x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
o
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
Maryland
|
52-2242751
|
|
(State
or other jurisdiction of
|
(I.R.S.
Employer
|
|
incorporation
or organization)
|
Identification
No.)
|
Page
Number
|
||
PART
I - FINANCIAL INFORMATION
|
||
ITEM
1.
|
Financial
Statements
|
|
Condensed
Consolidated Balance Sheets -
|
||
At
March 29, 2008 and June 30, 2007
|
4
|
|
Condensed
Consolidated Statements of Income -
|
||
For
the Quarters and Nine Months Ended
|
||
March
29, 2008 and March 31, 2007
|
5
|
|
Condensed
Consolidated Statements of Cash Flows -
|
||
For
the Nine Months Ended
|
||
March
29, 2008 and March 31, 2007
|
6
|
|
Notes
to Condensed Consolidated Financial Statements
|
7
|
|
ITEM
2.
|
Management’s
Discussion and Analysis of Financial Condition
|
|
and
Results of Operations
|
23
|
|
ITEM
3.
|
Quantitative
and Qualitative Disclosures about Market Risk
|
37
|
ITEM
4.
|
Controls
and Procedures
|
38
|
PART
II - OTHER INFORMATION
|
||
ITEM
1.
|
Legal
Proceedings
|
38
|
ITEM
1A.
|
Risk
Factors
|
39
|
ITEM
2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
39
|
ITEM
4.
|
Submission
of Matters to a Vote of Security Holders
|
39
|
ITEM
5.
|
Other
Information
|
39
|
ITEM
6.
|
Exhibits
|
39
|
SIGNATURE
|
40
|
COACH, INC.
|
|||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|||||||||
(amounts in thousands, except share data)
|
|||||||||
(unaudited)
|
March
29,
2008
|
|
June
30,
2007
|
|||||
ASSETS
|
|||||||
Current Assets:
|
|||||||
Cash and cash equivalents
|
$
|
608,200
|
$
|
556,956
|
|||
Short-term investments
|
8,002
|
628,860
|
|||||
Trade accounts receivable, less allowances of $6,469 and $6,579, respectively
|
148,074
|
107,814
|
|||||
Inventories
|
319,655
|
291,192
|
|||||
Prepaid assets
|
49,300
|
16,140
|
|||||
Other current assets
|
137,722
|
139,234
|
|||||
|
|||||||
Total current assets
|
1,270,953
|
1,740,196
|
|||||
|
|||||||
Property and equipment, net
|
420,943
|
368,461
|
|||||
Goodwill
|
263,204
|
213,794
|
|||||
Indefinite life intangibles
|
12,362
|
11,865
|
|||||
Other non-current assets
|
188,778
|
115,196
|
|||||
|
|||||||
Total assets
|
$
|
2,156,240
|
$
|
2,449,512
|
|||
|
|||||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|||||||
Current Liabilities:
|
|||||||
Accounts payable
|
$
|
63,676
|
$
|
109,309
|
|||
Accrued liabilities
|
289,554
|
298,452
|
|||||
Revolving credit facility
|
11,079
|
-
|
|||||
Current portion of long-term debt
|
285
|
235
|
|||||
|
|||||||
Total current liabilities
|
364,594
|
407,996
|
|||||
|
|||||||
Long-term debt
|
2,580
|
2,865
|
|||||
Non-current tax liabilities
|
161,978
|
-
|
|||||
Other liabilities
|
168,635
|
128,297
|
|||||
|
|||||||
Total liabilities
|
697,787
|
539,158
|
|||||
|
|||||||
Commitments and contingencies (Note 6)
|
|||||||
|
|||||||
Stockholders' Equity:
|
|||||||
Preferred
stock: (authorized 25,000,000 shares; $0.01 par value) none issued
|
-
|
-
|
|||||
Common
stock: (authorized 1,000,000,000 shares; $0.01 par value) issued
|
|||||||
and
outstanding - 341,189,847 and 372,521,112 shares, respectively
|
3,412
|
3,725
|
|||||
Additional
paid-in-capital
|
1,088,724
|
978,664
|
|||||
Retained
earnings
|
332,376
|
940,757
|
|||||
Accumulated
other comprehensive income (loss)
|
33,941
|
(12,792
|
)
|
||||
|
|||||||
Total stockholders' equity
|
1,458,453
|
1,910,354
|
|||||
|
|||||||
Total liabilities and stockholders' equity
|
$
|
2,156,240
|
$
|
2,449,512
|
Quarter
Ended
|
Nine
Months Ended
|
||||||||||||
March
29,
2008
|
March
31,
2007
|
March
29,
2008
|
March
31,
2007
|
||||||||||
|
|
|
|
|
|||||||||
|
|
|
|||||||||||
Net sales
|
$
|
744,522
|
$
|
625,303
|
$
|
2,399,257
|
$
|
1,960,327
|
|||||
|
|||||||||||||
Cost of sales
|
186,204
|
138,893
|
585,446
|
446,617
|
|||||||||
|
|||||||||||||
Gross profit
|
558,318
|
486,410
|
1,813,811
|
1,513,710
|
|||||||||
|
|||||||||||||
Selling, general and
|
|||||||||||||
administrative expenses
|
301,626
|
259,783
|
915,298
|
765,714
|
|||||||||
|
|||||||||||||
Operating income
|
256,692
|
226,627
|
898,513
|
747,996
|
