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Table of Contents
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended July 2, 2005
or
oo TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number: 1-16153
Coach, Inc.
(Exact name of registrant as specified in its charter)
Maryland 52-2242751
(State or other jurisdiction of
incorporation or organization) (I.R.S. Employer
Identification No.)
516 West 34th Street, New York, NY 10001
(Address of principal executive offices) (Zip Code)
(212) 594-1850
(Registrant’s telephone number, including area code)
Securities Registered Pursuant to Section 12(b) of the Act:
Title of Each Class: Name of Each Exchange on which Registered
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Securities registered pursuant to Section 12(g) of the Act: None
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
COACH, INC.
TABLE OF CONTENTS FORM 10-K
  Page
  Number
PART I
    
     
     

Table of contents

  • Page 1
    ... EXCHANGE ACT OF 1934 Commission file number: 1-16153 Coach, Inc. (Exact name of registrant as specified in its charter) Maryland (State or other jurisdiction of incorporation or organization) 516 West 34th Street, New York, NY (Address of principal executive offices) 52-2242751 (I.R.S. Employer...

  • Page 2
    ... and Results of Operations Quantitative and Qualitative Disclosures about Market Risk Financial Statements and Supplementary Data Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Controls and Procedures PART III Directors and Executive Officers of the Registrant...

  • Page 3
    ... by expanding into international markets, particularly in Japan and East Asia, diversifying its product offerings beyond leather handbags, further developing its multi-channel distribution strategy and licensing products with the Coach brand name. SPECIAL NOTE ON FORWARD-LOOKING INFORMATION This...

  • Page 4
    ... and factory store locations operated by Coach Japan, Inc.; and • Business to business. Over the last several years, Coach has successfully transformed itself from a manufacturer of traditionally styled classic leather products to a marketer of modern, fashionable handbags and accessories using...

  • Page 5
    ... stores, which are operated by our distributors, are located in key Japanese travel destinations such as South Korea and Hong Kong. Improve Operational Efficiencies. Coach has upgraded and reorganized its manufacturing, distribution and information systems over the past several years to allow...

  • Page 6
    ... of higher margin mixed material product and accessories; and sourcing cost initiatives. Coach expects these factors to continue to drive gross margin rate improvement. Coach's Products Handbags. Coach's original business, the design, manufacture and distribution of fine handbags, accounted for...

  • Page 7
    ...all new products prior to their sale. Marketing Coach's marketing strategy is to deliver a consistent message every time the consumer comes in contact with the Coach brand, through all of its communications and visual merchandising. The Coach image is created internally and executed by the creative...

  • Page 8
    ...on their size and location, the retail stores present product lines that include handbags, business cases, wallets, footwear, watches, weekend and travel related accessories. The modern store design creates a distinctive environment that showcases these various products. Store associates are trained...

  • Page 9
    ... venture to form Coach Japan, Inc., in order to operate the Coach business in Japan. During fiscal 2002, Coach Japan acquired the prior distributors of Coach products in Japan in order to expand its presence in the Japanese market and to exercise greater control over its brand in that country. On...

  • Page 10
    ... Coach products through department stores, freestanding retail locations and specialty retailers in 19 countries. Coach's current network of international distributors serves markets such as the U.S., South Korea, Hong Kong, Guam, Taiwan, Singapore, Australia, Japan, Mexico, Saudi Arabia, China...

  • Page 11
    ... in Florence, Italy that works closely with the New York design team. This broad-based, multi-country manufacturing strategy is designed to optimize the mix of cost, lead times and construction capabilities. Coach carefully balances its commitments to a limited number of "better brand" partners with...

  • Page 12
    ...'s Internet and catalog businesses are supported by Coach's order management system. Finally, the point-of-sale system supports all in-store transactions, distributes management reporting to each store, and collects sales and payroll information on a daily basis. This daily collection of store sales...

  • Page 13
    ... of handbags, accessories and other products for the limited space available for the display of these products to the consumer. Moreover, the general availability of contract manufacturing allows new entrants easy access to the markets in which Coach operates, which may increase the number of...

  • Page 14
    ... its products. If any of these factors were to render a particular country undesirable or impractical as a source of supply, there could be an adverse effect on Coach's business, including its gross profit. Coach's failure to continue to increase sales of its products in international markets could...

  • Page 15
    ...stock at an exercise price far below the then-current market price. Subject to certain exceptions, Coach's Board of Directors will be entitled to redeem the rights at $0.001 per right at any time before the close of business on the tenth day following either the public announcement that, or the date...

