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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM 11-K
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the Plan Year Ended June 30, 2005
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
Commission file number: 1-16153
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Coach, Inc. Savings and Profit Sharing Plan
(Full title of the Plan)
COACH, INC.
(Name of issuer of the securities held pursuant to the Plan)
516 West 34th Street, New York, NY 10001
(Address of principal executive offices); (Zip Code)
(212) 594-1850
(Telephone number, including area code)
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1
COACH, INC. SAVINGS AND PROFIT SHARING PLAN
TABLE OF CONTENTS
Page Number
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 3
FINANCIAL STATEMENTS
Statements of Net Assets Available for Benefits as of June 30, 2005 and 2004 4
Statement of Changes in Net Assets Available for Benefits
For the Year Ended June 30, 2005 5
Notes to Financial Statements 6
SUPPLEMENTAL SCHEDULE
Form 5500, Schedule H, Part IV, Line 4i - Schedule of Assets (Held
at End of Year) as of June 30, 2005 12
Note: All other schedules required by Section 2520.103-10 of the Department
of Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974 have been omitted because they are not
applicable.
EXHIBITS 13
SIGNATURE 14
2
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Participants of the Coach, Inc. Savings and Profit Sharing Plan and
the Human Resources and Governance Committee of Coach, Inc.:
We have audited the accompanying statements of net assets available for benefits
of the Coach, Inc. Savings and Profit Sharing Plan (the "Plan") as of June 30,
2005 and 2004, and the related statement of changes in net assets available for
benefits for the year ended June 30, 2005. These financial statements are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing 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
consideration of internal control over financial reporting as a basis for
designing audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of the Plan's
internal control over financial reporting. Accordingly, we express no such
opinion. An audit also includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, 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 financial statements present fairly, in all material
respects, the net assets available for benefits of the Plan as of June 30, 2005
and 2004, and the changes in its net assets available for benefits for the year
ended June 30, 2005, in conformity with accounting principles generally accepted
in the United States of America.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental Schedule of
Assets (Held At End of Year) as of June 30, 2005 is presented for the purpose of
additional analysis and is not a required part of the basic 2005 financial
statements but is supplementary information required by the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. This supplemental schedule is the
responsibility of the Plan's management. Such supplemental schedule has been
subjected to the auditing procedures applied in our audit of the basic 2005
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic 2005 financial statements taken as a whole.
/s/ Deloitte & Touche LLP
New York, New York
December 22, 2005
3
Coach, Inc. Savings and Profit Sharing Plan
Statements of Net Assets Available for Benefits
June 30, 2005 June 30, 2004
----------------- -------------
Assets:
Investments, at fair value:
Fidelity Management Trust Company:
Common and collective trust fund $ 10,723,967 $ 8,651,906
Mutual funds 42,686,357 33,854,714
Coach, Inc. common stock 30,532,454 17,833,353
Participant loans receivable 1,365,816 987,390
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Total Investments, at fair value 85,308,594 61,327,363
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Receivables:
Participant contributions 101,580 -
Employer contributions 5,382,545 5,001,029
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Total Receivables 5,484,125 5,001,029
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Total assets 90,792,719 66,328,392
Liabilities:
Administrative expenses payable 25,364 31,098
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Net assets available for benefits $ 90,767,355 $ 66,297,294
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See accompanying Notes to Financial Statements
4
Coach, Inc. Savings and Profit Sharing Plan
Statement of Changes in Net Assets Available for Benefits
Year Ended
June 30, 2005
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Additions:
Net investment income:
Net appreciation in fair value of investments $ 12,637,005
Interest and dividends 1,377,135
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14,014,140
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Contributions:
Participants 5,623,872
Employer 7,618,343
Participant rollovers 940,741
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14,182,956
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Total additions 28,197,096
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Deductions:
Participant withdrawals and benefit payments 3,573,855
Administrative expenses 142,945
Deemed distributions 10,235
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Total deductions 3,727,035
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Net increase in assets available for benefits 24,470,061
Net assets available for benefits:
Beginning of year 66,297,294
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End of year $ 90,767,355
======================
See accompanying Notes to Financial Statements
5
Coach, Inc. Savings and Profit Sharing Plan
Notes to Financial Statements
1. Description of Plan
The following description of the Coach, Inc. Savings and Profit Sharing
Plan (the "Plan") provides only general information. Participants should refer
to the Plan document for a more complete description of the Plan's provisions.
