Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a)	Financial Statements and Financial Statement Schedules. See “Index to Financial Statements,” appearing herein.

(b)	Exhibits. See the exhibit index which is included herein.

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 15, 2014	By:	/s/ Victor Luis
		Name: Victor Luis Title: 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 15, 2014.

Signature		Title
/s/ Victor Luis		Chief Executive Officer and Director
Victor Luis		(Principal Executive Officer)
/s/ Jane Nielsen		Chief Financial Officer
Jane Nielsen		(Principal Financial and Accounting Officer)
/s/ Lew Frankfort		Executive Chairman and Director
Lew Frankfort
/s/ David Denton		Director
David Denton
/s/ Susan Kropf		Director
Susan Kropf
/s/ Gary Loveman		Director
Gary Loveman
/s/ Ivan Menezes		Director
Ivan Menezes
/s/ Michael Murphy		Director
Michael Murphy
/s/ William Nuti		Director
William Nuti
/s/ Stephanie Tilenius		Director
Stephanie Tilenius
/s/ Jide Zeitlin		Director
Jide Zeitlin

COACH, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION

	Page Number
Reports of Independent Registered Public Accounting Firm	53
Consolidated Financial Statements:
Consolidated Balance Sheets	55
Consolidated Statements of Income	56
Consolidated Statements of Comprehensive Income	57
Consolidated Statements of Stockholders’ Equity	58
Consolidated Statements of Cash Flows	59
Notes to Consolidated Financial Statements	60
Financial Statement Schedules:
Schedule II — Valuation and Qualifying Accounts	85
Quarterly Financial Data	86

All other schedules are omitted because they are not applicable or the required information is shown in the Consolidated Financial Statements or Notes thereto.

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 28, 2014 and June 29, 2013, and the related consolidated statements of income, comprehensive income, stockholders' equity, and cash flows for each of the three years in the period ended June 28, 2014. Our audits also included the financial statement schedule listed in the Index to the financial statements. 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 financial position of Coach, Inc. and subsidiaries at June 28, 2014 and June 29, 2013, and the results of their operations and their cash flows for each of the three years in the period ended June 28, 2014, 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, present fairly, in all material respects, the information set forth therein.

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 28, 2014, based on the criteria established in Internal Control - Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated August 15, 2014 expressed an unqualified opinion on the Company's internal control over financial reporting.

/s/ DELOITTE & TOUCHE LLP

New York, New York

August 15, 2014

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 28, 2014, based on criteria established in Internal Control - Integrated Framework (1992) 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 28, 2014, based on the criteria established in Internal Control - Integrated Framework (1992) 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 28, 2014 of the Company and our report dated August 15, 2014 expressed an unqualified opinion on those financial statements and financial statement schedule.

/s/ DELOITTE & TOUCHE LLP

New York, New York

August 15, 2014

COACH, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands except per share data)

	June 28, 2014				June 29, 2013
ASSETS
Current Assets:
Cash and cash equivalents	$	591,923			$	1,062,785
Short-term investments	276,703				72,106
Trade accounts receivable, less allowances of $1,419 and $1,138, respectively	198,577				175,477
Inventories	526,175				524,706
Deferred income taxes	112,630				111,118
Prepaid expenses	45,473				37,956
Other current assets	103,736				86,799
Total current assets	1,855,217				2,070,947
Property and equipment, net	713,900				694,771
Long-term investments	484,518				197,340
Goodwill	361,407				345,039
Intangible assets	9,788				9,788
Deferred income taxes	111,556				84,845
Other assets	126,745				129,167
Total assets	$	3,663,131			$	3,531,897
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	153,870			$	178,857
Accrued liabilities	518,763				543,153
Current debt	140,485				500
Total current liabilities	813,118				722,510
Long-term debt	—				485
Other liabilities	429,360				399,744
Total liabilities	1,242,478				1,122,739
See Note 12 on commitments and contingencies
Stockholders’ Equity:
Preferred stock: (authorized 25,000 shares; $0.01 par value) none issued	—				—
Common stock: (authorized 1,000,000 shares; $0.01 par value) issued and outstanding – 274,361 and 281,902, respectively	2,744				2,819
Additional paid-in-capital	2,646,123				2,520,469
Accumulated deficit	(219,455		)		(101,884		)
Accumulated other comprehensive loss	(8,759		)		(12,246		)
Total stockholders’ equity	2,420,653				2,409,158
Total liabilities and stockholders’ equity	$	3,663,131			$	3,531,897

See accompanying Notes to Consolidated Financial Statements.

COACH, INC.

CONSOLIDATED STATEMENTS OF INCOME

(in thousands except per share data)

	Fiscal Year Ended
	June 28, 2014				June 29, 2013				June 30, 2012
Net sales	$	4,806,226			$	5,075,390			$	4,763,180
Cost of sales	1,509,263				1,377,242				1,297,102
Gross profit	3,296,963				3,698,148				3,466,078
Selling, general and administrative expenses	2,176,889				2,173,607				1,954,089
Operating income	1,120,074				1,524,541				1,511,989
Interest income	2,181				2,369				720
Other expense	—				(6,384		)		(7,046		)
Income before provision for income taxes	1,122,255				1,520,526				1,505,663
Provision for income taxes	340,919				486,106				466,753
Net income	$	781,336			$	1,034,420			$	1,038,910
Net income per share
Basic	$	2.81			$	3.66			$	3.60
Diluted	$	2.79			$	3.61			$	3.53
Shares used in computing net income per share
Basic	277,790				282,494				288,284
Diluted	280,379				286,307				294,129
Cash dividends declared per common share	$	1.35			$	1.24			$	0.98

See accompanying Notes to Consolidated Financial Statements.

COACH, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

	Fiscal Year Ended
	June 28, 2014				June 29, 2013				June 30, 2012
Net Income	$	781,336			$	1,034,420			$	1,038,910
Other comprehensive income (loss), net of tax:
Unrealized (losses) gains on cash flow hedging derivatives, net	(3,151		)		4,202				1,004
Unrealized gains (losses) on available-for-sale investments, net	4,155				(1,276		)		—
Change in pension liability, net	105				1,343				(1,388		)
Foreign currency translation adjustments	2,378				(66,990		)		(4,052		)
Other comprehensive income (loss), net of tax	3,487				(62,721		)		(4,436		)
Comprehensive income	$	784,823			$	971,699			$	1,034,474

See accompanying Notes to Consolidated Financial Statements.

COACH, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(amounts in thousands except per share data)

	Shares of Common Stock			Common Stock				Additional Paid-in- Capital				Retained Earnings/ (Accumulated Deficit)				Accumulated Other Comprehensive Income/(Loss)				Total Stockholders' Equity
Balance at July 3, 2011	288,515			$	2,886			$	2,000,426			$	(445,654	)		$	54,911			$	1,612,569
Net income	—			—				—				1,038,910				—				1,038,910
Other comprehensive loss	—			—				—				—				(4,436		)		(4,436		)
Shares issued for stock options and employee benefit plans	7,291			72				151,061				—				—				151,133
Share-based compensation	—			—				107,511				—				—				107,511
Excess tax benefit from share-based compensation	—			—				68,057				—				—				68,057
Repurchase and retirement of common stock	(10,688	)		(107		)		—				(699,893		)		—				(700,000		)
Dividends declared ($0.98 per share)	—			—				—				(280,813		)		—				(280,813		)
Balance at June 30, 2012	285,118			2,851				2,327,055				(387,450		)		50,475				1,992,931
Net income	—			—				—				1,034,420				—				1,034,420
Other comprehensive loss	—			—				—				—				(62,721		)		(62,721		)
Shares issued for stock options and employee benefit plans	3,850			39				46,124				—				—				46,163
Share-based compensation	—			—				120,460				—				—				120,460
Excess tax benefit from share-based compensation	—			—				26,830				—				—				26,830
Repurchase and retirement of common stock	(7,066	)		(71		)		—				(399,929		)		—				(400,000		)
Dividends declared ($1.24 per share)	—			—				—				(348,925		)		—				(348,925		)
Balance at June 29, 2013	281,902			2,819				2,520,469				(101,884		)		(12,246		)		2,409,158
Net income	—			—				—				781,336				—				781,336
Other comprehensive income	—			—				—				—				3,487				3,487
Shares issued for stock options and employee benefit plans	2,698			27				9,178				—				—				9,205
Share-based compensation	—			—				104,940				—				—				104,940
Excess tax benefit from share-based compensation	—			—				11,536				—				—				11,536
Repurchase and retirement of common stock	(10,239	)		(102		)		—				(524,824		)		—				(524,926		)
Dividends declared ($1.35 per share)	—			—				—				(374,083		)		—				(374,083		)
Balance at June 28, 2014	274,361			$	2,744			$	2,646,123			$	(219,455	)		$	(8,759	)		$	2,420,653

See accompanying Notes to Consolidated Financial Statements.

COACH, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	Fiscal Year Ended
	June 28, 2014				June 29, 2013				June 30, 2012
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	781,336			$	1,034,420			$	1,038,910
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization	189,360				162,987				132,909
Provision for bad debt	1,649				(529		)		595
Share-based compensation	95,106				120,460				107,511
Excess tax benefit from share-based compensation	(11,536		)		(26,830		)		(68,057		)
Transformation, restructuring and other related charges; sale of Reed Krakoff business	108,204				25,740				—
Deferred income taxes	(22,787		)		(6,520		)		27,568
Other noncash credits, net	6,481				1,157				217
Changes in operating assets and liabilities:
Trade accounts receivable	(23,713		)		(14,231		)		(26,565		)
Inventories	(64,074		)		(38,630		)		(71,680		)
Other liabilities	5,745				(12,974		)		(17,581		)
Accounts payable	(30,212		)		30,394				36,494
Accrued liabilities	14,070				98,865				84,180
Other balance sheet changes, net	(64,219		)		39,665				(22,812		)
Net cash provided by operating activities	985,410				1,413,974				1,221,689
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of interest in equity method investment	(87,233		)		(93,930		)		—
Acquisitions (net of cash acquired) and related advances to distributors	(3,759		)		(53,337		)		(53,235		)
Purchases of property and equipment	(219,587		)		(241,353		)		(184,309		)
Loans to related parties	—				(11,088		)		(24,138		)
Purchases of investments	(543,389		)		(170,792		)		—
Proceeds from maturities and sales of investments	146,260				—				2,256
Net cash used in investing activities	(707,708		)		(570,500		)		(259,426		)
CASH FLOWS FROM FINANCING ACTIVITIES
Dividend payments	(376,498		)		(339,724		)		(260,276		)
Repurchase of common stock	(524,926		)		(400,000		)		(700,000		)
Repayment of debt	(500		)		(22,375		)		(795		)
Proceeds from share-based awards	48,678				80,436				185,071
Borrowings under revolving credit facility	450,000				—				—
Repayment of revolving credit facility	(310,000		)		—				—
Taxes paid to net settle share-based awards	(40,339		)		(34,273		)		(33,938		)
Excess tax benefit from share-based compensation	11,536				26,830				68,057
Acquisition-related payment of contingent consideration	(6,000		)		—				—
Net cash used in financing activities	(748,049		)		(689,106		)		(741,881		)
Effect of exchange rate changes on cash and cash equivalents	(515		)		(8,798		)		(2,949		)
(Decrease) increase in cash and cash equivalents	(470,862		)		145,570				217,433
Cash and cash equivalents at beginning of year	1,062,785				917,215				699,782
Cash and cash equivalents at end of year	$	591,923			$	1,062,785			$	917,215
Supplemental information:
Cash paid for income taxes	$	384,222			$	445,043			$	438,884
Cash paid for interest	$	1,255			$	1,341			$	1,793
Noncash investing activity – property and equipment obligations	$	28,720			$	34,311			$	31,363

See accompanying Notes to Consolidated Financial Statements.

COACH, INC.

Notes to Consolidated Financial Statements (Continued)

(dollars and shares in thousands, except per share data)

1. NATURE OF OPERATIONS

Coach, Inc. (the “Company”) is a leading New York design house of modern luxury accessories and lifestyle collections. The Company’s primary product offerings, manufactured by third-party suppliers, include women’s and men’s bags, women’s and men’s small leather goods, business cases, footwear, wearables including outerwear, watches, weekend and travel accessories, scarves, sunwear, fragrance, jewelry, travel bags and other lifestyle products. Coach’s products are sold through the North America and International reportable segments. The North America segment includes sales to North American consumers through Coach-operated stores (including the Internet), and sales to wholesale customers and distributors. The International segment includes sales to consumers through Coach-operated stores (including the Internet) and concession shop-in-shops in Japan and mainland China, Coach-operated stores and concession shop-in-shops in Hong Kong, Macau, Singapore, Taiwan, Malaysia, South Korea, the United Kingdom, France, Ireland, Spain, Portugal, Germany and Italy, as well as sales to wholesale customers and distributors in approximately 35 countries. The Company also records sales generated in ancillary channels including licensing and disposition.

