Coach 2014 Annual Report Download - page 43

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TABLE OF CONTENTS



(dollars in millions)


June 29,
2013
Change
Net cash provided by operating activities
 
$ 1,413,974
$ (428,564)
Net cash used in investing activities

(570,500)
(137,208)
Net cash used in financing activities

(689,106)
(58,943)
Effect of exchange rate changes on cash and cash equivalents

(8,798)
8,283
Net (decrease)/increase in cash and cash equivalents
 
$ 145,570
$ (616,432)
The Company’s cash and cash equivalents decreased $470.9 million in fiscal 2014 compared to an increase of $145.6 million in fiscal 2013. The year-
over-year change is primarily driven by declines in net cash provided by operations as well as an increase in net investments purchased during fiscal 2014.

Net cash provided by operating activities decreased $428.6 million primarily due to changes in our operating asset and liability balances and lower net
income partially offset by higher non-cash expenses. Other balance sheet changes, which primarily relate to other assets, were a use of cash of $64.2 million
in fiscal 2014 due to an increase in tax receivables. This compares to a $39.7 million source of cash in fiscal 2013. Accrued liabilities were a lower source of
cash in fiscal 2014 of $14.1 million as compared to a source of cash of $98.9 million in fiscal 2013. This was primarily driven by lower compensation-related
accruals at the end of fiscal 2014. Accounts payable were a use of cash in fiscal 2014 of $30.2 million as compared to a source of cash of $30.4 million in
fiscal 2013, driven by the timing of payments related to inventory purchases. The increase in non-cash expenses reflected higher transformation and
restructuring charges and higher depreciation and amortization expenses partially offset by lower share-based compensation expense and the year-over-year
change in the deferred income tax provision.

Net cash used in investing activities was $707.7 million in fiscal 2014 compared to $570.5 million in fiscal 2013, with the increase of $137.2 million
primarily due to a net increase in our investment portfolio of $226.3 million, partially offset by a decline in cash used for acquisitions and related advances to
distributors of $49.6 million.

Net cash used in financing activities was $748.0 million in fiscal 2014, or an increase of $58.9 million as compared to the prior fiscal year. This net
increase was primarily attributable to higher cash used of $124.9 million related to common stock repurchases, higher dividend payments of $36.8 million as
result of an increased dividend rate per share and $31.8 million due to lower net proceeds from share-based awards. These increases were partially offset by
net borrowings of $140.0 million under the Company's revolving credit facility.

On June 18, 2012, the Company established a $400 million revolving credit facility with certain lenders and JP Morgan Chase Bank, N.A. as the primary
lender and administrative agent (the “JP Morgan facility”) with a maturity date of June 2017. On March 26, 2013, the Company amended the JP Morgan
facility to expand available aggregate revolving commitments to $700 million and to extend the maturity date to March 26, 2018. The JP Morgan facility is
available to finance the seasonal working capital requirements and general corporate purposes of the Company and its subsidiaries. At Coach’s request and
lenders’ consent, revolving commitments of the JP Morgan facility may be increased to $1 billion. At June 28, 2014 there was $140.0 million outstanding
under the JP Morgan facility. Our average borrowings outstanding for fiscal 2014 was $93.9 million. We had no revolving credit borrowings outstanding in
fiscal 2013.
Borrowings under the JP Morgan Facility bear interest at a rate per annum equal to, at Coach’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, Coach pays a commitment fee on the average daily unused
amount of the JP Morgan Facility. At June 28, 2014, the commitment fee was 9 basis points.
The JP Morgan facility contains various covenants and customary events of default. As of June 28, 2014, no known events of default have occurred
under the JP Morgan facility.
41