What changed in this filing

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Item 9A. Controls and Procedures

2020-08-13 compared with 2019-08-15 · 531 added, 330 removed, 1114 unchanged (44% of the section changed)

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Changes in Internal Control over Financial Reporting

During the first quarter of fiscal 2020, the Company adopted ASU 2016-02.

As such, the Company implemented new controls and modifications to existing accounting processes related to lease accounting.

These changes include the upgrade to a new lease accounting system and introduction of processes to evaluate and account for lease contracts under the new accounting standard.

During the second quarter of fiscal 2019, the Company completed the first phase of its ERP implementation, SAP’s S4/HANA, migrating the global finance functions for Corporate, Coach and Stuart Weitzman.

The second phase of this implementation which was the finance and supply chain functions were implemented for Kate Spade during the third quarter of fiscal 2019, with the supply chain functions for Coach and Stuart Weitzman to follow in early fiscal 2020.

As a result of the implementations to date, there were certain changes to processes and procedures, which resulted in changes to the Company’s internal control over financial reporting.

The second phase of this implementation which was the finance and supply chain functions were implemented for Kate Spade during the third quarter of fiscal 2019.

Furthermore, the supply chain functions for Coach and Stuart Weitzman followed during fiscal 2020.

As a result of the implementations, there were certain changes to processes and procedures, which resulted in changes to the Company’s internal control over financial reporting.

The implementation of SAP’s S4/HANA is expected to strengthen the financial controls by automating certain manual processes and standardizing business processes and reporting across the organization.

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For a discussion of risks related to the implementation of new systems, see Part I, Item 1A, Risk Factors herein.

Other than the ERP system implementation noted above, there were no other changes in our internal control over financial reporting during the fiscal year ended June 29, 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Other than the lease accounting standards adoption and ERP system implementation noted above, there were no other changes in our internal control over financial reporting during the fiscal year ended June 27, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

We have not experienced any material impact to our internal controls over financial reporting despite the fact that most of our employees are working remotely due to the Covid-19 pandemic.

We are continually monitoring and assessing Covid-19 as it relates to our internal controls.

OTHER INFORMATION

On August 12, 2019, the Human Resources Committee of the Board of Directors of the Company approved the Tapestry, Inc.

Special Severance Plan (the “Plan”), which is intended to provide benefits to designated employees of the Company who are members of a select group of management or highly compensated employees (as determined in accordance with Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA) in the event their employment is terminated by the Company without Cause or by the participant for Good Reason (each as defined in the Plan) upon or within 24 months following a Change in Control (a “Qualifying Termination”).

In the event of a Qualifying Termination, the Company shall provide the participants under the Plan with severance payment amounts equal to the sum of such participant’s Base Salary plus Bonus (each as defined in the Plan) multiplied by the Severance Multiple (as defined in the Plan) applicable to each participant, in addition to COBRA, accelerated vesting of unvested awards granted on or after August 12, 2019 and other benefits as described in the Plan.

The Severance Multiple for (i) the Company’s Chief Executive Officer shall by two and one-half times and (ii) for other executive officers, including the Company’s other named executive officers, shall be one and one-half times.

The Severance Multiples for other participants are described in the Plan.

The receipt of severance benefits under the Plan is conditioned on a participant’s execution and non-revocation of general release of claims in favor of the Company and its affiliates, except as expressly provided in the Plan.

Participants are also required to comply with certain post-termination restrictive covenants, including non-competition and employee and customer non-solicitation provisions.

If any payments or benefits under the Plan would be considered “parachute payments” under Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), and would be subject to the excise tax imposed by Section 4999 of the Code, then such payments will either be (i) reduced so than no portion of the payments is subject to the excise tax or (ii) delivered in full, whichever of the foregoing results in the participant receiving a greater amount on a net after-tax basis, taking into account all federal, state and local taxes and the excise tax imposed by Section 4999 of the Code.

The foregoing summary is not a complete summary of the terms of the Plan and is qualified in its entirety by reference to the text of the Plan, which is filed as Exhibit 10.40 to this Annual Report on Form 10-K for the fiscal year ended June 29, 2019.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

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August 13, 2020

/s/ Victor Luis

Chief Executive Officer

/s/ Joanne C.

Interim Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated below on August 13, 2020.

/s/ Victor Luis

Chief Executive Officer and Director

(Principal Executive Officer)

/s/ Joanne C.

Chief Financial Officer

Interim Chief Executive Officer

(Principal Executive Officer)

/s/ Andrea Shaw Resnick

Interim Chief Financial Officer

Andrea Shaw Resnick

(Principal Financial Officer)

/s/ Brian Satenstein

/s/ Manesh B.

Corporate Controller

Brian Satenstein

(Principal Accounting Officer)

/s/ Jide Zeitlin

Chairman and Director

/s/ Susan Kropf

Chair, Board of Directors

/s/ Darrell Cavens

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/s/ Anne Gates

/s/ Andrea Guerra

Andrea Guerra

/s/ Susan Kropf

/s/ Annabelle Yu Long

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We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of June 27, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated August 13, 2020, expressed an unqualified opinion on the Company's internal control over financial reporting.

Change in Accounting Principle

As discussed in Note 3 to the financial statements, effective June 30, 2019, the Company adopted Accounting Standards Update ("ASU") No.

2016-02, "Leases (Topic 842)" (“ASC 842”), using the modified retrospective approach.

Recently adopted accounting standards - ASC 842 is also communicated as a critical audit matter below.

Basis for Opinion

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Goodwill and Other Intangible Assets - Kate Spade - Refer to Notes 3 and 15 to the financial statements

Critical Audit Matter Description

The Company’s evaluation of goodwill and indefinite-lived brand intangible assets for impairment involves the comparison of carrying value to their respective fair values.

The determination of the fair values requires management to make significant estimates and assumptions related to forecasts of future revenue growth rates and profit margins, as well as discount rates.

Changes in these assumptions could have a significant impact on either the fair values, the amount of any impairment charge, or both.

The carrying value of goodwill associated with the Kate Spade reporting unit was $639.4 million and the carrying value of the Kate Spade indefinite-lived brand intangible asset was $1,300.0 million at June 27, 2020.

The fair value of goodwill and the Kate Spade indefinite-lived brand intangible asset exceeded their carrying values by approximately 13% and 35%, respectively.

Several factors could impact the Kate Spade brand's ability to achieve expected future cash flows, including continued economic volatility and operational challenges related to the Covid-19 pandemic, the reception of new collections in all channels, the success of international expansion strategies including the direct operation of certain previous distributor and joint venture businesses, the optimization of the store fleet productivity, the impact of promotional activity in department stores, and the simplification of certain corporate overhead structures and other initiatives aimed at increasing profitability of the business.

Given the significant judgments made by management to estimate the fair value of the Kate Spade operations used in both the goodwill and Kate Spade indefinite-lived brand intangible fair value analyses and the difference between their fair values and carrying values, performing auditing procedures to evaluate the reasonableness of management’s judgments regarding the business and valuation assumptions utilized in the valuation model, particularly the forecasts of future revenue growth rates and profit margins and the selection of the discount rate, required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the projected future revenue growth rates and profit margins and discount rates included the following:

We tested the effectiveness of management’s controls over its goodwill and indefinite-lived brand intangible asset impairment evaluations, including controls over the forecasts of future revenue and profit margin, and the selection of the discount rate.

We evaluated management’s ability to accurately forecast by comparing actual revenue and profit margin results to historical projections.

We evaluated management’s revenue and profit margin projections over the projection period with (1) internal communications to management and the board of directors, (2) peer companies, and (3) industry and market conditions.

We used the assistance of our fair value specialists to assess the acceptability of the weighting applied to value indications from different valuation techniques.

We used the assistance of our fair value specialists to assess the acceptability of the implied equity premium.

With respect to the market value of equity, we tested the calculations used in developing the respective market value of equity.

We used the assistance of our fair value specialists in evaluating the fair value methodology and the discount rate, including testing the underlying source information and the mathematical accuracy of the calculations.

Specific to the discount rate, we considered the inputs and calculations, and we developed a range of independent estimates and compared those to the respective discount rates selected by management.

Goodwill and Other Intangible Assets - Stuart Weitzman - Refer to Notes 3 and 15 to the financial statements

Critical Audit Matter Description

The Company’s evaluation of goodwill and indefinite-lived brand intangible assets for impairment involves the comparison of carrying value to their respective fair values.

Changes in these assumptions could have a significant impact on either the fair values, the amount of any impairment charge, or both.

During the third quarter of fiscal year 2020, revenue growth rate and profit margin trends continued to decline from those that were forecasted for the Stuart Weitzman brand, which resulted in reductions of both current and future forecasted cash flows.

As a result of these conditions, the Company concluded that a triggering event had occurred during the third quarter, resulting in the need to perform a quantitative interim impairment assessment over the Company’s Stuart Weitzman reporting unit and Stuart Weitzman indefinite-lived brand intangible asset.

The assessment concluded that the fair values of the Stuart Weitzman reporting unit and Stuart Weitzman indefinite-lived brand intangible asset as of March 28, 2020 did not exceed their respective carrying values.

The Company recorded a goodwill impairment charge of approximately $210.7 million related to the Stuart Weitzman reporting unit, and an impairment charge of approximately $267.0 million related to the Stuart Weitzman indefinite-lived brand intangible asset, each resulting in a full impairment.

Given the significant judgments made by management to estimate the fair value of the Stuart Weitzman operations used in both the goodwill and indefinite-lived brand intangible fair value analyses and the resulting impairment recorded, performing auditing

procedures to evaluate the reasonableness of management’s judgments regarding the business and valuation assumptions utilized in the valuation model, particularly the forecasts of future revenue growth rates and profit margins and the selection of the discount rate, required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the projected future revenue growth rates and profit margins and discount rates included the following:

We evaluated management’s ability to accurately forecast by comparing actual revenue and profit margin results to historical projections.

With the assistance of our fair value specialists, we evaluated the market approach, including evaluating the reasonableness of the selected guideline public companies and the resulting market multiples calculations, as well as benchmarking the selected multiples against these guideline public companies.

We used the assistance of our fair value specialists to assess the acceptability of the weighting applied to value indications from different valuation techniques.

Specific to the discount rate, we considered the inputs and calculations, and we developed a range of independent estimates and compared those to the respective discount rates selected by management.

We evaluated the reasonableness of the inputs and the mathematical accuracy of the calculation used to calculate the impairment recorded.

Recently adopted accounting standards - ASC 842- Incremental Borrowing Rate - Refer to Notes 3 and 11 to the

financial statements (also see Change in Accounting Principle explanatory paragraph above)

Critical Audit Matter Description

The Company adopted the provisions of ASC 842, Leases (“ASC 842”), as of June 30, 2020.

The Company recorded lease liabilities for the present value of its lease commitments and corresponding right-of-use (ROU) assets of approximately $2.32 billion and $2.13, respectively, upon adoption.

The Company developed estimated collateralized incremental borrowing rates (IBR) for each lease portfolio to present value the lease payments as required by ASC 842 when the discount rate is not implicit in the lease.

The determination of an IBR required management to use significant estimates and assumptions including its credit rating, credit spread, and adjustments for the impact of collateral, lease tenors, economic environment and currency.

We identified the IBRs used in the adoption of ASC 842 as a critical audit matter because of the significant impact of management’s assumptions and estimates in determining the selected IBRs for each lease portfolio and the related material impact upon the lease liabilities and corresponding right-of-use (ROU) assets recorded upon adoption.

Management’s assumptions and estimates used in determining the selected IBRs were the Company’s credit rating, credit spread, and adjustments for the impact of collateral, lease tenors, economic environment and currency.

