Coach 2006 Annual Report Download

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
(Exact Name of Registrant as Specified in its Charter)
 
(State or Other Jurisdiction of
Incorporation or Organization)
(I.R.S. Employer
Identification No.)
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(Address of Principal Executive Offices); (Zip Code)
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(Registrant’s Telephone Number, Including Area Code)
Securities Registered Pursuant to Section 12(b) of the Act:
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Common Stock, par value $.01 per share New York Stock Exchange
Securities Registered Pursuant to Section 12(g) of the Act: 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x NO o
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o NO x
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days. Yes x NO o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of
“accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer x Accelerated Filer o Non-accelerated filer o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o NO x
The aggregate market value of Coach, Inc. common stock held by non-affiliates as of December 29, 2006 (the last business day of the
most recently completed second fiscal quarter) was approximately $15.6 billion. For purposes of determining this amount only, the
registrant has excluded shares of common stock held by directors and officers. Exclusion of shares held by any person should not be
construed to indicate that such person possesses the power, direct or indirect, to direct or cause the direction of the management or policies of
the registrant, or that such person is controlled by or under common control with the registrant.
On August 17, 2007, the Registrant had 373,092,893 shares of common stock outstanding, which is the Registrant’s only class of
capital stock.
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 
Proxy Statement for the 2007 Annual Meeting of Stockholders Part III, Items 10 – 14

Table of contents

  • Page 1
    ... the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o NO x The aggregate market value of Coach, Inc. common stock held by non-affiliates as of December 29, 2006 (the last business day of the most recently completed second fiscal quarter) was approximately $15.6 billion...

  • Page 2
    ...Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Controls and Procedures Other Information PART III Directors, Executive Officers and Corporate Governance Executive Compensation Security Ownership of Certain Beneficial Owners and Management and Related Stockholder...

  • Page 3
    ...premium handbag and accessories market and the number two position within the Japanese imported luxury handbag and accessories market. Products Coach's product offerings include handbags, women's and men's accessories, footwear, outerwear, business cases, sunwear, watches, travel bags, jewelry and...

  • Page 4
    ...sold exclusively in Coach stores and on the Coach internet site. The Company plans to expand this category by introducing body lotions in fiscal 2008. Design and Merchandising Coach's New York-based design team, led by its Executive Creative Director, is responsible for conceptualizing and directing...

  • Page 5
    ...-oriented customers who would not otherwise buy the Coach brand. Prices are generally discounted from 10% to 50% below full retail prices. The following table shows the number of Coach factory stores and their total and average square footage: Fiscal Year Ended June 30, 2007 July 1, 2006 July...

  • Page 6
    ... net sales, respectively. U.S. Wholesale - This channel offers access to Coach products to consumers who prefer shopping at department stores or who live in markets with no Coach store. While overall U.S. department store sales have not increased over the last few years, the handbag and accessories...

  • Page 7
    ... Korea that work closely with our independent manufacturers. Coach also operates a European sourcing and product development organization based in Florence, Italy that works closely with the New York design team. This broad-based, multi-country manufacturing strategy is designed to optimize the mix...

  • Page 8
    ... orders, track shipments, manage inventory and generally provide better service to our customers. Coach's products are primarily shipped to Coach retail stores and wholesale customers via Federal Express and common carrier, and direct to consumers via Federal Express. Management Information Systems...

  • Page 9
    ... its relations with its employees are good, and it has never encountered a strike or work stoppage. Financial Information about Geographic Areas Geographic information is presented in Note 13 to the Consolidated Financial Statements. Available Information Our Annual Reports on Form 10-K, Quarterly...

  • Page 10
    ... higher excess inventories if wholesale customers order fewer products than anticipated. 12 TABLE OF CONTENTS Our operating results are subject to seasonal and quarterly fluctuations, which could adversely affect the market price of Coach common stock. Because Coach products are frequently...

  • Page 11
    ... stores located in North America and 137 department store shop-in-shops, retail stores and factory stores in Japan. These leases expire at various times through 2020. Coach considers these properties to be in generally good condition and believes that its facilities are adequate for its operations...

  • Page 12
    ...removed by Coach's board of directors at any time. Coach's directors are elected at the annual stockholders meeting and serve terms of one year. (2) Member of the audit committee. (3) Member of the human resources and governance committee. Lew Frankfort has been involved with the Coach business for...

  • Page 13
    ... industrial store operator. Previously, Mr. Devine was Chief Financial Officer at Industrial System Associates, Inc. from 1995 to 1997, and for the prior six years he was the Director of Finance and Distribution for McMaster-Carr Supply Co. He also serves as a member of the Board of Directors of...

  • Page 14
    ... University. 17 TABLE OF CONTENTS PART II Item 5. Marset for Registrant's Common Equity, Related Stocsholder Matters and Issuer Purchases of Equity Securities Refer to the information regarding the market for Coach's common stock, the quarterly market price information and the number of common...

