Polo Ralph Lauren (RL)

 

(b) Management’s Report of Internal Control Over Financial Reporting

 

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Securities Exchange Act Rule 13a-15(f). Internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and preparation of financial statements for external purposes in accordance with U.S. Generally Accepted Accounting Principles. Internal control over financial reporting includes maintaining records that in reasonable detail accurately and fairly reflect our transactions; providing reasonable assurance that transactions are recorded as necessary for preparation of our financial statements; providing reasonable assurance that receipts and expenditures of the Company’s assets are made in accordance with management authorization; and providing reasonable assurance that unauthorized acquisition, use or disposition 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 of its inherent limitations, internal control over financial reporting is not intended to provide absolute assurance that a misstatement of our financial statements would be prevented or detected. Further, the evaluation of the effectiveness of internal control over financial reporting was made as of a specific date, and continued effectiveness in future periods is subject to the risks that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies and procedures may decline.

 

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation 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 framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control-Integrated Framework. Based on this evaluation, management concluded that the Company’s internal controls over financial reporting were effective as of the fiscal year end covered by this Annual Report on Form 10-K.

 

During the first quarter of Fiscal 2008, the Company acquired control of certain of its Japanese businesses that were formerly conducted under pre-existing licensed arrangements. In particular, the Company acquired approximately 77% of the outstanding shares of Impact 21 that it did not previously own in a cash tender offer (as further defined and discussed in Note 5 to the accompanying audited consolidated financial statements). The Company is in the process of evaluating Impact 21’s internal controls. However, as permitted by related SEC Staff interpretive guidance for newly acquired businesses, the Company excluded Impact 21 from management’s annual assessment of the effectiveness of the Company’s internal control over financial reporting as of March 29, 2008. In the aggregate, Impact 21 represented 14.2% of the total consolidated assets (including purchase accounting allocations), 5.2% of total consolidated revenues and 4.6% of total consolidated operating income of the Company as of and for the fiscal year ended March 29, 2008.

 

(c) Changes in Internal Controls Over Financial Reporting

 

Except as discussed below, there has been no change in the Company’s internal control over financial reporting during the fourth quarter of Fiscal 2008, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

The Company is in the process of evaluating the internal control structure of Impact 21 and determining how best to integrate and improve the various processes, systems, resources and controls supporting that business. In the interim, the Company has designed and implemented various transitional controls over financial reporting to supplement the existing internal controls at Impact 21.

 

 

Not applicable.

 

 

Refer to Note 4 to the accompanying audited consolidated
financial statements for a discussion of certain accounting
standards the Company is not yet required to adopt which may
impact its results of operations
and/or
financial condition in future reporting periods.

 

 

For a discussion of the Company’s exposure to market risk,
see “Market Risk Management” in Item 7 included
elsewhere in this Annual Report on
Form 10-K.

 

 

See the “Index to Consolidated Financial Statements”
appearing at the end of this Annual Report on
Form 10-K.

 

 

Not applicable.

 

 

(a) Evaluation of Disclosure Controls and Procedures

 

Disclosure controls and procedures are the controls and other
procedures of an issuer that are designed to provide reasonable
assurance that information 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 procedures include, without limitation,
controls and procedures designed 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 is accumulated and communicated to the issuer’s
management, including its principal executive and principal
financial officers, or persons performing similar functions, as
appropriate to allow timely decisions regarding required
disclosure.

 

We have evaluated, under the supervision and with the
participation of our management, including our Chief Executive
Officer and Chief Financial Officer, 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 of the end of the fiscal
year covered by this annual report. Based on that evaluation,
our Chief Executive Officer and Chief Financial Officer have
concluded that the Company’s disclosure controls and
procedures were effective, as of the fiscal year end covered by
this Annual Report on
Form 10-K,
in timely making known to them material information relating to
the Company and the Company’s consolidated subsidiaries
required to be disclosed in the Company’s reports filed or
submitted under the Exchange Act.

