Coach 2002 Annual Report Download - page 51

Table of Contents
COACH, INC.
Notes to Consolidated Financial Statements — (Continued)
(dollars and shares in thousands, except per share data)
resulting translation adjustments are recorded as a component of accumulated other comprehensive income (loss) within stockholders’
equity. These gains and losses were not significant for fiscal 2003, 2002 and 2001.
Net Income Per Share
Basic net income per share was calculated by dividing net income by the weighted-average number of shares outstanding during the
period. Diluted net income per share was calculated similarly but includes potential dilution from the exercise of stock options and stock
awards.
Stock Split
In May 2002, Coach’s Board of Directors authorized a two-for-one split of the Company’s common stock, to be effected in the form of a
special dividend of one share of the Company’s common stock for each share outstanding. The additional shares issued as a result of the
stock split were distributed on July 3, 2002 to stockholders of record on June 19, 2002. The effect of the stock split on earnings per share was
retroactively applied to all periods presented. See Note 20 for Subsequent Event.
Recent Accounting Pronouncements
In April 2001, the Emerging Issues Task Force (“EITF”) of the Financial Accounting Standards Board (“FASB”) reached a final consensus
on Issue 00-25, “Accounting for Consideration from a Vendor to a Retailer in Connection with the Purchase or Promotion of the Vendor’s
Products.” In November 2001, EITF 00-25 was codified in EITF 01-09. This issue addresses the recognition, measurement and income
statement classification of consideration provided to distributors or retailers. Previously, the Company had recorded these activities within
selling, general and administrative expenses. The Company adopted EITF 00-25 in the first quarter of fiscal 2002. In connection with this
adoption, prior period amounts have been reclassified to conform with the current year’s presentation. The effect of the adoption resulted in a
reclassification from selling, general and administrative expense to a reduction in net sales of $15,588 for fiscal 2001.
On December 31, 2002, the FASB issued SFAS No. 148, “Accounting for Stock-Based Compensation — Transition and Disclosure”,
which amends SFAS No. 123, “Accounting for Stock-Based Compensation.” SFAS No. 148 provides alternative methods of transition for a
voluntary change to the fair value based method of accounting for stock-based employee compensation. The Company does not intend to
expense stock options; therefore the adoption of this statement will not have any impact on Coach’s consolidated financial position or results
of operations. In addition, SFAS No. 148 amends the disclosure requirements of SFAS No. 123 to require more prominent and more
frequent disclosures in financial statements of the effects of stock-based compensation. See above, “Stock-Based Compensation,” for these
expanded disclosures.
In November 2002, the FASB issued FASB Interpretation (“FIN”) No. 45, “Guarantor’s Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness of Others.” FIN No. 45 elaborates on the existing disclosures requirements for
most guarantees, including loan guarantees such as standby letters of credit and product warranties. It also clarifies that at the time a
company issues a guarantee, the company must recognize an initial liability for the fair value, or market value, of the obligation it assumes
under the guarantee and must disclose that information in its interim and annual financial statements. The provisions related to recognizing
a liability at inception of the guarantee for the fair value of the guarantor’s obligations do not apply to guarantees accounted for as derivatives.
The Company adopted this interpretation in second quarter of fiscal 2003. The adoption of this statement did not have a material impact on
Coach’s consolidated financial position or results of operations.
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