General:
The Plan, as amended, was adopted by Coach, Inc. (the "Company") effective
July 1, 2001 and is a defined contribution plan. All U.S. employees of the
Company who meet certain eligibility requirements and are not part of a
collective bargaining agreement may participate in the Plan.
The Plan is administered by the Human Resources and Governance Committee
("Plan Committee") appointed by the Board of Directors of the Company. The
assets of the Plan are maintained and transactions therein are executed by
Fidelity Management Trust Company, the trustee of the Plan ("Trustee"). The Plan
is subject to the reporting and disclosure requirements, participation and
vesting standards, and fiduciary responsibility provisions of the Employee
Retirement Income Security Act of 1974 ("ERISA"), as amended.
Eligibility:
Employees become eligible and may elect to participate in the 401(k)
feature of the Plan one year following their initial date of employment or
attainment of age 21, whichever is later.
Employees become eligible to participate in the profit sharing feature of
the Plan one year following their initial date of employment or attainment of
age 21, whichever is later. Once an employee is eligible, in order to receive a
profit sharing contribution for any Plan year, the employee must be employed by
Coach on the last day of the Plan year. In addition, employees are required to
work a minimum of 750 hours during the Plan year if the participant is a part
time employee or 1,000 hours during the Plan year if the participant is an
intern, temporary or seasonal employee.
Contributions:
The 401(k) feature of the Plan is funded by both employee and employer
matching contributions. Participants may contribute between 1% and 50% of their
pre-tax annual compensation, not to exceed the amount permitted pursuant to the
Internal Revenue Code ("IRC"). Employer matching contributions to the accounts
of Non Highly Compensated Employees ("NHCE's"), as defined by the IRS, are equal
to 100% of the first 3% of each participant's eligible compensation contributed
to the Plan and 50% of the next 2% of eligible compensation contributed to the
Plan. Employer matching contributions to the accounts of Highly Compensated
Employees ("HCE's"), as defined by the IRS, are equal to 50% of up to 6% of each
participant's eligible compensation contributed to the Plan. Employer matching
contributions are made to the account of each eligible employee each pay period.
6
Coach, Inc. Savings and Profit Sharing Plan
Notes to Financial Statements - Continued
The profit sharing feature of the Plan is non-contributory on the part of
employees and is funded by Company contributions from its current or accumulated
earnings and profit amounts. The discretionary annual contribution is authorized
by the Company's Board of Directors in accordance with, and subject to, the
terms and limitations of the Plan. Profit sharing contributions for the Plan
year ended June 30, 2005 were 3% of participant's eligible salaries, as defined,
for all executive participants, and 6% of participant's eligible salaries, as
defined, for all non executive participants. Eligible employees who had attained
the ages of 35-39 and were credited with 10 or more years of vested service as
of July 1, 2001 receive two times the above profit sharing contribution.
Eligible employees who had attained the age of 40 or more and were credited with
10 or more years of vested service as of July 1, 2001 receive three times the
above profit sharing contribution.
All contributions are allocated among the various investment options
according to the participant's selected investment direction.
Participant Accounts:
Each participant's account is credited with the participant's contributions
and employer's matching and profit sharing contributions, as well as an
allocation of each selected fund's earnings or losses. Allocations are based on
participant account balances as defined in the Plan document.
