Coach 2014 Annual Report Download - page 78

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TABLE OF CONTENTS



(1) Cash equivalents consist of money market funds and time deposits with maturities of three months or less at the date of purchase. Due to their short term
maturity, management believes that their carrying value approximates fair value.
(2) Short-term available-for-sale investments are recorded at fair value, which approximates their carrying value, and are primarily based upon quoted
vendor or broker priced securities in active markets. Short-term held to maturity investments are recorded at amortized cost, which approximates fair
value (Level 2).
(3) Fair value is primarily determined using vendor or broker priced securities in active markets. These securities have maturity dates between calendar years
2015 and 2017.
(4) Fair value is determined using a valuation model that takes into consideration the financial conditions of the issuer and the bond insurer, current market
conditions and the value of the collateral bonds. The Company has determined that the significant majority of the inputs used to value this security fall
within Level 3 of the fair value hierarchy as the inputs are based on unobservable estimates. This security was sold during the third quarter of fiscal 2014.
(5) The fair value of these hedges is primarily based on the forward curves of the specific indices upon which settlement is based and includes an adjustment
for the counterparty’s or Company’s credit risk.
The following table present a reconciliation of the assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for
the year ended June 28, 2014 and June 29, 2013. Level 3 available-for-sale securities consisted of one auction rate security.

June 29,

2013
Balance, beginning of year  
$ 6,000
Losses reclassified out of other comprehensive income
—
Loss on sale (included in "Income before taxes")
—
Sale of investment 
—
Balance, end of year  
$ 6,000

The Company’s non-financial instruments, which primarily consist of goodwill and property and equipment, are not required to be measured at fair value
on a recurring basis and are reported at carrying value. However, on a periodic basis whenever events or changes in circumstances indicate that their carrying
value may not be fully recoverable (and at least annually for goodwill), non-financial instruments are assessed for impairment and, if applicable, written-
down to and recorded at fair value, considering market participant assumptions.
The Company incurred impairment charges of $35,544 in fiscal 2014 and $16,624 in fiscal 2013, to reduce the carrying amount of certain store assets
(primarily leasehold improvements at selected retail store locations) to their fair values of $6,876 as of June 28, 2014 and $4,310 as of June 29, 2013. The fair
values of these assets were determined based on Level 3 measurements. Inputs to these fair value measurements included estimates of the amount and the
timing of the stores' net future discounted cash flows based on historical experience, current trends, and market conditions.


On June 18, 2012, the Company established a $400,000 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 $700,000 and to extend the maturity date to March 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 $1,000,000. As of June 28, 2014 and June 29, 2013, there was
$140,000 and $0, respectively, of outstanding borrowings on the JP Morgan facility. Due to the short-term nature of this borrowing, the fair value
approximates carrying value.
76