This earnings release includes certain non-GAAP financial measures relating to impairment and restructuring charges associated with the discontinuation of Rugby. The following is a reconciliation between the non-GAAP financial measures and the most directly comparable GAAP measures before and after these charges. The related tax effects were calculated using the respective statutory tax rates for each applicable jurisdiction. The Company uses non-GAAP financial measures, among other things, to evaluate its operating performance and in order to represent the manner in which the Company conducts and views its business. The Company believes that excluding items that are not comparable from period to period helps investors and others compare operating performance between two periods. While the Company considers the non-GAAP measures useful in analyzing its results, they are not intended to replace, nor act as a substitute for, any presentation included in the consolidated financial statements prepared in conformity with GAAP and may be different from non-GAAP measures reported by other companies.

                   
RALPH LAUREN CORPORATION
Reconciliation of Certain Non-GAAP Financial Measures
(in millions, except per share data)
(Unaudited)
 
Three Months Ended December 29, 2012  

Excluding Asset

Impairment &
Asset Impairment Restructuring

Restructuring
As Reported   Charges   Charges  

Charges
 
Total Operating Expenses $ 789.7 $ (11.3 ) $ (1.6 ) $ 776.8

Operating Expense Margin
42.8 % 42.1 %
 
Operating Income $ 304.4 $ 11.3 $ 1.6 $ 317.3

Operating Margin
16.5 % 17.2 %
 
Provision/(Benefit) for Income Taxes $ 78.9 $ (4.0 ) $ (0.6 ) $ 74.3
 
Net Income $ 215.7 $ 7.3 $ 1.0 $ 224.0
Net Income per Diluted Share $ 2.31 $ 0.08 $ 0.01 $ 2.40
 
SEGMENT INFORMATION -
OPERATING INCOME/(LOSS):

Wholesale
$ 144.9 $ - $ - $ 144.9

Retail
201.2 9.6 - 210.8

Licensing
37.0 1.7 - 38.7

Unallocated Corporate Expenses and Restructuring Charges
  (78.7 )   -     1.6     (77.1 )

Total Operating Income
$ 304.4   $ 11.3   $ 1.6   $ 317.3  
 

Retail Operating Margin
18.9 % 19.8 %
 
                       
RALPH LAUREN CORPORATION
Constant Currency Financial Measures
(in millions)
(Unaudited)
 
Same - Store Sales Data
 
Three Months Ended Nine Months Ended
December 29, 2012 December 29, 2012
% Change % Change
As Reported Constant Currency As Reported Constant Currency
Total Ralph Lauren 4 % 4 % 3 % 4 %
 
 
Operating Segment Data
 
Three Months Ended % Change
December 29, 2012 December 31, 2011 As Reported Constant Currency
Wholesale Net Sales $ 733.9 $ 750.0 (2.1 %) (1.2 %)
Retail Net Sales   1,062.0     1,006.0   5.6 % 5.9 %
Net Sales 1,795.9 1,756.0 2.3 % 2.9 %
Licensing Revenue   50.2     49.6   1.2 % 1.6 %
Net Revenue $ 1,846.1   $ 1,805.6   2.2 % 2.8 %
 
Nine Months Ended % Change
December 29, 2012 December 31, 2011 As Reported Constant Currency  
Wholesale Net Sales $ 2,342.5 $ 2,418.5 (3.1 %) (1.1 %)
Retail Net Sales   2,820.2     2,680.8   5.2 % 6.6 %
Net Sales 5,162.7 5,099.3 1.2 % 3.0 %
Licensing Revenue   138.8     137.3   1.1 % 1.3 %
Net Revenue $ 5,301.5   $ 5,236.6   1.2 % 2.9 %
 

Ralph Lauren is a global company that reports its financial information in U.S. dollars, in accordance with U.S. GAAP (“GAAP”). Foreign currency exchange rate fluctuations affect the amounts reported by the Company in U.S. dollars because the underlying currencies in which the Company transacts change in value over time compared to the U.S. dollar. These rate fluctuations can have a significant effect on reported operating results. As a supplement to its reported operating results, the Company presents constant currency financial information, which is a non-GAAP financial measure. The Company uses constant currency information to provide a framework to assess how its businesses performed excluding the effects of foreign currency exchange rate fluctuations. The Company believes this information is useful to investors to facilitate comparisons of operating results and better identify trends in its businesses. These constant currency performance measures should be viewed in addition to, and not in lieu of or superior to, the Company's operating performance measures calculated in accordance with GAAP.

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