UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

 

x		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended June 27, 2009

OR

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 1-16153

 

(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 34^th 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
Common Stock, par value $.01 per share		New York Stock Exchange

Securities Registered Pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes x No o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes o No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).Yes o No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer x    Accelerated Filer o    Non-Accelerated Filer o    Smaller Reporting Company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).Yes o No x

The aggregate market value of Coach, Inc. common stock held by non-affiliates as of December 27, 2008 (the last business day of the most recently completed second fiscal quarter) was approximately $6.4 billion. For purposes of determining this amount only, the registrant has excluded shares of common stock held by directors and officers. Exclusion of shares held by any person should not be construed to indicate that such person possesses the power, direct or indirect, to direct or cause the direction of the management or policies of the registrant, or that such person is controlled by or under common control with the registrant.

On August 7, 2009, the Registrant had 318,081,762 shares of common stock outstanding.

Documents		Form 10-K Reference
Proxy Statement for the 2009 Annual Meeting of Stockholders		Part III, Items 10 – 14

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COACH, INC.

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		Page
PART I
Item 1. Business			1
Item 1A. Risk Factors			9
Item 1B. Unresolved Staff Comments			12
Item 2. Properties			12
Item 3. Legal Proceedings			13
Item 4. Submission of Matters to a Vote of Security Holders			13
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities			14
Item 6. Selected Financial Data			16
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations			18
Item 7A. Quantitative and Qualitative Disclosures About Market Risk			32
Item 8. Financial Statements and Supplementary Data			33
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure			33
Item 9A. Controls and Procedures			33
Item 9B. Other Information			33
PART III
Item 10. Directors, Executive Officers and Corporate Governance			34
Item 11. Executive Compensation			34
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters			34
Item 13. Certain Relationships and Related Transactions, and Director Independence			34
Item 14. Principal Accountant Fees and Services			34
PART IV
Item 15. Exhibits, Financial Statement Schedules			34
Signatures			35

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This document and the documents incorporated by reference in this document contain certain forward-looking statements based on management’s current expectations. These forward-looking statements can be identified by the use of forward-looking terminology such as “may,” “will,” “should,” “expect,” “intend,” “estimate,” “are positioned to,” “continue,” “project,” “guidance,” “target,” “forecast,” “anticipated” or comparable terms.

Coach, Inc.’s actual results could differ materially from the results contemplated by these forward-looking statements due to a number of factors, including those discussed in the sections of this Form 10-K filing entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” These factors are not necessarily all of the important factors that could cause actual results to differ materially from those expressed in any of the forward-looking statements contained in this Form 10-K.

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In this Form 10-K, references to “Coach,” “we,” “our,” “us” and the “Company” refer to Coach, Inc., including consolidated subsidiaries. The fiscal years ended June 27, 2009 (“fiscal 2009”), June 28, 2008 (“fiscal 2008”) and June 30, 2007 (“fiscal 2007”) were each 52-week periods. The fiscal year ending July 3, 2010 (“fiscal 2010”) will be a 53-week period.

PART I

Item 1. Business

Founded in 1941, Coach was acquired by Sara Lee Corporation (“Sara Lee”) in 1985. In June 2000, Coach was incorporated in the state of Maryland. In October 2000, Coach was listed on the New York Stock Exchange and sold approximately 68 million shares of common stock, split adjusted, representing 19.5% of the outstanding shares. In April 2001, Sara Lee completed a distribution of its remaining ownership in Coach via an exchange offer, which allowed Sara Lee stockholders to tender Sara Lee common stock for Coach common stock.

In June 2001, Coach Japan was formed to expand our presence in the Japanese market and to exercise greater control over our brand in that country. Coach Japan was initially formed as a joint venture with Sumitomo Corporation. On July 1, 2005, we purchased Sumitomo’s 50% interest in Coach Japan, resulting in Coach Japan becoming a 100% owned subsidiary of Coach, Inc.

In fiscal 2009, the Company acquired the Coach domestic retail businesses in Hong Kong, Macau and mainland China (“Coach China”) from its former distributor, the ImagineX group. These acquisitions provide the Company with greater control over the brand in China, enabling Coach to raise brand awareness and aggressively grow market share with the Chinese consumer.

Segment information is presented in Note 14 to the Consolidated Financial Statements.

Coach has grown from a family-run workshop in a Manhattan loft to a leading American marketer of fine accessories and gifts for women and men. Coach is one of the most recognized fine accessories brands in the U.S. and in targeted international markets. We offer premium lifestyle accessories to a loyal and growing customer base and provide consumers with fresh, relevant and innovative products that are extremely well made, at an attractive price. Coach’s modern, fashionable handbags and accessories use a broad range of high quality leathers, fabrics and materials. In response to our customer’s demands for both fashion and function, Coach offers updated styles and multiple product categories which address an increasing share of our customer’s accessory wardrobe. Coach has created a sophisticated, modern and inviting environment to showcase our product assortment and reinforce a consistent brand position wherever the consumer may shop. We utilize a flexible, cost-effective global sourcing model, in which independent manufacturers supply our products, allowing us to bring our broad range of products to market rapidly and efficiently.

Coach offers a number of key differentiating elements that set it apart from the competition, including:

A Distinctive Brand — Coach offers distinctive, easily recognizable, accessible luxury products that are relevant, extremely well made and provide excellent value.

A Market Leadership Position With Growing Share — Coach is America’s leading premium handbag and accessories brand and each year, as our market share increases, our leadership position strengthens. In Japan, Coach is the leading imported luxury handbag and accessories brand by units sold.

Coach’s Loyal And Involved Consumer — Coach consumers have a specific emotional connection with the brand. Part of the Company’s everyday mission is to cultivate consumer relationships by strengthening this emotional connection.

Multi-Channel International Distribution — This allows Coach to maintain a critical balance as results do not depend solely on the performance of a single channel or geographic area. The Direct-to-Consumer

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channel provides us with immediate, controlled access to consumers through Coach-operated stores in North America, Japan, Hong Kong, Macau and mainland China, the Internet and the Coach catalog. The Indirect channel provides us with access to consumers via wholesale department store and specialty store locations in over 20 countries.

Coach Is Innovative And Consumer-Centric — Coach listens to its consumer through rigorous consumer research and strong consumer orientation. Coach works to anticipate the consumer’s changing needs by keeping the product assortment fresh and relevant.

We believe that these differentiating elements have enabled the Company to offer a unique proposition to the marketplace. We hold the number one position within the U.S. premium handbag and accessories market and the number two position within the Japanese imported luxury handbag and accessories market.

Coach’s product offerings include handbags, women’s and men’s accessories, footwear, jewelry, wearables, business cases, sunwear, travel bags, fragrance and watches. The following table shows the percent of net sales that each product category represented:

		Fiscal Year Ended
		June 27, 2009				June 28, 2008				June 30, 2007
Handbags			62	%			62	%			64	%
Accessories			29				29				28
All other products			9				9				8
Total			100	%			100	%			100	%

Handbags — Handbag collections feature classically inspired designs as well as fashion designs. Typically, there are three to four collections per quarter and four to seven styles per collection. These collections are designed to meet the fashion and functional requirements of our broad and diverse consumer base. In fiscal 2009, we introduced additional lifestyle collections, of which the Madison collection was the most notable. We also launched a new design, Coach Op Art, which provides us with an entirely new logo platform for the brand. In fiscal 2010, we will introduce additional lifestyle collections and update existing collections. The most notable collection, Poppy, was introduced in July 2009 and offers a variety of fresh silhouettes with a youthful appeal, vibrant colors and accessible price points, targeting both new and existing customers.

Accessories — Accessories include women’s and men’s small leather goods, novelty accessories and women’s and men’s belts. Women’s small leather goods, which coordinate with our handbags, include money pieces, wristlets, and cosmetic cases. Men’s small leather goods consist primarily of wallets and card cases. Novelty accessories include time management and electronic accessories. Key fobs and charms are also included in this category.

Footwear — Jimlar Corporation (“Jimlar”) has been Coach’s footwear licensee since 1999. Footwear is distributed through select Coach retail stores and over 850 U.S. department stores. Footwear sales are comprised primarily of women’s styles, which coordinate with Coach’s handbag collections.

Jewelry — This category is comprised of bangle bracelets, necklaces, rings and earrings offered in both sterling silver and non-precious metals.

Wearables — This category is comprised of jackets, sweaters, gloves, hats and scarves, including both cold weather and fashion. The assortment is primarily women’s and contains a fashion assortment in all components of this category.

Business Cases — This assortment is primarily men’s and includes computer bags, messenger-style bags and totes.

Sunwear — Marchon Eyewear, Inc. (“Marchon”) has been Coach’s eyewear licensee since 2003. This collection is a collaborative effort from Marchon and Coach that combines the Coach aesthetic for fashion

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accessories with the latest fashion directions in sunglasses. Coach sunglasses are sold in Coach retail stores, department stores, select sunglass retailers and optical retailers in major markets.

Travel Bags — The travel collections are comprised of luggage and related accessories, such as travel kits and valet trays.

Fragrance — Coach, in partnership with Beauty Bank, a division of Estee Lauder, Inc. offers two fragrances. The collections include a perfume spray, purse spray, perfume solid, shimmer powder, body lotion and lip gloss. Coach fragrances are sold exclusively in Coach stores and coach.com.

Watches — Movado Group, Inc. (“Movado”) has been Coach’s watch licensee since 1998 and has developed a distinctive collection of watches inspired primarily by the women’s collections with select men’s styles.

Coach’s New York-based design team, led by its Executive Creative Director, is responsible for conceptualizing and directing the design of all Coach products. Designers have access to Coach’s extensive archives of product designs created over the past nearly 70 years, which are a valuable resource for new product concepts. Coach designers are also supported by a strong merchandising team that analyzes sales, market trends and consumer preferences to identify business opportunities that help guide each season’s design process. Merchandisers also analyze products and edit, add and delete to achieve profitable sales across all channels. The product category teams, each comprised of design, merchandising/product development and sourcing specialists, help Coach execute design concepts that are consistent with the brand’s strategic direction.

During fiscal 2008, the Company announced a new business initiative, formerly referred to as Collection, to drive brand creativity. This initiative has evolved into a brand of its own, Reed Krakoff, and is supported by a new team of designers and merchandisers and will encompass all women’s categories, with a focus on ready-to-wear, handbags, women’s accessories, footwear and jewelry. Reed Krakoff, as a stand alone brand separate from the Coach brand, will target the true luxury market. We expect to introduce the Reed Krakoff brand in fiscal year 2011.

Coach’s design and merchandising teams work in close collaboration with all of our licensing partners to ensure that the licensed products (watches, footwear and eyewear) are conceptualized and designed to address the intended market opportunity and convey the distinctive perspective and lifestyle associated with the Coach brand.

Coach operates in two reportable segments: Direct-to-Consumer and Indirect. The reportable segments represent channels of distribution that offer similar products, service and marketing strategies.

Direct-to-Consumer Segment

The Direct-to-Consumer segment consists of channels that provide us with immediate, controlled access to consumers: Coach-operated stores in North America, Japan, Hong Kong, Macau and mainland China, the Internet and the Coach catalog. This segment represented approximately 84% of Coach’s total net sales in fiscal 2009, with North American stores, Coach Japan, the Internet and Coach China contributing approximately 61%, 21%, 2% and 1% of total net sales, respectively.

North American Retail Stores — Coach stores are located in regional shopping centers and metropolitan areas throughout the U.S. and Canada. The retail stores carry an assortment of products depending on their size and location. Our flagship stores, which offer the broadest assortment of Coach products, are located in high-visibility locations such as New York, Chicago, San Francisco and Toronto.

Our stores are sophisticated, sleek, modern and inviting. They showcase the world of Coach and enhance the shopping experience while reinforcing the image of the Coach brand. The modern store design creates a distinctive environment to display our products. Store associates are trained to maintain high standards of visual presentation, merchandising and customer service. The result is a complete statement of the Coach modern American style at the retail level.

