Status of Burberry License:

In December 2011, the Company and Burberry began discussions regarding the potential establishment of a new operating structure for the Burberry fragrance and beauty business. On July 16, 2012, while discussions were still underway, Burberry exercised its option to buy out the license rights effective December 31, 2012. On July 26, 2012, discussions with Burberry on the creation of a new operating model were discontinued as we were unable to agree on final terms. On October 11, 2012 the Company and Burberry entered into a transition agreement in order to facilitate a smooth transition. The transition agreement provides for an extension of certain license rights and obligations for an additional three months period ending on March 31, 2013. The Company will continue to operate certain aspects of the business for the brand including product development, testing, and distribution. The transition agreement also provides for non-exclusivity for manufacturing, a cap on sales of Burberry products, a reduced advertising requirement and no minimum royalty amounts.

The transition agreement confirms that the exit payment of €181 million (approximately $230 million at current exchange rates excluding receivables, inventories and other tangible assets), will be made by December 31, 2012, subject to the Company's continued compliance with the provisions of the existing license agreement. Accounts receivables will be collected in the ordinary course of business and it is anticipated that inventories at March 31, 2013 will be less than €15 million in the aggregate. Burberry has agreed to purchase, at cost, all Burberry Beauty finished goods subject to a €3 million maximum, and all Burberry fragrance and Burberry Beauty raw materials and components subject to a €5 million maximum. The Company will have until June 30, 2013 to sell-off any remaining inventory not purchased by Burberry and no loss is anticipated in connection with the sell-off of inventories.

At December 31, 2012, intangible assets are expected to include approximately €4 million, net of deferred taxes, which are to be written off against the gain on sale of assets. In addition, Burberry has agreed to buy all tangible assets related to the license at 50% of book value and the expected loss on the sale of tangible assets of approximately €3 million together with approximately €2 million of other negotiated settlements between the Company and Burberry will also be written off against the gain on sale of assets.