Coach 2014 Annual Report Download - page 69
Download and view the complete annual report
Please find page 69 of the 2014 Coach annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.-
1 -
2
-
3
-
4
-
5
-
6
-
7
-
8
-
9
-
10
-
11
-
12
-
13
-
14
-
15
-
16
-
17
-
18
-
19
-
20
-
21
-
22
-
23
-
24
-
25
-
26
-
27
-
28
-
29
-
30
-
31
-
32
-
33
-
34
-
35
-
36
-
37
-
38
-
39
-
40
-
41
-
42
-
43
-
44
-
45
-
46
-
47
-
48
-
49
-
50
-
51
-
52
-
53
-
54
-
55
-
56
-
57
-
58
-
59 -
60 -
61 -
62 -
63 -
64 -
65 -
66 -
67 -
68 -
69 -
70 -
71 -
72 -
73 -
74 -
75 -
76 -
77 -
78 -
79 -
80
-
81
-
82
-
83
-
84
-
85
-
86
-
87
-
88
-
89
-
90
-
91
-
92
-
93
-
94
-
95
-
96
-
97
 |
 |
TABLE OF CONTENTS
net carrying value of store-related long-lived assets to their estimated fair value. Store-related costs, recorded within SG&A expenses, primarily relate to
accelerated depreciation charges associated with store assets that the Company will no longer benefit from as a result of the Transformation Plan, including
certain store employee restructuring costs. The above charges were recorded as corporate unallocated expenses within the Company's Consolidated
Statements of Income.
The Company expects to incur additional pre-tax charges of approximately $120,000 to $170,000, primarily in fiscal 2015, in connection with the
Transformation Plan. These costs will primarily consist of store-related costs (including accelerated depreciation charges as a result of store updates) and
organizational efficiency charges (including employee severance costs).
Sale of Reed Krakoff Business
On August 30, 2013, the Company sold the Reed Krakoff business, involving the sale of the equity interests of Reed Krakoff LLC and certain assets,
including the Reed Krakoff brand name and related intellectual property rights, to Reed Krakoff International LLC (“Buyer”). The sale was pursuant to the
Asset Purchase and Sale Agreement dated July 29, 2013 (the “Purchase Agreement”) with Buyer and Reed Krakoff, the Company’s former President and
Executive Creative Director. Coach received a de minimus amount of cash and convertible preferred membership interests representing 8.0% of Buyer’s
issued and outstanding convertible preferred units and initial equity value immediately following such issuance. Coach recorded a cost method investment
of $3,261, included in Long-term investments in the consolidated balance sheet at June 28, 2014.
Concurrent with the Closing under the Purchase Agreement, the parties executed certain ancillary agreements which included a transition services
agreement between Coach and Buyer for up to nine months.
In connection with the Purchase Agreement, Mr. Krakoff’s resignation from Coach and the closing of the sale, Mr. Krakoff waived his right to receive
compensation, salary, bonuses, equity vesting and certain other benefits. The Company recorded a loss of $2,683 during the first quarter of fiscal 2014 related
to the sale, which is recorded in SG&A expenses on the Consolidated Statements of Income.
Restructuring and Transformation-Related Charges
In fiscal 2013, the Company incurred restructuring and transformation related charges, which are not related to the Company's fiscal 2014
Transformation Plan, of $53,202 ($32,568 after-tax, or $0.11 per diluted share). The charges recorded in SG&A expenses and cost of sales were $48,402 and
$4,800, respectively. The charges primarily related to our North America segment.
A summary of charges and related liabilities are as follows:
Fiscal 2013 charges $ 29,859
$ 16,624
$ 6,719
$ 53,202
Cash payments —
—
—
—
Non-cash charges (1,980)
$ (16,624)
$ (6,636)
$ (25,240)
Liability as of June 29, 2013 $ 27,879
$ —
$ 83
$ 27,962
(Income) expense
Non-cash charges
Cash payments and settlements
67