  • Page 15
    ... Overview Coach is a leading American marketer of fine accessories and gifts for men and women. Our product offerings include handbags, women's and men's accessories, footwear, outerwear, business cases, sunwear, watches, travel bags, jewelry and fragrance. Coach operates in two segments: Direct-to...

  • Page 16
    ... Japan opened 19 net new locations, bringing the total number of locations at the end of fiscal 2007 to 137. In addition, we expanded nine locations. In mainland China, together with our distributors, Coach opened eight net stores. In March 2007, the Company exited its corporate accounts business...

  • Page 17
    ... by increased sales from comparable stores, new stores and expanded stores. Comparable store sales measure sales performance at stores that have been open for at least 12 months. Coach excludes new locations from the comparable store base for the first year of operation. Similarly, stores that are...

  • Page 18
    ... the number of Coach and Coach Japan operated stores open during any fiscal period and the related proportion of retail and wholesale sales. Advertising, marketing and design expenses include employee compensation, media space and production, advertising agency fees, new product design costs, public...

  • Page 19
    ... in administrative expenses was primarily due to a decrease in share-based compensation expense and other employee staffing costs. However, fiscal 2006 expenses were reduced by $2.0 million due to the receipt of business interruption proceeds related to our World Trade Center location. The Company...

  • Page 20
    ... expenses to support sales growth in other channels. The increase in advertising, marketing and design costs was primarily due to increased staffing costs and increased design expenditures as well as increased development costs for new product categories. Distribution and consumer service expenses...

  • Page 21
    ... quarter of fiscal 2006. Revolving Credit Facilities As of the end of fiscal 2007, the Company maintained a $100 million unsecured revolving credit facility with certain lenders and Bank of America, N.A. as primary lender and administrative agent (the "Bank of America facility"). At Coach's request...

  • Page 22
    ... fiscal quarter Coach builds inventory for the holiday selling season, opens new retail stores and generates higher levels of trade receivables. In the second fiscal quarter its working capital requirements are reduced substantially as Coach generates consumer sales and collects wholesale accounts...

  • Page 23
    ...changes to certain judgments and assumptions inherent in these policies could affect the financial statements. For more information on Coach's accounting policies, please refer to the Notes to Consolidated Financial Statements. Inventories The Company's inventories are reported at the lower of cost...

  • Page 24
    ...for estimated uncollectible accounts, discounts and returns would have resulted in an insignificant change in accounts receivable and net sales. Share-Based Compensation The Company recognizes the cost of employee services received in exchange for awards of equity instruments, such as stock options...

  • Page 25
    ... non-licensed product needs were purchased from independent manufacturers in countries other than the United States. These countries include China, India, Hungary, Indonesia, Italy, Korea, Mauritius, Singapore, Spain, Taiwan and Turkey. Additionally, sales are made through international channels to...

  • Page 26
    ..., the Company's internal control over financial reporting. Item 9B. Other Information None. 33 TABLE OF CONTENTS PART III Item 10. Directors, Executive Officers and Corporate Governance The information set forth in the Proxy Statement for the 2007 Annual Meeting of Stockholders is incorporated...

  • Page 27
    ... Accountant Fees and Services The information required by this item is incorporated herein by reference to the section entitled "Matters Relating to Coach's Independent Auditors" in the Proxy Statement for the 2007 Annual Meeting of Stockholders. PART IV Item 15. Exhibits and Financial Statement...

  • Page 28
    ... information is shown in the consolidated financial statements or notes thereto. 36 TABLE OF CONTENTS 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...

  • Page 29
    ... Company's internal control over financial reporting. /s/ Deloitte & Touche LLP New York, New York August 23, 2007 37 TABLE OF CONTENTS REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Coach, Inc. New York, New York We have audited management...

  • Page 30
    ... and stockholders' equity See accompanying Notes to Condensed Consolidated Financial Statements. 39 TABLE OF CONTENTS COACH, INC. CONSOLIDATED STATEMENTS OF INCOME (amounts in thousands, except per share data) Fiscal Year Ended June 30, 2007 July 1, 2006 July 2, 2005 Net sales Cost of sales...

  • Page 31
    ... Translation adjustments Minimum pension liability Comprehensive income Balances at July 2, 2005 Net income Shares issued for stock options and employee benefit plans Share-based compensation Excess tax benefit from sharebased compensation Repurchase of common stock Changes in derivatives - - 69...

  • Page 32
    ... and employee benefit plans Share-based compensation Excess tax benefit from sharebased compensation 108,318 - 77 108,241 - - 7,692 56,726 65,100 - - - - - - 56,726 65,100 - - - - - - Adjustment to excess tax benefit from share-based compensation Repurchase of common stock Changes in...

  • Page 33
    ..., include handbags, women's and men's accessories, footwear, outerwear, business cases, sunwear, watches, travel bags, jewelry and fragrance. Coach's products are sold through its Direct-to-Consumer segment, which includes Company-operated stores in North America and Japan, its online store and its...

