Coach 2011 Annual Report Download - page 41

TABLE OF CONTENTS
at a rate per annum determined in accordance with the Pricing Grid, on the average daily unused amount of the JP Morgan Facility, and
certain fees with respect to letters of credit that are issued. At June 30, 2012, the commitment fee was nine basis points.
The JP Morgan facility contains various covenants and customary events of default. Coach has been in compliance with all covenants
of the facility 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 $52 million, at June 30, 2012.
Interest is based on the Tokyo Interbank rate plus a margin of 27.5 to 30 basis points. During fiscal 2012 and 2011, the peak borrowings
were $0 and $27.1 million, respectively. As of June 30, 2012 and July 2, 2011, 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 63 million Chinese renminbi, or approximately $10 million, at June 30, 2012. Interest is based on the People's
Bank of China rate. During fiscal 2012 and fiscal 2011, there were no borrowings under this credit facility. Accordingly, at June 30, 2012
and July 2, 2011, there were no outstanding borrowings under this facility.
Common Stock Repurchase Program
During fiscal 2011, the Company completed its $1.0 billion common stock repurchase program, which was put into place in April
2010. In January 2011, the Board approved a new common stock repurchase program to acquire up to $1.5 billion of Coach’s outstanding
common stock through June 2013. Purchases of Coach common stock are made 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 2012 and fiscal 2011, the Company repurchased and retired 10.7 million and 20.4 million shares, respectively, or $0.70
billion and $1.10 billion of common stock, respectively, at an average cost of $65.49 and $53.81, respectively. As of June 30, 2012,
$261.6 million remained available for future purchases under the existing program.
Liquidity and Capital Resources
In fiscal 2012, total capital expenditures were $184.3 million related primarily to new stores and corporate infrastructure in North
America, China, and Japan which accounted for approximately $58.4 million, $35.4, and $10.4 million, respectively, of total capital
expenditures. Spending on department store renovations and distributor locations accounted for approximately $9.9 million of the total
capital expenditures. The remaining capital expenditures related to corporate systems and infrastructure. These investments were financed
from on hand cash and operating cash flows.
For the fiscal year ending June 29, 2013, the Company expects total capital expenditures to be approximately $250 million. Capital
expenditures will be primarily for new stores in North America, Asia and technology to support our global expansion. We will also continue
to invest in corporate infrastructure and department store and distributor locations. These investments will be financed primarily from on
hand cash and operating cash flows.
Coach experiences significant seasonal variations in its working capital requirements. During the first fiscal quarter Coach builds
inventory for the holiday selling season, opens new retail stores and generates higher levels of trade receivables. In the second fiscal quarter
its working capital requirements are reduced substantially as Coach generates consumer sales and collects wholesale accounts receivable. In
fiscal 2012, Coach purchased approximately $1.4 billion of inventory, which was primarily funded by on hand cash and operating cash
flows.
Management believes that cash flow from operations and on hand cash will provide adequate funds for the foreseeable working capital
needs, planned capital expenditures, dividend payments and the common stock repurchase program. Any future acquisitions, joint ventures
or other similar transactions may require additional
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