Given these significant judgments made by management in determining the IBRs, performing audit procedures to evaluate the reasonableness of the methods and assumptions related to these assumptions and estimates involved a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the IBRs used in the adoption of ASC 842 included the following, among others:

We tested the effectiveness of controls over the methods and assumptions used by management to estimate the IBRs, including those over the credit rating, credit spreads and adjustments for the impact of collateral, lease tenors, economic environment and currency.

With the assistance of our fair value specialists, we evaluated the methods and assumptions used by management to estimate the IBRs and tested the inputs used by management to develop the IBRs as follows:

Assessed the reasonableness of the methodology and models used to estimate the IBRs based on the definition

and guidance in ASC 842 and other reference materials.

Assessed the reasonableness of the significant inputs used to estimate the IBRs by comparing to Company specific benchmarks, comparable companies and other market information:

The credit rating ascribed to the Company.

The credit spreads applied in determining the IBRs.

The collateral, lease tenors, economic environment and currency adjustments applied in determining the IBRs.

/s/ DELOITTE & TOUCHE LLP

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In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of June 27, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements and financial statement schedule as of and for the year ended June 29, 2019, of the Company and our report dated August 15, 2019, expressed an unqualified opinion on those financial statements and financial statement schedule.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements and financial statement schedule as of and for the year ended June 27, 2020, of the Company and our report dated August 13, 2020, expressed an unqualified opinion on those financial statements and financial statement schedule and included an explanatory paragraph regarding the Company’s adoption of Accounting Standards Update ("ASU") No.

2016-02, "Leases (Topic 842)", using the modified retrospective approach.

Basis for Opinion

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Property and equipment, net

Operating lease right-of-use assets

Long-term investments

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Accrued liabilities

Current portion of operating lease liabilities

Total current liabilities

Long-term debt

Long-term operating lease liabilities

Deferred income taxes

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Additional paid-in-capital

Retained earnings

Retained earnings (accumulated deficit)

Accumulated other comprehensive income (loss)

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Cost of sales

Selling, general and administrative expenses

Operating income

Other selling, general and administrative expenses

Impairment of goodwill and intangible assets

Operating income (loss)

Interest expense, net

Income before provision for income taxes

Other expense (income)

Income (loss) before provision for income taxes

Provision for income taxes

Net income per share:

Shares used in computing net income per share:

Net income (loss)

Net income (loss) per share:

Shares used in computing net income (loss) per share:

Cash dividends declared per common share

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TAPESTRY, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Fiscal Year Ended

Net income (loss)

Other comprehensive income (loss), net of tax:

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Other comprehensive income (loss), net of tax

Comprehensive income

Comprehensive income (loss)

See accompanying Notes.

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Balance at July 1, 2017

Net income (loss)

Other comprehensive income (loss)

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Share-based compensation

Excess tax effect from share-based compensation

Additional paid-in-capital as part of purchase consideration

Dividends declared ($1.350 per share)

Balance at July 1, 2017

Balance at June 30, 2018

Net income (loss)

Other comprehensive income (loss)

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Share-based compensation

Additional paid-in-capital as part of purchase consideration

Repurchase of common stock

Dividends declared ($1.350 per share)

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

Balance at June 29, 2019

Net income (loss)

Other comprehensive income (loss)

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CASH FLOWS PROVIDED BY OPERATING ACTIVITIES

Net income (loss)

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

Impairment charges

Provision for bad debt

Share-based compensation

Excess tax effect from share-based compensation

Acceleration program charges

Integration and restructuring activities

Deferred income taxes

Changes to lease related balances, net

Other non-cash charges, net

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CASH FLOWS (USED IN) PROVIDED BY INVESTING ACTIVITIES

Hudson Yards sale of investments, net of expenses

Sale of former headquarters, net of expenses

Acquisitions, net of cash acquired

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Repurchase of common stock

Proceeds from revolver

Proceeds from issuance of debt, net of discount

Debt issuance costs

Repayment of debt

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Taxes paid to net settle share-based awards

Excess tax effect from share-based compensation

Payment of deferred purchase price

Payments of finance lease liabilities

Net cash (used in) provided by financing activities

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The Stuart Weitzman segment includes global sales of Stuart Weitzman brand products primarily through Stuart Weitzman operated stores, including the Internet, sales to wholesale customers and through numerous independent third party distributors.

SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION AND ORGANIZATION

The Company’s fiscal year ends on the Saturday closest to June 30.

Unless otherwise stated, references to years in the financial statements relate to fiscal years.

The fiscal years ended June 29, 2019 (“fiscal 2019”), June 30, 2018 (“fiscal 2018”) and July 1, 2017 (“fiscal 2017”) were 52-week periods.

The fiscal year ending June 27, 2020 (“fiscal 2020”) will be a 52-week period.

The fiscal years ended June 27, 2020 (“fiscal 2020”), June 29, 2019 (“fiscal 2019”) and June 30, 2018 (“fiscal 2018”) were 52-week periods.

The fiscal year ending July 3, 2021 (“fiscal 2021”) will be a 53-week period.

Covid-19 Pandemic

The outbreak of a novel strain of coronavirus ("Covid-19") continues to grow worldwide, impacting a significant majority of the regions in which we operate.

In March 2020, the outbreak was labeled a global pandemic by the World Health Organization.

National, state and local governments have responded to the Covid-19 pandemic in a variety of ways, including, but not limited to, by declaring states of emergency, restricting people from gathering in groups or interacting within a certain physical distance (i.e., social distancing), requiring individuals to stay at home, and in most cases, ordering non-essential businesses to close or limit operations.

The Company had temporarily closed the majority of its directly operated stores globally for some period of time to help reduce the spread of Covid-19.

As of the end of the fiscal year, the vast majority of the Company's stores had been re-opened for either in-store or pick-up service.

Many of the Company's wholesale partners also closed their bricks and mortar stores as required by government orders during the third and fourth quarter.

The global Covid-19 pandemic continues to evolve and the full extent to which it will impact the Company - including unforeseen increased costs to the Company's business - will depend on future developments, which are highly uncertain and cannot be predicted, including the ultimate duration, severity and geographic spread of the virus and the success of actions to contain the virus or treat its impact, among others.

While the full magnitude of the effects on the Company's business is difficult to predict at this time, the Covid-19 pandemic has and is expected to continue to have a material adverse impact on the Company's business, financial condition, results of operations and cash flows for the foreseeable future.

The Company believes that cash flows from operations, access to the credit and capital markets and our credit lines, on-hand cash and cash equivalents and our investments provide adequate funds to support our operating, capital, and debt service requirements for fiscal 2021 and beyond.

The Company could experience other potential adverse impacts as a result of the Covid-19 pandemic, including, but not limited to, further charges from adjustments to the carrying amount of goodwill and other intangible assets, long-lived asset impairment charges, reserves for uncollectible accounts receivable and reserves for the realizability of inventory.

In addition, the negative impacts of the Covid-19 pandemic could result in the establishment of additional valuation allowances in certain jurisdictions.

In response to the Covid-19 pandemic, the Company has taken actions to reinforce its liquidity and financial flexibility.

Specific actions include:

suspending its quarterly dividend and all share repurchases for the foreseeable future, actively reducing non-essential SG&A expense, reducing in its corporate and retail workforce, reducing corporate compensation, tightly managing inventory and reducing capital expenditures.

Furthermore, the Company borrowed $ 700 million under its $ 900 million definitive credit agreement, as entered on October 24, 2019 ("Revolving Credit Facility") as a precautionary measure.

If stores are required to close again for an extended period of time due to a "second wave" of increased infections, its liquidity may continue to be negatively impacted and it may need to draw additional funds from our Revolving Credit Facility or seek additional sources of financing, which may or may not be available.

On May 19, 2020, the Company entered into Amendment No.

1 (the “Amendment”) to the Revolving Credit Facility, which sets

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

forth the modifications pertaining to the leverage ratio financial covenant required.

Refer to Note 13, "Debt", for additional information regarding the Company's outstanding notes payable and applicable amendments.

Use of Estimates

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All intercompany transactions and balances are eliminated in consolidation.

Share Repurchases

The Company accounts for stock repurchases by allocating the repurchase price to common stock and retained earnings.

Under Maryland law, the Company's state of incorporation, there are no treasury shares.

As a result, all repurchased shares are authorized but unissued shares.

The Company may terminate or limit the stock repurchase program at any time.

The total amount of common stock repurchase price allocated to accumulated deficit as of June 27, 2020 was $ 299.9 million .

Reclassifications

Certain reclassifications have been made to the prior periods' financial information in order to conform to the current period's presentation.

Beginning in fiscal 2020, the Company presented the impact of foreign currency gains and losses within Other expense (income) within its Consolidated Statements of Operations.

Accordingly, foreign currency gains and losses that were reported within Selling, general and administrative expenses ("SG&A") in fiscal 2019 are now reflected within Other expense (income).

SIGNIFICANT ACCOUNTING POLICIES

Cash and Cash Equivalents

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Dividend and interest income are recognized when earned.

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

Additionally, GAAP requires the consolidation of all entities for which a Company has a controlling voting interest and all variable interest entities (“VIEs”) for which a Company is deemed to be the primary beneficiary.

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(i) the entity has insufficient equity to finance its activities without additional subordinated financial support from other parties, (ii) the equity investors cannot make significant decisions about the entity’s operations or (iii) the voting rights of some investors are not proportional to their obligations to absorb the expected losses of the entity or receive the expected returns of the entity and substantially all of the entity’s activities involve or are conducted on behalf of the investor with disproportionately few voting rights.

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

Concentration of Credit Risk

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Substantially all of the Company's inventories are comprised of finished goods, and are reported at the lower of cost or net realizable value.

Inventory costs include material, conversion costs, freight and duties and are primarily determined by the first-in, first-out method.

Inventory costs include material, conversion costs, freight and duties and are primarily determined on a weighted-average cost basis.

The Company reserves for inventory, including slow-moving and aged inventory, based on current product demand, expected future demand and historical experience.

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Buildings are depreciated over 40 years and building improvements are depreciated over ten to 40 years .

Machinery and equipment are depreciated over lives of five to seven years , furniture and fixtures are depreciated over lives of three to ten years , and software and computer equipment is depreciated over lives of three to ten years .

Leasehold improvements are amortized over the shorter of their estimated useful lives or the related lease terms.

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Valuation of Long-Lived Assets

Long-lived assets, such as property and equipment, are evaluated for impairment whenever events or circumstances indicate that the carrying value of the assets may not be recoverable.

Long-lived assets, such as property and equipment and right-of-use assets are evaluated for impairment whenever events or circumstances indicate that the carrying value of the assets may not be recoverable.

In evaluating long-lived assets for recoverability, the Company uses its best estimate of future cash flows expected to result from the use of the related asset group and its eventual disposition.

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Refer to Note 4, "Acquisitions," for detailed disclosures related to our acquisitions.

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

Goodwill and Other Intangible Assets

Upon acquisition, the Company estimates and records the fair value of purchased intangible assets, which primarily consists of brands, customer relationships, lease rights and order backlog.

Upon acquisition, the Company estimates and records the fair value of purchased intangible assets, which primarily consists of brands, customer relationships, right-of-use assets and order backlog.

Goodwill and certain other intangible assets deemed to have indefinite useful lives, including brand intangible assets, are not amortized, but are assessed for impairment at least annually.

Finite-lived intangible assets are amortized over their respective estimated useful lives and, along with other long-lived assets as noted above, are evaluated for impairment periodically whenever events or changes in circumstances indicate that their related carrying values may not be fully recoverable.

Estimates of fair value for finite-lived and indefinite-lived intangible assets are primarily determined using discounted cash flows and the multi-period excess earnings method, respectively, with consideration of market comparisons.

