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Coach Reports Third Quarter Earnings Of $0.77, Up 24% On A 17% Sales Increase

“Our excellent results this quarter and the trends we’re continuing to experience reflect the vibrancy of the Coach proposition. Given the strength of our business, we remain confident in our ability to continue to drive sales and earnings at a double-digit pace over our planning horizon,” Mr. Frankfort concluded.

Coach will host a conference call to review third fiscal quarter results at 8:30 a.m. (EDT) today, April 24, 2012. Interested parties may listen to the webcast by accessing www.coach.com/investors on the Internet or dialing into 1-888-405-2080 or 1-210-795-9977 and asking for the Coach earnings call led by Andrea Shaw Resnick, SVP of Investor Relations & Corporate Communications. A telephone replay will be available starting at 12:00 noon today, for a period of five business days. The number to call is 1-866-352-7723 or 1-203-369-0080. A webcast replay of this call will be available for five business days on the Coach website.

Coach, with headquarters in New York, is a leading American marketer of fine accessories and gifts for women and men, including handbags, men’s bags, women’s and men’s small leathergoods, weekend and travel accessories, footwear, watches, outerwear, scarves, sunwear, fragrance, jewelry and related accessories. Coach is sold worldwide through Coach stores, select department stores and specialty stores, and through Coach’s website at www.coach.com. Coach’s common stock is traded on the New York Stock Exchange under the symbol COH and Coach’s Hong Kong Depositary Receipts are traded on The Stock Exchange of Hong Kong Limited under the symbol 6388.

Neither the Hong Kong Depositary Receipts nor the Hong Kong Depositary Shares evidenced thereby have been or will be registered under the U.S. Securities Act of 1933, as amended (the "Securities Act"), and may not be offered or sold in the United States or to, or for the account of, a U.S. Person (within the meaning of Regulation S under the Securities Act), absent registration or an applicable exemption from the registration requirements. Hedging transactions involving these securities may not be conducted unless in compliance with the Securities Act.

This press release contains forward-looking statements based on management's current expectations. These statements can be identified by the use of forward-looking terminology such as "may," "will," "should," "expect," “confidence,” “trends,” "intend," "estimate," "on track," "are positioned to," “on course,” “opportunity,” "continue," "project," "guidance," “target,” "forecast," "anticipated," or comparable terms. Future results may differ materially from management's current expectations, based upon risks and uncertainties such as expected economic trends, the ability to anticipate consumer preferences, the ability to control costs, etc. Please refer to Coach’s latest Annual Report on Form 10-K and its Quarterly Report on Form 10-Q for the quarterly period ended December 31, 2011 for a complete list of risk factors.

COACH, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

For the Quarters and Nine Months Ended March 31, 2012 and April 2, 2011

(in thousands, except per share data)

(unaudited)
       
QUARTER ENDED NINE MONTHS ENDED
March 31, April 2, March 31, April 2,
2012 2011 2012   2011
 
Net sales $ 1,108,981 $ 950,706 $ 3,607,989 $ 3,126,832
 
Cost of sales   290,914     259,051     980,058     843,830  
 
Gross profit 818,067 691,655 2,627,931 2,283,002
 
Selling, general and
administrative expenses   480,575     437,818     1,467,572     1,290,170  
 
Operating income 337,492 253,837 1,160,359 992,832
 
Interest income, net 257 292 355 770
 
Other expense   (1,929 )   (1,134 )   (5,160 )   (3,068 )
 
Income before provision for income taxes 335,820 252,995 1,155,554 990,534
 
Provision for income taxes   110,818     66,980     368,074     312,215  
 
Net income $ 225,002   $ 186,015   $ 787,480   $ 678,319  
 
 
Net income per share
 
Basic $ 0.78   $ 0.63   $ 2.73   $ 2.29  
 
Diluted $ 0.77   $ 0.62   $ 2.67   $ 2.24  
 
 

Shares used in computing net income per share

 
Basic   287,569     294,841     288,981     296,200  
 
Diluted   293,496     301,620     294,952     302,589  

COACH, INC.

