Coach 2014 Annual Report Download - page 31

TABLE OF CONTENTS

In fiscal 2014, we reported net sales of $4.81 billion, net income of $781.3 million and net income per diluted share of $2.79. This compares to net sales
of $5.08 billion, net income of $1.03 billion, and net income per diluted share of $3.61 in fiscal 2013. In fiscal 2014, the comparability of our operating
results has been affected by $131.5 million of pretax charges ($88.3 million after tax or $0.31 per diluted share) related to our Transformation Plan. In fiscal
2013, the comparability of our operating results was affected by $53.2 million of pretax charges ($32.6 million after tax or $0.11 per diluted share) related to
restructuring and transformation-related charges.
Our operating performance for fiscal 2014 reflected a decline in revenue of 5.3%, primarily due to decreased revenues from our North America business
partially offset by gains in our International businesses. Excluding the effects of foreign currency, net sales decreased 3.1%. Our gross profit decreased by
10.8% to $3.30 billion during fiscal 2014 which included the negative impact of charges under our Transformation Plan of $82.2 million. In fiscal 2013,
restructuring and transformation-related charges negatively impacted gross profit by $4.8 million. Selling, general and administrative ("SG&A") expenses
remained fairly consistent from fiscal 2013, however SG&A expense as a percentage of net sales increased by 250 basis points primarily due to higher selling
expenses to support our International businesses as well as a decline in total Net sales. Excluding charges under our Transformation Plan in fiscal 2014 and
restructuring and transformation-related charges in fiscal 2013, SG&A expenses remained fairly consistent.
Net income decreased in fiscal 2014 as compared to fiscal 2013, primarily due to a decrease in operating income of $404.4 million, partially offset by a
$145.2 million decrease in our provision for income taxes. Net income per diluted share decreased due to lower net income. Excluding charges under our
Transformation Plan in fiscal 2014 and restructuring and transformation-related charges in fiscal 2013, net income decreased 18.5% and net income per
diluted share decreased 16.9%.

The following table summarizes results of operations for fiscal 2014 compared to fiscal 2013. All percentages shown in the table below and the
discussion that follows have been calculated using unrounded numbers.

 
June 29, 2013
Variance
 (dollars in millions, except per share data)
 


Amount
% of
net sales
Amount
%
Net sales  

$ 5,075.4
100.0%
$ (269.2)
(5.3)%
Gross profit 

3,698.1
72.9
(401.1)
(10.8)
Selling, general and
administrative expenses 

2,173.6
42.8
3.3
0.2
Operating income 

1,524.5
30.0
(404.4)
(26.5)
Interest income, net 

2.4
—
(0.2)
(8.3)
Other expense 

(6.4)
(0.1)
6.4
(100.0)
Provision for income taxes 

486.1
9.6
(145.2)
(29.9)
Net income 

1,034.4
20.4
(253.1)
(24.5)
Net income per share: 

Basic  

$ 3.66
$ (0.85)
(23.2)%
Diluted 

3.61
(0.82)
(22.7)

The Company’s reported results are presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”).
The reported gross profit, selling, general and administrative expenses, operating income, income before provision for income taxes, provision for income
taxes, net income and earnings per diluted share in fiscal 2014 and 2013 reflect certain items which affect the comparability of our results, as noted in the
following tables. Refer to page 39 for a discussion on the Non-GAAP Measures.
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