Pottery Barn 2004 Annual Report Download - page 53

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Note B: Property and Equipment
Property and equipment consist of the following:
Dollars in thousands Jan. 30, 2005 Feb. 1, 2004
Leasehold improvements1$ 600,249 $ 511,089
Fixtures and equipment2398,826 345,060
Land and buildings2131,471 131,341
Capitalized software 132,614 111,386
Corporate systems projects in progress377,077 54,585
Corporate aircraft 48,618 36,980
Construction in progress48,063 22,183
Capital leases 11,920 11,920
Total 1,408,838 1,224,544
Accumulated depreciation and amortization2(556,426) (459,514)
Property and equipment — net $ 852,412 $ 765,030
1Includes approximately $17.4 million of leasehold improvements related to our lease accounting adjustment. See Note E.
2Includes approximately $28.4 million of land and buildings and $1.5 million of fixtures and equipment at January 30, 2005
and February 1, 2004 and $11.1 million and $10.4 million of related accumulated depreciation at January 30, 2005 and
February 1, 2004, respectively, due to the consolidation of our Memphis-based distribution facilities. See Note F.
3Corporate systems projects in progress is primarily comprised of a new merchandising, inventory management and order
management system currently under development.
4Construction in progress is primarily comprised of leasehold improvements and furniture and fixtures related to new,
unopened retail stores.
Note C: Borrowing Arrangements
Long-term debt consists of the following:
Dollars in thousands Jan. 30, 2005 Feb. 1, 2004
Senior notes $ 5,716 $11,430
Obligations under capital leases 5,673 7,724
Memphis-based distribution facilities obligation 17,000 18,223
Industrial development bonds 14,200 —
Total debt 42,589 37,377
Less current maturities 23,435 8,988
Total long-term debt $19,154 $28,389
Senior Notes
The final payment on the unsecured senior notes of $5,716,000 is due in August 2005 with interest payable semi-
annually at 7.2% per annum. The senior notes rank equally in right of payment with any of our existing and
future unsubordinated, unsecured debt and contain certain financial covenants including a minimum tangible net
worth covenant, a fixed charge coverage ratio and limitations on current and funded debt.
Capital Leases
Our $5,673,000 of capital lease obligations consist primarily of in-store computer equipment leases with a term
of 60 months. The in-store computer equipment leases include an early purchase option at 54 months for
$2,496,000, which is approximately 25% of the acquisition cost. We have an end of lease purchase option to
acquire the equipment at the greater of fair market value or 15% of the acquisition cost.
See Note F for a discussion on our bond-related debt pertaining to our Memphis-based distribution facilities.
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