Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Sep. 30, 2017 | Oct. 27, 2017 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2017 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | TPR | |
Entity Registrant Name | TAPESTRY, INC. | |
Entity Central Index Key | 1,116,132 | |
Current Fiscal Year End Date | --06-30 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 284,375,237 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Sep. 30, 2017 | Jul. 01, 2017 |
Current Assets: | ||
Cash and cash equivalents | $ 1,373.3 | $ 2,672.9 |
Short-term investments | 297.6 | 410.7 |
Trade accounts receivable, less allowances of $1.9 and $1.9, respectively | 302.7 | 268 |
Inventories | 852.8 | 469.7 |
Income tax receivable | 65 | 41.5 |
Prepaid expenses and other current assets | 130.9 | 90.5 |
Total current assets | 3,022.3 | 3,953.3 |
Property and equipment, net | 860.8 | 691.4 |
Long-term investments | 70 | 75.1 |
Goodwill | 1,410.2 | 480.5 |
Intangible assets | 1,753.1 | 340.8 |
Deferred income taxes | 204.1 | 170.5 |
Other assets | 133.9 | 120 |
Total assets | 7,454.4 | 5,831.6 |
Current Liabilities: | ||
Accounts payable | 292.7 | 194.6 |
Accrued liabilities | 641.6 | 559.2 |
Current debt | 800.6 | 0 |
Total current liabilities | 1,734.9 | 753.8 |
Long-term debt | 1,888.2 | 1,579.5 |
Other liabilities | 891.3 | 496.4 |
Total liabilities | 4,514.4 | 2,829.7 |
Commitments and contingencies | ||
Stockholders' Equity: | ||
Preferred stock: (authorized 25.0 million shares; $0.01 par value per share) none issued | 0 | 0 |
Common stock: (authorized 1.0 billion shares; $0.01 par value per share) issued and outstanding - 284.2 million and 281.9 million shares, respectively | 2.8 | 2.8 |
Additional paid-in-capital | 3,024.4 | 2,978.3 |
(Accumulated deficit) retained earnings | (5.9) | 107.7 |
Accumulated other comprehensive loss | (81.3) | (86.9) |
Total stockholders' equity | 2,940 | 3,001.9 |
Total liabilities and stockholders' equity | $ 7,454.4 | $ 5,831.6 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Millions | Sep. 30, 2017 | Jul. 01, 2017 |
Statement of Financial Position [Abstract] | ||
Trade accounts receivable, allowances | $ 1.9 | $ 1.9 |
Preferred stock, authorized (shares) | 25,000,000 | 25,000,000 |
Preferred stock, par value (USD per share) | $ 0.01 | $ 0.01 |
Preferred stock, issued (shares) | 0 | 0 |
Common stock, authorized (shares) | 1,000,000,000 | 1,000,000,000 |
Common stock, par value (USD per share) | $ 0.01 | $ 0.01 |
Common stock, issued (shares) | 284,200,000 | 281,900,000 |
Common stock, outstanding (shares) | 284,200,000 | 281,900,000 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Millions, $ in Millions | 3 Months Ended | |
Sep. 30, 2017 | Oct. 01, 2016 | |
Income Statement [Abstract] | ||
Net sales | $ 1,288.9 | $ 1,037.6 |
Cost of sales | 524.5 | 322.9 |
Gross profit | 764.4 | 714.7 |
Selling, general and administrative expenses | 786.2 | 548.8 |
Operating (loss) income | (21.8) | 165.9 |
Interest expense, net | 20.5 | 5.7 |
(Loss) income before provision for income taxes | (42.3) | 160.2 |
Provision for income taxes | (24.6) | 42.8 |
Net (loss) income | $ (17.7) | $ 117.4 |
Net (loss) income per share: | ||
Basic (USD per share) | $ (0.06) | $ 0.42 |
Diluted (USD per share) | $ (0.06) | $ 0.42 |
Shares used in computing net (loss) income per share: | ||
Basic (shares) | 283.2 | 279.5 |
Diluted (shares) | 286.7 | 281.9 |
Cash dividends declared per common share (USD per share) | $ 0.3375 | $ 0.3375 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME - USD ($) $ in Millions | 3 Months Ended | |
Sep. 30, 2017 | Oct. 01, 2016 | |
Statement of Comprehensive Income [Abstract] | ||
Net (loss) income | $ (17.7) | $ 117.4 |
Other comprehensive income, net of tax: | ||
Unrealized (losses) gains on cash flow hedging derivatives, net | (3.1) | 2.9 |
Unrealized gains (losses) on available-for-sale investments, net | 0.2 | (0.5) |
Foreign currency translation adjustments | 8.5 | 2.9 |
Other comprehensive income, net of tax | 5.6 | 5.3 |
Comprehensive (loss) income | $ (12.1) | $ 122.7 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 3 Months Ended | |
Sep. 30, 2017 | Oct. 01, 2016 | |
CASH FLOWS USED IN OPERATING ACTIVITIES | ||
Net (loss) income | $ (17.7) | $ 117.4 |
Adjustments to reconcile net (loss) income to net cash used in operating activities: | ||
Depreciation and amortization | 65.5 | 52.3 |
Provision for bad debt | 0.3 | 0 |
Share-based compensation | 20 | 16 |
Excess tax effect from share-based compensation | 0 | (0.4) |
Integration and restructuring activities | 94.6 | 3 |
Deferred income taxes | (23.6) | 4.8 |
Other non-cash charges, net | (3.2) | 3.4 |
Changes in operating assets and liabilities: | ||
Trade accounts receivable | 31.6 | 0.6 |
Inventories | (156) | (86.1) |
Accounts payable | (23.8) | (8) |
Accrued liabilities | (45.7) | (114.3) |
Other liabilities | (38.9) | (13.9) |
Other assets | (6.9) | (12.9) |
Net cash used in operating activities | (103.8) | (38.1) |
CASH FLOWS (USED IN) PROVIDED BY INVESTING ACTIVITIES | ||
Hudson Yards sale of investments | 0 | 680.6 |
Acquisition of Kate Spade, net of cash acquired | (2,320.2) | 0 |
Purchases of investments | (3) | (204.2) |
Proceeds from maturities and sales of investments | 150.5 | 153.6 |
Purchases of property and equipment | (48.9) | (67.6) |
Acquisition of lease rights, net | 0 | (6.8) |
Net cash (used in) provided by investing activities | (2,221.6) | 555.6 |
CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES | ||
Dividend payments | (95.1) | (94) |
Proceeds from issuance of debt | 1,100 | 0 |
Repayment of debt | 0 | (285) |
Proceeds from share-based awards | 43.5 | 20.7 |
Taxes paid to net settle share-based awards | (26) | (19.5) |
Excess tax effect from share-based compensation | 0 | 0.4 |
Net cash provided by (used in) financing activities | 1,022.4 | (377.4) |
Effect of exchange rate changes on cash and cash equivalents | 3.4 | 0.9 |
(Decrease) increase in cash and cash equivalents | (1,299.6) | 141 |
Cash and cash equivalents at beginning of period | 2,672.9 | 859 |
Cash and cash equivalents at end of period | 1,373.3 | 1,000 |
Supplemental information: | ||
Cash paid for income taxes, net | 22.5 | 75.1 |
Cash paid for interest | 12.8 | 13.2 |
Noncash investing activity - property and equipment obligations | $ 46.5 | $ 52.4 |
Nature of Operations
Nature of Operations | 3 Months Ended |
Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Operations | 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 worldwide sales of Coach brand products to customers through Coach operated stores, including the Internet, concession shop-in-shops and sales to wholesale customers and independent third party distributors. The Kate Spade segment includes worldwide sales primarily of kate spade new york brand products to customers through Kate Spade operated stores, including the Internet, concession shop-in-shops, independent third party distributors and to wholesale customers. The Stuart Weitzman segment includes worldwide sales of Stuart Weitzman brand products primarily to wholesale customers, numerous independent third party distributors and through Stuart Weitzman operated stores, including the Internet. |
Basis of Presentation and Organ
Basis of Presentation and Organization | 3 Months Ended |
Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation and Organization | 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 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, income, comprehensive income 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 filed with the SEC for the year ended July 1, 2017. The results of operations, cash flows and comprehensive loss for the three months ended September 30, 2017 are not necessarily indicative of results to be expected for the entire fiscal year, which will end on June 30, 2018 ("fiscal 2018 "). On July 11, 2017, the Company completed its acquisition of Kate Spade & Company ("Kate Spade"). The operating results of Kate Spade have been consolidated in the Company's operating results commencing on July, 11, 2017. Fiscal Periods The Company utilizes a 52-53 week fiscal year ending on the Saturday closest to June 30. Fiscal 2018 will be a 52-week period. Fiscal 2017 ended on July 1, 2017 and was also a 52-week period ("fiscal 2017"). The first quarter of fiscal 2018 ended on September 30, 2017 and was a 13-week period. The first quarter of fiscal 2017 ended on October 1, 2016 and was also a 13-week period. 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 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; reserves for litigation and other contingencies; useful lives and impairments of long-lived tangible and intangible assets; accounting for income taxes and related uncertain tax positions; the valuation of stock-based compensation awards and related estimated forfeiture rates; reserves for restructuring; and accounting for business combinations, amongst others. Principles of Consolidation These unaudited interim condensed consolidated financial statements include the accounts of the Company and all 100% owned subsidiaries. All intercompany transactions and balances have been 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, including the realignment of the Company's segment reporting structure, as further described in Note 15, "Segment Information." |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 3 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Recent Accounting Pronouncements | RECENT ACCOUNTING PROUNOUNCEMENTS Recently Adopted Accounting Pronouncements During the first quarter of fiscal 2018, the Company adopted ASU No. 2016-09, " Improvements to Employee Share-Based Payment Accounting (Topic 718), " which simplifies several aspects of the accounting for share-based payment transactions, including the accounting for income taxes, forfeitures and statutory tax withholding requirements, as well as classification in the statement of cash flows beginning in fiscal 2018. Additionally, the Company began recognizing all excess tax benefits and shortfalls as income tax expense or benefit in the income statement within the reporting period in which they occur. The Company adopted this standard prospectively, which resulted in a decrease in the tax provision of $7.7 million for the three months ended September 30, 2017. Future impacts of the adoption of this standard on the consolidated financial statements, particularly the income tax provision, will be dependent upon future events which are unpredictable. The Company has elected to continue to estimate expected forfeitures in determining compensation expense. Recently Issued Accounting Pronouncements Not Yet Adopted In August 2017, the FASB issued ASU No. 2017-12, "Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities," which amends the hedge accounting recognition and presentation requirements in ASC 815. This ASU's objective is to improve the transparency and understandability of information conveyed to financial statement users about an entity's risk management activities by better aligning the entity's financial reporting for hedging relationships with those risk management activities and to reduce the complexity of and simplify the application of hedge accounting by preparers. The requirements for the new standard will be effective for fiscal years beginning after December 15, 2018, and interim periods therein. Early adoption is permitted upon issuance. The Company is currently in the process of evaluating the impact that adopting ASU 2017-12 will have on its consolidated financial statements and notes thereto. In February 2016, the FASB issued ASU No. 2016-02, " Leases (Topic 842), " which is intended to increase transparency and comparability among companies that enter into leasing arrangements. This ASU requires recognition of lease assets and lease liabilities on the balance sheet for nearly all leases (other than short-term leases), as well as a retrospective recognition and measurement of existing impacted leases. The requirements of the new standard will be effective for annual reporting periods beginning after December 15, 2018, and interim periods within those annual periods, which for the Company is the first quarter of fiscal 2020. Early adoption is permitted. The new standard is required to be applied with a modified retrospective approach to each prior reporting period with various optional practical expedients. The Company is currently performing a comprehensive evaluation of the impact of adopting this guidance on its consolidated financial statements and notes thereto. The Company expects the guidance will result in a significant increase to long-term assets and long-term liabilities on its consolidated balance sheets and does not expect it to have a material impact on the consolidated statements of income. This guidance is not expected to have a material impact on the Company's liquidity. In May 2014, the FASB issued ASU No. 2014-09, " Revenue from Contracts with Customers ," which provides a single, comprehensive revenue recognition model for all contracts with customers, and contains principles to determine the measurement of revenue and timing of when it is recognized. The model will supersede most existing revenue recognition guidance, and also requires enhanced revenue-related disclosures. The FASB has also issued several related ASUs which provide additional implementation guidance and clarify the requirements of the model. The requirements of the new standard will be effective for annual reporting periods beginning after December 15, 2017, and interim periods within those annual periods, which for the Company is the first quarter of fiscal 2019. Early adoption will be permitted for annual reporting periods beginning after December 15, 2016, including interim periods within those annual periods. The Company is currently in the process of evaluating the impact that adopting ASU 2014-09 will have on its consolidated financial statements and notes thereto. The Company has a cross-functional implementation team in place that is performing a comprehensive evaluation of the impact. The Company’s evaluation efforts to date have included a review of current accounting policies and processes, as well as typical terms in contracts with customers, to identify potential differences upon the adoption of the new standard. Based on these efforts, the Company currently anticipates that the performance obligations underlying its core revenue streams (i.e., its retail and wholesale businesses), and the timing of revenue recognition thereof, will remain substantially unchanged for the Coach and Stuart Weitzman segments. The Company is still in the process of evaluating the impact of the new standard on the Kate Spade business, as well as the impact of the new standard on ancillary sources of revenue, such as its licensing business, which represented approximately 1% of total net sales in fiscal 2017. The Company is currently assessing whether the timing of recognizing contractually guaranteed minimum royalty amounts will change. The Company has not yet determined whether the guidance will be adopted using the full retrospective restatement of all prior periods presented, or using the modified retrospective basis with a cumulative adjustment to opening retained earnings in the year of initial adoption. |
Integration and Acquisition Cos
Integration and Acquisition Costs | 3 Months Ended |
Sep. 30, 2017 | |
Business Combinations [Abstract] | |