|||||||||
|
|||||||||||||
Interest income, net
|
9,547
|
12,988
|
35,111
|
27,465
|
|||||||||
|
|||||||||||||
Income before provision for income
|
|||||||||||||
taxes and discontinued operations
|
266,239
|
239,615
|
933,624
|
775,461
|
|||||||||
Provision for income taxes
|
103,827
|
92,225
|
364,109
|
298,335
|
|||||||||
Income from continuing operations
|
162,412
|
147,390
|
569,515
|
477,126
|
|||||||||
Income (loss) from discontinued
|
|||||||||||||
operations, net of income taxes (Note 13)
|
(4
|
)
|
2,574
|
16
|
25,927
|
||||||||
Net income
|
$
|
162,408
|
$
|
149,964
|
$
|
569,531
|
$
|
503,053
|
|||||
Net income (loss) per share
|
|||||||||||||
Basic
|
|||||||||||||
Continuing operations
|
$
|
0.47
|
$
|
0.40
|
$
|
1.58
|
$
|
1.29
|
|||||
Discontinued operations
|
(0.00
|
)
|
0.01
|
0.00
|
0.07
|
||||||||
Net income
|
$
|
0.47
|
$
|
0.41
|
$
|
1.58
|
$
|
1.36
|
|||||
Diluted
|
|||||||||||||
Continuing operations
|
$
|
0.46
|
$
|
0.39
|
$
|
1.56
|
$
|
1.27
|
|||||
Discontinued operations
|
(0.00
|
)
|
0.01
|
0.00
|
0.07
|
||||||||
Net income
|
$
|
0.46
|
$
|
0.40
|
$
|
1.56
|
$
|
1.34
|
|||||
Shares used in computing net
|
|||||||||||||
income per share
|
|||||||||||||
Basic
|
348,125
|
370,264
|
360,507
|
369,039
|
|||||||||
Diluted
|
351,593
|
379,289
|
365,497
|
376,334
|
Nine
Months Ended
|
|||||||
March
29,
2008
|
March
31,
2007
|
||||||
|
|
|
|||||
CASH
FLOWS FROM OPERATING ACTIVITIES
|
|
|
|||||
Net income
|
$
|
569,531
|
$
|
503,053
|
|||
Adjustments to reconcile net income to net cash from operating activities:
|
|||||||
Depreciation and amortization
|
74,948
|
59,555
|
|||||
Provision for bad debt
|
1,034
|
2,458
|
|||||
Share-based compensation
|
50,473
|
41,553
|
|||||
Excess tax benefit from share-based compensation
|
(21,537
|
)
|
(44,899
|
)
|
|||
(Increase) decrease in deferred tax assets
|
(17,538
|
)
|
10,466
|
||||
Decrease in deferred tax liabilities
|
(19,337
|
)
|
(16,299
|
)
|
|||
Other noncash charges and credits, net
|
(4,981
|
)
|
(252
|
)
|
|||
Changes in operating assets and liabilities:
|
|||||||
Increase in trade accounts receivable
|
(29,458
|
)
|
(43,894
|
)
|
|||
Decrease (increase) in inventories
|
6,230
|
(18,839
|
)
|
||||
Increase in other assets
|
(27,132
|
)
|
(33,407
|
)
|
|||
Increase in other liabilities
|
11,571
|
22,577
|
|||||
Decrease in accounts payable
|
(53,778
|
)
|
(17,013
|
)
|
|||
Increase in accrued liabilities
|
60,295
|
57,685
|
|||||
Net cash provided by operating activities
|
600,321
|
522,744
|
|||||
|
|||||||
CASH
FLOWS FROM INVESTING ACTIVITIES
|
|||||||
Purchases of property and equipment
|
(119,777
|
)
|
(98,391
|
)
|
|||
Proceeds from dispositions of property and equipment
|
-
|
33
|
|||||
Purchases of investments
|
(162,300
|
)
|
(773,521
|
)
|
|||
Proceeds from maturities and sales of investments
|
782,460
|
453,314
|
|||||
Net cash provided by (used in) investing activities
|
500,383
|
(418,565
|
)
|
||||
|
|||||||
CASH
FLOWS FROM FINANCING ACTIVITIES
|
|||||||
Repurchase of common stock
|
(1,166,600
|
)
|
(149,999
|
)
|
|||
Repayment of long-term debt
|
(235
|
)
|
(170
|
)
|
|||
Net borrowings on revolving credit facility
|
9,563
|
-
|
|||||
Proceeds from exercise of stock options
|
80,984
|
96,921
|
|||||
Excess tax benefit from share-based compensation
|
21,537
|
44,899
|
|||||
Adjustment to excess tax benefit from share-based compensation
|
-
|
(16,658
|
)
|
||||
Net cash used in financing activities
|
(1,054,751
|
)
|
(25,007
|
)
|
|||
|
|||||||
|
|||||||
Effect
of exchange rate changes on cash and cash equivalents
|
5,291
|
(244
|
)
|
||||
|
|||||||
|
|||||||
Increase
in cash and cash equivalents
|
51,244
|
78,928
|
|||||
Cash
and cash equivalents at beginning of period
|
556,956
|
143,388
|
|||||
Cash
and cash equivalents at end of period
|
$
|
608,200
|
$
|
222,316
|
|||
|
|||||||
Supplemental
Information:
|
|||||||
Cash
paid for income taxes
|
$
|
373,783
|
$
|
309,207
|
|||
Cash
paid for interest
|
$
|
590
|
$
|
598
|
|||
Noncash
investing activity - property and equipment obligations incurred
|
$
|
24,395
|
$
|
26,851
|
1.