This approach uses significant estimates and assumptions, including projected future cash flows, discount rates and growth rates.

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

The Company generally performs its annual goodwill and indefinite-lived intangible assets impairment analysis using a quantitative approach.

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The Company performs its annual impairment assessment of goodwill as well as brand intangibles during the fourth quarter of each fiscal year.

The Company determined that there was no impairment in fiscal 2019 , fiscal 2018 or fiscal 2017 .

The Company determined that there was no impairment in fiscal 2019 or fiscal 2018 .

In fiscal 2020 , the Company recorded a goodwill impairment charge of $ 210.7 million related to the Stuart Weitzman reporting unit and an impairment charge of $ 267.0 million related to the Stuart Weitzman indefinite-lived brand.

Operating Leases

The Company’s leases for office space, retail locations and distribution facilities are primarily accounted for as operating leases.

Certain of the Company's leases contain renewal options, rent escalation clauses, and/or landlord incentives.

Renewal terms generally reflect market rates at the time of renewal.

Rent expense for non-cancelable operating leases with scheduled rent increases and/or landlord incentives is recognized on a straight-line basis over the lease term, including any applicable rent holidays, beginning with the lease commencement date, or the date the Company takes control of the leased space, whichever is earlier.

The excess of straight-line rent expense over scheduled payment amounts and landlord incentives is recorded as a deferred rent liability.

As of the end of fiscal 2019 and fiscal 2018 , deferred rent obligations of $ 288.9 million and $ 240.3 million , respectively, were classified primarily within other non-current liabilities in the Company's Consolidated Balance Sheets.

Certain rentals are also contingent upon factors such as sales.

Contingent rentals are recognized when the achievement of the target (i.e., sale levels) which triggers the related rent payment is considered probable and estimable.

As discussed in “Recent Accounting Pronouncements” herein, the Company adopted Accounting Standards Update ("ASU") No.

2016-02, "Leases (Topic 842)" ("ASU 2016-02") and related ASUs at the beginning of fiscal 2020.

The Company leases retail space, office space, warehouse facilities, distribution centers, storage space, machinery, equipment and certain other items under operating leases.

These leases may also include rent escalation clauses or lease incentives in the form of construction allowances and rent reduction.

In determining the lease term used in the lease right-of-use ("ROU") asset and lease liability calculations, the Company considers various factors such as market conditions and the terms of any renewal or termination options that may exist.

When deemed reasonably certain, the renewal and termination options are included in the determination of the lease term and calculation of the lease ROU asset and lease liability.

The Company is typically required to make fixed minimum rent payments, variable rent payments primarily based on performance (i.e., percentage-of-sales-based payments), or a combination thereof, directly related to its ROU asset.

The Company is also often required, by the lease, to pay for certain other costs including real estate taxes, insurance, common area maintenance fees, and/or certain other costs, which may be fixed or variable, depending upon the terms of the respective lease agreement.

To the extent these payments are fixed, the Company has included them in calculating the lease ROU assets and lease liabilities.

The Company calculates lease ROU assets and lease liabilities as the present value of fixed lease payments over the reasonably certain lease term beginning at the commencement date.

Per the guidance, the use of the implicit rate to determine the present value of lease payments is required.

As the rate implicit in the Company's leases is not readily determinable, the Company uses its incremental borrowing rate based on the information available at the lease commencement date, including the Company's credit rating, credit spread and adjustments for the impact of collateral, lease tenors, economic environment and currency.

For operating leases, fixed lease payments are recognized as operating lease cost on a straight-line basis over the lease term.

For finance leases and impaired operating leases, the ROU asset is depreciated on a straight-line basis over the remaining lease term, along with recognition of interest expense associated with accretion of the lease liability.

For leases with a lease term of 12 months or less ("short-term lease"), any fixed lease payments are recognized on a straight-line basis over such term, and are not recognized on the Consolidated Balance Sheets.

Variable lease cost for both operating and finance leases, if any, is recognized as incurred.

Asset retirement obligations represent legal obligations associated with the retirement of a tangible long-lived asset.

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Control is transferred when the customer obtains the ability to direct the use of and obtain substantially all of the remaining benefits from the products or services.

The amount of revenue recognized is the amount of consideration to which the Company expects to be entitled, including estimation of sale terms that may create variability in the consideration.

Revenue subject to variability is constrained to an amount which will not result in a significant reversal in future periods when the contingency that creates variability is resolved.

The amount of revenue recognized is the amount of consideration to which the Company expects to be entitled, including estimation of sale terms

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

that may create variability in the consideration.

Revenue subject to variability is constrained to an amount which will not result in a significant reversal in future periods when the contingency that creates variability is resolved.

Retail store and concession shop-in-shop revenues are recognized at the point-of-sale, when the customer obtains physical possession of the products.

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The balance of the Company's transportation-related costs related to its distribution network is included in SG&A expenses rather than in cost of sales.

The amount previously recorded as shipping and handling costs in fiscal 2019 has been corrected in the current year disclosure to exclude other costs.

Advertising costs include expenses related to direct marketing activities, such as direct mail pieces, digital and other media and production costs.

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Advertising costs are generally expensed when the advertising first appears.

Cash Paid for Interest

Cash paid for interest includes cash paid for interest related to the Company's Revolving Credit Facility, Senior Notes, and Note Payable and was $ 68.1 million , $ 64.1 million and $ 63.0 million in fiscal 2020 , fiscal 2019 and fiscal 2018 , respectively, and is disclosed as supplemental information on the Consolidated Statement of Cash Flows.

The amount previously reported as cash paid for interest in fiscal 2019 has been corrected in the current year disclosure.

TAPESTRY, INC.

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The use of different market assumptions or methodologies could affect the estimated fair value.

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

For derivative instruments that qualify for hedge accounting, the changes in the fair value of these instruments is either (i) offset against the changes in fair value of the hedged assets or liabilities through earnings or (ii) recognized as a component of accumulated other comprehensive income (loss) ("AOCI") until the hedged item is recognized in earnings, depending on whether the derivative is being used to hedge changes in fair value or cash flows, respectively.

accumulated other comprehensive income (loss) ("AOCI") until the hedged item is recognized in earnings, depending on whether the derivative is being used to hedge changes in fair value or cash flows, respectively.

Each derivative instrument entered into by the Company that qualifies for hedge accounting is expected to be highly effective at reducing the risk associated with the exposure being hedged.

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Forward foreign currency exchange contracts designated as fair value hedges and associated with intercompany and other contractual obligations are recognized within foreign currency gains (losses) generally in the period in which the related balances being hedged are revalued.

Current maturity dates are in August 2019, and such contracts are typically renewed upon maturity if the related balance has not been settled.

Current maturity dates are in July 2020, and such contracts are typically renewed upon maturity if the related balance has not been settled.

Foreign Currency

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Foreign currency transaction gains and losses also include amounts realized on the settlement of certain intercompany loans with foreign subsidiaries.

Share Repurchases

The Company accounts for stock repurchases by allocating the repurchase price to common stock and retained earnings.

Under Maryland law, the Company's state of incorporation, there are no treasury shares.

As a result, all repurchased shares are authorized but unissued shares.

The Company may terminate or limit the stock repurchase program at any time.

The total amount of common stock repurchase price allocated to retained earnings as of June 29, 2019 was $ 100.0 million .

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

Reclassifications

Certain reclassifications have been made to the prior period's financial information in order to conform to the current period's presentation.

This includes the realignment of the Company's segment reporting structure, as further described in Note 17, "Segment Information."

In addition, certain prior year costs related to compensation of the supply chain function for Kate Spade have been reclassified to conform to the current year presentation.

These costs amounted to $ 5.4 million for the fiscal year ended June 30, 2018 and have been reclassified from SG&A expenses to Cost of sales within the Company's Consolidated Statements of Operations.

Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

During the first quarter of fiscal 2020, the Company adopted Accounting Standards Update ("ASU") No.

2016-02, " Leases (Topic 842)" ("ASU 2016-02") and related ASUs.

This ASU requires recognition of lease assets and lease liabilities on the balance sheet for all leases other than short-term leases.

The Company elected the package of practical expedients intended to ease transition whereby the Company need not reassess as of the adoption date (1) whether contracts are or contain leases, (2) the lease classification for any existing leases and (3) initial direct costs for any existing leases.

The Company also elected the practical expedient to combine non-lease components and lease components for real estate leases.

The Company applied the provisions of ASU No.

2018-11, " Leases (Topic 842):

Targeted Improvements " ("ASU 2018-11"), allowing it to recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption without restating the comparative prior year periods.

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

The effects of the adoption on selected line items within the Company's Consolidated Balance Sheet as of June 30, 2019 were as follows:

June 29, 2019

June 30, 2019

As Reported under ASC 840

ASC 842 Adjustments

As Reported under ASC 842

Current Assets:

Prepaid expenses (1)

Other current assets (1)

Long-term Assets:

Operating lease right-of-use assets (1)

Intangible assets (1)

Deferred income tax assets (3)

Other assets and long-term investments (1)

Current Liabilities:

Accrued liabilities (1)(3)

Operating lease liabilities (2)

Long-term Liabilities:

Long-term debt

Operating lease liabilities (2)

Deferred income tax liabilities (3)

Other liabilities (1)(3)

Stockholder's Equity:

Retained earnings (accumulated deficit) (3)

Upon adoption, the Company recognized operating lease right-of-use ("ROU") assets on the Consolidated Balance Sheet.

In conjunction with this recognition, the Company reclassified amounts to lease right-of-use assets including:

prepaid rent from prepaid expenses;

key money and lease right intangibles from current and long-term other assets;

deferred rent, lease incentives, unfavorable lease right liability and other accrued rent from current and long-term other liabilities.

In addition, upon adoption in the first quarter of fiscal 2020, the Company recognized initial ROU asset balances of $ 2.13 billion on its Consolidated Balance Sheet.

Upon adoption, the Company recognized lease liabilities of $ 2.32 billion on the Consolidated Balance Sheet, which were recorded within Current and Long-term lease liabilities.

Upon adoption, the Company recognized a cumulative adjustment of $ 63.7 million , net of tax, decreasing the opening balance of Retained earnings, related to right-of-use asset impairment charges for certain of the Company’s stores where it was previously determined that the carrying value of assets was not recoverable.

This adjustment was partially offset by ($ 14.8 ) million , net of tax, of increases to retained earnings to recognize deferred gains resulting from real estate transactions.

In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No.

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Effects of adoption include balance sheet presentation changes including presentation of estimated returned products and refund liabilities on a gross basis, as well as an increase in deferred revenue related to current year licensing contract activity due to a change in the method of recognizing sales-based royalties.

These balance sheet presentation changes resulted in an increase of $ 7.4 million to Other current assets, an increase of $ 2.3 million to Accrued liabilities and a decrease of $ 5.1 million to Accounts receivable as of June 29, 2019 .

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

receivable as of June 29, 2019.

Furthermore, the adoption changed the income statement classification of certain items, primarily related to cooperative advertising allowances and other consideration provided to wholesale customers.

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Early adoption is permitted.

The Company is

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

currently in the process of evaluating the impact that adopting ASU 2018-13 will have on its consolidated financial statements and notes thereto, however, does not expect a material impact resulting from this guidance.

The Company does not currently expect that the adoption of ASU 2018-13 will have a material impact on its consolidated financial statements.

In August 2018, the FASB issued ASU No.

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Early adoption is permitted.

The Company is currently in the process of evaluating the impact that adopting ASU 2018-15 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.

The Company does not currently expect that the adoption of ASU 2018-15 will have a material impact on its consolidated financial statements.

In June 2016, the FASB issued ASU No.

