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þ
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Maryland
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52-2242751
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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Title of Each Class
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Name of Each Exchange on which Registered
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Common Stock, par value $.01 per share
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New York Stock Exchange
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Large accelerated filer
þ
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Accelerated filer
o
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Non-accelerated filer
o
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Smaller reporting company
o
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Emerging growth company
o
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Documents
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Form 10-K Reference
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Proxy Statement for the 2018 Annual Meeting of Stockholders
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Part III, Items 10 – 14
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Page Number
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PART I
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PART II
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PART III
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PART IV
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•
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Coach includes global sales of Coach brand products to customers through Coach operated stores, including the Internet and concession shop-in-shops, and sales to wholesale customers and through independent third party distributors. This segment represented
71.8%
of total net sales in fiscal
2018
.
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•
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Kate Spade includes global sales primarily of kate spade new york brand products to customers through Kate Spade operated stores, including the Internet, to wholesale customers, through concession shop-in-shops and through independent third party distributors. This segment represented
21.8%
of total net sales in fiscal
2018
.
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•
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Stuart Weitzman includes global sales of Stuart Weitzman brand products primarily through Stuart Weitzman operated stores, including the Internet, to wholesale customers and through numerous independent third party distributors. This segment represented
6.4%
of total net sales in fiscal
2018
.
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Coach
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|||||||
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North America
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International
(1)
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|
Total
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|||
Store Count
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|
|
|
|
|
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|||
Fiscal 2018
|
|
402
|
|
|
585
|
|
|
987
|
|
Net change vs. prior year
|
|
(17
|
)
|
|
42
|
|
|
25
|
|
% change vs. prior year
|
|
(4.1
|
)%
|
|
7.7
|
%
|
|
2.6
|
%
|
|
|
|
|
|
|
|
|||
Fiscal 2017
|
|
419
|
|
|
543
|
|
|
962
|
|
Net change vs. prior year
|
|
(13
|
)
|
|
21
|
|
|
8
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|
% change vs. prior year
|
|
(3.0
|
)%
|
|
4.0
|
%
|
|
0.8
|
%
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2016
|
|
432
|
|
|
522
|
|
|
954
|
|
Net change vs. prior year
|
|
(30
|
)
|
|
19
|
|
|
(11
|
)
|
% change vs. prior year
|
|
(6.5
|
)%
|
|
3.8
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%
|
|
(1.1
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)%
|
|
|
|
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|
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|||
Square Footage
|
|
|
|
|
|
|
|||
Fiscal 2018
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|
1,835,543
|
|
|
1,256,525
|
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|
3,092,068
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|
Net change vs. prior year
|
|
(48,661
|
)
|
|
89,605
|
|
|
40,944
|
|
% change vs. prior year
|
|
(2.6
|
)%
|
|
7.7
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%
|
|
1.3
|
%
|
|
|
|
|
|
|
|
|||
Fiscal 2017
|
|
1,884,204
|
|
|
1,166,920
|
|
|
3,051,124
|
|
Net change vs. prior year
|
|
(7,942
|
)
|
|
80,605
|
|
|
72,663
|
|
% change vs. prior year
|
|
(0.4
|
)%
|
|
7.4
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%
|
|
2.4
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%
|
|
|
|
|
|
|
|
|||
Fiscal 2016
|
|
1,892,146
|
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|
1,086,315
|
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|
2,978,461
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|
Net change vs. prior year
|
|
(25,705
|
)
|
|
55,620
|
|
|
29,915
|
|
% change vs. prior year
|
|
(1.3
|
)%
|
|
5.4
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%
|
|
1.0
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%
|
|
|
|
|
|
|
|
|||
Average Square Footage
|
|
|
|
|
|
|
|||
Fiscal 2018
|
|
4,566
|
|
|
2,148
|
|
|
3,133
|
|
Fiscal 2017
|
|
4,497
|
|
|
2,149
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|
|
3,172
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|
Fiscal 2016
|
|
4,380
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|
|
2,081
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|
3,122
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(1)
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Fiscal 2018 includes the addition of 21 retail stores acquired as a result of the Coach distributor acquisition in Australia and New Zealand completed during the third quarter of fiscal 2018.
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Kate Spade
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|||||||
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North America
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International
(2)
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Total
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|||
Store Count
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|
|
|
|
|
|
|||
Fiscal 2018
(1)
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|
200
|
|
|
142
|
|
|
342
|
|
|
|
|
|
|
|
|
|||
Square Footage
|
|
|
|
|
|
|
|||
Fiscal 2018
(1)
|
|
495,121
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|
|
171,754
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|
|
666,875
|
|
|
|
|
|
|
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|
|||
Average Square Footage
|
|
|
|
|
|
|
|||
Fiscal 2018
(1)
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|
2,476
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|
|
1,210
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|
1,950
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(1)
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The Kate Spade business was acquired in the first quarter of fiscal 2018 which included the addition of 180 stores in North America and 95 international stores.
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(2)
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Includes the addition of 50 retail stores related to taking operational control of the Kate Spade Joint Ventures that operate in mainland China, Hong Kong, Macau and Taiwan in the third quarter of fiscal 2018.
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Stuart Weitzman
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|||||||
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North America
(1)
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International
(2)
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Total
|
|||
Store Count
|
|
|
|
|
|
|
|||
Fiscal 2018
|
|
68
|
|
|
35
|
|
|
103
|
|
Net change vs. prior year
|
|
(1
|
)
|
|
23
|
|
|
22
|
|
% change vs. prior year
|
|
(1.4
|
)%
|
|
191.7
|
%
|
|
27.2
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%
|
|
|
|
|
|
|
|
|||
Fiscal 2017
|
|
69
|
|
|
12
|
|
|
81
|
|
Net change vs. prior year
|
|
5
|
|
|
1
|
|
|
6
|
|
% change vs. prior year
|
|
7.8
|
%
|
|
9.1
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%
|
|
8.0
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%
|
|
|
|
|
|
|
|
|||
Fiscal 2016
|
|
64
|
|
|
11
|
|
|
75
|
|
Net change vs. prior year
|
|
18
|
|
|
3
|
|
|
21
|
|
% change vs. prior year
|
|
39.1
|
%
|
|
37.5
|
%
|
|
38.9
|
%
|
|
|
|
|
|
|
|
|||
Square Footage
|
|
|
|
|
|
|
|||
Fiscal 2018
|
|
117,869
|
|
|
47,498
|
|
|
165,367
|
|
Net change vs. prior year
|
|
(75
|
)
|
|
28,690
|
|
|
28,615
|
|
% change vs. prior year
|
|
(0.1
|
)%
|
|
152.5
|
%
|
|
20.9
|
%
|
|
|
|
|
|
|
|
|||
Fiscal 2017
|
|
117,944
|
|
|
18,808
|
|
|
136,752
|
|
Net change vs. prior year
|
|
12,680
|
|
|
6,252
|
|
|
18,932
|
|
% change vs. prior year
|
|
12.0
|
%
|
|
49.8
|
%
|
|
16.1
|
%
|
|
|
|
|
|
|
|
|||
Fiscal 2016
|
|
105,264
|
|
|
12,556
|
|
|
117,820
|
|
Net change vs. prior year
|
|
23,387
|
|
|
3,332
|
|
|
26,719
|
|
% change vs. prior year
|
|
28.6
|
%
|
|
36.1
|
%
|
|
29.3
|
%
|
|
|
|
|
|
|
|
|||
Average Square Footage
|
|
|
|
|
|
|
|||
Fiscal 2018
|
|
1,733
|
|
|
1,357
|
|
|
1,606
|
|
Fiscal 2017
|
|
1,709
|
|
|
1,567
|
|
|
1,688
|
|
Fiscal 2016
|
|
1,645
|
|
|
1,141
|
|
|
1,571
|
|
|
Brand
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Category
|
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Partner
|
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Expiration
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Coach
|
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Eyewear
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Luxottica
|
|
2020
|
Coach
|
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Watches
|
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Movado
|
|
2020
|
Coach
|
|
Fragrance
|
|
Interparfums
|
|
2026
|
Kate Spade
|
|
Fashion Bedding
|
|
HTA
|
|
2019
|
Kate Spade
|
|
Eyewear
|
|
Safilo
|
|
2020
|
Kate Spade
|
|
Footwear
|
|
Steve Madden
|
|
2020
|
Kate Spade
|
|
Tableware
|
|
Lenox
|
|
2020
|
Kate Spade
|
|
Stationery and Gift
|
|
Lifeguard Press
|
|
2020
|
Kate Spade
|
|
Tech Accessories
|
|
Incipio
|
|
2021
|
Kate Spade
|
|
Watches
|
|
Fossil
|
|
2025
|
|
Fiscal Year Ended
|
|||||||||||||||||||
|
June 30, 2018
|
|
July 1, 2017
|
|
July 2, 2016
|
|||||||||||||||
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(millions)
|
|||||||||||||||||||
|
Amount
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|
% of total
net sales
|
|
Amount
|
|
% of total
net sales
|
|
Amount
|
|
% of total
net sales
|
|||||||||
Coach:
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|
|||||||||
Women's Handbags
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$
|
2,298.2
|
|
|
39
|
%
|
|
$
|
2,308.0
|
|
|
52
|
%
|
|
$
|
2,392.9
|
|
|
53
|
%
|
Men's
|
844.6
|
|
|
14
|
|
|
808.0
|
|
|
18
|
|
|
725.7
|
|
|
16
|
|
|||
Women's Accessories
|
747.1
|
|
|
13
|
|
|
721.0
|
|
|
16
|
|
|
721.6
|
|
|
16
|
|
|||
Other Products
|
331.6
|
|
|
6
|
|
|
277.7
|
|
|
6
|
|
|
306.9
|
|
|
7
|
|
|||
Total Coach
|
$
|
4,221.5
|
|
|
72
|
%
|
|
$
|
4,114.7
|
|
|
92
|
%
|
|
$
|
4,147.1
|
|
|
92
|
%
|
Kate Spade:
(1)
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|
|
|
|
|
|
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|
|||||||||
Women's Handbags
|
$
|
703.4
|
|
|
12
|
%
|
|
$
|
—
|
|
|
—
|
%
|
|
$
|
—
|
|
|
—
|
%
|
Other Products
|
311.6
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
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|
|||
Women's Accessories
|
269.7
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
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|
|||
Total Kate Spade
|
$
|
1,284.7
|
|
|
22
|
%
|
|
$
|
—
|
|
|
—
|
%
|
|
$
|
—
|
|
|
—
|
%
|
Stuart Weitzman
(2)
|
$
|
373.8
|
|
|
6
|
%
|
|
$
|
373.6
|
|
|
8
|
%
|
|
$
|
344.7
|
|
|
8
|
%
|
Total Net Sales
|
$
|
5,880.0
|
|
|
100
|
%
|
|
$
|
4,488.3
|
|
|
100
|
%
|
|
$
|
4,491.8
|
|
|
100
|
%
|
|
(1)
|
On July 11, 2017, the Company completed its acquisition of Kate Spade. The operating results of the Kate Spade brand have been consolidated in the Company's operating results commencing on July 11, 2017.
|
(2)
|
The significant majority of sales for Stuart Weitzman is attributable to women's footwear.
|
•
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failure of the business to perform as planned following the acquisition or achieve anticipated revenue or profitability targets;
|
•
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delays, unexpected costs or difficulties in completing the integration of acquired companies or assets;
|
•
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higher than expected costs, lower than expected cost savings or synergies and/or a need to allocate resources to manage unexpected operating difficulties;
|
•
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difficulties assimilating the operations and personnel of acquired companies into our operations;
|
•
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diversion of the attention and resources of management or other disruptions to current operations;
|
•
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the impact on our or an acquired business’ internal controls and compliance with the requirements under the Sarbanes-Oxley Act of 2002;
|
•
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unanticipated changes in applicable laws and regulations;
|
•
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unanticipated changes in the combined business due to potential divestitures or other requirements imposed by antitrust regulators;
|
•
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retaining key customers, suppliers and employees;
|
•
|
retaining and obtaining required regulatory approvals, licenses and permits;
|
•
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operating risks inherent in the acquired business and our business;
|
•
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consumers’ failure to accept product offerings by us or our licensees;
|
•
|
assumption of liabilities not identified in due diligence; and
|
•
|
other unanticipated issues, expenses and liabilities.
|
•
|
political or economic instability or changing macroeconomic conditions in our major markets, including the potential impact of (1) new policies that may be implemented by the U.S. or other jurisdictions, particularly with respect to tax and trade policies or (2) the United Kingdom ("U.K.") voting to leave the European Union ("E.U."), commonly known as Brexit. On March 29, 2017, the U.K. triggered Article 50 of the Lisbon Treaty formally starting negotiations with the E.U. The U.K. and E.U. announced in March 2018 an agreement in principle to transitional provisions under which E.U. law would remain in force in the U.K. until the end of December 2020, but this remains subject to the successful conclusion of a final withdrawal agreement between the parties. In the absence of such an agreement there would be no transitional provisions and a "hard" Brexit would occur on March 29, 2019. Although the terms of the U.K.'s future relationship with the E.U. are still unknown, it is possible that there will be increased regulatory and legal complexities, including potentially divergent national laws and regulations between the U.K. and E.U. Brexit may also cause disruption and create uncertainty surrounding our business, including affecting our relationship with our existing and future customers, suppliers and employees and resulting in increased cost by way of new or elevated Customs duties or financial implications from operational challenges;
|
•
|
changes to the U.S.'s participation in, withdrawal out of, renegotiation of certain international trade agreements or other major trade related issues including the non-renewal of expiring favorable tariffs granted to developing countries, tariff quotas, and retaliatory tariffs (including, but not limited to, the Trump Administration's tariffs on China and China's retaliatory tariffs on certain products from the U.S.), trade sanctions, new or onerous trade restrictions, embargoes and other stringent government controls;
|
•
|
changes in exchange rates for foreign currencies, which may adversely affect the retail prices of our products, result in decreased international consumer demand, or increase our supply costs in those markets, with a corresponding negative impact on our gross margin rates;
|
•
|
compliance with laws relating to foreign operations, including the Foreign Corrupt Practices Act (FCPA) and the U.K. Bribery Act, and other global anti-corruption laws, which in general concern the bribery of foreign public officials;
|
•
|
changes in tourist shopping patterns, particularly that of the Chinese consumer;
|
•
|
natural and other disasters;
|
•
|
changes in legal and regulatory requirements, including, but not limited to safeguard measures, anti-dumping duties, cargo restrictions to prevent terrorism, restrictions on the transfer of currency, climate change and other environmental legislation, product safety regulations or other charges or restrictions
|
•
|
unavailability of, or significant fluctuations in the cost of, raw materials;
|
•
|
compliance by us and our independent manufacturers and suppliers with labor laws and other foreign governmental regulations;
|
•
|
imposition of additional duties, taxes and other charges on imports or exports;
|
•
|
increases in the cost of labor, fuel (including volatility in the price of oil), travel and transportation;
|
•
|
compliance with our Global Business Integrity Program;
|
•
|
compliance by our independent manufacturers and suppliers with our Global Operating Principles and/or Supplier Code of Conduct, as applicable;
|
•
|
compliance with U.S. laws regarding the identification and reporting on the use of “conflict minerals” sourced from the Democratic Republic of the Congo in the Company’s products and the FCPA, U.K. Bribery Act and other global anti-corruption laws, as applicable;
|
•
|
disruptions or delays in shipments;
|
•
|
loss or impairment of key manufacturing or distribution sites;
|
•
|
inability to engage new independent manufacturers that meet the Company’s cost-effective sourcing model;
|
•
|
product quality issues;
|
•
|
political unrest;
|
•
|
unforeseen public health crises, such as pandemic and epidemic diseases;
|
•
|
natural disasters or other extreme weather events, whether as a result of climate change or otherwise; and
|
•
|
acts of war or terrorism and other external factors over which we have no control.
|
Location
|
|
Use
|
|
Approximate
Square Footage
|
|
Jacksonville, Florida
|
|
Coach North America distribution and customer service
|
|
850,000
|
|
New York, New York
|
|
Corporate, design, sourcing and product development
|
|
695,000
|
|
Westchester, Ohio
|
|
Kate Spade North America distribution and customer service
|
|
601,000
|
|
New York, New York
|
|
Kate Spade corporate management
|
|
135,000
|
|
North Bergen, New Jersey
|
|
Corporate office
|
|
106,000
|
|
Carlstadt, New Jersey
|
|
Corporate office
|
|
65,000
|
|
Tokyo, Japan
|
|
Coach Japan regional management
|
|
24,900
|
|
Hong Kong, China
|
|
Corporate regional management
|
|
23,900
|
|
Shanghai, China
|
|
Coach Greater China (including Hong Kong, Macau, and mainland China) regional management
|
|
23,000
|
|
Elda, Spain
|
|
Stuart Weitzman regional management, sourcing and quality control
|
|
19,000
|
|
Seoul, South Korea
|
|
Coach South Korea regional management
|
|
18,000
|
|
Hong Kong, China
|
|
Coach sourcing and quality control
|
|
17,000
(1)
|
|
Dongguan, China
|
|
Coach sourcing, quality control and product development
|
|
16,700
|
|
Tokyo, Japan
|
|
Kate Spade Japan regional management
|
|
14,200
|
|
London, U.K.
|
|
Coach Europe regional management
|
|
12,300
|
|
Fort Lauderdale, Florida
|
|
Stuart Weitzman corporate office
|
|
12,100
|
|
Shanghai, China
|
|
Coach Asia regional management
|
|
10,400
|
|
Montreal, Canada
|
|
Stuart Weitzman Canada regional management and distribution
|
|
9,100
|
|
Ho Chi Minh City, Vietnam
|
|
Coach sourcing and quality control
|
|
8,600
|
|
Taipei City, Taiwan
|
|
Coach Taiwan regional management
|
|
6,400
|
|
Paris, France
|
|
Coach Europe regional management
|
|
5,900
|
|
London, England
|
|
Kate Spade Europe regional management
|
|
5,000
|
|
Singapore
|
|
Coach Singapore regional management, sourcing and quality control
|
|
5,000
|
|
Kuala Lumpur, Malaysia
|
|
Coach Malaysia regional management
|
|
3,800
|
|
Beijing, China
|
|
Coach Greater China regional management
|
|
3,000
|
|
Shanghai, China
|
|
Kate Spade regional management
|
|
2,700
|
|
Milan, Italy
|
|
Stuart Weitzman corporate office
|
|
2,700
|
|
Lincoln, Rhode Island
|
|
Kate Spade regional management
|
|
2,500
|
|
Clark, Philippines
|
|
Coach sourcing and quality control
|
|
2,400
|
|
|
(1)
|
Represents a Company-owned location.
