Coach 2002 Annual Report Download - page 52

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Table of Contents
COACH, INC.
Notes to Consolidated Financial Statements — (Continued)
(dollars and shares in thousands, except per share data)
In January 2003, the FASB issued FIN No. 46 “Consolidations of Variable Interest Entities”. This interpretation requires a company to
consolidate variable interest entities (“VIE”) if the enterprise is a primary beneficiary (holds a majority of the variable interest) of the VIE and
the VIE possesses specific characteristics. It also requires additional disclosure for parties involved with VIEs. The provisions of FIN No. 46
are effective for fiscal 2003. Since the Company does not have any unconsolidated VIEs, the adoption of FIN No. 46 did not have an impact
on its financial position or results of operations.
In April 2003, the FASB issued SFAS No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities,” to
amend and clarify financial accounting and reporting for derivative instruments embedded in other contracts and for hedging activities under
SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities.” SFAS No. 149 requires that contracts with comparable
characteristics be accounted for similarly and clarifies under what circumstances a contract with an initial net investment meets the
characteristics of a derivative as discussed in SFAS No. 133. In addition, it clarifies when a derivative contains a financing component that
warrants special reporting in the statement of cash flows. SFAS No. 149 is effective for contracts entered into or modified after June 30, 2003
and for hedging relationships designated after June 30, 2003. The Company believes that the adoption of SFAS No. 149 will not have an
impact on its financial position or results of operations.
In May 2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and
Equity.” SFAS No. 150 establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of
both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some
circumstances). The provisions of SFAS No. 150 are effective for financial instruments entered into or modified after May 31, 2003, and
otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. The Company believes that the adoption of
SFAS No. 150 will not have an impact on its financial position or results of operations.
2. Balance Sheet Components
The components of certain balance sheet accounts are as follows:
June 28, 2003 June 29, 2002
Property and Equipment
Machinery and equipment $10,789 $9,069
Furniture and fixtures 101,137 82,279
Leasehold improvements 153,442 123,279
Construction in progress 26,470 22,933
Less: accumulated depreciation (173,291) (146,971)
Total property and equipment, net $118,547 $90,589
Accrued Liabilities
Income and other taxes $8,335 $13,016
Payroll and benefits 41,173 34,251
Rent, utilities, insurance, interest and administrative 18,458 15,238
Accrued operating expenses 40,307 36,860
Total accrued liabilities $108,273 $99,365
48