2016-13, “ Measurement of Credit Losses on Financial Instruments ” (“ASU 2016-13”), which requires companies to use a forward-looking approach based on expected losses to estimate credit losses on certain types of financial instruments, including trade receivables.

The FASB has subsequently issued updates to the standard to provide additional clarification on specific topics.

The requirement of the new standard will be effective for annual reporting periods beginning after December 15, 2019, and interim periods within those annual periods, which for the Company is the first quarter of fiscal 2021.

Early adoption is permitted.

In July 2018, the FASB issued ASU 2018-11, with targeted improvements to the guidance including an additional transition method for the new standard.

As a result, the new standard may be applied with a retrospective approach to each prior reporting period with various optional practical expedients.

The Company will elect the package of practical expedients intended to ease transition whereby the Company need not assess (1) whether any expired or existing contracts are or contain leases, (2) the lease classification for any expired or existing leases and (3) initial direct costs for any existing leases.

The Company also will elect the practical expedient to combine non-lease components and lease components.

Furthermore, the Company has determined that it will apply the provisions of ASU 2018-11 with the initial application at the adoption date with a cumulative effect adjustment in the opening balance of Retained earnings in the first quarter of fiscal 2020.

The Company expects the adoption of ASU 2016-02 will result in an initial increase to long-term assets and liabilities of approximately $ 2.2 billion to $ 2.4 billion , which will change over time as the Company's lease portfolio changes.

In addition, the Company will recognize a cumulative-effect adjustment in retained earnings primarily related to deferred gains on headquarters real estate transactions, partially offset by impairment of certain right-of-use assets at the effective date.

The standard also requires enhanced quantitative and qualitative lease-related disclosures.

The timing and amount of lease expense in the consolidated statement of operations will not significantly change.

This guidance is not expected to have a material impact on the Company's liquidity.

The Company does not currently expect that the adoption of ASU 2016-13 will have a material impact on its consolidated financial statements.

Fiscal 2019 Acquisitions

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The excess of the purchase consideration over the fair value of the net assets acquired was recorded as non-tax deductible goodwill in the amount of $ 26.0 million , of which $ 13.3 million was assigned to the Stuart Weitzman segment and $ 12.7 million was assigned to the Kate Spade segment.

The purchase price allocation for these assets acquired and liabilities assumed is substantially complete, however may be subject to change as additional information is obtained during the acquisition measurement period.

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

The results of the operations of each acquired entity have been included in the consolidated financial statements since the respective date of each acquisition.

The pro forma results are not presented for these acquisitions as they are immaterial.

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The aggregate cash paid in connection with the acquisition of Kate Spade was $ 2.39 billion (or $ 2.32 billion net of cash acquired).

Consideration also includes $ 5.3 million as a result of the conversion of previously granted unvested equity awards

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

held by Kate Spade employees.

Consideration also includes $ 5.3 million 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, as well as debt proceeds.

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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.

The purchase price allocation for the assets acquired and liabilities assumed is complete.

The following table summarizes the fair value of the assets acquired and liabilities assumed as of the acquisition date:

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(2) The majority of the goodwill balance is not deductible for tax purposes.

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

The Company assigned $ 324.0 million of goodwill associated with the Kate Spade acquisition to Coach brand reporting units based upon the analysis of expected synergies, including the allocation of corporate synergies to the brands.

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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,

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

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.

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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.

Refer to Note 15, "Income Taxes," for more information about changes to the Company's deferred tax position as a result of the enactment of the new tax legislation.

Includes an adjustment for unfavorable lease rights of $ 49.5 million (amortized over the remainder of the underlying lease terms).

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The results of the operations of each acquired entity have been included in the consolidated financial statements since the respective date of each acquisition.

The pro forma results are not presented for these acquisitions as they are immaterial.

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Gift cards issued by the Company are recorded as a liability until redeemed by the customer, at which point revenue is recognized.

The Company also uses historical information to estimate the amount of gift card balances that will never be redeemed

The Company also uses historical information to estimate the amount of gift card balances that will never be redeemed and recognizes that amount as revenue over time in proportion to actual customer redemptions if the Company does not have a legal obligation to remit unredeemed gift cards to any jurisdiction as unclaimed property.

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

and recognizes that amount as revenue over time in proportion to actual customer redemptions if the Company does not have a legal obligation to remit unredeemed gift cards to any jurisdiction as unclaimed property.

Certain of the Company's retail operations use sales incentive programs, such as customer loyalty programs and the issuance of coupons.

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Stuart Weitzman

Greater China includes mainland China, Hong Kong, Macau and Taiwan.

Greater China includes mainland China, Hong Kong SAR, Macao SAR and Taiwan.

Other Asia includes Japan, Australia, New Zealand, South Korea, Thailand and other countries within Asia.

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For the fiscal year ended June 27, 2020 , net sales of $ 12.3 million were recognized from amounts recorded as deferred revenue as of June 29, 2019 .

INTEGRATION AND ACQUISITION COSTS

For the fiscal year ended June 29, 2019 , net sales of $ 18.6 million were recognized from amounts recorded as deferred revenue as of June 30, 2018 .

During the fiscal year ended June 27, 2020 , the Company incurred integration and acquisition-related costs of $ 12.9 million .

The charges recorded in cost of sales for the fiscal year ended June 27, 2020 were $ 5.6 million .

Of the amount recorded to cost of sales for the fiscal year ended June 29, 2019 , $ 6.3 million was recorded within the Kate Spade segment, $ 19.6 million was recorded within the Stuart Weitzman segment and $ 1.9 million was recorded within the Coach segment.

The charges recorded in SG&A expenses for the fiscal year ended June 29, 2019 were $ 66.6 million .

Of the amount recorded to SG&A expenses for the

Of the amount recorded to cost of sales for the fiscal year ended June 27, 2020 , $ 4.3 million was recorded within the Stuart Weitzman segment, $ 1.2 million was recorded within the Kate Spade segment and $ 0.1 million was recorded within the Coach segment.

The charges recorded in SG&A

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

fiscal year ended June 29, 2019 , $ 14.5 million was recorded in the Kate Spade segment, $ 30.0 million was recorded within Corporate, $ 15.0 million was recorded within the Stuart Weitzman segment and $ 7.1 million was recorded within the Coach segment.

Of the total costs of $ 94.4 million , $ 32.5 million were non-cash charges related to inventory, organization-related costs and asset write-offs.

The Company currently estimates that it will incur approximately $ 20 - 30 million in pre-tax charges in fiscal 2020.

As a result of these acquisitions, during the fiscal year ended June 30, 2018 , the Company incurred integration and acquisition-related costs of $ 301.6 million .

expenses for the fiscal year ended June 27, 2020 were $ 7.3 million .

Of the amount recorded to SG&A expenses for the fiscal year ended June 27, 2020 , $ 8.7 million was recorded within Corporate, $ 0.5 million was recorded within the Coach segment, $ 0.1 million was recorded within the Kate Spade segment and a reduction of expense of $ 2.0 million was recorded within the Stuart Weitzman segment.

Of the total costs of $ 12.9 million , $ 2.6 million were non-cash charges related to inventory, organization-related costs and purchase accounting adjustments.

During the fiscal year ended June 29, 2019 , the Company incurred integration and acquisition-related costs of $ 94.4 million .

The charges recorded in cost of sales for the fiscal year ended June 29, 2019 were $ 27.8 million .

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Of the amount recorded to SG&A expenses for the fiscal year ended June 29, 2019 , $ 14.5 million was recorded in the Kate Spade segment, $ 30.0 million was recorded within Corporate, $ 15.0 million was recorded within the Stuart Weitzman segment and $ 7.1 million was recorded within the Coach segment.

Of the total costs of $ 301.6 million , $ 133.1 million were non-cash charges related to purchase accounting adjustments, inventory, organization-related costs and asset write-offs.

Of the total costs of $ 94.4 million , $ 32.5 million were non-cash charges related to inventory, organization-related costs and asset write-offs.

Refer to Note 4, "Acquisitions," for more information.

5 unchanged sentences

Contractual payments (4)

Organization-related costs (5)

Purchase accounting adjustments primarily relate to the short-term impact of the amortization of fair value adjustments.

Acquisition costs primarily relate to deal fees associated with the acquisitions.

Inventory-related charges primarily relate to a one-time write-off of inventory for the fiscal year ended June 29, 2019.

For the fiscal year ended June 30, 2018, these payments primarily relate to reserves for the future destruction of certain on-hand inventory and non-cancelable inventory purchase commitments related to raw materials.

Contractual payments primarily relate to contract termination charges for the fiscal year ended June 29, 2019.

For the fiscal year ended June 30, 2018, these payments primarily relate to severance and related costs as a result of pre-existing agreements with certain Kate Spade executives which became effective upon the closing of the acquisition.

Organization-related costs primarily relate to severance charges.

Other primarily relates to professional fees, asset write-offs and inventory true-up.

Inventory-related charges primarily relate to inventory reserves for the fiscal year ended June 27, 2020.

For the fiscal year ended June 29, 2019, these charges primarily relate to one-time write-off of inventory.

For the fiscal year ended June 29, 2019, contractual payments primarily relate to contract termination charges.

Other primarily relates to professional fees, severance charges, asset write-offs and inventory true-up.

RESTRUCTURING ACTIVITIES

Operational Efficiency Plan

On April 26, 2016, the Company announced a plan (the “Operational Efficiency Plan”) to enhance organizational efficiency, update core technology platforms and streamline its supply chain network.

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.

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

During fiscal year 2018, the Company incurred Operational Efficiency Plan related charges within SG&A expenses of $ 19.5 million , primarily due to technology infrastructure costs, organizational efficiency costs and to a lesser extent, network optimization costs.

Total cumulative charges incurred under the Operational Efficiency Plan to date are $ 87.4 million .

The plan was completed 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)

Liability as of July 2, 2016

Fiscal 2017 charges

Cash payments

Non-cash charges

Liability as of July 1, 2017

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

Acceleration Program

The Company is undergoing a review of its business under its multi-year growth agenda.

This multi-faceted, multi-year strategic growth plan (the "Acceleration Program") reflects:

(i) actions to streamline the Company's organization;

(ii) select store closures as the Company optimizes its fleet (including store closure costs incurred as the Company exits certain regions in which it currently operates);

and (iii) professional fees and compensation costs incurred as a result of the development and execution of the Company's comprehensive strategic initiatives aimed at increasing profitability.

Under the Acceleration Program, the Company expects to incur total pre-tax charges of approximately $ 185 - $ 200 million .

The Acceleration Program is expected to be substantially complete by the end of fiscal 2022.

Under the Acceleration Program, the Company incurred charges of $ 87.0 million during the fourth quarter of fiscal 2020, of which $ 8.4 million was recorded within cost of sales and $ 78.6 million was recorded within SG&A expenses.

Of the $ 8.4 million recorded within cost of sales, $ 8.4 million was recorded within the Stuart Weitzman segment.

Of the $ 78.6 million recorded within SG&A expenses, $ 28.9 million was recorded within Corporate, $ 18.5 million was recorded within the Coach segment, $ 17.6 million was recorded within the Stuart Weitzman segment and $ 13.6 million was recorded within the Kate Spade segment.

A summary of charges and related liabilities under the Acceleration Program is as follows:

Organization-Related (1)

Store Closure (2)

Fiscal 2020 charges

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Non-cash charges

Liability as of June 30, 2018

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.

Technology infrastructure costs, recorded within SG&A expenses, related to the initial costs of replacing and updating the Company's core technology platforms.

Network optimization costs, recorded within SG&A expenses, related to lease termination costs.

The balance as of June 30, 2018 are included within Accrued liabilities on the Company's Consolidated Balance Sheets.