2. SIGNIFICANT ACCOUNTING POLICIES

Fiscal Year

The Company’s fiscal year ends on the Saturday closest to June 30. Unless otherwise stated, references to years in the financial statements relate to fiscal years. The fiscal years ended June 28, 2014 (“fiscal 2014”), June 29, 2013 (“fiscal 2013”) and June 30, 2012 (“fiscal 2012”) were each 52-week periods. The fiscal year ending June 27, 2015 (“fiscal 2015”) will be also be a 52-week period.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from estimates in amounts that may be material to the financial statements.

Significant estimates inherent in the preparation of the consolidated financial statements include customer returns, discounts, end-of-season markdowns, and operational chargebacks; the realizability of inventory; reserves for contingencies; useful lives and impairments of long-lived tangible and intangible assets; accounting for income taxes and related uncertain tax positions; the valuation of stock-based compensation and related expected forfeiture rates; reserves for restructuring; and accounting for business combinations, amongst others.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and all 100% owned subsidiaries. All intercompany transactions and balances are eliminated in consolidation.

Cash and Cash Equivalents

Cash and cash equivalents consist of cash balances and highly liquid investments with a maturity of three months or less at the date of purchase.

Investments

Long-term investments primarily consist of high-credit quality U.S. and non-U.S. issued corporate debt securities, U.S. Treasuries and government agency securities, classified as available-for-sale, and recorded at fair value, with unrealized gains and losses recorded in other comprehensive income. Long-term investments also include the equity method investment related to the Hudson Yards joint venture and the Reed Krakoff cost method investment. Short-term investments consist primarily of time deposits, U.S. Treasuries and government agency securities, and high-credit quality U.S. and non-U.S. issued corporate debt securities with original maturities greater than three months and with maturities within one year of balance sheet date, classified as available-for-sale and held-to-maturity. Held-to-maturity investments are recorded at amortized cost, which approximates fair value. Dividend and interest income are recognized when earned.

Investments in companies in which the Company has significant influence, but less than a controlling financial interest, are accounted for using the equity method. Significant influence is generally presumed to exist when the Company owns between

COACH, INC.

Notes to Consolidated Financial Statements (Continued)

(dollars and shares in thousands, except per share data)

20% and 50% of the investee, however, other factors are considered, such as board representation and the rights to participate in the day-to-day operations of the business.

Additionally, GAAP requires the consolidation of all entities for which a Company has a controlling voting interest and all variable interest entities (“VIEs”) for which a Company is deemed to be the primary beneficiary. An entity is generally a VIE if it meets any of the following criteria: (i) the entity has insufficient equity to finance its activities without additional subordinated financial support from other parties, (ii) the equity investors cannot make significant decisions about the entity’s operations or (iii) the voting rights of some investors are not proportional to their obligations to absorb the expected losses of the entity or receive the expected returns of the entity and substantially all of the entity’s activities involve or are conducted on behalf of the investor with disproportionately few voting rights.

From time to time, Coach may make an investment that requires judgment in determining whether the entity is a VIE. If it is determined that the entity is a VIE, the Company must assess whether it is the primary beneficiary.

Concentration of Credit Risk

Financial instruments that potentially expose Coach to concentration of credit risk consist primarily of cash and cash equivalents, investments and accounts receivable. The Company places its cash investments with high-credit quality financial institutions and currently invests primarily in U.S. government and agency debt securities, municipal government and corporate debt securities, bank deposits, and money market instruments placed with major banks and financial institutions. Accounts receivable is generally diversified due to the number of entities comprising Coach’s customer base and their dispersion across many geographical regions. The Company believes no significant concentration of credit risk exists with respect to these investments and accounts receivable.

Inventories

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. 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.

Property and Equipment, Net

Property and equipment, net is stated at cost less accumulated depreciation including the impact long-lived asset impairment and disposals. Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets. Buildings are depreciated over 40 years. Machinery and equipment are depreciated over lives of five to seven years, furniture and fixtures are depreciated over lives of three to five years, and computer software is depreciated over lives of three to seven years. Leasehold improvements are amortized over the shorter of their estimated useful lives or the related lease terms. Maintenance and repair costs are charged to earnings as incurred while expenditures for major renewals and improvements are capitalized.

Valuation of Long-Lived Assets

Long-lived assets, such as property and equipment, are evaluated for impairment whenever events or circumstances indicate that the carrying value of the assets may not be recoverable. The evaluation is based on a review of forecasted operating cash flows and the profitability of the related asset group. An impairment loss is recognized if the forecasted cash flows are less than the carrying amount of the asset. Similar to prior fiscal years, when assessing store assets for impairment in fiscal 2014, the Company analyzed the cash flows at an individual store-by-store level, which is the lowest level for identifiable cash flows. The Company recorded impairment losses of $35,544 in fiscal 2014 and $16,624 in fiscal 2013. The Company did not record any impairment losses in fiscal 2012.

In determining future cash flows, Coach takes various factors into account, including changes in merchandising strategy, the emphasis on retail store cost controls, the effects of macroeconomic trends such as consumer spending, the impacts of the experienced level of retail store managers, the level of advertising, promotional cadence and in-store capital investments. Since the determination of future cash flows is an estimate of future performance, there may be future impairments in the event that future cash flows do not meet expectations.

Operating Leases

The Company’s leases for office space, retail locations and distribution facilities are accounted for as operating leases. Certain of the Company's leases contain renewal options, rent escalation clauses, and/or landlord incentives. Renewal terms generally reflect market rates at the time of renewal. Rent expense for noncancelable operating leases with scheduled rent increases and/or

COACH, INC.

Notes to Consolidated Financial Statements (Continued)

(dollars and shares in thousands, except per share data)

landlord incentives is recognized on a straight-line basis over the lease term, including any applicable rent holidays, beginning with the lease commencement date, or the date the Company takes control of the leased space, whichever is sooner. The excess of straight-line rent expense over scheduled payment amounts and landlord incentives is recorded as a deferred rent liability. As of the end of fiscal 2014 and fiscal 2013, deferred rent obligations of $135,154 and $117,502, respectively, were classified primarily within other non-current liabilities in the Company's consolidated balance sheets. Certain rentals are also contingent upon factors such as sales. Contingent rentals are recognized when the achievement of the target (i.e., sale levels), which triggers the related rent payment, is considered probable and estimable.

Asset retirement obligations represent legal obligations associated with the retirement of a tangible long-lived asset. The Company’s asset retirement obligations are primarily associated with leasehold improvements that we are contractually obligated to remove at the end of a lease to comply with the lease agreement. When such an obligation exists, the Company recognizes an asset retirement obligation at the inception of a lease at its estimated fair value. The asset retirement obligation is recorded in current liabilities or non-current liabilities (based on the expected timing of payment of the related costs) and is subsequently adjusted for any changes in estimates. The associated estimated asset retirement costs are capitalized as part of the carrying amount of the long-lived asset and depreciated over its useful life. As of the end of fiscal 2014 and fiscal 2013, the Company had asset retirement obligations of $18,351 and $16,497, respectively, primarily classified within other non-current liabilities in the Company's consolidated balance sheets.

Goodwill and Other Intangible Assets

Goodwill and certain other intangible assets deemed to have indefinite useful lives are not amortized, but are assessed for impairment at least annually. The Company has no finite-lived intangible assets.

The Company uses a quantitative goodwill impairment test, which is a two-step process. The first step is to identify the existence of potential impairment by comparing the fair value of each reporting unit with its carrying value, including goodwill. If the fair value of a reporting unit exceeds its carrying value, the reporting unit's goodwill is considered not to be impaired and performance of the second step of the quantitative goodwill impairment test is unnecessary.

If the carrying value of a reporting unit exceeds its fair value, the second step of the goodwill impairment test is performed to measure the amount of impairment loss, if any. The second step of the goodwill impairment test compares the implied fair value of the reporting unit’s goodwill with the carrying value of that goodwill. If the carrying value of the reporting unit’s goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess. The implied fair value of goodwill is determined in the same manner as the amount of goodwill that would be recognized in a business combination. In other words, the fair value of the reporting unit is allocated to all of the assets and liabilities of that unit as if the reporting unit had been acquired in a business combination and the fair value was the purchase price paid to acquire the reporting unit.

Determination of the fair value of a reporting unit and the fair value of individual assets and liabilities of a reporting unit is judgmental in nature and often involves the use of significant estimates and assumptions. These estimates and assumptions could have a significant impact on whether or not an impairment charge is recognized and the amount of any such charge. Estimates of fair value are primarily determined using discounted cash flows, market comparisons, and recent transactions. These approaches use significant estimates and assumptions, including projected future cash flows, discount rates, growth rates, and determination of appropriate market comparables.

The Company performs its annual impairment assessment of goodwill during the fourth quarter of each fiscal year. The Company determined that there was no impairment in fiscal 2014, fiscal 2013 or fiscal 2012 as the fair values of our reporting units significantly exceeded their respective carrying values.

Stock Repurchase and Retirement

Coach accounts for stock repurchases and retirements by allocating the repurchase price to common stock and retained earnings. The repurchase price allocation is based upon the equity contribution associated with historical issuances, beginning with the earliest issuance. Under Maryland law, Coach’s state of incorporation, treasury shares are not allowed. As a result, all repurchased shares are retired when acquired. During the second quarter of fiscal 2008, the Company’s total cumulative stock repurchases exceeded the total shares issued in connection with the Company’s October 2000 initial public offering, and stock repurchases in excess of this amount are assumed to be made from the Company’s April 2001 Sara Lee exchange offer. Shares issued in connection with this exchange offer were accounted for as a contribution to common stock and retained earnings. Therefore, stock repurchases and retirements associated with the exchange offer are accounted for by allocation of the repurchase price to common stock and retained earnings. During the fourth quarter of fiscal 2010, cumulative stock repurchases allocated to retained earnings resulted in an accumulated deficit balance. Since its initial public offering, the Company has not experienced a net loss in any fiscal year,

COACH, INC.

Notes to Consolidated Financial Statements (Continued)

(dollars and shares in thousands, except per share data)

and the net accumulated deficit balance in stockholders’ equity is attributable to the cumulative stock repurchase activity. The total cumulative amount of common stock repurchase price allocated to retained earnings as of June 28, 2014 and June 29, 2013 was approximately $6,725,000 and $6,200,000, respectively.

Revenue Recognition

Revenue is recognized by the Company when there is persuasive evidence of an arrangement, delivery has occurred (and risks and rewards of ownership have been transferred to the buyer), price has been fixed or is determinable, and collectability is reasonably assured.

Retail store and concession-based shop-in-shop revenues are recognized at the point of sale, which occurs when merchandise is sold in an over-the-counter consumer transaction. These revenues are recognized net of estimated returns at the time of sale to consumers. Internet revenue from sales of products ordered through the Company’s e-commerce sites is recognized upon delivery and receipt of the shipment by its customers and includes shipping and handling charges paid by customers. Internet revenue is also reduced by an estimate for returns.

Wholesale revenue is recognized at the time title passes and risk of loss is transferred to customers. Wholesale revenue is recorded net of estimates of returns, discounts, and markdown allowances. Returns and allowances require pre-approval from management and discounts are based on trade terms. Estimates for markdown reserves are based on historical trends, actual and forecasted seasonal results, an evaluation of current economic and market conditions, retailer performance, and, in certain cases, contractual terms. The Company reviews and refines these estimates on at least a quarterly basis. The Company’s historical estimates of these costs have not differed materially from actual results.

Gift cards issued by the Company are recorded as a liability until they are redeemed, at which point revenue is recognized. The Company recognizes income for unredeemed gift cards when the likelihood of a gift card being redeemed by a customer is remote, which is approximately two years after the gift card is issued, and the Company determines that it does not have a legal obligation to remit the value of the unredeemed gift card to the relevant jurisdiction as unclaimed or abandoned property. Revenue associated with gift card breakage is not material to the Company’s net operating results.

The Company accounts for sales taxes and other related taxes on a net basis, excluding such taxes from revenue.

Cost of Sales

Cost of sales consists of inventory costs and other related costs such as changes in reserves for shrinkage and inventory realizability, destruction costs, damages and replacements.

Selling, General and Administrative Expenses ("SG&A")

Selling, general and administrative expenses are comprised of four categories: (1) selling; (2) advertising, marketing and design; (3) distribution and customer service; and (4) administrative. Selling expenses include store employee compensation, occupancy costs and supply costs, wholesale and retail account administration compensation globally and Coach international operating expenses. These expenses are affected by the number of Coach-operated stores open during any fiscal period and store performance, as compensation and rent expenses vary with sales. Advertising, marketing and design expenses include employee compensation, media space and production, advertising agency fees (primarily to support North America), new product design costs, public relations and market research expenses. Distribution and customer service expenses include warehousing, order fulfillment, shipping and handling, customer service and bag repair costs. Administrative expenses include compensation costs for “corporate” functions including: executive, finance, human resources, legal and information systems departments, as well as corporate headquarters occupancy costs, consulting and certain software expenses. Administrative expenses also include global equity compensation expense.

