Coach (COH) Provides Details on Previously Announced Pre-tax Charges

In an amended 8-K filing, Coach, Inc. (NYSE: COH) provided clarity on $250-$300 in previously reported pre-tax charges. The text is below.

On June 19, 2014, Coach filed a Current Report on Form 8-K reporting that it expects to incur total pre-tax charges approximating $250 – $300 million (the “Total Charge”) in connection with the Transformation Plan. As of the date of the filing of that Current Report, the Company was unable to provide good faith estimates of the amount or range of amounts for each major type of cost (and related future cash expenditures) associated with the Transformation Plan.

Of the Total Charge, the Company has now determined that it will record, in the fourth quarter of fiscal 2014 and throughout fiscal year 2015, charges related to inventory (donations and destruction) of approximately $75 – $85 million (of which approximately $15 – $25 million will be cash); store closures costs (including lease termination costs, accelerated depreciation, and store employee severance) of approximately $45 – $60 million (of which approximately $40 – $50 million will be cash); non-cash impairment charges of approximately $30 – $40 million; non-cash accelerated depreciation of existing store assets in connection with the updating of such stores of approximately $15 – $20 million; and up to $15 million (of which up to $10 million is estimated to be cash) of other related, but individually insignificant, costs.

The non-cash impairment charges are attributable to the Company’s ongoing assessment of the recoverability of its store assets. Upon completion of its long range financial plan in the fourth quarter of fiscal 2014, the Company determined that current and future projected profitability and related cash flows at the store level were insufficient to fully recover the carrying value of its assets.

All charges described herein relate predominantly to the Company’s North America segment as well as to corporate unallocated costs. The cash portion of these charges will be substantially paid in fiscal year 2015.

The Company will amend this Current Report on Form 8-K, or disclose in another periodic filing with the Securities and Exchange Commission when the amount or range of amounts for costs associated with organizational efficiencies are determinable.

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