Vesting and Forfeitures:
Percentage vesting for each category of contributions is as follows:
Years of Employer Matching Contributions Employer Profit
Service for Employee NHCE NHCE Sharing
Vesting Contributions (Pre 7/1/02) (Post 7/1/02) HCE Contributions
------- ------------- ------------ ------------- --- -------------
Immediate 100% - 100% - -
1 - 20% - 20% -
2 - 40% - 40% -
3 - 60% - 60% -
4 - 80% - 80% -
5 - 100% - 100% 100%
A participant also becomes 100% vested in his or her matching and profit
sharing contribution accounts upon termination of employment by reason of death,
retirement or disability. For purposes of the Plan, retirement is defined as
termination of employment after age 65 or age 55 if the participant has ten
years of service with the Company. In the event a participant leaves the Company
prior to becoming fully vested, the participant's unvested employer matching and
profit sharing contribution accounts may forfeit. A forfeiture will occur in the
plan year in which a participant takes a distribution of his/her total vested
7
Coach, Inc. Savings and Profit Sharing Plan
Notes to Financial Statements - Continued
account balance from the Plan, or if no distribution is taken, after five
consecutive one-year breaks in service. If the participant does not take a
distribution and rejoins the Company within one year, his or her account will
vest as if they never left the Company; if the participant rejoins the Company
between one and five years, vesting will continue from the point of rehire. If
the participant does take a distribution, the amount that was forfeited will
only be restored if the participant repays to the Plan the full amount of the
distribution before the earlier of (1) the end of five consecutive breaks in
service years beginning after the distribution or (2) within five years after
reemployment with the Company.
Forfeited accounts will be used first to pay Plan administrative expenses.
Any remaining amounts will be used to reduce future employer contributions
payable under the Plan. As of June 30, 2005 and 2004, forfeited non-vested
amounts totaled $47,042 and $301,893, respectively. For the Plan year ended June
30, 2005, forfeitures of non-vested employer contributions totaled $269,865.
During the Plan year ended June 30, 2005, $134,943 of forfeitures was used to
pay Plan administrative expenses and $418,000 was used to reduce employer
contributions.
Administrative Expenses:
Unless elected to be paid by the Company, administrative expenses incurred
in connection with the Plan shall be paid from forfeitures, if any, or from the
Trust.
Participant Loans:
Active participants may borrow from their fund accounts a minimum of
$1,000, up to a maximum of the lesser of 50% of their vested account balance or
$50,000, reduced by the highest outstanding loan balance in the participant's
account during the prior twelve month period. The loans are secured by the
balance in the participant's account and bear interest at rates commensurate
with prevailing market rates, as determined by the Plan Committee. During the
2005 Plan year, interest rates on outstanding loans ranged from 4.0% to 8.5%.
Principal repayments and interest payments are made ratably through payroll
deductions and must be repaid within five years unless used by the participant
to purchase a primary residence, in which case the term is ten years. A
participant may only have one loan outstanding at a time.
If a participant's loan is in default, the participant shall be treated as
having received a taxable deemed distribution for the amount in default.
Participant payments on a loan after the date it was deemed distributed shall be
treated as employee contributions to the Plan for purposes of increasing the tax
basis in the participant's account. These payments shall not be treated as
employee contributions for any other purpose under the Plan. In the 2005 Plan
year, deemed distributions totaled $10,235.
Payment of Benefits:
Upon termination of employment, participants are entitled to receive the
full vested balance of their Plan account in a lump sum cash distribution or in
part in the form of installments. In the event of a participant's death, the
distribution of the participant's account balance will be made to the
participant's designated beneficiary or the participant's estate, if no
beneficiary has been so designated.
8
Coach, Inc. Savings and Profit Sharing Plan
Notes to Financial Statements - Continued
Any participant may apply to withdraw all or part of his or her vested
account balance subject to specific hardship and in-service withdrawal
provisions of the Plan. Hardship withdrawals must be approved by the Plan
Administrator, who is appointed by the Plan Committee, and are limited to
amounts of participants' deferral contributions, effective July 1, 2002.