  • Page 34
    ... to these cash investments and accounts receivable. 43 TABLE OF CONTENTS COACH, INC. Notes to Consolidated Financial Statements (dollars and shares in thousands, except per share data) 2. Significant Accounting Policies - (continued) Inventories Inventories consist primarily of finished goods...

  • Page 35
    ... due to the short-term maturities of these accounts. See Note 6, "Investments," for the fair values of the Company's investments as of June 30, 2007 and July 1, 2006. Coach Japan enters into foreign currency contracts that hedge certain U.S. dollar denominated inventory purchases and its fixed rate...

  • Page 36
    ... on the Company's consolidated financial statements. 3. Discontinued Operations In March 2007, the Company exited its corporate accounts business in order to better control the location and image of the brand where Coach product is sold. Through the corporate accounts business, Coach sold products...

  • Page 37
    ... Non-Employee Director Stock Plan and the 2004 Stock Incentive Plan to award stock options, shares and other forms of equity compensation to certain members of Coach management and the outside members of its Board of Directors. These plans were approved by Coach's stockholders. The exercise price of...

  • Page 38
    ... compensation cost related to non-vested stock option awards is expected to be recognized over a weighted-average period of 1.5 years. 49 TABLE OF CONTENTS COACH, INC. Notes to Consolidated Financial Statements (dollars and shares in thousands, except per share data) 4. Share-Based Compensation...

  • Page 39
    ... 30, 2007 and July 1, 2006 were $1,922 and $3,622, respectively, and are included within total liabilities in the consolidated balance sheets. The following table summarizes share and exercise price information about Coach's equity compensation plans as of June 30, 2007: Number of Securities to be...

  • Page 40
    ... included in short-term investments as they are intended to meet the short-term working capital needs of the Company and the Company can sell or roll them over at each 7, 28 or 35 day auction cycle. 7. Debt Revolving Credit Facilities As of the end of fiscal 2007, the Company maintained a $100,000...

  • Page 41
    ...years. The remaining letters of credit, which expire at various dates through 2012, primarily collateralize the Company's obligation to third parties for the purchase of inventory. Coach is a party to employment agreements with certain key executives which provide for compensation and other benefits...

  • Page 42
    ... as a component of cost of sales when the related inventory is sold. Coach is also exposed to market risk from foreign currency exchange rate fluctuations with respect to Coach Japan as a result of its $231,000 U.S. dollar denominated fixed rate intercompany loan from Coach. To manage this risk, on...

  • Page 43
    ... 201,132 55 TABLE OF CONTENTS COACH, INC. Notes to Consolidated Financial Statements (dollars and shares in thousands, except per share data) 11. Income Taxes - (continued) Current and deferred tax provisions (benefits) were: Fiscal Year Ended June 30, 2007 Current Deferred July 1, 2006 Current...

  • Page 44
    .... This plan provides benefits based on employees' years of service and earnings. The Company uses a March 31 measurement date for its defined benefit retirement plans. In September 2006, the FASB issued SFAS 158, "Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans - an...

  • Page 45
    ... 58 TABLE OF CONTENTS COACH, INC. Notes to Consolidated Financial Statements (dollars and shares in thousands, except per share data) 12. Retirement Plans - (continued) Fiscal Year Ended June 30, 2007 July 1, 2006 July 2, 2005 Components of net periodic benefit cost Service cost Interest cost...

  • Page 46
    ... reportable segments: Direct-to-Consumer and Indirect. The Company's reportable segments represent channels of distribution that offer similar merchandise, service and marketing strategies. Sales of Coach products through Company-operated stores in North America and Japan, the Internet and the Coach...

  • Page 47
    ... 137 department store shop-in-shops, retail stores and factory stores in Japan. Coach also operates distribution, product development and quality control locations in the United States, Italy, Hong Kong, China and South Korea. Geographic revenue information is based on the location of our customer...

  • Page 48
    ...sales from Coach-operated stores in Canada. 14. Business Interruption Insurance In the fiscal year ended June 29, 2002, Coach's World Trade Center location was completely destroyed as a result of the September 11 th terrorist attack. Inventory and fixed asset loss claims were filed with the Company...

  • Page 49
    ... from time to time, subject to market conditions and at prevailing market prices, through open market purchases. Repurchased shares of common stock will become authorized but unissued shares and may be issued in the future for general corporate and other purposes. The Company may terminate or limit...

  • Page 50
    ... share of Coach's common stock to buy one additional common share of the Company at an exercise price far below the then-current market price. Subject to certain exceptions, Coach's Board of Directors will be entitled to redeem the rights at $0.0001 per right at any time before the close of business...

  • Page 51
    ... "COH." The following table sets forth, for the fiscal periods indicated, the high and low closing prices per share of Coach's common stock as reported on the New York Stock Exchange Composite Tape. Fiscal Year Ended 2007 High Low Quarter ended: September 30, 2006 December 30, 2006 March 31, 2007...

