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Restructuring and Related Impairment Charges | 6 Months Ended
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Jun. 30, 2020
Restructuring and Related Activities [Abstract] |
Restructuring and Related Impairment Charges | Restructuring and Related Impairment Charges On March 31, 2020, the Company's Board of Directors approved the previously announced restructuring plan ("2020 Restructuring") designed to rebalance the Company’s cost base to further improve profitability and cash flow generation. This restructuring plan was developed prior to assessing the potential impacts of the COVID-19 pandemic on the Company’s business and the Company continues to evaluate what actions may be necessary related to the pandemic. In connection with the restructuring plan, the Company expects to incur total estimated pre-tax restructuring and related charges in the range of $475 million to $525 million during 2020 primarily consisting of up to approximately: •$175 million of cash restructuring charges, comprised of up to: $55 million in facility and lease termination costs, $25 million in employee severance and benefit costs, and $95 million in contract termination and other restructuring costs; and •$350 million of non-cash charges comprised of an impairment of $290 million related to the Company’s New York City flagship store and $60 million of intangibles and other asset related impairments. The Company recorded $38.9 million and $340.0 million of restructuring and related impairment charges for the three and six months ended June 30, 2020, respectively. The summary of the costs recorded during the three and six months ended June 30, 2020, as well as the Company's current estimates of the amount expected to be incurred during the remainder of 2020 in connection with the 2020 restructuring plan is as follows:
| Restructuring and Related Impairment Charges Recorded |  |  |  | Estimated Restructuring and Related Impairment Charges to be Incurred (1) |  |
(In thousands) | Three months ended June 30, 2020 |  | Six months ended June 30, 2020 |  | Six Months Ending December 31, 2020 |  | Year Ending December 31, 2020
Costs recorded in cost of goods sold: |  |  |  |  |  |  |
Contract-based royalties | $ | — |  |  | $ | — |  |  | $ | 11,000 |  |  | $ | 11,000 |
Total costs recorded in cost of goods sold | — |  |  | — |  |  | 11,000 |  |  | 11,000 |
Costs recorded in restructuring and related impairment charges: |  |  |  |  |  |  |
Property and equipment impairment | 15,810 |  |  | 22,904 |  |  | 21,096 |  |  | 44,000 |
ROU asset impairment | — |  |  | 290,813 |  |  | — |  |  | 290,813 |
Employee related costs | 829 |  |  | 829 |  |  | 24,171 |  |  | 25,000 |
Contract exit costs (2) | 14,942 |  |  | 14,942 |  |  | 100,058 |  |  | 115,000 |
Other restructuring costs | 7,356 |  |  | 10,538 |  |  | 28,462 |  |  | 39,000 |
Total costs recorded in restructuring and related impairment charges | 38,937 |  |  | 340,026 |  |  | 173,787 |  |  | 513,813 |
Total restructuring and related impairment and restructuring related costs | $ | 38,937 |  |  | $ | 340,026 |  |  | $ | 184,787 |  |  | $ | 524,813 |
(1) Estimated restructuring and related impairment charges to be incurred reflect the high-end of the range of the estimated remaining charges expected to be taken by the Company during 2020 in connection with the restructuring plan. (2) Contract exit costs are primarily comprised of proposed lease exits of certain brand and factory house stores and office facilities, and proposed marketing and other contract exits. All restructuring and related impairment charges are included in the Company's Corporate Other non-operating segment, of which $30.4 million are North America related, $0.3 million are Latin America related, and $0.1 million are EMEA related for the three months ended June 30, 2020 and $328.3 million are North America related, $0.3 million are Latin America related, and $0.1 million are EMEA related for the six months ended June 30, 2020. The lease term for the Company's New York City flagship store commenced on March 1, 2020 and an operating lease ROU asset and corresponding operating lease liability of $344.8 million was recorded on the Company's unaudited consolidated balance sheet. In March 2020, as a part of the 2020 Restructuring, the Company made the strategic decision to forgo the opening of its New York City flagship store and the property is actively being marketed for sublease. Accordingly, in the first quarter of 2020, the Company recognized a ROU asset impairment of $290.8 million, reducing the carrying value of the lease asset to its estimated fair value. Fair value was estimated using an income-approach based on management's forecast of future cash flows expected to be derived from the property based on current sublease market rent. Rent expense or sublease income related to this lease will be recorded within other income (expense) on the unaudited consolidated statements of operations. There were no related ROU asset impairment charges for the three months ended June 30, 2020. These charges require the Company to make certain judgements and estimates regarding the amount and timing of restructuring and related impairment charges or recoveries. The estimated liability could change subsequent to its recognition, requiring adjustments to the expense and the liability recorded. On a quarterly basis, the Company conducts an evaluation of the related liabilities and expenses and revises its assumptions and estimates as appropriate as new or updated information becomes available. A summary of the activity in the restructuring reserve related to the Company's 2020 restructuring plan, as well as prior restructuring plans in 2018 and 2017 are as follows:
(In thousands) | Employee Related Costs |  | Contract Exit Costs |  | Other Restructuring Related Costs
Balance at January 1, 2020 | $ | 462 |  |  | $ | 17,843 |  |  | $ | — |
Additions charged to expense | 376 |  |  | 2,366 |  |  | 10,533 |
Cash payments charged against reserve | — |  |  | (570) |  |  | (3,267) |
Changes in reserve estimate | — |  |  | 42 |  |  | — |
Balance at June 30, 2020 | $ | 838 |  |  | $ | 19,681 |  |  | $ | 7,266 |

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- Definition The entire disclosure for restructuring and related activities. Description of restructuring activities such as exit and disposal activities, include facts and circumstances leading to the plan, the expected plan completion date, the major types of costs associated with the plan activities, total expected costs, the accrual balance at the end of the period, and the periods over which the remaining accrual will be settled. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 420 -URI http://asc.fasb.org/topic&trid=2175745 + Details
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