No liabilities remain as of June 29, 2019.

The above charges were recorded as Corporate expenses within the Company's Consolidated Statements of Operations.

Refer to Note 17, "Segment Information," for further information.

Liability balance as of June 27, 2020

Organization-related charges, recorded within SG&A expenses, primarily relates to severance and other related costs.

Store closure charges represent lease termination penalties, removal or modification of lease assets and liabilities established in connection with the adoption of the new lease accounting standard, establishing inventory reserves, accelerated depreciation and severance.

Other charges, recorded within SG&A, primarily relates to professional fees incurred related to the Acceleration Program.

The Company expects to incur approximately $ 100 - $ 115 million in additional charges under its the Acceleration Program, of which the majority is estimated to be cash and mostly expected to be recorded in fiscal 2021.

TAPESTRY, INC.

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Cumulative Translation Adjustment

Balances at July 1, 2017

Balances at June 30, 2018

Other comprehensive income (loss) before reclassifications

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Other represents the accumulated loss on the Company's minimum pension liability adjustment.

The balances at June 29, 2019 and June 30, 2018 are net of tax of $ 0.5 million and $ 0.6 million , respectively.

The balance at June 29, 2019 is net of tax of $ 0.5 million .

There was no remaining balance at June 27, 2020 .

SHARE-BASED COMPENSATION

3 unchanged sentences

Income tax benefit related to share-based compensation expense

During the fiscal year ended June 27, 2020 , the Company incurred $ 9.8 million of share-based compensation expense related to its organization-related and integration activities and $ 4.0 million of share-based compensation expense related to its Acceleration Program.

During the fiscal year ended June 29, 2019 and June 30, 2018 , the Company incurred $ 3.2 million and $ 6.0 million of share-based compensation expense related to integration efforts, respectively.

There were no share-based compensation expense under the Operational Efficiency Plan in fiscal year ended June 29, 2019.

During the fiscal years ended June 30, 2018 and July 1, 2017 , the Company incurred $ 0.8 million and $ 2.5 million of share-based compensation expense under the Company's Operational Efficiency Plan, respectively, primarily as a result of the accelerated vesting of certain awards.

Refer to Note 5, "Integration and Acquisition Costs," and Note 6, "Restructuring Activities," for further information.

There were no share-based compensation expense under the Operational Efficiency Plan in fiscal years ended June 27, 2020 or June 29, 2019 .

During the fiscal year ended June 30, 2018 , the Company incurred $ 0.8 million of share-based compensation expense under the Company's Operational Efficiency Plan, respectively, primarily as a result of the accelerated vesting of certain awards.

Refer to Note 6, "Integration," and Note 7, "Restructuring Activities," for further information.

TAPESTRY, INC.

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Non-vested at June 27, 2020

At June 29, 2019 , $ 14.2 million of total unrecognized compensation cost related to non-vested share awards is expected to be recognized over a weighted-average period of 1.0 year .

At June 27, 2020 , $ 0.2 million of total unrecognized compensation cost related to non-vested share awards is expected to be recognized over a weighted-average period of 0.3 years .

The weighted-average grant-date fair value per share of PRSU awards granted during fiscal 2020 , fiscal 2019 and fiscal 2018 was $ 21.43 , $ 49.78 and $ 43.80 , respectively.

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These securities have original maturities greater than three months and are recorded at fair value.

These securities as of June 29, 2019 have maturity dates between calendar years 2019 and 2020 and are recorded at fair value.

These securities as of June 29, 2019 had maturity dates between calendar years 2019 and 2020 and were recorded at fair value.

There were no material gross unrealized gains or losses on available-for-sale investments as of the periods ended June 27, 2020 and June 29, 2019 .

The Company leases retail, distribution and office facilities.

The lease agreements, which expire at various dates through fiscal 2037 , are subject, in most cases, to renewal options and provide for the payment of taxes, insurance and maintenance.

Certain leases contain escalation clauses resulting from the pass-through of increases in operating costs, property taxes and the effect on costs from changes in consumer price indices.

Certain store-related rent expense is also contingent upon sales.

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

Rent expense for the Company's operating leases consisted of the following:

The Company leases retail space, office space, warehouse facilities, distribution centers, storage space, machinery, equipment and certain other items under operating leases.

The Company's leases have initial terms ranging from 1 to 20 years and may have renewal or early termination options ranging from 1 to 10 years .

These leases may also include rent escalation clauses or lease incentives in the form of construction allowances and rent reduction.

In determining the lease term used in the lease ROU asset and lease liability calculations, the Company considers various factors such as market conditions and the terms of any renewal or termination options that may exist.

When deemed reasonably certain, the renewal and termination options are included in the determination of the lease term and calculation of the lease ROU asset and lease liability.

To the extent these payments are fixed, the Company has included them in calculating the lease ROU assets and lease liabilities.

The Company calculates lease ROU assets and lease liabilities as the present value of fixed lease payments over the reasonably certain lease term beginning at the commencement date.

ASU 2016-02 requires the use of the implicit rate to determine the present value of lease payments.

For operating leases, fixed lease payments are recognized as operating lease cost on a straight-line basis over the lease term.

Variable lease cost for both operating and finance leases, if any, is recognized as incurred.

The Company acts as sublessor in certain leasing arrangements, primarily related to a sublease of a portion of the Company's leased headquarters space as well as certain retail locations.

Fixed sublease payments received are recognized on a straight-line basis over the sublease term.

ROU assets, along with any other related long-lived assets, are periodically evaluated for impairment.

The following table summarizes the ROU assets and lease liabilities recorded on the Company's Consolidated Balance Sheet as of June 27, 2020 :

June 27, 2020

Location Recorded on Balance Sheet

Operating leases

Operating lease right-of-use assets

Finance leases

Property and equipment, net

Total lease assets

Operating leases:

Current lease liabilities

Long-term lease liabilities

Total operating lease liabilities

Finance leases:

Current lease liabilities

Accrued liabilities

Long-term lease liabilities

Other liabilities

Total finance lease liabilities

Total lease liabilities

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

The following table summarizes the composition of net lease costs, primarily recorded within SG&A expenses on the Company's Consolidated Statement of Operations for the fiscal year ended June 27, 2020 :

Fiscal Year Ended

Minimum rent (1)

Contingent rent

Total rent expense

$ 0.2 million of lease termination charges due to restructuring-related closures were included in fiscal 2017.

Future minimum rental payments under non-cancelable operating leases, as of June 29, 2019 , are as follows:

June 27, 2020

Finance lease cost:

Amortization of right-of-use assets

Interest on lease liabilities (1)

Total finance lease cost

Operating lease cost

Short-term lease cost

Variable lease cost (2)

Operating lease right-of-use impairment (3)

sublease income

Total net lease cost

Interest on lease liabilities is recorded within Interest expense, net on the Company's Consolidated Statement of Operations.

(2) Rent concessions negotiated related to Covid-19 are recorded in variable lease expense and were not material in fiscal 2020.

(3) Operating lease right-of-use impairment includes charges under the Acceleration Program.

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

The following table summarizes certain cash flow information related to the Company's leases for the fiscal year ended June 27, 2020 :

Fiscal Year Ended

June 27, 2020

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows from operating leases

Operating cash flows from finance leases

Financing cash flows from finance leases

Non-cash transactions:

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

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

The following table provides a maturity analysis of the Company's lease liabilities recorded on the Consolidated Balance Sheet as of June 27, 2020 :

June 27, 2020

Operating Leases

Finance Leases

Fiscal 2026 and thereafter

Total lease payments

imputed interest

Total lease liabilities

The future minimum fixed sublease receipts under non-cancelable operating lease agreements as of June 27, 2020 are as follows:

June 27, 2020

Fiscal 2026 and thereafter

Total sublease income

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

The following table summarizes the weighted-average remaining lease terms and weighted-average discount rates related to the Company's operating leases and finance leases recorded on the Consolidated Balance Sheet as of June 27, 2020 :

June 27, 2020

Weighted average remaining lease term (years):

Operating leases

Finance leases

Weighted average discount rate:

Operating leases

Finance leases

Additionally, the Company had an immaterial amount of future payment obligations related to executed lease agreements for which the related lease has not yet commenced as of June 27, 2020 .

As reported under the previous accounting standard, the following table provides a summary of future minimum rental payments under non-cancelable operating leases, as of June 29, 2019:

June 29, 2019

Subsequent to 2024

Total minimum future rental payments

During the first quarter of fiscal 2017, the Company announced the lease of its new global headquarters.

Refer to Note 21, "Headquarters Transactions," for further information.

FAIR VALUE MEASUREMENTS

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Refer to Note 4, "Acquisitions," for further discussion of the approaches used in valuing acquired assets and assumed liabilities.

The company recorded $ 7.4 million of impairment charges in fiscal 2019 to reduce the carrying amount of certain store assets (primarily leasehold improvements at selected retail store locations) to their fair values of $ 1.1 million as of June 29, 2019.

The Company recorded $ 9.1 million of impairment charges in fiscal 2018 to reduce the carrying amount of certain store assets (primarily leasehold improvements at selected retail store locations) to their fair values of $ 1.2 million as of June 30, 2018.

The fair values of these assets were determined based on Level 3 measurements.

Inputs to these fair value measurements included estimates of the amount and the timing of the stores' net future discounted cash flows based on historical experience, current trends, and market conditions.

During the fiscal year ended June 27, 2020 , the Company recorded a full impairment of $ 267.0 million to the Stuart Weitzman indefinite-lived brand intangibles, and a full impairment of $ 210.7 million to goodwill pertaining to the Stuart Weitzman reporting unit.

Refer to Note 15, "Goodwill and Other Intangible Assets" for further information.

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

Furthermore, when the Company evaluates its long-lived assets for impairment, the assessment is performed for the related asset group that represents the lowest level for which identifiable cash flows are independent of the cash flows of other assets.

This determination requires a significant amount of judgment, and is dependent on the Company's overall operating strategy.

The Company historically grouped select flagship locations with other stores located within the geographic area surrounding the flagship store as the Company believed the assets of the related group benefited from the Company's investments in the flagship location.

Beginning in fiscal 2020, the Company began to (i) evaluate select flagship store closures across all brands, (ii) be more selective about new store openings as it focuses on store productivity and (iii) invest more significantly in growing its digital business and capabilities.

Following this shift in strategy, during the quarter ended September 28, 2019, the Company determined for these certain flagship locations that the individual store represents the lowest level of independent identifiable cash flows.

As a result, the Company identified impairment indicators at certain flagship store locations and recorded lease ROU assets and property and equipment asset impairment charges.

In addition, during the third and fourth quarter of fiscal 2020, the Company identified impairment indicators at various store locations globally as a result of the Covid-19 pandemic.

The fair value of these assets were determined based on Level 3 measurements.

Inputs to these fair value measurements included estimates of the amounts and the timing of the stores' net future discounted cash flows based on historical experience, current trends and market conditions.

During the fiscal year ended June 27, 2020 , the Company recorded $ 111.8 million of impairment charges to reduce the carrying amount of certain store assets within property and equipment, net to their estimated fair values.

During the fiscal year ended June 29, 2019 , the Company recorded $ 7.4 million of impairment charges to reduce the carrying amount of certain store assets (primarily leasehold improvements at selected retail store locations) within property and equipment, net to their estimated fair values.

During the fiscal year ended June 27, 2020 , the Company recorded $ 155.4 million of impairment charges to reduce the carrying amount of certain operating lease right-of-use assets to their estimated fair values.

The following table summarizes the components of the Company’s outstanding debt:

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Capital Lease Obligations

Revolving Credit Facility

Total Current Debt

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Revolving Credit Facility

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 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”).