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The following table shows the number of Coach retail stores and their total and average square footage:

		Fiscal Year Ended
		June 27, 2009				June 28, 2008				June 30, 2007
Retail stores			330				297				259
Net increase vs. prior year			33				38				41
Percentage increase vs. prior year			11.1	%			14.7	%			18.8	%
Retail square footage			893,037				795,226				672,737
Net increase vs. prior year			97,811				122,489				110,184
Percentage increase vs. prior year			12.3	%			18.2	%			19.6	%
Average square footage			2,706				2,678				2,597

North American Factory Stores — Coach’s factory stores serve as an efficient means to sell manufactured-for-factory-store product, including factory exclusives, as well as discontinued and irregular inventory outside the retail channel. These stores operate under the Coach Factory name and are geographically positioned primarily in established outlet centers that are generally more than 50 miles from major markets.

Coach’s factory store design, visual presentations and customer service levels support and reinforce the brand’s image. Through these factory stores, Coach targets value-oriented customers who would not otherwise buy the Coach brand. Prices are generally discounted from 10% to 50% below full retail prices.

The following table shows the number of Coach factory stores and their total and average square footage:

		Fiscal Year Ended
		June 27, 2009				June 28, 2008				June 30, 2007
Factory stores			111				102				93
Net increase vs. prior year			9				9				7
Percentage increase vs. prior year			8.8	%			9.7	%			8.1	%
Factory square footage			477,724				413,389				321,372
Net increase vs. prior year			64,335				92,017				39,585
Percentage increase vs. prior year			15.6	%			28.6	%			14.0	%
Average square footage			4,304				4,053				3,456

Coach Japan — Coach Japan operates department store shop-in-shop locations as well as freestanding flagship, retail and factory stores. Flagship stores, which offer the broadest assortment of Coach products, are located in select shopping districts throughout Japan.

The following table shows the number of Coach Japan locations and their total and average square footage:

		Fiscal Year Ended
		June 27, 2009				June 28, 2008				June 30, 2007
Coach Japan locations			155				149				137
Net increase vs. prior year			6				12				19
Percentage increase vs. prior year			4.0	%			8.8	%			16.1	%
Coach Japan square footage			280,428				259,993				229,862
Net increase vs. prior year			20,435				30,131				35,487
Percentage increase vs. prior year			7.9	%			13.1	%			18.3	%
Average square footage			1,809				1,745				1,678

Coach China — Coach China operates department store shop-in-shop locations as well as freestanding flagship, retail and factory stores. Flagship stores, which offer the broadest assortment of Coach products, are located in select shopping districts throughout Hong Kong and mainland China.

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The following table shows the number of Coach China locations and their total and average square footage:

		Fiscal Year Ended
		June 27, 2009				June 28, 2008(1)				June 30, 2007(1)
Coach China locations			28				24				16
Net increase vs. prior year			4				8				6
Percentage increase vs. prior year			16.7	%			50.0	%			60.0	%
Coach China square footage			52,671				44,504				25,541
Net increase vs. prior year			8,167				18,963				11,301
Percentage increase vs. prior year			18.4	%			74.2	%			79.4	%
Average square footage			1,881				1,854				1,596

Internet — Coach views its website as a key communications vehicle for the brand to promote traffic in Coach retail stores and department store locations and build brand awareness. During fiscal 2009, we relaunched the coach.com website, to enhance the e-commerce shopping experience while reinforcing the image of the Coach brand. With approximately 51 million unique visits to the website in fiscal 2009, our online store provides a showcase environment where consumers can browse through a selected offering of the latest styles and colors.

Indirect Segment

Coach began as a U.S. wholesaler to department stores and this segment remains important to our overall consumer reach. Today, we work closely with our partners, both domestic and international, to ensure a clear and consistent product presentation. The Indirect segment represented approximately 16% of total net sales in fiscal 2009, with U.S. Wholesale and Coach International representing approximately 10% and 5% of total net sales, respectively. The Indirect segment also includes royalties earned on licensed product.

U.S. Wholesale — This channel offers access to Coach products to consumers who prefer shopping at department stores. Coach products are also available on macys.com, dillards.com and nordstrom.com. While overall U.S. department store sales have not increased over the last few years, the handbag and accessories category has remained strong, in part due to the strength of the Coach brand. The Company continues to tightly manage inventories in this channel given weak results at point-of-sale.

Coach recognizes the continued importance of U.S. department stores as a distribution channel for premier accessories. We continue to fine-tune our strategy to increase productivity and drive volume in existing locations by enhancing presentation, primarily through the creation of more shop-in-shops with proprietary Coach fixtures. Coach custom tailors its assortments through wholesale product planning and allocation processes to better match the attributes of our department store consumers in each local market.

Coach’s products are sold in approximately 930 wholesale locations in the U.S. and Canada. Our most significant U.S. wholesale customers are Macy’s (including Bloomingdale’s), Dillard’s, Nordstrom, Saks (including Carson’s) and Lord and Taylor.

Coach International — This channel represents sales to international wholesale distributors and authorized retailers. Travel retail represents the largest portion of our customers’ sales in this channel. However, we continue to drive growth by expanding our distribution to reach local consumers in emerging markets. Coach has developed relationships with a select group of distributors who sell Coach products through department stores and freestanding retail locations in over 20 countries. Coach’s current network of international distributors serves the following markets: Korea, Taiwan, United States & territories (primarily Hawaii and Guam), Mexico, Saudi Arabia, Singapore, Thailand, Greece, Japan, Malaysia, UAE, Australia, Hong Kong, Indonesia, Russia, Bahamas, Bahrain, France, India, Macau, New Zealand, St. Thomas, United Kingdom, and Vietnam. For locations not in freestanding stores, Coach has created shop-in-shops and other image enhancing environments to increase brand appeal and stimulate growth. Coach continues to improve

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productivity in this channel by opening larger image-enhancing locations, expanding existing stores and closing smaller, less productive stores. Coach’s most significant international wholesale customers are the DFS Group, Lotte Group, Shinsegae International, Shilla Group and Tasa Meng Corp.

The following table shows the number of international wholesale locations at which Coach products are sold:

		Fiscal Year Ended
		June 27, 2009				June 28, 2008				June 30, 2007
International freestanding stores			44				37				25
International department store locations			81				83				74
Other international locations			34				23				25
Total international wholesale locations			159				143	(1)			124	(1)

Licensing — In our licensing relationships, Coach takes an active role in the design process and controls the marketing and distribution of products under the Coach brand. The current licensing relationships as of June 27, 2009 are as follows:

Category

Licensing Partner

Introduction Date

Territory

License Expiration Date

Watches

Movado

Spring ‘98

Worldwide

2015

Footwear

Jimlar

Spring ‘99

U.S.

2014

Eyewear

Marchon

Fall ‘03

Worldwide

2011

Products made under license are, in most cases, sold through all of the channels discussed above and, with Coach’s approval, these licensees have the right to distribute Coach brand products selectively through several other channels: shoes in department store shoe salons, watches in selected jewelry stores and eyewear in selected optical retailers. These venues provide additional, yet controlled, exposure of the Coach brand. Coach’s licensing partners pay royalties to Coach on their net sales of Coach branded products. However, such royalties are not material to the Coach business as they currently comprise less than 1% of Coach’s total revenues. The licensing agreements generally give Coach the right to terminate the license if specified sales targets are not achieved.

Coach’s marketing strategy is to deliver a consistent message each time the consumer comes in contact with the Coach brand through our communications and visual merchandising. The Coach image is created internally and executed by the creative marketing, visual merchandising and public relations teams. Coach also has a sophisticated consumer and market research capability, which helps us assess consumer attitudes and trends and gauge the likelihood of a product’s success in the marketplace prior to its introduction.

In conjunction with promoting a consistent global image, Coach uses its extensive customer database and consumer knowledge to target specific products and communications to specific consumers to efficiently stimulate sales across all distribution channels.

Coach engages in several consumer communication initiatives, including direct marketing activities and national, regional and local advertising. In fiscal 2009, consumer contacts increased 14% to over 164 million. However, the Company continues to leverage marketing expenses by refining our marketing programs to increase productivity and optimize distribution. Total expenses related to consumer communications in fiscal 2009 were $50 million, representing less than 2% of net sales.

Coach’s wide range of direct marketing activities includes email contacts, catalogs and brochures targeted to promote sales to consumers in their preferred shopping venue. In addition to building brand awareness, the

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coach.com website and the Coach catalog serve as effective brand communications vehicles by providing a showcase environment where consumers can browse through a strategic offering of the latest styles and colors, which drive store traffic.

As part of Coach’s direct marketing strategy, it uses its database consisting of approximately 13 million active households in North America and 3.5 million active households in Japan. Email contacts and catalogs are Coach’s principal means of communication and are sent to selected households to stimulate consumer purchases and build brand awareness. During fiscal 2009, the Company sent approximately 94 million emails to strategically selected customers as we continue to evolve our internet outreach to maximize productivity while streamlining distribution. In fiscal 2009, the Company distributed approximately 5 million catalogs in Coach stores in North America, Japan, Hong Kong, Macau and mainland China. The growing number of visitors to the coach.com websites in the U.S., Canada and Japan provide an opportunity to increase the size of these databases.

Coach continues to explore new technologies such as blogs and social networking websites as a cost effective consumer communication opportunity to increase on-line and store sales and build brand awareness.

The Company also runs national, regional and local advertising campaigns in support of its major selling seasons.

All of our products are manufactured by independent manufacturers. However, we maintain control of the supply chain from design through manufacture. We are able to do this by qualifying all raw material suppliers and by maintaining sourcing and product development offices in Hong Kong, China, South Korea and India that work closely with our independent manufacturers. This broad-based, global manufacturing strategy is designed to optimize the mix of cost, lead times and construction capabilities. Over the last several years, we have increased the presence of our senior management at the manufacturers’ facilities to enhance control over decision making and ensure the speed with which we bring new product to market is maximized.

These independent manufacturers support a broad mix of product types, materials and a seasonal influx of new, fashion oriented styles, which allows us to meet shifts in marketplace demand and changes in consumer preferences. During fiscal 2009, approximately 72% of Coach’s total net sales were generated from products introduced within the fiscal year. As the collections are seasonal and planned to be sold in stores for short durations, our production quantities are limited which lowers our exposure to excess and obsolete inventory.

All product sources, including independent manufacturers and licensing partners, must achieve and maintain Coach’s high quality standards, which are an integral part of the Coach identity. One of Coach’s keys to success lies in the rigorous selection of raw materials. Coach has longstanding relationships with purveyors of fine leathers and hardware. Although Coach products are manufactured by independent manufacturers, we maintain control of the raw materials that are used in all of our products. Compliance with quality control standards is monitored through on-site quality inspections at all independent manufacturing facilities.

Coach carefully balances its commitments to a limited number of “better brand” partners with demonstrated integrity, quality and reliable delivery. Our manufacturers are located in many countries, including China, Italy, United States, Hong Kong, India, Thailand, Vietnam, Turkey, Philippines, Ecuador, Malaysia, Mauritius, Peru, Spain and Taiwan. Coach continues to evaluate new manufacturing sources and geographies to deliver the finest quality products at the lowest cost and help limit the impact of manufacturing in inflationary markets. No one vendor currently provides more than approximately 10% of Coach’s total units. Before partnering with a vendor, Coach evaluates each facility by conducting a quality and business practice standards audit. Periodic evaluations of existing, previously approved facilities are conducted on a random basis. We believe that all of our manufacturing partners are in material compliance with Coach’s integrity standards.

Coach operates an 850,000 square foot distribution and consumer service facility in Jacksonville, Florida. This automated facility uses a bar code scanning warehouse management system. Coach’s distribution center employees use handheld radio frequency scanners to read product bar codes, which allow them to more

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accurately process and pack orders, track shipments, manage inventory and generally provide excellent service to our customers. Coach’s products are primarily shipped to Coach retail stores and wholesale customers via express delivery providers and common carriers, and direct to consumers via express delivery providers. We expect that the facility’s current capacity will support the projected sales growth of the Company over the next several years.