Business Acquisition, Integration, Restructuring and Other Related Costs | INTEGRATION AND ACQUISITION COSTS The Company completed its acquisition of Kate Spade on July 11, 2017. As a result of this acquisition, during the first quarter of fiscal 2018, the Company incurred integration and acquisition-related costs of $187.5 million . These charges recorded in cost of sales and selling, general and administrative ("SG&A") expenses were $88.4 million and $99.1 million , respectively. The charges recorded to cost of sales were recorded in the Kate Spade segment. Of the amount recorded to SG&A expenses, $67.8 million was recorded in the Kate Spade segment, $30.4 million was recorded in Corporate and $0.9 million was recorded in the Stuart Weitzman segment. The Company incurred acquisition costs of $16.9 million in fiscal 2017 related to the Kate Spade acquisition which were recorded as Corporate expense. The Company continues to develop its plans for integration, and currently estimates that it will incur approximately $80 million in pre-tax charges, of which approximately $35 million are expected to be non-cash charges, for the remainder of fiscal 2018. Refer to Note 6, "Acquisition" for more information related to the Kate Spade acquisition. A summary of charges and related liabilities related to the integration and acquisition of Kate Spade is as follows: Purchase Accounting Adjustments (1) Acquisition Costs (2) Inventory-Related Charges (3) Contractual Payments (4) Organization-Related (5) Other (6) Total (millions) Assumed Liability $ — $ — $ 2.5 $ — $ — $ — $ 2.5 Fiscal 2018 charges 52.0 39.9 37.6 35.9 14.0 8.1 187.5 Cash payments — (38.0 ) (0.8 ) (28.2 ) (2.6 ) (5.7 ) (75.3 ) Non-cash charges (52.0 ) — (37.6 ) — (2.5 ) (1.7 ) (93.8 ) Liability as of September 30, 2017 $ — $ 1.9 $ 1.7 $ 7.7 $ 8.9 $ 0.7 $ 20.9 (1) Purchase accounting adjustments, of which $50.8 million was recorded within cost of sales and $1.2 million was recorded in SG&A expenses within the Kate Spade segment, relate to the short-term impact of the amortization of fair value adjustments. (2) Acquisition costs, which were recorded to SG&A expenses, and of which $20.8 million were within Corporate expenses and $19.1 million were within the Kate Spade segment, primarily relate to deal fees associated with the acquisition. (3) Inventory-related charges, recorded within cost of sales in the Kate Spade segment, primarily related to reserves for the future destruction of certain on-hand inventory and non-cancelable inventory purchase commitments related to raw materials. As of September 30, 2017, a reserve of $37.8 million is included within Inventories on the Company's Condensed Consolidated Balance Sheet. (4) Contractual payments, which were recorded to SG&A expenses within the Kate Spade segment, primarily relate to severance and related costs as a result of pre-existing agreements that were in place with certain Kate Spade executives which became effective upon the closing of the acquisition. The amounts do not include expense of $2.4 million that was recorded as part of the Company's ongoing operations. For the remainder of fiscal 2018, the Company expects to incur costs of approximately $17 million in connection with these agreements, of which approximately $13 million will be considered an integration charge. (5) Organization-related costs, which were recorded to SG&A expenses, and of which $9.8 million were within the Kate Spade segment and $4.2 million within Corporate expenses, primarily relate to severance related charges, including $2.5 million of accelerated share-based compensation expense. (6) Other primarily relates to professional fees and asset write-offs. These costs were recorded to SG&A expenses, of which $5.4 million was recorded within Corporate expenses, $1.8 million was recorded to Kate Spade and $0.9 million was recorded to Stuart Weitzman. |
Restructuring Activities
Restructuring Activities | 3 Months Ended |
Sep. 30, 2017 | |
Restructuring and Related Activities [Abstract] | |
Restructuring Activities | RESTRUCTURING ACTIVITIES Operational Efficiency Plan During the fourth quarter of fiscal 2016, the Company announced a plan (the “Operational Efficiency Plan”) to enhance organizational efficiency, update core technology platforms and network optimization. The Operational Efficiency Plan was adopted as a result of a strategic review of the Company’s corporate structure which focused on creating an agile and scalable business model. During the three months ended September 30, 2017 , the Company incurred Operational Efficiency Plan related charges within SG&A expenses of $3.1 million , primarily due to technology infrastructure costs and organizational efficiency costs. During the three months ended October 1, 2016 , the Company incurred Operational Efficiency Plan related charges within SG&A expenses of $7.1 million , primarily due to organizational efficiency costs and, to a lesser extent, network optimization costs. Total cumulative charges incurred under the Operational Efficiency Plan to date are $71.0 million . The remaining charges under this plan will approximate $5 - 10 million within Corporate expenses in fiscal 2018. A summary of charges and related liabilities under the Company's Operational Efficiency Plan is as follows: Organizational Efficiency (1) Technology Infrastructure (2) Network Optimization (3) Total (millions) Liability as of July 2, 2016 $ 22.2 $ — $ 3.2 $ 25.4 Fiscal 2017 charges 15.6 8.0 0.4 24.0 Cash payments (23.3 ) (7.7 ) (3.0 ) (34.0 ) Non-cash charges (7.9 ) — (0.6 ) (8.5 ) Liability as of July 1, 2017 $ 6.6 $ 0.3 $ — $ 6.9 Fiscal 2018 charges 0.6 2.5 — 3.1 Cash payments (2.8 ) (2.5 ) — (5.3 ) Non-cash charges (0.8 ) — — (0.8 ) Liability as of September 30, 2017 $ 3.6 $ 0.3 $ — $ 3.9 (1) Organizational efficiency charges, recorded within SG&A expenses, primarily related to accelerated depreciation associated with the retirement of information technology systems, severance and related costs of corporate employees as well as consulting fees related to process and organizational optimization. (2) Technology infrastructure costs, recorded within SG&A expenses, related to the initial costs of replacing and updating the Company’s core technology platforms. (3) Network optimization costs, recorded within SG&A expenses, related to lease termination costs. The balances as of September 30, 2017 and July 1, 2017 are included within Accrued liabilities on the Company's Condensed Consolidated Balance Sheets. The above charges were recorded as Corporate expenses within the Company's Condensed Consolidated Statements of Operations. Refer to Note 15, "Segment Information," for further information. |
Acquisition
Acquisition | 3 Months Ended |
Sep. 30, 2017 | |
Business Combinations [Abstract] | |
Acquisitions | ACQUISITION Fiscal 2018 Acquisition On July 11, 2017, the Company completed its acquisition of Kate Spade & Company for $18.50 per share for a total purchase price of $2.40 billion . As a result, Kate Spade has become a wholly owned subsidiary of the Company. The combination of the Company and Kate Spade & Company creates a leading New York-based luxury lifestyle company with a more diverse multi-brand portfolio supported by significant expertise in handbag design, merchandising, supply chain and retail operations. The results of Kate Spade's operations have been presented as a segment of Tapestry within Note 15, "Segment Information" for the period commencing on July 11, 2017. The aggregate cash paid in connection with the acquisition of Kate Spade was $2.39 billion (or $2.32 billion net of cash acquired), excluding $5.3 million of consideration which will be settled in Tapestry shares, as a result of the conversion of previously granted unvested equity awards held by Kate Spade employees. The Company funded the acquisition through cash on-hand and debt proceeds, as described in Note 11, "Debt." The Company accounted for the acquisition of Kate Spade under the acquisition method of accounting for business combinations. Accordingly, the cost to acquire such assets was allocated to the underlying net assets based on their respective fair values. The excess of the purchase price over the estimated fair value of the net assets acquired was recorded as goodwill, which consists largely of the synergies expected from the acquisition. The purchase price allocation for the assets acquired and liabilities assumed is substantially complete, however may be subject to change as additional information is obtained during the acquisition measurement period. The Company may assign goodwill to other reporting units of the Company when the analysis of expected synergies is completed. The following table summarizes the fair value of the assets acquired and liabilities assumed as of the acquisition date: Assets Acquired and Liabilities Assumed Fair Value (millions) Cash and cash equivalents $ 71.8 Trade accounts receivable 62.8 Inventories (1) 310.1 Prepaid expenses and other current assets 33.9 Property and equipment 175.5 Goodwill (2) 927.5 Brand (3) 1,300.0 Other intangible assets (4) 119.2 Other assets 59.0 Total assets acquired 3,059.8 Accounts payable and accrued liabilities 233.3 Deferred income taxes (5) 344.4 Other liabilities (6) 84.8 Total liabilities assumed 662.5 Total purchase price 2,397.3 Less: Cash acquired (71.8 ) Total purchase price, net of cash acquired $ 2,325.5 (1) Included a step-up adjustment of approximately $67.5 million , which will be amortized over 4 months . (2) The goodwill balance is not deductible for tax purposes. (3) The brand intangible asset was valued based on the multi-period excess earnings method. (4) The components of other intangible assets included favorable lease rights of approximately $72.2 million (amortized over the remainder of the underlying lease terms), customer relationships of approximately $45.0 million (amortized over 15 years) and order backlog of $2.0 million (amortized over 6 months). Favorable lease rights were valued based on a comparison of market participant information and Company-specific lease terms. The customer relationship intangible asset was valued using the excess earnings method, which discounts the estimated after-tax cash flows associated with the existing base of customers as of the acquisition date, factoring in expected attrition of the existing base. The order backlog intangible asset was valued using the excess earnings method, which discounts the estimated after-tax cash flows associated with open customer orders as of the acquisition date. (5) The Company acquired approximately $209.0 million of net deferred tax assets related to Kate Spade historical federal and state net operating losses, which the Company expects to be able to utilize. The deferred tax adjustments resulting from the step-up in basis of acquired assets, most notably the brand intangible asset, resulted in an overall deferred tax liability. (6) Includes an adjustment for unfavorable lease rights of approximately $49.5 million (amortized over the remainder of the underlying lease terms). The operational results of Kate Spade for the post-acquisition period from July 11, 2017 to September 30, 2017 are included in the Company’s accompanying condensed consolidated statement of operations for the three months ended September 30, 2017 . Refer to Note 15, "Segment Information," for the operational results of the Kate Spade business. The following pro forma information has been prepared as if the Kate Spade acquisition and the related debt financing had occurred as of the beginning of fiscal 2017. These adjustments include the removal of certain historical amounts. The pro forma amounts reflect the combined historical operational results for Tapestry and Kate Spade, after giving effect to adjustments related to the impact of purchase accounting, transaction costs and financing. The pro forma financial information is not indicative of the operational results that would have been obtained had the transactions actually occurred as of that date, nor is it necessarily indicative of the Company’s future operational results. The following adjustments have been made: (i) Depreciation and amortization expenses related to the fair value adjustments to Kate Spade's property and equipment and intangible assets have been reflected in the in the first quarter of fiscal 2017. Short-term purchase accounting amortization has been excluded from the pro forma amounts due to the non-recurring nature. (ii) Transaction costs in the first quarter of fiscal 2018 have been excluded from the pro forma amounts due to their non-recurring nature. (iii) Interest expense, including amortization of deferred financing fees, of debt issued to finance the acquisition of have been reflected in the first quarter of fiscal 2017. Historical interest expense for Kate Spade has been removed. (iv) The tax effects of the pro forma adjustments at an estimated statutory rate of 40.0%. (v) Earnings per share amounts are calculated using the Company's historical weighted average shares outstanding. Three Months Ended September 30, October 1, (millions, except per share data) Pro forma Net sales (1) $ 1,321.8 $ 1,351.2 Pro forma Net income (1) 41.2 137.3 Pro forma Net income per share: Basic $ 0.15 $ 0.49 Diluted $ 0.14 $ 0.49 (1) The pro forma net sales for first quarter of fiscal 2018 includes revenue and operating income from the pre-combination period in fiscal 2018. |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 3 Months Ended |
Sep. 30, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Other Intangible Assets | GOODWILL AND OTHER INTANGIBLE ASSETS Goodwill The change in the carrying amount of the Company’s goodwill by segment is as follows: Coach Stuart Weitzman Kate Spade Total (millions) Balance at July 1, 2017 $ 324.5 $ 156.0 $ — $ 480.5 Foreign exchange impact 1.0 1.2 — 2.2 Acquisition of goodwill (1) — — 927.5 927.5 Balance at September 30, 2017 $ 325.5 $ 157.2 $ 927.5 $ 1,410.2 (1) Refer to Note 6, "Acquisition," for further information. The Company may assign goodwill to other reporting units of the Company when the analysis of expected synergies is completed. Intangible Assets Intangible assets consist of the following: September 30, 2017 July 1, 2017 Gross Accum. Net Gross Accum. Net (millions) Intangible assets subject to amortization: Customer relationships $ 99.7 $ (11.6 ) $ 88.1 $ 54.7 $ (9.7 ) $ 45.0 Order backlog 2.0 (1.0 ) 1.0 — — — Favorable lease rights 98.3 (11.1 ) 87.2 26.1 (7.1 ) 19.0 Total intangible assets subject to amortization 200.0 (23.7 ) 176.3 80.8 (16.8 ) 64.0 Intangible assets not subject to amortization: Trademarks and trade names 1,576.8 — 1,576.8 276.8 — 276.8 Total intangible assets $ 1,776.8 $ (23.7 ) $ 1,753.1 $ 357.6 $ (16.8 ) $ 340.8 As of September 30, 2017 , the expected amortization expense for intangible assets is as follows: Amortization Expense (millions) Remainder of fiscal 2018 $ 15.1 Fiscal 2019 22.8 Fiscal 2020 20.9 Fiscal 2021 19.3 Fiscal 2022 17.2 Fiscal 2023 16.1 Fiscal 2024 and thereafter 64.9 Total $ 176.3 The expected amortization expense above reflects remaining useful lives ranging from approximately 12.3 to 14.8 years for customer relationships and the remaining lease terms ranging from approximately 3 months to 17.5 years for favorable lease rights. |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Sep. 30, 2017 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Equity | STOCKHOLDERS' EQUITY A reconciliation of stockholders' equity is presented below: Shares of Common Stock Common Stock Additional Paid-in- Capital (Accumulated Deficit) / Retained Earnings Accumulated Other Comprehensive Loss Total Stockholders' Equity (millions, except per share data) Balance at July 2, 2016 278.5 $ 2.8 $ 2,857.1 $ (104.1 ) $ (72.9 ) $ 2,682.9 Net income — — — 117.4 — 117.4 Other comprehensive income — — — — 5.3 5.3 Shares issued, pursuant to stock-based compensation arrangements, net of shares withheld for taxes 1.8 — 1.1 — — 1.1 Share-based compensation — — 16.0 — — 16.0 Excess tax effect from share-based compensation — — 0.4 — — 0.4 Dividends declared ($0.3375 per share) — — — (94.6 ) — (94.6 ) Balance at October 1, 2016 280.3 $ 2.8 $ 2,874.6 $ (81.3 ) $ (67.6 ) $ 2,728.5 Balance at July 1, 2017 281.9 $ 2.8 $ 2,978.3 $ 107.7 $ (86.9 ) $ 3,001.9 Net loss — — — (17.7 ) — (17.7 ) Other comprehensive income — — — — 5.6 5.6 Shares issued, pursuant to stock-based compensation arrangements, net of shares withheld for taxes 2.3 — 17.5 — — 17.5 Share-based compensation — — 23.3 — — 23.3 Additional paid-in-capital as part of purchase consideration — — 5.3 — — 5.3 Dividends declared ($0.3375 per share) — — — (95.9 ) — (95.9 ) Balance at September 30, 2017 284.2 $ 2.8 $ 3,024.4 $ (5.9 ) $ (81.3 ) $ 2,940.0 The components of accumulated other comprehensive loss ("AOCI"), as of the dates indicated, are as follows: Unrealized (Losses) Gains on Cash Flow Hedges (1) Unrealized Gains (Losses) on Available- for-Sale Debt Securities Cumulative Translation Adjustment Other (2) Total (millions) Balances at July 2, 2016 $ (8.8 ) $ 0.3 $ (62.9 ) $ (1.5 ) $ (72.9 ) Other comprehensive income (loss) before reclassifications 0.1 (0.5 ) 2.9 — 2.5 Less: losses reclassified from accumulated other comprehensive income to earnings (2.8 ) — — — (2.8 ) Net current-period other comprehensive income (loss) 2.9 (0.5 ) 2.9 — 5.3 Balances at October 1, 2016 $ (5.9 ) $ (0.2 ) $ (60.0 ) $ (1.5 ) $ (67.6 ) Balances at July 1, 2017 $ 3.0 $ (0.4 ) $ (89.1 ) $ (0.4 ) $ (86.9 ) Other comprehensive (loss) income before reclassifications (1.5 ) 0.2 8.5 — 7.2 Less: income reclassified from accumulated other comprehensive income to earnings 1.6 — — — 1.6 Net current-period other comprehensive (loss) income (3.1 ) 0.2 8.5 — 5.6 Balances at September 30, 2017 $ (0.1 ) $ (0.2 ) $ (80.6 ) $ (0.4 ) $ (81.3 ) (1) The ending balances of AOCI related to cash flow hedges are net of tax of ($1.1) million and $3.0 million as of September 30, 2017 and October 1, 2016 , respectively. The amounts reclassified from AOCI are net of tax of ($1.0) million and $1.4 million as of September 30, 2017 and October 1, 2016 , respectively. (2) Other represents the accumulated loss on the Company's minimum pension liability adjustment. The balances at September 30, 2017 and October 1, 2016 are net of tax of $0.2 million and $0.8 million, respectively. |
Earnings per Share
Earnings per Share | 3 Months Ended |
Sep. 30, 2017 | |
Earnings Per Share [Abstract] | |