|
|
High
|
|
Low
|
|
Closing
|
|
Dividends Declared per Common Share
|
||||||||
Fiscal 2018 Quarter ended:
|
|
|
|
|
|
|
|
||||||||
September 30, 2017
|
$
|
48.85
|
|
|
$
|
39.11
|
|
|
|
|
$
|
0.3375
|
|
||
December 30, 2017
|
45.28
|
|
|
38.70
|
|
|
|
|
0.3375
|
|
|||||
March 31, 2018
|
53.57
|
|
|
44.23
|
|
|
|
|
0.3375
|
|
|||||
June 30, 2018
|
55.50
|
|
|
43.54
|
|
|
46.71
|
|
|
0.3375
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Fiscal 2017 Quarter ended:
|
|
|
|
|
|
|
|
|
|
|
|
||||
October 1, 2016
|
$
|
43.71
|
|
|
$
|
34.55
|
|
|
|
|
$
|
0.3375
|
|
||
December 31, 2016
|
38.86
|
|
|
34.07
|
|
|
|
|
0.3375
|
|
|||||
April 1, 2017
|
41.70
|
|
|
34.33
|
|
|
|
|
0.3375
|
|
|||||
July 1, 2017
|
47.76
|
|
|
38.47
|
|
|
$
|
47.34
|
|
|
0.3375
|
|
•
|
L Brands, Inc.,
|
•
|
PVH Corp.,
|
•
|
Ralph Lauren Corporation,
|
•
|
Tiffany & Co.,
|
•
|
V.F. Corporation,
|
•
|
Estee Lauder, Inc.,
|
•
|
Michael Kors Holdings Limited
|
•
|
L Brands, Inc.,
|
•
|
PVH Corp.,
|
•
|
Ralph Lauren Corporation,
|
•
|
Tiffany & Co.,
|
•
|
V.F. Corporation,
|
•
|
Estee Lauder, Inc.,
|
•
|
Kate Spade & Company,
|
•
|
Abercrombie & Fitch Co., and
|
•
|
Michael Kors Holdings Limited
|
|
|
Fiscal 2013
|
|
Fiscal 2014
|
|
Fiscal 2015
|
|
Fiscal 2016
|
|
Fiscal 2017
|
|
Fiscal 2018
|
TPR
|
|
$100.00
|
|
$62.10
|
|
$67.47
|
|
$79.15
|
|
$95.17
|
|
$96.80
|
Revised Peer Set
|
|
$100.00
|
|
$126.45
|
|
$146.61
|
|
$136.88
|
|
$136.80
|
|
$190.10
|
Former Set
|
|
$100.00
|
|
$127.88
|
|
$146.25
|
|
$137.03
|
|
$136.15
|
|
$189.61
|
S&P 500
|
|
$100.00
|
|
$124.65
|
|
$136.33
|
|
$139.50
|
|
$164.11
|
|
$187.70
|
|
Fiscal Year Ended
(5)
|
||||||||||||||||||
|
June 30,
2018
(1)
|
|
July 1,
2017 |
|
July 2,
2016
(2)
|
|
June 27,
2015
(3)
|
|
June 28,
2014 (4) |
||||||||||
|
(millions, except per share data)
|
||||||||||||||||||
Consolidated Statements of Operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Net sales
|
$
|
5,880.0
|
|
|
$
|
4,488.3
|
|
|
$
|
4,491.8
|
|
|
$
|
4,191.6
|
|
|
$
|
4,806.2
|
|
Gross profit
|
3,853.9
|
|
|
3,081.1
|
|
|
3,051.3
|
|
|
2,908.6
|
|
|
3,297.0
|
|
|||||
Selling, general and administrative ("SG&A") expenses
|
3,183.1
|
|
|
2,293.7
|
|
|
2,397.8
|
|
|
2,290.6
|
|
|
2,176.9
|
|
|||||
Operating income
|
670.8
|
|
|
787.4
|
|
|
653.5
|
|
|
618.0
|
|
|
1,120.1
|
|
|||||
Net income
|
397.5
|
|
|
591.0
|
|
|
460.5
|
|
|
402.4
|
|
|
781.3
|
|
|||||
Net income per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Basic
|
$
|
1.39
|
|
|
$
|
2.11
|
|
|
$
|
1.66
|
|
|
$
|
1.46
|
|
|
$
|
2.81
|
|
Diluted
|
$
|
1.38
|
|
|
$
|
2.09
|
|
|
$
|
1.65
|
|
|
$
|
1.45
|
|
|
$
|
2.79
|
|
Weighted-average basic shares outstanding
|
285.4
|
|
|
280.6
|
|
|
277.6
|
|
|
275.7
|
|
|
277.8
|
|
|||||
Weighted-average diluted shares outstanding
|
288.6
|
|
|
282.8
|
|
|
279.3
|
|
|
277.2
|
|
|
280.4
|
|
|||||
Dividends declared per common share
|
$
|
1.350
|
|
|
$
|
1.350
|
|
|
$
|
1.350
|
|
|
$
|
1.350
|
|
|
$
|
1.350
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Consolidated Percentage of Net Sales Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Gross margin
|
65.5
|
%
|
|
68.6
|
%
|
|
67.9
|
%
|
|
69.4
|
%
|
|
68.6
|
%
|
|||||
SG&A expenses
|
54.1
|
%
|
|
51.1
|
%
|
|
53.4
|
%
|
|
54.6
|
%
|
|
45.3
|
%
|
|||||
Operating margin
|
11.4
|
%
|
|
17.5
|
%
|
|
14.5
|
%
|
|
14.7
|
%
|
|
23.3
|
%
|
|||||
Net income
|
6.8
|
%
|
|
13.2
|
%
|
|
10.3
|
%
|
|
9.6
|
%
|
|
16.3
|
%
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Consolidated Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Working capital
|
$
|
1,494.4
|
|
|
$
|
3,199.5
|
|
|
$
|
1,346.2
|
|
|
$
|
1,671.8
|
|
|
$
|
1,042.1
|
|
Total assets
|
6,678.3
|
|
|
5,831.6
|
|
|
4,892.7
|
|
|
4,666.9
|
|
|
3,663.1
|
|
|||||
Cash, cash equivalents and investments
|
1,250.0
|
|
|
3,158.7
|
|
|
1,878.0
|
|
|
1,931.8
|
|
|
1,353.1
|
|
|||||
Inventory
|
673.8
|
|
|
469.7
|
|
|
459.2
|
|
|
485.1
|
|
|
526.2
|
|
|||||
Total debt
|
1,600.6
|
|
|
1,579.5
|
|
|
876.2
|
|
|
890.4
|
|
|
140.5
|
|
|||||
Stockholders' equity
|
3,244.6
|
|
|
3,001.9
|
|
|
2,682.9
|
|
|
2,489.9
|
|
|
2,420.6
|
|
|
Fiscal Year Ended
|
|||||||||||||
|
June 30,
2018
(1)
|
|
July 1,
2017 |
|
July 2,
2016 (2) |
|
June 27,
2015 (3) |
|
June 28,
2014 (4) |
|||||
Store Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stores open at fiscal year-end:
|
|
|
|
|
|
|
|
|
|
|||||
Coach North America stores
|
402
|
|
|
419
|
|
|
432
|
|
|
462
|
|
|
539
|
|
Coach International stores
|
585
|
|
|
543
|
|
|
522
|
|
|
503
|
|
|
475
|
|
Kate Spade North America stores
|
200
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Kate Spade International stores
|
142
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Stuart Weitzman North America stores
|
68
|
|
|
69
|
|
|
64
|
|
|
46
|
|
|
—
|
|
Stuart Weitzman International stores
|
35
|
|
|
12
|
|
|
11
|
|
|
8
|
|
|
—
|
|
Total stores open at fiscal year-end
|
1,432
|
|
|
1,043
|
|
|
1,029
|
|
|
1,019
|
|
|
1,014
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Store square footage at fiscal year-end:
|
|
|
|
|
|
|
|
|
|
|||||
Coach North America stores
|
1,835,543
|
|
|
1,884,204
|
|
|
1,892,146
|
|
|
1,917,851
|
|
|
2,042,717
|
|
Coach International stores
|
1,256,525
|
|
|
1,166,920
|
|
|
1,086,315
|
|
|
1,030,695
|
|
|
918,995
|
|
Kate Spade North America stores
|
495,121
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Kate Spade International stores
|
171,754
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Stuart Weitzman North America stores
|
117,869
|
|
|
117,944
|
|
|
105,264
|
|
|
81,877
|
|
|
—
|
|
Stuart Weitzman International stores
|
47,498
|
|
|
18,808
|
|
|
12,556
|
|
|
9,224
|
|
|
—
|
|
Total store square footage at fiscal year-end
|
3,924,310
|
|
|
3,187,876
|
|
|
3,096,281
|
|
|
3,039,647
|
|
|
2,961,712
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Average store square footage at fiscal year-end:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Coach North America stores
|
4,566
|
|
|
4,497
|
|
|
4,380
|
|
|
4,151
|
|
|
3,790
|
|
Coach International stores
|
2,148
|
|
|
2,149
|
|
|
2,081
|
|
|
2,049
|
|
|
1,935
|
|
Kate Spade North America stores
|
2,476
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Kate Spade International stores
|
1,210
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Stuart Weitzman North America stores
|
1,733
|
|
|
1,709
|
|
|
1,645
|
|
|
1,780
|
|
|
—
|
|
Stuart Weitzman International stores
|
1,357
|
|
|
1,567
|
|
|
1,141
|
|
|
1,153
|
|
|
—
|
|
|
(1)
|
The Company acquired Kate Spade & Company in the first quarter of fiscal 2018 (which included the impact of an additional 180 stores in North America and 95 stores internationally). During the third quarter of fiscal 2018, the Company acquired designated assets of its Stuart Weitzman distributor in Northern China (which included the impact of an additional 20 stores internationally), entered into an agreement to obtain operational control of the Kate Spade Joint Ventures (which included the impact of an additional 50 stores) and acquired designated assets of its Coach distributor in Australia and New Zealand (which included the impact of an additional 21 stores internationally).
|
(2)
|
The Company acquired the Stuart Weitzman Canada distributor in the fourth quarter of fiscal 2016 (which included the impact of an additional 14 retail stores in North America).
|
(3)
|
The Company acquired Stuart Weitzman Holdings LLC in the fourth quarter of fiscal 2015.
|
(4)
|
The Company acquired the remaining 50% interest in its Europe business for Coach from its former joint venture partner in the first quarter of fiscal 2014.
|
(5)
|
For all fiscal years presented below, the Company recorded certain items which affect the comparability of our results. See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” for further information on the items related to fiscal 2018, fiscal 2017 and fiscal 2016. During fiscal 2015, the Company recorded adjustments in cost of sales and SG&A expenses of $5.0 million and $140.9 million, respectively, related to accelerated depreciation and lease termination charges as a result of store updates and closures within North America and select international stores, organizational efficiency charges and charges related to the destruction of inventory. In fiscal 2015 the Company also recorded adjustments in cost of sales and SG&A expenses of $4.7 million and $19.9 million, respectively, related to the acquisition of Stuart Weitzman. During fiscal 2014, the Company recorded adjustments in cost of sales and SG&A expenses of $82.2 million and
|
|
|
|
|
|
|
|
Net Income
|
||||||||||||
Fiscal 2018
|
Gross Profit
|
|
SG&A Expenses
|
|
Operating Income
|
|
Amount
|
|
Per Diluted Share
|
||||||||||
As Reported: (GAAP Basis)
|
$
|
3,853.9
|
|
|
$
|
3,183.1
|
|
|
$
|
670.8
|
|
|
$
|
397.5
|
|
|
$
|
1.38
|
|
Excluding Non-GAAP Adjustments
|
116.4
|
|
|
(204.7
|
)
|
|
321.1
|
|
|
362.4
|
|
|
1.25
|
|
|||||
Adjusted: (Non-GAAP Basis)
|
$
|
3,970.3
|
|
|
$
|
2,978.4
|
|
|
$
|
991.9
|
|
|
$
|
759.9
|
|
|
$
|
2.63
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
Net Income
|
||||||||||||
Fiscal 2017
|
Gross Profit
|
|
SG&A Expenses
|
|
Operating Income
|
|
Amount
|
|
Per Diluted Share
|
||||||||||
As Reported: (GAAP Basis)
|
$
|
3,081.1
|
|
|
$
|
2,293.7
|
|
|
$
|
787.4
|
|
|
$
|
591.0
|
|
|
$
|
2.09
|
|
Excluding Non-GAAP Adjustments
|
2.9
|
|
|
(22.3
|
)
|
|
25.2
|
|
|
18.3
|
|
|
0.06
|
|
|||||
Adjusted: (Non-GAAP Basis)
|
$
|
3,084.0
|
|
|
$
|
2,271.4
|
|
|
$
|
812.6
|
|
|
$
|
609.3
|
|
|
$
|
2.15
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
Net Income
|
||||||||||||
Fiscal 2016
|
Gross Profit
|
|
SG&A Expenses
|
|
Operating Income
|
|
Amount
|
|
Per Diluted Share
|
||||||||||
As Reported: (GAAP Basis)
|
$
|
3,051.3
|
|
|
$
|
2,397.8
|
|
|
$
|
653.5
|
|
|
$
|
460.5
|
|
|
$
|
1.65
|
|
Excluding Non-GAAP Adjustments
|
1.1
|
|
|
(122.0
|
)
|
|
123.1
|
|
|
91.2
|
|
|
0.33
|
|
|||||
Adjusted: (Non-GAAP Basis)
|
$
|
3,052.4
|
|
|
$
|
2,275.8
|
|
|
$
|
776.6
|
|
|
$
|
551.7
|
|
|
$
|
1.98
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
Net Income
|
||||||||||||
Fiscal 2015
|
Gross Profit
|
|
SG&A Expenses
|
|
Operating Income
|
|
Amount
|
|
Per Diluted Share
|
||||||||||
As Reported: (GAAP Basis)
|
$
|
2,908.6
|
|
|
$
|
2,290.6
|
|
|
$
|
618.0
|
|
|
$
|
402.4
|
|
|
$
|
1.45
|
|
Excluding Non-GAAP Adjustments
|
9.7
|
|
|
(160.8
|
)
|
|
170.5
|
|
|
128.8
|
|
|
0.47
|
|
|||||
Adjusted: (Non-GAAP Basis)
|
$
|
2,918.3
|
|
|
$
|
2,129.8
|
|
|
$
|
788.5
|
|
|
$
|
531.2
|
|
|
$
|
1.92
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
Net Income
|
||||||||||||
Fiscal 2014
|
Gross Profit
|
|
SG&A Expenses
|
|
Operating Income
|
|
Amount
|
|
Per Diluted Share
|
||||||||||
As Reported: (GAAP Basis)
|
$
|
3,297.0
|
|
|
$
|
2,176.9
|
|
|
$
|
1,120.1
|
|
|
$
|
781.3
|
|
|
$
|
2.79
|
|
Excluding Non-GAAP Adjustments
|
82.2
|
|
|
(49.3
|
)
|
|
131.5
|
|
|
88.3
|
|
|
0.31
|
|
|||||
Adjusted: (Non-GAAP Basis)
|
$
|
3,379.2
|
|
|
$
|
2,127.6
|
|
|
$
|
1,251.6
|
|
|
$
|
869.6
|
|
|
$
|
3.10
|
|
•
|
Coach -
Includes global sales of Coach brand products to customers through Coach operated stores, including the Internet and concession shop-in-shops, and sales to wholesale customers and through independent third party distributors.
|
•
|
Kate Spade
- Includes global sales primarily of kate spade new york brand products to customers through Kate Spade operated stores, including the Internet, to wholesale customers, through concession shop-in-shops and through independent third party distributors.
|
•
|
Stuart Weitzman -
Includes global sales of Stuart Weitzman brand products primarily through Stuart Weitzman operated stores, including the Internet, to wholesale customers and through numerous independent third party distributors.
|
•
|
Capture the full benefit of multi-brand structure and synergies
|
•
|
Fuel brand innovation by accelerating product newness across all brands
|
•
|
Drive global growth with an emphasis on the Chinese consumer
|
•
|
Advance our digital and data analytic capabilities
|
•
|
The Company expects to receive the full benefit of the rate reduction in fiscal 2019, as compared with the partial rate reduction during fiscal 2018 based on the pro-rated number of days the new rate applied in fiscal 2018. In the current year, the U.S federal statutory income tax rate was approximately 28%, which is expected to decline to 21% in fiscal 2019.
|
•
|
Foreign earnings that may exist after December 31, 2017 will generally be eligible for a 100% dividends received exemption, however companies may be subject to the alternative BEAT and GILTI tax provisions which could increase the global effective tax rate. Conversely, Companies may be eligible for a reduced rate to the extent their earnings qualify as FDII, which would reduce their global effective tax rate. These tax provisions are expected to impact the Company in fiscal year 2019. Based on current facts and circumstances the Company believes that GILTI is the tax provision most likely to apply. Under GILTI, a portion of the Company’s foreign earnings will be subject to U.S. taxation. To the extent a company’s foreign operations are subject to GILTI and there is an existing outside basis difference in the Company’s foreign investments that exists within the reporting period, the Company may need to record a deferred tax liability for some portion of the anticipated additional tax resulting from future GILTI inclusions. Outside-basis difference is generally defined as the difference between an entity’s financial statement carrying amount and the tax basis of the parent’s investment in that entity’s stock. Outside basis differences typically arise from things such as the entity earning income, that has yet to be distributed to the parent company, or from purchase accounting adjustments not recognized for tax purposes. For companies subject to GILTI, the Financial Accounting Standards Board ("FASB") has indicated that companies are allowed to record tax associated with GILTI as a period cost in the period the earnings are included on the U.S. tax return. The Company has chosen to adopt this policy.