The foundation of Coach’s information systems is its Enterprise Resource Planning (“ERP”) system. This fully integrated system supports all aspects of finance and accounting, procurement, inventory control, sales and store replenishment. The system functions as a central repository for all of Coach’s transactional information, resulting in increased efficiencies, improved inventory control and a better understanding of consumer demand. This system was upgraded in fiscal 2008 and continues to be fully scalable to accommodate growth.

Complementing its ERP system are several other system solutions, each of which Coach believes is well suited for its needs. The data warehouse system summarizes the transaction information and provides a single platform for all management reporting. The supply chain management system supports sales and inventory planning and reporting functions. Product fulfillment is facilitated by Coach’s highly automated warehouse management system and electronic data interchange system, while the unique requirements of Coach’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 and inventory information results in early identification of business trends and provides a detailed baseline for store inventory replenishment. Updates and upgrades of these systems are made on a periodic basis in order to ensure that we constantly improve our functionality. All complementary systems are integrated with the central ERP system.

Coach owns all of the material trademark rights used in connection with the production, marketing and distribution of all of its products, both in the U.S. and in other countries in which the products are principally sold. Coach also owns and maintains worldwide registrations for trademarks in all relevant classes of products in each of the countries in which Coach products are sold. Major trademarks include Coach, Coach and lozenge design, Coach and tag design, Signature C design and The Heritage Logo (Coach Leatherware Est. 1941). Coach is not dependent on any one particular trademark or design patent although Coach believes that the Coach name is important for its business. In addition, several of Coach’s products are covered by design patents or patent applications. Coach aggressively polices its trademarks and trade dress, and pursues infringers both domestically and internationally. It also pursues counterfeiters domestically and internationally through leads generated internally, as well as through its network of investigators, the Coach hotline and business partners around the world.

Coach expects that its material trademarks will remain in existence for as long as Coach continues to use and renew them. Coach has no material patents.

Because Coach products are frequently given as gifts, Coach has historically realized, and expects to continue to realize, higher sales and operating income in the second quarter of its fiscal year, which includes the holiday months of November and December. In addition, fluctuations in sales and operating income in any fiscal quarter are affected by the timing of seasonal wholesale shipments and other events affecting retail sales. Over the last several years, we have achieved higher levels of growth in the non-holiday quarters, which has reduced these seasonal fluctuations.

Most of Coach’s imported products are subject to existing or potential duties, tariffs or quotas that may limit the quantity of products that Coach may import into the U.S. and other countries or may impact the cost of such products. Coach has not been restricted by quotas in the operation of its business and customs duties have not comprised a material portion of the total cost of its products. In addition, Coach is subject to foreign

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governmental regulation and trade restrictions, including U.S. retaliation against certain prohibited foreign practices, with respect to its product sourcing and international sales operations.

The premium handbag and accessories industry is highly competitive. The Company mainly competes with European luxury brands as well as private label retailers, including some of Coach’s wholesale customers. Over the last several years the category has grown, encouraging the entry of new competitors as well as increasing the competition from existing competitors. However, the Company believes that as a market leader we benefit from this increased competition as it drives consumer interest in this brand loyal category.

The Company believes that there are several factors that differentiate us from our competitors, including but not limited to: distinctive newness, innovation and quality of our products, ability to meet consumer’s changing preferences and our superior customer service.

As of June 27, 2009, Coach employed approximately 12,000 people, including both full and part time employees. Of these employees, approximately 4,100 and 5,900 were full time and part time employees, respectively, in the retail field in North America, Japan, Hong Kong, Macau, and mainland China. Approximately 50 of Coach’s employees are covered by collective bargaining agreements. Coach believes that its relations with its employees are good, and it has never encountered a strike or work stoppage.

Geographic information is presented in Note 14 to the Consolidated Financial Statements.

Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and all amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, are available free of charge on our website, located at www.coach.com, as soon as reasonably practicable after they are filed with or furnished to the Securities and Exchange Commission. These reports are also available on the Securities and Exchange Commission’s website at www.sec.gov. No information contained on any of our websites is intended to be included as part of, or incorporated by reference into, this Annual Report on Form 10-K.

The Company has included the Chief Executive Officer (“CEO”) and Chief Financial Officer certifications regarding its public disclosure required by Section 302 of the Sarbanes-Oxley Act of 2002 as Exhibit 31.1 to this report on Form 10-K. Additionally, the Company filed with the New York Stock Exchange (“NYSE”) the CEO’s certification regarding the Company’s compliance with the NYSE’s Corporate Governance Listing Standards (“Listing Standards”) pursuant to Section 303A.12(a) of the Listing Standards, which indicated that the CEO was not aware of any violations of the Listing Standards by the Company.

Item 1A. Risk Factors

You should consider carefully all of the information set forth or incorporated by reference in this document and, in particular, the following risk factors associated with the Business of Coach and forward-looking information in this document. Please also see “Special Note on Forward-Looking Information” at the beginning of this report. The risks described below are not the only ones we face. Additional risks not presently known to us or that we currently deem immaterial may also have an adverse effect on us. If any of the risks below actually occur, our business, results of operations, cash flows or financial condition could suffer.

The current economic crisis is having a significant negative impact on businesses around the world. Our results can be impacted by a number of macroeconomic factors, including but not limited to consumer confidence and spending levels, unemployment, consumer credit availability, fuel and energy costs, global factory production, commercial real estate market conditions, credit market conditions and the level of customer traffic in malls and shopping centers.

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Demand for our products is significantly impacted by negative trends in consumer confidence and other economic factors affecting consumer spending behavior. The downturn in the economy may continue to affect consumer purchases of our products for the foreseeable future and adversely impact our results of operations.

Our growth depends on the continued success of existing products, as well as the successful design and introduction of new products. Our ability to create new products and to sustain existing products is affected by whether we can successfully anticipate and respond to consumer preferences and fashion trends. The failure to develop and launch successful new products could hinder the growth of our business. Also, any delay in the development or launch of a new product could result in our not being the first to market, which could compromise our competitive position.

We face intense competition in the product lines and markets in which we operate. Our competitors are European luxury brands as well as private label retailers, including some of Coach’s wholesale customers. There is a risk that our competitors may develop new products that are more popular with our customers. We may be unable to anticipate the timing and scale of such product introductions by competitors, which could harm our business. Our ability to compete also depends on the strength of our brand, whether we can attract and retain key talent, and our ability to protect our trademarks and design patents. A failure to compete effectively could adversely affect our growth and profitability.

We operate on a global basis, with approximately 28% of our net sales coming from operations outside the U.S. However, sales to our international wholesale customers are denominated in U.S. dollars. While geographic diversity helps to reduce the Company’s exposure to risks in any one country, we are subject to risks associated with international operations, including, but not limited to:

To minimize the impact on earnings of foreign currency rate movements, we monitor our foreign currency exposure in Japan through foreign currency hedging of Coach Japan’s U.S. dollar-denominated inventory purchases. We cannot ensure, however, that these hedges will succeed in offsetting any negative impact of foreign currency rate movements.

Many factors affect the level of consumer spending in the premium handbag and accessories market, including, among others, general business conditions, interest rates, the availability of consumer credit, taxation and consumer confidence in future economic conditions. Consumer purchases of discretionary luxury items, such as Coach products, tend to decline during recessionary periods, when disposable income is lower. A downturn in the economies in which Coach sells its products may adversely affect Coach’s sales.

As a company engaged in sourcing on a global scale, we are subject to the risks inherent in such activities, including, but not limited to:

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While we have business continuity and contingency plans for our sourcing sites, significant disruption of manufacturing for any of the above reasons could interrupt product supply and, if not remedied in a timely manner, could have an adverse impact on our business.

If Coach misjudges the market for its products it may be faced with significant excess inventories for some products and missed opportunities for other products. In addition, because Coach places orders for products with its manufacturers before it receives wholesale customers’ orders, it could experience higher excess inventories if wholesale customers order fewer products than anticipated.

Because Coach products are frequently given as gifts, Coach has historically realized, and expects to continue to realize, higher sales and operating income in the second quarter of its fiscal year, which includes the holiday months of November and December. In addition, fluctuations in sales and operating income in any fiscal quarter are affected by the timing of seasonal wholesale shipments and other events affecting retail sales. However, over the past several years, we have achieved higher levels of growth in the non-holiday quarters, which has reduced these seasonal fluctuations.

Our quarterly cash dividend is currently $0.075 per common share. The dividend program requires the use of a modest portion of our cash flow. Our ability to pay dividends will depend on our ability to generate sufficient cash flows from operations in the future. This ability may be subject to certain economic, financial, competitive and other factors that are beyond our control. Our Board of Directors may, at its discretion, decrease the intended level of dividends or entirely discontinue the payment of dividends at any time. Any failure to pay dividends after we have announced our intention to do so may negatively impact our reputation and investor confidence in us and negatively impact our stock price.

Coach’s charter and bylaws and Maryland law contain provisions that could make it more difficult for a third party to acquire Coach without the consent of Coach’s Board of Directors. Coach’s charter permits its Board of Directors, without stockholder approval, to amend the charter to increase or decrease the aggregate number of shares of stock or the number of shares of stock of any class or series that Coach has the authority to issue. In addition, Coach’s Board of Directors may classify or reclassify any unissued shares of common stock or preferred stock and may set the preferences, rights and other terms of the classified or reclassified shares. Although Coach’s Board of Directors has no intention to do so at the present time, it could establish a series of preferred stock that could have the effect of delaying, deferring or preventing a transaction or a change in control that might involve a premium price for Coach’s common stock or otherwise be in the best interest of Coach’s stockholders.

On May 3, 2001 Coach declared a “poison pill” dividend distribution of rights to buy additional common stock to the holder of each outstanding share of Coach’s common stock. Subject to limited

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exceptions, these rights may be exercised if a person or group intentionally acquires 10% or more of Coach’s common stock or announces a tender offer for 10% or more of the common stock on terms not approved by the Coach Board of Directors. In this event, each right would entitle the holder of each share of Coach’s common stock to buy one additional common share of Coach 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 $0.0001 per right at any time before the close of business on the tenth day following either the public announcement that, or the date on which a majority of Coach’s Board of Directors becomes aware that, a person has acquired 10% or more of the outstanding common stock. As of the end of fiscal 2009, there were no shareholders whose common stock holdings exceeded the 10% threshold established by the rights plan.

Coach’s bylaws can only be amended by Coach’s Board of Directors. Coach’s bylaws also provide that nominations of persons for election to Coach’s Board of Directors and the proposal of business to be considered at a stockholders meeting may be made only in the notice of the meeting, by Coach’s Board of Directors or by a stockholder who is entitled to vote at the meeting and has complied with the advance notice procedures of Coach’s bylaws. Also, under Maryland law, business combinations, including issuances of equity securities, between Coach and any person who beneficially owns 10% or more of Coach’s common stock or an affiliate of such person are prohibited for a five-year period unless exempted in accordance with the statute. After this period, a combination of this type must be approved by two super-majority stockholder votes, unless some conditions are met or the business combination is exempted by Coach’s Board of Directors. Coach’s Board has exempted any business combination with us or any of our affiliates from the five-year prohibition and the super-majority vote requirements.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

The following table sets forth the location, use and size of Coach’s distribution, corporate and product development facilities as of June 27, 2009. The majority of the properties are leased, with the leases expiring at various times through 2028, subject to renewal options.

Location		Use				Approximate Square Footage
Jacksonville, Florida			Distribution and consumer service				850,000
New York, New York			Corporate, sourcing and product development				385,000	(1)
Carlstadt, New Jersey			Corporate and product development				65,000
Tokyo, Japan			Coach Japan regional management				32,000
Dongguan, China			Sourcing, quality control and product development				27,000
Hong Kong			Coach Hong Kong regional management				9,000
Hong Kong			Sourcing and quality control				6,000
Shanghai, China			Coach China regional management				6,000
Seoul, South Korea			Sourcing				3,000

As of June 27, 2009, Coach also occupied 330 retail and 111 factory leased stores located in North America, 155 Coach-operated department store shop-in-shops, retail stores and factory stores in Japan and 28 Coach-operated department store shop-in-shops, retail stores and factory stores in Hong Kong, Macau and mainland China. These leases expire at various times through 2024. Coach considers these properties to be in generally good condition and believes that its facilities are adequate for its operations and provide sufficient capacity to meet its anticipated requirements.

