Coach 2012 Annual Report Download - page 68

COACH, INC.
Notes to Consolidated Financial Statements (Continued)
(dollars and shares in thousands, except per share data)
7. DEBT − (continued)
no borrowings under the JP Morgan facility and the Bank of America facility. Accordingly, as of June 30,
2012 and July 2, 2011, there were no outstanding borrowings. The Company’s borrowing capacity as of
June 30, 2012 was $393,300 due to outstanding letters of credit.
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 $51,500, 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 $10,000 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.
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 June 30, 2012 and July 2, 2011, the remaining balance on the loan was $1,440 and
$1,860, 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 June 30, 2012, the remaining balance on the mortgage was $21,920. Future principal
payments under these obligations are as follows:
Fiscal Year Amount
2013....................................................... $22,375
2014....................................................... 500
2015....................................................... 485
2016....................................................... —
2017....................................................... —
Subsequent to 2017 ............................................ —
Total ................................................... $23,360
8. COMMITMENTS AND CONTINGENCIES
At June 30, 2012 and July 2, 2011, the Company had credit available of $600,000 and $275,000,
respectively, of which letters of credit totaling $215,380 and $171,916, respectively, were outstanding. The
letters of credit, which expire at various dates through 2014, primarily collateralize the Company’s obligation
to third parties for the purchase of inventory.
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