithin one year; and (ii) non-current liabilities that have no cash outflows associated with them (e.g., deferred revenue), or the cash outflows associated with61 them are uncertain or do not represent a "purchase obligation" as the term is used herein (e.g., deferred taxes, derivative financial instruments, and othermiscellaneous items).We also have certain contractual arrangements that would require us to make payments if certain events or circumstances occur. See Note 14 to theaccompanying consolidated financial statements for a description of our contingent commitments not included in the above table.Off-Balance Sheet ArrangementsIn addition to the commitments included in the above table, our other off-balance sheet firm commitments relating to our outstanding letters of creditamounted to $9.3 million as of March 31, 2018. We do not maintain any other off-balance sheet arrangements, transactions, obligations, or otherrelationships with unconsolidated entities that would be expected to have a material current or future effect on our consolidated financial statements.MARKET RISK MANAGEMENTAs discussed in Note 13 to the accompanying consolidated financial statements, we are exposed to a variety of risks, including changes in foreigncurrency exchange rates relating to foreign currency-denominated balances, certain anticipated cash flows from our international operations, and possibledeclines in the value of reported net assets of our foreign operations, as well as changes in the fair value of our fixed-rate debt relating to changes in interestrates. Consequently, at times, in the normal course of business, we employ established policies and procedures, including the use of derivative financialinstruments, to manage such risks. We do not enter into derivative transactions for speculative or trading purposes.As a result of the use of derivative instruments, we are exposed to the risk that counterparties to our contracts will fail to meet their contractualobligations. To mitigate this counterparty credit risk, we have a policy of only entering into contracts with carefully selected financial institutions basedupon an evaluation of their credit ratings and certain other factors, adhering to established limits for credit exposure. Our established policies and proceduresfor mitigating credit risk from derivative transactions include ongoing review and assessment of the creditworthiness of our counterparties. We also enter intomaster netting arrangements with counterparties, when possible, to mitigate credit risk associated with our derivative instruments. As a result of the aboveconsiderations, we do not believe that we are exposed to any undue concentration of counterparty risk with respect to our derivative contracts as of March 31,2018. However, we do have in aggregate $1.6 million of derivative instruments in net asset positions with two creditworthy financial institutions.Foreign Currency Risk ManagementWe manage our exposure to changes in foreign currency exchange rates through the use of forward foreign currency exchange and cross-currency swapcontracts. Refer to Note 13 to the accompanying consolidated financial statements for a summary of the notional amounts and fair values of our forwardforeign currency exchange and cross-currency swap contracts outstanding as of March 31, 2018.Forward Foreign Currency Exchange ContractsWe enter into forward foreign currency exchange contracts as hedges to reduce our risk related to exchange rate fluctuations on inventory transactionsmade in an entity's non-functional currency, intercompany royalty payments made by certain of our international operations, the settlement of foreigncurrency-denominated balances, and the translation of certain foreign operations' net assets into U.S. Dollars. As part of our overall strategy to manage thelevel 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 KoreanWon, the Australian Dollar, the Canadian Dollar, the British Pound Sterling, the Swiss Franc, the Swedish Krona, the Chinese Renminbi, the New TaiwanDollar, and the Hong Kong Dollar, we hedge a portion of our foreign currency exposures anticipated over a two-year period. In doing so, we use forwardforeign currency exchange contracts that generally have maturities of two months to two years to provide continuing coverage throughout the hedgingperiod of the respective exposure.Our foreign exchange risk management activities are governed by our Company's established policies and procedures. These policies and proceduresprovide a framework that allows for the management of currency exposures while ensuring the activities are conducted within our established guidelines. Ourpolicies include guidelines for the organizational structure of our risk management function and for internal controls over foreign exchange risk managementactivities, including, but not limited to, authorization levels, transaction limits, and credit quality controls, as well as various measurements for monitoringcompliance. We monitor foreign exchange risk using different techniques, including a periodic review of market values and sensitivity analyses.62 We record our forward foreign currency exchange contracts at fair value in our consolidated balance sheets. To the extent forward foreign currencyexchange contracts are designated as cash flow hedges and are highly effective in offsetting changes in the value of the hedged items, the related gains orlosses are initially deferred in equity as a component of accumulated other comprehensive income ("AOCI") and are subsequently recognized in ourconsolidated statements of operations as follows:•Forecasted Inventory Transactions — recognized as part of the cost of the inventory being hedged within cost of goods sold when the relatedinventory is sold to a third party.•Intercompany Royalties/Settlement of Foreign Currency Balances — recognized within other expense, net, during the period that the hedgedbalance is remeasured through earnings, generally through its settlement when the related payment occurs.We recognized in earnings net losses on forward foreign currency exchange contracts of $8.7 million and $2.6 million during Fiscal 2018 and Fiscal2017, respectively, and a net gain of $32.4 million during Fiscal 2016.Cross-Currency Swap ContractsDuring Fiscal 2016, we entered into two pay-floating rate, receive-floating rate cross-currency swaps, with notional amounts of €280 million and €274million, which we designated as hedges of our net investment in certain of our European subsidiaries (the "Cross-Currency Swaps"). The Cross-CurrencySwaps, which mature on September 26, 2018 and August 18, 2020, respectively, swap the U.S. Dollar-denominated variable interest rate payments based onthe 3-month London Interbank Offered Rate ("LIBOR") plus a fixed spread for Euro-denominated variable interest rate payments based on the 3-month EuroInterbank Offered Rate plus a fixed spread. As a result, the Cross-Currency Swaps, in conjunction with the Interest Rate Swaps (as defined below),economically convert our $300 million fixed-rate 2.125% and $300 million fixed-rate 2.625% obligations to €280 million and €274 million floating-rateEuro-denominated liabilities, respectively.SensitivityWe perform a sensitivity analysis to determine the effects that market risk exposures may have on the fair values of our forward foreign currencyexchange and cross-currency swap contracts. To perform the analysis, we assess the risk of loss in these contracts' fair values that would result fromhypothetical changes in foreign currency exchange rates. This analysis assumes a like movement by the foreign currencies in our hedge portfolio against theU.S. Dollar. As of March 31, 2018, a 10% appreciation or depreciation of the U.S. Dollar against the exchange rates for foreign currencies under contractwould result in a net increase or decrease, respectively, in the fair value of our derivative portfolio of approximately $141 million. This hypothetical netchange in fair value should ultimately be largely offset by the net change in the fair values of the underlying hedged items.Interest Rate Risk ManagementDuring Fiscal 2016, we entered into two pay-floating rate, receive-fixed rate interest rate swap contracts which we designated as hedges againstchanges in the respective fair values of our fixed-rate 2.125% Senior Notes and our fixed-rate 2.625% Senior Notes attributed to changes in the benchmarkinterest rate (the "Interest Rate Swaps"). The Interest Rate Swaps, which mature on September 26, 2018 and August 18, 2020, respectively, both have notionalamounts of $300 million and swap the fixed interest rates on our 2.125% Senior Notes and 2.625% Senior Notes for variable interest rates based on 3-monthLIBOR plus a fixed spread.SensitivityAs of March 31, 2018, notwithstanding the aforementioned Interest Rate Swaps, we had no variable-rate debt outstanding. As such, our exposure tochanges in interest rates primarily relates to a change in the fair value of our fixed-rate Senior Notes and borrowings outstanding under our credit facilities. Asof March 31, 2018, the fair values of our Senior Notes and borrowings outstanding under our credit facilities were $598.1 million and $10.1 million,respectively. A 25 basis point increase or decrease in the level of interest rates would decrease or increase, respectively, the aggregate fair value of our SeniorNotes and borrowings outstanding under our credit facilities by approximately $2 million. Such potential increases or decreases in the fair value of our debtwould only be relevant if we were to retire all or a portion of the debt prior to its maturity, and are based on certain simplifying assumptions, including animmediate across-the-board increase or decrease in the level of interest rates with no other subsequent changes for the remainder of the period.63 Investment Risk ManagementAs of March 31, 2018, we had cash and cash equivalents on-hand of $1.305 billion, consisting of deposits in interest bearing accounts, investments inmoney market deposit accounts, and investments in time deposits and commercial paper with original maturities of 90 days or less. Our other significantinvestments included $699.4 million of short-term investments, consisting of investments in time deposits and commercial paper with original maturitiesgreater than 90 days; $50.9 million of restricted cash placed in escrow with certain banks as collateral, primarily to secure guarantees in connection withcertain international tax matters; and $86.2 million of investments with maturities greater than one year, consisting of time deposits.We actively monitor our exposure to changes in the fair value of our global investment portfolio in accordance with our established policies andprocedures, which include monitoring both general and issuer-specific economic conditions, as discussed further below. Our investment objectives includecapital preservation, maintaining adequate liquidity, diversification to minimize liquidity and credit risk, and achievement of maximum returns within theguidelines set forth in our investment policy. See Note 13 to the accompanying consolidated financial statements for further detail of the composition of ourinvestment portfolio as of March 31, 2018.We evaluate investments held in unrealized loss positions, if any, for other-than-temporary impairment on a quarterly basis. This evaluation involves avariety of considerations, including assessments of risks and uncertainties associated with general economic conditions and distinct conditions affectingspecific issuers. We consider the following factors: (i) the length of time and the extent to which the fair value has been below cost, (ii) the financialcondition, credit worthiness, and near-term prospects of the issuer, (iii) the length of time to maturity, (iv) anticipated future economic conditions and marketforecasts, (v) our intent and ability to retain our investment for a period of time sufficient to allow for recovery of market value, and (vi) an assessment ofwhether it is more likely than not that we will be required to sell our investment before recovery of market value. No material realized or unrealized gains orlosses on available-for-sale investments or other-than-temporary impairment charges were recorded in any of the fiscal years presented.CRITICAL ACCOUNTING POLICIESAn accounting policy is considered to be critical if it is important to our results of operations, financial condition, and cash flows, and requiressignificant judgment and estimates on the part of management in its application. Our estimates are often based on complex judgments, assessments ofprobability, and assumptions that management believes to be reasonable, but that are inherently uncertain and unpredictable. It is also possible that otherprofessionals, applying reasonable judgment to the same set of facts and circumstances, could develop and support a range of alternative estimated amounts.We believe that the following list represents our critical accounting policies. For a discussion of all of our significant accounting policies, including ourcritical accounting policies, see Note 3 to the accompanying consolidated financial statements.Sales Reserves and Uncollectible AccountsA significant area of judgment affecting reported revenue and net income involves estimating sales reserves, which represent the portion of grossrevenues not expected to be realized. In particular, revenue related to our wholesale business is reduced by estimates of returns, discounts, end-of-seasonmarkdowns, and operational chargebacks. Revenue related to our retail business, including digital commerce sales, is also reduced by an estimate of returns.In determining estimates of returns, discounts, end-of-season markdowns, and operational chargebacks, we analyze historical trends, seasonal results,current economic and market conditions, and retailer performance. We review and refine these estimates on a quarterly basis. Our historical estimates of thesecosts have not differed materially from actual results. A hypothetical 1% increase in our reserves for returns, discounts, end-of-season markdowns, andoperational chargebacks as of March 31, 2018 would have decreased our Fiscal 2018 net revenues by approximately $2 million.Similarly, we evaluate our accounts receivable balances to determine if they will ultimately be collected. Significant judgments and estimates areinvolved in this evaluation, including an analysis of specific risks on a customer-by-customer basis for larger accounts and customers, and a receivablesaging analysis that determines the percentage of receivables that has historically been uncollected by aged category. Based on this information, we provide areserve for the estimated amounts believed to be uncollectible. Although we believe that we have adequately provided for those risks as part of our bad debtreserve, a severe and prolonged adverse impact on our major customers' business operations could have a corresponding material adverse effect on our netsales, cash flows, and/or financial condition.64 See "Accounts Receivable" in Note 3 to the accompanying consolidated financial statements for an analysis of the activity in our sales reserves andallowance for doubtful accounts for each of the three fiscal years presented.InventoriesWe hold inventory that is sold through wholesale distribution channels to major department stores and specialty retail stores. We also hold retailinventory that is sold in our own stores and digital commerce sites directly to consumers. Substantially all of our inventories are comprised of finished goods,which are stated at the lower of cost or estimated realizable value, with cost determined on a weighted-average cost basis.The estimated net realizable value of inventory is determined based on an analysis of historical sales trends of our individual product lines, the impactof market trends and economic conditions, and a forecast of future demand, giving consideration to the value of current orders in-house for future sales ofinventory, as well as plans to sell inventory through our factory stores, among other liquidation channels. Actual results may differ from estimates due to thequantity, quality, and mix of products in inventory, consumer and retailer preferences, and market conditions. Reserves for inventory shrinkage, representingthe risk of physical loss of inventory, are estimated based on historical experience and are adjusted based upon physical inventory counts. Our historicalestimates of these costs and the related provisions have not differed materially from actual results.A hypothetical 1% increase in the level of our inventory reserves as of March 31, 2018 would have decreased our Fiscal 2018 gross profit byapproximately $1 million.Impairment of Goodwill and Other Intangible AssetsGoodwill and certain other intangible assets deemed to have indefinite useful lives are not amortized. Rather, goodwill and indefinite-lived intangibleassets are assessed for impairment at least annually. Finite-lived intangible assets are amortized over their respective estimated useful lives and, along withother long-lived assets, are evaluated for impairment periodically whenever events or changes in circumstances indicate that their carrying values may not befully recoverable.We generally perform our annual goodwill impairment assessment using a qualitative approach to determine whether it is more likely than not that thefair value of a reporting unit is less than its respective carrying value. However, in order to reassess the fair values of our reporting units, we periodicallyperform a quantitative impairment analysis in lieu of using the qualitative approach.Performance of the qualitative goodwill impairment assessment requires judgment in identifying and considering the significance of relevant keyfactors, events, and circumstances that affect the fair values of our reporting units. This requires consideration and assessment of external factors such asmacroeconomic, industry, and market conditions, as well as entity-specific factors, such as our actual and planned financial performance. We also giveconsideration to the difference between each reporting unit's fair value and carrying value as of the most recent date that a fair value measurement wasperformed. If the results of the qualitative assessment conclude that it is not more likely than not that the fair value of a reporting unit exceeds its carryingvalue, additional quantitative impairment testing is performed.The quantitative goodwill impairment test involves comparing the fair value of a reporting unit with its carrying value, including goodwill. If the fairvalue of a reporting unit exceeds its carrying value, the reporting unit's goodwill is considered not to be impaired. However, if the carrying value of areporting unit exceeds its fair value, an impairment loss is recorded in an amount equal to that excess. Any impairment charge recognized is limited to theamount of the respective reporting unit's allocated goodwill.Determining the fair value of a reporting unit under the quantitative goodwill impairment test requires judgment and often involves the use ofsignificant estimates and assumptions. Similarly, estimates and assumptions are used when determining the fair values of other indefinite-lived intangibleassets. These estimates and assumptions could have a significant impact on whether or not an impairment charge is recognized and the magnitude of any suchcharge. To assist management in the process of determining any potential goodwill impairment, we may review and consider appraisals from accreditedindependent valuation firms. Estimates of fair value are primarily determined using discounted cash flows, market comparisons, and recent transactions.These approaches use significant estimates and assumptions, including projected future cash flows (including timing), discount rates reflecting the risksinherent in future cash flows, perpetual growth rates, and determination of appropriate market comparables.We performed our annual goodwill impairment assessment as of the beginning of the second quarter of Fiscal 2018 using the qualitative approachdiscussed above, while giving consideration to our most recent quantitative goodwill impairment test (the results of which indicated that the fair values ofour reporting units with allocated goodwill significantly exceeded their respective65 carrying values). Based on the results of the qualitative impairment assessment performed, we concluded that it is more likely than not that the fair values ofthese reporting units significantly exceeded their respective carrying values and there were no reporting units at risk of impairment. Additionally, nogoodwill impairment charges were recorded during any of the three fiscal years presented in connection with the Company's annual goodwill impairmentassessments.Subsequent to our Fiscal 2017 annual goodwill impairment assessment, we realigned our segment reporting structure during the fourth quarter ofFiscal 2017 as a result of significant organizational changes implemented in connection with the Way Forward Plan. As a result of the realignment of oursegment reporting structure, we reallocated the carrying amount of goodwill to our new reporting units based upon each reporting unit's relative fair value asof the first day of our fourth quarter of Fiscal 2017. In connection with this reallocation, we performed an interim assessment of the recoverability of goodwillassigned to our new reporting units using the quantitative approach described above. Based on the results of the quantitative impairment assessmentperformed, we concluded that the fair value of one of our new reporting units was less than its carrying value. As a result, a goodwill impairment charge of$5.2 million was recorded during the fourth quarter of Fiscal 2017 to fully write off the carrying value of the reporting unit's reallocated goodwill. The fairvalues of the remaining new reporting units significantly exceeded their respective carrying values and were not at risk of impairment.In evaluating finite-lived intangible assets for recoverability, we use our best estimate of future cash flows expected to result from the use of the assetand its eventual disposition where probable. To the extent that estimated future undiscounted net cash flows attributable to the asset are less than its carryingvalue, an impairment loss is recognized equal to the difference between the carrying value of such asset and its fair value, considering external marketparticipant assumptions.During Fiscal 2018, we recorded a non-cash impairment charge of $8.8 million as a result of a change in the planned usage of a certain intangible assetto reduce the value of the intangible asset to its estimated fair value. There were no other finite-lived intangible asset impairment charges recorded during anyof the fiscal periods presented. See Note 8 to the accompanying consolidated financial statements for further discussion.It is possible that our conclusions regarding impairment or recoverability of goodwill or other intangible assets could change in future periods if, forexample, (i) our businesses do not perform as projected, (ii) overall economic conditions in future years vary from current assumptions, (iii) businessconditions or strategies change from our current assumptions, or (iv) the identification of our reporting units change, among other factors. Such changescould result in a future impairment charge of goodwill or other intangible assets, which could have a material adverse effect on our consolidated financialposition or results of operations.Impairment of Other Long-Lived AssetsProperty and equipment, along with other long-lived assets, are evaluated for impairment periodically whenever events or changes in circumstancesindicate that their related carrying values may not be fully recoverable. In evaluating long-lived assets for recoverability, we use our best estimate of futurecash flows expected to result from the use of the asset and its eventual disposition, where applicable. To the extent that estimated future undiscounted netcash flows attributable to the asset are less than its carrying value, an impairment loss is recognized equal to the difference between the carrying value of suchasset and its fair value, considering external market participant assumptions. Assets to be disposed of and for which there is a committed plan of disposal arereported at the lower of carrying value or fair value, less costs to sell.In determining future cash flows, we take various factors into account, including changes in merchandising strategy, the emphasis on retail store costcontrols, the effects of macroeconomic trends such as consumer spending, and the impacts of more experienced retail store managers and increased localadvertising. Since the determination of future cash flows is an estimate of future performance, future impairments may arise in the event that future cash flowsdo not meet expectations.During Fiscal 2018, Fiscal 2017, and Fiscal 2016, we recorded non-cash impairment charges of $41.2 million, $248.6 million, and $48.8 million,respectively, to fully write off the carrying values of certain long-lived assets based upon their assumed fair values of zero. See Note 8 to the accompanyingconsolidated financial statements for further discussion.Income TaxesIn determining our income tax provision for financial reporting purposes, we establish a reserve for uncertain tax positions. If we consider that a taxposition is more likely than not of being sustained upon audit, based solely on the technical merits of the position, we recognize the tax benefit. We measurethe tax benefit by determining the largest amount that is greater than 50% likely of being realized upon settlement, presuming that the tax position isexamined by the appropriate taxing authority that has full knowledge of all relevant information. These assessments can be complex and require significantjudgment, and we often obtain assistance from external advisors. To the extent that our estimates change or the final tax outcome of these matters is different66 from the amounts recorded, such differences will impact the income tax provision in the period in which such determinations are made. If the initialassessment of a position fails to result in the recognition of a tax benefit, we will recognize the tax benefit if (i) there are changes in tax law or analogous caselaw that sufficiently raise the likelihood of prevailing on the technical merits of the position to more likely than not; (ii) the statute of limitations expires; or(iii) there is a completion of an audit resulting in a settlement of that tax year with the appropriate agency.Deferred income taxes reflect the tax effect of certain net operating losses, capital losses, general business credit carryforwards, and the net tax effectsof temporary differences between the carrying amount of assets and liabilities for financial statement and income tax purposes, as determined under enactedtax laws and rates. Valuation allowances are established when management determines that it is more likely than not that some portion or all of a deferred taxasset will not be realized. Tax valuation allowances are analyzed periodically by assessing the adequacy of future expected taxable income, which typicallyinvolves the use of significant estimates. Such allowances are adjusted as events occur, or circumstances change, that warrant adjustments to those balances.During Fiscal 2018, we recorded net charges of $221.4 million within our income tax provision in connection with the TCJA. These charges wererecorded on a provisional basis, as permitted by SAB 118, based on our present interpretations of the TCJA, current available information, and assumptionsabout future events. Although we believe these provisional amounts represent a reasonable estimate of the ultimate enactment-related impact the TCJA willhave on our consolidated financial statements, the amounts could be adjusted materially as additional information becomes available, including potentialnew or interpretative guidance issued by the Financial Accounting Standards Board or the Internal Revenue Service and other tax agencies, and as furtheranalyses are completed.See Note 10 to the accompanying consolidated financial statements for further discussion of income taxes.ContingenciesWe are periodically exposed to various contingencies in the ordinary course of conducting our business, including certain litigation, allegedinformation system security breaches, contractual disputes, employee relation matters, various tax or other governmental audits, and trademark andintellectual property matters and disputes. We record a liability for such contingencies to the extent that we conclude their occurrence is probable and therelated losses are estimable. In addition, if it is reasonably possible that an unfavorable settlement of a contingency could exceed the established liability, wedisclose the estimated impact on our liquidity, financial condition, and results of operations, if practicable. Management considers many factors in makingthese assessments. As the ultimate resolution of contingencies is inherently unpredictable, these assessments can involve a series of complex judgmentsabout future events including, but not limited to, court rulings, negotiations between affected parties, and governmental actions. As a result, the accountingfor loss contingencies relies heavily on management's judgment in developing the related estimates and assumptions.Stock-Based CompensationWe expense all stock-based compensation awarded to employees and non-employee directors based on the grant date fair value of the awards over therequisite service period, adjusted for forfeitures which are estimated based on an analysis of historical experience and expected future trends.Stock OptionsStock options have been granted to employees and non-employee directors with exercise prices equal to the fair market value of our Class A commonstock on the date of grant. We use the Black-Scholes option-pricing model to estimate the grant date fair value of stock options, which requires the use ofboth subjective and objective assumptions. Certain key assumptions involve estimating future uncertain events. The key factors influencing the estimationprocess include the expected term of the option, expected volatility of our stock price, our expected dividend yield, and the risk-free interest rate, amongothers. Generally, once stock option values are determined, accounting practices do not permit them to be changed, even if the estimates used are differentfrom actual results.No stock options were granted during any of the three fiscal years presented. See Note 17 to the accompanying consolidated financial statements forfurther discussion.67 Restricted Stock and Restricted Stock Units ("RSUs")We grant restricted shares of our Class A common stock to our non-employee directors and service-based RSUs to certain of our senior executives andother employees. In addition, we grant performance-based RSUs to such senior executives and other key executives. The fair values of restricted stock sharesand RSUs are based on the fair value of our Class A common stock on the date of grant, adjusted to reflect the absence of dividends for any awards notentitled to accrue dividend equivalents while outstanding. Compensation expense for performance-based RSUs is recognized over the employees' requisiteservice period when attainment of the performance goals is deemed probable, which involves judgment as to achievement of certain performance metrics.Our performance-based RSU awards with a market condition in the form of a total shareholder return ("TSR") modifier are valued based on theexpected attainment of performance at the end of a three-year performance period and TSR achieved relative to the S&P 500 index over the performanceperiod. The fair value of these awards is estimated using a Monte Carlo simulation valuation model prepared by an independent third party. This pricingmodel utilizes multiple input variables that determine the probability of satisfying each market condition stipulated in the terms of the award to estimate itsgrant date fair value. Compensation expense, net of estimated forfeitures, is updated for the Company's expected net income performance level against therelated goal at the end of each reporting period. No performance-based RSUs with a TSR modifier were granted during any of the three fiscal years presented.See Note 17 to the accompanying consolidated financial statements for further discussion.SensitivityThe assumptions used in calculating the grant date fair values of stock-based compensation awards represent our best estimates. In addition, judgmentis required in estimating the number of stock-based awards that are expected to be forfeited. If actual results differ significantly from our estimates andassumptions, if we change the assumptions used to estimate the grant date fair value for future stock-based award grants, or if there are changes in marketconditions, stock-based compensation expense and, therefore, our results of operations could be materially impacted. A hypothetical 10% change in ourstock-based compensation expense would have affected our Fiscal 2018 net income by approximately $5 million.RECENTLY ISSUED ACCOUNTING STANDARDSSee Note 4 to the accompanying consolidated financial statements for a description of certain recently issued or proposed accounting standards whichhave impacted our consolidated financial statements, or may impact our consolidated financial statements in future reporting periods.Item 7A.Quantitative and Qualitative Disclosures about Market Risk.For a discussion of our exposure to market risk, see "Market Risk Management" in Item 7 included elsewhere in this Annual Report on Form 10-K.Item 8.Financial Statements and Supplementary Data.See the "Index to Consolidated Financial Statements" appearing at the end of this Annual Report on Form 10-K.Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.Not applicable.Item 9A.Controls and Procedures.(a) Evaluation of Disclosure Controls and ProceduresDisclosure controls and procedures are the controls and other procedures of an issuer that are designed to provide reasonable assurance thatinformation required to be disclosed by the issuer in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed,summarized, and reported within the time period specified in the Securities and Exchange Commission's rules and forms. Disclosure controls and proceduresinclude, without limitation, controls and procedures designed68 to ensure that material information required to be disclosed by an issuer in the reports that it files or submits under the Securities Exchange Act of 1934 isaccumulated and communicated to the issuer's management, including its principal executive and principal financial officers, or persons performing similarfunctions, as appropriate to allow timely decisions regarding required disclosure.We have evaluated, under the supervision and with the participation of management, including our principal executive and principal financialofficers, the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as ofthe end of the fiscal year covered by this annual report. Based on that evaluation, our principal executive and principal financial officers have concluded thatthe Company's disclosure controls and procedures were effective at the reasonable assurance level, as of the fiscal year-end covered by this Annual Report onForm 10-K.(b) Management's Report on Internal Control Over Financial ReportingManagement is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Securities Exchange ActRule 13a-15(f). Internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting andpreparation of financial statements for external purposes in accordance with U.S. Generally Accepted Accounting Principles. Internal control over financialreporting includes maintaining records that in reasonable detail accurately and fairly reflect our transactions; providing reasonable assurance thattransactions are recorded as necessary for preparation of our financial statements; providing reasonable assurance that receipts and expenditures of theCompany's assets are made in accordance with management authorization; and providing reasonable assurance that unauthorized acquisition, use ordisposition of the Company's assets that could have a material effect on our financial statements would be prevented or detected on a timely basis. Because ofits inherent limitations, internal control over financial reporting is not intended to provide absolute assurance that a misstatement of our financial statementswould be prevented or detected. Further, the evaluation of the effectiveness of internal control over financial reporting was made as of a specific date, andcontinued effectiveness in future periods is subject to the risks that controls may become inadequate because of changes in conditions or that the degree ofcompliance with the policies and procedures may decline.Under the supervision and with the participation of management, including our principal executive and principal financial officers, we conducted anevaluation of the effectiveness of our internal control over financial reporting as of the end of the fiscal year covered by this report based on the frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework (2013 Framework). Based onthis evaluation, management concluded that the Company's internal controls over financial reporting were effective at the reasonable assurance level as ofthe fiscal year-end covered by this Annual Report on Form 10-K.Ernst & Young LLP, the Company's independent registered public accounting firm, has issued an attestation report on the Company's internal controlover financial reporting as included elsewhere herein.(c) Changes in Internal Controls over Financial ReportingExcept as discussed below, there has been no change in our internal control over financial reporting during the fourth quarter of Fiscal 2018 that hasmaterially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.Operating and Financial Reporting System ImplementationDuring the first quarter of Fiscal 2018, we completed the migration of our European operations to an operating and financial reporting informationtechnology system, SAP, as part of a multi-year plan to integrate and upgrade our global systems and processes.As a result of the implementation of this system, we have experienced certain changes to our processes and procedures which, in turn, result in changesto our internal control over financial reporting. While we expect SAP to strengthen our internal financial controls by automating certain manual processesand standardizing business processes and reporting across our organization, management will continue to evaluate and monitor our internal controls asprocesses and procedures in each of the affected areas evolve. For a discussion of risks related to the implementation of new systems, seeItem 1A — "Risk Factors — Risks and uncertainties associated with the implementation of information systems may negatively impact our business."Item 9B.Other Information.Not applicable.69 PART IIIItem 10.Directors, Executive Officers and Corporate Governance.Information relating to our directors and corporate governance will be set forth in the Company's proxy statement for its 2018 annual meeting ofstockholders to be filed within 120 days after March 31, 2018 (the "Proxy Statement") and is incorporated by reference herein. Information relating to ourexecutive officers is set forth in Item 1 of this Annual Report on Form 10-K under the caption "Executive Officers."We have a Code of Ethics for Principal Executive Officers and Senior Financial Officers that covers the Company's principal executive officer,principal operating officer, principal financial officer, principal accounting officer, controller, and any person performing similar functions, as applicable. Wealso have a Code of Business Conduct and Ethics that covers the Company's directors, officers, and employees. You can find our Code of Ethics for PrincipalExecutive Officers and Senior Financial Officers and our Code of Business Conduct and Ethics (collectively, the "Codes") on our Internet site,http://investor.ralphlauren.com. We will post any amendments to the Codes and any waivers that are required to be disclosed by the rules of either the SEC orthe NYSE on our Internet site.Item 11.Executive Compensation.Information relating to executive and director compensation will be set forth in the Proxy Statement and such information is incorporated by referenceherein.Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.Equity Compensation Plan InformationThe following table sets forth information as of March 31, 2018 regarding compensation plans under which the Company's equity securities areauthorized for issuance: (a) (b) (c) Plan Category Numbers ofSecurities to beIssued uponExercise ofOutstandingOptions, Warrantsand Rights Weighted-AverageExercise Price ofOutstanding Options ($) Number of SecuritiesRemaining Available forFuture Issuance UnderEquity CompensationPlans (ExcludingSecurities Reflected inColumn (a)) Equity compensation plans approved by securityholders 3,829,623(1) $157.86(2) 3,111,331(3) Equity compensation plans not approved bysecurity holders — — — Total 3,829,623 $157.86 3,111,331 (1) Consists of 1,150,895 options to purchase shares of our Class A common stock and 2,678,728 restricted stock units that are payable solely inshares of Class A common stock (including 449,426 service-based restricted stock units that have fully vested but for which the underlying shareshave not yet been delivered as of March 31, 2018). Does not include 19,096 outstanding restricted shares that are subject to forfeiture.(2) Represents the weighted average exercise price of outstanding stock options.(3) All of the securities remaining available for future issuance set forth in column (c) may be in the form of options, stock appreciation rights,restricted stock, restricted stock units, performance awards, or other stock-based awards under the Company's 1997 Incentive Plan and 2010Incentive Plan (the "Plans"). An additional 19,096 outstanding shares of restricted stock granted under the Company's Plans that remain subject toforfeiture are not reflected in column (c).Other information relating to security ownership of certain beneficial owners and management will be set forth in the Proxy Statement and suchinformation is incorporated by reference herein.70 Item 13.Certain Relationships and Related Transactions, and Director Independence.The information required to be included by Item 13 of Form 10-K will be included in the Proxy Statement and such information is incorporated byreference herein.Item 14.Principal Accounting Fees and Services.The information required to be included by Item 14 of Form 10-K will be included in the Proxy Statement and such information is incorporated byreference herein.PART IVItem 15.Exhibits, Financial Statement Schedules.(a) 1., 2. Financial Statements and Financial Statement Schedules. See index on Page F-1.3. ExhibitsExhibitNumber Description3.1 Amended and Restated Certificate of Incorporation of the Company (filed as Exhibit 3.1 to the Company's Registration Statement on Form S-1(File No. 333-24733) (the "S-1"))3.2 Certificate of Amendment to the Amended and Restated Certificate of Incorporation of the Company (filed as Exhibit 3.1 to the Form 8-K filedAugust 16, 2011)3.3 Fourth Amended and Restated By-laws of the Company (filed as Exhibit 3.3 to the Form 10-Q for the quarterly period ended July 1, 2017)4.1 Indenture, dated as of September 26, 2013, by and between the Company and Wells Fargo Bank, National Association (including the form ofNote) (filed as Exhibit 4.1 to the Form 8-K filed September 26, 2013)4.2 First Supplemental Indenture, dated as of September 26, 2013, by and between the Company and Wells Fargo Bank, National Association(filed as Exhibit 4.2 to the Form 8-K filed September 26, 2013)4.3 Second Supplemental Indenture, dated as of August 18, 2015, by and between the Company and Wells Fargo Bank, National Association(filed as Exhibit 4.2 to the Form 8-K filed August 18, 2015)10.1 Registration Rights Agreement dated as of June 9, 1997 by and among Ralph Lauren, GS Capital Partners, L.P., GS Capital Partner PRLHolding I, L.P., GS Capital Partners PRL Holding II, L.P., Stone Street Fund 1994, L.P., Stone Street 1994 Subsidiary Corp., Bridge StreetFund 1994, L.P., and the Company (filed as Exhibit 10.3 to the S-1)10.2 Form of Indemnification Agreement between the Company and its Directors and Executive Officers (filed as Exhibit 10.26 to the S-1)10.3 Amended and Restated Employment Agreement, effective as of April 2, 2017, between the Company and Ralph Lauren (filed as Exhibit 10.1to the Form 8-K filed March 31, 2017)†10.4 Employment Agreement, dated May 13, 2017, between the Company and Patrice Louvet (filed as Exhibit 10.1 to the Form 8-K filed May 17,2017)†10.5 Amendment No. 1 to the Employment Agreement, dated June 30, 2017, between the Company and Patrice Louvet (filed as Exhibit 10.1 to theForm 10-Q for the quarterly period ended July 1, 2017)†10.6 Amended and Restated Employment Agreement, effective as of April 4, 2016, between the Company and Valérie Hermann (filed as Exhibit10.1 to the Form 8-K filed May 4, 2016)†10.7 Amendment No. 1 to the Amended and Restated Employment Agreement, dated as of November 9, 2016, between the Company and ValérieHermann (filed as Exhibit 10.1 to the Form 10-Q for the quarterly period ended October 1, 2016)†10.8 Employment Agreement, dated June 8, 2016, between the Company and Jane Nielsen (filed as Exhibit 10.1 to the Form 8-K filed June 10,2016)†10.9 Employment Agreement, dated as of September 25, 2015, between the Company and Stefan Larsson (filed as Exhibit 10.2 to the Form 8-Kfiled October 1, 2015)†10.10 Amendment No. 1 to the Employment Agreement, effective as of August 9, 2016, between the Company and Stefan Larsson (filed as Exhibit10.1 to the Form 10-Q for the quarterly period ended July 2, 2016)†10.11 Employment Separation Agreement and Release, between the Company and Stefan Larsson (filed as Exhibit 10.1 to the Form 8-K filedFebruary 2, 2017)†71 ExhibitNumber Description10.12 Restricted Stock Unit Award Agreement, dated as of June 8, 2004, between the Company and Ralph Lauren (filed as Exhibit 10.15 to theCompany's Annual Report on Form 10-K for the fiscal year ended April 2, 2005)†10.13 Executive Officer Annual Incentive Plan, as amended as of August 9, 2012 (filed as Appendix B to the Company's Definitive Proxy Statementdated July 2, 2012)†10.14 Executive Officer Annual Incentive Plan, as amended as of August 10, 2017 (filed as Exhibit 10.2 to the Form 10-Q for the quarterly periodended July 1, 2017)†10.15 1997 Long-Term Stock Incentive Plan, as Amended and Restated as of August 12, 2004 (filed as Exhibit 99.1 to the Form 8-K filed October 4,2004)†10.16 Amendment, as of June 30, 2006, to the 1997 Long-Term Stock Incentive Plan, as Amended and Restated as of August 12, 2004 (filed asExhibit 10.4 to the Form 10-Q for the quarterly period ended July 1, 2006)†10.17 Amendment No. 2, dated as of May 21, 2009, to the 1997 Long-Term Stock Incentive Plan, as Amended and Restated as of August 12, 2004(filed as Exhibit 10.26 to the Company's Annual Report on Form 10-K for the fiscal year ended March 28, 2009)†10.18 Amended and Restated 2010 Long-Term Incentive Plan, amended as of August 11, 2016 (filed as Exhibit 10.4 to the Form 10-Q for thequarterly period ended July 2, 2016)†10.19 Cliff Restricted Performance Share Unit Award Overview containing the standard terms of cliff restricted performance share unit awards underthe Amended and Restated 2010 Long-Term Stock Incentive Plan (filed as Exhibit 10.25 to the Company's Annual Report on Form 10-K forthe fiscal year ended March 29, 2014 (the "Fiscal 2014 10-K"))†10.20 Pro-Rata Restricted Performance Share Unit Award Overview containing the standard terms of restricted performance share unit awards underthe Amended and Restated 2010 Long-Term Stock Incentive Plan (filed as Exhibit 10.26 to the Fiscal 2014 10-K)†10.21 Stock Option Award Overview containing the standard terms of stock option awards under the Amended and Restated 2010 Long-Term StockIncentive Plan (filed as Exhibit 10.27 to the Fiscal 2014 10-K)†10.22 Cliff Restricted Performance Share Unit with TSR Modifier Award Overview containing the standard terms of cliff restricted performance shareunit awards under the Amended and Restated 2010 Long-Term Stock Incentive Plan (filed as Exhibit 10.28 to the Fiscal 2014 10-K)†10.23 Form of Performance Share Unit Award Agreement under the Amended and Restated 2010 Long-Term Stock Incentive Plan (filed as Exhibit10.38 to the Company's Annual Report on Form 10-K for the fiscal year ended March 28, 2015 (the "Fiscal 2015 10-K"))†10.24 Form of Performance-Based Restricted Stock Unit Award Agreement under the Amended and Restated 2010 Long-Term Stock Incentive Plan(filed as Exhibit 10.39 to the Fiscal 2015 10-K)†10.25 Form of Restricted Stock Unit Award Agreement under the Amended and Restated 2010 Long-Term Stock Incentive Plan (filed as Exhibit10.1 to the Form 10-Q for the quarterly period ended June 27, 2015)†10.26 Form of Non-Employee Director Restricted Stock Award Agreement under the Amended and Restated 2010 Long-Term Stock Incentive Plan(filed as Exhibit 10.37 to the Company's Annual Report on Form 10-K for the fiscal year ended April 2, 2016 (the "Fiscal 2016 10-K")†10.27 Performance Share Unit Award Overview containing the standard terms of performance share unit awards under the Amended and Restated2010 Long-Term Stock Incentive Plan (filed as Exhibit 10.1 to the Form 10-Q for the quarterly period ended September 30, 2017)†10.28 Performance-Based Restricted Stock Unit - Award Notification containing the standard terms of performance-based restricted stock unit awardsunder the Amended and Restated 2010 Long-Term Stock Incentive Plan (filed as Exhibit 10.2 to the Form 10-Q for the quarterly period endedSeptember 30, 2017)†10.29 Restricted Stock Unit Overview containing the standard terms of restricted stock unit awards under the Amended and Restated 2010 Long-Term Stock Incentive Plan (filed as Exhibit 10.3 to the Form 10-Q for the quarterly period ended September 30, 2017)†10.30 Amended and Restated Credit Agreement, dated as of February 11, 2015, among the Company, Acqui Polo C.V., Polo Fin B.V. and RalphLauren Asia Pacific Limited, as the borrowers, the lenders party thereto, Bank of America, N.A., as syndication agent, Wells Fargo Bank, N.A.,HSBC Bank USA, N.A. and Deutsche Bank Securities Inc., as co-documentation agents, and JPMorgan Chase Bank, N.A., as administrativeagent (the "2015 Credit Agreement") (filed as Exhibit 10.1 to the Form 8-K filed February 18, 2015)10.31 First Amendment to the 2015 Credit Agreement, dated as of March 22, 2016, among the Company, Acqui Polo C.V., RL Finance B.V.(formerly known as Polo Fin B.V.) and Ralph Lauren Asia Pacific Limited, as the borrowers, the lenders parties thereto, JPMorgan Chase Bank,N.A., as administrative agent, and the other agents parties thereto (filed as Exhibit 10.39 to the Fiscal 2016 10-K)10.32 Amended and Restated Polo Ralph Lauren Supplemental Executive Retirement Plan (filed as Exhibit 10.1 to the Company's Form 10-Q for thequarterly period ended December 31, 2005)†12.1* Computation of Ratio of Earnings to Fixed Charges72 ExhibitNumber Description14.1 Code of Ethics for Principal Executive Officers and Senior Financial Officers (filed as Exhibit 14.1 to the Company's Annual Report on Form10-K for the fiscal year ended March 29, 2003 and available, as amended, on the Company's Internet site)14.2 Code of Business Conduct and Ethics of the Company (filed as Exhibit 14.1 to the Form 10-Q for the quarterly period ended June 27, 2015and available, as amended, on the Company's Internet site)21.1* List of Significant Subsidiaries of the Company23.1* Consent of Ernst & Young LLP31.1* Certification of Principal Executive Officer pursuant to 17 CFR 240.13a-14(a)31.2* Certification of Principal Financial Officer pursuant to 17 CFR 240.13a-14(a)32.1* Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Actof 200232.2* Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Actof 2002101* Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Consolidated Balance Sheets at March 31, 2018 and April 1, 2017, (ii) theConsolidated Statements of Operations for the fiscal years ended March 31, 2018, April 1, 2017, and April 2, 2016, (iii) the ConsolidatedStatements of Comprehensive Income (Loss) for the fiscal years ended March 31, 2018, April 1, 2017, and April 2, 2016, (iv) the ConsolidatedStatements of Cash Flows for the fiscal years ended March 31, 2018, April 1, 2017, and April 2, 2016, (v) the Consolidated Statements ofEquity for the fiscal years ended March 31, 2018, April 1, 2017, and April 2, 2016, and (vi) the Notes to the Consolidated FinancialStatements.Exhibits 32.1 and 32.2 shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability ofthat Section. Such exhibits shall not be deemed incorporated by reference into any filing under the Securities Act of 1933 or Securities Exchange Act of1934. *Filed herewith.†Management contract or compensatory plan or arrangement.73 SIGNATURESPursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by theundersigned thereunto duly authorized. RALPH LAUREN CORPORATION By:/S/ JANE HAMILTON NIELSEN Jane Hamilton Nielsen Chief Financial Officer (Principal Financial and Accounting Officer)Date: May 23, 2018 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of theregistrant and in the capacities and on the dates indicated:Signature Title Date /S/ RALPH LAUREN Executive Chairman, Chief Creative Officer, and Director May 23, 2018Ralph Lauren /S/ PATRICE LOUVET President, Chief Executive Officer, and Director (PrincipalExecutive Officer) May 23, 2018Patrice Louvet /S/ JANE HAMILTON NIELSEN Chief Financial Officer (Principal Financial and AccountingOfficer) May 23, 2018Jane Hamilton Nielsen /s/ DAVID LAUREN Vice Chairman, Chief Innovation Officer, Strategic Advisor tothe CEO, and Director May 23, 2018David Lauren /S/ JOHN R. ALCHIN Director May 23, 2018John R. Alchin /S/ ARNOLD H. ARONSON Director May 23, 2018Arnold H. Aronson /S/ FRANK A. BENNACK, JR. Director May 23, 2018Frank A. Bennack, Jr. /S/ DR. JOYCE F. BROWN Director May 23, 2018Dr. Joyce F. Brown /S/ JOEL L. FLEISHMAN Director May 23, 2018Joel L. Fleishman /s/ MICHAEL A. GEORGE Director May 23, 2018Michael A. George 74 Signature Title Date /S/ HUBERT JOLY Director May 23, 2018Hubert Joly /S/ JUDITH MCHALE Director May 23, 2018Judith McHale /S/ ROBERT C. WRIGHT Director May 23, 2018Robert C. Wright 75 RALPH LAUREN CORPORATIONINDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION PageConsolidated Financial Statements: Consolidated Balance SheetsF-2Consolidated Statements of OperationsF-3Consolidated Statements of Comprehensive Income (Loss)F-4Consolidated Statements of Cash FlowsF-5Consolidated Statements of EquityF-6Notes to Consolidated Financial StatementsF-7Management's Report on Responsibility For Financial StatementsF-52Reports of Independent Registered Public Accounting FirmF-53Supplementary Information: Selected Financial InformationF-55Quarterly Financial InformationF-57 EX-12.1 EX-21.1 EX-23.1 EX-31.1 EX-31.2 EX-32.1 EX-32.2 EX-101INSTANCE DOCUMENT EX-101SCHEMA DOCUMENT EX-101CALCULATION LINKBASE DOCUMENT EX-101LABELS LINKBASE DOCUMENT EX-101PRESENTATION LINKBASE DOCUMENT EX-101DEFINITION LINKBASE DOCUMENT F-1 RALPH LAUREN CORPORATIONCONSOLIDATED BALANCE SHEETS March 31, 2018 April 1, 2017 (millions)ASSETSCurrent assets: Cash and cash equivalents $1,304.6 $668.3Short-term investments 699.4 684.7Accounts receivable, net of allowances of $222.2 million and $214.4 million 421.4 450.2Inventories 761.3 791.5Income tax receivable 38.0 79.4Prepaid expenses and other current assets 323.7 280.4Total current assets 3,548.4 2,954.5Property and equipment, net 1,186.3 1,316.0Deferred tax assets 86.6 125.9Goodwill 950.5 904.6Intangible assets, net 188.0 219.8Other non-current assets 183.5 131.2Total assets $6,143.3 $5,652.0LIABILITIES AND EQUITYCurrent liabilities: Short-term debt $10.1 $—Current portion of long-term debt 298.1 —Accounts payable 165.6 147.7Income tax payable 30.0 29.5Accrued expenses and other current liabilities 1,083.4 982.7Total current liabilities 1,587.2 1,159.9Long-term debt 288.0 588.2Income tax payable 124.8 —Non-current liability for unrecognized tax benefits 79.2 62.7Other non-current liabilities 606.7 541.6Commitments and contingencies (Note 14) Total liabilities 2,685.9 2,352.4Equity: Class A common stock, par value $.01 per share; 102.0 million and 101.5 million shares issued;55.4 million and 55.1 million shares outstanding 1.0 0.9Class B common stock, par value $.01 per share; 25.9 million shares issued and outstanding 0.3 0.3Additional paid-in-capital 2,383.4 2,308.8Retained earnings 5,752.2 5,751.9Treasury stock, Class A, at cost; 46.6 million and 46.4 million shares (4,581.0) (4,563.9)Accumulated other comprehensive loss (98.5) (198.4)Total equity 3,457.4 3,299.6Total liabilities and equity $6,143.3 $5,652.0See accompanying notes.F-2 RALPH LAUREN CORPORATIONCONSOLIDATED STATEMENTS OF OPERATIONS Fiscal Years Ended March 31, 2018 April 1, 2017 April 2, 2016 (millions, except per share data)Net revenues $6,182.3 $6,652.8 $7,405.2Cost of goods sold (2,430.6) (3,001.7) (3,218.5)Gross profit 3,751.7 3,651.1 4,186.7Selling, general, and administrative expenses (3,095.5) (3,171.0) (3,412.5)Impairment of assets (50.0) (253.8) (48.8)Restructuring and other charges (108.0) (318.6) (142.6)Total other operating expenses, net (3,253.5) (3,743.4) (3,603.9)Operating income (loss) 498.2 (92.3) 582.8Interest expense (18.2) (12.4) (21.0)Interest income 12.3 7.3 6.3Other expense, net (3.1) (7.5) (16.3)Income (loss) before income taxes 489.2 (104.9) 551.8Income tax benefit (provision) (326.4) 5.6 (155.4)Net income (loss) $162.8 $(99.3) $396.4 Net income (loss) per common share: Basic $1.99 $(1.20) $4.65Diluted $1.97 $(1.20) $4.62Weighted average common shares outstanding: Basic 81.7 82.7 85.2Diluted 82.5 82.7 85.9Dividends declared per share $2.00 $2.00 $2.00See accompanying notes.F-3 RALPH LAUREN CORPORATIONCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) Fiscal Years Ended March 31, 2018 April 1, 2017 April 2, 2016 (millions)Net income (loss) $162.8 $(99.3) $396.4Other comprehensive income (loss), net of tax: Foreign currency translation gains (losses) 126.9 (48.6) 36.4Net gains (losses) on cash flow hedges (30.6) 26.6 (55.2)Net gains on defined benefit plans 3.6 5.1 2.9Other comprehensive income (loss), net of tax 99.9 (16.9) (15.9)Total comprehensive income (loss) $262.7 $(116.2) $380.5See accompanying notes.F-4 RALPH LAUREN CORPORATIONCONSOLIDATED STATEMENTS OF CASH FLOWS Fiscal Years Ended March 31, 2018 April 1, 2017 April 2, 2016 (millions)Cash flows from operating activities: Net income (loss) $162.8 $(99.3) $396.4Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization expense 295.2 307.5 309.4Deferred income tax expense (benefit) 84.1 (38.9) (7.9)Equity in losses of equity-method investees 4.5 5.2 10.9Non-cash stock-based compensation expense 74.5 63.6 97.0Non-cash impairment of assets 50.0 253.8 48.8Non-cash restructuring-related inventory charges 7.6 197.9 20.4Other non-cash charges 7.4 29.2 19.7Changes in operating assets and liabilities: Accounts receivable 34.5 54.1 129.4Inventories 57.8 120.4 (90.9)Prepaid expenses and other current assets (15.1) (27.8) 30.2Accounts payable and accrued liabilities 64.6 112.9 90.1Income tax receivables and payables 165.1 (34.0) (14.6)Deferred income 1.4 (20.7) (7.9)Other balance sheet changes (19.3) 28.7 (14.3)Net cash provided by operating activities 975.1 952.6 1,016.7Cash flows from investing activities: Capital expenditures (161.6) (284.0) (417.7)Purchases of investments (1,605.6) (860.4) (1,085.0)Proceeds from sales and maturities of investments 1,582.7 942.4 942.7Acquisitions and ventures (4.6) (6.1) (16.3)Net cash used in investing activities (189.1) (208.1) (576.3)Cash flows from financing activities: Proceeds from issuance of short-term debt 10.1 3,735.2 4,343.9Repayments of short-term debt — (3,851.3) (4,462.6)Proceeds from issuance of long-term debt — — 299.4Payments of capital lease obligations (28.2) (27.3) (24.3)Payments of dividends (162.4) (164.8) (170.3)Repurchases of common stock, including shares surrendered for tax withholdings (17.1) (215.2) (500.4)Proceeds from exercise of stock options 0.1 5.0 33.2Other financing activities — — (1.9)Net cash used in financing activities (197.5) (518.4) (483.0)Effect of exchange rate changes on cash, cash equivalents, and restricted cash 55.2 (16.4) 7.2Net increase (decrease) in cash, cash equivalents, and restricted cash 643.7 209.7 (35.4)Cash, cash equivalents, and restricted cash at beginning of period 711.8 502.1 537.5Cash, cash equivalents, and restricted cash at end of period $1,355.5 $711.8 $502.1See accompanying notes.F-5 RALPH LAUREN CORPORATIONCONSOLIDATED STATEMENTS OF EQUITY Additional Treasury Stock Common Stock(a) Paid-in Retained at Cost Total Shares Amount Capital Earnings Shares Amount AOCI(b) Equity (millions)Balance at March 28, 2015 125.9 $1.2 $2,117.1 $5,787.2 39.6 $(3,848.3) $(165.6) $3,891.6Comprehensive income: Net income 396.4 Other comprehensive loss (15.9) Total comprehensive income 380.5Dividends declared (168.6) (168.6)Repurchases of common stock 4.4 (500.4) (500.4)Stock-based compensation 97.0 97.0Shares issued and tax benefits recognizedpursuant to stock-based compensation plans(c) 1.0 — 43.4 43.4Balance at April 2, 2016 126.9 $1.2 $2,257.5 $6,015.0 44.0 $(4,348.7) $(181.5) $3,743.5Comprehensive loss: Net loss (99.3) Other comprehensive loss (16.9) Total comprehensive loss (116.2)Dividends declared (163.8) (163.8)Repurchases of common stock 2.4 (215.2) (215.2)Stock-based compensation 63.6 63.6Shares issued and tax shortfalls recognizedpursuant to stock-based compensation plans(c) 0.5 — (12.3) (12.3)Balance at April 1, 2017 127.4 $1.2 $2,308.8 $5,751.9 46.4 $(4,563.9) $(198.4) $3,299.6Comprehensive income: Net income 162.8 Other comprehensive income 99.9 Total comprehensive income 262.7Dividends declared (162.5) (162.5)Repurchases of common stock 0.2 (17.1) (17.1)Stock-based compensation 74.5 74.5Shares issued pursuant to stock-basedcompensation plans(c) 0.5 0.1 0.1 0.2Balance at March 31, 2018 127.9 $1.3 $2,383.4 $5,752.2 46.6 $(4,581.0) $(98.5) $3,457.4 (a) Includes Class A and Class B common stock.