  • Page 16
    ... Location Use Approximate Square Footage Jacksonville, Florida New York, New York Carlstadt, New Jersey Tokyo, Japan Shenzhen, People's Republic of China Florence, Italy Kowloon, Hong Kong Seoul, South Korea Distribution and customer service Corporate and product development Corporate and product...

  • Page 17
    ... annual stockholders meeting and serve terms of one year. Member of the audit committee. (2) (3) Member of the human resources and governance committee. Lew Frankfort has been involved with the Coach business for more than 25 years. He has served as Chairman and Chief Executive Officer of Coach...

  • Page 18
    ... store operator. Previously, Mr. Devine was Chief Financial Officer at Industrial System Associates, Inc. from 1995 to 1997, and for the prior six years he was the Director of Finance and Distribution for McMaster-Carr Supply Co. Mr. Devine holds a Bachelor of Science degree in Finance and Marketing...

  • Page 19
    ...Menezes was elected to Coach's Board of Directors in February 2005. Mr. Menezes has served as President and Chief Executive Officer of Diageo North America, the world's leading premium drinks company, since January 2004, after having served as its President and Chief Operation Officer from July 2002...

  • Page 20
    ... Harvard Business School. PART II Item 5. Market for Registrant's Common Equity and Related Stockholder Matters Refer to the information regarding the market for Coach's Common Stock and the quarterly market price information appearing under the caption "Market and Dividend Information" included...

  • Page 21
    ...39 Diluted Consolidated Percentage of Net Sales Data: Gross margin Selling, general and administrative expenses Operating income Net income Consolidated Balance Sheet Data: Working capital Total assets Inventory Revolving credit facility Long-term debt Stockholders' equity (1) 378,I70 390,191 372...

  • Page 22
    ... retailers in 19 countries and through 103 department store shop-in-shops, and retail and factory store locations operated by Coach Japan, Inc. Coach generates additional wholesale sales through business-to-business programs, in which companies purchase Coach products to use as gifts or incentive...

  • Page 23
    ... as follows: trade accounts receivable of $15.4 million, inventory of $43.1 million, property and equipment of $21.8 million, customer list of $0.3 million, goodwill of $225.3 million, other assets of $25.0 million, and liabilities of $30.7 million. The results of operations for Coach Japan, Inc...

  • Page 24
    ....3 100.0% 55.0% 45.0 100.0% 58.7% 41.3 100.0% 53-week fiscal year Fiscal 2005 Compared to Fiscal 2004 Net Sales Coach excludes new locations from the comparable store base for the first year of operation. Similarly, stores that are expanded by more than 15% are also excluded from the comparable...

  • Page 25
    ... fiscal 2004. The net sales increase was further offset by Coach Japan store closures. Since the end of fiscal 2004, Coach Japan has closed eight locations. The increase in indirect net sales was also driven by growth in the U.S. wholesale, international wholesale and business-to-business divisions...

  • Page 26
    ....I million in fiscal 2004. The dollar increase was caused primarily by increased store operating expenses attributable to new stores opened both domestically and in Japan and increased variable expenses to support increased net sales. As a percentage of net sales, selling, general and administrative...

  • Page 27
    ... in reported net sales of $21.7 million. These net sales increases were slightly offset by store closures. Since the end of fiscal 2003, Coach Japan has closed one location. The increase in indirect net sales was also driven by growth in the U.S. wholesale, international wholesale and business-to...

  • Page 28
    ..., marketing, and design costs increased by 10.8% to $I3.5 million, or 4.8% of net sales, in fiscal 2004, from $57.3 million, or I.0% of net sales, in fiscal 2003. This dollar increase was primarily due to increased staffing costs and increased design expenditures. Distribution and customer service...

  • Page 29
    ..., of common stock, at an average cost of $24.09 and $18.18 per share, respectively. In fiscal 2005, total capital expenditures were $94.I million. Coach opened 19 new retail and seven new factory stores in North America, which represented $20.0 million of capital expenditures. We also expanded 28

  • Page 30
    ... for the opening of 12 new locations, store expansions and information systems. These investments were financed by using funds from our Japanese revolving credit facilities and operating cash flow. Coach experiences significant seasonal variations in its working capital requirements. During...

  • Page 31
    ... by the Office of the Chief Accountant of the Securities and Exchange Commission to the American Institute of Certified Public Accountants on February 7, 2005. Tenant improvement allowances are recorded as a deferred lease credit on the balance sheet and amortized over the lease term, which is...

  • Page 32
    ...current product demand. We evaluate the adequacy of reserves quarterly. A decrease in product demand due to changing customer tastes, buying patterns or increased competition could impact Coach's evaluation of its slow-moving and aged merchandise. For more information on Coach's accounting policies...

