Coach 2012 Annual Report Download - page 38

The year-over-year comparisons of our financial results are affected by the following items included in
our reported results:
Fiscal Year Ended
(dollars in millions, except per share data)
June 30, 2012 July 2, 2011 June 27, 2009 June 28, 2008
Operating income
Cost savings measures ................. $ — $ — $(13.4) $ —
Charitable foundation contribution ......... (39.2) (25.7) (15.0) (20.0)
Variable expense ..................... — — — (12.1)
Total Operating income impact .......... $(39.2) $(25.7) $(28.4) $(32.1)
Provision for income taxes
Cost savings measures ................. $ — $ — $ (5.1) $ —
Charitable foundation contribution ......... (15.3) (10.2) (5.7) (7.8)
Tax adjustments ...................... (23.9) (15.5) (18.8) (60.6)
Variable expense ..................... — — — (4.7)
Total Provision for income taxes impact .... $(39.2) $(25.7) $(29.6) $(73.1)
Net income
Cost savings measures ................. $ — $ — $ (8.3) $ —
Charitable foundation contribution ......... 23.9 (15.5) (9.3) (12.2)
Tax adjustments ...................... (23.9) 15.5 18.8 60.6
Variable expense ..................... — — — (7.4)
Total Net income impact .............. $ 0.0 $ 0.0 $ 1.2 $41.0
Diluted earnings per share
Cost savings measures ................. $ — $ — $(0.03) $ —
Charitable foundation contribution ......... 0.08 (0.05) (0.03) (0.03)
Tax adjustments ...................... (0.08) 0.05 0.06 0.17
Variable expense ..................... — — — (0.02)
Total Diluted earnings per share impact .... $0.00 $ 0.00 $ 0.00 $ 0.11
Fiscal 2012 Items
Charitable Contributions and Tax Adjustments
During fiscal 2012, the Company decreased the provision for income taxes by $23.9 million, primarily as
a result of recording the effect of a revaluation of certain deferred tax asset balances due to a change in
Japan’s corporate tax laws and the favorable settlement of a multi-year transfer pricing agreement with Japan.
The Company used the net income favorability to contribute an aggregate $39.2 million to the Coach
Foundation. The Company believed that in order to reflect the direct results of the normal, ongoing business
operations, both the tax adjustments and the resulting Coach Foundation funding needed to be adjusted. This
exclusion is consistent with the way management views its results and is the basis on which incentive
compensation was calculated for fiscal 2012.
Fiscal 2011 Items
Charitable Contributions and Tax Adjustments
During the third quarter of fiscal 2011, the Company decreased the provision for income taxes by
$15.5 million, primarily as a result of a favorable settlement of a multi-year tax return examination. The
Company used the net income favorability to contribute $20.9 million to the Coach Foundation and 400
million yen or $4.8 million to the Japanese Red Cross Society. The Company believed that in order to reflect
the direct results of the normal, ongoing business operations, both the tax adjustments and the resulting Coach
Foundation funding and Japanese Red Cross Society contribution needed to be adjusted. This exclusion is
consistent with the way management views its results and is the basis on which incentive compensation was
calculated and paid for fiscal 2011.
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