Acc_280_Executive_Summary

Coach Executive Summary Coach is a company that started in 1941 and has since grown dramatically. Coach began only making leather goods and several years later started to make and sell a much broader range of products. Coach is not only sold in the United States but also internationally. Coach is traded on the New York Stock Exchange (NYSE) and owns a separate Japan company as well. Coach has also made significant improvements in the company’s financial status within the last decade, has formed The Coach Foundation, and has also been an avid donator of time and money to many charities worldwide within the last few years. Coach started out as a company that was known for making quality and unique leather goods; the popular signature style and Coach emblem with the horse and carriage distinctively identifies the Coach brand. The company was founded in Manhattan in 1941. Six artisans began handcrafting leather goods in a Manhattan loft and quickly built a large customer base because of the quality and unique craftsmanship of the Coach products. In 1999 Coach launched its online store at www.coach.com (Coach Inc., 2011). After launching the Coach website the company has flourished even more and is a larger and more prominent business with more than 400 Coach Stores in the United States and Canada. Coach products are also available in more than 900 department stores in the United States, 182 international department stores, retail stores, and duty free shops located in more than 20 countries, 161 department store shop-in-shops, retail stores, and factory store locations owned and operated by Coach Japan, Incorporated (Coach Inc., 2011). With Coach is one of the most recognized accessory brands in the United States; they also strived to increase international distribution and gain an international customer base. They planned to do this by starting a company called Coach Japan Incorporated, which is fully owned and operated by Coach; this gives them complete control over the distribution in Japan. Even with Coach growing immensely the company’s corporate headquarters still remains in Manhattan on 34th Street, in the location of the former factory lofts where the company was started (Coach Inc., 2011). With Coach growing rapidly throughout the world there are many counterfeit products or replicas. However, Coach has a credo with a serial number on most leather goods the company makes; each product has a unique serial number stamped on the leather patch or credo as well as Coach stamped on most brass and nickel fixtures. Having the credo, serial number, only using high quality materials and the quality craftsmanship are what set Coach products apart from the competitors and poor quality replicas and counterfeits. With Coach being a very lucrative business and committed to the company’s core values as well as being good citizens of the global community they started the Coach Foundation in 2008 (Coach Inc., 2011). The Coach Foundation's principle mission is to give back to the organizations that empower education and support women and children worldwide. The Breast Cancer Research Foundation is one of many the Coach Foundation sponsors, and they have donated proceeds of more than one million dollars. Coach also supports the organization Peace First (www.peacefirst.org); the organization provides hands on mentoring and education that make life long differences in children, schools, and families (Coach Inc., 2011). Coach has not donated only $300,000 to Peace First, but hundreds of Coach Employees have also volunteered and been active in the organization. The Coach Foundation has also been an avid donator and supporter of humanitarian aid for victims and relief efforts through the American Red Cross and Japanese Red Cross (Coach, 2011). The Coach Foundation also has two programs, The Coach Women’s Initiative and the Coach Education Initiative. The Coach Foundation also regularly funds employee recommended causes and many Coach Employees are active members and volunteers in the local community (Coach Inc., 2011). Coach has expanded enormously after the company first began and is a marketer of not only leather goods but also fine accessories and gifts for both men and women. The product offerings include handbags, accessories for men and women, footwear, jewelry, sunglasses, travel bags, apparel, dog collars, and leashes. The company has two business segments for which they can sell the products directly and indirectly. During 2010, the company introduced Poppy, as an additional lifestyle collection for various products (Coach Inc., 2011). Coach stock became publically traded on October 5, 2000 on the New York Stock Exchange (NYSE) under the symbol COH as a common stock (NYSE, 2011). As of August 17, 2011, the stocks last traded price was $52.68 (NYSE, 2011). The volume of shares traded was 6,646,580 and its Market Cap was 14.97 Billion (NYSE, 2011). At the 2009 year end (June 27, 2009), the company had total current liabilities of $459,652,000 whereas the current liabilities increased to $529,036,000 at the year end in 2010 (July 3, 2010) (NYSE, 2011). The current liabilities indicate the amount of $529,036,000, which is less than the total current assets in the amount of $1,302,641,000 (NYSE, 2011). This means the company met its short term liabilities through the funds of current assets. The largest current liabilities are accrued liabilities and accounts payable in both years. In 2009 the accrued liabilities were $348,619,000 and in 2010 liabilities increased to $422,725,000 (NYSE, 2011). In 2009 the amount of accounts payable was $103,029,000, and it increased to $105,569,000 in 2010 (NYSE, 2011). The total