Document
false--06-27Q1202000011161321500000010000000440000019000000.33750.010.01100000000010000000002868000002759000002868000002759000000.00250.00300.0050.00350.030.041250.04250.010.01250000002500000000 0001116132 2019-06-30 2019-09-28 0001116132 us-gaap:PerformanceSharesMember 2019-06-30 2019-09-28 0001116132 tpr:ServiceBasedRestrictedStockUnitsMember 2019-06-30 2019-09-28 0001116132 2019-10-25 0001116132 2019-06-29 0001116132 2019-09-28 0001116132 2018-07-01 2018-09-29 0001116132 2018-06-30 0001116132 2018-09-29 0001116132 2019-06-30 0001116132 us-gaap:AccountingStandardsUpdate201602Member 2019-06-30 0001116132 us-gaap:AccountingStandardsUpdate201811Member 2019-06-30 2019-06-30 0001116132 us-gaap:AccountingStandardsUpdate201811Member 2019-06-30 0001116132 tpr:LicensingBusinessMember us-gaap:SalesRevenueNetMember 2019-06-30 2019-09-28 0001116132 srt:MinimumMember 2019-06-30 2019-09-28 0001116132 srt:MaximumMember 2019-06-30 2019-09-28 0001116132 tpr:GreaterChinaMember tpr:KateSpadeCompanyMember 2019-06-30 2019-09-28 0001116132 tpr:GreaterChinaMember 2019-06-30 2019-09-28 0001116132 srt:NorthAmericaMember tpr:KateSpadeCompanyMember 2018-07-01 2018-09-29 0001116132 tpr:CoachSegmentMember 2019-06-30 2019-09-28 0001116132 tpr:StuartWeitzmanMember 2019-06-30 2019-09-28 0001116132 tpr:OtherAsiaMember 2019-06-30 2019-09-28 0001116132 us-gaap:NonUsMember tpr:CoachSegmentMember 2018-07-01 2018-09-29 0001116132 tpr:KateSpadeCompanyMember 2018-07-01 2018-09-29 0001116132 tpr:OtherAsiaMember tpr:KateSpadeCompanyMember 2019-06-30 2019-09-28 0001116132 tpr:OtherAsiaMember tpr:StuartWeitzmanMember 2018-07-01 2018-09-29 0001116132 tpr:OtherAsiaMember tpr:CoachSegmentMember 2019-06-30 2019-09-28 0001116132 us-gaap:NonUsMember tpr:CoachSegmentMember 2019-06-30 2019-09-28 0001116132 us-gaap:NonUsMember tpr:KateSpadeCompanyMember 2019-06-30 2019-09-28 0001116132 tpr:GreaterChinaMember tpr:StuartWeitzmanMember 2019-06-30 2019-09-28 0001116132 srt:NorthAmericaMember 2018-07-01 2018-09-29 0001116132 srt:NorthAmericaMember tpr:StuartWeitzmanMember 2018-07-01 2018-09-29 0001116132 srt:NorthAmericaMember tpr:KateSpadeCompanyMember 2019-06-30 2019-09-28 0001116132 tpr:KateSpadeCompanyMember 2019-06-30 2019-09-28 0001116132 tpr:OtherAsiaMember tpr:StuartWeitzmanMember 2019-06-30 2019-09-28 0001116132 srt:NorthAmericaMember 2019-06-30 2019-09-28 0001116132 us-gaap:NonUsMember tpr:StuartWeitzmanMember 2018-07-01 2018-09-29 0001116132 us-gaap:NonUsMember tpr:KateSpadeCompanyMember 2018-07-01 2018-09-29 0001116132 srt:NorthAmericaMember tpr:CoachSegmentMember 2018-07-01 2018-09-29 0001116132 tpr:OtherAsiaMember 2018-07-01 2018-09-29 0001116132 tpr:OtherAsiaMember tpr:CoachSegmentMember 2018-07-01 2018-09-29 0001116132 tpr:StuartWeitzmanMember 2018-07-01 2018-09-29 0001116132 srt:NorthAmericaMember tpr:CoachSegmentMember 2019-06-30 2019-09-28 0001116132 tpr:OtherAsiaMember tpr:KateSpadeCompanyMember 2018-07-01 2018-09-29 0001116132 tpr:GreaterChinaMember tpr:CoachSegmentMember 2019-06-30 2019-09-28 0001116132 us-gaap:NonUsMember 2019-06-30 2019-09-28 0001116132 tpr:GreaterChinaMember 2018-07-01 2018-09-29 0001116132 us-gaap:NonUsMember 2018-07-01 2018-09-29 0001116132 us-gaap:NonUsMember tpr:StuartWeitzmanMember 2019-06-30 2019-09-28 0001116132 tpr:GreaterChinaMember tpr:CoachSegmentMember 2018-07-01 2018-09-29 0001116132 tpr:GreaterChinaMember tpr:StuartWeitzmanMember 2018-07-01 2018-09-29 0001116132 tpr:GreaterChinaMember tpr:KateSpadeCompanyMember 2018-07-01 2018-09-29 0001116132 srt:NorthAmericaMember tpr:StuartWeitzmanMember 2019-06-30 2019-09-28 0001116132 tpr:CoachSegmentMember 2018-07-01 2018-09-29 0001116132 tpr:KateSpadeCompanyMember tpr:NoncashChargesRelatedtoInventoryOrganizationCostsPurchaseAccountingAdjustmentsandAssetWriteOffsMember 2019-06-30 2019-09-28 0001116132 us-gaap:CorporateNonSegmentMember tpr:KateSpadeCompanyMember us-gaap:SellingGeneralAndAdministrativeExpensesMember 2019-06-30 2019-09-28 0001116132 tpr:KateSpadeCompanyMember us-gaap:SellingGeneralAndAdministrativeExpensesMember tpr:StuartWeitzmanSegmentMember 2019-06-30 2019-09-28 0001116132 tpr:KateSpadeCompanyMember us-gaap:SellingGeneralAndAdministrativeExpensesMember tpr:KateSpadeCompanyMember 2019-06-30 2019-09-28 0001116132 tpr:KateSpadeCompanyMember us-gaap:CostOfSalesMember 2019-06-30 2019-09-28 0001116132 tpr:KateSpadeCompanyMember us-gaap:CostOfSalesMember tpr:StuartWeitzmanSegmentMember 2019-06-30 2019-09-28 0001116132 us-gaap:SellingGeneralAndAdministrativeExpensesMember 2018-07-01 2018-09-29 0001116132 us-gaap:CostOfSalesMember tpr:KateSpadeCompanyMember 2018-07-01 2018-09-29 0001116132 us-gaap:SellingGeneralAndAdministrativeExpensesMember tpr:StuartWeitzmanSegmentMember 2018-07-01 2018-09-29 0001116132 tpr:KateSpadeCompanyMember us-gaap:SellingGeneralAndAdministrativeExpensesMember 2019-06-30 2019-09-28 0001116132 tpr:KateSpadeCompanyMember us-gaap:CostOfSalesMember tpr:KateSpadeCompanyMember 2019-06-30 2019-09-28 0001116132 tpr:NoncashChargesRelatedtoInventoryOrganizationCostsPurchaseAccountingAdjustmentsandAssetWriteOffsMember 2018-07-01 2018-09-29 0001116132 tpr:KateSpadeCompanyMember us-gaap:SellingGeneralAndAdministrativeExpensesMember tpr:CoachSegmentMember 2019-06-30 2019-09-28 0001116132 us-gaap:CorporateNonSegmentMember us-gaap:SellingGeneralAndAdministrativeExpensesMember 2018-07-01 2018-09-29 0001116132 tpr:KateSpadeCompanyMember 2019-06-30 2019-09-28 0001116132 tpr:KateSpadeCompanyMember us-gaap:CostOfSalesMember tpr:CoachSegmentMember 2019-06-30 2019-09-28 0001116132 us-gaap:CostOfSalesMember 2018-07-01 2018-09-29 0001116132 us-gaap:CostOfSalesMember tpr:CoachSegmentMember 2018-07-01 2018-09-29 0001116132 us-gaap:SellingGeneralAndAdministrativeExpensesMember tpr:KateSpadeCompanyMember 2018-07-01 2018-09-29 0001116132 tpr:ContractualPaymentsMember 2019-06-30 2019-09-28 0001116132 tpr:OtherIntegrationChargesMember 2018-07-01 2018-09-29 0001116132 tpr:PurchaseAccountingAdjustmentsMember 2019-06-30 2019-09-28 0001116132 tpr:InventoryRelatedChargesNettingMemberMember 2018-07-01 2018-09-29 0001116132 tpr:ContractualPaymentsMember 2018-07-01 2018-09-29 0001116132 tpr:InventoryRelatedChargesNettingMemberMember 2019-06-30 2019-09-28 0001116132 tpr:PurchaseAccountingAdjustmentsMember 2018-07-01 2018-09-29 0001116132 tpr:OtherIntegrationChargesMember 2019-06-30 2019-09-28 0001116132 srt:MaximumMember tpr:KateSpadeCompanyMember 2019-09-28 0001116132 srt:MinimumMember tpr:KateSpadeCompanyMember 2019-09-28 0001116132 tpr:DistributorAcquisitionsMember tpr:StuartWeitzmanMember 2019-06-29 0001116132 tpr:DistributorAcquisitionsMember 2018-07-01 2019-06-29 0001116132 tpr:DistributorAcquisitionsMember tpr:KateSpadeCompanyMember 2019-06-29 0001116132 tpr:DistributorAcquisitionsMember 2019-06-29 0001116132 srt:MinimumMember us-gaap:CustomerRelationshipsMember 2019-06-30 2019-09-28 0001116132 srt:MaximumMember us-gaap:CustomerRelationshipsMember 2019-06-30 2019-09-28 0001116132 us-gaap:LeaseAgreementsMember 2019-06-29 0001116132 us-gaap:TrademarksAndTradeNamesMember 2019-09-28 0001116132 us-gaap:CustomerRelationshipsMember 2019-09-28 0001116132 us-gaap:CustomerRelationshipsMember 2019-06-29 0001116132 us-gaap:TrademarksAndTradeNamesMember 2019-06-29 0001116132 