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 19, 2016	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 19, 2016.

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/ Jide Zeitlin		Chairman and Director
Jide Zeitlin
/s/ David Denton		Director
David Denton
/s/ Andrea Guerra		Director
Andrea Guerra
/s/ Susan Kropf		Director
Susan Kropf
/s/ Annabelle Yu Long		Director
Annabelle Yu Long
/s/ Ivan Menezes		Director
Ivan Menezes
/s/ William Nuti		Director
William Nuti
/s/ Stephanie Tilenius		Director
Stephanie Tilenius

COACH, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION

	Page Number
Reports of Independent Registered Public Accounting Firm	57
Consolidated Financial Statements:
Consolidated Balance Sheets	59
Consolidated Statements of Income	60
Consolidated Statements of Comprehensive Income	61
Consolidated Statements of Stockholders’ Equity	62
Consolidated Statements of Cash Flows	63
Notes to Consolidated Financial Statements	64
Financial Statement Schedules:
Schedule II — Valuation and Qualifying Accounts	96
Quarterly Financial Data	97

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 July 2, 2016 and June 27, 2015, and the related consolidated statements of income, comprehensive income, stockholders' equity, and cash flows for each of the three years in the period ended July 2, 2016. Our audits also included the financial statement schedule listed in the Index to the Consolidated 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 July 2, 2016 and June 27, 2015, and the results of their operations and their cash flows for each of the three years in the period ended July 2, 2016, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

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 July 2, 2016, based on the criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated August 19, 2016 expressed an unqualified opinion on the Company's internal control over financial reporting.

/s/ DELOITTE & TOUCHE LLP

New York, New York

August 19, 2016

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 July 2, 2016, based on criteria established in Internal Control - Integrated Framework (2013) 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 July 2, 2016, based on the criteria established in Internal Control - Integrated Framework (2013) 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 July 2, 2016 of the Company and our report dated August 19, 2016 expressed an unqualified opinion on those financial statements and financial statement schedule.

/s/ DELOITTE & TOUCHE LLP

New York, New York

August 19, 2016

COACH, INC.

CONSOLIDATED BALANCE SHEETS

	July 2, 2016				June 27, 2015
	(millions)
ASSETS
Current Assets:
Cash and cash equivalents	$	859.0			$	1,291.8
Short-term investments	460.4				234.0
Trade accounts receivable, less allowances of $2.2 and $3.1, respectively	245.2				219.5
Inventories	459.2				485.1
Deferred income taxes	—				98.4
Prepaid expenses	58.0				73.1
Other current assets	91.1				104.6
Total current assets	2,172.9				2,506.5
Property and equipment, net	919.5				732.6
Long-term investments	558.6				406.0
Goodwill	502.4				434.2
Intangible assets	346.8				359.9
Deferred income taxes	248.8				115.8
Other assets	143.7				111.9
Total assets	$	4,892.7			$	4,666.9
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	186.7			$	222.8
Accrued liabilities	625.0				600.6
Current debt	15.0				11.3
Total current liabilities	826.7				834.7
Long-term debt	861.2				879.1
Other liabilities	521.9				463.2
Total liabilities	2,209.8				2,177.0
See Note 11 on commitments and contingencies
Stockholders’ Equity:
Preferred stock: (authorized 25.0 million shares; $0.01 par value) none issued	—				—
Common stock: (authorized 1,000.0 million shares; $0.01 par value) issued and outstanding – 278.5 million and 276.6 million shares, respectively	2.8				2.8
Additional paid-in-capital	2,857.1				2,754.4
Accumulated deficit	(104.1		)		(189.6		)
Accumulated other comprehensive loss	(72.9		)		(77.7		)
Total stockholders’ equity	2,682.9				2,489.9
Total liabilities and stockholders’ equity	$	4,892.7			$	4,666.9

See accompanying Notes.

COACH, INC.

CONSOLIDATED STATEMENTS OF INCOME

	Fiscal Year Ended
	July 2, 2016				June 27, 2015				June 28, 2014
	(millions, except per share data)
Net sales	$	4,491.8			$	4,191.6			$	4,806.2
Cost of sales	1,440.5				1,283.0				1,509.2
Gross profit	3,051.3				2,908.6				3,297.0
Selling, general and administrative expenses	2,397.8				2,290.6				2,176.9
Operating income	653.5				618.0				1,120.1
Interest (expense) income, net	(26.9		)		(6.4		)		2.2
Income before provision for income taxes	626.6				611.6				1,122.3
Provision for income taxes	166.1				209.2				341.0
Net income	$	460.5			$	402.4			$	781.3
Net income per share:
Basic	$	1.66			$	1.46			$	2.81
Diluted	$	1.65			$	1.45			$	2.79
Shares used in computing net income per share:
Basic	277.6				275.7				277.8
Diluted	279.3				277.2				280.4
Cash dividends declared per common share	$	1.350			$	1.350			$	1.350

See accompanying Notes.

COACH, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

	Fiscal Year Ended
	July 2, 2016				June 27, 2015				June 28, 2014
	(millions)
Net Income	$	460.5			$	402.4			$	781.3
Other comprehensive income (loss), net of tax:
Unrealized (losses) gains on cash flow hedging derivatives, net	(13.2		)		3.8				(3.1		)
Unrealized (losses) gains on available-for-sale debt investments, net	(0.2		)		(1.3		)		4.1
Change in pension liability, net	(0.6		)		1.0				0.1
Foreign currency translation adjustments	18.8				(72.5		)		2.4
Other comprehensive income (loss), net of tax	4.8				(69.0		)		3.5
Comprehensive income	$	465.3			$	333.4			$	784.8

See accompanying Notes.

COACH, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

	Shares of Common Stock			Common Stock				Additional Paid-in-Capital				Accumulated Deficit				Accumulated Other Comprehensive Loss				Total Stockholders' Equity
	(millions, except per share data)
Balance at June 29, 2013	281.9			$	2.8			$	2,520.5			$	(101.9	)		$	(12.2	)		$	2,409.2
Net income	—			—				—				781.3				—				781.3
Other comprehensive income	—			—				—				—				3.5				3.5
Shares issued for stock options and employee benefit plans	2.7			—				9.2				—				—				9.2
Share-based compensation	—			—				104.9				—				—				104.9
Excess tax benefit from share-based compensation	—			—				11.5				—				—				11.5
Repurchase and retirement of common stock	(10.2	)		(0.1		)		—				(524.8		)		—				(524.9		)
Dividends declared ($1.350 per share)	—			—				—				(374.1		)		—				(374.1		)
Balance at June 28, 2014	274.4			2.7				2,646.1				(219.5		)		(8.7		)		2,420.6
Net income	—			—				—				402.4				—				402.4
Other comprehensive loss	—			—				—				—				(69.0		)		(69.0		)
Shares issued for stock options and employee benefit plans	2.2			0.1				19.5				—				—				19.6
Share-based compensation	—			—				94.4				—				—				94.4
Excess tax shortfall from share-based compensation	—			—				(5.6		)		—				—				(5.6		)
Dividends declared ($1.350 per share)	—			—				—				(372.5		)		—				(372.5		)
Balance at June 27, 2015	276.6			2.8				2,754.4				(189.6		)		(77.7		)		2,489.9
Net income	—			—				—				460.5				—				460.5
Other comprehensive income	—			—				—				—				4.8				4.8
Shares issued for stock options and employee benefit plans	1.9			—				16.4				—				—				16.4
Share-based compensation	—			—				95.3				—				—				95.3
Excess tax shortfall from share-based compensation	—			—				(9.0		)		—				—				(9.0		)
Dividends declared ($1.350 per share)	—			—				—				(375.0		)		—				(375.0		)
Balance at July 2, 2016	278.5			$	2.8			$	2,857.1			$	(104.1	)		$	(72.9	)		$	2,682.9

See accompanying Notes.

COACH, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Fiscal Year Ended
	July 2, 2016				June 27, 2015				June 28, 2014
	(millions)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	460.5			$	402.4			$	781.3
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	210.6				191.8				189.4
Provision for bad debt	3.7				1.7				1.6
Share-based compensation	86.8				88.9				95.1
Excess tax effect from share-based compensation	9.0				5.6				(11.5		)
Restructuring activities	17.7				59.7				108.2
Deferred income taxes	(52.3		)		21.5				(22.8		)
Other noncash charges, net	(14.7		)		(3.2		)		6.5
Changes in operating assets and liabilities:
Trade accounts receivable	(28.3		)		0.3				(23.7		)
Inventories	40.7				29.2				(64.1		)
Other liabilities	49.5				(5.9		)		5.7
Accounts payable	(48.4		)		64.4				(30.2		)
Accrued liabilities	30.1				63.2				14.1
Other balance sheet changes, net	(6.3		)		17.8				(64.2		)
Net cash provided by operating activities	758.6				937.4				985.4
CASH FLOWS USED IN INVESTING ACTIVITIES
Acquisition of interest in equity method investment	(140.3		)		(139.1		)		(87.2		)
Acquisitions, net of cash acquired	(25.6		)		(519.6		)		(3.8		)
Purchases of property and equipment	(396.4		)		(199.3		)		(219.6		)
Purchases of investments	(664.7		)		(49.6		)		(543.4		)
Proceeds from maturities and sales of investments	425.9				305.2				146.3
Acquisition of lease rights	(8.9		)		(10.5		)		—
Net cash used in investing activities	(810.0		)		(612.9		)		(707.7		)
CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES
Dividend payments	(374.5		)		(371.8		)		(376.5		)
Repurchase of common stock	—				—				(524.9		)
Proceeds from issuance of long-term debt, net of discount	—				896.7				—
Debt issuance costs	—				(6.6		)		—
Repayment of debt	(15.0		)		(0.5		)		(0.5		)
Proceeds from share-based awards	29.1				36.5				48.6
Borrowings under revolving credit facility	—				340.0				450.0
Repayment of revolving credit facility	—				(480.0		)		(310.0		)
Taxes paid to net settle share-based awards	(15.5		)		(15.6		)		(40.3		)
Excess tax effect from share-based compensation	(9.0		)		(5.6		)		11.5
Acquisition-related payment of contingent consideration	—				(3.8		)		(6.0		)
Net cash (used in) provided by financing activities	(384.9		)		389.3				(748.1		)
Effect of exchange rate changes on cash and cash equivalents	3.5				(13.9		)		(0.5		)
(Decrease) Increase in cash and cash equivalents	(432.8		)		699.9				(470.9		)
Cash and cash equivalents at beginning of year	1,291.8				591.9				1,062.8
Cash and cash equivalents at end of year	$	859.0			$	1,291.8			$	591.9
Supplemental information:
Cash paid for income taxes, net	$	158.9			$	180.3			$	384.2
Cash paid for interest	$	33.7			$	1.4			$	1.3
Noncash investing activity – property and equipment obligations	$	48.0			$	59.5			$	28.7

See accompanying Notes.

COACH, INC.

Notes to Consolidated Financial Statements

1. NATURE OF OPERATIONS

Coach, Inc. (the "Company") is a leading New York design house of modern luxury accessories and lifestyle brands. The Company’s primary product offerings, manufactured by third-party suppliers, include women’s and men’s bags, small leather goods, footwear, business cases, ready-to-wear including outerwear, watches, weekend and travel accessories, scarves, sunwear, fragrance, jewelry, travel bags and other lifestyle products. Coach branded products are primarily sold through its 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-branded stores and concession shop-in-shops in Japan, mainland China, Hong Kong, Macau, Singapore, Taiwan, Malaysia, South Korea, the United Kingdom, France, Ireland, Spain, Portugal, Germany, Italy, Austria, Belgium, the Netherlands and Switzerland. Additionally, International includes sales to consumers through the Internet in Japan, mainland China, the United Kingdom and South Korea, as well as sales to wholesale customers and distributors in approximately 55 countries. The Stuart Weitzman segment includes worldwide sales generated by the Stuart Weitzman brand, primarily through department stores in North America and international locations, within numerous independent third party distributors and within Stuart Weitzman operated stores (including the Internet) in the United States, Canada and Europe. The Company also records sales of Coach brand products generated in licensing and disposition channels.

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 year ended July 2, 2016 (“fiscal 2016”) was a 53-week period, and the fiscal years ended June 27, 2015 (“fiscal 2015”) and June 28, 2014 (“fiscal 2014”) were each 52-week periods. The fiscal year ending July 1, 2017 (“fiscal 2017”) will 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 ("U.S. 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 reserves for inventory; customer returns, end-of-season markdowns, and operational chargebacks; reserves for litigation and other 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 awards 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

Short-term investments consist primarily of high-credit quality U.S. and non-U.S. issued corporate debt securities, and U.S. Treasuries and government agency 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. 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 investment related to the Hudson Yards joint venture. See Note 19, "Subsequent Events," for further discussion on the Company's Hudson Yards joint venture. During fiscal 2015, held-to-maturity investments were recorded at amortized cost, which approximated fair value. Dividend and interest income are recognized when earned.

COACH, INC.

Notes to Consolidated Financial Statements (Continued)

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 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. The Company has an equity method investment in Hudson Yards related to an equity interest in an entity formed for the purpose of developing a new office tower in Manhattan. Refer to Note 6, "Investments," for further information.

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.

Concentration of Credit Risk

Financial instruments that potentially expose the Company 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 corporate debt securities, money market instruments, U.S. government and agency debt securities, municipal government debt securities, commercial paper and bank deposits placed with major banks and financial institutions. Accounts receivable is generally diversified due to the number of entities comprising the Company'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 holds inventory that is sold through retail and wholesale distribution channels, including e-commerce sites. Substantially all of the Company's inventories are comprised of finished goods, and are reported at the lower of cost or market. Inventory costs include material, conversion costs, freight and duties and are primarily determined by the first-in, first-out method. The Company reserves for inventory, including slow-moving and aged inventory, based on current product demand, expected future demand and historical experience. A decrease in product demand due to changing customer tastes, buying patterns or increased competition could impact the Company's evaluation of its 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 of 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, and building improvements are depreciated over ten to 40 years. Machinery and equipment are depreciated over lives of five to seven years, furniture and fixtures are depreciated over lives of three to ten 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. In evaluating long-lived assets for recoverability, the Company uses its best estimate of future cash flows expected to result from the use of the related asset group and its eventual disposition. To the extent that estimated future undiscounted net cash flows attributable to the asset are less than its carrying value, an impairment loss is recognized equal to the difference between the carrying value of such asset and its fair value, considering external market participant assumptions. The Company had no material impairment losses in fiscal 2016 and in fiscal 2015. The Company recorded impairment losses of $35.5 million in fiscal 2014, within Selling, general and administrative expenses.

In determining future cash flows, the Company takes various factors into account, including the effects of macroeconomic trends such as consumer spending, in-store capital investments, promotional cadence, the level of advertising and changes in merchandising strategy. 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.

COACH, INC.

Notes to Consolidated Financial Statements (Continued)

Business Combinations

In connection with an acquisition, the Company records all assets acquired and liabilities assumed of the acquired business at their acquisition date fair value, including the recognition of contingent consideration at fair value on the acquisition date. These fair value determinations require judgment and may involve the use of significant estimates and assumptions, including assumptions with respect to future cash inflows and outflows, discount rates, asset lives, and market multiples, among other items. Furthermore, the Company may utilize or consider independent third-party valuation firms when necessary. Refer to Note 7, "Acquisitions," for detailed disclosures related to our acquisitions.

Goodwill and Other Intangible Assets

Upon acquisition, the Company estimates and records the fair value of purchased intangible assets, which primarily consists of trademarks and trade names, customer relationships, lease rights and order backlog. The excess of the purchase consideration over the fair value of net assets acquired, both tangible and intangible, is recorded as goodwill. Finite-lived intangible assets are amortized over their respective estimated useful lives and, along with other long-lived assets as noted above, are evaluated for impairment periodically whenever events or changes in circumstances indicate that their related carrying values may not be fully recoverable. Estimates of fair value for finite-lived and indefinite-lived intangible assets are primarily determined using discounted cash flows and the relief from royalty method, respectively, with consideration of market comparisons and recent transactions. This approach uses significant estimates and assumptions, including projected future cash flows, discount rates and growth rates.

Goodwill and certain other intangible assets deemed to have indefinite useful lives, including trademarks and trade names, are not amortized, but are assessed for impairment at least annually. The Company generally performs its annual goodwill and indefinite-lived intangible assets impairment analysis using a qualitative approach to determine whether it is more likely than not that the fair values of such assets are less than their respective carrying values. If, based on the results of the qualitative assessment, it is concluded that it is not more likely than not that the fair value of the asset exceeds its carrying value, a quantitative test is performed. The quantitative goodwill impairment test 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 based on management's assessment, considering independent third-party appraisals when necessary. Furthermore, this determination is judgmental in nature and often involves the use of significant estimates and assumptions, including projected future cash flows, discount rates, growth rates, and determination of appropriate market comparables and recent transactions. 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.

The Company performs its annual impairment assessment of goodwill, including trademarks and trade names, during the fourth quarter of each fiscal year. The Company determined that there was no impairment in fiscal 2016, fiscal 2015 or fiscal 2014.

COACH, INC.

Notes to Consolidated Financial Statements (Continued)

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 non-cancelable operating leases with scheduled rent increases and/or 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 2016 and fiscal 2015, deferred rent obligations of $172.9 million and $122.4 million, 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 2016 and fiscal 2015, the Company had asset retirement obligations of $23.9 million and $16.0 million, respectively, primarily classified within other non-current liabilities in the Company's consolidated balance sheets.

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. 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. Revenues are also reduced by an estimate for returns at the time of sale.

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 markdown allowances, returns and discounts. 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. Returns and allowances require pre-approval from management and discounts are based on trade terms. The Company reviews and refines these estimates on 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 generally approximately three 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 reserves for inventory realizability and shrinkage, destruction costs, damages and replacements.

COACH, INC.

Notes to Consolidated Financial Statements (Continued)

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

SG&A 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, supply costs, wholesale and retail account administration compensation globally and the Company's international operating expenses. These expenses are affected by the number of 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, new product design costs, public relations and market research expenses. Distribution and customer service expenses include warehousing, order fulfillment, shipping and handling, customer service, employee compensation 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 fees and software expenses. Administrative expenses also include global equity compensation expense.

Shipping and Handling

Shipping and handling costs incurred were $43.6 million, $41.2 million and $61.9 million in fiscal 2016, fiscal 2015 and fiscal 2014, respectively, and are included in SG&A expenses. The Company includes inbound product-related transportation costs from service providers within cost of sales. The balance of the Company's transportation-related costs related to its distribution network is included in SG&A expenses rather than in cost of sales.

Advertising

Advertising costs include expenses related to direct marketing activities, such as direct mail pieces, digital and other media and production costs. In fiscal 2016, fiscal 2015 and fiscal 2014, advertising expenses for the Company totaled $202.2 million, $160.9 million and $130.1 million respectively. Advertising costs are generally expensed when the advertising first appears.

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 the Company'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 key executives, the vesting of which is subject to the executive’s continuing employment and the Company's or individual'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 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 the Company operates. The Company classifies interest and penalties on uncertain tax positions in the provision for income taxes. The Company records net deferred tax assets to the extent it 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 and expected future 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.

COACH, INC.

Notes to Consolidated Financial Statements (Continued)

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 the tax authorities may take a contrary position that could result in a significant impact on the Company's results of operations. Significant management judgment is required in determining the effective tax rate, in evaluating tax positions and in determining the net realizable value of deferred tax assets.

See Note 13, "Income Taxes" and "Recently Adopted Accounting Pronouncements" herein for further discussion on the Company's income taxes.

Derivative Instruments

The majority of the Company’s purchases and sales involving international parties, excluding international consumer sales, are denominated in U.S. dollars, which limits the Company’s exposure to the transactional 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 loans which are not long term in investment nature. The Company uses derivative financial instruments to manage these risks. These derivative transactions are in accordance with the Company’s risk management policies. The Company 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.

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).

COACH, INC.

Notes to Consolidated Financial Statements (Continued)

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 and Euro-denominated inventory purchases, as well as various cross-currency intercompany 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:

•	Forward foreign currency exchange contracts and zero-cost collars - These derivatives 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 2016 to June 2017.

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 are in August 2017, and are renewed monthly when applicable.

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.

Stock Repurchase and Retirement

The Company 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, the Company's state of incorporation, treasury shares are not allowed. As a result, all repurchased shares are retired when acquired. The Company's stock repurchase plan expired at the end of fiscal 2015. Since its initial public offering, the Company has not experienced a net loss in any fiscal year, and the net accumulated deficit balance in stockholders’ equity is attributable to the cumulative stock repurchase activity.

Reclassifications

The Stuart Weitzman brand, which was reported within the results of Other during fiscal 2015, is reported as a standalone reportable segment in our fiscal 2016 results.

Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In November 2015, the FASB issued ASU No. 2015-17, “Balance Sheet Classification of Deferred Taxes” ("ASU 2015-17") as part of its simplification initiative. Under the ASU, all deferred tax assets and liabilities are required to be classified as noncurrent in the balance sheets. The Company elected to early adopt ASU 2015-17 during the fourth quarter of fiscal 2016 on a prospective basis. Prior periods have not been retrospectively adjusted to reflect the adoption of this ASU. Other than the balance sheet reclassification of current deferred tax assets and liabilities to noncurrent, this standard did not have an effect on the Company's consolidated financial statements.

In September 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2015-16, "Simplifying the Accounting for Measurement-Period Adjustments," ("ASU No. 2015-16") which pertains to the

COACH, INC.

Notes to Consolidated Financial Statements (Continued)

accounting for business combinations. Under the ASU, an acquirer must recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The ASU also requires acquirers to present separately on the face of the income statement, or disclose in the notes, the portion of the amount recorded in current period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. The requirements of the new standard are effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years, with early adoption permitted. The Company elected to early adopt this guidance during the third quarter of fiscal 2016, with no material effect on the Company's consolidated financial statements or notes thereto. Refer to Note 7, "Acquisitions," for further discussion.

Recently Issued Accounting Pronouncements Not Yet Adopted

In March 2016, the FASB issued ASU No. 2016-09, "Improvements to Employee Share-Based Payment Accounting (Topic 718)," which simplifies several aspects of the accounting for share-based payment transactions, including the accounting for income taxes, forfeitures and statutory tax withholding requirements, as well as classification in the statement of cash flows. Most notably, the Company will be required to recognize all excess tax benefits and shortfalls as income tax expense or benefit in the income statement within the reporting period in which they occur. The requirements of the new standard will be effective for annual reporting periods beginning after December 15, 2016, including interim periods within those annual reporting periods, which for the Company is the first quarter of fiscal 2018. Early adoption is permitted. The Company is in the process of determining the impact of the adoption of this guidance on its consolidated financial statements or notes thereto.

In February 2016, the FASB issued ASU No. 2016-02, "Leases (Topic 842)," which is intended to increase transparency and comparability among companies that enter into leasing arrangements. This ASU requires recognition of lease assets and lease liabilities on the balance sheet for nearly all leases (other than short-term leases), as well as a retrospective recognition and measurement of existing impacted leases. The requirements of the new standard will be effective for annual reporting periods beginning after December 15, 2018, and interim periods within those annual periods, which for the Company is the first quarter of fiscal 2020. Early adoption is permitted. The new standard is required to be applied with a modified retrospective approach to each prior reporting period with various optional practical expedients. The Company is in the process of determining the impact of the adoption of this guidance on its consolidated financial statements or notes thereto, however it does anticipate that the new guidance will have a significant impact on its consolidated financial statements given its portfolio of lease arrangements. This guidance is not expected, however, to have a material impact on the Company's liquidity.

In January 2016, the FASB issued ASU No. 2016-01, "Recognition and Measurement of Financial Assets and Financial Liabilities." Under the ASU, equity investments not accounted for under the equity method of accounting or consolidation accounting must be measured at fair value with changes in fair value recognized in net income. The ASU also requires public entities to use the exit price notion when measuring fair value for disclosure. Financial assets and liabilities must be presented separately by measurement category and form on the balance sheet or within the notes to the financial statements. Additionally, public entities no longer have to disclose the methods and assumptions used to estimate fair value for assets measured at amortized cost. The requirements of the new standard will be effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, which for the Company is the first quarter of fiscal 2019. Early adoption is permitted. The Company is in the process of determining the impact of the adoption of this guidance on its consolidated financial statements or notes thereto.

In May 2014, the FASB issued ASU No. 2014-09, "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, 2017, and interim periods within those annual periods, which for the Company is the first quarter of fiscal 2019. Early adoption will be permitted for annual reporting periods beginning after December 15, 2016, including interim periods within those annual periods. The Company is in the process of determining the impact of the adoption of this guidance on its consolidated financial statements or notes thereto.

COACH, INC.

Notes to Consolidated Financial Statements (Continued)

3. RESTRUCTURING ACTIVITIES

Operational Efficiency Plan

On April 26, 2016, the Company announced a plan (the “Operational Efficiency Plan”) to enhance organizational efficiency, update core technology platforms, and streamline its supply chain network. The Operational Efficiency Plan was adopted as a result of a strategic review of the Company’s corporate structure which focused on creating an agile and scalable business model. As a result of this Operational Efficiency Plan, the Company expects to incur overall pre-tax charges of approximately $65-80 million within corporate unallocated expenses, which have been reflected beginning in the fiscal 2016 fourth quarter results, and will be substantially complete by the end of fiscal year 2017. Approximately $55-65 million of these charges will be cash.

Approximately $45-55 million of these charges will be related to organizational efficiencies, which will consist primarily of corporate employee severance and related costs, as well as consulting fees related to process and organizational optimization and accelerated depreciation associated with the retirement of information technology systems. Approximately $15 million of these charges will be related to the initial costs of replacing and updating the Company’s core technology platforms, allowing the Company to support a scalable business model. The remaining $5-10 million of these charges will be related to network optimization, consisting of office location and supply chain consolidations.

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

	Organizational Efficiency(1)				Technology Infrastructure				Network Optimization(2)				Total
	(millions)
Fiscal 2016 charges	$	40.4			$	—			$	3.5			$	43.9
Cash payments	(9.7		)		—				—				(9.7		)
Non-cash charges	(8.5		)		—				(0.3		)		(8.8		)
Balance at July 2, 2016	$	22.2			$	—			$	3.2			$	25.4

(1)	Organizational efficiency charges, recorded within SG&A expenses, primarily related to severance and related costs of corporate employees.

(2)	Network optimization costs, recorded within SG&A expenses, related to lease termination costs.

The balance as of July 2, 2016 is included within Accrued liabilities on the Company's Consolidated Balance Sheets. The above charges were recorded as corporate unallocated expenses within the Company's Consolidated Statements of Income.

Additional actions under our Operational Efficiency Plan will continue into fiscal 2017, with expected incremental charges of around $20 million to $35 million (which will primarily relate to the costs of replacing and updating the Company’s core technology platforms, as well as office location and supply chain consolidations).

Transformation Plan

During the fourth quarter of fiscal 2014, the Company announced a multi-year strategic plan to transform the Coach brand and reinvigorate growth. This multi-faceted, multi-year transformation plan (the "Transformation Plan"), which continued through the end of fiscal 2016, included key operational and cost measures, including: (i) the investment in capital improvements in stores and wholesale locations to drive comparable sales improvement; (ii) the optimization and streamlining of the Company's organizational model as well as the closure of underperforming stores in North America, and select International stores; (iii) the realignment of inventory levels and mix to reflect the Company's elevated product strategy and consumer preferences; (iv) the investment in incremental advertising costs to elevate consumer perception of the Coach brand, drive sales growth and promote this new strategy, which started in fiscal 2015; and (v) the significant scale-back of promotional cadence in an increased global promotional environment, particularly within the outlet Internet sales site, which began in fiscal 2014.

Total cumulative charges incurred under the Transformation Plan through July 2, 2016 were $321.5 million. The fourth quarter of fiscal 2016 was the last reporting period in which charges were incurred under this plan.

In fiscal 2016, the Company incurred transformation-related charges of $44.1 million ($33.4 million after-tax, or $0.12 per diluted share), which were largely related to the Company's North America business. The charges recorded in cost of sales and SG&A expenses were $0.0 million and $44.1 million, respectively. In fiscal 2015, the Company recorded charges of $145.9 million ($107.8 million after-tax, or $0.39 per diluted share). The charges recorded in cost of sales and SG&A expenses were $5.0 million

COACH, INC.

Notes to Consolidated Financial Statements (Continued)

and $140.9 million, respectively, and primarily related to the Company's North America business. In the fourth quarter of fiscal 2014, the Company recorded charges of $131.5 million ($88.3 million after-tax, or $0.31 per diluted share). The charges recorded in cost of sales and SG&A expenses were $82.2 million and $49.3 million, respectively, and primarily related 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(1)				Impairment(2)				Store-Related Costs(3)				Organizational Efficiency Costs(4)				Other(5)				Total
	(millions)
Balance at June 29, 2013	$	—			$	—			$	—			$	—			$	—			$	—
Fiscal 2014 charges	82.2				35.5				12.2				1.0				0.6				131.5
Cash payments	—				—				—				—				—				—
Non-cash charges	(66.8		)		(35.5		)		(6.7		)		—				—				(109.0		)
Balance at June 28, 2014	$	15.4			$	—			$	5.5			$	1.0			$	0.6			$	22.5
Fiscal 2015 charges	$	3.0			$	—			$	80.4			$	47.3			$	15.2			$	145.9
Cash payments	(15.4		)		—				(34.6		)		(30.8		)		(10.1		)		(90.9		)
Non-cash charges	(3.0		)		—				(48.8		)		(5.5		)		(2.4		)		(59.7		)
Balance at June 27, 2015	$	—			$	—			$	2.5			$	12.0			$	3.3			$	17.8
Fiscal 2016 charges	$	—			$	—			$	16.6			$	27.5			$	—			$	44.1
Cash payments	—				—				(10.2		)		(34.0		)		(3.3		)		(47.5		)
Non-cash charges	—				—				(8.9		)		—				—				(8.9		)
Balance at July 2, 2016	$	—			$	—			$	—			$	5.5			$	—			$	5.5

(1)	Inventory-related charges, recorded within cost of sales, primarily related to reserves for the donation and destruction of certain on-hand inventory and future non-cancelable inventory purchase commitments. As of July 2, 2016 and June 27, 2015, a reserve of $10.3 million and $11.1 million is included within Inventories on the Company's Consolidated Balance Sheets.

(2)	Impairment charges, recorded within SG&A expenses, were based on discounted expected cash flows of certain impacted retail stores, and resulted in the reduction of the net carrying value of store-related long-lived assets to their estimated fair value.

(3)	Store-related costs, recorded within SG&A expenses, relate to store closure costs which include accelerated depreciation charges associated with store assets that the Company will no longer benefit from as a result of the Transformation Plan, as well as lease termination and store employee severance costs.

(4)	Organizational efficiency charges, recorded within SG&A expenses, primarily relate to the severance and related costs of corporate employees.

(5)	Other charges comprise of consulting costs and the write-down of certain assets that will not be placed into service by the Company, which are recorded within SG&A expenses, and certain freight and handling costs incurred related to the destruction of inventory which are recorded within cost of sales.

The remaining balance as of July 2, 2016 and June 27, 2015 is included within Accrued liabilities on the Company's Consolidated Balance Sheets. The above charges were recorded as corporate unallocated expenses within the Company's Consolidated Statements of Income. See Note 15, "Segment Information," for further information.

COACH, INC.

Notes to Consolidated Financial Statements (Continued)

Sale of Reed Krakoff Business

In the first quarter of fiscal 2014, 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 "Reed Krakoff Purchase Agreement") with Buyer and Reed Krakoff, the Company’s former President and Executive Creative Director, and resulted in the Company recording a cost method investment of $3.3 million, which was included in Long-term investments in the consolidated balance sheet in the prior period. During the third quarter of fiscal 2015, the Company wrote-off its cost method investment, with the charge recorded within SG&A expenses.

In connection with the Reed Krakoff Purchase Agreement, Mr. Krakoff’s resignation from the Company 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 $2.7 million during the first quarter of fiscal 2014 related to the sale, which is recorded in SG&A expenses on the consolidated statements of income.

4. ACCUMULATED OTHER COMPREHENSIVE INCOME

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

	Unrealized Gains (Losses) on Cash Flow Hedges(1)				Unrealized Losses on Available-for-Sale Debt Securities				Cumulative Translation Adjustment				Other(2)				Total
	(millions)
Balances at June 28, 2014	$	0.6			$	1.8			$	(9.2	)		$	(1.9	)		$	(8.7	)
Other comprehensive income (loss) before reclassifications	11.9				(1.3		)		(72.5		)		—				(61.9		)
Less: gains (losses) reclassified from accumulated other comprehensive income	8.1				—				—				(1.0		)		7.1
Net current-period other comprehensive income (loss)	3.8				(1.3		)		(72.5		)		1.0				(69.0		)
Balances at June 27, 2015	$	4.4			$	0.5			$	(81.7	)		$	(0.9	)		$	(77.7	)
Other comprehensive (loss) income before reclassifications	(10.2		)		(0.4		)		18.8				—				8.2
Less: gains (losses) reclassified from accumulated other comprehensive income	3.0				(0.2		)		—				0.6				3.4
Net current-period other comprehensive (loss) income	(13.2		)		(0.2		)		18.8				(0.6		)		4.8
Balances at July 2, 2016	$	(8.8	)		$	0.3			$	(62.9	)		$	(1.5	)		$	(72.9	)

(1)	The ending balances of AOCI related to cash flow hedges are net of tax of $4.5 million and $(2.6) million as of July 2, 2016 and June 27, 2015, respectively. The amounts reclassified from AOCI are net of tax of $(1.4) million and $(4.0) million as of July 2, 2016 and June 27, 2015, respectively.

(2)	As of July 2, 2016 and June 27, 2015, Other represents the accumulated loss on the Company's minimum pension liability adjustment. The balances at July 2, 2016 and June 27, 2015 are net of tax of $0.8 million and $0.5 million, 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 Consolidated Statements of Income:

	July 2, 2016(1)				June 27, 2015(1)				June 28, 2014(2)
	(millions)
Share-based compensation expense	$	95.3			$	94.4			$	104.9
Income tax benefit related to share-based compensation expense	28.6				28.5				33.1

(1)

During the fiscal years ended July 2, 2016 and June 27, 2015, the Company incurred $8.5 million (or $2.4 million of income tax benefit) and $5.5 million (or $2.0 million of income tax benefit) of share-based compensation expense related to organizational efficiency costs under the Company's Operational Efficiency Plan and Transformation Plan, respectively, primarily as a result of the accelerated vesting of certain awards. See Note 3, "Restructuring Activities," for more information.

COACH, INC.

Notes to Consolidated Financial Statements (Continued)

(2) Approximately $9.8 million of share based compensation expense and $3.8 million 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, "Restructuring Activities," for more information.

Stock-Based Plans

The Company maintains the Amended and Restated 2010 Stock Incentive Plan to award stock options and shares to certain members of management and the outside members of its Board of Directors (“Board”). The Company 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 the Company's stockholders. The exercise price of each stock option equals 100% of the market price of the Company'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. Stock option and share awards are subject to forfeiture until completion of the vesting period, which ranges from one to three years. The Company issues new shares upon the exercise of stock options or vesting of share awards.

Stock Options

A summary of stock option activity during the year ended July 2, 2016 is as follows:

	Number of Options Outstanding			Weighted- Average Exercise Price per Option				Weighted- Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
	(millions)
Outstanding at June 27, 2015	13.5			$	42.81
Granted	4.4			31.56
Exercised	(0.8	)		38.64
Forfeited or expired	(2.0	)		39.60
Outstanding at July 2, 2016	15.1			40.18				6.6		$	54.5
Vested and expected to vest at July 2, 2016	14.2			41.88				6.2		51.9
Exercisable at July 2, 2016	8.2			45.34				5.1		54.6

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

	July 2, 2016			June 27, 2015			June 28, 2014
Expected term (years)	4.2			3.6			3.1
Expected volatility	32.2	%		31.9	%		32.5	%
Risk-free interest rate	1.4	%		1.1	%		0.8	%
Dividend yield	4.3	%		3.7	%		2.6	%

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 the Company'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 2016, fiscal 2015 and fiscal 2014 was $5.65, $6.41, and $9.79, respectively. The total intrinsic value of options exercised during fiscal 2016, fiscal 2015 and fiscal 2014 was $6.2 million, $12.1 million, and $28.0 million, respectively. The total cash received from option exercises was $25.7 million, $32.4 million, and $44.5 million in fiscal 2016, fiscal 2015 and fiscal 2014, respectively, and the cash tax benefit realized for the tax deductions from these option exercises was $2.3 million, $4.7 million, and $10.4 million, respectively.

COACH, INC.

Notes to Consolidated Financial Statements (Continued)

At July 2, 2016, $19.4 million 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.

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

A summary of service-based RSU activity during the year ended July 2, 2016 is as follows:

	Number of Non-vested RSUs			Weighted- Average Grant- Date Fair Value per RSU
	(millions)
Non-vested at June 27, 2015	3.3			$	52.39
Granted	2.3			31.65
Vested	(1.4	)		32.53
Forfeited	(0.5	)		37.58
Non-vested at July 2, 2016	3.7			49.06

At July 2, 2016, $49.9 million 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 2016, fiscal 2015 and fiscal 2014 was $31.65, $36.38 and $52.93, respectively. The total fair value of shares vested during fiscal 2016, fiscal 2015 and fiscal 2014 was $45.8 million, $48.4 million and $78.7 million, 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 July 2, 2016 is as follows:

	Number of Non-vested PRSUs			Weighted- Average Grant- Date Fair Value per PRSU
	(millions)
Non-vested at June 27, 2015	1.1			$	41.76
Granted	0.4			31.67
Change due to performance condition achievement(1)	—			55.07
Vested(1)	—			30.93
Forfeited	(0.1	)		45.39
Non-vested at July 2, 2016	1.4			38.67

(1) During fiscal 2016, there was less than 0.1 million shares of PRSU activity due to changes in performance conditions and shares vested, individually and in the aggregate.

At July 2, 2016, $11.5 million 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 2016, fiscal 2015 and fiscal 2014 was $31.67, $36.43 and $32.53, respectively. The total fair value of awards that vested during fiscal 2016, fiscal 2015 and fiscal 2014 was $1.4 million, $2.5 million and $23.8 million, respectively.

During the fiscal years ended July 2, 2016 and June 27, 2015, the Company granted 0.4 million shares (with a fair value of $11.6 million) and 0.4 million shares (with a fair value of $12.6 million) of common stock to executives, respectively. The shares of common stock under these PRSU awards will be earned and distributed based on certain Company-specific productivity, strategic

COACH, INC.

Notes to Consolidated Financial Statements (Continued)

and sales metrics. Further, the shares are subject to a three-year cliff vesting, subject to the employee's continuing employment and the Company's achievement of the aforementioned performance goals established at the beginning of the performance period. The fair value of the PRSU's is based on the fair value of the Company's common stock on the date of grant. Included in the non-vested amount at July 2, 2016 are approximately 0.7 million of PRSU awards that are based on the aforementioned performance criteria.

During fiscal 2014, the Company granted 0.2 million shares of common stock with a fair value of $6.8 million to selected executives as retention PRSU awards with a maximum potential number of shares issued and fair value (excluding dividends) of 0.3 million shares and $9.1 million, respectively. 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%. Included in the non-vested amount at July 2, 2016 are approximately 0.7 million of PRSU awards that are based on the aforementioned performance criteria.

In fiscal 2016, fiscal 2015 and fiscal 2014, the cash tax benefit realized for the tax deductions from all RSUs (service and performance-based) was $14.2 million, $15.7 million and $33.5 million, respectively.

Employee Stock Purchase Plan

Under the 2001 Employee Stock Purchase Plan, full-time employees are permitted to purchase a limited number of Company common shares at 85% of market value. Under this plan, the Company sold 0.1 million, 0.1 million, and 0.1 million shares to employees in fiscal 2016, fiscal 2015 and fiscal 2014, 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
	July 2, 2016			June 27, 2015			June 28, 2014
Expected term (years)	0.5			0.5			0.5
Expected volatility	28.6	%		26.4	%		29.5	%
Risk-free interest rate	0.3	%		0.1	%		0.1	%
Dividend yield	4.1	%		3.5	%		2.2	%

The weighted-average fair value of the purchase rights granted during fiscal 2016, fiscal 2015 and fiscal 2014 was $7.43, $8.41, and $13.30, respectively. The Company issues new shares for employee stock purchases.

6. INVESTMENTS

The following table summarizes the Company’s U.S. dollar-denominated investments, recorded within the consolidated balance sheets as of July 2, 2016 and June 27, 2015:

	July 2, 2016												June 27, 2015
	Short-term				Long-Term				Total				Short-term				Long-term				Total
	(millions)
Available-for-sale investments:
Commercial paper(1)	$	54.8			$	—			$	54.8			$	—			$	—			$	—
Government securities – U.S.(2)	131.7				—				131.7				42.8				9.3				52.1
Corporate debt securities – U.S.(2)	161.4				64.2				225.6				110.0				42.6				152.6
Corporate debt securities – non-U.S.(2)	111.5				33.9				145.4				74.6				33.9				108.5
Available-for-sale investments, total	$	459.4			$	98.1			$	557.5			$	227.4			$	85.8			$	313.2
Held to maturity:
Corporate debt securities – U.S.(3)	$	—			$	—			$	—			$	6.6			$	—			$	6.6
Other:
Time deposits(1)	0.6				—				0.6				—				—				—
Other(4)	0.4				460.5				460.9				—				320.2				320.2
Total Investments	$	460.4			$	558.6			$	1,019.0			$	234.0			$	406.0			$	640.0

(1)	These securities have original maturities greater than three months and are recorded at fair value.

(2)	The securities as of July 2, 2016 have maturity dates between calendar years 2016 and 2018 and are recorded at fair value.

(3)	These securities were recorded at amortized cost which approximated fair value utilizing Level 2 information.

(4)

Long-Term Other relates to the equity method investment in Hudson Yards, 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. Refer to Note 11, "Commitments and Contingencies," and Note 19, "Subsequent Events," for further information.

There were no material gross unrealized gains or losses on available-for-sale securities as of the periods ended July 2, 2016 and June 27, 2015.

COACH, INC.

Notes to Consolidated Financial Statements (Continued)

7. ACQUISITIONS

Fiscal 2016 Acquisition

On May 1, 2016, the Company acquired all of the outstanding equity interests of Franco Niro Holdings Inc./Les Placements Franco Niro Inc., the Stuart Weitzman Canadian retail distributor ("Stuart Weitzman Canada"), consisting of 14 retail stores and one e-commerce website. The results of the Stuart Weitzman Canada operations have been included in the consolidated financial statements since the date of acquisition within the Stuart Weitzman segment. The aggregate cash paid in connection with the acquisition of Stuart Weitzman Canada was $25.6 million, net of a 10% purchase price hold-back amount to be paid 18 months following the closing date if all conditions are satisfied.

The purchase price allocations for these assets and liabilities are substantially complete, however may be subject to change as additional information is obtained during the measurement period. The following table summarizes the fair value of the assets acquired and liabilities assumed as of the acquisition date:

Assets Acquired and Liabilities Assumed	Fair Value
	(millions)
Inventories and other current assets(1)	$	5.3
Property and equipment, net	3.2
Goodwill(2)	24.6
Total assets acquired	33.1
Accounts Payable and accrued liabilities	4.8
Other liabilities(3)	2.7
Total liabilities assumed	7.5
Total cash paid	$	25.6

(1) The balance primarily consists of inventories of $5.0 million, including a step-up adjustment of approximately $0.9 million, which is being amortized over 6 months.

(2) The entire balance of acquired goodwill is not tax deductible.

(3) Included within Other liabilities is a $2.6 million liability attributable to the 10% purchase price hold-back amount.

There were no material pre-tax acquisition costs directly associated with the acquisition of Stuart Weitzman Canada.

Fiscal 2015 Acquisition

On May 4, 2015, the Company acquired all of the outstanding equity interests of Stuart Weitzman Topco LLC (“Topco”) and Stuart Weitzman Intermediate LLC (“Stuart Weitzman”), a wholly owned subsidiary of Topco, which the Company believes will complement its current leadership position in premium handbags and accessories. Stuart Weitzman designs and manufactures women’s luxury footwear and accessories. The results of the Stuart Weitzman’s operations have been included in the consolidated financial statements since the date of acquisition within the Stuart Weitzman segment.

The aggregate cash paid in connection with the acquisition of Stuart Weitzman was $531.1 million (or $519.6 million net of cash acquired). Furthermore, the acquisition agreement contains a potential earnout payment of up to $14.7 million annually in cash over the next three calendar years, based on the achievement of certain revenue targets. The agreement also contains a catch-up provision that provides that if the revenue targets are missed in any one year but are surpassed in succeeding years then amounts for past years become due upon surpassing targets in succeeding years. The total amount payable under the earnout will not exceed $44.0 million.

The Company funded the acquisition through cash on-hand, including the utilization of a portion of debt related proceeds, as described in Note 10, “Debt.”

COACH, INC.

Notes to Consolidated Financial Statements (Continued)

The Company has completed its purchase price allocation. The following table summarizes the fair value of the assets acquired and liabilities assumed as of the acquisition date:

Assets Acquired and Liabilities Assumed	Fair Value			Measurement Period Adjustments(6)			Adjusted Fair Value
	(millions)
Cash and cash equivalents	$	11.5		$	—		$	11.5
Trade accounts receivable	34.0			—			34.0
Inventories(1)	32.9			—			32.9
Prepaid expenses and other current assets	5.2			(2.1		)	3.1
Property and equipment, net	28.3			(2.5		)	25.8
Goodwill(2)	125.8			5.2			131.0
Trademarks and trade names(3)	267.0			—			267.0
Other intangible assets(4)	87.0			0.1			87.1
Deferred income taxes	7.1			(0.1		)	7.0
Other assets	2.3			—			2.3
Total assets acquired	601.1			0.6			601.7
Accounts Payable and accrued liabilities	15.7			0.6			16.3
Other liabilities(5)	54.3			—			54.3
Total liabilities assumed	70.0			0.6			70.6
Total purchase price	531.1			—			531.1
Less: Cash acquired	(11.5		)	—			(11.5		)
Total purchase price, net of cash acquired	$	519.6		$	—		$	519.6

(1) Included a step-up adjustment of approximately $5.6 million, which was amortized over 4 months.

(2) Approximately $44 million of the goodwill balance is tax deductible.

(3) The trademarks and trade names intangible asset was valued based on the relief from royalty method.

(4) The components of Other intangible assets include customer relationships of approximately $54.7 million (amortized over 15 years), order backlog of approximately $7.7 million (amortized over 6 months) and favorable lease rights of approximately $24.7 million (amortized over the remainder of the underlying lease terms). The customer relationship intangible asset was valued using the excess earnings method, which discounts the estimated after-tax cash flows associated with the existing base of customers as of the acquisition date, factoring in expected attrition of the existing base. The order backlog intangible asset was valued using the excess earnings method, which discounts the estimated after-tax cash flows associated with open customer orders as of the acquisition date. Favorable lease rights, net were valued based on a comparison of market participant information and Company-specific lease terms.

(5) Included within Other liabilities is the fair value measurement of the contingent earnout payment of $17.8 million. This was valued primarily utilizing Level 3 inputs as defined by the fair value hierarchy, and was based on a weighted average expected achievement probability and discount rate over the expected measurement period. See Note 9, "Fair Value Measurements," for a reconciliation of the contingent earnout liability as of July 2, 2016.

COACH, INC.

Notes to Consolidated Financial Statements (Continued)

(6)

During the twelve months ended July 2, 2016, and in accordance with the early adoption of ASU No. 2015-16, the Company made certain measurement period adjustments to provisional amounts primarily related to the fair value of acquired property and equipment, deferred income taxes, favorable lease rights, as well as certain working capital accounts. These adjustments were the result of new information obtained about facts and circumstances that existed as of the date of acquisition. The $5.2 million net impact of these adjustments on the Consolidated Balance Sheets has been adjusted through goodwill, as noted above. Furthermore, the net impact of these adjustments, recorded within SG&A expenses, was immaterial to the Company's Consolidated Statements of Income.

During the twelve months ended July 2, 2016 and June 27, 2015, the Company incurred pre-tax costs directly associated with the acquisition of approximately $0.0 million and $14.2 million, respectively, recorded within SG&A expenses.

Fiscal 2014 Acquisition

On July 1, 2013, the Company became the 100% owner of its European joint venture by purchasing Hackett Limited’s remaining 50% interest in the joint venture, enabling the Company 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 $15.1 million and the forgiveness of a loan from the Company to Hackett Limited of approximately $18.0 million. The allocation of the purchase price acquisition has been completed resulting in goodwill of $14.8 million which is not tax deductible.

8. LEASES

The Company leases retail, distribution and office facilities. The lease agreements, which expire at various dates through 2036, 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 store-related rent expense may also be contingent upon sales.

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

	Fiscal Year Ended
	July 2, 2016				June 27, 2015				June 28, 2014
	(millions)
Minimum rent(1)	$	229.9			$	213.8			$	172.8
Contingent rent	134.8				142.8				144.4
Total rent expense	$	364.7			$	356.6			$	317.2

(1)	$5.9 million and $27.3 million of lease termination charges due to transformation-related store closures were included in fiscal 2016 and fiscal 2015, respectively.

Future minimum rental payments under non-cancelable operating leases, as of July 2, 2016, are as follows:

Fiscal Year		Amount(1)
		(millions)
2017		$	254.2
2018		232.4
2019		209.4
2020		181.4
2021		150.4
Subsequent to 2021		597.4
Total minimum future rental payments		$	1,625.2

(1)	Refer to Note 19, "Subsequent Events," for further information on the sale of the Company's investments in 10 Hudson Yards and lease of the Company's new corporate headquarters. The table above excludes future minimum rental payments under this new lease, as follows:

Hudson Yards

Fiscal Year		Amount
		(millions)
2017		$	41.4
2018		45.1
2019		45.1
2020		45.1
2021		45.1
Subsequent to 2021		825.5
Total minimum future rental payments		$	1,047.3

9. 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.

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.

COACH, INC.

Notes to Consolidated Financial Statements (Continued)

The following table shows the fair value measurements of the Company’s financial assets and liabilities at July 2, 2016 and June 27, 2015:

	Level 1								Level 2								Level 3
	July 2, 2016				June 27, 2015				July 2, 2016				June 27, 2015				July 2, 2016				June 27, 2015
	(millions)
Assets:
Cash equivalents(1)	$	197.9			$	485.0			$	0.4			$	14.7			$	—			$	—
Short-term investments:
Time deposits(2)	—				—				0.6				—				—				—
Commercial paper(2)	—				—				54.8				—				—				—
Government securities - U.S.(2)	119.9				42.8				11.8				—				—				—
Corporate debt securities - U.S.(2)	—				—				161.4				110.0				—				—
Corporate debt securities - non U.S.(2)	—				—				111.5				74.6				—				—
Other	—				—				0.4				—				—				—
Long-term investments:
Government securities - U.S.(3)	—				9.3				—				—				—				—
Corporate debt securities - U.S.(3)	—				—				64.2				42.6				—				—
Corporate debt securities - non U.S.(3)	—				—				33.9				33.9				—				—
Derivative Assets:
Inventory-related instruments(4)	—				—				0.2				3.3				—				—
Intercompany loan hedges(4)	—				—				0.4				0.1				—				—
Liabilities:
Contingent earnout obligation(5)	$	—			$	—			$	—			$	—			$	28.4			$	19.4
Derivative liabilities:
Inventory-related instruments(4)	—				—				11.0				0.2				—				—
Intercompany loan hedges(4)	—				—				0.1				—				—				—

(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 as of June 27, 2015 were recorded at amortized cost, which approximated fair value.

(3)	Fair value is primarily determined using vendor or broker priced securities in active markets. These securities have maturity dates between calendar years 2017 and 2018.

(4)	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.

(5)	Refer to Note 7, "Acquisitions," for further information.

Refer to Note 10, "Debt," for the fair value of the Company's outstanding debt instruments.

COACH, INC.

Notes to Consolidated Financial Statements (Continued)

The following table presents a reconciliation of the liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the years ended July 2, 2016 and June 27, 2015. Level 3 liabilities consisted of the contingent earnout obligation related to the Stuart Weitzman acquisition.

	July 2,				June 27,
	2016				2015
	(millions)
Balance, beginning of year	$	19.4			$	—
Contingent earnout obligation recorded in purchase accounting	—				17.8
Increase to contingent earnout obligation	9.0				1.6
Balance, end of year	$	28.4			$	19.4

Non-Financial Assets and Liabilities

The Company’s non-financial instruments, which primarily consist of goodwill, intangible assets 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 and indefinite-lived intangible assets), non-financial instruments are assessed for impairment and, if applicable, written-down to and recorded at fair value, considering market participant assumptions. Refer to Note 7, "Acquisitions," for further discussion of the approaches used in valuing acquired assets and assumed liabilities.

No material impairment charges were recorded in fiscal 2016 and fiscal 2015. During fiscal 2014, $35.5 million of impairment charges were recorded, to reduce the carrying amount of certain store assets (primarily leasehold improvements at selected retail store locations) to their fair values of $6.9 million as of June 28, 2014. 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.

10. DEBT

The following table summarizes the components of the Company’s outstanding debt:

	July 2, 2016				June 27, 2015
	(millions)
Current Debt:
Term Loan(1)	$	15.0			$	11.3
Total Current Debt	$	15.0			$	11.3
Long-Term Debt:
Term Loan(1)	$	270.0			$	288.7
4.250% Senior Notes	600.0				600.0
Total Long-Term Debt	870.0				888.7
Less: Unamortized Discount and Debt Issuance Costs on 4.250% Senior Notes	(8.8		)		(9.6		)
Total Long-Term Debt, net	$	861.2			$	879.1

(1)	On August 3, 2016, the Company prepaid its outstanding borrowings under the Term Loan facility. Refer to Note 19, "Subsequent Events," for further information.

During fiscal 2016, 2015 and 2014 the Company recognized interest expense related to the outstanding debt of $32.9 million, $11.9 million and $1.7 million, respectively.

COACH, INC.

Notes to Consolidated Financial Statements (Continued)

Amended and Restated Credit Agreement

In March 2015, the Company amended and restated its existing $700.0 million revolving credit facility (the "Revolving Facility") with certain lenders and JP Morgan Chase Bank, N.A. as the administrative agent, to provide for a five-year senior unsecured $300.0 million term loan (the “Term Loan”) and to extend the maturity date to March 18, 2020 (the "Amended and Restated Credit Agreement"). As of July 2, 2016, there were no borrowings under the Revolving Facility.

The Term Loan required repayment by quarterly installments beginning in September 2015 through December 2019, with the remaining expected outstanding balance of $202.5 million due on maturity at March 18, 2020. However, the Company prepaid its outstanding borrowings under the Term Loan facility on August 3, 2016, as further described in Note 19, "Subsequent Events." The Amended and Restated Credit Agreement will continue to be used for general corporate purposes of the Company and its subsidiaries.

Borrowings under the Amended and Restated Credit Agreement bear interest at a rate per annum equal to, at the Company'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 (i) the Prime Rate in effect on such day, (ii) the Federal Funds Effective Rate in effect on such day plus ½ of 1% or (iii) the Adjusted LIBO Rate for a one month Interest Period on such day plus 1%). Additionally, the Company pays a commitment fee on the average daily unused amount of the Revolving Facility. At July 2, 2016, the interest rate on these borrowings was 1.720% and the commitment fee was 0.150%.

The fair value of the outstanding balance of the Term Loan as of July 2, 2016 approximated carrying value, and was based on available external pricing data and current market rates for similar debt instruments, among other factors, and is classified as Level 2 measurements within the fair value hierarchy.

4.250% Senior Notes

In March 2015, the Company issued $600.0 million aggregate principal amount of 4.250% senior unsecured notes due April 1, 2025 at 99.445% of par (the “4.250% Senior Notes”). Interest is payable semi-annually on April 1 and October 1 beginning October 1, 2015. Prior to January 1, 2025 (90 days prior to the scheduled maturity date), the Company may redeem the 4.250% Senior Notes in whole or in part, at its option at any time or from time to time, at a redemption price equal to the greater of (1) 100% of the principal amount of the 4.250% Senior Notes to be redeemed or (2) the sum of the present values of the remaining scheduled payments of principal and interest thereon that would have been payable in respect of the 4.250% Senior Notes calculated as if the maturity date of the 4.250% Senior Notes was January 1, 2025 (not including any portion of payments of interest accrued to the date of redemption), discounted to the redemption date on a semi-annual basis at the Adjusted Treasury Rate (as defined in the indenture for the 4.250% Senior Notes) plus 35 basis points, plus, in the case of each of (1) and (2), accrued and unpaid interest to the redemption date. On and after January 1, 2025 (90 days prior to the scheduled maturity date), the Company may redeem the 4.250% Senior Notes in whole or in part, at its option at any time or from time to time, at a redemption price equal to 100% of the principal amount of the 4.250% Senior Notes to be redeemed, plus accrued and unpaid interest to the redemption date.

At July 2, 2016 and June 27, 2015, the fair value of the 4.250% Senior Notes was approximately $622 million and $579 million, respectively, based on external pricing data, including available quoted market prices of these instruments, and consideration of comparable debt instruments with similar interest rates and trading frequency, among other factors, and is classified as Level 2 measurements within the fair value hierarchy.

COACH, INC.

Notes to Consolidated Financial Statements (Continued)

Debt Maturities

As of July 2, 2016, the Company's aggregate maturities of total debt are as follows:

Fiscal Year		Amount
		(millions)
2017(1)		$	15.0
2018(1)		15.0
2019(1)		22.5
2020(1)		232.5
2021		—
Subsequent to 2021		600.0
Total future debt repayments		$	885.0

(1)	The following maturities are related to the Company's outstanding borrowings under the Term Loan facility. On August 3, 2016, the Company prepaid its outstanding borrowings under the Term Loan facility. Refer to Note 19, "Subsequent Events," for further information.

Other

Coach Japan, a wholly owned subsidiary of the Company, maintains credit facilities with several Japanese financial institutions to provide funding for working capital and general corporate purposes, allowing a total maximum borrowing capacity of 5.3 billion yen, or approximately $50 million, as of July 2, 2016. Interest is based on the Tokyo Interbank rate plus a margin of 25 to 30 basis points.

During fiscal 2016 and fiscal 2015, there were no borrowings under this facility. The Coach Japan credit facility can be terminated at any time by the financial institution, and there is no guarantee that it will be available to the Company in future periods.

11. COMMITMENTS AND CONTINGENCIES

Hudson Yards

As of July 2, 2016, the Company's equity method investment in Hudson Yards 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. The new building will serve as the Company's new corporate headquarters. On August 1, 2016, the Company sold its related investments, and executed an agreement to lease back the office space for a 20-year term. Refer to Note 19, "Subsequent Events," for further information.

During fiscal 2016, the Company invested $140.3 million in the joint venture. Since the formation of the Hudson Yards joint venture, the Company has invested $460.5 million. In addition to its investment in the joint venture, the Company is directly investing in a portion of the design and build-out of the new corporate headquarters and has incurred $179.6 million of capital expenditures life-to-date, including $145.6 million in fiscal 2016, and expects to incur approximately $33 million over the remaining period of construction.

The Hudson Yards joint venture is determined to be a variable interest entity 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. The Company 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.

Letters of Credit

The Company had standby letters of credit totaling $7.5 million and $6.8 million outstanding at both July 2, 2016 and June 27, 2015. The letters of credit, which expire at various dates through calendar 2017, primarily collateralize the Company’s obligation to third parties for insurance claims, materials used in product manufacturing and leases. The Company pays certain fees with respect to letters of credit that are issued.

COACH, INC.

Notes to Consolidated Financial Statements (Continued)

Other

The Company had other contractual cash obligations as of July 2, 2016, including $200.1 million related to inventory purchase obligations, $98.5 million related to firm capital expenditure purchase obligations, $9.8 million of other purchase obligations, $885.0 million of debt repayments and $229.5 million of interest payments on the 4.250% Senior Notes. Refer to Note 8, "Leases," for a summary of the Company's future minimum rental payments under non-cancelable leases. Furthermore, refer to Note 7, "Acquisitions," for a description of potential earnout payments attributable to the Stuart Weitzman acquisition. On August 3, 2016, the Company prepaid its outstanding borrowings under the Term Loan facility. Refer to Note 19, "Subsequent Events," for further information.

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

12. GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill

The change in the carrying amount of the Company’s goodwill, is as follows:

	International			Stuart Weitzman			Total
	(millions)
Balance at June 28, 2014	$	361.4		$	—		$	361.4
Acquisition of Stuart Weitzman	—			125.8			125.8
Foreign exchange impact	(53.0		)	—			(53.0		)
Balance at June 27, 2015	308.4			125.8			434.2
Acquisition of Stuart Weitzman Canada	—			24.6			24.6
Foreign exchange impact	38.5			(0.1		)	38.4
Purchase accounting adjustment(1)	—			5.2			5.2
Balance at July 2, 2016	$	346.9		$	155.5		$	502.4

(1)	Refer to Note 7, "Acquisitions," for further information.

Other Intangible Assets

Other intangible assets consist of the following:

	Fiscal Year Ended(1)
	July 2, 2016												June 27, 2015
	Gross Carrying Amount				Accum. Amort.				Net				Gross Carrying Amount				Accum. Amort.				Net
	(millions)
Intangible assets subject to amortization:
Customer relationships	$	54.7			$	(5.8	)		$	48.9			$	54.7			$	(0.8	)		$	53.9
Order backlog	7.7				(7.7		)		—				7.7				(2.6		)		5.1
Favorable lease rights, net	24.7				(3.6		)		21.1				24.6				(0.5		)		24.1
Total intangible assets subject to amortization	87.1				(17.1		)		70.0				87.0				(3.9		)		83.1
Intangible assets not subject to amortization:
Trademarks and trade names	276.8				—				276.8				276.8				—				276.8
Total intangible assets	$	363.9			$	(17.1	)		$	346.8			$	363.8			$	(3.9	)		$	359.9

(1)	Refer to Note 7, "Acquisitions," for further information.

COACH, INC.

Notes to Consolidated Financial Statements (Continued)

Amortization

Based on the balance of the Company's intangible assets subject to amortization as of July 2, 2016, the expected amortization expense for each of the next five fiscal years and thereafter is as follows:

	Amortization Expense
	(millions)
Fiscal 2017	$	7.0
Fiscal 2018	6.6
Fiscal 2019	6.5
Fiscal 2020	6.2
Fiscal 2021	6.0
Thereafter	37.7
Total	$	70.0

The expected future amortization expense above reflects remaining useful lives of 13.8 years for customer relationships and the remaining lease terms ranging from approximately one to 9 years for favorable lease rights.

13. 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 (in millions):

	Fiscal Year Ended
	July 2, 2016							June 27, 2015							June 28, 2014
	Amount				Percentage			Amount				Percentage			Amount				Percentage
Income before provision for income taxes:
United States	$	357.5			57.1	%		$	361.2			59.1	%		$	818.6			72.9	%
Foreign	269.1				42.9			250.4				40.9			303.7				27.1
Total income before provision for income taxes	$	626.6			100.0	%		$	611.6			100.0	%		$	1,122.3			100.0	%
Tax expense at U.S. statutory rate	$	219.3			35.0	%		$	214.0			35.0	%		$	392.8			35.0	%
State taxes, net of federal benefit	11.2				1.8			26.4				4.3			34.6				3.1
Effects of foreign operations(1)	(53.7		)		(8.6	)		(79.7		)		(13.0	)		(93.1		)		(8.3	)
Effects of foreign tax credits and acquisition reorganization	(19.6		)		(3.1	)		9.3				1.5			(1.5		)		(0.1	)
Other, net	8.9				1.4			39.2				6.4			8.2				0.7
Taxes at effective worldwide rates	$	166.1			26.5	%		$	209.2			34.2	%		$	341.0			30.4	%

(1)	The "Effects of foreign operations" impact, as noted above, is primarily attributable to the Company's foreign tax rate differential of its Greater China and Japan tax jurisdictions.

COACH, INC.

Notes to Consolidated Financial Statements (Continued)

Current and deferred tax provision (benefit) was:

	Fiscal Year Ended
	July 2, 2016								June 27, 2015								June 28, 2014
	Current				Deferred				Current				Deferred				Current				Deferred
	(millions)
Federal	$	145.8			$	(52.0	)		$	142.9			$	10.5			$	283.4			$	(6.8	)
Foreign	46.8				2.2				9.8				13.8				20.0				(5.7		)
State	25.8				(2.5		)		35.0				(2.8		)		60.4				(10.3		)
Total current and deferred tax provision (benefit)	$	218.4			$	(52.3	)		$	187.7			$	21.5			$	363.8			$	(22.8	)

The components of deferred tax assets and liabilities were:

	July 2, 2016				June 27, 2015
	(millions)
Share-based compensation	$	68.5			$	66.7
Reserves not deductible until paid	69.6				68.1
Deferred rent	27.9				16.4
Employee benefits	48.3				48.4
Basis difference in foreign investments	21.5				—
Net operating loss(1)	176.7				178.9
Other	4.2				0.8
Prepaid expenses	0.8				1.9
Property and equipment	34.3				16.4
Gross deferred tax assets	451.8				397.6
Valuation allowance(1)	173.4				169.8
Deferred tax assets after valuation allowance	$	278.4			$	227.8
Goodwill	88.2				73.6
Other	(1.3		)		—
Gross deferred tax liabilities	86.9				73.6
Net deferred tax assets	$	191.5			$	154.2
Consolidated Balance Sheets Classification(2)
Deferred income taxes – current asset	$	—			$	98.4
Deferred income taxes – noncurrent asset	248.8				115.8
Deferred income taxes – current liability	—				—
Deferred income taxes – noncurrent liability (included within "Other Liabilities")	(57.3		)		(60.0		)
Net deferred tax asset	$	191.5			$	154.2

(1)	The deferred tax asset for net operating losses and the related valuation allowance has been presented on a gross basis as of July 2, 2016, with a corresponding reclass of the July 27, 2015 balances, previously presented on a net basis.

COACH, INC.

Notes to Consolidated Financial Statements (Continued)

(2)	The amounts presented in this table are reflective of the prospective adoption of ASU 2015-17, which requires entities to classify deferred tax assets and deferred tax liabilities as non-current. Prior periods have not been adjusted to reflect the adoption of this ASU. Refer to Note 2, "Significant Accounting Policies" for more information.

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 in accordance with the requirements of ASC 740.

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

	July 2, 2016				June 27, 2015				June 28, 2014
	(millions)
Balance at beginning of fiscal year	$	168.1			$	170.7			$	148.8
Gross increase due to tax positions related to prior periods	25.5				5.4				14.7
Gross decrease due to tax positions related to prior periods	(4.4		)		(1.1		)		(3.3		)
Gross increase due to tax positions related to current period	8.7				16.5				28.6
Decrease due to lapse of statutes of limitations	(59.0		)		(21.1		)		(17.3		)
Decrease due to settlements with taxing authorities	(0.3		)		(2.3		)		(0.8		)
Balance at end of fiscal year	$	138.6			$	168.1			$	170.7

Of the $138.6 million ending gross unrecognized tax benefit balance as of July 2, 2016, $111.1 million relates to items which, if recognized, would impact the effective tax rate. Of the $168.1 million ending gross unrecognized tax benefit balance as of June 27, 2015, $121.5 million relates to items which, if recognized, would impact the effective tax rate. As of July 2, 2016 and June 27, 2015, gross interest and penalties payable was $29.0 million and $17.6 million, respectively, which are included in Other liabilities. During fiscal 2016, fiscal 2015 and fiscal 2014, the Company recognized gross interest and penalty income of $11.5 million, gross interest and penalty income of $0.1 million and gross interest and penalty expense of $0.8 million, 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 2013 to present are open to examination in the U.S. federal jurisdiction, fiscal 2009 to present in select state jurisdictions and fiscal 2004 to present in select foreign jurisdictions. The Company anticipates that one or more of these audits may be finalized and certain statutes of limitation may expire 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 July 2, 2016 and June 27, 2015, the Company had net operating loss carryforwards in foreign tax jurisdictions of $593.4 million and $618.3 million, the majority of which can be carried forward indefinitely.

The total amount of undistributed earnings of foreign subsidiaries as of July 2, 2016 and June 27, 2015, was $2.39 billion and $2.09 billion, 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.

14. DEFINED CONTRIBUTION PLAN

The Company maintains the Coach, Inc. Savings 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 the Company for this defined contribution plan was $8.3 million, $7.2 million, and $7.5 million in fiscal 2016, fiscal 2015 and fiscal 2014, respectively.

15. SEGMENT INFORMATION

In fiscal 2016, the Company has three reportable segments based on its business activities and organization:

•	North America, which is composed of Coach brand sales to North American consumers through stores, including the Internet, and sales to wholesale customers.

•

International, which is composed of Coach brand sales to consumers through stores and concession shop-in-shops in Japan, mainland China, Hong Kong, Macau, Singapore, Taiwan, Malaysia, South Korea, the United Kingdom, France, Ireland, Spain, Portugal, Germany, Italy, Austria, Belgium, the Netherlands and Switzerland. Additionally, International includes Coach brand sales to consumers through the Internet in Japan, mainland China, the United Kingdom and South Korea, as well as sales to wholesale customers and distributors in approximately 55 countries.

•

Stuart Weitzman, which includes worldwide sales generated by the Stuart Weitzman brand, primarily through department stores in North America and international locations, within numerous independent third party distributors and within Stuart Weitzman operated stores (including the Internet) in the United States, Canada and Europe. Amounts presented within the Stuart Weitzman segment in fiscal 2015 were reclassified from Other, where they were previously reported, as Stuart Weitzman became a reportable segment in fiscal 2016.

In deciding how to allocate resources and assess performance, the Company'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, "Restructuring Activities," and certain acquisition-related costs are also included as unallocated corporate expenses.

COACH, INC.

Notes to Consolidated Financial Statements (Continued)

The following table summarizes segment performance for fiscal 2016, fiscal 2015 and fiscal 2014:

	North America				International				Other(1)				Corporate Unallocated(2)				Stuart Weitzman				Total
	(millions)
Fiscal 2016
Net sales	$	2,397.1			$	1,704.0			$	46.0			$	—			$	344.7			$	4,491.8
Gross profit	1,478.4				1,286.2				32.3				52.0				202.4				3,051.3
Operating income (loss)	737.3				512.7				22.9				(651.9		)		32.5				653.5
Income (loss) before provision for income taxes	737.3				512.7				22.9				(678.8		)		32.5				626.6
Depreciation and amortization expense(3)	64.0				70.6				—				64.9				19.6				219.1
Total assets	435.2				1,033.9				9.9				2,782.5				631.2				4,892.7
Additions to long-lived assets	91.6				112.8				—				180.5				11.5				396.4

	North America				International				Other(1)(4)				Corporate Unallocated(2)				Stuart Weitzman				Total
	(millions)
Fiscal 2015
Net sales	$	2,467.5			$	1,622.0			$	59.1			$	—			$	43.0			$	4,191.6
Gross profit	1,574.6				1,248.8				38.1				27.2				19.9				2,908.6
Operating income (loss)	820.5				480.6				30.1				(708.6		)		(4.6		)		618.0
Income (loss) before provision for income taxes	820.5				480.6				30.1				(715.0		)		(4.6		)		611.6
Depreciation and amortization expense(3)	61.8				63.1				—				110.5				5.2				240.6
Total assets	385.1				1,057.6				7.4				2,614.2				602.6				4,666.9
Additions to long-lived assets	89.9				73.9				—				34.0				1.5				199.3

	North America				International				Other(1)				Corporate Unallocated(2)				Stuart Weitzman				Total
	(millions)
Fiscal 2014
Net sales	$	3,100.5			$	1,644.2			$	61.5			$	—			$	—			$	4,806.2
Gross profit	1,992.7				1,295.3				36.9				(27.9		)		—				3,297.0
Operating income (loss)	1,164.1				555.7				34.2				(633.9		)		—				1,120.1
Income (loss) before provision for income taxes	1,164.1				555.7				34.2				(631.7		)		—				1,122.3
Depreciation and amortization expense(3)	72.9				58.8				—				57.7				—				189.4
Total assets	432.6				1,128.5				5.6				2,096.4				—				3,663.1
Additions to long-lived assets	102.2				71.5				—				45.9								219.6

(1) Other, which is not a reportable segment, consists of Coach brand sales and expenses generated in licensing and disposition channels.

(2) Corporate unallocated expenses include Coach brand inventory-related costs (such as production variances), advertising, marketing, design, administration and information systems, as well as distribution and consumer service expenses. Furthermore, transformation-related and operational efficiency charges incurred by the Company as described in Note 3, "Restructuring Activities" and to a lesser extent, charges associated with contingent earn out payments of the Stuart Weitzman

COACH, INC.

Notes to Consolidated Financial Statements (Continued)

acquisition (as described in Note 7, "Acquisitions") and other integration-related activities, are also included as unallocated corporate expenses.

(3)	Depreciation and amortization expense includes $8.5 million of transformation-related and operational efficiency plan charges for the fiscal year ended July 2, 2016. Depreciation and amortization expense includes $48.8 million of transformation-related charges for the fiscal year ended June 27, 2015. These charges are recorded as corporate unallocated expenses.

The following table shows net sales for each product category represented (in millions):

	Fiscal Year Ended
	July 2, 2016				% of Total			June 27, 2015				% of Total			June 28, 2014				% of Total
Women's Handbags	$	2,392.9			53	%		$	2,389.6			57	%		$	2,826.1			59	%
Men's	725.7				16			680.4				16			691.8				14
Women's Accessories	721.6				16			709.4				17			860.3				18
All Other Products	306.9				7			369.2				9			428.0				9
Coach brand	$	4,147.1			92	%		$	4,148.6			99	%		$	4,806.2			100	%
Stuart Weitzman brand(1)	344.7				8			43.0				1			—				—
Total Sales	$	4,491.8			100	%		$	4,191.6			100	%		$	4,806.2			100	%

(1)	The significant majority of sales for the Stuart Weitzman brand is attributable to women's footwear.

COACH, INC.

Notes to Consolidated Financial Statements (Continued)

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

	Fiscal Year Ended
	July 2, 2016				June 27, 2015				June 28, 2014
	(millions)
Inventory-related costs(1)	$	52.0			$	27.2			$	(27.9	)
Advertising, marketing and design(2)	(260.3		)		(246.7		)		(238.1		)
Administration and information systems(2)(3)	(381.6		)		(422.8		)		(283.9		)
Distribution and customer service(2)	(62.0		)		(66.3		)		(84.0		)
Total corporate unallocated	$	(651.9	)		$	(708.6	)		$	(633.9	)

(1)	Inventory-related costs consist of production variances and transformation-related costs, and are recorded within cost of sales. In fiscal 2016, 2015 and 2014 production variances were $52.0 million, $32.2 million and $54.3 million, respectively. In fiscal 2016, fiscal 2015 and fiscal 2014, transformation and other-related costs were $0.0 million, $(5.0) million and $(82.2) million, respectively.

(2)	Costs recorded within SG&A expenses.

(3)	Fiscal 2016 includes Transformation Plan, Operational Efficiency Plan and Stuart Weitzman acquisition-related charges of $(107.4) million. Fiscal 2015 and fiscal 2014 includes charges of $(156.7) million and $(49.3) million, respectively, related to Transformation Plan and Stuart Weitzman acquisition-related charges.

Geographic Area Information

As of July 2, 2016, the Company operated 250 retail stores and 195 outlet stores in the United States, 40 retail stores and 11 outlet stores in Canada. Outside of North America, the Company operated 195 concession shop-in-shops within department stores, retail stores and outlet stores in Japan, 185 in Greater China (including Hong Kong, Macau and mainland China), and 153 in other international locations. Geographic revenue information is based on the location of our customer sale. 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.

	United States				Japan				Greater China(2)				Other(3)				Total
	(millions)
Fiscal 2016
Net sales(1)	$	2,477.3			$	559.8			$	652.2			$	802.5			$	4,491.8
Long-lived assets	750.3				74.8				96.6				141.5				1,063.2
Fiscal 2015
Net sales(1)	$	2,372.8			$	545.6			$	635.8			$	637.4			$	4,191.6
Long-lived assets	559.5				55.4				91.2				138.4				844.5
Fiscal 2014
Net sales(1)	$	2,968.6			$	654.7			$	583.9			$	599.0			$	4,806.2
Long-lived assets	594.7				70.4				83.9				91.6				840.6

(1)	Includes net sales from our global travel retail business in locations within the specified geographic area.

(2)	Greater China includes mainland China, Hong Kong and Macau.

(3)	Other International sales reflect shipments to third-party distributors, primarily in East Asia, and sales from Company-operated stores and concession shop-in-shops in Canada, Europe, South Korea, Taiwan, Malaysia and Singapore.

COACH, INC.

Notes to Consolidated Financial Statements (Continued)

16. 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 restricted stock units and any other potentially dilutive instruments, only in the periods in which such effects are dilutive under the treasury stock method.

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

	Fiscal Year Ended
	July 2, 2016				June 27, 2015				June 28, 2014
	(millions, except per share data)
Net income	$	460.5			$	402.4			$	781.3
Total weighted-average basic shares	277.6				275.7				277.8
Dilutive securities:
Share-based award plans	1.3				0.9				1.0
Stock option programs	0.4				0.6				1.6
Total weighted-average diluted shares	279.3				277.2				280.4
Net income per share:
Basic	$	1.66			$	1.46			$	2.81
Diluted	$	1.65			$	1.45			$	2.79

At July 2, 2016, options to purchase 5.1 million shares of common stock were outstanding but not included in the computation of diluted earnings per share, as these options’ exercise prices, ranging from $39.42 to $78.46, were greater than the average market price of the common shares.

At June 27, 2015, options to purchase 5.9 million shares of common stock were outstanding but not included in the computation of diluted earnings per share, as these options’ exercise prices, ranging from $38.75 to $78.46, were greater than the average market price of the common shares.

At June 28, 2014, options to purchase 6.4 million 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.

Earnings per share amounts have been calculated based on unrounded numbers. Options to purchase shares of the Company's common stock at an exercise price greater than the average market price of the common stock during the reporting period are anti-dilutive and therefore not included in the computation of diluted net income per common share. In addition, the Company has outstanding restricted stock unit awards that are issuable only upon the achievement of certain performance goals. Performance-based restricted stock unit awards are included in the computation of diluted shares only to the extent that the underlying performance conditions (and any applicable market condition modifiers) (i) are satisfied as of the end of the reporting period or (ii) would be considered satisfied if the end of the reporting period were the end of the related contingency period and the result would be dilutive under the treasury stock method. As of July 2, 2016, June 27, 2015 and June 28, 2014, there were approximately 5.9 million, 6.8 million, and 7.1 million, respectively, of additional shares issuable upon exercise of anti-dilutive options and contingent vesting of performance-based restricted stock unit awards, which were excluded from the diluted share calculations.

COACH, INC.

Notes to Consolidated Financial Statements (Continued)

17. STOCK REPURCHASE PROGRAM

Purchases of the Company's common stock have been made from time to time, subject to market conditions and at prevailing market prices, through open market purchases. Under Maryland law, the Company's state of incorporation, treasury shares are not allowed. As a result, all repurchased shares are retired when acquired. The Company's stock repurchase program expired at the end of fiscal 2015, with zero remaining availability at July 2, 2016.

During fiscal 2016 and fiscal 2015, the Company did not repurchase any shares of common stock. During fiscal 2014, the Company repurchased and retired 10.2 million shares, or $524.9 million of common stock, at an average cost of $51.27 per share.

18. RELATED PARTIES

The Stuart Weitzman brand and one of its employees each maintain a partial ownership interest of less than 50% in a factory (two in total) located in Spain, which are involved in the production of Stuart Weitzman inventory. Payments to these two factories represented $39.2 million and $6.3 million in fiscal 2016 and fiscal 2015, respectively. Amounts payable to these factories were not material at July 2, 2016 or June 27, 2015.

19. SUBSEQUENT EVENTS

Hudson Yards

On August 1, 2016, the Company announced the sale of its investments in 10 Hudson Yards, in New York City, and the lease of its new global headquarters. The Company received a purchase price of approximately $707 million (net of approximately $77 million due to the developer of Hudson Yards) before transaction costs of $26 million, resulting in a gain of approximately $30 million, which will be amortized through SG&A expenses over the lease term of 20 years. The Company has simultaneously entered into a 20-year lease for the headquarters space in the building, comprising of approximately 694,000 square feet.

Refer to Note 11, "Commitments and Contingencies," for further information. Furthermore, refer to Note 8, "Leases," for a summary of the Company's future minimum rental payments under this new lease.

Term Loan

On August 3, 2016, the Company prepaid its outstanding borrowings of approximately $285 million (including accrued and unpaid interest) under the Term Loan facility of its Amended and Restated Credit Agreement. A portion of the proceeds from the sale of the Company's investments in 10 Hudson Yards, as described above, was used to make the prepayment. The Revolving Facility under the Amended and Restated Credit Agreement will continue to remain in effect. Refer to Note 10, "Debt," for a summary of the Company's debt position as of July 2, 2016.

COACH, INC.

Notes to Consolidated Financial Statements (Continued)

20. SUPPLEMENTAL BALANCE SHEET INFORMATION

The components of certain balance sheet accounts are as follows:

	July 2, 2016				June 27, 2015
	(millions)
Property and equipment
Land and building	$	168.5			$	168.5
Machinery and equipment	34.5				34.7
Furniture and fixtures	653.2				640.9
Leasehold improvements	898.7				650.7
Construction in progress	26.4				78.8
Less: accumulated depreciation	(861.8		)		(841.0		)
Total property and equipment, net	$	919.5			$	732.6
Accrued liabilities
Payroll and employee benefits	$	180.5			$	181.9
Accrued rent	45.2				47.8
Dividends payable	93.9				93.3
Operating expenses	305.4				277.6
Total accrued liabilities	$	625.0			$	600.6
Other liabilities
Deferred lease obligation	$	172.9			$	122.4
Gross unrecognized tax benefit	138.6				168.1
Deferred tax liabilities	57.3				60.0
Other	153.1				112.7
Total other liabilities	$	521.9			$	463.2

COACH, INC.

Schedule II — Valuation and Qualifying Accounts

For the Fiscal Years Ended July 2, 2016, June 27, 2015 and June 28, 2014

	Balance at Beginning of Year				Additions Charged to Costs and Expenses				Additions Related to Acquisition				Write-offs/ Allowances Taken				Balance at End of Year
	(millions)
Fiscal 2016
Allowance for bad debts	$	3.1			$	3.7			$	—			$	(4.6	)		$	2.2
Allowance for returns	7.5				11.5				—				(13.0		)		6.0
Allowance for markdowns	18.0				54.1				—				(56.9		)		15.2
Valuation allowance	169.8				3.6				—				—				173.4
Total	$	198.4			$	72.9			$	—			$	(74.5	)		$	196.8
Fiscal 2015
Allowance for bad debts	$	1.4			$	1.7			$	0.9			$	(0.9	)		$	3.1
Allowance for returns	2.9				8.9				0.7				(5.0		)		7.5
Allowance for markdowns	11.6				42.5				3.8				(39.9		)		18.0
Valuation allowance	131.8				38.0				—				—				169.8
Total	$	147.7			$	91.1			$	5.4			$	(45.8	)		$	198.4
Fiscal 2014
Allowance for bad debts	$	1.1			$	1.6			$	—			$	(1.3	)		$	1.4
Allowance for returns	7.0				0.8				—				(4.9		)		2.9
Allowance for markdowns	8.4				37.9				—				(34.7		)		11.6
Valuation allowance	79.6				52.2				—				—				131.8
Total	$	96.1			$	92.5			$	—			$	(40.9	)		$	147.7

COACH, INC.

Quarterly Financial Data

(unaudited)

	First Quarter				Second Quarter				Third Quarter				Fourth Quarter
	(millions, except per share data)
Fiscal 2016(1)(2)
Net sales	$	1,030.3			$	1,273.8			$	1,033.1			$	1,154.6
Gross profit	696.5				859.1				713.0				782.7
Net income	96.4				170.1				112.5				81.5
Net income per common share:
Basic	0.35				0.61				0.40				0.29
Diluted	0.35				0.61				0.40				0.29
Fiscal 2015(1)
Net sales	$	1,038.8			$	1,219.4			$	929.3			$	1,004.1
Gross profit	715.4				840.0				665.5				687.7
Net income	119.1				183.5				88.1				11.7
Net income per common share:
Basic	0.43				0.67				0.32				0.04
Diluted	0.43				0.66				0.32				0.04
Fiscal 2014(1)
Net sales	$	1,150.8			$	1,419.6			$	1,099.6			$	1,136.2
Gross profit	826.6				982.7				781.3				706.4
Net income	217.9				297.4				190.8				75.2
Net income per common share:
Basic	0.77				1.07				0.69				0.27
Diluted	0.77				1.06				0.68				0.27

(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.

(2)	The fiscal year ended July 2, 2016 (“fiscal 2016”) was a 53-week period, and the fiscal years ended June 27, 2015 (“fiscal 2015”) and June 28, 2014 (“fiscal 2014”) were each 52-week periods. The fourth quarter of fiscal 2016 included the results of the 53rd week, contributing to $84.4 million in net revenues and $0.07 in net income per diluted share.

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 August 17, 2015, which is incorporated herein by reference from Exhibit 3.1 to Coach’s Current Report on Form 8-K filed on August 17, 2015
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
4.4		Indenture, dated as of March 2, 2015, relating to the 4.250% senior unsecured notes due 2025, between Coach and U.S. Bank National Association, as trustee, which is incorporated herein by reference from Exhibit 4.1 to Coach’s Current Report on Form 8-K filed on March 2, 2015
4.5		First Supplemental Indenture, dated as of March 2, 2015, relating to the 4.250% senior unsecured notes due 2025, between Coach and U.S. Bank National Association, as trustee, which is incorporated herein by reference from Exhibit 4.2 to Coach’s Current Report on Form 8-K filed on March 2, 2015
4.6		Form of 4.250% senior unsecured notes due 2025 (included in the First Supplemental Indenture), which is incorporated herein by reference from Exhibit 4.3 to Coach’s Current Report on Form 8-K filed on March 2, 2015
10.1		Purchase Agreement among Stuart Weitzman Topco LLC, Stuart Weitzman Intermediate LLC and Coach, dated January 5, 2015, which is incorporated by reference from Exhibit 10.1 to Coach’s Quarterly Report on Form 10-Q for the period ended December 27, 2014
10.2		Letter Agreement between Stuart Weitzman and Coach, dated January 5, 2015, which is incorporated by reference from Exhibit 10.2 to Coach’s Quarterly Report on Form 10-Q for the period ended December 27, 2014
10.3		Amendment and Restatement Agreement, dated as of March 18, 2015, by and between Coach, certain lenders and JPMorgan Chase Bank, N.A., as administrative agent, which amends and restates the Revolving Credit Agreement, dated as of June 18, 2012 (as amended by Amendment No. 1 dated March 26, 2013, Amendment No. 2 dated November 27, 2013 and Amendment No. 3 dated September 9, 2014) , which is incorporated by reference from Exhibit 10.2 to Coach’s Quarterly Report on Form 10-Q for the period ended March 28, 2015
10.4~		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
10.5~		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
10.6		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
10.7		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
10.8†		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

Exhibit		Description
10.9†		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
10.10†		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
10.11†		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
10.12†		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
10.13†		Amendment to the Coach, Inc. 2010 Stock Incentive Plan, which is incorporated herein by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on September 22, 2014
10.14†		Coach, Inc. Amended and Restated 2010 Stock Incentive Plan, which is incorporated herein by reference from Appendix B to the Registrant’s Definitive Proxy Statement for the 2014 Annual Meeting of Stockholders, filed on September 26, 2014
10.15†		Coach, Inc. Amended and Restated 2010 Stock Incentive Plan (Amended and Restated as of September 18, 2015), which is incorporated herein by reference from Appendix B to the Registrant’s Definitive Proxy Statement for the 2014 Annual Meeting of Stockholders, filed on September 25, 2015
10.16†		Form of Stock Option Grant Notice and Agreement under the Amended and Restated Coach, Inc. 2010 Stock Incentive Plan
10.17†		Form of Restricted Stock Unit Award Grant Notice and Agreement under the Amended and Restated Coach, Inc. 2010 Stock Incentive Plan
10.18†		Form of Performance Restricted Stock Unit Agreement Grant Notice and Agreement under the Amended and Restated Coach, Inc. 2010 Stock Incentive Plan
10.19†		Form of Stock Option Grant Notice and Agreement for Outside Directors under the Amended and Restated Coach, Inc. 2010 Stock Incentive Plan
10.20†		Form of Restricted Stock Unit Grant Notice and Agreement for Outside Directors under the Amended and Restated Coach, Inc. 2010 Stock Incentive Plan
10.21†		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
10.22†		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
10.23†		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
10.24†		Employment Offer Letter, dated September 2, 2014, between Coach and Gebhard Rainer, which is incorporated by reference from Exhibit 10.2 to Coach’s Quarterly Report on Form 10-Q for the period ended September 27, 2014
10.25*†		Separation and Release Agreement, dated June 7, 2016, between Coach and Gebhard Rainer
10.26†		Employment Offer Letter, dated January 26, 2015, between Coach and Ian Bickley, which is incorporated by reference from Exhibit 10.2 to Coach’s Quarterly Report on Form 10-Q for the period ended March 28, 2015
10.27†		Employment Offer Letter, dated January 26, 2015, between Coach and Andre Cohen, which is incorporated by reference from Exhibit 10.2 to Coach’s Quarterly Report on Form 10-Q for the period ended March 28, 2015
10.28†		Letter Agreement, dated June 22, 2015, between Coach and Sarah Dunn, which is incorporated by reference from Exhibit 10.3 to Coach’s Current Report on Form 8-K, filed on June 22, 2015
10.29†		Letter Agreement, dated June 22, 2015, between Coach and Todd Kahn, which is incorporated by reference from Exhibit 10.2 to Coach’s Current Report on Form 8-K, filed on June 22, 2015
10.30†		Letter Agreement, dated June 22, 2015, between Coach and Jane Nielsen, which is incorporated by reference from Exhibit 10.4 to Coach’s Current Report on Form 8-K, filed on June 22, 2015
12*		Computation of Ratio of Earnings to Fixed Charges
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

Exhibit		Description
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.

†	Management contract or compensatory plan or arrangement.