  • Page 52
    ...2005 Annual Meeting of Stockholders, filed on September 28, 2005 Coach, Inc. 2000 Non-Employee Director Stock Plan, which is incorporated by reference from Exhibit 10.13 to Coach's Annual Report on Form 10-K for the fiscal year ended June 28, 2003 Coach, Inc. Non-Qualified Deferred Compensation Plan...

  • Page 53
    ...Exhibit 10.23 to Coach's Annual Report on Form 10-K for the fiscal year ended July 2, 2005 Employment Agreement dated November 8, 2005 between Coach and Michael Tucci, which is incorporated by reference from Exhibit 10.1 to Coach's Quarterly Report on Form 10-Q for the period ended December 31, 2005...

  • Page 54
    EXECUTION VERSION Published CUSIP Number: 18976DAA1 REVOLVING CREDIT AGREEMENT Dated as of July 26, 2007 among COACH, INC., THE LENDERS LISTED ON SCHEDULE I HERETO and BANK OF AMERICA, N.A., as Administrative Agent and HSBC BANK USA , NATIONAL ASSOCIATION, as Syndication Agent and ...

  • Page 55
    ... Notes Interest on Revolving Credit Loans Requests for Revolving Credit Loans 2.6.1 General 2.6.2 Swing Line 2.7 Conversion Options 2.7.1 2.7.2 2.7.3 2.7.4 2.8 Conversion to Different Type of Revolving Credit Loan Continuation of Type of Revolving Credit Loan Eurodollar Rate Loans Applicability...

  • Page 56

  • Page 57
    TABLE OF CONTENTS (continued) Page 4.1.7 4.1.8 4.2 4.3 Cash Collateral Applicability ISP and UCP 30 30 30 Letter of Credit Fees Conflict with Issuer Documents 31 31 31 31 31 31 31 32 32 32 33 34 34 34 34 34 5. CERTAIN GENERAL PROVISIONS 5.1 5.2 5.3 Arrangement Fee Administrative Agent's Fee...

  • Page 58

  • Page 59
    ...Statements, etc Certain Transactions Employee Benefit Plans 37 37 38 38 38 38 38 7.14.1 7.14.2 7.14.3 7.14.4 In General Terminability of Welfare Plans Guaranteed Pension Plans Multiemployer Plans 7.15 Use of Proceeds 39 39 39 39 39 40 40 40 40 40 7.15.1 General 7.15.2 Regulations U and X 7.15...

  • Page 60

  • Page 61
    ... with Environmental Laws Employee Benefit Plans Transactions with Affiliates FINANCIAL COVENANT 10.1 Fixed Charge Ratio 11. CLOSING CONDITIONS 11.1 11.2 11.3 11.4 11.5 11.6 11.7 11.8 11.9 11.10 11.11 12. Loan Documents Certified Copies of Governing Documents Corporate or Other Action...

  • Page 62

  • Page 63
    ... Administrative Agent as Lender Resignation Notification of Defaults and Events of Default 15. ASSIGNMENT AND PARTICIPATION 15.1 15.2 15.3 15.4 15.5 15.6 15.7 15.8 15.9 16. Conditions to Assignment by Lenders Certain Representations and Warranties; Limitations; Covenants Register New Notes...

  • Page 64
    ...Form of Revolving Credit Note Form of Loan Request Form of Compliance Certificate Assignment and Acceptance Form of Guaranty Form of Subsidiary Reimbursement Agreement Schedules Schedule 1 Schedule 4.1.1 Schedule 7.3 Schedule 7.7 Schedule 7.16 Schedule 7.17(a) Schedule 7.17(b) Schedule 9.1 Schedule...

  • Page 65
    ...corporation having its principal place of business at 516 West 34th Street, New York, New York 10001, BANK OF AMERICA, N.A, a national banking association ("Bank of America"), the other lending institutions listed on Schedule 1 and Bank of America, as administrative agent (the " Administrative Agent...

  • Page 66
    ...period commencing on the Closing Date through the date immediately preceding the first Adjustment Date to occur after the fiscal quarter ending on or about June 30, 2007, the Applicable Margin with respect to the Loans outstanding and the Letter of Credit Fees and the Commitment Fee payable shall be...

  • Page 67
    ... institutions in the state of New York or the state where the Administrative Agent's Office is located, are open for the transaction of banking business and, in the case of Eurodollar Rate Loans, also a day which is a Eurodollar Business Day. Capital Expenditures . Amounts paid or Indebtedness...

  • Page 68
    ... a majority of the board of directors of the Borrower. CJI. Coach Japan, Inc., a Subsidiary of the Borrower. Closing Date. The first date on which the conditions set forth in Section 11 have been satisfied and any Revolving Credit Loans are to be made or any Letter of Credit is to be issued...

  • Page 69
    ...of any shares of any class of Capital Stock of the Borrower. Documentary Letter of Credit Fee . See Section 4.2. Dollars or $. Dollars in lawful currency of the United States of America. Domestic Lending Office. Initially, the office of each Lender designated as such in Schedule 1 hereto; thereafter...

