Restructuring and Other Charges

A description of significant restructuring and other activities and related costs is included below.

Way Forward Plan

On June 2, 2016, the Company's Board of Directors approved a restructuring plan with the objective of delivering sustainable, profitable sales growth and long-term value creation for shareholders (the "Way Forward Plan"). The Company plans to refocus on its core brands and evolve its product, marketing, and shopping experience to increase desirability and relevance. It also intends to evolve its operating model to enable sustainable, profitable sales growth by significantly reducing supply chain lead times, improving its sourcing, and executing a disciplined multi-channel distribution and expansion strategy. As part of the Way Forward Plan, the Company plans to rightsize its cost structure and implement a return on investment-driven financial model to free up resources to invest in the brand and drive high-quality sales. The Way Forward Plan includes strengthening the Company's leadership team and creating a more nimble organization by moving from an average of nine to six layers of management. The Way Forward Plan will result in a reduction in workforce and the closure of certain stores, and is expected to be substantially completed by the end of Fiscal 2017.

In connection with the Way Forward Plan, the Company currently expects to incur total estimated charges of approximately $400 million, comprised of cash-related restructuring charges of approximately $300 million and non-cash charges of approximately $100 million. The Company also expects to incur an additional non-cash charge of up to $150 million associated with the reduction of inventory out of current liquidation channels in line with its Way Forward Plan. The Company's assessment of restructuring-related activities is still ongoing and incremental charges beyond this range may be incurred.

In addition to the Way Forward Plan, the Company also expects to incur total estimated charges of approximately $20 million over the course of the fourth quarter of Fiscal 2017 and the first quarter of the Company's fiscal year ending March 31, 2018 ("Fiscal 2018") in connection with the planned departure of the Company's Chief Executive Officer (see Note 19).

A summary of the charges recorded in connection with the Way Forward Plan during the three-month and nine-month periods ended December 31, 2016 is as follows:



	December 31, 2016
	Three Months Ended		Nine Months Ended
	(millions)
Cash-related restructuring charges:
Severance and benefit costs	$	14	$	116
Lease termination and store closure costs	49		64
Other cash charges	3		9
Total cash-related restructuring charges	66		189
Non-cash charges:
Impairment of assets (see Note 7)	11		57
Inventory-related charges^(a)	14		149
Total non-cash charges	25		206
Total charges	$	91	$	395


^(a)	Includes charges of $11 million and $125 million associated with the reduction of inventory out of current liquidation channels for the three-month and nine-month periods ended December 31, 2016, respectively. Inventory-related charges are recorded within cost of goods sold in the consolidated statements of operations.

A summary of the activity in the restructuring reserve related to the Way Forward Plan is as follows:



	Severance and Benefit Costs			Lease Termination and Store Closure Costs			Other Cash Charges			Total
	(millions)
Balance at April 2, 2016	$	—		$	—		$	—		$	—
Additions charged to expense	116			64			9			189
Cash payments charged against reserve	(65		)	(50		)	(7		)	(122		)
Foreign currency translation	(1		)	(1		)	—			(2		)
Balance at December 31, 2016	$	50		$	13		$	2		$	65

Global Reorganization Plan

On May 12, 2015, the Company's Board of Directors approved a reorganization and restructuring plan comprised of the following major actions: (i) the reorganization of the Company from its historical channel and regional structure to an integrated global brand-based operating structure, which will streamline the Company's business processes to better align its cost structure with its long-term growth strategy; (ii) a strategic store and shop-within-shop performance review conducted by region and brand; (iii) a targeted corporate functional area review; and (iv) the consolidation of certain of the Company's luxury lines (collectively, the "Global Reorganization Plan"). Actions associated with the Global Reorganization Plan resulted in a reduction in workforce and the closure of certain stores and shop-within-shops.

A summary of the charges recorded in connection with the Global Reorganization Plan during the three-month and nine-month periods ended December 31, 2016 and December 26, 2015, as well as the cumulative charges recorded since its inception, is as follows:



	Three Months Ended				Nine Months Ended
	December 31, 2016		December 26, 2015		December 31, 2016		December 26, 2015		Cumulative Charges
	(millions)
Cash-related restructuring charges:
Severance and benefit costs	$	—	$	11	$	5	$	49	$	69
Lease termination and store closure costs	—		—		—		7		8
Other cash charges^(a)	—		3		—		11		14
Total cash-related restructuring charges	—		14		5		67		91
Non-cash charges:
Impairment of assets (see Note 7)	—		9		—		24		27
Accelerated stock-based compensation expense^(b)	—		9		—		9		9
Inventory-related charges^(c)	—		10		—		13		20
Total non-cash charges	—		28		—		46		56
Total charges	$	—	$	42	$	5	$	113	$	147


^(a)	Other cash charges primarily consisted of consulting fees recorded in connection with the Global Reorganization Plan.


^(b)	Accelerated stock-based compensation expense, which is recorded within restructuring and other charges in the consolidated statements of operations, was recorded in connection with vesting provisions associated with certain separation agreements.


^(c)	Inventory-related charges are recorded within cost of goods sold in the consolidated statements of operations.

Actions associated with the Global Reorganization Plan are now complete and no additional charges are expected to be incurred in relation to this plan.

A summary of current period activity in the restructuring reserve related to the Global Reorganization Plan is as follows:



	Severance and Benefit Costs			Lease Termination and Store Closure Costs			Other Cash Charges			Total
	(millions)
Balance at April 2, 2016	$	31		$	6		$	3		$	40
Additions charged to expense	5			—			—			5
Cash payments charged against reserve	(21		)	(2		)	(2		)	(25		)
Balance at December 31, 2016	$	15		$	4		$	1		$	20

Other Charges

During both the three-month and nine-month periods ended December 26, 2015, the Company recorded other charges of $34 million related to its pending customs audit (see Note 13). Additionally, during the three-month and nine-month periods ended December 26, 2015, the Company recorded other charges of $1 million and $13 million, respectively, primarily related to the settlement of certain litigation claims.