(b) Accumulated other comprehensive income (loss).(c) Includes an excess tax shortfall relating to stock-based compensation plans of $17.3 million in Fiscal 2017 and an excess tax benefit of $10.2 million in Fiscal 2016. InFiscal 2018, the Company adopted ASU 2016-09 (as defined in Note 4), which requires such excess tax benefits and shortfalls be reflected prospectively as income taxbenefit (provision) in the statements of operations. See Note 4 for further discussion of the Company's adoption of ASU 2016-09.See accompanying notes.F-6 RALPH LAUREN CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS1.Description of BusinessRalph Lauren Corporation ("RLC") is a global leader in the design, marketing, and distribution of premium lifestyle products, including apparel,accessories, home furnishings, and other licensed product categories. RLC's long-standing reputation and distinctive image have been developed across anexpanding number of products, brands, sales channels, and international markets. RLC's brand names include Ralph Lauren, Ralph Lauren Collection, RalphLauren Purple Label, Polo Ralph Lauren, Double RL, Lauren Ralph Lauren, Polo Ralph Lauren Children, Chaps, and Club Monaco, among others. RLC andits subsidiaries are collectively referred to herein as the "Company," "we," "us," "our," and "ourselves," unless the context indicates otherwise.The Company diversifies its business by geography (North America, Europe, and Asia, among other regions) and channels of distribution (wholesale,retail, and licensing). This allows the Company to maintain a dynamic balance as its operating results do not depend solely on the performance of any singlegeographic area or channel of distribution. The Company's wholesale sales are made principally to major department stores and specialty stores around theworld. The Company also sells directly to consumers through its integrated retail channel, which includes its retail stores, concession-based shop-within-shops, and digital commerce operations around the world. In addition, the Company licenses to unrelated third parties for specified periods the right tooperate retail stores and/or to use its various trademarks in connection with the manufacture and sale of designated products, such as certain apparel, eyewear,fragrances, and home furnishings.The Company organizes its business into the following three reportable segments: North America, Europe, and Asia. In addition to these reportablesegments, the Company also has other non-reportable segments. See Note 19 for further discussion of the Company's segment reporting structure.2.Basis of PresentationBasis of ConsolidationThese consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. ("U.S. GAAP")and present the consolidated financial position, income (loss), comprehensive income (loss), and cash flows of the Company, including all entities in whichthe Company has a controlling financial interest and is determined to be the primary beneficiary. All significant intercompany balances and transactionshave been eliminated in consolidation.Fiscal YearThe Company utilizes a 52-53 week fiscal year ending on the Saturday closest to March 31. As such, fiscal year 2018 ended on March 31, 2018 andwas a 52-week period ("Fiscal 2018"); fiscal year 2017 ended on April 1, 2017 and was a 52-week period ("Fiscal 2017"); fiscal year 2016 ended on April 2,2016 and was a 53-week period ("Fiscal 2016"); and fiscal year 2019 will end on March 30, 2019 and will be a 52-week period ("Fiscal 2019").Use of EstimatesThe preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect theamounts reported in the financial statements and notes thereto. Actual results could differ materially from those estimates.Significant estimates inherent in the preparation of the consolidated financial statements include reserves for bad debt, customer returns, discounts,end-of-season markdowns, operational chargebacks, and certain cooperative advertising allowances; the realizability of inventory; reserves for litigation andother contingencies; useful lives and impairments of long-lived tangible and intangible assets; fair value measurements; accounting for income taxes andrelated uncertain tax positions; valuation of stock-based compensation awards and related estimated forfeiture rates; reserves for restructuring activity; andaccounting for business combinations, among others.ReclassificationsCertain reclassifications have been made to the prior periods' financial information in order to conform to the current period's presentation.F-7 RALPH LAUREN CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)3.Summary of Significant Accounting PoliciesRevenue RecognitionRevenue is recognized across all segments of the business when there is persuasive evidence of an arrangement, delivery has occurred, the price hasbeen fixed or is determinable, and collectability is reasonably assured.Revenue within the Company's wholesale business is recognized at the time title passes and risk of loss is transferred to customers. Wholesale revenueis recorded net of estimates of returns, discounts, end-of-season markdowns, operational chargebacks, and certain cooperative advertising allowances. Returnsand allowances require pre-approval from management and discounts are based on trade terms. Estimates for end-of-season markdown reserves are based onhistorical trends, actual and forecasted seasonal results, an evaluation of current economic and market conditions, retailer performance, and, in certain cases,contractual terms. Estimates for operational chargebacks are based on actual customer notifications of order fulfillment discrepancies and historical trends.The Company reviews and refines these estimates on at least a quarterly basis. The Company's historical estimates of these costs have not differed materiallyfrom actual results.Retail store and concession-based shop-within-shop revenue is recognized net of estimated returns at the time of sale to consumers. Revenue from salesof products ordered through the Company's digital commerce sites and those of third-party digital partners is recognized upon delivery of the shipment to itscustomers. 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 recognizesincome for unredeemed gift cards when the likelihood of redemption by a customer is remote and the Company determines that it does not have a legalobligation 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 thehigher of (i) contractually guaranteed minimum royalty levels or (ii) actual sales and royalty data, or estimates thereof, received from the Company'slicensees.The Company accounts for sales taxes and other related taxes on a net basis, excluding such taxes from revenue.Cost of Goods Sold and Selling ExpensesCost of goods sold includes the expenses incurred to acquire and produce inventory for sale, including product costs, freight-in, and import costs, aswell as changes in reserves for shrinkage and inventory realizability. Gains and losses associated with forward foreign currency exchange contracts that aredesignated as cash flow hedges of inventory transactions are also recognized within cost of goods sold when the hedged inventory is sold. The costs ofselling merchandise, including those associated with preparing merchandise for sale, such as picking, packing, warehousing, and order charges ("handlingcosts"), are included in selling, general, and administrative ("SG&A") expenses in the consolidated statements of operations.Shipping and Handling CostsThe costs associated with shipping goods to customers are reflected as a component of SG&A expenses in the consolidated statements of operations.Shipping and handling costs (described above) billed to customers are included in revenue. A summary of shipping and handling costs is as follows: Fiscal Years Ended March 31, 2018 April 1, 2017 April 2, 2016 (millions)Shipping costs $39.1 $42.8 $44.6Handling costs 155.4 170.1 181.2F-8 RALPH LAUREN CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)Advertising and Marketing CostsAdvertising costs, including the costs to produce advertising, are expensed when the advertisement is first exhibited. Out-of-store advertising costspaid to wholesale customers under cooperative advertising programs are expensed as an advertising cost within SG&A expenses if both the identifiedadvertising benefit is sufficiently separable from the purchase of the Company's products by customers and the fair value of such benefit is measurable.Otherwise, such costs are reflected as a reduction of revenue. Costs of in-store advertising paid to wholesale customers under cooperative advertisingprograms are not included in advertising costs, but rather are reflected as a reduction of revenue since the benefits are not sufficiently separable from thepurchases of the Company's products by customers. Costs associated with the marketing and promotion of the Company's products are included within SG&Aexpenses.Advertising and marketing expenses amounted to $241.1 million, $219.9 million, and $280.0 million in Fiscal 2018, Fiscal 2017, and Fiscal 2016,respectively. Deferred advertising, marketing, and promotional costs, which principally relate to advertisements that have not yet been exhibited or servicesthat have not yet been received, were $6.8 million and $4.1 million at the end of Fiscal 2018 and Fiscal 2017, respectively, and were recorded within prepaidexpenses and other current assets in the Company's consolidated balance sheets.Foreign Currency Translation and TransactionsThe financial position and operating results of the Company's foreign operations are primarily consolidated using their respective local currency as thefunctional currency. Local currency assets and liabilities are translated to U.S. Dollars at the rates of exchange in effect on the balance sheet date, and localcurrency revenues and expenses are translated to U.S. Dollars at average rates of exchange in effect during the period. The resulting translation gains or lossesare included in the consolidated statements of comprehensive income (loss) as a component of other comprehensive income (loss) ("OCI") and in theconsolidated statements of equity within accumulated other comprehensive income (loss) ("AOCI"). Gains and losses on the translation of intercompanyloans made to foreign subsidiaries that are of a long-term investment nature are also included within this component of equity.The Company also recognizes gains and losses on both third-party and intercompany transactions that are denominated in a currency other than therespective entity's functional currency. Such foreign currency transaction gains and losses are recognized in earnings within other expense, net, in theconsolidated statements of operations, inclusive of the effects of any related hedging activities, and reflected net gains of $4.5 million and $1.1 million inFiscal 2018 and Fiscal 2017, respectively, and net losses of $3.8 million in Fiscal 2016.Comprehensive Income (Loss)Comprehensive income (loss), which is reported in the consolidated statements of comprehensive income (loss) and consolidated statements of equity,consists of net income (loss) and other gains and losses affecting equity that, under U.S. GAAP, are excluded from net income (loss). The components of OCIfor the Company consist of foreign currency translation gains (losses); net realized and unrealized gains (losses) on cash flow hedges, such as forward foreigncurrency exchange contracts; net realized and unrealized gains (losses) on available-for-sale investments; and net realized and unrealized gains (losses)related to the Company's defined benefit plans.Net Income (Loss) per Common ShareBasic net income (loss) per common share is computed by dividing net income (loss) attributable to common shares by the weighted-average numberof 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 (loss) per common share adjusts basic net income (loss) per common share for the dilutive effects of outstanding stock options, restrictedstock units ("RSUs"), and any other potentially dilutive instruments, only in the periods in which such effects are dilutive.F-9 RALPH LAUREN CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)The weighted-average number of common shares outstanding used to calculate basic net income (loss) per common share is reconciled to shares usedto calculate diluted net income (loss) per common share as follows: Fiscal Years Ended March 31, 2018 April 1, 2017 April 2, 2016 (millions)Basic shares 81.7 82.7 85.2Dilutive effect of stock options and RSUs 0.8 —(a) 0.7Diluted shares 82.5 82.7 85.9 (a) Incremental shares of 0.7 million attributable to outstanding stock options and RSUs were excluded from the computation of diluted shares forFiscal 2017, as such shares would not be dilutive as a result of the net loss incurred.All earnings per share amounts have been calculated using unrounded numbers. Options to purchase shares of the Company's Class A common stock atan exercise price greater than the average market price of the common stock during the reporting period are anti-dilutive and therefore not included in thecomputation of diluted net income (loss) per common share. In addition, the Company has outstanding performance-based RSUs, which are included in thecomputation of diluted shares only to the extent that the underlying performance conditions (and applicable market condition modifiers, if any) (i) have beensatisfied 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 contingencyperiod and the result would be dilutive. As of the end of Fiscal 2018, Fiscal 2017, and Fiscal 2016, there were 2.0 million, 2.2 million, and 2.6 million,respectively, additional shares issuable upon exercise of anti-dilutive options and contingent vesting of performance-based RSUs, that were excluded fromthe diluted shares calculations.Stock-Based CompensationThe Company recognizes expense for all stock-based compensation awards granted to employees and non-employee directors based on the grant datefair value of the awards over the requisite service period, adjusted for forfeitures which are estimated based on an analysis of historical experience andexpected future trends. The Company uses the Black-Scholes valuation model to estimate the grant date fair value of its stock option awards. Forperformance-based RSU awards that include a market condition in the form of a total shareholder return ("TSR") modifier, the Company uses a Monte Carlosimulation valuation model to estimate the grant date fair value. The fair values of restricted stock awards, service-based RSUs, and performance-based RSUsthat are not subject to a TSR modifier are determined based on the fair value of the Company's Class A common stock on the date of grant, adjusted to reflectthe absence of dividends for those awards that are not entitled to dividend equivalents. Compensation expense for all performance-based RSUs is recognizedover the requisite service period when attainment of the performance goal is deemed probable, net of estimated forfeitures. The Company recognizescompensation expense on an accelerated basis for all awards with graded vesting terms, including stock options, restricted stock, and certain RSUs. For RSUawards with cliff vesting terms, compensation expense is recognized on a straight-line basis. For certain RSU awards granted to retirement-eligibleemployees, or employees who will become retirement-eligible prior to the end of the awards' respective stated vesting periods, the related stock-basedcompensation expense is recognized on an accelerated basis over a term commensurate with the period that the employee is required to provide service inorder to vest in the award. See Note 17 for further discussion of the Company's stock-based compensation plans.Cash and Cash EquivalentsCash and cash equivalents include all highly liquid investments with original maturities of 90 days or less, including investments in time deposits anddebt securities. Investments in debt securities are diversified among high-credit quality securities in accordance with the Company's risk-managementpolicies.Restricted CashThe Company is periodically required to place cash in escrow with various banks as collateral, primarily to secure guarantees of correspondingamounts made by the banks to international tax authorities on behalf of the Company, such as to secure refunds of value-added tax payments in certaininternational tax jurisdictions or in the case of certain international tax audits. Such cashF-10 RALPH LAUREN CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)is classified as restricted cash and reported as a component of either prepaid expenses and other current assets or other non-current assets in the Company'sconsolidated balance sheets.InvestmentsThe Company's investment objectives include capital preservation, maintaining adequate liquidity, diversification to minimize liquidity and creditrisk, and achievement of maximum returns within the guidelines set forth in the Company's investment policy.Short-term investments consist of investments which the Company expects to convert into cash within one year, including time deposits and debtsecurities, which have original maturities greater than 90 days. Non-current investments, which are classified within other non-current assets in theconsolidated balance sheets, consist of those investments which the Company does not expect to convert into cash within one year.The Company classifies all of its investments at the time of purchase as available-for-sale. These investments are recorded at fair value with unrealizedgains or losses classified as a component of AOCI in the consolidated balance sheets, and related realized gains or losses classified as a component of otherexpense, net, in the consolidated statements of operations. Cash inflows and outflows related to the sale and purchase of investments are classified asinvesting activities in the Company's consolidated statements of cash flows.Equity-method InvestmentsInvestments in companies in which the Company has significant influence, but less than a controlling financial interest, are accounted for using theequity method. Significant influence is generally presumed to exist when the Company owns between 20% and 50% of the investee.Under the equity method of accounting, the following amounts are recorded in the Company's consolidated financial statements: the Company'sinvestment in and amounts due to and from the investee are included in the consolidated balance sheets; the Company's share of the investee's earnings(losses) is included in the consolidated statements of operations; and dividends, cash distributions, loans, or other cash received from the investee andadditional cash investments, loan repayments, or other cash paid to the investee are included in the consolidated statements of cash flows.The Company's equity-method investments include its 50% interest in the Ralph Lauren Watch and Jewelry Company, Sárl, a ten-year term jointventure formed with Compagnie Financière Richemont SA, the Swiss luxury goods group, which expired in March 2018. This joint venture is a Swisscorporation whose purpose was to design, develop, manufacture, sell, and distribute luxury watches and fine jewelry through Ralph Lauren stores, as well asthrough fine independent jewelry and luxury watch retailers around the world. As a result of its expiration, the joint venture's operations will wind-downduring Fiscal 2019.During Fiscal 2018, Fiscal 2017, and Fiscal 2016, equity in losses of equity-method investees were $4.5 million, $5.2 million, and $10.9 million,respectively, and were recorded within other expense, net, in the Company's consolidated statements of operations.Impairment AssessmentThe Company evaluates investments held in unrealized loss positions, if any, for other-than-temporary impairment on a quarterly basis. Suchevaluation involves a variety of considerations, including assessments of the risks and uncertainties associated with general economic conditions anddistinct conditions affecting specific issuers. Factors considered by the Company include (i) the length of time and the extent to which the fair value has beenbelow cost; (ii) the financial condition, credit worthiness, and near-term prospects of the issuer; (iii) the length of time to maturity; (iv) future economicconditions and market forecasts; (v) the Company's intent and ability to retain its investment for a period of time sufficient to allow for recovery of marketvalue; and (vi) an assessment of whether it is more likely than not that the Company will be required to sell its investment before recovery of market value.See Note 13 for further information relating to the Company's investments.F-11 RALPH LAUREN CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)Accounts ReceivableIn the normal course of business, the Company extends credit to wholesale customers that satisfy defined credit criteria. Accounts receivable isrecorded at carrying value, which approximates fair value, and is presented in the Company's consolidated balance sheets net of certain reserves andallowances. These reserves and allowances consist of (i) reserves for returns, discounts, end-of-season markdowns, operational chargebacks, and certaincooperative advertising allowances (see the "Revenue Recognition" section above for further discussion of related accounting policies) and (ii) allowances fordoubtful accounts.A rollforward of the activity in the Company's reserves for returns, discounts, end-of-season markdowns, operational chargebacks, and certaincooperative advertising allowances is presented below: Fiscal Years Ended March 31, 2018 April 1, 2017 April 2, 2016 (millions)Beginning reserve balance $202.8 $239.7 $239.7Amount charged against revenue to increase reserve 585.0 666.6 749.0Amount credited against customer accounts to decrease reserve (596.6) (698.8) (753.0)Foreign currency translation 11.3 (4.7) 4.0Ending reserve balance $202.5 $202.8 $239.7An allowance for doubtful accounts is determined through an analysis of accounts receivable aging, assessments of collectability based on anevaluation 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.A rollforward of the activity in the Company's allowance for doubtful accounts is presented below: Fiscal Years Ended March 31, 2018 April 1, 2017 April 2, 2016 (millions)Beginning reserve balance $11.6 $14.5 $11.4Amount recorded to expense to increase reserve(a) 10.2 6.2 6.8Amount written-off against customer accounts to decrease reserve (3.2) (8.5) (4.1)Foreign currency translation 1.1 (0.6) 0.4Ending reserve balance $19.7 $11.6 $14.5 (a) Amounts recorded to bad debt expense are included within SG&A expenses in the consolidated statements of operations.Concentration of Credit RiskThe Company sells its wholesale merchandise primarily to major department and specialty stores around the world, and extends credit based on anevaluation of each customer's financial capacity and condition, usually without requiring collateral. In the Company's wholesale business, concentration ofcredit risk is relatively limited due to the large number of customers and their dispersion across many geographic areas. However, the Company has three keywholesale customers that generate significant sales volume. During Fiscal 2018, the Company's sales to its largest wholesale customer, Macy's, Inc.