Presentation on theme: "Annual Report Project Coach, Inc. Kathryn St. Croix ACG2021.080."— Presentation transcript:
Annual Report Project Coach, Inc. Kathryn St. Croix ACG2021.080
Executive Summary Coach, Inc. has grown significantly in the past couple of years, offers a high-quality product, and is wisely investing in new retail stores and markets overseas. I would buy stock in Coach, Inc. and if the company’s current financial trend continues, Coach, Inc. will expand to be a very profitable business. After you read about Coach, Inc.’s performance over the past two years, visit their website for more information about their product as you will undoubtedly be impressed. Coach website - Open Here Open Coach Inc. Annual Reports 2001-2005
Introduction to Coach, Inc. Lew Frankfort, Chairman and Chief Executive Officer Coach's corporate headquarters are located at 516 West 34th Street in midtown Manhattan The fiscal year ended July 2, 2005. Coach, Inc. is a designer, producer and marketer of modern American classic accessories, handbags, women's and men's small leather goods, business cases, weekend and travel accessories, outerwear and related accessories. Together with its licensing partners, Coach also offers watches, footwear, eyewear and office furniture with the Coach brand name. The US represented 73%, Japan represented 22% and other International, which reflects shipments to third-party distributors primarily in East Asia, represented about 5%.
Audit Report of Coach, Inc. Deloitte & Touche USA LLP Deloitte & Touche USA LLP stated that after auditing the consolidated financial statements of Coach, Inc., the financial statements are found to be in conformity with Generally Accepted Accounting Principles in the USA.
Stock Market Information Current price of the company’s stock: $ 35.91 Coach has never paid a cash dividend and presently intends to use its cash flow to reinvest in the business. Coach stock should be purchased as a long-term investment. Their stock price will continue to rise with the company’s future plans of expansion. Date of the above information: 27-Jan-2006 4:00 PM Twelve month trading range of Coach stock HighLow 36.8424.51 28 Nov 200518 Apr 2005
Industry Situation and Company Plans The distinctive Coach brand differentiates them from their competition and provides a strong foundation for accelerated, sustainable growth. The Coach business is based on our multi-channel international distribution model, which maintains a critical balance. Their success does not depend on the performance of a single channel. Coach has a clearly specified plans for company growth, aimed at doubling sales over the next four to five years and a higher rate of profitability. To facilitate this growth, Coach has a strong, knowledge-driven management team in place, supported by a performance-based corporate culture. They have a flexible supply chain adaptable to change, and advanced technological systems designed to support growth. Their strategy for the future is focused on two “primary drivers” 1. increasing distribution 2. maximizing productivity Excellent customer service is critical to the success of the Coach brand. In-store marketing programs have evolved, making it easier for our consumers to shop. An example is a program called “Coach By Special Request”, which allows our consumers to order Coach products, direct from our factory and shipped to their home. Comprehensive training programs for our sales associates and consumer appreciation programs elevate the level of customer service.
Income Statement Information for Coach, Inc. 2005 Multi-step format Statement of Income: Gross margin, operating income and net income have increased significantly for Coach, Inc. in the past two years. 200520042003 Gross profit1,310,771990,082677,429 Income from operations 621,810444,465243,762 Net income388,652261,748146,628
Balance Sheet for Coach, Inc. 2005 Assets increased from 2004 to 2005 for Coach, Inc. more than liabilities. Stockholders equity increased significantly from 2004 to 2005. Assets=Liabilities+Stockholder s Equity 20051,347,132=314,356+1,032,776 20041,044,425=262,139+782,286
Statement of Cash Flows Cash flows from operations are less than net income for the past two years. Coach, Inc. is growing through investing activities: New and renovated retail stores in North America and Japan. Technological enhancements. Primary sources of financing: Long-term loans from Bank of America (~$100M) and Japanese creditors Stock sales Cash has decreased over the past two years for Coach, Inc.
Accounting Policies for Coach, Inc. CASH AND CASH EQUIVALENTS: Cash and cash equivalents consist of cash balances and highly liquid investments with a maturity of less than 90 days. INVESTMENTS: Investments consist of U.S. government and agency debt securities as well as municipal government and corporate debt securities. These securities are classified as held to maturity, as the Company has both the ability and the intent to hold these securities until maturity. Investments are recorded at amortized cost. Premiums are amortized and discounts are accreted over the lives of the related securities as adjustments to interest income, using the effective interest method. Dividend and interest income are recognized when earned. INVENTORIES: Inventories consist primarily of finished goods. U.S. inventories are valued at the lower of cost (determined by the first-in, first-out method (“FIFO”)) or market. Inventories in Japan are valued at the lower of cost (determined by the last-in, first-out method (“LIFO”)) or market. At the end of fiscal 2005 and fiscal 2004, inventories recorded at LIFO were $17 lower and $2,409 higher, respectively, than if they were valued at FIFO. Inventories valued under LIFO amounted to $40,861 and $34,508 in fiscal 2005 and 2004, respectively. Inventory costs include material, conversion costs, freight and duties. REVENUE RECOGNITION: Sales are recognized at the point of sale, which occurs when merchandise is sold in an over-the-counter consumer transaction or, for the wholesale, Internet and catalog channels, upon shipment of merchandise, when title passes to the customer. Allowances for estimated uncollectible accounts, discounts and returns are provided when sales are recorded. Royalty revenues are earned through license agreements with manufacturers of other consumer products that incorporate the Coach brand. Revenue earned under these contracts is recognized based upon reported sales from the licensee.
Topics of the Notes to the Financial Statements 1. NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES 2. BALANCE SHEET COMPONENTS 3. INCOME TAXES 4. DEBT 5. LEASES 6. COMMITMENTS AND CONTINGENCIES 7. INVESTMENTS 8. STOCK-BASED COMPENSATION 9. RETIREMENT PLANS 10. SEGMENT INFORMATION 11. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES 12. GOODWILL 13. BUSINESS INTERRUPTION INSURANCE 14. EARNINGS PER SHARE 15. STOCK REPURCHASE PROGRAM 16. RELATED-PARTY TRANSACTION 17. ACQUISITION OF COACH JAPAN, I NC. 18. SHAREHOLDER R IGHTS PLAN 19. SUBSEQUENT EVENT 20. QUARTERLY FINANCIAL DATA (UNAUDITED)
Financial Analysis: Liquidity Ratios Working Capital 2005: $443,580 2004: $535,384 Current Ratio 2005: 2.669 2004: 4.145 Receivable turnover 2005: 26 days 2004: 24 days Average days’ sales uncollected 2005: 14 days 2004: 15 days Inventory turnover 2005: 2.167 2004: 2.044 Average days’ inventory on hand 2005: 168.436 2004: 178.571
Financial Analysis: Solvency Ratio Coach, Inc. is not leveraged because the debt to equity ratio for 2005 and 2004 is less than one, meaning the stockholders own the company. LiabilitiesStockholders Equity Debt to Equity 2005314,3561,032,7760.3044 2004262,139782,2860.3351
Financial Analysis: Market Strength Ratios Price/earnings per share for 2005: $1.06 Dividend yield: Coach, Inc. does not pay dividends Price/earnings per share for 2004: $0.75 Dividend yield: Coach, Inc. does not pay dividends