  • Page 33
    ... Compensation." SFAS 123R supersedes Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees." The pronouncement requires an entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the...

  • Page 34
    ... revenues translated into U.S. dollars. Approximately 98% of Coach's fiscal 2005 non-licensed product needs were purchased from independent manufacturers in countries other than the United States. These countries include China, Hong Kong, Italy, India, Singapore, South Korea, Spain, Turkey, Costa...

  • Page 35
    ... an audit report of the Company's internal control over financial reporting. This report appears on page 38. PART III Item 10. Directors and Executive Officers of the Registrant The information set forth in the Proxy Statement for the 2005 annual meeting of stockholders is incorporated herein...

  • Page 36
    ...this report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated below on September 9, 2005. Signature Title /s/ Lew Frankfort Chairman, Chief Executive Officer and Director Lew Frankfort /s/ Keith Monda President, Chief Operating Officer and...

  • Page 37
    ... 20549 FORM 10-K FINANCIAL STATEMENTS For the Fiscal Year Ended July 2, 2005 COACH, INC. New York, New York 10001 INDEX TO FINANCIAL STATEMENTS Page Number Financial Statements Reports of Independent Registered Public Accounting Firm Consolidated Balance Sheets - At July 2, 2005 and July 3, 2004...

  • Page 38
    ... of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Coach, Inc. New York, New York We have audited the accompanying consolidated balance sheets of Coach, Inc. and subsidiaries (the "Company") as of July 2, 2005 and July 3, 2004, and the...

  • Page 39
    ...ACCOUNTING FIRM To the Board of Directors and Stockholders of Coach, Inc. New York, New York We have audited management's assessment, included in the accompanying Management's Report on Internal Control Over Financial Reporting, that Coach, Inc. and subsidiaries (the "Company") maintained effective...

  • Page 40
    ... BALANCE SHEETS July 2, 2005 July 3, 2004 (amounts in thousands, except share data) ASSETS Cash and cash equivalents Short-term investments Trade accounts receivable, less allowances of $4,124 and $5,45I, respectively Inventories Deferred income taxes Prepaid expenses and other current assets...

  • Page 41
    ...Year Ended July 3, 2004(1) July 2, 2005 June 28, 2003 (amounts in thousands, except per share data) Net sales Cost of sales Gross profit Selling, general and administrative expenses Operating... 444,4I5 3,192 $ 953,22I 275,797 I77,429 433,II7 243,7I2 1,059 244,821 90,585 7,I08 14I,I28 0....

  • Page 42
    ... 1,122 1,122 2I5,302 379,23I $ Balances at July 3, 2004 Net income Shares issued for stock options 782,28I 388,I52 - - 3,792 - 355,130 - 430,4I1 388,I52 2,195 - (9,292) - 388,I52 and employee benefit plans Tax benefit from exercise of stock options 42,988 - 102 42,88I - - - 10...

  • Page 43
    ... awards Amortization of restricted stock awards Unrealized gain on cash flow hedging derivatives, net Translation adjustments Minimum pension liability Comprehensive income - - - 10,408 - - (10,408) - I,I33 - - - - - I,I33 - 1,229 (2,331) (190) - - - - - - - - - - - - 1,229...

  • Page 44
    ... Tax benefit from exercise of stock options (Increase) decrease in deferred taxes Other non cash credits, net Changes in assets and liabilities: Increase in trade accounts receivable Increase in inventories Increase in other assets Increase in other liabilities Increase in accounts payable Increase...

  • Page 45
    ... channels, including department store locations in the United States, international department stores, freestanding retail locations and specialty retailers and retail and factory store locations operated by Coach Japan, Inc. Significant Accounting Policies Fiscal year The Company's fiscal year...

  • Page 46
    ... by the Office of the Chief Accountant of the Securities and Exchange Commission to the American Institute of Certified Public Accountants on February 7, 2005. Tenant improvement allowances are recorded as a deferred lease credit on the balance sheet and amortized over the lease term, which is...

  • Page 47
    ... when title passes to the customer. Allowances for estimated uncollectible accounts, discounts and returns are provided when sales are recorded. Royalty revenues are earned through license agreements with manufacturers of other consumer products that incorporate the Coach brand. Revenue earned under...

  • Page 48
    ... the United States. As permitted in the Accounting Principles Board ("APB") Opinion No. 23, "Accounting for Income Taxes - Special Areas," the Company does not provide U.S. income taxes on these earnings. Stock-Based Compensation The Company's stock-based compensation plans and the employee stock...

