NOTE 6 – RETURNS AND CHARGES ASSOCIATED WITH RESTRUCTURING ACTIVITIES

In an effort to drive down costs and achieve synergies within the organization, in February 2009, the Company announced the implementation of a multi-faceted cost savings program (the “Program”) to position the Company to achieve long-term profitable growth. The Company anticipated the Program would result in total cumulative restructuring charges and other costs to implement those initiatives of between $350 million and $450 million before taxes. During the second quarter of fiscal 2013, the Company closed the Program. The Company concluded the approval of all initiatives under the Program and anticipates commencing the execution of those initiatives through fiscal 2014. As a result of the closure of the Program and the evaluation of the initiatives that have been implemented, as of June 30, 2013, the Company anticipates total cumulative restructuring charges and other costs to implement those initiatives to total between $320 million and $330 million and that such charges have been substantially recorded through fiscal 2013. The Company will continue to monitor the progress of these initiatives and revise estimates as appropriate.

The following is a reconciliation of cumulative approved charges under the Program as compared with the revised estimated charges related to initiatives under the Program and total cumulative charges incurred through June 30, 2013:

	Restructuring Charges																				Total
(In millions)	Employee- Related Costs			Asset Write- offs			Contract Terminations and Other Exit Costs			Total Restructuring			Returns			Inventory Write-offs		Other Charges			Restructuring Charges and Other Costs to Implement

Approved charges from inception through December 31, 2012	$	205.5		$	23.5		$	43.5		$	272.5		$	43.0		$	20.0	$	50.0		$	385.5
Adjustments of estimated costs over (under)	(35.0		)	(2.0		)	(4.0		)	(41.0		)	(11.0		)	4.0		(13.0		)	(61.0		)
Revised estimated charges as of June 30, 2013	$	170.5		$	21.5		$	39.5		$	231.5		$	32.0		$	24.0	$	37.0		$	324.5
Cumulative charges incurred through June 30, 2013	$	169.6		$	21.4		$	37.4		$	228.4		$	32.0		$	23.2	$	36.8		$	320.4

The Program focused on a redesign of the Company’s organizational structure in order to integrate it in a more cohesive way and operate more globally across brands and functions. The principal aspect of the Program was the reduction of the workforce by approximately 2,000 employees. Specific actions taken since the Program inception included:

· Resize and Reorganize the Organization – The Company continued the realignment and optimization of its organization to better leverage scale, improve productivity, reduce complexity and achieve cost savings in each region and across various functions. This included reduction of the workforce which occurred through the consolidation of certain functions, which it achieved through a combination of normal attrition and job eliminations, and the closure and consolidation of certain distribution and office facilities. As of June 30, 2013, the Company identified approximately $14 million of previously-approved restructuring costs that will not be incurred related to these activities, primarily as a result of certain employees relocating to other available positions within the Company.

· Turnaround or Exit Unprofitable Operations – To improve the profitability in certain of the Company’s brands and regions, the Company has selectively exited certain channels of distribution, categories and markets, and has made changes to turn around others. This included the exit from the global wholesale distribution of its Prescriptives brand, the reformulation of Ojon brand products and the exit from the global distribution of Sean John products. In connection with these activities, the Company incurred charges for product returns, inventory write-offs, reduction of workforce and termination of contracts. As of June 30, 2013, the Company identified approximately $21 million of previously-approved returns and other costs related to these activities that will not be incurred, primarily as a result of better-than-expected sales of products prior to the exit of the operations, as well as lower employee-related and store closure costs than originally estimated.

· Outsourcing – In order to balance the growing need for information technology support with the Company’s efforts to provide the most efficient and cost effective solutions, it continued the outsourcing of certain information technology processes. The Company incurred costs to transition services to outsource providers and employee-related termination costs. As of June 30, 2013, the Company identified approximately $26 million of previously-approved outsourcing initiatives for information technology services stemming from the decision not to implement certain aspects of these initiatives, as well as lower costs than originally anticipated to transition services on initiatives that were implemented.

