Pottery Barn 2004 Annual Report Download - page 55

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Letter of Credit Facilities
We have three unsecured commercial letter of credit reimbursement facilities for an aggregate of $125,000,000,
each of which expires on July 2, 2005. As of January 30, 2005, an aggregate of $100,552,000 was outstanding
under the letter of credit facilities. Such letters of credit represent only a future commitment to fund inventory
purchases to which we had not taken legal title as of January 30, 2005. The latest expiration for the letters of
credit issued under the facilities is November 29, 2005.
Standby Letters of Credit
As of January 30, 2005, we had issued and outstanding standby letters of credit under the credit facility in an
aggregate amount of $31,763,000. The standby letters of credit were issued to secure the liabilities associated
with workers’ compensation, other insurance programs and the Mississippi Debt Transaction.
Interest Expense
Interest expense was $1,703,000 (net of capitalized interest of $1,689,000), $22,000 (net of capitalized interest of
$2,142,000), and $1,441,000 (net of capitalized interest of $1,269,000) for fiscal 2004, fiscal 2003 and fiscal
2002, respectively.
Note D: Income Taxes
The components of earnings before income taxes, by tax jurisdiction, are as follows:
Fiscal Year Ended
Dollars in thousands Jan. 30, 2005 Feb. 1, 2004 Feb. 2, 2003
United States $303,986 $252,119 $201,867
Foreign 6,219 3,519 415
Total earnings before income taxes $310,205 $255,638 $202,282
The provision for income taxes consists of the following:
Fiscal Year Ended
Dollars in thousands Jan. 30, 2005 Feb. 1, 2004 Feb. 2, 2003
Current payable
Federal $105,096 $ 87,194 $ 69,536
State 17,642 15,640 11,555
Foreign 2,487 2,065 (696)
Total current 125,225 104,899 80,395
Deferred
Federal (6,168) (3,587) (2,749)
State (70) (2,015) (700)
Foreign (16) (870) 933
Total deferred (6,254) (6,472) (2,516)
Total provision $118,971 $ 98,427 $ 77,879
The American Jobs Creation Act will not have an impact on our fiscal 2005 income tax provision.
Except where required by U.S. tax law, no provision was made for U.S. income taxes on the cumulative
undistributed earnings of our Canadian subsidiary, as we intend to utilize those earnings in the Canadian
operations for an indefinite period of time and do not intend to repatriate such earnings.
Accumulated undistributed earnings of our Canadian subsidiary were approximately $6,300,000 as of January
30, 2005. It is currently not practical to estimate the tax liability that might be payable if these foreign earnings
were repatriated.
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