Coach 2009 Annual Report Download - page 35

TABLE OF CONTENTS
Net cash used in financing activities was $1,019.9 million in fiscal 2010 as compared to $440.1 million in fiscal 2009. The increase of
$579.8 million was primarily attributable to $696.2 million of incremental common stock repurchases and $94.3 million of payments of
Company dividends, partially offset by $197.6 million higher cash proceeds from share-based compensation awards during the current
fiscal year.
Revolving Credit Facilities
On July 26, 2007, the Company renewed its $100 million revolving credit facility with certain lenders and Bank of America, N.A. as
the primary lender and administrative agent (the “Bank of America facility”), extending the facility expiration to July 26, 2012. At Coach’s
request and lenders’ consent, the Bank of America facility can be expanded to $200 million. The facility can also be extended for two
additional one-year periods, at Coach’s request and lenders’ consent.
Coach’s 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 2010 and fiscal 2009 there were no borrowings under the Bank of America facility.
Accordingly, as of July 3, 2010 and June 27, 2009, there were no outstanding borrowings under the Bank of America facility. The
Company’s borrowing capacity as of July 3, 2010 was $90.0 million, due to outstanding letters of credit.
Coach pays a commitment fee of 6 to 12.5 basis points on any unused amounts and interest of LIBOR plus 20 to 55 basis points on
any outstanding borrowings. Both the commitment fee and the LIBOR margin are based on the Company’s fixed charge coverage ratio. At
July 3, 2010, the commitment fee was 7 basis points and the LIBOR margin was 30 basis points.
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 has available credit facilities with several Japanese
financial institutions. These facilities allow a maximum borrowing of 4.1 billion Yen, or approximately $46.7 million, at July 3, 2010.
Interest is based on the Tokyo Interbank rate plus a margin of 30 basis points. During fiscal 2010 and fiscal 2009, the peak borrowings
under the Japanese credit facilities were $0 million and $14.4 million, respectively. As of July 3, 2010 and June 27, 2009, there were no
outstanding borrowings under the Japanese credit facilities.
To provide funding for working capital and general corporate purposes, Coach Shanghai Limited has a credit facility that allows a
maximum borrowing of 67 million Renminbi, or approximately $10 million at July 3, 2010. Interest is based on the People’s Bank of China
rate. During both fiscal 2010 and fiscal 2009, the peak borrowings under this credit facility were $7.5 million. At July 3, 2010 and June
27, 2009, there were $0 and $7.5 million outstanding borrowings under this facility.
Common Stock Repurchase Program
In April 2010, the Company completed its $1.0 billion common stock repurchase program, which was put into place in August 2008. In
April 2010, the Company’s Board approved a new common stock repurchase program to acquire up to $1.0 billion of Coach’s outstanding
common stock through June 2012. Purchases of Coach stock are made from time to time, subject to market conditions and at prevailing
market prices, through open market purchases. Repurchased shares become authorized but unissued shares and may be issued in the future
for general corporate and other uses. The Company may terminate or limit the stock repurchase program at any time.
During fiscal 2010 and fiscal 2009, the Company repurchased and retired 30.7 million and 20.2 million shares of common stock,
respectively, at an average cost of $37.48 and $22.51 per share, respectively. As of July 3, 2010, $559.6 million remained available for
future purchases under the existing program.
Liquidity and Capital Resources
In fiscal 2010, total capital expenditures were $81.1 million and related primarily to new stores in North America and Japan which
accounted for approximately $30.5 million and $4.8 million, respectively, of total capital expenditures. Approximately $9.8 million related
to investments in new stores and corporate infrastructure in Hong Kong and mainland China. Spending on department store renovations
and distributor
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