|
Basis
of Presentation and
Organization
|
2.
|
Share-Based
Compensation
|
Quarter
Ended
|
Nine
Months Ended
|
||||||||||||
March
29,
2008
|
March
31,
2007
|
March
29,
2008
|
March
31,
2007
|
||||||||||
Share-based
compensation expense
|
$
|
16,320
|
$
|
15,467
|
$
|
50,473
|
$
|
41,553
|
|||||
Income
tax benefit related to share-based
|
|||||||||||||
compensation
expense
|
6,000
|
6,088
|
18,840
|
16,368
|
Number
of
Options
Outstanding
|
Weighted-
Average
Exercise
Price
|
Weighted-
Average
Remaining
Contractual
Term
(in
years)
|
Aggregate
Intrinsic
Value
|
||||||||||
|
|
|
|
|
|||||||||
Outstanding at June 30, 2007
|
29,376
|
$
|
27.36
|
||||||||||
Granted
|
3,506
|
43.82
|
|||||||||||
Exercised
|
(3,157
|
)
|
25.16
|
||||||||||
Forfeited or expired
|
(729
|
)
|
34.05
|
||||||||||
Outstanding at March 29, 2008
|
28,996
|
$
|
29.42
|
6.38
|
$
|
121,828
|
|||||||
Exercisable at March 29, 2008
|
15,936
|
$
|
26.28
|
5.14
|
$
|
99,522
|
Options
Outstanding
|
Options
Exercisable
|
|||||||||||||||
Range
of
Exercise
Prices
|
Number
Outstanding
at
March
29,
2008
|
Weighted-
Average
Remaining
Contractual
Term
(in years)
|
Weighted-
Average
Exercise
Price
|
Number
Exercisable
at
March
29,
2008
|
Weighted-
Average
Exercise
Price
|
|||||||||||
|
|
|
|
|
|
|||||||||||
$2.00
- 5.00
|
481
|
2.98
|
$
|
4.12
|
481
|
$
|
4.12
|
|||||||||
$5.01
- 10.00
|
850
|
4.38
|
6.36
|
850
|
6.36
|
|||||||||||
$10.01
- 20.00
|
6,377
|
5.76
|
15.53
|
5,044
|
16.33
|
|||||||||||
$20.01
- 30.00
|
6,325
|
7.16
|
29.27
|
2,887
|
28.59
|
|||||||||||
$30.01
- 40.00
|
10,483
|
6.03
|
34.09
|
5,463
|
34.86
|
|||||||||||
$40.01
- 50.00
|
4,400
|
7.68
|
45.49
|
1,211
|
46.27
|
|||||||||||
$50.01
- 51.56
|
80
|
9.06
|
50.44
|
-
|
-
|
|||||||||||
|
28,996
|
6.38
|
$
|
29.42
|
15,936
|
$
|
26.28
|
|
Nine
Months Ended
|
||||||
|
|
|
|||||
March
29,
2008
|
March
31,
2007
|
||||||
|
|
|
|||||
Expected
term (years)
|
2.6
|
2.3
|
|||||
Expected
volatility
|
32.4
|
%
|
30.0
|
%
|
|||
Risk-free
interest rate
|
4.4
|
%
|
4.9
|
%
|
|||
Dividend
yield
|
0.0
|
%
|
0.0
|
%
|
Number
of
Non-vested
Shares
|
Weighted-
Average
Grant-
Date
Fair
Value
|
||||||
|
|
|
|||||
|
|
|
|||||
Non-vested at June 30, 2007
|
1,326
|
$
|
26.10
|
||||
Granted
|
761
|
41.58
|
|||||
Vested
|
(438
|
)
|
21.45
|
||||
Forfeited
|
(90
|
)
|
37.97
|
||||
Non-vested at March 29, 2008
|
1,559
|
$
|
34.29
|
3.