Shipping and Handling

Shipping and handling costs incurred were $61,893, $66,828 and $52,240 in fiscal 2014, fiscal 2013 and fiscal 2012, respectively, and are included in selling, general and administrative expenses.

Advertising

Advertising costs include expenses related to direct marketing activities, such as direct mail pieces, digital and other media and production costs. In fiscal 2014, fiscal 2013 and fiscal 2012, advertising expenses totaled $130,122, $102,701 and $89,159 respectively, and are included in selling, general and administrative expenses. Advertising costs are expensed when the advertising first appears.

COACH, INC.

Notes to Consolidated Financial Statements (Continued)

(dollars and shares in thousands, except per share data)

Share-Based Compensation

The Company recognizes the cost of equity awards to employees and the non-employee Directors based on the grant-date fair value of those awards. The grant-date fair values of share unit awards are based on the fair value of the Company's common stock on the date of grant. 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.

For stock options and share unit awards, the Company recognizes share-based compensation net of estimated forfeitures and revises the estimates in subsequent periods if actual forfeitures differ from the estimates. The Company estimates the forfeiture rate based on historical experience as well as expected future behavior.

The Company grants performance-based share awards to certain key executives, the vesting of which is subject to the executive’s continuing employment and the Company's achievement of certain performance goals. On a quarterly basis, the Company assesses actual performance versus the predetermined performance goals, and adjusts the share-based compensation expense to reflect the relative performance achievement. Actual distributed shares are calculated upon conclusion of the service and performance periods, and include dividend equivalent shares. If the performance-based award incorporates a market condition, the grant-date fair value of such award is determined using a pricing model, such as a Monte Carlo Simulation.

Income Taxes

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. The Company classifies interest and penalties on uncertain tax positions in the provision for income taxes. Coach records net deferred tax assets to the extent the Company believes that it is more likely than not that these assets will be realized. In making such determination, the Company considers all available evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent results of operation. The Company reduces deferred tax assets by a valuation allowance if, based upon the weight of available evidence, it is more likely than not that some amount of deferred tax assets is not expected to be realized. Deferred taxes are not provided on the undistributed earnings of subsidiaries as such amounts are considered to be permanently invested.

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. Although the Company believes that the estimates and assumptions used are reasonable and legally supportable, the final determination of tax audits could be different than that which is reflected in historical tax provisions and recorded assets and liabilities. Tax authorities periodically audit the Company’s income tax returns, and in specific cases, the tax authorities may take a contrary position that could result in a significant impact on our results of operations. 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.

Derivative Instruments

Substantially all of the Company’s transactions involving international parties, excluding international consumer sales, are denominated in U.S. dollars, which limits the Company’s exposure to the effects of foreign currency exchange rate fluctuations. However, the Company is exposed to foreign currency exchange risk related to its foreign operating subsidiaries’ U.S. dollar-denominated inventory purchases and various cross-currency intercompany and related party loans. Coach uses derivative financial instruments to manage these risks. These derivative transactions are in accordance with the Company’s risk management policies. Coach does not enter into derivative transactions for speculative or trading purposes.

The Company records all derivative contracts at fair value on the consolidated balance sheet. The fair values of foreign currency derivatives are based on the forward curves of the specific indices upon which settlement is based and include an adjustment for the Company’s credit risk. Judgment is required of management in developing estimates of fair value. The use of different market assumptions or methodologies could affect the estimated fair value.

For derivative instruments that qualify for hedge accounting, the effective portion of changes in the fair value of these instruments is either (i) offset against the changes in fair value of the hedged assets or liabilities through earnings or (ii) recognized as a component of accumulated other comprehensive income (loss) ("AOCI") until the hedged item is recognized in earnings, depending on whether the derivative is being used to hedge changes in fair value or cash flows, respectively.

COACH, INC.

Notes to Consolidated Financial Statements (Continued)

(dollars and shares in thousands, except per share data)

Each derivative instrument entered into by the Company that qualifies for hedge accounting is expected to be highly effective at reducing the risk associated with the exposure being hedged. For each derivative that is designated as a hedge, the Company documents the related risk management objective and strategy, including identification of the hedging instrument, the hedged item and the risk exposure, as well as how hedge effectiveness will be assessed over the term of the instrument. The extent to which a hedging instrument has been and is expected to remain highly effective in achieving offsetting changes in fair value or cash flows is assessed and documented by the Company on at least a quarterly basis.

To the extent that a derivative designated as a cash flow hedge is not considered to be effective, any change in its fair value related to such ineffectiveness is immediately recognized in earnings within foreign currency gains (losses). If it is determined that a derivative instrument has not been highly effective, and will continue not to be highly effective in hedging the designated exposure, hedge accounting is discontinued and further gains (losses) are recognized in earnings within foreign currency gains (losses). Upon discontinuance of hedge accounting, the cumulative change in fair value of the derivative previously recorded in AOCI is recognized in earnings when the related hedged item affects earnings, consistent with the original hedging strategy, unless the forecasted transaction is no longer probable of occurring, in which case the accumulated amount is immediately recognized in earnings within foreign currency gains (losses).

As a result of the use of derivative instruments, the Company may be exposed to the risk that the counterparties to such contacts will fail to meet their contractual obligations. To mitigate this counterparty credit risk, the Company has a policy of only entering into contracts with carefully selected financial institutions based upon an evaluation of their credit ratings, among other factors.

The fair values of the Company’s derivative instruments are recorded on its consolidated balance sheets on a gross basis. For cash flow reporting purposes, the Company classifies proceeds received or amounts paid upon the settlement of a derivative instrument in the same manner as the related item being hedged, primarily within cash from operating activities.

Hedging Portfolio

The Company enters into derivative contracts primarily to reduce its risks related to exchange rate fluctuations on U.S. dollar-denominated inventory purchases and various cross-currency intercompany and related party loans. To the extent its derivative contracts designated as cash flow hedges are highly effective in offsetting changes in the value of the hedged items, the related gains (losses) are initially deferred in AOCI and subsequently recognized in the consolidated statements of income as follows:

•	Zero-cost collars - These derivatives are primarily executed by two of the Company’s businesses outside of the United States (Coach Japan and Coach Canada), and are recognized as part of the cost of the inventory purchases being hedged within cost of sales, when the related inventory is sold to a third party. Current maturity dates range from July 2014 to June 2015.

•	Cross currency swaps - These derivatives relate to intercompany loans, and are recognized within foreign currency gains (losses) generally in the period in which the related payments being hedged are revalued or settled. Current maturity dates range from August 2014 to November 2014.

Forward foreign currency exchange contracts, designated as fair value hedges and associated with intercompany and other contractual obligations, are recognized within foreign currency gains (losses) generally in the period in which the related payments being hedged are revalued. Current maturity dates range from July 2014 to August 2014.

Foreign Currency

The functional currency of the Company's foreign operations is generally the applicable local currency. Assets and liabilities are translated into U.S. dollars using the current exchange rates in effect at the balance sheet date, while revenues and expenses are translated at the weighted-average exchange rates for the period. The resulting translation adjustments are included in the consolidated statements of comprehensive income as a component of other comprehensive income (loss) (“OCI”) and in the consolidated statements of equity within AOCI. Gains and losses on the translation of intercompany loans made to foreign subsidiaries that are of a long-term investment nature also are included within this component of equity.

The Company also recognizes gains and losses on transactions that are denominated in a currency other than the respective entity's functional currency in earnings. Foreign currency transaction gains and losses also include amounts realized on the settlement of certain intercompany loans with foreign subsidiaries.

Earnings per Share

Basic net income per share is calculated by dividing net income by the weighted-average number of shares outstanding during the period. Diluted net income per share is calculated similarly but includes potential dilution from the exercise of stock options and vesting of stock awards, or any other potentially dilutive instruments.

COACH, INC.

Notes to Consolidated Financial Statements (Continued)

(dollars and shares in thousands, except per share data)

Reclassifications

Certain prior year amounts, specifically related to disclosures of short-term investments in Note 10, "Fair Value Measurements" and amounts in connection with the acquisition of the retail business in Europe, have been reclassified to conform to the current year presentation in the consolidated financial statements.

Recent Accounting Pronouncements

In February 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2013-02, “Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income” (“ASU 2013-02”). ASU 2013-02 requires disclosure of significant amounts reclassified out of AOCI by component. If the amounts are required to be reclassified from AOCI to net income in their entirety in the same reporting period, the effect of such reclassifications on the relevant line items of net income must be presented either on the face of the financial statements or in the notes. For amounts that are not required to be reclassified to net income in their entirety in the same reporting period, cross-references to other disclosures that provide additional details about such reclassifications are required. ASU 2013-02 did not change the requirements for determining or reporting net income or OCI. The Company adopted the provisions of ASU 2013-02 as of the beginning of the first quarter of fiscal 2014, which resulted in expanded OCI-related disclosures (see Note 4), but did not have an impact on the Company’s Consolidated Financial Statements.

In May 2014, the FASB issued Accounting Standards Codification Topic 606, “Revenue from Contracts with Customers,” which provides a single, comprehensive revenue recognition model for all contracts with customers, and contains principles to determine the measurement of revenue and timing of when it is recognized. The requirements of the new standard will be effective for annual reporting periods beginning after December 15, 2016, and interim periods within those annual periods, which for the Company is the first quarter of fiscal 2018. The Company is currently evaluating this guidance, but does not expect its adoption to have a material effect on its Consolidated Financial Statements.

3. TRANSFORMATION, RESTRUCTURING AND OTHER RELATED ACTIONS

Fiscal 2014 Charges

Transformation-Related Charges

During the fourth quarter of fiscal 2014, Coach announced a multi-year strategic plan to transform the brand and reinvigorate growth. This multi-faceted, multi-year transformation plan (the "Transformation Plan") includes key operational and cost measures needed in order to fund and execute this plan, including: (i) the investment in capital improvements in stores and wholesale locations in fiscal 2015 and fiscal 2016; (ii) the optimization of the North American store fleet including the closure of underperforming locations in fiscal 2015; (iii) the realignment of inventory levels to reflect the Company's elevated product strategy in fiscal 2014; (iv) the investment in incremental advertising costs to further promote this new strategy starting in fiscal 2015; and (v) the significant scale-back of the Company's promotional cadence, particularly within the outlet Internet sales site starting in fiscal 2014.

In fiscal 2014, the Company incurred restructuring and transformation related charges of $131,507 ($88,281 after-tax, or $0.31 per diluted share). The charges recorded in cost of sales and SG&A expenses were $82,192 and $49,315, respectively, and primarily relate to the Company's North America business.

A summary of charges and related liabilities under the Company's Transformation Plan are as follows:

	Inventory-Related Charges				Impairment				Store-Related Costs(1)				Other				Total
Fiscal 2014 charges	$	82,192			$	35,544			$	12,191			$	1,580			$	131,507
Cash payments	—				—				—				—				—
Non-cash charges	(66,774		)		(35,544		)		(6,737		)		—				(109,055		)
Liability as of June 28, 2014	$	15,418			$	—			$	5,454			$	1,580			$	22,452

(1) Includes store closure costs, related severance and accelerated depreciation charges as a result of store updates.

Inventory-related charges, recorded within cost of sales, primarily relate to reserves for the donation and destruction of certain on-hand inventory and future non-cancelable inventory purchase commitments. Impairment charges, recorded within SG&A expenses, were based on discounted expected cash flows within certain impacted retail stores, and resulted in the reduction of the

COACH, INC.

Notes to Consolidated Financial Statements (Continued)

(dollars and shares in thousands, except per share data)

net carrying value of store-related long-lived assets to their estimated fair value. Store-related costs, recorded within SG&A expenses, primarily relate to accelerated depreciation charges associated with store assets that the Company will no longer benefit from as a result of the Transformation Plan, including certain store employee restructuring costs. The above charges were recorded as corporate unallocated expenses within the Company's Consolidated Statements of Income.

The Company expects to incur additional pre-tax charges of approximately $120,000 to $170,000, primarily in fiscal 2015, in connection with the Transformation Plan. These costs will primarily consist of store-related costs (including accelerated depreciation charges as a result of store updates) and organizational efficiency charges (including employee severance costs).

Sale of Reed Krakoff Business

On August 30, 2013, the Company sold the Reed Krakoff business, involving the sale of the equity interests of Reed Krakoff LLC and certain assets, including the Reed Krakoff brand name and related intellectual property rights, to Reed Krakoff International LLC (“Buyer”). The sale was pursuant to the Asset Purchase and Sale Agreement dated July 29, 2013 (the “Purchase Agreement”) with Buyer and Reed Krakoff, the Company’s former President and Executive Creative Director. Coach received a de minimus amount of cash and convertible preferred membership interests representing 8.0% of Buyer’s issued and outstanding convertible preferred units and initial equity value immediately following such issuance. Coach recorded a cost method investment of $3,261, included in Long-term investments in the consolidated balance sheet at June 28, 2014.

Concurrent with the Closing under the Purchase Agreement, the parties executed certain ancillary agreements which included a transition services agreement between Coach and Buyer for up to nine months.