  • Page 70
    ..., any Default or Event of Default has occurred and is continuing, any other bank, insurance company, commercial finance company or other financial institution or other Person approved by the Administrative Agent. Employee Benefit Plan . Any employee benefit plan, whether single-employer or multiple...

  • Page 71
    ... Line Loan bearing interest at the Fixed Rate for a period of time agreed to by the Borrower and the Swing Line Lender pursuant to Section 2.5(c). Foreign Assets Control Regulations . See Section 7.19. GAAP or generally accepted accounting principles . (a) When used in Section 10, whether directly...

  • Page 72
    ... Capital Stock. Governmental Authority. Any foreign, federal, state, regional, local, municipal or other government, or any department, commission, board, bureau, agency, public authority or instrumentality thereof, or any court or arbitrator. Guaranteed Pension Plan . Any employee pension benefit...

  • Page 73
    ... Date of such Loan and ending on the last day of one of the periods set forth below, as selected by the Borrower in a Loan Request or as otherwise required by the terms of this Credit Agreement (i) for any Base Rate Loan, the last day of the calendar quarter; (ii) for any Fixed Rate Loan, the period...

  • Page 74
    ... end on the last Eurodollar Business Day of a calendar month; and (E) any Interest Period that would otherwise extend beyond the Revolving Credit Loan Maturity Date shall end on the Revolving Credit Loan Maturity Date. International Standby Practices . With respect to any standby Letter of Credit...

  • Page 75
    ... and the Fee Letter. Loan Request. See Section 2.6. Loans. The Revolving Credit Loans. Material Adverse Effect . With respect to any change or effect, a material adverse change in, or a material adverse effect on, as the case may be, (i) business, properties, condition (economic, financial or...

  • Page 76
    ...the Swing Line Lender), any Issuing Lender and the Administrative Agent arising or incurred under this Credit Agreement or any of the other Loan Documents or in respect of any of the Loans made or Reimbursement Obligations incurred or any Note, Letter of Credit Application, Letter of Credit or other...

  • Page 77
    ...Line Loans) made or to be made by the Lenders or the Administrative Agent to the Borrower pursuant to Section 2. Revolving Credit Note Record . A Record with respect to a Revolving Credit Note. Revolving Credit Notes . See Section 2.4. Sale and Leaseback . See Section 9.6. Second Extension Request...

  • Page 78
    ... Date relating to any Loan Request, (b) the date which is no more than ten (10) days after the making of a Swing Line Loan pursuant to Section 2.6.2, (d) at the option of the Administrative Agent, on any Business Day following a day on which the account officers of the Administrative Agent active...

  • Page 79
    ... Stock. Stock or similar interests, of any class or classes (however designated), the holders of which are at the time entitled, as such holders, to vote for the election of a majority of the directors (or persons performing similar functions) of the corporation, association, trust or other business...

  • Page 80
    ... of such conditions precedent as the Administrative Agent may require, including, without limitation, the obtaining by any applicable Lender of requisite internal approvals, the Administrative Agent's receipt of evidence of applicable corporate authorization and other corporate documentation from...

  • Page 81
    ... Lenders. If the Required Lenders consent to the Second Extension Request by so notifying the Administrative Agent in writing no later than thirty (30) Business Days after notice of such Extension Request, the Revolving Credit Loan Maturity Date shall be extended to July 26, 2014 with respect...

  • Page 82
    ... shall pay to the Administrative Agent for the respective accounts of the Lenders the full amount of any Commitment Fee then accrued on the amount of the reduction. No reduction or termination of the Commitments may be reinstated. 2.4 The Revolving Credit Notes . The Revolving Credit Loans shall...

  • Page 83
    ...give to the Administrative Agent written notice in the form of Exhibit B hereto (or telephonic notice confirmed promptly in a writing in the form of Exhibit B hereto) of each Revolving Credit Loan requested hereunder (a " Loan Request") (a) by no later than 12:00 p.m. (New York time) on the proposed...

  • Page 84
    ... from time to time to convert any outstanding Revolving Credit Loan to a Revolving Credit Loan of another Type, provided that (a) with respect to any such conversion of a Eurodollar Rate Loan to a Base Rate Loan, the Borrower shall give the Administrative Agent at least one (1) Business Day prior...

  • Page 85
    ... to Swing Line Loans. 2.8 Funds for Revolving Credit Loan . 2.8.1 Funding Procedures. Not later than 3:00 p.m. (New York time) on the proposed Drawdown Date of any Revolving Credit Loans, each of the Lenders will make available to the Administrative Agent, at the Administrative Agent's Office, in...

  • Page 86
    ... Agent shall, not later than 1:00 p.m. (New York time), give telephonic, facsimile or electronic mail notice (a) to the Lenders and the Borrower of the respective outstanding amount of Revolving Credit Loans made by the Administrative Agent on behalf of the Lenders or in the form of Swing Line Loans...