("Macy's"), accounted for approximately 8% of total net revenues. Further, during Fiscal 2018, sales to the Company's three largest wholesale customers,including Macy's, accounted for approximately 19% of total net revenues, as compared to approximately 21% during Fiscal 2017. Substantially all of theCompany's sales to its three largest wholesale customers related to its North America segment. As of March 31, 2018, these three key wholesale customersconstituted approximately 29% of total gross accounts receivable.F-12 RALPH LAUREN CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)InventoriesThe Company holds inventory that is sold through wholesale distribution channels to major department stores and specialty retail stores. TheCompany also holds retail inventory that is sold in its own stores and digital commerce sites directly to consumers. Substantially all of the Company'sinventories are comprised of finished goods, which are stated at the lower of cost or estimated realizable value, with cost determined on a weighted-averagecost basis.The estimated realizable value of inventory is determined based on an analysis of historical sales trends of the Company's individual product lines, theimpact of market trends and economic conditions, and a forecast of future demand, giving consideration to the value of current in-house orders for futuresales of inventory, as well as plans to sell inventory through the Company's factory stores, among other liquidation channels. Actual results may differ fromestimates due to the quantity, quality, and mix of products in inventory, consumer and retailer preferences, and market conditions. Reserves for inventoryshrinkage, representing the risk of physical loss of inventory, are estimated based on historical experience and are adjusted based upon physical inventorycounts. The Company's historical estimates of these costs and its related provisions have not differed materially from actual results.Property and Equipment, NetProperty and equipment, net is stated at cost less accumulated depreciation. Depreciation is calculated using the straight-line method based upon theestimated useful lives of depreciable assets, which range from three to seven years for furniture and fixtures, machinery and equipment, and capitalizedsoftware; and from ten to forty years for buildings and improvements. Leasehold improvements are depreciated over the shorter of the estimated useful livesof the respective assets or the term of the related lease.Property and equipment, along with other long-lived assets, are evaluated for impairment periodically whenever events or changes in circumstancesindicate that their related carrying values may not be fully recoverable. In evaluating long-lived assets for recoverability, including finite-lived intangibles asdescribed below, the Company uses its best estimate of future cash flows expected to result from the use of the asset and its eventual disposition. To theextent that estimated future undiscounted net cash flows attributable to the asset are less than its carrying value, an impairment loss is recognized equal to thedifference between the carrying value of such asset and its fair value, considering external market participant assumptions. Assets to be disposed of and forwhich there is a committed plan for disposal are reported at the lower of carrying value or fair value, less costs to sell.Goodwill and Other Intangible AssetsAt acquisition, the Company estimates and records the fair value of purchased intangible assets, which typically consist of reacquired licenseagreements, customer relationships, non-compete agreements, and/or order backlog. The fair values of these intangible assets are estimated based onmanagement's assessment, considering independent third-party appraisals when necessary. The excess of the purchase consideration over the fair value of netassets acquired, both tangible and intangible, is recorded as goodwill. Goodwill and certain other intangible assets deemed to have indefinite useful lives arenot amortized. Rather, goodwill and such indefinite-lived intangible assets are assessed for impairment at least annually. The Company generally performs itsannual goodwill and indefinite-lived intangible assets impairment analyses using a qualitative approach to determine whether it is more likely than not thatthe fair values of such assets are less than their respective carrying values. If, based on the results of the qualitative assessment, it is concluded that it is notmore likely than not that the fair value of the asset exceeds its carrying value, a quantitative test is performed. Under the quantitative test, if the carryingvalue of the asset exceeds its fair value, an impairment loss is recognized in the amount of the excess. The Company also periodically performs a quantitativetest to assess its goodwill for impairment in lieu of using the qualitative approach in order to reassess the fair values of its reporting units.Finite-lived intangible assets are amortized over their respective estimated useful lives and, along with other long-lived assets as noted above, areevaluated for impairment periodically whenever events or changes in circumstances indicate that their related carrying values may not be fully recoverable.See discussion of the Company's accounting policy for long-lived asset impairment as previously described under the caption "Property and Equipment,Net."Income TaxesIncome taxes are provided using the asset and liability method. Under this method, income taxes (i.e., deferred tax assets and liabilities, current taxespayable/refunds receivable, and tax expense) are recorded based on amounts refundable or payable in the current year and include the results of anydifference between U.S. GAAP and tax reporting. Deferred income taxes reflect the tax effect of certain net operating losses, capital losses, general businesscredit carryforwards, and the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial statement and incometax purposes, as determinedF-13 RALPH LAUREN CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)under enacted tax laws and rates. The Company accounts for the financial effect of changes in tax laws or rates in the period of enactment.In addition, valuation allowances are established when management determines that it is more likely than not that some portion or all of a deferred taxasset will not be realized. Tax valuation allowances are analyzed periodically and adjusted as events occur or circumstances change that warrant adjustments.In determining the income tax benefit (provision) for financial reporting purposes, the Company establishes a reserve for uncertain tax positions. If theCompany considers that a tax position is more likely than not of being sustained upon audit, based solely on the technical merits of the position, itrecognizes the tax benefit. The Company measures the tax benefit by determining the largest amount that is greater than 50% likely of being realized uponsettlement, presuming that the tax position is examined by the appropriate taxing authority that has full knowledge of all relevant information. Theseassessments can be complex and the Company often obtains assistance from external advisors. To the extent that the Company's estimates change or the finaltax outcome of these matters is different than the amounts recorded, such differences will impact the income tax benefit (provision) in the period in whichsuch determinations are made. If the initial assessment fails to result in the recognition of a tax benefit, the Company regularly monitors its position andsubsequently recognizes the tax benefit if (i) there are changes in tax law or analogous case law that sufficiently raise the likelihood of prevailing on thetechnical merits of the position to more likely than not; (ii) the statute of limitations expires; or (iii) there is a completion of an audit resulting in a settlementof that tax year with the appropriate agency. Uncertain tax positions are classified as current only when the Company expects to pay cash within the nexttwelve months. Interest and penalties are recorded within the income tax benefit (provision) in the Company's consolidated statements of operations and areclassified on the consolidated balance sheets together with the related liability for unrecognized tax benefits.See Note 10 for further discussion of the Company's income taxes.LeasesThe Company leases certain facilities and equipment, including the vast majority of its retail stores. Certain of the Company's lease agreementscontain renewal options, rent escalation clauses, and/or landlord incentives. Renewal terms generally reflect market rates at the time of renewal. Rent expensefor noncancelable operating leases with scheduled rent increases and/or landlord incentives is recognized on a straight-line basis over the lease term,including any applicable rent holidays, beginning on the earlier of the lease commencement date or the date the Company takes control of the leased space.The excess of straight-line rent expense over the scheduled payment amounts and landlord incentives is recorded as a deferred rent obligation. As of the endof Fiscal 2018 and Fiscal 2017, deferred rent obligations of $249.5 million and $246.3 million, respectively, were classified primarily within other non-current liabilities in the Company's consolidated balance sheets.In certain lease arrangements, the Company is involved with the construction of the building or leasehold improvements (generally on property ownedby the landlord). If the Company concludes that it has substantively all of the risks of ownership during construction of a leased property and therefore isdeemed the owner of the project for accounting purposes, it records an asset and related financing obligation in the amount of the total project costs related toconstruction-in-progress and the fair value of the pre-existing building. Once construction is complete, the Company considers the requirements for sale-leaseback treatment, including the transfer back of all risks of ownership and whether the Company has any continuing involvement in the leased property. Ifthe arrangement does not qualify for sale-leaseback treatment, the Company continues to amortize the financing obligation and depreciate the building overthe lease term.Derivative Financial InstrumentsThe Company records all derivative financial instruments on its consolidated balance sheets at fair value. For derivative instruments that qualify forhedge accounting, the effective portion of changes in their fair value is either (i) offset against the changes in fair value of the related hedged assets,liabilities, or firm commitments through earnings or (ii) recognized in equity as a component of AOCI until the hedged item is recognized in earnings,depending on whether the derivative is being used to hedge against changes in fair value or cash flows and net investments, respectively.Each derivative instrument that qualifies for hedge accounting is expected to be highly effective at reducing the risk associated with the exposurebeing hedged. For each derivative instrument that is designated as a hedge, the Company formally documents the related risk management objective andstrategy, including identification of the hedging instrument, the hedged item, and the risk exposure, as well as how hedge effectiveness will be assessedprospectively and retrospectively over the instrument's term. To assess hedge effectiveness, the Company generally uses regression analysis, a statisticalmethod, to compare the change in theF-14 RALPH LAUREN CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)fair value of the derivative instrument to the change in fair value or cash flows of the related hedged item. The extent to which a hedging instrument has beenand is expected to remain highly effective in achieving offsetting changes in fair value or cash flows is assessed and documented by the Company on at leasta quarterly basis.As a result of its use of derivative instruments, the Company is exposed to the risk that counterparties to such contracts will fail to meet theircontractual obligations. To mitigate this counterparty credit risk, the Company has a policy of only entering into contracts with carefully selected financialinstitutions based upon an evaluation of their credit ratings and certain other factors, adhering to established limits for credit exposure. The Company'sestablished policies and procedures for mitigating credit risk from derivative transactions include ongoing review and assessment of its counterparties'creditworthiness. The Company also enters into master netting arrangements with counterparties, when possible, to mitigate credit risk associated with itsderivative instruments. In the event of default or termination (as such terms are defined within the respective master netting arrangement), these arrangementsallow the Company to net-settle amounts payable and receivable related to multiple derivative transactions with the same counterparty. The master nettingarrangements 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 reportingpurposes, proceeds received or amounts paid upon the settlement of a derivative instrument are classified in the same manner as the related item beinghedged, primarily within cash flows from operating activities.Cash Flow HedgesThe Company uses forward foreign currency exchange contracts to reduce its risk related to exchange rate fluctuations on inventory transactions madein an entity's non-functional currency, intercompany royalty payments made by certain of its international operations, and the settlement of foreign currency-denominated balances. To the extent forward foreign currency exchange contracts are designated as cash flow hedges and are highly effective in offsettingchanges in the value of the hedged items, the related gains or losses are initially deferred in equity as a component of AOCI and are subsequently recognizedin the consolidated statements of operations as follows:•Forecasted Inventory Transactions — recognized as part of the cost of the inventory being hedged within cost of goods sold when the relatedinventory is sold to a third party.•Intercompany Royalties/Settlement of Foreign Currency Balances — recognized within other expense, net, during the period that the hedgedbalance is remeasured through earnings, generally through its settlement when the related payment occurs.To the extent that a derivative instrument designated as a cash flow hedge is not considered effective, any change in its fair value relating to suchineffectiveness is immediately recognized in earnings within other expense, net. 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 immediatelyrecognized in earnings within other expense, net. Upon discontinuance of hedge accounting, the cumulative change in fair value of the derivative instrumentpreviously recorded in AOCI is recognized in earnings when the related hedged item affects earnings, consistent with the originally-documented hedgingstrategy, unless the forecasted transaction is no longer probable of occurring, in which case the accumulated amount is immediately recognized in earningswithin other expense, net.Hedge of a Net Investment in a Foreign OperationThe Company periodically uses cross-currency swap contracts and forward foreign currency exchange contracts to reduce risk associated withexchange rate fluctuations on certain of its net investments in foreign subsidiaries. Changes in the fair values of such derivative instruments that aredesignated as hedges of net investments in foreign operations are recorded in equity as a component of AOCI in the same manner as foreign currencytranslation adjustments, to the extent they are effective as a hedge. To assess effectiveness, the Company uses a method based on changes in spot rates tomeasure the impact of foreign currency exchange rate fluctuations on both its foreign subsidiary net investment and the related derivative hedginginstrument. Accordingly, changes in fair value of the hedging instrument other than those due to changes in the spot rate are excluded from the assessment ofhedge effectiveness and are recorded in the consolidated statement of operations with any other ineffectiveness as interest expense. Amounts associated withthe effective portion of net investment hedges are released from AOCI and recognized in earnings only upon the sale or liquidation of the hedged netinvestment.F-15 RALPH LAUREN CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)Fair Value HedgesChanges in the fair value of a derivative instrument that is designated as a fair value hedge, along with offsetting changes in the fair value of therelated hedged item attributable to the hedged risk, are recorded in earnings. Hedge ineffectiveness is recorded in earnings to the extent that the change in thefair value of the hedged item does not offset the change in the fair value of the hedging instrument.Undesignated HedgesAll of the Company's undesignated hedges are entered into to hedge specific economic risks, particularly foreign currency exchange rate risk related toforeign currency-denominated balances. Changes in the fair value of undesignated derivative instruments are immediately recognized in earnings withinother expense, net.See Note 13 for further discussion of the Company's derivative financial instruments.4.Recently Issued Accounting StandardsTargeted Improvements to Accounting for Hedging ActivitiesIn August 2017, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2017-12, "TargetedImprovements to Accounting for Hedging Activities" ("ASU 2017-12"). ASU 2017-12 amends existing hedge accounting guidance by better aligning anentity's financial reporting with its risk management activities and by simplifying its application. Among its provisions, ASU 2017-12 eliminates therequirement to separately measure and report ineffectiveness for instruments that qualify for hedge accounting, and generally requires that the entire changein fair value of such instruments ultimately be presented in the same income statement line as the respective hedged item. Additionally, the updated guidancereduces complexity in the accounting for certain hedging relationships, eases documentation and effectiveness assessment requirements, broadens the scopeof risk components eligible to qualify for hedge accounting, and modifies certain disclosure requirements. ASU 2017-12 is effective for the Companybeginning in its fiscal year ending March 28, 2020 ("Fiscal 2020"), with early adoption permitted, and is to be applied using a modified retrospectivetransition approach, except for the amended presentation and disclosure requirements, which are to be applied prospectively. The Company is currentlyevaluating the impact that ASU 2017-12 will have on its consolidated financial statements and related disclosures.Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit CostIn March 2017, the FASB issued ASU No. 2017-07, "Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement BenefitCost" ("ASU 2017-07"). Among its provisions, ASU 2017-07 requires that for defined benefit plans, an employer present only the service cost component ofnet pension expense within the same income statement line item used to reflect other compensation costs arising from services rendered by employees duringthe period. All other components of net periodic pension and postretirement benefit expense must be presented separately from the service cost component,outside of operating income.The Company early-adopted ASU 2017-07 during the fourth quarter of Fiscal 2018 and applied its provisions on a retrospective basis by reclassifying$2.5 million and $0.9 million from SG&A expenses to other expense, net, in its consolidated statements of operations for Fiscal 2017 and Fiscal 2016,respectively, representing the non-service cost components of net pension expense for its international defined benefit plans during these periods. Theservice cost component of net pension expense for these periods remains presented within SG&A expenses. Other than this change in presentation, theadoption of ASU 2017-07 did not have an impact on the Company's consolidated financial statements. See Note 18 for further discussion of the Company'sinternational defined benefit plans, including a summary of net pension expense for the fiscal years presented.Restricted CashIn November 2016, the FASB issued ASU No. 2016-18, "Restricted Cash" ("ASU 2016-18"). ASU 2016-18 requires that the statement of cash flowsexplain the change during the period in the total of cash, cash equivalents, and restricted cash. Accordingly, restricted cash will be included with cash andcash equivalents when reconciling the beginning-of-period and end-of-period total amounts presented on the statement of cash flows. The Company early-adopted ASU 2016-18 during the first quarter of Fiscal 2018 and applied its provisions retrospectively. Other than the change in presentation within thestatement of cash flows,F-16 RALPH LAUREN CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)the adoption of ASU 2016-18 did not have an impact on the Company's consolidated financial statements. See Note 20 for a reconciliation of cash, cashequivalents, and restricted cash from the consolidated balance sheets to the consolidated statements of cash flows.Improvements to Employee Share-Based Payment AccountingIn March 2016, the FASB issued ASU No. 2016-09, "Improvements to Employee Share-Based Payment Accounting" ("ASU 2016-09"). ASU 2016-09simplifies several aspects related to the accounting for and financial statement presentation of share-based payments, including the accounting for incometaxes upon award settlement and forfeitures, and the classification of excess tax benefits and shares surrendered for tax withholdings in the statement of cashflows.The Company adopted ASU 2016-09 during the first quarter of Fiscal 2018. Among its various provisions, ASU 2016-09 impacts the accounting forincome taxes upon award settlement by requiring that all excess tax benefits and shortfalls be reflected in the income tax benefit (provision) in the statementof operations in the period that they are realized. This reflects a change from previous practice, which generally required that such activity be recorded inequity as additional paid-in-capital. This change, which was applied prospectively in the Company's consolidated financial statements, increased theCompany's income tax provision by $15.4 million during Fiscal 2018. Future impacts of this guidance on the Company's income tax benefit (provision) willdepend largely on unpredictable events and other factors, including the timing of both employee stock option exercises and cancellations, if any, and thevalue realized upon vesting or exercise of shares compared to the grant date fair value of those shares, and will likely result in increased volatility. Thisincrease in volatility is expected to be more pronounced during the first half of the Company's fiscal year due to the timing of annual stock-basedcompensation award vestings and stock option expirations.Additionally, ASU 2016-09 changes the classification of excess tax benefits presented in the Company's consolidated statements of cash flows from afinancing activity to an operating activity. The Company applied this change in classification on a retrospective basis by reclassifying excess tax benefits of$0.3 million and $10.2 million from cash flows from financing activities to cash flows from operating activities for Fiscal 2017 and Fiscal 2016, respectively.Lastly, as permitted, the Company has elected to continue to estimate the impact of expected forfeitures when determining the amount ofcompensation cost to be recognized each period, as opposed to reflecting the impact of forfeitures only as they occur.The remaining provisions of ASU 2016-09 did not have a material impact on the Company's consolidated financial statements.LeasesIn February 2016, the FASB issued ASU No. 2016-02, "Leases" ("ASU 2016-02"). ASU 2016-02 requires that a lessee's rights and fixed paymentobligations under most leases be recognized as right-of-use assets and lease liabilities on the consolidated balance sheet. ASU 2016-02 retains a dual modelfor classifying leases as either financing or operating, which governs the pattern of expense recognition to be reflected in the consolidated statement ofoperations. Variable lease payments based on performance, such as percentage-of-sales-based payments, will not be included in the measurement of right-of-use assets and lease liabilities. Rather, consistent with current practice, such amounts will be recognized as an expense in the period incurred. ASU 2016-02 iseffective for the Company beginning in Fiscal 2020, with early adoption permitted, and is to be adopted using a modified retrospective transition approach,which requires application of the guidance at the beginning of the earliest comparative period presented. However, the FASB recently approved an optionaltransition alternative, which allows for application of the guidance at the beginning of the period in which it is adopted, rather than at the beginning of theearliest comparative period presented.The Company is currently in the process of evaluating the impact that ASU 2016-02 will have on its consolidated financial statements and relateddisclosures. The Company's assessment efforts to date have included reviewing the standard's provisions and gathering information to evaluate the landscapeof its real estate, personal property, and other arrangements that may meet the definition of a lease. Based on these efforts, the Company currently anticipatesthat the adoption of ASU 2016-02 will result in a significant increase to its long-term assets and liabilities as, at a minimum, most of its current operatinglease commitments will be subject to balance sheet recognition. The standard is also expected to result in enhanced quantitative and qualitative lease-relateddisclosures. Recognition of lease expense in the consolidated statement of operations is not anticipated to significantly change.F-17 RALPH LAUREN CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)Revenue from Contracts with CustomersIn May 2014, the FASB issued ASU No. 2014-09, "Revenue from Contracts with Customers" ("ASU 2014-09"). ASU 2014-09 provides a single,comprehensive accounting model for revenues arising from contracts with customers that will supersede most existing revenue recognition guidance,including industry-specific guidance. Under this model, revenue, representing the amount to which an entity expects to be entitled in exchange for providingpromised goods or services (i.e., performance obligations), is recognized upon control of promised goods or services transferring to a customer. ASU 2014-09also requires enhanced qualitative and quantitative revenue-related disclosures. Since its original issuance, the FASB has issued several additional relatedASUs to address implementation concerns and further amend and clarify certain guidance within ASU 2014-09. ASU 2014-09 may be adopted on a fullretrospective basis and applied to all prior periods presented, or on a modified retrospective basis through a cumulative adjustment recorded to openingretained earnings in the year of initial application.The Company's process and efforts for assessing the impact that ASU 2014-09 will have on its consolidated financial statements and relateddisclosures have involved reviewing current revenue-related accounting policies, processes, arrangements, and disclosures to identify differences that willarise from its application. Based on these efforts, the Company has concluded that the performance obligations underlying its core revenue streams (i.e., itsretail and wholesale businesses), and the timing of recognition thereof, will remain substantially unchanged. Revenues for these businesses are generatedthrough the sale of finished products, and will continue to be recognized at the point in time when merchandise is transferred to the customer and in anamount that considers the impacts of estimated returns, end-of-season markdowns, and other allowances that are variable in nature. For its licensing business,which has historically comprised approximately 2% of total revenues, the Company will continue to recognize the related revenue, including anycontractually-guaranteed minimum royalty amounts, over time consistent with current practice.Overall, the adoption of ASU 2014-09 will not have a significant impact on the Company's consolidated financial statements, although the accountingfor certain ancillary items will be impacted. Specifically, revenue relating to estimated unredeemed gift card balances will be recognized over time inproportion to the amounts ultimately redeemed by customers, rather than when the likelihood of redemption becomes remote. Additionally, certain costsassociated with the marketing of merchandise to wholesale customers for a particular selling season will be expensed as incurred, rather than deferred andexpensed over the course of the related season. Finally, inventory amounts associated with estimated sales returns will be presented within prepaid expensesand other current assets in the consolidated balance sheets, rather than within inventories.The Company will adopt ASU 2014-09 in the first quarter of its Fiscal 2019 using the modified retrospective method, under which the cumulativeeffect of initially applying the standard will be recognized as an adjustment to opening Fiscal 2019 retained earnings, which is not expected to be material.5.Property and EquipmentProperty and equipment, net consists of the following: March 31, 2018 April 1, 2017 (millions)Land and improvements $16.8 $16.8Buildings and improvements 460.5 457.2Furniture and fixtures 671.0 687.2Machinery and equipment 430.4 414.0Capitalized software 578.4 549.0Leasehold improvements 1,181.2 1,179.1Construction in progress 41.5 33.4 3,379.8 3,336.7Less: accumulated depreciation (2,193.5) (2,020.7)Property and equipment, net $1,186.3 $1,316.0Depreciation expense was $271.2 million, $283.4 million, and $285.7 million during Fiscal 2018, Fiscal 2017, and Fiscal 2016, respectively, and isrecorded primarily within SG&A expenses in the consolidated statements of operations.F-18 RALPH LAUREN CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)6.Goodwill and Other Intangible AssetsGoodwillThe following table details the changes in goodwill for each of the Company's segments during Fiscal 2018 and Fiscal 2017: Wholesale Retail Licensing NorthAmerica Europe Asia Other Non-reportableSegments Total (millions)Balance at April 2, 2016 $581.8 $202.8 $133.3 $— $— $— $— $917.9Foreign currency translation (14.3) (2.6) (1.3) — — — — (18.2)Balance at December 31, 2016 567.5 200.2 132.0 — — — — 899.7Segment reallocation(a) (567.5) (200.2) (132.0) 421.8 269.2 71.5 137.2 —Impairments — — — — — — (5.2) (5.2)Foreign currency translation — — — — 6.7 3.4 — 10.1Balance at April 1, 2017 — — — 421.8 275.9 74.9 132.0 904.6Foreign currency translation — — — — 42.0 3.9 — 45.9Balance at March 31, 2018 $— $— $— $421.8 $317.9 $78.8 $132.0 $950.5 (a) In connection with the realignment of the Company's segment reporting structure, the Company reallocated the carrying amount of goodwill to itsnew reporting units based upon each reporting unit's relative fair value as of the first day of its fourth quarter of Fiscal 2017.Based on the results of the Company's goodwill impairment testing, the Company recorded an impairment charge of $5.2 million during Fiscal 2017 tofully write off the carrying value of reallocated goodwill related to one of its reporting units. No goodwill impairment charges were recorded during Fiscal2018 or Fiscal 2016. See Note 12 for further discussion of the Company's goodwill impairment testing.Other Intangible AssetsOther intangible assets consist of the following: March 31, 2018 April 1, 2017 GrossCarryingAmount Accum.Amort. Net GrossCarryingAmount Accum.Amort. Net (millions)Intangible assets subject to amortization: Re-acquired licensed trademarks $232.7 $(140.0) $92.7 $231.1 $(130.2) $100.9Customer relationships 256.5 (171.4) 85.1 252.1 (152.9) 99.2Other 10.1 (7.2) 2.9 26.9 (14.5) 12.4Total intangible assets subject to amortization 499.3 (318.6) 180.7 510.1 (297.6) 212.5Intangible assets not subject to amortization: Trademarks and brands 7.3 N/A 7.3 7.3 N/A 7.3Total intangible assets $506.6 $(318.6) $188.0 $517.4 $(297.6) $219.8F-19 RALPH LAUREN CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)AmortizationAmortization expense was $24.0 million, $24.1 million, and $23.7 million during Fiscal 2018, Fiscal 2017, and Fiscal 2016, respectively, and isrecorded within SG&A expenses in the consolidated statements of operations.Based on the balance of the Company's intangible assets subject to amortization as of March 31, 2018, the expected amortization expense for each ofthe next five fiscal years and thereafter is as follows: Amortization Expense (millions)Fiscal 2019 $23.6Fiscal 2020 22.9Fiscal 2021 20.1Fiscal 2022 18.1Fiscal 2023 14.4Fiscal 2024 and thereafter 81.6Total $180.7The expected future amortization expense above reflects weighted-average estimated remaining useful lives of 11.8 years for re-acquired licensedtrademarks, 8.6 years for customer relationships, and 10.4 years for the Company's finite-lived intangible assets in total.7.Other Assets and LiabilitiesPrepaid expenses and other current assets consist of the following: March 31, 2018 April 1, 2017 (millions)Other taxes receivable $171.4 $127.8Prepaid rent expense 37.0 37.4Restricted cash 15.5 9.8Derivative financial instruments 12.3 23.0Prepaid samples 11.2 5.9Prepaid software maintenance 8.7 6.5Prepaid advertising and marketing 6.8 4.1Tenant allowances receivable 4.3 16.4Other prepaid expenses and current assets 56.5 49.5Total prepaid expenses and other current assets $323.7 $280.4F-20 RALPH LAUREN CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)Other non-current assets consist of the following: March 31, 2018 April 1, 2017 (millions)Non-current investments $86.2 $21.4Restricted cash 35.4 33.7Security deposits 27.3 26.5Derivative financial instruments — 9.6Other non-current assets 34.6 40.0Total other non-current assets $183.5 $131.2Accrued expenses and other current liabilities consist of the following: March 31, 2018 April 1, 2017 (millions)Accrued