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Item 3. Legal Proceedings

Coach is involved in various routine legal proceedings as both plaintiff and defendant incident to the ordinary course of its business, including proceedings to protect Coach’s intellectual property rights, litigation instituted by persons alleged to have been injured upon premises within Coach’s control and litigation with present or former employees.

As part of Coach’s policing program for its intellectual property rights, from time to time, Coach files lawsuits in the U.S. and abroad alleging acts of trademark counterfeiting, trademark infringement, patent infringement, trade dress infringement, trademark dilution and/or state or foreign law claims. At any given point in time, Coach may have a number of such actions pending. These actions often result in seizure of counterfeit merchandise and/or out of court settlements with defendants. From time to time, defendants will raise, either as affirmative defenses or as counterclaims, the invalidity or unenforceability of certain of Coach’s intellectual properties.

Although Coach’s litigation with present or former employees is routine and incidental to the conduct of Coach’s business, as well as for any business employing significant numbers of U.S.-based employees, such litigation can result in large monetary awards when a civil jury is allowed to determine compensatory and/or punitive damages for actions claiming discrimination on the basis of age, gender, race, religion, disability or other legally protected characteristic or for termination of employment that is wrongful or in violation of implied contracts.

Coach believes that the outcome of all pending legal proceedings in the aggregate will not have a material adverse effect on Coach’s business or consolidated financial statements.

Coach has not entered into any transactions that have been identified by the IRS as abusive or that have a significant tax avoidance purpose. Accordingly, we have not been required to pay a penalty to the IRS for failing to make disclosures required with respect to certain transactions that have been identified by the IRS as abusive or that have a significant tax avoidance purpose.

Item 4. Submission of Matters to a Vote of Security Holders

None.

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PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Refer to the information regarding the market for Coach’s common stock, the quarterly market price information and the number of common shareholders of record appearing under the caption “Market and Dividend Information” included herein.

The following graph compares the cumulative total stockholder return (assuming investment of dividends) of Coach’s common stock with the cumulative total return of the S&P 500 Stock Index and the “peer group” companies listed below over the five-fiscal-year period from July 2, 2004 through June 26, 2009, the last trading day of Coach’s most recent fiscal year. Coach’s “peer group,” as determined by management, consists of:

		Jul-04				Jul-05				Jul-06				Jun-07				Jun-08				Jun-09
Coach, Inc.			100.00				145.67				129.75				205.64				125.32				117.18
Peer Composite			100.00				100.96				105.59				135.74				88.06				57.70
S&P 500			100.00				107.77				117.07				141.18				122.65				90.45

The graph assumes that $100 was invested on July 2, 2004 at the per share closing price in each of Coach’s common stock, the S&P 500 Stock Index and a “Peer Composite” index compiled by us tracking the peer group companies listed above, and that all dividends were reinvested. The stock performance shown in the graph is included in response to the SEC’s requirements and is not intended to forecast or be indicative of future performance.

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In April 2009, the Company’s Board of Directors voted to declare a cash dividend at an expected annual rate of $0.30 per share. The first quarterly payment of $0.075 per quarter, or approximately $23.8 million was made on June 29, 2009 (the first day of fiscal 2010).

The Company repurchased 20.2 million common shares during the first nine months of fiscal 2009. There were no repurchases of common stock during the fourth quarter of fiscal 2009. At June 27, 2009, $709.6 million remained available for future repurchases under the current repurchase plan, which expires in June 2010.

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Item 6. Selected Financial Data (dollars and shares in thousands, except per share data)

The selected historical financial data presented below as of and for each of the fiscal years in the five-year period ended June 27, 2009 have been derived from Coach’s audited Consolidated Financial Statements. The financial data should be read in conjunction with Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” the Consolidated Financial Statements and Notes thereto and other financial data included elsewhere herein.

		Fiscal Year Ended(1)
		June 27, 2009(3)				June 28, 2008(3)				June 30, 2007(2)				July 1, 2006				July 2, 2005
Consolidated Statements of Income:
Net sales		$	3,230,468			$	3,180,757			$	2,612,456			$	2,035,085			$	1,651,704
Gross profit			2,322,610				2,407,103				2,022,986				1,581,567				1,267,551
Selling, general and administrative expenses			1,350,697				1,259,974				1,029,589				866,860				731,891
Operating income			971,913				1,147,129				993,397				714,707				535,660
Interest income, net			5,168				47,820				41,273				32,623				15,760
Income from continuing operations			623,369				783,039				636,529				463,840				336,647
Income from continuing operations:
Per basic share		$	1.93			$	2.20			$	1.72			$	1.22			$	0.89
Per diluted share			1.91				2.17				1.69				1.19				0.86
Weighted-average basic shares outstanding			323,714				355,731				369,661				379,635				378,670
Weighted-average diluted shares outstanding			325,620				360,332				377,356				388,495				390,191
Consolidated Percentage of Net Sales Data:
Gross margin			71.9	%			75.7	%			77.4	%			77.7	%			76.7	%
Selling, general and administrative expenses			41.8	%			39.6	%			39.4	%			42.6	%			44.3	%
Operating margin			30.1	%			36.1	%			38.0	%			35.1	%			32.4	%
Income from continuing operations			19.3	%			24.6	%			24.4	%			22.8	%			20.4	%
Consolidated Balance Sheet Data:(4)
Working capital		$	936,757			$	908,277			$	1,309,299			$	608,152			$	418,285
Total assets			2,564,336				2,247,353				2,426,611				1,602,014				1,344,743
Cash, cash equivalents and investments			806,362				706,905				1,185,816				537,565				505,116
Inventory			326,148				318,490				267,779				208,476				158,493
Dividends declared per common share(5)			0.075				—				—				—				—
Revolving credit facility			7,496				—				—				—				12,292
Long-term debt			25,072				2,580				2,865				3,100				3,270
Stockholders’ equity			1,696,042				1,490,375				1,888,499				1,165,274				1,031,552
Coach Operated Store Data:(6)
North American retail stores			330				297				259				218				193
North American factory stores			111				102				93				86				82
Coach Japan locations			155				149				137				118				103
Coach China locations			28				24				16				10				5
Total stores open at fiscal year-end			624				572				505				432				383
North American retail stores			893,037				795,226				672,737				562,553				490,925
North American factory stores			477,724				413,389				321,372				281,787				252,279
Coach Japan locations			280,428				259,993				229,862				194,375				161,632
Coach China locations			52,671				44,504				25,541				14,240				4,219
Total store square footage at fiscal year-end			1,703,860				1,513,112				1,249,512				1,052,955				909,055
Average store square footage at fiscal year-end:
North American retail stores			2,706				2,678				2,597				2,581				2,544
North American factory stores			4,304				4,053				3,456				3,277				3,077
Coach Japan locations			1,809				1,745				1,678				1,647				1,569
Coach China locations			1,881				1,854				1,596				1,424				844

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		Fiscal 2009
														Income from Continuing Operations
		SG&A				Operating Income				Interest Income, Net				Amount				Per Diluted Share
As Reported:		$	1,350,697			$	971,913			$	5,168			$	623,369			$	1.91
Excluding items affecting comparability			(28,365	)			28,365				(2,012	)			(1,241	)			0.00
Adjusted:		$	1,322,332			$	1,000,278			$	3,156			$	622,128			$	1.91

		Fiscal 2008
														Income from Continuing Operations
		SG&A				Operating Income				Interest Income, Net				Amount				Per Diluted Share
As Reported:		$	1,259,974			$	1,147,129			$	47,820			$	783,039			$	2.17
Excluding items affecting comparability			(32,100	)			32,100				(10,650	)			(41,037	)			(0.11	)
Adjusted:		$	1,227,874			$	1,179,229			$	37,170			$	742,002			$	2.06

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion of Coach’s financial condition and results of operations should be read together with Coach’s financial statements and notes to those statements included elsewhere in this document.

Coach is a leading American marketer of fine accessories and gifts for women and men. Our product offerings include handbags, women’s and men’s accessories, footwear, jewelry, wearables, business cases, sunwear, travel bags, fragrance and watches. Coach operates in two segments: Direct-to-Consumer and Indirect. The Direct-to-Consumer segment includes sales to consumers through Company-operated stores in North America, Japan, Hong Kong, Macau and mainland China, the Internet and Coach catalog. The Indirect segment includes sales to wholesale customers and distributors in over 20 countries, including the United States, and royalties earned on licensed product. As Coach’s business model is based on multi-channel international distribution, our success does not depend solely on the performance of a single channel or geographic area.

In order to sustain growth within our global framework, we continue to focus on two key growth strategies: increased global distribution, with an emphasis on North America and China, and improved store sales productivity. To that end we are focused on four key initiatives:

We believe the growth strategies outlined above will allow us to deliver long-term superior returns on our investments and drive increased cash flows from operating activities. However, the current macroeconomic environment has created a very challenging retail market in which it is difficult to achieve productivity gains. The Company believes long-term growth can still be achieved through a combination of expanded distribution, a focus on innovation to support productivity and disciplined expense control. Our multi-channel distribution model is diversified and includes substantial international and factory businesses, which reduces our reliance upon our full-price U.S. business. With an essentially debt-free balance sheet and significant cash position, we believe we are well positioned to manage through this economic downturn.

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Items Affecting Comparability of Our Financial Results

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 27, 2009				June 28, 2008				June 30, 2007
Operating income
Cost savings measures		$	(13.4	)		$	—			$	—
Charitable foundation contribution			(15.0	)			(20.0	)			—
Non-recurring variable expense			—				(12.1	)			—
Total Operating income impact		$	(28.4	)		$	(32.1	)		$	—
Interest Income, net
Tax-related interest adjustments		$	2.0			$	10.7			$	—
Total Interest income, net impact		$	2.0			$	10.7			$	—
Provision for income taxes
Cost savings measures		$	(5.1	)		$	—			$	—
Charitable foundation contribution			(5.7	)			(7.8	)			—
Tax adjustments			(16.8	)			(50.0	)			—
Non-recurring variable expense			—				(4.7	)			—
Total Provision for income taxes impact		$	(27.6	)		$	(62.5	)		$	—
Net income
Cost savings measures		$	(8.3	)		$	—			$	—
Charitable foundation contribution			(9.3	)			(12.2	)			—
Tax adjustments			18.8				60.6				—
Non-recurring variable expense			—				(7.4	)			—
Total Net income impact		$	1.2			$	41.0			$	—
Diluted earnings per share
Cost savings measures		$	(0.03	)		$	—			$	—
Charitable foundation contribution			(0.03	)			(0.03	)			—
Tax adjustments			0.06				0.17				—
Non-recurring variable expense			—				(0.02	)			—
Total Diluted earnings per share impact		$	0.00			$	0.11			$	—

Fiscal 2009 Items

Cost Savings Measures

During the third quarter of fiscal 2009, the Company recorded a charge of $13.4 million, related to cost savings initiatives. These initiatives included the elimination of approximately 150 positions from the Company’s corporate offices in New York, New Jersey and Jacksonville, the closure of four underperforming retail stores and the closure of Coach Europe Services, the Company’s sample-making facility in Italy.

Charitable Contribution and Tax Adjustments

During the fourth quarter of fiscal 2009, the Company decreased the provision for income taxes by $16.8 million and increased interest income by $2.0 million, primarily as a result of a favorable settlement of a multi-year tax return examination and other tax accounting adjustments. The Company used the net income favorability to contribute $15.0 million to the Coach Foundation.

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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.

