Coach 2009 Annual Report Download - page 62

TABLE OF CONTENTS
COACH, INC.
Notes to Consolidated Financial Statements
(dollars and shares in thousands, except per share data)
7. DEBT – (continued)
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 $9,896 at July 3, 2010. Interest is based on the People’s Bank of China
rate. During fiscal 2010 and fiscal 2009, the peak borrowings under this credit facility were $7,496. At July 3, 2010, there were no
outstanding borrowings under this facility.
Long-Term Debt
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 August 2014. As of July 3, 2010 and June 27, 2009, the remaining
balance on the loan was $2,245 and $2,580, respectively. During fiscal 2009, Coach assumed a mortgage in connection with the purchase
of its corporate headquarters building in New York City. This mortgage bears interest at 4.68%. Interest payments are made monthly and
principal payments began in July 2009, with the final payment of $21,555 due in June 2013. As of July 3, 2010, the remaining balance on
the mortgage was $22,656. Future principal payments under these obligations are as follows:
Fiscal Year Amount
2011 $ 742
2012 791
2013 22,383
2014 500
2015 485
Subsequent to 2015 —
Total $ 24,901
8. COMMITMENTS AND CONTINGENCIES
At July 3, 2010 and June 27, 2009, the Company had letters of credit available of $275,000, of which $147,380 and $101,940,
respectively, were outstanding. The 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 and the respective
expiration dates are as follows:
Executive Title Expiration Date
Lew Frankfort Chairman and Chief Executive Officer August 2011
Reed Krakoff President and Executive Creative Director June 2014
Michael Tucci President, North America Retail Division June 2013
In addition to the employment agreements described above, other contractual cash obligations as of July 3, 2010 and June 27, 2009
included $166,596 and $105,114, respectively, related to inventory purchase obligations and $1,611 and $2,370, respectively, 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
material effect on Coach’s cash flow, results of operations or financial position.
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