In connection with the Purchase Agreement, Mr. Krakoff’s resignation from Coach and the closing of the sale, Mr. Krakoff waived his right to receive compensation, salary, bonuses, equity vesting and certain other benefits. The Company recorded a loss of $2,683 during the first quarter of fiscal 2014 related to the sale, which is recorded in SG&A expenses on the Consolidated Statements of Income.

Fiscal 2013 Charges

Restructuring and Transformation-Related Charges

In fiscal 2013, the Company incurred restructuring and transformation related charges, which are not related to the Company's fiscal 2014 Transformation Plan, of $53,202 ($32,568 after-tax, or $0.11 per diluted share). The charges recorded in SG&A expenses and cost of sales were $48,402 and $4,800, respectively. The charges primarily related to our North America segment.

A summary of charges and related liabilities are as follows:

	Severance and Related Costs				Impairment				Other				Total
Fiscal 2013 charges	$	29,859			$	16,624			$	6,719			$	53,202
Cash payments	—				—				—				—
Non-cash charges	(1,980		)		$	(16,624	)		$	(6,636	)		$	(25,240	)
Liability as of June 29, 2013	$	27,879			$	—			$	83			$	27,962
(Income) expense	$	(1,732	)		$	—			$	1,903			$	171
Non-cash charges	(345		)		—				(1,822		)		(2,167		)
Cash payments and settlements	(25,245		)		$	—			$	(164	)		$	(25,409	)
Liability as of June 28, 2014	$	557			$	—			$	—			$	557

COACH, INC.

Notes to Consolidated Financial Statements (Continued)

(dollars and shares in thousands, except per share data)

4. ACCUMULATED OTHER COMPREHENSIVE INCOME

The components of accumulated other comprehensive income, as of the dates indicated, are as follows:

	Gains				Unrealized
	(Losses)				(Losses) Gains
	on Cash				on Available-				Cumulative
	Flow				for-Sale				Translation
	Hedges(1)				Securities				Adjustment				Other(2)				Total
Balance at June 30, 2012	$	(461	)		$	—			$	55,360			$	(4,424	)		$	50,475
Other comprehensive income (loss) before reclassifications	8,005				(1,276		)		(66,990		)		1,343				(58,918		)
Less: gains reclassified from accumulated other comprehensive income	3,803				—				—				—				3,803
Net current-period other comprehensive income (loss)	4,202				(1,276		)		(66,990		)		1,343				(62,721		)
Balance at June 29, 2013	$	3,741			$	(1,276	)		$	(11,630	)		$	(3,081	)		$	(12,246	)
Other comprehensive income before reclassifications	3,271				3,150				2,378				105				8,904
Less: gains (losses) reclassified from accumulated other comprehensive income	6,422				67				—				(1,072		)		5,417
Net current-period other comprehensive (loss) income	(3,151		)		3,083				2,378				1,177				3,487
Balance at June 28, 2014	$	590			$	1,807			$	(9,252	)		$	(1,904	)		$	(8,759	)

(1)	The ending balances of accumulated other comprehensive income related to cash flow hedges are net of tax of $(532) and $(2,338) as of June 28, 2014 and June 29, 2013, respectively. The amounts reclassified from accumulated other comprehensive income are net of tax of $(3,432) and $(2,416) as of June 28, 2014 and June 29, 2013, respectively.

(2)	The components of Other include the accumulated loss on the Company's investment in an auction rate security and the minimum pension liability adjustment of $0 and $(1,904) as of June 28, 2014 and $(1,072) and $(2,009) as of June 29, 2013, respectively. As of June 28, 2014 and June 29, 2013 the balances of accumulated other comprehensive income are net of tax of $1,531 and $2,118, respectively.

5. SHARE-BASED COMPENSATION

The Company maintains several share-based compensation plans which are more fully described below. The following table shows the total compensation cost charged against income for these plans and the related tax benefits recognized in the income statement:

	June 28, 2014(1)				June 29, 2013				June 30, 2012
Compensation expense	$	104,940			$	120,460			$	107,511
Related income tax benefit	33,095				39,436				37,315

(1) Approximately $9,834 of share based compensation expense and $3,997 of related income tax benefit are related to the sale of the Reed Krakoff business and restructuring and transformation recognized by the Company in the first quarter of fiscal 2014. See Note 3 for information as it relates to the sale of the Reed Krakoff business.

COACH, INC.

Notes to Consolidated Financial Statements (Continued)

(dollars and shares in thousands, except per share data)

Coach Stock-Based Plans

Coach maintains the 2010 Stock Incentive Plan to award stock options and shares to certain members of Coach management and the outside members of its Board of Directors (“Board”). Coach maintains the 2000 Stock Incentive Plan and the 2004 Stock Incentive Plan for awards granted prior to the establishment of the 2010 Stock Incentive Plan. These plans were approved by Coach’s stockholders. The exercise price of each stock option equals 100% of the market price of Coach’s stock on the date of grant and generally has a maximum term of 10 years. Stock options and service based share awards that are granted as part of the annual compensation process generally vest ratably over three years. Other stock option and share awards are subject to forfeiture until completion of the vesting period, which ranges from one to five years. The Company issues new shares upon the exercise of stock options or vesting of share units.

Stock Options

A summary of stock option activity during the year ended June 28, 2014 is as follows:

	Number of Options Outstanding			Weighted- Average Exercise Price				Weighted- Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Outstanding at June 29, 2013	12,893			$	43.37
Granted	2,440			52.52
Exercised	(1,380	)		32.27
Forfeited or expired	(2,274	)		55.60
Outstanding at June 28, 2014	11,679			44.21				5.67		$	19,920
Vested or expected to vest at June 28, 2014	11,419			43.96				5.55		19,920
Exercisable at June 28, 2014	7,550			38.92				4.07		19,920

The fair value of each Coach option grant is estimated on the date of grant using the Black-Scholes option pricing model and the following weighted-average assumptions:

	June 28, 2014			June 29, 2013			June 30, 2012
Expected term (years)	3.1			3.1			3.1
Expected volatility	32.5	%		39.5	%		39.4	%
Risk-free interest rate	0.8	%		0.4	%		0.6	%
Dividend yield	2.6	%		2.2	%		1.5	%

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. The risk free interest rate is based on the zero-coupon U.S. Treasury issue as of the date of the grant. Dividend yield is based on the current expected annual dividend per share and the Company’s stock price.

The weighted-average grant-date fair value of options granted during fiscal 2014, fiscal 2013 and fiscal 2012 was $9.79, $13.02, and $15.59, respectively. The total intrinsic value of options exercised during fiscal 2014, fiscal 2013 and fiscal 2012 was $28,028, $76,956, and $197,793, respectively. The total cash received from option exercises was $44,541, $74,277, and $178,292 in fiscal 2014, fiscal 2013 and fiscal 2012, respectively, and the cash tax benefit realized for the tax deductions from these option exercises was $10,419, $29,230, and $73,982, respectively.

At June 28, 2014, $26,059 of total unrecognized compensation cost related to non-vested stock option awards is expected to be recognized over a weighted-average period of 1.0 year.

COACH, INC.

Notes to Consolidated Financial Statements (Continued)

(dollars and shares in thousands, except per share data)

Service-based Restricted Stock Unit Awards (“RSUs”)

A summary of service-based RSU activity during the year ended June 28, 2014 is as follows:

	Number of Non-vested Share Units			Weighted- Average Grant-Date Fair Value
Non-vested at June 29, 2013	3,269			$	54.06
Granted	2,018			52.93
Vested	(1,503	)		50.89
Forfeited	(563	)		54.88
Non-vested at June 28, 2014	3,221			54.68

At June 28, 2014, $92,437 of total unrecognized compensation cost related to non-vested share awards is expected to be recognized over a weighted-average period of 1.0 year.

The weighted-average grant-date fair value of share awards granted during fiscal 2014, fiscal 2013 and fiscal 2012 was $52.93, $54.49 and $62.84, respectively. The total fair value of shares vested during fiscal 2014, fiscal 2013 and fiscal 2012 was $78,692, $93,319 and $99,488, respectively.

Performance-based Restricted Stock Unit Awards (“PRSU”)

The Company grants performance-based share awards to key executives, the vesting of which is subject to the executive’s continuing employment and the Company's achievement of certain performance goals. A summary of performance-based share award activity during the year ended June 28, 2014 is as follows:

	Number of Non-vested Share Units			Weighted- Average Grant-Date Fair Value
Non-vested at June 29, 2013	1,093			$	46.84
Granted	315			32.53
Change due to performance condition achievement	62			36.48
Vested	(453	)		40.96
Forfeited	(118	)		42.81
Non-vested at June 28, 2014	899			44.60

At June 28, 2014, $14,535 of total unrecognized compensation cost related to non-vested share awards is expected to be recognized over a weighted-average period of 1.4 years.

The weighted-average grant-date fair value of share awards granted during fiscal 2014, fiscal 2013 and fiscal 2012 was $32.53, $50.55 and $62.07, respectively. The total fair value of awards that vested during fiscal 2014 was $23,754. There were no vestings of performance-based shares during fiscal 2013 or fiscal 2012.

During fiscal 2014, the Company granted 241 shares of common stock with a fair value of $6,814 to selected executives as retention PRSU awards with a maximum potential number of shares issued and fair value (excluding dividends) of 321 shares and $9,085, respectively. These shares are included within the PRSU tables above. The shares of common stock under these PRSU awards will be earned and distributed based on performance criteria which compares the Company’s total stockholder return over the performance period to the total stockholder return of the companies included in the Standard & Poor’s 500 Index on the date of grant (excluding the Company). The grant date fair value of the PRSU awards was determined utilizing a Monte Carlo simulation and the following assumptions: expected volatility of 32.61%, risk-free interest rate of 0.63%, and dividend yield of 0.00%.

In fiscal 2014, fiscal 2013 and fiscal 2012, the cash tax benefit realized for the tax deductions from all RSUs (service and performance-based) was $33,523, $26,097 and $30,740, respectively.

COACH, INC.

Notes to Consolidated Financial Statements (Continued)

(dollars and shares in thousands, except per share data)

Employee Stock Purchase Plan

Under the 2001 Employee Stock Purchase Plan, full-time Coach employees are permitted to purchase a limited number of Coach common shares at 85% of market value. Under this plan, Coach sold 119, 122, and 129 shares to employees in fiscal 2014, fiscal 2013 and fiscal 2012, respectively. Compensation expense is calculated for the fair value of employees’ purchase rights using the Black-Scholes model and the following weighted-average assumptions:

	Fiscal Year Ended
	June 28, 2014			June 29, 2013			June 30, 2012
Expected term (years)	0.5			0.5			0.5
Expected volatility	29.5	%		34.1	%		45.6	%
Risk-free interest rate	0.1	%		0.1	%		0.1	%
Dividend yield	2.2	%		1.7	%		1.4	%

The weighted-average fair value of the purchase rights granted during fiscal 2014, fiscal 2013 and fiscal 2012 was $13.30, $15.08, and $17.31, respectively. The Company issues new shares for employee stock purchases.

6. INVESTMENTS

The following table summarizes the Company’s investments, all of which are denominated in U.S. dollars, recorded within the consolidated balance sheets as of June 28, 2014 and June 29, 2013:

	June 28, 2014												June 29, 2013
	Short-term				Long-Term				Total				Short-term				Long-term				Total
Available-for-sale investments:
Government securities - U.S.(1)	$	41,969			$	55,360			$	97,329			$	—			$	—			$	—
Corporate debt securities – U.S.(1)	25,387				144,881				170,268				2,094				63,442				65,536
Corporate debt securities – non-U.S.(1)	34,683				98,766				133,449				—				33,968				33,968
Auction rate security(2)	—				—				—				—				6,000				6,000
Asset backed securities(3)	—				1,085				1,085				—				—				—
Available-for-sale investments, total	$	102,039			$	300,092			$	402,131			$	2,094			$	103,410			$	105,504
Held to maturity:
Government securities - U.S.(4)	$	18,173			$	—			$	18,173			$	—			$	—			$	—
Corporate debt securities – U.S.(4)	33,511				—				33,511				—				—				—
Corporate debt securities – non-U.S.(4)	24,370				—				24,370				—				—				—
Commercial paper(4)	23,541				—				23,541				—				—				—
Other:
Time deposits(5)	75,069				—				75,069				70,012				—				70,012
Other(6)	—				184,426				184,426				—				93,930				93,930
Total Investments	$	276,703			$	484,518			$	761,221			$	72,106			$	197,340			$	269,446

(1)	These securities have maturity dates between calendar years 2014 and 2017 and are recorded at fair value.

(2)	The investment was sold in the third quarter of fiscal 2014. Refer to Note 10, "Fair Value Measurements," for further information.

(3)	The security matures during calendar year 2016.

(4)	These securities have maturity dates of less than one year and are recorded at amortized cost which approximates fair value.

COACH, INC.

Notes to Consolidated Financial Statements (Continued)

(dollars and shares in thousands, except per share data)

(5)	These time deposits have original maturities greater than 3 months and are recorded at fair value.