us-gaap:LeaseAgreementsMember 2019-09-28 0001116132 tpr:KateSpadeCompanyMember 2019-09-28 0001116132 tpr:StuartWeitzmanIntermediateLLCMember 2019-09-28 0001116132 tpr:KateSpadeCompanyMember 2019-06-29 0001116132 tpr:StuartWeitzmanIntermediateLLCMember 2019-06-30 2019-09-28 0001116132 tpr:CoachSegmentMember 2019-09-28 0001116132 tpr:StuartWeitzmanIntermediateLLCMember 2019-06-29 0001116132 tpr:CoachSegmentMember 2019-06-29 0001116132 us-gaap:RetainedEarningsMember 2018-07-01 2018-09-29 0001116132 us-gaap:CommonStockMember 2019-09-28 0001116132 us-gaap:CommonStockMember 2018-09-29 0001116132 us-gaap:RetainedEarningsMember 2018-06-30 0001116132 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-07-01 2018-09-29 0001116132 us-gaap:AccountingStandardsUpdate201616Member 2018-07-01 0001116132 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-06-29 0001116132 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-09-28 0001116132 us-gaap:AdditionalPaidInCapitalMember 2018-07-01 2018-09-29 0001116132 us-gaap:RetainedEarningsMember 2019-09-28 0001116132 us-gaap:RetainedEarningsMember 2019-06-30 2019-09-28 0001116132 us-gaap:CommonStockMember 2019-06-30 2019-09-28 0001116132 us-gaap:RetainedEarningsMember 2018-09-29 0001116132 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-06-30 2019-09-28 0001116132 us-gaap:AccountingStandardsUpdate201616Member us-gaap:RetainedEarningsMember 2018-07-01 0001116132 us-gaap:CommonStockMember 2018-07-01 2018-09-29 0001116132 us-gaap:AccountingStandardsUpdate201616Member 2019-06-30 0001116132 us-gaap:AdditionalPaidInCapitalMember 2019-06-30 2019-09-28 0001116132 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-09-29 0001116132 us-gaap:AdditionalPaidInCapitalMember 2019-09-28 0001116132 us-gaap:AccountingStandardsUpdate201616Member us-gaap:RetainedEarningsMember 2019-06-30 0001116132 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-06-30 0001116132 us-gaap:AdditionalPaidInCapitalMember 2018-09-29 0001116132 us-gaap:AdditionalPaidInCapitalMember 2018-06-30 0001116132 us-gaap:AdditionalPaidInCapitalMember 2019-06-29 0001116132 us-gaap:CommonStockMember 2018-06-30 0001116132 us-gaap:CommonStockMember 2019-06-29 0001116132 us-gaap:RetainedEarningsMember 2019-06-29 0001116132 us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember 2019-06-30 2019-09-28 0001116132 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2019-06-30 2019-09-28 0001116132 us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember 2018-07-01 2018-09-29 0001116132 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2018-07-01 2018-09-29 0001116132 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2019-06-30 2019-09-28 0001116132 us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember 2019-09-28 0001116132 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2019-06-29 0001116132 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2019-06-29 0001116132 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2019-09-28 0001116132 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2018-09-29 0001116132 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2018-07-01 2018-09-29 0001116132 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2018-09-29 0001116132 us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember 2019-06-29 0001116132 us-gaap:AccumulatedTranslationAdjustmentMember 2019-06-29 0001116132 us-gaap:AccumulatedTranslationAdjustmentMember 2018-09-29 0001116132 us-gaap:AccumulatedTranslationAdjustmentMember 2018-07-01 2018-09-29 0001116132 us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember 2018-06-30 0001116132 us-gaap:AccumulatedTranslationAdjustmentMember 2019-06-30 2019-09-28 0001116132 us-gaap:AccumulatedTranslationAdjustmentMember 2018-06-30 0001116132 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2018-06-30 0001116132 us-gaap:AccumulatedTranslationAdjustmentMember 2019-09-28 0001116132 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2019-09-28 0001116132 us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember 2018-09-29 0001116132 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2018-06-30 0001116132 2017-07-02 2017-09-30 0001116132 us-gaap:CostOfSalesMember 2019-06-30 2019-09-28 0001116132 srt:MaximumMember 2019-09-28 2019-09-28 0001116132 srt:MaximumMember 2019-09-28 0001116132 srt:MinimumMember 2019-09-28 2019-09-28 0001116132 srt:MinimumMember 2019-09-28 0001116132 tpr:ServiceBasedRestrictedStockUnitsMember 2019-06-29 0001116132 tpr:ServiceBasedRestrictedStockUnitsMember 2019-09-28 0001116132 tpr:IntegrationMember 2019-06-30 2019-09-28 0001116132 us-gaap:EmployeeStockOptionMember 2018-07-01 2018-09-29 0001116132 tpr:IntegrationMember 2018-07-01 2018-09-29 0001116132 us-gaap:EmployeeStockOptionMember 2019-06-30 2019-09-28 0001116132 us-gaap:PerformanceSharesMember 2018-07-01 2018-09-29 0001116132 tpr:ServiceBasedRestrictedStockUnitsMember 2018-07-01 2018-09-29 0001116132 us-gaap:PerformanceSharesMember 2019-09-28 0001116132 us-gaap:PerformanceSharesMember 2019-06-29 0001116132 us-gaap:EmployeeStockOptionMember 2019-06-29 0001116132 us-gaap:EmployeeStockOptionMember 2019-09-28 0001116132 tpr:SeniorNotes4.250Member us-gaap:SeniorNotesMember 2019-09-28 0001116132 us-gaap:CapitalLeaseObligationsMember 2019-09-28 0001116132 tpr:SeniorNote3.000Member us-gaap:SeniorNotesMember 2019-06-29 0001116132 tpr:SeniorNote3.000Member us-gaap:SeniorNotesMember 2019-09-28 0001116132 tpr:SeniorNote4.125Member us-gaap:SeniorNotesMember 2019-06-29 0001116132 tpr:SeniorNote4.125Member us-gaap:SeniorNotesMember 2019-09-28 0001116132 us-gaap:CapitalLeaseObligationsMember 2019-06-29 0001116132 tpr:NotePayableMember 2019-09-28 0001116132 tpr:NotePayableMember 2019-06-29 0001116132 tpr:SeniorNotes4.250Member us-gaap:SeniorNotesMember 2019-06-29 0001116132 tpr:SeniorNotes4.250Member us-gaap:SeniorNotesMember 2015-03-02 0001116132 tpr:SeniorNote4.125Member us-gaap:SeniorNotesMember 2017-06-20 0001116132 us-gaap:RevolvingCreditFacilityMember tpr:RevolvingFacilityMember us-gaap:LondonInterbankOfferedRateLIBORMember 2019-06-30 2019-09-28 0001116132 tpr:SeniorNotes4.250Member us-gaap:SeniorNotesMember 2015-03-02 2015-03-02 0001116132 tpr:SeniorNote3.000Member us-gaap:FairValueInputsLevel2Member us-gaap:SeniorNotesMember 2019-09-28 0001116132 tpr:KateSpadeJointVenturesMember us-gaap:CorporateJointVentureMember 2019-09-28 0001116132 us-gaap:RevolvingCreditFacilityMember tpr:RevolvingFacilityMember 2017-05-30 0001116132 tpr:SeniorNotes4.250Member us-gaap:FairValueInputsLevel2Member us-gaap:SeniorNotesMember 2019-06-29 0001116132 tpr:SeniorNote3.000Member us-gaap:SeniorNotesMember 2017-06-20 0001116132 tpr:SeniorNote3.000Member us-gaap:SeniorNotesMember 2017-06-20 2017-06-20 0001116132 us-gaap:RevolvingCreditFacilityMember tpr:NewRevolvingCreditFacilityMember us-gaap:SubsequentEventMember 2019-10-24 0001116132 tpr:SeniorNote4.125Member us-gaap:SeniorNotesMember 2017-06-20 2017-06-20 0001116132 tpr:KateSpadeJointVenturesMember us-gaap:CorporateJointVentureMember 2019-06-29 0001116132 us-gaap:RevolvingCreditFacilityMember tpr:RevolvingFacilityMember 2019-09-28 0001116132 tpr:SeniorNotes4.250Member us-gaap:FairValueInputsLevel2Member us-gaap:SeniorNotesMember 2019-09-28 