Integration

6 Months Ended

Dec. 28, 2019

INTEGRATION

During the three and six months ended December 28, 2019, the Company incurred integration costs of $3.9 million and $8.2 million. The charges recorded in Cost of sales for the three and six months ended December 28, 2019 were $1.5 million and $5.6 million. Of the amount recorded to Cost of sales, $1.5 million and $4.3 million was recorded in the Stuart Weitzman segment, $0.0 million and $1.2 million was recorded in the Kate Spade segment and $0.0 million and $0.1 million was recorded in the Coach segment, respectively. The charges recorded to SG&A expenses for the three and six months ended December 28, 2019 were $2.4 million and $2.6 million, respectively. Of the amount recorded to SG&A expenses, $1.8 million and $4.0 million was recorded within Corporate, $0.3 million and a reduction of expense of $2.1 million was recorded in the Stuart Weitzman segment, $0.7 million and $0.8 million was recorded in the Kate Spade segment and a reduction of expense of $0.4 million and $0.1 million was recorded in the Coach segment, respectively. Of the total costs of $3.9 million, $1.1 million were non-cash charges related to inventory-related charges, organization-related costs and purchase accounting adjustments. Of the total costs of $8.2 million, $3.9 million were non-cash charges related to inventory-related charges, organization-related costs and purchase accounting adjustments.

The Company estimates that it will incur approximately $5-10 million in pre-tax charges, of which the majority are expected to be cash charges, for the remainder of fiscal 2020.

During the three and six months ended December 29, 2018, the Company incurred integration costs of $15.2 million and $34.7 million, respectively. The charges recorded in Cost of sales for the three and six months ended December 29, 2018 were $3.5 million and $4.1 million, respectively. Of the amount recorded to Cost of sales, $0.0 million and $2.0 million was recorded in the Coach segment, $2.5 million and $1.1 million was recorded in the Kate Spade segment and $1.0 million and $1.0 million was recorded in the Stuart Weitzman segment, respectively. The charges recorded in SG&A expenses for the three and six months ended December 29, 2018 were $11.7 million and $30.6 million, respectively. Of the amount recorded to SG&A expenses, $0.6 million and $12.1 million was recorded in the Stuart Weitzman segment, $7.4 million and $11.4 million was recorded within Corporate and $3.7 million and $7.1 million was recorded in the Kate Spade segment, respectively. Of the total costs of $15.2 million, $4.8 million were non-cash charges related to purchase accounting adjustments and asset write-offs. Of the total costs of $34.7 million, $6.2 million were non-cash charges related to purchase accounting adjustments, organization-related costs and asset write-offs.

Refer to Note 6, "Acquisitions," for more information.

A summary of the integration charges is as follows:



	Three Months Ended				Six Months Ended
	December 28, 2019		December 29, 2018		December 28, 2019		December 29, 2018
	(millions)
Purchase accounting adjustments⁽¹⁾	$	0.2	$	3.4	$	0.8	$	5.4
Acquisition costs⁽²⁾	—		0.7		—		0.7
Inventory-related charges⁽³⁾	1.3		—		4.9		(1.4		)
Contractual payments⁽⁴⁾	—		0.1		—		7.2
Other⁽⁵⁾	2.4		11.0		2.5		22.8
Total	$	3.9	$	15.2	$	8.2	$	34.7


⁽¹⁾	Purchase accounting adjustments primarily relate to the short-term impact of the amortization of fair value adjustments.


⁽²⁾	Acquisition costs were primarily related to deal fees associated with acquisitions.


⁽³⁾	Inventory-related charges primarily relate to inventory reserves.


⁽⁴⁾	Contractual payments primarily relate to contract termination charges for the three and six months ended December 29, 2018.

⁽⁵⁾

Other primarily relates to share-based compensation, severance charges, professional fees and asset write-offs.