  • Page 87
    ... promises to pay to the Administrative Agent for its own account, and there shall become absolutely due and payable, the outstanding principal amount of each Swing Line Loan made to the Borrower on the earlier of the Settlement Date with respect thereto and the Revolving Credit Loan Maturity Date...

  • Page 88
    ... at such time, then the Borrower shall immediately pay the amount of such excess to the Administrative Agent for the respective accounts of the Lenders for application: first, to the Swing Line Loans; second, to any Unpaid Reimbursement Obligations; third, to the Revolving Credit Loans; and fourth...

  • Page 89
    ...to the Administrative Agent) in the form of a Letter of Credit Application, appropriately completed and signed by the Borrower. Such Letter of Credit Application must be received by the Issuing Lender and the Administrative Agent not later than 3:00 p.m. (New York time) at least one Business Day (or...

  • Page 90
    ..., the Administrative Agent, the Borrower or any Guarantor, at least one Business Day prior to the requested date of issuance or amendment of the applicable Letter of Credit, that one or more applicable conditions contained in Section 12 shall not then be satisfied, then, subject to the terms and...

  • Page 91
    ... make funds available to the Administrative Agent for the account of the Issuing Lender at the Administrative Agent's Office in an amount equal to its Commitment Percentage of the Unpaid Reimbursement Obligations not later than 3:00 p.m. (New York time) on the Business Day specified in such notice...

  • Page 92
    ... thereon (whether directly from the Borrower or otherwise), the Administrative Agent will distribute to such Lender its pro rata share thereof (appropriately adjusted, in the case of interest payments, to reflect the period of time during which such Lender's Letter of Credit Advance was outstanding...

  • Page 93
    ... complying with the terms and conditions of a Letter of Credit. In furtherance and not in limitation of the foregoing, the Issuing Lender may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the...

  • Page 94
    ... (or, in the case of clause (a) above, the difference between the Total Commitment and the Maximum Drawing Amount of the Letters of Credit then outstanding), cash or deposit account balances pursuant to documentation in form and substance satisfactory t o the Administrative Agent and the Issuing...

  • Page 95
    ... Dollars, for the respective accounts of the Lenders and the Administrative Agent, at the Administrative Agent's Office or at such other place that the Administrative Agent may from time to time designate, in each case at or about 3:00 p.m. (New York time or other local time at the place of payment...

  • Page 96
    ... applicable to such Eurodollar Rate Loans or within such earlier period as may be required by law. The Borrower hereby agrees promptly to pay the Administrative Agent for the account of such Lender, upon demand by such Lender, any additional amounts necessary to compensate such Lender for any costs...

  • Page 97
    ... account of, or loans by, or letters of credit issued by, or commitments of an office of any Lender, or (d) impose on any Lender or the Administrative Agent any other conditions or requirements with respect to this Credit Agreement, the other Loan Documents, any Letters of Credit, the Loans, such...

  • Page 98
    ... adoption of or change in any law, governmental rule, regulation, policy, guideline or directive (whether or not having the force of law) regarding capital requirements for Lenders or Lender holding companies or any change in the interpretation or application thereof by a Governmental Authority with...

  • Page 99
    ...terms of the Guaranties. 7. REPRESENTATIONS AND WARRANTIES. The Borrower represents and warrants to the Lenders and the Administrative Agent as follows: 7.1 Corporate Authority. 7.1.1 Incorporation; Good Standing . Each of the Borrower and its Subsidiaries (a) is a corporation (or similar business...

  • Page 100
    ...for the fiscal year then ended. Such balance sheet and statements of income have been prepared in accordance with GAAP and fairly present the financial condition of the Borrower as at the close of business on the date thereof and the results of operations for the fiscal year then ended. There are no...

  • Page 101
    ... is subject to any of the accounting or cost-allocation requirements of the Public Utility Holding Company Act of 2005, or the regulations or orders of the FERC promulgated thereunder or (ii) is or is required to be registered as an "investment company" under the Investment Company Act of 1940. 7.12...

  • Page 102
    ...or is an officer, director, trustee or partner. 7.14 Employee Benefit Plans . 7.14.1 In General. Each Employee Benefit Plan and each Guaranteed Pension Plan has been maintained and operated in compliance in all material respects with the provisions of ERISA and all Applicable Pension Legislation and...

  • Page 103
    ..."margin security" or "margin stock" as such terms are used in Regulations U and X of the Board of Governors of the Federal Reserve System, 12 C.F.R. Parts 221 and 224. 7.15.3 Ineligible Securities. No portion of the proceeds of any Loans is to be used, and no portion of any Letter of Credit is to be...

  • Page 104
    ... of effects resulting from changes in general economic conditions, legal standards or regulatory conditions. 7.19 Foreign Assets Control Regulations, Etc . None of the requesting or borrowing of the Loans, the requesting or issuance, extension or renewal of any Letters of Credit or the use of...