  • Page 49
    ... as a result of the stock split were distributed on October 1, 2003 to stockholders of record on September 17, 2003. In January 2005, Coach's Board of Directors authorized a two-for-one stock split of the Company's common stock, to be effected in the form of a special dividend of one share of the...

  • Page 50
    ... employee is required to provide service in exchange for the award - the requisite service period (typically the vesting period). SFAS 123R is effective as of the beginning of the first interim or annual reporting period that begins after June 15, 2005. The Company is currently evaluating the effect...

  • Page 51
    ...have been reclassified to conform with the current year presentation. 2. Balance Sheet Components The components of certain balance sheet accounts are as follows: July 2, 2005 July 3, 2004 Property and Equipment Machinery and equipment Furniture and fixtures Leasehold improvements Construction in...

  • Page 52
    ... (0.7) (0.1) 3I.9% 37.5% $ Current and deferred tax provisions (benefits) were: July 2, 2005 Current Deferred Fiscal Year Ended July 3, 2004 Current Deferred June 28, 2003 Current Deferred Federal Puerto Rico Foreign State Total current and deferred tax provisions (benefits) $ 184,318 - 28,228...

  • Page 53
    ... reversed. The impact of this reversal on the current year provision for income taxes was a reduction of $1I,247. The American Jobs Creation Act of 2004 was signed into law on October 22, 2004. The Act included a special one-time 85% dividends received deduction (the "Repatriation Provision") on the...

  • Page 54
    ... factors as the Board of Directors deems relevant. The Bank of America facility contains various covenants and customary events of default. The Company has been in compliance with all covenants since its inception. To provide funding for working capital and general corporate purposes, Coach Japan...

  • Page 55
    ...in operating costs, property taxes and the effect on costs from changes in consumer price indices. Certain rentals are also contingent upon factors such as sales. Rent-free periods and scheduled rent increases are recorded as components of rent expense on a straight-line basis over the related terms...

  • Page 56
    ...letter of credit for at least 10 years. The remaining letters of credit, which expire at various dates through 2008, primarily collateralize the Company's obligation to third parties for the purchase of inventory and lease guarantees. Coach is a party to employment agreements with certain executives...

  • Page 57
    ...the 2000 Non-Employee Director Stock Plan were approved by Coach's stockholders during fiscal 2002. The 2004 Stock Incentive Plan was approved by Coach's stockholders during fiscal 2005. The exercise price of each stock option equals 100% of the market price of Coach's stock on the date of grant and...

  • Page 58
    ... of each Coach option grant is estimated on the date of grant using the Black-Scholes option pricing model and the following weighted-average assumptions: July 2, 2005 Fiscal Year Ended July 3, 2004 June 28, 2003 Expected lives (years) Risk-free interest rate Expected volatility Dividend yield...

  • Page 59
    ... by deferred stock units, which represent the right to receive shares of Coach common stock on the distribution date elected by the participant, or placed in an interest-bearing account to be paid on such distribution date. The amounts accrued under these plans at July 2, 2005 and July 3, 2004 were...

  • Page 60
    ... share data) The Company uses a March 31 measurement date for its defined benefit retirement plan. Obligation and funded status information for the Company's defined benefit retirement plan is as follows: Fiscal Year Ended July 2, 2005 July 3, 2004 Change in Benefit Obligation Benefit obligation...

  • Page 61
    ...% 7.50% N/A To develop the expected long-term rate of return on plan assets assumption, the Company considered the current level of expected returns on risk-free investments (primarily government bonds), the historical level of the risk premium associated with the other asset classes in which the...

  • Page 62
    ... indirect. The Company's reportable segments represent channels of distribution that offer similar merchandise, service and marketing strategies. Sales of Coach products through Company-operated retail and factory stores, the Internet and the Coach catalog constitute the direct-to-consumer segment...

  • Page 63
    .... Unallocated corporate expenses include production variances, general marketing, administration and information systems, as well as distribution and customer service expenses. Fiscal 2005 Direct-toConsumer Indirect Corporate Unallocated Total Net sales Operating income (loss) Interest income...

  • Page 64
    ...shops and retail and factory store locations in Japan. Coach operates distribution, product development and quality control locations in the United States, Italy, Hong Kong, China and South Korea. United States Japan Other International(1) Total Fiscal 2005 Net sales Long-lived assets Fiscal 2004...

  • Page 65
    ... in Coach Japan. See Note 17, "Acquisition of Coach Japan, Inc." for more information on the acquisition. 13. Business Interruption Insurance As a result of the September 11, 2001 attack, the World Trade Center store was completely destroyed. Losses relating to the Company's business interruption...