|
Stockholders’
Equity
|
Common
Stockholders'
Equity
|
Additional
Paid-in-
Capital
|
Retained
Earnings
|
Accumulated
Other
Comprehensive
Income
(Loss)
|
Total
Stockholders'
Equity
|
||||||||||||
Balances
at June 30, 2007
|
$
|
3,725
|
$
|
978,664
|
$
|
940,757
|
$
|
(12,792
|
)
|
$
|
1,910,354
|
|||||
|
||||||||||||||||
Net income
|
569,531
|
569,531
|
||||||||||||||
Shares issued for stock options and employee
|
||||||||||||||||
benefit plans
|
36
|
75,186
|
75,222
|
|||||||||||||
Share-based compensation
|
50,473
|
50,473
|
||||||||||||||
Excess tax benefit from share-based compensation
|
21,537
|
21,537
|
||||||||||||||
Repurchase and retirement of common stock
|
(349
|
)
|
(37,136
|
)
|
(1,129,115
|
)
|
(1,166,600
|
)
|
||||||||
Adjustment to adopt FIN 48
|
(48,797
|
)
|
(48,797
|
)
|
||||||||||||
Unrealized losses on cash flow hedging derivatives,
|
||||||||||||||||
net of tax
|
(3,282
|
)
|
(3,282
|
)
|
||||||||||||
Translation adjustments
|
50,015
|
50,015
|
||||||||||||||
|
||||||||||||||||
Balances
at March 29, 2008
|
$
|
3,412
|
$
|
1,088,724
|
$
|
332,376
|
$
|
33,941
|
$
|
1,458,453
|
Common
Stockholders'
Equity
|
Additional
Paid-in-
Capital
|
Retained
Earnings
|
Accumulated
Other
Comprehensive
Income
(Loss)
|
Total
Stockholders'
Equity
|
||||||||||||
|
|
|
|
|
|
|||||||||||
|
|
|
|
|
|
|||||||||||
Balances
at July 1, 2006
|
$
|
3,698
|
$
|
775,209
|
$
|
417,087
|
$
|
(7,260
|
)
|
$
|
1,188,734
|
|||||
|
||||||||||||||||
Net income
|
503,053
|
503,053
|
||||||||||||||
Shares issued for stock options and employee
|
||||||||||||||||
benefit plans
|
63
|
93,553
|
93,616
|
|||||||||||||
Share-based compensation
|
41,553
|
41,553
|
||||||||||||||
Excess tax benefit from share-based compensation
|
44,899
|
44,899
|
||||||||||||||
Adjustment to excess tax benefit from share-
|
||||||||||||||||
based compensation
|
(16,658
|
)
|
(16,658
|
)
|
||||||||||||
Repurchase and retirement of common stock
|
(50
|
)
|
(9,954
|
)
|
(139,995
|
)
|
(149,999
|
)
|
||||||||
Unrealized gains on cash flow hedging derivatives,
|
||||||||||||||||
net of tax
|
4,067
|
4,067
|
||||||||||||||
Translation adjustments
|
(3,819
|
)
|
(3,819
|
)
|
||||||||||||
|
||||||||||||||||
Balances
at March 31, 2007
|
$
|
3,711
|
$
|
928,602
|
$
|
780,145
|
$
|
(7,012
|
)
|
$
|
1,705,446
|
Quarter
Ended
|
Nine
Months Ended
|
||||||||||||
March
29,
2008
|
March
31,
2007
|
March
29,
2008
|
March
31,
2007
|
||||||||||
|
|||||||||||||
Net income
|
$
|
162,408
|
$
|
149,964
|
$
|
569,531
|
$
|
503,053
|
|||||
Unrealized (losses)/gains on cash flow
|
|||||||||||||
hedging derivatives, net of tax
|
(3,752
|
)
|
(278
|
)
|
(3,282
|
)
|
4,067
|
||||||
Translation adjustments
|
27,710
|
(666
|
)
|
50,015
|
(3,819
|
)
|
|||||||
|
|||||||||||||
Comprehensive income
|
$
|
186,366
|
$
|
149,020
|
$
|
616,264
|
$
|
503,301
|
March
29,
2008
|
June
30,
2007
|
||||||
Cumulative translation adjustments
|
$
|
37,565
|
$
|
(12,450
|
)
|
||
Unrealized (losses)/gains on cash flow hedging derivatives,
net of tax of $1,456 and $(796)
|
(2,121
|
)
|
1,161
|
||||
SFAS 158 adjustment and minimum pension liability, net of tax of
|
|||||||
$981 and $981
|
(1,503
|
)
|
(1,503
|
)
|
|||
Accumulated other comprehensive income (loss)
|
$
|
33,941
|
$
|
(12,792
|
)
|
4.
|
Investments
|
March
29, 2008
|
June
30, 2007
|
||||||||||||||||||
Amortized
Cost
|
Fair
Value
|
Unrealized
Gain/(Loss)
|
Amortized
Cost
|
Fair
Value
|
Unrealized
Gain/(Loss)
|
||||||||||||||
Short-term investments:
|
|
|
|
|
|
|
|||||||||||||
U.S. government and agency securities
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
25,000
|
$
|
25,000
|
$
|
-
|
|||||||
Corporate debt securities
|
8,002
|
8,002
|
-
|
206,675
|
206,675
|
-
|
|||||||||||||
Municipal securities
|
-
|
-
|
-
|
397,185
|
397,185
|
-
|
|||||||||||||
Short-term investments
|
$
|
8,002
|
$
|
8,002
|
$
|
-
|
$
|
628,860
|
$
|
628,860
|
$
|
-
|
5.
|
Debt
|
Period
Ended
|
|||||||
March
29,
2008
|
June
30,
2007
|
||||||
|
|
||||||
Balance
at beginning of period
|
$
|
1,161
|
$
|
(3,547
|
)
|
||
Net
(gains)/losses transferred to earnings
|
27
|
(2,724
|
)
|
||||
Change
in fair value, net of tax expense of $2,252 and $(3,161)
|
(3,309
|
)
|
7,432
|
||||
Balance
at end of period
|
$
|
(2,121
|
)
|
$
|
1,161
|
8.
|
Goodwill
and Intangible Assets
|
Direct-to-
Consumer
|
Indirect
|
Total
|
||||||||
|
|
|
||||||||
Goodwill
balance at June 30, 2007
|
$
|
212,278
|
$
|
1,516
|
$
|
213,794
|
||||
Foreign
exchange impact
|
49,410
|
-
|
49,410
|
|||||||
Goodwill
balance at March 29, 2008
|
$
|
261,688
|
$
|
1,516
|
$
|
263,204
|
March
29, 2008
|
June
30, 2007
|
||||||
Trademarks
|
$
|
9,788
|
$
|
9,788
|
|||
Workforce
|
2,574
|
2,077
|
|||||
Total
Indefinite Life Intangible Assets
|
$
|
12,362
|
$
|
11,865
|
9.