 

(b) Management’s Report of Internal Control Over
Financial Reporting

 

Management is responsible for establishing and maintaining
adequate internal control over financial reporting, as defined
in Securities Exchange Act
Rule 13a-15(f).
Internal control over financial reporting is designed to provide
reasonable assurance regarding the reliability of financial
reporting and preparation of financial statements for external
purposes in accordance with U.S. Generally Accepted
Accounting Principles. Internal control over financial reporting
includes maintaining records that in reasonable detail
accurately and fairly reflect our transactions; providing
reasonable assurance that transactions are recorded as necessary
for preparation of our financial statements; providing
reasonable assurance that receipts and expenditures of the
Company’s assets are made in accordance with management
authorization; and providing reasonable assurance that
unauthorized acquisition, use or disposition 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 of its inherent limitations, internal control
over financial reporting is not intended to provide absolute
assurance that a misstatement of our financial statements would
be prevented or detected. Further, the evaluation of the
effectiveness of internal control over financial reporting was
made as of a specific date, and continued effectiveness in
future periods is subject to the risks that controls may become
inadequate because of changes in conditions or that the degree
of compliance with the policies and procedures may decline.

 

Under the supervision and with the participation of our
management, including our Chief Executive Officer and Chief
Financial Officer, we conducted an evaluation 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 framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (“COSO”) in
Internal Control-Integrated Framework. Based on this
evaluation, management concluded that the Company’s
internal controls over financial reporting were effective as of
the fiscal year end covered by this Annual Report on
Form 10-K.

 

During the first quarter of Fiscal 2008, the Company acquired
control of certain of its Japanese businesses that were formerly
conducted under pre-existing licensed arrangements. In
particular, the Company acquired approximately 77% of the
outstanding shares of Impact 21 that it did not previously own
in a cash tender offer (as further defined and discussed in
Note 5 to the accompanying audited consolidated financial
statements). The Company is in the process of evaluating Impact
21’s internal controls. However, as permitted by related
SEC Staff interpretive guidance for newly acquired businesses,
the Company excluded Impact 21 from management’s annual
assessment of the effectiveness of the Company’s internal
control over financial reporting as of March 29, 2008. In
the aggregate, Impact 21 represented 14.2% of the total
consolidated assets (including purchase accounting allocations),
5.2% of total consolidated revenues and 4.6% of total
consolidated operating income of the Company as of and for the
fiscal year ended March 29, 2008.

 

(c) Changes in Internal Controls Over Financial
Reporting

 

Except as discussed below, there has been no change in the
Company’s internal control over financial reporting during
the fourth quarter of Fiscal 2008, that has materially affected,
or is reasonably likely to materially affect, the Company’s
internal control over financial reporting.

 

The Company is in the process of evaluating the internal control
structure of Impact 21 and determining how best to integrate and
improve the various processes, systems, resources and controls
supporting that business. In the interim, the Company has
designed and implemented various transitional controls over
financial reporting to supplement the existing internal controls
at Impact 21.

 

 

Not applicable.

 

 

 

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that the Company files or submits under the Securities and Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.

 

As of September 29, 2007, the Company carried out an evaluation, under the supervision and with the participation of its management, including its Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to the Securities and Exchange Act Rule 13(a)-15(b). Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective in timely making known to them material information relating to the Company and the Company’s consolidated subsidiaries required to be disclosed in the Company’s reports filed or submitted under the Exchange Act. Except as discussed below, there has been no change in the Company’s internal control over financial reporting during the fiscal quarter ended September 29, 2007, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

During the first quarter of Fiscal 2008, the Company acquired control of certain of its Japanese businesses that were formerly conducted under pre-existing licensed arrangements. In particular, the Company acquired approximately 77% of the outstanding shares of Impact 21 that it did not previously own in a cash tender offer (as further defined and discussed in Note 5 to the accompanying unaudited interim consolidated financial statements). The Company is currently in the process of evaluating Impact 21’s internal controls. However, as permitted by related SEC Staff interpretive guidance for newly acquired businesses, the Company anticipates that Impact 21 will be excluded from management’s annual assessment of the effectiveness of the Company’s internal control over financial reporting as of March 29, 2008. In the aggregate, Impact 21 represented 13.2% of the total consolidated assets (including purchase accounting allocations), 4.8% of total consolidated revenues and 4.3% of total consolidated operating income of the Company as of and for the six months ended September 29, 2007.

 

Act Rule 13(a)-15(b). Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective in timely making known to them material information relating to the Company and the Company’s consolidated subsidiaries required to be disclosed in the Company’s reports filed or submitted under the Exchange Act. Except as discussed below, there has been no change in the Company’s internal control over financial reporting during the fiscal quarter ended June 30, 2007, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

During the first quarter of Fiscal 2008, the Company acquired control of certain of its Japanese businesses that were formerly conducted under pre-existing licensed arrangements. In particular, the Company acquired approximately 77% of the outstanding shares of Impact 21 that it did not previously own in a cash tender offer (as further defined and discussed in Note 5 to the accompanying unaudited interim consolidated financial statements). The Company is currently in the process of evaluating Impact 21’s internal controls. However, as permitted by related SEC Staff interpretive guidance for newly acquired businesses, the Company anticipates that Impact 21 will be excluded from management’s annual assessment of the effectiveness of the Company’s internal control over financial reporting as of March 29, 2008. In the aggregate, Impact 21 represented 12.4% of the total consolidated assets (including purchase accounting allocations), 4.8% of total consolidated revenues and 5.5% of total consolidated operating income of the Company as of and for the three months ended June 30, 2007.

accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

 

We have evaluated, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, 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 of the end of the fiscal year covered by this annual report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were effective as of the fiscal year end covered by this annual report.

 

 

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Securities Exchange Act Rule 13a-15(f). Internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and preparation of financial statements for external purposes in accordance with U.S. Generally Accepted Accounting Principles.

 

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation 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 framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control-Integrated Framework. Based on this evaluation, management concluded that the Company’s internal controls over financial reporting were effective as of the fiscal year end covered by this annual report.

 

Management’s assessment of the effectiveness of internal control over financial reporting as of March 31, 2007 was audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report, which is included in this Annual Report on Form 10-K.

 

 

Other than the remediation of the income tax accounting material weakness described below, there were no changes during the fourth quarter of Fiscal 2007 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

Prior to March 31, 2007, our management had concluded that our disclosure controls and procedures were not effective due to the material weakness in our internal control over financial reporting with respect to income tax accounting. This control deficiency, which management first determined to be a material weakness under the Public Company Accounting Oversight Board’s Auditing Standard No. 2 in its Annual Report on Form 10-K for the fiscal year ended April 2, 2005, largely related to inadequate internal tax resources for a sufficient period of time, lack of formal training for tax personnel and inadequate controls and procedures over the tax accounting process to complete a comprehensive and timely review of the income tax accounts and required tax footnote disclosures. We undertook several remedial steps during the period covered by this report as well as during the course of Fiscal 2006, as described below, to enhance controls. As of the end of the period covered by this report, we believe we have taken the necessary steps to remediate the material weakness. Before concluding that the material weakness was remediated, management implemented and evaluated its new controls and procedures for income tax accounting and determined that these procedures were operating effectively for a sufficient period of time and subjected them to appropriate tests in order to conclude that they are operating effectively. Accordingly, management has concluded that the material weakness in our internal control over financial reporting with respect to income tax accounting was remediated as of March 31, 2007.

 

Remediation of material weakness

 

During Fiscal 2006 and 2007, the following remedial steps were taken to strengthen internal controls to address the material weakness described above:

 

 

 

Management believes the aforementioned steps have resolved the material weakness in controls described above for a period of time sufficient to conclude that our controls over financial reporting are now effective.

 

remediated until the remediated procedures have operated for an appropriate period and have been tested, and management has concluded that they are operating effectively.

 

To compensate for this material weaknesses, the Company performed additional analysis and other procedures in order to prepare the unaudited quarterly consolidated financial statements in accordance with generally accepted accounting principles in the United States of America. Accordingly, management believes that the unaudited consolidated financial statements included in this Quarterly Report on Form 10-Q fairly present, in all material respects, our financial condition, results of operations and cash flows for the periods presented.

 

Except for our ongoing remediation efforts over income tax accounting, there were no changes during the quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.