  • Page 66
    ... at prevailing market prices, through open market purchases. Repurchased shares will become authorized but unissued shares and may be issued in the future for general corporate and other uses. The Company may terminate or limit the stock repurchase program at any time. During fiscal 2005, 2004 and...

  • Page 67
    ... common stock to buy one additional common share of the Company at an exercise price far below the then-current market price. Subject to certain exceptions, Coach's Board of Directors will be entitled to redeem the rights at $0.001 per right at any time before the close of business on the tenth day...

  • Page 68
    ...2004 fourth quarter and total fiscal year net sales include week 53 sales of $19,500 The sum of the quarterly earnings per common share may not equal the full-year amount, since the computations of the weightedaverage number of common-equivalent shares outstanding for each quarter and the full year...

  • Page 69
    ... and Dividend Information Coach's common stock is listed on the New York Stock Exchange and is traded under the symbol "COH". The following table sets forth, for the fiscal periods indicated, the high and low closing prices per share of Coach's common stock as reported on the New York Stock Exchange...

  • Page 70
    ...Qualifying Accounts For the Fiscal Years Ended July 2, 2005, July 3, 2004 and June 28, 2003 Provision Charged Balance at Beginning of Year to Costs and Expenses Write-offs/ Allowances Taken Balance at End of Year (amounts in thousands) Fiscal 2005 Allowance for bad debts Allowance for returns...

  • Page 71
    ... from Exhibit 99.1 to Coach's Current Report on Form 8-K filed on February 2, 2005 Amended and Restated Rights Agreement, dated as of May 3, 2001, between Coach, Inc. and Mellon Investor Services LLC 3.5 4.1 4.2 Specimen Certificate for Common Stock of Coach, which is incorporated herein...

  • Page 72

  • Page 73
    ... Plan, which is incorporated by reference from Appendix A to the Registrant's Definitive Proxy Statement for the 2004 Annual Meeting of Stockholders, filed on September 29, 2004 10.17 10.18 10.19 Stock Purchase Agreement, dated April 25, 2005, among Coach, Coach Japan Holdings, Inc., Coach Japan...

  • Page 74
    ... of Mr. Menezes to the Audit Committee and the Human Resources and Governance Committee of the Board. Current Report on Form 8-K, filed with the Commission on July 7, 2005. This report announced the completion of the Company's purchase of Sumitomo's 50% ownership interest in Coach Japan, Inc.

  • Page 75
    ... Services LLC, a New Jersey limited liability company, as Rights Agent (the "Rights Agent"). RECITALS WHEREAS, the Company and the Rights Agent entered into a Rights Agreement, dated as of May 3, 2001 (the "Original Rights Agreement"). WHEREAS, on May 3, 2001, the Board of Directors of the Company...

  • Page 76
    ... Rules and Regulations under the Exchange Act as in effect on the date of this Agreement); (ii) which such Person or any of such Person's Affiliates or Associates, directly or indirectly, has (A) the right to acquire (whether such right is exercisable immediately, or only after the passage of time...

  • Page 77
    ... such officer, director or employee of an Exempt Person. 1.4. "Business Day" shall mean any day other than a Saturday, Sunday, or a day on which banking institutions in the State of New York are authorized or obligated by law or executive order to close. 1.5. "close of business" on any given date...

  • Page 78
    ... an Acquiring Person. 1.12. The following terms shall have the meanings defined for such terms in the Sections set forth below: Term ---Adjustment Shares common stock equivalent Company current per share market price Current Value Distribution Date Exchange Act Exchange Consideration Existing...

  • Page 79
    ... prepare and execute, the Rights Agent will countersign and the Company (or, if requested and provided with all necessary information, the Rights Agent) will send, by first-class, postage-prepaid mail, to each record holder of Common Shares as of the close of business on the Distribution Date (other...

  • Page 80
    ... with the provisions of this Agreement, or as may be required to comply with any applicable law or with any rule or regulation made pursuant thereto or with any rule or regulation of any stock exchange or trading system on which the Rights may from time to time be listed or quoted, or to conform...

  • Page 81
    ..., shall be a proper officer of the Company to sign such Right Certificate, although at the date of the execution of this Agreement any such person was not such an officer. 7 Following the Distribution Date and receipt by the Rights Agent of all necessary information, the Rights Agent will keep or...

  • Page 82
    ... United States of America in accordance with Section 7.3. 7.3. Payment Procedures. Upon receipt of a Right Certificate representing exercisable Rights, with the form of election to purchase and certification duly executed, accompanied by payment of the aggregate Purchase Price for the total number...

