Coach 2010 Annual Report Download - page 67

TABLE OF CONTENTS
COACH, INC.
Notes to Consolidated Financial Statements
(dollars and shares in thousands, except per share data)
10. INCOME TAXES – (continued)
A reconciliation of the beginning and ending gross amount of unrecognized tax benefits is as follows:
Fiscal 2011 Fiscal 2010 Fiscal 2009
Balance at beginning of fiscal year $ 165,676 $ 137,807 $ 131,185
Gross increase due to tax positions related to prior periods 5,225 3,903 13,690
Gross decrease due to tax positions related to prior periods (1,218) (971) (9,841)
Gross increase due to tax positions related to current period 29,342 27,034 42,367
Decrease due to lapse of statutes of limitations (6,519) (1,692) (833)
Decrease due to settlements with taxing authorities (30,446) (405) (38,761)
Balance at end of fiscal year $ 162,060 $ 165,676 $ 137,807
Of the $162,060 ending gross unrecognized tax benefit balance, $79,370 relates to items which, if recognized, would impact the
effective tax rate. As of July 2, 2011 and July 3, 2010, gross interest and penalties payable was $35,258 and $35,331, which are included
in other liabilities. During fiscal 2011, fiscal 2010 and fiscal 2009, the Company recognized interest and penalty (income) expense of
$(3,195), $6,204 and $5,611, respectively, in the Consolidated Statements of Income.
The Company files income tax returns in the U.S. federal jurisdiction as well as various state and foreign jurisdictions. Fiscal years
2008 to present are open to examination in the federal jurisdiction, fiscal 2004 to present in significant state jurisdictions, and from fiscal
2004 to present in foreign jurisdictions. During the fiscal 2011 and fiscal 2009, the Company decreased the provision for income taxes
primarily as a result of a favorable settlement of a multi-year tax return examination.
Based on the number of tax years currently under audit by the relevant tax authorities, the Company anticipates that one or more of these
audits may be finalized in the foreseeable future. However, based on the status of these examinations, and the protocol of finalizing audits
by the relevant tax authorities, we cannot reasonably estimate the impact of any amount of such changes in the next 12 months, if any, to
previously recorded uncertain tax positions.
At July 2, 2011, the Company had net operating loss carryforwards in foreign tax jurisdictions of $100,393, which will expire
beginning in fiscal years 2013 through fiscal year 2017.
The total amount of undistributed earnings of foreign subsidiaries as of July 2, 2011 was $941,859. It is the Company’s intention to
permanently reinvest undistributed earnings of its foreign subsidiaries and thereby indefinitely postpone their remittance. Accordingly, no
provision has been made for foreign withholding taxes or United States income taxes which may become payable if undistributed earnings
of foreign subsidiaries are paid as dividends.
11. DEFINED CONTRIBUTION PLAN
Coach maintains the Coach, Inc. Savings and Profit Sharing Plan, which is a defined contribution plan. Employees who meet certain
eligibility requirements and are not part of a collective bargaining agreement may participate in this program. The annual expense incurred
by Coach for this defined contribution plan was $16,029, $13,285 and $12,511 in fiscal 2011, fiscal 2010 and fiscal 2009,
respectively.
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