|
Income
Taxes
|
10. |
Retirement
Plans
|
Quarter
Ended
|
Nine
Months Ended
|
||||||||||||
March
29,
2008
|
March
31,
2007
|
March
29,
2008
|
March
31,
2007
|
||||||||||
|
|
|
|
|
|||||||||
Service
cost
|
$
|
202
|
$
|
179
|
$
|
574
|
$
|
545
|
|||||
Interest
cost
|
96
|
89
|
287
|
265
|
|||||||||
Expected
return on plan assets
|
(79
|
)
|
(77
|
)
|
(237
|
)
|
(231
|
)
|
|||||
Recognized
actuarial loss
|
67
|
54
|
197
|
163
|
|||||||||
Net
periodic pension cost
|
$
|
286
|
$
|
245
|
$
|
821
|
$
|
742
|
11. |
Segment
Information
|
Direct-to-
Consumer
|
Indirect
|
Corporate
Unallocated
|
Total
|
||||||||||
Quarter Ended March 29, 2008
|
|
|
|
|
|||||||||
|
|
|
|
|
|||||||||
Net sales
|
$
|
578,490
|
$
|
166,032
|
$
|
-
|
$
|
744,522
|
|||||
Operating income (loss)
|
228,047
|
104,239
|
(75,594
|
)
|
256,692
|
||||||||
Income (loss) before provision for
|
|||||||||||||
income taxes and discontinued operations
|
228,047
|
104,239
|
(66,047
|
)
|
266,239
|
||||||||
Depreciation and amortization expense
|
18,340
|
2,478
|
4,991
|
25,809
|
|||||||||
Total assets
|
1,009,966
|
133,338
|
1,012,936
|
2,156,240
|
|||||||||
Additions to long-lived assets
|
22,710
|
2,571
|
7,229
|
32,510
|
|||||||||
|
|||||||||||||
Quarter Ended March 31, 2007
|
|||||||||||||
|
|||||||||||||
Net sales
|
$
|
480,916
|
$
|
144,387
|
$
|
-
|
$
|
625,303
|
|||||
Operating income (loss)
|
203,337
|
90,178
|
(66,888
|
)
|
226,627
|
||||||||
Income (loss) before provision for
|
|||||||||||||
income taxes and discontinued operations
|
203,337
|
90,178
|
(53,900
|
)
|
239,615
|
||||||||
Depreciation and amortization expense
|
14,049
|
1,897
|
4,679
|
20,625
|
|||||||||
Total assets
|
827,143
|
115,988
|
1,200,064
|
2,143,195
|
|||||||||
Additions to long-lived assets
|
22,331
|
1,785
|
10,362
|
34,478
|
|||||||||
|
|||||||||||||
Nine Months Ended March 29, 2008
|
|||||||||||||
|
|||||||||||||
Net sales
|
$
|
1,885,271
|
$
|
513,986
|
$
|
-
|
$
|
2,399,257
|
|||||
Operating income (loss)
|
815,102
|
328,566
|
(245,155
|
)
|
898,513
|
||||||||
Income (loss) before provision for
|
|||||||||||||
income taxes and discontinued operations
|
815,102
|
328,566
|
(210,044
|
)
|
933,624
|
||||||||
Depreciation and amortization expense
|
51,098
|
7,166
|
16,684
|
74,948
|
|||||||||
Total assets
|
1,009,966
|
133,338
|
1,012,936
|
2,156,240
|
|||||||||
Additions to long-lived assets
|
80,864
|
12,686
|
21,549
|
115,099
|
|||||||||
|
|||||||||||||
Nine Months Ended March 31, 2007
|
|||||||||||||
|
|||||||||||||
Net sales
|
$
|
1,560,491
|
$
|
399,836
|
$
|
-
|
$
|
1,960,327
|
|||||
Operating income (loss)
|
706,878
|
248,015
|
(206,897
|
)
|
747,996
|
||||||||
Income (loss) before provision for
|
|||||||||||||
income taxes and discontinued operations
|
706,878
|
248,015
|
(179,432
|
)
|
775,461
|
||||||||
Depreciation and amortization expense
|
40,963
|
5,237
|
13,355
|
59,555
|
|||||||||
Total assets
|
827,143
|
115,988
|
1,200,064
|
2,143,195
|
|||||||||
Additions to long-lived assets
|
63,258
|
9,680
|
31,252
|
104,190
|
Quarter
Ended
|
Nine
Months Ended
|
||||||||||||
March
29,
2008
|
March
31,
2007
|
March
29,
2008
|
March
31,
2007
|
||||||||||
|
|
|
|||||||||||
Production variances
|
$
|
12,354
|
$
|
10,952
|
$
|
19,330
|
$
|
16,774
|
|||||
Advertising, marketing and design
|
(32,818
|
)
|
(28,268
|
)
|
(96,101
|
)
|
(82,289
|
)
|
|||||
Administration and
|
|||||||||||||
information systems
|
(44,081
|
)
|
(36,753
|
)
|
(134,187
|
)
|
(102,823
|
)
|
|||||
Distribution and customer service
|
(11,049
|
)
|
(12,819
|
)
|
(34,197
|
)
|
(38,559
|
)
|
|||||
Total corporate unallocated
|
$
|
(75,594
|
)
|
$
|
(66,888
|
)
|
$
|
(245,155
|
)
|
$
|
(206,897
|
)
|
United
States
|
Japan
|
Other
International
(1)
|
Total
|
||||||||||
Quarter
Ended March 29, 2008
|
|
|
|
|
|||||||||
|
|
|
|
||||||||||
Net
sales
|
$
|
530,643
|
$
|
157,617
|
$
|
56,262
|
$
|
744,522
|
|||||
Long-lived
assets
|
418,712
|
344,757
|
7,896
|
771,365
|
|||||||||
Quarter
Ended March 31, 2007
|
|||||||||||||
Net
sales
|
$
|
464,062
|
$
|
126,711
|
$
|
34,530
|
$
|
625,303
|
|||||
Long-lived
assets
|
307,328
|
296,208
|
5,334
|
608,870
|
United
States
|
Japan
|
Other
International
(1)
|
Total
|
||||||||||
Nine
Months Ended March 29, 2008
|
|