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:

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Fiscal 2009 Compared to Fiscal 2008

The following table summarizes results of operations for fiscal 2009 compared to fiscal 2008:

		Fiscal Year Ended
		June 27, 2009								June 28, 2008								Variance
		(dollars in millions, except per share data)
		Amount				% of Net Sales				Amount				% of Net Sales				Amount				%
Net sales		$	3,230.5				100.0	%		$	3,180.8				100.0	%		$	49.7				1.6	%
Gross profit			2,322.6				71.9				2,407.1				75.7				(84.5	)			(3.5	)
Selling, general and administrative expenses			1,350.7				41.8				1,260.0				39.6				90.7				7.2
Operating income			971.9				30.1				1,147.1				36.1				(175.2	)			(15.3	)
Interest income, net			5.2				0.2				47.8				1.5				(42.7	)			(89.2	)
Provision for income taxes			353.7				10.9				411.9				13.0				(58.2	)			(14.1	)
Income from continuing operations			623.4				19.3				783.0				24.6				(159.7	)			(20.4	)
Income from discontinued operations, net of taxes			—				0.0				0.0				0.0				(0.0	)			(100.0	)
Net income			623.4				19.3				783.1				24.6				(159.7	)			(20.4	)
Net Income per share:
Basic:
Continuing operations		$	1.93							$	2.20							$	(0.28	)			(12.5	)%
Discontinued operations			—								0.00								(0.00	)			(100.0	)
Net income			1.93								2.20								(0.28	)			(12.5	)
Diluted:
Continuing operations		$	1.91							$	2.17							$	(0.26	)			(11.9	)%
Discontinued operations			—								0.00								(0.00	)			(100.0	)
Net income			1.91								2.17								(0.26	)			(11.9	)

Net Sales

The following table presents net sales by operating segment for fiscal 2009 compared to fiscal 2008:

		Fiscal Year Ended
		Net Sales								Rate of Increase				Percentage of Total Net Sales
		June 27, 2009				June 28, 2008								June 27, 2009				June 28, 2008
		(dollars in millions)								(FY09 vs. FY08)
Direct-to-Consumer		$	2,726.9			$	2,557.9				6.6	%			84.4	%			80.4	%
Indirect			503.6				622.9				(19.2	)			15.6				19.6
Total net sales		$	3,230.5			$	3,180.8				1.6	%			100.0	%			100.0	%

In connection with the acquisitions of the retail businesses in Hong Kong, Macau and mainland China, the Company evaluated the composition of its reportable segments and concluded that sales in these regions should be included in the Direct-to-Consumer segment. Accordingly, fiscal 2008 and fiscal 2007 comparable sales have been reclassified to conform to the current year presentation.

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Direct-to-Consumer — Net sales increased 6.6% to $2.73 billion during fiscal 2009 from $2.56 billion during fiscal 2008, driven by sales from new and expanded stores, partially offset by a decline in comparable store sales. Comparable store sales measure sales performance at stores that have been open for at least 12 months. Coach excludes new locations from the comparable store base for the first year of operation. Similarly, stores that are expanded by 15.0% or more are also excluded from the comparable store base until the first anniversary of their reopening. Stores that are closed for renovations are removed from the comparable store base.

In North America, net sales increased 5.4% as sales from new and expanded stores were partially offset by a 6.8% decline in comparable store sales and a decline in Internet sales. During fiscal 2009, Coach opened 33 net new retail stores and nine net new factory stores, and expanded 11 retail stores and nine factory stores in North America. In Japan, net sales increased 11.1% driven by an approximately $70.2 million or 11.8% positive impact from foreign currency exchange. During fiscal 2009, Coach opened six net new locations and expanded three locations in Japan. The remaining change in net sales is attributable to Coach China, primarily as a result of the acquisitions of our retail businesses in Hong Kong, Macau and mainland China.

Indirect — Net sales decreased 19.2% driven primarily by a 20.8% decrease in U.S. wholesale as the Company reduced shipments into U.S. department stores in order to manage customer inventory levels due to a weaker sales environment. International shipments also declined 6.7% as strong retail sales at locations targeting the domestic customer were offset by a decrease in retail sales at locations serving international tourists. Licensing revenue of approximately $19.5 million and $27.1 million in fiscal 2009 and fiscal 2008, respectively, is included in Indirect sales.

Operating Income

Operating income decreased 15.3% to $971.9 million in fiscal 2009 as compared to $1.15 billion in fiscal 2008. Excluding items affecting comparability of $28.4 million and $32.1 million in fiscal 2009 and fiscal 2008, respectively, operating income decreased 15.2% to $1.00 billion in fiscal 2009 as compared to $1.18 billion in fiscal 2008. Operating margin decreased to 30.1% as compared to 36.1% in the prior year, as gross margin declined while selling, general, and administrative expenses increased. Excluding items affecting comparability, operating margin was 31.0% and 37.1% in fiscal 2009 and fiscal 2008, respectively.

Gross profit decreased 3.5% to $2.32 billion in fiscal 2009 from $2.41 billion in fiscal 2008. Gross margin was 71.9% in fiscal 2009 as compared to 75.7% during fiscal 2008. The change in gross margin was driven primarily by promotional activities in Coach-operated North American factory stores and channel mix. Gross margin was also negatively impacted by our sharper pricing initiative, in which retail prices on handbags and women’s accessories have been reduced in response to consumers’ reluctance to spend, and an increase in average unit cost. Coach’s gross profit is dependent upon a variety of factors, including changes in the relative sales mix among distribution channels, changes in the mix of products sold, foreign currency exchange rates and fluctuations in material costs. These factors among others may cause gross profit to fluctuate from year to year.

Selling, general and administrative (“SG&A”) expenses are comprised of four categories: (1) selling; (2) advertising, marketing and design; (3) distribution and consumer service; and (4) administrative. Selling expenses include store employee compensation, store occupancy costs, store supply costs, wholesale account administration compensation and all Coach Japan and Coach China operating expenses. These expenses are affected by the number of Coach-operated stores in North America, Japan, Hong Kong, Macau and mainland China open during any fiscal period and the related proportion of retail and wholesale sales. Advertising, marketing and design expenses include employee compensation, media space and production, advertising agency fees, new product design costs, public relations, market research expenses and mail order costs. Distribution and consumer service expenses include warehousing, order fulfillment, shipping and handling, customer service and bag repair costs. Administrative expenses include compensation costs for the executive, finance, human resources, legal and information systems departments, corporate headquarters occupancy costs, and consulting and software expenses. SG&A expenses increase as the number of Coach-operated stores increase, although an increase in the number of stores generally results in the fixed portion of SG&A expenses being spread over a larger sales base.

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During fiscal 2009, SG&A expenses increased 7.2% to $1.35 billion, compared to $1.26 billion in fiscal 2008, driven primarily by an increase in selling expenses partially offset by a decrease in administrative expenses. As a percentage of net sales, SG&A expenses were 41.8% and 39.6% during fiscal 2009 and fiscal 2008, respectively. Excluding items affecting comparability of $28.4 million and $32.1 million in fiscal 2009 and fiscal 2008, respectively, SG&A expenses were $1.32 billion and $1.23 billion, respectively, representing 40.9% and 38.6% of net sales, respectively.

Selling expenses were $981.5 million, or 30.4% of net sales, in fiscal 2009 compared to $865.2 million, or 27.2% of net sales, in fiscal 2008. Excluding items affecting comparability during fiscal 2009 of $5.0 million related to the closure of four underperforming stores, selling expenses were $976.5 million, representing 30.2% of net sales. The dollar increase in selling expenses was primarily due to an increase in operating expenses of North American stores, the newly formed Coach China and Coach Japan. The increase in North American store expenses was primarily attributable to expenses from new and expanded stores opened during fiscal 2009 and the incremental expense associated with having a full year of expenses related to stores opened in the prior year. Fiscal 2009 includes operating expenses of Coach China, which consisted of investments in stores, marketing, organization and infrastructure. The increase in Coach Japan operating expenses was driven primarily by the impact of foreign currency exchange rates which increased reported expenses by approximately $29.1 million.

Advertising, marketing, and design costs were $163.6 million, or 5.1% of net sales, in fiscal 2009, compared to $147.7 million, or 4.6% of net sales, during fiscal 2008. The increase was primarily due to design expenditures and development costs for new merchandising initiatives.

Distribution and consumer service expenses were $52.2 million, or 1.6% of net sales, in fiscal 2009, compared to $47.6 million, or 1.5%, in fiscal 2008. The increase was primarily the result of an increase in fixed occupancy costs related to the expansion of our distribution center that was completed in August 2008.

Administrative expenses were $153.4 million, or 4.7% of net sales, in fiscal 2009 compared to $199.5 million, or 6.3% of net sales, during fiscal 2008. Excluding items affecting comparability of $23.4 million and $32.1 million in fiscal 2009 and fiscal 2008, respectively, expenses were $130.0 million and $167.4 million, respectively, representing 4.0% and 5.3% of net sales. The decrease in administrative expenses was primarily due to a decrease in performance-based compensation expense and lower rent expense as a result of the purchase of our corporate headquarters building.

Net interest income was $5.2 million in fiscal 2009 compared to $47.8 million in fiscal 2008. Excluding items affecting comparability of $2.0 million and $10.7 million in fiscal 2009 and fiscal 2008, respectively, net interest income was $3.2 million and $37.2 million. This decrease is attributable to lower returns on our investments due to lower interest rates and lower average cash balances.

The effective tax rate was 36.2% in fiscal 2009 compared to 34.5% in fiscal 2008. In the fourth quarter of fiscal 2009 and fiscal 2008, the Company recorded a benefit of $16.8 million and $50.0 million, respectively, primarily related to favorable settlements of tax return examinations and certain other tax accounting adjustments. Excluding these benefits, the effective tax rates were 38.0% and 39.0%.

Income from continuing operations was $623.4 million in fiscal 2009 compared to $783.0 million in fiscal 2008. Excluding items affecting comparability of $1.2 million and $41.0 million in fiscal 2009 and fiscal 2008, respectively, income from continuing operations was $622.1 million and $742.0 million in fiscal 2009 and fiscal 2008, respectively. This decrease was primarily due to a decline in operating income and interest income, net, partially offset by a lower provision for income taxes.

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Fiscal 2008 Compared to Fiscal 2007

The following table summarizes results of operations for fiscal 2008 compared to fiscal 2007:

		Fiscal Year Ended
		June 28, 2008								June 30, 2007								Variance
		(dollars in millions, except per share data)
		Amount				% of Net Sales				Amount				% of Net Sales				Amount				%
Net sales		$	3,180.8				100.0	%		$	2,612.5				100.0	%		$	568.3				21.8	%
Gross profit			2,407.1				75.7				2,023.0				77.4				384.1				19.0
Selling, general and administrative expenses			1,260.0				39.6				1,029.6				39.4				230.4				22.4
Operating income			1,147.1				36.1				993.4				38.0				153.7				15.5
Interest income, net			47.8				1.5				41.3				1.6				6.5				15.9
Provision for income taxes			411.9				13.0				398.1				15.2				13.8				3.5
Income from continuing operations			783.0				24.6				636.5				24.4				146.5				23.0
Income from discontinued operations, net of taxes			0.0				0.0				27.1				1.0				(27.1	)			(100.0	)
Net income			783.1				24.6				663.7				25.4				119.4				18.0
Net Income per share:
Basic:
Continuing operations		$	2.20							$	1.72							$	0.48				27.8	%
Discontinued operations			0.00								0.07								(0.07	)			(100.0	)
Net income			2.20								1.80								0.41				22.6
Diluted:
Continuing operations		$	2.17							$	1.69							$	0.49				28.8	%
Discontinued operations			0.00								0.07								(0.07	)			(100.0	)
Net income			2.17								1.76								0.41				23.6

Net Sales

The following table presents net sales by operating segment for fiscal 2008 compared to fiscal 2007:

		Fiscal Year Ended
		Net Sales								Rate of Increase				Percentage of Total Net Sales
		June 28, 2008				June 30, 2007								June 28, 2008				June 30, 2007
		(dollars in millions)								(FY08 vs. FY07)
Direct-to-Consumer		$	2,557.9			$	2,109.0				21.3	%			80.4	%			80.7	%
Indirect			622.9				503.5				23.7				19.6				19.3
Total net sales		$	3,180.8			$	2,612.5				21.8	%			100.0	%			100.0	%

Direct-to-Consumer — Net sales increased by 21.3%, driven by increased sales from new stores, comparable stores and expanded stores.

