Coach 2006 Annual Report Download - page 41

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The Bank of America facility is available for seasonal working capital requirements or general corporate purposes and may be prepaid
without penalty or premium. During fiscal 2007 and fiscal 2006 there were no borrowings under the Bank of America facility. Accordingly,
as of June 30, 2007 and July 1, 2006, there were no outstanding borrowings under the Bank of America facility.
The Bank of America facility contains various covenants and customary events of default. Coach has been in compliance with all
covenants since its inception.
To provide funding for working capital and general corporate purposes, Coach Japan entered into credit facilities with several Japanese
financial institutions. These facilities allow a maximum borrowing of 7.4 billion yen, or approximately $60,000, at June 30, 2007. Interest is
based on the Tokyo Interbank rate plus a margin of up to 50 basis points.
During fiscal 2007 and fiscal 2006, the peak borrowings under the Japanese credit facilities were $25,518 and $21,568, respectively.
As of June 30, 2007 and July 1, 2006, outstanding borrowings under the Japanese credit facilities were $0.
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Coach is party to an Industrial Revenue Bond related to its Jacksonville, Florida facility. This loan bears interest at 4.5%. Principal and
interest payments are made semi-annually, with the final payment due in 2014. As of June 30, 2007 and July 1, 2006, the remaining balance
on the loan was $3,100 and $3,270, respectively. Future principal payments under the Industrial Revenue Bond are as follows:
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2008 $ 235
2009 285
2010 335
2011 385
2012 420
Subsequent to 2012 1,440
Total $ 3,100
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At June 30, 2007 and July 1, 2006, the Company had letters of credit available of $205,000 and $155,000, of which $115,575 and
$91,855, respectively, were outstanding. Of these amounts, $13,236 and $15,057, respectively, relate to the letter of credit obtained in
connection with leases transferred to the Company by the Sara Lee Corporation, for which Sara Lee retains contingent liability. Coach
expects that it will be required to maintain the letter of credit for approximately 10 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. The
agreements also provide for severance payments under certain circumstances. The Company’s employment agreements with Lew Frankfort,
Chairman and Chief Executive Officer, Reed Krakoff, President and Executive Creative Director and Keith Monda, President and Chief
Operating Officer run through August 2011. The Company’s employment agreements with Michael Tucci, President, North America Retail
Division and Michael F. Devine, III, Executive Vice President and Chief Financial Officer run through June 30, 2010.
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In addition to the employment agreements described above, other contractual cash obligations as of June 30, 2007 included $134,690
related to inventory purchase obligations and $2,482 related to capital expenditure purchase obligations.
In the ordinary course of business, Coach is a party to several pending legal proceedings and claims. Although the outcome of such
items cannot be determined with certainty, Coach’s general counsel and management are of the opinion that the final outcome will not have a