On October 24, 2019, 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 made available to the Company

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

a $ 900.0 million revolving credit facility, including sub-facilities for letters of credit, with a maturity date of October 24, 2024 (the “Revolving Credit Facility”).

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.

There were no outstanding borrowings on the Revolving Credit Facility as of June 29, 2019 .

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.

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 operating lease liability to (b) consolidated EBITDAR.

Additionally, the Company pays a commitment fee at a rate determined by the reference to the aforementioned pricing grid.

On May 19, 2020, the Company entered into Amendment No.

1 (the “Amendment”) to the Revolving Credit Facility under the terms of the Amendment, during the period from the Effective Date until October 2, 2021, the Company must maintain available liquidity of $ 700 million (with available liquidity defined as the sum of unrestricted cash and cash equivalents and available commitments under credit facilities, including the Revolving Credit Facility).

Following the period from the Effective Date until the compliance certificate is delivered for the fiscal quarter ending July 3, 2021 (the “Covenant Relief Period”), the Company must comply on a quarterly basis with a maximum net leverage ratio of 4.0 to 1.0.

In addition, the Amendment provides that during the Covenant Relief Period, if any two of the Company’s three credit ratings are non-investment grade, the Revolving Credit Facility will be guaranteed by the Company’s material domestic subsidiaries and will be subject to liens on accounts receivable, inventory and intellectual property, in each case subject to customary exceptions.

The Amendment also contains negative covenants that limit the ability of the Company and its subsidiaries to, among other things, incur certain debt, incur certain liens, dispose of assets, make investments, loans or advances, and engage in share buybacks during the Covenant Relief Period.

An increased interest rate will be applicable during the Covenant Relief Period when the Company’s gross leverage ratio exceeds 4.0 to 1.0.

The $ 900 million aggregate commitment amount under the revolving credit facility remains unchanged.

As of June 27, 2020, $ 700.0 million of borrowings were outstanding under the Revolving Credit Facility.

4.250 % Senior Notes due 2025

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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

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

the 2025 Senior Notes to be redeemed, plus accrued and unpaid interest to the redemption date.

3.000 % Senior Notes due 2022

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Prior to June 15, 2022 (one month prior to the scheduled maturity date), the Company may redeem the 2022 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.

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

4.125 % Senior Notes due 2027

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At June 29, 2019 , the fair value of the 2025, 2022 and 2027 Senior Notes was approximately $ 629.6 million , $ 398.6 million and $ 605.5 million , respectively.

As a result of taking operational control of the Kate Spade Joint Ventures, the Company has an outstanding Note Payable of $ 11.4 million as of June 29, 2019 to the other partner of the Kate Spade Joint Ventures to be payable in fiscal 2021.

Capital Lease Obligations

As a result of the Company's sale-leaseback agreement for its office building in North Bergen, NJ, the Company has total capital lease obligations of $ 0.8 million recorded within Current debt and $ 5.3 million recorded within Long-Term debt on the Consolidated Balance Sheets as of June 29, 2019 .

The remaining lease obligations will be amortized through May 1, 2025.

As a result of taking operational control of the Kate Spade Joint Ventures, the Company has an outstanding Note Payable of $ 11.5 million and $ 11.4 million as of June 27, 2020 and June 29, 2019 , respectively, to the other partner of the Kate Spade Joint Ventures to be payable in fiscal 2021.

Debt Maturities

As of June 29, 2019 , the Company's aggregate debt, excluding capital lease obligations, is approximately $ 1.61 billion , of which $ 11.4 million is due in fiscal 2021, $ 400.0 million is due in fiscal 2023 and $ 1.20 billion is due subsequent to fiscal 2023.

As of June 27, 2020 , the Company's aggregate debt is approximately $ 2.30 billion , of which $ 711.5 million is due in fiscal 2021, $ 400.0 million is due in fiscal 2023 and $ 1.20 billion is due subsequent to fiscal 2023.

COMMITMENTS AND CONTINGENCIES

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The Company pays certain fees with respect to letters of credit that are issued.

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

Tax Legislation

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Refer to Note 16, "Income Taxes," for more information related to the impact of the Tax Legislation.

The Company had other contractual cash obligations as of June 29, 2019 , including $ 404.2 million related to inventory purchase obligations, $ 16.2 million related to capital expenditure purchase obligations, $ 93.6 million of other purchase obligations, $ 1.61 billion of debt repayments, $ 6.1 million of capital lease obligations and $ 407.8 million of interest payments on the outstanding debt.

The Company had other contractual cash obligations as of June 27, 2020 , including $ 280.4 million related to inventory purchase obligations, $ 17.0 million related to capital expenditure purchase obligations, $ 72.8 million of other purchase obligations, $ 2.31 billion of debt repayments, $ 6.9 million of finance lease obligations and $ 325.0 million of interest payments on the outstanding debt.

Refer to Note 11, "Leases," for a summary of the Company's future minimum rental payments under non-cancelable leases.

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GOODWILL AND OTHER INTANGIBLE ASSETS

The Company performs its annual impairment assessment of goodwill as well as brand intangibles at the beginning of the fourth quarter of each fiscal year or if an event occurs that would more likely than not reduce the fair value below its carrying amount.

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

During the third quarter of fiscal 2020, profitability trends continued to decline from those that were expected for the Stuart Weitzman brand.

This reduction in both current and future expected cash flows was exacerbated by the Covid-19 pandemic, which resulted in a decline in sales driven by full and partial closures of a significant portion of our stores globally.

The assessment concluded that the fair values of the Stuart Weitzman reporting unit and indefinite-lived brand intangible asset as of March 28, 2020 did not exceed their respective carrying values.

Accordingly, the Company recorded a goodwill impairment charge of $ 210.7 million related to the Stuart Weitzman reporting unit, resulting in a full impairment, during the third quarter of the fiscal year.

The Company also recorded an impairment charge of $ 267.0 million related to the Stuart Weitzman indefinite-lived brand, resulting in a full impairment.

The goodwill and brand intangible impairment charges were recorded within total SG&A expenses on the Company's Consolidated Statement of Operations.

The estimated fair value of the Stuart Weitzman reporting unit was based on a weighted average of the income and market approaches.

The income approach is based on estimated discounted future cash flows, while the market approach is based on earnings multiples of selected guideline companies.

The approach, which qualifies as level 3 in the fair value hierarchy, incorporated a number of significant assumptions and judgments, including, but not limited to, estimated future cash flows, discount rates, income tax rates, terminal growth rates and valuation multiples derived from comparable publicly traded companies.

In considering the excess of the fair value over its carrying value for the Coach and Kate Spade reporting units and indefinite-lived brand intangibles, management did not perform an interim assessment for these reporting units.

The change in the carrying amount of the Company’s goodwill by segment is as follows:

Stuart Weitzman

Balance at July 1, 2017

Balance at June 30, 2018

Acquisition of goodwill (1)

Allocation of goodwill (2)

Measurement period adjustment (1)

Foreign exchange impact

Balance at June 29, 2019

Acquisition of goodwill (1)

Impairment charges

Foreign exchange impact

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Refer to Note 4, "Acquisitions," for further information.

The Company assigned a portion of goodwill associated with the Kate Spade acquisition to Coach brand reporting units based upon the analysis of expected synergies, including the allocation of corporate synergies to the brands.

TAPESTRY, INC.

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Customer relationships

Order backlog

Favorable lease rights (1)

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Intangible assets not subject to amortization:

Brand intangible assets

Trademarks and trade names (2)

Total intangible assets

Refer to Note 3, "Acquisitions," for further information.

Refer to Note 3, "Significant Accounting Policies," for further information.

The Company recognized a $ 267.0 million non-cash charge related to the impairment of the Stuart Weitzman indefinite-lived brand in fiscal 2020 .

As of June 27, 2020 , the expected amortization expense for intangible assets is as follows:

Amortization Expense

The expected future amortization expense above reflects remaining useful lives ranging from approximately 10.8 years to 13.0 years for customer relationships and the remaining lease terms ranging from approximately seven months to 15.8 years for favorable lease rights.

The expected future amortization expense above reflects remaining useful lives ranging from approximately 9.8 years to 12.0 years for customer relationships.

TAPESTRY, INC.

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June 29, 2019

June 30, 2018

Income before provision for income taxes:

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Effects of tax credits and acquisition reorganization

Effects of Impairment (3)

Change in state valuation allowance

Taxes at effective worldwide rates (2)

For the fiscal years ended June 29, 2019, June 30, 2018 and July 1, 2017, the United States jurisdiction includes foreign pre-tax earnings allocated to the Company from its interest in a foreign partnership.

For the fiscal years ended June 27, 2020, June 29, 2019 and June 30, 2018, the United States jurisdiction includes foreign pre-tax earnings allocated to the Company from its interest in a foreign partnership.

The Company has chosen to record the future tax associated with GILTI as a period cost, and accordingly, the Company has recorded deferred taxes associated with GILTI in fiscal 2020.

This item represents the effective tax rate impact of the SW Goodwill and indefinite-lived brand intangible impairment activity recorded in fiscal 2020.

Current and deferred tax provision (benefit) was:

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June 29, 2019

June 30, 2018

Total current and deferred tax provision (benefit)

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Reserves not deductible until paid

Deferred rent

Deferred lease obligation

Employee benefits

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Net operating loss

Capital loss carryforward

Lease liability

Gross deferred tax assets

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Property and equipment

Foreign investments

Prepaid expenses

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Net deferred tax (liabilities) assets

In fiscal 2018, the Company recorded a net deferred tax liability of $ 325.7 million as part of the opening balance sheet recorded in purchase accounting for fiscal 2018 acquisitions.

Given that this balance was recorded as part of purchase accounting, it had no impact on total deferred tax expense recorded during fiscal 2018.

Significant judgment is required in determining the worldwide provision for income taxes, and there are many transactions for which the ultimate tax outcome is uncertain.

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Of the $ 85.8 million ending gross unrecognized tax benefit balance as of June 29, 2019 , $ 58.1 million relates to items which, if recognized, would impact the effective tax rate.

Of the $ 94.1 million ending gross unrecognized tax benefit balance as of July 1, 2017, $ 83.6 million relates to items which, if recognized, would impact the effective tax rate.

As of June 29, 2019 , June 30, 2018 and July 1, 2017, gross interest and penalties payable was $ 12.6 million , $ 12.9 million and $ 24.1 million , respectively, which are included in Other liabilities on the Company's Consolidated Balance Sheet.

During fiscal 2019 and fiscal 2018 , the Company recognized gross interest and penalty income of $ 0.2 million and $ 10.8 million , respectively, and gross interest and penalty expense of $ 2.8 million during fiscal 2017.

As of June 27, 2020 and June 29, 2019 , gross interest and penalties payable was $ 10.9 million and $ 12.6 million , respectively, which are included in Other liabilities.

During fiscal 2020 , fiscal 2019 and fiscal 2018, the Company recognized gross interest and penalty income of $ 1.2 million , gross interest and penalty expense of $ 0.2 million and gross interest and penalty income of $ 10.8 million , respectively.

The Company files income tax returns in the U.S.

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The Company is currently under audit in the U.S.

for fiscal 2017.

for fiscal 2017 and fiscal 2018.

The Company anticipates that one or more of these audits may be finalized and certain statutes of limitation may expire in the foreseeable future.

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As of June 29, 2019 , the Company had the following tax loss carryforwards available:

federal loss carryforwards of $ 448.4 million , state tax loss carryforwards of approximately $ 831 million and tax loss carryforwards of various foreign jurisdictions of $ 921.9 million .

federal loss carryforwards of $ 127.7 million , state tax loss carryforwards of $ 717.2 million and tax loss carryforwards of various foreign jurisdictions of $ 116.0 million .