|
|
|
|||||||||
|
|
|
|
||||||||||
Net
sales
|
$
|
1,807,982
|
$
|
439,890
|
$
|
151,385
|
$
|
2,399,257
|
|||||
Long-lived
assets
|
418,712
|
344,757
|
7,896
|
771,365
|
|||||||||
Nine
Months Ended March 31, 2007
|
|||||||||||||
Net
sales
|
$
|
1,503,584
|
$
|
364,405
|
$
|
92,338
|
$
|
1,960,327
|
|||||
Long-lived
assets
|
307,328
|
296,208
|
5,334
|
608,870
|
(1)
|
Other
International sales reflect shipments to third-party distributors,
primarily in East Asia, and sales from Coach-operated stores in
Canada.
|
12. |
Earnings
Per Share
|
Quarter
Ended
|
Nine
Months Ended
|
||||||||||||
March
29,
2008
|
March
31,
2007
|
March
29,
2008
|
March
31,
2007
|
||||||||||
|
|
|
|
|
|||||||||
Income from continuing operations
|
$
|
162,412
|
$
|
147,390
|
$
|
569,515
|
$
|
477,126
|
|||||
|
|
|
|
|
|||||||||
Total weighted-average basic shares
|
348,125
|
370,264
|
360,507
|
369,039
|
|||||||||
|
|
|
|
|
|||||||||
Dilutive securities:
|
|
|
|
|
|||||||||
Employee benefit and
|
|
|
|
|
|||||||||
share award plans
|
468
|
817
|
604
|
1,044
|
|||||||||
Stock option programs
|
3,000
|
8,208
|
4,386
|
6,251
|
|||||||||
|
|
|
|
|
|||||||||
Total weighted-average diluted shares
|
351,593
|
379,289
|
365,497
|
376,334
|
|||||||||
|
|
|
|||||||||||
Income from continuing
operations per share:
|
|
|
|
|
|||||||||
Basic
|
$
|
0.47
|
$
|
0.40
|
$
|
1.58
|
$
|
1.29
|
|||||
Diluted
|
$
|
0.46
|
$
|
0.39
|
$
|
1.56
|
$
|
1.27
|
13. |
Discontinued
Operations
|
Quarter
Ended
|
Nine
Months Ended
|
||||||||||||
March
29,
2008
|
March
31,
2007
|
March
29,
2008
|
March
31,
2007
|
||||||||||
|
|
|
|
|
|||||||||
Net sales
|
$
|
-
|
$
|
8,149
|
$
|
102
|
$
|
63,363
|
|||||
Income (loss) before provision for
income taxes
|
(3
|
)
|
4,219
|
31
|
42,503
|
||||||||
Income (loss) from discontinued
operations
|
(4
|
)
|
2,574
|
16
|
25,927
|
14. |
Recent
Accounting
Developments
|
ITEM
2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of Operations
|
·
|
Build
market share in the growing North American women’s accessories market. As
part of our culture of innovation and continuous improvement, we
are
implementing a number of initiatives to accelerate the level of newness,
elevate our product offering and enhance the in-store experience.
These
initiatives will enable us to continue to leverage our leadership
position
in the market.
|
·
|
Rapidly
grow our North American retail store base by adding stores within
existing
markets and opening in new markets. We plan to add about 40 retail
stores
in North America in each of the next several years and believe that
North
America can support about 500 retail stores in total, including up
to 20
in Canada. In addition, we will continue to expand select, highly
productive retail and factory locations.
|
·
|
Expand
market share with the Japanese consumer, driving growth in Japan
primarily
by opening new retail locations and expanding existing ones. We plan
to
add about 10 net new locations in fiscal 2008 and believe that Japan
can
support about 180 locations in total. We will also continue to expand
key
locations.
|
·
|
Raise
brand awareness in emerging markets to build the foundation for
substantial sales in the future. Specifically, Greater China, Korea
and
other emerging geographies are increasing in importance as the handbag
and
accessories category grows in these areas. In fiscal 2008, we intend
to
open approximately 30 net new locations, through distributors, including
eight in Greater China.
|
·
|
Earnings
per diluted share from continuing operations increased 18.9% to $0.46
per
diluted share.
|
·
|
Net
income from continuing operations increased 10.2% to $162.4 million.
|
·
|
Net
sales increased 19.1% to $744.5
million.
|
·
|
Direct-to-consumer
sales rose 20.3% to $578.5 million.
|
·
|
Comparable
store sales in North America increased
9.0%.
|
·
|
Coach
Japan sales, when translated into U.S. dollars, rose 25.5% driven
primarily by expanded distribution. This 25.5% increase includes
a 13.4%
positive impact from currency translation.
|
·
|
In
North America, Coach opened five new retail stores and two new factory
stores, bringing the total number of retail and factory stores to
287 and
101, respectively, at the end of the third quarter of fiscal 2008.