In North America, net sales increased 22.0% driven by sales from new stores, a 9.8% increase in comparable store sales and an increase in sales from expanded stores. During fiscal 2008, Coach opened 38 net new retail stores and nine new factory stores, and expanded 18 retail stores and 19 factory stores in North America. In Japan, net sales increased 23.4% driven primarily by sales from new and expanded stores. Coach Japan’s reported net sales were positively impacted by approximately $44 million as a result of foreign currency exchange. During fiscal 2008, Coach opened 12 net new locations and expanded 11 locations in Japan. These sales increases were slightly offset by store closures and a decline in the Internet and direct marketing channels.

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Indirect — Net sales increased by 23.7% to $622.9 million in fiscal 2008 from $503.5 million in fiscal 2007, driven primarily by a 16.4% increase in sales in the U.S. wholesale division and a 40.3% increase in sales in the international wholesale division. Licensing revenue of approximately $27 million and $15 million in fiscal 2008 and fiscal 2007, respectively, is included in Indirect sales.

Operating income increased 15.5% to $1.15 billion in fiscal 2008 as compared to $993.4 million in fiscal 2007, driven by increases in net sales and gross profit, partially offset by an increase in selling, general and administrative expenses. Excluding items affecting comparability of $32.1 million, operating income increased 18.7% to $1.18 billion. Operating margin was 36.1% in fiscal 2008 compared to 38.0% in fiscal 2007 as gains from increased net sales were offset by a decrease in gross margin and increase in operating expenses. Excluding items affecting comparability, operating margin was 37.1% in fiscal 2008.

Gross profit increased 19.0% to $2.41 billion in fiscal 2008 compared to $2.02 billion in fiscal 2007. Gross margin was 75.7% in fiscal 2008 compared to 77.4% in fiscal 2007. The change in gross margin was driven by promotional activities in Coach-operated North American stores, the fluctuation in foreign currency translation rates and channel mix.

During fiscal 2008, SG&A expenses increased 22.4% to $1.26 billion, compared to $1.03 billion in fiscal 2007, driven primarily by increased selling expenses. As a percentage of net sales, SG&A expenses were 39.6% and 39.4% during fiscal 2008 and fiscal 2007, respectively. Excluding items affecting comparability in fiscal 2008 of $32.1 million, SG&A expenses were $1.23 billion, representing 38.6% of net sales, an improvement of 80 basis points over fiscal 2007, as we continued to leverage our expense base on higher sales.

Selling expenses were $865.2 million, or 27.2% of net sales, in fiscal 2008 compared to $718.0 million, or 27.5% of net sales, in fiscal 2007. The increase in selling expenses was primarily due to an increase in operating expenses of North American stores and Coach Japan. The increase in North American store expenses is attributable to increased variable expenses related to higher sales, new stores opened during the fiscal year and the incremental expense associated with having a full year of expenses related to stores opened in the prior year. The increase in Coach Japan operating expenses was primarily driven by increased variable expenses related to higher sales and new store operating expenses. The impact of foreign currency exchange rates increased reported expenses by approximately $19.2 million. The remaining increase in selling expenses was due to increased variable expenses to support sales growth in other channels.

Advertising, marketing, and design costs were $147.7 million, or 4.6% of net sales, in fiscal 2008, compared to $119.8 million, or 4.6% of net sales, during fiscal 2007. The increase in advertising, marketing and design costs was primarily due to increased expenses related to direct-mail marketing programs and increased staffing costs.

Distribution and consumer service expenses were $47.6 million, or 1.5% of net sales, in fiscal 2008, compared to $53.2 million, or 2.0%, in fiscal 2007. The decrease in these expenses is primarily the result of efficiency gains, partially offset by higher sales volume.

Administrative expenses were $199.5 million, or 6.3% of net sales, in fiscal 2008 compared to $138.6 million, or 5.3% of net sales, during fiscal 2007. Fiscal 2008 expense includes $32.1 million related to the charitable contribution to the Coach Foundation and non-recurring variable expenses. Excluding these charges, administrative expenses were $167.4 million, representing 5.3% of net sales, primarily driven by an increase in employee staffing costs, including share-based compensation expense and an increase in consulting and depreciation expenses as a result of investments in technology systems.

Interest income, net was $47.8 million in fiscal 2008 as compared to $41.3 million in fiscal 2007. This increase was primarily due to a reduction of $10.7 million of interest expense, related to a favorable settlement of a tax return examination. Excluding this benefit, interest income, net decreased primarily as a result of lower returns on our investments as a result of lower interest rates.

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The effective tax rate was 34.5% in fiscal 2008 compared to 38.5% in fiscal 2007. During the fourth quarter of fiscal 2008, the Company recorded a benefit of $50.0 million, primarily related to a favorable settlement of a tax return examination. Excluding this benefit, the effective tax rate in fiscal 2008 was essentially flat as compared to the fiscal 2007 effective rate.

Income from continuing operations increased 23.0% to $783.0 million in fiscal 2008 compared to $636.5 million in fiscal 2007. Excluding items affecting comparability of $41.0 million discussed above, income from continuing operations was $742.0 million, a 16.6% increase over prior year. The increase is primarily attributable to increased net sales as discussed above.

Income from Discontinued Operations

In March 2007, the Company exited its corporate accounts business in order to better control the location and image of the brand where Coach product is sold. Through the corporate accounts business, Coach sold products primarily to distributors for gift-giving and incentive programs. The results of the corporate accounts business, previously included in the Indirect segment, have been segregated from continuing operations and reported as discontinued operations in the Consolidated Statements of Income for all periods presented.

In fiscal 2007, net sales and net income from discontinued operations were $66.5 million and $27.1 million, respectively. In fiscal 2008, net sales and net income from discontinued operations were not significant.

Financial Condition

Net cash provided by operating activities was $809.2 million in fiscal 2009 compared to $923.4 million in fiscal 2008. The $114.2 million decrease was primarily due to decreased earnings of $159.7 million. The changes in operating assets and liabilities were attributable to normal operating fluctuations.

Net cash used by investing activities was $264.7 million in fiscal 2009 compared to $445.4 million net cash provided by investing activities in fiscal 2008. The $710.2 million change is primarily attributable to a $620.2 million decrease in the net proceeds from maturities of investments, a $103.3 million use of cash related to the purchase of Coach’s corporate headquarters building and a $24.4 million use of cash related to the acquisition of our retail businesses in Hong Kong, Macau and mainland China. These items were partially offset by a $37.7 million decrease in expenditures on property and equipment.

Net cash used in financing activities was $440.1 million in fiscal 2009 compared to $1.23 billion in fiscal 2008. The decrease of $790.2 million in net cash used was attributable to an $882.8 million decrease in funds expended to repurchase common stock in fiscal 2009 as compared to fiscal 2008. This decrease in cash used was partially offset by a $76.0 million decrease in proceeds from the exercise of share-based awards and a $24.1 million decrease in the excess tax benefit from share-based compensation.

On July 26, 2007, the Company renewed its $100 million revolving credit facility with certain lenders and Bank of America, N.A. as the primary lender and administrative agent (the “Bank of America facility”), extending the facility expiration to July 26, 2012. At Coach’s request, the Bank of America facility can be expanded to $200 million. The facility can also be extended for two additional one-year periods, at Coach’s request.

Coach’s Bank of America facility is available for seasonal working capital requirements or general corporate purposes and may be prepaid without penalty or premium. During fiscal 2009 and fiscal 2008 there were no borrowings under the Bank of America facility. Accordingly, as of June 27, 2009 and June 28, 2008, there were no outstanding borrowings under the Bank of America facility. The Company’s borrowing capacity as of June 27, 2009 was $87.0 million, due to outstanding letters of credit.

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Coach pays a commitment fee of 6 to 12.5 basis points on any unused amounts and interest of LIBOR plus 20 to 55 basis points on any outstanding borrowings. Both the commitment fee and the LIBOR margin are based on the Company’s fixed charge coverage ratio. At June 27, 2009, the commitment fee was 7 basis points and the LIBOR margin was 30 basis points.

The Bank of America facility contains various covenants and customary events of default. Coach has been in compliance with all covenants since its inception.

To provide funding for working capital and general corporate purposes, Coach Japan has available credit facilities with several Japanese financial institutions. These facilities allow a maximum borrowing of 7.6 billion yen, or approximately $79.9 million, at June 27, 2009. Interest is based on the Tokyo Interbank rate plus a margin of 30 to 100 basis points. During fiscal 2009 and fiscal 2008, the peak borrowings under the Japanese credit facilities were $14.4 million and $26.8 million, respectively. As of June 27, 2009 and June 28, 2008, there were no outstanding borrowings under the Japanese credit facilities.

During fiscal 2009, Coach Shanghai Limited entered into a credit facility that allows a maximum borrowing of $10 million at June 27, 2009. This facility is available to provide funding for working capital and general corporate purposes. Coach Shanghai pays a commitment fee of 10 basis points on the daily unused amount if the daily unused amount exceeds 60% of the total facility. Interest is based on the People’s Bank of China rate plus 2%, per annum. During fiscal 2009, the peak borrowings under this credit facility were $7.5 million. At June 27, 2009, there was $7.5 million of outstanding borrowings under this facility.

On August 19, 2008, the Company completed its $1.0 billion common stock repurchase program, which was put into place in November 2007. On August 25, 2008, the Coach Board of Directors approved a new common stock repurchase program to acquire up to $1.0 billion of Coach’s outstanding common stock through June 2010. Purchases of Coach stock are made from time to time, subject to market conditions and at prevailing market prices, through open market purchases. Repurchased shares 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 2009 and fiscal 2008, the Company repurchased and retired 20.2 million and 39.7 million shares of common stock, respectively, at an average cost of $22.51 and $33.68 per share, respectively. As of June 27, 2009, $709.6 million remained available for future purchases under the existing program.

In fiscal 2009, total capital expenditures were $240.3 million and related primarily to the purchase of the Company’s corporate headquarters building in New York City for $103.3 million. New stores and expansions in North America and Japan accounted for $71.9 million and $11.3 million, respectively, of total capital expenditures. Approximately $4.0 million related to investments in corporate infrastructure in Hong Kong and mainland China. Spending on department store renovations and distributor locations accounted for approximately $11.4 million of the total capital expenditures. The remaining capital expenditures related to corporate systems and infrastructure. These investments were financed from on hand cash, operating cash flows and by using funds from the revolving credit facility maintained by Coach Shanghai Limited.

For the fiscal year ending July 3, 2010, the Company expects total capital expenditures to be approximately $110.0 million. Capital expenditures will be primarily for new stores in North America, Japan, Hong Kong, Macau and mainland China. We will also continue to invest in corporate infrastructure and department store and distributor locations. These investments will be financed primarily from on hand cash and operating cash flows.

Coach experiences significant seasonal variations in its working capital requirements. During the first fiscal quarter Coach builds inventory for the holiday selling season, opens new retail stores and generates higher levels of trade receivables. In the second fiscal quarter its working capital requirements are reduced substantially as Coach generates consumer sales and collects wholesale accounts receivable. In fiscal 2009, Coach purchased approximately $916.0 million of inventory, which was primarily funded by on hand cash and operating cash flow.

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Management believes that cash flow from continuing operations and on hand cash will provide adequate funds for the foreseeable working capital needs, planned capital expenditures, dividend payments and the common stock repurchase program. Any future acquisitions, joint ventures or other similar transactions may require additional capital. There can be no assurance that any such capital will be available to Coach on acceptable terms or at all. Coach’s ability to fund its working capital needs, planned capital expenditures, dividend payments and scheduled debt payments, as well as to comply with all of the financial covenants under its debt agreements, depends on its future operating performance and cash flow, which in turn are subject to prevailing economic conditions and to financial, business and other factors, some of which are beyond Coach’s control.

At June 27, 2009, the Company had letters of credit available of $275.0 million, of which $101.9 million were outstanding. These letters of credit, which expire at various dates through 2012, primarily collateralize the Company’s obligation to third parties for the purchase of inventory.