|
•
|
The Tax Legislation includes, what many believe, is an unintended consequence that results in certain leasehold improvements, being ineligible for bonus depreciation. The Company has estimated fiscal year 2018 depreciation expense based on how the law was drafted, with no consideration of the perceived legislative intent. The Company has estimated its capital expenditures by class to estimate depreciation expense for purposes of calculating the rate change adjustment of our deferred tax balance. If Tax Legislation for QIP is adjusted in fiscal 2019 or beyond, it will impact the rate change adjustment, which in turn will impact the Company’s estimated annual effective tax rate in the year the legislation is revised.
|
•
|
At this time, it is unknown whether certain states in which the Company operates will conform to the Tax Legislation or adopt an alternative regime. The Company continues to monitor developments; at this time all material aspects of its provision for income tax for the fiscal year ended June 30, 2018 are recorded based on recent guidance or its historical approach to state tax expense.
|
•
|
Other provisions of the new legislation that are not applicable to the Company until fiscal 2019 include, but are not limited to, the provisions limiting deductibility of interest and executive compensation expense. Based on current facts and circumstances, we do not anticipate the impact of these provisions to be material to the overall financial statements.
|
|
Fiscal Year Ended
|
|||||||||||||||||||
|
June 30, 2018
|
|
July 1, 2017
|
|
Variance
|
|||||||||||||||
|
(millions, except per share data)
|
|||||||||||||||||||
|
Amount
|
|
% of
net sales
|
|
Amount
|
|
% of
net sales
|
|
Amount
|
|
%
|
|||||||||
Net sales
|
$
|
5,880.0
|
|
|
100.0
|
%
|
|
$
|
4,488.3
|
|
|
100.0
|
%
|
|
$
|
1,391.7
|
|
|
31.0
|
%
|
Gross profit
|
3,853.9
|
|
|
65.5
|
|
|
3,081.1
|
|
|
68.6
|
|
|
772.8
|
|
|
25.1
|
|
|||
SG&A expenses
|
3,183.1
|
|
|
54.1
|
|
|
2,293.7
|
|
|
51.1
|
|
|
889.4
|
|
|
38.8
|
|
|||
Operating income
|
670.8
|
|
|
11.4
|
|
|
787.4
|
|
|
17.5
|
|
|
(116.6
|
)
|
|
(14.8
|
)
|
|||
Interest expense, net
|
74.0
|
|
|
1.3
|
|
|
28.4
|
|
|
0.6
|
|
|
45.6
|
|
|
160.8
|
|
|||
Income before provision for income taxes
|
596.8
|
|
|
10.2
|
|
|
759.0
|
|
|
16.9
|
|
|
(162.2
|
)
|
|
(21.4
|
)
|
|||
Provision for income taxes
|
199.3
|
|
|
3.4
|
|
|
168.0
|
|
|
3.7
|
|
|
31.3
|
|
|
18.6
|
|
|||
Net income
|
397.5
|
|
|
6.8
|
|
|
591.0
|
|
|
13.2
|
|
|
(193.5
|
)
|
|
(32.7
|
)
|
|||
Net income per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Basic
|
$
|
1.39
|
|
|
|
|
|
$
|
2.11
|
|
|
|
|
|
$
|
(0.72
|
)
|
|
(33.9
|
)%
|
Diluted
|
$
|
1.38
|
|
|
|
|
|
$
|
2.09
|
|
|
|
|
|
$
|
(0.71
|
)
|
|
(34.1
|
)%
|
|
June 30, 2018
|
||||||||||||||||||
|
GAAP Basis
(As Reported)
|
|
Operational Efficiency Plan
|
|
Integration & Acquisition
|
|
Impact of Tax Legislation
|
|
Non-GAAP Basis
(Excluding Items)
|
||||||||||
|
(millions, except per share data)
|
||||||||||||||||||
Gross profit
|
$
|
3,853.9
|
|
|
$
|
—
|
|
|
$
|
(116.4
|
)
|
|
$
|
—
|
|
|
$
|
3,970.3
|
|
SG&A expenses
|
3,183.1
|
|
|
19.5
|
|
|
185.2
|
|
|
—
|
|
|
2,978.4
|
|
|||||
Operating income
|
670.8
|
|
|
(19.5
|
)
|
|
(301.6
|
)
|
|
—
|
|
|
991.9
|
|
|||||
Income before provision for income taxes
|
596.8
|
|
|
(19.5
|
)
|
|
(301.6
|
)
|
|
—
|
|
|
917.9
|
|
|||||
Provision for income taxes
|
199.3
|
|
|
(6.2
|
)
|
|
(130.7
|
)
|
|
178.2
|
|
|
158.0
|
|
|||||
Net income
|
397.5
|
|
|
(13.3
|
)
|
|
(170.9
|
)
|
|
(178.2
|
)
|
|
759.9
|
|
|||||
Diluted net income per share
|
1.38
|
|
|
(0.05
|
)
|
|
(0.58
|
)
|
|
(0.62
|
)
|
|
2.63
|
|
•
|
Operational Efficiency Plan
- Total charges of
$19.5 million
primarily related to technology infrastructure costs. Refer to the "Executive Overview" herein and Note 5, "Restructuring Activities," for further information regarding this plan.
|
•
|
Integration & Acquisition -
Total charges of
$301.6 million
, primarily attributable to the integration and acquisition of Kate Spade, and to a lesser extent the acquisition of certain distributors for the Coach and Stuart Weitzman brands and assumed operational control of the Kate Spade Joint Ventures. Provision for income taxes includes a one-time benefit of $40.7 million as a result of the reversal of certain valuation allowances that relate, in part, to the enactment of Tax Legislation. These charges include:
|
◦
|
Limited life purchase accounting adjustments
|
◦
|
Professional fees
|
◦
|
Severance and other costs related to contractual agreements with certain Kate Spade executives
|
◦
|
Organizational costs as a result of integration
|
◦
|
Inventory reserves established primarily for the destruction of inventory
|
•
|
Impact of Tax Legislation -
Total charges of
$178.2 million
primarily related to the net impact of the transition tax and re-measurement of deferred tax balances. Refer to the "Executive Overview" herein and Note 14, "Income Taxes," for further information.
|
|
June 30, 2018
|
||||||||||||||||||||||
|
GAAP Basis
(As Reported) |
|
Coach
|
|
Kate Spade
|
|
Stuart Weitzman
|
|
Corporate
|
|
Non-GAAP Basis
(Excluding Items) |
||||||||||||
|
(millions)
|
||||||||||||||||||||||
COGS
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Integration & Acquisition
(1)
|
|
|
(4.1
|
)
|
|
(106.5
|
)
|
|
(5.8
|
)
|
|
—
|
|
|
|
||||||||
Gross profit
|
$
|
3,853.9
|
|
|
$
|
(4.1
|
)
|
|
$
|
(106.5
|
)
|
|
$
|
(5.8
|
)
|
|
$
|
—
|
|
|
$
|
3,970.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
SG&A
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Integration & Acquisition
(1)
|
|
|
0.5
|
|
|
113.7
|
|
|
7.8
|
|
|
63.2
|
|
|
|
||||||||
Operational Efficiency Plan
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
19.5
|
|
|
|
||||||||
SG&A
|
$
|
3,183.1
|
|
|
$
|
0.5
|
|
|
$
|
113.7
|
|
|
$
|
7.8
|
|
|
$
|
82.7
|
|
|
$
|
2,978.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Operating income
|
$
|
670.8
|
|
|
$
|
(4.6
|
)
|
|
$
|
(220.2
|
)
|
|
$
|
(13.6
|
)
|
|
$
|
(82.7
|
)
|
|
$
|
991.9
|
|
|
(1)
|
During the first quarter of fiscal 2018, the Company completed its acquisition of Kate Spade & Company. During the third quarter of fiscal 2018, the Company completed its acquisition of certain distributors for the Coach and Stuart Weitzman brands and obtained operational control of the Kate Spade Joint Ventures. The operating results of the respective entity have been consolidated in the Company's operating results commencing on the date of each acquisition.
|
|
July 1, 2017
|
||||||||||||||
|
GAAP Basis
(As Reported) |
|
Operational Efficiency Plan
|
|
Integration & Acquisition
|
|
Non-GAAP Basis
(Excluding Items) |
||||||||
|
(millions, except per share data)
|
||||||||||||||
Gross profit
|
$
|
3,081.1
|
|
|
$
|
—
|
|
|
$
|
(2.9
|
)
|
|
$
|
3,084.0
|
|
SG&A expenses
|
2,293.7
|
|
|
24.0
|
|
|
(1.7
|
)
|
|
2,271.4
|
|
||||
Operating income
|
787.4
|
|
|
(24.0
|
)
|
|
(1.2
|
)
|
|
812.6
|
|
||||
Income before provision for income taxes
|
759.0
|
|
|
(24.0
|
)
|
|
(10.7
|
)
|
|
793.7
|
|
||||
Provision for income taxes
|
168.0
|
|
|
(8.3
|
)
|
|
(8.1
|
)
|
|
184.4
|
|
||||
Net income
|
591.0
|
|
|
(15.7
|
)
|
|
(2.6
|
)
|
|
609.3
|
|
||||
Diluted net income per share
|
2.09
|
|
|
(0.05
|
)
|
|
(0.01
|
)
|
|
2.15
|
|
•
|
Operational Efficiency Plan
- Total charges of
$24.0 million
primarily related to organizational efficiency costs, technology infrastructure costs and, to a lesser extent, network optimization costs.
|
•
|
Integration & Acquisition -
Total charges of
$10.7 million
, related to $29.0 million of Stuart Weitzman integration-related costs, which were more than offset by the reversal of a $35.2 million accrual related to estimated contingent purchase price payments which were not paid, and $16.9 million of Kate Spade integration-related costs.
|
|
July 1, 2017
|
||||||||||||||||||
|
GAAP Basis
(As Reported) |
|
Coach
|
|
Stuart Weitzman
|
|
Corporate
(1)
|
|
Non-GAAP Basis
(Excluding Items) |
||||||||||
|
(millions)
|
||||||||||||||||||
COGS
|
|
|
|
|
|
|
|
|
|
||||||||||
Integration & Acquisition
|
|
|
—
|
|
|
(2.9
|
)
|
|
—
|
|
|
|
|||||||
Gross profit
|
$
|
3,081.1
|
|
|
$
|
—
|
|
|
$
|
(2.9
|
)
|
|
$
|
—
|
|
|
$
|
3,084.0
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
SG&A
|
|
|
|
|
|
|
|
|
|
||||||||||
Integration & Acquisition
|
|
|
—
|
|
|
17.7
|
|
|
(19.4
|
)
|
|
|
|||||||
Operational Efficiency Plan
|
|
|
—
|
|
|
—
|
|
|
24.0
|
|
|
|
|||||||
SG&A
|
$
|
2,293.7
|
|
|
$
|
—
|
|
|
$
|
17.7
|
|
|
$
|
4.6
|
|
|
$
|
2,271.4
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating income
|
$
|
787.4
|
|
|
$
|
—
|
|
|
$
|
(20.6
|
)
|
|
$
|
(4.6
|
)
|
|
$
|
812.6
|
|
|
(1)
|
The Company incurred $9.5 million related to bridge financing fees recorded in interest expense within Corporate, which is not included in the above table.
|
|
Fiscal Year Ended
|
|||||||||||||||||||
|
June 30, 2018
|
|
July 1, 2017
|
|
Variance
|
|||||||||||||||
|
(millions)
|
|||||||||||||||||||
|
Amount
|
|
% of
net sales |
|
Amount
|
|
% of
net sales |
|
Amount
|
|
%
|
|||||||||
Net sales
|
$
|
4,221.5
|
|
|
100.0
|
%
|
|
$
|
4,114.7
|
|
|
100.0
|
%
|
|
$
|
106.8
|
|
|
2.6
|
%
|
Gross profit
|
2,931.5
|
|
|
69.4
|
|
|
2,855.0
|
|
|
69.4
|
|
|
76.5
|
|
|
2.7
|
|
|||
SG&A expenses
|
1,847.3
|
|
|
43.8
|
|
|
1,815.0
|
|
|
44.1
|
|
|
32.3
|
|
|
1.8
|
|
|||
Operating income
|
1,084.2
|
|
|
25.7
|
|
|
1,040.0
|
|
|
25.3
|
|
|
44.2
|
|
|
4.3
|
|
|
Fiscal Year Ended
|
||||||||||||||||
|
June 30, 2018
(1)
|
|
July 1, 2017
|
|
Variance
|
||||||||||||
|
(millions)
|
||||||||||||||||
|
Amount
|
|
% of
net sales
|
|
Amount
|
|
% of
net sales
|
|
Amount
|
|
%
|
||||||
Net sales
|
$
|
1,284.7
|
|
|
100.0
|
%
|
|
$
|
—
|
|
|
—
|
%
|
|
NM
|
|
NM
|
Gross profit
|
711.1
|
|
|
55.4
|
|
|
—
|
|
|
—
|
|
|
NM
|
|
NM
|
||
SG&A expenses
|
773.0
|
|
|
60.2
|
|
|
—
|
|
|
—
|
|
|
NM
|
|
NM
|
||
Operating loss
|
(61.9
|
)
|
|
(4.8
|
)
|
|
—
|
|
|
—
|
|
|
NM
|
|
NM
|
|
(1)
|
On July 11, 2017, the Company completed its acquisition of Kate Spade. The operating results of the Kate Spade brand have been consolidated in the Company's operating results commencing on July 11, 2017.
|
|
Fiscal Year Ended
|
|||||||||||||||||||
|
June 30, 2018
|
|
July 1, 2017
|
|
Variance
|
|||||||||||||||
|
(millions)
|
|||||||||||||||||||
|
Amount
|
|
% of
net sales |
|
Amount
|
|
% of
net sales |
|
Amount
|
|
%
|
|||||||||
Net sales
|
$
|
373.8
|
|
|
100.0
|
%
|
|
$
|
373.6
|
|
|
100.0
|
%
|
|
$
|
0.2
|
|
|
—
|
%
|
Gross profit
|
211.3
|
|
|
56.5
|
|
|
226.1
|
|
|
60.5
|
|
|
(14.8
|
)
|
|
(6.5
|
)
|
|||
SG&A expenses
|
213.9
|
|
|
57.2
|
|
|
210.6
|
|
|
56.4
|
|
|
3.3
|
|
|
1.6
|
|
|||
Operating (loss) income
|
(2.6
|
)
|
|
(0.7
|
)
|
|
15.5
|
|
|
4.2
|
|
|
(18.1
|
)
|
|
NM
|
|
|
|
Fiscal Year Ended
|
|||||||||||||||||||
|
July 1, 2017
|
|
July 2, 2016
|
|
Variance
|
|||||||||||||||
|
(millions, except per share data)
|
|||||||||||||||||||
|
Amount
|
|
% of
net sales
|
|
Amount
|
|
% of
net sales
|
|
Amount
|
|
%
|
|||||||||
Net sales
|
$
|
4,488.3
|
|
|
100.0
|
%
|
|
$
|
4,491.8
|
|
|
100.0
|
%
|
|
$
|
(3.5
|
)
|
|
(0.1
|
)%
|
Gross profit
|
3,081.1
|
|
|
68.6
|
|
|
3,051.3
|
|
|
67.9
|
|
|
29.8
|
|
|
1.0
|
|
|||
SG&A expenses
|
2,293.7
|
|
|
51.1
|
|
|
2,397.8
|
|
|
53.4
|
|
|
(104.1
|
)
|
|
(4.3
|
)
|
|||
Operating income
|
787.4
|
|
|
17.5
|
|
|
653.5
|
|
|
14.5
|
|
|
133.9
|
|
|
20.5
|
|
|||
Interest expense, net
|
28.4
|
|
|
0.6
|
|
|
26.9
|
|
|
0.6
|
|
|
1.5
|
|
|
5.5
|
|
|||
Income before provision for income taxes
|
759.0
|
|
|
16.9
|
|
|
626.6
|
|
|
14.0
|
|
|
132.4
|
|
|
21.1
|
|
|||
Provision for income taxes
|
168.0
|
|
|
3.7
|
|
|
166.1
|
|
|
3.7
|
|
|
1.9
|
|
|
1.2
|
|
|||
Net income
|
591.0
|
|
|
13.2
|
|
|
460.5
|
|
|
10.3
|
|
|
130.5
|
|
|
28.3
|
|
|||
Net Income per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Basic
|
$
|
2.11
|
|
|
|
|
|
$
|
1.66
|
|
|
|
|
|
$
|
0.45
|
|
|
27.0
|
%
|
Diluted
|
$
|
2.09
|
|
|
|
|
|
$
|
1.65
|
|
|
|
|
|
$
|
0.44
|
|
|
26.7
|
%
|
|
July 1, 2017
|
||||||||||||||||||
|
GAAP Basis
(As Reported)
|
|
Operational Efficiency Plan
|
|
Stuart Weitzman Acquisition-Related Costs
|
|
Kate Spade Acquisition-Related Costs
|
|
Non-GAAP Basis
(Excluding Items)
|
||||||||||
|
(millions, except per share data)
|
||||||||||||||||||
Gross profit
|
$
|
3,081.1
|
|
|
$
|
—
|
|
|
$
|
(2.9
|
)
|
|
$
|
—
|
|
|
$
|
3,084.0
|
|
SG&A expenses
|
2,293.7
|
|
|
24.0
|
|
|
(9.1
|
)
|
|
7.4
|
|
|
2,271.4
|
|
|||||
Operating income
|
787.4
|
|
|
(24.0
|
)
|
|
6.2
|
|
|
(7.4
|
)
|
|
812.6
|
|
|||||
Income before provision for income taxes
|
759.0
|
|
|
(24.0
|
)
|
|
6.2
|
|
|
(16.9
|
)
|
|
793.7
|
|
|||||
Provision for income taxes
|
168.0
|
|
|
(8.3
|
)
|
|
(1.5
|
)
|
|
(6.6
|
)
|
|
184.4
|
|
|||||
Net income
|
591.0
|
|
|
(15.7
|
)
|
|
7.7
|
|
|
(10.3
|
)
|
|
609.3
|
|
|||||
Diluted net income per share
|
2.09
|
|
|
(0.05
|
)
|
|
0.03
|
|
|
(0.04
|
)
|
|
2.15
|
|
•
|
Operational Efficiency Plan
- Total charges of
$24.0 million
primarily related to organizational efficiency costs, technology infrastructure costs and, to a lesser extent, network optimization costs.
|
•
|
Stuart Weitzman Acquisition-Related Costs -
Total income of
$6.2 million
, primarily attributable to the reversal of an accrual of $35.2 million related to estimated contingent purchase price payments which were not paid, offset by integration-related costs.
|
•
|
Kate Spade Acquisition-Related Costs
- Total charges of
$16.9 million
, of which $9.5 million is related to bridge financing fees and recorded in interest expense and $7.4 million is related to professional fees.
|
|
July 1, 2017
|
||||||||||||||||||
|
GAAP Basis
(As Reported) |
|
Coach
|
|
Stuart Weitzman
|
|
Corporate
(1)
|
|
Non-GAAP Basis
(Excluding Items) |
||||||||||
|
(millions)
|
||||||||||||||||||
COGS
|
|
|
|
|
|
|
|
|
|
||||||||||
Stuart Weitzman Acquisition-Related Costs
|
|
|
—
|
|
|
(2.9
|
)
|
|
—
|
|
|
|
|||||||
Gross profit
|
$
|
3,081.1
|
|
|
$
|
—
|
|
|
$
|
(2.9
|
)
|
|
$
|
—
|
|
|
$
|
3,084.0
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
SG&A
|
|
|
|
|
|
|
|
|
|
||||||||||
Stuart Weitzman Acquisition-Related Costs
|
|
|
—
|
|
|
17.7
|
|
|
(26.8
|
)
|
|
|
|||||||
Kate Spade Acquisition-Related Costs
|
|
|
—
|
|
|
—
|
|
|
7.4
|
|
|
|
|||||||
Operational Efficiency Plan
|
|
|
—
|
|
|
—
|
|
|
24.0
|
|
|
|
|||||||
SG&A
|
$
|
2,293.7
|
|
|
$
|
—
|
|
|
$
|
17.7
|
|
|
$
|
4.6
|
|
|
$
|
2,271.4
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating income
|
$
|
787.4
|
|
|
$
|
—
|
|
|
$
|
(20.6
|
)
|
|
$
|
(4.6
|
)
|
|
$
|
812.6
|
|
|
(1)
|
The Company incurred $9.5 million related to bridge financing fees recorded in interest expense within Corporate, which is not included in the above table.
|
|
July 2, 2016
|
||||||||||||||
|
GAAP Basis
(As Reported)
|
Transformation and Other Actions
|
Operational Efficiency Plan
|
Stuart Weitzman Acquisition-Related Costs
|
Non-GAAP Basis
(Excluding Items)
|
||||||||||
|
(millions, except per share data)
|
||||||||||||||
Gross profit
|
$
|
3,051.3
|
|
$
|
—
|
|
$
|
—
|
|
$
|
(1.1
|
)
|
$
|
3,052.4
|
|
SG&A expenses
|
2,397.8
|
|
44.1
|
|
43.9
|
|
34.0
|
|
2,275.8
|
|
|||||
Operating income
|
653.5
|
|
(44.1
|
)
|
(43.9
|
)
|
(35.1
|
)
|
776.6
|
|
|||||
Income before provision for income taxes
|
626.6
|
|
(44.1
|
)
|
(43.9
|
)
|
(35.1
|
)
|
749.7
|
|
|||||
Provision for income taxes
|
166.1
|
|
(10.7
|
)
|
(10.3
|
)
|
(10.9
|
)
|
198.0
|
|
|||||
Net income
|
460.5
|
|
(33.4
|
)
|
(33.6
|
)
|
(24.2
|
)
|
551.7
|
|
|||||
Diluted net income per share
|
1.65
|
|
(0.12
|
)
|
(0.12
|
)
|
(0.09
|
)
|
1.98
|
|
•
|
Transformation and Other Actions -
Total charges of
$44.1 million
primarily due to organizational efficiency costs, lease termination charges and accelerated depreciation as a result of store renovations within North America and select international stores.
|
•
|
Operational Efficiency Plan
- Total charges of
$43.9 million
primarily related to organizational efficiency costs and, to a lesser extent, network optimization costs.
|
•
|
Stuart Weitzman Acquisition-Related Costs -
Total charges of
$35.1 million
related to the acquisition of Stuart Weitzman Holdings LLC, of which $27.6 million is primarily related to charges attributable to contingent payments and integration-related activities and $7.5 million is related to the limited life impact of purchase accounting, primarily due to the amortization of the fair value of the order backlog asset, distributor relationships and inventory step-up.
|
|
July 2, 2016
|
||||||||||||||||||
|
GAAP Basis
(As Reported) |
|
Coach
|
|
Stuart Weitzman
|
|
Corporate
|
|
Non-GAAP Basis
(Excluding Items) |
||||||||||
|
(millions)
|
||||||||||||||||||
COGS
|
|
|
|
|
|
|
|
|
|
||||||||||
Integration & Acquisition
|
|
|
—
|
|
|
(1.1
|
)
|
|
—
|
|
|
|
|||||||
Gross profit
|
$
|
3,051.3
|
|
|
$
|
—
|
|
|
$
|
(1.1
|
)
|
|
$
|
—
|
|
|
$
|
3,052.4
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
SG&A
|
|
|
|
|
|
|
|
|
|
||||||||||
Transformation and Other Actions
|
|
|
—
|
|
|
—
|
|
|
44.1
|
|
|
|
|||||||
Stuart Weitzman Acquisition-Related Costs
|
|
|
—
|
|
|
14.6
|
|
|
19.4
|
|
|
|
|||||||
Operational Efficiency Plan
|
|
|
—
|
|
|
—
|
|
|
43.9
|
|
|
|
|||||||
SG&A
|
$
|
2,397.8
|
|
|
$
|
—
|
|
|
$
|
14.6
|
|
|
$
|
107.4
|
|
|
$
|
2,275.8
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating income
|
$
|
653.5
|
|
|
$
|
—
|
|
|
$
|
(15.7
|
)
|
|
$
|
(107.4
|
)
|
|
$
|
776.6
|
|
|
Fiscal Year Ended
|
|||||||||||||||||||
|
July 1, 2017
|
|
July 2, 2016
|
|
Variance
|
|||||||||||||||
|
(millions)
|
|||||||||||||||||||
|
Amount
|
|
% of
net sales
|
|
Amount
|
|
% of
net sales
|
|
Amount
|
|
%
|
|||||||||
Net sales
|
$
|
4,114.7
|
|
|
100.0
|
%
|
|
$
|
4,147.1
|
|
|
100.0
|
%
|
|
$
|
(32.4
|
)
|
|
(0.8
|
)%
|
Gross profit
|
2,855.0
|
|
|
69.4
|
|
|
2,848.9
|
|
|
68.7
|
|
|
6.1
|
|
|
0.2
|
|
|||
SG&A expenses
|
1,815.0
|
|
|
44.1
|
|
|
1,824.5
|
|
|
44.0
|
|
|
(9.5
|
)
|
|
(0.5
|
)
|
|||
Operating income
|
1,040.0
|
|
|
25.3
|
|
|
1,024.4
|
|
|
24.7
|
|
|
15.6
|
|
|
1.5
|
|
|
Fiscal Year Ended
|
|||||||||||||||||||
|
July 1, 2017
|
|
July 2, 2016
|
|
Variance
|
|||||||||||||||
|
(millions)
|
|||||||||||||||||||
|
Amount
|
|
% of
net sales |
|
Amount
|
|
% of
net sales |
|
Amount
|
|
%
|
|||||||||
Net sales
|
$
|
373.6
|
|
|
100.0
|
%
|
|
$
|
344.7
|
|
|
100.0
|
%
|
|
$
|
28.9
|
|
|
8.4
|
%
|
Gross profit
|
226.1
|
|
|
60.5
|
|
|
202.4
|
|
|
58.7
|
|
|
23.7
|
|
|
11.7
|
|
|||
SG&A expenses
|
210.6
|
|
|
56.4
|
|
|
169.9
|
|
|
49.3
|
|
|
40.7
|
|
|
24.0
|
|
|||
Operating income (loss)
|
15.5
|
|
|
4.2
|
|
|
32.5
|
|
|
9.4
|
|
|
(17.0
|
)
|
|
(52.2
|
)
|
|
|
Fiscal Year Ended
|
|
|
||||||||
|
|
July 1,
2018
|
|
July 1,
2017
|
|
Change
|
||||||
|
|
(millions)
|
||||||||||
Net cash provided by operating activities
|
|
$
|
996.7
|
|
|
$
|
853.8
|
|
|
$
|
142.9
|
|
Net cash (used in) provided by investing activities
|
|
(2,164.8
|
)
|
|
593.0
|
|
|
(2,757.8
|
)
|
|||
Net cash (used in) provided by financing activities
|
|
(249.9
|
)
|
|
369.5
|
|
|
(619.4
|
)
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
|
(11.5
|
)
|
|
(2.4
|
)
|
|
(9.1
|
)
|
|||
Net (decrease) increase in cash and cash equivalents
|
|
$
|
(1,429.5
|
)
|
|
$
|
1,813.9
|
|
|
$
|
(3,243.4
|
)
|
•
|
Other liabilities changed by
$211.1 million
. They were a source of cash of
$157.7 million
in fiscal
2018
compared to a use of cash of
$53.4 million
in fiscal
2017
, primarily driven by an increase in the Company's long-term income tax payable as a result of the Transition Tax.
|
•
|
Inventories changed by
$50.4 million
. They were a source of cash of $
30.4 million
in fiscal
2018
as compared to a use of cash of $
20.0 million
in fiscal
2017
, primarily driven by Kate Spade inventory balances as a result of heightened focus on inventory management.
|
•
|
Accrued liabilities changed by
$33.2 million
. They were a use of cash of $
16.9 million
in fiscal
2018
as compared to a use of cash of $
50.1 million
in fiscal
2017
, primarily driven by the timing of employee-related costs.
|
•
|
Other assets changed by
$32.9 million
. They were a source of cash of
$80.9 million
in fiscal
2018
as compared to a source of cash of
$48.0 million
in fiscal
2017
, primarily driven by timing of income tax payments.
|
•
|
Accounts payable changed by
$85.7 million
. They were a use of cash of
$77.3 million
in fiscal
2018
as compared to a source of cash in fiscal
2017
of
$8.4 million
, primarily driven by the timing of Kate Spade and Coach inventory payments.
|
|
|
Fiscal Year Ended
|
|
|
||||||||
|
|
July 1,
2017
|
|
July 2,
2016
|
|
Change
|
||||||
|
|
(millions)
|
||||||||||
Net cash provided by operating activities
|
|
$
|
853.8
|
|
|
$
|
758.6
|
|
|
$
|
95.2
|
|
Net cash provided by (used in) investing activities
|
|
593.0
|
|
|
(810.0
|
)
|
|
1,403.0
|
|
|||
Net cash provided by (used in) financing activities
|
|
369.5
|
|
|
(384.9
|
)
|
|
754.4
|
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
|
(2.4
|
)
|
|
3.5
|
|
|
(5.9
|
)
|
|||
Net increase (decrease) in cash and cash equivalents
|
|
$
|
1,813.9
|
|
|
$
|
(432.8
|
)
|
|
$
|
2,246.7
|
|
|
Sources of Liquidity
|
|
Outstanding Indebtedness
|
|
Total Available Liquidity
(1)
|
||||||
|
(millions)
|
||||||||||
Cash and cash equivalents
(1)
|
$
|
1,243.4
|
|
|
$
|
—
|
|
|
$
|
1,243.4
|
|
Short-term investments
(1)
|
6.6
|
|
|
—
|
|
|
6.6
|
|
|||
Revolving Credit Facility
(2)
|
900.0
|
|
|
—
|
|
|
900.0
|
|
|||
3.000% Senior Notes due 2022
(3)
|
400.0
|
|
|
400.0
|
|
|
—
|
|
|||
4.250% Senior Notes due 2025
(3)
|
600.0
|
|
|
600.0
|
|
|
—
|
|
|||
4.125% Senior Notes due 2027
(3)
|
600.0
|
|
|
600.0
|
|
|
—
|
|
|||
Total
|
$
|
3,750.0
|
|
|
$
|
1,600.0
|
|
|
$
|
2,150.0
|
|
|
(1)
|
As of
June 30, 2018
, approximately 73% of our cash and short-term investments were held outside the United States. 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. In fiscal 2018, we have analyzed our global working capital and cash requirements, and the potential tax liabilities associated with repatriation, and have determined that we will likely repatriate some portion of available foreign cash in the foreseeable future. See Note 14, "Income Taxes" for more information.
|
(2)
|
In May 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" and collectively with the Term Loan Facilities, the "Facility"). Borrowings under the 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 47 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, defined in the Credit Agreement, based on the ratio of (a) consolidated debt plus 600% of consolidated lease expense to (b) consolidated EBITDAR. Additionally, the Company pays a commitment fee at a rate determined by the reference to the aforementioned pricing grid. The Company had no outstanding borrowings under the Revolving Credit Facility at fiscal year-end. Refer to Note 11, "Debt," for further information on our existing debt instruments.
|
(3)
|
In March 2015, the Company issued $600.0 million aggregate principal amount of 4.250% senior unsecured notes due April 1, 2025 at 99.445% of par (the "2025 Senior Notes"). Furthermore, on June 20, 2017, the Company issued $400.0 million aggregate principal amount of 3.000% senior unsecured notes due July 15, 2022 at 99.505% of par (the "2022 Senior Notes"), and $600.0 million aggregate principal amount of 4.125% senior unsecured notes due July 15, 2027 at 99.858% of par (the "2027 Senior Notes"). Furthermore, the indentures for the 2025 Senior Notes, 2022 Senior Notes and 2027 Senior Notes contain certain covenants limiting the Company's ability to: (i) create certain liens, (ii) enter into certain sale and leaseback transactions and (iii) merge, or consolidate or transfer, sell or lease all or substantially all of the Company's assets. As of
June 30, 2018
, no known events of default have occurred. Refer to Note 11, "Debt," for further information on our existing debt instruments.
|
|
|
Total
|
|
Fiscal
2019 |
|
Fiscal
2020 – 2021 |
|
Fiscal
2022 – 2023 |
|
Fiscal 2024
and Beyond |
||||||||||
|
|
(millions)
|
||||||||||||||||||
Capital expenditure commitments
|
|
$
|
21.5
|
|
|
$
|
21.5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Inventory purchase obligations
|
|
342.8
|
|
|
342.8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Operating lease obligations
|
|
2,768.3
|
|
|
384.8
|
|
|
643.8
|
|
|
528.6
|
|
|
1,211.1
|
|
|||||
Capital lease obligations
|
|
9.7
|
|
|
1.4
|
|
|
2.8
|
|
|
2.8
|
|
|
2.7
|
|
|||||
Debt repayment
|
|
1,611.4
|
|
|
—
|
|
|
11.4
|
|
|
400.0
|
|
|
1,200.0
|
|
|||||
Interest on outstanding debt
|
|
468.6
|
|
|
62.7
|
|
|
125.1
|
|
|
118.5
|
|
|
162.3
|
|
|||||
Mandatory transition tax payments
(1)
|
|
266.0
|
|
|
43.6
|
|
|
42.4
|
|
|
60.9
|
|
|
119.1
|
|
|||||
Other
|
|
31.0
|
|
|
14.2
|
|
|
16.0
|
|
|
0.8
|
|
|
—
|
|
|||||
Total
|
|
$
|
5,519.3
|
|
|
$
|
871.0
|
|
|
$
|
841.5
|
|
|
$
|
1,111.6
|
|
|
$
|
2,695.2
|
|
|
(1)
|
Mandatory transition tax payments represent our tax obligation incurred in connection with the deemed repatriation of previously deferred foreign earnings pursuant to the Tax Legislation. These amounts represent the Company's best estimate as of June 30, 2018, but may change based on refinements to the calculation. Refer to Note 14, "Income Taxes," for further information.
|
(a)
|
Financial Statements and Financial Statement Schedules. Refer to “Index to Financial Statements” appearing herein.
|
(b)
|
Exhibits. Refer to the exhibit index which is included herein.
|
Date: August 16, 2018
|
By:
|
/s/ Victor Luis
|
|
|
Name: Victor Luis
Title: Chief Executive Officer
|
Signature
|
|
Title
|
|
|
|
/s/ Victor Luis
|
|
Chief Executive Officer and Director
|
Victor Luis
|
|
(Principal Executive Officer)
|
|
|
|
/s/ Kevin Wills
|
|
Chief Financial Officer
|
Kevin Wills
|
|
(Principal Financial Officer)
|
|
|
|
/s/ Melinda Brown
|
|
Corporate Controller
|
Melinda Brown
|
|
(Principal Accounting Officer)
|
|
|
|
/s/ Jide Zeitlin
|
|
Chairman and Director
|
Jide Zeitlin
|
|
|
|
|
|
/s/ Darrell Cavens
|
|
Director
|
Darrell Cavens
|
|
|
|
|
|
/s/ David Denton
|
|
Director
|
David Denton
|
|
|
|
|
|
/s/ Anne Gates
|
|
Director
|
Anne Gates
|
|
|
|
|
|
/s/ Andrea Guerra
|
|
Director
|
Andrea Guerra
|
|
|
|
|
|
/s/ Susan Kropf
|
|
Director
|
Susan Kropf
|
|
|
|
|
|
/s/ Annabelle Yu Long
|
|
Director
|
Annabelle Yu Long
|
|
|
|
|
|
/s/ Ivan Menezes
|
|
Director
|
Ivan Menezes
|
|
|
|
|
|
/s/ William Nuti
|
|
Director
|
William Nuti
|
|
|
|
|
|
/s/ Doreen Toben
|
|
Director
|
Doreen Toben
|
|
|
|
|
|
|
Page
Number
|
Consolidated Financial Statements:
|
|
Financial Statement Schedules:
|
|
|
Fiscal Year Ended
|
||||||||||
|
June 30,
2018 |
|
July 1,
2017 |
|
July 2,
2016 |
||||||
|
(millions, except per share data)
|
||||||||||
Net sales
|
$
|
5,880.0
|
|
|
$
|
4,488.3
|
|
|
$
|
4,491.8
|
|
Cost of sales
|
2,026.1
|
|
|
1,407.2
|
|
|
1,440.5
|
|
|||
Gross profit
|
3,853.9
|
|
|
3,081.1
|
|
|
3,051.3
|
|
|||
Selling, general and administrative expenses
|
3,183.1
|
|
|
2,293.7
|
|
|
2,397.8
|
|
|||
Operating income
|
670.8
|
|
|
787.4
|
|
|
653.5
|
|
|||
Interest expense, net
|
74.0
|
|
|
28.4
|
|
|
26.9
|
|
|||
Income before provision for income taxes
|
596.8
|
|
|
759.0
|
|
|
626.6
|
|
|||
Provision for income taxes
|
199.3
|
|
|
168.0
|
|
|
166.1
|
|
|||
Net income
|
$
|
397.5
|
|
|
$
|
591.0
|
|
|
$
|
460.5
|
|
Net income per share:
|
|
|
|
|
|
|
|
|
|||
Basic
|
$
|
1.39
|
|
|
$
|
2.11
|
|
|
$
|
1.66
|
|
Diluted
|
$
|
1.38
|
|
|
$
|
2.09
|
|
|
$
|
1.65
|
|
Shares used in computing net income per share:
|
|
|
|
|
|
|
|
|
|||
Basic
|
285.4
|
|
|
280.6
|
|
|
277.6
|
|
|||
Diluted
|
288.6
|
|
|
282.8
|
|
|
279.3
|
|
|||
Cash dividends declared per common share
|
$
|
1.350
|
|
|
$
|
1.350
|
|
|
$
|
1.350
|
|
|
Fiscal Year Ended
|
||||||||||
|
June 30,
2018 |
|
July 1,
2017 |
|
July 2,
2016 |
||||||
|
(millions)
|
||||||||||
Net income
|
$
|
397.5
|
|
|
$
|
591.0
|
|
|
$
|
460.5
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
|
|||
Unrealized (losses) gains on cash flow hedging derivatives, net
|
(1.6
|
)
|
|
11.8
|
|
|
(13.2
|
)
|
|||
Unrealized gains (losses) on available-for-sale investments, net
|
0.4
|
|
|
(0.7
|
)
|
|
(0.2
|
)
|
|||
Change in pension liability, net
|
1.5
|
|
|
1.1
|
|
|
(0.6
|
)
|
|||
Foreign currency translation adjustments
|
3.8
|
|
|
(26.2
|
)
|
|
18.8
|
|
|||
Other comprehensive income (loss), net of tax
|
4.1
|
|
|
(14.0
|
)
|
|
4.8
|
|
|||
Comprehensive income
|
$
|
401.6
|
|
|
$
|
577.0
|
|
|
$
|
465.3
|
|
|
Shares of Common Stock
|
|
Common Stock
|
|
Additional Paid-in-Capital
|
|
(Accumulated Deficit)/ Retained Earnings
|
|
Accumulated Other Comprehensive (Loss)/Income
|
|
Total Stockholders' Equity
|
|||||||||||
|
(millions, except per share data)
|
|||||||||||||||||||||
Balance at June 27, 2015
|
276.6
|
|
|
$
|
2.8
|
|
|
$
|
2,754.4
|
|
|
$
|
(189.6
|
)
|
|
$
|
(77.7
|
)
|
|
$
|
2,489.9
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
460.5
|
|
|
—
|
|
|
460.5
|
|
|||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4.8
|
|
|
4.8
|
|
|||||
Shares issued, pursuant to stock-based compensation arrangements, net of shares withheld for taxes
|
1.9
|
|
|
—
|
|
|
16.4
|
|
|
—
|
|
|
—
|
|
|
16.4
|
|
|||||
Share-based compensation
|
—
|
|
|
—
|
|
|
95.3
|
|
|
—
|
|
|
—
|
|
|
95.3
|
|
|||||
Excess tax effect from share-based compensation
|
—
|
|
|
—
|
|
|
(9.0
|
)
|
|
—
|
|
|
—
|
|
|
(9.0
|
)
|
|||||
Dividends declared ($1.350 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
(375.0
|
)
|
|
—
|
|
|
(375.0
|
)
|
|||||
Balance at July 2, 2016
|
278.5
|
|
|
2.8
|
|
|
2,857.1
|
|
|
(104.1
|
)
|
|
(72.9
|
)
|
|
2,682.9
|
|
|||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
591.0
|
|
|
—
|
|
|
591.0
|
|
|||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(14.0
|
)
|
|
(14.0
|
)
|
|||||
Shares issued, pursuant to stock-based compensation arrangements, net of shares withheld for taxes
|
3.4
|
|
|
—
|
|
|
48.9
|
|
|
—
|
|
|
—
|
|
|
48.9
|
|
|||||
Share-based compensation
|
—
|
|
|
—
|
|
|
76.1
|
|
|
—
|
|
|
—
|
|
|
76.1
|
|
|||||
Excess tax effect from share-based compensation
|
—
|
|
|
—
|
|
|
(3.8
|
)
|
|
—
|
|
|
—
|
|
|
(3.8
|
)
|
|||||
Dividends declared ($1.350 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
(379.2
|
)
|
|
—
|
|
|
(379.2
|
)
|
|||||
Balance at July 1, 2017
|
281.9
|
|
|
2.8
|
|
|
2,978.3
|
|
|
107.7
|
|
|
(86.9
|
)
|
|
3,001.9
|
|
|||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
397.5
|
|
|
—
|
|
|
397.5
|
|
|||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4.1
|
|
|
4.1
|
|
|||||
Shares issued, pursuant to stock-based compensation arrangements, net of shares withheld for taxes
|
6.1
|
|
|
0.1
|
|
|
133.8
|
|
|
—
|
|
|
—
|
|
|
133.9
|
|
|||||
Share-based compensation
|
—
|
|
|
—
|
|
|
88.1
|
|
|
—
|
|
|
—
|
|
|
88.1
|
|
|||||
Additional paid-in-capital as part of purchase consideration
|
—
|
|
|
—
|
|
|
5.3
|
|
|
—
|
|
|
—
|
|
|
5.3
|
|
|||||
Dividends declared ($1.350 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
(386.2
|
)
|
|
—
|
|
|
(386.2
|
)
|
|||||
Balance at June 30, 2018
|
288.0
|
|
|
$
|
2.9
|
|
|
$
|
3,205.5
|
|
|
$
|
119.0
|
|
|
$
|
(82.8
|
)
|
|
$
|
3,244.6
|
|
|
Fiscal Year Ended
|
||||||||||
|
June 30,
2018 |
|
July 1,
2017 |
|
July 2,
2016 |
||||||
|
(millions)
|
||||||||||
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
|||
Net income
|
$
|
397.5
|
|
|
$
|
591.0
|
|
|
$
|
460.5
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
|||
Depreciation and amortization
|
260.3
|
|
|
212.8
|
|
|
210.6
|
|
|||
Provision for bad debt
|
1.3
|
|
|
1.7
|
|
|
3.7
|
|
|||
Share-based compensation
|
81.3
|
|
|
73.6
|
|
|
86.8
|
|
|||
Excess tax effect from share-based compensation
|
—
|
|
|
3.8
|
|
|
9.0
|
|
|||
Integration and restructuring activities
|
134.9
|
|
|
8.5
|
|
|
17.7
|
|
|||
Deferred income taxes
|
(50.9
|
)
|
|
78.0
|
|
|
(52.3
|
)
|
|||
Other non-cash charges, net
|
3.1
|
|
|
(19.1
|
)
|
|
(14.7
|
)
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|||
Trade accounts receivable
|
(5.6
|
)
|
|
(29.4
|
)
|
|
(28.3
|
)
|
|||
Inventories
|
30.4
|
|
|
(20.0
|
)
|
|
40.7
|
|
|||
Other liabilities
|
157.7
|
|
|
(53.4
|
)
|
|
49.5
|
|
|||
Accounts payable
|
(77.3
|
)
|
|
8.4
|
|
|
(48.4
|
)
|
|||
Accrued liabilities
|
(16.9
|
)
|
|
(50.1
|
)
|
|
30.1
|
|
|||
Other assets
|
80.9
|
|
|
48.0
|
|
|
(6.3
|
)
|
|||
Net cash provided by operating activities
|
996.7
|
|
|
853.8
|
|
|
758.6
|
|
|||
CASH FLOWS (USED IN) PROVIDED BY INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|||
Hudson Yards sale of investments, net of expenses
|
—
|
|
|
680.6
|
|
|
—
|
|
|||
Sale of former headquarters, net of expenses
|
—
|
|
|
126.0
|
|
|
—
|
|
|||
Acquisition of interest in equity method investment
|
—
|
|
|
—
|
|
|
(140.3
|
)
|
|||
Acquisitions, net of cash acquired
|
(2,375.8
|
)
|
|
—
|
|
|
(25.6
|
)
|
|||
Purchases of property and equipment
|
(267.4
|
)
|
|
(283.1
|
)
|
|
(396.4
|
)
|
|||
Purchases of investments
|
(3.8
|
)
|
|
(523.5
|
)
|
|
(664.7
|
)
|
|||
Proceeds from maturities and sales of investments
|
482.2
|
|
|
591.2
|
|
|
425.9
|
|
|||
Acquisition of lease rights, net of proceeds
|
—
|
|
|
1.8
|
|
|
(8.9
|
)
|
|||
Net cash (used in) provided by investing activities
|
(2,164.8
|
)
|
|
593.0
|
|
|
(810.0
|
)
|
|||
CASH FLOWS (USED IN) PROVIDED BY FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|||
Dividend payments
|
(384.1
|
)
|
|
(378.0
|
)
|
|
(374.5
|
)
|
|||
Proceeds from issuance of debt, net of discount
|
1,100.0
|
|
|
997.2
|
|
|
—
|
|
|||
Debt issuance costs
|
—
|
|
|
(9.8
|
)
|
|
—
|
|
|||
Repayment of debt
|
(1,100.0
|
)
|
|
(285.0
|
)
|
|
(15.0
|
)
|
|||
Proceeds from share-based awards
|
165.7
|
|
|
70.4
|
|
|
29.1
|
|
|||
Taxes paid to net settle share-based awards
|
(31.5
|
)
|
|
(21.5
|
)
|
|
(15.5
|
)
|
|||
Excess tax effect from share-based compensation
|
—
|
|
|
(3.8
|
)
|
|
(9.0
|
)
|
|||
Net cash (used in) provided by financing activities
|
(249.9
|
)
|
|
369.5
|
|
|
(384.9
|
)
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
(11.5
|
)
|
|
(2.4
|
)
|
|
3.5
|
|
|||
(Decrease) increase in cash and cash equivalents
|
(1,429.5
|
)
|
|
1,813.9
|
|
|
(432.8
|
)
|
|||
Cash and cash equivalents at beginning of year
|
2,672.9
|
|
|
859.0
|
|
|
1,291.8
|
|
|||
Cash and cash equivalents at end of year
|
$
|
1,243.4
|
|
|
$
|
2,672.9
|
|
|
$
|
859.0
|
|
Supplemental information:
|
|
|
|
|
|
|
|
|
|||
Cash paid for income taxes, net
|
$
|
16.4
|
|
|
$
|
159.1
|
|
|
$
|
158.9
|
|
Cash paid for interest
|
$
|
63.0
|
|
|
$
|
35.4
|
|
|
$
|
33.7
|
|
Non-cash investing activity – property and equipment obligations
|
$
|
30.1
|
|
|
$
|
39.7
|
|
|
$
|
48.0
|
|
Assets Acquired and Liabilities Assumed
|
Fair Value At Acquisition Date
|
Measurement Period Adjustments
|
Adjusted Fair Value
|
||||||
|
(millions)
|
|
|
||||||
Cash and cash equivalents
|
$
|
71.8
|
|
$
|
—
|
|
$
|
71.8
|
|
Trade accounts receivable
|
62.8
|
|
—
|
|
62.8
|
|
|||
Inventories
(1)
|
310.1
|
|
—
|
|
310.1
|
|
|||
Prepaid expenses and other current assets
|
33.9
|
|
(1.2
|
)
|
32.7
|
|
|||
Property and equipment
|
175.5
|
|
—
|
|
175.5
|
|
|||
Goodwill
(2)(3)
|
916.1
|
|
(16.1
|
)
|
900.0
|
|
|||
Brand intangible asset
(4)
|
1,300.0
|
|
—
|
|
1,300.0
|
|
|||
Other intangible assets
(5)
|
119.2
|
|
—
|
|
119.2
|
|
|||
Other assets
|
59.0
|
|
11.1
|
|
70.1
|
|
|||
Total assets acquired
|
3,048.4
|
|
(6.2
|
)
|
3,042.2
|
|
|||
Accounts payable and accrued liabilities
|
233.3
|
|
|
233.3
|
|
||||
Deferred income taxes
(6)
|
333.0
|
|
(7.3
|
)
|
325.7
|
|
|||
Other liabilities
(7)
|
84.8
|
|
1.1
|
|
85.9
|
|
|||
Total liabilities assumed
|
651.1
|
|
(6.2
|
)
|
644.9
|
|
|||
Total purchase price
|
2,397.3
|
|
—
|
|
2,397.3
|
|
|||
|
|
|
|
|
|||||
Less: Cash acquired
|
(71.8
|
)
|
—
|
|
(71.8
|
)
|
|||
|
|
|
|
|
|||||
Total purchase price, net of cash acquired
|
$
|
2,325.5
|
|
$
|
—
|
|
$
|
2,325.5
|
|
|
(3)
|
The Company assigned
$324 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. Refer to Note 13, "Goodwill and Other Intangible Assets," for further information.
|
(6)
|
The Company acquired approximately
$200.1 million
of net deferred tax assets related to Kate Spade historical federal and state net operating losses, net of a
$39.3 million
valuation allowance, which the Company expects to be able to utilize. The deferred tax adjustments resulting from the step-up in basis of acquired assets, most notably the brand intangible asset, resulted in an overall deferred tax liability. Refer to Note 14, "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.
|
(7)
|
Includes an adjustment for unfavorable lease rights of approximately
$49.5 million
(amortized over the remainder of the underlying lease terms).
|
(i)
|
Depreciation and amortization expenses related to the fair value adjustments to Kate Spade's property and equipment and intangible assets have been reflected in the year ended
July 1, 2017
. Short-term purchase accounting amortization has been excluded from the pro forma amounts due to the non-recurring nature.
|
(ii)
|
Transaction costs in the year ended
June 30, 2018
have been excluded from the pro forma amounts due to their non-recurring nature.
|
(iii)
|
Interest expense of debt issued to finance the acquisition, including amortization of deferred financing fees, has been reflected in the year ended
July 1, 2017
. Historical interest expense for Kate Spade has been removed.
|
(iv)
|
The tax effects of the pro forma adjustments at an estimated statutory rate of
40.0%
.
|
(v)
|
Earnings per share amounts are calculated using unrounded numbers and the Company's historical weighted average shares outstanding.
|
|
Year Ended
|
||||||
|
June 30,
2018
|
|
July 1,
2017
|
||||
|
(unaudited)
|
||||||
|
(millions, except per share data)
|
||||||
Pro forma Net sales
(1)
|
$
|
5,912.9
|
|
|
$
|
5,837.4
|
|
Pro forma Net income
(1)
|
472.8
|
|
|
695.4
|
|
||
|
|
|
|
||||
Pro forma Net income per share:
|
|
|
|
|
|
||
Basic
|
$
|
1.66
|
|
|
$
|
2.48
|
|
Diluted
|
$
|
1.64
|
|
|
$
|
2.46
|
|
|
(1)
|
The pro forma results for the year ended
June 30, 2018
include revenue and operating income from the pre-combination period in fiscal 2018.
|
|
Purchase Accounting Adjustments
(1)
|
|
Acquisition Costs
(2)
|
|
Inventory-Related Charges
(3)
|
|
Contractual Payments
(4)
|
|
Organization-Related
(5)
|
|
Other
(6)
|
|
Total
|
||||||||||||||
|
(millions)
|
||||||||||||||||||||||||||
Addition Related to Acquisitions
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2.5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2.5
|
|
Fiscal 2018 charges
|
82.8
|
|
|
42.9
|
|
|
35.4
|
|
|
50.6
|
|
|
39.8
|
|
|
50.1
|
|
|
301.6
|
|
|||||||
Cash payments
|
—
|
|
|
(42.2
|
)
|
|
(2.8
|
)
|
|
(50.6
|
)
|
|
(22.4
|
)
|
|
(37.4
|
)
|
|
(155.4
|
)
|
|||||||
Non-cash charges
|
(82.8
|
)
|
|
—
|
|
|
(34.8
|
)
|
|
—
|
|
|
(5.8
|
)
|
|
(9.7
|
)
|
|
(133.1
|
)
|
|||||||
Liability as of June 30, 2018
|
$
|
—
|
|
|
$
|
0.7
|
|
|
$
|
0.3
|
|
|
$
|
—
|
|
|
$
|
11.6
|
|
|
$
|
3.0
|
|
|
$
|
15.6
|
|
|
(1)
|
Purchase accounting adjustments, of which
$79.6 million
was recorded within cost of sales and
$3.2 million
was recorded in SG&A expenses for the fiscal year ended
June 30, 2018
, relate to the short-term impact of the amortization of fair value adjustments. Of the amount recorded to cost of sales for the year ended
June 30, 2018
,
$71.8 million
was recorded within the Kate Spade segment,
$4.1 million
was recorded within the Coach segment and
$3.7 million
was recorded within the Stuart Weitzman segment. Of the amount recorded to SG&A expenses,
$3.2 million
was recorded within the Kate Spade segment.
|
(2)
|
Acquisition costs, which were recorded to SG&A expenses, and of which
$23.6 million
were within Corporate,
$19.1 million
were within the Kate Spade segment, and
$0.2 million
were within the Coach segment for the fiscal year ended
June 30, 2018
, primarily relate to deal fees associated with the acquisitions.
|
(3)
|
Inventory-related charges, recorded within cost of sales, of which
$34.7 million
was recorded within the Kate Spade segment and
$0.7 million
was recorded within the Stuart Weitzman segment, primarily related to reserves for the future destruction of certain on-hand inventory and non-cancelable inventory purchase commitments related to raw materials. As of
June 30, 2018
, a reserve of
$4.9 million
is included within inventories on the Company's Consolidated Balance Sheets.
|
(4)
|
Contractual payments, which were recorded to SG&A expenses within the Kate Spade segment, primarily related to severance and related costs as a result of pre-existing agreements that were in place with certain Kate Spade executives which became effective upon the closing of the acquisition.
|
(5)
|
Organization-related costs, which were recorded to SG&A expenses, and of which
$25.6 million
were within the Kate Spade segment,
$10.4 million
within Corporate and
$3.8 million
within the Stuart Weitzman segment for the fiscal year ended
June 30, 2018
, primarily related to severance related charges. The severance related charges includes
$6.0 million
of accelerated share-based compensation expense.
|
(6)
|
Other primarily relates to professional fees, asset write-offs and inventory true-up. The charges were primarily recorded in SG&A expenses, of which
$29.2 million
was recorded within Corporate,
$15.2 million
was recorded within the Kate Spade segment,
$4.0 million
was recorded within the Stuart Weitzman segment and
$0.3 million
was recorded within the Coach segment. Furthermore,
$1.4 million
was recorded in cost of sales within Stuart Weitzman for the fiscal year ended
June 30, 2018
.
|
|
Organizational Efficiency
(1)
|
|
Technology Infrastructure
(2)
|
|
Network Optimization
(3)
|
|
Total
|
||||||||
|
(millions)
|
||||||||||||||
Liability as of June 27, 2015
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Fiscal 2016 charges
|
40.4
|
|
|
—
|
|
|
3.5
|
|
|
43.9
|
|
||||
Cash payments
|
(9.7
|
)
|
|
—
|
|
|
—
|
|
|
(9.7
|
)
|
||||
Non-cash charges
|
(8.5
|
)
|
|
—
|
|
|
(0.3
|
)
|
|
(8.8
|
)
|
||||
Liability as of July 2, 2016
|
$
|
22.2
|
|
|
$
|
—
|
|
|
$
|
3.2
|
|
|
$
|
25.4
|
|
Fiscal 2017 charges
|
15.6
|
|
|
8.0
|
|
|
0.4
|
|
|
24.0
|
|
||||
Cash payments
|
(23.3
|
)
|
|
(7.7
|
)
|
|
(3.0
|
)
|
|
(34.0
|
)
|
||||
Non-cash charges
|
(7.9
|
)
|
|
—
|
|
|
(0.6
|
)
|
|
(8.5
|
)
|
||||
Liability as of July 1, 2017
|
$
|
6.6
|
|
|
$
|
0.3
|
|
|
$
|
—
|
|
|
$
|
6.9
|
|
Fiscal 2018 charges
|
0.6
|
|
|
18.9
|
|
|
—
|
|
|
19.5
|
|
||||
Cash payments
|
(5.6
|
)
|
|
(17.6
|
)
|
|
—
|
|
|
(23.2
|
)
|
||||
Non-cash charges
|
(0.8
|
)
|
|
(1.0
|
)
|
|
—
|
|
|
(1.8
|
)
|
||||
Liability as of June 30, 2018
|
$
|
0.8
|
|
|
$
|
0.6
|
|
|
$
|
—
|
|
|
$
|
1.4
|
|
|
(1)
|
Organizational efficiency charges, recorded within SG&A expenses, primarily related to accelerated depreciation associated with the retirement of information technology systems, severance and related costs of corporate employees, as well as consulting fees related to process and organizational optimization.
|
(2)
|
Technology infrastructure costs, recorded within SG&A expenses, related to the initial costs of replacing and updating the Company's core technology platforms.
|
(3)
|
Network optimization costs, recorded within SG&A expenses, related to lease termination costs.
|
|
Unrealized (Losses) Gains on Cash Flow Hedging Derivatives
(1)
|
|
Unrealized Gains (Losses) on Available-for-Sale Investments
|
|
Cumulative Translation Adjustment
|
|
Other
(2)
|
|
Total
|
||||||||||
|
(millions)
|
||||||||||||||||||
Balances at July 2, 2016
|
$
|
(8.8
|
)
|
|
$
|
0.3
|
|
|
$
|
(62.9
|
)
|
|
$
|
(1.5
|
)
|
|
$
|
(72.9
|
)
|
Other comprehensive income (loss) before reclassifications
|
7.7
|
|
|
(0.7
|
)
|
|
(26.2
|
)
|
|
—
|
|
|
(19.2
|
)
|
|||||
Less: losses reclassified from accumulated other comprehensive income
|
(4.1
|
)
|
|
—
|
|
|
—
|
|
|
(1.1
|
)
|
|
(5.2
|
)
|
|||||
Net current-period other comprehensive income (loss)
|
11.8
|
|
|
(0.7
|
)
|
|
(26.2
|
)
|
|
1.1
|
|
|
(14.0
|
)
|
|||||
Balances at July 1, 2017
|
$
|
3.0
|
|
|
$
|
(0.4
|
)
|
|
$
|
(89.1
|
)
|
|
$
|
(0.4
|
)
|
|
$
|
(86.9
|
)
|
Other comprehensive (loss) income before reclassifications
|
(1.2
|
)
|
|
0.5
|
|
|
3.8
|
|
|
—
|
|
|
3.1
|
|
|||||
Less: income (losses) reclassified from accumulated other comprehensive income
|
0.4
|
|
|
0.1
|
|
|
—
|
|
|
(1.5
|
)
|
|
(1.0
|
)
|
|||||
Net current-period other comprehensive (loss) income
|
(1.6
|
)
|
|
0.4
|
|
|
3.8
|
|
|
1.5
|
|
|
4.1
|
|
|||||
Balances at June 30, 2018
|
$
|
1.4
|
|
|
$
|
—
|
|
|
$
|
(85.3
|
)
|
|
$
|
1.1
|
|
|
$
|
(82.8
|
)
|
|
(1)
|
The ending balances of AOCI related to cash flow hedges are net of tax of
$(0.9) million
and
$(1.8) million
as of
June 30, 2018
and
July 1, 2017
, respectively. The amounts reclassified from AOCI are net of tax of
$(1.1) million
and
$2.2 million
as of
June 30, 2018
and
July 1, 2017
, respectively.
|
(2)
|
Other represents the accumulated loss on the Company's minimum pension liability adjustment. The balances at
June 30, 2018
and
July 1, 2017
are net of tax of
$0.6 million
and
$0.2 million
, respectively.
|
|
June 30,
2018
(1)
|
|
July 1,
2017
(1)
|
|
July 2,
2016
(1)
|
||||||
|
(millions)
|
||||||||||
Share-based compensation expense
|
$
|
88.1
|
|
|
$
|
76.1
|
|
|
$
|
95.3
|
|
Income tax benefit related to share-based compensation expense
(2)
|
23.5
|
|
|
24.4
|
|
|
28.6
|
|
|
(1)
|
During the year ended
June 30, 2018
, the Company incurred
$6.0 million
of share-based compensation expense related to severance as a result of integration. During the fiscal years ended
June 30, 2018
,
July 1, 2017
and
July 2, 2016
, the Company incurred
$0.8 million
,
$2.5 million
and
$8.5 million
of share-based compensation expense under the Company's Operational
|
(2)
|
The tax rates used to calculate the income tax benefit for fiscal 2018 are based on the enactment of the new tax legislation. Refer to Note 14, "Income Taxes," for further information.
|
|
Number of
Options Outstanding
|
|
Weighted-
Average
Exercise
Price per Option
|
|
Weighted-
Average
Remaining
Contractual
Term
(in years)
|
|
Aggregate
Intrinsic
Value
|
|||||
|
(millions)
|
|
|
|
|
|
(millions)
|
|||||
Outstanding at July 1, 2017
|
15.0
|
|
|
$
|
39.75
|
|
|
|
|
|
||
Granted
|
3.1
|
|
|
41.12
|
|
|
|
|
|
|||
Exercised
|
(4.6
|
)
|
|
35.37
|
|
|
|
|
|
|||
Forfeited or expired
|
(1.0
|
)
|
|
45.06
|
|
|
|
|
|
|||
Outstanding at June 30, 2018
|
12.5
|
|
|
42.94
|
|
|
6.6
|
|
$
|
75.8
|
|
|
Vested and expected to vest at June 30, 2018
|
12.2
|
|
|
42.99
|
|
|
6.5
|
|
74.4
|
|
||
Exercisable at June 30, 2018
|
6.5
|
|
|
46.35
|
|
|
4.9
|
|
33.3
|
|
|
June 30,
2018 |
|
July 1,
2017 |
|
July 2,
2016 |
|||
Expected term (years)
|
5.1
|
|
|
4.4
|
|
|
4.2
|
|
Expected volatility
|
28.4
|
%
|
|
30.5
|
%
|
|
32.2
|
%
|
Risk-free interest rate
|
1.8
|
%
|
|
1.1
|
%
|
|
1.4
|
%
|
Dividend yield
|
3.3
|
%
|
|
3.4
|
%
|
|
4.3
|
%
|
|
Number of
Non-vested
RSUs
|
|
Weighted-
Average Grant- Date Fair Value per RSU
|
|||
|
(millions)
|
|
|
|||
Non-vested at July 1, 2017
|
3.5
|
|
|
$
|
50.28
|
|
Granted
|
1.8
|
|
|
41.75
|
|
|
Awards issued in connection with acquisition
|
0.4
|
|
|
47.26
|
|
|
Vested
|
(1.8
|
)
|
|
39.14
|
|
|
Forfeited
|
(0.4
|
)
|
|
39.98
|
|
|
Non-vested at June 30, 2018
|
3.5
|
|
|
40.26
|
|
|
Number of
Non-vested
PRSUs
|
|
Weighted-
Average Grant- Date Fair Value per PRSU
|
|||
|
(millions)
|
|
|
|||
Non-vested at July 1, 2017
|
1.5
|
|
|
$
|
37.78
|
|
Granted
|
0.4
|
|
|
43.80
|
|
|
Change due to performance condition achievement
|
(0.6
|
)
|
|
47.32
|
|
|
Vested
|
(0.3
|
)
|
|
36.29
|
|
|
Forfeited
|
(0.1
|
)
|
|
37.17
|
|
|
Non-vested at June 30, 2018
|
0.9
|
|
|
38.27
|
|
|
Fiscal Year Ended
|
|||||||
|
June 30,
2018 |
|
July 1,
2017 |
|
July 2,
2016 |
|||
Expected term (years)
|
0.5
|
|
|
0.5
|
|
|
0.5
|
|
Expected volatility
|
26.9
|
%
|
|
24.7
|
%
|
|
28.6
|
%
|
Risk-free interest rate
|
1.3
|
%
|
|
0.6
|
%
|
|
0.3
|
%
|
Dividend yield
|
3.1
|
%
|
|
3.6
|
%
|
|
4.1
|
%
|
|
June 30, 2018
|
|
July 1, 2017
|
||||||||||||||||||||
|
Short-term
|
|
Long-Term
|
|
Total
|
|
Short-term
|
|
Long-term
|
|
Total
|
||||||||||||
|
(millions)
|
||||||||||||||||||||||
Available-for-sale investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Commercial paper
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
68.8
|
|
|
$
|
—
|
|
|
$
|
68.8
|
|
Government securities – U.S.
|
—
|
|
|
—
|
|
|
—
|
|
|
130.4
|
|
|
—
|
|
|
130.4
|
|
||||||
Corporate debt securities – U.S.
|
—
|
|
|
—
|
|
|
—
|
|
|
116.2
|
|
|
46.9
|
|
|
163.1
|
|
||||||
Corporate debt securities – non-U.S.
|
—
|
|
|
—
|
|
|
—
|
|
|
92.6
|
|
|
28.2
|
|
|
120.8
|
|
||||||
Available-for-sale investments, total
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
408.0
|
|
|
$
|
75.1
|
|
|
$
|
483.1
|
|
Other:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Time deposits
(1)
|
0.6
|
|
|
—
|
|
|
0.6
|
|
|
0.6
|
|
|
—
|
|
|
0.6
|
|
||||||
Other
|
6.0
|
|
|
—
|
|
|
6.0
|
|
|
2.1
|
|
|
—
|
|
|
2.1
|
|
||||||
Total Investments
|
$
|
6.6
|
|
|
$
|
—
|
|
|
$
|
6.6
|
|
|
$
|
410.7
|
|
|
$
|
75.1
|
|
|
$
|
485.8
|
|
|
(1)
|
These securities have original maturities greater than three months and are recorded at fair value.
|
|
Fiscal Year Ended
|
||||||||||
|
June 30,
2018 |
|
July 1,
2017 |
|
July 2,
2016 |
||||||
|
(millions)
|
||||||||||
Minimum rent
(1)
|
$
|
359.8
|
|
|
$
|
295.1
|
|
|
$
|
229.9
|
|
Contingent rent
|
164.7
|
|
|
129.4
|
|
|
134.8
|
|
|||
Total rent expense
|
$
|
524.5
|
|
|
$
|
424.5
|
|
|
$
|
364.7
|
|
|
(1)
|
$0.2 million
and
$5.9 million
of lease termination charges due to restructuring-related closures were included in fiscal 2017 and fiscal 2016, respectively.
|
Fiscal Year
|
|
Amount
|
||
|
|
(millions)
|
||
2019
|
|
$
|
384.8
|
|
2020
|
|
343.1
|
|
|
2021
|
|
300.7
|
|
|
2022
|
|
279.0
|
|
|
2023
|
|
249.6
|
|
|
Subsequent to 2023
|
|
1,211.1
|
|
|
Total minimum future rental payments
|
|
$
|
2,768.3
|
|
|
Level 1
|
|
Level 2
|
||||||||||||
|
June 30,
2018 |
|
July 1,
2017 |
|
June 30,
2018 |
|
July 1,
2017 |
||||||||
|
(millions)
|
||||||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash equivalents
(1)
|
$
|
592.5
|
|
|
$
|
760.0
|
|
|
$
|
0.4
|
|
|
$
|
226.0
|
|
Short-term investments:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Time deposits
(2)
|
—
|
|
|
—
|
|
|
0.6
|
|
|
0.6
|
|
||||
Commercial paper
(2)
|
—
|
|
|
—
|
|
|
—
|
|
|
68.8
|
|
||||
Government securities - U.S.
(2)
|
—
|
|
|
130.4
|
|
|
—
|
|
|
—
|
|
||||
Corporate debt securities - U.S.
(2)
|
—
|
|
|
—
|
|
|
—
|
|
|
116.2
|
|
||||
Corporate debt securities - non U.S.
(2)
|
—
|
|
|
—
|
|
|
—
|
|
|
92.6
|
|
||||
Other
|
—
|
|
|
—
|
|
|
6.0
|
|
|
2.1
|
|
||||
Long-term investments:
|
|
|
|
|
|
|
|
||||||||
Corporate debt securities - U.S.
(3)
|
—
|
|
|
—
|
|
|
—
|
|
|
46.9
|
|
||||
Corporate debt securities - non U.S.
(3)
|
—
|
|
|
—
|
|
|
—
|
|
|
28.2
|
|
||||
Derivative Assets:
|
|
|
|
|
|
|
|
||||||||
Inventory-related instruments
(4)
|
—
|
|
|
—
|
|
|
5.6
|
|
|
3.5
|
|
||||
Intercompany loan hedges
(4)
|
—
|
|
|
—
|
|
|
0.3
|
|
|
—
|
|
||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Derivative liabilities:
|
|
|
|
|
|
|
|
||||||||
Inventory-related instruments
(4)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2.3
|
|
|
$
|
1.0
|
|
Intercompany loan hedges
(4)
|
—
|
|
|
—
|
|
|
0.1
|
|
|
0.7
|
|
|
(1)
|
Cash equivalents consist of money market funds and time deposits with maturities of three months or less at the date of purchase. Due to their short term maturity, management believes that their carrying value approximates fair value.
|
(2)
|
Short-term available-for-sale investments are recorded at fair value, which approximates their carrying value, and are primarily based upon quoted vendor or broker priced securities in active markets.
|
(3)
|
Fair value is primarily determined using vendor or broker priced securities in active markets.
|
(4)
|
The fair value of these hedges is primarily based on the forward curves of the specific indices upon which settlement is based and includes an adjustment for the counterparty’s or Company’s credit risk.
|
|
June 30,
2018
|
|
July 1,
2017 |
||||
|
(millions)
|
||||||
Current Debt:
|
|
|
|
||||
Capital Lease Obligations
|
$
|
0.7
|
|
|
$
|
—
|
|
Total Current Debt
|
$
|
0.7
|
|
|
$
|
—
|
|
|
|
|
|
||||
Long-Term Debt:
|
|
|
|
||||
4.250% Senior Notes due 2025
|
600.0
|
|
|
600.0
|
|
||
3.000% Senior Notes due 2022
|
400.0
|
|
|
400.0
|
|
||
4.125% Senior Notes due 2027
|
600.0
|
|
|
600.0
|
|
||
Note Payable
|
11.4
|
|
|
—
|
|
||
Capital Lease Obligations
|
6.0
|
|
|
—
|
|
||
Total Long-Term Debt
|
1,617.4
|
|
|
1,600.0
|
|
||
Less: Unamortized Discount and Debt Issuance Costs on Senior Notes
|
(17.5
|
)
|
|
(20.5
|
)
|
||
Total Long-Term Debt, net
|
$
|
1,599.9
|
|
|
$
|
1,579.5
|
|
|
Coach
|
|
Kate Spade
|
|
Stuart Weitzman
|
|
Total
|
||||||||
|
(millions)
|
||||||||||||||
Balance at July 2, 2016
|
$
|
346.9
|
|
|
$
|
—
|
|
|
$
|
155.5
|
|
|
$
|
502.4
|
|
Measurement period adjustment
|
—
|
|
|
—
|
|
|
0.5
|
|
|
0.5
|
|
||||
Foreign exchange impact
|
(22.4
|
)
|
|
—
|
|
|
—
|
|
|
(22.4
|
)
|
||||
Balance at July 1, 2017
|
324.5
|
|
|
—
|
|
|
156.0
|
|
|
480.5
|
|
||||
Acquisition of goodwill
(1)
|
1.6
|
|
|
968.9
|
|
|
49.3
|
|
|
1,019.8
|
|
||||
Allocation of goodwill
(2)
|
324.0
|
|
|
(324.0
|
)
|
|
—
|
|
|
—
|
|
||||
Measurement period adjustment
(1)
|
—
|
|
|
(18.4
|
)
|
|
(0.5
|
)
|
|
(18.9
|
)
|
||||
Foreign exchange impact
|
4.7
|
|
|
0.5
|
|
|
(2.3
|
)
|
|
2.9
|
|
||||
Balance at June 30, 2018
|
$
|
654.8
|
|
|
$
|
627.0
|
|
|
$
|
202.5
|
|
|
$
|
1,484.3
|
|
|
(1)
|
Refer to Note 3, "Acquisitions," for further information.
|
(2)
|
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.
|
|
Fiscal Year Ended
(1)
|
||||||||||||||||||||||
|
June 30, 2018
|
|
July 1, 2017
|
||||||||||||||||||||
|
Gross
Carrying Amount |
|
Accum.
Amort. |
|
Net
|
|
Gross
Carrying Amount |
|
Accum.
Amort. |
|
Net
|
||||||||||||
|
(millions)
|
||||||||||||||||||||||
Intangible assets subject to amortization:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Customer relationships
|
$
|
100.5
|
|
|
$
|
(17.3
|
)
|
|
$
|
83.2
|
|
|
$
|
54.7
|
|
|
$
|
(9.7
|
)
|
|
$
|
45.0
|
|
Order backlog
|
2.0
|
|
|
(2.0
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Favorable lease rights
|
97.3
|
|
|
(24.4
|
)
|
|
72.9
|
|
|
26.1
|
|
|
(7.1
|
)
|
|
19.0
|
|
||||||
Total intangible assets subject to amortization
|
199.8
|
|
|
(43.7
|
)
|
|
156.1
|
|
|
80.8
|
|
|
(16.8
|
)
|
|
64.0
|
|
||||||
Intangible assets not subject to amortization:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Brand intangible assets
|
1,576.8
|
|
|
—
|
|
|
1,576.8
|
|
|
276.8
|
|
|
—
|
|
|
276.8
|
|
||||||
Total intangible assets
|
$
|
1,776.6
|
|
|
$
|
(43.7
|
)
|
|
$
|
1,732.9
|
|
|
$
|
357.6
|
|
|
$
|
(16.8
|
)
|
|
$
|
340.8
|
|
|
(1)
|
Refer to Note 3, "Acquisitions," for further information.
|
|
Amortization Expense
|
||
|
(millions)
|
||
Fiscal 2019
|
$
|
21.8
|
|
Fiscal 2020
|
20.2
|
|
|
Fiscal 2021
|
18.7
|
|
|
Fiscal 2022
|
16.7
|
|
|
Fiscal 2023
|
15.7
|
|
|
Thereafter
|
63.0
|
|
|
Total
|
$
|
156.1
|
|
|
Fiscal Year Ended
|
|||||||||||||||||||
|
June 30, 2018
|
|
July 1, 2017
|
|
July 2, 2016
|
|||||||||||||||
|
Amount
|
|
Percentage
|
|
Amount
|
|
Percentage
|
|
Amount
|
|
Percentage
|
|||||||||
|
(millions)
|
|||||||||||||||||||
Income before provision for income taxes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
United States
|
$
|
161.2
|
|
|
27.0
|
%
|
|
$
|
365.5
|
|
|
48.2
|
%
|
|
$
|
357.5
|
|
|
57.1
|
%
|
Foreign
|
435.6
|
|
|
73.0
|
|
|
393.5
|
|
|
51.8
|
|
|
269.1
|
|
|
42.9
|
|
|||
Total income before provision for income taxes
|
$
|
596.8
|
|
|
100.0
|
%
|
|
$
|
759.0
|
|
|
100.0
|
%
|
|
$
|
626.6
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Tax expense at U.S. statutory rate
|
$
|
167.0
|
|
|
28.0
|
%
|
|
$
|
265.7
|
|
|
35.0
|
%
|
|
$
|
219.3
|
|
|
35.0
|
%
|
State taxes, net of federal benefit
|
2.4
|
|
|
0.4
|
|
|
15.1
|
|
|
2.0
|
|
|
11.2
|
|
|
1.8
|
|
|||
Effects of foreign operations
|
(55.6
|
)
|
|
(9.3
|
)
|
|
(86.7
|
)
|
|
(11.4
|
)
|
|
(53.7
|
)
|
|
(8.6
|
)
|
|||
Transition tax on deferred foreign earnings
|
266.0
|
|
|
44.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Re-measurement of deferred taxes
|
(87.8
|
)
|
|
(14.7
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Effects of foreign tax credits and acquisition reorganization
|
(36.2
|
)
|
|
(6.1
|
)
|
|
(12.3
|
)
|
|
(1.6
|
)
|
|
(19.6
|
)
|
|
(3.1
|
)
|
|||
Release of state valuation allowance
|
(40.7
|
)
|
|
(6.8
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Other, net
|
(15.8
|
)
|
|
(2.7
|
)
|
|
(13.8
|
)
|
|
(1.9
|
)
|
|
8.9
|
|
|
1.4
|
|
|||
Taxes at effective worldwide rates
|
$
|
199.3
|
|
|
33.4
|
%
|
|
$
|
168.0
|
|
|
22.1
|
%
|
|
$
|
166.1
|
|
|
26.5
|
%
|
|
Fiscal Year Ended
|
||||||||||||||||||||||
|
June 30, 2018
|
|
July 1, 2017
|
|
July 2, 2016
|
||||||||||||||||||
|
Current
|
|
Deferred
|
|
Current
|
|
Deferred
|
|
Current
|
|
Deferred
|
||||||||||||
|
(millions)
|
||||||||||||||||||||||
Federal
|
$
|
181.1
|
|
|
$
|
(1.9
|
)
|
|
$
|
42.9
|
|
|
$
|
56.4
|
|
|
$
|
145.8
|
|
|
$
|
(52.0
|
)
|
Foreign
|
79.1
|
|
|
(11.2
|
)
|
|
39.7
|
|
|
7.4
|
|
|
46.8
|
|
|
2.2
|
|
||||||
State
|
(10.0
|
)
|
|
(37.8
|
)
|
|
7.4
|
|
|
14.2
|
|
|
25.8
|
|
|
(2.5
|
)
|
||||||
Total current and deferred tax provision (benefit)
|
$
|
250.2
|
|
|
$
|
(50.9
|
)
|
|
$
|
90.0
|
|
|
$
|
78.0
|
|
|
$
|
218.4
|
|
|
$
|
(52.3
|
)
|
|
June 30,
2018 |
|
July 1,
2017 |
||||
|
(millions)
|
||||||
Share-based compensation
|
$
|
27.1
|
|
|
$
|
64.8
|
|
Reserves not deductible until paid
|
39.2
|
|
|
39.2
|
|
||
Deferred rent
|
22.5
|
|
|
22.7
|
|
||
Employee benefits
|
19.0
|
|
|
40.9
|
|
||
Foreign investments
|
—
|
|
|
1.1
|
|
||
Net operating loss
|
395.2
|
|
|
199.2
|
|
||
Other
|
9.5
|
|
|
10.4
|
|
||
Prepaid expenses
|
—
|
|
|
0.6
|
|
||
Inventory
|
18.9
|
|
|
21.6
|
|
||
Capital loss carryforward
|
56.8
|
|
|
—
|
|
||
Gross deferred tax assets
|
588.2
|
|
|
400.5
|
|
||
Valuation allowance
|
305.9
|
|
|
196.1
|
|
||
Deferred tax assets after valuation allowance
|
$
|
282.3
|
|
|
$
|
204.4
|
|
|
|
|
|
||||
Goodwill
|
84.3
|
|
|
82.6
|
|
||
Other intangibles
|
347.9
|
|
|
—
|
|
||
Property and equipment
|
25.8
|
|
|
8.4
|
|
||
Foreign investments
|
5.7
|
|
|
—
|
|
||
Prepaid expenses
|
0.5
|
|
|
—
|
|
||
Other
|
—
|
|
|
6.2
|
|
||
Gross deferred tax liabilities
|
464.2
|
|
|
97.2
|
|
||
Net deferred tax (liabilities) assets
|
$
|
(181.9
|
)
|
|
$
|
107.2
|
|
|
|
|
|
||||
Consolidated Balance Sheets Classification
|
|
|
|
|
|
||
Deferred income taxes – noncurrent asset
|
24.3
|
|
|
170.5
|
|
||
Deferred income taxes – noncurrent liability
|
(206.2
|
)
|
|
(63.3
|
)
|
||
Net deferred tax (liabilities) assets
|
$
|
(181.9
|
)
|
|
$
|
107.2
|
|
|
June 30,
2018 |
|
July 1,
2017 |
|
July 2,
2016 |
||||||
|
(millions)
|
||||||||||
Balance at beginning of fiscal year
|
$
|
94.1
|
|
|
$
|
138.6
|
|
|
$
|
168.1
|
|
Gross increase due to tax positions related to prior periods
|
3.8
|
|
|
2.7
|
|
|
25.5
|
|
|||
Gross decrease due to tax positions related to prior periods
|
(4.0
|
)
|
|
(2.7
|
)
|
|
(4.4
|
)
|
|||
Gross increase due to tax positions related to current period
|
6.4
|
|
|
8.1
|
|
|
8.7
|
|
|||
Decrease due to lapse of statutes of limitations
|
(23.9
|
)
|
|
(39.5
|
)
|
|
(59.0
|
)
|
|||
Decrease due to settlements with taxing authorities
|
(25.1
|
)
|
|
(13.1
|
)
|
|
(0.3
|
)
|
|||
Increase due to current year acquisitions
|
24.0
|
|
|
—
|
|
|
—
|
|
|||
Balance at end of fiscal year
|
$
|
75.3
|
|
|
$
|
94.1
|
|
|
$
|
138.6
|
|
|
Year Ended
|
||
|
June 30, 2018
|
||
|
(millions)
|
||
Impact of Change in U.S. Federal Statutory Rate on Pre-Tax Income
|
$
|
(10.9
|
)
|
Discrete Impacts of Tax Legislation:
|
|
||
Transition Tax - Federal and State
(1)
|
266.0
|
|
|
Re-measurement of deferred taxes
(2)
|
(87.8
|
)
|
|
Total Impact of Tax Legislation
(3)
|
$
|
167.3
|
|
|
(1)
|
The Tax Legislation requires the Company to pay a Transition Tax on previously unremitted earnings of certain non-U.S. subsidiaries. The Transition Tax is payable in installments over
8 years
beginning in the Company's fiscal 2018. In the year ended June 30, 2018, the Company recorded a cumulative charge of
$266.0 million
for the Transition Tax. In the year ended June 30, 2018,
$222.4 million
is recorded as long-term income taxes payable and
$43.6 million
is recorded in accrued liabilities related to the current portion of this payable on the Company's Consolidated Balance Sheet as of June 30, 2018. Additional detailed information required to complete the calculation includes, but is not limited to, (i) completing a foreign earnings and profit study to determine the Company’s deferred foreign income since 1986, including all acquisitions; (ii) determining foreign taxes paid against deferred foreign income; and (iii) concluding on the total balance of cash and cash equivalents.
|
|
Transition Tax Payments
|
||
|
(millions)
|
||
Fiscal 2019
|
$
|
43.6
|
|
Fiscal 2020
|
21.2
|
|
|
Fiscal 2021
|
21.2
|
|
|
Fiscal 2022
|
21.2
|
|
|
Fiscal 2023
|
39.7
|
|
|
Fiscal 2024 and 2025
|
119.1
|
|
|
Total
|
$
|
266.0
|
|
(2)
|
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. The Company has estimated the rate change adjustment related to the deferred tax balances that reverses within the 2018 fiscal year at a blended U.S federal statutory income tax rate of 28% and those that will reverse after the 2018 fiscal year at the U.S federal statutory income tax rate of 21%. This deferred tax rate change adjustment is provisional and will be finalized after the Company files its federal and state tax returns for fiscal year 2018. The estimated impact recorded in fiscal 2018 will change if the timing of the deferred tax impacts shifts between fiscal 2018 and fiscal 2019 and beyond. The Company’s estimated adjustment may also be affected by other analysis related to the Tax Legislation, including, but not limited to, the calculation of deemed repatriation of deferred foreign income and the U.S. state income tax effect of adjustments made to federal temporary differences, such as the full expensing of qualified property which may not be allowed from a state tax perspective.
|
(3)
|
This table does not include the
$40.7 million
of valuation allowances that were initially established during purchase accounting, but were reversed based on facts introduced subsequent to the acquisition date that relate, in part, to the enactment of Tax Legislation. In addition, this table does not include
$5.5 million
of state taxes due on the expected remittance of earnings from non-U.S. subsidiaries.
|
•
|
Coach
- Includes global sales of Coach brand products to customers through Coach operated stores, including the Internet and concession shop-in-shops, and sales to wholesale customers and through independent third party distributors.
|
•
|
Kate Spade
- Includes global sales primarily of kate spade new york brand products to customers through Kate Spade operated stores, including the Internet, to wholesale customers, through concession shop-in-shops and through independent third party distributors.
|
•
|
Stuart Weitzman -
Includes global sales of Stuart Weitzman brand products primarily through Stuart Weitzman operated stores, including the Internet, to wholesale customers and through numerous independent third party distributors.
|
|
Coach
(1)
|
|
Kate
Spade
(1)
|
|
Stuart Weitzman
(1)
|
|
Corporate
(2)
|
|
Total
|
||||||||||
|
(millions)
|
||||||||||||||||||
Fiscal 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Net sales
|
$
|
4,221.5
|
|
|
$
|
1,284.7
|
|
|
$
|
373.8
|
|
|
$
|
—
|
|
|
$
|
5,880.0
|
|
Gross profit
|
2,931.5
|
|
|
711.1
|
|
|
211.3
|
|
|
—
|
|
|
3,853.9
|
|
|||||
Operating income (loss)
|
1,084.2
|
|
|
(61.9
|
)
|
|
(2.6
|
)
|
|
(348.9
|
)
|
|
670.8
|
|
|||||
Income (loss) before provision for income taxes
|
1,084.2
|
|
|
(61.9
|
)
|
|
(2.6
|
)
|
|
(422.9
|
)
|
|
596.8
|
|
|||||
Depreciation and amortization expense
(3)
|
139.5
|
|
|
67.2
|
|
|
20.8
|
|
|
43.8
|
|
|
271.3
|
|
|||||
Total assets
|
2,256.8
|
|
|
2,626.3
|
|
|
746.4
|
|
|
1,048.8
|
|
|
6,678.3
|
|
|||||
Additions to long-lived assets
(4)
|
134.4
|
|
|
34.4
|
|
|
7.8
|
|
|
90.8
|
|
|
267.4
|
|
Fiscal 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Net sales
|
$
|
4,114.7
|
|
|
$
|
—
|
|
|
$
|
373.6
|
|
|
$
|
—
|
|
|
$
|
4,488.3
|
|
Gross profit
|
2,855.0
|
|
|
—
|
|
|
226.1
|
|
|
—
|
|
|
3,081.1
|
|
|||||
Operating income (loss)
|
1,040.0
|
|
|
—
|
|
|
15.5
|
|
|
(268.1
|
)
|
|
787.4
|
|
|||||
Income (loss) before provision for income taxes
|
1,040.0
|
|
|
—
|
|
|
15.5
|
|
|
(296.5
|
)
|
|
759.0
|
|
|||||
Depreciation and amortization expense
(3)
|
149.9
|
|
|
—
|
|
|
18.9
|
|
|
50.1
|
|
|
218.9
|
|
|||||
Total assets
|
1,937.1
|
|
|
—
|
|
|
628.4
|
|
|
3,266.1
|
|
|
5,831.6
|
|
|||||
Additions to long-lived assets
(4)
|
170.5
|
|
|
—
|
|
|
20.2
|
|
|
92.4
|
|
|
283.1
|
|
Fiscal 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Net sales
|
$
|
4,147.1
|
|
|
$
|
—
|
|
|
$
|
344.7
|
|
|
$
|
—
|
|
|
$
|
4,491.8
|
|
Gross profit
|
2,848.9
|
|
|
—
|
|
|
202.4
|
|
|
—
|
|
|
3,051.3
|
|
|||||
Operating income (loss)
|
1,024.4
|
|
|
—
|
|
|
32.5
|
|
|
(403.4
|
)
|
|
653.5
|
|
|||||
Income (loss) before provision for income taxes
|
1,024.4
|
|
|
—
|
|
|
32.5
|
|
|
(430.3
|
)
|
|
626.6
|
|
|||||
Depreciation and amortization expense
(3)
|
132.6
|
|
|
—
|
|
|
19.6
|
|
|
66.9
|
|
|
219.1
|
|
|||||
Total assets
|
1,975.5
|
|
|
—
|
|
|
631.2
|
|
|
2,286.0
|
|
|
4,892.7
|
|
|||||
Additions to long-lived assets
(4)
|
210.2
|
|
|
—
|
|
|
11.5
|
|
|
174.7
|
|
|
396.4
|
|
|
(1)
|
During the first quarter of fiscal 2018, the Company completed its acquisition of Kate Spade & Company. During the third quarter of fiscal 2018, the Company completed its acquisition of certain distributors for the Coach and Stuart Weitzman brands and obtained operational control of the Kate Spade Joint Ventures. The operating results of the respective entity have been consolidated commencing on the date of each transaction.
|
(3)
|
Depreciation and amortization expense includes
$11.0 million
of Integration & Acquisition costs for the fiscal year ended
June 30, 2018
. There were
no
costs incurred related to the Operational Efficiency Plan for the fiscal year ended
June 30, 2018
. Depreciation and amortization expenses includes
$6.1 million
of Operational Efficiency Plan charges and
$8.5
million of Operational Efficiency Plan and Transformation Plan charges for the fiscal years ended
July 1, 2017
and July 2, 2016, respectively. These charges are recorded within Corporate. Depreciation and amortization expense for the segments includes an allocation of expense related to assets which support multiple segments.