Earnings per Share | 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. The following is a reconciliation of the weighted-average shares outstanding and calculation of basic and diluted earnings per share: Three Months Ended September 30, October 1, (millions, except per share data) Net (loss) income $ (17.7 ) $ 117.4 Weighted-average basic shares 283.2 279.5 Effect of dilutive securities 3.5 2.4 Weighted-average diluted shares 286.7 281.9 Net (loss) income per share: Basic $ (0.06 ) $ 0.42 Diluted $ (0.06 ) $ 0.42 Earnings per share amounts have been calculated based on unrounded numbers. Options to purchase shares of the Company's common stock at an exercise price greater than the average market price of the common stock during the reporting period are anti-dilutive and therefore not included in the computation of diluted net income per common share. In addition, the Company has outstanding restricted stock unit awards that are issuable only upon the achievement of certain performance goals. Performance-based restricted stock unit awards are included in the computation of diluted shares only to the extent that the underlying performance conditions (and any applicable market condition modifiers) (i) are satisfied as of the end of the reporting period or (ii) would be considered satisfied if the end of the reporting period were the end of the related contingency period and the result would be dilutive under the treasury stock method. As of September 30, 2017 and October 1, 2016 , there were 5.2 million and 9.1 million , respectively, of additional shares issuable upon exercise of anti-dilutive options and contingent vesting of performance-based restricted stock unit awards, which were excluded from the diluted share calculations. |
Share-based Compensation
Share-based Compensation | 3 Months Ended |
Sep. 30, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Share-based Compensation | SHARE-BASED COMPENSATION The following table shows the total compensation cost charged against income for share-based compensation plans and the related tax benefits recognized in the Company's Condensed Consolidated Statements of Income for the periods indicated: Three Months Ended September 30, 2017 (1) October 1, 2016 (millions) Share-based compensation expense $ 23.3 $ 16.0 Income tax benefit related to share-based compensation expense 7.6 4.7 (1) During the three months ended September 30, 2017 , the Company incurred $2.5 million of share-based compensation expense related to Kate Spade integration severance as well as $0.8 million of expense under the Company's Operational Efficiency Plan. Stock Options A summary of stock option activity during the three months ended September 30, 2017 is as follows: Number of Options Outstanding Weighted-Average Exercise Price per Option (millions) Outstanding at July 1, 2017 15.0 $ 39.75 Granted 2.9 41.00 Exercised (1.2 ) 45.69 Forfeited or expired (0.3 ) 39.29 Outstanding at September 30, 2017 16.4 39.54 Vested and expected to vest at September 30, 2017 16.3 42.28 Exercisable at September 30, 2017 10.1 42.83 At September 30, 2017 , $36.9 million of total unrecognized compensation cost related to non-vested stock option awards is expected to be recognized over a weighted-average period of 1.5 years. The weighted-average grant-date fair value of options granted during the three months ended September 30, 2017 and October 1, 2016 was $7.69 and $7.29 , respectively. The total intrinsic value of options exercised during the three months ended September 30, 2017 and October 1, 2016 was $9.2 million and $5.7 million, respectively. The total cash received from option exercises was $43.5 million for the three months ended September 30, 2017 and $20.7 million for the three months ended October 1, 2016 , and the cash tax benefit realized for the tax deductions from these option exercises was approximately $4.2 million and $2.1 million, respectively. Service-based Restricted Stock Unit Awards ("RSUs") A summary of service-based RSU activity during the three months ended September 30, 2017 is as follows: Number of Non-vested RSUs Weighted- Average Grant- Date Fair Value per RSU (millions) Non-vested at July 1, 2017 3.5 $ 50.28 Granted 1.5 41.11 Awards issued in connection with acquisition 0.4 47.26 Vested (1.5 ) 47.45 Forfeited (0.1 ) 39.59 Non-vested at September 30, 2017 3.8 47.74 At September 30, 2017 , $105.1 million of total unrecognized compensation cost related to non-vested share awards is expected to be recognized over a weighted-average period of 1.4 years. The weighted-average grant-date fair value of share awards granted during the three months ended September 30, 2017 and October 1, 2016 was $41.11 and $39.88 , respectively. The total fair value of shares vested during the three months ended September 30, 2017 and October 1, 2016 was $70.2 million and $62.1 million, respectively. Performance-based Restricted Stock Unit Awards ("PRSUs") A summary of PRSU activity during the three months ended September 30, 2017 is as follows: Number of Non-vested PRSUs Weighted- Average Grant- Date Fair Value per PRSU (millions) Non-vested at July 1, 2017 1.5 $ 37.78 Granted 0.3 41.26 Change due to performance condition achievement (0.1 ) 36.29 Vested (0.2 ) 46.90 Forfeited (1) — 36.36 Non-vested at September 30, 2017 1.5 37.36 (1) During the three months ended September 30, 2017 , fewer than 0.1 million PRSU shares forfeited. At September 30, 2017 , $17.6 million of total unrecognized compensation cost related to non-vested PRSU awards is expected to be recognized over a weighted-average period of 1.2 years. Included in the non-vested amount at September 30, 2017 are approximately 0.6 million PRSU awards that are based on performance criteria which compares the Company's total stockholder return over the performance period to the total stockholder return of the companies included in the Standard and Poor's 500 Index. There were no awards granted during the three months ended September 30, 2017 with this performance criteria. The remaining 0.8 million PRSU awards included in the non-vested amount are based on certain Company-specific financial and operational metrics. The weighted-average grant-date fair value per share of PRSU awards granted during the three months ended September 30, 2017 and October 1, 2016 was $41.26 and $39.92 , respectively. The total fair value of awards that vested during the three months ended September 30, 2017 and October 1, 2016 was $11.4 million and $0.9 million, respectively. In the three months ended September 30, 2017 and October 1, 2016 , the cash tax benefit realized for the tax deductions from all RSUs (service and performance-based) was $16.7 million and $18.3 million, respectively. |
Debt
Debt | 3 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
Debt | DEBT The following table summarizes the components of the Company’s outstanding debt: September 30, 2017 July 1, 2017 (millions) Current Debt: Term Loan $ 800.0 $ — Capital Lease Obligations 0.6 — Total Current Debt $ 800.6 $ — Long-Term Debt: Term Loan $ 300.0 $ — 4.250% Senior Notes due 2025 600.0 600.0 3.000% Senior Notes due 2022 400.0 400.0 4.125% Senior Notes due 2027 600.0 600.0 Capital Lease Obligations 7.8 — Total Long-Term Debt 1,907.8 1,600.0 Less: Unamortized Discount and Debt Issuance Costs (19.6 ) (20.5 ) Total Long-Term Debt, net $ 1,888.2 $ 1,579.5 During the three months ended September 30, 2017 and three months ended October 1, 2016 , the Company recognized interest expense related to its debt of $24.4 million and $7.4 million , respectively. Bridge Facility On May 7, 2017, the Company entered into a bridge facility commitment letter (the "Bridge Facility") pursuant to which Merrill Lynch, Pierce, Fenner & Smith Incorporated and Bank of America, N.A. (together, "BofA Merrill Lynch") committed to provide up to $2.1 billion under a 364-day senior unsecured bridge term loan credit facility to finance the Kate Spade acquisition in the event that the Company had not issued senior unsecured notes and obtained term loans prior to the consummation of the acquisition. As of September 30, 2017, the Bridge Facility has been terminated. Credit Facilities/Term Loans On May 30, 2017, the Company entered into a definitive credit agreement whereby Bank of America, N.A., as administrative agent, the other agents party thereto, and a syndicate of banks and financial institutions have (i) committed to lend to the Company, subject to the satisfaction or waiver of the conditions set forth in the agreement, an $800.0 million term loan facility maturing six months after the term loans thereunder are borrowed (the “Six-Month Term Loan Facility”), and a $300.0 million term loan facility maturing three years after the term loans thereunder are borrowed (collectively with the Six-Month Term Loan Facility, the “Term Loan Facilities”) and (ii) made available to the Company a $900.0 million revolving credit facility, including sub-facilities for letters of credit, with a maturity date of May 30, 2022 (the “Revolving Credit Facility,” collectively with the Term Loan Facilities, "the Facility"). The Revolving Credit Facility replaced the Company’s previously existing revolving credit facility under the Amendment and Restatement Agreement, dated as of March 18, 2015, by and between the Company, certain lenders and JPMorgan Chase Bank, N.A., as administrative agent. The Revolving Credit Facility may be used to finance the working capital needs, capital expenditures, permitted investments, share purchases, dividends and other general corporate purposes of the Company and its subsidiaries (which may include commercial paper back-up). Letters of credit and swing line loans may be issued under the Revolving Credit Facility as described below. On July 10, 2017, the Company borrowed $800.0 million under the Six-Month Term Loan Facility and $300.0 million under the Three-Year Term Loan Facility to pay a portion of the purchase price of the Company's acquisition of Kate Spade. Under the Term Loan Facilities, there were total borrowings of $1.1 billion outstanding and no outstanding borrowings on the Revolving Credit Facility as of September 30, 2017. Borrowings under the Revolving Credit Facility bear interest at a rate per annum equal to, at the Borrowers’ option, either (a) an alternate base rate (which is a rate equal to the greatest of (i) the Prime Rate in effect on such day, (ii) the Federal Funds Effective Rate in effect on such day plus ½ of 1% or (iii) the Adjusted LIBO Rate for a one month Interest Period on such day plus 1% ) or (b) a rate based on the rates applicable for deposits in the interbank market for U.S. Dollars or the applicable currency in which the loans are made plus, in each case, an applicable margin. The applicable margin will be determined by reference to a grid, as defined in the Credit Agreement, based on the ratio of (a) consolidated debt plus 600% of consolidated lease expense to (b) consolidated EBITDAR. Additionally, the Company pays a commitment fee at a rate determined by the reference to the aforementioned pricing grid. 2025 Senior Notes On March 2, 2015, the Company issued $600.0 million aggregate principal amount of 4.250% senior unsecured notes due April 1, 2025 at 99.445% of par (the “2025 Senior Notes”). Interest is payable semi-annually on April 1 and October 1 beginning October 1, 2015. Prior to January 1, 2025 ( 90 days prior to the scheduled maturity date), the Company may redeem the 2025 Senior Notes in whole or in part, at its option at any time or from time to time, at a redemption price equal to the greater of (1) 100% of the principal amount of the 2025 Senior Notes to be redeemed or (2) the sum of the present values of the remaining scheduled payments of principal and interest thereon that would have been payable in respect of the 2025 Senior Notes calculated as if the maturity date of the 2025 Senior Notes was January 1, 2025 (not including any portion of payments of interest accrued to the date of redemption), discounted to the redemption date on a semi-annual basis at the Adjusted Treasury Rate (as defined in the indenture for the 2025 Senior Notes) plus 35 basis points, plus, in the case of each of (1) and (2), accrued and unpaid interest to the redemption date. On and after January 1, 2025 ( 90 days prior to the scheduled maturity date), the Company may redeem the 2025 Senior Notes in whole or in part, at its option at any time or from time to time, at a redemption price equal to 100% of the principal amount of the 2025 Senior Notes to be redeemed, plus accrued and unpaid interest to the redemption date. 2022 Senior Notes On June 20, 2017, the Company issued $400.0 million aggregate principal amount of 3.000% senior unsecured notes due July 15, 2022 at 99.505% of par (the "2022 Senior Notes"). Interest is payable semi-annually on January 15 and July 15 beginning January 15, 2018. Prior to June 15, 2022 (one month prior to the scheduled maturity date), the Company may redeem the 3.000% Senior Notes in whole or in part, at its option at any time or from time to time, at a redemption price equal to the greater of (1) 100% of the principal amount of the 2022 Senior Notes to be redeemed or (2) as determined by a Quotation Agent, the sum of the present values of the remaining scheduled payments of principal and interest thereon that would have been payable in respect of the 2022 Senior Notes calculated as if the maturity date of the 2022 Senior Notes was June 15, 2022 (not including any portion of payments of interest accrued to the date of redemption), discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Adjusted Treasury Rate (as defined in the Prospectus Supplement) plus 25 basis points, plus, in the case of each of (1) and (2), accrued and unpaid interest to the redemption date. 2027 Senior Notes On June 20, 2017, the Company issued $600.0 million aggregate principal amount of 4.125% senior unsecured notes due July 15, 2027 at 99.858% of par (the "2027 Senior Notes"). Interest is payable semi-annually on January 15 and July 15 beginning January 15, 2018. Prior to April 15, 2027 (the date that is three months prior to the scheduled maturity date), the Company may redeem the 2027 Senior Notes in whole or in part, at its option at any time or from time to time, at a redemption price equal to the greater of (1) 100% of the principal amount of the 2027 Senior Notes to be redeemed or (2) as determined by a Quotation Agent, the sum of the present values of the remaining scheduled payments of principal and interest thereon that would have been payable in respect of the 2027 Senior Notes calculated as if the maturity date of the 2027 Senior Notes was April 15, 2027 (not including any portion of payments of interest accrued to the date of redemption), discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Adjusted Treasury Rate (as defined in the Prospectus Supplement) plus 30 basis points, plus, in the case of each of (1) and (2), accrued and unpaid interest to the redemption date. At September 30, 2017 and July 1, 2017 , the total fair value of the 2025, 2022 and 2027 Senior Notes was approximately $1.63 billion and $1.62 billion , respectively, based on external pricing data, including available quoted market prices of these instruments, and consideration of comparable debt instruments with similar interest rates and trading frequency, among other factors, and is classified as a Level 2 measurement within the fair value hierarchy. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Sep. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | FAIR VALUE MEASUREMENTS The Company categorizes its assets and liabilities, based on the priority of the inputs to the valuation technique, into a three-level fair value hierarchy as set forth below. The three levels of the hierarchy are defined as follows: Level 1 — Unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 — Observable inputs other than quoted prices included in Level 1. Level 2 inputs include quoted prices for identical assets or liabilities in non-active markets, quoted prices for similar assets or liabilities in active markets, and inputs other than quoted prices that are observable for substantially the full term of the asset or liability. Level 3 — Unobservable inputs reflecting management’s own assumptions about the input used in pricing the asset or liability. The following table shows the fair value measurements of the Company’s financial assets and liabilities at September 30, 2017 and July 1, 2017 : Level 1 Level 2 Level 3 September 30, July 1, September 30, July 1, September 30, July 1, (millions) Assets: Cash equivalents (1) $ 449.8 $ 760.0 $ 62.5 $ 226.0 $ — $ — Short-term investments : Time deposits (2) — — 0.6 0.6 — — Commercial paper (2) — — 28.9 68.8 — — Government securities - U.S. (2) 69.8 130.4 — — — — Corporate debt securities - U.S. (2) — — 110.3 116.2 — — Corporate debt securities - non U.S. (2) — — 82.9 92.6 — — Other — — 5.1 2.1 — — Long-term investments : Corporate debt securities - U.S. (3) — — 29.2 46.9 — — Corporate debt securities - non U.S. (3) — — 10.9 28.2 — — Derivative Assets : Inventory-related hedges (4) — — 4.0 3.5 — — Intercompany loan hedges (4) — — 1.0 — — — Liabilities: Derivative liabilities : Inventory-related hedges (4) — — 4.1 1.0 — — Intercompany loan hedges (4) — — 0.1 0.7 — — (1) Cash equivalents consist of money market funds and time deposits with maturities of three months or less at the date of purchase. Due to their short term maturity, management believes that their carrying value approximates fair value. (2) Short-term available-for-sale investments are recorded at fair value, which approximates their carrying value, and are primarily based upon quoted vendor or broker priced securities in active markets. (3) Fair value is primarily determined using vendor or broker priced securities in active markets. These securities have maturity dates in calendar years 2018 and 2019. (4) The fair value of these hedges is primarily based on the forward curves of the specific indices upon which settlement is based and includes an adjustment for the counterparty’s or Company’s credit risk. Non-Financial Assets and Liabilities The Company’s non-financial instruments, which primarily consist of goodwill, intangible assets and property and equipment, are not required to be measured at fair value on a recurring basis and are reported at carrying value. However, on a periodic basis whenever events or changes in circumstances indicate that their carrying value may not be fully recoverable (and at least annually for goodwill and indefinite-lived intangible assets), non-financial instruments are assessed for impairment and, if applicable, written-down to and recorded at fair value, considering market participant assumptions. |