liabilities of the company in 2009 were $869,294,000 and in 2010 were increased to $961,822,000 (NYSE, 2011). In 2009, the long term debt was $25,072,000 whereas in 2010 it decreased to $24,159,000 (NYSE, 2011). The other liabilities portion increased from $383,570,000 in 2009 to $408,627,000 in 2010. The current portion of the long-term debt increased from $508,000 in 2009 to $742,000 in 2010, hence the total liabilities increased during 2010 (NYSE, 2011). Accounts payable is another area that affects a company and how much they may be worth or what they have in total value. In 2009 the amount of accounts payable was $103,029,000, and it increased to $105,569,000 in 2010 (NYSE, 2011). In a year the balance of their accounts payable went up by $2,540,000, which is not a drastic increase when considering how much their profits increased, but this means that they still have to owe others money. Coach is an expanding company, and they have many assets and significant revenue; the amount of accounts payable is a very small percentage when considering their financial status. A balance sheet summarizes a company’s assets, liabilities, and stockholder’s equity. Coach’s cash and cash equivalents are under the asset section of the company’s balance sheet. The two most recent annual reporting periods are July 3, 2010 and June 27, 2009. The reporting period of 2010 shows Coach’s cash and cash equivalent amount of $596, 470, for the period of 2009 the amount is $800, 362 (Coach Inc., 2011). A person can see a sufficient decrease in the cash and cash equivalent amounts from 2009 to 2010. The balance sheet also reveals what were Coach’s two largest current assets at the end of its latest two annual reporting periods. The largest assets were: (1) cash & cash equivalents and (2) property & equipment, net (Coach Inc., 2011). The greater values showed on the 2009 report (cash and cash equivalents = $800,362,000 and property & equipment = $592,982,000). Again, 2010 shows a decrease in assets (cash and cash equivalents = $596,470,000 and property and equipment = $548,474,000) (Coach, 2011). The net income for 2009 was $623,369,000 and in 2010 there was a large increase for a net income of $734,940,000 (NYSE, 2011). As the low interest income received in 2010, the profits decreased with the variation of around $ 341,000 (NYSE, 2011). However, the income per share increased with the existing net income. In 2009 the net income per share was $1.93 whereas the net income per share in 2010 was $2.36, which is an attraction to the investors (NYSE, 2011). Coach’s net incomes are $783,055,000 for 2008; $623,369,000 for 2009, and $734,940,000 for 2010 (Coach Inc., 2011). Coach’s net revenues are $3,180,757 for 2008; $3,230,468 for 2009, and $3,607,636 for 2010 (Coach Inc., 2011). The change in dollars in the company’s net income from fiscal year 2010 to fiscal year 2009 was $111,571,000. The result of the increase in net income was because of better management of operating income and tax accounting adjustments. The change in dollars of the company’s net income from fiscal year 2009 to fiscal year 2008 was -$159,686,000. In 2009 for the first time since the company has been in operation it had to make costs saving changes that resulted in the elimination of 150 positions from the corporate offices, the closure of four retail stores not performing well, and the closure of the Coach Europe facility (Coach Inc., 2011). The reasons for these changes are evident in the decrease of the net income from 2008 to 2009. For any company there is a particular order to list the assets in the annual report. The assets should follow in this particular order: Cash and cash equivalents, short-term investments, accounts and noted receivable, inventories, and then prepaid expenses, etc. (Weygandt, 2008). The last two annual statements for 2009 and 2010 Coach have listed the assets as they should be listed. In 2009 the total reporting assets was $2,564,336,000 and in 2010 their total reporting assets was $2,467,115,000 (NYSE, 2011). In just a year their assets went down by $97,221,000, which is a significant difference in just one year. The auditing firm of a company is responsible for making sure the company’s financial statements are completely accurate in showing the company’s financial status. The auditing firm employed by Coach is the internationally renowned firm of Deloitte & Touche LLP in New York, New York (Coach Inc., 2011). At the age of 25, William Welch Deloitte opened his own accounting office in 1845. In 1898 George Touche opened his office (Deloitte Development LLC., 2011). A merger created Deloitte & Touche in 1990. The firm’s services include audit, consulting, financial advisory, risk management, and accounting (Deloitte Development LLC., 2011). Coach is a company that has expanded greatly since 1941. They not only supply the United States and Canada with their products but also supply more than 20 foreign countries as well. Coach and Coach Japan Inc. have made extreme efforts in making the company a global success. Coach had a high increase in net income for 2010; this was due to several things. If management continues to make changes that better the company Coach and all stakeholders can only gain from it and become more successful. Resources Coach Inc. (2011). Company Information. Retrieved August 14, 2011, from: http://www.coach.com/online/handbags/genWCM-10551-10051-en-/Coach_US/CompanyInformation/InvestorRelations/CompanyProfile Deloitte Development LLC. (2011). About Deloitte. Retrieved August 19, 2011, from: http://www.deloitte.com/view/en_US/us/About/index.htm NYSE. (2011). Coach, Inc. Retrieved August 16, 2011, from: http://www.nyse.com/listed/coh.html