Hardship withdrawals require a six-month suspension from contributing to the
Plan from the date of the hardship withdrawal. In-service withdrawals are
available to participants upon the attainment of age 59 1/2 and are limited to
the participants' vested account balance. Hardship and in-service withdrawals
will be subject to income taxes. Hardship withdrawals may also be subject to an
additional tax based on early withdrawal.
Investment Options:
Participants may direct employee deferrals as well as employer matching and
profit sharing contributions into any of 20 different investment options,
including a common collective trust fund, several mutual funds and the Company
stock fund, in no less than 1% increments. Twice a month, the Plan Trustee buys
shares of the Company's common stock at current market prices on the New York
Stock Exchange.
2. Summary of Significant Accounting Policies
Basis of Accounting:
The Plan's financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America.
Payment of Benefits:
Benefit payments to participants are recorded when paid.
Investment Valuation and Income Recognition:
The Plan's investments are stated at market value. Shares of the trust and
mutual funds are valued at the net asset value of shares held by the Plan at
year-end. Shares of Coach, Inc. common stock are stated at fair value as
determined by quoted market prices at year-end. The Plan presents, in the
statement of changes in net assets available for benefits, the net appreciation
in the fair value of its investments, which consists of the realized gains or
losses and the unrealized net appreciation on those investments based on the
value of the assets at the beginning of the Plan year or at the time of purchase
during the year.
Purchases and sales of investments are recorded on a trade date basis.
Dividend income is recorded on the ex-dividend date. Interest income is recorded
when earned. Cost of securities sold is determined by the specific
identification method.
9
Coach, Inc. Savings and Profit Sharing Plan
Notes to Financial Statements - Continued
Use of Estimates:
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 that affect the reported amounts of
net assets available for benefits and changes therein. Actual results could
differ from estimates in amounts that may be material to the financial
statements.
Risk and Uncertainties:
Investment securities, in general, are exposed to various risks, such as
interest rate, credit and overall market volatility. Due to the level of risk
associated with certain investment securities, it is reasonably possible that
changes in such risk factors could materially affect participant account
balances and the amount reported on the statement of net assets available for
benefits and changes therein.
3. Investments
The market value of individual investments that represent 5% or more of the
Plan's total net assets available for benefits at June 30, 2005 and 2004 were as
follows:
June 30, June 30,
Fund 2005 2004
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Fidelity Managed Income Porfolio, 10,723,967 and 8,651,906 shares, respectively $10,723,967 $8,651,906
Fidelity Balanced Fund, 425,286 and 367,586 shares, respectively 7,718,934 6,285,717
Spartan U.S. Equity Index Fund, 256,399 and 232,625 shares, respectively 10,853,387 9,412,016
Neuberger Berman Genesis Trust, 216,227 and 201,528 shares, respectively 9,896,687 8,202,185
Coach, Inc. Common Stock, 909,516 and 789,262 shares, respectively 30,532,454 17,833,353
During the Plan year ended June 30, 2005, the Plan investments (including
gains and losses on investments bought and sold, as well as held during the
year) appreciated in value by $12,637,005 as follows:
Fund Types
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Mutual funds $2,591,039
Coach, Inc. Common Stock 10,045,966
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Net appreciation in fair value of investments $12,637,005
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4. Related Party Transactions
Certain Plan investments are shares of mutual funds managed by Fidelity
Investments, Inc. Fidelity Management Trust Company, the Plan Trustee, is an
affiliate of Fidelity Investments, Inc., and therefore,
10
Coach, Inc. Savings and Profit Sharing Plan
Notes to Financial Statements - Continued
these transactions qualify as party-in-interest transactions. Fees paid by the
Plan for administrative expenses amounted to $142,945 for the year ended June
30, 2005.
The Company is also a party-in-interest to the Plan under the definition
provided in Section 3(14) of ERISA. Therefore, Coach, Inc.'s common stock
transactions qualify as party-in-interest transactions. At June 30, 2005 and
2004, the Plan held 909,516 and 789,262 shares, respectively, of common stock of
the Company, the sponsoring employer, with a cost basis of $9,089,811 and
$4,971,409 respectively.