The federal and state net operating loss carryforwards generally start to expire in 2031 and 2020, respectively.

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Deferred tax assets, including the deferred tax assets recognized on these net operating losses, have been reduced by a valuation allowance of $ 39.6 million as of June 27, 2020 and $ 32.9 million as of June 29, 2019 .

During fiscal 2019, the Company wrote off certain net operating losses and corresponding full valuation allowances that were determined to have a remote likelihood of being utilized.

The Company is not permanently reinvested with respect to the earnings of a limited number of foreign entities and has recorded the tax consequences of remitting earnings from these entities.

The Company is permanently reinvested with respect to all other earnings.

The total estimated amount of unremitted earnings of foreign subsidiaries as of June 29, 2019 and June 30, 2018 was $ 2.04 billion and $ 3.09 billion , respectively.

Before the Tax Legislation, the Company considered the earnings of its non-U.S.

subsidiaries to be indefinitely reinvested, and accordingly, recorded no deferred income taxes on these earnings.

The Tax Legislation imposed a one-time Transition Tax on the deemed repatriated earnings, thereby removing the potential federal income tax consequences of repatriating these earnings to the U.S.

However actual remittance from non-U.S.

subsidiaries may result in additional foreign withholding taxes, U.S.

state taxes and taxes related to foreign currency gains or losses.

The total estimated amount of unremitted earnings of foreign subsidiaries as of June 27, 2020 and June 29, 2019 was $ 739.4 million and $ 2.04 billion , respectively.

The Company intends to distribute $ 739.4 million of earnings that were previously subject to U.S.

Federal Tax and has recorded a deferred tax liability of

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

$ 2.3 million during fiscal 2019 for U.S.

state taxes related to the future distribution.

Based on the Company's current analysis, the amount of the unrecognized deferred tax liability related to unremitted earnings is estimate to be between $ 5 million and $ 7 million .

Federal Tax and has recorded a deferred tax liability of $ 5.5 million during fiscal 2020 for U.S.

state taxes and foreign withholding taxes related to the future distribution.

Based on the Company's current analysis, there is no further unrecognized deferred tax liability related to unremitted earnings.

Tax Legislation

On December 22, 2017, H.R.1, formerly known as the Tax Cuts and Jobs Act (the “Tax Legislation”) was enacted.

The Tax Legislation significantly revises the U.S.

tax code by (i) lowering the U.S federal statutory income tax rate from 35% to 21% , (ii) implementing a territorial tax system, (iii) imposing a one-time transition tax on deemed repatriated earnings of foreign subsidiaries ("Transition Tax"), (iv) requiring current inclusion of global intangible low taxed income (“GILTI”) of certain earnings of controlled foreign corporations in U.S.

federal taxable income, (v) creating the base erosion anti-abuse tax (“BEAT”) provision, (vi) implementing bonus depreciation that will allow for full expensing of qualified property, (vii) enacting a beneficial rate to be applied against Foreign Derived Intangible Income ("FDII") and (viii) limiting deductibility of interest and executive compensation expense, among other changes.

In December 2017, the SEC Staff issued Staff Accounting Bulletin ("SAB") 118 to provide guidance to registrants in accounting for income taxes under the Tax Legislation.

In accordance with SAB 118, the Company made reasonable estimates and recorded provisional amounts for the Tax Legislation during fiscal 2018.

Under the transitional provisions of SAB 118, the Company had a one-year measurement period to complete the accounting for the initial tax effects of the Tax Legislation, which was completed during fiscal 2019.

The following table represents amounts recorded to provision for income taxes in the year ended June 29, 2019 for items related to the Tax Legislation:

Fiscal Year Ended

June 29, 2019

June 30, 2018

Impact of Change in U.S.

Federal Statutory Rate on Pre-Tax Income

Discrete Impacts of Tax Legislation:

Transition Tax - Federal and State

Re-measurement of deferred taxes (federal and state)

Global intangible low-taxed income

Foreign derived intangible income

Total Impact of Tax Legislation

The Tax Legislation requires the Company to pay a one-time tax, or Transition Tax, on previously unremitted earnings of certain non-US subsidiaries.

The Company has elected to pay the Transition Tax in installments.

As shown in the table below, the remaining Transition Tax payable is $ 155.9 million and is payable between fiscal 2021 and fiscal 2025.

The $ 155.9 million Transition Tax payable is reduced from the fiscal 2018 Transition Tax liability of $ 266.0 million due to payments made during fiscal 2019, as well as the application of net operating losses to reduce the Transition Tax payable.

Transition Tax Payments

Under GILTI, a portion of the Company’s foreign earnings will be subject to U.S.

taxation, offset by available foreign tax credits subject to limitations.

For companies subject to GILTI, the FASB has indicated that companies are allowed to record a deferred tax liability related to the outside basis difference in the fiscal year of enactment or record the tax associated with GILTI as a period cost in the period the earnings are included on the U.S.

The Company has chosen to record the future tax

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

associated with GILTI as a period cost, and accordingly, the Company has recorded no additional deferred tax liability in fiscal 2018.

Transition Tax Payments

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) was signed into law in response to the Covid-19 pandemic.

The CARES Act contains numerous income tax provisions, such as refundable payroll tax credits, deferral of the employer portion of certain payroll taxes, net operating loss carrybacks, modifications to net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property.

The CARES Act require the Company to make significant judgments and estimates in the interpretation of the law and in the calculation of the provision for income taxes.

However, additional guidance may be issued by the Internal Revenue Service (“IRS”), the Department of the Treasury, or other governing body that may significantly differ from our interpretation of the law, which may result in a material effect on our business, cash flow, results of operations, or financial conditions.

DEFINED CONTRIBUTION PLAN

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Operating income is the gross margin of the segment less direct expenses of the segment.

Beginning in fiscal 2019, the Company changed its expense reporting to more closely align with the organizational structure and management of the business.

Accordingly, certain SG&A expenses that were previously reported in fiscal 2017 and fiscal 2018 within our reportable segments are now reflected in Corporate expense.

The costs primarily relate to employee costs within shared functional groups.

Beginning in fiscal 2020, the Company presented the impact of foreign currency gains and losses within Other expense (income) within its Consolidated Statements of Operations.

Accordingly, foreign currency gains and losses that were reported within Selling, general and administrative expenses ("SG&A") in fiscal 2019 and fiscal 2018 are now reflected within Other expense (income).

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

The following table summarizes segment performance for fiscal 2020 , fiscal 2019 and fiscal 2018 :

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Corporate (2)

Gross profit (3)

Operating income (loss)

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Additions to long-lived assets (5)

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

Operating income (loss)

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These costs primarily represent administrative and information systems expense.

Furthermore, certain integration and acquisition costs as well as costs under the Company's Operational Efficiency Plan and Transformation Plan as described in Note 6, "Restructuring Activities," are included within Corporate.

Depreciation and amortization expense includes $ 2.2 million of Integration & Acquisition costs for the fiscal year ended June 29, 2019 .

There were no costs incurred related to the Operational Efficiency Plan for the fiscal year ended June 29, 2019 and June 30, 2018 .

Depreciation and amortization expenses includes $ 6.1 million of Operational Efficiency Plan charges for the fiscal year ended July 1, 2017 .

These charges are recorded within Corporate.

(3) Gross profit reflects charges recorded within Cost of sales of $ 61.9 million within the Coach segment, $ 32.3 million within the Kate Spade segment and $ 9.8 million within the Stuart Weitzman segment for the fiscal year ended June 27, 2020 as a result of establishing inventory reserves directly related to the expected impact of Covid-19 on the Company's future sales projections.

The non-cash portion of these charges are presented within Impairment charges on the Consolidated Statement of Cash Flows.

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

Depreciation and amortization expense includes $ 0.4 million and $ 2.2 million of Integration & Acquisition costs for the fiscal year ended June 27, 2020 and June 29, 2019 , respectively.

Depreciation and amortization expense includes impairment charges of $ 44.6 million for Coach, $ 36.0 million for Kate Spade and $ 499.9 million for Stuart Weitzman for the fiscal year ended June 27, 2020 .

Refer to Note 12, "Fair Value Measurements," and Note 15, "Goodwill and Other Intangible Assets" for further information.

Depreciation and amortization expense for the segments includes an allocation of expense related to assets which support multiple segments.

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As such, depreciation expense for these assets may be subsequently allocated to a reportable segment.

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

The following table shows net sales for each product category represented:

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June 29, 2019

June 30, 2018 (1)

% of total net sales

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Other Products

Kate Spade (1)

Women's Handbags

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Total Net sales

On July 11, 2017, the Company completed its acquisition of Kate Spade.

The Company completed its acquisition of Kate Spade in fiscal 2018.

The operating results of the Kate Spade brand have been consolidated in the Company's operating results commencing on July 11, 2017.

The significant majority of sales for the Stuart Weitzman brand is attributable to women's footwear.

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

Geographic Area Information

Geographic revenue information is based on the location of our customer sale.

Geographic long-lived asset information is based on the physical location of the assets at the end of each fiscal year and includes property and equipment, net and other assets.

Geographic long-lived asset information is based on the physical location of the assets at the end of each fiscal year and includes property and equipment, net, right of use assets and other assets.

Net sales (1)

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Includes net sales from our global travel retail business in locations within the specified geographic area.

Greater China includes mainland China, Hong Kong, Macau and Taiwan.

Greater China includes mainland China, Hong Kong SAR, Macao SAR and Taiwan.

Other includes sales in Europe, Canada, South Korea, Malaysia, Singapore, Australia and New Zealand and royalties related to licensing.

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(millions, except per share data)

Net income (loss)

Weighted-average basic shares

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Weighted-average diluted shares

Net income per share:

Net income (loss) per share:

There was no dilutive effect for fiscal year 2020 as the impact of these items would be anti-dilutive as a result of the net loss incurred during the period.

At June 27, 2020 , options to purchase 15.0 million shares of common stock were outstanding but not included in the computation of diluted earnings per share, as these options’ exercise prices, ranging from $ 15.38 to $ 78.46 , were greater than the average market price of the common shares.

At June 29, 2019 , options to purchase 12.3 million shares of common stock were outstanding but not included in the computation of diluted earnings per share, as these options’ exercise prices, ranging from $ 31.46 to $ 78.46 , were greater than the average market price of the common shares.

At July 1, 2017 , options to purchase 4.5 million shares of common stock were outstanding but not included in the computation of diluted earnings per share, as these options’ exercise prices, ranging from $ 45.13 to $ 78.46 , were greater than the average market price of the common shares.

At June 30, 2018 , options to purchase 3.4 million shares of common stock were outstanding but not included in the computation of diluted earnings per share, as these options’ exercise prices, ranging from $ 48.08 to $ 78.46 , were greater than the average market price of the common shares.

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 June 29, 2019 , June 30, 2018 and July 1, 2017 , there were approximately 12.6 million , 4.2 million , and 5.6 million , respectively, of 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.

As of June 27, 2020 , June 29, 2019 and June 30, 2018 , there were approximately 16.2 million , 12.6 million , and 4.2 million , respectively, of 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.

RELATED PARTIES

The Stuart Weitzman brand owns approximately 50 % of a factory and one of its former employees, who left the Company during fiscal 2017, maintains a partial ownership interest of less than 50 % in a factory, both of which are located in Spain, which are involved in the production of Stuart Weitzman inventory.

Payments to these two factories represented $ 16.8 million and $ 17.1 million in fiscal 2019 and fiscal 2018 , respectively.

Amounts payable to these factories were not material at June 29, 2019 or June 30, 2018 .