  • Page 83
    ... Automated Quotation System ("Nasdaq") (including the National Market or Small Cap Market), the Company shall use its best efforts to cause, from and after such time as the Rights become exercisable, all shares reserved for such issuance to be listed or admitted to trading on such exchange or quoted...

  • Page 84
    ... are subject to adjustment from time to time as provided in this Section 11. 11.1. Post Execution Events. 11.1.1 Corporate Dividends, Reclassifications, Etc. In the event the Company shall at any time after the date of the Original Rights Agreement (A) declare and pay a dividend on the Common Shares...

  • Page 85
    ... of shares of capital stock which, if such Right had been exercised immediately prior to such date and at a time when the Common Shares transfer books of the Company were open, he would have owned upon such exercise and been entitled to receive by virtue of such dividend, subdivision, combination or...

  • Page 86
    ... equity securities of the Company (including, without limitation, shares, or fractions of shares, of preferred stock which, by virtue of having dividend, voting and liquidation rights 13 substantially comparable to those of the Common Shares, the Board of Directors of the Company has deemed in good...

  • Page 87
    ... shares of capital stock of the Company issuable upon exercise of one Right. In case such subscription price may be paid in a consideration part or all of which shall be in a form other than cash, the value of such consideration shall be as determined in good faith by the Board of Directors of the...

  • Page 88
    ..., or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the New York Stock Exchange or, if the...

  • Page 89
    ... so to be distributed shall be issued, executed and countersigned in the manner provided for herein (and may bear, at the option of the Company, the adjusted Purchase Price) and shall be registered in the names of the holders of record of Right Certificates on the record date specified in the public...

  • Page 90
    ...to the contrary, in the event that the Company shall at any time after the date of the Original Rights Agreement and prior to the Distribution Date (i) declare or pay any dividend on the outstanding Common Shares payable in Common Shares, (ii) effect a subdivision or consolidation of the outstanding...

  • Page 91
    ...11.12) and (y) dividing that product by 50% of the then current per share market price of the Common Shares of such Principal Party (determined pursuant to Section 11.4) on the date of consummation of such consolidation, merger, sale or transfer; PROVIDED, that the price per Right so payable and the...

  • Page 92
    ... at all times meeting the requirements of the Securities Act) until the Expiration Date and similarly comply with applicable state securities laws; 20 (2) use its best efforts, if the Common Shares of the Principal Party shall be listed or admitted to trading on the New York Stock Exchange or on...

  • Page 93
    securities exercisable for, or convertible into, Common Shares or common stock equivalents of such Principal Party at less than such then current market price (other than to holders of Rights pursuant to this Section 13), or (ii) providing for any special payment, taxes or similar provision in ...

  • Page 94
    ... no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the New York Stock Exchange or, if the Rights are not...

  • Page 95
    ... Rights Agent designated for such purpose, duly endorsed or accompanied by a proper instrument of transfer with all required certifications completed; and (c) the Company and the Rights Agent may deem and treat the Person in whose name the Right Certificate (or, prior to the Distribution Date, the...

  • Page 96
    ... to which the Rights Agent or any successor Rights Agent shall be a party, or any Person succeeding to the corporate trust or stock transfer business of the Rights Agent or any successor Rights Agent, shall be the successor to the Rights Agent under this Agreement without the execution or filing of...

  • Page 97
    ...a certificate signed by any one of the Chairman of the Board of Directors, the Chief Executive Officer, the President, the Chief Financial Officer, any Vice President, the Treasurer, the Secretary or any Assistant Treasurer or Assistant Secretary of the Company and delivered to the Rights Agent; and...

  • Page 98
    ... Rights Agent of the provisions of this Agreement. 20.7. Authorized Company Officers. The Rights Agent is hereby authorized and directed to accept instructions with respect to the performance of its duties hereunder from any one of the Chairman of the Board of Directors, the Chief Executive Officer...

  • Page 99
    ... the United States so long as such Person is duly qualified and authorized to do business, authorized to exercise stock transfer powers and subject to supervision or examination by Federal or state authority, and which has at the time of its appointment as Rights Agent a combined capital and surplus...

  • Page 100
    ..., stock dividend, recapitalization or similar transaction occurring after the date of the Original Rights Agreement (such redemption price being hereinafter referred to as the "Redemption Price"), and the Company may, at its option, pay the Redemption Price in Common Shares (based on the "current...

  • Page 101
    ... of Common Shares prior to the Distribution Date. Section 24. Notice of Certain Events. In case the Company shall propose at any time after the earlier of the Shares Acquisition Date and the Distribution Date (a) to pay any dividend payable in stock of any class to the holders of Common Shares...