Contractual Obligations

As of June 27, 2009, Coach’s long-term contractual obligations are as follows:

		Payments Due by Period
		Total				Less Than 1 Year				1 – 3 Years				3 – 5 Years				More Than 5 Years
		(amounts in millions)
Capital expenditure commitments(1)		$	2.4			$	2.4			$	—			$	—			$	—
Inventory purchase obligations(2)			105.1				105.1				—				—				—
Long-term debt, including the current portion(3)			25.6				0.5				1.5				22.9				0.7
Operating leases			877.4				127.3				238.4				193.8				317.9
Total		$	1,010.5			$	235.3			$	239.9			$	216.7			$	318.6

The table above excludes the following: amounts included in current liabilities, other than the current portion of long-term debt, in the Consolidated Balance Sheet at June 27, 2009 as these items will be paid within one year; long-term liabilities not requiring cash payments, such as deferred lease incentives; and cash contributions for the Company’s pension plans. The Company intends to contribute approximately $0.4 million to its pension plans during the next year. The above table also excludes reserves recorded in accordance with Statement of Financial Accounting Standard (“SFAS”) Interpretation (“FIN”) 48, “ Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109”, as we are unable to reasonably estimate the timing of future cash flows related to these reserves.

Coach does not have any off-balance-sheet financing or unconsolidated special purpose entities. Coach’s risk management policies prohibit the use of derivatives for trading purposes. The valuation of financial instruments that are marked-to-market are based upon independent third-party sources.

Coach is party to an Industrial Revenue Bond related to its Jacksonville, Florida distribution and consumer service facility. This loan has a remaining balance of $2.6 million and bears interest at 4.5%. Principal and interest payments are made semiannually, with the final payment due in 2014.

During fiscal 2009, Coach assumed a mortgage in connection with the purchase of its corporate headquarters building in New York City. This mortgage bears interest at 4.68%. Interest payments are made monthly and principal payments begin in July 2009, with the final payment of $21.6 million due in June 2013. As of June 27, 2009, the remaining balance on the mortgage was $23.0 million.

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The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions. Predicting future events is inherently an imprecise activity and, as such, requires the use of judgment. Actual results may vary from estimates in amounts that may be material to the financial statements. The development and selection of the Company’s critical accounting policies and estimates are periodically reviewed with the Audit Committee of the Board of Directors.

The accounting policies discussed below are considered critical because changes to certain judgments and assumptions inherent in these policies could affect the financial statements. For more information on Coach’s accounting policies, please refer to the Notes to Consolidated Financial Statements.

The Company’s effective tax rate is based on pre-tax income, statutory tax rates, tax laws and regulations, and tax planning strategies available in the various jurisdictions in which Coach operates. Deferred tax assets are reported at net realizable value, as determined by management. Significant management judgment is required in determining the effective tax rate, in evaluating our tax positions and in determining the net realizable value of deferred tax assets. In accordance with FIN 48, the Company recognizes the impact of tax positions in the financial statements if those positions will more likely than not be sustained on audit, based on the technical merits of the position. Tax authorities periodically audit the Company’s income tax returns. Management believes that our tax filing positions are reasonable and legally supportable. However, in specific cases, various tax authorities may take a contrary position. A change in our tax positions or audit settlements could have a significant impact on our results of operations. For further information about income taxes, see Note 12 to the Consolidated Financial Statements.

The Company’s inventories are reported at the lower of cost or market. Inventory costs include material, conversion costs, freight and duties and are determined by the first-in, first-out method. Prior to fiscal 2009, inventory of Coach Japan was determined by the last-in, first-out method. For further information about this change in accounting principle, see Note 3 to the Consolidated Financial Statements. The Company reserves for slow-moving and aged inventory based on historical experience, current product demand and expected future demand. 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 inventory and additional reserves might be required. At June 27, 2009, a 10% change in the reserve for slow-moving and aged inventory would have resulted in an insignificant change in inventory and cost of goods sold.

The Company evaluates goodwill and other indefinite life intangible assets annually for impairment. In order to complete our impairment analysis, we must perform a valuation analysis which includes determining the fair value of the Company’s reporting units based on discounted cash flows. This analysis contains uncertainties as it requires management to make assumptions and estimate the profitability of future growth strategies. The Company determined that there was no impairment in fiscal 2009, fiscal 2008 or fiscal 2007.

Long-lived assets, such as property and equipment, are evaluated for impairment annually to determine if the carrying value of the assets is recoverable. The evaluation is based on a review of forecasted operating cash flows and the profitability of the related business. An impairment loss is recognized if the forecasted cash flows are less than the carrying amount of the asset. The Company recorded an impairment loss in fiscal 2009 of $1.5 million related to the closure of three underperforming stores. The Company did not record any impairment losses in fiscal 2008 or fiscal 2007. However, as the determination of future cash flows is based on expected future performance, impairment could result in the future if expectations are not met.

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Sales are recognized at the point of sale, which occurs when merchandise is sold in an over-the-counter consumer transaction or, for the wholesale channels, upon shipment of merchandise, when title passes to the customer. Revenue associated with gift cards is recognized upon redemption. The Company estimates the amount of gift cards that will not be redeemed and records such amounts as revenue over the period of the performance obligation. Allowances for estimated uncollectible accounts, discounts and returns are provided when sales are recorded based upon historical experience and current trends. Royalty revenues are earned through license agreements with manufacturers of other consumer products that incorporate the Coach brand. Revenue earned under these contracts is recognized based upon reported sales from the licensee. At June 27, 2009, a 10% change in the allowances for estimated uncollectible accounts, discounts and returns would have resulted in an insignificant change in accounts receivable and net sales.

The Company recognizes the cost of employee services received in exchange for awards of equity instruments, such as stock options, based on the grant-date fair value of those awards. The grant-date fair value of stock option awards is determined using the Black-Scholes option pricing model and involves several assumptions, including the expected term of the option, expected volatility and dividend yield. The expected term of options represents the period of time that the options granted are expected to be outstanding and is based on historical experience. Expected volatility is based on historical volatility of the Company’s stock as well as the implied volatility from publicly traded options on Coach’s stock. Dividend yield is based on the current expected annual dividend per share and the Company’s stock price. Changes in the assumptions used to determine the Black-Scholes value could result in significant changes in the Black-Scholes value. However, a 10% change in the Black-Scholes value would result in an insignificant change in fiscal 2009 share-based compensation expense.

In September 2006, the Financial Accounting Standards Board (“FASB”) issued SFAS 157, “Fair Value Measurements.” SFAS 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. The Company adopted the provisions of SFAS 157 related to financial assets and liabilities in the first quarter of fiscal 2009. The adoption of these provisions did not have a material impact on our consolidated financial statements. The remaining provisions of SFAS 157 are effective for the first quarter of the fiscal 2010. For further information about the fair value measurements of our financial assets and liabilities see Note 7.

In September 2006, the FASB issued SFAS 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans — an amendment of FASB Statements No. 87, 88, 106 and 132(R).” SFAS 158 requires an employer to recognize the funded status of a benefit plan, measured as the difference between plan assets at fair value and the projected benefit obligation, in its statement of financial position. SFAS 158 also requires an employer to measure defined benefit plan assets and obligations as of the date of the employer’s fiscal year-end statement of financial position. The Company adopted the recognition provision and the related disclosures as of the end of the fiscal year ended June 30, 2007, and the measurement provision during the first quarter of fiscal 2009. See Note 13 for further information.

In December 2007, the FASB issued SFAS 141 (revised 2007), “Business Combinations.” Under SFAS 141(R), an acquiring entity will be required to recognize all the assets acquired and liabilities assumed in a transaction at the acquisition-date fair value with limited exceptions. SFAS 141(R) will change the accounting treatment for certain specific acquisition-related items, including expensing acquisition-related costs as incurred, valuing noncontrolling interests (minority interests) at fair value at the acquisition date, and expensing restructuring costs associated with an acquired business. SFAS 141(R) also includes expanded disclosure requirements. SFAS 141(R) is to be applied prospectively to business combinations for which the acquisition date is on or after June 28, 2009. The Company does not expect the adoption of SFAS 141(R) to have a material impact on the Company’s consolidated financial statements.

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In March 2008, the FASB issued SFAS 161, “Disclosures about Derivative Instruments and Hedging Activities — an amendment of FASB Statement No. 133.” SFAS 161 requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of and gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative agreements. This statement was effective for Coach’s financial statements beginning with the interim period ended on March 28, 2009. SFAS 161 did not have a material impact on the Company’s consolidated financial statements. See Note 10 for further information.

In October 2008, the FASB issued Staff Position (“FSP”) No. SFAS 157-3, “Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active” which amends SFAS 157 by incorporating an example to illustrate key considerations in determining the fair value of a financial asset in an inactive market. FSP 157-3 was effective on October 10, 2008. The Company has adopted the provisions of SFAS 157 and incorporated the considerations of this FSP in determining the fair value of its financial assets. FSP 157-3 did not have a material impact on the Company’s consolidated financial statements.

In December 2008, the FASB issued FSP No. SFAS 132(R)-1, “Employers’ Disclosures about Postretirement Benefit Plan Assets” which provides guidance on employer’s disclosures about plan assets of a defined benefit pension or other postretirement plan. FSP 132(R)-1 is effective for fiscal years ending after December 15, 2009. The Company does not expect the application of this FSP to have a material impact on the Company’s consolidated financial statements.

In April 2009, the FASB issued FSP No. SFAS 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” which amends SFAS 157 by incorporating a two-step process to determine whether a market is not active and a transaction is not distressed. The Company adopted FSP 157-4 for the annual period ending June 27, 2009. FSP 157-4 did not have a material impact on the Company’s consolidated financial statements.

In April 2009, the FASB issued FSP No. SFAS 107-1 and APB 28-1, “Interim Disclosures about Fair Value of Financial Statements” which amends the interim disclosure requirements in scope for FAS 107, “Disclosures about Fair Value of Financial Instruments.” The Company adopted FSP 107-1 and 28-1 for the annual period ending June 27, 2009. FSP 107-1 and 28-1 did not have a material impact on the Company’s consolidated financial statements.

In April 2009, the FASB issued FSP No. SFAS 115-2 and SFAS 124-2, “Recognition and Presentation of Other-Than-Temporary Impairments” which amends the other-than-temporary impairment indicators to (a) management has no intent to sell the security and (b) it is more likely than not management will not have to sell the security before recovery. The Company adopted FSP 115-2 and 124-2 for the annual period ending June 27, 2009. See Note 7 for further information.

In May 2009, the FASB issued SFAS 165, “Subsequent Events,” which formalizes the recognition and nonrecognition of subsequent events and the disclosure requirements not addressed in other applicable generally accepted accounting guidance. This statement was effective for Coach’s financial statements beginning with the annual period ended on June 27, 2009. See Note 21 for further information.

In June 2009, the FASB issued SFAS 168, “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles-a replacement of FASB Statement No. 162.” SFAS 168 states that the FASB Accounting Standards Codification will become the source of authoritative U.S. GAAP recognized by the FASB. Once effective, the Codification’s content will carry the same level of authority, effectively superseding Statement 162. The GAAP hierarchy will be modified to include only two levels of GAAP: authoritative and nonauthoritative. This statement will be effective for Coach’s financial statements beginning with the interim period ending September 26, 2009. The Company does not expect the application of SFAS 168 to have a material impact on the Company’s consolidated financial statements.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

The market risk inherent in our financial instruments represents the potential loss in fair value, earnings or cash flows arising from adverse changes in interest rates or foreign currency exchange rates. Coach manages these exposures through operating and financing activities and, when appropriate, through the use of derivative financial instruments with respect to Coach Japan. The use of derivative financial instruments is in accordance with Coach’s risk management policies. Coach does not enter into derivative transactions for speculative or trading purposes.

The following quantitative disclosures are based on quoted market prices obtained through independent pricing sources for the same or similar types of financial instruments, taking into consideration the underlying terms and maturities and theoretical pricing models. These quantitative disclosures do not represent the maximum possible loss or any expected loss that may occur, since actual results may differ from those estimates.