0001116132 tpr:SeniorNote4.125Member us-gaap:FairValueInputsLevel2Member us-gaap:SeniorNotesMember 2019-09-28 0001116132 tpr:SeniorNote3.000Member us-gaap:FairValueInputsLevel2Member us-gaap:SeniorNotesMember 2019-06-29 0001116132 tpr:SeniorNote4.125Member us-gaap:FairValueInputsLevel2Member us-gaap:SeniorNotesMember 2019-06-29 0001116132 tpr:SeniorNote4.125Member us-gaap:SeniorNotesMember tpr:AdjustedTreasuryRateMember 2017-06-20 2017-06-20 0001116132 tpr:SeniorNote3.000Member us-gaap:SeniorNotesMember tpr:AdjustedTreasuryRateMember 2017-06-20 2017-06-20 0001116132 us-gaap:RevolvingCreditFacilityMember tpr:RevolvingFacilityMember us-gaap:FederalFundsEffectiveSwapRateMember 2017-05-30 2017-05-30 0001116132 tpr:SeniorNotes4.250Member us-gaap:SeniorNotesMember tpr:AdjustedTreasuryRateMember 2019-06-30 2019-09-28 0001116132 us-gaap:FairValueInputsLevel2Member us-gaap:USTreasuryAndGovernmentMember us-gaap:ShortTermInvestmentsMember 2019-09-28 0001116132 us-gaap:FairValueInputsLevel2Member tpr:InventoryrelatedHedgesMember 2019-06-29 0001116132 us-gaap:FairValueInputsLevel1Member us-gaap:CommercialPaperMember us-gaap:ShortTermInvestmentsMember 2019-06-29 0001116132 us-gaap:FairValueInputsLevel2Member tpr:IntercompanyLoanandPayablesHedgesMember 2019-06-29 0001116132 us-gaap:FairValueInputsLevel2Member 2019-09-28 0001116132 us-gaap:FairValueInputsLevel1Member us-gaap:ForeignCorporateDebtSecuritiesMember us-gaap:ShortTermInvestmentsMember 2019-06-29 0001116132 us-gaap:FairValueInputsLevel2Member us-gaap:CommercialPaperMember us-gaap:ShortTermInvestmentsMember 2019-06-29 0001116132 us-gaap:FairValueInputsLevel2Member us-gaap:OtherInvestmentsMember us-gaap:OtherLongTermInvestmentsMember 2019-09-28 0001116132 us-gaap:FairValueInputsLevel1Member us-gaap:OtherInvestmentsMember us-gaap:OtherLongTermInvestmentsMember 2019-06-29 0001116132 us-gaap:FairValueInputsLevel2Member us-gaap:DomesticCorporateDebtSecuritiesMember us-gaap:ShortTermInvestmentsMember 2019-09-28 0001116132 us-gaap:FairValueInputsLevel1Member tpr:IntercompanyLoanandPayablesHedgesMember 2019-09-28 0001116132 us-gaap:FairValueInputsLevel1Member 2019-06-29 0001116132 us-gaap:FairValueInputsLevel1Member us-gaap:OtherInvestmentsMember us-gaap:ShortTermInvestmentsMember 2019-09-28 0001116132 us-gaap:FairValueInputsLevel1Member us-gaap:USTreasuryAndGovernmentMember us-gaap:ShortTermInvestmentsMember 2019-06-29 0001116132 us-gaap:FairValueInputsLevel2Member us-gaap:OtherInvestmentsMember us-gaap:OtherLongTermInvestmentsMember 2019-06-29 0001116132 us-gaap:FairValueInputsLevel1Member us-gaap:BankTimeDepositsMember us-gaap:ShortTermInvestmentsMember 2019-06-29 0001116132 us-gaap:FairValueInputsLevel1Member tpr:InventoryrelatedHedgesMember 2019-06-29 0001116132 us-gaap:FairValueInputsLevel2Member us-gaap:USTreasuryAndGovernmentMember us-gaap:ShortTermInvestmentsMember 2019-06-29 0001116132 us-gaap:FairValueInputsLevel2Member tpr:InventoryrelatedHedgesMember 2019-09-28 0001116132 us-gaap:FairValueInputsLevel1Member tpr:IntercompanyLoanandPayablesHedgesMember 2019-06-29 0001116132 us-gaap:FairValueInputsLevel2Member tpr:IntercompanyLoanandPayablesHedgesMember 2019-09-28 0001116132 us-gaap:FairValueInputsLevel1Member us-gaap:CommercialPaperMember us-gaap:ShortTermInvestmentsMember 2019-09-28 0001116132 us-gaap:FairValueInputsLevel2Member us-gaap:ForeignCorporateDebtSecuritiesMember us-gaap:ShortTermInvestmentsMember 2019-09-28 0001116132 us-gaap:FairValueInputsLevel2Member us-gaap:ForeignCorporateDebtSecuritiesMember us-gaap:ShortTermInvestmentsMember 2019-06-29 0001116132 us-gaap:FairValueInputsLevel2Member us-gaap:OtherInvestmentsMember us-gaap:ShortTermInvestmentsMember 2019-06-29 0001116132 us-gaap:FairValueInputsLevel1Member us-gaap:DomesticCorporateDebtSecuritiesMember us-gaap:ShortTermInvestmentsMember 2019-06-29 0001116132 us-gaap:FairValueInputsLevel1Member us-gaap:ForeignCorporateDebtSecuritiesMember us-gaap:ShortTermInvestmentsMember 2019-09-28 0001116132 us-gaap:FairValueInputsLevel1Member us-gaap:DomesticCorporateDebtSecuritiesMember us-gaap:ShortTermInvestmentsMember 2019-09-28 0001116132 us-gaap:FairValueInputsLevel1Member us-gaap:BankTimeDepositsMember us-gaap:ShortTermInvestmentsMember 2019-09-28 0001116132 us-gaap:FairValueInputsLevel2Member us-gaap:CommercialPaperMember us-gaap:ShortTermInvestmentsMember 2019-09-28 0001116132 us-gaap:FairValueInputsLevel1Member us-gaap:OtherInvestmentsMember us-gaap:ShortTermInvestmentsMember 2019-06-29 0001116132 us-gaap:FairValueInputsLevel2Member us-gaap:OtherInvestmentsMember us-gaap:ShortTermInvestmentsMember 2019-09-28 0001116132 us-gaap:FairValueInputsLevel2Member us-gaap:BankTimeDepositsMember us-gaap:ShortTermInvestmentsMember 2019-06-29 0001116132 us-gaap:FairValueInputsLevel2Member 2019-06-29 0001116132 us-gaap:FairValueInputsLevel1Member 2019-09-28 0001116132 us-gaap:FairValueInputsLevel2Member us-gaap:BankTimeDepositsMember us-gaap:ShortTermInvestmentsMember 2019-09-28 0001116132 us-gaap:FairValueInputsLevel2Member us-gaap:DomesticCorporateDebtSecuritiesMember us-gaap:ShortTermInvestmentsMember 2019-06-29 0001116132 us-gaap:FairValueInputsLevel1Member us-gaap:OtherInvestmentsMember us-gaap:OtherLongTermInvestmentsMember 2019-09-28 0001116132 us-gaap:FairValueInputsLevel1Member tpr:InventoryrelatedHedgesMember 2019-09-28 0001116132 us-gaap:FairValueInputsLevel1Member us-gaap:USTreasuryAndGovernmentMember us-gaap:ShortTermInvestmentsMember 2019-09-28 0001116132 us-gaap:FairValueInputsLevel3Member tpr:StoreAssetsMember 2019-09-28 0001116132 us-gaap:FairValueInputsLevel3Member tpr:StoreAssetsMember 2019-06-30 2019-09-28 0001116132 us-gaap:FairValueInputsLevel3Member tpr:OperatingLeaseRightofuseAssetsMember 2019-06-30 2019-09-28 0001116132 us-gaap:FairValueInputsLevel3Member 2019-09-28 0001116132 us-gaap:CommercialPaperMember 2019-06-29 0001116132 us-gaap:CommercialPaperMember 2019-09-28 0001116132 us-gaap:ForeignCorporateDebtSecuritiesMember 2019-06-29 0001116132 us-gaap:BankTimeDepositsMember 2019-09-28 0001116132 us-gaap:USGovernmentAgenciesDebtSecuritiesMember 2019-09-28 0001116132 us-gaap:DomesticCorporateDebtSecuritiesMember 2019-09-28 0001116132 us-gaap:DomesticCorporateDebtSecuritiesMember 2019-06-29 0001116132 us-gaap:USGovernmentAgenciesDebtSecuritiesMember 2019-06-29 0001116132 us-gaap:BankTimeDepositsMember 2019-06-29 0001116132 us-gaap:ForeignCorporateDebtSecuritiesMember 2019-09-28 0001116132 us-gaap:CorporateNonSegmentMember 2018-07-01 2018-09-29 0001116132 us-gaap:OperatingSegmentsMember tpr:CoachSegmentMember 2018-07-01 2018-09-29 0001116132 us-gaap:OperatingSegmentsMember tpr:KateSpadeCompanyMember 2019-06-30 2019-09-28 0001116132 us-gaap:OperatingSegmentsMember tpr:CoachSegmentMember 2019-06-30 2019-09-28 0001116132 us-gaap:OperatingSegmentsMember tpr:StuartWeitzmanSegmentMember 2018-07-01 2018-09-29 0001116132 us-gaap:OperatingSegmentsMember tpr:KateSpadeCompanyMember 2018-07-01 2018-09-29 0001116132 us-gaap:CorporateNonSegmentMember 2019-06-30 2019-09-28 0001116132 us-gaap:OperatingSegmentsMember tpr:StuartWeitzmanSegmentMember 2019-06-30 2019-09-28 0001116132 tpr:StuartWeitzmanSegmentMember 2019-06-30 2019-09-28 xbrli:shares xbrli:pure iso4217:USD iso4217:USD xbrli:shares tpr:segment