  • Page 105
    ... (c) at all times engage an independent certified public accountant. 8.3 Financial Statements, Certificates and Information . The Borrower will deliver to the Administrative Agent: (a) as soon as practicable, but in any event not later than ninety (90) days after the end of each fiscal year of the...

  • Page 106
    ... 10K of the Borrower, annual income statements, balance sheets and cash flow statements for the immediately succeeding fiscal year of the Borrower and its Subsidiaries delivered to the Administrative Agent; and (f) from time to time such other additional information regarding the financial position...

  • Page 107
    ...or useful in the conduct of its business or the business of its Subsidiaries to be maintained and kept in good condition, repair and working order and supplied with all necessary equipment, (ii) will cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof...

  • Page 108
    ...certified public accountants and authorizes such accountants to disclose to the Administrative Agent and the Lenders any and all financial statements and other supporting financial documents and schedules including copies of any management letter with respect to the business, financial condition and...

  • Page 109
    ...bound and (d) all applicable decrees, orders, and judgments. 8.10 Use of Proceeds. The Borrower will use the proceeds of the Loans and obtain Letters of Credit solely for the purposes set forth in Section 7.15.1. 8.11 Subsidiaries . 8.11.1 Additional Subsidiaries . If, after the Closing Date, the...

  • Page 110
    ... Administrative Agent arising under any of the Loan Documents; (b) endorsements for collection, deposit or negotiation and warranties of products or services, in each case incurred in the ordinary course of business; (c) Indebtedness existing on the date hereof and listed and described on Schedule...

  • Page 111
    ... judgments or awards that have been in force for less than the applicable period for taking an appeal so long as execution is not levied thereunder or in respect of which the Borrower or such Subsidiary shall at the time in good faith be prosecuting an appeal or proceedings for review and in respect...

  • Page 112
    ... exist or to remain outstanding any Investment except Investments in: (a) marketable direct or guaranteed obligations of the United States of America or any agency or instrumentality thereof; (b) demand deposits, certificates of deposit, bank acceptances and time deposits of (i) United States banks...

  • Page 113
    ...; and (c) any asset or stock or other equity interest acquisition by the Borrower or any of its Subsidiaries of Persons in the same or similar line of business as the Borrower (a " Permitted Acquisition ") where (1) the Borrower has notified the Administrative Agent of such Permitted Acquisition...

  • Page 114
    ...directly or indirectly, whereby the Borrower or any Subsidiary of the Borrower shall sell or transfer any assets owned by it in order then or thereafter to lease such assets that the Borrower or any Subsidiary of the Borrower intends to use for substantially the same purpose as the assets being sold...

  • Page 115
    ... take any action which would contravene any Applicable Pension Legislation. 9.9 Transactions with Affiliates. The Borrower will not, and will not permit any of its Subsidiaries to, engage in any transaction with any Affiliate (other than for services as employees, officers and directors), including...

  • Page 116
    ... in the case of the Borrower, to make Loan Requests and Conversion Requests and to apply for Letters of Credit; and (c) to give notices and to take other action on its behalf under the Loan Documents. 11.5 Certificates of Location and UCC Search Results . The Administrative Agent shall have received...

  • Page 117
    ... Counsel as set forth in the Fee Letter. 11.9 Termination of Existing Credit Facility . The Administrative Agent shall have received evidence that the Prior Credit Agreement has been terminated and all obligations thereunder have been discharged. 11.10 Closing Certificate . The Borrower shall have...

  • Page 118
    ... Agent and the Administrative Agent's Special Counsel, and the Lenders, the Administrative Agent and such counsel shall have received all information and such counterpart originals or certified or other copies of such documents as the Administrative Agent may reasonably request. 13. EVENTS...

  • Page 119
    ... shall fail to pay at maturity, or within any applicable period of grace, any obligation for borrowed money or credit received or in respect of any Capitalized Leases, in an aggregate principal amount in excess of $25,000,000, or fail to observe or perform any material term, covenant or agreement...

  • Page 120
    ... or otherwise, or a termination event occurs in connection with any such sale or with respect to any such facility; or (n) a Change of Control shall occur; then, and in any such event, so long as the same may be continuing, the Administrative Agent may, and upon the request of the Required Lenders...

  • Page 121
    ... Uniform Commercial Code, for purposes of actions for the benefit of the Lenders and the Administrative Agent with respect to all cash collateral for Letters of Credit described in Section 4.1.7 hereof and guaranties contemplated by the Loan Documents. 14.2 Employees and Administrative Agents. The...

  • Page 122
    ....4 No Representations . 14.4.1 General. The Administrative Agent shall not be responsible for the execution or validity or enforceability of this Credit Agreement, the Notes, the Letters of Credit, any of the other Loan Documents or any instrument at any time constituting, or intended to constitute...

  • Page 123
    ...accepts such assignment); provided, however, that: (i) such Delinquent Lender shall pay to the Administrative Agent the assignment fee specified in Section 15.3; (ii) such Delinquent Lender shall have received payment of an amount equal to the outstanding principal of its Loans and Letter of Credit...