Investments
Investments | 3 Months Ended |
Sep. 30, 2017 | |
Investments, Debt and Equity Securities [Abstract] | |
Investments | INVESTMENTS The following table summarizes the Company’s U.S. dollar-denominated investments, recorded within the Company's Condensed Consolidated Balance Sheets as of September 30, 2017 and July 1, 2017 : September 30, 2017 July 1, 2017 Short-term Long-term Total Short-term Long-term Total (millions) Available-for-sale investments: Commercial paper (1) $ 28.9 $ — $ 28.9 $ 68.8 $ — $ 68.8 Government securities - U.S. (2) 69.8 — 69.8 130.4 — 130.4 Corporate debt securities - U.S. (2) 110.3 29.2 139.5 116.2 46.9 163.1 Corporate debt securities - non-U.S. (2) 82.9 10.9 93.8 92.6 28.2 120.8 Available-for-sale investments, total $ 291.9 $ 40.1 $ 332.0 $ 408.0 $ 75.1 $ 483.1 Other: Time deposits (1) 0.6 — 0.6 0.6 — 0.6 Other (3) 5.1 29.9 35.0 2.1 — 2.1 Total Investments $ 297.6 $ 70.0 $ 367.6 $ 410.7 $ 75.1 $ 485.8 (1) These securities have original maturities greater than three months and are recorded at fair value. (2) The securities as of September 30, 2017 have maturity dates between calendar years 2017 and 2019 and are recorded at fair value. (3) Other long-term investments relate to Kate Spade's investments in joint ventures. The Company accounts for its investments in the joint ventures under the equity method of accounting. The Company and Walton Brown each own 50.0% of the shares of KS China Co., Limited and KS HMT Co., Limited, the holding company for the Kate Spade businesses in Hong Kong, Macau and Taiwan. With an equal partnership structure, the Company and Walton Brown actively manage the businesses together. There were no material gross unrealized gains or losses on available-for-sale securities during the periods ended September 30, 2017 and July 1, 2017 . |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | COMMITMENTS AND CONTINGENCIES Letters of Credit The Company had standby letters of credit and bank guarantees totaling $17.5 million and $9.0 million outstanding at September 30, 2017 and July 1, 2017 , respectively. The agreements, which expire at various dates through calendar 2039, primarily collateralize the Company's obligation to third parties for leases, insurance claims and materials used in product manufacturing. The Company pays certain fees with respect to letters of credit that are issued. Other In the ordinary course of business, the Company is a party to several pending legal proceedings and claims. Although the outcome of such items cannot be determined with certainty, the Company's general counsel and management are of the opinion that the final outcome will not have a material effect on the Company’s cash flow, results of operations or financial position. Kate Spade & Company Acquisition In connection with the acquisition of Kate Spade & Company, pre-existing agreements were in place with certain Kate Spade executives which became effective upon the closing of the acquisition. Refer to Note 4, "Integration and Acquisition Costs," for further information. |
Segment Information
Segment Information | 3 Months Ended |
Sep. 30, 2017 | |
Segment Reporting [Abstract] | |
Segment Information | SEGMENT INFORMATION Prior to the first quarter of fiscal 2018, the Company had the following three reportable segments: North America (Coach brand), International (Coach brand) and Stuart Weitzman. Beginning in fiscal 2018 , the Company realigned its business following the acquisition of Kate Spade. The Company now has three reportable segments, which are the Company's operating segments. These segments are based on its business activities and organization: • Coach - Includes worldwide sales of Coach brand products to customers through Coach-operated stores, including the Internet, concession shop-in-shops and sales to wholesale customers and independent third party distributors. • Kate Spade - Includes worldwide sales primarily of kate spade new york brand products to customers through Kate Spade operated stores, including the Internet, concession shop-in-shops, independent third party distributors and to wholesale customers. • Stuart Weitzman - Includes worldwide sales of Stuart Weitzman brand products primarily to wholesale customers, numerous independent third party distributors and through Stuart Weitzman operated stores, including the Internet. The new segment structure is consistent with how the Company establishes its overall business strategy, allocates resources and assesses performance of its business. Additionally, certain costs were reclassified from Corporate unallocated to the Coach and Stuart Weitzman segments, as the costs can now be specifically identified to each segment. The following table summarizes segment performance for the three months ended September 30, 2017 and October 1, 2016 : Coach Kate Spade (1) Stuart Weitzman Corporate (2) Total (millions) Three Months Ended September 30, 2017 Net sales $ 923.7 $ 268.8 $ 96.4 $ — $ 1,288.9 Gross profit 632.1 76.3 56.0 — 764.4 Operating income (loss) 198.3 (134.9 ) 8.4 (93.6 ) (21.8 ) Income (loss) before provision for income taxes 198.3 (134.9 ) 8.4 (114.1 ) (42.3 ) Depreciation and amortization expense (3) 38.1 10.4 4.0 13.0 65.5 Additions to long-lived assets 29.1 6.9 0.7 12.2 48.9 Three Months Ended October 1, 2016 Net sales $ 950.1 $ — $ 87.5 $ — $ 1,037.6 Gross profit 663.6 — 51.1 — 714.7 Operating income (loss) 232.3 — 3.9 (70.3 ) 165.9 Income (loss) before provision for income taxes 232.3 — 3.9 (76.0 ) 160.2 Depreciation and amortization expense (3) 35.6 — 3.8 15.9 55.3 Additions to long-lived assets 42.9 — 9.1 15.6 67.6 (1) On July 11, 2017, the Company completed its acquisition of Kate Spade. The operating results of Kate Spade have been consolidated in the Company's operating results commencing on July 11, 2017. Kate Spade's sales are primarily generated by kate spade new york brand women's handbags, small leather goods, ready-to-wear and jewelry. Kate Spade's assets are primarily located in the U.S. (2) Corporate, which is not a reportable segment represents certain costs that are not directly attributable to a brand. These costs primarily represent administration and information systems expense. Furthermore, certain integration and acquisition costs as well as costs under the Company's Operational Efficiency Plan as described in Note 4, "Integration and Acquisition Costs" and Note 5, "Restructuring Activities," respectively, are included as Corporate expenses. During the three months ended September 30, 2017 , Operational Efficiency Plan charges recorded within SG&A expenses were $3.1 million . Furthermore, during the three months ended September 30, 2017 , $30.4 million of charges related to integration and acquisition-related activities were recorded within Corporate costs. During the three months ended October 1, 2016 , Operational Efficiency Plan costs recorded within SG&A expenses were $7.1 million . During the three months ended October 1, 2016 , $2.4 million of charges related to the Stuart Weitzman contingent earn out payments and other integration-related activities were recorded within Corporate costs. (3) Depreciation and amortization expense includes $3.0 million of Operational Efficiency Plan charges for the three months ended October 1, 2016 . These charges are recorded as Corporate expenses. There were no costs incurred during the three months ended September 30, 2017. |
Headquarters Transactions
Headquarters Transactions | 3 Months Ended |
Sep. 30, 2017 | |
Leases [Abstract] | |
Headquarters Transactions | HEADQUARTERS TRANSACTIONS Sale of Interest and Lease Transaction of Hudson Yards During the first quarter of fiscal 2017, the Company announced the sale of its investments in 10 Hudson Yards, in New York City, and the lease of its new global headquarters. The Company sold its equity investment in the Hudson Yards joint venture as well as net fixed assets related to the design and build-out of the space. The Company received a purchase price of approximately $707 million (net of approximately $77 million due to the developer of Hudson Yards) before transaction costs of approximately $26 million , resulting in a gain of $28.8 million , which will be amortized through SG&A expenses over the lease term of 20 years, as discussed below. The Company has simultaneously entered into a 20 -year lease, accounted for as an operating lease, for the headquarters space in the building, comprised of approximately 694,000 square feet. Under the lease, the Company has the right to expand its premises to portions of the 24 th and 25 th floors of the building and has a right of first offer with respect to available space on the 26 th floor of the building. The total commitment related to this lease is approximately $1.05 billion , with minimum lease payments of $41.4 million due in fiscal 2017, $45.1 million due each year from fiscal 2018 through fiscal 2021, and $825.5 million total due for years subsequent to 2021. In addition to its fixed rent obligations, the Company is obligated to pay its percentage share for customary escalations for operating expenses attributable to the building and the Hudson Yards development, taxes and tax related payments. The Company is not obligated to pay any amount of contingent rent. Sale of Former Headquarters During the second quarter of fiscal 2017, the Company completed the sale of its former headquarters on West 34th Street. Net cash proceeds of $126.0 million were generated and the sale did not result in a material gain or loss. Sublease Agreement On September 13, 2017, the Company entered into a Sublease (the "Sublease"), as sublandlord, with The Guardian Life Insurance Company of America, a New York mutual insurance company ("Guardian"), as subtenant, pursuant to which the Company has agreed to sublease to Guardian three floors of the Company's leased space at 10 Hudson Yards, New York, NY, consisting of approximately 148,813 square feet of office space. The term of the Sublease expires on June 29, 2036 (the "Expiration Date"). The rent commencement date under the Sublease is estimated to occur on February 1, 2019. Under the terms of the sublease, and assuming a rent commencement date of February 1, 2019, Guardian has agreed to pay monthly base rent to the Company of approximately $0.8 million from March 1, 2019 through June 30, 2019 and monthly base rent ranging from approximately $1.1 million to $1.3 million depending on the period from July 1, 2019 through the Expiration Date. In addition to monthly base rent, Guardian has agreed to pay to the Company Guardian’s proportionate share of increases in payments in lieu of taxes and taxes over the tax year commencing July 1, 2019, as well as Guardian’s proportionate share of increases in operating expenses over the operating year commencing January 1, 2019. Subject to certain customary conditions set forth in the Sublease, the Company has agreed to reimburse Guardian for certain subtenant improvements in an amount equal to $80.00 per rentable square foot, or approximately $11.9 million in the aggregate, subject to a deduction equal to $10.00 per rentable square foot, or approximately $1.5 million in the aggregate, for work previously performed by or on behalf of the Company. |
Subsequent Event
Subsequent Event | 3 Months Ended |
Sep. 30, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Event | SUBSEQUENT EVENT Tapestry, Inc. On October 11, 2017, the Company announced that it was changing its name to Tapestry, Inc., (NYSE: TPR). This change was effective as of October 31, 2017. |
Basis of Presentation and Org24
Basis of Presentation and Organization (Policies) | 3 Months Ended |
Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Fiscal Periods | Fiscal Periods The Company utilizes a 52-53 week fiscal year ending on the Saturday closest to June 30. Fiscal 2018 will be a 52-week period. Fiscal 2017 ended on July 1, 2017 and was also a 52-week period ("fiscal 2017"). The first quarter of fiscal 2018 ended on September 30, 2017 and was a 13-week period. The first quarter of fiscal 2017 ended on October 1, 2016 and was also a 13-week period. |
Use of Estimates | 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 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; reserves for litigation and other contingencies; useful lives and impairments of long-lived tangible and intangible assets; accounting for income taxes and related uncertain tax positions; the valuation of stock-based compensation awards and related estimated forfeiture rates; reserves for restructuring; and accounting for business combinations, amongst others. |
Principles of Consolidation | Principles of Consolidation These unaudited interim condensed consolidated financial statements include the accounts of the Company and all 100% owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. |
Reclassifications | Reclassifications Certain reclassifications have been made to the prior periods' financial information in order to conform to the current period's presentation, including the realignment of the Company's segment reporting structure, as further described in Note 15, "Segment Information." |
Recently Adopted Accounting Pronouncements and Recently Issued Accounting Pronouncements Not Yet Adopted | Recently Adopted Accounting Pronouncements During the first quarter of fiscal 2018, the Company adopted ASU No. 2016-09, " Improvements to Employee Share-Based Payment Accounting (Topic 718), " which simplifies several aspects of the accounting for share-based payment transactions, including the accounting for income taxes, forfeitures and statutory tax withholding requirements, as well as classification in the statement of cash flows beginning in fiscal 2018. Additionally, the Company began recognizing all excess tax benefits and shortfalls as income tax expense or benefit in the income statement within the reporting period in which they occur. The Company adopted this standard prospectively, which resulted in a decrease in the tax provision of $7.7 million for the three months ended September 30, 2017. Future impacts of the adoption of this standard on the consolidated financial statements, particularly the income tax provision, will be dependent upon future events which are unpredictable. The Company has elected to continue to estimate expected forfeitures in determining compensation expense. Recently Issued Accounting Pronouncements Not Yet Adopted In August 2017, the FASB issued ASU No. 2017-12, "Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities," which amends the hedge accounting recognition and presentation requirements in ASC 815. This ASU's objective is to improve the transparency and understandability of information conveyed to financial statement users about an entity's risk management activities by better aligning the entity's financial reporting for hedging relationships with those risk management activities and to reduce the complexity of and simplify the application of hedge accounting by preparers. The requirements for the new standard will be effective for fiscal years beginning after December 15, 2018, and interim periods therein. Early adoption is permitted upon issuance. The Company is currently in the process of evaluating the impact that adopting ASU 2017-12 will have on its consolidated financial statements and notes thereto. In February 2016, the FASB issued ASU No. 2016-02, " Leases (Topic 842), " which is intended to increase transparency and comparability among companies that enter into leasing arrangements. This ASU requires recognition of lease assets and lease liabilities on the balance sheet for nearly all leases (other than short-term leases), as well as a retrospective recognition and measurement of existing impacted leases. The requirements of the new standard will be effective for annual reporting periods beginning after December 15, 2018, and interim periods within those annual periods, which for the Company is the first quarter of fiscal 2020. Early adoption is permitted. The new standard is required to be applied with a modified retrospective approach to each prior reporting period with various optional practical expedients. The Company is currently performing a comprehensive evaluation of the impact of adopting this guidance on its consolidated financial statements and notes thereto. The Company expects the guidance will result in a significant increase to long-term assets and long-term liabilities on its consolidated balance sheets and does not expect it to have a material impact on the consolidated statements of income. This guidance is not expected to have a material impact on the Company's liquidity. In May 2014, the FASB issued ASU No. 2014-09, " Revenue from Contracts with Customers ," which provides a single, comprehensive revenue recognition model for all contracts with customers, and contains principles to determine the measurement of revenue and timing of when it is recognized. The model will supersede most existing revenue recognition guidance, and also requires enhanced revenue-related disclosures. The FASB has also issued several related ASUs which provide additional implementation guidance and clarify the requirements of the model. The requirements of the new standard will be effective for annual reporting periods beginning after December 15, 2017, and interim periods within those annual periods, which for the Company is the first quarter of fiscal 2019. Early adoption will be permitted for annual reporting periods beginning after December 15, 2016, including interim periods within those annual periods. The Company is currently in the process of evaluating the impact that adopting ASU 2014-09 will have on its consolidated financial statements and notes thereto. The Company has a cross-functional implementation team in place that is performing a comprehensive evaluation of the impact. The Company’s evaluation efforts to date have included a review of current accounting policies and processes, as well as typical terms in contracts with customers, to identify potential differences upon the adoption of the new standard. Based on these efforts, the Company currently anticipates that the performance obligations underlying its core revenue streams (i.e., its retail and wholesale businesses), and the timing of revenue recognition thereof, will remain substantially unchanged for the Coach and Stuart Weitzman segments. The Company is still in the process of evaluating the impact of the new standard on the Kate Spade business, as well as the impact of the new standard on ancillary sources of revenue, such as its licensing business, which represented approximately 1% of total net sales in fiscal 2017. The Company is currently assessing whether the timing of recognizing contractually guaranteed minimum royalty amounts will change. The Company has not yet determined whether the guidance will be adopted using the full retrospective restatement of all prior periods presented, or using the modified retrospective basis with a cumulative adjustment to opening retained earnings in the year of initial adoption. |
Integration and Acquisition C25
Integration and Acquisition Costs (Tables) | 3 Months Ended |
Sep. 30, 2017 | |
Business Combinations [Abstract] | |
Schedule of Business Acquisitions | A summary of charges and related liabilities related to the integration and acquisition of Kate Spade is as follows: Purchase Accounting Adjustments (1) Acquisition Costs (2) Inventory-Related Charges (3) Contractual Payments (4) Organization-Related (5) Other (6) Total (millions) Assumed Liability $ — $ — $ 2.5 $ — $ — $ — $ 2.5 Fiscal 2018 charges 52.0 39.9 37.6 35.9 14.0 8.1 187.5 Cash payments — (38.0 ) (0.8 ) (28.2 ) (2.6 ) (5.7 ) (75.3 ) Non-cash charges (52.0 ) — (37.6 ) — (2.5 ) (1.7 ) (93.8 ) Liability as of September 30, 2017 $ — $ 1.9 $ 1.7 $ 7.7 $ 8.9 $ 0.7 $ 20.9 (1) Purchase accounting adjustments, of which $50.8 million was recorded within cost of sales and $1.2 million was recorded in SG&A expenses within the Kate Spade segment, relate to the short-term impact of the amortization of fair value adjustments. (2) Acquisition costs, which were recorded to SG&A expenses, and of which $20.8 million were within Corporate expenses and $19.1 million were within the Kate Spade segment, primarily relate to deal fees associated with the acquisition. (3) Inventory-related charges, recorded within cost of sales in the Kate Spade segment, primarily related to reserves for the future destruction of certain on-hand inventory and non-cancelable inventory purchase commitments related to raw materials. As of September 30, 2017, a reserve of $37.8 million is included within Inventories on the Company's Condensed Consolidated Balance Sheet. (4) Contractual payments, which were recorded to SG&A expenses within the Kate Spade segment, primarily relate to severance and related costs as a result of pre-existing agreements that were in place with certain Kate Spade executives which became effective upon the closing of the acquisition. The amounts do not include expense of $2.4 million that was recorded as part of the Company's ongoing operations. For the remainder of fiscal 2018, the Company expects to incur costs of approximately $17 million in connection with these agreements, of which approximately $13 million will be considered an integration charge. (5) Organization-related costs, which were recorded to SG&A expenses, and of which $9.8 million were within the Kate Spade segment and $4.2 million within Corporate expenses, primarily relate to severance related charges, including $2.5 million of accelerated share-based compensation expense. (6) Other primarily relates to professional fees and asset write-offs. These costs were recorded to SG&A expenses, of which $5.4 million was recorded within Corporate expenses, $1.8 million was recorded to Kate Spade and $0.9 million was recorded to Stuart Weitzman. |
Restructuring Activities (Table
Restructuring Activities (Tables) | 3 Months Ended |
Sep. 30, 2017 | |
Restructuring and Related Activities [Abstract] | |
Summary of Charges and Related Liabilities Under Operational Efficiency Plan | A summary of charges and related liabilities under the Company's Operational Efficiency Plan is as follows: Organizational Efficiency (1) Technology Infrastructure (2) Network Optimization (3) Total (millions) Liability as of July 2, 2016 $ 22.2 $ — $ 3.2 $ 25.4 Fiscal 2017 charges 15.6 8.0 0.4 24.0 Cash payments (23.3 ) (7.7 ) (3.0 ) (34.0 ) Non-cash charges (7.9 ) — (0.6 ) (8.5 ) Liability as of July 1, 2017 $ 6.6 $ 0.3 $ — $ 6.9 Fiscal 2018 charges 0.6 2.5 — 3.1 Cash payments (2.8 ) (2.5 ) — (5.3 ) Non-cash charges (0.8 ) — — (0.8 ) Liability as of September 30, 2017 $ 3.6 $ 0.3 $ — $ 3.9 (1) Organizational efficiency charges, recorded within SG&A expenses, primarily related to accelerated depreciation associated with the retirement of information technology systems, severance and related costs of corporate employees as well as consulting fees related to process and organizational optimization. (2) Technology infrastructure costs, recorded within SG&A expenses, related to the initial costs of replacing and updating the Company’s core technology platforms. (3) Network optimization costs, recorded within SG&A expenses, related to lease termination costs. |
Acquisition (Tables)
Acquisition (Tables) | 3 Months Ended |
Sep. 30, 2017 | |
Business Combinations [Abstract] | |
Schedule of assets acquired and liabilities assumed | The following table summarizes the fair value of the assets acquired and liabilities assumed as of the acquisition date: Assets Acquired and Liabilities Assumed Fair Value (millions) Cash and cash equivalents $ 71.8 Trade accounts receivable 62.8 Inventories (1) 310.1 Prepaid expenses and other current assets 33.9 Property and equipment 175.5 Goodwill (2) 927.5 Brand (3) 1,300.0 Other intangible assets (4) 119.2 Other assets 59.0 Total assets acquired 3,059.8 Accounts payable and accrued liabilities 233.3 Deferred income taxes (5) 344.4 Other liabilities (6) 84.8 Total liabilities assumed 662.5 Total purchase price 2,397.3 Less: Cash acquired (71.8 ) Total purchase price, net of cash acquired $ 2,325.5 (1) Included a step-up adjustment of approximately $67.5 million , which will be amortized over 4 months . (2) The goodwill balance is not deductible for tax purposes. (3) The brand intangible asset was valued based on the multi-period excess earnings method. (4) The components of other intangible assets included favorable lease rights of approximately $72.2 million (amortized over the remainder of the underlying lease terms), customer relationships of approximately $45.0 million (amortized over 15 years) and order backlog of $2.0 million (amortized over 6 months). Favorable lease rights were valued based on a comparison of market participant information and Company-specific lease terms. The customer relationship intangible asset was valued using the excess earnings method, which discounts the estimated after-tax cash flows associated with the existing base of customers as of the acquisition date, factoring in expected attrition of the existing base. The order backlog intangible asset was valued using the excess earnings method, which discounts the estimated after-tax cash flows associated with open customer orders as of the acquisition date. |
Pro forma information, adjustments | The following pro forma information has been prepared as if the Kate Spade acquisition and the related debt financing had occurred as of the beginning of fiscal 2017. These adjustments include the removal of certain historical amounts. The pro forma amounts reflect the combined historical operational results for Tapestry and Kate Spade, after giving effect to adjustments related to the impact of purchase accounting, transaction costs and financing. The pro forma financial information is not indicative of the operational results that would have been obtained had the transactions actually occurred as of that date, nor is it necessarily indicative of the Company’s future operational results. The following adjustments have been made: (i) Depreciation and amortization expenses related to the fair value adjustments to Kate Spade's property and equipment and intangible assets have been reflected in the in the first quarter of fiscal 2017. Short-term purchase accounting amortization has been excluded from the pro forma amounts due to the non-recurring nature. (ii) Transaction costs in the first quarter of fiscal 2018 have been excluded from the pro forma amounts due to their non-recurring nature. (iii) Interest expense, including amortization of deferred financing fees, of debt issued to finance the acquisition of have been reflected in the first quarter of fiscal 2017. Historical interest expense for Kate Spade has been removed. (iv) The tax effects of the pro forma adjustments at an estimated statutory rate of 40.0%. (v) Earnings per share amounts are calculated using the Company's historical weighted average shares outstanding. Three Months Ended September 30, October 1, (millions, except per share data) Pro forma Net sales (1) $ 1,321.8 $ 1,351.2 Pro forma Net income (1) 41.2 137.3 Pro forma Net income per share: Basic $ 0.15 $ 0.49 Diluted $ 0.14 $ 0.49 (1) The pro forma net sales for first quarter of fiscal 2018 includes revenue and operating income from the pre-combination period in fiscal 2018. |
Goodwill and Other Intangible28
Goodwill and Other Intangible Assets (Tables) | 3 Months Ended |
Sep. 30, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Change in Carrying Amount of Goodwill by Segment | The change in the carrying amount of the Company’s goodwill by segment is as follows: Coach Stuart Weitzman Kate Spade Total (millions) Balance at July 1, 2017 $ 324.5 $ 156.0 $ — $ 480.5 Foreign exchange impact 1.0 1.2 — 2.2 Acquisition of goodwill (1) — — 927.5 927.5 Balance at September 30, 2017 $ 325.5 $ 157.2 $ 927.5 $ 1,410.2 (1) Refer to Note 6, "Acquisition," for further information. The Company may assign goodwill to other reporting units of the Company when the analysis of expected synergies is completed. |
Schedule of Indefinite-Lived Intangible Assets | Intangible assets consist of the following: September 30, 2017 July 1, 2017 Gross Accum. Net Gross Accum. Net (millions) Intangible assets subject to amortization: Customer relationships $ 99.7 $ (11.6 ) $ 88.1 $ 54.7 $ (9.7 ) $ 45.0 Order backlog 2.0 (1.0 ) 1.0 — — — Favorable lease rights 98.3 (11.1 ) 87.2 26.1 (7.1 ) 19.0 Total intangible assets subject to amortization 200.0 (23.7 ) 176.3 80.8 (16.8 ) 64.0 Intangible assets not subject to amortization: Trademarks and trade names 1,576.8 — 1,576.8 276.8 — 276.8 Total intangible assets $ 1,776.8 $ (23.7 ) $ 1,753.1 $ 357.6 $ (16.8 ) $ 340.8 |
Schedule of Finite-Lived Intangible Assets | Intangible assets consist of the following: September 30, 2017 July 1, 2017 Gross Accum. Net Gross Accum. Net (millions) Intangible assets subject to amortization: Customer relationships $ 99.7 $ (11.6 ) $ 88.1 $ 54.7 $ (9.7 ) $ 45.0 Order backlog 2.0 (1.0 ) 1.0 — — — Favorable lease rights 98.3 (11.1 ) 87.2 26.1 (7.1 ) 19.0 Total intangible assets subject to amortization 200.0 (23.7 ) 176.3 80.8 (16.8 ) 64.0 Intangible assets not subject to amortization: Trademarks and trade names 1,576.8 — 1,576.8 276.8 — 276.8 Total intangible assets $ 1,776.8 $ (23.7 ) $ 1,753.1 $ 357.6 $ (16.8 ) $ 340.8 |
Expected Amortization Expense | As of September 30, 2017 , the expected amortization expense for intangible assets is as follows: Amortization Expense (millions) Remainder of fiscal 2018 $ 15.1 Fiscal 2019 22.8 Fiscal 2020 20.9 Fiscal 2021 19.3 Fiscal 2022 17.2 Fiscal 2023 16.1 Fiscal 2024 and thereafter 64.9 Total $ 176.3 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 3 Months Ended |
Sep. 30, 2017 | |
Stockholders' Equity Note [Abstract] | |
Reconciliation of Stockholders Equity | A reconciliation of stockholders' equity is presented below: Shares of Common Stock Common Stock Additional Paid-in- Capital (Accumulated Deficit) / Retained Earnings Accumulated Other Comprehensive Loss Total Stockholders' Equity (millions, except per share data) Balance at July 2, 2016 278.5 $ 2.8 $ 2,857.1 $ (104.1 ) $ (72.9 ) $ 2,682.9 Net income — — — 117.4 — 117.4 Other comprehensive income — — — — 5.3 5.3 Shares issued, pursuant to stock-based compensation arrangements, net of shares withheld for taxes 1.8 — 1.1 — — 1.1 Share-based compensation — — 16.0 — — 16.0 Excess tax effect from share-based compensation — — 0.4 — — 0.4 Dividends declared ($0.3375 per share) — — — (94.6 ) — (94.6 ) Balance at October 1, 2016 280.3 $ 2.8 $ 2,874.6 $ (81.3 ) $ (67.6 ) $ 2,728.5 Balance at July 1, 2017 281.9 $ 2.8 $ 2,978.3 $ 107.7 $ (86.9 ) $ 3,001.9 Net loss — — — (17.7 ) — (17.7 ) Other comprehensive income — — — — 5.6 5.6 Shares issued, pursuant to stock-based compensation arrangements, net of shares withheld for taxes 2.3 — 17.5 — — 17.5 Share-based compensation — — 23.3 — — 23.3 Additional paid-in-capital as part of purchase consideration — — 5.3 — — 5.3 Dividends declared ($0.3375 per share) — — — (95.9 ) — (95.9 ) Balance at September 30, 2017 284.2 $ 2.8 $ 3,024.4 $ (5.9 ) $ (81.3 ) $ 2,940.0 |
Components of Accumulated Other Comprehensive Income (Loss) | The components of accumulated other comprehensive loss ("AOCI"), as of the dates indicated, are as follows: Unrealized (Losses) Gains on Cash Flow Hedges (1) Unrealized Gains (Losses) on Available- for-Sale Debt Securities Cumulative Translation Adjustment Other (2) Total (millions) Balances at July 2, 2016 $ (8.8 ) $ 0.3 $ (62.9 ) $ (1.5 ) $ (72.9 ) Other comprehensive income (loss) before reclassifications 0.1 (0.5 ) 2.9 — 2.5 Less: losses reclassified from accumulated other comprehensive income to earnings (2.8 ) — — — (2.8 ) Net current-period other comprehensive income (loss) 2.9 (0.5 ) 2.9 — 5.3 Balances at October 1, 2016 $ (5.9 ) $ (0.2 ) $ (60.0 ) $ (1.5 ) $ (67.6 ) Balances at July 1, 2017 $ 3.0 $ (0.4 ) $ (89.1 ) $ (0.4 ) $ (86.9 ) Other comprehensive (loss) income before reclassifications (1.5 ) 0.2 8.5 — 7.2 Less: income reclassified from accumulated other comprehensive income to earnings 1.6 — — — 1.6 Net current-period other comprehensive (loss) income (3.1 ) 0.2 8.5 — 5.6 Balances at September 30, 2017 $ (0.1 ) $ (0.2 ) $ (80.6 ) $ (0.4 ) $ (81.3 ) (1) The ending balances of AOCI related to cash flow hedges are net of tax of ($1.1) million and $3.0 million as of September 30, 2017 and October 1, 2016 , respectively. The amounts reclassified from AOCI are net of tax of ($1.0) million and $1.4 million as of September 30, 2017 and October 1, 2016 , respectively. (2) Other represents the accumulated loss on the Company's minimum pension liability adjustment. The balances at September 30, 2017 and October 1, 2016 are net of tax of $0.2 million and $0.8 million, respectively. |
Earnings per Share (Tables)
Earnings per Share (Tables) | 3 Months Ended |
Sep. 30, 2017 | |
Earnings Per Share [Abstract] | |
Reconciliation of Weighted-average Shares Outstanding and Calculation of Basic and Diluted Earnings Per Share | The following is a reconciliation of the weighted-average shares outstanding and calculation of basic and diluted earnings per share: Three Months Ended September 30, October 1, (millions, except per share data) Net (loss) income $ (17.7 ) $ 117.4 Weighted-average basic shares 283.2 279.5 Effect of dilutive securities 3.5 2.4 Weighted-average diluted shares 286.7 281.9 Net (loss) income per share: Basic $ (0.06 ) $ 0.42 Diluted $ (0.06 ) $ 0.42 |
Share-based Compensation (Table
Share-based Compensation (Tables) | 3 Months Ended |
Sep. 30, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Compensation Cost Charged Against Income and Related Tax Benefits for Share-based Compensation Plans | The following table shows the total compensation cost charged against income for share-based compensation plans and the related tax benefits recognized in the Company's Condensed Consolidated Statements of Income for the periods indicated: Three Months Ended September 30, 2017 (1) October 1, 2016 (millions) Share-based compensation expense $ 23.3 $ 16.0 Income tax benefit related to share-based compensation expense 7.6 4.7 (1) During the three months ended September 30, 2017 , the Company incurred $2.5 million of share-based compensation expense related to Kate Spade integration severance as well as $0.8 million of expense under the Company's Operational Efficiency Plan. |
Summary of Stock Option Activity | A summary of stock option activity during the three months ended September 30, 2017 is as follows: Number of Options Outstanding Weighted-Average Exercise Price per Option (millions) Outstanding at July 1, 2017 15.0 $ 39.75 Granted 2.9 41.00 Exercised (1.2 ) 45.69 Forfeited or expired (0.3 ) 39.29 Outstanding at September 30, 2017 16.4 39.54 Vested and expected to vest at September 30, 2017 16.3 42.28 Exercisable at September 30, 2017 10.1 42.83 |
Service-based Restricted Stock Unit Awards (RSU) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Summary of RSU Activity | A summary of service-based RSU activity during the three months ended September 30, 2017 is as follows: Number of Non-vested RSUs Weighted- Average Grant- Date Fair Value per RSU (millions) Non-vested at July 1, 2017 3.5 $ 50.28 Granted 1.5 41.11 Awards issued in connection with acquisition 0.4 47.26 Vested (1.5 ) 47.45 Forfeited (0.1 ) 39.59 Non-vested at September 30, 2017 3.8 47.74 |
Performance-based Restricted Stock Unit Awards (PRSU) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Summary of RSU Activity | A summary of PRSU activity during the three months ended September 30, 2017 is as follows: Number of Non-vested PRSUs Weighted- Average Grant- Date Fair Value per PRSU (millions) Non-vested at July 1, 2017 1.5 $ 37.78 Granted 0.3 41.26 Change due to performance condition achievement (0.1 ) 36.29 Vested (0.2 ) 46.90 Forfeited (1) — 36.36 Non-vested at September 30, 2017 1.5 37.36 (1) During the three months ended September 30, 2017 , fewer than 0.1 million PRSU shares forfeited. |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
Summary of the Components of Outstanding Debt | The following table summarizes the components of the Company’s outstanding debt: September 30, 2017 July 1, 2017 (millions) Current Debt: Term Loan $ 800.0 $ — Capital Lease Obligations 0.6 — Total Current Debt $ 800.6 $ — Long-Term Debt: Term Loan $ 300.0 $ — 4.250% Senior Notes due 2025 600.0 600.0 3.000% Senior Notes due 2022 400.0 400.0 4.125% Senior Notes due 2027 600.0 600.0 Capital Lease Obligations 7.8 — Total Long-Term Debt 1,907.8 1,600.0 Less: Unamortized Discount and Debt Issuance Costs (19.6 ) (20.5 ) Total Long-Term Debt, net $ 1,888.2 $ 1,579.5 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Sep. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements of Assets and Liabilities | The following table shows the fair value measurements of the Company’s financial assets and liabilities at September 30, 2017 and July 1, 2017 : Level 1 Level 2 Level 3 September 30, July 1, September 30, July 1, September 30, July 1, (millions) Assets: Cash equivalents (1) $ 449.8 $ 760.0 $ 62.5 $ 226.0 $ — $ — Short-term investments : Time deposits (2) — — 0.6 0.6 — — Commercial paper (2) — — 28.9 68.8 — — Government securities - U.S. (2) 69.8 130.4 — — — — Corporate debt securities - U.S. (2) — — 110.3 116.2 — — Corporate debt securities - non U.S. (2) — — 82.9 92.6 — — Other — — 5.1 2.1 — — Long-term investments : Corporate debt securities - U.S. (3) — — 29.2 46.9 — — Corporate debt securities - non U.S. (3) — — 10.9 28.2 — — Derivative Assets : Inventory-related hedges (4) — — 4.0 3.5 — — Intercompany loan hedges (4) — — 1.0 — — — Liabilities: Derivative liabilities : Inventory-related hedges (4) — — 4.1 1.0 — — Intercompany loan hedges (4) — — 0.1 0.7 — — (1) Cash equivalents consist of money market funds and time deposits with maturities of three months or less at the date of purchase. Due to their short term maturity, management believes that their carrying value approximates fair value. (2) Short-term available-for-sale investments are recorded at fair value, which approximates their carrying value, and are primarily based upon quoted vendor or broker priced securities in active markets. (3) Fair value is primarily determined using vendor or broker priced securities in active markets. These securities have maturity dates in calendar years 2018 and 2019. (4) The fair value of these hedges is primarily based on the forward curves of the specific indices upon which settlement is based and includes an adjustment for the counterparty’s or Company’s credit risk. |
Investments (Tables)
Investments (Tables) | 3 Months Ended |
Sep. 30, 2017 | |
Investments, Debt and Equity Securities [Abstract] | |
Summary of Investments | The following table summarizes the Company’s U.S. dollar-denominated investments, recorded within the Company's Condensed Consolidated Balance Sheets as of September 30, 2017 and July 1, 2017 : September 30, 2017 July 1, 2017 Short-term Long-term Total Short-term Long-term Total (millions) Available-for-sale investments: Commercial paper (1) $ 28.9 $ — $ 28.9 $ 68.8 $ — $ 68.8 Government securities - U.S. (2) 69.8 — 69.8 130.4 — 130.4 Corporate debt securities - U.S. (2) 110.3 29.2 139.5 116.2 46.9 163.1 Corporate debt securities - non-U.S. (2) 82.9 10.9 93.8 92.6 28.2 120.8 Available-for-sale investments, total $ 291.9 $ 40.1 $ 332.0 $ 408.0 $ 75.1 $ 483.1 Other: Time deposits (1) 0.6 — 0.6 0.6 — 0.6 Other (3) 5.1 29.9 35.0 2.1 — 2.1 Total Investments $ 297.6 $ 70.0 $ 367.6 $ 410.7 $ 75.1 $ 485.8 (1) These securities have original maturities greater than three months and are recorded at fair value. (2) The securities as of September 30, 2017 have maturity dates between calendar years 2017 and 2019 and are recorded at fair value. (3) Other long-term investments relate to Kate Spade's investments in joint ventures. The Company accounts for its investments in the joint ventures under the equity method of accounting. The Company and Walton Brown each own 50.0% of the shares of KS China Co., Limited and KS HMT Co., Limited, the holding company for the Kate Spade businesses in Hong Kong, Macau and Taiwan. With an equal partnership structure, the Company and Walton Brown actively manage the businesses together. |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Sep. 30, 2017 | |
Segment Reporting [Abstract] | |
Summary of Segment Performance | The following table summarizes segment performance for the three months ended September 30, 2017 and October 1, 2016 : Coach Kate Spade (1) Stuart Weitzman Corporate (2) Total (millions) Three Months Ended September 30, 2017 Net sales $ 923.7 $ 268.8 $ 96.4 $ — $ 1,288.9 Gross profit 632.1 76.3 56.0 — 764.4 Operating income (loss) 198.3 (134.9 ) 8.4 (93.6 ) (21.8 ) Income (loss) before provision for income taxes 198.3 (134.9 ) 8.4 (114.1 ) (42.3 ) Depreciation and amortization expense (3) 38.1 10.4 4.0 13.0 65.5 Additions to long-lived assets 29.1 6.9 0.7 12.2 48.9 Three Months Ended October 1, 2016 Net sales $ 950.1 $ — $ 87.5 $ — $ 1,037.6 Gross profit 663.6 — 51.1 — 714.7 Operating income (loss) 232.3 — 3.9 (70.3 ) 165.9 Income (loss) before provision for income taxes 232.3 — 3.9 (76.0 ) 160.2 Depreciation and amortization expense (3) 35.6 — 3.8 15.9 55.3 Additions to long-lived assets 42.9 — 9.1 15.6 67.6 (1) On July 11, 2017, the Company completed its acquisition of Kate Spade. The operating results of Kate Spade have been consolidated in the Company's operating results commencing on July 11, 2017. Kate Spade's sales are primarily generated by kate spade new york brand women's handbags, small leather goods, ready-to-wear and jewelry. Kate Spade's assets are primarily located in the U.S. (2) Corporate, which is not a reportable segment represents certain costs that are not directly attributable to a brand. These costs primarily represent administration and information systems expense. Furthermore, certain integration and acquisition costs as well as costs under the Company's Operational Efficiency Plan as described in Note 4, "Integration and Acquisition Costs" and Note 5, "Restructuring Activities," respectively, are included as Corporate expenses. During the three months ended September 30, 2017 , Operational Efficiency Plan charges recorded within SG&A expenses were $3.1 million . Furthermore, during the three months ended September 30, 2017 , $30.4 million of charges related to integration and acquisition-related activities were recorded within Corporate costs. During the three months ended October 1, 2016 , Operational Efficiency Plan costs recorded within SG&A expenses were $7.1 million . During the three months ended October 1, 2016 , $2.4 million of charges related to the Stuart Weitzman contingent earn out payments and other integration-related activities were recorded within Corporate costs. (3) Depreciation and amortization expense includes $3.0 million of Operational Efficiency Plan charges for the three months ended October 1, 2016 . These charges are recorded as Corporate expenses. There were no costs incurred during the three months ended September 30, 2017. |
Recent Accounting Pronounceme36
Recent Accounting Pronouncements Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended |
Sep. 30, 2017 | Jul. 01, 2017 | |
Accounting Policies [Abstract] | ||
Decrease in tax provision | $ 7.7 | |
Nonsoftware License Arrangement | Sales Revenue, Net | ||
Concentration Risk [Line Items] | ||
Percentage of revenue | 1.00% |
Integration and Acquisition C37
Integration and Acquisition Costs (Narrative) (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |
Sep. 30, 2017 | Oct. 01, 2016 | Jul. 01, 2017 | |
Corporate | |||
Business Acquisition [Line Items] | |||
Integration and acquisition costs | $ 30.4 | $ 2.4 | |
Kate Spade & Company | |||
Business Acquisition [Line Items] | |||
Integration and acquisition costs | 187.5 | ||
Expected integration costs | 80 | ||
Integration costs expected to be settled without cash | 35 | ||
Kate Spade & Company | Cost of Sales | |||
Business Acquisition [Line Items] | |||
Integration and acquisition costs | 88.4 | ||
Kate Spade & Company | Selling, General and Administrative Expenses | |||
Business Acquisition [Line Items] | |||
Integration and acquisition costs | 99.1 | ||
Kate Spade & Company | Kate Spade & Company | Selling, General and Administrative Expenses | |||
Business Acquisition [Line Items] | |||
Integration and acquisition costs | 67.8 | ||
Kate Spade & Company | Stuart Weitzman | Selling, General and Administrative Expenses | |||
Business Acquisition [Line Items] | |||
Integration and acquisition costs | 0.9 | ||
Kate Spade & Company | Corporate | |||
Business Acquisition [Line Items] | |||
Acquisition costs | $ 16.9 | ||
Kate Spade & Company | Corporate | Selling, General and Administrative Expenses | |||
Business Acquisition [Line Items] | |||
Integration and acquisition costs | $ 30.4 |
Integration and Acquisition C38
Integration and Acquisition Costs (Liabilities Related to Integration and Acquisition of Kate Spade) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2017 | Oct. 01, 2016 | Jun. 30, 2018 | |
Corporate | |||
Integration Reserve [Roll Forward] | |||
Fiscal 2018 charges | $ 30.4 | $ 2.4 | |
Kate Spade & Company | |||
Integration Reserve [Roll Forward] | |||
Assumed Liability | 2.5 | $ 20.9 | |
Fiscal 2018 charges | 187.5 | ||
Cash payments | (75.3) | ||
Non-cash charges | (93.8) | ||
Liability as of September 30, 2017 | 20.9 | ||
Officers' compensation | 2.4 | ||
Kate Spade & Company | Cost of Sales | |||
Integration Reserve [Roll Forward] | |||
Fiscal 2018 charges | 88.4 | ||
Kate Spade & Company | Selling, General and Administrative Expenses | |||
Integration Reserve [Roll Forward] | |||
Fiscal 2018 charges | 99.1 | ||
Kate Spade & Company | Inventory | |||
Integration Reserve [Roll Forward] | |||
Assumed Liability | 37.8 | ||
Liability as of September 30, 2017 | 37.8 | ||
Kate Spade & Company | Kate Spade & Company | Selling, General and Administrative Expenses | |||
Integration Reserve [Roll Forward] | |||
Fiscal 2018 charges | 67.8 | ||
Kate Spade & Company | Stuart Weitzman | Selling, General and Administrative Expenses | |||
Integration Reserve [Roll Forward] | |||
Fiscal 2018 charges | 0.9 | ||
Kate Spade & Company | Corporate | Selling, General and Administrative Expenses | |||
Integration Reserve [Roll Forward] | |||
Fiscal 2018 charges | 30.4 | ||
Kate Spade & Company | Purchase Accounting Adjustments | |||
Integration Reserve [Roll Forward] | |||
Assumed Liability | 0 | 0 | |
Fiscal 2018 charges | 52 | ||
Cash payments | 0 | ||
Non-cash charges | (52) | ||
Liability as of September 30, 2017 | 0 | ||
Kate Spade & Company | Purchase Accounting Adjustments | Kate Spade & Company | Cost of Sales | |||
Integration Reserve [Roll Forward] | |||
Fiscal 2018 charges | 50.8 | ||
Kate Spade & Company | Purchase Accounting Adjustments | Kate Spade & Company | Selling, General and Administrative Expenses | |||
Integration Reserve [Roll Forward] | |||
Fiscal 2018 charges | 1.2 | ||
Kate Spade & Company | Acquisition Costs | |||
Integration Reserve [Roll Forward] | |||
Assumed Liability | 0 | 1.9 | |
Fiscal 2018 charges | 39.9 | ||
Cash payments | (38) | ||
Non-cash charges | 0 | ||
Liability as of September 30, 2017 | 1.9 | ||
Kate Spade & Company | Acquisition Costs | Kate Spade & Company | Selling, General and Administrative Expenses | |||
Integration Reserve [Roll Forward] | |||
Fiscal 2018 charges | 19.1 | ||
Kate Spade & Company | Acquisition Costs | Corporate | Selling, General and Administrative Expenses | |||
Integration Reserve [Roll Forward] | |||
Fiscal 2018 charges | 20.8 | ||
Kate Spade & Company | Inventory Related Charges | |||
Integration Reserve [Roll Forward] | |||
Assumed Liability | 2.5 | 1.7 | |
Fiscal 2018 charges | 37.6 | ||
Cash payments | (0.8) | ||
Non-cash charges | (37.6) | ||
Liability as of September 30, 2017 | 1.7 | ||
Kate Spade & Company | Contractual Payments | |||
Integration Reserve [Roll Forward] | |||
Assumed Liability | 0 | 7.7 | |
Fiscal 2018 charges | 35.9 | ||
Cash payments | (28.2) | ||
Non-cash charges | 0 | ||
Liability as of September 30, 2017 | 7.7 | ||
Kate Spade & Company | Organizational Related | |||
Integration Reserve [Roll Forward] | |||
Assumed Liability | 0 | 8.9 | |
Fiscal 2018 charges | 14 | ||
Cash payments | (2.6) | ||
Non-cash charges | (2.5) | ||
Liability as of September 30, 2017 | 8.9 | ||
Kate Spade & Company | Organizational Related | Kate Spade & Company | Selling, General and Administrative Expenses | |||
Integration Reserve [Roll Forward] | |||
Severance costs | 9.8 | ||
Kate Spade & Company | Organizational Related | Corporate | Selling, General and Administrative Expenses | |||
Integration Reserve [Roll Forward] | |||
Severance costs | 4.2 | ||
Accelerated share-based compensation expense | 2.5 | ||
Kate Spade & Company | Other Integration Charges | |||
Integration Reserve [Roll Forward] | |||
Assumed Liability | 0 | 0.7 | |
Fiscal 2018 charges | 8.1 | ||
Cash payments | (5.7) | ||
Non-cash charges | (1.7) | ||
Liability as of September 30, 2017 | 0.7 | ||
Kate Spade & Company | Other Integration Charges | Kate Spade & Company | Selling, General and Administrative Expenses | |||
Integration Reserve [Roll Forward] | |||
Fiscal 2018 charges | 1.8 | ||
Kate Spade & Company | Other Integration Charges | Stuart Weitzman | Selling, General and Administrative Expenses | |||
Integration Reserve [Roll Forward] | |||
Fiscal 2018 charges | 0.9 | ||
Kate Spade & Company | Other Integration Charges | Corporate | Selling, General and Administrative Expenses | |||
Integration Reserve [Roll Forward] | |||
Fiscal 2018 charges | $ 5.4 | ||
Scenario, Forecast | Kate Spade & Company | |||
Integration Reserve [Roll Forward] | |||
Officers' compensation | 17 | ||
Scenario, Forecast | Kate Spade & Company | Contractual Payments | |||
Integration Reserve [Roll Forward] | |||
Officers' compensation | $ 13 |
Restructuring Activities (Narra
Restructuring Activities (Narrative) (Details) - Operational Efficiency Plan - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |
Sep. 30, 2017 | Oct. 01, 2016 | Jul. 01, 2017 | |
Restructuring Cost and Reserve [Line Items] | |||
Restructuring charges | $ 3.1 | $ 24 | |
Cost incurred to date | 71 | ||
Minimum | |||
Restructuring Cost and Reserve [Line Items] | |||
Remaining charges | 5 | ||
Maximum | |||
Restructuring Cost and Reserve [Line Items] | |||
Remaining charges | 10 | ||
SG&A expenses | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring charges | $ 3.1 | $ 7.1 |
Restructuring Activities (Opera
Restructuring Activities (Operational Efficiency Plan) (Details) - Operational Efficiency Plan - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended |
Sep. 30, 2017 | Jul. 01, 2017 | |
Restructuring Reserve [Roll Forward] | ||
Restructuring liability at beginning of period | $ 6.9 | $ 25.4 |
Restructuring charges | 3.1 | 24 |
Cash payments | (5.3) | (34) |
Non-cash charges | (0.8) | (8.5) |
Restructuring liability at end of period | 3.9 | 6.9 |
Organizational Efficiency | ||
Restructuring Reserve [Roll Forward] | ||
Restructuring liability at beginning of period | 6.6 | 22.2 |
Restructuring charges | 0.6 | 15.6 |
Cash payments | (2.8) | (23.3) |
Non-cash charges | (0.8) | (7.9) |
Restructuring liability at end of period | 3.6 | 6.6 |
Technology Infrastructure | ||
Restructuring Reserve [Roll Forward] | ||
Restructuring liability at beginning of period | 0.3 | 0 |
Restructuring charges | 2.5 | 8 |
Cash payments | (2.5) | (7.7) |
Non-cash charges | 0 | 0 |
Restructuring liability at end of period | 0.3 | 0.3 |
Network Optimization | ||
Restructuring Reserve [Roll Forward] | ||
Restructuring liability at beginning of period | 0 | 3.2 |
Restructuring charges | 0 | 0.4 |
Cash payments | 0 | (3) |
Non-cash charges | 0 | (0.6) |
Restructuring liability at end of period | $ 0 | $ 0 |
Acquisition - Narrative (Detail
Acquisition - Narrative (Details) - USD ($) $ / shares in Units, $ in Millions | Jul. 11, 2017 | Sep. 30, 2017 | Oct. 01, 2016 |
Business Acquisition [Line Items] | |||
Total purchase price, net of cash acquired | $ 2,320.2 | $ 0 | |
Kate Spade & Company | |||
Business Acquisition [Line Items] | |||
Business acquisition, share price (USD per share) | $ 18.50 | ||
Purchase price | $ 2,400 | ||
Payments to acquire business, gross | 2,390 | ||
Total purchase price, net of cash acquired | 2,320 | ||
Equity interests issuable | 5.3 | ||
Inventory step-up adjustment | $ 67.5 | ||
Inventory step-up adjustment, amortization period | 4 months | ||
Deferred tax asset | $ 209 | ||
Off-market Lease, Unfavorable | $ 49.5 | ||
Kate Spade & Company | Customer relationships | |||
Business Acquisition [Line Items] | |||
Intangible asset acquired | $ 45 | ||
Intangible asset acquired, amortization period | 15 years | ||
Kate Spade & Company | Favorable lease rights | |||
Business Acquisition [Line Items] | |||
Intangible asset acquired | $ 72.2 | ||
Kate Spade & Company | Order backlog | |||
Business Acquisition [Line Items] | |||
Intangible asset acquired | $ 2 | ||
Intangible asset acquired, amortization period | 6 months |
Acquisition - Assets Acquired a
Acquisition - Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Millions | Jul. 11, 2017 | Sep. 30, 2017 | Jul. 01, 2017 |
Business Acquisition [Line Items] | |||
Goodwill | $ 1,410.2 | $ 480.5 | |
Kate Spade & Company | |||
Business Acquisition [Line Items] | |||
Cash and cash equivalents | $ 71.8 | ||
Trade accounts receivable | 62.8 | ||
Inventories | 310.1 | ||
Prepaid expenses and other current assets | 33.9 | ||
Property and equipment | 175.5 | ||
Goodwill | 927.5 | ||
Brand | 1,300 | ||
Other liabilities asset | 119.2 | ||
Other assets | 59 | ||
Total assets acquired | 3,059.8 | ||
Accounts payable and accrued liabilities | 233.3 | ||
Deferred income taxes | 344.4 | ||
Other liabilities | 84.8 | ||
Total liabilities assumed | 662.5 | ||
Total purchase price | 2,397.3 | ||
Less: Cash acquired | (71.8) | ||
Total purchase price, net of cash acquired | $ 2,325.5 |
Acquisition - Pro Forma (Detail
Acquisition - Pro Forma (Details) - Kate Spade & Company - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | |
Sep. 30, 2017 | Oct. 01, 2016 | |
Business Acquisition [Line Items] | ||
Pro forma net sales income (loss) | $ 1,321.8 | $ 1,351.2 |
Pro forma net income (loss) | $ 41.2 | $ 137.3 |
Pro forma net income per share - basic earnings (per share) | $ 0.15 | $ 0.49 |
Pro forma net income per share - diluted earnings (per share) | $ 0.14 | $ 0.49 |
Goodwill and Other Intangible44
Goodwill and Other Intangible Assets (Change in Carrying Value of Goodwill) (Details) $ in Millions | 3 Months Ended |
Sep. 30, 2017USD ($) | |
Goodwill [Roll Forward] | |
Beginning Balance | $ 480.5 |
Foreign exchange impact | 2.2 |
Goodwill acquired during period | 927.5 |
Ending Balance | 1,410.2 |
Coach | |
Goodwill [Roll Forward] | |
Beginning Balance | 324.5 |
Foreign exchange impact | 1 |
Goodwill acquired during period | 0 |
Ending Balance | 325.5 |
Stuart Weitzman | |
Goodwill [Roll Forward] | |
Beginning Balance | 156 |
Foreign exchange impact | 1.2 |
Goodwill acquired during period | 0 |
Ending Balance | 157.2 |
Kate Spade & Company | |
Goodwill [Roll Forward] | |
Beginning Balance | 0 |
Foreign exchange impact | 0 |
Goodwill acquired during period | 927.5 |
Ending Balance | $ 927.5 |
Goodwill and Other Intangible45
Goodwill and Other Intangible Assets (Indefinite and Finite Lived Assets) (Details) - USD ($) $ in Millions | Sep. 30, 2017 | Jul. 01, 2017 |
Intangible assets subject to amortization: | ||
Gross Carrying Amount | $ 200 | $ 80.8 |
Accumulated amortization | (23.7) | (16.8) |
Total | 176.3 | 64 |
Intangible assets not subject to amortization: | ||
Intangible assets, gross (excluding goodwill) | 1,776.8 | 357.6 |
Intangible assets, net (excluding goodwill) | 1,753.1 | 340.8 |
Trademarks and trade names | ||
Intangible assets not subject to amortization: | ||
Indefinite-lived intangible assets (excluding goodwill) | 1,576.8 | 276.8 |
Customer relationships | ||
Intangible assets subject to amortization: | ||
Gross Carrying Amount | 99.7 | 54.7 |
Accumulated amortization | (11.6) | (9.7) |
Total | 88.1 | 45 |
Order backlog | ||
Intangible assets subject to amortization: | ||
Gross Carrying Amount | 2 | 0 |
Accumulated amortization | (1) | 0 |
Total | 1 | 0 |
Favorable lease rights | ||
Intangible assets subject to amortization: | ||
Gross Carrying Amount | 98.3 | 26.1 |
Accumulated amortization | (11.1) | (7.1) |
Total | $ 87.2 | $ 19 |
Goodwill and Other Intangible46
Goodwill and Other Intangible Assets (Future Amortization Expense) (Details) - USD ($) $ in Millions | Sep. 30, 2017 | Jul. 01, 2017 |
Expected Amortization Expense For Intangible Assets | ||
Remainder of fiscal 2018 | $ 15.1 | |
Fiscal 2,019 | 22.8 | |
Fiscal 2,020 | 20.9 | |
Fiscal 2,021 | 19.3 | |
Fiscal 2,022 | 17.2 | |
Fiscal 2,023 | 16.1 | |
Fiscal 2024 and thereafter | 64.9 | |
Total | $ 176.3 | $ 64 |
Goodwill and Other Intangible47
Goodwill and Other Intangible Assets (Narrative) (Details) | 3 Months Ended |
Sep. 30, 2017 | |
Customer relationships | Minimum | |
Finite-Lived Intangible Assets [Line Items] | |
Finite-lived intangible asset, useful life | 12 years 3 months |
Customer relationships | Maximum | |
Finite-Lived Intangible Assets [Line Items] | |
Finite-lived intangible asset, useful life | 14 years 9 months |
Favorable lease rights | Minimum | |
Finite-Lived Intangible Assets [Line Items] | |
Finite-lived intangible asset, useful life | 3 months |
Favorable lease rights | Maximum | |
Finite-Lived Intangible Assets [Line Items] | |
Finite-lived intangible asset, useful life | 17 years 6 months |
Stockholders' Equity (Schedule
Stockholders' Equity (Schedule of Stockholders' Equity) (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | |
Sep. 30, 2017 | Oct. 01, 2016 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||
Beginning balance (shares) | 281.9 | |
Beginning balance | $ 3,001.9 | $ 2,682.9 |
Net loss | (17.7) | 117.4 |
Other comprehensive income | 5.6 | 5.3 |
Shares issued, pursuant to stock-based compensation arrangements, net of shares withheld for taxes | 17.5 | 1.1 |
Share-based compensation | 23.3 | 16 |
Excess tax effect from share-based compensation | 0.4 | |
Additional paid-in-capital as part of purchase consideration | 5.3 | |
Dividends declared | $ (95.9) | (94.6) |
Ending balance (shares) | 284.2 | |
Ending balance | $ 2,940 | $ 2,728.5 |
Dividends declared (USD per share) | $ 0.3375 | $ 0.3375 |
Common Stock | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||
Beginning balance (shares) | 281.9 | 278.5 |
Beginning balance | $ 2.8 | $ 2.8 |
Shares issued, pursuant to stock-based compensation arrangements, net of shares withheld for taxes (shares) | 2.3 | 1.8 |
Ending balance (shares) | 284.2 | 280.3 |
Ending balance | $ 2.8 | $ 2.8 |
Additional Paid-in- Capital | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||
Beginning balance | 2,978.3 | 2,857.1 |
Shares issued, pursuant to stock-based compensation arrangements, net of shares withheld for taxes | 17.5 | 1.1 |
Share-based compensation | 23.3 | 16 |
Excess tax effect from share-based compensation | 0.4 | |
Additional paid-in-capital as part of purchase consideration | 5.3 | |
Ending balance | 3,024.4 | 2,874.6 |
(Accumulated Deficit) / Retained Earnings | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||
Beginning balance | 107.7 | (104.1) |
Net loss | (17.7) | 117.4 |
Dividends declared | (95.9) | (94.6) |
Ending balance | (5.9) | (81.3) |
Accumulated Other Comprehensive Loss | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||
Beginning balance | (86.9) | (72.9) |
Other comprehensive income | 5.6 | 5.3 |
Ending balance | $ (81.3) | $ (67.6) |
Stockholders' Equity (AOCI) (De
Stockholders' Equity (AOCI) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Sep. 30, 2017 | Oct. 01, 2016 | |
Accumulated Other Comprehensive (Loss) Income, Net of Tax [Rollforward] | ||
Beginning balance | $ 3,001.9 | $ 2,682.9 |
Other comprehensive (loss) income before reclassifications | 7.2 | 2.5 |
Less: income reclassified from accumulated other comprehensive income to earnings | 1.6 | (2.8) |
Net current-period other comprehensive (loss) income | 5.6 | 5.3 |
Ending balance | 2,940 | 2,728.5 |
Amounts reclassified from AOCI, tax | (1) | 1.4 |
Unrealized Gains (Losses) on Cash Flow Hedges | ||
Accumulated Other Comprehensive (Loss) Income, Net of Tax [Rollforward] | ||
Beginning balance | 3 | (8.8) |
Other comprehensive (loss) income before reclassifications | (1.5) | 0.1 |
Less: income reclassified from accumulated other comprehensive income to earnings | 1.6 | (2.8) |
Net current-period other comprehensive (loss) income | (3.1) | 2.9 |
Ending balance | (0.1) | (5.9) |
AOCI related to cash flow hedges, accumulated tax | (1.1) | 3 |
Unrealized Gains (Losses) on Available- for-Sale Debt Securities | ||
Accumulated Other Comprehensive (Loss) Income, Net of Tax [Rollforward] | ||
Beginning balance | (0.4) | 0.3 |
Other comprehensive (loss) income before reclassifications | 0.2 | (0.5) |
Less: income reclassified from accumulated other comprehensive income to earnings | 0 | 0 |
Net current-period other comprehensive (loss) income | 0.2 | (0.5) |
Ending balance | (0.2) | (0.2) |
Cumulative Translation Adjustment | ||
Accumulated Other Comprehensive (Loss) Income, Net of Tax [Rollforward] | ||
Beginning balance | (89.1) | (62.9) |
Other comprehensive (loss) income before reclassifications | 8.5 | 2.9 |
Less: income reclassified from accumulated other comprehensive income to earnings | 0 | 0 |
Net current-period other comprehensive (loss) income | 8.5 | 2.9 |
Ending balance | (80.6) | (60) |
Other | ||
Accumulated Other Comprehensive (Loss) Income, Net of Tax [Rollforward] | ||
Beginning balance | (0.4) | (1.5) |
Other comprehensive (loss) income before reclassifications | 0 | 0 |
Less: income reclassified from accumulated other comprehensive income to earnings | 0 | 0 |
Net current-period other comprehensive (loss) income | 0 | 0 |
Ending balance | (0.4) | (1.5) |
AOCI related to cash flow hedges, accumulated tax | 0.2 | 0.8 |
Total | ||
Accumulated Other Comprehensive (Loss) Income, Net of Tax [Rollforward] | ||
Beginning balance | (86.9) | (72.9) |
Ending balance | $ (81.3) | $ (67.6) |
Earnings per Share (Reconciliat
Earnings per Share (Reconciliation of Weighted Average Shares Outstanding and Calculation of Basic and Diluted Earnings Per Share) (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | |
Sep. 30, 2017 | Oct. 01, 2016 | |
Earnings Per Share [Abstract] | ||
Net (loss) income | $ (17.7) | $ 117.4 |
Weighted-average basic shares (shares) | 283.2 | 279.5 |
Effect of dilutive securities (shares) | 3.5 | 2.4 |
Weighted-average diluted shares (shares) | 286.7 | 281.9 |
Net (loss) income per share: | ||
Basic (USD per share) | $ (0.06) | $ 0.42 |
Diluted (USD per share) | $ (0.06) | $ 0.42 |
Earnings Per Share (Anti-Diluti
Earnings Per Share (Anti-Dilutive Impact on Diluted Earnings per Share) (Details) - shares shares in Millions | 3 Months Ended | |
Sep. 30, 2017 | Oct. 01, 2016 | |
Earnings Per Share [Abstract] | ||
Shares excluded from diluted share calculations (shares) | 5.2 | 9.1 |
Share-based Compensation (Total
Share-based Compensation (Total Compensation Cost and Related Tax Benefits) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Sep. 30, 2017 | Oct. 01, 2016 | |
Restructuring Cost and Reserve [Line Items] | ||
Share-based compensation expense | $ 23.3 | $ 16 |
Income tax benefit related to share-based compensation expense | 7.6 | $ 4.7 |
Kate Spade & Company Integration | ||
Restructuring Cost and Reserve [Line Items] | ||
Share-based compensation expense | 2.5 | |
Operational Efficiency Plan | ||
Restructuring Cost and Reserve [Line Items] | ||
Share-based compensation expense | $ 0.8 |
Share-based Compensation (Summa
Share-based Compensation (Summary of Option Activity) (Details) - Stock Options shares in Millions | 3 Months Ended |
Sep. 30, 2017$ / sharesshares | |
Number of Options Outstanding | |
Beginning balance (shares) | shares | 15 |
Granted (shares) | shares | 2.9 |
Exercised (shares) | shares | (1.2) |
Forfeited or expired (shares) | shares | (0.3) |
Ending balance (shares) | shares | 16.4 |
Number of options outstanding, vested and expected to vest (shares) | shares | 16.3 |
Number of options outstanding, exercisable (shares) | shares | 10.1 |
Weighted-Average Exercise Price per Option | |
Beginning balance (USD per share) | $ / shares | $ 39.75 |
Granted (USD per share) | $ / shares | 41 |
Exercised (USD per share) | $ / shares | 45.69 |
Forfeited or expired (USD per share) | $ / shares | 39.29 |
Ending balance (USD per share) | $ / shares | 39.54 |
Weighted-average exercise price per option, vested and expected to vest (USD per share) | $ / shares | 42.28 |
Weighted-average exercise price per option, exercisable (USD per share) | $ / shares | $ 42.83 |
Share-based Compensation (Narra
Share-based Compensation (Narrative) (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | ||
Sep. 30, 2017 | Oct. 01, 2016 | Jul. 01, 2017 | |
Stock Options | |||
Compensation Related Costs Share Based Payments Disclosure [Line Items] | |||
Total unrecognized compensation cost related to non-vested stock options | $ 36.9 | ||
Options outstanding, weighted-average remaining contractual term | 1 year 6 months | ||
Weighted-average grant-date fair value of awards granted (USD per share) | $ 7.69 | $ 7.29 | |
Total intrinsic value of options exercised | $ 9.2 | $ 5.7 | |
Total cash received from option exercises | 43.5 | 20.7 | |
Tax benefit realized for the tax deductions from option exercises | $ 4.2 | 2.1 | |
Awards that are based on performance criteria (shares) | 16,400,000 | 15,000,000 | |
Restricted Stock Unit Awards (RSU) | |||
Compensation Related Costs Share Based Payments Disclosure [Line Items] | |||
Tax benefit realized for the tax deductions from option exercises | $ 16.7 | $ 18.3 | |
Service-based Restricted Stock Unit Awards (RSU) | |||
Compensation Related Costs Share Based Payments Disclosure [Line Items] | |||
Weighted-average grant-date fair value of awards granted (USD per share) | $ 41.11 | $ 39.88 | |
Total unrecognized compensation cost related to non-vested awards | $ 105.1 | ||
Total unrecognized compensation cost related to non-vested awards, weighted-average recognition period | 1 year 5 months | ||
Awards granted (shares) | 1,500,000 | ||
Total fair value of shares vested | $ 70.2 | $ 62.1 | |
Performance-based Restricted Stock Unit Awards (PRSU) | |||
Compensation Related Costs Share Based Payments Disclosure [Line Items] | |||
Weighted-average grant-date fair value of awards granted (USD per share) | $ 41.26 | $ 39.92 | |
Total unrecognized compensation cost related to non-vested awards | $ 17.6 | ||
Total unrecognized compensation cost related to non-vested awards, weighted-average recognition period | 1 year 2 months | ||
Awards granted (shares) | 300,000 | ||
Total fair value of shares vested | $ 11.4 | $ 0.9 | |
Total Stockholder Return Performance Restricted Stock Units | |||
Compensation Related Costs Share Based Payments Disclosure [Line Items] | |||
Awards that are based on performance criteria (shares) | 600,000 | ||
Awards granted (shares) | 0 | ||
Performance-based Restricted Stock Unit, Productivity, Strategic and Sales Metrics | |||
Compensation Related Costs Share Based Payments Disclosure [Line Items] | |||
Awards that are based on performance criteria (shares) | 800,000 |
Share-based Compensation (Sum55
Share-based Compensation (Summary of Non-vested Service-Based Restricted Stock Unit Activity) (Details) - Service-based Restricted Stock Unit Awards (RSU) shares in Millions | 3 Months Ended |
Sep. 30, 2017$ / sharesshares | |
Number of Non-vested Options | |
Beginning balance (shares) | shares | 3.5 |
Granted (shares) | shares | 1.5 |
Awards issued in connection with acquisition (shares) | shares | 0.4 |
Vested (shares) | shares | (1.5) |
Forfeited (shares) | shares | (0.1) |
Ending balance (shares) | shares | 3.8 |
Weighted-Average Grant-Date Fair Value | |
Beginning balance (USD per share) | $ / shares | $ 50.28 |
Granted (USD per share) | $ / shares | 41.11 |
Awards issued in connection with acquisition (USD per share) | $ / shares | 47.26 |
Vested (USD per share) | $ / shares | 47.45 |
Forfeited (USD per share) | $ / shares | 39.59 |
Ending balance (USD per share) | $ / shares | $ 47.74 |
Share-based Compensation (Sum56
Share-based Compensation (Summary of Non-vested Performance-based Restricted Stock Unit) (Details) - Performance-based Restricted Stock Unit Awards (PRSU) shares in Millions | 3 Months Ended |
Sep. 30, 2017$ / sharesshares | |
Number of Non-vested RSUs | |
Beginning balance (shares) | shares | 1.5 |
Granted (shares) | shares | 0.3 |
Change due to performance condition achievement (shares) | shares | (0.1) |
Vested (shares) | shares | (0.2) |
Forfeited, less than (shares) | shares | (0.1) |
Ending balance (shares) | shares | 1.5 |
Weighted- Average Grant- Date Fair Value per RSU | |
Beginning balance (USD per share) | $ / shares | $ 37.78 |
Granted (USD per share) | $ / shares | 41.26 |
Change due to performance condition achievement (USD per share) | $ / shares | 36.29 |
Vested (USD per share) | $ / shares | 46.90 |
Forfeited (USD per share) | $ / shares | 36.36 |
Ending balance (USD per share) | $ / shares | $ 37.36 |
Debt (Summary of Debt) (Details
Debt (Summary of Debt) (Details) - USD ($) $ in Millions | Sep. 30, 2017 | Jul. 01, 2017 | Jun. 20, 2017 | Mar. 02, 2015 |
Current Debt: | ||||
Current debt | $ 800.6 | $ 0 | ||
Long-Term Debt: | ||||
Long-term debt | 1,907.8 | 1,600 | ||
Less: Unamortized Discount and Debt Issuance Costs | (19.6) | (20.5) | ||
Total Long-Term Debt, net | $ 1,888.2 | 1,579.5 | ||
4.250% Senior Notes due 2025 | ||||
Long-Term Debt: | ||||
Interest rate, stated percentage | 4.25% | |||
3.000% Senior Notes due 2022 | ||||
Long-Term Debt: | ||||
Interest rate, stated percentage | 3.00% | |||
4.125% Senior Notes due 2027 | ||||
Long-Term Debt: | ||||
Interest rate, stated percentage | 4.125% | |||
Term Loan | ||||
Current Debt: | ||||
Current debt | $ 800 | 0 | ||
Long-Term Debt: | ||||
Long-term debt | 300 | 0 | ||
Total Long-Term Debt, net | 1,100 | |||
Capital Lease Obligations | ||||
Current Debt: | ||||
Current debt | 0.6 | 0 | ||
Long-Term Debt: | ||||
Long-term debt | 7.8 | 0 | ||
Senior Notes | 4.250% Senior Notes due 2025 | ||||
Long-Term Debt: | ||||
Long-term debt | 600 | 600 | ||
Interest rate, stated percentage | 4.25% | |||
Senior Notes | 3.000% Senior Notes due 2022 | ||||
Long-Term Debt: | ||||
Long-term debt | 400 | 400 | ||
Interest rate, stated percentage | 3.00% | |||
Senior Notes | 4.125% Senior Notes due 2027 | ||||
Long-Term Debt: | ||||
Long-term debt | $ 600 | $ 600 | ||
Interest rate, stated percentage | 4.125% |
Debt (Narrative) (Details)
Debt (Narrative) (Details) - USD ($) | Jun. 20, 2017 | May 30, 2017 | Mar. 02, 2015 | Mar. 31, 2015 | Sep. 30, 2017 | Oct. 01, 2016 | Jul. 10, 2017 | Jul. 01, 2017 | May 07, 2017 |
Debt Instrument [Line Items] | |||||||||
Interest expense | $ 24,400,000 | $ 7,400,000 | |||||||
Long-term debt | $ 1,888,200,000 | $ 1,579,500,000 | |||||||
4.250% Senior Notes due 2025 | |||||||||
Debt Instrument [Line Items] | |||||||||
Interest rate, stated percentage | 4.25% | ||||||||
3.000% Senior Notes due 2022 | |||||||||
Debt Instrument [Line Items] | |||||||||
Interest rate, stated percentage | 3.00% | ||||||||
4.125% Senior Notes due 2027 | |||||||||
Debt Instrument [Line Items] | |||||||||
Interest rate, stated percentage | 4.125% | ||||||||
Revolving Facility | Revolving Facility | |||||||||
Debt Instrument [Line Items] | |||||||||
Maximum borrowing capacity | $ 900,000,000 | ||||||||
Long-term debt | $ 0 | ||||||||
Revolving Facility | Revolving Facility | Federal Funds Rate | |||||||||
Debt Instrument [Line Items] | |||||||||
Basis spread on variable rate | 0.50% | ||||||||
Revolving Facility | Revolving Facility | London Interbank Offered Rate (LIBOR) | |||||||||
Debt Instrument [Line Items] | |||||||||
Basis spread on variable rate | 1.00% | ||||||||
Percentage of lease expense | 600.00% | ||||||||
Term Loan | |||||||||
Debt Instrument [Line Items] | |||||||||
Long-term debt | $ 1,100,000,000 | ||||||||
Term Loan | Six-Month Term Loan Facility | |||||||||
Debt Instrument [Line Items] | |||||||||
Maximum borrowing capacity | $ 800,000,000 | ||||||||
Long-term debt | $ 800,000,000 | ||||||||
Term Loan | Three Year Term Loan Facility | |||||||||
Debt Instrument [Line Items] | |||||||||
Maximum borrowing capacity | $ 300,000,000 | ||||||||
Long-term debt | $ 300,000,000 | ||||||||
Bridge Facility | Bridge Facility | |||||||||
Debt Instrument [Line Items] | |||||||||
Maximum borrowing capacity | $ 2,100,000,000 | ||||||||
Senior Notes | Fair Value, Inputs, Level 2 | |||||||||
Debt Instrument [Line Items] | |||||||||
Long-term debt, fair value | $ 1,630,000,000 | $ 1,620,000,000 | |||||||
Senior Notes | 4.250% Senior Notes due 2025 | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument, face amount | $ 600,000,000 | ||||||||
Interest rate, stated percentage | 4.25% | ||||||||
Debt instrument, issuance amount, percent of par | 99.445% | ||||||||
Long-term debt, maturities, redemption period before maturity | 90 days | ||||||||
Debt instrument, redemption price, percentage | 100.00% | ||||||||
Senior Notes | 4.250% Senior Notes due 2025 | Adjusted Treasury Rate | |||||||||
Debt Instrument [Line Items] | |||||||||
Basis spread on variable rate | 0.35% | ||||||||
Senior Notes | 3.000% Senior Notes due 2022 | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument, face amount | $ 400,000,000 | ||||||||
Interest rate, stated percentage | 3.00% | ||||||||
Debt instrument, issuance amount, percent of par | 99.505% | ||||||||
Debt instrument, redemption price, percentage | 100.00% | ||||||||
Senior Notes | 4.125% Senior Notes due 2027 | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument, face amount | $ 600,000,000 | ||||||||
Interest rate, stated percentage | 4.125% | ||||||||
Debt instrument, issuance amount, percent of par | 99.858% | ||||||||
Debt instrument, redemption price, percentage | 100.00% |
Fair Value Measurements (Fair V
Fair Value Measurements (Fair Value Measurements of Assets and Liabilities) (Details) - USD ($) $ in Millions | Sep. 30, 2017 | Jul. 01, 2017 |
Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | $ 449.8 | $ 760 |
Level 1 | Inventory-related hedges | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative assets | 0 | 0 |
Derivative liabilities | 0 | 0 |
Level 1 | Intercompany loan hedges | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative assets | 0 | 0 |
Derivative liabilities | 0 | 0 |
Level 1 | Short-term Investments | Time deposits | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | 0 |
Level 1 | Short-term Investments | Commercial paper | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | 0 |
Level 1 | Short-term Investments | Government securities - U.S. | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 69.8 | 130.4 |
Level 1 | Short-term Investments | Corporate debt securities - U.S. | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | 0 |
Level 1 | Short-term Investments | Corporate debt securities - non U.S. | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | 0 |
Level 1 | Short-term Investments | Other | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | 0 |
Level 1 | Long-term Investments | Corporate debt securities - U.S. | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | 0 |
Level 1 | Long-term Investments | Corporate debt securities - non U.S. | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | 0 |
Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 62.5 | 226 |
Level 2 | Inventory-related hedges | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative assets | 4 | 3.5 |
Derivative liabilities | 4.1 | 1 |
Level 2 | Intercompany loan hedges | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative assets | 1 | 0 |
Derivative liabilities | 0.1 | 0.7 |
Level 2 | Short-term Investments | Time deposits | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0.6 | 0.6 |
Level 2 | Short-term Investments | Commercial paper | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 28.9 | 68.8 |
Level 2 | Short-term Investments | Government securities - U.S. | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | 0 |
Level 2 | Short-term Investments | Corporate debt securities - U.S. | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 110.3 | 116.2 |
Level 2 | Short-term Investments | Corporate debt securities - non U.S. | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 82.9 | 92.6 |
Level 2 | Short-term Investments | Other | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 5.1 | 2.1 |
Level 2 | Long-term Investments | Corporate debt securities - U.S. | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 29.2 | 46.9 |
Level 2 | Long-term Investments | Corporate debt securities - non U.S. | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 10.9 | 28.2 |
Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 0 | 0 |
Level 3 | Inventory-related hedges | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative assets | 0 | 0 |
Derivative liabilities | 0 | 0 |
Level 3 | Intercompany loan hedges | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative assets | 0 | 0 |
Derivative liabilities | 0 | 0 |
Level 3 | Short-term Investments | Time deposits | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | 0 |
Level 3 | Short-term Investments | Commercial paper | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | 0 |
Level 3 | Short-term Investments | Government securities - U.S. | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | 0 |
Level 3 | Short-term Investments | Corporate debt securities - U.S. | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | 0 |
Level 3 | Short-term Investments | Corporate debt securities - non U.S. | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | 0 |
Level 3 | Short-term Investments | Other | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | 0 |
Level 3 | Long-term Investments | Corporate debt securities - U.S. | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | 0 |
Level 3 | Long-term Investments | Corporate debt securities - non U.S. | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | $ 0 | $ 0 |
Investments (Summary of Investm
Investments (Summary of Investments) (Details) - USD ($) $ in Millions | Sep. 30, 2017 | Jul. 01, 2017 |
Schedule of Available-for-sale Securities [Line Items] | ||
Short-term | $ 297.6 | $ 410.7 |
Long-term | 70 | 75.1 |
Total | 367.6 | 485.8 |
Available-for-sale Investments | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Short-term | 291.9 | 408 |
Long-term | 40.1 | 75.1 |
Total | 332 | 483.1 |
Available-for-sale Investments | Commercial paper | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Short-term | 28.9 | 68.8 |
Long-term | 0 | 0 |
Total | 28.9 | 68.8 |
Available-for-sale Investments | Government securities - U.S. | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Short-term | 69.8 | 130.4 |
Long-term | 0 | 0 |
Total | 69.8 | 130.4 |
Available-for-sale Investments | Corporate debt securities - U.S. | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Short-term | 110.3 | 116.2 |
Long-term | 29.2 | 46.9 |
Total | 139.5 | 163.1 |
Available-for-sale Investments | Corporate debt securities - non U.S. | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Short-term | 82.9 | 92.6 |
Long-term | 10.9 | 28.2 |
Total | 93.8 | 120.8 |
Other | Time deposits | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Short-term | 0.6 | 0.6 |
Long-term | 0 | 0 |
Total | 0.6 | 0.6 |
Other | Other | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Short-term | 5.1 | 2.1 |
Long-term | 29.9 | 0 |
Total | $ 35 | $ 2.1 |
Investments (Summary of Inves61
Investments (Summary of Investments Footnote) (Details) | 3 Months Ended | 12 Months Ended |
Sep. 30, 2017 | Jul. 01, 2017 | |
Schedule of Equity Method Investments [Line Items] | ||
Time deposit, maturity period, greater than | 3 months | 3 months |
Maturity of commercial paper | 3 months | 3 months |
KS China Co., Limited | ||
Schedule of Equity Method Investments [Line Items] | ||
Ownership percentage | 50.00% | |
KS HMT Co., Limited | ||
Schedule of Equity Method Investments [Line Items] | ||
Ownership percentage | 50.00% |
Investments (Narrative) (Detail
Investments (Narrative) (Details) - USD ($) $ in Millions | Sep. 30, 2017 | Jul. 01, 2017 |
Investments, Debt and Equity Securities [Abstract] | ||
Available-for-sale securities, gross unrealized gain (loss) | $ 0 | $ 0 |
Commitments and Contingencies (
Commitments and Contingencies (Narrative) (Details) - USD ($) $ in Millions | Sep. 30, 2017 | Jul. 01, 2017 |
Commitments and Contingencies Disclosure [Abstract] | ||
Standby letters of credit and bank guarantees | $ 17.5 | $ 9 |
Segment Information (Narrative)
Segment Information (Narrative) (Details) - segment | 3 Months Ended | |
Sep. 30, 2017 | Oct. 01, 2016 | |
Segment Reporting [Abstract] | ||
Reportable segments | 3 | 3 |
Segment Information (Summary of
Segment Information (Summary of Segment Information) (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |
Sep. 30, 2017 | Oct. 01, 2016 | Jul. 01, 2017 | |
Segment Reporting Information [Line Items] | |||
Net sales | $ 1,288,900,000 | $ 1,037,600,000 | |
Gross profit | 764,400,000 | 714,700,000 | |
Operating income (loss) | (21,800,000) | 165,900,000 | |
Income (loss) before provision for income taxes | (42,300,000) | 160,200,000 | |
Depreciation and amortization expense | 65,500,000 | 55,300,000 | |
Additions to long-lived assets | 48,900,000 | 67,600,000 | |
Operational Efficiency Plan | |||
Segment Reporting Information [Line Items] | |||
Depreciation and amortization expense | 0 | 3,000,000 | |
Restructuring charges | 3,100,000 | $ 24,000,000 | |
Operating Segments | Coach | |||
Segment Reporting Information [Line Items] | |||
Net sales | 923,700,000 | 950,100,000 | |
Gross profit | 632,100,000 | 663,600,000 | |
Operating income (loss) | 198,300,000 | 232,300,000 | |
Income (loss) before provision for income taxes | 198,300,000 | 232,300,000 | |
Depreciation and amortization expense | 38,100,000 | 35,600,000 | |
Additions to long-lived assets | 29,100,000 | 42,900,000 | |
Operating Segments | Kate Spade | |||
Segment Reporting Information [Line Items] | |||
Net sales | 268,800,000 | 0 | |
Gross profit | 76,300,000 | 0 | |
Operating income (loss) | (134,900,000) | 0 | |
Income (loss) before provision for income taxes | (134,900,000) | 0 | |
Depreciation and amortization expense | 10,400,000 | 0 | |
Additions to long-lived assets | 6,900,000 | 0 | |
Operating Segments | Stuart Weitzman | |||
Segment Reporting Information [Line Items] | |||
Net sales | 96,400,000 | 87,500,000 | |
Gross profit | 56,000,000 | 51,100,000 | |
Operating income (loss) | 8,400,000 | 3,900,000 | |
Income (loss) before provision for income taxes | 8,400,000 | 3,900,000 | |
Depreciation and amortization expense | 4,000,000 | 3,800,000 | |
Additions to long-lived assets | 700,000 | 9,100,000 | |
Corporate | |||
Segment Reporting Information [Line Items] | |||
Net sales | 0 | 0 | |
Gross profit | 0 | 0 | |
Operating income (loss) | (93,600,000) | (70,300,000) | |
Income (loss) before provision for income taxes | (114,100,000) | (76,000,000) | |
Depreciation and amortization expense | 13,000,000 | 15,900,000 | |
Additions to long-lived assets | 12,200,000 | 15,600,000 | |
Integration and acquisition costs | 30,400,000 | 2,400,000 | |
Selling, General and Administrative Expenses | Operational Efficiency Plan | |||
Segment Reporting Information [Line Items] | |||
Restructuring charges | $ 3,100,000 | $ 7,100,000 |
Headquarters Transactions (Deta
Headquarters Transactions (Details) $ in Millions | Sep. 13, 2017USD ($)ft²$ / ft² | Dec. 31, 2016USD ($) | Oct. 01, 2016USD ($)ft² | Jun. 30, 2019USD ($) | Jun. 29, 2036USD ($) |
Sale Leaseback Transaction [Line Items] | |||||
Minimum lease payments | $ 1,050 | ||||
Minimum lease payments, due in fiscal 2017 | 41.4 | ||||
Minimum lease payments, due in fiscal 2018 | 45.1 | ||||
Minimum lease payments, due in fiscal 2019 | 45.1 | ||||
Minimum lease payments, due in fiscal 2020 | 45.1 | ||||
Minimum lease payments, due in fiscal 2021 | 45.1 | ||||
Minimum lease payments, due for years subsequent to 2021 | 825.5 | ||||
Proceeds from sale of former headquarters | $ 126 | ||||
Office Building | |||||
Sale Leaseback Transaction [Line Items] | |||||
Investment purchase price received | 707 | ||||
Amount due to developer | 77 | ||||
Transaction costs | 26 | ||||
Deferred gain | $ 28.8 | ||||
Amortization period of deferred gain | 20 years | ||||
Lease term | 20 years | ||||
Leased building area | ft² | 694,000 | ||||
Office Building | The Guardian Life Insurance Company of America | |||||
Sale Leaseback Transaction [Line Items] | |||||
Leased building area | ft² | 148,813 | ||||
Tenant improvements expense (usd per sqft) | $ / ft² | 80 | ||||
Tenant improvements expense | $ 11.9 | ||||
Tenant reimbursements (usd per sqft) | $ / ft² | 10 | ||||
Tenant reimbursements | $ 1.5 | ||||
Office Building | The Guardian Life Insurance Company of America | Scenario, Forecast | |||||
Sale Leaseback Transaction [Line Items] | |||||
Rent expense, sublease rentals per month | $ 0.8 | ||||
Minimum | Office Building | The Guardian Life Insurance Company of America | Scenario, Forecast | |||||
Sale Leaseback Transaction [Line Items] | |||||
Rent expense, sublease rentals per month | $ 1.1 | ||||
Maximum | Office Building | The Guardian Life Insurance Company of America | Scenario, Forecast | |||||
Sale Leaseback Transaction [Line Items] | |||||
Rent expense, sublease rentals per month | $ 1.3 |