 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
 
          QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
For the Quarterly Period Ended September 28, 2019
or 
          TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
Commission file number: 1-16153
 
Tapestry, Inc.
(Exact name of registrant as specified in its charter)
Maryland
 
52-2242751
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)

10 Hudson Yards, New York, NY 10001
(Address of principal executive offices); (Zip Code) 
(212) 946-8400
(Registrant’s telephone number, including area code) 
 
 
Title of Each Class
 
Trading Symbol
 
Name of Each Exchange on which Registered
Common Stock, par value $.01 per share
 
TPR
 
New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
 
Accelerated filer
 
Non-accelerated filer
 
Smaller reporting company
Emerging growth company
 
 
 
 
 
 
 
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No
On October 25, 2019, the Registrant had 275,935,645 outstanding shares of common stock, which is the Registrant’s only class of common stock.
 





TAPESTRY, INC.
INDEX
 
 
 
Page Number
PART I – FINANCIAL INFORMATION (unaudited)
 
 
 
ITEM 1.
Financial Statements:
 
 
 
 
 
 
ITEM 2.
ITEM 3.
ITEM 4.
PART II – OTHER INFORMATION
ITEM 1.
ITEM 1A.
ITEM 2.
ITEM 4.
ITEM 6.
 

 




In this Form 10-Q, references to “we,” “our,” “us,” "Tapestry" and the “Company” refer to Tapestry, Inc., including consolidated subsidiaries. References to "Coach," "Kate Spade," "kate spade new york" or "Stuart Weitzman" refer only to the referenced brand.
SPECIAL NOTE ON FORWARD-LOOKING INFORMATION
This document, and the documents incorporated by reference in this document, in our press releases and in oral statements made from time to time by us or on our behalf, contain certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, and are based on management’s current expectations, that involve risks and uncertainties that could cause our actual results to differ materially from our current expectations. These forward-looking statements can be identified by the use of forward-looking terminology such as "believes," "may," "will," "should," "expect," "confidence," "trends," "intend," "estimate," "on track," "are positioned to," "on course," "opportunity," "continue," "project," "guidance," "target," "forecast," "anticipated," "plan," "potential," the negative of these terms or comparable terms. The Company's actual results could differ materially from the results contemplated by these forward-looking statements and are subject to a number of risks, uncertainties, estimates and assumptions that may cause actual results to differ materially from current expectations due to a number of important factors, including but not limited to: (i) our ability to achieve intended benefits, cost savings and synergies from acquisitions; (ii) our ability to upgrade our information technology systems precisely and efficiently; (iii) our ability to successfully execute our Enterprise Resource Planning (ERP) implementation and growth strategies, including our efforts to expand internationally into a global house of lifestyle brands; (iv) the risks associated with potential changes to international trade agreements and the imposition of additional duties on importing our products; (v) our exposure to international risks, including currency fluctuations and changes in economic or political conditions in the markets where we sell or source our products; (vi) the effect of existing and new competition in the marketplace; (vii) our ability to retain the value of our brands and to respond to changing fashion and retail trends in a timely manner; (viii) our ability to control costs; (ix) the effect of seasonal and quarterly fluctuations on our sales or operating results; (x) our ability to protect against infringement of our trademarks and other proprietary rights; (xi) the risk of cyber security threats and privacy or data security breaches; (xii) the impact of tax legislation; and (xiii) such other risk factors as set forth in Part II, Item 1A. "Risk Factors" and elsewhere in this report and in the Company’s Annual Report on Form 10-K for the fiscal year ended June 29, 2019. The Company assumes no obligation to revise or update any such forward-looking statements for any reason, except as required by law.
 WHERE YOU CAN FIND MORE INFORMATION
Tapestry's quarterly financial results and other important information are available by calling the Investor Relations Department at (212) 629-2618.
Tapestry maintains its website at www.tapestry.com where investors and other interested parties may obtain, free of charge, press releases and other information as well as gain access to our periodic filings with the SEC.



 






TAPESTRY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS

 
September 28,
2019
 
June 29,
2019
 
(millions)
 
(unaudited)
ASSETS
 

 
 

Current Assets:
 

 
 

Cash and cash equivalents
$
522.1

 
$
969.2

Short-term investments
266.3

 
264.6

Trade accounts receivable, less allowances of $1.9 and $4.4, respectively
313.1

 
298.1

Inventories
880.2

 
778.3

Prepaid expenses
65.2

 
99.8

Income tax receivable
52.6

 
55.8

Other current assets
104.4

 
91.0

Total current assets
2,203.9

 
2,556.8

Property and equipment, net
889.3

 
938.8

Operating lease right-of-use assets
2,057.1

 

Goodwill
1,511.6

 
1,516.2

Intangible assets
1,651.5

 
1,711.9

Deferred income taxes
28.7

 
19.4

Other assets
108.0

 
134.2

Total assets
$
8,450.1

 
$
6,877.3

LIABILITIES AND STOCKHOLDERS' EQUITY
 

 
 

Current Liabilities:
 

 
 

Accounts payable
$
254.3

 
$
243.6

Accrued liabilities
628.8

 
673.6

Current portion of operating lease liabilities
328.9

 

Current debt

 
0.8

Total current liabilities
1,212.0

 
918.0

Long-term debt
1,597.3

 
1,601.9

Long-term operating lease liabilities
1,965.4

 

Deferred income taxes
196.9

 
234.1

Long-term income taxes payable
152.9

 
155.9

Other liabilities
238.7

 
454.0

Total liabilities
5,363.2

 
3,363.9

 
 
 
 
See Note 15 on commitments and contingencies


 


 
 
 
 
Stockholders' Equity:
 

 
 

Preferred stock: (authorized 25.0 million shares; $0.01 par value per share) none issued

 

Common stock: (authorized 1.0 billion shares; $0.01 par value per share) issued and outstanding - 275.9 million and 286.8 million shares, respectively
2.8

 
2.9

Additional paid-in-capital
3,314.4

 
3,302.1

Retained earnings (accumulated deficit)
(134.3
)
 
291.6

Accumulated other comprehensive income (loss)
(96.0
)
 
(83.2
)
Total stockholders' equity
3,086.9

 
3,513.4

Total liabilities and stockholders' equity
$
8,450.1

 
$
6,877.3

 
See accompanying Notes.

1



TAPESTRY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 
 
Three Months Ended
 
September 28,
2019
 
September 29,
2018
 
(millions, except per share data)
 
(unaudited)
Net sales
$
1,357.9

 
$
1,381.2

Cost of sales
443.4

 
446.1

Gross profit
914.5

 
935.1

Selling, general and administrative expenses
862.9

 
772.8

Operating income
51.6

 
162.3

Interest expense, net
12.3

 
13.1

Other expense (income)
12.7

 
4.6

Income before provision for income taxes
26.6

 
144.6

Provision for income taxes
6.6

 
22.3

Net income
$
20.0

 
$
122.3

Net income per share:
 

 
 

Basic
$
0.07

 
$
0.42

Diluted
$
0.07

 
$
0.42

Shares used in computing net income per share:
 

 
 

Basic
284.4

 
288.8

Diluted
285.7

 
292.0

Cash dividends declared per common share
$
0.3375

 
$
0.3375

 
See accompanying Notes.
 

2



TAPESTRY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME (LOSS)
 
 
Three Months Ended
 
September 28,
2019
 
September 29,
2018
 
(millions)
 
(unaudited)
Net income
$
20.0

 
$
122.3

Other comprehensive income (loss), net of tax:
 

 
 

Unrealized gains (losses) on cash flow hedging derivatives, net
2.7

 
4.5

Foreign currency translation adjustments
(13.8
)
 
(9.8
)
Other
(1.7
)
 

Other comprehensive income (loss), net of tax
(12.8
)
 
(5.3
)
Comprehensive income
$
7.2

 
$
117.0

 
See accompanying Notes.