(6)

Primarily relates to the equity method investment related to an equity interest in an entity formed during fiscal 2013 for the purpose of developing a new office tower in Manhattan (the “Hudson Yards joint venture”), with the Company owning less than 43% of the joint venture, and the Reed Krakoff cost method investment. As of June 28, 2014, the Company has recorded $181,163 and $3,261 in the Hudson Yards joint venture and the Reed Krakoff cost method investment, respectively. The Hudson Yards joint venture is determined to be a VIE primarily due to the fact that it has insufficient equity to finance its activities without additional subordinated financial support from its two joint venture partners. Coach is not considered the primary beneficiary of the entity primarily because the Company does not have the power to direct the activities that most significantly impact the entity’s economic performance. The Company’s maximum loss exposure is limited to the committed capital. Refer to Note 12, "Commitments and Contingencies" for further information.

The amortized cost, gross unrealized gains, gross unrealized losses and fair value of available-for-sale securities are presented below:

	June 28, 2014
	Amortized Cost				Gross Unrealized Gains				Gross Unrealized Losses				Estimated Fair Value
Government securities - U.S.	$	97,224			$	113			$	(8	)		$	97,329
Corporate debt issues - U.S.	169,259				1,024				(15		)		170,268
Corporate debt issues - non-U.S.	132,756				704				(11		)		133,449
Asset backed securities	1,085				—				—				1,085
Total	$	400,324			$	1,841			$	(34	)		$	402,131
	June 29, 2013
	Amortized Cost				Gross Unrealized Gains				Gross Unrealized Losses				Estimated Fair Value
Corporate debt issues - U.S.	$	66,387			$	—			$	(851	)		$	65,536
Corporate debt issues - non-U.S.	34,393				2				(427		)		33,968
Auction rate security	6,000				—				—				6,000
Total	$	106,780			$	2			$	(1,278	)		$	105,504

7. ACQUISITIONS

Fiscal 2014 Acquisition

On July 1, 2013, Coach became the 100% owner of its European joint venture by purchasing Hackett Limited’s 50% interest in the joint venture, enabling Coach to assume direct control and consolidate its European retail business. The joint venture included 18 retail locations in Spain, Portugal, Great Britain, France, Ireland and Germany. The results of the acquired business have been included in the consolidated financial statements since the date of acquisition within the International segment. The purchase price consisted of cash payments of approximately $15,105 and the forgiveness of a loan from Coach to Hackett Limited of approximately $18,019. The Company made cash payments of $7,893 in fiscal 2013 and $7,212 in fiscal 2014, which were partially offset by cash acquired as part of the acquisition of $3,453. The allocation of the purchase price acquisition has been completed resulting in goodwill of $14,812, which is not tax deductible.

Fiscal 2013 Acquisitions

On July 1, 2012, Coach acquired 100% of its domestic retail business in Malaysia (consisting of 10 retail stores) from the former distributor, Valiram Group, and on August 5, 2012, acquired 100% of its domestic retail business in South Korea (consisting of 47 retail and department store locations) from the former distributor, Shinsegae International. The results of the acquired businesses have been included in the consolidated financial statements since the dates of acquisition within the International segment. The aggregate cash paid in connection with the acquisitions of the Malaysia and South Korea businesses was $8,593 and

COACH, INC.

Notes to Consolidated Financial Statements (Continued)

(dollars and shares in thousands, except per share data)

$36,851, respectively. The Company made a contingent payment to Shinsegae International, of $6,000 in fiscal 2014 (classified as financing activities within the Consolidated Statements of Cash Flows) and is scheduled to make a contingent payment of $4,000 during the first quarter of fiscal 2015.

The following table summarizes the fair values of the assets acquired as part of the fiscal 2013 acquisitions:

Assets Acquired	Fair Value
Current assets	$	21,448
Fixed assets and other non-current assets	2,351
Goodwill(1)	31,645
Total assets acquired	$	55,444

(1) Approximately $30,000 of the goodwill balance is tax deductible.

Unaudited pro forma information related to the fiscal 2014 and 2013 acquisitions is not included, as the impact of these transactions is not material to the consolidated results of the Company.

8. LEASES

Coach leases office, distribution and retail facilities. The lease agreements, which expire at various dates through 2028, are subject, in most cases, to renewal options and provide for the payment of taxes, insurance and maintenance. Certain leases contain escalation clauses resulting from the pass-through of increases in operating costs, property taxes and the effect on costs from changes in consumer price indices. Certain rentals are also contingent upon factors such as sales.

Rent expense for the Company's operating leases consisted of the following:

	Fiscal Year Ended
	June 28, 2014				June 29, 2013				June 30, 2012
Minimum rent	$	172,768			$	169,737			$	153,577
Contingent rent(1)	144,439				112,568				94,579
Total rent expense	$	317,207			$	282,305			$	248,156

(1)	A portion of the increase in contingent rent from fiscal 2013 is due to the inclusion of concession-based expense attributable to certain shop-in-shops in the International segment.

Future minimum rental payments under noncancelable operating leases are as follows:

Fiscal Year		Amount
2015		$	208,519
2016		186,808
2017		166,338
2018		135,464
2019		107,937
Subsequent to 2019		405,891
Total minimum future rental payments		$	1,210,957

COACH, INC.

Notes to Consolidated Financial Statements (Continued)

(dollars and shares in thousands, except per share data)

9. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

The following tables provide information related to the Company’s derivatives:

		Notional Value								Derivative Assets										Derivative Liabilities
												Fair Value										Fair Value
Designated Derivative Hedging Instruments (1)		June 28, 2014				June 29, 2013				Balance Sheet Classification		June 28, 2014				June 29, 2013				Balance Sheet Classification		June 28, 2014				June 29, 2013
C - Inventory purchases		$	90,274			$	193,352			Other Current Assets		$	439			$	1,592			Accrued Liabilities		$	(565	)		$	(2,555	)
CCS - Intercompany loans		4,793				111,195				Other Current Assets		53				1,366				Accrued Liabilities		—				(85		)
FC - Intercompany & Related Party Loans		8,375				36,396				Other Current Assets		—				1,024				Accrued Liabilities		(9		)		—
FC - Contractual Obligations(2)		4,000				16,944				Other Current Assets		—				523				Accrued Liabilities		(323		)		(255		)
Total Hedges		$	107,442			$	357,887					$	492			$	4,505					$	(897	)		$	(2,895	)

(1)	C = Zero-cost Collars; CCS = Cross Currency Swaps; FC = Forward foreign currency exchange contracts;

(2)	Contractual obligations as of fiscal 2014 and 2013 consist of $4,000 and $10,000 respectively, due to Shinsegae International, related to the acquisition of the domestic retail business in South Korea. Fiscal 2013 also had contractual obligations of $6,944 due to Hackett Limited related to the acquired European joint venture.

		Amount of Gain (Loss) Recognized in OCI on Derivatives (Effective Portion)												Amount of Net Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)
		Fiscal Year Ended(1)												Income Statement Classification		Fiscal Year Ended(2)
Designated Cash Flow Hedges:		June 28, 2014				June 29, 2013				June 30, 2012				June 28, 2014				June 29, 2013				June 30, 2012
C - Inventory purchases		$	3,085			$	8,483			$	(2,568	)		Cost of Sales		$	6,422			$	3,803			$	(3,099	)
CCS - Intercompany loans		186				(478		)		473				SG&A		—				—				—
Total Hedges		$	3,271			$	8,005			$	(2,095	)				$	6,422			$	3,803			$	(3,099	)

(1)	For fiscal 2014, fiscal 2013 and fiscal 2012, the amounts above are net of tax of $(1,626), $(5,325) and $1,858, respectively.

(2)	For fiscal 2014, fiscal 2013 and fiscal 2012, the amounts above are net of tax of $(3,432), $(2,416) and $2,181, respectively.

During fiscal 2014 and fiscal 2013, there were no material gains or losses recognized in income due to hedge ineffectiveness.

For forward foreign currency exchange contracts that are designated as fair value hedges, the gain (loss) on the derivative as well as the offsetting gain (loss) on the hedged item attributable to the hedged risk, both of which are recorded within SG&A, resulted in an immaterial net impact to the Company's statement of operations.

The Company expects that $1,131 of net derivative gains included in accumulated other comprehensive income at June 28, 2014 will be reclassified into earnings within the next 12 months. This amount will vary due to fluctuations in foreign currency exchange rates.

10. FAIR VALUE MEASUREMENTS

The Company categorizes its assets and liabilities based on the priority of the inputs to the valuation technique into a three-level fair value hierarchy as set forth below. The three levels of the hierarchy are defined as follows:

Level 1 — Unadjusted quoted prices in active markets for identical assets or liabilities.

COACH, INC.

Notes to Consolidated Financial Statements (Continued)

(dollars and shares in thousands, except per share data)

Level 2 — Observable inputs other than quoted prices included in Level 1. Level 2 inputs include quoted prices for identical assets or liabilities in non-active markets, quoted prices for similar assets or liabilities in active markets, and inputs other than quoted prices that are observable for substantially the full term of the asset or liability.

Level 3 — Unobservable inputs reflecting management’s own assumptions about the input used in pricing the asset or liability.

The following table shows the fair value measurements of the Company’s financial assets and liabilities at June 28, 2014 and June 29, 2013:

	Level 1								Level 2								Level 3
	June 28, 2014				June 29, 2013				June 28, 2014				June 29, 2013				June 28, 2014				June 29, 2013
Assets:
Cash equivalents(1)	$	1,188			$	124,420			$	45,169			$	337,239			$	—			$	—
Short-term investments:
Time deposits(2)	—				—				75,069				70,012				—				—
Commercial paper(2)	—				—				—				—				—				—
Government securities - U.S.(2)	41,969				—				—				—				—				—
Corporate debt securities - U.S.(2)	—				—				25,387				2,094				—				—
Corporate debt securities - non U.S.(2)	—				—				34,683				—				—				—
Long-term investments:
Asset backed securities(3)	—				—				1,085				—				—				—
Government securities - U.S.(3)	55,360				—				—				—				—				—
Corporate debt securities – U.S.(3)	—				—				144,881				63,442				—				—
Corporate debt securities - non U.S.(3)	—				—				98,766				33,968				—				—
Auction rate security(4)	—				—				—				—				—				6,000
Derivative Assets:
Zero-cost collar options(5)	—				—				439				1,592				—				—
Forward contracts and cross currency swaps(5)	—				—				53				2,913				—				—
Total	$	98,517			$	124,420			$	425,532			$	511,260			$	—			$	6,000
Liabilities:
Derivative liabilities:
Zero-cost collar options(5)	$	—			$	—			$	565			$	2,555			$	—			$	—
Forward contracts and cross currency swaps(5)	—				—				332				340				—				—
Total	$	—			$	—			$	897			$	2,895			$	—			$	—

COACH, INC.

Notes to Consolidated Financial Statements (Continued)

(dollars and shares in thousands, except per share data)

(1)	Cash equivalents consist of money market funds and time deposits with maturities of three months or less at the date of purchase. Due to their short term maturity, management believes that their carrying value approximates fair value.

(2)	Short-term available-for-sale investments are recorded at fair value, which approximates their carrying value, and are primarily based upon quoted vendor or broker priced securities in active markets. Short-term held to maturity investments are recorded at amortized cost, which approximates fair value (Level 2).

(3)	Fair value is primarily determined using vendor or broker priced securities in active markets. These securities have maturity dates between calendar years 2015 and 2017.

(4)

Fair value is determined using a valuation model that takes into consideration the financial conditions of the issuer and the bond insurer, current market conditions and the value of the collateral bonds. The Company has determined that the significant majority of the inputs used to value this security fall within Level 3 of the fair value hierarchy as the inputs are based on unobservable estimates. This security was sold during the third quarter of fiscal 2014.

(5)	The fair value of these hedges is primarily based on the forward curves of the specific indices upon which settlement is based and includes an adjustment for the counterparty’s or Company’s credit risk.

The following table present a reconciliation of the assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the year ended June 28, 2014 and June 29, 2013. Level 3 available-for-sale securities consisted of one auction rate security.

	June 28,				June 29,
	2014				2013
Balance, beginning of year	$	6,000			$	6,000
Losses reclassified out of other comprehensive income	1,072				—
Loss on sale (included in "Income before taxes")	(25		)		—
Sale of investment	(7,047		)		—
Balance, end of year	$	—			$	6,000

Non-Financial Assets and Liabilities

The Company’s non-financial instruments, which primarily consist of goodwill and property and equipment, are not required to be measured at fair value on a recurring basis and are reported at carrying value. However, on a periodic basis whenever events or changes in circumstances indicate that their carrying value may not be fully recoverable (and at least annually for goodwill), non-financial instruments are assessed for impairment and, if applicable, written-down to and recorded at fair value, considering market participant assumptions.

The Company incurred impairment charges of $35,544 in fiscal 2014 and $16,624 in fiscal 2013, to reduce the carrying amount of certain store assets (primarily leasehold improvements at selected retail store locations) to their fair values of $6,876 as of June 28, 2014 and $4,310 as of June 29, 2013. The fair values of these assets were determined based on Level 3 measurements. Inputs to these fair value measurements included estimates of the amount and the timing of the stores' net future discounted cash flows based on historical experience, current trends, and market conditions.

11. DEBT

Revolving Credit Facilities

On June 18, 2012, the Company established a $400,000 revolving credit facility with certain lenders and JP Morgan Chase Bank, N.A. as the primary lender and administrative agent (the “JP Morgan facility”) with a maturity date of June 2017. On March 26, 2013, the Company amended the JP Morgan facility to expand available aggregate revolving commitments to $700,000 and to extend the maturity date to March 2018. The JP Morgan facility is available to finance the seasonal working capital requirements and general corporate purposes of the Company and its subsidiaries. At Coach’s request and lenders’ consent, revolving commitments of the JP Morgan facility may be increased to $1,000,000. As of June 28, 2014 and June 29, 2013, there was $140,000 and $0, respectively, of outstanding borrowings on the JP Morgan facility. Due to the short-term nature of this borrowing, the fair value approximates carrying value.

COACH, INC.

Notes to Consolidated Financial Statements (Continued)

(dollars and shares in thousands, except per share data)

Borrowings under the JP Morgan Facility bear interest at a rate per annum equal to, at Coach’s option, either (a) a rate based on the rates applicable for deposits in the interbank market for U.S. dollars or the applicable currency in which the loans are made plus an applicable margin or (b) an alternate base rate (which is a rate equal to the greatest of (1) the Prime Rate in effect on such day, (2) the Federal Funds Effective Rate in effect on such day plus ½ of 1% or (3) the Adjusted LIBO Rate for a one month Interest Period on such day plus 1%). Additionally, Coach pays a commitment fee on the average daily unused amount of the JP Morgan Facility. At June 28, 2014, the commitment fee was 9 basis points.

Coach Japan maintains credit facilities with several Japanese financial institutions to provide funding for working capital and general corporate purposes, with total maximum borrowing capacity of 5.3 billion yen, or approximately $52,300 at June 28, 2014. Interest is based on the Tokyo Interbank rate plus a margin of 25 to 30 basis points. At June 28, 2014 and during fiscal 2014, there were no outstanding borrowings under these facilities.

Coach Shanghai Limited maintains a credit facility to provide funding for working capital and general corporate purposes, with a maximum borrowing capacity of 63.0 million Chinese renminbi, or approximately $10,100 at June 28, 2014. Interest is based on the People's Bank of China rate. At June 28, 2014 and during fiscal 2014, there were no outstanding borrowings under this facility.

Both the Coach Japan and Coach Shanghai Limited credit facilities can be terminated at any time by either party, and there is no guarantee that they will be available to the Company in future periods.

12. COMMITMENTS AND CONTINGENCIES

As of June 28, 2014, the Company's equity method investment related to an equity interest in an entity formed during fiscal 2013 for the purpose of developing a new office tower in Manhattan, the Hudson Yards joint venture, with the Company owning less than 43% of the joint venture. This investment is included in the Company’s long-term investments.

The formation of the Hudson Yards joint venture serves as a financing vehicle for the project. Construction of the new building has commenced and upon completion of the office tower in fiscal 2016, the Company will retain a condominium interest serving as its new corporate headquarters. During fiscal 2014, the Company invested $87,233 in the joint venture. Since the formation of the Hudson Yards joint venture, the Company has invested $181,163. The Company expects to invest approximately $350,000 over the next two years, with approximately $240,000 estimated in fiscal 2015, depending on construction progress. Outside of the joint venture, Coach is directly investing in a portion of the design and build-out of the new corporate headquarters. In fiscal 2014, $2,082 was included in capital expenditures and we expect approximately another $188,000 over the period of construction.

The Hudson Yards joint venture is determined to be a VIE primarily due to the fact that it has insufficient equity to finance its activities without additional subordinated financial support from its two joint venture partners. Coach is not considered the primary beneficiary of the entity primarily because the Company does not have the power to direct the activities that most significantly impact the entity’s economic performance. The Company’s maximum loss exposure is limited to the committed capital.

At June 28, 2014 and June 29, 2013, the Company had standby letters of credit totaling $5,558 and $14,885 outstanding. The letters of credit, which expire at various dates through 2015, primarily collateralize the Company’s obligation to third parties for insurance claims and value-added tax refunds. Coach pays certain fees with respect to letters of credit that are issued.

The Company had other contractual cash obligations as of June 28, 2014, including $533,504 related to inventory purchase obligations, $15,900 related to capital expenditure purchase obligations, and $9,100 of other purchase obligations. Refer to Note 8, "Leases," for a summary of the Company's future minimum rental payments under noncancelable leases.

In the ordinary course of business, Coach is a party to several pending legal proceedings and claims. Although the outcome of such items cannot be determined with certainty, Coach's general counsel and management are of the opinion that the final outcome will not have a material effect on Coach's cash flow, results of operations or financial position.

COACH, INC.

Notes to Consolidated Financial Statements (Continued)

(dollars and shares in thousands, except per share data)

13. GOODWILL AND OTHER INTANGIBLE ASSETS

The change in the carrying amount of the Company’s goodwill, all of which is included within the International reportable segment, is as follows:

	Total
Balance at June 30, 2012	$	376,035
Acquisition of Singapore and Taiwan retail businesses	31,645
Foreign exchange impact	(62,641		)
Balance at June 29, 2013	345,039
Acquisition of Europe retail business	14,812
Foreign exchange impact	1,556
Balance at June 28, 2014	$	361,407

At June 28, 2014 and June 29, 2013, the Company’s intangible assets, which are not subject to amortization, consisted of $9,788 of trademarks.

14. INCOME TAXES

The provisions for income taxes computed by applying the U.S. statutory rate to income before taxes as reconciled to the actual provisions were:

	Fiscal Year Ended
	June 28, 2014							June 29, 2013							June 30, 2012
	Amount				Percentage			Amount				Percentage			Amount				Percentage
Income before provision for income taxes:
United States	$	818,610			72.9	%		$	1,116,819			73.4	%		$	1,152,576			76.5	%
Foreign	303,645				27.1			403,707				26.6			353,087				23.5
Total income before provision for income taxes:	$	1,122,255			100.0	%		$	1,520,526			100.0	%		$	1,505,663			100.0	%
Tax expense at U.S. statutory rate	$	392,789			35.0	%		$	532,184			35.0	%		$	526,979			35.0	%
State taxes, net of federal benefit	34,581				3.1			51,036				3.4			46,233				3.1
Effects of foreign operations	(93,125		)		(8.3	)		(119,218		)		(7.9	)		(120,642		)		(8.1	)
Tax benefit related to agreements with tax authorities	—				—			(3,546		)		(0.2	)		(11,553		)		(0.7	)
Other, net	6,674				0.6			25,650				1.7			25,736				1.7
Taxes at effective worldwide rates	$	340,919			30.4	%		$	486,106			32.0	%		$	466,753			31.0	%

Current and deferred tax provision (benefit) was:

	Fiscal Year Ended
	June 28, 2014								June 29, 2013								June 30, 2012
	Current				Deferred				Current				Deferred				Current				Deferred
Federal	$	283,391			$	(6,759	)		$	411,646			$	(11,596	)		$	398,494			$	9,676
Foreign	19,953				(5,745		)		12,944				4,146				(13,685		)		16,623
State	60,362				(10,283		)		68,036				930				54,108				1,537
Total current and deferred tax provision (benefit)	$	363,706			$	(22,787	)		$	492,626			$	(6,520	)		$	438,917			$	27,836

COACH, INC.

Notes to Consolidated Financial Statements (Continued)

(dollars and shares in thousands, except per share data)

The components of deferred tax assets and liabilities were:

	June 28, 2014				June 29, 2013
Share-based compensation	$	66,793			$	66,590
Reserves not deductible until paid	97,917				49,531
Employee benefits	39,465				62,628
Net operating loss	23,197				25,413
Other	9,716				(1,037		)
Prepaid expenses	$	506			$	2,234
Property and equipment	18,505				(1,996		)
Gross deferred tax assets	$	256,099			$	203,363
Goodwill	91,411				73,726
Other	217				323
Gross deferred tax liabilities	91,628				74,049
Net deferred tax assets	$	164,471			$	129,314
Consolidated Balance Sheets Classification
Deferred income taxes – current asset	$	112,630			$	111,118
Deferred income taxes – noncurrent asset	111,556				84,845
Deferred income taxes – current liability	—				(14,424		)
Deferred income taxes – noncurrent liability (included within "Other Liabilities")	(59,715		)		(52,225		)
Net deferred tax asset	$	164,471			$	129,314

Significant judgment is required in determining the worldwide provision for income taxes, and there are many transactions for which the ultimate tax outcome is uncertain. It is the Company’s policy to establish provisions for taxes that may become payable in future years, including those due to an examination by tax authorities. The Company establishes the provisions based upon management’s assessment of exposure associated with uncertain tax positions. The provisions are analyzed at least quarterly and adjusted as appropriate based on new information or circumstances.

A reconciliation of the beginning and ending gross amount of unrecognized tax benefits is as follows:

	June 28, 2014				June 29, 2013				June 30, 2012
Balance at beginning of fiscal year	$	148,810			$	155,599			$	162,060
Gross increase due to tax positions related to prior periods	14,673				5,335				1,271
Gross decrease due to tax positions related to prior periods	(3,317		)		(6,404		)		(7,264		)
Gross increase due to tax positions related to current period	28,684				33,637				28,151
Gross decrease due to tax positions related to current period	—				—				—
Decrease due to lapse of statutes of limitations	(17,309		)		(29,075		)		(15,187		)
Decrease due to settlements with taxing authorities	(848		)		(10,282		)		(13,432		)
Balance at end of fiscal year	$	170,693			$	148,810			$	155,599

Of the $170,693 ending gross unrecognized tax benefit balance as of June 28, 2014, $113,007 relates to items which, if recognized, would impact the effective tax rate. Of the $148,810 ending gross unrecognized tax benefit balance as of June 29, 2013, $89,360 relates to items which, if recognized, would impact the effective tax rate. As of June 28, 2014 and June 29, 2013, gross interest and penalties payable was $17,991 and $17,301, respectively, which are included in other liabilities. The Company

COACH, INC.

Notes to Consolidated Financial Statements (Continued)

(dollars and shares in thousands, except per share data)

recognized gross interest and penalty expense of $767 in fiscal 2014, and gross interest and penalty income of $7,037 and $10,920 in fiscal 2013 and fiscal 2012, respectively.

The Company files income tax returns in the U.S. federal jurisdiction, as well as various state and foreign jurisdictions. Tax examinations are currently in progress in select foreign and state jurisdictions that are extending the years open under the statutes of limitation. Fiscal years 2011 to present are open to examination in the U.S. federal jurisdiction, fiscal 2007 to present in select state jurisdictions and fiscal 2005 to present in select foreign jurisdictions. The Company anticipates that one or more of these audits may be finalized in the foreseeable future. However, based on the status of these examinations, and the average time typically incurred in finalizing audits with the relevant tax authorities, we cannot reasonably estimate the impact these audits may have in the next 12 months, if any, to previously recorded uncertain tax positions. We accrue for certain known and reasonably anticipated income tax obligations after assessing the likely outcome based on the weight of available evidence. Although we believe that the estimates and assumptions we have used are reasonable and legally supportable, the final determination of tax audits could be different than that which is reflected in historical income tax provisions and recorded assets and liabilities. With respect to all jurisdictions, we believe we have made adequate provision for all income tax uncertainties.

For the years ended June 28, 2014 and June 29, 2013, the Company had net operating loss carryforwards in foreign tax jurisdictions of $526,681 and $340,893, the majority of which can be carried forward indefinitely. The deferred tax assets related to the carryforwards have been reflected net of $131,788 and $79,599 valuation allowances at June 28, 2014 and June 29, 2013, respectively. The Company’s valuation allowance increased by $52,189 in fiscal 2014 and $26,096 in fiscal 2013, primarily as the result of actual or anticipated results in the foreign jurisdictions.

The total amount of undistributed earnings of foreign subsidiaries as of June 28, 2014 and June 29, 2013, was $2,033,869 and $1,601,637, respectively. It is the Company’s intention to permanently reinvest undistributed earnings of its foreign subsidiaries and thereby indefinitely postpone their remittance. Accordingly, no provision has been made for foreign withholding taxes or United States income taxes which may become payable if undistributed earnings of foreign subsidiaries are paid as dividends. Determination of the amount of unrecognized deferred income tax liabilities on these earnings is not practicable because such liability, if any, is subject to many variables and is dependent on circumstances existing if and when remittance occurs.

15. DEFINED CONTRIBUTION PLAN

Coach maintains the Coach, Inc. Savings and Profit Sharing Plan, which is a defined contribution plan. Employees who meet certain eligibility requirements and are not part of a collective bargaining agreement may participate in this program. The annual expense incurred by Coach for this defined contribution plan was $7,541, $16,274, and $18,641 in fiscal 2014, fiscal 2013 and fiscal 2012, respectively.

16. SEGMENT INFORMATION

In fiscal 2014, the Company’s operations reflect five operating segments aggregated into two reportable segments:

•	North America, which includes sales to North American consumers through Company-operated stores, including the Internet, and sales to wholesale customers.

•

International, which includes sales to consumers through Coach-operated stores (including the Internet) and concession shop-in-shops in Japan and mainland China, Coach-operated stores and concession shop-in-shops in Hong Kong, Macau, Singapore, Taiwan, Malaysia, South Korea, the United Kingdom, France, Ireland, Spain, Portugal, Germany and Italy, as well as sales to wholesale customers and distributors in approximately 35 countries.

In deciding how to allocate resources and assess performance, Coach's chief operating decision maker regularly evaluates the sales and operating income of these segments. Operating income is the gross margin of the segment less direct expenses of the segment. Unallocated corporate expenses include inventory-related costs (such as production variances), advertising, marketing, design, administration and information systems, as well as distribution and consumer service expenses. Additionally, costs incurred by the Company as described in Note 3, "Transformation, Restructuring and Other Related Actions," are also included as unallocated corporate expenses.

COACH, INC.

Notes to Consolidated Financial Statements (Continued)

(dollars and shares in thousands, except per share data)

	North America				International(1)				Other(1)(2)				Corporate Unallocated				Total
Fiscal 2014
Net sales	$	3,100,482			$	1,644,163			$	61,581			$	—			$	4,806,226
Gross profit	1,992,693				1,295,253				36,893				(27,876		)		3,296,963
Operating income (loss)	1,164,088				555,714				34,147				(633,875		)		1,120,074
Income (loss) before provision for income taxes	1,164,088				555,714				34,147				(631,694		)		1,122,255
Depreciation and amortization expense	72,883				58,837				—				57,640				189,360
Total assets	432,566				1,128,509				5,663				2,096,393				3,663,131
Additions to long-lived assets	102,225				71,514				—				45,848				219,587

	North America				International(1)				Other(1)(2)				Corporate Unallocated				Total
Fiscal 2013
Net sales	$	3,478,198			$	1,558,104			$	39,088			$	—			$	5,075,390
Gross profit	2,345,826				1,255,220				32,390				64,712				3,698,148
Operating income (loss)	1,459,974				582,202				30,065				(547,700		)		1,524,541
Income (loss) before provision for income taxes	1,459,974				582,202				30,065				(551,715		)		1,520,526
Depreciation and amortization expense	72,279				45,693				—				45,015				162,987
Total assets	459,835				894,785				34,788				2,142,489				3,531,897
Additions to long-lived assets	98,645				60,932				—				81,776				241,353

	North America				International(1)				Other(1)(2)				Corporate Unallocated				Total
Fiscal 2012
Net sales	$	3,316,895			$	1,413,021			$	33,264			$	—			$	4,763,180
Gross profit	2,263,140				1,139,103				28,572				35,263				3,466,078
Operating income (loss)	1,447,964				557,715				26,526				(520,216		)		1,511,989
Income (loss) before provision for income taxes	1,447,964				557,715				26,526				(526,542		)		1,505,663
Depreciation and amortization expense	63,800				38,361				—				30,748				132,909
Total assets	441,826				985,098				32,379				1,645,018				3,104,321
Additions to long-lived assets	75,093				53,418				—				69,776				198,287

(1)

As a result of the acquisition of the European joint venture (as discussed in Note 7), certain amounts have been reclassed from Other to International to conform to the 2014 presentation of the European results. For fiscal 2013, amounts reclassified are net sales of $17,411, gross profit of $8,368, operating income of $8,013 and income before provision for income taxes of $8,013. For fiscal 2012, amounts reclassified are net sales of $11,232, gross profit of $5,276, operating income of $3,880, and income before provision for income taxes of $3,880.

(2) Other, which is not a reportable segment, consists of sales generated in ancillary channels including licensing and disposition.

COACH, INC.

Notes to Consolidated Financial Statements (Continued)

(dollars and shares in thousands, except per share data)

Coach's product offerings include modern luxury accessories and lifestyle collections, including women's and men's bags, women’s and men’s small leather goods, business cases, footwear, wearables including outerwear, watches, weekend and travel accessories, scarves, sunwear, fragrance, jewelry, travel bags and other lifestyle products. The following table shows net sales for each product category represented:

	Fiscal Year Ended
	June 28, 2014				% of Total			June 29, 2013				% of Total			June 30, 2012				% of Total
Women's Handbags	$	2,642,402			55	%		$	2,923,124			58	%		$	2,886,270			61	%
Women's Accessories	1,046,265				22			1,195,622				23			1,169,858				24
Men's	691,764				14			599,531				12			423,524				9
All Other Products	425,795				9			357,113				7			283,528				6
Total Sales	$	4,806,226			100	%		$	5,075,390			100	%		$	4,763,180			100	%

The following is a summary of the all costs not allocated in the determination of segment operating income performance:

	Fiscal Year Ended
	June 28, 2014				June 29, 2013				June 30, 2012
Inventory-related costs(1)	$	(27,875	)		$	64,712			$	35,262
Advertising, marketing and design	(238,064		)		(236,713		)		(217,167		)
Administration and information systems(2)	(283,918		)		(292,985		)		(272,556		)
Distribution and customer service	(84,018		)		(82,714		)		(65,755		)
Total corporate unallocated	$	(633,875	)		$	(547,700	)		$	(520,216	)

(1) Inventory-related costs consist of production variances and transformation-related costs. In fiscal 2014, 2013 and 2012 production variances were $54,317, $69,512 and $35,262, respectively. In fiscal 2014 and fiscal 2013, transformation and other-related costs were ($82,192) and ($4,800), respectively. There were no transformation and/or other-related charges in fiscal 2012.

(2)	Includes ($49,315) in fiscal 2014 and ($48,402) in fiscal 2013 related to transformation and other-related charges and ($39,209) related to charitable contributions in fiscal 2012.

Geographic Area Information

As of June 28, 2014, Coach operated 303 retail stores and 199 outlet stores in the United States, 29 retail stores and eight outlet stores in Canada, 198 concession shop-in-shops within department stores, retail stores and outlet stores in Japan, 250 concession shop-in-shops within department stores, retail stores and outlet stores in Hong Kong, Macau, mainland China, Singapore, Taiwan, Malaysia and South Korea, and 27 concession shop-in-shops within department stores, retail stores and outlet stores in Europe. Coach also operates distribution, product development and quality control locations in the United States, Hong Kong, China, South Korea, Vietnam, Philippines and India. Geographic revenue information is based on the location of our customer. Geographic long-lived asset information is based on the physical location of the assets at the end of each fiscal year and includes property and equipment, net and other assets.

COACH, INC.

Notes to Consolidated Financial Statements (Continued)

(dollars and shares in thousands, except per share data)

	United States				Japan				Other International(1)				Total
Fiscal 2014
Net sales	$	2,968,599			$	654,653			$	1,182,974			$	4,806,226
Long-lived assets	594,731				70,436				175,478				840,645
Fiscal 2013
Net sales	$	3,334,479			$	760,941			$	979,970			$	5,075,390
Long-lived assets	638,758				73,041				112,139				823,938
Fiscal 2012
Net sales	$	3,243,710			$	844,863			$	674,607			$	4,763,180
Long-lived assets	631,979				74,324				108,334				814,637

(1)	Other International sales reflect shipments to third-party distributors, primarily in East Asia, and sales from Coach-operated stores and concession shop-in-shops in Hong Kong, Macau, mainland China, Singapore, Taiwan, Malaysia, South Korea, Europe and Canada.

17. EARNINGS PER SHARE

The following is a reconciliation of the weighted-average shares outstanding and calculation of basic and diluted earnings per share:

	Fiscal Year Ended
	June 28, 2014				June 29, 2013				June 30, 2012
Net income	$	781,336			$	1,034,420			$	1,038,910
Total weighted-average basic shares	277,790				282,494				288,284
Dilutive securities:
Share-based award plans	987				1,450				1,694
Stock option programs	1,602				2,363				4,151
Total weighted-average diluted shares	280,379				286,307				294,129
Net income per share:
Basic	$	2.81			$	3.66			$	3.60
Diluted	$	2.79			$	3.61			$	3.53

At June 28, 2014, options to purchase 6,378 shares of common stock were outstanding but not included in the computation of diluted earnings per share, as these options’ exercise prices, ranging from $43.39 to $78.46, were greater than the average market price of the common shares.

At June 29, 2013, options to purchase 2,145 shares of common stock were outstanding but not included in the computation of diluted earnings per share, as these options’ exercise prices, ranging from $56.95 to $78.46, were greater than the average market price of the common shares.

At June 30, 2012, options to purchase 116 shares of common stock were outstanding but not included in the computation of diluted earnings per share, as these options’ exercise prices, ranging from $72.06 to $78.46, were greater than the average market price of the common shares.

COACH, INC.

Notes to Consolidated Financial Statements (Continued)

(dollars and shares in thousands, except per share data)

18. STOCK REPURCHASE PROGRAM

Purchases of Coach’s common stock are made from time to time, subject to market conditions and at prevailing market prices, through open market purchases. Under Maryland law, Coach’s state of incorporation, treasury shares are not allowed. As a result, all repurchased shares are retired when acquired. The Company may terminate or limit the stock repurchase program at any time.

During fiscal 2014, fiscal 2013, and fiscal 2012, the Company repurchased and retired 10,239, 7,066 and 10,688 shares, respectively, or $524,926, $400,000, and $700,000 of common stock, respectively, at an average cost of $51.27, $56.61 and $65.49 per share, respectively. As of June 28, 2014, Coach had $836,701 remaining in the stock repurchase program.

19. SUPPLEMENTAL BALANCE SHEET INFORMATION

The components of certain balance sheet accounts are as follows:

	June 28, 2014				June 29, 2013
Property and equipment
Land and building	$	168,550			$	168,550
Machinery and equipment	34,746				33,172
Furniture and fixtures	544,580				564,574
Leasehold improvements	648,592				632,550
Construction in progress	85,150				67,665
Less: accumulated depreciation	(767,718		)		(771,740		)
Total property and equipment, net	$	713,900			$	694,771
Accrued liabilities
Payroll and employee benefits	$	137,752			$	193,112
Accrued rent	50,946				39,984
Dividends payable	92,582				94,998
Operating expenses	237,483				215,059
Total accrued liabilities	$	518,763			$	543,153
Other liabilities
Deferred lease obligation	$	135,154			$	117,502
Gross unrecognized tax benefit	170,693				148,810
Deferred tax liabilities	59,715				52,225
Other	63,798				81,207
Total other liabilities	$	429,360			$	399,744

COACH, INC.

Schedule II — Valuation and Qualifying Accounts

For the Fiscal Years Ended June 28, 2014, June 29, 2013 and June 30, 2012

(amounts in thousands)

	Balance at Beginning of Year				Provision Charged to Costs and Expenses				Write-offs/ Allowances Taken				Balance at End of Year
Fiscal 2014
Allowance for bad debts	$	1,138			$	1,649			$	(1,368	)		$	1,419
Allowance for returns	7,023				744				(4,902		)		2,865
Allowance for markdowns	8,324				37,997				(34,714		)		11,607
Valuation allowance	79,599				52,189				—				131,788
Total	$	96,084			$	92,579			$	(40,984	)		$	147,679
Fiscal 2013
Allowance for bad debts	$	3,318			$	(529	)		$	(1,651	)		$	1,138
Allowance for returns	2,810				8,644				(4,431		)		7,023
Allowance for markdowns	3,685				22,484				(17,845		)		8,324
Valuation allowance	53,503				29,252				(3,156		)		79,599
Total	$	63,316			$	59,851			$	(27,083	)		96,084
Fiscal 2012
Allowance for bad debts	$	3,431			$	(117	)		$	4			$	3,318
Allowance for returns	2,196				1,752				(1,138		)		2,810
Allowance for markdowns	3,917				10,267				(10,499		)		3,685
Valuation allowance	21,800				31,703				—				53,503
Total	$	31,344			$	43,605			$	(11,633	)		$	63,316

COACH, INC.

Quarterly Financial Data

(dollars and shares in thousands, except per share data)

(unaudited)

	First Quarter				Second Quarter				Third Quarter				Fourth Quarter
Fiscal 2014(1)
Net sales	$	1,150,760			$	1,419,624			$	1,099,626			$	1,136,216
Gross profit	826,573				982,679				781,339				706,372
Net income	217,883				297,438				190,740				75,275
Net income per common share:
Basic	0.77				1.07				0.69				0.27
Diluted	0.77				1.06				0.68				0.27
Fiscal 2013(1)
Net sales	$	1,161,350			$	1,503,774			$	1,187,578			$	1,222,688
Gross profit	845,168				1,085,382				880,188				887,410
Net income	221,381				352,764				238,932				221,343
Net income per common share:
Basic	0.78				1.25				0.85				0.79
Diluted	0.77				1.23				0.84				0.78
Fiscal 2012(1)
Net sales	$	1,050,359			$	1,448,649			$	1,108,981			$	1,155,191
Gross profit	764,653				1,045,211				818,067				838,147
Net income	214,983				347,495				225,002				251,430
Net income per common share:
Basic	0.74				1.20				0.78				0.88
Diluted	0.73				1.18				0.77				0.86

(1)	The sum of the quarterly earnings per share may not equal the full-year amount, as the computations of the weighted-average number of common basic and diluted shares outstanding for each quarter and the full year are performed independently.

EXHIBITS TO FORM 10-K

(a)	Exhibit Table (numbered in accordance with Item 601 of Regulation S-K)

Exhibit		Description
3.1		Amended and Restated Bylaws of Coach, Inc., dated February 7, 2008, which is incorporated herein by reference from Exhibit 3.1 to Coach’s Current Report on Form 8-K filed on February 13, 2008
3.2		Articles Supplementary of Coach, Inc., dated May 3, 2001, which is incorporated herein by reference from Exhibit 3.2 to Coach’s Current Report on Form 8-K filed on May 9, 2001
3.3		Articles of Amendment of Coach, Inc., dated May 3, 2001, which is incorporated herein by reference from Exhibit 3.3 to Coach’s Current Report on Form 8-K filed on May 9, 2001
3.4		Articles of Amendment of Coach, Inc., dated May 3, 2002, which is incorporated by reference from Exhibit 3.4 to Coach’s Annual Report on Form 10-K for the fiscal year ended June 29, 2002
3.5		Articles of Amendment of Coach, Inc., dated February 1, 2005, which is incorporated by reference from Exhibit 99.1 to Coach’s Current Report on Form 8-K filed on February 2, 2005
4.1		Specimen Certificate for Common Stock of Coach, which is incorporated herein by reference from Exhibit 4.1 to Coach's Registration Statement on Form S-1 (Registration No. 333-39502)
4.2		Deposit Agreement, dated November 24, 2011, between Coach, Inc. and JPMorgan Chase Bank, N.A., as depositary, which is incorporated by reference from Exhibit 4.1 to Coach’s Current Report on Form 8-K filed on November 25, 2011
4.3		Deed Poll, dated November 24, 2011, executed by Coach, Inc. and JPMorgan Chase Bank, N.A., as depositary, pursuant to the deposit agreement in favor of and in relation to the rights of the holders of the depositary receipts, which is incorporated by reference from Exhibit 4.1 to Coach’s Current Report on Form 8-K filed on November 25, 2011
10.1		Revolving Credit Agreement, dated as of June 18, 2012, by and between Coach, certain lenders and JPMorgan Chase Bank, N.A., as administrative agent, which is incorporated by reference from Exhibit 10.2 to Coach’s Annual Report on Form 10-K for the fiscal year ended June 30, 2012
10.2		Amendment No. 1 to the Revolving Credit Agreement, dated as of March 26, 2013, by and between Coach, certain lenders and JPMorgan Chase Bank N.A., as administrative agent, which is incorporated by reference from Exhibit 10.2 to Coach’s Quarterly Report on Form 10-Q for the period ended March 30, 2013
10.3~		Limited Liability Company Agreement, dated April 10, 2013, by and between Coach Legacy Yards LLC, an affiliate of Coach, and Podium Fund Tower C SPV LLC, which is incorporated herein by reference from Exhibit 10.3 to Coach’s Annual Report on Form 10-K for the fiscal year ended June 29, 2013
10.4~		Development Agreement, dated April 10, 2013, by and between Coach Legacy Yards LLC, an affiliate of Coach, and ERY Developer LLC, which is incorporated herein by reference from Exhibit 10.4 to Coach’s Annual Report on Form 10-K for the fiscal year ended June 29, 2013
10.5		Guaranty Agreement, dated April 10, 2013, by Coach, Inc., to and for the benefit of ERY Developer LLC and Podium Fund Tower C SPV LLC, which is incorporated herein by reference from Exhibit 10.5 to Coach’s Annual Report on Form 10-K for the fiscal year ended June 29, 2013
10.6		Purchase and Sale Agreement, dated April 10, 2013, by and between 504-514 West 34th Street Corp. and 516 West 34th Street LLC, both subsidiaries of Coach, and ERY 34th Street Acquisition LLC, which is incorporated herein by reference from Exhibit 10.6 to Coach’s Annual Report on Form 10-K for the fiscal year ended June 29, 2013
10.7		Coach, Inc. 2000 Stock Incentive Plan, which is incorporated by reference from Exhibit 10.10 to Coach’s Annual Report on Form 10-K for the fiscal year ended June 28, 2003
10.8		Coach, Inc. Performance-Based Annual Incentive Plan, which is incorporated by reference from Appendix A to the Registrant’s Definitive Proxy Statement for the 2008 Annual Meeting of Stockholders, filed on September 19, 2008
10.9		Coach, Inc. 2000 Non-Employee Director Stock Plan, which is incorporated by reference from Exhibit 10.13 to Coach’s Annual Report on Form 10-K for the fiscal year ended June 28, 2003
10.10		Coach, Inc. Non-Qualified Deferred Compensation Plan for Outside Directors, which is incorporated by reference from Exhibit 10.14 to Coach’s Annual Report on Form 10-K for the fiscal year ended June 28, 2003
10.11		Coach, Inc. 2001 Employee Stock Purchase Plan, which is incorporated by reference from Exhibit 10.15 to Coach’s Annual Report on Form 10-K for the fiscal year ended June 29, 2002
10.12		Coach, Inc. 2004 Stock Incentive Plan, which is incorporated by reference from Appendix A to the Registrant’s Definitive Proxy Statement for the 2004 Annual Meeting of Stockholders, filed on September 29, 2004

Exhibit		Description
10.13		Employment Agreement dated June 1, 2003 between Coach and Lew Frankfort, which is incorporated by reference from Exhibit 10.20 to Coach’s Annual Report on Form 10-K for the fiscal year ended June 28, 2003
10.14		Employment Agreement dated June 1, 2003 between Coach and Reed Krakoff, which is incorporated by reference from Exhibit 10.21 to Coach’s Annual Report on Form 10-K for the fiscal year ended June 28, 2003
10.15		Branding Agreement dated August 5, 2010 between Coach and Reed Krakoff, which is incorporated by reference from Exhibit 10.10 to Coach’s Annual Report on Form 10-K for the fiscal year ended July 3, 2010
10.16		Amendment to Employment Agreement, dated August 22, 2005, between Coach and Lew Frankfort, which is incorporated by reference from Exhibit 10.23 to Coach’s Annual Report on Form 10-K for the fiscal year ended July 2, 2005
10.17		Amendment to Employment Agreement, dated August 22, 2005, between Coach and Reed Krakoff, which is incorporated by reference from Exhibit 10.23 to Coach’s Annual Report on Form 10-K for the fiscal year ended July 2, 2005
10.18		Performance Restricted Stock Unit Award Grant Notice and Agreement, dated August 6, 2009, between Coach and Lew Frankfort, which is incorporated by reference from Exhibit 10.13 to Coach’s Annual Report on Form 10-K for the fiscal year ended July 3, 2010
10.19		Employment Agreement dated November 8, 2005 between Coach and Michael Tucci, which is incorporated by reference from Exhibit 10.1 to Coach’s Quarterly Report on Form 10-Q for the period ended December 31, 2005
10.20		Amendment to Employment Agreement, dated March 11, 2008, between Coach and Reed Krakoff, which is incorporated herein by reference from Exhibit 10.16 to Coach’s Annual Report on Form 10-K for the fiscal year ended June 28, 2008
10.21		Amendment to Employment Agreement, dated August 5, 2008, between Coach and Michael Tucci, which is incorporated herein by reference from Exhibit 10.16 to Coach’s Annual Report on Form 10-K for the fiscal year ended June 28, 2008
10.22		Performance Restricted Stock Unit Award Grant Notice and Agreement, dated August 5, 2010, between Coach and Jerry Stritzke, which is incorporated herein by reference from Exhibit 10.19 to Coach’s Annual Report on Form 10-K for the fiscal year ended July 3, 2010
10.23		Coach, Inc. 2010 Stock Incentive Plan, which is incorporated by reference from Appendix A to the Registrant’s Definitive Proxy Statement for the 2010 Annual Meeting of Stockholders, filed on September 24, 2010
10.24		Amendment to Employment Agreement, dated May 7, 2012, between Coach and Lew Frankfort, which is incorporated herein by reference from Exhibit 10.1 to Coach’s Current Report on Form 8-K filed on May 8, 2012
10.25		Amendment to Employment Agreement, dated May 7, 2012, between Coach and Reed Krakoff, which is incorporated herein by reference from Exhibit 10.2 to Coach’s Current Report on Form 8-K filed on May 8, 2012
10.26		Amendment to Employment Agreement, dated May 7, 2012, between Coach and Michael Tucci, which is incorporated herein by reference from Exhibit 10.3 to Coach’s Current Report on Form 8-K filed on May 8, 2012
10.27		Performance Restricted Stock Unit Award Grant Notice and Agreement, dated August 4, 2011, between Coach and Michael Tucci, which is incorporated herein by reference from Exhibit 10.1 to Coach’s Quarterly Report on Form 10-Q for the fiscal period ended October 1, 2011
10.28		Employment Offer Letter, dated July 19, 2011, between Coach and Jane Nielsen, which is incorporated herein by reference from Exhibit 10.2 to Coach’s Quarterly Report on Form 10-Q for the fiscal period ended October 1, 2011
10.29		Letter Agreement, dated February 13, 2013, between Coach and Victor Luis, which is incorporated herein by reference from Exhibit 10.29 to Coach’s Annual Report on Form 10-K for the fiscal year ended June 29, 2013
10.30		Amendment to Employment Agreement, dated May 3, 2013, between Coach and Michael Tucci, which is incorporated herein by reference from Exhibit 10.30 to Coach’s Annual Report on Form 10-K for the fiscal year ended June 29, 2013
10.31		Letter Agreement, dated July 10, 2013, between Coach and Reed Krakoff, which is incorporated by reference from Exhibit 10.1 to Coach’s Current Report on Form 8-K filed on July 10, 2013
10.32		Sponsor Agreement, dated November 24, 2011, between Coach, Inc. and J.P. Morgan Securities (Asia Pacific) Limited, as sponsor, which is incorporated herein by reference from Exhibit 4.1 to Coach’s Current Report on Form 8-K filed on November 25, 2011
10.33		Coach, Inc. 2013 Performance-Based Annual Incentive Plan, which is incorporated herein by reference from Appendix B to the Registrant’s Definitive Proxy Statement for the 2013 Annual Meeting of Stockholders, filed on September 27, 2013

Exhibit		Description
10.34		Asset Purchase and Sale Agreement, dated as of July 29, 2013, by and among Reed Krakoff Investments LLC, Reed Krakoff and Coach, Inc., which is incorporated herein by reference from Exhibit 10.1 to Coach’s Quarterly Report on Form 10-Q for the fiscal period ended September 28, 2013
10.35		Resignation Letter, dated as of July 29, 2013, by and between Reed Krakoff and Coach, Inc., which is incorporated herein by reference from Exhibit 10.3 to Coach’s Quarterly Report on Form 10-Q for the fiscal period ended September 28, 2013
10.36		Amendment to Employment Agreement, dated December 23, 2013, between Coach and Lew Frankfort, which is incorporated by reference from Exhibit 10.1 to Coach’s Current Report on Form 8-K filed on December 23, 2013
10.37		Amendment No. 2 to the Revolving Credit Agreement, dated as of November 27, 2013, by and between Coach, certain lenders and JPMorgan Chase Bank N.A., as administrative agent, which is incorporated herein by reference from Exhibit 10.3 to Coach’s Quarterly Report on Form 10-Q for the fiscal period ended December 28, 2013
10.38		Amendment to Employment Agreement, dated June 30, 2014, between Coach and Lew Frankfort, which is incorporated by reference from Exhibit 10.1 to Coach’s Current Report on Form 8-K filed on July 2, 2014
18		Letter re: change in accounting principle, which is incorporated herein by reference from Exhibit 18 to Coach’s Quarterly Report on Form 10-Q for the period ended October 2, 2010
21.1*		List of Subsidiaries of Coach, Inc,
23.1*		Consent of Deloitte & Touche LLP
31.1*		Rule 13(a)-14(a)/15(d)-14(a) Certifications
32.1*		Section 1350 Certifications
101.INS*		XBRL Instance Document
101.SCH*		XBRL Taxonomy Extension Schema Document
101.CAL*		XBRL Taxonomy Extension Calculation Linkbase
101.LAB*		XBRL Taxonomy Extension Label Linkbase
101.PRE*		XBRL Taxonomy Extension Presentation Linkbase
101.DEF*		XBRL Taxonomy Extension Definition Linkbase

*	Filed herewith

~	The Registrant has requested confidential treatment for certain portions of this Exhibit pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.