The Stuart Weitzman brand owns approximately 50 % of a factory located in Spain, which is involved in the production of Stuart Weitzman inventory.

Payments to this factory represented $ 14.9 million and $ 16.8 million in fiscal 2020 and fiscal 2019 , respectively.

Amounts payable to this factory were not material at June 27, 2020 or June 29, 2019 .

TAPESTRY, INC.

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Payroll and employee benefits

Accrued income taxes

Dividends payable

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Total other liabilities

HEADQUARTERS TRANSACTIONS

Sale of Interest and Lease Transaction of Hudson Yards

During the first quarter of fiscal 2017, the Company sold its investments in 10 Hudson Yards, in New York City, and announced 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 was initially amortized through SG&A expenses over the lease term of 20 years.

As a result of the adoption of ASU No.

2016-02, as discussed in Note 2, the unamortized balance of the gain will be recorded to equity at the start of fiscal 2020.

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 was approximately $ 1.05 billion .

Minimum lease payments of $ 45.1 million are 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.

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

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

During the first quarter of fiscal 2018, 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").

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 EVENTS

Subsequent to the end of the fiscal year, the Company announced that Jide Zeitlin resigned as the Company’s Chairman, Chief Executive Officer and from the Company's Board of Directors, effective July 20, 2020.

Effective July 21, 2020, the Company appointed Joanne Crevoiserat, the Company's Chief Financial Officer, as Interim Chief Executive Officer.

The Company also appointed Andrea Shaw Resnick, the Company's Global Head of Investor Relations and Corporate Communications, as Interim Chief Financial Officer.

TAPESTRY, INC.

Schedule II — Valuation and Qualifying Accounts

For the Fiscal Years Ended June 29, 2019 , June 30, 2018 and July 1, 2017

For the Fiscal Years Ended June 27, 2020 , June 29, 2019 and June 30, 2018

Balance at Beginning

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Valuation allowance

During the year ended June 29, 2019 , other adjustments of $ 5.1 million represent the adjustment to the allowance for returns as a result of the adoption of ASU 2014-09, " Revenue from Contracts with Customers.

" During the fiscal year ended June 30, 2018 , other adjustments of $ 143.9 million represent additions as a result of acquisitions.

During the fiscal year ended June 29, 2019 , other adjustments of $ 5.1 million represent the adjustment to the allowance for returns as a result of the adoption of ASU 2014-09, " Revenue from Contracts with Customers ." During the fiscal year ended June 30, 2018, other adjustments of $ 143.9 million represent additions as a result of acquisitions.

TAPESTRY, INC.

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Fiscal 2020 (1)

Net income per common share:

Net income (loss)

Net income (loss) per common share:

Fiscal 2019 (1)

Net income per common share:

Net income (loss)

Net income (loss) per common share:

Fiscal 2018 (1)

Net income per common share:

Net income (loss)

Net income (loss) per common share:

The sum of the quarterly earnings per share may not equal the full-year amount, as the computations of the weighted-average number of common basic and diluted shares outstanding for each quarter and the full year are performed independently.

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Exhibit Table (numbered in accordance with Item 601 of Regulation S-K)

Agreement and Plan of Merger, dated as of May 7, 2017, by and among Coach, Inc., Kate Spade & Company and Chelsea Merger Sub, Inc., which is incorporated by reference from Exhibit 2.1 to the Registrant's Quarterly Report on Form 10-Q for the period ended April 1, 2017

Amended and Restated Bylaws of Tapestry, Inc., effective as of October 31, 2017, which is incorporated herein by reference from Exhibit 3.2 to the Registrant’s Current Report on Form 8-K filed on October 31, 2017

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Form of 4.125% senior unsecured notes due 2027 (included in the Third Supplemental Indenture), which is incorporated by reference from Exhibit 4.4 to the Registrant's Current Report on Form 8-K, filed on June 20, 2017

Purchase Agreement among Stuart Weitzman Topco LLC, Stuart Weitzman Intermediate LLC and Coach, Inc., dated January 5, 2015, which is incorporated by reference from Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the period ended December 27, 2014

Letter Agreement between Stuart Weitzman and Coach, Inc., dated January 5, 2015, which is incorporated by reference from Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q for the period ended December 27, 2014

Description of Securities

Non-Qualified Deferred Compensation Plan for Outside Directors, which is incorporated by reference from Exhibit 10.14 to The Registrant’s Annual Report on Form 10-K for the fiscal year ended June 28, 2003

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Amended and Restated 2010 Stock Incentive Plan (Amended and Restated as of September 18, 2015), which is incorporated herein by reference from Appendix B to the Registrant’s Definitive Proxy Statement for the 2015 Annual Meeting of Stockholders, filed on September 25, 2015

Executive Deferred Compensation Plan, effective as of January 1, 2016

Executive Deferred Compensation Plan, effective as of January 1, 2016, which is incorporated herein by reference from Exhibit 10.10 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended June 29, 2019

Amended and Restated 2010 Stock Incentive Plan (Amended and Restated as of September 23, 2016), which is incorporated herein by reference from Appendix B to the Registrant's Definitive Proxy Statement for the 2016 Annual Meeting of the Stockholders, filed on September 30, 2016

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Form of Stock Option Grant Notice and Agreement under the Tapestry, Inc.

2018 Stock Incentive Plan

2018 Stock Incentive Plan, which is incorporated herein by reference from Exhibit 10.14 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended June 29, 2019

Form of Restricted Stock Unit Award Grant Notice and Agreement under the Tapestry, Inc.

2018 Stock Incentive Plan

2018 Stock Incentive Plan, which is incorporated herein by reference from Exhibit 10.15 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended June 29, 2019

Form of Performance Restricted Stock Unit Agreement Grant Notice and Agreement under the Tapestry, Inc.

2018 Stock Incentive Plan

2018 Stock Incentive Plan, which is incorporated herein by reference from Exhibit 10.16 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended June 29, 2019

Form of Stock Option Grant Notice and Agreement for Outside Directors under the Tapestry, Inc.

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2018 Stock Incentive Plan, which is incorporated by reference from Exhibit 10.4 to the Registrant's Quarterly Report on Form 10-Q for the period ended December 29, 2018

2013 Performance-Based Annual Incentive Plan, which is incorporated herein by reference from Appendix B to the Registrant’s Definitive Proxy Statement for the 2013 Annual Meeting of Stockholders, filed on September 27, 2013

Tapestry, Inc.

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and Victor Luis, which is incorporated herein by reference from Exhibit 10.29 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended June 29, 2013

Employment Offer Letter, dated January 26, 2015, between Coach, Inc.

and Ian Bickley, which is incorporated by reference from Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q for the period ended March 28, 2015

Letter Agreement, dated June 22, 2015, between Coach, Inc.

and Sarah Dunn, which is incorporated by reference from Exhibit 10.3 to the Registrant’s Current Report on Form 8-K, filed on June 22, 2015

Letter Agreement, dated June 22, 2015, between Coach, Inc.

and Todd Kahn, which is incorporated by reference from Exhibit 10.2 to the Registrant’s Current Report on Form 8-K, filed on June 22, 2015

Letter Agreement, dated August 11, 2016, between Coach Inc.

and Todd Kahn

Letter Agreement, dated August 22, 2016, between Coach, Inc.

and Victor Luis, which is incorporated by reference from Exhibit 10.1 to the Registrant's Current Report on Form 8-K, filed on August 26, 2016

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Termination and Release of the Coach Guaranty, dated as of August 1, 2016, by and between Podium Fund Tower C SPV LLC and ERY Developer LLC, which is incorporated by reference from Exhibit 10.4 to the Registrant's Quarterly Report on Form 10-Q for the period ended October 1, 2016

Employment Offer Letter, dated December 12, 2016, between Coach, Inc.

and Kevin Wills, which is incorporated by reference from Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for the period ended December 31, 2016

Employment Offer Letter, dated March 27, 2017, between Coach, Inc.

and Joshua Schulman, which is incorporated by reference from Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for the period ended April 1, 2017

Credit Agreement, dated as of May 30, 2017, by and among Coach, Inc., Bank of America, N.A., as Administrative Agent, JPMorgan Chase Bank, N.A.

and HSBC Bank USA, National Association, as Co-Syndication Agents, and the other lenders party thereto, which is incorporated by reference from Exhibit 10.1 to the Registrant's Current Report on Form 8-K, filed on May 31, 2017

Sublease, dated as of September 13, 2017 between Coach, Inc.

and The Guardian Life Insurance Company of America, a New York mutual insurance company, which is incorporated by reference from Exhibit 10.1 to the Registrant's Current Report on Form 8-K, filed on September 14, 2017.

Letter Agreement, dated March 8, 2018, between the Registrant and Anna Bakst

Separation and Release Agreement dated December 6, 2018, between Tapestry and Kevin Wills, which is incorporated by reference from Exhibit 10.5 to the Registrant's Quarterly Report on Form 10-Q for the period ended December 29, 2018

Letter Agreement, dated May 8, 2019 between the Registrant and Thomas Glaser

Letter Agreement, dated May 8, 2019 between the Registrant and Thomas Glaser, which is incorporated herein by reference from Exhibit 10.37 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended June 29, 2019

Tapestry, Inc.

Severance Pay Plan for Vice Presidents and Above, Amended and Restated effective May 9, 2019

Letter Agreement, dated June 17, 2019 between the Registrant and Joanne Crevoiserat

Severance Pay Plan for Vice Presidents and Above, Amended and Restated effective May 9, 2019, which is incorporated herein by reference from Exhibit 10.38 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended June 29, 2019

Letter Agreement, dated June 17, 2019 between the Registrant and Joanne Crevoiserat, which is incorporated herein by reference from Exhibit 10.39 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended June 29, 2019

Tapestry, Inc.

Special Severance Plan, effective August 12, 2019

change in accounting principle, which is incorporated herein by reference from Exhibit 18 to the Registrant’s Quarterly Report on Form 10-Q for the period ended October 2, 2010

Special Severance Plan, effective August 12, 2019, which is incorporated herein by reference from Exhibit 10.40 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended June 29, 2019

Separation and Mutual Release Agreement, between Tapestry, Inc.

and Victor Luis, which is incorporated by reference from Exhibit 10.1 to Tapestry's Current Report on 8-K filed on September 4, 2019

Letter Agreement, between Tapestry, Inc.

and Jide Zeitlin, which is incorporated by reference from Exhibit 10.2 to Tapestry's Current Report on 8-K filed on September 4, 2019

Amended & Restated Tapestry Inc.

2018 Stock Incentive Plan, which is incorporated herein by reference from Appendix B to the Registrant's Definitive Proxy Statement for the 2019 Annual Meeting of Stockholders, filed on September 27, 2019

Credit Agreement, dated as of October 24, 2019, by and among Tapestry, Inc., Bank of America, N.A.

as Administrative Agent, JPMorgan Chase Bank, N.A.

and HSBC Bank USA, N.A., as Co-Syndication Agents, and the other lenders party thereto, incorporated by reference from Exhibit 10.4 to Tapestry’s Quarterly Report on Form 10-Q filed on November 7, 2019

Amendment No.

1, dated May 19, 2020, to the Credit Agreement, dated as of October 24, 2019 by and among Tapestry, Inc., Bank of America, N.A.

as Administrative Agent, JPMorgan Chase Bank, N.A.

and HSBC Bank USA, N.A., as Co-Syndication Agents, and the other lenders party thereto

Letter Agreement, dated July 20, 2020 between the Registrant and Joanne Crevoiserat

Letter Agreement, dated July 20, 2020 between the Registrant and Andrea Shaw Resnick

Letter Agreement, dated July 20, 2020 between the Registrant and Todd Kahn

List of Subsidiaries of Tapestry, Inc.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures