Item 16. FORM 10-K SUMMARY

None.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

TAPESTRY, INC.

Date: August 18, 2022			By:			/s/ Joanne C. Crevoiserat
						Name: Joanne C. Crevoiserat Title: Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated below on August 18, 2022.

Signature						Title
/s/ Joanne C. Crevoiserat						Chief Executive Officer
Joanne C. Crevoiserat						(Principal Executive Officer)
/s/ Scott A. Roe						Chief Financial Officer
Scott A. Roe						(Principal Financial Officer)
/s/ Manesh B. Dadlani						Corporate Controller
Manesh B. Dadlani						(Principal Accounting Officer)
/s/ Anne Gates						Independent Chair, Board of Directors
Anne Gates
/s/ John P. Bilbrey						Director
John P. Bilbrey
/s/ Darrell Cavens						Director
Darrell Cavens
/s/ David Denton						Director
David Denton
/s/ Johanna W. Faber						Director
Johanna W. Faber
/s/ Thomas R. Greco						Director
Thomas R. Greco
/s/ Pam Lifford						Director
Pam Lifford
/s/ Annabelle Yu Long						Director
Annabelle Yu Long
/s/ Ivan Menezes						Director
Ivan Menezes

TAPESTRY, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION

			Page Number
Reports of Independent Registered Public Accounting Firm (PCAOB ID No. 34)			59
Consolidated Financial Statements:
Consolidated Balance Sheets			62
Consolidated Statements of Operations			63
Consolidated Statements of Comprehensive Income			64
Consolidated Statements of Stockholders’ Equity			65
Consolidated Statements of Cash Flows			66
Notes to Consolidated Financial Statements			67
Financial Statement Schedules:
Schedule II — Valuation and Qualifying Accounts			103

All other schedules are omitted because they are not applicable or the required information is shown in the Consolidated Financial Statements or Notes thereto.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the stockholders and the Board of Directors of Tapestry, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Tapestry, Inc. and subsidiaries (the "Company") as of July 2, 2022 and July 3, 2021, the related consolidated statements of operations, comprehensive income, stockholders' equity, and cash flows, for each of the three years in the period ended July 2, 2022, and the related notes and the financial statement Schedule II listed in the Index to the Consolidated Financial Statements (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of July 2, 2022 and July 3, 2021, and the results of its operations and its cash flows for each of the three years in the period ended July 2, 2022, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) ("PCAOB"), the Company's internal control over financial reporting as of July 2, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated August 18, 2022, expressed an unqualified opinion on the Company's internal control over financial reporting.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Goodwill and Other Intangible Assets - Kate Spade - Refer to Notes 3 and 14 to the financial statements

Critical Audit Matter Description

The Company’s evaluation of goodwill and indefinite-lived brand intangible assets for impairment involves the comparison of carrying value to their respective fair values. The determination of the fair values requires management to make significant estimates and assumptions related to forecasts of future cash flows and growth rates, as well as discount rates. Changes in these assumptions could have a significant impact on either the fair values, the amount of any impairment charge, or both.

The fair values of the Kate Spade brand reporting unit and indefinite-lived brand as of the fiscal 2022 testing date exceeded their respective carrying values by approximately 50% and 90%, respectively. Several factors could impact the Kate Spade brand's ability to achieve expected future cash flows, including the optimization of the store fleet productivity, the success of international expansion strategies, the impact of promotional activity, continued economic volatility and potential operational challenges related to the macroeconomic factors, the reception of new collections in all channels, and other initiatives aimed at increasing profitability of the business.

Given the significant judgments made by management to estimate the fair value of the Kate Spade operations used in both the goodwill and Kate Spade indefinite-lived brand intangible fair value analyses and the difference between their fair values and carrying values, performing auditing procedures to evaluate the reasonableness of management’s judgments regarding the

business and valuation assumptions utilized in the valuation model, particularly the forecasts of future cash flows and growth rates and the selection of the discount rate, required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the projected future cash flows and growth rates and discount rates included the following:

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

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

• We evaluated management’s revenue and profit margin projections over the projection period by comparing them with (1) internal communications to management and the Board of Directors, (2) peer companies, and (3) industry and market conditions.

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

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

• We used the assistance of our fair value specialists to assess the acceptability of the implied equity premium. With respect to the market value of equity, we tested the calculations used in developing the respective market value of equity.

• We used the assistance of our fair value specialists in evaluating the fair value methodology and the discount rate, including testing the underlying source information and the mathematical accuracy of the calculations. Specific to the discount rate, we considered the inputs and calculations, and we developed a range of independent estimates and compared those to the respective discount rates selected by management.

/s/ DELOITTE & TOUCHE LLP

New York, New York

August 18, 2022

We have served as the Company's auditor since 2002.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the stockholders and the Board of Directors of Tapestry, Inc.

Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting of Tapestry, Inc. and subsidiaries (the “Company”) as of July 2, 2022 based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO"). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of July 2, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) ("PCAOB"), the consolidated financial statements and financial statement schedule as of and for the year ended July 2, 2022, of the Company and our report dated August 18, 2022, expressed an unqualified opinion on those financial statements.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ DELOITTE & TOUCHE LLP

New York, New York

August 18, 2022

TAPESTRY, INC.

CONSOLIDATED BALANCE SHEETS

			July 2, 2022						July 3, 2021
			(millions)
ASSETS
Current Assets:
Cash and cash equivalents			$	789.8					$	2,007.7
Short-term investments			163.4						8.1
Trade accounts receivable, less allowances for credit losses of $3.7 and $4.2, respectively			252.3						200.2
Inventories			994.2						734.8
Income tax receivable			217.2						254.6
Prepaid expenses			105.2						93.8
Other current assets			51.7						76.1
Total current assets			2,573.8						3,375.3
Property and equipment, net			544.4						678.1
Operating lease right-of-use assets			1,281.6						1,496.6
Goodwill			1,241.5						1,297.3
Intangible assets			1,366.6						1,373.4
Deferred income taxes			47.9						65.6
Other assets			209.5						96.1
Total assets			$	7,265.3					$	8,382.4
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable			$	520.7					$	445.2
Accrued liabilities			628.2						661.2
Current portion of operating lease liabilities			288.7						319.4
Current debt			31.2						—
Total current liabilities			1,468.8						1,425.8
Long-term debt			1,659.2						1,590.7
Long-term operating lease liabilities			1,282.3						1,525.9
Deferred income taxes			221.7						203.9
Long-term income taxes payable			95.3						127.1
Other liabilities			252.5						249.7
Total liabilities			4,979.8						5,123.1
See Note 13 on commitments and contingencies
Stockholders’ Equity:
Preferred stock: (authorized 25.0 million shares; $0.01 par value) none issued			—						—
Common stock: (authorized 1.0 billion shares; $0.01 par value) issued and outstanding – 241.2 million and 279.5 million shares, respectively			2.4						2.8
Additional paid-in-capital			3,620.2						3,487.0
Retained earnings (accumulated deficit)			(1,166.2)						(158.5)
Accumulated other comprehensive income (loss)			(170.9)						(72.0)
Total stockholders’ equity			2,285.5						3,259.3
Total liabilities and stockholders’ equity			$	7,265.3					$	8,382.4

See accompanying Notes.

TAPESTRY, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

			Fiscal Year Ended
			July 2, 2022						July 3, 2021						June 27, 2020
			(millions, except per share data)
Net sales			$	6,684.5					$	5,746.3					$	4,961.4
Cost of sales			2,034.1						1,664.4						1,722.1
Gross profit			4,650.4						4,081.9						3,239.3
Other selling, general and administrative expenses			3,474.6						3,113.9						3,312.4
Impairment of goodwill and intangible assets			—						—						477.7
Operating income (loss)			1,175.8						968.0						(550.8)
Loss on extinguishment of debt			53.7						—						—
Interest expense, net			58.7						71.4						60.1
Other expense (income)			16.4						(0.7)						13.3
Income (loss) before provision for income taxes			1,047.0						897.3						(624.2)
Provision for income taxes			190.7						63.1						27.9
Net income (loss)			$	856.3					$	834.2					$	(652.1)
Net income (loss) per share:
Basic			$	3.24					$	3.00					$	(2.34)
Diluted			$	3.17					$	2.95					$	(2.34)
Shares used in computing net income (loss) per share:
Basic			264.3						277.9						278.6
Diluted			270.1						283.0						278.6

See accompanying Notes.

TAPESTRY, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

			Fiscal Year Ended
			July 2, 2022						July 3, 2021						June 27, 2020
			(millions)
Net income (loss)			$	856.3					$	834.2					$	(652.1)
Other comprehensive income (loss), net of tax:
Unrealized gains (losses) on cash flow hedging derivatives, net			(1.6)						(1.8)						5.6
Unrealized gains (losses) on available-for-sale investments, net			(0.5)						—						0.5
Change in pension liability, net			—						—						(1.7)
Foreign currency translation adjustments			(96.8)						22.0						(13.4)
Other comprehensive income (loss), net of tax			(98.9)						20.2						(9.0)
Comprehensive income (loss)			$	757.4					$	854.4					$	(661.1)

See accompanying Notes.

TAPESTRY, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

			Shares of Common Stock												Common Stock						Additional Paid-in-Capital						Retained Earnings / (Accumulated Deficit)						Accumulated Other Comprehensive Income (Loss)						Total Stockholders' Equity
			(millions, except per share data)
Balance at June 29, 2019			286.8												$	2.9					$	3,302.1					$	291.6					$	(83.2)					$	3,513.4
Net income (loss)			—												—						—						(652.1)						—						(652.1)
Other comprehensive income (loss)			—												—						—						—						(9.0)						(9.0)
Shares issued, pursuant to stock-based compensation arrangements, net of shares withheld for taxes			1.3												—						(10.5)						—						—						(10.5)
Share-based compensation			—												—						66.9						—						—						66.9
Repurchase and retirement of common stock			(11.9)												(0.1)						—						(299.9)						—						(300.0)
Dividends declared ($1.013 per share)			—												—						—						(283.5)						—						(283.5)
Cumulative adjustment from adoption of new accounting standards			—												—						—						(48.8)						—						(48.8)
Balance at June 27, 2020			276.2												2.8						3,358.5						(992.7)						(92.2)						2,276.4
Net income (loss)			—												—						—						834.2						—						834.2
Other comprehensive income (loss)			—												—						—						—						20.2						20.2
Shares issued, pursuant to stock-based compensation arrangements, net of shares withheld for taxes			3.3												—						53.6						—						—						53.6
Share-based compensation			—												—						74.9						—						—						74.9
Balance at July 3, 2021			279.5												2.8						3,487.0						(158.5)						(72.0)						3,259.3
Net income (loss)			—												—						—						856.3						—						856.3
Other comprehensive income (loss)			—												—						—						—						(98.9)						(98.9)
Shares issued, pursuant to stock-based compensation arrangements, net of shares withheld for taxes			3.7												—						43.8						—						—						43.8
Share-based compensation			—												—						89.4						—						—						89.4
Repurchase of common stock			(42.0)												(0.4)						—						(1,599.6)						—						(1,600.0)
Dividends declared ($1.000 per share)			—												—						—						(264.4)						—						(264.4)
Balance at July 2, 2022			241.2												$	2.4					$	3,620.2					$	(1,166.2)					$	(170.9)					$	2,285.5

See accompanying Notes.

TAPESTRY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

			Fiscal Year Ended
			July 2, 2022						July 3, 2021						June 27, 2020
			(millions)
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES
Net income (loss)			$	856.3					$	834.2					$	(652.1)
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			195.3						218.7						248.3
Covid-19 related impairment charges			—						45.8						813.5
Provision for bad debt			19.9						2.8						26.0
Loss on extinguishment of debt			53.7						—						—
Share-based compensation			72.2						64.1						53.1
Acceleration program charges			14.8						5.1						24.8
Integration and restructuring activities			—						—						14.0
Deferred income taxes			29.9						52.6						(115.7)
Changes to lease related balances, net			(53.4)						(125.6)						73.1
Gain on sale of building			—						(13.2)						—
Gain on deferred purchase price			—						(12.5)						—
Other non-cash charges, net			31.3						21.4						2.3
Changes in operating assets and liabilities:
Trade accounts receivable			(96.0)						(9.6)						61.9
Inventories			(311.7)						32.2						(58.6)
Other liabilities			(9.2)						(16.8)						(37.8)
Accounts payable			86.4						307.3						(91.7)
Accrued liabilities			(16.1)						140.3						7.6
Other assets			(20.2)						(223.1)						38.3
Net cash provided by operating activities			853.2						1,323.7						407.0
CASH FLOWS (USED IN) PROVIDED BY INVESTING ACTIVITIES
Purchases of property and equipment			(93.9)						(116.0)						(205.4)
Purchases of investments			(540.4)						(0.7)						(212.4)
Proceeds from maturities and sales of investments			380.7						1.8						462.1
Proceeds from sale of building			—						23.9						—
Net cash (used in) provided by investing activities			(253.6)						(91.0)						44.3
CASH FLOWS (USED IN) PROVIDED BY FINANCING ACTIVITIES
Payment of dividends			(264.4)						—						(380.3)
Repurchase of common stock			(1,600.0)						—						(300.0)
Proceeds from revolver			—						—						700.0
Proceeds from debt, net of discount			998.5						—						—
Payment of initial debt costs			(4.6)						—						—
Payment of debt extinguishment costs			(50.7)						—						—
Repayment of debt			(900.0)						(11.5)						—
Proceeds from share-based awards			74.7						61.2						4.3
Repayment of revolving credit facility			—						(700.0)						—
Taxes paid to net settle share-based awards			(30.6)						(7.5)						(14.9)
Other financing activity			(1.0)						(8.2)						(3.2)
Net cash (used in) provided by financing activities			(1,778.1)						(666.0)						5.9
Effect of exchange rate changes on cash and cash equivalents			(39.4)						14.7						(0.1)
(Decrease) increase in cash and cash equivalents			(1,217.9)						581.4						457.1
Cash and cash equivalents at beginning of year			2,007.7						1,426.3						969.2
Cash and cash equivalents at end of year			$	789.8					$	2,007.7					$	1,426.3
Supplemental information:
Cash paid for income taxes, net			$	179.7					$	251.8					$	87.2
Cash paid for interest			$	67.8					$	69.7					$	68.1
Non-cash investing activity – property and equipment obligations			$	6.7					$	14.4					$	21.1

See accompanying Notes.

TAPESTRY, INC.

Notes to Consolidated Financial Statements

1. NATURE OF OPERATIONS

Tapestry, Inc. (the "Company") is a leading New York-based house of accessible luxury accessories and lifestyle brands. Our global house of brands unites the magic of Coach, kate spade new york and Stuart Weitzman. Each of our brands are unique and independent, while sharing a commitment to innovation and authenticity defined by distinctive products and differentiated customer experiences across channels and geographies. We use our collective strengths to move our customers and empower our communities, to make the fashion industry more sustainable, and to build a company that’s equitable, inclusive, and diverse. Individually, our brands are iconic. Together, we can stretch what’s possible.

The Coach segment includes global sales of Coach products to customers through Coach operated stores, including e-commerce sites and concession shop-in-shops, and sales to wholesale customers and through independent third party distributors.

The Kate Spade segment includes global sales primarily of kate spade new york brand products to customers through Kate Spade operated stores, including e-commerce sites, sales to wholesale customers, through concession shop-in-shops and through independent third party distributors.

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

2. BASIS OF PRESENTATION AND ORGANIZATION

Fiscal Year

The Company’s fiscal year ends on the Saturday closest to June 30. Unless otherwise stated, references to years in the financial statements relate to fiscal years. The fiscal year ended July 2, 2022 (“fiscal 2022”) was a 52-week period. The fiscal year ended July 3, 2021 (“fiscal 2021”) was a 53-week period and the fiscal year ended June 27, 2020 (“fiscal 2020”) was a 52-week period. The fiscal year ending July 1, 2023 (“fiscal 2023”) will be a 52-week period.

Covid-19 Pandemic

The outbreak of a novel strain of coronavirus ("Covid-19") continues to impact a significant majority of the regions in which we operate, resulting in significant global business disruptions. The widespread impact of Covid-19 resulted in temporary closures of directly operated stores globally, as well as at our wholesale and licensing partners starting in fiscal 2020. Since then, certain directly operated stores and the stores of our wholesale and licensing partners have experienced temporary re-closures or are operating under tighter restrictions in compliance with local government regulation. Covid-19 has also resulted in ongoing supply chain challenges, such as logistic constraints, the temporary closure of certain third-party manufacturers and increased freight costs.

The global Covid-19 pandemic is continuously evolving and the extent to which this impacts the Company - including unforeseen increased costs to the Company's business - will depend on future developments, which cannot be predicted, including the ultimate duration, severity and geographic resurgence of the virus and the success of actions to contain the virus, including variants of the novel strain, or treat its impact, among others. As the full magnitude of the effects on the Company's business is difficult to predict, the Covid-19 pandemic has and may continue to have a material adverse impact on the Company's business, financial condition, results of operations and cash flows for the foreseeable future. The Company believes that cash flows from operations, access to the credit and capital markets and our credit lines, on-hand cash and cash equivalents and our investments provide adequate funds to support our operating, capital, and debt service requirements. There can be no assurance, however, that any such capital will be available to the Company on acceptable terms or at all. The Company could experience other potential adverse impacts as a result of the Covid-19 pandemic, including, but not limited to, further charges from adjustments to the carrying amount of goodwill and other intangible assets, long-lived asset impairment charges, reserves for uncollectible accounts receivable and reserves for the realizability of inventory.

Starting in fiscal 2020, in response to the Covid-19 pandemic, the Company took actions to reinforce its liquidity and financial flexibility. If stores are required to close again for an extended period of time due to a resurgence of increased infections, the Company's liquidity may be negatively impacted. Refer to Part I, Item 1A. "Risk Factors" herein.

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and footnotes thereto. Actual results could differ from estimates in amounts that may be material to the financial statements.

Significant estimates inherent in the preparation of the consolidated financial statements include reserves for the realizability of inventory; asset retirement obligations; customer returns, end-of-season markdowns and operational chargebacks; useful lives and impairments of long-lived tangible and intangible assets; accounting for income taxes and related uncertain tax positions; accounting for business combinations; the valuation of stock-based compensation awards and related expected forfeiture rates; reserves for restructuring; and reserves for litigation and other contingencies, amongst others.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and all 100% owned and controlled subsidiaries. All intercompany transactions and balances are eliminated in consolidation.

Share Repurchases

The Company accounts for stock repurchases by allocating the repurchase price to common stock and retained earnings. Under Maryland law, the Company's state of incorporation, there are no treasury shares. All repurchased shares are authorized but unissued shares and these shares may be issued in the future for general corporate and other purposes. The Company may terminate or limit the stock repurchase program at any time. The Company accrues for the shares purchased under the share repurchase plan based on the trade date. Purchases of the Company's common stock are executed through open market purchases, including through purchase agreements under Rule 10b5-1.

3. SIGNIFICANT ACCOUNTING POLICIES

Cash and Cash Equivalents

Cash and cash equivalents consist of cash balances and highly liquid investments with a maturity of three months or less at the date of purchase.

Investments

Short-term investments consist primarily of high-credit quality U.S. and non-U.S. issued corporate debt securities, and U.S. Treasuries and government agency securities with original maturities greater than three months and with maturities within one year of balance sheet date, classified as available-for-sale. Long-term investments typically consist of high-credit quality U.S. and non-U.S. issued corporate debt securities, U.S. Treasuries and government agency securities, classified as available-for-sale, and recorded at fair value, with unrealized gains and losses recorded in other comprehensive income. Dividend and interest income are recognized when earned.

Additionally, GAAP requires the consolidation of all entities for which a Company has a controlling voting interest and all variable interest entities (“VIEs”) for which a Company is deemed to be the primary beneficiary. An entity is generally a VIE if it meets any of the following criteria: (i) the entity has insufficient equity to finance its activities without additional subordinated financial support from other parties, (ii) the equity investors cannot make significant decisions about the entity’s operations or (iii) the voting rights of some investors are not proportional to their obligations to absorb the expected losses of the entity or receive the expected returns of the entity and substantially all of the entity’s activities involve or are conducted on behalf of the investor with disproportionately few voting rights.

Concentration of Credit Risk

Financial instruments that potentially expose the Company to concentration of credit risk consist primarily of Cash and cash equivalents, investments and accounts receivable. The Company places its cash investments with high-credit quality financial institutions and generally invests primarily in corporate debt securities, money market instruments, U.S. government and agency debt securities, commercial paper and bank deposits placed with major banks and financial institutions. Accounts receivable is generally diversified due to the number of entities comprising the Company's customer base and their dispersion across many geographical regions. The Company believes no significant concentration of credit risk exists with respect to these investments and accounts receivable.

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

Inventories

The Company holds inventory that is sold through retail, including e-commerce, and wholesale distribution channels. Substantially all of the Company's Inventories are comprised of finished goods, and are reported at the lower of cost or net realizable value. Inventory costs include material, conversion costs, freight and duties and are primarily determined on a weighted-average cost basis. The Company reserves for inventory, including slow-moving and aged inventory, based on current product demand, expected future demand and historical experience. A decrease in product demand due to changing customer tastes, buying patterns or increased competition could impact the Company's evaluation of its inventory and additional reserves might be required.

Property and Equipment, Net

Property and equipment, net is stated at cost less accumulated depreciation including the impact of long-lived asset impairment and disposals. Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets. Buildings are depreciated over 40 years and building improvements are depreciated over ten to 40 years. Machinery and equipment are depreciated over lives of five to seven years, furniture and fixtures are depreciated over lives of three to ten years, and software and computer equipment is generally depreciated over lives of three to seven years. Implementation costs eligible for capitalization related to cloud computing arrangements that are a service contract are recorded within Prepaid expenses and Other non-current assets in the Consolidated Balance Sheets and amortized as Selling, general and administrative ("SG&A") expense in the Consolidated Statement of Operations over the term of the associated hosting arrangement. Leasehold improvements are amortized over the shorter of their estimated useful lives or the related lease terms. Maintenance and repair costs are charged to earnings as incurred while expenditures for major renewals and improvements are capitalized.

Valuation of Long-Lived Assets

Long-lived assets, such as Property and equipment and Operating lease right-of-use ("ROU") assets are evaluated for impairment whenever events or circumstances indicate that the carrying value of the assets may not be recoverable. In evaluating long-lived assets for recoverability, the Company uses its best estimate of future cash flows expected to result from the use of the related asset group and its eventual disposition. To the extent that estimated future undiscounted net cash flows attributable to the asset are less than its carrying value, an impairment loss is recognized equal to the difference between the carrying value of such asset and its fair value, considering external market participant assumptions. The Company recorded $4.0 million and $60.9 million of impairment charges in fiscal 2022 and fiscal 2021, respectively.

In determining future cash flows, the Company takes various factors into account, including the effects of macroeconomic trends such as consumer spending, in-store capital investments, promotional cadence, the level of advertising and changes in merchandising strategy. Since the determination of future cash flows is an estimate of future performance, there may be future impairments in the event that future cash flows do not meet expectations.

Goodwill and Other Intangible Assets

Upon acquisition, the Company estimates and records the fair value of purchased intangible assets, which primarily consists of brands, customer relationships, right-of-use assets and order backlog. Goodwill and certain other intangible assets deemed to have indefinite useful lives, including brand intangible assets, are not amortized, but are assessed for impairment at least annually. Finite-lived intangible assets are amortized over their respective estimated useful lives and, along with other long-lived assets as noted above, are evaluated for impairment periodically whenever events or changes in circumstances indicate that their related carrying values may not be fully recoverable. Estimates of fair value for finite-lived and indefinite-lived intangible assets are primarily determined using discounted cash flows and the multi-period excess earnings method, respectively, with consideration of market comparisons when appropriate. This approach uses significant estimates and assumptions, including projected future cash flows, discount rates and growth rates.

The Company generally performs its annual goodwill and indefinite-lived intangible assets impairment analysis using a quantitative approach. The quantitative goodwill impairment test identifies the existence of potential impairment by comparing the fair value of each reporting unit with its carrying value, including goodwill. If the fair value of a reporting unit exceeds its carrying value, the reporting unit's goodwill is considered not to be impaired. If the carrying value of a reporting unit exceeds its fair value, an impairment charge is recognized in an amount equal to that excess. The impairment charge recognized is limited to the amount of goodwill allocated to that reporting unit.

Determination of the fair value of a reporting unit and intangible asset is based on management's assessment, considering independent third-party appraisals when necessary. Furthermore, this determination is judgmental in nature and often involves the use of significant estimates and assumptions, which may include projected future cash flows, discount rates, growth rates,

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

and determination of appropriate market comparables and recent transactions. These estimates and assumptions could have a significant impact on whether or not an impairment charge is recognized and the amount of any such charge.

The Company performs its annual impairment assessment of goodwill as well as brand intangibles during the fourth quarter of each fiscal year or if an event occurs that would more likely than not reduce the fair value below its carrying amount. The Company determined that there was no impairment in fiscal 2022 or fiscal 2021. In fiscal 2020, the Company recorded a goodwill impairment charge of $210.7 million related to the Stuart Weitzman reporting unit and an impairment charge of $267.0 million related to the Stuart Weitzman indefinite-lived brand.

Operating Leases

The Company leases retail space, office space, warehouse facilities, fulfillment centers, storage space, machinery, equipment and certain other items under operating leases. These leases may also include rent escalation clauses or lease incentives in the form of construction allowances and rent reduction. In determining the lease term used in the lease right-of-use ("ROU") asset and lease liability calculations, the Company considers various factors such as market conditions and the terms of any renewal or termination options that may exist. When deemed reasonably certain, the renewal and termination options are included in the determination of the lease term and calculation of the lease ROU asset and lease liability. The Company is typically required to make fixed minimum rent payments, variable rent payments primarily based on performance (i.e., percentage-of-sales-based payments), or a combination thereof, directly related to its ROU asset. The Company is also often required, by the lease, to pay for certain other costs including real estate taxes, insurance, common area maintenance fees, and/or certain other costs, which may be fixed or variable, depending upon the terms of the respective lease agreement. To the extent these payments are fixed, the Company has included them in calculating the lease ROU assets and lease liabilities.

The Company calculates lease ROU assets and lease liabilities as the present value of fixed lease payments over the reasonably certain lease term beginning at the commencement date. Per the guidance, the use of the implicit rate to determine the present value of lease payments is required. As the rate implicit in the Company's leases is not readily determinable, the Company uses its incremental borrowing rate based on the information available at the lease commencement date, including the Company's credit rating, credit spread and adjustments for the impact of collateral, lease tenors, economic environment and currency.

For operating leases, fixed lease payments are recognized as operating lease cost on a straight-line basis over the lease term. For finance leases and impaired operating leases, the ROU asset is depreciated on a straight-line basis over the remaining lease term, along with recognition of interest expense associated with accretion of the lease liability. For leases with a lease term of 12 months or less ("short-term lease"), any fixed lease payments are recognized on a straight-line basis over such term, and are not recognized on the Consolidated Balance Sheets. Variable lease cost for both operating and finance leases, if any, is recognized as incurred.

Asset retirement obligations represent legal obligations associated with the retirement of a tangible long-lived asset. The Company’s asset retirement obligations are primarily associated with leasehold improvements in which the Company is contractually obligated to remove at the end of a lease to comply with the lease agreement. When such an obligation exists, the Company recognizes an asset retirement obligation at the inception of a lease at its estimated fair value. The asset retirement obligation is recorded in current liabilities or non-current liabilities (based on the expected timing of payment of the related costs) and is subsequently adjusted for any changes in estimates. The associated estimated asset retirement costs are capitalized as part of the carrying amount of the long-lived asset and depreciated over its useful life. As of the end of fiscal 2022 and fiscal 2021, the Company had asset retirement obligations of $48.8 million and $45.1 million, respectively, primarily classified within Other non-current liabilities in the Company's Consolidated Balance Sheets.

Revenue Recognition

Revenue is recognized when the Company satisfies its performance obligations by transferring control of promised products or services to its customers, which may be at a point of time or over time. Control is transferred when the customer obtains the ability to direct the use of and obtain substantially all of the remaining benefits from the products or services. The amount of revenue recognized is the amount of consideration to which the Company expects to be entitled, including estimation of sale terms that may create variability in the consideration. Revenue subject to variability is constrained to an amount which will not result in a significant reversal in future periods when the contingency that creates variability is resolved.

Retail store and concession shop-in-shop revenues are recognized at the point-of-sale, when the customer obtains physical possession of the products. Digital revenue from sales of products ordered through the Company’s e-commerce sites is recognized upon delivery and receipt of the shipment by its customers and includes shipping and handling charges paid by

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

customers. Retail and digital revenues are recorded net of estimated returns, which are estimated by developing an expected value based on historical experience. Payment is due at the point of sale.

The Company recognizes revenue within the wholesale channel at the time title passes and risk of loss is transferred to customers, which is generally at the point of shipment of products but may occur upon receipt of the shipment by the customer in certain cases. Wholesale revenue is recorded net of estimates for returns, discounts, end-of-season markdowns, cooperative advertising allowances and other consideration provided to the customer. The Company's historical estimates of these variable amounts have not differed materially from actual results.

The Company recognizes licensing revenue over time during the contract period in which licensees are granted access to the Company's trademarks. These arrangements require licensees to pay a sales-based royalty and may include a contractually guaranteed minimum royalty amount. Revenue for contractually guaranteed minimum royalty amounts is recognized ratably over the license year and any excess sales-based royalties are recognized as earned once the minimum royalty threshold is achieved.

Gift cards issued by the Company are recorded as a liability until they are redeemed, at which point revenue is recognized. The Company also uses historical information to estimate the amount of gift card balances that will never be redeemed and recognizes that amount as revenue over time in proportion to actual customer redemptions if the Company does not have a legal obligation to remit unredeemed gift cards to any jurisdiction as unclaimed property.

The Company accounts for sales taxes and other related taxes on a net basis, excluding such taxes from revenue.

Refer to Note 4, "Revenue," for additional information.

Cost of Sales

Cost of sales consists of inventory costs and other related costs such as reserves for inventory realizability and shrinkage, damages and replacements.

Selling, General and Administrative ("SG&A") Expenses

Selling expenses include store employee compensation, occupancy costs, depreciation, supply costs, wholesale and retail account administration compensation globally. These expenses are affected by the number of stores open during any fiscal period and store performance, as compensation and rent expenses can vary with sales. Advertising, marketing and design expenses include employee compensation, media space and production, advertising agency fees, new product design costs, public relations and market research expenses. Distribution and customer service expenses include warehousing, order fulfillment, shipping and handling, customer service, employee compensation and bag repair costs. SG&A expenses also include compensation costs for corporate functions including: executive, finance, human resources, legal and information systems departments, as well as corporate headquarters occupancy costs, consulting fees and software expenses.

Shipping and Handling

Shipping and handling costs incurred were $230.8 million, $178.6 million and $128.1 million in fiscal 2022, fiscal 2021 and fiscal 2020, respectively, and are included in SG&A expenses. The Company includes inbound product-related transportation costs from manufacturers within Cost of sales. The balance of the Company's transportation-related costs related to its distribution network is included in SG&A expenses rather than in Cost of sales.

Advertising

Advertising costs include expenses related to direct marketing activities, such as digital and other media and production costs. In fiscal 2022, fiscal 2021 and fiscal 2020, advertising expenses for the Company totaled $551.6 million, $395.2 million and $238.0 million, respectively, and are included in SG&A expenses. Advertising costs are generally expensed when the advertising first appears.

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

Share-Based Compensation

The Company recognizes the cost of equity awards to employees and the non-employee Directors based on the grant-date fair value of those awards. The grant-date fair values of share unit awards are based on the fair value of the Company's common stock on the date of grant. The grant-date fair value of stock option awards is determined using the Black-Scholes option pricing model and involves several assumptions, including the expected term of the option, expected volatility and dividend yield. The expected term of options represents the period of time that the options granted are expected to be outstanding and is based on historical experience. Expected volatility is based on historical volatility of the Company’s stock as well as the implied volatility from publicly traded options on the Company's stock. Dividend yield is based on the current expected annual dividend per share and the Company’s stock price. Changes in the assumptions used to determine the Black-Scholes value could result in significant changes in the Black-Scholes value.

The Company recognizes share-based compensation net of estimated forfeitures and revises the estimates in subsequent periods if actual forfeitures differ from the estimates. The Company estimates the forfeiture rate based on historical experience as well as expected future behavior.

The Company grants performance-based share awards to key executives, the vesting of which is subject to the executive’s continuing employment and the Company's or individual's achievement of certain performance goals. On a quarterly basis, the Company assesses actual performance versus the predetermined performance goals, and adjusts the share-based compensation expense to reflect the relative performance achievement. Actual distributed shares are calculated upon conclusion of the service and performance periods, and include dividend equivalent shares. If the performance-based award incorporates a market condition, the grant-date fair value of such award is determined using a pricing model, such as a Monte Carlo Simulation.

Income Taxes

The Company’s effective tax rate is based on pre-tax income, statutory tax rates, tax laws and regulations, and tax planning strategies available in the various jurisdictions in which the Company operates. The Company classifies interest and penalties on uncertain tax positions in the Provision for income taxes. The Company records net deferred tax assets to the extent it believes that it is more likely than not that these assets will be realized. In making such determination, the Company considers all available evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent and expected future results of operation. The Company reduces deferred tax assets by a valuation allowance if, based upon the weight of available evidence, it is more likely than not that some amount of deferred tax assets is not expected to be realized. The Company is not permanently reinvested with respect to earnings of a limited number of foreign entities and has recorded the tax consequences of remitting earnings from these entities. The Company is permanently reinvested with respect to all other earnings.

The Company recognizes the impact of tax positions in the financial statements if those positions will more likely than not be sustained on audit, based on the technical merits of the position. Although the Company believes that the estimates and assumptions used are reasonable and legally supportable, the final determination of tax audits could be different than that which is reflected in historical tax provisions and recorded assets and liabilities. Tax authorities periodically audit the Company’s income tax returns and the tax authorities may take a contrary position that could result in a significant impact on the Company's results of operations. Significant management judgment is required in determining the effective tax rate, in evaluating tax positions and in determining the net realizable value of deferred tax assets.

Refer to Note 15, "Income Taxes," herein for further discussion on the Company's income taxes.

Derivative Instruments

The majority of the Company’s purchases of finished goods are denominated in U.S. dollars, which limits the Company’s exposure to the transactional effects of foreign currency exchange rate fluctuations. However, the Company is exposed to foreign currency exchange risk related to its sale of U.S. dollar inventory to foreign operating subsidiaries in local currency, as well as risk related to various cross-currency intercompany loans and payables, and translation risk. The Company is also exposed to foreign currency risk related to changes in the U.S. dollar value of its net investment in foreign subsidiaries. The Company uses derivative financial instruments to manage these risks. These derivative transactions are in accordance with the Company’s risk management policies. The Company does not enter into derivative transactions for speculative or trading purposes.

The Company records all derivative contracts at fair value on the Consolidated Balance Sheets. The fair values of foreign currency derivatives are based on the forward curves of the specific indices upon which settlement is based and include an

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

adjustment for the Company’s credit risk. Judgment is required of management in developing estimates of fair value. The use of different market assumptions or methodologies could affect the estimated fair value.

For derivative instruments that qualify for hedge accounting, the changes in the fair value of these instruments are either (i) offset against the changes in fair value of the hedged assets or liabilities through earnings or (ii) recognized as a component of Accumulated other comprehensive income (loss) ("AOCI") until the hedged item is recognized in earnings, depending on whether the derivative is being used to hedge changes in fair value or cash flows. For derivative instruments that are designated as a net investment hedge, the changes in the fair value of the instruments are recognized as a component of AOCI, and upon discontinuation of the hedge remain in AOCI until the net investment is sold or liquidated.

Each derivative instrument entered into by the Company that qualifies for hedge accounting is expected to be highly effective at reducing the risk associated with the exposure being hedged. For each derivative that is designated as a hedge, the Company documents the related risk management objective and strategy, including identification of the hedging instrument, the hedged item and the risk exposure, as well as how hedge effectiveness will be assessed over the term of the instrument. The extent to which a hedging instrument has been and is expected to remain highly effective in achieving offsetting changes in fair value or cash flows is assessed and documented by the Company on at least a quarterly basis.

If it is determined that a derivative instrument has not been highly effective, and will continue not to be highly effective in hedging the designated exposure, hedge accounting is discontinued and further gains (losses) are recognized in earnings within foreign currency gains (losses). Upon discontinuance of hedge accounting, the cumulative change in fair value of cash flow derivatives previously recorded in AOCI is recognized in earnings when the related hedged item affects earnings, consistent with the original hedging strategy, unless the forecasted transaction is no longer probable of occurring, in which case the accumulated amount is immediately recognized in earnings within foreign currency gains (losses).

As a result of the use of derivative instruments, the Company may be exposed to the risk that the counterparties to such contacts will fail to meet their contractual obligations. To mitigate this counterparty credit risk, the Company has a policy of only entering into contracts with carefully selected financial institutions based upon an evaluation of their credit ratings, among other factors.

The fair values of the Company’s derivative instruments are recorded on its Consolidated Balance Sheets on a gross basis. For cash flow reporting purposes, the Company classifies proceeds received or amounts paid upon the settlement of a derivative instrument in the same manner as the related item being hedged, primarily within cash from operating activities.

Hedging Portfolio

The Company enters into forward currency contracts primarily to reduce its risks related to exchange rate fluctuations on foreign currency denominated inventory transactions, as well as various cross-currency intercompany loans and payables. To the extent its derivative contracts designated as cash flow hedges are highly effective in offsetting changes in the value of the hedged items, the related gains (losses) are initially deferred in AOCI and subsequently recognized in the Consolidated Statements of Operations as part of the cost of the inventory purchases being hedged within Cost of sales, when the related inventory is sold to a third party. Current maturity dates range from July 2022 to June 2023. Forward foreign currency exchange contracts designated as fair value hedges and associated with intercompany and other contractual obligations are recognized within foreign currency gains (losses) generally in the period in which the related balances being hedged are revalued. The maturity date of most instruments held as of July 2, 2022 are in August 2022, and such contracts are typically renewed upon maturity if the related balance has not been settled. The Company also enters into cross-currency swaps to reduce its risks related to exchange rate fluctuations on net investments in foreign subsidiaries. The related gains (losses) are deferred in AOCI until the net investment is sold or liquidated, and current maturity dates range from April 2025 to March 2032.

Foreign Currency

The functional currency of the Company's foreign operations is generally the applicable local currency. Assets and liabilities are translated into U.S. dollars using the current exchange rates in effect at the balance sheet date, while revenues and expenses are translated at the weighted-average exchange rates for the period. The resulting translation adjustments are included in the Consolidated Statements of Comprehensive Income as a component of Other comprehensive income (loss) (“OCI”) and in the Consolidated Statements of Equity within AOCI.

The Company recognizes gains and losses on transactions that are denominated in a currency other than the respective entity's functional currency in earnings. Foreign currency transaction gains and losses also include amounts realized on the settlement of certain intercompany loans with foreign subsidiaries.

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In December 2019, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes". The ASU simplifies the accounting for income taxes by, among other things, eliminating certain existing exceptions related to the general approach in Topic 740 relating to franchise taxes, reducing complexity in the interim-period accounting for year-to-date loss limitations and changes in tax laws, and clarifying the accounting for the step-up in the tax basis of goodwill. The Company adopted ASU 2019-12 as of the beginning of fiscal 2022. The adoption of ASU 2019-12 did not have a material impact on the Company's consolidated financial statements and notes thereto.

Recently Issued Accounting Pronouncements Not Yet Adopted

The Company has considered all new accounting pronouncements and has concluded that there are no new pronouncements that may have a material impact on our results of operations, financial condition or cash flows based on current information.

4. REVENUE

The Company recognizes revenue primarily from sales of the products of its brands through retail and wholesale channels, including e-commerce sites. The Company also generates revenue from royalties related to licensing its trademarks, as well as sales in ancillary channels. In all cases, revenue is recognized upon the transfer of control of the promised products or services to the customer, which may be at a point in time or over time. Control is transferred when the customer obtains the ability to direct the use of and obtain substantially all of the remaining benefits from the products or services. The amount of revenue recognized is the amount of consideration to which the Company expects to be entitled, including estimation of sale terms that may create variability in the consideration. Revenue subject to variability is constrained to an amount which will not result in a significant reversal in future periods when the contingency that creates variability is resolved.

The Company recognizes revenue in its retail stores, including concession shop-in-shops, at the point-of-sale when the customer obtains physical possession of the products. Digital revenue from sales of products ordered through the Company's e-commerce sites is recognized upon delivery and receipt of the shipment by its customers and includes shipping and handling charges paid by customers. Retail and digital revenues are recorded net of estimated returns, which are estimated by developing an expected value based on historical experience. Payment is due at the point of sale.

Gift cards issued by the Company are recorded as a liability until redeemed by the customer, at which point revenue is recognized. The Company also uses historical information to estimate the amount of gift card balances that will never be redeemed and recognizes that amount as revenue over time in proportion to actual customer redemptions if the Company does not have a legal obligation to remit unredeemed gift cards to any jurisdiction as unclaimed property.

Certain of the Company's retail operations use sales incentive programs, such as customer loyalty programs and the issuance of coupons. Loyalty programs provide the customer a material right to acquire additional products and give rise to the Company having a separate performance obligation. Additionally, certain products sold by the Company include an assurance warranty that is not considered a separate performance obligation. These programs are immaterial individually and in the aggregate.

The Company recognizes revenue within the wholesale channel at the time title passes and risk of loss is transferred to customers, which is generally at the point of shipment of products but may occur upon receipt of the shipment by the customer in certain cases. Payment is generally due 30 to 90 days after shipment. Wholesale revenue is recorded net of estimates for returns, discounts, end-of-season markdowns, cooperative advertising allowances and other consideration provided to the customer. Discounts are based on contract terms with the customer, while cooperative advertising allowances and other consideration may be based on contract terms or negotiated on a case by case basis. Returns and markdowns generally require approval from the Company and are estimated based on historical trends, current season results and inventory positions at the wholesale locations, current market and economic conditions as well as, in select cases, contractual terms. The Company's historical estimates of these variable amounts have not differed materially from actual results.

The Company recognizes licensing revenue over time during the contract period in which licensees are granted access to the Company's trademarks. These arrangements require licensees to pay a sales-based royalty and may include a contractually guaranteed minimum royalty amount. Revenue for contractually guaranteed minimum royalty amounts is recognized ratably over the license year and any excess sales-based royalties are recognized as earned once the minimum royalty threshold is achieved. Payments from the customer are generally due quarterly in an amount based on the licensee's sales of goods bearing

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

the licensed trademarks during the period, which may differ from the amount of revenue recorded during the period thereby generating a contract asset or liability. Contract assets and liabilities and contract costs related to the licensing arrangements are immaterial as the licensing business represents approximately 1% of total net sales in the fiscal year ended July 2, 2022.

The Company has elected a practical expedient not to disclose the remaining performance obligations that are unsatisfied as of the end of the period related to contracts with an original duration of one year or less or variable consideration related to sales-based royalty arrangements. There are no other contracts with transaction price allocated to remaining performance obligations other than future minimum royalties as discussed above, which are not material.

Other practical expedients elected by the Company include (i) assuming no significant financing component exists for any contract with a duration of one year or less, (ii) accounting for shipping and handling as a fulfillment activity within SG&A expense regardless of the timing of the shipment in relation to the transfer of control and (iii) excluding sales and value added tax from the transaction price.

Disaggregated Net Sales

The following table disaggregates the Company's net sales into geographies that depict how economic factors may impact the revenues and cash flows for the periods presented. Each geography presented includes net sales related to the Company's directly operated channels, global travel retail business and to wholesale customers, including distributors, in locations within the specified geographic area.

			North America						Greater China**(1)**						Other Asia**(2)**						Other**(3)**						Total
			(millions)
Fiscal 2022
Coach			$	3,102.8					$	892.2					$	691.3					$	235.0					$	4,921.3
Kate Spade			1,156.7						41.7						139.0						108.1						1,445.5
Stuart Weitzman			189.9						92.7						0.4						34.7						317.7
Total			$	4,449.4					$	1,026.6					$	830.7					$	377.8					$	6,684.5
Fiscal 2021
Coach			$	2,466.3					$	930.6					$	666.3					$	189.9					$	4,253.1
Kate Spade			936.7						55.2						134.7						83.4						1,210.0
Stuart Weitzman			139.4						108.3						4.0						31.5						283.2
Total			$	3,542.4					$	1,094.1					$	805.0					$	304.8					$	5,746.3
Fiscal 2020
Coach			$	2,015.5					$	600.8					$	691.0					$	218.4					$	3,525.7
Kate Spade			889.4						48.3						141.6						70.2						1,149.5
Stuart Weitzman			146.2						81.2						18.3						40.5						286.2
Total			$	3,051.1					$	730.3					$	850.9					$	329.1					$	4,961.4

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

(2) Other Asia includes Japan, Malaysia, Australia, New Zealand, South Korea, Singapore and other countries within Asia.

(3) Other sales primarily represents sales in Europe, the Middle East and royalties earned from the Company's licensing partners.

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

Deferred Revenue

Deferred revenue results from cash payments received or receivable from customers prior to the transfer of the promised goods or services, and is primarily related to unredeemed gift cards, net of breakage which has been recognized. Additional deferred revenue may result from sales-based royalty payments received or receivable which exceed the revenue recognized during the contractual period. The balance of such amounts as of July 2, 2022 and July 3, 2021 was $41.5 million and $32.4 million, respectively, which were primarily recorded within Accrued liabilities on the Company's Consolidated Balance Sheets and are generally expected to be recognized as revenue within a year. For the fiscal year ended July 2, 2022, net sales of $16.8 million were recognized from amounts recorded as deferred revenue as of July 3, 2021. For the fiscal year ended July 3, 2021, net sales of $12.5 million were recognized from amounts recorded as deferred revenue as of June 27, 2020.

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

5. RESTRUCTURING ACTIVITIES

Acceleration Program

Starting in fiscal 2020, the Company embarked on a strategic growth plan after undergoing a review of its business under its multi-year growth agenda. This multi-faceted, multi-year strategic growth plan (the "Acceleration Program") reflects: (i) actions to streamline the Company's organization; (ii) select store closures as the Company optimizes its fleet (including store closure costs incurred as the Company exits certain regions in which it currently operates); and (iii) professional fees and share-based compensation costs incurred as a result of the development and execution of the Company's comprehensive strategic initiatives aimed at increasing profitability. Since inception in fiscal 2020, the Company incurred total pre-tax charges of $219.4 million. The Company does not expect to incur further expenses related to the Acceleration Program in fiscal 2023.

Under the Acceleration Program, the Company incurred charges of $42.8 million during the fiscal year ended July 2, 2022, all of which was recorded within SG&A expenses. Of the $42.8 million recorded within SG&A expenses, $26.6 million was recorded within Corporate, $6.7 million was recorded within the Coach segment, $5.9 million was recorded within the Kate Spade segment and $3.6 million was recorded within the Stuart Weitzman segment.

During the fiscal year ended July 3, 2021, the Company incurred charges of $89.6 million, all of which was recorded within SG&A expenses. Of the $89.6 million recorded within SG&A, $65.8 million was recorded within Corporate, $21.9 million was recorded within the Coach segment, $4.4 million was recorded within the Kate Spade segment and a reduction of expense of $2.5 million was recorded within the Stuart Weitzman segment.

During the fiscal year ended June 27, 2020, the Company incurred charges of $87.0 million, of which $8.4 million was recorded within Cost of sales and $78.6 million was recorded within SG&A expenses. Of the $8.4 million recorded within Cost of sales, $8.4 million was recorded within the Stuart Weitzman segment. Of the $78.6 million recorded within SG&A expenses, $28.9 million was recorded within Corporate, $18.5 million was recorded within the Coach segment, $17.6 million was recorded within the Stuart Weitzman segment and $13.6 million was recorded within the Kate Spade segment.

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

			Organization-Related**(1)**						Store Closure**(2)**						Other**(3)**						Total
			(millions)
Fiscal 2020 charges			$	44.7					$	32.3					$	10.0					$	87.0
Cash payments			(15.8)						(11.0)						(7.1)						(33.9)
Non-cash charges			(4.0)						(20.8)						—						(24.8)
Liability balance as of June 27, 2020			$	24.9					$	0.5					$	2.9					$	28.3
Fiscal 2021 charges			$	16.6					$	5.9					$	67.1					$	89.6
Cash payments			(38.2)						(11.9)						(36.6)						(86.7)
Non-cash charges			—						5.8						(10.9)						(5.1)
Liability balance as of July 3, 2021			$	3.3					$	0.3					$	22.5					$	26.1
Fiscal 2022 charges			$	0.5					$	3.9					$	38.4					$	42.8
Cash payments			(2.7)						(6.4)						(38.2)						(47.3)
Non-cash charges			—						2.4						(17.2)						(14.8)
Liability balance as of July 2, 2022			$	1.1					$	0.2					$	5.5					$	6.8

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

(2) Store closure charges represent lease termination penalties, removal or modification of lease assets and liabilities, establishing inventory reserves, accelerated depreciation and severance.

(3) Other charges, recorded within SG&A, primarily relates to share-based compensation and professional fees.

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

6. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The components of Accumulated other comprehensive income (loss), as of the dates indicated, are as follows:

			Unrealized Gains (Losses) on Cash Flow Hedging Derivatives**(1)**						Unrealized Gains (Losses) on Available-for-Sale Investments									Cumulative Translation Adjustment**(2)**						Total
			(millions)
Balances at June 27, 2020			$	1.1					$	—								$	(93.3)					$	(92.2)
Other comprehensive income (loss) before reclassifications			(6.6)						—									22.0						15.4
Less: amounts reclassified from accumulated other comprehensive income (loss)			(4.8)						—									—						(4.8)
Net current-period other comprehensive income (loss)			(1.8)						—									22.0						20.2
Balances at July 3, 2021			$	(0.7)					$	—								$	(71.3)					$	(72.0)
Other comprehensive income (loss) before reclassifications			(4.2)						(0.5)									(96.8)						(101.5)
Less: amounts reclassified from accumulated other comprehensive income (loss)			(2.6)						—									—						(2.6)
Net current-period other comprehensive income (loss)			(1.6)						(0.5)									(96.8)						(98.9)
Balances at July 2, 2022			$	(2.3)					$	(0.5)								$	(168.1)					$	(170.9)

(1) The ending balances of AOCI related to cash flow hedges are net of tax of $0.9 million and $0.3 million as of July 2, 2022 and July 3, 2021, respectively. The amounts reclassified from AOCI are net of tax of $0.8 million and $0.1 million as of July 2, 2022 and July 3, 2021, respectively.

(2) As of July 2, 2022, OCI before reclassifications includes a net loss of $7.6 million related to changes in the fair values of instruments designated as hedges of the Company's net investment in certain foreign operations. The ending balances of AOCI related to net investment hedges are net of tax of $(11.4) million as of July 2, 2022 and as the Company began entering into net investment hedges in Fiscal 2022, there was no balance as of July 3, 2021.

7. SHARE-BASED COMPENSATION

The Company maintains several share-based compensation plans which are more fully described below. The following table shows the total compensation cost charged against income for these plans and the related tax benefits recognized in the Consolidated Statements of Operations:

			July 2, 2022						July 3, 2021						June 27, 2020
			(millions)
Share-based compensation expense(1)			$	89.4					$	74.9					$	66.9
Income tax benefit related to share-based compensation expense			15.2						12.9						13.8

(1) During the fiscal year ended July 2, 2022, the Company incurred $17.2 million of share-based compensation expense related to its Acceleration Program. During the fiscal year ended July 3, 2021, the Company incurred $10.8 million of share-based compensation expense related to Acceleration Program. During the fiscal year ended June 27, 2020, the Company incurred $9.8 million of share-based compensation expense related to its organization-related and integration activities and $4.0 million of share-based compensation expense related to its Acceleration Program. Refer to Note 5, "Restructuring Activities," for further information.

Stock-Based Plans

The Company maintains the Amended and Restated Tapestry, Inc. 2018 Stock Incentive Plan to award stock options and shares to certain members of management and the outside members of its Board of Directors (“Board”). The Company

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

maintains the 2010 Stock Incentive Plan for awards granted prior to the establishment of the 2018 Stock Incentive Plan. These plans were approved by the Company's stockholders. The exercise price of each stock option equals 100% of the market price of the Company's stock on the date of grant and generally has a maximum term of 10 years. Stock options and service based share awards that are granted as part of the annual compensation process generally vest ratably over four years. Stock option and share awards are subject to forfeiture until completion of the vesting period, which ranges from one to four years. The Company issues new shares upon the exercise of stock options or vesting of share awards.

Stock Options

A summary of stock option activity during the fiscal year ended July 2, 2022 is as follows:

			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 3, 2021			13.3						$	35.99
Granted			0.7						42.27
Exercised			(2.2)						33.70
Forfeited or expired			(1.8)						48.94
Outstanding at July 2, 2022			10.0						34.52						5.4						$	49.9
Vested and expected to vest at July 2, 2022			10.0						34.61						5.3						49.0
Exercisable at July 2, 2022			6.5						39.32						4.0						15.7

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model and the following weighted-average assumptions:

			July 2, 2022						July 3, 2021						June 27, 2020
Expected term (years)			5.0						5.1						5.1
Expected volatility			46.9		%				48.8		%				37.6		%
Risk-free interest rate			0.8		%				0.3		%				1.5		%
Dividend yield			2.4		%				—		%				6.3		%

The expected term of options represents the period of time that the options granted are expected to be outstanding and is based on historical experience. Expected volatility is based on historical volatility of the Company’s stock as well as the implied volatility from publicly traded options on the Company's stock. The risk free interest rate is based on the zero-coupon U.S. Treasury issue as of the date of the grant. Dividend yield is based on the expected annual dividend per share and the Company’s stock price as of the grant date.

The weighted-average grant-date fair value of options granted during fiscal 2022, fiscal 2021 and fiscal 2020 was $13.94, $7.54 and $3.83, respectively. The total intrinsic value of options exercised during fiscal 2022, fiscal 2021 and fiscal 2020 was $17.5 million, $17.0 million and $0.0 million, respectively. The total cash received from option exercises was $71.3 million, $58.1 million and $0.1 million in fiscal 2022, fiscal 2021 and fiscal 2020, respectively, and the cash tax benefit realized for the tax deductions from these option exercises was $3.7 million, $3.7 million and $0.0 million, respectively.

At July 2, 2022, $16.7 million of total unrecognized compensation cost related to non-vested stock option awards is expected to be recognized over a weighted-average period of 1.3 years.

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

Service-based Restricted Stock Unit Awards (“RSUs”)

A summary of service-based RSU activity during the year ended July 2, 2022 is as follows:

			Number of Non-vested RSUs						Weighted- Average Grant- Date Fair Value per RSU
			(millions)
Non-vested at July 3, 2021			7.3						$	21.11
Granted			1.9						41.70
Vested			(2.2)						25.00
Forfeited			(0.6)						24.62
Non-vested at July 2, 2022			6.4						25.15

At July 2, 2022, $94.1 million of total unrecognized compensation cost related to non-vested share awards is expected to be recognized over a weighted-average period of 1.3 years.

The weighted-average grant-date fair value of share awards granted during fiscal 2022, fiscal 2021 and fiscal 2020 was $41.70, $16.40 and $21.31, respectively. The total fair value of shares vested during fiscal 2022, fiscal 2021 and fiscal 2020 was $92.5 million, $26.3 million and $33.5 million, respectively.

Performance-based Restricted Stock Unit Awards (“PRSU”)

The Company grants PRSUs to key executives, the vesting of which is subject to the executive’s continuing employment and the Company's achievement of certain performance goals. A summary of PRSU activity during the fiscal year ended July 2, 2022 is as follows:

			Number of Non-vested PRSUs						Weighted- Average Grant- Date Fair Value per PRSU
			(millions)
Non-vested at July 3, 2021			1.0						$	20.82
Granted			0.3						41.86
Change due to performance condition achievement			(0.1)						48.38
Vested			—						—
Forfeited			—						—
Non-vested at July 2, 2022			1.2						23.52

At July 2, 2022, $17.6 million of total unrecognized compensation cost related to non-vested share awards is expected to be recognized over a weighted-average period of 1.1 years.

The weighted-average grant-date fair value per share of PRSU awards granted during fiscal 2022, fiscal 2021 and fiscal 2020 was $41.86, $16.83 and $21.43, respectively. The total fair value of awards that vested during fiscal 2022, fiscal 2021 and fiscal 2020 was $0.0 million, $3.7 million and $8.3 million, respectively.

PRSUs are subject to a two-year and three-year cliff vesting contingent on the employee's continuing employment and the Company's achievement of the performance goals established at the beginning of the performance period. The fair value of the PRSU's is based on the price of the Company's common stock on the date of grant.

In fiscal 2022, fiscal 2021 and fiscal 2020, the cash tax benefit realized for the tax deductions from all RSUs (service and performance-based) was $17.4 million, $6.2 million and $8.8 million, respectively.

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

Employee Stock Purchase Plan

Under the 2001 Employee Stock Purchase Plan, eligible employees are permitted to purchase a limited number of Company common shares at 85% of market value. Under this plan, the Company sold 0.1 million, 0.2 million and 0.2 million shares to employees in fiscal 2022, fiscal 2021 and fiscal 2020, respectively. Compensation expense is calculated for the fair value of employees’ purchase rights using the Black-Scholes model and the following weighted-average assumptions:

			Fiscal Year Ended
			July 2, 2022						July 3, 2021						June 27, 2020
Expected term (years)			0.5						0.5						0.5
Expected volatility			38.2		%				81.6		%				50.2		%
Risk-free interest rate			0.1		%				0.1		%				1.9		%
Dividend yield			1.5		%				—		%				4.9		%

The weighted-average fair value of the purchase rights granted during fiscal 2022, fiscal 2021 and fiscal 2020 was $10.71, $7.39 and $7.75, respectively. The Company issues new shares for employee stock purchases.

8. INVESTMENTS

The following table summarizes the Company’s primarily U.S. dollar-denominated investments, recorded within the Consolidated Balance Sheets as of July 2, 2022 and July 3, 2021:

			July 2, 2022																		July 3, 2021
			Short-term						Long-term**(3)**						Total						Short-term						Long-term(3)						Total
			(millions)
Available-for-sale investments:
Commercial paper(1)			$	59.6					$	—					$	59.6					$	—					$	—					$	—
Government securities – U.S.(2)			39.4						—						39.4						—						—						—
Corporate debt securities – U.S.(2)			55.2						—						55.2						—						—						—
Available-for-sale investments, total			$	154.2					$	—					$	154.2					$	—					$	—					$	—
Other:
Time deposits(1)			0.6						—						0.6						0.7						—						0.7
Other			8.6						0.1						8.7						7.4						0.1						7.5
Total Investments			$	163.4					$	0.1					$	163.5					$	8.1					$	0.1					$	8.2

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

(2)These securities as of July 2, 2022 have maturity dates during fiscal 2023 and are recorded at fair value.

(3)Long-term investments are presented within Other assets on the Consolidated Balance Sheets.

There were no material gross unrealized gains or losses on available-for-sale investments as of the periods ended July 2, 2022 and July 3, 2021.

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

9. LEASES

The Company leases retail space, office space, warehouse facilities, fulfillment centers, storage space, machinery, equipment and certain other items under operating leases. The Company's leases have initial terms ranging from 1 to 20 years and may have renewal or early termination options ranging from 1 to 10 years. These leases may also include rent escalation clauses or lease incentives. In determining the lease term used in the lease ROU asset and lease liability calculations, the Company considers various factors such as market conditions and the terms of any renewal or termination options that may exist. When deemed reasonably certain, the renewal and termination options are included in the determination of the lease term and calculation of the lease ROU asset and lease liability. The Company is typically required to make fixed minimum rent payments, variable rent payments primarily based on performance (i.e., percentage-of-sales-based payments), or a combination thereof, directly related to its ROU asset. The Company is also often required, by the lease, to pay for certain other costs including real estate taxes, insurance, common area maintenance fees, and/or certain other costs, which may be fixed or variable, depending upon the terms of the respective lease agreement. To the extent these payments are fixed, the Company has included them in calculating the lease ROU assets and lease liabilities.

The Company calculates lease ROU assets and lease liabilities as the present value of fixed lease payments over the reasonably certain lease term beginning at the commencement date. The Company is required to use the implicit rate to determine the present value of lease payments. As the rate implicit in the Company's leases is not readily determinable, the Company uses its incremental borrowing rate based on the information available at the lease commencement date, including the Company's credit rating, credit spread and adjustments for the impact of collateral, lease tenors, economic environment and currency.

For operating leases, fixed lease payments are recognized as operating lease cost on a straight-line basis over the lease term. For finance leases and impaired operating leases, the ROU asset is depreciated on a straight-line basis over the remaining lease term, along with recognition of interest expense associated with accretion of the lease liability. For leases with a lease term of 12 months or less ("short-term lease"), any fixed lease payments are recognized on a straight-line basis over such term, and are not recognized on the Consolidated Balance Sheets. Variable lease cost for both operating and finance leases, if any, is recognized as incurred.

The Company acts as sublessor in certain leasing arrangements, primarily related to a sublease of a portion of the Company's leased headquarters space as well as certain retail locations. Fixed sublease payments received are recognized on a straight-line basis over the sublease term.

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

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

The following table summarizes the ROU assets and lease liabilities recorded on the Company's Consolidated Balance Sheet as of July 2, 2022 and July 3, 2021:

						July 2, 2022						July 3, 2021						Location Recorded on Balance Sheet
						(millions)
Assets:
Operating leases						$	1,281.6					$	1,496.6					Operating lease right-of-use assets
Finance leases						1.9						2.6						Property and equipment, net
Total lease assets						$	1,283.5					$	1,499.2
Liabilities:
Operating leases:
Current lease liabilities						$	288.7					$	319.4					Current lease liabilities
Long-term lease liabilities						1,282.3						1,525.9						Long-term lease liabilities
Total operating lease liabilities						$	1,571.0					$	1,845.3
Finance leases:
Current lease liabilities						$	1.1					$	1.0					Accrued liabilities
Long-term lease liabilities						2.4						3.4						Other liabilities
Total finance lease liabilities						$	3.5					$	4.4
Total lease liabilities						$	1,574.5					$	1,849.7

The following table summarizes the composition of net lease costs, primarily recorded within SG&A expenses on the Company's Consolidated Statement of Operations for the fiscal year ended July 2, 2022 and July 3, 2021:

						Fiscal Year Ended
						July 2, 2022						July 3, 2021
						(millions)
Finance lease cost:
Amortization of right-of-use assets						$	0.9					$	0.8
Interest on lease liabilities(1)						0.5						0.6
Total finance lease cost						1.4						1.4
Operating lease cost						331.9						348.7
Short-term lease cost						23.5						23.0
Variable lease cost(2)						203.0						115.7
Operating lease right-of-use impairment(3)						0.9						48.3
Less: sublease income						(19.7)						(20.2)
Total net lease cost						$	541.0					$	516.9

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

(2) Rent concessions negotiated related to Covid-19 are recorded in variable lease cost.

(3) Operating lease right-of-use impairment includes charges under the Acceleration Program for the year ended July 3, 2021.

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

The following table summarizes certain cash flow information related to the Company's leases for the fiscal year ended July 2, 2022 and July 3, 2021:

						Fiscal Year Ended
						July 2, 2022						July 3, 2021
						(millions)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases						$	418.3					$	487.6
Operating cash flows from finance leases						0.5						0.6
Financing cash flows from finance leases						0.9						0.8
Non-cash transactions:
Right-of-use assets obtained in exchange for operating lease liabilities						111.7						62.3
Right-of-use assets obtained in exchange for finance lease liabilities						—						—

The following table provides a maturity analysis of the Company's lease liabilities recorded on the Consolidated Balance Sheet as of July 2, 2022:

						July 2, 2022
						Operating Leases						Finance Leases						Total
						(millions)
Fiscal 2023						$	358.8					$	1.4					$	360.2
Fiscal 2024						298.5						1.4						299.9
Fiscal 2025						236.7						1.3						238.0
Fiscal 2026						192.4						—						192.4
Fiscal 2027						159.4						—						159.4
Fiscal 2028 and thereafter						637.6						—						637.6
Total lease payments						1,883.4						4.1						1,887.5
Less: imputed interest						(312.4)						(0.6)						(313.0)
Total lease liabilities						$	1,571.0					$	3.5					$	1,574.5

The future minimum fixed sublease receipts under non-cancelable operating lease agreements as of July 2, 2022 are as follows:

						July 2, 2022
						(millions)
Fiscal 2023						$	16.3
Fiscal 2024						16.7
Fiscal 2025						16.6
Fiscal 2026						14.8
Fiscal 2027						14.8
Fiscal 2028 and thereafter						142.3
Total sublease income						$	221.5

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

The following table summarizes the weighted-average remaining lease terms and weighted-average discount rates related to the Company's operating leases and finance leases recorded on the Consolidated Balance Sheet as of July 2, 2022 and July 3, 2021:

						July 2, 2022						July 3, 2021
Weighted average remaining lease term (years):
Operating leases						8.0						8.3
Finance leases						2.9						3.9
Weighted average discount rate:
Operating leases						3.9		%				3.8		%
Finance leases						11.3		%				11.3		%

Additionally, the Company had approximately $181.4 million of future payment obligations related to executed lease agreements for which the related lease had not yet commenced as of July 2, 2022. This obligation primarily relates to a lease agreement for a fulfillment center to be located in Las Vegas, Nevada.

10. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

The following tables provide information related to the Company's derivative instruments recorded on the Company's Consolidated Balance Sheets as of July 2, 2022 and July 3, 2021:

						Notional Value												Derivative Assets																		Derivative Liabilities
Designated Derivative Hedging Instruments																								Fair Value																		Fair Value
			July 2, 2022						July 3, 2021						Balance Sheet Classification						July 2, 2022						July 3, 2021						Balance Sheet Classification						July 2, 2022						July 3, 2021
						(millions)
FC - Inventory purchases(1)						$	41.5					$	61.4					Other Current Assets						$	—					$	—					Accrued Liabilities						$	2.7					$	1.2
FC - Intercompany liabilities and loans(2)						274.1						248.2						Other Current Assets						0.4						0.3						Accrued Liabilities						0.5						—
CCS - Net investment hedges(3)						1,200.0						—						Other Assets						47.8						—						Other Liabilities						44.0						—
Total Hedges						$	1,515.6					$	309.6											$	48.2					$	0.3											$	47.2					$	1.2

(1)Represents forward foreign currency exchange contracts ("FC") designated as derivative instruments in cash flow hedging relationships.

(2)Represents forward foreign currency exchange contracts ("FC") designated as derivative instruments in fair value hedging relationships.

(3)Represents cross currency swap contracts ("CCS") designated as derivative instruments in net investment hedging relationships.

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

The following tables provides the pretax impact of gains and losses from the Company's designated derivative instruments on its Consolidated Financial Statements for the fiscal years ended July 2, 2022, July 3, 2021 and June 27, 2020:

						Amount of Gain (Loss) Recognized in OCI on Derivatives
						Fiscal Year Ended
						July 2, 2022						July 3, 2021						June 27, 2020
						(millions)
Cash flow hedges:
Inventory purchases(1)						$	(5.6)					$	(7.2)					$	(7.9)
Cash flow hedges, total						$	(5.6)					$	(7.2)					$	(7.9)
Fair value hedges:
Intercompany liabilities & loans(2)						—						—						—
Fair value hedges, total						$	—					$	—					$	—
Other:
Net investment hedges						3.8						—						—
Other, total						$	3.8					$	—					$	—
Total hedges						$	(1.8)					$	(7.2)					$	(7.9)

						Amount of Gain (Loss) Reclassified from Accumulated OCI into Income
						Statement of Operations Classification						Fiscal Year Ended
						July 2, 2022						July 3, 2021						June 27, 2020
												(millions)
Cash flow hedges:
Inventory purchases(1)						Cost of Sales						$	(3.4)					$	(4.9)					$	(12.4)
Total hedges												$	(3.4)					$	(4.9)					$	(12.4)

For forward foreign currency exchange contracts that are designated as fair value hedges, both the gain (loss) on the derivative as well as the offsetting gain (loss) on the hedged item attributable to the hedged risk are recorded within Other expense (income) on the Company's Consolidated Statement of Operations.

The Company expects that $3.6 million of net derivative gains included in Accumulated other comprehensive income at July 2, 2022 will be reclassified into earnings within the next 12 months. This amount will vary due to fluctuations in foreign currency exchange rates.

The Company assesses the cross-currency swaps used as a net investment hedges under the spot method. This results in the cross-currency basis spread being excluded from the assessment of hedge effectiveness, and recorded as incurred as a reduction in interest expense in the Company’s consolidated statements of operations. Accordingly, the Company recorded net interest income of $2.2 million during Fiscal 2022.

11. FAIR VALUE MEASUREMENTS

The Company categorizes its assets and liabilities, based on the priority of the inputs to the valuation technique, into a three-level fair value hierarchy as set forth below. The three levels of the hierarchy are defined as follows:

Level 1 — Unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2 — Observable inputs other than quoted prices included in Level 1. Level 2 inputs include quoted prices for identical assets or liabilities in non-active markets, quoted prices for similar assets or liabilities in active markets, and inputs other than quoted prices that are observable for substantially the full term of the asset or liability.

Level 3 — Unobservable inputs reflecting management’s own assumptions about the input used in pricing the asset or liability. The Company does not have any Level 3 investments.

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

The following table shows the fair value measurements of the Company’s financial assets and liabilities at July 2, 2022 and July 3, 2021:

			Level 1												Level 2
			July 2, 2022						July 3, 2021						July 2, 2022						July 3, 2021
			(millions)
Assets:
Cash equivalents(1)			$	99.1					$	662.0					$	10.9					$	0.4
Short-term investments:
Time deposits(2)			—						—						0.6						0.7
Commercial paper(2)			—						—						59.6						—
Government securities - U.S.(2)			39.4						—						—						—
Corporate debt securities - U.S.(2)			—						—						55.2						—
Other			—						—						8.6						7.4
Long-term investments:
Other			—						—						0.1						0.1
Derivative Assets:
Inventory-related instruments(3)			—						—						—						—
Net investment hedges(3)			—						—						47.8						—
Intercompany loans and payables(3)			—						—						0.4						0.3
Liabilities:
Derivative liabilities:
Inventory-related instruments(3)			$	—					$	—					$	2.7					$	1.2
Net investment hedges(3)			—						—						44.0						—
Intercompany loans and payables(3)			—						—						0.5						—

(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 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)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.

Refer to Note 12, "Debt," for the fair value of the Company's outstanding debt instruments.

Non-Financial Assets and Liabilities

The Company’s non-financial instruments, which primarily consist of goodwill, intangible assets, right-of-use assets and property and equipment, are not required to be measured at fair value on a recurring basis and are reported at carrying value. However, on a periodic basis whenever events or changes in circumstances indicate that their carrying value may not be fully recoverable (and at least annually for goodwill and indefinite-lived intangible assets), non-financial instruments are assessed for impairment and, if applicable, written-down to and recorded at fair value, considering market participant assumptions.

During the fiscal year ended July 2, 2022, the Company recorded $3.1 million of impairment charges to reduce the carrying amount of certain store assets within property and equipment, net to their estimated fair values. During the fiscal year ended July 3, 2021, the Company recorded $12.6 million of impairment charges to reduce the carrying amount of certain store assets within property and equipment, net to their estimated fair values.

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

During the fiscal year ended July 2, 2022, the Company recorded $0.9 million of impairment charges to reduce the carrying amount of certain operating lease right-of-use assets to their estimated fair values. During the fiscal year ended July 3, 2021, the Company recorded $48.3 million of impairment charges to reduce the carrying amount of certain operating lease right-of-use assets to their estimated fair values.

The fair value of store assets were determined based on Level 3 measurements. Inputs to these fair value measurements included estimates of the amounts and the timing of the stores' net future discounted cash flows based on historical experience, current trends and market conditions.

During the fiscal year ended June 27, 2020, the Company recorded a full impairment of $267.0 million to the Stuart Weitzman indefinite-lived brand intangibles, and a full impairment of $210.7 million to goodwill pertaining to the Stuart Weitzman reporting unit. Refer to Note 14, "Goodwill and Other Intangible Assets" for further information.

12. DEBT

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

			July 2, 2022						July 3, 2021
			(millions)
Current Debt:
Term Loan			$	31.2					$	—
Total Current Debt			$	31.2					$	—
Long-Term Debt:
Term Loan			$	468.8					$	—
3.050% Senior Notes due 2032			500.0						—
4.125% Senior Notes due 2027			396.6						600.0
3.000% Senior Notes due 2022			—						400.0
4.250% Senior Notes due 2025			303.4						600.0
Total Long-Term Debt			1,668.8						1,600.0
Less: Unamortized Discount and Debt Issuance Costs on Senior Notes			(9.6)						(9.3)
Total Long-Term Debt, net			$	1,659.2					$	1,590.7

During fiscal 2022, 2021 and 2020 the Company recognized interest expense related to the outstanding debt of $68.8 million, $73.5 million and $71.5 million, respectively.

$1.25 Billion Revolving Credit Facility and $500.0 Million Term Loan

On May 11, 2022, the Company financed and replaced the $900.0 Million Revolving Credit Facility by entering into a new credit facility that (i) includes an increased revolving credit facility (the “$1.25 Billion Revolving Credit Facility”) from $900.0 million to $1.25 billion, (ii) includes an unsecured $500.0 million Term Loan (the “Term Loan”) and (iii) redefines certain terms within the replaced Revolving Credit Facility (see “$900.0 Million Revolving Credit Facility” below). Both the $1.25 Billion Revolving Credit Facility and Term Loan (collectively, the “Credit Facilities”) will mature on May 11, 2027. The Company and its subsidiaries must comply on a quarterly basis with a maximum 4.0 to 1.0 ratio of (a) consolidated debt minus unrestricted cash and cash equivalents in excess of $300 million to (b) consolidated EBITDAR.

Borrowings under the $1.25 Billion Revolving Credit Facility bear interest at a rate per annum equal to, at the Company’s option, (i) for borrowings in U.S. Dollars, either (a) an alternate base rate or (b) a term secured overnight financing rate, (ii) for borrowings in Euros, the Euro Interbank Offered Rate, (iii) for borrowings in Pounds Sterling, the Sterling Overnight Index Average Reference Rate and (iv) for borrowings in Japanese Yen, the Tokyo Interbank Offer Rate, plus, in each case, an applicable margin. The applicable margin will be adjusted by reference to a grid (the “Pricing Grid”) based on the ratio of (a) consolidated debt to (b) consolidated EBITDAR (the “Gross Leverage Ratio”). Additionally, the Company will pay facility fees, calculated at a rate per annum determined in accordance with the Pricing Grid, on the full amount of the $1.25 Billion Revolving Credit Facility, payable quarterly in arrears, and certain fees with respect to letters of credit that are issued. The $1.25 Billion Revolving Credit Facility may be used to finance the working capital needs, capital expenditures, permitted

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

investments, share purchases, dividends and other general corporate purposes of the Company and its subsidiaries (which may include commercial paper backup). There were no outstanding borrowings on the $1.25 Billion Revolving Credit Facility as of July 2, 2022.

The Term Loan includes up to a two-month delayed draw period from the closing date. On June 14, 2022 the Company drew down on the Term Loan to satisfy the Company’s remaining obligations under the 3.000% senior unsecured notes due 2022 and for general corporate purposes. The Term Loan amortizes in an amount equal to 5.00% per annum, with payments made quarterly. Borrowings under the Term Loan bear interest at a rate per annum equal to, at the Company’s option, either (i) an alternate base rate or (ii) a term secured overnight financing rate plus, in each case, an applicable margin. The applicable margin will be adjusted by reference to a pricing grid based on the Gross Leverage Ratio. Additionally, the Company will pay a ticking fee on the undrawn amount of the Term Loan.

3.050% Senior Notes due 2032

On December 1, 2021, the Company issued $500.0 million aggregate principal amount of 3.050% senior unsecured notes due March 15, 2032 at 99.705% of par (the "2032 Senior Notes"). Interest is payable semi-annually on March 15 and September 15 beginning March 15, 2022. Prior to December 15, 2031 (the date that is three months prior to the scheduled maturity date), the Company may redeem the 2032 Senior Notes in whole or in part, at its option at any time or from time to time, at a redemption price equal to the greater of (1) 100% of the principal amount of the 2032 Senior Notes to be redeemed or (2) as determined by a Quotation Agent, the sum of the present values of the remaining scheduled payments of principal and interest thereon that would have been payable in respect of the 2032 Senior Notes calculated as if the maturity date of the 2032 Senior Notes was December 15, 2031 (not including any portion of payments of interest accrued to the date of redemption), discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Adjusted Treasury Rate (as defined in the Prospectus Supplement) plus 25 basis points, plus, in the case of each of (1) and (2), accrued and unpaid interest to the redemption date.

Cash Tender Offer

On December 1, 2021, the proceeds from the 2032 Senior Notes were utilized to complete a cash tender offer of $203.4 million and $296.6 million of the outstanding aggregate principal amount of the Company's 2027 Senior Notes (defined below under "4.125% Senior Notes due 2027") and 2025 Senior Notes (defined below under "4.250% Senior Notes due 2025"), respectively. As a result of these cash tender offers completed prior to their scheduled maturities, the transactions were subject to a premium of $22.4 million and $26.8 million for the 2027 Senior Notes and 2025 Senior Notes, respectively. Additionally, the Company recognized $4.5 million of debt issuance costs, tender fees, and unamortized original discount in connection with the transaction. These premiums and costs, which totaled $53.7 million, were recorded as a pre-tax debt extinguishment charge during the second quarter of fiscal 2022. Refer to the fiscal 2022, "GAAP to Non-GAAP Reconciliation," in Item 7. "Management’s Discussion and Analysis of Financial Condition and Results of Operations" for additional information.

4.125% Senior Notes due 2027

On June 20, 2017, the Company issued $600.0 million aggregate principal amount of 4.125% senior unsecured notes due July 15, 2027 at 99.858% of par (the "2027 Senior Notes"). Interest is payable semi-annually on January 15 and July 15 beginning January 15, 2018. Prior to April 15, 2027 (the date that is three month prior to the scheduled maturity date), the Company may redeem the 2027 Senior Notes in whole or in part, at its option at any time or from time to time, at a redemption price equal to the greater of (1) 100% of the principal amount of the 2027 Senior Notes to be redeemed or (2) as determined by a Quotation Agent, the sum of the present values of the remaining scheduled payments of principal and interest thereon that would have been payable in respect of the 2027 Senior Notes calculated as if the maturity date of the 2027 Senior Notes was April 15, 2027 (not including any portion of payments of interest accrued to the date of redemption), discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Adjusted Treasury Rate (as defined in the Prospectus Supplement) plus 30 basis points, plus, in the case of each of (1) and (2), accrued and unpaid interest to the redemption date. On December 1, 2021, the Company completed a cash tender offer for $203.4 million of the outstanding aggregate principal amount of its 2027 Senior Notes.

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

3.000% Senior Notes due 2022

On June 20, 2017, the Company issued $400.0 million aggregate principal amount of 3.000% senior unsecured notes due July 15, 2022 at 99.505% of par (the "2022 Senior Notes"). Interest is payable semi-annually on January 15 and July 15 beginning January 15, 2018. On June 15, 2022 (the “Redemption Date”), the Company utilized the proceeds from the Term Loan to complete the full redemption of $400.0 million in aggregate principal amount of the 2022 Senior Notes at a redemption price equal to 100.00% of the principal amount of the Notes redeemed, plus accrued and unpaid interest to the Redemption Date of $5.0 million.

4.250% Senior Notes due 2025

On March 2, 2015, the Company issued $600.0 million aggregate principal amount of 4.250% senior unsecured notes due April 1, 2025 at 99.445% of par (the “2025 Senior Notes”). Interest is payable semi-annually on April 1 and October 1 beginning October 1, 2015. Prior to January 1, 2025 (90 days prior to the scheduled maturity date), the Company may redeem the 2025 Senior Notes in whole or in part, at its option at any time or from time to time, at a redemption price equal to the greater of (1) 100% of the principal amount of the 2025 Senior Notes to be redeemed or (2) the sum of the present values of the remaining scheduled payments of principal and interest thereon that would have been payable in respect of the 2025 Senior Notes calculated as if the maturity date of the 2025 Senior Notes was January 1, 2025 (not including any portion of payments of interest accrued to the date of redemption), discounted to the redemption date on a semi-annual basis at the Adjusted Treasury Rate (as defined in the indenture for the 2025 Senior Notes) plus 35 basis points, plus, in the case of each of (1) and (2), accrued and unpaid interest to the redemption date. On and after January 1, 2025 (90 days prior to the scheduled maturity date), the Company may redeem the 2025 Senior Notes in whole or in part, at its option at any time or from time to time, at a redemption price equal to 100% of the principal amount of the 2025 Senior Notes to be redeemed, plus accrued and unpaid interest to the redemption date. On December 1, 2021, the Company completed a cash tender offer for $296.6 million of the outstanding aggregate principal amount of its 2025 Senior Notes.

At July 2, 2022, the fair value of the 2032, 2027, and 2025 Senior Notes was approximately $409.0 million, $383.0 million, and $304.1 million, respectively, based on external pricing data, including available quoted market prices of these instruments, and consideration of comparable debt instruments with similar interest rates and trading frequency, among other factors, and is classified as Level 2 measurements within the fair value hierarchy. At July 3, 2021, the fair value of the 2027, 2022 and 2025 Senior Notes was approximately $659.3 million, $407.4 million and $651.9 million, respectively.

$900.0 Million Revolving Credit Facility

On October 24, 2019, the Company entered into a definitive credit agreement whereby Bank of America, N.A., as administrative agent, the other agents party thereto, and a syndicate of banks and financial institutions have made available to the Company a $900.0 million revolving credit facility (“900.0 Million Revolving Credit Facility”), including sub-facilities for letters of credit, with a maturity date of October 24, 2024. The $900 Million Revolving Credit Facility may be used to finance the working capital needs, capital expenditures, permitted investments, share purchases, dividends and other general corporate purposes of the Company and its subsidiaries (which may include commercial paper back-up). Letters of credit and swing line loans may be issued under the $900.0 Million Revolving Credit Facility as described below.

Borrowings under the $900.0 Million Revolving Credit Facility bear interest at a rate per annum equal to, at the Borrowers’ option, either (a) an alternate base rate (which is a rate equal to the greatest of (i) the Prime Rate in effect on such day, (ii) the Federal Funds Effective Rate in effect on such day plus ½ of 1% or (iii) the Adjusted LIBO Rate for a one month Interest Period on such day plus 1%) or (b) a rate based on the rates applicable for deposits in the interbank market for U.S. Dollars or the applicable currency in which the loans are made plus, in each case, an applicable margin. The applicable margin will be determined by reference to a grid, as defined in the Credit Agreement, based on the ratio of (a) consolidated debt plus operating lease liability to (b) consolidated EBITDAR. Additionally, the Company pays a commitment fee at a rate determined by the reference to the aforementioned pricing grid.

On May 19, 2020, the Company entered into Amendment No. 1 (the “Amendment”) to the $900.0 Million Revolving Credit Facility under the terms of the Amendment, during the period from the Effective Date until October 2, 2021, the Company must maintain available liquidity of $700 million (with available liquidity defined as the sum of unrestricted cash and cash equivalents and available commitments under credit facilities, including the $900.0 Million Revolving Credit Facility). This requirement, among others that the Company was subject to during the period from the Effective Date until the compliance certificate was delivered for the fiscal quarter ending July 3, 2021 (the “Covenant Relief Period”), has been fulfilled. Going forward, the Company must comply on a quarterly basis with a maximum net leverage ratio of 4.0 to 1.0. The $900 million aggregate commitment amount under the Revolving Credit Facility remained unchanged under the amendment. However, on

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

May 11, 2022, the $900 Million Revolving Credit Facility was replaced by the $1.25 Billion Revolving Credit Facility described above under, "$1.25 Billion Revolving Credit Facility and $500.0 Million Term Loan".

Debt Maturities

As of July 2, 2022 the debt maturities for the next five fiscal years and thereafter are as follows:

			Principal
			(millions)
2023			$	31.2
2024			25.0
2025			328.4
2026			25.0
2027			393.8
Thereafter			896.6
Total			$	1,700.0

13. COMMITMENTS AND CONTINGENCIES

Letters of Credit

The Company had standby letters of credit, surety bonds and bank guarantees totaling $37.8 million and $40.5 million outstanding at July 2, 2022 and July 3, 2021, respectively. The agreements, which expire at various dates through calendar 2028, primarily collateralize the Company’s obligation to third parties for duty, leases, insurance claims and materials used in product manufacturing. The Company pays certain fees with respect to letters of credit that are issued.

Tax Legislation

The Tax Legislation requires the Company to pay a one-time tax, or Transition Tax, on previously unremitted earnings of certain non-U.S. subsidiaries. The Company expects to pay approximately $127.1 million related to the remaining obligation on the Transition Tax. Refer to Note 15, "Income Taxes," for more information related to the impact of the Tax Legislation.

Other

The Company had other contractual cash obligations as of July 2, 2022, including $460.7 million related to inventory purchase obligations, $49.7 million related to capital expenditure and cloud computing implementation commitments, $323.5 million of other purchase obligations, $1.70 billion of debt repayments, $4.1 million of finance lease obligations and $347.5 million of interest payments on the outstanding debt. Refer to Note 9, "Leases," for a summary of the Company's future minimum rental payments under non-cancelable leases.

The Company is involved in various legal proceedings as both plaintiff and defendant, including proceedings to protect Tapestry, Inc.'s intellectual property rights, litigation instituted by persons alleged to have been injured by advertising claims or upon premises within the Company's control, contract disputes, insurance claims and litigation with present or former employees.

As part of Tapestry’s policing program for its intellectual property rights, from time to time, the Company files lawsuits in the U.S. and abroad alleging acts of trademark counterfeiting, trademark infringement, patent infringement, trade dress infringement, copyright infringement, unfair competition, trademark dilution and/or state or foreign law claims. At any given point in time, Tapestry may have a number of such actions pending. These actions often result in seizure of counterfeit merchandise and/or out of court settlements with defendants. From time to time, defendants will raise, either as affirmative defenses or as counterclaims, the invalidity or unenforceability of certain of Tapestry’s intellectual properties.

Although the Company's litigation as described above is incidental to the conduct of Tapestry’s business, such litigation can result in large monetary awards, such as when a civil jury is allowed to determine compensatory and/or punitive damages.

The Company believes that the outcome of all pending legal proceedings in the aggregate will not have a material effect on the Company's business or consolidated financial statements.

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

14. GOODWILL AND OTHER INTANGIBLE ASSETS

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

The Company determined there was no impairment in fiscal 2022 and fiscal 2021 based on the annual assessment and no events occurring that would more likely than not reduce the fair value below its carrying amount.

During the third quarter of fiscal 2020, profitability trends continued to decline from those that were expected for the Stuart Weitzman brand. This reduction in both current and future expected cash flows was exacerbated by the Covid-19 pandemic, which resulted in a decline in sales driven by full and partial closures of a significant portion of the Company's stores and the Company's wholesale partners globally. As a result of these macroeconomic conditions, the Company concluded that a triggering event had occurred during the third quarter of fiscal year 2020, resulting in the need to perform a quantitative interim impairment assessment over the Company’s Stuart Weitzman reporting unit and indefinite-lived brand intangible assets. The assessment concluded that the fair values of the Stuart Weitzman reporting unit and indefinite-lived brand intangible asset as of March 28, 2020 did not exceed their respective carrying values.

Accordingly, during the three months ended March 28, 2020, the Company recorded a goodwill impairment charge of $210.7 million related to the Stuart Weitzman reporting unit, resulting in a full impairment. The Company also recorded an impairment charge of $267.0 million related to the Stuart Weitzman indefinite-lived brand, resulting in a full impairment. The goodwill and brand intangible impairment charges were recorded within total SG&A expenses on the Company's Consolidated Statement of Operations for fiscal 2020.

The estimated fair value of the Stuart Weitzman reporting unit was based on a weighted average of the income and market approaches. The income approach is based on estimated discounted future cash flows, while the market approach is based on earnings multiples of selected guideline companies. The approach, which qualifies as level 3 in the fair value hierarchy, incorporated a number of significant assumptions and judgments, including, but not limited to, estimated future cash flows, discount rates, income tax rates, terminal growth rates and valuation multiples derived from comparable publicly traded companies. In considering the excess of the fair value over its carrying value for the Coach and Kate Spade reporting units and indefinite-lived brand intangibles, management did not perform an interim assessment for these reporting units during the three months ended March 28, 2020. The Company determined there was no impairment during the fiscal 2020 annual impairment assessment.

Goodwill

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

			Coach						Kate Spade						Stuart Weitzman (1)						Total
			(millions)
Balance at June 27, 2020			$	661.7					$	639.4					$	—					$	1,301.1
Foreign exchange impact			(5.4)						1.6						—						(3.8)
Balance at July 3, 2021			656.3						641.0						—						1,297.3
Foreign exchange impact			(47.2)						(8.6)						—						(55.8)
Balance at July 2, 2022			$	609.1					$	632.4					$	—					$	1,241.5

(1) Amount is net of accumulated goodwill impairment charges of $210.7 million as of July 2, 2022, July 3, 2021 and June 27, 2020.

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

Intangible Assets

Intangible assets consist of the following:

			Fiscal Year Ended
			July 2, 2022																		July 3, 2021
			Gross Carrying Amount						Accum. Amort.						Net						Gross Carrying Amount						Accum. Amort.						Net
			(millions)
Intangible assets subject to amortization:
Customer relationships			$	100.3					$	(43.5)					$	56.8					$	100.5					$	(36.9)					$	63.6
Total intangible assets subject to amortization			100.3						(43.5)						56.8						100.5						(36.9)						63.6
Intangible assets not subject to amortization:
Trademarks and trade names			1,309.8						—						1,309.8						1,309.8						—						1,309.8
Total intangible assets			$	1,410.1					$	(43.5)					$	1,366.6					$	1,410.3					$	(36.9)					$	1,373.4

As of July 2, 2022, the expected amortization expense for intangible assets is as follows:

			Amortization Expense
			(millions)
Fiscal 2023			$	6.5
Fiscal 2024			6.5
Fiscal 2025			6.5
Fiscal 2026			6.5
Fiscal 2027			6.5
Thereafter			24.3
Total			$	56.8

The expected future amortization expense above reflects remaining useful lives ranging from approximately 7.8 years to 10.0 years for customer relationships.

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

15. INCOME TAXES

The provisions for income taxes, computed by applying the U.S. statutory rate to income before taxes, as reconciled to the actual provisions were:

			Fiscal Year Ended
			July 2, 2022												July 3, 2021												June 27, 2020
			Amount						Percentage						Amount						Percentage						Amount						Percentage
			(millions)
Income before provision for income taxes:
United States(1)			$	392.0					37.4		%				$	341.0					38.0		%				$	(496.4)					79.5		%
Foreign			655.0						62.6						556.3						62.0						(127.8)						20.5
Total income before provision for income taxes			$	1,047.0					100.0		%				$	897.3					100.0		%				$	(624.2)					100.0		%
Tax expense at U.S. statutory rate			$	219.9					21.0		%				$	188.4					21.0		%				$	(131.1)					21.0		%
State taxes, net of federal benefit			15.8						1.5						18.0						2.0						3.9						(0.6)
Effects of foreign operations(2)			(3.5)						(0.3)						6.5						0.7						89.8						(14.4)
Effects of tax credits and reorganization(3)			(49.8)						(4.8)						(94.5)						(10.5)						(28.6)						4.6
Effects of Impairment(4)			—						—						—						—						91.7						(14.7)
Change in state valuation allowance			—						—						11.5						1.3						1.6						(0.3)
Impact of net operating loss carryback									—						(65.4)						(7.3)						(8.3)						1.3
Other, net			8.3						0.8						(1.4)						(0.2)						8.9						(1.4)
Taxes at effective worldwide rates			$	190.7					18.2		%				$	63.1					7.0		%				$	27.9					(4.5)		%

(1)The United States jurisdiction includes foreign pre-tax earnings allocated to the Company from its interest in a foreign partnership.

(2)This includes the tax related to the Global Intangible Low-Taxed Income ("GILTI"). The Company has elected to account for the tax associated with GILTI as a period cost, and accordingly, the Company has not recorded deferred taxes associated with GILTI.

(3) Fiscal 2021 is comprised primarily of $60.9 million of U.S. federal foreign tax credits generated in fiscal 2021.

(4) This item represents the effective tax rate impact of the Stuart Weitzman Goodwill and indefinite-lived brand intangible impairment activity recorded in fiscal 2020.

Current and deferred tax provision (benefit) was:

			Fiscal Year Ended
			July 2, 2022												July 3, 2021												June 27, 2020
			Current						Deferred						Current						Deferred						Current						Deferred
			(millions)
Federal			$	104.0					$	13.9					$	(80.0)					$	57.3					$	74.1					$	(88.7)
Foreign			46.6						11.2						63.8						(9.4)						68.8						(30.9)
State			10.7						4.3						26.7						4.7						0.7						3.9
Total current and deferred tax provision (benefit)			$	161.3					$	29.4					$	10.5					$	52.6					$	143.6					$	(115.7)

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

The components of deferred tax assets and liabilities were:

			July 2, 2022						July 3, 2021
			(millions)
Share-based compensation			$	26.1					$	28.6
Reserves not deductible until paid			51.1						46.4
Employee benefits			36.7						43.6
Net operating loss			74.7						88.6
Other			19.6						19.6
Inventory			28.8						33.0
Lease liability			335.3						418.1
Gross deferred tax assets			572.3						677.9
Valuation allowance			51.6						65.9
Deferred tax assets after valuation allowance			$	520.7					$	612.0
Goodwill			69.1						85.4
Other intangibles			309.6						303.7
Property and equipment			11.3						20.3
Foreign investments			23.5						14.4
Right-of-use			280.4						324.6
Prepaid expenses			0.6						1.9
Gross deferred tax liabilities			694.5						750.3
Net deferred tax (liabilities) assets			$	(173.8)					$	(138.3)
Consolidated Balance Sheets Classification
Deferred income taxes – noncurrent asset			47.9						65.6
Deferred income taxes – noncurrent liability			(221.7)						(203.9)
Net deferred tax (liabilities) assets			$	(173.8)					$	(138.3)

Significant judgment is required in determining the worldwide provision for income taxes, and there are many transactions for which the ultimate tax outcome is uncertain. It is the Company’s policy to establish provisions for taxes that may become payable in future years, including those due to an examination by tax authorities. The Company establishes the provisions based upon management’s assessment of exposure associated with uncertain tax positions. The provisions are analyzed at least quarterly and adjusted as appropriate based on new information or circumstances in accordance with the requirements of ASC 740.

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

A reconciliation of the beginning and ending gross amount of unrecognized tax benefits is as follows:

			July 2, 2022						July 3, 2021						June 27, 2020
			(millions)
Balance at beginning of fiscal year			$	111.4					$	88.5					$	85.8
Gross increase due to tax positions related to prior periods			1.6						38.3						11.2
Gross decrease due to tax positions related to prior periods			(11.7)						(9.4)						(1.6)
Gross increase due to tax positions related to current period			7.4						6.8						6.8
Decrease due to lapse of statutes of limitations			(10.9)						(12.0)						(8.6)
Decrease due to settlements with taxing authorities			(1.7)						(0.8)						(5.1)
Balance at end of fiscal year			$	96.1					$	111.4					$	88.5

Of the $96.1 million ending gross unrecognized tax benefit balance as of July 2, 2022, $88.3 million relates to items which, if recognized, would impact the effective tax rate. Of the $111.4 million ending gross unrecognized tax benefit balance as of July 3, 2021, $98.1 million relates to items which, if recognized, would impact the effective tax rate. As of July 2, 2022 and July 3, 2021, gross interest and penalties payable was $8.2 million and $10.1 million, respectively, which are included in Other liabilities. During fiscal 2022, fiscal 2021 and fiscal 2020, the Company recognized gross interest and penalty income of $1.5 million, gross interest and penalty expense of $0.8 million and gross interest and penalty income of $1.2 million, respectively.

The Company files income tax returns in the U.S. federal jurisdiction, as well as various state and foreign jurisdictions. Tax examinations are currently in progress in select foreign and state jurisdictions that are extending the years open under the statutes of limitation. Fiscal years 2018 to present are open to examination in the U.S. federal jurisdiction, fiscal 2016 to present in select state jurisdictions and fiscal 2015 to present in select foreign jurisdictions. The Company is currently under U.S. federal audit for fiscal 2018. The Company anticipates that one or more of these audits may be finalized and certain statutes of limitation may expire in the foreseeable future. However, based on the status of these examinations, and the average time typically incurred in finalizing audits with the relevant tax authorities, the Company cannot reasonably estimate the impact these audits may have in the next 12 months, if any, to previously recorded uncertain tax positions. The Company accrues for certain known and reasonably anticipated income tax obligations after assessing the likely outcome based on the weight of available evidence. Although the Company believes that the estimates and assumptions used are reasonable and legally supportable, the final determination of tax audits could be different than that which is reflected in historical income tax provisions and recorded assets and liabilities. With respect to all jurisdictions, the Company has made adequate provision for all income tax uncertainties.

As of July 2, 2022, the Company had the following tax loss carryforwards available: U.S. state tax loss carryforwards of $706.0 million and tax loss carryforwards of various foreign jurisdictions of $123.9 million. As of July 3, 2021, the Company had the following tax loss carryforwards available: U.S. state tax loss carryforwards of $705.6 million and tax loss carryforwards of various foreign jurisdictions of $211.7 million. The state net operating loss carryforwards generally start to expire in fiscal 2023, respectively. The majority of the foreign net operating loss can be carried forward indefinitely. Deferred tax assets, including the deferred tax assets recognized on these net operating losses, have been reduced by a valuation allowance of $51.6 million as of July 2, 2022 and $65.9 million as of July 3, 2021.

The Company is not permanently reinvested with respect to the earnings of a limited number of foreign entities and has recorded the tax consequences of remitting earnings from these entities. The Company is permanently reinvested with respect to all other earnings. The total estimated amount of unremitted earnings of foreign subsidiaries as of July 2, 2022 and July 3, 2021 was $747.6 million and $1.01 billion, respectively. The Company intends to distribute $525.5 million of earnings that were previously subject to U.S. Federal Tax and has recorded a deferred tax liability of $1.9 million during fiscal 2022 for U.S. state taxes and foreign withholding taxes related to the future distribution. Based on the Company's current analysis, there is further unrecognized deferred tax liability of approximately $2 to $4 million on the remaining unremitted earnings.

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

Transition Tax

The Company is required to pay a one-time Transition Tax on previously unremitted earnings of certain non-U.S. subsidiaries. The Company has elected to pay the Transition Tax in installments. As shown in the table below, the remaining Transition Tax payable is $127.1 million and is payable between fiscal 2023 and fiscal 2025.

			Transition Tax Payments
			(millions)
Fiscal 2023			$	31.8
Fiscal 2024			42.4
Fiscal 2025			52.9
Total			$	127.1

16. DEFINED CONTRIBUTION PLAN

The Company maintains the Tapestry, Inc. 401(k) Savings Plan, which is a defined contribution plan. Employees who meet certain eligibility requirements and are not part of a collective bargaining agreement may participate in this program. The annual expense incurred by the Company for this defined contribution plan was $11.8 million, $10.6 million and $12.3 million in fiscal 2022, fiscal 2021 and fiscal 2020, respectively.

17. SEGMENT INFORMATION

The Company has three reportable segments:

• Coach - Includes global sales of Coach products to customers through Coach operated stores, including e-commerce sites 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 e-commerce sites, sales 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 e-commerce sites, sales to wholesale customers and through numerous independent third party distributors.

In deciding how to allocate resources and assess performance, the Company's chief operating decision maker regularly evaluates the sales and operating income of these segments. Operating income is the gross margin of the segment less direct expenses of the segment.

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

The following table summarizes segment performance for fiscal 2022, fiscal 2021 and fiscal 2020:

			Coach						Kate Spade						Stuart Weitzman						Corporate**(1)**						Total
			(millions)
Fiscal 2022
Net sales			$	4,921.3					$	1,445.5					$	317.7					$	—					$	6,684.5
Gross profit**(2)**			3,553.8						912.0						184.6						—						4,650.4
Operating income (loss)			1,473.9						157.4						1.8						(457.3)						1,175.8
Income (loss) before provision for income taxes			1,473.9						157.4						1.8						(586.1)						1,047.0
Depreciation and amortization expense**(3)**			110.1						48.5						10.3						26.4						195.3
Total assets			2,392.2						2,641.3						269.3						1,962.5						7,265.3
Additions to long-lived assets**(4)**			52.3						14.2						2.6						92.5						161.6

Fiscal 2021
Net sales			$	4,253.1					$	1,210.0					$	283.2					$	—					$	5,746.3
Gross profit(2)			3,149.0						768.4						164.5						—						4,081.9
Operating income (loss)			1,312.1						108.5						(8.6)						(444.0)						968.0
Income (loss) before provision for income taxes			1,312.1						108.5						(8.6)						(514.7)						897.3
Depreciation and amortization expense(3)			102.2						46.8						13.3						58.2						220.5
Total assets			2,513.5						2,707.3						298.6						2,863.0						8,382.4
Additions to long-lived assets(4)			37.3						13.5						3.4						61.8						116.0

Fiscal 2020
Net sales			$	3,525.7					$	1,149.5					$	286.2					$	—											$	4,961.4
Gross profit(2)			2,411.6						682.9						144.8						—												3,239.3
Operating income (loss)			589.4						(99.3)						(621.4)						(419.5)												(550.8)
Income (loss) before provision for income taxes			589.4						(99.3)						(621.4)						(492.9)												(624.2)
Depreciation and amortization expense(3)			159.1						97.8						518.8						53.5												829.2
Total assets			2,616.6						2,769.2						305.1						2,233.3												7,924.2
Additions to long-lived assets(4)			75.7						62.0						14.3						54.4												206.4

(1) Corporate, which is not a reportable segment, represents certain costs that are not directly attributable to a brand. These costs primarily represent administrative and information systems expense.

(2) For the fiscal year ended July 3, 2021, gross profit reflects a reduction of expense recorded within Cost of sales of $8.1 million within the Coach segment due to the reversal of raw material reserves, which were established in fiscal 2020 as a result of the projected impact of Covid-19. For the fiscal year ended June 27, 2020, gross profit reflects charges recorded within Cost of sales of $61.9 million within the Coach segment, $32.3 million within the Kate Spade segment and $9.8 million within the Stuart Weitzman segment as a result of establishing inventory reserves directly related to the expected impact of Covid-19 on the Company's future sales projections. The non-cash portion of these charges are presented within Impairment charges on the Consolidated Statement of Cash Flows.

(3) For the fiscal year ended July 3, 2021, depreciation and amortization expense includes $1.8 million of Acceleration Program costs, respectively. For the fiscal year ended June 27, 2020, depreciation and amortization expense included $0.4 million of Integration & Acquisition costs as well as impairment charges of $44.6 million for Coach, $36.0 million for Kate Spade and $499.9 million for Stuart Weitzman. Refer to Note 11, "Fair Value Measurements," and Note 14, "Goodwill and

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

Other Intangible Assets" for further information. Depreciation and amortization expense for the segments includes an allocation of expense related to assets which support multiple segments.

(4) Additions to long-lived assets for the reportable segments primarily include costs for assets that will be capitalized within Property and equipment, net, and costs relating to cloud computing implementation costs. Cloud computing implementation costs are recognized within Prepaid expenses and Other assets on the Consolidated Balance Sheets. Brand additions include costs that are specific for the brand and 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.

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

			Fiscal Year Ended
			July 2, 2022												July 3, 2021												June 27, 2020
			Amount						% of total net sales						Amount						% of total net sales						Amount						% of total net sales
			(millions)
Coach
Women's Handbags			$	2,574.8					38		%				$	2,302.3					40		%				$	1,852.0					37		%
Women's Accessories			942.5						14						776.7						14						645.4						13
Men's			904.8						14						769.3						13						688.0						14
Other Products			499.2						7						404.8						7						340.3						7
Total Coach			$	4,921.3					73		%				$	4,253.1					74		%				$	3,525.7					71		%
Kate Spade
Women's Handbags			$	819.5					12		%				$	681.5					12		%				$	648.9					13		%
Other Products			319.0						5						269.3						5						260.0						5
Women's Accessories			307.0						5						259.2						4						240.6						5
Total Kate Spade			$	1,445.5					22		%				$	1,210.0					21		%				$	1,149.5					23		%
Stuart Weitzman(1)			$	317.7					5		%				$	283.2					5		%				$	286.2					6		%
Total Net sales			$	6,684.5					100		%				$	5,746.3					100		%				$	4,961.4					100		%

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

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

Geographic Area Information

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

			United States						Japan						Greater China**(2)**						Other**(3)**						Total
			(millions)
Fiscal 2022
Net sales(1)			$	4,174.3					$	578.8					$	1,026.6					$	904.8					$	6,684.5
Long-lived assets			1,578.9						94.0						131.0						231.6						2,035.5
Fiscal 2021
Net sales(1)			$	3,365.9					$	598.9					$	1,094.1					$	687.4					$	5,746.3
Long-lived assets			1,722.2						132.0						125.7						290.8						2,270.7
Fiscal 2020
Net sales(1)			$	2,839.7					$	602.9					$	730.3					$	788.5					$	4,961.4
Long-lived assets			1,933.6						166.0						156.0						379.0						2,634.6

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

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

(3)Other includes sales in Europe, Canada, Malaysia, Australia and New Zealand, South Korea, Singapore, and royalties earned from the Company's licensing partners.

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

18. EARNINGS PER SHARE

Basic net income per share is calculated by dividing net income by the weighted-average number of shares outstanding during the period. Diluted net income per share is calculated similarly but includes potential dilution from the exercise of stock options and restricted stock units and any other potentially dilutive instruments, only in the periods in which such effects are dilutive under the treasury stock method.

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

			Fiscal Year Ended
			July 2, 2022						July 3, 2021						June 27, 2020
			(millions, except per share data)
Net income (loss)			$	856.3					$	834.2					$	(652.1)
Weighted-average basic shares			264.3						277.9						278.6
Dilutive securities:
Effect of dilutive securities(1)			5.8						5.1						—
Weighted-average diluted shares			270.1						283.0						278.6
Net income (loss) per share:
Basic			$	3.24					$	3.00					$	(2.34)
Diluted			$	3.17					$	2.95					$	(2.34)

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

At July 2, 2022, options to purchase 5.4 million shares of common stock were outstanding but not included in the computation of diluted earnings per share, as these options’ exercise prices, ranging from $33.46 to $58.54, were greater than the average market price of the common shares.

At July 3, 2021, options to purchase 3.7 million shares of common stock were outstanding but not included in the computation of diluted earnings per share, as these options’ exercise prices, ranging from $44.97 to $78.46, were greater than the average market price of the common shares.

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

Earnings per share amounts have been calculated based on unrounded numbers. Options to purchase shares of the Company's common stock at an exercise price greater than the average market price of the common stock during the reporting period are anti-dilutive and therefore not included in the computation of diluted net income (loss) per common share. In addition, the Company has outstanding restricted stock unit awards that are issuable only upon the achievement of certain performance goals. Performance-based restricted stock unit awards are included in the computation of diluted shares only to the extent that the underlying performance conditions (and any applicable market condition modifiers) (i) are satisfied as of the end of the reporting period or (ii) would be considered satisfied if the end of the reporting period were the end of the related contingency period and the result would be dilutive under the treasury stock method. As of July 2, 2022, July 3, 2021 and June 27, 2020, there were approximately 6.9 million, 5.0 million, and 16.2 million, respectively, of shares issuable upon exercise of anti-dilutive options and contingent vesting of performance-based restricted stock unit awards, which were excluded from the diluted share calculations.

19. RELATED PARTIES

The Stuart Weitzman brand owns approximately 50% of a factory located in Spain, which is involved in the production of Stuart Weitzman inventory. Payments to this factory represented $15.6 million and $17.9 million in fiscal 2022 and fiscal 2021, respectively. Amounts payable to this factory were not material at July 2, 2022 or July 3, 2021.

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

20. SUPPLEMENTAL BALANCE SHEET INFORMATION

The components of certain balance sheet accounts are as follows:

			July 2, 2022						July 3, 2021
			(millions)
Property and equipment
Land and building			$	8.0					$	8.0
Machinery and equipment			50.1						46.9
Software and computer equipment			584.7						601.6
Furniture and fixtures			310.7						320.9
Leasehold improvements			738.2						799.2
Construction in progress			40.4						45.6
Less: accumulated depreciation			(1,187.7)						(1,144.1)
Total property and equipment, net			$	544.4					$	678.1
Accrued liabilities
Payroll and employee benefits			$	212.4					$	216.1
Accrued rent			18.9						20.0
Accrued income taxes			35.8						52.0
Accrued freight			80.4						48.9
Operating expenses			280.7						324.2
Total accrued liabilities			$	628.2					$	661.2
Other liabilities
Deferred lease obligation			$	46.0					$	62.2
Gross unrecognized tax benefit			96.1						111.4
Other			110.4						76.1
Total other liabilities			$	252.5					$	249.7

TAPESTRY, INC.

Schedule II — Valuation and Qualifying Accounts

For the Fiscal Years Ended July 2, 2022, July 3, 2021 and June 27, 2020

			Balance at Beginning of Year						Additions Charged to Costs and Expenses						Write-offs/ Allowances Taken						Balance at End of Year
			(millions)
Fiscal 2022
Allowance for credit losses			$	4.2					$	19.9					$	(20.4)					$	3.7
Allowance for returns			18.7						8.8						(16.3)						11.2
Allowance for markdowns			11.4						13.6						(13.4)						11.6
Valuation allowance			65.9						—						(14.3)						51.6
Total			$	100.2					$	42.3					$	(64.4)					$	78.1
Fiscal 2021
Allowance for credit losses			$	15.9					$	2.8					$	(14.5)					$	4.2
Allowance for returns			19.3						18.6						(19.2)						18.7
Allowance for markdowns			9.7						16.6						(14.9)						11.4
Valuation allowance			39.6						27.7						(1.4)						65.9
Total			$	84.5					$	65.7					$	(50.0)					$	100.2
Fiscal 2020
Allowance for credit losses			$	4.4					$	26.0					$	(14.5)					$	15.9
Allowance for returns			10.6						29.1						(20.4)						19.3
Allowance for markdowns			17.8						39.9						(48.0)						9.7
Valuation allowance			32.9						9.3						(2.6)						39.6
Total			$	65.7					$	104.3					$	(85.5)					$	84.5

EXHIBITS TO FORM 10-K

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

Exhibit						Description
1.1						Underwriting Agreement, dated as of November 16, 2021, among the Company and BofA Securities, Inc., HSBC Securities (USA) Inc. and J.P. Morgan Securities LLC, as representatives of the several underwriters named therein, which is incorporated herein by reference from Exhibit 1.1 to the Registrant’s Current Report on Form 8-K filed on November 17, 2021
3.1						Amended and Restated Bylaws of Tapestry, Inc., effective as of October 31, 2017, which is incorporated herein by reference from Exhibit 3.2 to the Registrant’s Current Report on Form 8-K filed on October 31, 2017
3.2						Articles of Incorporation, dated June 1, 2000, which is incorporated herein by reference from Exhibit 3.1 of to the Registrant's Registration Statement on Form S-1 filed on June 16, 2000
3.3						Articles Supplementary of Coach, Inc., dated May 3, 2001, which is incorporated herein by reference from Exhibit 3.2 to the Registrant’s Current Report on Form 8-K filed on May 9, 2001
3.4						Articles of Amendment of Coach, Inc., dated May 3, 2001, which is incorporated herein by reference from Exhibit 3.3 to the Registrant’s Current Report on Form 8-K filed on May 9, 2001
3.5						Articles of Amendment of Coach, Inc., dated May 3, 2002, which is incorporated by reference from Exhibit 3.4 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended June 29, 2002
3.6						Articles of Amendment of Coach, Inc., dated February 1, 2005, which is incorporated by reference from Exhibit 99.1 to the Registrant’s Current Report on Form 8-K filed on February 2, 2005
3.7						Articles of Amendment to Charter of Tapestry, Inc., effective as of October 31, 2017, which is incorporated by reference from Exhibit 3.1 to the Registrant's Current Report on Form 8-K filed on October 31, 2017
4.1						Specimen Certificate for Common Stock of Tapestry, Inc. which is incorporated by reference from Exhibit 4.1 to the Registrant's Annual Report on Form 10-K for the fiscal year ended June 30, 2018, filed on August 16, 2018
4.2						Indenture, dated as of March 2, 2015, between Coach, Inc. and U.S. Bank National Association, as trustee, which is incorporated herein by reference from Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed on March 2, 2015
4.3						First Supplemental Indenture, dated as of March 2, 2015, relating to the 4.250% senior unsecured notes due 2025, between Coach, Inc. and U.S. Bank National Association, as trustee, which is incorporated herein by reference from Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed on March 2, 2015
4.4						Form of 4.250% senior unsecured notes due 2025 (included in the First Supplemental Indenture), which is incorporated herein by reference from Exhibit 4.3 to the Registrant’s Current Report on Form 8-K filed on March 2, 2015
4.5						Second Supplemental Indenture, dated as of June 20, 2017, relating to the 3.000% senior unsecured notes due 2022, between Coach, Inc. and U.S. Bank National Association, as trustee, which is incorporated by reference from Exhibit 4.1 to the Registrant's Current Report on Form 8-K, filed on June 20, 2017
4.6						Third Supplemental Indenture, dated as of June 20, 2017, relating to the 4.125% senior unsecured notes due 2027, between Coach, Inc. and U.S. Bank National Association, as trustee, which is incorporated by reference from Exhibit 4.2 to the Registrant's Current Report on Form 8-K, filed on June 20, 2017
4.7						Form of 3.000% senior unsecured notes due 2022 (included in the Second Supplemental Indenture), which is incorporated by reference from Exhibit 4.3 to the Registrant's Current Report on Form 8-K, filed on June 20, 2017
4.8						Form of 4.125% senior unsecured notes due 2027 (included in the Third Supplemental Indenture), which is incorporated by reference from Exhibit 4.4 to the Registrant's Current Report on Form 8-K, filed on June 20, 2017
4.9						Indenture, dated as of December 1, 2021, between the Company and U.S. Bank National Association, as trustee, which is incorporated herein by reference from Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed on December 1, 2021
4.10						First Supplemental Indenture, dated as of December 1, 2021, relating to the 3.050% senior unsecured notes due 2032, between the Company and U.S. Bank National Association, as trustee, which is incorporated by reference from Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed on December 1, 2021
4.11						Form of 3.050% senior unsecured notes due 2032 (included in the First Supplemental Indenture), which is incorporated by reference from Exhibit 4.3 to the Registrant’s Current Report on Form 8-K, filed on December 1, 2021
4.12						Description of Securities, which is incorporated by reference from Exhibit 4.9 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended June 27, 2020

Exhibit						Description
10.1†						Coach, Inc. Non-Qualified Deferred Compensation Plan for Outside Directors, which is incorporated by reference from Exhibit 10.14 to The Registrant’s Annual Report on Form 10-K for the fiscal year ended June 28, 2003
10.2†						Amended and Restated Tapestry, Inc. 2001 Employee Stock Purchase Plan, which is incorporated by reference to Appendix C to the Registrant's Definitive Proxy Statement for the 2016 Annual Meeting of Stockholders filed on September 30, 2016
10.3†						Coach, Inc. 2004 Stock Incentive Plan, which is incorporated by reference from Appendix A to the Registrant’s Definitive Proxy Statement for the 2004 Annual Meeting of Stockholders, filed on September 29, 2004
10.4†						Coach, Inc. 2010 Stock Incentive Plan, which is incorporated by reference from Appendix A to the Registrant’s Definitive Proxy Statement for the 2010 Annual Meeting of Stockholders, filed on September 24, 2010
10.5†						Amendment to the Coach, Inc. 2010 Stock Incentive Plan, which is incorporated herein by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on September 22, 2014
10.6†						Coach, Inc. Amended and Restated 2010 Stock Incentive Plan, which is incorporated herein by reference from Appendix B to the Registrant’s Definitive Proxy Statement for the 2014 Annual Meeting of Stockholders, filed on September 26, 2014
10.7†						Coach, Inc. Amended and Restated 2010 Stock Incentive Plan (Amended and Restated as of September 18, 2015), which is incorporated herein by reference from Appendix B to the Registrant’s Definitive Proxy Statement for the 2015 Annual Meeting of Stockholders, filed on September 25, 2015
10.8†						Coach Inc. Executive Deferred Compensation Plan, effective as of January 1, 2016, which is incorporated herein by reference from Exhibit 10.10 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended June 29, 2019
10.9†						Coach, Inc. Amended and Restated 2010 Stock Incentive Plan (Amended and Restated as of September 23, 2016), which is incorporated herein by reference from Appendix B to the Registrant's Definitive Proxy Statement for the 2016 Annual Meeting of the Stockholders, filed on September 30, 2016
10.10†						Coach, Inc. Amended and Restated 2010 Stock Incentive Plan (Amended and Restated as of September 20, 2017), which is incorporated herein by reference from Appendix B to the Registrant's Definitive Proxy Statement for the 2017 Annual Meeting of the Stockholders, filed on September 29, 2017
10.11†						Tapestry Inc. 2018 Stock Incentive Plan, which is incorporated herein by reference from Appendix B to the Registrant's Definitive Proxy Statement for the 2018 Annual Meeting of Stockholders, filed on September 28, 2018
10.12†						Form of Stock Option Grant Notice and Agreement under the Tapestry, Inc. 2018 Stock Incentive Plan, which is incorporated herein by reference from Exhibit 10.14 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended June 29, 2019
10.13†						Form of Restricted Stock Unit Award Grant Notice and Agreement under the Tapestry, Inc. 2018 Stock Incentive Plan, which is incorporated herein by reference from Exhibit 10.15 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended June 29, 2019
10.14†						Form of Performance Restricted Stock Unit Agreement Grant Notice and Agreement under the Tapestry, Inc. 2018 Stock Incentive Plan, which is incorporated herein by reference from Exhibit 10.16 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended June 29, 2019
10.15†						Form of Stock Option Grant Notice and Agreement for Outside Directors under the Tapestry, Inc. 2018 Stock Incentive Plan, which is incorporated by reference from Exhibit 10.3 to the Registrant's Quarterly Report on Form-Q for the period ended December 29, 2018
10.16†						Form of Restricted Stock Unit Grant Notice and Agreement for Outside Directors under the Tapestry, Inc. 2018 Stock Incentive Plan, which is incorporated by reference from Exhibit 10.4 to the Registrant's Quarterly Report on Form 10-Q for the period ended December 29, 2018
10.17†						Tapestry, Inc. 2018 Performance-Based Annual Incentive Plan, which is incorporated herein by reference from Exhibit 10.1 to the Registrant's Current Report on Form 8-K, filed on August 10, 2018
10.18†						Letter Agreement, dated June 22, 2015, between Coach, Inc. and Todd Kahn, which is incorporated by reference from Exhibit 10.2 to the Registrant’s Current Report on Form 8-K, filed on June 22, 2015
10.19†						Letter Agreement, dated August 11, 2016, between Coach Inc. and Todd Kahn, which is incorporated herein by reference from Exhibit 10.20 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended June 27, 2020
10.20						Redemption Agreement and Amendment to Limited Liability Company Agreement, dated as of August 1, 2016, by and between Legacy Yards LLC, Coach Legacy Yards LLC and Podium Fund Tower C SPV LLC, which is incorporated by reference from Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for the period ended October 1, 2016

Exhibit						Description
10.21						Lease Agreement, dated as of August 1, 2016, by and between Coach, Inc. and Legacy Yards Tenant LP, which is incorporated by reference from Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for the period ended October 1, 2016
10.22						Amended and Restated Development Agreement, dated as of August 1, 2016, by and between ERY Developer LLC and Coach Legacy Yards LLC, which is incorporated by reference from Exhibit 10.3 to the Registrant's Quarterly Report on Form 10-Q for the period ended October 1, 2016
10.23						Termination and Release of the Coach Guaranty, dated as of August 1, 2016, by and between Podium Fund Tower C SPV LLC and ERY Developer LLC, which is incorporated by reference from Exhibit 10.4 to the Registrant's Quarterly Report on Form 10-Q for the period ended October 1, 2016
10.24						Sublease, dated as of September 13, 2017 between Coach, Inc. and The Guardian Life Insurance Company of America, a New York mutual insurance company, which is incorporated by reference from Exhibit 10.1 to the Registrant's Current Report on Form 8-K, filed on September 14, 2017.
10.25†						Letter Agreement, dated May 8, 2019 between the Registrant and Thomas Glaser, which is incorporated herein by reference from Exhibit 10.37 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended June 29, 2019
10.26†						Tapestry, Inc. Severance Pay Plan for Vice Presidents and Above, Amended and Restated effective May 9, 2019, which is incorporated herein by reference from Exhibit 10.38 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended June 29, 2019
10.27†						Tapestry, Inc. Special Severance Plan, effective August 12, 2019, which is incorporated herein by reference from Exhibit 10.40 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended June 29, 2019
10.28†						Amended & Restated Tapestry Inc. 2018 Stock Incentive Plan, which is incorporated herein by reference from Appendix B to the Registrant's Definitive Proxy Statement for the 2019 Annual Meeting of Stockholders, filed on September 27, 2019
10.29						Credit Agreement, dated as of October 24, 2019, by and among Tapestry, Inc., Bank of America, N.A. as Administrative Agent, JPMorgan Chase Bank, N.A. and HSBC Bank USA, N.A., as Co-Syndication Agents, and the other lenders party thereto, incorporated by reference from Exhibit 10.4 to Tapestry’s Quarterly Report on Form 10-Q filed on November 7, 2019
10.30†						Letter Agreement, dated January 28, 2020, between the Registrant and Liz Fraser, which is incorporated herein by reference from Exhibit 10.33 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended July 3, 2021.
10.31						Amendment No. 1, dated May 19, 2020, to the Credit Agreement, dated as of October 24, 2019 by and among Tapestry, Inc., Bank of America, N.A. as Administrative Agent, JPMorgan Chase Bank, N.A. and HSBC Bank USA, N.A., as Co-Syndication Agents, and the other lenders party thereto, which is incorporated herein by reference from Exhibit 10.37 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended June 27, 2020
10.32†						Letter Agreement, dated July 20, 2020 between the Registrant and Todd Kahn, which is incorporated herein by reference from Exhibit 10.40 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended June 27, 2020
10.33†						Second Amended and Restated Tapestry Inc. 2018 Stock Incentive Plan, which is incorporated by reference from Appendix B to the Registrant's Definitive Proxy Statement for the 2020 Annual Meeting of Stockholders, filed on September 25, 2020
10.34†						Letter Agreement, dated October 24, 2020 between the Registrant and Joanne Crevoiserat, incorporated by reference from Exhibit 10.5 to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 26, 2020
10.35						First Amendment to Lease, dated as of March 12, 2021, between Legacy Yards Tenant LP, a Delaware limited partnership and Tapestry, Inc., incorporated by reference from Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q

Exhibit						Description
10.36†						Letter Agreement, dated April 12, 2021, between the Registrant and Todd Kahn, incorporated by reference from Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q
10.37†						Letter Agreement, dated April 26, 2021, between the Registrant and Scott Roe, incorporated by reference from Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q
10.38						Waiver, dated August 11, 2021, to the Credit Agreement, dated as of October 24, 2019 by and among Tapestry, Inc., Bank of America, N.A. as Administrative Agent, JPMorgan Chase Bank, N.A. and HSBC Bank USA, N.A., as Co-Syndication Agents, and the other lenders party thereto, which is incorporated herein by reference from Exhibit 10.44 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended July 3, 2021
10.39						Credit Agreement dated as of May 11, 2022, among Tapestry, Inc., the foreign subsidiary borrowers from time to time party thereto, the lenders from time to time party thereto, and Bank of America, N.A. as administrative agent, incorporated by reference from Exhibit 1.1 to the Registrant’s Current Report on Form 8-K filed on May 12, 2022
10.40†						Letter Agreement, dated August 4, 2022, between the Registrant and Scott Roe, incorporated by reference from Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed on August 4, 2022
21.1*						List of Subsidiaries of Tapestry, Inc.
23.1*						Consent of Deloitte & Touche LLP
31.1*						Rule 13(a)-14(a)/15(d)-14(a) Certifications
32.1*						Section 1350 Certifications
101.INS*						XBRL Instance Document
						Note: the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH*						XBRL Taxonomy Extension Schema Document
101.CAL*						XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB*						XBRL Taxonomy Extension Label Linkbase Document
101.PRE*						XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF*						XBRL Taxonomy Extension Definition Linkbase Document

• Filed herewith

† Management contract or compensatory plan or arrangement.