  • Page 124
    ...applicable laws, statutes, regulations or guidelines, directives or requests of, or agreements with, any Governmental Authority (whether or not having the force of law). 14.6 Holders of Notes. The Administrative Agent may deem and treat the payee of any Note or the purchaser of any Letter of Credit...

  • Page 125
    ... Questionnaire. 15.4 New Notes. Upon its receipt of an Assignment and Acceptance executed by the parties to such assignment, together with each Note subject to such assignment, the Administrative Agent shall record the information contained therein in the Register. Promptly upon the request of the...

  • Page 126
    ...of the United States of America or any state thereof, it shall, prior to the date on which any interest or fees are payable hereunder or under any of the other Loan Documents for its account, deliver to the Borrower and the Administrative Agent certification satisfactory in form and substance to the...

  • Page 127
    ... Letter, (d) all reasonable out-of-pocket expenses (including without limitation reasonable attorneys' fees and costs, which attorneys may be employees of any Lender, any Issuing Lender, the Swing Line Lender or the Administrative Agent, and reasonable consulting, accounting, appraisal, investment...

  • Page 128
    ... foregoing, each Lender severally agrees to pay to the Administrative Agent (or any such sub-agent), the Issuing Lender or such Related Party, as the case may be, such Lender's Commitment Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought...

  • Page 129
    ... partners, directors, officers, employees, agents, advisors and representatives (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by...

  • Page 130
    ...) sufficient time for the Borrower to respond to or defend such order, request or demand. 16.4.3 Other. In no event shall any Lender, any Issuing Lender, the Swing Line Lender or the Administrative Agent be obligated or required to return any materials furnished to it or any Financial Affiliate by...

  • Page 131
    ... to have been sent at the opening of business on the next business day for the recipient, and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause...

  • Page 132
    ... Lender and the Swing Line Lender. In addition, each Lender agrees to notify the Administrative Agent from time to time to ensure that the Administrative Agent has on record (i) an effective address, contact name, telephone number, telecopier number and electronic mail address to which notices and...

  • Page 133
    ... . The Loan Documents and any other documents executed in connection herewith or therewith express the entire understanding of the parties with respect to the transactions contemplated hereby. Neither this Credit Agreement nor any term hereof may be changed, waived, discharged or terminated, except...

  • Page 134
    ... of the Administrative Agent's Fee payable for the Administrative Agent's account or any other provision applicable to the Administrative Agent; and (d) without the written consent of the Swing Line Lender, amend or waive Section 2.6.2, the amount or time of payment of the Swing Line Loans or any...

  • Page 135
    ..., accounting, regulatory and tax advisors to the extent it has deemed appropriate, and (C) the Borrower is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby and by the other Loan Documents; (ii) (A) the Administrative Agent...

  • Page 136
    IN WITNESS WHEREOF, the undersigned have duly executed this Credit Agreement as of the date first set forth above. COACH, INC. By: _____ Name: Nancy Walsh Title: Vice President and Treasurer Signature Page to Revolving Credit Agreement -72-

  • Page 137
    BANK OF AMERICA, N.A., individually and as Administrative Agent By: _____ Name: Title: Signature Page to Revolving Credit Agreement

  • Page 138
    HSBC BANK USA, NATIONAL ASSOCIATION By: _____ Name: Title: Signature Page to Revolving Credit Agreement

  • Page 139
    THE NORTHERN TRUST COMPANY By: _____ Name: Title: Signature Page to Revolving Credit Agreement

  • Page 140
    US BANK, NATIONAL ASSOCIATION By: _____ Name: Title: Signature Page to Revolving Credit Agreement

  • Page 141
    JPMORGAN CHASE BANK, N.A. By: _____ Name: Title: Signature Page to Revolving Credit Agreement

  • Page 142
    NATIONAL CITY BANK By: _____ Name: Title: Signature Page to Revolving Credit Agreement

  • Page 143
    ... 10. Coach Europe Services S.r.l. (Italy) Coach Stores Canada Inc. (Canada) Coach International Holdings, Inc. (Cayman Islands) Coach International Limited (Hong Kong) 11. Coach Manufacturing Limited (Hong Kong) 12. 13. Coach Japan, Inc. (Japan) Coach Consulting (Shenzhen) Company Limited (China)

  • Page 144
    ...consolidated financial statement schedule of Coach, Inc. and subsidiaries, and management's report on the effectiveness of internal control over financial reporting, appearing in this Annual Report on Form 10-K of Coach, Inc. for the year ended June 30, 2007. /s/ Deloitte & Touche LLP New York, NY...

  • Page 145
    ... the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who...

  • Page 146
    ... the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who...

  • Page 147
    ... and (ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: August 23, 2007 By: /s/ Lew Frankfort Name: Lew Frankfort Title: Chairman and Chief Executive Officer Pursuant to 18 U.S.C. § 1350...