We also
expanded one factory store in North America.
|
·
|
In
Japan, Coach opened two new department store locations and closed
two
retail locations, leaving the total number of Coach Japan-operated
locations at the end of the third quarter of fiscal 2008 at 142.
In
addition, we expanded five locations.
|
Quarter
Ended
|
|||||||||||||||||||||
March
29, 2008
|
March
31, 2007
|
Variance
|
|||||||||||||||||||
(dollars
in millions, except per share data)
|
|||||||||||||||||||||
(unaudited)
|
|||||||||||||||||||||
Amount
|
%
of
net
sales
|
Amount
|
%
of
net
sales
|
Amount
|
%
|
||||||||||||||||
Net sales
|
$
|
744.5
|
100.0
|
%
|
$
|
625.3
|
100.0
|
%
|
$
|
119.2
|
19.1
|
%
|
|||||||||
|
|||||||||||||||||||||
Gross profit
|
558.3
|
75.0
|
486.4
|
77.8
|
71.9
|
14.8
|
|||||||||||||||
|
|||||||||||||||||||||
Selling, general and
|
|||||||||||||||||||||
administrative expenses
|
301.6
|
40.5
|
259.8
|
41.5
|
41.8
|
16.1
|
|||||||||||||||
|
|||||||||||||||||||||
Operating income
|
256.7
|
34.5
|
226.6
|
36.2
|
30.1
|
13.3
|
|||||||||||||||
|
|||||||||||||||||||||
Interest income, net
|
9.5
|
1.3
|
13.0
|
2.1
|
(3.5
|
)
|
(26.9
|
)
|
|||||||||||||
|
|||||||||||||||||||||
Provision for income taxes
|
103.8
|
13.9
|
92.2
|
14.7
|
11.6
|
12.6
|
|||||||||||||||
|
|||||||||||||||||||||
Income from
continuing operations
|
162.4
|
21.8
|
147.4
|
23.6
|
15.0
|
10.2
|
|||||||||||||||
|
|||||||||||||||||||||
Income from discontinued
operations, net of taxes
|
-
|
0.0
|
2.6
|
0.4
|
(2.6
|
)
|
(100.0
|
)
|
|||||||||||||
|
|||||||||||||||||||||
Net income
|
$
|
162.4
|
21.8
|
%
|
$
|
150.0
|
24.0
|
%
|
$
|
12.4
|
8.3
|
%
|
|||||||||
|
|||||||||||||||||||||
Net income per share:
|
|||||||||||||||||||||
Basic:
|
|||||||||||||||||||||
Continuing operations
|
$
|
0.47
|
$
|
0.40
|
$
|
0.07
|
17.2
|
%
|
|||||||||||||
Discontinued operations
|
-
|
0.01
|
(0.01
|
)
|
(100.0
|
)
|
|||||||||||||||
Net income
|
$
|
0.47
|
$
|
0.41
|
$
|
0.06
|
15.2
|
%
|
|||||||||||||
|
|||||||||||||||||||||
Diluted:
|
|||||||||||||||||||||
Continuing operations
|
$
|
0.46
|
$
|
0.39
|
$
|
0.07
|
18.9
|
%
|
|||||||||||||
Discontinued operations
|
-
|
0.01
|
(0.01
|
)
|
(100.0
|
)
|
|||||||||||||||
Net income
|
$
|
0.46
|
$
|
0.40
|
$
|
0.07
|
16.8
|
%
|
Quarter
Ended
|
||||||||||||||||||
(unaudited)
|
||||||||||||||||||
Net
Sales
|
Percentage
of
Total
Net Sales
|
|||||||||||||||||
March
29,
2008
|
March
31,
2007
|
Rate
of
Increase
|
March
29,
2008
|
March
31,
2007
|
||||||||||||||
(dollars
in millions)
|
(FY08
v. FY07)
|
|||||||||||||||||
|
|
|
|
|
|
|||||||||||||
Direct-to-consumer
|
$
|
578.5
|
$
|
480.9
|
20.3
|
%
|
77.7
|
%
|
76.9
|
%
|
||||||||
Indirect
|
166.0
|
144.4
|
15.0
|
22.3
|
23.1
|
|||||||||||||
Total
net sales
|
$
|
744.5
|
$
|
625.3
|
19.1
|
%
|
100.0
|
%
|
100.0
|
%
|
Nine
Months Ended
|
|||||||||||||||||||||
March
29, 2008
|
March
31, 2007
|
Variance
|
|||||||||||||||||||
(dollars
in millions, except per share data)
(unaudited)
|
|||||||||||||||||||||
|
|
Amount
|
|
%
of
net
sales
|
|
|
Amount
|
|
%
of
net
sales
|
|
|
Amount
|
|
%
|
|||||||
Net sales
|
$
|
2,399.3
|
100.0
|
%
|
$
|
1,960.3
|
100.0
|
%
|
$
|
439.0
|
22.4
|
%
|
|||||||||
|
|||||||||||||||||||||
Gross profit
|
1,813.8
|
75.6
|
1,513.7
|
77.2
|
300.1
|
19.8
|
|||||||||||||||
|
|||||||||||||||||||||
Selling, general and
|
|||||||||||||||||||||
administrative expenses
|
915.3
|
38.1
|
765.7
|
39.1