5. Federal Income Tax Status
The Internal Revenue Service ("IRS") has determined and informed the
Company by letter dated June 23, 2003 that the Plan and related trust are
designed in accordance with applicable sections of the IRC. The Plan
Administrator and the Plan's tax counsel believe that the Plan is designed and
is currently being operated in compliance with the applicable requirements of
the IRC and the Plan and related trust continue to be tax-exempt. Therefore, no
provision for income taxes has been included in the Plan's financial statements.
6. Plan Termination
Although it has not expressed any intent to do so, the Board of Directors
of the Company reserves the right to change, amend or terminate the Plan at any
time at its discretion, subject to the provisions of ERISA. In the event the
Plan is terminated, participants would become 100% vested in their employer
matching and profit sharing contributions.
11
Plan No.: 001
EIN: 52-2242751
Supplemental Schedule
Coach, Inc.
Savings and Profit Sharing Plan
Form 5500, Schedule H, Part IV, Line 4i - Schedule of Assets (Held at End of Year)
June 30, 2005
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Identity of Issuer, Borrower,
Lessor or Similar Party Description Current Value
- ------------------------------------------------- ------------------------------------- -------------
* Fidelity Managed Income Portfolio Common and collective trust fund $10,723,967
* Fidelity Balanced Fund Mutual fund 7,718,934
* Fidelity Blue Chip Growth Fund Mutual fund 2,787,898
* Fidelity Diversified International Fund Mutual fund 4,386,172
* Fidelity Equity-Income Fund Mutual fund 2,909,784
* Fidelity Freedom 2000 Fund Mutual fund 26,721
* Fidelity Freedom 2005 Fund Mutual fund 5,650
* Fidelity Freedom 2010 Fund Mutual fund 215,354
* Fidelity Freedom 2015 Fund Mutual fund 38,285
* Fidelity Freedom 2020 Fund Mutual fund 236,863
* Fidelity Freedom 2025 Fund Mutual fund 52,983
* Fidelity Freedom 2030 Fund Mutual fund 479,328
* Fidelity Freedom 2035 Fund Mutual fund 146,608
* Fidelity Freedom 2040 Fund Mutual fund 278,166
* Fidelity Freedom Income Fund Mutual fund 40,751
* Fidelity U.S. Bond Index Fund Mutual fund 2,304,637
* Calamos Growth Fund Mutual fund 308,149
* Neuberger Berman Genesis Trust Mutual fund 9,896,687
* Spartan U.S. Equity Index Fund Mutual fund 10,853,387
* Coach, Inc. Common Stock Common stock 30,532,454
Participant loans (1) Loans to participants with interest rates
ranging from 4.0% to 8.5% and with
maturity dates to June 9, 2015. 1,365,816
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Total $85,308,594
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* Represents a party-in-interest to the Plan.
Note: Cost information is not required for participant directed investments and is therefore not included.
12
COACH, INC. SAVINGS AND PROFIT SHARING PLAN
EXHIBITS TO FORM 11-K
For the Plan Year Ended June 30, 2005
Commission File No. 1-16153
Exhibits (numbered in accordance with Item 601 of Regulation S-K)
Exhibit
Number Description
23.1 Consent of Deloitte & Touche LLP
13
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Plan
Committee has duly caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
Coach, Inc. Savings and Profit Sharing Plan
(Name of Plan)
/s/ Felice Schulaner
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Felice Schulaner
Plan Administrator
December 22, 2005
14
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in Registration Statement No.
333-64610 of Coach, Inc. on Form S-8 of our report dated December 22, 2005,
appearing in this Annual Report on Form 11-K of the Coach, Inc. Savings and
Profit Sharing Plan for the year ended June 30, 2005.
/S/ DELOITTE & TOUCHE
New York, New York
December 22, 2005
15