GAAP TO NON-GAAP RECONCILIATION

For the Quarter Ended April 2, 2011

(in thousands, except per share data)

(unaudited)

         
QUARTER ENDED
April 2, 2011
GAAP Basis Tax Japan Charitable Non-GAAP Basis
(As Reported) Adjustment Donation Contribution (Excluding Items)
 
Selling, general and
administrative expenses $ 437,818 $ - $ 4,809 $ 20,869 $ 412,140
 
Operating income $ 253,837 $ - $ (4,809 ) $ (20,869 ) $ 279,515
 
Income before provision for income taxes $ 252,995 $ - $ (4,809 ) $ (20,869 ) $ 278,673
 
Provision for income taxes $ 66,980 $ (15,517 ) $ (2,022 ) $ (8,139 ) $ 92,658
 
Net income $ 186,015 $ 15,517 $ (2,787 ) $ (12,730 ) $ 186,015
 
Diluted Net income per share $ 0.62 $ 0.05 $ (0.01 ) $ (0.04 ) $ 0.62

COACH, INC.

GAAP TO NON-GAAP RECONCILIATION

For the Nine Months Ended March 31, 2012 and April 2, 2011

(in thousands, except per share data)

(unaudited)

         
NINE MONTHS ENDED
March 31, 2012 April 2, 2011
GAAP Basis Tax Charitable Non-GAAP Basis Non-GAAP Basis
(As Reported) Adjustment Contribution (Excluding Items) (Excluding Items)
 
Selling, general and
administrative expenses $ 1,467,572 $ - $ 20,270 $ 1,447,302 $ 1,264,492
 
Operating income $ 1,160,359 $ - $ (20,270 ) $ 1,180,629 $ 1,018,510
 
Income before provision for income taxes $ 1,155,554 $ - $ (20,270 ) $ 1,175,824 $ 1,016,212
 
Provision for income taxes $ 368,074 $ (12,365 ) $ (7,905 ) $ 388,344 $ 337,893
 
Net income $ 787,480 $ 12,365 $ (12,365 ) $ 787,480 $ 678,319
 
Diluted Net income per share $ 2.67 $ 0.04 $ (0.04 ) $ 2.67 $ 2.24
 
 
NINE MONTHS ENDED
April 2, 2011
GAAP Basis Tax Japan Charitable Non-GAAP Basis
(As Reported) Adjustment Donation Contribution (Excluding Items)
 
Selling, general and
administrative expenses $ 1,290,170 $ - $ 4,809 $ 20,869 $ 1,264,492
 
Operating income $ 992,832 $ - $ (4,809 ) $ (20,869 ) $ 1,018,510
 
Income before provision for income taxes $ 990,534 $ - $ (4,809 ) $ (20,869 ) $ 1,016,212
 
Provision for income taxes $ 312,215 $ (15,517 ) $ (2,022 ) $ (8,139 ) $ 337,893
 
Net income $ 678,319 $ 15,517 $ (2,787 ) $ (12,730 ) $ 678,319
 
Diluted Net income per share $ 2.24 $ 0.05 $ (0.01 ) $ (0.04 ) $ 2.24

COACH, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

At March 31, 2012, July 2, 2011 and April 2, 2011

(in thousands)

(unaudited)

     
March 31, July 2, April 2,
2012 2011 2011
ASSETS
 
Cash, cash equivalents and short term investments $ 929,670 $ 702,038 $ 886,159
Receivables 169,467 142,898 131,731
Inventories 475,364 421,831 391,442
Other current assets   185,047   185,621   153,070
 
Total current assets 1,759,548 1,452,388 1,562,402
 
Property and equipment, net 602,685 582,348 552,842
Other noncurrent assets   622,637   600,380   606,621
 
Total assets $ 2,984,870 $ 2,635,116 $ 2,721,865
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
Accounts payable $ 107,394 $ 118,612 $ 92,632
Accrued liabilities 514,992 473,610 456,606
Current portion of long-term debt   847   795   791
 
Total current liabilities 623,233 593,017 550,029
 
Long-term debt 22,607 23,360 23,454
Other liabilities 400,128 406,170 405,724
 
Stockholders' equity   1,938,902   1,612,569   1,742,658
 
Total liabilities and stockholders' equity $ 2,984,870 $ 2,635,116 $ 2,721,865




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