payroll and benefits $227.8 $173.5Accrued operating expenses 225.8 188.0Other taxes payable 194.2 172.2Accrued inventory 174.0 154.9Restructuring reserve 69.6 140.8Derivative financial instruments 60.8 12.3Dividends payable 40.6 40.5Accrued capital expenditures 37.0 45.7Deferred income 30.4 29.7Capital lease obligations 19.5 22.6Other accrued expenses and current liabilities 3.7 2.5Total accrued expenses and other current liabilities $1,083.4 $982.7Other non-current liabilities consist of the following: March 31, 2018 April 1, 2017 (millions)Capital lease obligations $236.4 $250.9Deferred rent obligations 212.2 211.1Derivative financial instruments 49.2 9.4Deferred tax liabilities 36.5 11.8Deferred compensation 7.0 7.8Other non-current liabilities 65.4 50.6Total other non-current liabilities $606.7 $541.6F-21 RALPH LAUREN CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)8.Impairment of AssetsDuring Fiscal 2018, the Company recorded non-cash impairment charges of $41.2 million to write off certain fixed assets related to its domestic andinternational stores, shop-within-shops, and corporate offices, of which $16.0 million was recorded in connection with the Way Forward Plan (see Note 9) and$25.2 million was recorded in connection with underperforming stores and shop-within-shops as a result of its on-going store portfolio evaluation.Additionally, as a result of a change in the planned usage of a certain intangible asset, the Company recorded a non-cash impairment charge of $8.8 millionto reduce the carrying value of the intangible asset to its estimated fair value.During Fiscal 2017, the Company recorded non-cash impairment charges of $248.6 million to write off certain fixed assets related to its domestic andinternational stores, shop-within-shops, and corporate offices, as well as its in-house global digital commerce platform which was in development, of which$234.6 million was recorded in connection with the Way Forward Plan (see Note 9) and $14.0 million was recorded in connection with underperformingstores that were subject to potential future closure. Additionally, as a result of the realignment of its segment reporting structure, the Company recorded anon-cash goodwill impairment charge of $5.2 million during Fiscal 2017.During Fiscal 2016, the Company recorded non-cash impairment charges of $48.8 million, primarily to write off certain fixed assets related to itsdomestic and international stores and shop-within-shops, of which $27.2 million was recorded in connection with the Global Reorganization Plan (see Note9) and $21.6 million was recorded in connection with underperforming stores that were subject to potential future closure.See Note 12 for further discussion of the non-cash impairment charges recorded during the fiscal years presented.9.Restructuring and Other ChargesA description of significant restructuring and other activities and related costs is included below.Way Forward PlanOn June 2, 2016, the Company's Board of Directors approved a restructuring plan with the objective of delivering sustainable, profitable sales growthand long-term value creation for shareholders (the "Way Forward Plan"). The Company is refocusing on its core brands and evolving its product, marketing,and shopping experience to increase desirability and relevance. It is also evolving its operating model to enable sustainable, profitable sales growth bysignificantly improving quality of sales, reducing supply chain lead times, improving its sourcing, and executing a disciplined multi-channel distributionand expansion strategy. As part of the Way Forward Plan, the Company is rightsizing its cost structure and implementing a return on investment-drivenfinancial model to free up resources to invest in the brand and drive high-quality sales. The Way Forward Plan includes strengthening the Company'sleadership team and creating a more nimble organization by moving from an average of nine to six layers of management. The Way Forward Plan alsoincludes the discontinuance of the Company's Denim & Supply brand and the integration of its denim product offerings into its Polo Ralph Lauren brand.Collectively, these actions, which were substantially completed during Fiscal 2017, resulted in a reduction in workforce and the closure of certain stores andshop-within-shops.On March 30, 2017, the Company's Board of Directors approved the following additional restructuring-related activities associated with its WayForward Plan: (i) the restructuring of its in-house global digital commerce platform which was in development and shifting to a more cost-effective, flexibleplatform through a new agreement with Salesforce's Commerce Cloud, formerly known as Demandware; (ii) the closure of its Polo store at 711 Fifth Avenuein New York City; and (iii) the further streamlining of the organization and the execution of other key corporate actions in line with the Company's WayForward Plan. Together, these actions are an important part of the Company's efforts to achieve its stated objective to return to sustainable, profitable growthand invest in the future. These additional restructuring-related activities were largely completed during Fiscal 2018 and resulted in a further reduction inworkforce and the closure of certain corporate office and store locations. The remaining activities, which are primarily lease-related, are expected to becompleted during Fiscal 2019.F-22 RALPH LAUREN CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)In connection with the Way Forward Plan, the Company currently expects to incur total estimated charges of approximately $770 million, comprisedof cash-related restructuring charges of approximately $450 million and non-cash charges of approximately $320 million. Cumulative charges incurred sinceinception were $669.2 million and the Company expects to incur the remaining charges of approximately $100 million during Fiscal 2019. In addition tothese charges, the Company also incurred an additional non-cash charge of $155.2 million during Fiscal 2017 associated with the destruction of inventoryout of current liquidation channels in line with its Way Forward Plan.A summary of the charges recorded in connection with the Way Forward Plan during Fiscal 2018 and Fiscal 2017, as well as the cumulative chargesrecorded since its inception, is as follows: Fiscal Year Ended Cumulative Charges March 31, 2018 April 1, 2017 (millions)Cash-related restructuring charges: Severance and benefits costs $39.0 $182.7 $221.7Lease termination and store closure costs 33.2 87.3 120.5Other cash charges 6.3 19.1 25.4Total cash-related restructuring charges 78.5 289.1 367.6Non-cash charges: Impairment of assets (see Note 8) 16.0 234.6 250.6Inventory-related charges(a) 7.6 197.9 205.5Accelerated stock-based compensation expense(b) 0.7 — 0.7Total non-cash charges 24.3 432.5 456.8Total charges $102.8 $721.6 $824.4 (a) Includes charges of $155.2 million associated with the destruction of inventory out of current liquidation channels during Fiscal 2017. Inventory-related charges are recorded within cost of goods sold in the consolidated statements of operations.(b) Accelerated stock-based compensation expense, which is recorded within restructuring and other charges in the consolidated statements ofoperations, was recorded in connection with vesting provisions associated with certain separation agreements.A summary of the activity in the restructuring reserve related to the Way Forward Plan is as follows: Severance andBenefits Costs Lease Terminationand StoreClosure Costs Other Cash Charges Total (millions)Balance at April 2, 2016 $— $— $— $—Additions charged to expense 182.7 87.3 19.1 289.1Cash payments charged against reserve (87.4) (52.2) (11.5) (151.1)Non-cash adjustments (1.0) (0.8) (1.0) (2.8)Balance at April 1, 2017 94.3 34.3 6.6 135.2Additions charged to expense 39.0 33.2 6.3 78.5Cash payments charged against reserve (97.9) (22.8) (11.1) (131.8)Non-cash adjustments 2.2 8.8 — 11.0Balance at March 31, 2018 $37.6 $53.5 $1.8 $92.9F-23 RALPH LAUREN CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)Global Reorganization PlanOn May 12, 2015, the Company's Board of Directors approved a reorganization and restructuring plan comprised of the following major actions: (i) thereorganization of the Company's operating structure in order to streamline the Company's business processes to better align its cost structure with its long-term growth strategy; (ii) a strategic store and shop-within-shop performance review conducted by region and brand; (iii) a targeted corporate functional areareview; and (iv) the consolidation of certain of the Company's luxury lines (collectively, the "Global Reorganization Plan"). The Global Reorganization Planresulted in a reduction in workforce and the closure of certain stores and shop-within-shops.Actions associated with the Global Reorganization Plan were completed by the end of the first quarter of Fiscal 2017 and no additional charges areexpected to be incurred in relation to this plan. A summary of the charges recorded in connection with the Global Reorganization Plan during Fiscal 2017and Fiscal 2016, as well as the cumulative charges recorded since its inception, is as follows: Fiscal Years Ended Cumulative Charges April 1, 2017 April 2, 2016 (millions)Cash-related restructuring charges: Severance and benefits costs $4.7 $64.4 $69.1Lease termination and store closure costs 0.2 7.8 8.0Other cash charges — 13.8 13.8Total cash-related restructuring charges 4.9 86.0 90.9Non-cash charges: Impairment of assets (see Note 8) — 27.2 27.2Inventory-related charges(a) — 20.4 20.4Accelerated stock-based compensation expense(b) — 8.9 8.9Total non-cash charges — 56.5 56.5Total charges $4.9 $142.5 $147.4 (a) Inventory-related charges are recorded within cost of goods sold in the consolidated statements of operations.(b) Accelerated stock-based compensation expense, which is recorded within restructuring and other charges in the consolidated statements ofoperations, was recorded in connection with vesting provisions associated with certain separation agreements.A summary of the activity in the restructuring reserve related to the Global Reorganization Plan is as follows: Severance andBenefits Costs Lease Terminationand Store ClosureCosts Other Cash Charges Total (millions)Balance at March 28, 2015 $— $— $— $—Additions charged to expense 64.4 7.8 13.8 86.0Cash payments charged against reserve (33.2) (2.5) (10.7) (46.4)Non-cash adjustments — 0.7 — 0.7Balance at April 2, 2016 31.2 6.0 3.1 40.3Additions charged to expense 4.7 0.2 — 4.9Cash payments charged against reserve (27.3) (2.8) (2.9) (33.0)Balance at April 1, 2017 8.6 3.4 0.2 12.2Cash payments charged against reserve (5.5) (1.9) (0.2) (7.6)Balance at March 31, 2018 $3.1 $1.5 $— $4.6F-24 RALPH LAUREN CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)Other ChargesDuring Fiscal 2018, the Company recorded other charges of $14.1 million related to depreciation expense associated with the Company's former Polostore at 711 Fifth Avenue in New York City, recorded after the store closed during the first quarter of Fiscal 2018 in connection with the Way Forward Plan.Although the Company is no longer generating revenue or has any other economic activity associated with its former Polo store, it continues to incurdepreciation expense due to its involvement at the time of construction.Additionally, during Fiscal 2018, the Company recorded other charges of $10.2 million related to its pending customs audit (see Note 14) and $6.7million (inclusive of accelerated stock-based compensation expense of $2.1 million) primarily related to the departure of Mr. Stefan Larsson as theCompany's President and Chief Executive Officer and as a member of its Board of Directors, effective as of May 1, 2017. Refer to the Form 8-K filed onFebruary 2, 2017 for additional discussion regarding the departure of Mr. Larsson.These other charges recorded in Fiscal 2018 were partially offset by the favorable impact of $2.2 million related to the reversal of reserves associatedwith the settlement of certain non-income tax issues.During Fiscal 2017, the Company recorded other charges of $13.2 million related to the anticipated settlement of certain non-income tax issues and$11.4 million (inclusive of accelerated stock-based compensation expense of $4.3 million) related to Mr. Larsson's departure.During Fiscal 2016, the Company recorded other charges of $34.1 million related to its pending customs audit (see Note 14) and $13.6 millionprimarily related to the settlement of certain litigation claims.10.Income TaxesU.S. Tax ReformOn December 22, 2017, President Trump signed into law new tax legislation commonly referred to as the Tax Cuts and Jobs Act (the "TCJA"), whichbecame effective January 1, 2018. The TCJA significantly revised U.S. tax law by, among other provisions, lowering the U.S. federal statutory income tax ratefrom 35% to 21%, creating a territorial tax system that includes a one-time mandatory transition tax on previously deferred foreign earnings, and eliminatingor reducing certain income tax deductions.ASC Topic 740, "Income Taxes," requires the effects of changes in tax laws to be recognized in the period in which the legislation is enacted. However,due to the complexity and significance of the TCJA's provisions, the SEC staff issued Staff Accounting Bulletin No. 118 ("SAB 118") on December 22, 2017,which allows companies to record the tax effects of the TCJA on a provisional basis based on a reasonable estimate, and then, if necessary, subsequentlyadjust such amounts during a limited measurement period as more information becomes available. The measurement period ends when a company hasobtained, prepared, and analyzed the information necessary to finalize its accounting, but cannot extend beyond one year from enactment.During the third quarter of Fiscal 2018, the Company recorded charges of $231.3 million within its income tax provision in connection with the TCJA,of which $215.5 million related to the mandatory transition tax, which it expects to pay over an eight-year period (see Note 14) and $15.8 million related tothe revaluation of the Company's deferred tax assets and liabilities. Subsequently, as a result of finalizing its full Fiscal 2018 operating results, the issuance ofnew interpretive guidance, and other analyses performed, the Company recorded immaterial measurement period adjustments during the fourth quarter ofFiscal 2018, whereby it reversed $6.2 million of the charges related to the mandatory transition tax and $5.5 million related to the revaluation of its deferredtaxes. These reversals were partially offset by an incremental charge of $1.8 million related to the expected future remittance of certain previously deferredforeign earnings. Collectively, these net charges of $221.4 million, which were recorded on a provisional basis, negatively impacted the Company's effectivetax rate by 4,520 basis points and lowered its diluted earnings per share by $2.68 during Fiscal 2018. The provisional amounts were based on the Company'spresent interpretations of the TCJA, current available information, and assumptions about future events, and are subject to further refinement as additionalinformation becomes available, including potential new or interpretative guidance issued by the FASB or the Internal Revenue Service and other taxagencies, and as further analyses are completed.F-25 RALPH LAUREN CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)Additionally, the Company reevaluated its permanent reinvestment assertion and determined that undistributed foreign earnings that were subject tothe one-time mandatory transition tax were no longer considered to be permanently reinvested, effective December 31, 2017. In connection with thisdecision, the Company repatriated $252.0 million of cash to the U.S. from certain of its foreign subsidiaries during the fourth quarter of Fiscal 2018, and itrepatriated an additional $400.0 million during the first quarter of Fiscal 2019. The mandatory transition tax does not apply to undistributed foreign earningsgenerated after December 31, 2017, and therefore the Company intends to permanently reinvest such earnings. See "Deferred Taxes" for additionaldiscussion.The Company is also in the process of assessing various international taxation provisions of the TCJA that are effective for the Company beginning inthe first quarter of Fiscal 2019, including a minimum tax on global intangible low-taxed income ("GILTI"). The Company has tentatively decided to accountfor GILTI tax in the period in which it is incurred and therefore has not provided any deferred tax impacts of GILTI in its consolidated financial statements forFiscal 2018. The Company will continue to evaluate this policy election during Fiscal 2019.Taxes on Income (Loss)Domestic and foreign pretax income (loss) are as follows: Fiscal Years Ended March 31, 2018 April 1, 2017 April 2, 2016 (millions)Domestic $16.4 $(155.3) $274.8Foreign 472.8 50.4 277.0Total income (loss) before income taxes $489.2 $(104.9) $551.8Benefits (provisions) for current and deferred income taxes are as follows: Fiscal Years Ended March 31, 2018 April 1, 2017 April 2, 2016 (millions)Current: Federal(a) $(154.6) $29.1 $(87.9)State and local(a) (5.0) 2.3 3.2Foreign (82.7) (64.7) (78.6) (242.3) (33.3) (163.3)Deferred: Federal (64.1) 25.1 4.6State and local (12.6) 2.9 1.4Foreign (7.4) 10.9 1.9 (84.1) 38.9 7.9Total income tax benefit (provision) $(326.4) $5.6 $(155.4) (a) Excludes federal, state, and local tax provisions of $17.3 million in Fiscal 2017 and federal, state, and local tax benefits of $10.2 million in Fiscal2016 resulting from stock-based compensation arrangements. Such amounts were recorded within equity. In Fiscal 2018, the Company adoptedASU 2016-09, which requires such excess tax benefits and shortfalls be reflected prospectively in the income tax benefit (provision) in thestatement of operations. See Note 4 for further discussion of the Company's adoption of ASU 2016-09.F-26 RALPH LAUREN CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)Tax Rate ReconciliationThe differences between income taxes expected at the U.S. federal statutory income tax rate and income taxes provided are as set forth below: Fiscal Years Ended March 31, 2018 April 1, 2017 April 2, 2016 (millions)Benefit (provision) for income taxes at the U.S. federal statutory rate(a) $(154.3) $36.7 $(193.2)Change due to: State and local income taxes, net of federal benefit (1.6) 2.7 (10.9)Foreign income taxed at different rates, net of U.S. foreign tax credits 74.7 (25.4) 33.6Unrecognized tax benefits and settlements of tax examinations (14.4) 0.5 12.7Changes in valuation allowance on deferred tax assets 2.5 (7.3) —TCJA enactment-related charges (221.4) — —Stock-based compensation (15.4) — —Other 3.5 (1.6) 2.4Total income tax benefit (provision) $(326.4) $5.6 $(155.4)Effective tax rate(b) 66.7% 5.3% 28.2% (a) The U.S. federal statutory income tax rate for the Company's Fiscal 2017 and Fiscal 2016 was 35.0%. The TCJA reduced the statutory tax rate from35.0% to 21.0%, effective January 1, 2018, and resulted in a blended statutory rate of 31.5% for the Company's Fiscal 2018.(b) Effective tax rate is calculated by dividing the income tax benefit (provision) by income (loss) before income taxes.The Company's Fiscal 2018 effective tax rate was higher than the blended statutory rate primarily due to the enactment-related charges recorded inconnection with the TCJA, as previously discussed, the negative impact of the adoption of ASU 2016-09 (see Note 4), and the unfavorable impact ofadditional income tax reserves associated with certain income tax audits, partially offset by the favorable impact of the proportion of earnings generated inlower taxed foreign jurisdictions versus the U.S. and tax benefits associated with adjustments recorded on deferred tax assets and provision to tax returnadjustments. The Company's Fiscal 2017 effective tax rate was lower than the statutory rate primarily due to the tax impact of earnings in foreignjurisdictions, valuation allowances and adjustments recorded on deferred tax assets, and income tax reserves largely associated with an income tax settlementand certain income tax audits, partially offset by the reversal of an income tax reserve resulting from a change in tax law that impacted an interest assessmenton a prior year withholding tax. The Company's Fiscal 2016 effective tax rate was lower than the statutory tax rate primarily due to the tax impact of earningsin foreign jurisdictions and the favorable impact of a change to the assessment period associated with certain tax liabilities, partially offset by the reversal ofcertain deferred tax assets that were determined to not be realizable.During the second quarter of Fiscal 2016, the Company concluded, with the assistance of a third-party consultant, that based on recent auditsettlements and taxpayer audit trends, the assessment period associated with certain tax liabilities established under ASC Topic 740, "Income Taxes," shouldbe reduced. This change is considered a change in estimate for accounting purposes and the related impact was recorded during the second quarter of Fiscal2016. This change lowered the Company's provision for income taxes by $7.7 million, including interest and penalties, and net of deferred tax asset reversals,and increased basic and diluted earnings per share by $0.09 for Fiscal 2016.F-27 RALPH LAUREN CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)Deferred TaxesSignificant components of the Company's deferred tax assets and liabilities are as follows: March 31, 2018 April 1, 2017 (millions)Goodwill and other intangible assets $(149.2) $(217.1)Property and equipment (36.2) (61.6)Undistributed foreign earnings (7.1) —Net operating loss carryforwards 54.8 64.1Lease obligations 49.6 80.7Deferred compensation 45.7 141.6Receivable allowances and reserves 38.5 65.8Inventory basis difference 16.0 21.8Cumulative translation adjustment and hedges 15.0 (10.8)Accrued expenses 12.1 9.8Unrecognized tax benefits 10.8 16.0Transfer pricing 9.0 5.6Deferred rent 6.9 14.3Deferred income 5.2 9.0Excess foreign tax credits — 7.9Other 14.4 5.1Valuation allowance (35.4) (38.1)Net deferred tax assets(a) $50.1 $114.1 (a) The net deferred tax balances as of March 31, 2018 and April 1, 2017 were comprised of non-current deferred tax assets of $86.6 million and$125.9 million, respectively, recorded within deferred tax assets, and non-current deferred tax liabilities of $36.5 million and $11.8 million,respectively, recorded within other non-current liabilities in the consolidated balance sheets.The Company has available state and foreign net operating loss carryforwards of $237.4 million and $71.5 million, respectively, for tax purposes tooffset future taxable income. The net operating loss carryforwards expire beginning in Fiscal 2019.The Company also has available state and foreign net operating loss carryforwards of $44.2 million and $204.6 million, respectively, for which no netdeferred tax asset has been recognized. A full valuation allowance has been recorded against these carryforwards since management does not believe that theCompany will more likely than not be able to utilize these carryforwards to offset future taxable income. Subsequent recognition of these deferred tax assetswould result in an income tax benefit in the year of such recognition. The valuation allowances relating to state and foreign net operating loss carryforwardsincreased by $5.3 million and $2.3 million, respectively, largely as a result of additional net operating losses in certain jurisdictions where management doesnot believe that the Company will more likely than not be able to utilize these carryforwards in the future.In connection with the Company's decision to no longer permanently reinvest undistributed foreign earnings that were subject to the TCJA's one-timemandatory transition tax, the Company recorded a deferred tax liability of $7.1 million on a provisional basis for the expected future remittance of previouslytaxed foreign earnings. The mandatory transition tax does not apply to undistributed foreign earnings generated after December 31, 2017. Accordingly,provision has not been made for U.S. or additional foreign taxes on approximately $98 million of undistributed earnings of foreign subsidiaries generatedafter December 31, 2017, as such earnings are expected to be permanently reinvested. These earnings could become subject to tax if they were remitted asdividends, if foreign earnings were lent to RLC, a subsidiary or a U.S. affiliate of RLC, or if the stock of the subsidiaries were sold. Determination of theamount of unrecognized deferred tax liability with respect to such earnings is not practicable.F-28 RALPH LAUREN CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)Uncertain Income Tax BenefitsFiscal 2018, Fiscal 2017, and Fiscal 2016 ActivityReconciliations of the beginning and ending amounts of unrecognized tax benefits, excluding interest and penalties, for Fiscal 2018, Fiscal 2017, andFiscal 2016 are presented below: Fiscal Years Ended March 31, 2018 April 1, 2017 April 2, 2016 (millions)Unrecognized tax benefits beginning balance $49.9 $49.7 $68.0Additions related to current period tax positions 6.8 5.3 5.0Additions related to prior period tax positions 9.5 15.3 6.9Reductions related to prior period tax positions (1.3) (3.4) (11.3)Reductions related to expiration of statutes of limitations (3.3) (4.1) (7.2)Reductions related to settlements with taxing authorities (0.7) (12.0) (12.0)Additions (reductions) related to foreign currency translation 3.3 (0.9) 0.3Unrecognized tax benefits ending balance $64.2 $49.9 $49.7The Company classifies interest and penalties related to unrecognized tax benefits as part of its provision for income taxes. Reconciliations of thebeginning and ending amounts of accrued interest and penalties related to unrecognized tax benefits for Fiscal 2018, Fiscal 2017, and Fiscal 2016 arepresented below: Fiscal Years Ended March 31, 2018 April 1, 2017 April 2, 2016 (millions)Accrued interest and penalties beginning balance $12.8 $30.9 $47.6Net additions charged to expense 3.8 2.3 4.0Reductions related to prior period tax positions (1.6) (18.3)(a) (15.4)Reductions related to settlements with taxing authorities (0.3) (0.8) (5.3)Additions (reductions) related to foreign currency translation 0.3 (1.3) —Accrued interest and penalties ending balance $15.0 $12.8 $30.9 (a) Includes a $15.9 million reversal of an income tax reserve resulting from a change in tax law that impacted an interest assessment on a prior yearwithholding tax.The total amount of unrecognized tax benefits, including interest and penalties, was $79.2 million and $62.7 million as of March 31, 2018 and April 1,2017, respectively, and is included within the non-current liability for unrecognized tax benefits in the consolidated balance sheets. The total amount ofunrecognized tax benefits that, if recognized, would affect the Company's effective tax rate was $68.4 million and $46.7 million as of March 31, 2018 andApril 1, 2017, respectively.Future Changes in Unrecognized Tax BenefitsThe total amount of unrecognized tax benefits relating to the Company's tax positions is subject to change based on future events including, but notlimited to, settlements of ongoing tax audits and assessments and the expiration of applicable statutes of limitations. Although the outcomes and timing ofsuch events are highly uncertain, the Company does not anticipate that the balance of gross unrecognized tax benefits, excluding interest and penalties, willchange significantly during the next twelve months. However, changes in the occurrence, expected outcomes, and timing of such events could cause theCompany's current estimate to change materially in the future.F-29 RALPH LAUREN CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)The Company files a consolidated U.S. federal income tax return, as well as tax returns in various state, local, and foreign jurisdictions. The Companyis generally no longer subject to examinations by the relevant tax authorities for years prior to its fiscal year ended April 3, 2010.11.DebtDebt consists of the following: March 31, 2018 April 1, 2017 (millions)$300 million 2.125% Senior Notes(a) $298.1 $298.1$300 million 2.625% Senior Notes(b) 288.0 290.1Borrowings outstanding under credit facilities 10.1 —Total debt 596.2 588.2Less: short-term debt and current portion of long-term debt 308.2 —Total long-term debt $288.0 $588.2 (a) During Fiscal 2016, the Company entered into an interest rate swap contract which it designated as a hedge against changes in the fair value of itsfixed-rate 2.125% Senior Notes (see Note 13). Accordingly, the carrying value of the 2.125% Senior Notes as of March 31, 2018 and April 1, 2017reflects adjustments of $1.6 million and $1.2 million, respectively, for the change in fair value attributable to the benchmark interest rate. Thecarrying value of the 2.125% Senior Notes is also net of unamortized debt issuance costs and discount of $0.3 million and $0.7 million as ofMarch 31, 2018 and April 1, 2017, respectively.