|
(4)
|
Additions to long-lived assets for the reportable segments primarily includes store assets as well as assets that support a specific brand. Corporate additions include all other assets which includes a combination of Corporate assets, as well as assets that may support all segments. As such, depreciation expense for these assets may be subsequently allocated to a reportable segment.
|
|
Fiscal Year Ended
|
|||||||||||||||||||
|
June 30, 2018
|
|
July 1, 2017
|
|
July 2, 2016
|
|||||||||||||||
|
Amount
|
|
% of total net sales
|
|
Amount
|
|
% of total net sales
|
|
Amount
|
|
% of total net sales
|
|||||||||
|
(millions)
|
|||||||||||||||||||
Coach:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Women's Handbags
|
$
|
2,298.2
|
|
|
39
|
%
|
|
$
|
2,308.0
|
|
|
52
|
%
|
|
$
|
2,392.9
|
|
|
53
|
%
|
Men's
|
844.6
|
|
|
14
|
|
|
808.0
|
|
|
18
|
|
|
725.7
|
|
|
16
|
|
|||
Women's Accessories
|
747.1
|
|
|
13
|
|
|
721.0
|
|
|
16
|
|
|
721.6
|
|
|
16
|
|
|||
Other Products
|
331.6
|
|
|
6
|
|
|
277.7
|
|
|
6
|
|
|
306.9
|
|
|
7
|
|
|||
Total Coach
|
$
|
4,221.5
|
|
|
72
|
%
|
|
$
|
4,114.7
|
|
|
92
|
%
|
|
$
|
4,147.1
|
|
|
92
|
%
|
Kate Spade:
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Women's Handbags
|
$
|
703.4
|
|
|
12
|
%
|
|
$
|
—
|
|
|
—
|
%
|
|
$
|
—
|
|
|
—
|
%
|
Other Products
|
311.6
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Women's Accessories
|
269.7
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Total Kate Spade
|
$
|
1,284.7
|
|
|
22
|
%
|
|
$
|
—
|
|
|
—
|
%
|
|
$
|
—
|
|
|
—
|
%
|
Stuart Weitzman
(2)
|
$
|
373.8
|
|
|
6
|
%
|
|
$
|
373.6
|
|
|
8
|
%
|
|
$
|
344.7
|
|
|
8
|
%
|
Total Net Sales
|
$
|
5,880.0
|
|
|
100
|
%
|
|
$
|
4,488.3
|
|
|
100
|
%
|
|
$
|
4,491.8
|
|
|
100
|
%
|
|
(1)
|
On July 11, 2017, the Company completed its acquisition of Kate Spade. The operating results of the Kate Spade brand have been consolidated in the Company's operating results commencing on July 11, 2017.
|
(2)
|
The significant majority of sales for the Stuart Weitzman brand is attributable to women's footwear.
|
|
United
States
|
|
Japan
|
|
Greater
China
(2)
|
|
Other
(3)
|
|
Total
|
||||||||||
|
(millions)
|
||||||||||||||||||
Fiscal 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net sales
(1)
|
$
|
3,457.4
|
|
|
$
|
695.7
|
|
|
$
|
737.4
|
|
|
$
|
989.5
|
|
|
$
|
5,880.0
|
|
Long-lived assets
|
663.3
|
|
|
60.6
|
|
|
98.4
|
|
|
181.9
|
|
|
1,004.2
|
|
|||||
Fiscal 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net sales
(1)
|
$
|
2,432.5
|
|
|
$
|
572.8
|
|
|
$
|
643.9
|
|
|
$
|
839.1
|
|
|
$
|
4,488.3
|
|
Long-lived assets
|
497.7
|
|
|
58.3
|
|
|
93.2
|
|
|
162.2
|
|
|
811.4
|
|
|||||
Fiscal 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net sales
(1)
|
$
|
2,477.3
|
|
|
$
|
559.8
|
|
|
$
|
652.2
|
|
|
$
|
802.5
|
|
|
$
|
4,491.8
|
|
Long-lived assets
|
750.3
|
|
|
74.8
|
|
|
96.6
|
|
|
141.5
|
|
|
1,063.2
|
|
|
(1)
|
Includes net sales from our global travel retail business in locations within the specified geographic area.
|
(2)
|
Greater China includes mainland China, Hong Kong and Macau.
|
(3)
|
Other international sales reflect shipments to third-party distributors, primarily in East Asia, and sales from Company-operated stores and concession shop-in-shops in Europe, Canada, Taiwan, South Korea, Malaysia and Singapore.
|
|
Fiscal Year Ended
|
||||||||||
|
June 30,
2018 |
|
July 1,
2017 |
|
July 2,
2016 |
||||||
|
(millions, except per share data)
|
||||||||||
Net income
|
$
|
397.5
|
|
|
$
|
591.0
|
|
|
$
|
460.5
|
|
|
|
|
|
|
|
||||||
Weighted-average basic shares
|
285.4
|
|
|
280.6
|
|
|
277.6
|
|
|||
Dilutive securities:
|
|
|
|
|
|
||||||
Effect of dilutive securities
|
3.2
|
|
|
2.2
|
|
|
1.7
|
|
|||
Weighted-average diluted shares
|
288.6
|
|
|
282.8
|
|
|
279.3
|
|
|||
|
|
|
|
|
|
||||||
Net income per share:
|
|
|
|
|
|
|
|
||||
Basic
|
$
|
1.39
|
|
|
$
|
2.11
|
|
|
$
|
1.66
|
|
Diluted
|
$
|
1.38
|
|
|
$
|
2.09
|
|
|
$
|
1.65
|
|
|
June 30,
2018 |
|
July 1,
2017 |
||||
|
(millions)
|
||||||
Property and equipment
|
|
|
|
|
|
||
Land and building
|
$
|
19.0
|
|
|
$
|
13.7
|
|
Machinery and equipment
|
56.0
|
|
|
34.4
|
|
||
Software and computer equipment
|
409.1
|
|
|
310.4
|
|
||
Furniture and fixtures
|
322.5
|
|
|
329.6
|
|
||
Leasehold improvements
|
891.0
|
|
|
729.7
|
|
||
Construction in progress
|
142.2
|
|
|
71.7
|
|
||
Less: accumulated depreciation
|
(954.4
|
)
|
|
(798.1
|
)
|
||
Total property and equipment, net
|
$
|
885.4
|
|
|
$
|
691.4
|
|
Accrued liabilities
|
|
|
|
|
|
||
Payroll and employee benefits
|
$
|
174.3
|
|
|
$
|
152.7
|
|
Accrued rent
|
53.9
|
|
|
45.5
|
|
||
Dividends payable
|
97.2
|
|
|
95.1
|
|
||
Operating expenses
|
347.8
|
|
|
265.9
|
|
||
Total accrued liabilities
|
$
|
673.2
|
|
|
$
|
559.2
|
|
Other liabilities
|
|
|
|
|
|
||
Deferred lease obligation
|
$
|
200.7
|
|
|
$
|
204.2
|
|
Gross unrecognized tax benefit
|
75.3
|
|
|
94.1
|
|
||
Other
|
191.0
|
|
|
134.8
|
|
||
Total other liabilities
|
$
|
467.0
|
|
|
$
|
433.1
|
|
|
Balance at Beginning
of Year
|
|
Additions Charged to Costs and Expenses
|
|
Additions Related to Acquisition
|
|
Write-offs/
Allowances Taken
|
|
Balance at
End of Year
|
||||||||||
|
(millions)
|
||||||||||||||||||
Fiscal 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Allowance for bad debts
|
$
|
1.9
|
|
|
$
|
1.3
|
|
|
$
|
—
|
|
|
$
|
(1.7
|
)
|
|
$
|
1.5
|
|
Allowance for returns
|
4.4
|
|
|
12.9
|
|
|
5.0
|
|
|
(10.8
|
)
|
|
11.5
|
|
|||||
Allowance for markdowns
|
9.4
|
|
|
51.4
|
|
|
9.1
|
|
|
(53.2
|
)
|
|
16.7
|
|
|||||
Valuation allowance
|
196.1
|
|
|
20.7
|
|
|
129.8
|
|
|
(40.7
|
)
|
|
305.9
|
|
|||||
Total
|
$
|
211.8
|
|
|
$
|
86.3
|
|
|
$
|
143.9
|
|
|
$
|
(106.4
|
)
|
|
$
|
335.6
|
|
Fiscal 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Allowance for bad debts
|
$
|
2.2
|
|
|
$
|
1.7
|
|
|
$
|
—
|
|
|
$
|
(2.0
|
)
|
|
$
|
1.9
|
|
Allowance for returns
|
6.0
|
|
|
10.3
|
|
|
—
|
|
|
(11.9
|
)
|
|
4.4
|
|
|||||
Allowance for markdowns
|
15.2
|
|
|
36.9
|
|
|
—
|
|
|
(42.7
|
)
|
|
9.4
|
|
|||||
Valuation allowance
|
173.4
|
|
|
22.7
|
|
|
—
|
|
|
—
|
|
|
196.1
|
|
|||||
Total
|
$
|
196.8
|
|
|
$
|
71.6
|
|
|
$
|
—
|
|
|
$
|
(56.6
|
)
|
|
$
|
211.8
|
|
Fiscal 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Allowance for bad debts
|
$
|
3.1
|
|
|
$
|
3.7
|
|
|
$
|
—
|
|
|
$
|
(4.6
|
)
|
|
$
|
2.2
|
|
Allowance for returns
|
7.5
|
|
|
11.5
|
|
|
—
|
|
|
(13.0
|
)
|
|
6.0
|
|
|||||
Allowance for markdowns
|
18.0
|
|
|
54.1
|
|
|
—
|
|
|
(56.9
|
)
|
|
15.2
|
|
|||||
Valuation allowance
|
169.8
|
|
|
3.6
|
|
|
—
|
|
|
—
|
|
|
173.4
|
|
|||||
Total
|
$
|
198.4
|
|
|
$
|
72.9
|
|
|
$
|
—
|
|
|
$
|
(74.5
|
)
|
|
$
|
196.8
|
|
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
||||||||
|
(millions, except per share data)
|
||||||||||||||
Fiscal 2018
(1)
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net sales
|
$
|
1,288.9
|
|
|
$
|
1,785.0
|
|
|
$
|
1,322.4
|
|
|
$
|
1,483.7
|
|
Gross profit
|
764.4
|
|
|
1,177.4
|
|
|
908.9
|
|
|
1,003.2
|
|
||||
Net income
|
(17.7
|
)
|
|
63.2
|
|
|
140.3
|
|
|
211.7
|
|
||||
Net income per common share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(0.06
|
)
|
|
$
|
0.22
|
|
|
$
|
0.49
|
|
|
$
|
0.74
|
|
Diluted
|
$
|
(0.06
|
)
|
|
$
|
0.22
|
|
|
$
|
0.48
|
|
|
$
|
0.73
|
|
Fiscal 2017
(1)
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net sales
|
$
|
1,037.6
|
|
|
$
|
1,321.7
|
|
|
$
|
995.2
|
|
|
$
|
1,133.8
|
|
Gross profit
|
714.7
|
|
|
906.2
|
|
|
705.7
|
|
|
754.5
|
|
||||
Net income
|
117.4
|
|
|
199.7
|
|
|
122.2
|
|
|
151.7
|
|
||||
Net income per common share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.42
|
|
|
$
|
0.71
|
|
|
$
|
0.44
|
|
|
$
|
0.54
|
|
Diluted
|
$
|
0.42
|
|
|
$
|
0.71
|
|
|
$
|
0.43
|
|
|
$
|
0.53
|
|
Fiscal 2016
(1)(2)
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net sales
|
$
|
1,030.3
|
|
|
$
|
1,273.8
|
|
|
$
|
1,033.1
|
|
|
$
|
1,154.6
|
|
Gross profit
|
696.5
|
|
|
859.1
|
|
|
713.0
|
|
|
782.7
|
|
||||
Net income
|
96.4
|
|
|
170.1
|
|
|
112.5
|
|
|
81.5
|
|
||||
Net income per common share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.35
|
|
|
$
|
0.61
|
|
|
$
|
0.40
|
|
|
$
|
0.29
|
|
Diluted
|
$
|
0.35
|
|
|
$
|
0.61
|
|
|
$
|
0.40
|
|
|
$
|
0.29
|
|
|
(1)
|
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.
|
(2)
|
The fourth quarter of fiscal 2016 included the results of the 53rd week, contributing to
$84.4 million
in net revenues and
$0.07
in net income per diluted share.
|
(a)
|
Exhibit Table (numbered in accordance with Item 601 of Regulation S-K)
|
Exhibit
|
|
Description
|
2.1
|
|
|
3.1
|
|
|
3.2
|
|
|
3.3
|
|
|
3.4
|
|
|
3.5
|
|
|
3.6
|
|
|
4.1
|
|
|
4.2
|
|
|
4.3
|
|
|
4.4
|
|
|
4.5
|
|
|
4.6
|
|
|
4.7
|
|
|
4.8
|
|
|
10.1
|
|
|
10.2
|
|
|
10.3
†
|
|
|
10.4†
|
|
|
10.5†
|
|
|
10.6†
|
|
Exhibit
|
|
Description
|
10.7†
|
|
|
10.8†
|
|
|
10.9†
|
|
|
10.10†
|
|
|
10.11†
|
|
|
10.12†
|
|
|
10.13†
|
|
|
10.14†
|
|
|
10.15†
|
|
|
10.16†
|
|
|
10.17†
|
|
|
10.18†
|
|
|
10.19†
|
|
|
10.20†
|
|
|
10.21†
|
|
|
10.22†
|
|
|
10.23†
|
|
|
10.24†
|
|
|
10.25†
|
|
|
10.26†
|
|
|
10.27†
|
|
Exhibit
|
|
Description
|
10.28
|
|
|
10.29
|
|
|
10.30
|
|
|
10.31
|
|
|
10.32†
|
|
|
10.33†
|
|
|
10.34
|
|
|
10.35
|
|
|
10.36
|
|
|
12*
|
|
|
18
|
|
|
21.1*
|
|
|
23.1*
|
|
|
31.1*
|
|
|
32.1*
|
|
|
101.INS*
|
|
XBRL Instance Document
|
101.SCH*
|
|
XBRL Taxonomy Extension Schema Document
|
101.CAL*
|
|
XBRL Taxonomy Extension Calculation Linkbase
|
101.LAB*
|
|
XBRL Taxonomy Extension Label Linkbase
|
101.PRE*
|
|
XBRL Taxonomy Extension Presentation Linkbase
|
101.DEF*
|
|
XBRL Taxonomy Extension Definition Linkbase
|
|
*
|
Filed herewith
|
†
|
Management contract or compensatory plan or arrangement.
|
|
Coach Stores, Unipessoal LDA
|
Portugal
|
Coach Thailand Holdings, LLC
|
United States
|
Coach Vietnam Company Limited
|
Viet Nam
|
Creaciones S.W., S.A.
|
Spain
|
Fifth & Pacific Companies Canada, Inc.
|
Canada
|
Fifth & Pacific Companies Cosmetics, Inc.
|
United States
|
Fifth & Pacific Companies Foreign Holdings, LLC
|
United States
|
FNP Holdings, LLC
|
United States
|
Hope Diamon, S.L.
|
Spain
|
IP Holdings 2017 LLC
|
United States
|
Juicy Couture, Inc.
|
United States
|
Karucci LLC
|
United States
|
Kate Spade & Company International Limited
|
Hong Kong
|
Kate Spade & Company LLC
|
United States
|
Kate Spade Canada Incorporation
|
Canada
|
Kate Spade Holdings, LLC
|
United States
|
Kate Spade Hong Kong Limited
|
Hong Kong
|
Kate Spade IP Holdings Limited
|
United Kingdom
|
Kate Spade Japan Co., Ltd.
|
Japan
|
Kate Spade LLC
|
United States
|
Kate Spade Macau Limited
|
Macau
|
Kate Spade New York - France SARL
|
France
|
Kate Spade Puerto Rico, LLC
|
United States
|
Kate Spade Retail Hong Kong Limited
|
Hong Kong
|
Kate Spade UK Holdings Limited
|
England
|
Kate Spade UK Ltd.
|
United Kingdom
|
KS China Co., Ltd.
|
Hong Kong
|
KS HMT Co., Limited
|
Hong Kong
|
L.C. Licensing, LLC
|
United States
|
LCCI Holdings LLC
|
United States
|
LCI Holdings, LLC
|
United States
|
LCI Investments, LLC
|
United States
|
Liz Foreign B.V.
|
Netherlands
|
Lizzy Mae LLC
|
United States
|
MFE Limited
|
Hong Kong
|
Mocaroni, S.L.
|
Spain
|
Preparaciones y Moldeados, SL
|
Spain
|
Shanghai Kate Spade Trading Co., Ltd.
|
China
|
Shenghui Fashion (Shenzhen) Co. Ltd.
|
China
|
Shoe Heaven, S.L.
|
Spain
|
Shoes By Stuart, S.L.U.
|
Spain
|
Stuart Weitzman International UK Holdings Limited
|
United Kingdom
|
Stuart Weitzman IP, LLC
|
United States
|
Stuart Weitzman Monaco S.A.R.L.
|
Monaco
|
Stuart Weitzman UK Holdings Limited
|
United Kingdom
|
Stuart Weitzman UK Limited
|
United Kingdom
|
Sunburst, S.L.
|
Spain
|
SW Luxembourg Holdings
|
Luxembourg
|
SW-Italy, LLC
|
United States
|
Tapestry (Cambodia) Company Limited
|
Cambodia
|
Tapestry International US Holdings LLC
|
United States
|
Tapestry Myanmar Limited
|
Myanmar
|
WCFL Holdings LLC
|
United States
|
Westcoast Contempo Fashions Limited
|
Canada
|
1.
|
I have reviewed this Annual Report on Form 10-K of Tapestry, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
By:
|
/s/ Victor Luis
|
|
Name: Victor Luis
Title: Chief Executive Officer
|
1.
|
I have reviewed this Annual Report on Form 10-K of Tapestry, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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By:
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/s/ Kevin Wills
|
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Name: Kevin Wills
Title: Chief Financial Officer
|
By:
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/s/ Victor Luis
|
|
Name: Victor Luis
Title: Chief Executive Officer
|
By:
|
/s/ Kevin Wills
|
|
Name: Kevin Wills
Title: Chief Financial Officer
|