Coach 2010 Annual Report Download - page 61

TABLE OF CONTENTS
COACH, INC.
Notes to Consolidated Financial Statements
(dollars and shares in thousands, except per share data)
5. FAIR VALUE MEASUREMENTS – (continued)
As of July 2, 2011 and July 3, 2010, the fair value of the Company’s cross-currency swap derivatives were included within accrued
liabilities. The Company uses a management model which includes a combination of observable inputs, such as tenure of the agreement and
notional amount and unobservable inputs, such as the Company’s credit rating. The table below presents the changes in the fair value of the
cross-currency swap during fiscal 2011 and fiscal 2010:
Cross-Currency
Swaps
Balance at July 3, 2010 $ 2,418
Settlement of cross-currency swap on June 30, 2011 (2,418)
Unrealized loss on cross-currency swap maturing on December 29, 2011, recorded in
accumulated other comprehensive income
651
Balance at July 2, 2011 $ 651
Balance at June 27, 2009 $ 36,118
Settlement of cross-currency swap on July 2, 2010 (36,118)
Unrealized loss on cross-currency swap maturing on June 30, 2011, recorded in
accumulated other comprehensive income
2,418
Balance at July 3, 2010 $ 2,418
The above settlement amounts for the cross-currency swaps on June 30, 2011 and July 2, 2010 are net of previously unrecognized
losses recognized through accumulated other comprehensive income of $10,807 and $14,851 in fiscal 2011 and 2010, respectively, prior to
the respective settlement dates.
During fiscal 2011 and fiscal 2010, the Company purchased $224,007 and $229,860, respectively, of short-term investments
consisting of U.S. treasury bills and commercial paper. These investments, net of proceeds from sales and maturities, totaled $2,256 and
$99,928 as of July 2, 2011 and July 3, 2010, respectively, and are classified as held-to-maturity based on our positive intent and ability to
hold the securities to maturity. They are stated at amortized cost, which approximates fair market value due to their short maturities.
6. DEBT
Revolving Credit Facilities
The Company maintains a $100,000 revolving credit facility with certain lenders and Bank of America, N.A. as the primary lender and
administrative agent (the “Bank of America facility”). The facility expires on July 26, 2012. At Coach’s request and lenders’ consent, the
Bank of America facility can be expanded to $200,000 and can also be extended for two additional one-year periods. Under the Bank of
America facility, 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. At July 2, 2011, the commitment fee was 7 basis points and the LIBOR margin was 30 basis
points.
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 2011 and fiscal 2010 there were no borrowings under the Bank of America facility. Accordingly,
as of July 2, 2011 and July 3, 2010, there were no outstanding borrowings under the Bank of America facility. The Company’s borrowing
capacity as of July 2, 2011 was $89,993, due to outstanding letters of credit.
The Bank of America facility contains various covenants and customary events of default. Coach has been in compliance with all
covenants since its inception.
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