Coach 2012 Annual Report Download - page 62

COACH, INC.
Notes to Consolidated Financial Statements (Continued)
(dollars and shares in thousands, except per share data)
3. ACQUISITIONS − (continued)
The following table summarizes the preliminary estimated fair values of the assets and liabilities acquired
as of the dates of acquisition:
Estimated Fair
Value
Current assets ................................................ $12,671
Fixed assets and other non-current assets .............................. 3,087
Goodwill
(1)
.................................................. 41,307
Liabilities ................................................... (2,554)
Total net assets acquired ......................................... $54,511
(1) We anticipate the entire balance of acquired goodwill to be tax deductible.
Prior to these acquisitions, Valiram Group operated five retail and department store locations in Singapore
and Tasa Meng operated 26 retail and department stores in Taiwan. Management believes the strength of these
established locations supported a premium above the fair value of the individual assets acquired. Unaudited
pro forma information related to these acquisitions is not included, as the impact of this transaction is not
material to the consolidated results of the Company.
In connection with the fiscal 2011 agreement with the Valiram Group, the Company assumed direct
control of its domestic retail business in Malaysia in July 2012. Additionally, in connection with the fiscal
2012 agreement with Shinsegae International, the Company assumed direct control of its retail business in
Korea in early August 2012.
4. SHARE-BASED COMPENSATION
The Company maintains several share-based compensation plans which are more fully described below.
The following table shows the total compensation cost charged against income for these plans and the related
tax benefits recognized in the income statement:
Fiscal Year Ended
June 30,
2012
July 2,
2011
July 3,
2010
Share-based compensation expense ........ $107,511 $95,830 $81,420
Income tax benefit related to share-based
compensation expense ............... 37,315 33,377 28,446
Coach Stock-Based Plans
Coach maintains the 2010 Stock Incentive Plan to award stock options and shares to certain members of
Coach management and the outside members of its Board of Directors (‘‘Board’’). Coach maintains the 2000
Stock Incentive Plan, the 2000 Non-Employee Director Stock Plan and the 2004 Stock Incentive Plan for
awards granted prior to the establishment of the 2010 Stock Incentive Plan. These plans were approved by
Coach’s stockholders. The exercise price of each stock option equals 100% of the market price of Coach’s
stock on the date of grant and generally has a maximum term of 10 years. Stock options and share awards
that are granted as part of the annual compensation process generally vest ratably over three years. Other
stock option and share awards, granted primarily for retention purposes, are subject to forfeiture until
completion of the vesting period, which ranges from one to five years. The Company issues new shares upon
the exercise of stock options, vesting of share units and employee stock purchases.
For options granted under Coach’s stock option plans prior to July 1, 2003, an active employee can
receive a replacement stock option equal to the number of shares surrendered upon a stock-for-stock exercise.
The exercise price of the replacement option equals 100% of the market value at the date of exercise of the
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