3



TAPESTRY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
Three Months Ended
 
September 28,
2019
 
September 29,
2018
 
(millions)
 
(unaudited)
CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES
 

 
 

Net income
$
20.0

 
$
122.3

Adjustments to reconcile net income to net cash provided by (used in) operating activities:
 

 
 

Depreciation and amortization
64.2

 
61.0

Provision for bad debt
0.9

 
2.6

Share-based compensation
17.1

 
22.0

Organization-related and integration activities
14.2

 
1.4

Impairment charges
75.6

 

Changes to lease related balances, net
9.0

 

Deferred income taxes
(34.1
)
 
17.2

Other non-cash charges, net
(2.6
)
 
5.6

Changes in operating assets and liabilities:
 

 
 

Trade accounts receivable
(38.1
)
 
25.5

Inventories
(116.7
)
 
(150.7
)
Accounts payable
37.1

 
23.4

Accrued liabilities
(14.1
)
 
(65.7
)
Other liabilities
(8.9
)
 
(2.0
)
Other assets
(17.9
)
 
(81.7
)
Net cash provided by (used in) operating activities
5.7

 
(19.1
)
CASH FLOWS USED IN INVESTING ACTIVITIES
 

 
 

Acquisitions, net of cash acquired

 
(15.7
)
Purchases of investments
(95.7
)
 
(159.9
)
Proceeds from maturities and sales of investments
94.0

 
7.8

Purchases of property and equipment
(71.9
)
 
(55.2
)
Net cash used in investing activities
(73.6
)
 
(223.0
)
CASH FLOWS USED IN FINANCING ACTIVITIES
 

 
 

Dividend payments
(96.8
)
 
(97.2
)
Repurchase of common stock
(267.0
)
 

Proceeds from share-based awards
0.1

 
26.2

Taxes paid to net settle share-based awards
(13.5
)
 
(23.1
)
Payments of finance lease liabilities
(0.2
)
 
(0.2
)
Net cash used in financing activities
(377.4
)
 
(94.3
)
Effect of exchange rate changes on cash and cash equivalents
(1.8
)
 
(2.3
)
Net decrease in cash and cash equivalents
(447.1
)
 
(338.7
)
Cash and cash equivalents at beginning of period
969.2

 
1,243.4

Cash and cash equivalents at end of period
$
522.1

 
$
904.7

Supplemental information:
 
 
 
Cash paid for income taxes, net
$
34.7

 
$
69.2

Cash paid for interest
$
18.7

 
$
19.1

Noncash investing activity - property and equipment obligations
$
35.0

 
$
39.7

 

See accompanying Notes.

4

TAPESTRY, INC.
 
Notes to Condensed Consolidated Financial Statements
(Unaudited)



1. NATURE OF OPERATIONS
Tapestry, Inc. (the "Company") is a leading New York-based house of modern luxury accessories and lifestyle brands. Tapestry owns the Coach, Kate Spade and Stuart Weitzman brands. The Company’s primary product offerings, manufactured by third-party suppliers, include women’s and men’s bags, small leather goods, footwear, ready-to-wear including outerwear, watches, weekend and travel accessories, scarves, eyewear, fragrance, jewelry and other lifestyle products.
The Coach segment includes global sales of Coach products to customers through Coach operated stores, including the Internet and concession shop-in-shops, and sales to wholesale customers and through independent third party distributors.
The Kate Spade segment includes global sales primarily of kate spade new york brand products to customers through Kate Spade operated stores, including the Internet, sales to wholesale customers, through concession shop-in-shops and through independent third party distributors.
The Stuart Weitzman segment includes global sales of Stuart Weitzman brand products primarily through Stuart Weitzman operated stores, including the Internet, sales to wholesale customers and through numerous independent third party distributors.
2. BASIS OF PRESENTATION AND ORGANIZATION
Interim Financial Statements
These interim condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") and are unaudited. In the opinion of management, such condensed consolidated financial statements contain all normal and recurring adjustments necessary to present fairly the consolidated financial position, results of operations, comprehensive income (loss) and cash flows of the Company for the interim periods presented. In addition, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the U.S. ("U.S. GAAP") have been condensed or omitted from this report as is permitted by the SEC's rules and regulations. However, the Company believes that the disclosures provided herein are adequate to prevent the information presented from being misleading. This report should be read in conjunction with the audited consolidated financial statements and notes thereto, included in the Company’s Annual Report on Form 10-K for the year ended June 29, 2019 ("fiscal 2019") and other filings filed with the SEC.
The results of operations, cash flows and comprehensive income for the three months ended September 28, 2019 are not necessarily indicative of results to be expected for the entire fiscal year, which will end on June 27, 2020 ("fiscal 2020"). 
During the fiscal year ended June 29, 2019, the Company acquired designated assets of its Stuart Weitzman distributor in Southern China and Australia and of its Kate Spade distributor in Australia, Malaysia and Singapore. The results of operations of each acquired entity have been included in the condensed consolidated financial statements since the respective date of each acquisition.
Fiscal Periods
The Company utilizes a 52-53 week fiscal year ending on the Saturday closest to June 30. Fiscal 2020 will be a 52-week period. Fiscal 2019 ended on June 29, 2019 and was also a 52-week period. The first quarter of fiscal 2020 ended on September 28, 2019 and the first quarter of fiscal 2019 ended on September 29, 2018, both of which were 13-week periods.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and footnotes thereto. Actual results could differ from estimates in amounts that may be material to the financial statements.
Significant estimates inherent in the preparation of the condensed consolidated financial statements include reserves for the realizability of inventory; customer returns, end-of-season markdowns and operational chargebacks; useful lives and impairments of long-lived tangible and intangible assets; accounting for income taxes (including the impacts of tax legislation) and related uncertain tax positions; accounting for business combinations; the valuation of stock-based compensation awards and related expected forfeiture rates; reserves for restructuring; and reserves for litigation and other contingencies, amongst others.
Share Repurchases
The Company accounts for share repurchases by allocating the repurchase price to common stock and retained earnings. As a result, all repurchased shares are authorized but unissued shares. Under Maryland law, the Company's state of incorporation, there are no treasury shares. The Company accrues for the shares purchased under the share repurchase plan based on the trade

5

TAPESTRY, INC.
 
Notes to Condensed Consolidated Financial Statements (continued)




date. Purchases of the Company's common stock were executed through open market purchases, including through a purchase agreement under Rule 10b5-1. The Company may terminate or limit the share repurchase program at any time.
Principles of Consolidation
These unaudited interim condensed consolidated financial statements include the accounts of the Company and all 100% owned and controlled subsidiaries. All intercompany transactions and balances are eliminated in consolidation.
Reclassifications
Certain reclassifications have been made to the prior periods' financial information in order to conform to the current period's presentation. Beginning in fiscal 2020, the Company presented the impact of foreign currency gains and losses within Other expense (income) within its Condensed Consolidated Statements of Operations. Accordingly, foreign currency gains and losses that were reported within Selling, general and administrative expenses ("SG&A") in fiscal 2019 are now reflected within Other expense (income).
3. RECENT ACCOUNTING PROUNOUNCEMENTS
Recently Adopted Accounting Pronouncements
During the first quarter of fiscal 2020, the Company adopted Accounting Standards Update ("ASU") No. 2016-02, "Leases (Topic 842)" ("ASU 2016-02") and related ASUs. This ASU requires recognition of lease assets and lease liabilities on the balance sheet for all leases other than short-term leases. The Company elected the package of practical expedients intended to ease transition whereby the Company need not reassess as of the adoption date (1) whether contracts are or contain leases, (2) the lease classification for any existing leases and (3) initial direct costs for any existing leases. The Company also elected the practical expedient to combine non-lease components and lease components for real estate leases. The Company applied the provisions of ASU No. 2018-11, "Leases (Topic 842): Targeted Improvements" ("ASU 2018-11"), allowing it to recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption without restating the comparative prior year periods.
The effects of the adoption on selected line items within the Company's Condensed Consolidated Balance Sheet as of June 30, 2019 were as follows:
 
 
June 29, 2019
 
 
 
June 30, 2019
 
 
As Reported under ASC 840
 
ASC 842 Adjustments
 
As Reported under ASC 842
 
 
(millions)
Current Assets:
 
 
 
 
 
 
Prepaid expenses(1)
 
$
99.8

 
$
(37.8
)
 
$
62.0

Other current assets(1)
 
91.0

 
(2.3
)
 
88.7

Long-term Assets:
 
 
 
 
 

Operating lease right-of-use assets(1)
 

 
2,133.7

 
2,133.7

Intangible assets(1)
 
1,711.9

 
(58.5
)
 
1,653.4

Deferred income tax assets(3)
 
19.4

 
1.7

 
21.1

Other assets(1)
 
134.2

 
(27.4
)
 
106.8

Current Liabilities:
 
 
 
 
 

Accrued liabilities(1)(3)
 
673.6

 
(39.2
)
 
634.4

Operating lease liabilities(2)
 

 
362.3

 
362.3

Current debt
 
0.8

 
(0.8
)
 

Long-term Liabilities:
 
 
 
 
 

Long-term debt
 
1,601.9

 
(5.3
)
 
1,596.6

Operating lease liabilities(2)
 

 
1,961.6

 
1,961.6

Deferred income tax liabilities(3)
 
234.1

 
(13.1
)
 
221.0

Other liabilities(1)(3)
 
454.0

 
(207.2
)
 
246.8

Stockholder's Equity:
 
 
 
 
 

Retained earnings (accumulated deficit)(3)
 
291.6

 
(48.9
)
 
242.7


6

TAPESTRY, INC.
 
