Polo Ralph Lauren Signs Agreement in Principle to Increase Direct Management of its Japanese Business.Business Editors NEW YORK--(BUSINESS WIRE)--Oct. 15, 2002 Polo Ralph Lauren Polo Ralph Lauren (NYSE: RL) is American fashion designer Ralph Lauren's luxury lifestyle company. Polo Ralph Lauren specializes in high-end casual/semi-formal wear for men and women, as well as accessories, fragrance, and housewares. Corporation (NYSE NYSE See: New York Stock Exchange :RL): - Will Acquire 50% Interest in Japanese Master License - Will Hold 18% Equity Stake in Men's, Women's and Jeans Japanese Sublicense Group - Reaffirms Second Quarter Earnings Guidance in the Range of $0.48 to $0.53 Polo Ralph Lauren Corporation (NYSE: RL) today announced it has signed an agreement in principle to increase the direct management of its growing business in Japan. Since 1978, Polo's Japanese business had been licensed to Seibu Department Stores This is a list of department stores. In the case of department store groups the location of the flagship store is given. This list does not include large specialist stores, which sometimes resemble department stores. . The agreement in principle outlines a series of transactions whereby Polo will acquire a 50% interest in its Japanese Master License and will acquire an 18% equity interest in a company that will hold the sublicenses for Polo's men's, women's and Polo Jeans businesses in Japan. Polo's total investment in the transactions will be approximately $70 million and will be funded through Polo's available cash. Definitive agreements are expected to be signed and the transactions are expected to close by March 2003. The transactions are expected to be accretive to earnings in fiscal year 2004. "Our growing business in Japan represented more than one billion dollars of retail sales last year and is second only to our sales in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . With increasing demand for our luxury lifestyle products in Japan, we believe this enhanced arrangement presents a tremendous opportunity for Polo to increase our international business and to directly influence the growth of our brands in this important region," said Ralph Lauren Ralph Lauren (born Ralph Lifschitz on October 14, 1939) is an American fashion designer and business executive. Life Ralph J. Lauren was born in the New York City borough of The Bronx to Ashkenazi Jewish immigrants Fraydl (Kotlar) and Frank Lifshitz, a house , Chairman and Chief Executive Officer. Japanese Master License Prior to the contemplated transactions, Seibu owned 100% of the Master License giving it the rights to distribute specific Polo Ralph Lauren product categories through sublicenses and through wholesale and retail stores in Japan. Under the terms of the new arrangements, Polo will hold a 50% interest in the Japanese Master License, Onward on·ward adj. Moving or tending forward. adv. also on·wards In a direction or toward a position that is ahead in space or time; forward. Kashiyama, Japan's leading apparel wholesaler, will hold a 45% interest and Seibu, Japan's leading department store operator, will hold a 5% position. Polo expects to consolidate the financial results of the Master License operations in its consolidated financial statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge , including Master License royalty revenues that will be partially offset by the expenses related to operating the License and the minority interest. The financial results are incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. to the Japanese licensing revenues Polo currently receives under the existing agreement. Japanese Sublicense sub·li·cense n. A license giving rights of production or marketing of products or services to a person or company that is not the primary holder of such rights. tr.v. Group Over the past 25 years, Seibu has sublicensed the product categories it has rights to under the Master License to leading manufacturers and wholesalers in Japan. These categories include men's, women's, Polo Jeans, Polo Golf, children's apparel, accessories and home furnishings furnishings the extra type or quantity of hair on the head, tail, ears or legs, specified for a particular breed. For example, the feathers in setters, the beard in Bearded collies, the eyebrows in Schnauzers. . Polo's men's, women's and Polo Jeans businesses are sublicensed to three companies, Impact 21 (women's), Acty 21 (men's) and Partner 21 (jeans) which are all majority-owned subsidiaries majority-owned subsidiary A firm in which more than 50% of outstanding voting stock is owned by the parent company. of Onward Kashiyama. Currently, both Impact 21 and Acty 21 are publicly traded companies publicly traded company A company whose shares of common stock are held by the public and are available for purchase by investors. The shares of publicly traded firms are bought and sold on the organized exchanges or in the over-the-counter market. in Japan. With the completion of the new arrangement, Impact 21, Acty 21 and Partner 21 will merge to form one publicly traded Japanese company, Impact 21. The remaining sublicensees will continue to operate as separate entities. Polo Ralph Lauren will purchase from Onward Kashiyama an equity stake that will equal 18% of the merged Impact 21 at the closing of the transactions. Onward Kashiyama will retain 41% of the merged Impact 21 and the balance will be held by the public. Upon the closing of the transaction, Polo expects to include its investment in Impact 21 in its consolidated financial statements using the equity method of accounting. "Our Japanese business continues to grow and we are experiencing strong demand for our products there. With Seibu, we have enjoyed 25 years of success in building a strong business. Now with Onward Kashiyama, we have another great partner who has manufacturing expertise that we can leverage to reach the full growth potential of this key market. When completed, this arrangement will allow Polo to accelerate the development of our brands and to more actively participate in the financial impact of this business," said Roger Farah, President and Chief Operating Officer Chief Operating Officer (COO) The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. . Polo Ralph Lauren has already identified opportunities that it will pursue including the three-year, $70 million renovation of more than 150 shop-within-shops that was begun last year by its Japanese partners. In the stores where the renovations have been completed, sales have increased by double digits Double Digits was a pricing game on the American television game show, The Price Is Right. Played from April 20, 1973 through May 18, 1973's show, it was played for a car and used small prizes. . In addition, the Master License partners will look to develop successful specialty retail concepts. UBS UBS Union Bank of Switzerland UBS United Bible Societies UBS United Blood Services UBS United Buying Service UBS Used Bookstore UBS University Business Services UBS Universal Building Society (UK) UBS Ulaanbaatar Broadcasting System Warburg acted as the exclusive financial advisor to Polo Ralph Lauren with respect to these transactions. In addition to the proposed new arrangements in Japan, the Company remains comfortable with its previously announced adjusted second quarter earnings guidance in the range of $0.48 to $0.53. Although Polo Ralph Lauren, Seibu and Onward Kashiyama have executed an agreement in principle, no assurance can be given that definitive agreements will be signed or that the transactions will close as contemplated. Certain statements including, without limitation, the statements made by Ralph Lauren and Roger Farah and the statements relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the earnings outlook for fiscal 2003 contained herein constitute "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " within the meaning of the U.S. Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Such forward-looking statements are based on current expectations and involve certain risks and uncertainties. Actual results might differ materially from those projected in the forward-looking statements. Among the factors that could cause actual results to materially differ are the following: risks associated with a general economic downturn Downturn The transition point between a rising, expanding economy to a falling, contracting one. downturn A decline in security prices or economic activity following a period of rising or stable prices or activity. and other events leading to a reduction in discretionary consumer spending Consumer demand or consumption is also known as personal consumption expenditure. It is the largest part of aggregate demand or effective demand at the macroeconomic level. ; risks associated with implementing the Company's plans to enhance its worldwide luxury retail business, inventory management program and operating efficiency initiatives; risks associated with changes in the competitive marketplace, including the introduction of new products or pricing changes by the Company's competitors; changes in global economic and political conditions; risks associated with the Company's dependence on sales to a limited number of large department store customers, including risks related to extending credit to customers; risks associated with the Company's dependence on its licensing partners for a substantial portion of its net income and risks associated with a lack of operational and financial control over licensed businesses; risks associated with consolidations, restructurings and other ownership changes in the retail industry; risks associated with competition in the segments of the fashion and consumer product industries in which the Company operates, including the Company's ability to shape, stimulate and respond to changing consumer tastes and demands by producing attractive products, brands and marketing, and its ability to remain competitive in the areas of quality and price; risks associated with uncertainty relating to the Company's ability to implement its growth strategies; risks associated with the Company's entry into new markets either through internal development activities or through acquisitions; risks associated with the possible adverse impact of the Company's unaffiliated manufacturers' inability to manufacture in a timely manner, to meet quality standards or to use acceptable labor practices and other factors detailed in the filings made by the Company with the Securities and Exchange Commission. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Polo Ralph Lauren Corporation is a leader in the design, marketing and distribution of premium lifestyle products in four categories: apparel, home, accessories and fragrances. For 35 years, Polo's reputation and distinctive image have been consistently developed across an expanding number of products, brands and international markets. The Company's brand names, which include "Polo", "Polo by Ralph Lauren", "Ralph Lauren Purple Label", "Polo Sport", "Ralph Lauren", "RALPH", "Lauren", "Polo Jeans Co.", "RL", "Chaps", and "Club Monaco Club Monaco is an upscale clothing retailer with more than 65 stores in North America. Canada, Hong Kong, Taiwan, Seoul, the United Arab Emirates and the United States. Club Monaco plans to open stores in the United Kingdom and expand to Philadelphia, and Manila. " among others, constitute one of the world's most widely recognized families of consumer brands. For more investor information, go to http://investor.polo.com. |
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