Foreign currency exposures arise from transactions, including firm commitments and anticipated contracts, denominated in a currency other than the entity’s functional currency, and from foreign-denominated revenues and expenses translated into U.S. dollars.

Substantially all of Coach’s fiscal 2009 non-licensed product needs were purchased from independent manufacturers in countries other than the United States. These countries include China, Italy, United States, Hong Kong, India, Thailand, Vietnam, Turkey, Philippines, Ecuador, Malaysia, Mauritius, Peru, Spain and Taiwan. Additionally, sales are made through international channels to third party distributors. Substantially all purchases and sales involving international parties, excluding Coach Japan and Coach China, are denominated in U.S. dollars and, therefore, are not subject to foreign currency exchange risk.

In Japan, Coach is exposed to market risk from foreign currency exchange rate fluctuations as a result of Coach Japan’s U.S. dollar-denominated inventory purchases. Coach Japan enters into certain foreign currency derivative contracts, primarily zero-cost collar options, to manage these risks. The foreign currency contracts entered into by the Company have durations no greater than 12 months. As of June 27, 2009 and June 28, 2008, open foreign currency forward contracts designated as hedges with a notional amount of $32.0 million and $233.9 million, respectively, were outstanding.

Coach is also exposed to market risk from foreign currency exchange rate fluctuations with respect to Coach Japan as a result of its $231.0 million U.S. dollar-denominated fixed rate intercompany loan from Coach. To manage this risk, on July 1, 2005, Coach Japan entered into a cross currency swap transaction, the terms of which include an exchange of a U.S. dollar fixed interest rate for a yen fixed interest rate. The loan matures in 2010, at which point the swap requires an exchange of yen and U.S. dollar based principals.

The fair value of open foreign currency derivatives included in current assets at June 27, 2009 and June 28, 2008 was $0 and $7.9 million, respectively. The fair value of open foreign currency derivatives included in current liabilities at June 27, 2009 and June 28, 2008 was $37.1 million and $5.5 million, respectively. The fair value of these contracts is sensitive to changes in yen exchange rates.

Coach believes that exposure to adverse changes in exchange rates associated with revenues and expenses of foreign operations, which are denominated in Japanese Yen, Chinese Renminbi, Hong Kong Dollar, Macau Pataca and Canadian Dollars, are not material to the Company’s consolidated financial statements.

Coach is exposed to interest rate risk in relation to its investments, revolving credit facilities and long-term debt.

The Company’s investment portfolio is maintained in accordance with the Company’s investment policy, which identifies allowable investments, specifies credit quality standards and limits the credit exposure of any single issuer. The primary objective of our investment activities is the preservation of principal while maximizing interest income and minimizing risk. We do not hold any investments for trading purposes. The Company’s investment portfolio consists of U.S. government and agency securities as well as municipal

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government and corporate debt securities. At June 27, 2009, the Company’s investments, classified as available-for-sale, consisted of a $6.0 million auction rate security. As auction rate securities’ adjusted book value equals its fair value, there are no unrealized gains or losses associated with these investments.

As of June 27, 2009, the Company had outstanding borrowings on its revolving credit facility maintained by Coach Shanghai Limited of $7.5 million. The fair value of any current outstanding or future borrowings may be impacted by fluctuations in interest rates.

As of June 27, 2009, Coach’s outstanding long-term debt, including the current portion, was $25.6 million. A hypothetical 10% change in the interest rate applied to the fair value of debt would not have a material impact on earnings or cash flows of Coach.

Item 8. Financial Statements and Supplementary Data

See “Index to Financial Statements,” which is located on page 36 of this report.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Based on the evaluation of the Company’s disclosure controls and procedures, as that term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended, each of Lew Frankfort, the Chief Executive Officer of the Company, and Michael F. Devine, III, the Chief Financial Officer of the Company, has concluded that the Company’s disclosure controls and procedures are effective as of June 27, 2009.

The Company’s management is responsible for establishing and maintaining adequate internal controls over financial reporting. The Company’s internal control system was designed to provide reasonable assurance to the Company’s management and board of directors regarding the preparation and fair presentation of published financial statements. Management evaluated the effectiveness of the Company’s internal control over financial reporting using the criteria set forth by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission in Internal Control-Integrated Framework. Management, under the supervision and with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of the Company’s internal control over financial reporting as of June 27, 2009 and concluded that it is effective.

The Company’s independent auditors have issued an audit report on the Company’s internal control over financial reporting. The audit report appears on page 38 of this report.

There were no changes in internal control over financial reporting that occurred during the fourth fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Item 9B. Other Information

None.

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PART III

Item 10. Directors, Executive Officers and Corporate Governance

The information set forth in the Proxy Statement for the 2009 Annual Meeting of Stockholders is incorporated herein by reference. The Proxy Statement will be filed with the Commission within 120 days after the end of the fiscal year covered by this Form 10-K pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended.

Item 11. Executive Compensation

The information set forth in the Proxy Statement for the 2009 Annual Meeting of Stockholders is incorporated herein by reference. The Proxy Statement will be filed with the Commission within 120 days after the end of the fiscal year covered by this Form 10-K pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

(a) Security ownership of management set forth in the Proxy Statement for the 2009 Annual Meeting of Stockholders is incorporated herein by reference.

(b) There are no arrangements known to the registrant that may at a subsequent date result in a change in control of the registrant.

The Proxy Statement will be filed with the Commission within 120 days after the end of the fiscal year covered by this Form 10-K pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended.

Item 13. Certain Relationships and Related Transactions, and Director Independence

The information set forth in the Proxy Statement for the 2009 Annual Meeting of Stockholders is incorporated herein by reference. The Proxy Statement will be filed with the Commission within 120 days after the end of the fiscal year covered by this Form 10-K pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended.

Item 14. Principal Accountant Fees and Services

The information required by this item is incorporated herein by reference to the section entitled “Matters Relating to Coach’s Independent Auditors” in the Proxy Statement for the 2009 Annual Meeting of Stockholders. The Proxy Statement will be filed with the Commission within 120 days after the end of the fiscal year covered by this Form 10-K pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended.

PART IV

Item 15. Exhibits, Financial Statement Schedules

See “Index to Financial Statements” which is located on page 36 of this report.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		COACH, INC.
Date: August 19, 2009		By: /s/ Lew Frankfort Name: Lew Frankfort Title: Chairman and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated below on August 19, 2009.

Signature		Title
/s/ Lew Frankfort Lew Frankfort		Chairman, Chief Executive Officer and Director
/s/ Jerry Stritzke Jerry Stritzke		President, Chief Operating Officer
/s/ Michael F. Devine, III Michael F. Devine, III		Executive Vice President and Chief Financial Officer (as principal financial officer and principal accounting officer of Coach)
/s/ Susan Kropf Susan Kropf		Director
/s/ Gary Loveman Gary Loveman		Director
/s/ Ivan Menezes Ivan Menezes		Director
/s/ Keith Monda Keith Monda		Director
/s/ Irene Miller Irene Miller		Director
/s/ Michael Murphy Michael Murphy		Director
/s/ Jide Zeitlin Jide Zeitlin		Director

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UNITED STATES

SECURITES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

FINANCIAL STATEMENTS
For the Fiscal Year Ended June 27, 2009

COACH, INC.

New York, New York 10001

INDEX TO FINANCIAL STATEMENTS

		Page
Reports of Independent Registered Public Accounting Firm			37
Consolidated Balance Sheets — At June 27, 2009 and June 28, 2008			39
Consolidated Statements of Income — For Fiscal Years Ended June 27, 2009, June 28, 2008 and June 30, 2007			40
Consolidated Statements of Stockholders’ Equity — For Fiscal Years Ended June 27, 2009, June 28, 2008 and June 30, 2007			41
Consolidated Statements of Cash Flows — For Fiscal Years Ended June 27, 2009, June 28, 2008 and June 30, 2007			42
Notes to Consolidated Financial Statements			43
Market and Dividend Information			70
Financial Statement Schedules for the years ended June 27, 2009, June 28, 2008 and June 30, 2007:
Schedule II — Valuation and Qualifying Accounts			71

All other schedules are omitted because they are not applicable or the required information is shown in the consolidated financial statements or notes thereto.

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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 June 27, 2009 and June 28, 2008, and the related consolidated statements of income, stockholders’ equity, and cash flows for each of the three years in the period ended June 27, 2009. Our audits also included the financial statement schedule listed in the Index at Item 15. These financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on the financial statements and financial statement schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company at June 27, 2009 and June 28, 2008, and the results of their operations and their cash flows for each of the three years in the period ended June 27, 2009, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

As discussed in Note 3 to the consolidated financial statements, effective June 29, 2008, the Company changed its method of accounting for inventories in Japan from determining cost using the last-in, first-out method to determining cost using the first-in, first-out method.

As discussed in Note 12 to the consolidated financial statements, effective July 1, 2007, the Company adopted Financial Accounting Standards Board Interpretation No. 48, “Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109.”

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of June 27, 2009, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated August 19, 2009 expressed an unqualified opinion on the Company’s internal control over financial reporting.

/s/ Deloitte & Touche LLP

New York, New York
August 19, 2009

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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 internal control over financial reporting of Coach, Inc. and subsidiaries (the “Company”) as of June 27, 2009 based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of June 27, 2009, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements and financial statement schedule as of and for the year ended June 27, 2009 of the Company and our report dated August 19, 2009 expressed an unqualified opinion on those consolidated financial statements and consolidated financial statement schedule and includes an explanatory paragraph regarding the Company’s change in method of accounting for valuing inventory in Japan from the last-in, first-out method to the first-in, first-out method.

/s/ Deloitte & Touche LLP

New York, New York
August 19, 2009

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COACH, INC.
  
CONSOLIDATED BALANCE SHEETS
(amounts in thousands, except share data)

		June 27, 2009				June 28, 2008
ASSETS
Current Assets:
Cash and cash equivalents		$	800,362			$	698,905
Trade accounts receivable, less allowances of $6,347 and $7,717, respectively			108,707				106,738
Inventories			326,148				318,490
Deferred income taxes			49,476				70,069
Prepaid expenses			48,342				65,569
Other current assets			63,374				99,447
Total current assets			1,396,409				1,359,218
Long-term investments			6,000				8,000
Property and equipment, net			592,982				464,226
Goodwill			283,387				249,118
Intangible assets			9,788				9,788
Deferred income taxes			159,092				81,346
Other assets			116,678				75,657
Total assets		$	2,564,336			$	2,247,353
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable		$	103,029			$	134,726
Accrued liabilities			348,619				315,930
Revolving credit facilities			7,496				—
Current portion of long-term debt			508				285
Total current liabilities			459,652				450,941
Deferred income taxes			—				25,371
Long-term debt			25,072				2,580
Other liabilities			383,570				278,086
Total liabilities			868,294				756,978
Commitments and contingencies (Note 9)
Stockholders’ Equity:
Preferred stock: (authorized 25,000,000 shares; $0.01 par value) none issued			—				—
Common stock: (authorized 1,000,000,000 shares; $0.01 par value) issued and outstanding — 318,006,466 and 336,728,851 shares, respectively			3,180				3,367
Additional paid-in-capital			1,189,060				1,115,041
Retained earnings			499,951				353,122
Accumulated other comprehensive income			3,851				18,845
Total stockholders’ equity			1,696,042				1,490,375
Total liabilities and stockholders’ equity		$	2,564,336			$	2,247,353

 
 
See accompanying Notes to Consolidated Financial Statements.

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COACH, INC.
  
CONSOLIDATED STATEMENTS OF INCOME
(amounts in thousands, except per share data)

		Fiscal Year Ended
		June 27, 2009				June 28, 2008				June 30, 2007
Net sales		$	3,230,468			$	3,180,757			$	2,612,456
Cost of sales			907,858				773,654				589,470
Gross profit			2,322,610				2,407,103				2,022,986
Selling, general and administrative expenses			1,350,697				1,259,974				1,029,589
Operating income			971,913				1,147,129				993,397
Interest income, net			5,168				47,820				41,273
Income before provision for income taxes and discontinued operations			977,081				1,194,949				1,034,670
Provision for income taxes			353,712				411,910