(b) During Fiscal 2016, the Company entered into an interest rate swap contract which it designated as a hedge against changes in the fair value of itsfixed-rate 2.625% Senior Notes (see Note 13). Accordingly, the carrying value of the 2.625% Senior Notes as of March 31, 2018 and April 1, 2017reflects adjustments of $10.8 million and $8.2 million, respectively, for the change in fair value attributable to the benchmark interest rate. Thecarrying value of the 2.625% Senior Notes is also net of unamortized debt issuance costs and discount of $1.2 million and $1.7 million as ofMarch 31, 2018 and April 1, 2017, respectively.Senior NotesIn September 2013, the Company completed a registered public debt offering and issued $300 million aggregate principal amount of unsecured seniornotes due September 26, 2018, which bear interest at a fixed rate of 2.125%, payable semi-annually (the "2.125% Senior Notes"). The 2.125% Senior Noteswere issued at a price equal to 99.896% of their principal amount. The proceeds from this offering were used for general corporate purposes, includingrepayment of the Company's previously outstanding €209 million principal amount of 4.5% Euro-denominated notes, which matured on October 4, 2013.In August 2015, the Company completed a second registered public debt offering and issued an additional $300 million aggregate principal amountof unsecured senior notes due August 18, 2020, which bear interest at a fixed rate of 2.625%, payable semi-annually (the "2.625% Senior Notes"). The2.625% Senior Notes were issued at a price equal to 99.795% of their principal amount. The proceeds from this offering were used for general corporatepurposes.The Company has the option to redeem the 2.125% Senior Notes and 2.625% Senior Notes (collectively, the "Senior Notes"), in whole or in part, atany time at a price equal to accrued and unpaid interest on the redemption date, plus the greater of (i) 100% of the principal amount of the series of SeniorNotes to be redeemed or (ii) the sum of the present value of Remaining Scheduled Payments, as defined in the supplemental indentures governing suchSenior Notes (together with the indenture governing the Senior Notes, the "Indenture"). The Indenture contains certain covenants that restrict the Company'sability, 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 financialcovenants.F-30 RALPH LAUREN CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)Commercial PaperIn May 2014, the Company initiated a commercial paper borrowing program (the "Commercial Paper Program") that allowed it to issue up to $300million of unsecured commercial paper notes through private placement using third-party broker-dealers. In May 2015, the Company expanded itsCommercial Paper Program to allow for a total issuance of up to $500 million of unsecured commercial paper notes.Borrowings under the Commercial Paper Program are supported by the Global Credit Facility, as defined below. Accordingly, the Company does notexpect combined borrowings outstanding under the Commercial Paper Program and Global Credit Facility to exceed $500 million. Commercial PaperProgram borrowings may be used to support the Company's general working capital and corporate needs. Maturities of commercial paper notes vary, butcannot exceed 397 days from the date of issuance. Commercial paper notes issued under the Commercial Paper Program rank equally with the Company'sother forms of unsecured indebtedness. As of March 31, 2018, there were no borrowings outstanding under the Commercial Paper Program.Revolving Credit FacilitiesGlobal Credit FacilityIn February 2015, the Company entered into an amended and restated credit facility (which was further amended in March 2016) that provides for a$500 million senior unsecured revolving line of credit through February 11, 2020 (the "Global Credit Facility") under terms and conditions substantiallysimilar to those previously in effect. The Global Credit Facility is also used to support the issuance of letters of credit and the maintenance of the CommercialPaper Program. Borrowings under the Global Credit Facility may be denominated in U.S. Dollars and other currencies, including Euros, Hong Kong Dollars,and Japanese Yen. The Company has the ability to expand its borrowing availability under the Global Credit Facility to $750 million, subject to theagreement of one or more new or existing lenders under the facility to increase their commitments. There are no mandatory reductions in borrowing abilitythroughout the term of the Global Credit Facility. As of March 31, 2018, there were no borrowings outstanding under the Global Credit Facility and theCompany was contingently liable for $8.3 million of outstanding letters of credit.U.S. Dollar-denominated borrowings under the Global Credit Facility bear interest, at the Company's option, either at (a) a base rate, by reference to thegreatest of: (i) the annual prime commercial lending rate of JPMorgan Chase Bank, N.A. in effect from time to time, (ii) the weighted-average overnightFederal funds rate plus 50 basis points, or (iii) the one-month London Interbank Offered Rate ("LIBOR") plus 100 basis points; or (b) LIBOR, adjusted for theFederal Reserve Board's Eurocurrency liabilities maximum reserve percentage, plus a spread of 87.5 basis points, subject to adjustment based on theCompany's credit ratings ("Adjusted LIBOR"). Foreign currency-denominated borrowings bear interest at Adjusted LIBOR.In addition to paying interest on any outstanding borrowings under the Global Credit Facility, the Company is required to pay a commitment fee tothe lenders under the Global Credit Facility with respect to the unutilized commitments. The commitment fee rate of 7 basis points under the terms of theGlobal Credit Facility is subject to adjustment based on the Company's credit ratings.The Global Credit Facility contains a number of covenants that, among other things, restrict the Company's ability, subject to specified exceptions, toincur additional debt; incur liens; sell or dispose of assets; merge with or acquire other companies; liquidate or dissolve itself; engage in businesses that arenot in a related line of business; make loans, advances, or guarantees; engage in transactions with affiliates; and make certain investments. The Global CreditFacility also requires the Company to maintain a maximum ratio of Adjusted Debt to Consolidated EBITDAR (the "leverage ratio") of no greater than 3.75 asof the date of measurement for the four most recent consecutive fiscal quarters. Adjusted Debt is defined generally as consolidated debt outstanding plus fourtimes consolidated rent expense for the four most recent consecutive fiscal quarters. Consolidated EBITDAR is defined generally as consolidated net incomeplus (i) income tax expense, (ii) net interest expense, (iii) depreciation and amortization expense, (iv) consolidated rent expense, (v) restructuring and othernon-recurring expenses, and (vi) acquisition-related costs. As of March 31, 2018, no Event of Default (as such term is defined pursuant to the Global CreditFacility) has occurred under the Company's Global Credit Facility.Upon the occurrence of an Event of Default under the Global Credit Facility, the lenders may cease making loans, terminate the Global Credit Facility,and declare all amounts outstanding to be immediately due and payable. The Global Credit Facility specifies a number of events of default (many of whichare subject to applicable grace periods), including, among others, the failure to make timely principal, interest, and fee payments or to satisfy the covenants,including the financial covenant described above.F-31 RALPH LAUREN CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)Additionally, the Global Credit Facility provides that an Event of Default will occur if Mr. Ralph Lauren, the Company's Executive Chairman and ChiefCreative Officer, and entities controlled by the Lauren family fail to maintain a specified minimum percentage of the voting power of the Company's commonstock.Pan-Asia Credit FacilitiesCertain of the Company's subsidiaries in Asia have uncommitted credit facilities with regional branches of JPMorgan Chase (the "Banks") in Chinaand South Korea (the "Pan-Asia Credit Facilities"). These credit facilities are subject to annual renewal and may be used to fund general working capital andcorporate needs of the Company's operations in the respective countries. Borrowings under the Pan-Asia Credit Facilities are guaranteed by the parentcompany and are granted at the sole discretion of the Banks, subject to availability of the Banks' funds and satisfaction of certain regulatory requirements.The Pan-Asia Credit Facilities do not contain any financial covenants. The Company's Pan-Asia Credit Facilities by country are as follows:•China Credit Facility — provides Ralph Lauren Trading (Shanghai) Co., Ltd. with a revolving line of credit of up to 50 million ChineseRenminbi (approximately $8 million) through April 3, 2019, which is also able to be used to support bank guarantees.•South Korea Credit Facility — provides Ralph Lauren (Korea) Ltd. with a revolving line of credit of up to 47 billion South Korean Won(approximately $44 million) through October 31, 2018.As of March 31, 2018, borrowings outstanding under the Pan-Asia Credit Facilities were $10.1 million, which have been classified as short-term debtin the Company's consolidated balance sheet.12.Fair Value MeasurementsU.S. GAAP establishes a three-level valuation hierarchy for disclosure of fair value measurements. The determination of the applicable level within thehierarchy 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 aremarket-based (observable) or internally-derived (unobservable). A financial instrument's categorization within the valuation hierarchy is based upon thelowest level of input that is significant to the fair value measurement. The three levels are defined as follows:•Level 1 — inputs to the valuation methodology based on quoted prices (unadjusted) for identical assets or liabilities in active markets.•Level 2 — inputs to the valuation methodology based on quoted prices for similar assets or liabilities in active markets for substantially the fullterm of the financial instrument; quoted prices for identical or similar instruments in markets that are not active for substantially the full term ofthe 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 valuemeasurement.The following table summarizes the Company's financial assets and liabilities that are measured and recorded at fair value on a recurring basis,excluding accrued interest components: March 31, 2018 April 1, 2017 (millions)Investments in commercial paper(a)(b) $234.2 $—Derivative assets(a) 12.3 32.6Derivative liabilities(a) 110.0 21.7 (a) Based on Level 2 measurements.(b) $15.0 million included within cash and cash equivalents and $219.2 million included within short-term investments in the consolidated balancesheet as of March 31, 2018.F-32 RALPH LAUREN CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)The Company's investments in commercial paper are classified as available-for-sale and recorded at fair value in its consolidated balance sheets usingexternal pricing data, based on interest rates and credit ratings for similar issuances with the same remaining term as the Company's investments. To theextent the Company invests in bonds, such investments are also classified as available-for-sale and recorded at fair value in its consolidated balance sheetsbased on quoted prices in active markets.The Company's derivative financial instruments are recorded at fair value in its consolidated balance sheets and are valued using pricing models thatare primarily based on market observable external inputs, including spot and forward currency exchange rates, benchmark interest rates, and discount ratesconsistent with the instrument's tenor, and consider the impact of the Company's own credit risk, if any. Changes in counterparty credit risk are alsoconsidered 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 onLevel 1 measurements.The Company's debt instruments are recorded at their carrying values in its consolidated balance sheets, which may differ from their respective fairvalues. The fair values of the Senior Notes are estimated based on external pricing data, including available quoted market prices, and with reference tocomparable debt instruments with similar interest rates, credit ratings, and trading frequency, among other factors. The fair values of the Company'scommercial paper notes and borrowings outstanding under its credit facilities, if any, are estimated using external pricing data, based on interest rates andcredit ratings for similar issuances with the same remaining term as the Company's outstanding borrowings. Due to their short-term nature, the fair values ofthe Company's commercial paper notes and borrowings outstanding under its credit facilities, if any, generally approximate their carrying values.The following table summarizes the carrying values and the estimated fair values of the Company's debt instruments: March 31, 2018 April 1, 2017 Carrying Value Fair Value(a) Carrying Value Fair Value(a) (millions)$300 million 2.125% Senior Notes $298.1(b) $299.4 $298.1(b) $302.2$300 million 2.625% Senior Notes 288.0(b) 298.7 290.1(b) 302.8Borrowings outstanding under credit facilities 10.1 10.1 — — (a) Based on Level 2 measurements.(b) See Note 11 for discussion of the carrying values of the Company's Senior Notes.Unrealized gains or losses resulting from changes in the fair value of the Company's debt do not result in the realization or expenditure of cash, unlessthe debt is retired prior to its maturity.Non-financial Assets and LiabilitiesThe Company's non-financial assets, which primarily consist of goodwill, other intangible assets, and property and equipment, are not required to bemeasured at fair value on a recurring basis and are reported at carrying value. However, on a periodic basis or whenever events or changes in circumstancesindicate that their carrying value may not be fully recoverable (and at least annually for goodwill and indefinite-lived intangible assets), non-financial assetsare assessed for impairment and, if applicable, written down to and recorded at fair value, considering external market participant assumptions.During Fiscal 2018, Fiscal 2017, and Fiscal 2016, the Company recorded non-cash impairment charges of $41.2 million, $248.6 million, and $48.8million, respectively, to fully write off the carrying values of certain long-lived assets based upon their assumed fair values of zero. Additionally, as a result ofa change in the planned usage of a certain intangible asset, the Company recorded a non-cash impairment charge of $8.8 million to reduce the carrying valueof the intangible asset from $11.7 million to its estimated fair value of $2.9 million. The fair values of these long-lived and intangible assets were determinedbased on Level 3 measurements. Inputs to these fair value measurements included estimates of the amount and timing of the assets' net future discounted cashflows based on historical experience, current trends, and market conditions. See Note 8 for further discussion of the non-cash impairment charges recorded bythe Company during the fiscal years presented.F-33 RALPH LAUREN CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)In Fiscal 2018, the Company performed its annual goodwill impairment assessment as of the beginning of the second quarter of the fiscal year using aqualitative approach. In performing the assessment, the Company identified and considered the significance of relevant key factors, events, andcircumstances that affected the fair values and/or carrying amounts of its reporting units with allocated goodwill. These factors included external factors suchas macroeconomic, industry, and market conditions, as well as entity-specific factors, such as the Company's actual and expected financial performance.Additionally, the results of the Company's most recent quantitative goodwill impairment test indicated that the fair values of these reporting unitssignificantly exceeded their respective carrying values. Based on the results of its qualitative goodwill impairment assessment, the Company concluded thatit is not more likely than not that the fair values of its reporting units are less than their respective carrying values, and there were no reporting units at risk ofimpairment. No goodwill impairment charges were recorded during any of the three fiscal years presented in connection with the Company's annual goodwillimpairment assessments.Subsequent to the Company's Fiscal 2017 annual goodwill impairment assessment, the Company realigned its segment reporting structure during thefourth quarter of Fiscal 2017 as a result of significant organizational changes implemented in connection with the Way Forward Plan. As a result of therealignment of its segment reporting structure, the Company reallocated the carrying amount of goodwill to its new reporting units based upon each reportingunit's relative fair value as of the first day of the Company's fourth quarter of Fiscal 2017. In connection with this reallocation, the Company performed aninterim assessment of the recoverability of goodwill assigned to its new reporting units using a quantitative approach. The estimated fair values of theCompany's new reporting units were determined using discounted cash flows and market comparisons. Based on the results of the quantitative impairmentassessment performed, the Company concluded that the fair value of one of its new reporting units was less than its carrying value. As a result, a goodwillimpairment charge of $5.2 million was recorded to fully write off the carrying value of the reporting unit's reallocated goodwill. The fair values of theremaining new reporting units significantly exceeded their respective carrying values and were not at risk of impairment.13.Financial InstrumentsDerivative Financial InstrumentsThe Company is exposed to changes in foreign currency exchange rates, primarily relating to certain anticipated cash flows and the value of thereported net assets of its international operations, as well as changes in the fair value of its fixed-rate debt attributed to changes in the benchmark interest rate.Consequently, the Company uses derivative financial instruments to manage and mitigate such risks. The Company does not enter into derivativetransactions for speculative or trading purposes.The following table summarizes the Company's outstanding derivative instruments on a gross basis as recorded in its consolidated balance sheets as ofMarch 31, 2018 and April 1, 2017: Notional Amounts Derivative Assets Derivative LiabilitiesDerivative Instrument(a) March 31, 2018 April 1, 2017 March 31, 2018 April 1, 2017 March 31, 2018 April 1, 2017 BalanceSheetLine(b) FairValue BalanceSheetLine(b) FairValue BalanceSheetLine(b) FairValue BalanceSheetLine(b) FairValue (millions)Designated Hedges: FC — Cash flow hedges $514.5 $533.2 PP $1.1 PP $17.7 (e) $13.5 AE $3.7IRS — Fixed-rate debt 600.0 600.0 — — (f) 12.4 ONCL 9.4Net investment hedges(c) 1,081.2 591.2 PP 0.1 ONCA 9.6 (g) 82.6 —Total Designated Hedges 2,195.7 1,724.4 1.2 27.3 108.5 13.1Undesignated Hedges: FC — Undesignated hedges(d) 459.2 375.1 PP 11.1 PP 5.3 AE 1.5 AE 8.6Total Hedges $2,654.9 $2,099.5 $12.3 $32.6 $110.0 $21.7 (a) FC = Forward foreign currency exchange contracts; IRS = Interest rate swap contracts.(b) PP = Prepaid expenses and other current assets; AE = Accrued expenses and other current liabilities; ONCA = Other non-current assets; ONCL = Othernon-current liabilities.F-34 RALPH LAUREN CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(c) Includes cross-currency swaps and forward foreign currency exchange contracts designated as hedges of the Company's net investment in certain foreignoperations.(d) Primarily includes undesignated hedges of foreign currency-denominated intercompany loans and other intercompany balances.(e) $12.9 million included within accrued expenses and other current liabilities and $0.6 million included within other non-current liabilities.(f) $1.6 million included within accrued expenses and other current liabilities and $10.8 million included within other non-current liabilities.(g) $44.8 million included within accrued expenses and other current liabilities and $37.8 million included within other non-current liabilities.The Company records and presents the fair values of all of its derivative assets and liabilities in its consolidated balance sheets on a gross basis, evenwhen they are subject to master netting arrangements. However, if the Company were to offset and record the asset and liability balances of all of itsderivative instruments on a net basis in accordance with the terms of each of its master netting arrangements, spread across eight separate counterparties, theamounts presented in the consolidated balance sheets as of March 31, 2018 and April 1, 2017 would be adjusted from the current gross presentation asdetailed in the following table: March 31, 2018 April 1, 2017 Gross AmountsPresented in theBalance Sheet Gross Amounts NotOffset in the BalanceSheet that are Subject toMaster NettingAgreements NetAmount Gross AmountsPresented in theBalance Sheet Gross Amounts NotOffset in the BalanceSheet that are Subject toMaster NettingAgreements NetAmount (millions)Derivative assets $12.3 $(10.7) $1.6 $32.6 $(18.3) $14.3Derivative liabilities 110.0 (10.7) 99.3 21.7 (18.3) 3.4The Company's master netting arrangements do not require cash collateral to be pledged by the Company or its counterparties. See Note 3 for furtherdiscussion of the Company's master netting arrangements.The following tables summarize the pretax impact of the effective portion of gains and losses from the Company's designated derivative instrumentson its consolidated financial statements for the fiscal years presented: Gains (Losses)Recognized in OCI Fiscal Years Ended March 31, 2018 April 1, 2017 April 2, 2016 (millions)Designated Hedges: FC — Cash flow hedges $(45.5) $30.4 $(20.5)Net investment hedges(a) (90.9) 37.7 (28.4)Total Designated Hedges $(136.4) $68.1 $(48.9) Gains (Losses) Reclassifiedfrom AOCI to Earnings Location ofGains (Losses)Reclassified from AOCIto Earnings Fiscal Years Ended March 31, 2018 April 1, 2017 April 2, 2016 (millions) Designated Hedges: FC — Cash flow hedges $(8.2) $0.5 $43.7 Cost of goods soldFC — Cash flow hedges (2.9) 0.5 (4.7) Other expense, netTotal Designated Hedges $(11.1) $1.0 $39.0 (a)Amounts recognized in OCI would be recognized in earnings only upon the sale or liquidation of the hedged net investment.F-35 RALPH LAUREN CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)As of March 31, 2018, it is estimated that $17.6 million of pretax net losses on both outstanding and matured derivative instruments deferred in AOCIwill be recognized in earnings over the next twelve months. The amounts ultimately recognized in earnings will depend on exchange rates in effect whenoutstanding derivative instruments are settled. No material gains or losses relating to ineffective cash flow hedges were recognized during any of the fiscalyears presented.The following table summarizes the pretax impact of gains and losses from the Company's undesignated derivative instruments on its consolidatedfinancial statements for the fiscal years presented: Gains (Losses)Recognized in Earnings Location ofGains (Losses)Recognizedin Earnings Fiscal Years Ended March 31, 2018 April 1, 2017 April 2, 2016 (millions) Undesignated Hedges: FC — Undesignated hedges $2.4 $(3.6) $(6.6) Other expense, netTotal Undesignated Hedges $2.4 $(3.6) $(6.6) Risk Management StrategiesForward Foreign Currency Exchange ContractsThe Company uses forward foreign currency exchange contracts to reduce its risk related to exchange rate fluctuations on inventory transactions madein an entity's non-functional currency, intercompany royalty payments made by certain of its international operations, the settlement of foreign currency-denominated balances, and the translation of certain foreign operations' net assets into U.S. Dollars. As part of its overall strategy to manage the level ofexposure to the risk of foreign currency exchange rate fluctuations, primarily to changes in the value of the Euro, the Japanese Yen, the South Korean Won,the Australian Dollar, the Canadian Dollar, the British Pound Sterling, the Swiss Franc, the Swedish Krona, the Chinese Renminbi, the New Taiwan Dollar,and the Hong Kong Dollar, the Company hedges a portion of its foreign currency exposures anticipated over a two-year period. In doing so, the Companyuses forward foreign currency exchange contracts that generally have maturities of two months to two years to provide continuing coverage throughout thehedging period of the respective exposure.Interest Rate Swap ContractsDuring Fiscal 2016, the Company entered into two pay-floating rate, receive-fixed rate interest rate swap contracts which it designated as hedgesagainst changes in the respective fair values of its fixed-rate 2.125% Senior Notes and its fixed-rate 2.625% Senior Notes attributed to changes in thebenchmark interest rate (the "Interest Rate Swaps"). The Interest Rate Swaps, which mature on September 26, 2018 and August 18, 2020, respectively, bothhave notional amounts of $300 million and swap the fixed interest rates on the Company's 2.125% Senior Notes and 2.625% Senior Notes for variableinterest rates based on the 3-month LIBOR plus a fixed spread. Changes in the fair values of the Interest Rate Swaps were offset by changes in the fair valuesof the 2.125% Senior Notes and 2.625% Senior Notes attributed to changes in the benchmark interest rate, with no resulting ineffectiveness recognized inearnings during any of the fiscal years presented.Cross-Currency Swap ContractsDuring Fiscal 2016, the Company entered into two pay-floating rate, receive-floating rate cross-currency swap contracts, with notional amounts of€280 million and €274 million, which it designated as hedges of its net investment in certain of its European subsidiaries (the "Cross-Currency Swaps"). TheCross-Currency Swaps, which mature on September 26, 2018 and August 18, 2020, respectively, swap the U.S. Dollar-denominated variable interest ratepayments based on 3-month LIBOR plus a fixed spread (as paid under the Interest Rate Swaps described above) for Euro-denominated variable interest ratepayments based on the 3-month Euro Interbank Offered Rate plus a fixed spread. As a result, the Cross-Currency Swaps, in conjunction with the Interest RateSwaps, economically convert the Company's $300 million fixed-rate 2.125% and $300 million fixed-rate 2.625% obligations to €280 million and €274million floating-rate Euro-denominated liabilities, respectively. No material gains or losses related to the ineffective portion, or the amount excluded fromeffectiveness testing, were recognized in interest expense within the consolidated statements of operations during any of the fiscal years presented.F-36 RALPH LAUREN CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)See Note 3 for further discussion of the Company's accounting policies relating to its derivative financial instruments.InvestmentsAs of March 31, 2018, the Company's short-term investments consisted of $480.2 million of time deposits and $219.2 million of commercial paper,and its non-current investments consisted of $86.2 million of time deposits. As of April 1, 2017, the Company held short-term investments of $684.7 millionand non-current investments of $21.4 million, both consisting of time deposits.No significant realized or unrealized gains or losses on available-for-sale investments or other-than-temporary impairment charges were recorded inany of the fiscal years presented.See Note 3 for further discussion of the Company's accounting policies relating to its investments.14.Commitments and ContingenciesLeasesThe Company operates most of its retail stores under various leasing arrangements. The Company also occupies various office and warehouse facilitiesand uses certain equipment under numerous lease agreements. Such leasing arrangements are accounted for as either operating leases or capital leases. In thiscontext, capital leases include leases whereby the Company is considered to have the substantive risks of ownership during construction of a leased property.Information on the Company's operating and capital leasing activities is set forth below.Operating LeasesThe Company is typically required to make minimum rental payments, and often contingent rental payments, under its operating leases. Many of theCompany's retail store leases provide for contingent rental payments based upon sales, and certain rental agreements require payment based solely on apercentage of sales. Terms of the Company's leases generally contain renewal options, rent escalation clauses, and landlord incentives. Rent expense, net ofsublease income, was $443.1 million, $460.5 million, and $472.4 million in Fiscal 2018, Fiscal 2017, and Fiscal 2016, respectively. Such amounts includecontingent rental charges of $175.9 million, $164.0 million, and $163.4 million in Fiscal 2018, Fiscal 2017, and Fiscal 2016, respectively. In addition tosuch amounts, the Company is normally required to pay taxes, insurance, and certain occupancy costs relating to the leased real estate properties.As of March 31, 2018, future minimum rental payments under noncancelable operating leases with lease terms in excess of one year were as follows: Minimum OperatingLease Payments(a) (millions)Fiscal 2019 $343.8Fiscal 2020 318.1Fiscal 2021 262.6Fiscal 2022 220.1Fiscal 2023 199.1Fiscal 2024 and thereafter 504.5Total net minimum rental payments $1,848.2 (a) Net of sublease income, which is not significant in any period.F-37 RALPH LAUREN CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)Capital LeasesAssets under capital leases, including build-to-suit leases, amounted to $243.2 million and $264.9 million at the end of Fiscal 2018 and Fiscal 2017,respectively, net of accumulated depreciation of $104.5 million and $77.6 million, respectively. Such assets are classified within property and equipment, netin the consolidated balance sheets based on their nature.As of March 31, 2018, future minimum rental payments under noncancelable capital leases, including build-to-suit leases, with lease terms in excess ofone year were as follows: Minimum Capital Lease Payments(a)(b) (millions)Fiscal 2019 $29.6Fiscal 2020 31.9Fiscal 2021 30.5Fiscal 2022 29.4Fiscal 2023 28.9Fiscal 2024 and thereafter 78.5Total net minimum rental payments 228.8Less: amount representing interest (73.4)Present value of net minimum rental payments $155.4 (a) Net of sublease income, which is not significant in any period.