|
149.6
|
19.5
|
|||||||||||||||
|
|||||||||||||||||||||
Operating income
|
898.5
|
37.4
|
748.0
|
38.2
|
150.5
|
20.1
|
|||||||||||||||
|
|||||||||||||||||||||
Interest income, net
|
35.1
|
1.5
|
27.5
|
1.4
|
7.6
|
27.8
|
|||||||||||||||
|
|||||||||||||||||||||
Provision for income taxes
|
364.1
|
15.2
|
298.3
|
15.2
|
65.8
|
22.0
|
|||||||||||||||
|
|||||||||||||||||||||
Income from
continuing operations
|
569.5
|
23.7
|
477.1
|
24.3
|
92.4
|
19.4
|
|||||||||||||||
|
|||||||||||||||||||||
Income from discontinued
operations, net of taxes
|
-
|
0.0
|
25.9
|
1.3
|
(25.9
|
)
|
(100.0
|
)
|
|||||||||||||
|
|||||||||||||||||||||
Net income
|
$
|
569.5
|
23.7
|
%
|
$
|
503.1
|
25.7
|
%
|
$
|
66.4
|
13.2
|
%
|
|||||||||
|
|||||||||||||||||||||
Net income per share:
|
|||||||||||||||||||||
Basic:
|
|||||||||||||||||||||
Continuing operations
|
$
|
1.58
|
$
|
1.29
|
$
|
0.29
|
22.2
|
%
|
|||||||||||||
Discontinued operations
|
-
|
0.07
|
(0.07
|
)
|
(100.0
|
)
|
|||||||||||||||
Net income
|
$
|
1.58
|
$
|
1.36
|
$
|
0.22
|
15.9
|
%
|
|||||||||||||
|
|||||||||||||||||||||
Diluted:
|
|||||||||||||||||||||
Continuing operations
|
$
|
1.56
|
$
|
1.27
|
$
|
0.29
|
22.9
|
%
|
|||||||||||||
Discontinued operations
|
-
|
0.07
|
(0.07
|
)
|
(100.0
|
)
|
|||||||||||||||
Net income
|
$
|
1.56
|
$
|
1.34
|
$
|
0.22
|
16.6
|
%
|
Nine
Months Ended
|
||||||||||||||||||
(unaudited)
|
||||||||||||||||||
Net
Sales
|
Percentage
of
Total
Net Sales
|
|||||||||||||||||
March
29,
2008
|
March
31,
2007
|
Rate
of
Increase
|
March
29,
2008
|
March
31,
2007
|
||||||||||||||
(dollars
in millions)
|
(FY08
v. FY07)
|
|||||||||||||||||
|
|
|
|
|
|
|||||||||||||
Direct-to-consumer
|
$
|
1,885.3
|
$
|
1,560.5
|
20.8
|
%
|
78.6
|
%
|
79.6
|
%
|
||||||||
Indirect
|
514.0
|
399.8
|
28.6
|
%
|
21.4
|
20.4
|
||||||||||||
Total
net sales
|
$
|
2,399.3
|
$
|
1,960.3
|
22.4
|
%
|
100.0
|
%
|
100.0
|
%
|
Period
|
Total
Number
of
Shares
Purchased
|
Average
Price
Paid
per
Share
|
Total
Number of
Shares
Purchased
as
Part of Publicly
Announced
Plans or
Programs
(1)
|
Approximate
Dollar
Value
of Shares that
May
Yet be Purchased
Under
the Plans or
Programs
(1)
|
|||||||||
|
(in
thousands, except per share data)
|
||||||||||||
|
|
|
|
|
|||||||||
Period
7 (12/30/07 - 2/2/08)
|
453
|
$
|
29.96
|
453
|
$
|
647,269
|
|||||||
Period
8 (2/3/08 - 3/1/08)
|
4,933
|
29.84
|
4,933
|
500,051
|
|||||||||
Period
9 (3/2/08 - 3/29/08)
|
5,964
|
27.95
|
5,964
|
333,409
|
|||||||||
Total
|
11,350
|
$
|
28.85
|
11,350
|
(1)
|
The
Company repurchases its common shares under repurchase programs that
were
approved by the Board of Directors as
follows:
|
Date
Share Repurchase Programs
were
Publicly Announced
|
Total
Dollar
Amount
Approved
|
Expiration
Date of Plan
|
||
September
17, 2001
|
$80
million
|
September
2004
|
||
January
30, 2003
|
$100
million
|
January
2006
|
||
August
12, 2004
|
$200
million
|
August
2006
|
||
May
11, 2005
|
$250
million
|
May
2007
|
||
May
9, 2006
|
$500
million
|
June
2007
|
||
October
20, 2006
|
$500
million
|
June
2008
|
||
November
9, 2007
|
$1
billion
|
June
2009
|
(a)
|
Exhibits
|
31.1
|
Rule
13(a) - 14(a)/15(d) - 14(a)
Certifications
|
32.1
|
Section
1350 Certifications
|
COACH,
INC.
(Registrant)
|
||
|
|
|
By: | /s/ Michael F. Devine, III | |
Name: Michael F. Devine, III |
||
Title:
Executive
Vice President,
Chief Financial Officer and Chief Accounting Officer |