Restructuring Charges

The following table presents aggregate restructuring charges related to the Program to date:

(In millions)	Employee- Related Costs		Asset Write-offs		Contract Terminations		Other Exit Costs		Total

Fiscal 2009	$	60.9	$	4.2	$	3.4	$	1.8	$	70.3
Fiscal 2010	29.3		11.0		2.3		6.2		48.8
Fiscal 2011	34.6		2.4		3.0		1.1		41.1
Fiscal 2012	37.1		1.7		12.6		2.2		53.6
Fiscal 2013	7.7		2.1		1.5		3.3		14.6
Charges recorded through June 30, 2013	$	169.6	$	21.4	$	22.8	$	14.6	$	228.4

The following table presents accrued restructuring charges and the related activities under the Program to date:

(In millions)	Employee-Related Costs			Asset Write-offs			Contract Terminations			Other Exit Costs			Total

Charges	$	60.9		$	4.2		$	3.4		$	1.8		$	70.3
Cash payments	(7.5		)	—			(0.5		)	(1.6		)	(9.6		)
Non-cash write-offs	—			(4.2		)	—			—			(4.2		)
Translation adjustments	0.6			—			—			—			0.6
Other adjustments	(2.4		)	—			—			—			(2.4		)
Balance at June 30, 2009	51.6			—			2.9			0.2			54.7

Charges	29.3			11.0			2.3			6.2			48.8
Cash payments	(49.5		)	—			(5.1		)	(6.0		)	(60.6		)
Non-cash write-offs	—			(11.0		)	—			—			(11.0		)
Translation adjustments	(0.8		)	—			—			—			(0.8		)
Balance at June 30, 2010	30.6			—			0.1			0.4			31.1

Charges	34.6			2.4			3.0			1.1			41.1
Cash payments	(30.6		)	—			(2.4		)	(1.4		)	(34.4		)
Non-cash write-offs	—			(2.4		)	—			—			(2.4		)
Translation adjustments	1.2			—			(0.1		)	0.1			1.2
Balance at June 30, 2011	35.8			—			0.6			0.2			36.6

Charges	37.1			1.7			12.6			2.2			53.6
Cash payments	(23.6		)	—			(12.4		)	(2.0		)	(38.0		)
Non-cash write-offs	—			(1.7		)	—			—			(1.7		)
Translation adjustments	(1.4		)	—			—			0.1			(1.3		)
Balance at June 30, 2012	47.9			—			0.8			0.5			49.2

Charges	7.7			2.1			1.5			3.3			14.6
Cash payments	(26.0		)	—			(2.1		)	(3.1		)	(31.2		)
Non-cash write-offs	—			(2.1		)	—			—			(2.1		)
Translation adjustments	0.2			—			—			—			0.2
Other adjustments	(2.3		)	—			—			—			(2.3		)
Balance at June 30, 2013	$	27.5		$	—		$	0.2		$	0.7		$	28.4

Accrued restructuring charges at June 30, 2013 are expected to result in cash expenditures funded from cash provided by operations of approximately $23 million in fiscal 2014 and $5 million in fiscal 2015.

Total Returns and Other Charges Associated with Restructuring Activities

The following table presents total returns and charges associated with restructuring and other activities related to the Program:

	Year Ended June 30
(In millions)	2013		2012		2011
Sales returns (included in Net Sales)	$	1.5	$	2.1	$	4.6
Cost of sales	1.2		1.5		5.8
Restructuring charges	14.6		53.6		41.1
Other charges	0.5		6.0		7.9
Total charges associated with restructuring activities	$	17.8	$	63.2	$	59.4

During fiscal 2013, the Company recorded $1.5 million reflecting sales returns (less related cost of sales of $0.2 million) and a write-off of inventory of $1.4 million associated with exiting unprofitable operations.

During fiscal 2012, the Company recorded $2.1 million reflecting sales returns (less related cost of sales of $0.3 million) and a write-off of inventory of $1.8 million associated with exiting unprofitable operations.

During fiscal 2011, the Company recorded $4.6 million reflecting sales returns (less related cost of sales of $1.2 million) and a write-off of inventory of $7.0 million associated with turnaround operations, primarily related to the reformulation of Ojon brand products.

Other charges in connection with the implementation of the Program primarily relate to consulting and other professional services.