(b) Includes lease payments related to the Company's build-to-suit lease agreement for its former Polo store on Fifth Avenue in New York City, whichwas closed during the first quarter of Fiscal 2018. The total remaining commitment related to this lease was $135.1 million as of March 31, 2018,comprised of a $41.2 million operating lease obligation related to the land portion of the lease (included in the minimum operating leasepayments table above) and a $93.9 million obligation related to the building portion of the lease (included in this minimum capital leasepayments table).U.S. Tax ReformIn connection with the TCJA's provision that subjects previously deferred foreign earnings to a one-time mandatory transition tax, the Companyrecorded net charges of $209.3 million within its income tax provision during Fiscal 2018 on a provisional basis (as described in Note 10). The relatedincome tax payable obligation of $147.8 million, which is net of foreign tax credits and other federal income tax activity of $61.5 million that the Companyexpects to utilize to partially reduce this tax obligation, is expected to be paid over an eight-year period as follows: Mandatory TransitionTax Payments(a) (millions)Fiscal 2019 $23.0Fiscal 2020 11.6Fiscal 2021 11.6Fiscal 2022 11.6Fiscal 2023 19.2Fiscal 2024 and thereafter 70.8Total mandatory transition tax payments $147.8 (a) Included within current and non-current income tax payable in the consolidated balance sheets based upon the estimating timing of payments.See Note 10 for further discussion of the TCJA and its enactment-related impacts on the Company's consolidated financial statements.F-38 RALPH LAUREN CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)Employee AgreementsThe Company has employment agreements with certain executives in the normal course of business which provide for compensation and certain otherbenefits. These agreements also provide for severance payments under certain circumstances.Other CommitmentsOther off-balance sheet firm commitments amounted to $880.9 million as of March 31, 2018, including inventory purchase commitments of $741.7million, outstanding letters of credit of $9.3 million, interest payments related to the Company's Senior Notes of $22.9 million, and other commitments of$107.0 million, comprised of the Company's legally-binding obligations under sponsorship, licensing, and other marketing and advertising agreements,distribution-related agreements, information technology-related service agreements, and pension-related obligations.Customs AuditIn September 2014, one of the Company's international subsidiaries received a pre-assessment notice from the relevant customs officials concerningthe method used to determine the dutiable value of imported inventory. The notice communicated the customs officials' assertion that the Company shouldhave applied an alternative duty method, which could result in up to $46 million in incremental duty and non-creditable value-added tax, including $11million in interest and penalties. The Company believes that the alternative duty method claimed by the customs officials is not applicable to the Company'sfacts and circumstances and is vigorously contesting their asserted methodology.In October 2014, the Company filed an appeal of the pre-assessment notice in accordance with the standard procedures established by the relevantcustoms authorities. In response to the filing of the Company's appeal of the pre-assessment notice, the review committee instructed the customs officials toreconsider their assertion of the alternative duty method and conduct a re-audit to evaluate the facts and circumstances noted in the pre-assessment notice. InDecember 2015, the Company received the results of the re-audit conducted and a customs audit assessment notice in the amount of $34.1 million, which theCompany recorded within restructuring and other charges in its consolidated statements of operations during the third quarter of Fiscal 2016 (see Note 9).Although the Company disagrees with the assessment notice, in order to secure the Company's rights, the Company was required to pay the assessmentamount and then subsequently file an appeal with the customs authorities.In October 2017, the tax tribunal presiding over the Company's appeal instructed the customs officials to reconsider their assertions under thealternative duty method and conduct a second re-audit to evaluate the facts and circumstances noted in the pre-assessment notice. In March 2018, theCompany received the results of the second re-audit conducted and a related net refund in the amount of $15.6 million. Also in March 2018, the Companyfiled voluntary disclosure requests to the relevant customs authorities for certain post-audit periods and made related payments of $40.6 million, whichincluded recoverable value-added tax of $14.8 million. In connection with the re-audit refund received and the non-tax portion of the voluntary disclosurepayment made, the Company recorded a net charge of $10.2 million within restructuring and other charges in its consolidated statements of operationsduring the fourth quarter of Fiscal 2018 (see Note 9).The Company continues to maintain its original filing position and is assessing its options to contest the proposed methodology asserted by thecustoms officials, including further appeal of the re-audit decision within the courts. Should the Company be successful in its merits, a full refund for theamounts paid plus interest will be required to be paid by the customs authorities. At this time, while the Company believes that the customs officials' claimsare not meritorious and that the Company should prevail, the outcome of the appeals process is subject to risk and uncertainty.Other MattersThe Company is involved, from time to time, in litigation, other legal claims, and proceedings involving matters associated with or incidental to itsbusiness, including, among other things, matters involving credit card fraud, trademark and other intellectual property, licensing, importation andexportation of its products, taxation, unclaimed property, and employee relations. The Company believes at present that the resolution of currently pendingmatters will not individually or in the aggregate have a material adverse effect on its consolidated financial statements. However, the Company's assessmentof 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.F-39 RALPH LAUREN CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)In the normal course of business, the Company enters into agreements that provide general indemnifications. The Company has not made anysignificant indemnification payments under such agreements in the past, and does not currently anticipate incurring any material indemnification payments.15.EquityCapital StockThe Company's capital stock consists of two classes of common stock. There are 500 million shares of Class A common stock and 100 million shares ofClass B common stock authorized to be issued. Shares of Class A and Class B common stock have substantially identical rights, except with respect to votingrights. Holders of Class A common stock are entitled to one vote per share and holders of Class B common stock are entitled to ten votes per share. Holders ofboth classes of stock vote together as a single class on all matters presented to the stockholders for their approval, except with respect to the election andremoval of directors or as otherwise required by applicable law. All outstanding shares of Class B common stock are owned by Mr. Ralph Lauren, theCompany's Executive Chairman and Chief Creative Officer, and entities controlled by the Lauren family, and are convertible at any time into shares ofClass A common stock on a one-for-one basis.Common Stock Repurchase ProgramIn June 2016, as part of its common stock repurchase program, the Company entered into an accelerated share repurchase program with a third-partyfinancial institution under which it made an upfront payment of $100 million in exchange for an initial delivery of 0.9 million shares of its Class A commonstock, representing 90% of the total shares ultimately expected to be delivered over the program's term (the "ASR Program"). The initial shares received,which had an aggregate cost of $90 million based on the June 20, 2016 closing share price, were immediately retired and recorded as an increase to treasurystock.In September 2016, at the ASR Program's conclusion, the Company received 0.1 million additional shares and recorded a related $10 million increaseto treasury stock. The number of additional shares delivered was based on the volume-weighted average price per share of the Company's Class A commonstock over the term of the ASR Program, less an agreed upon discount. The average price per share paid for all of the shares delivered under the ASR Programwas $98.48.A summary of the Company's repurchases of Class A common stock under its common stock repurchase program, including the ASR Program, is asfollows: Fiscal Years Ended March 31, 2018 April 1, 2017 April 2, 2016 (in millions)Cost of shares repurchased $— $200.0 $479.9Number of shares repurchased 0.0 2.2 4.2As of March 31, 2018, the remaining availability under the Company's Class A common stock repurchase program was approximately $100 million.Repurchases of shares of Class A common stock are subject to overall business and market conditions.In addition, during each of Fiscal 2018, Fiscal 2017, and Fiscal 2016, 0.2 million shares of Class A common stock at a cost of $17.1 million, $15.2million, and $20.5 million, respectively, were surrendered to or withheld by the Company in satisfaction of withholding taxes in connection with the vestingof 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.DividendsSince 2003, the Company has maintained a regular quarterly cash dividend program on its common stock. During Fiscal 2018, Fiscal 2017, and Fiscal2016, the quarterly cash dividend was $0.50 per share. Dividends paid amounted to $162.4 million, $164.8 million, and $170.3 million in Fiscal 2018, Fiscal2017, and Fiscal 2016, respectively.F-40 RALPH LAUREN CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)16.Accumulated Other Comprehensive Income (Loss)The following table presents OCI activity, net of tax, which is accumulated in equity: Foreign CurrencyTranslation Gains(Losses)(a) Net UnrealizedGains (Losses) onCash FlowHedges(b) Net UnrealizedGains (Losses) onDefined BenefitPlans(c) Total AccumulatedOtherComprehensiveIncome (Loss) (millions)Balance at March 28, 2015 $(194.0) $43.2 $(14.8) $(165.6)Other comprehensive income (loss), net of tax: OCI before reclassifications 36.4 (18.8) 1.4 19.0Amounts reclassified from AOCI to earnings — (36.4) 1.5 (34.9)Other comprehensive income (loss), net of tax 36.4 (55.2) 2.9 (15.9)Balance at April 2, 2016 (157.6) (12.0) (11.9) (181.5)Other comprehensive income (loss), net of tax: OCI before reclassifications (48.6) 28.2 1.8 (18.6)Amounts reclassified from AOCI to earnings — (1.6) 3.3 1.7Other comprehensive income (loss), net of tax (48.6) 26.6 5.1 (16.9)Balance at April 1, 2017 (206.2) 14.6 (6.8) (198.4)Other comprehensive income (loss), net of tax: OCI before reclassifications 126.9 (40.5) 0.9 87.3Amounts reclassified from AOCI to earnings — 9.9 2.7 12.6Other comprehensive income (loss), net of tax 126.9 (30.6) 3.6 99.9Balance at March 31, 2018 $(79.3) $(16.0) $(3.2) $(98.5) (a) OCI before reclassifications to earnings related to foreign currency translation gains (losses) includes income tax benefits of $23.3 million and$10.7 million for Fiscal 2018 and Fiscal 2016, respectively, and includes an income tax provision of $15.0 million for Fiscal 2017. OCI beforereclassifications to earnings includes losses of $59.6 million (net of a $31.3 million income tax benefit) and $17.4 million (net of an $11.0 millionincome tax benefit) for Fiscal 2018 and Fiscal 2016, respectively, and includes a gain of $23.4 million (net of a $14.3 million income taxprovision) for Fiscal 2017, related to the effective portion of changes in the fair values of instruments designated as hedges of the Company's netinvestment in certain foreign operations (see Note 13).(b) OCI before reclassifications to earnings related to net unrealized gains (losses) on cash flow hedges are presented net of income tax benefits of$5.0 million and $1.7 million for Fiscal 2018 and Fiscal 2016, respectively, and are presented net of an income tax provision of $2.2 million forFiscal 2017. The tax effects on amounts reclassified from AOCI to earnings are presented in a table below.(c) Activity is presented net of taxes, which were immaterial for all periods presented.The following table presents reclassifications from AOCI to earnings for cash flow hedges, by component: Fiscal Years Ended March 31, 2018 April 1, 2017 April 2, 2016 Location of Gains (Losses)Reclassified from AOCI to Earnings (millions) Gains (losses) on cash flow hedges(a): FC — Cash flow hedges $(8.2) $0.5 $43.7 Cost of goods sold FC — Cash flow hedges (2.9) 0.5 (4.7) Other expense, net Tax effect 1.2 0.6 (2.6) Income tax benefit (provision)Net of tax $(9.9) $1.6 $36.4 (a)FC = Forward foreign currency exchange contracts.F-41 RALPH LAUREN CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)17.Stock-based CompensationLong-term Stock Incentive PlansThe Company's stock-based compensation awards are currently issued under the 2010 Incentive Plan, which was approved by its stockholders onAugust 5, 2010. However, any prior awards granted under the 1997 Incentive Plan remain subject to the terms of that plan. Any awards that expire, areforfeited, or are surrendered to the Company in satisfaction of taxes are available for issuance under the 2010 Incentive Plan. On September 1, 2016, theCompany registered with the Securities and Exchange Commission an additional 0.9 million shares of its Class A common stock for issuance pursuant to the2010 Incentive Plan. As of March 31, 2018, 3.1 million shares remained available for future issuance under the Company's incentive plans.Stock-based compensation awards that may be made under the 2010 Incentive Plan include, but are not limited to, (i) stock options, (ii) restrictedstock, and (iii) RSUs. Beginning in Fiscal 2016, annual grants consisted entirely of RSUs, as the Company elected to issue service-based RSUs in lieu ofstock options. Additionally, new vesting provisions for certain awards granted to retirement-eligible employees were introduced. Specifically, beginning inFiscal 2016, for certain service-based and performance-based RSUs granted to retirement-eligible employees, or employees who become retirement-eligibleprior to the end of the awards' respective stated vesting periods, vesting continues post-retirement for all or a portion of the remaining unvested RSUs.Impact on ResultsA summary of stock-based compensation expense and the related income tax benefits recognized is as follows: Fiscal Years Ended March 31, 2018 April 1, 2017 April 2, 2016 (millions)Compensation expense(a) $74.5 $63.6 $97.0Income tax benefit (25.3) (22.6) (36.8) (a) Fiscal 2018, Fiscal 2017, and Fiscal 2016 includes $2.8 million, $4.3 million, and $8.9 million, respectively, of accelerated stock-basedcompensation expense recorded within restructuring and other charges in the consolidated statements of operations (see Note 9). All other stock-based compensation expense was recorded within SG&A expenses.The Company issues its annual grants of stock-based compensation awards in the first half of each fiscal year. Due to the timing of the annual grantsand other factors, including the timing and magnitude of forfeiture and performance goal achievement adjustments, as well as changes to the size andcomposition of the eligible employee population, stock-based compensation expense recognized during any given fiscal period is not indicative of the levelof compensation expense expected to be incurred in future periods.Stock OptionsStock options are granted to employees and non-employee directors with exercise prices equal to the fair market value of the Company's Class Acommon stock on the date of grant. Generally, options become exercisable ratably (graded-vesting schedule) over a three-year vesting period, subject to theemployee's continuing employment. Stock options generally expire seven years from the date of grant. No stock options were granted during any of the fiscalyears presented.F-42 RALPH LAUREN CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)A summary of stock option activity during Fiscal 2018 is as follows: Number ofShares Weighted-AverageExercise Price Weighted-AverageRemainingContractualTerm AggregateIntrinsic Value(a) (thousands) (years) (millions)Options outstanding at April 1, 2017 1,720 $146.35 2.6 $1.0Granted — N/A Exercised — N/A Cancelled/Forfeited (569) 122.91 Options outstanding at March 31, 2018 1,151 $157.86 2.1 $— Options vested at March 31, 2018(b) 1,151 $157.86 2.1 $—Options exercisable at March 31, 2018 1,151 $157.86 2.1 $— (a) Aggregate intrinsic value is the amount by which the market price of the Company's Class A common stock at the end of the period exceeds theexercise price of the stock option, multiplied by the number of options.(b) There were no nonvested stock options as of March 31, 2018. Accordingly, there was no related unrecognized compensation expense as ofMarch 31, 2018.Additional information pertaining to the Company's stock option plans is as follows: Fiscal Years Ended March 31, 2018 April 1, 2017 April 2, 2016 (millions)Aggregate intrinsic value of stock options exercised(a) $— $3.0 $43.8Cash received from the exercise of stock options 0.1 5.0 33.2Tax benefits realized on exercise of stock options — 1.0 16.8 (a) Aggregate intrinsic value is the amount by which the market price of the Company's Class A common stock exceeded the stock option's exerciseprice when exercised, multiplied by the number of options.Restricted Stock Awards and Service-based RSUsRestricted shares granted to non-employee directors vest ratably over a three-year period, subject to the director's continued service to the Company.The fair values of restricted stock awards are based on the fair value of the Company's Class A common stock on the date of grant. Holders of restricted sharesare entitled to receive cash dividends in connection with the payments of dividends on the Company's Class A common stock.Service-based RSUs granted to certain of the Company's senior executives and other employees generally vest over a three-year period, subject to theemployee's continuing employment (except for awards granted to retirement-eligible employees, or employees who become retirement-eligible prior to theend of the awards' respective stated vesting periods, as previously discussed). The fair values of service-based RSUs are based on the fair value of theCompany's Class A common stock on the date of grant, adjusted to reflect the absence of dividends for any awards not entitled to accrue dividendequivalents while outstanding.F-43 RALPH LAUREN CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)A summary of restricted stock and service-based RSU activity during Fiscal 2018 is as follows: RestrictedStock Service-based RSUs Number ofShares Weighted-Average GrantDate Fair Value Number ofShares Weighted-Average GrantDate Fair Value (thousands) (thousands) Nonvested at April 1, 2017 19 $92.11 922 $94.31Granted — N/A 701 73.59Vested — N/A (366) 98.65Forfeited — N/A (185) 83.64Nonvested at March 31, 2018 19 $92.11 1,072 $81.27 RestrictedStock Service-based RSUsTotal unrecognized compensation expense at March 31, 2018 (millions) $0.4 $26.8Weighted-average period expected to be recognized over (years) 1.5 1.6Additional information pertaining to restricted stock and service-based RSU activity is as follows: Fiscal Years Ended March 31, 2018 April 1, 2017 April 2, 2016Restricted Stock: Weighted-average grant date fair value of awards granted N/A $81.78 $111.94Total fair value of awards vested (millions) N/A $0.5 $0.7Service-based RSUs: Weighted-average grant date fair value of awards granted $73.59 $82.89 $125.19Total fair value of awards vested (millions) $30.0 $13.8 $2.1Performance-based RSUsThe Company grants performance-based RSUs to its senior executives and other key executives. Performance-based RSUs generally vest (i) upon thecompletion of a three-year period of time (cliff vesting), subject to the employee's continuing employment (except for awards granted to retirement-eligibleemployees, or employees who become retirement-eligible prior to the end of the awards' respective stated vesting periods, as previously discussed) and theCompany's achievement of certain performance goals established at the beginning of the three-year performance period or (ii) ratably, over a three-yearperiod of time (graded vesting), subject to the employee's continuing employment during the applicable vesting period (except for awards granted toretirement-eligible employees, or employees who become retirement-eligible prior to the end of the awards' respective stated vesting periods, as previouslydiscussed) and the achievement by the Company of certain performance goals in the initial year of the three-year vesting period. For performance-based RSUssubject to cliff vesting, the number of shares that may be earned ranges between 0% (if the specified threshold performance level is not attained) and 150% (ifperformance meets or exceeds the maximum achievement level) of the awards originally granted. If actual performance exceeds the pre-established threshold,the number of shares earned is calculated based on the relative performance between specified levels of achievement.Cliff vesting performance-based RSU awards granted by the Company, in addition to being subject to continuing employment requirements and theCompany's performance goals noted above, may also be subject to a market condition in the form of a total shareholder return ("TSR") modifier. The actualnumber of shares that vest at the end of the respective three-year period is determined based on the Company's achievement of the three-year performancegoals described above, as well as its TSR relative to the S&P 500 over the related three-year performance period. At the end of the three-year performanceperiod, if the performance condition is achieved at or above the pre-established threshold, the number of shares earned is further adjusted by a TSR modifierpayout percentage, which ranges between 75% and 125%, based on the Company's TSR performance relative to that of the S&P 500 indexF-44 RALPH LAUREN CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)over the respective three-year period. Depending on the total level of achievement, the actual number of shares that vest for performance-based RSU awardswith a TSR modifier may range from 0% to 187.5% of the awards originally granted.The fair value of the Company's performance-based RSUs that are not subject to a TSR modifier is based on the fair value of the Company's Class Acommon stock on the date of grant, adjusted to reflect the absence of dividends for those securities that are not entitled to dividend equivalents. The fairvalue 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 TSRperformance ranking. No such performance-based RSUs with a TSR modifier were granted during any of the fiscal years presented.A summary of performance-based RSUs without TSR Modifier and performance-based RSUs with TSR Modifier activity during Fiscal 2018 is asfollows: Performance-basedRSUs — without TSR Modifier Performance-basedRSUs — with TSR Modifier Number ofShares Weighted-Average GrantDate Fair Value Number ofShares Weighted-Average GrantDate Fair Value (thousands) (thousands) Nonvested at April 1, 2017 788 $109.87 61 $170.03Granted 585 69.40 — N/AChange due to performance/market condition achievement (12) 158.76 (21) 170.03Vested (149) 142.08 (40) 170.03Forfeited (55) 90.90 — N/ANonvested at March 31, 2018 1,157 $85.73 — N/A Performance-basedRSUs — without TSRModifier Performance-basedRSUs — with TSR ModifierTotal unrecognized compensation expense at March 31, 2018 (millions) $39.6 $—Weighted-average period expected to be recognized over (years) 1.8 N/AAdditional information pertaining to performance-based RSUs without TSR Modifier and performance-based RSUs with TSR Modifier activity is asfollows: Fiscal Years Ended March 31, 2018 April 1, 2017 April 2, 2016Performance-based RSUs — without TSR Modifier: Weighted-average grant date fair value of awards granted $69.40 $86.11 $126.48Total fair value of awards vested (millions) $10.3 $19.7 $38.3Performance-based RSUs — with TSR Modifier: Weighted-average grant date fair value of awards granted N/A N/A N/ATotal fair value of awards vested (millions) $2.6 $4.7 $6.6F-45 RALPH LAUREN CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)18.Employee Benefit PlansDefined Contribution PlansThe Company sponsors defined contribution benefit plans covering substantially all eligible employees in the U.S. and Puerto Rico who are notcovered by a collective bargaining agreement. The plans include a savings plan feature under Section 401(k) of the Internal Revenue Code. The Companymakes matching contributions to the plans equal to 50% of the first 6% of salary contributed by an eligible employee. Additionally, the Company makes asupplemental matching contribution for plan years in which the Company achieves a "stretch" or a "maximum" performance target based on certain goalsestablished at the beginning of each fiscal year, increasing the matching contribution to 75% or 100%, respectively, of the first 6% of salary contributed byeligible employees, not to exceed the maximum contribution permitted by the plan.Under the terms of the plans, a participant becomes 100% vested in the Company's matching contributions after five years of credited service.Contributions made by the Company under these plans were $10.6 million, $10.1 million, and $10.5 million in Fiscal 2018, Fiscal 2017, and Fiscal 2016,respectively.International Defined Benefit PlansThe Company sponsors certain single-employer defined benefit plans and cash balance plans at international locations which are not considered to bematerial individually or in the aggregate to the Company's financial statements. Pension benefits under these plans are based on formulas that reflect theemployees' years of service and compensation levels during their employment period. The aggregate funded status of the single-employer defined benefitplans reflected net liabilities of $1.1 million and $3.0 million as of March 31, 2018 and April 1, 2017, respectively, and were primarily recorded within othernon-current liabilities in the Company's consolidated balance sheets. These single-employer defined benefit plans had aggregate projected benefitobligations of $43.4 million and aggregate fair values of plan assets of $42.3 million as of March 31, 2018, compared to aggregate projected benefitobligations of $55.6 million and aggregate fair values of plan assets of $52.6 million as of April 1, 2017. The asset portfolio of the single-employer definedbenefit plans primarily consists of fixed income securities, which have been measured at fair value largely using Level 2 inputs, as described in Note 12. Netpension expense for these plans was $6.6 million, $9.2 million, and $5.8 million in Fiscal 2018, Fiscal 2017, and Fiscal 2016, respectively. The service costcomponent of $4.6 million, $6.7 million, and $4.9 million in Fiscal 2018, Fiscal 2017, and Fiscal 2016, respectively, was recorded within SG&A expenses inthe Company's consolidated statements of operations. All other components of net pension expense during the fiscal years presented were recorded withinother expense, net, in the Company's consolidated statement of operations.Union Pension PlanThe Company participates in a multi-employer pension plan and is required to make contributions to the Workers United union (which was previouslyknown as UNITE HERE) (the "Union") for dues based on wages paid to union employees. A portion of these dues is allocated by the Union to a retirementfund which provides defined benefits to substantially all unionized workers. The Company does not participate in the management of the plan and has notbeen furnished with information with respect to the type of benefits provided, vested and non-vested benefits, or assets.Under the Employee Retirement Income Security Act of 1974, as amended, an employer, upon withdrawal from or termination of a multi-employerplan, is required to continue funding its proportionate share of the plan's unfunded vested benefits. Such liability was assumed in conjunction with theacquisition of certain assets from a non-affiliated licensee. The Company has no current intention of withdrawing from the plan.Other Compensation PlansThe Company had a non-qualified supplemental retirement plan for certain highly compensated employees whose benefits under the 401(k) profitsharing retirement savings plans were expected to be constrained by the operation of Internal Revenue Code limitations. These supplemental benefits vestedover time and the related compensation expense was recognized over the vesting period. Effective August 2008, the Company amended this plan, resultingin a suspension of the annual contributions for substantially all plan participants. Further, affected participants were provided with a one-time election toeither withdraw all benefits vested in the plan in a lump sum amount or remain in the plan and receive future distributions of benefits. As of March 31, 2018and April 1, 2017, amounts accrued under this plan totaled $7.0 million and $7.8 million, respectively, and were classified within other non-current liabilitiesin the consolidated balance sheets. Total compensation expense recognized related to these benefits was not material in any of the three fiscal yearspresented.F-46 RALPH LAUREN CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)19.Segment InformationThe Company has three reportable segments based on its business activities and organization:•North America — The North America segment primarily consists of sales of Ralph Lauren branded apparel, accessories, home furnishings, andrelated products made through the Company's wholesale and retail businesses in the U.S. and Canada, excluding Club Monaco. In NorthAmerica, the Company's wholesale business is comprised primarily of sales to department stores, and to a lesser extent, specialty stores. TheCompany's retail business in North America is comprised of its Ralph Lauren stores, its factory stores, and its digital commerce site,www.RalphLauren.com.•Europe — The Europe segment primarily consists of sales of Ralph Lauren branded apparel, accessories, home furnishings, and related productsmade through the Company's wholesale and retail businesses in Europe and the Middle East, excluding Club Monaco. In Europe, theCompany's wholesale business is comprised of a varying mix of sales to both department stores and specialty stores, depending on the country.The Company's retail business in Europe is comprised of its Ralph Lauren stores, its factory stores, its concession-based shop-within-shops, andits various digital commerce sites.•Asia — The Asia segment primarily consists of sales of Ralph Lauren branded apparel, accessories, home furnishings, and related products madethrough the Company's wholesale and retail businesses in Asia, Australia, and New Zealand. The Company's retail business in Asia is comprisedof its Ralph Lauren stores, its factory stores, and its concession-based shop-within-shops. In addition, the Company sells its products onlinethrough various third-party digital partner commerce sites. In Asia, the Company's wholesale business is comprised primarily of sales todepartment stores, with related products distributed through shop-within-shops.No operating segments were aggregated to form the Company's reportable segments. In addition to these reportable segments, the Company also hasother non-reportable segments, which primarily consist of (i) sales of Club Monaco branded products made through its retail businesses in the U.S., Canada,and Europe, and its licensing alliances in Europe and Asia, (ii) sales of Ralph Lauren branded products made through its wholesale business in Latin America,and (iii) royalty revenues earned through its global licensing alliances, excluding Club Monaco.The Company's segment reporting structure is consistent with how it establishes its overall business strategy, allocates resources, and assessesperformance of its business. The accounting policies of the Company's segments are consistent with those described in Notes 2 and 3. Sales and transfersbetween segments are generally recorded at cost and treated as transfers of inventory. All intercompany revenues are eliminated in consolidation and are notreviewed when evaluating segment performance. Each segment's performance is evaluated based upon net revenues and operating income beforerestructuring-related charges, impairment of assets, and certain other one-time items, if any. Certain corporate overhead expenses related to global functions,most notably the Company's executive office, information technology, finance and accounting, human resources, and legal departments, largely remain atcorporate. Additionally, other costs that cannot be allocated to the segments based on specific usage are also maintained at corporate, including corporateadvertising and marketing expenses, depreciation and amortization of corporate assets, and other general and administrative expenses resulting fromcorporate-level activities and projects. Asset information by segment is not utilized for purposes of assessing performance or allocating resources, andtherefore such information has not been presented.Net revenues for each of the Company's segments are as follows: Fiscal Years Ended March 31, 2018 April 1, 2017 April 2, 2016 (millions)Net revenues: North America $3,231.0 $3,783.0 $4,479.6Europe 1,585.0 1,543.4 1,561.7Asia 933.7 882.5 892.4Other non-reportable segments 432.6 443.9 471.5Total net revenues(a) $6,182.3 $6,652.8 $7,405.2F-47 RALPH LAUREN CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (a) The Company's sales to its largest wholesale customer, Macy's, accounted for approximately 8%, 10%, and 11%, of its total net revenues in Fiscal2018, Fiscal 2017, and Fiscal 2016, respectively. Substantially all of the Company's sales to Macy's related to its North America segment.Operating income (loss) for each of the Company's segments is as follows: Fiscal Years Ended March 31, 2018 April 1, 2017 April 2, 2016 (millions)Operating income (loss)(a): North America $677.6 $666.8 $941.3Europe 356.7 305.2 281.0Asia 137.2 (86.3) (1.2)Other non-reportable segments 107.5 81.0 119.3 1,279.0 966.7 1,340.4Unallocated corporate expenses (672.8) (740.4) (615.0)Unallocated restructuring and other charges(b) (108.0) (318.6) (142.6)Total operating income (loss) $498.2 $(92.3) $582.8(a) Segment operating income (loss) and unallocated corporate expenses during the fiscal years presented included certain restructuring-relatedinventory charges (see Note 9) and asset impairment charges (see Note 8), which are detailed below: Fiscal Years Ended March 31, 2018 April 1, 2017 April 2, 2016 (millions)Restructuring-related inventory charges: North America $(2.8) $(33.9) $(7.2)Europe (1.5) (20.1) (2.4)Asia (2.9) (137.6) (10.8)Other non-reportable segments (0.4) (6.3) —Total restructuring-related inventory charges $(7.6) $(197.9) $(20.4) Fiscal Years Ended March 31, 2018 April 1, 2017 April 2, 2016 (millions)Asset impairment charges: North America $(4.7) $(62.5) $(20.5)Europe (1.2) (3.1) (8.2)Asia (1.0) (42.0) (18.2)Other non-reportable segments (22.4) (29.2) (1.9)Unallocated corporate expenses (20.7) (117.0) —Total asset impairment charges $(50.0) $(253.8) $(48.8)F-48 RALPH LAUREN CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(b) The fiscal years presented included certain unallocated restructuring and other charges (see Note 9), which are detailed below: Fiscal Years Ended March 31, 2018 April 1, 2017 April 2, 2016 (millions)Unallocated restructuring and other charges: North America-related $(15.5) $(34.7) $(26.1)Europe-related (4.5) (27.7) (5.6)Asia-related 2.5 (68.3) (3.2)Other non-reportable segment-related (8.5) (7.7) (5.6)Corporate operations-related (53.2) (155.6) (54.4)Unallocated restructuring charges (79.2) (294.0) (94.9)Other charges (see Note 9) (28.8) (24.6) (47.7)Total unallocated restructuring and other charges $(108.0) $(318.6) $(142.6)The following tables summarize depreciation and amortization expense and capital expenditures for each of the Company's segments: Fiscal Years Ended March 31, 2018 April 1, 2017 April 2, 2016 (millions)Depreciation and amortization: North America $82.5 $110.0 $112.4Europe 34.8 31.8 35.2Asia 50.3 47.8 58.2Other non-reportable segments 10.7 14.5 13.7Unallocated corporate 102.8 103.4 89.9Unallocated restructuring and other charges (see Note 9) 14.1 — —Total depreciation and amortization $295.2 $307.5 $309.4 Fiscal Years Ended March 31, 2018 April 1, 2017 April 2, 2016 (millions)Capital expenditures: North America $41.9 $62.8 $84.9Europe 28.5 43.6 48.2Asia 40.7 30.2 49.1Other non-reportable segments 5.3 20.1 38.0Unallocated corporate 45.2 127.3 197.5Total capital expenditures $161.6 $284.0 $417.7F-49 RALPH LAUREN CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)Net revenues and long-lived assets by geographic location of the reporting subsidiary are as follows: Fiscal Years Ended March 31, 2018 April 1, 2017 April 2, 2016 (millions)Net revenues(a): The Americas(b) $3,652.1 $4,214.7 $4,938.2Europe(c) 1,595.2 1,554.1 1,572.7Asia(d) 935.0 884.0 894.3Total net revenues $6,182.3 $6,652.8 $7,405.2 March 31, 2018 April 1, 2017 (millions)Long-lived assets(a): The Americas(b) $915.4 $1,061.7Europe(c) 154.8 141.8Asia(d) 116.1 112.5Total long-lived assets $1,186.3 $1,316.0 (a) Net revenues and long-lived assets for certain of the Company's licensed operations are included within the geographic location of the reportingsubsidiary which holds the respective license.(b) Includes the U.S., Canada, and Latin America. Net revenues earned in the U.S. were $3.427 billion, $3.990 billion, and $4.688 billion in Fiscal2018, Fiscal 2017, and Fiscal 2016, respectively. Long-lived assets located in the U.S. were $889.7 million and $1.033 billion as of March 31,2018 and April 1, 2017, respectively.(c) Includes the Middle East.(d) Includes Australia and New Zealand.20.Additional Financial InformationReconciliation of Cash, Cash Equivalents, and Restricted CashA reconciliation of cash, cash equivalents, and restricted cash as of March 31, 2018 and April 1, 2017 from the consolidated balance sheets to theconsolidated statements of cash flows is as follows: March 31, 2018 April 1, 2017 (millions)Cash and cash equivalents $1,304.6 $668.3Restricted cash included within prepaid expenses and other current assets 15.5 9.8Restricted cash included within other non-current assets 35.4 33.7Total cash, cash equivalents, and restricted cash $1,355.5 $711.8Amounts included in restricted cash relate to cash placed in escrow with certain banks as collateral, primarily to secure guarantees in connection withcertain international tax matters.F-50 RALPH LAUREN CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)Cash Interest and TaxesCash paid for interest and income taxes is as follows: Fiscal Years Ended March 31, 2018 April 1, 2017 April 2, 2016 (millions)Cash paid for interest $11.7 $13.0 $15.0Cash paid for income taxes 54.0 81.7 171.7Non-cash TransactionsNon-cash investing activities included capital expenditures incurred but not yet paid of $37.0 million, $45.7 million, and $65.2 million as of the endof Fiscal 2018, Fiscal 2017, and Fiscal 2016, respectively.Additionally, during Fiscal 2018, Fiscal 2017, and Fiscal 2016, the Company recorded capital lease assets and corresponding capital lease obligationsof $3.3 million, $10.9 million, and $48.7 million, respectively, within its consolidated balance sheet.There were no other significant non-cash investing or financing activities for any of the fiscal years presented.F-51 MANAGEMENT'S REPORT ON RESPONSIBILITY FOR FINANCIAL STATEMENTSThe management of Ralph Lauren Corporation is responsible for the preparation, objectivity, and integrity of the consolidated financial statementsand other information contained in this Annual Report. The consolidated financial statements have been prepared in accordance with accounting principlesgenerally accepted in the United States and include some amounts that are based on management's informed judgments and best estimates.These consolidated financial statements have been audited by Ernst & Young LLP in Fiscal 2018, Fiscal 2017, and Fiscal 2016, which is anindependent registered public accounting firm. They conducted their audits in accordance with the standards of the Public Company Accounting OversightBoard (United States) and have expressed herein their unqualified opinions on those financial statements.The Audit Committee of the Board of Directors, which oversees all of the Company's financial reporting process on behalf of the Board of Directors,consists solely of independent directors, meets with the independent registered accountants, internal auditors, and management periodically to review theirrespective activities and the discharge of their respective responsibilities. Both the independent registered public accountants and the internal auditors haveunrestricted access to the Audit Committee, with or without management, to discuss the scope and results of their audits and any recommendations regardingthe system of internal controls.May 23, 2018 /s/ PATRICE LOUVET /s/ JANE HAMILTON NIELSENPatrice Louvet Jane Hamilton NielsenPresident and Chief Executive Officer Chief Financial Officer(Principal Executive Officer) (Principal Financial and Accounting Officer)F-52 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMThe Board of Directors and Shareholders of Ralph Lauren CorporationOpinion on the Financial StatementsWe have audited the accompanying consolidated balance sheets of Ralph Lauren Corporation and subsidiaries (the "Company") as of March 31, 2018and April 1, 2017, and the related consolidated statements of operations, comprehensive income (loss), equity, and cash flows for each of the three years inthe period ended March 31, 2018, and the related notes (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidatedfinancial statements present fairly, in all material respects, the financial position of the Company at March 31, 2018 and April 1, 2017, and the results of itsoperations and its cash flows for each of the three years in the period ended March 31, 2018, in conformity with U.S. generally accepted accountingprinciples.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company'sinternal control over financial reporting as of March 31, 2018, based on the criteria established in Internal Control-Integrated Framework issued by theCommittee of Sponsoring Organizations of the Treadway Commission and our report dated May 23, 2018 expressed an unqualified opinion thereon.Basis for OpinionThese financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financialstatements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Companyin accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtainreasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performingprocedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond tothose risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits alsoincluded evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of thefinancial statements. We believe that our audits provide a reasonable basis for our opinion./s/ Ernst & Young LLPWe have served as the Company's auditor since 2009.New York, New YorkMay 23, 2018F-53 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMThe Board of Directors and Shareholders of Ralph Lauren CorporationOpinion on Internal Control over Financial ReportingWe have audited Ralph Lauren Corporation and subsidiaries internal control over financial reporting as of March 31, 2018, based on criteriaestablished in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013framework) (the COSO criteria). In our opinion, Ralph Lauren Corporation and subsidiaries (the Company) maintained, in all material respects, effectiveinternal control over financial reporting as of March 31, 2018, based on the COSO criteria.We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidatedbalance sheets of the Company as of March 31, 2018 and April 1, 2017, and the related consolidated statements of operations, comprehensive income (loss),equity, and cash flows for each of the three years in the period ended March 31, 2018, and the related notes and our report dated May 23, 2018 expressed anunqualified opinion thereon.Basis for OpinionThe Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectivenessof internal control over financial reporting included in the accompanying Management's Report on Internal Control Over Financial Reporting. Ourresponsibility is to express an opinion on the Company's internal control over financial reporting based on our audit. We are a public accounting firmregistered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and theapplicable rules and regulations of the Securities and Exchange Commission and the PCAOB.We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtainreasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing andevaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considerednecessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.Definition and Limitations of Internal Control Over Financial ReportingA company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internalcontrol over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately andfairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary topermit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the companyare being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financialstatements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of anyevaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degreeof compliance with the policies or procedures may deteriorate./s/ Ernst & Young LLPNew York, New YorkMay 23, 2018F-54 RALPH LAUREN CORPORATIONSELECTED FINANCIAL INFORMATIONThe following table sets forth selected historical financial information as of the dates and for the periods indicated.The consolidated statement of operations data for each of the three fiscal years in the period ended March 31, 2018, as well as the consolidated balancesheet data as of March 31, 2018 and April 1, 2017 have been derived from, and should be read in conjunction with, the audited financial statements, notes,and other financial information presented elsewhere herein. The consolidated statements of operations data for the fiscal years ended March 28, 2015 andMarch 29, 2014 and the consolidated balance sheet data at April 2, 2016, March 28, 2015, and March 29, 2014 have been derived from audited financialstatements not included herein. Capitalized terms are as defined and described in the consolidated financial statements or elsewhere herein. The historicalresults are not necessarily indicative of the results to be expected in any future period. Fiscal Years Ended(a)(b) March 31,2018(c) April 1, 2017 April 2, 2016 March 28, 2015 March 29, 2014(d) (millions, except per share data)Statement of Operations Data: Net revenues $6,182.3 $6,652.8 $7,405.2 $7,620.3 $7,449.8Gross profit(e) 3,751.7 3,651.1 4,186.7 4,377.9 4,310.1Impairment of assets (50.0) (253.8) (48.8) (6.9) (1.3)Restructuring and other charges (108.0) (318.6) (142.6) (10.1) (17.8)Operating income (loss) 498.2 (92.3) 582.8 1,035.5 1,130.1Interest expense, net (5.9) (5.1) (14.7) (9.0) (14.7)Net income (loss) $162.8 $(99.3) $396.4 $702.2 $775.5Net income (loss) per common share: Basic $1.99 $(1.20) $4.65 $7.96 $8.55Diluted $1.97 $(1.20) $4.62 $7.88 $8.43Weighted average common shares outstanding: Basic 81.7 82.7 85.2 88.2 90.7Diluted 82.5 82.7 85.9 89.1 92.0Dividends declared per common share $2.00 $2.00 $2.00 $1.85 $1.70 (a) Fiscal 2016 consisted of 53 weeks. All other fiscal years presented consisted of 52 weeks. The inclusion of the 53rd week in Fiscal 2016 resultedin incremental net revenues of $72.2 million and net income of $8.3 million, or $0.10 per diluted share.(b) Reflects the Company's adoption of ASU No. 2017-07, "Improving the Presentation of Net Periodic Pension Cost and Net Periodic PostretirementBenefit Cost" during Fiscal 2018 on a retrospective basis, which requires that certain components of net pension expense be presented outside ofoperating income (see Note 4 to the accompanying consolidated financial statements).(c) Reflects TCJA enactment-related charges of $221.4 million recorded within the income tax provision (see Note 10 to the accompanyingconsolidated financial statements).(d) Reflects the acquisition of the North American Chaps-branded men's sportswear business effective in April 2013, which resulted in the recognitionof a $16.4 million gain on acquisition, as well as the acquisition of the Ralph Lauren-branded apparel and accessories business in Australia andNew Zealand effective in July 2013.(e) Fiscal 2018, Fiscal 2017, and Fiscal 2016 reflect non-cash inventory-related charges of $7.6 million, $197.9 million, and $20.4 million,respectively, recorded in connection with the Company's restructuring plans (see Note 9 to the accompanying consolidated financial statements).F-55 RALPH LAUREN CORPORATIONSELECTED FINANCIAL INFORMATION (Continued) March 31, 2018 April 1, 2017 April 2, 2016 March 28, 2015 March 29, 2014 (millions)Balance Sheet Data: Cash and cash equivalents $1,304.6 $668.3 $456.3 $499.7 $797.4Investments 785.6 706.1 816.0 652.2 490.1Working capital(a) 1,961.2 1,794.6 1,854.4 2,137.4 2,359.0Total assets 6,143.3 5,652.0 6,213.1 6,105.8 6,087.7Total debt (including current maturities of debt) 596.2 588.2 713.1 532.3 297.9Other non-current obligations(b) 361.2 250.9 265.7 237.5 255.0Equity 3,457.4 3,299.6 3,743.5 3,891.6 4,034.3 (a) Working capital is calculated as total current assets less total current liabilities (including current maturities of debt). Working capital as of March31, 2018, April 1, 2017, and April 2, 2016 reflect the Company's adoption of ASU No. 2015-17, "Balance Sheet Classification of Deferred Taxes,"which requires all deferred tax assets and liabilities, together with any related valuation allowances, to be classified as non-current on theconsolidated balance sheet (past guidance required deferred tax assets and liabilities to be broken out as current and non-current on theconsolidated balance sheet). Prior periods were not retrospectively adjusted.(b) Comprised of the Company's non-current capital lease and income tax payable obligations.F-56 RALPH LAUREN CORPORATIONQUARTERLY FINANCIAL INFORMATION (UNAUDITED)The following table sets forth the quarterly financial information of the Company: Quarterly Periods Ended(a)(b) July 1, 2017 September 30, 2017 December 30,2017(c) March 31,2018(c) (millions, except per share data)Net revenues $1,347.1 $1,664.2 $1,641.8 $1,529.2Gross profit 851.2 995.8 996.2 908.5Net income (loss) 59.5 143.8 (81.8) 41.3Net income (loss) per common share(d): Basic $0.73 $1.76 $(1.00) $0.51Diluted $0.72 $1.75 $(1.00) $0.50Dividends declared per common share $0.50 $0.50 $0.50 $0.50 Quarterly Periods Ended(a)(e) July 2, 2016 October 1, 2016 December 31, 2016 April 1, 2017 (millions, except per share data)Net revenues $1,552.2 $1,820.6 $1,714.6 $1,565.4Gross profit 894.6 954.2 983.2 819.1Net income (loss) (22.3) 45.7 81.3 (204.0)Net income (loss) per common share(d): Basic $(0.27) $0.55 $0.98 $(2.48)Diluted $(0.27) $0.55 $0.98 $(2.48)Dividends declared per common share $0.50 $0.50 $0.50 $0.50 (a) All fiscal quarters presented consisted of 13 weeks.(b) Net income (loss) and net income (loss) per common share for the three-month periods ended July 1, 2017, September 30, 2017, December 30,2017, and March 31, 2018 were negatively impacted by pretax restructuring-related charges, impairment of assets, and certain other charges of$47.2 million, $30.4 million, $27.2 million, and $60.8 million, respectively (see Notes 8 and 9 to the accompanying consolidated financialstatements).(c) Net loss and net loss per common share for the three months ended December 30, 2017 reflected the negative impact of TCJA enactment-relatedcharges of $231.3 million. During the three months ended March 31, 2018, net income and net income per common share were favorably impactedby TCJA measurement period adjustments of $9.9 million (see Note 10 to the accompanying consolidated financial statements).(d) Per common share amounts for the quarters and full years have been calculated separately. Accordingly, quarterly amounts may not add to theannual amount because of differences in the average number of common shares outstanding during each period.(e) Net income (loss) and net income (loss) per common share for the three-month periods ended July 2, 2016, October 1, 2016, December 31, 2016,and April 1, 2017 were negatively impacted by pretax restructuring-related charges, impairment of assets, and certain other charges of $159.1million, $149.5 million, $91.4 million, and $370.3 million, respectively (see Notes 8 and 9 to the accompanying consolidated financialstatements).F-57 EXHIBIT 12.1RALPH LAUREN CORPORATIONCOMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES Fiscal Years Ended(a) March 31, 2018 April 1, 2017 April 2, 2016 March 28, 2015 March 29, 2014 (millions)Earnings, as defined: Income (loss) before income taxes $489.2 $(104.9) $551.8 $987.4 $1,095.8 Add: Equity in losses of equity-method investees 4.5 5.2 10.9 11.5 9.4 Fixed charges 165.9 165.9 178.4 172.0 170.2Earnings available to cover fixed charges $659.6 $66.2 $741.1 $1,170.9 $1,275.4 Fixed Charges: Interest expense $18.2 $12.4 $21.0 $16.7 $18.7 Interest component of rent expense 147.7 153.5 157.4 155.3 151.5Total fixed charges $165.9 $165.9 $178.4 $172.0 $170.2 Ratio of earnings to fixed charges(b) 4.0 0.4 4.2 6.8 7.5 (a)Fiscal 2016 consisted of 53 weeks. All other fiscal years presented consisted of 52 weeks.(b) All ratios have been calculated using unrounded numbers.EXHIBIT 21.1SUBSIDIARIES OF THE COMPANYEntity Name Jurisdiction of FormationAcqui Polo CV NetherlandsAcqui Polo GP, LLC DelawarePRL Fashions Inc. DelawarePRL International, Inc. DelawarePRL Netherlands Limited, LLC (f/k/a Acqui Polo Limited, LLC) DelawarePRL USA Holdings, Inc. DelawarePRL USA, Inc. DelawareRalph Lauren Asia Pacific Limited (f/k/a Polo Ralph Lauren Asia Pacific, Limited) Hong KongRalph Lauren Europe Sàrl (f/k/a Polo Ralph Lauren Europe Sàrl) SwitzerlandRalph Lauren Holding BV (f/k/a Polo Hold BV) NetherlandsRalph Lauren Retail, Inc. (f/k/a Fashions Outlet of America, Inc.) DelawareRL Acqui Polo Holding GP, LLC DelawareRL CV Holding Limited, LLC DelawareRL Finance BV (f/k/a Polo Fin BV) NetherlandsThe Polo/Lauren Company LP New York EXHIBIT 23.1CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMWe consent to the incorporation by reference in the Registration Statements on Form S-8 pertaining to the 1997 Long-Term Stock Incentive Plan(Registration No. 333-46808), Form S-8 pertaining to the 1997 Long-Term Stock Incentive Plan and 1997 Stock Option Plan for Non-Employee Directors(Registration No. 333-29023), Form S-8 pertaining to the 2010 Long-Term Stock Incentive Plan (Registration No. 333-169619), Form S-8 pertaining to theAmended and Restated 2010 Long-Term Stock Incentive Plan (Registration No. 333-191338), Form S-3 pertaining to the registration of 10,350,000 Class ACommon Shares (Registration No. 333-167503) of Ralph Lauren Corporation, and Form S-3 pertaining to the September 2013 and August 2015 registeredpublic debt offerings (Registration No. 333-191302) by Ralph Lauren Corporation, of our reports dated May 23, 2018, with respect to the consolidatedfinancial statements of Ralph Lauren Corporation and the effectiveness of internal control over financial reporting of Ralph Lauren Corporation included inthis Annual Report (Form 10-K) for the year ended March 31, 2018./s/ Ernst & Young LLPNew York, NYMay 23, 2018EXHIBIT 31.1CERTIFICATIONI, Patrice Louvet, certify that:1.I have reviewed this Annual Report on Form 10-K of Ralph Lauren Corporation;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for theregistrant and have:a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under oursupervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by otherswithin those entities, particularly during the period in which this report is being prepared;b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for externalpurposes in accordance with generally accepted accounting principles;c)evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; andd)disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's mostrecent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely tomaterially affect, the registrant's internal control over financial reporting.5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function):a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; andb)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internalcontrol over financial reporting. /s/ PATRICE LOUVET Patrice Louvet President and Chief Executive Officer (Principal Executive Officer) Date: May 23, 2018 EXHIBIT 31.2CERTIFICATIONI, Jane Hamilton Nielsen, certify that:1.I have reviewed this Annual Report on Form 10-K of Ralph Lauren Corporation;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for theregistrant and have:a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under oursupervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by otherswithin those entities, particularly during the period in which this report is being prepared;b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for externalpurposes in accordance with generally accepted accounting principles;c)evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; andd)disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's mostrecent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely tomaterially affect, the registrant's internal control over financial reporting.5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function):a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; andb)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internalcontrol over financial reporting. /s/ JANE HAMILTON NIELSEN Jane Hamilton Nielsen Chief Financial Officer (Principal Financial and Accounting Officer) Date: May 23, 2018 EXHIBIT 32.1Certification of Patrice Louvet Pursuant to 18 U.S.C. Section 1350,as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002In connection with the Annual Report of Ralph Lauren Corporation (the "Company") on Form 10-K for the period ended March 31, 2018, as filed withthe Securities and Exchange Commission on the date hereof (the "Report"), I, Patrice Louvet, Chief Executive Officer of the Company, certify, pursuant to 18U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:1.The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and2.The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. /s/ PATRICE LOUVET Patrice Louvet May 23, 2018 A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting thesignature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Ralph LaurenCorporation and will be retained by Ralph Lauren Corporation and furnished to the Securities and Exchange Commission or its staff upon request.EXHIBIT 32.2Certification of Jane Hamilton Nielsen Pursuant to 18 U.S.C. Section 1350,as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002In connection with the Annual Report of Ralph Lauren Corporation (the "Company") on Form 10-K for the period ended March 31, 2018, as filed withthe Securities and Exchange Commission on the date hereof (the "Report"), I, Jane Hamilton Nielsen, Chief Financial Officer of the Company, certify,pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:1.The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and2.The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. /s/ JANE HAMILTON NIELSEN Jane Hamilton Nielsen May 23, 2018 A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting thesignature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Ralph LaurenCorporation and will be retained by Ralph Lauren Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

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