  • Page 102
    ... this Agreement to be given or made by the Company or the Rights Agent to the holder of any Right Certificate (or, prior to the Distribution Date, to the holder of any certificate representing Common Shares) shall be sufficiently given or made if sent by first-class mail, postage-prepaid, addressed...

  • Page 103
    ..., stock dividend or similar transaction occurring after the date of the Original Rights Agreement (such amount per Right being hereinafter referred to as the "Exchange Consideration"). Notwithstanding the foregoing, the Board of Directors shall not be empowered to effect such exchange at any time...

  • Page 104
    ...Company, the Rights Agent and the registered holders of the Right Certificates (and, prior to the Distribution Date, the Common Shares). Section 30. Determination and Actions by the Board of Directors; General Limitations on Redemption, Modification or Termination of Rights or Amendment to Agreement...

  • Page 105
    ...any time after the Distribution Date and prior to 5:00 P.M. (New York City time) on May 2, 2011, at the offices of the Rights Agent, or its successors as Rights Agent, designated for such purpose, one fully paid, nonassessable common share (the "Common Shares") of the Company, at a purchase price of...

  • Page 106
    ... for the number of whole Rights not exercised. Subject to the provisions of the Agreement, the Board of Directors may, at its option, (i) redeem the Rights evidenced by this Right Certificate at a redemption price of $.001 per Right at any time prior to the close of business on the tenth day after...

  • Page 107
    ... an Acquiring Person or an Affiliate or Associate thereof. Dated Signature A-5 FORM OF ELECTION TO PURCHASE (To be executed if holder desires to exercise the Right Certificate.) To: COACH, INC. The undersigned hereby irrevocably elects to exercise _____ Rights represented by this Right Certificate...

  • Page 108
    ... not be all the Rights evidenced by this Right Certificate, a new Right Certificate for the balance remaining of such Rights shall be registered in the name of and delivered to: Please insert social security or other identifying number _____ (Please print name and address Dated Signature Signature...

  • Page 109
    ... 3, 2001 the Board of Directors of Coach, Inc. (the "Company") authorized and declared a dividend of one right (a "Right") for each share of common stock, $0.01 par value per share (the "Common Shares"), of the Company outstanding at the close of business on May 22, 2001 (the "Record Date"). As long...

  • Page 110
    ...on the last trading date prior to the date of exercise. B-2 The Rights may be redeemed in whole, but not in part, at a price of $.001 per Right (the "Redemption Price") by the Board of Directors at any time prior to the close of business on the tenth day following either the public announcement that...

  • Page 111
    of the Rights does not purport to be complete and is qualified in its entirety by reference to the Agreement, which is incorporated herein by reference. B-3

  • Page 112
    ... you and the Company dated as of June 1, 2003 (the "Employment Agreement"), which is attached hereto as Exhibit A. Capitalized terms used in this Letter Agreement and not defined herein shall have the meaning given such terms in the Employment Agreement. 1. Employment Agreement Term. You and the...

  • Page 113
    ...construed under the internal laws of the State of New York and may be executed in several counterparts. Very truly yours, _____ Felice Schulaner SVP, Human Resources Agreed and Accepted: _____ Lew Frankfort 3 EXHIBIT A [EMPLOYMENT APREEMENT] 4 COACH 2000 STOCK INCENTIVE PLAN EXTENSION OPTION PRANT...

  • Page 114
    ...the Employment Agreement), any portion of this Option that is not vested and exercisable as of the date of such termination shall thereupon be forfeited; provided, that in the alternative the Human Resources and Corporate Povernance Committee (the "COMMITTEE") of the Company's Board of Directors may...

  • Page 115
    ... or cause the Company to violate the Securities Act of 1933, as amended, the rules and regulations promulgated thereunder, any other state or federal law, or the laws of any other country. The Company reserves the right to place restrictions required by law on Common Stock received by you pursuant...

  • Page 116
    ... all of the terms of this Agreement and the Plan. 12. NO RIPHTS TO CONTINUED EMPLOYMENT. Nothing in this Agreement confers any right on you to continue in the employ of the Coach Companies or affects in any way the right of any of the Coach Companies to terminate your employment at any time with or...

  • Page 117
    _____ Felice Schulaner Senior Vice President of Human Resources Date: August 22, 2005 I ACKNOWLEDPE THAT I HAVE READ AND UNDERSTAND THE TERMS AND CONDITIONS OF THIS APREEMENT AND OF THE PLAN AND I APREE TO BE BOUND THERETO. OPTIONEE: _____ LEW FRANKFORT SSN: _____ Date: 6 August 22, 2005

  • Page 118
    ... you and the Company dated as of June 1, 2003 (the "Employment Agreement"), which is attached hereto as Exhibit A. Capitalized terms used in this Letter Agreement and not defined herein shall have the meaning given such terms in the Employment Agreement. 1. Employment Agreement Term. You and the...