Notes to Condensed Consolidated Financial Statements (continued)




 
(1)  
Upon adoption, the Company recognized operating lease right-of-use ("ROU") assets on the Condensed Consolidated Balance Sheet. In conjunction with this recognition, the Company reclassified amounts to lease right-of-use assets including: prepaid rent from prepaid expenses; key money and lease right intangibles from current and long-term other assets; deferred rent, lease incentives, unfavorable lease right liability and other accrued rent from current and long-term other liabilities. In addition, upon adoption in the first quarter of fiscal 2020, the Company recognized initial ROU asset balances of $2.13 billion on its Condensed Consolidated Balance Sheet.
(2)  
Upon adoption, the Company recognized lease liabilities of $2.32 billion on the Condensed Consolidated Balance Sheet, which were recorded with Current and Long-term lease liabilities.
(3)  
Upon adoption, the Company recognized a cumulative adjustment of $63.7 million, net of tax, decreasing the opening balance of Retained earnings, related to right-of-use asset impairment charges for certain of the Company’s stores where it was previously determined that the carrying value of assets was not recoverable. This adjustment was partially offset by ($14.8) million, net of tax, of increases to retained earnings to recognize deferred gains resulting from real estate transactions.
Recently Issued Accounting Pronouncements Not Yet Adopted
In August 2018, the FASB issued ASU No. 2018-13, "Fair Value Measurement (Topic 820)" ("ASU 2018-13"), which is intended to improve the effectiveness of fair value disclosures. The ASU removes or modifies certain disclosure requirements related to fair value information, as well as adds new disclosure requirements for Level 3 fair value measurements. The requirements of the new standard will be effective for annual reporting periods beginning after December 15, 2019, and interim periods within those annual periods, which for the Company is the first quarter of fiscal 2021. Early adoption is permitted. The Company is currently in the process of evaluating the impact that adopting ASU 2018-13 will have on its condensed consolidated financial statements and notes thereto, however, does not expect a material impact resulting from this guidance.
In August 2018, the FASB issued ASU No. 2018-15, "Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40)" ("ASU 2018-15"), which is intended to clarify the accounting for implementation costs of cloud computing arrangements which are deemed to be a service contract rather than a software license. The requirements of the new standard will be effective for annual reporting periods beginning after December 15, 2019, and interim periods within those annual periods, which for the Company is the first quarter of fiscal 2021. Early adoption is permitted. The Company is currently in the process of evaluating the impact that adopting ASU 2018-15 will have on its condensed consolidated financial statements and notes thereto.
In June 2016, the FASB issued ASU No. 2016-13, “Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”), which requires companies to use a forward-looking approach based on expected losses to estimate credit losses on certain types of financial instruments, including trade receivables. The FASB has subsequently issued updates to the standard to provide additional clarification on specific topics. The requirement of the new standard will be effective for annual reporting periods beginning after December 15, 2019, and interim periods within those annual periods, which for the Company is the first quarter of fiscal 2021. Early adoption is permitted. The Company is currently in the process of evaluating the impact that adopting ASU 2016-13 will have on its condensed consolidated financial statements and notes thereto.
4. REVENUE
The Company recognizes revenue primarily from sales of the products of its brands through retail and wholesale channels, including the Internet. The Company also generates revenue from royalties related to licensing its trademarks, as well as sales in ancillary channels. In all cases, revenue is recognized upon the transfer of control of the promised products or services to the customer, which may be at a point in time or over time. Control is transferred when the customer obtains the ability to direct the use of and obtain substantially all of the remaining benefits from the products or services. The amount of revenue recognized is the amount of consideration to which the Company expects to be entitled, including estimation of sale terms that may create variability in the consideration. Revenue subject to variability is constrained to an amount which will not result in a significant reversal in future periods when the contingency that creates variability is resolved.
The Company recognizes revenue in its retail stores, including concession shop-in-shops, at the point-of-sale when the customer obtains physical possession of the products. Internet revenue from sales of products ordered through the Company's e-commerce sites is recognized upon delivery and receipt of the shipment by its customers and includes shipping and handling charges paid by customers. Retail and Internet revenues are recorded net of estimated returns, which are estimated by developing an expected value based on historical experience. Payment is due at the point of sale.
Gift cards issued by the Company are recorded as a liability until redeemed by the customer, at which point revenue is recognized. The Company also uses historical information to estimate the amount of gift card balances that will never be redeemed

7

TAPESTRY, INC.
 
Notes to Condensed Consolidated Financial Statements (continued)




and recognizes that amount as revenue over time in proportion to actual customer redemptions if the Company does not have a legal obligation to remit unredeemed gift cards to any jurisdiction as unclaimed property.
The Company recognizes revenue within the wholesale channel at the time title passes and risk of loss is transferred to customers, which is generally at the point of shipment of products but may occur upon receipt of the shipment by the customer in certain cases. Payment is generally due 30 to 90 days after shipment. Wholesale revenue is recorded net of estimates for returns, discounts, end-of-season markdowns, cooperative advertising allowances and other consideration provided to the customer. Discounts are based on contract terms with the customer, while cooperative advertising allowances and other consideration may be based on contract terms or negotiated on a case-by-case basis. Returns and markdowns generally require approval from the Company and are estimated based on historical trends, current season results and inventory positions at the wholesale locations, current market and economic conditions as well as, in select cases, contractual terms. The Company's historical estimates of these variable amounts have not differed materially from actual results.
The Company recognizes licensing revenue over time during the contract period in which licensees are granted access to the Company's trademarks. These arrangements require licensees to pay a sales-based royalty and may include a contractually guaranteed minimum royalty amount. Revenue for contractually guaranteed minimum royalty amounts is recognized ratably over the license year and any excess sales-based royalties are recognized as earned once the minimum royalty threshold is achieved. Payments from the customer are generally due quarterly in an amount based on the licensee's sales of goods bearing the licensed trademarks during the period, which may differ from the amount of revenue recorded during the period thereby generating a contract asset or liability. Contract assets and liabilities and contract costs related to the licensing arrangements are immaterial as the licensing business represents approximately 1% of total net sales in the three months ended September 28, 2019.
The Company has elected a practical expedient not to disclose the remaining performance obligations that are unsatisfied as of the end of the period related to contracts with an original duration of one year or less or variable consideration related to sales-based royalty arrangements. There are no other contracts with transaction price allocated to remaining performance obligations other than future minimum royalties as discussed above, which are not material.
Other practical expedients elected by the Company include (i) assuming no significant financing component exists for any contract with a duration of one year or less, (ii) accounting for shipping and handling as a fulfillment activity within SG&A expense regardless of the timing of the shipment in relation to the transfer of control and (iii) excluding sales and value added tax from the transaction price.
Disaggregated Net Sales
The following table disaggregates the Company's net sales into geographies that depict how economic factors may impact the revenues and cash flows for the periods presented. Each geography presented includes net sales related to the Company's directly operated channels, global travel retail business and to wholesale customers, including distributors, in locations within the specified geographic area.    
 
North America
 
Greater China(1)
 
Other Asia(2)
 
Other(3)
 
Total
 
(millions)
Three Months Ended September 28, 2019
 
 
 
 
 
 
 
 
 
Coach
$
543.7

 
$
159.2

 
$
198.8

 
$
64.2

 
$
965.9

Kate Spade
231.9

 
12.3

 
42.2

 
19.1

 
305.5

Stuart Weitzman
46.7

 
19.4

 
5.4

 
15.0

 
86.5

Total
$
822.3

 
$
190.9

 
$
246.4

 
$
98.3

 
$
1,357.9

 
 
 
 
 
 
 
 
 
 
Three Months Ended September 29, 2018
 
 
 
 
 
 
 
 
 
Coach
$
544.6

 
$
161.1

 
$
190.9

 
$
64.1

 
$
960.7

Kate Spade
257.6

 
11.2

 
35.0

 
21.6

 
325.4

Stuart Weitzman
48.3

 
14.9

 
5.9

 
26.0

 
95.1

Total
$
850.5

 
$
187.2

 
$
231.8

 
$
111.7

 
$
1,381.2

 
(1) 
Greater China includes mainland China, Hong Kong, Macau and Taiwan.
(2) 
Other Asia includes Japan, Australia, New Zealand, South Korea, Thailand and other countries within Asia.

8

TAPESTRY, INC.
 
Notes to Condensed Consolidated Financial Statements (continued)




(3) 
Other sales primarily represents sales in Europe, the Middle East and royalties related to licensing.
Deferred Revenue
Deferred revenue results from cash payments received or receivable from customers prior to the transfer of the promised goods or services, and is primarily related to unredeemed gift cards, net of breakage which has been recognized. Additional deferred revenue may result from sales-based royalty payments received or receivable which exceed the revenue recognized during the contractual period. The balance of such amounts as of September 28, 2019 and June 29, 2019 was $31.6 million and $27.5 million, respectively, which were primarily recorded within Accrued liabilities on the Company's Condensed Consolidated Balance Sheets and are generally expected to be recognized as revenue within a year. For the three months ended September 28, 2019, net sales of $4.5 million were recognized from amounts recorded as deferred revenue as of June 29, 2019. For the three months ended September 29, 2018, net sales of $3.0 million were recognized from amounts recorded as deferred revenue as of June 30, 2018.
5. INTEGRATION
During the three months ended September 28, 2019, the Company incurred integration costs of $4.3 million. The charges recorded in Cost of sales for the three months ended September 28, 2019 were $4.1 million. Of the amount recorded to Cost of sales, $2.8 million was recorded in the Stuart Weitzman segment, $1.2 million was recorded in the Kate Spade segment and $0.1 million was recorded in the Coach segment. The charges recorded to SG&A expenses for the three months ended September 28, 2019 were $0.2 million. Of the amount recorded to SG&A expenses, $2.2 million was recorded within Corporate, a reduction of the expense of $2.4 million was recorded in the Stuart Weitzman segment, $0.3 million was recorded in the Coach segment and $0.1 million was recorded in the Kate Spade segment. Of the total costs of $4.3 million, $2.8 million were non-cash charges related to inventory-related charges, organization-related costs and purchase accounting adjustments.
The Company estimates that it will incur approximately $10-15 million in pre-tax charges, of which the majority are expected to be cash charges, for the remainder of fiscal 2020.
During the three months ended September 29, 2018, the Company incurred integration costs of $19.5 million. The charges recorded in Cost of sales were $0.6 million. Of the amount recorded to Cost of sales, $2.0 million was recorded in the Coach segment and a reduction of expense of $1.4 million was recorded in the Kate Spade segment. The charges recorded in SG&A expenses were $18.9 million. Of the amount recorded to SG&A expenses, $11.5 million was recorded in the Stuart Weitzman segment, $4.0 million was recorded within Corporate and $3.4 million was recorded in the Kate Spade segment. Of the total costs of $19.5 million, $1.4 million were non-cash charges related to inventory, organization-related costs and asset write-offs.
Refer to Note 6, "Acquisitions," for more information.
A summary of the integration charges is as follows:
 
 
Three Months Ended
 
 
September 28,
2019
 
September 29,
2018
 
 
(millions)
Purchase accounting adjustments(1)
 
$
0.6

 
$
2.0

Inventory-related charges(2)
 
3.6

 
(1.4
)
Contractual payments(3)
 

 
7.1

Other(4)
 
0.1

 
11.8

Total
 
$
4.3

 
$
19.5

 
(1) 
Purchase accounting adjustments primarily relate to the short-term impact of the amortization of fair value adjustments.
(2) 
Inventory-related charges primarily relate to inventory reserves.
(3) 
Contractual payments primarily relate to contract termination charges for the three months ended September 29, 2018.
(4) 
Other primarily relates to share-based compensation, severance charges, professional fees and asset write-offs.

9

TAPESTRY, INC.
 
Notes to Condensed Consolidated Financial Statements (continued)




6. ACQUISITIONS
Fiscal 2019 Acquisitions
Distributor Acquisitions
During the fiscal year ended June 29, 2019, the Company acquired designated assets of its Stuart Weitzman distributor in Southern China and Australia and of its Kate Spade distributor in Australia, Malaysia and Singapore.
The aggregate purchase consideration for the acquisitions was $47.8 million, $44.0 million of which was cash consideration and the remaining is related to non-cash consideration. Of the $44.0 million of cash consideration, $43.5 million was paid during fiscal 2019 and the remaining will be paid in the future. Of the total purchase consideration of $47.8 million, $21.8 million of net assets were recorded at their fair values. The excess of the purchase consideration over the fair value of the net assets acquired was recorded as non-tax deductible goodwill in the amount of $26.0 million, of which $13.3 million was assigned to the Stuart Weitzman segment and $12.7 million was assigned to the Kate Spade segment.
The purchase price allocation for these assets acquired and liabilities assumed is completed or substantially complete, however may be subject to change as additional information is obtained during the acquisition measurement period for the respective acquisitions. The pro forma results are not presented for these acquisitions as they are immaterial.
7. GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill
The change in the carrying amount of the Company’s goodwill by segment is as follows:
 
Coach
 
Kate Spade
 
Stuart Weitzman
 
Total
 
(millions)
Balance at June 29, 2019
$
661.8

 
$
640.4

 
$
214.0

 
$
1,516.2

Foreign exchange impact
(1.8
)
 
(0.4
)
 
(2.4
)
 
(4.6
)
Balance at September 28, 2019
$
660.0

 
$
640.0

 
$
211.6

 
$
1,511.6


Intangible Assets
Intangible assets consist of the following:
 
September 28, 2019
 
June 29, 2019
 
Gross
Carrying
Amount
 
Accum.
Amort.
 
Net
 
Gross
Carrying
Amount
 
Accum.
Amort.
 
Net
 
(millions)
Intangible assets subject to amortization:
 
 
 
 
 
 
 
 
 
 
 
Customer relationships
$
100.5

 
$
(25.8
)
 
$
74.7

 
$
100.6

 
$
(24.0
)
 
$
76.6

Favorable lease rights(1)

 

 

 
93.1

 
(34.6
)
 
58.5

Total intangible assets subject to amortization
100.5

 
(25.8
)
 
74.7

 
193.7

 
(58.6
)
 
135.1

Intangible assets not subject to amortization:
 
 
 
 
 
 
 
 
 
 
 
Trademarks and trade names
1,576.8

 

 
1,576.8

 
1,576.8

 

 
1,576.8

Total intangible assets
$
1,677.3

 
$
(25.8
)
 
$
1,651.5

 
$
1,770.5

 
$
(58.6
)
 
$
1,711.9


 
(1) 
Refer to Note 3, "Recent Accounting Pronouncements," for further information.

10

TAPESTRY, INC.
 
Notes to Condensed Consolidated Financial Statements (continued)




As of September 28, 2019, the expected amortization expense for intangible assets is as follows:
 
 Amortization Expense
 
(millions)
Remainder of fiscal 2020
$
4.8

Fiscal 2021
6.5

Fiscal 2022
6.5

Fiscal 2023
6.5

Fiscal 2024
6.5

Fiscal 2025
6.5

Fiscal 2026 and thereafter
37.4

Total
$
74.7


The expected amortization expense above reflects remaining useful lives ranging from approximately 10.6 to 12.8 years for customer relationships.
8. STOCKHOLDERS' EQUITY
A reconciliation of stockholders' equity is presented below:
 
Shares of
Common
Stock
 
Common Stock
 
Additional
Paid-in-
Capital
 
Retained Earnings / (Accumulated Deficit)
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Total
Stockholders'
Equity
 
(millions, except per share data)
Balance at June 30, 2018
288.0

 
$
2.9

 
$
3,205.5

 
$
119.0

 
$
(82.8
)
 
$
3,244.6

Net income

 

 

 
122.3

 

 
122.3

Other comprehensive income (loss)

 

 

 

 
(5.3
)
 
(5.3
)
Shares issued, pursuant to stock-based compensation arrangements, net of shares withheld for taxes
1.8

 

 
3.2

 

 

 
3.2

Share-based compensation

 

 
22.4

 

 

 
22.4

Dividends declared ($0.3375 per share)

 

 

 
(97.8)

 

 
(97.8)

Cumulative adjustment from adoption of new accounting standard
(see Note 3)

 

 

 
20.2

 

 
20.2

Balance at September 29, 2018
289.8

 
$
2.9

 
$
3,231.1

 
$
163.7

 
$
(88.1
)
 
$
3,309.6

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Shares of
Common
Stock
 
Common Stock
 
Additional
Paid-in-
Capital
 
Retained Earnings / (Accumulated Deficit)
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Total
Stockholders'
Equity
 
(millions, except per share data)
Balance at June 29, 2019
286.8

 
$
2.9

 
$
3,302.1

 
$
291.6

 
$
(83.2
)
 
$
3,513.4

Net income

 

 

 
20.0

 

 
20.0

Other comprehensive income (loss)

 

 

 

 
(12.8
)
 
(12.8
)
Shares issued, pursuant to stock-based compensation arrangements, net of shares withheld for taxes
1.0

 

 
(14.4
)
 

 

 
(14.4
)
Share-based compensation

 

 
26.7

 

 

 
26.7

Repurchase of common stock
(11.9
)
 
(0.1
)
 

 
(299.9
)
 

 
(300.0
)
Dividends declared ($0.3375 per share)

 

 

 
(97.1
)
 

 
(97.1
)
Cumulative adjustment from adoption of new accounting standard
(see Note 3)

 

 

 
(48.9
)
 

 
(48.9
)
Balance at September 28, 2019
275.9

 
$
2.8

 
$
3,314.4

 
$
(134.3
)
 
$
(96.0
)
 
$
3,086.9



11

TAPESTRY, INC.
 
Notes to Condensed Consolidated Financial Statements (continued)




The components of accumulated other comprehensive income (loss) ("AOCI"), as of the dates indicated, are as follows:
 
Unrealized Gains (Losses) on Cash
Flow
Hedging Derivatives(1)
 
Unrealized Gains
(Losses) on Available-
for-Sale Investments
 
Cumulative
Translation
Adjustment
 
Other(2)
 
Total
 
(millions)
Balances at June 30, 2018
$
1.4

 
$

 
$
(85.3
)
 
$
1.1

 
$
(82.8
)
Other comprehensive income (loss) before reclassifications
3.6

 

 
(9.8
)
 

 
(6.2
)
Less: losses (income) reclassified from accumulated other comprehensive income to earnings
(0.9
)
 

 

 

 
(0.9
)
Net current-period other comprehensive income (loss)
4.5

 

 
(9.8
)
 

 
(5.3
)
Balances at September 29, 2018
$
5.9

 
$

 
$
(95.1
)
 
$
1.1

 
$
(88.1
)
 
 
 
 
 
 
 
 
 
 
Balances at June 29, 2019
$
(4.5
)
 
$
(0.5
)
 
$
(79.9
)
 
$
1.7

 
$
(83.2
)
Other comprehensive income (loss) before reclassifications
2.1

 

 
(13.8
)
 

 
(11.7
)
Less: losses (income) reclassified from accumulated other comprehensive income to earnings
(0.6
)
 

 

 
1.7

 
1.1

Net current-period other comprehensive income (loss)
2.7

 

 
(13.8
)
 
(1.7
)
 
(12.8
)
Balances at September 28, 2019
$
(1.8
)
 
$
(0.5
)
 
$
(93.7
)
 
$

 
$
(96.0
)
 
(1) 
The ending balances of AOCI related to cash flow hedges are net of tax of $0.8 million and ($1.6) million as of September 28, 2019 and September 29, 2018, respectively. The amounts reclassified from AOCI are net of tax of $0.2 million and $0.3 million as of September 28, 2019 and September 29, 2018, respectively.
(2)
Other represents the accumulated loss on the Company's minimum pension liability adjustment. The balance at September 29, 2018 is net of tax of $0.6 million. There was no remaining balance at September 28, 2019.

12

TAPESTRY, INC.
 
Notes to Condensed Consolidated Financial Statements (continued)




9. LEASES
The Company leases retail space, office space, warehouse facilities, distribution centers, storage space, machinery, equipment and certain other items under operating leases. The Company's leases have initial terms ranging from 1 to 20 years and may have renewal or early termination options ranging from 1 to 10 years. These leases may also include rent escalation clauses or lease incentives in the form of construction allowances and rent reduction. In determining the lease term used in the lease ROU asset and lease liability calculations, the Company considers various factors such as market conditions and the terms of any renewal or termination options that may exist. When deemed reasonably certain, the renewal and termination options are included in the determination of the lease term and calculation of the lease ROU asset and lease liability. The Company is typically required to make fixed minimum rent payments, variable rent payments primarily based on performance (i.e., percentage-of-sales-based payments), or a combination thereof, directly related to its ROU asset. The Company is also often required, by the lease, to pay for certain other costs including real estate taxes, insurance, common area maintenance fees, and/or certain other costs, which may be fixed or variable, depending upon the terms of the respective lease agreement. To the extent these payments are fixed, the Company has included them in calculating the lease ROU assets and lease liabilities.
The Company calculates lease ROU assets and lease liabilities as the present value of fixed lease payments over the reasonably certain lease term beginning at the commencement date. ASU 2016-02 requires the use of the implicit rate to determine the present value of lease payments. As the rate implicit in the Company's leases is not readily determinable, the Company uses its incremental borrowing rate based on the information available at the lease commencement date, including the lease term, currency, country, Company specific risk premium and adjustments for collateral.
For operating leases, fixed lease payments are recognized as operating lease cost on a straight-line basis over the lease term. For finance leases and impaired operating leases, the ROU asset is depreciated on a straight-line basis over the remaining lease term, along with recognition of interest expense associated with accretion of the lease liability. For leases with a lease term of 12 months or less ("short-term lease"), any fixed lease payments are recognized on a straight-line basis over such term, and are not recognized on the Condensed Consolidated Balance Sheets. Variable lease cost for both operating and finance leases, if any, is recognized as incurred.
The Company acts as sublessor in certain leasing arrangements, primarily related to a sublease of a portion the Company's leased headquarters space. Fixed sublease payments received are recognized on a straight-line basis over the sublease term.
ROU assets, along with any other related long-lived assets, are periodically evaluated for impairment.
The following table summarizes the ROU assets and lease liabilities recorded on the Company's Condensed Consolidated Balance Sheet as of September 28, 2019:
 
 
September 28, 2019
Location Recorded on Balance Sheet
 
 
(millions)
 
Assets:
 
 
 
Operating leases
 
$
2,057.1

Operating lease right-of-use assets
Finance leases
 
3.8

Property and equipment, net
Total lease assets
 
$
2,060.9

 
Liabilities:
 
 
 
Operating leases:
 
 
 
Current lease liabilities
 
$
328.9

Current lease liabilities
Long-term lease liabilities
 
1,965.4

Long-term lease liabilities
Total operating lease liabilities
 
$
2,294.3

 
Finance leases:
 
 
 
Current lease liabilities
 
$
0.8

Accrued liabilities
Long-term lease liabilities
 
5.1

Other liabilities
Total finance lease liabilities
 
$
5.9

 
 
 
 
 
Total lease liabilities
 
$
2,300.2

 


13

TAPESTRY, INC.
 
Notes to Condensed Consolidated Financial Statements (continued)




The following table summarizes the composition of net lease costs, primarily recorded within SG&A expenses on the Company's Condensed Consolidated Statement of Operations for the three months ended September 28, 2019:
 
 
Three Months Ended
 
 
September 28, 2019
 
 
(millions)
Finance lease cost:
 
 
Amortization of right-of-use assets
 
$
0.2

Interest on lease liabilities(1)
 
0.2

Total finance lease cost
 
0.4

Operating lease cost
 
111.8

Short-term lease cost
 
1.7

Variable lease cost(2)
 
51.0

Operating lease right-of-use impairment
 
35.8

Less: sublease income
 
(5.4
)
Total net lease cost
 
$
195.3

 
(1) 
Interest on lease liabilities is recorded within Interest expense, net on the Company's Condensed Consolidated Statement of Operations.
(2) 
For the three months ended September 28, 2019, $0.7 million of variable lease cost is recorded within Cost of sales within the Company's Condensed Consolidated Statement of Operations.
The following table summarizes certain cash flow information related to the Company's leases for the three months ended September 28, 2019:
 
 
Three Months Ended
 
 
September 28, 2019
 
 
(millions)
Cash paid for amounts included in the measurement of lease liabilities:
 
 
Operating cash flows from operating leases
 
$
102.7

Operating cash flows from finance leases
 
0.2

Financing cash flows from finance leases
 
0.2

Non-cash transactions:
 
 
Right-of-use assets obtained in exchange for operating lease liabilities
 
65.0

Right-of-use assets obtained in exchange for finance lease liabilities
 



14

TAPESTRY, INC.
 
Notes to Condensed Consolidated Financial Statements (continued)




The following table provides a maturity analysis of the Company's lease liabilities recorded on the Condensed Consolidated Balance Sheet as of September 28, 2019:
 
 
September 28, 2019
 
 
Operating Leases
 
Finance Leases
 
Total
 
 
(millions)
Remainder of Fiscal 2020
 
$
301.3

 
$
1.1

 
$
302.4

Fiscal 2021
 
387.9

 
1.4

 
389.3

Fiscal 2022
 
350.4

 
1.4

 
351.8

Fiscal 2023
 
307.7

 
1.4

 
309.1

Fiscal 2024
 
261.5

 
1.4

 
262.9

Fiscal 2025 and thereafter
 
1,158.8

 
1.3

 
1,160.1

Total lease payments
 
2,767.6

 
8.0

 
2,775.6

Less: interest
 
473.3

 
2.1

 
475.4

Total lease liabilities
 
$
2,294.3

 
$
5.9

 
$
2,300.2


The future minimum fixed sublease receipts under non-cancelable operating lease agreements as of September 28, 2019 are as follows:
 
 
September 28, 2019
 
 
(millions)
Remainder of Fiscal 2020
 
$
16.1

Fiscal 2021
 
21.1

Fiscal 2022
 
20.1

Fiscal 2023
 
16.0

Fiscal 2024
 
15.5

Fiscal 2025 and thereafter
 
187.5

Total sublease income
 
$
276.3


The following table summarizes the weighted-average remaining lease terms and weighted-average discount rates related to the Company's operating leases and finance leases recorded on the Condensed Consolidated Balance Sheet as of September 28, 2019:
 
 
September 28, 2019
Weighted average remaining lease term (years):
 
 
Operating leases
 
8.95

Finance leases
 
5.67

Weighted average discount rate:
 
 
Operating leases
 
3.7
%
Finance leases
 
11.3
%

Additionally, the Company had approximately $30 million of future payment obligations related to executed lease agreements for which the related lease has not yet commenced as of September 28, 2019.
10. EARNINGS PER SHARE
Basic net income per share is calculated by dividing net income by the weighted-average number of shares outstanding during the period. Diluted net income per share is calculated similarly but includes potential dilution from the exercise of stock options and restricted stock units and any other potentially dilutive instruments, only in the periods in which such effects are dilutive under the treasury stock method.

15

TAPESTRY, INC.
 
Notes to Condensed Consolidated Financial Statements (continued)




The following is a reconciliation of the weighted-average shares outstanding and calculation of basic and diluted earnings per share: