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## Restructuring and Special Charges 

During the fourth quarter of fiscal 2002, we recorded charges for a restructuring related to repositioning cer- tain businesses as part of our ongoing efforts to drive long-term growth and increase profitability. The restruc- turing focused on cost reduction opportunities related to the Internet, our supply chain, globalization of the organ- ization and distribution channel refinements. We commit- ted to a defined plan of action, which resulted in an aggregate pre-tax charge of $117.4 million, of which $59.4 million is cash related. On an after-tax basis, the aggregate charge was $76.9 million, equal to $.32 per diluted share. 

Specifically, the charge included the following: 

• Internet. In an effort to achieve strategic objectives, reduce costs and improve profitability, we outsourced Gloss.com platform development and maintenance efforts to a third-party provider. Additionally,Gloss.com closed its San Francisco facility and consolidated its operations in New York. As a result, included in the charge was a $23.9 million provision for restructuring the Gloss.com operations, including benefits and sever- ance packages for 36 employees as well as asset write- offs. We also took a $20.1 million charge to write off the related Gloss.com acquisition goodwill. 

• Supply Chain. Building on previously announced supply chain initiatives, we restructured certain manufacturing, distribution, research and development, information sys- tems and quality assurance operations in the United States, Canada and Europe, which included benefits and severance for 110 employees. A charge of $23.7 million was recorded related to this effort. 

• Globalization of Organization. We continued to imple- ment our transition, announced in fiscal 2001, to a global brand structure designed to streamline the decision-making process and increase innovation and speed-to-market. The next phase of this transition entailed eliminating duplicate functions and responsi- bilities, which resulted in charges for benefits and sever- ance for 122 employees. We recorded a charge of $27.1 million associated with these efforts. 

• Distribution. We evaluated areas of distribution relative to our financial targets and decided to focus our resources on the most productive sales channels and markets. As a result, we closed our operations in Argentina and the remaining customers are being serviced by our Chilean affiliate. We began to close all remaining in-store “tommy’s shops” and we identified for closing other select points of distribution. We recorded a $22.6 mil- lion provision related to these actions, which included benefits and severance for 85 employees. 

Following is a summary of the charges as recorded in the consolidated statement of earnings for fiscal 2002: 

<img src='content_image/54964.jpg'>

The restructuring charge was recorded in other accrued liabilities or, where applicable, as a reduction of the related asset. During fiscal 2002, $9.3 million related to this restructuring was paid. We expected to, and did, settle a majority of the remaining obligations by the end of fiscal 2003 with certain additional payments to be made ratably through fiscal 2006. 

During the fourth quarter of fiscal 2001, we recorded charges for restructuring and special charges related to repositioning certain businesses as part of our ongoing efforts to drive long-term growth and increase profit- 

ability. The restructuring and special charges focused on four areas: product fixtures for the jane brand; in-store “tommy’s shops”; information systems and other assets; and global brand reorganization. We committed to a defined plan of action, which resulted in an aggregate pre-tax charge of $63.0 million, of which $35.9 million is cash related. On an after-tax basis, the aggregate charge was $40.3 million, equal to $.17 per diluted share. As of June 30, 2003, the remaining obligation was $2.6 million with payments expected to be made ratably through fiscal 2004. 

