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Annual Report Project. Coach, Inc. Kathryn St. Croix ACG2021.080. Executive Summary.

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annual report project

Annual Report Project

Coach, Inc.Kathryn St. Croix ACG2021.080

executive summary

Executive Summary

Coach, Inc. has grown significantly in the past couple of years, offers a high-quality product, and is wisely investing in new retail stores and markets overseas. I would buy stock in Coach, Inc. and if the company’s current financial trend continues, Coach, Inc. will expand to be a very profitable business. After you read about Coach, Inc.’s performance over the past two years, visit their website for more information about their product as you will undoubtedly be impressed.

Coach website - Open Here

Open Coach Inc. Annual Reports 2001-2005

introduction to coach inc
Introduction to Coach, Inc.
  • Lew Frankfort, Chairman and Chief Executive Officer
  • Coach's corporate headquarters are located at 516 West 34th Street in midtown Manhattan
  • The fiscal year ended July 2, 2005.
  • Coach, Inc. is a designer, producer and marketer of modern American classic accessories, handbags, women's and men's small leather goods, business cases, weekend and travel accessories, outerwear and related accessories. Together with its licensing partners, Coach also offers watches, footwear, eyewear and office furniture with the Coach brand name.
  • The US represented 73%, Japan represented 22% and other International, which reflects shipments to third-party distributors primarily in East Asia, represented about 5%.
audit report of coach inc
Audit Report of Coach, Inc.

Deloitte & Touche USA LLP

Deloitte & Touche USA LLP stated that after auditing the consolidated financial statements of Coach, Inc., the financial statements are found to be in conformity with Generally Accepted Accounting Principles in the USA.

stock market information
Stock Market Information

Current price of the company’s stock: $35.91

Coach has never paid a cash dividend and presently intends to use its cash flow to reinvest in the business.

Coach stock should be purchased as a long-term investment. Their stock price will continue to rise with the company’s future plans of expansion.

Date of the above information: 27-Jan-2006 4:00 PM

industry situation and company plans

Industry Situation and Company Plans

The distinctive Coach brand differentiates them from their competition and provides a strong foundation for accelerated, sustainable growth. The Coach business is based on our multi-channel international distribution model, which maintains a critical balance. Their success does not depend on the performance of a single channel.

Coach has a clearly specified plans for company growth, aimed at doubling sales over the next four to five years and a higher rate of profitability.

To facilitate this growth, Coach has a strong, knowledge-driven management team in place, supported by a performance-based corporate culture. They have a flexible supply chain adaptable to change, and advanced technological systems designed to support growth.

Their strategy for the future is focused on two “primary drivers”

1. increasing distribution

2. maximizing productivity

Excellent customer service is critical to the success of the Coach brand. In-store marketing programs have evolved, making it easier for our consumers to shop. An example is a program called “Coach By Special Request”, which allows our consumers to order Coach products, direct from our factory and shipped to their home. Comprehensive training programs for our sales associates and consumer appreciation programs elevate the level of customer service.

income statement information for coach inc 2005

Income Statement Information for Coach, Inc. 2005

Multi-step format Statement of Income:

Gross margin, operating income and net income have increased significantly for Coach, Inc. in the past two years.

balance sheet for coach inc 2005

Balance Sheet for Coach, Inc. 2005

Assets increased from 2004 to 2005 for Coach, Inc. more than liabilities. Stockholders equity increased significantly from 2004 to 2005.

statement of cash flows

Statement of Cash Flows

Cash flows from operations are less than net income for the past two years.

Coach, Inc. is growing through investing activities:

New and renovated retail stores in North America and Japan.

Technological enhancements.

Primary sources of financing:

Long-term loans from Bank of America (~$100M) and Japanese creditors

Stock sales

Cash has decreased over the past two years for Coach, Inc.

accounting policies for coach inc

Accounting Policies for Coach, Inc.

CASH AND CASH EQUIVALENTS: Cash and cash equivalents consist of cash balances and highly liquid investments with a maturity of less than 90 days.

INVESTMENTS: Investments consist of U.S. government and agency debt securities as well as municipal government and corporate debt securities. These securities are classified as held to maturity, as the Company has both the ability and the intent to hold these securities until maturity. Investments are recorded at amortized cost. Premiums are amortized and discounts are accreted over the lives of the related securities as adjustments to interest income, using the effective interest method. Dividend and interest income are recognized when earned.

INVENTORIES: Inventories consist primarily of finished goods. U.S. inventories are valued at the lower of cost (determined by the first-in, first-out method (“FIFO”)) or market. Inventories in Japan are valued at the lower of cost (determined by the last-in, first-out method (“LIFO”)) or market. At the end of fiscal 2005 and fiscal 2004, inventories recorded at LIFO were $17 lower and $2,409 higher, respectively, than if they were valued at FIFO. Inventories valued under LIFO amounted to $40,861 and $34,508 in fiscal 2005 and 2004, respectively. Inventory costs include material, conversion costs, freight and duties.

REVENUE RECOGNITION: 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, Internet and catalog channels, upon shipment of merchandise, when title passes to the customer. Allowances for estimated uncollectible accounts, discounts and returns are provided when sales are recorded. 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.

topics of the notes to the financial statements
Topics of the Notes to the Financial Statements

1. NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES

2. BALANCE SHEET COMPONENTS

3. INCOME TAXES

4. DEBT

5. LEASES

6. COMMITMENTS AND CONTINGENCIES

7. INVESTMENTS

8. STOCK-BASED COMPENSATION

9. RETIREMENT PLANS

10. SEGMENT INFORMATION

11. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

12. GOODWILL

13. BUSINESS INTERRUPTION INSURANCE

14. EARNINGS PER SHARE

15. STOCK REPURCHASE PROGRAM

16. RELATED-PARTY TRANSACTION

17. ACQUISITION OF COACH JAPAN, I NC.

18. SHAREHOLDER R IGHTS PLAN

19. SUBSEQUENT EVENT

20. QUARTERLY FINANCIAL DATA (UNAUDITED)

financial analysis liquidity ratios
Financial Analysis: Liquidity Ratios
  • Working Capital

2005: $443,580

2004: $535,384

  • Current Ratio

2005: 2.669

2004: 4.145

  • Receivable turnover

2005: 26 days

2004: 24 days

  • Average days’ sales uncollected

2005: 14 days

2004: 15 days

  • Inventory turnover

2005: 2.167

2004: 2.044

  • Average days’ inventory on hand

2005: 168.436

2004: 178.571

financial analysis profitability ratios
Financial Analysis: Profitability Ratios
  • Profit margin

2005: 22.72%

2004: 19.8%

  • Asset turnover

2005: 1.2697

2004: 1.2649

  • Return on assets

2005: 28.85%

2004: 25.06%

  • Return on equity

2005: 37.63%

2004: 33.46%

financial analysis solvency ratio
Financial Analysis: Solvency Ratio

Coach, Inc. is not leveraged because the debt to equity ratio for 2005 and 2004 is less than one, meaning the stockholders own the company.

financial analysis market strength ratios
Financial Analysis: Market Strength Ratios
  • Price/earnings per share for 2005: $1.06
  • Dividend yield: Coach, Inc. does not pay dividends
  • Price/earnings per share for 2004: $0.75
  • Dividend yield: Coach, Inc. does not pay dividends