Coach 2002 Annual Report Download - page 54
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Table of Contents
COACH, INC.
Notes to Consolidated Financial Statements — (Continued)
(dollars and shares in thousands, except per share data)
The following are the components of the deferred tax provisions (benefits) occurring as a result of transactions being reported in different
years for financial and tax reporting:
Fiscal Year Ended
June 28, June 29, June 30,
2003 2002 2001
Deferred tax provisions (benefits)
Depreciation $2,269 $(261) $(2,909)
Employee benefits 1,048 5,346 (314)
Advertising accruals 348 — (240)
Non-deductible reserves (2,025) (65) 113
Other, net 7,138 (9,989) (2,447)
Total deferred tax provisions (benefits) $8,778 $(4,969) $(5,797)
The deferred tax assets at the respective year-ends were as follows:
June 28, June 29, June 30,
2003 2002 2001
Deferred tax assets
Reserves not deductible until paid $8,193 $3,351 $3,224
Pension and other employee benefits 2,269 4,165 9,510
Property, plant and equipment 11,906 10,549 10,288
Other 8,008 21,089 9,960
Total deferred tax assets $30,376 $39,154 $32,982
At June 28, 2003, foreign gross tax loss carryforwards totaled approximately $3,400. These loss carryforwards have no expiration. Coach
believes that it is more likely than not that the deferred tax asset associated with these losses will be realized.
4. Debt
Revolving Credit Facilities
Prior to February 27, 2001, Coach participated in a cash concentration system requiring that cash balances be deposited with Sara Lee,
which were netted against borrowings/billings provided by Sara Lee.
On July 2, 2000, Coach entered into a revolving credit facility with Sara Lee. The maximum borrowing permitted under this facility was
$75,000. Interest accrued at U.S. dollar LIBOR plus 30 basis points. Any receivable balance from Sara Lee under this facility earned interest
at U.S. dollar LIBOR minus 20 basis points. The credit facility contained certain covenants, all of which were complied with. This facility was
repaid and terminated on February 27, 2001.
During October 2000, Coach completed an equity restructuring, which included the assumption of $190,000 of long-term debt payable to
a subsidiary of Sara Lee. This long-term debt had an original maturity date of September 30, 2002, accruing interest at U.S. dollar LIBOR
plus 30 basis points. The note contained certain covenants, consistent with the above mentioned revolving credit facility. In fiscal 2001, this
loan was fully paid off by the Company from the net proceeds of the initial public offering, redeeming the short-term investments with Sara
Lee and drawing down on the Sara Lee revolving credit facility.
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