  • Page 119
    ... agree that it be final and legally binding on you and the Company. This Letter Agreement shall be governed and construed under the internal laws of the State of New York and may be executed in several counterparts. Very truly yours, _____ Felice Schulaner SVP, Human Resources Agreed and Accepted:

  • Page 120
    ... Grant Date, the "EMPLOYMENT AGREEMENT"). 1. OPTION RIGHT. Your Option is to purchase, on the terms and conditions set forth below, the following number of shares (the "OPTION SHARES") of the Company's Common Stock, par value $.01 per share (the "COMMON STOCK"), at the exercise price specified below...

  • Page 121
    ... in the Employment Agreement) or during the 12 month period immediately following such Change in Control, then (i) this Option shall become fully vested and exercisable with respect to all shares subject thereto effective immediately prior to the date of such termination and (ii) the last day on...

  • Page 122
    ... all of the terms of this Agreement and the Plan. 12. NO RIGHTS TO CONTINUED EMPLOYMENT. Nothing in this Agreement confers any right on you to continue in the employ of the Coach Companies or affects in any way the right of any of the Coach Companies to terminate your employment at any time with or...

  • Page 123
    ... witness whereof, the parties hereto have executed and delivered this agreement. COACH, INC. _____ Felice Schulaner Senior Vice President of Human Resources Date: August 22, 2005 I ACKNOWLEDGE THAT I HAVE READ AND UNDERSTAND THE TERMS AND CONDITIONS OF THIS AGREEMENT AND OF THE PLAN AND I AGREE TO...

  • Page 124
    ... you and the Company dated as of June 1, 2003 (the "Employment Agreement"), which is attached hereto as Exhibit A. Capitalized terms used in this Letter Agreement and not defined herein shall have the meaning given such terms in the Employment Agreement. 1. Employment Agreement Term. You and the...

  • Page 125
    ... Letter Agreement shall be governed and construed under the internal laws of the State of New York and may be executed in several counterparts. Very truly yours, _____ Felice Schulaner SVP, Human Resources Agreed and Accepted: _____ Keith Monda 3 EXHIBIT A [EMPLOYMENT AGREEMENT] 4 COACH 2000 STOCK...

  • Page 126
    ... in the alternative the Human Resources and Corporate Governance Committee (the "COMMITTEE") of the Company's Board of Directors may, in its sole discretion, cause all or any portion of this Option then held by you to become vested and exercisable effective as of the date of such termination. In the...

  • Page 127
    ... or cause the Company to violate the Securities Act of 1933, as amended, the rules and regulations promulgated thereunder, any other state or federal law, or the laws of any other country. The Company reserves the right to place restrictions required by law on Common Stock received by you pursuant...

  • Page 128
    ... all of the terms of this Agreement and the Plan. 12. NO RIGHTS TO CONTINUED EMPLOYMENT. Nothing in this Agreement confers any right on you to continue in the employ of the Coach Companies or affects in any way the right of any of the Coach Companies to terminate your employment at any time with or...

  • Page 129
    _____ Felice Schulaner Senior Vice President of Human Resources Date: August 22, 2005 I ACKNOWLEDGE THAT I HAVE READ AND UNDERSTAND THE TERMS AND CONDITIONS OF THIS AGREEMENT AND OF THE PLAN AND I AGREE TO BE BOUND THERETO. OPTIONEE: _____ KEITH MONDA SSN: 284-42-3048 Date: August 22, 2005 6

  • Page 130
    ...) Coach Japan Investments, Inc. (Delaware) 504-514 West 34th Street Corp. (Maryland) Coach Europe Services S.r.l. (Italy) Coach Stores Canada Inc. (Canada) Coach International Holdings, Inc. (Cayman Islands) Coach International Limited (Hong Kong) Coach Manufacturing Limited (Hong Kong) Coach Japan...

  • Page 131
    ...consolidated financial statement schedule of Coach, Inc., and management's report on the effectiveness of internal control over financial reporting appearing in this Annual Report on Form 10K of Coach, Inc. for the year ended July 2, 2005. /s/ Deloitte and Touche LLP New York, New York September 9th...

  • Page 132
    ...evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal controls...

  • Page 133
    ...evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal controls...

  • Page 134
    ..., as amended; and (ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: September 9, 2005 By: /s/ Lew Frankfort Name: Lew Frankfort Title: Chairman and Chief Executive Officer Pursuant to 18...