Coach 2008 Annual Report Download - page 24

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TABLE OF CONTENTS
Fiscal 2008 Items
Charitable Contribution and Tax Adjustments
During the fourth quarter of fiscal 2008, the Company decreased the provision for income taxes by $50.0 million and increased interest
income by $10.7 million, primarily as a result of a favorable settlement of a tax return examination. The Company used the net income
favorability to create the Coach Foundation. The Company recorded an initial contribution to the Coach Foundation in the amount of $20.0
million.
Non-Recurring Variable Expenses
As a result of the higher interest income, net and lower income tax provision, the Company incurred additional incentive compensation
expense of $12.1 million, as a portion of the Company’s incentive compensation plan is based on net income and earnings per share.
Non-GAAP Measures
The Company’s reported results are presented in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). The
reported selling, general, and administrative expenses, operating income, interest income, net, provision for income taxes, income from
continuing operations, net income and earnings per diluted share from continuing operations reflect certain items which affect the
comparability of our results. These metrics are also reported on a non-GAAP basis to exclude the impact of these items. The Company
believes these non-GAAP financial measures are useful to investors in evaluating the Company’s ongoing operating and financial results and
understanding how such results compare with the Company’s historical performance. The non-GAAP financial measures should be
considered in addition to, and not in lieu of, U.S. GAAP financial measures.
Fiscal 2009
The key metrics of fiscal 2009 were:
•Earnings per diluted share fell 11.9% to $1.91. Excluding items affecting comparability in fiscal 2009 and fiscal 2008, earnings
per diluted share decreased 7.2% to $1.91 per diluted share.
•Net sales increased 1.6% to $3.23 billion.
•Direct-to-consumer sales rose 6.6% to $2.73 billion.
•Comparable sales in Coach’s North American stores declined 6.8%, primarily due to the challenging retail environment which
resulted in decreased traffic in our full-priced stores.
•Coach Japan sales, when translated into U.S. dollars, rose 11.1%. This increase in sales reflects an 11.8% increase due to currency
translation.
•In North America, Coach opened 33 net new retail stores and nine new factory stores, bringing the total number of retail and factory
stores to 330 and 111, respectively, at the end of fiscal 2009. We also expanded 11 retail stores and nine factory stores in North
America.
•Coach Japan opened six net new locations, bringing the total number of locations at the end of fiscal 2009 to 155. In addition, we
expanded three locations.
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