Pottery Barn 2005 Annual Report Download - page 27

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As a result, we expect that throughout the year there could be ongoing variability in our quarterly tax rates as
taxable events occur and exposures are re-evaluated. Further, our effective tax rate in a given financial statement
period may be materially impacted by changes in the mix and level of earnings.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
Our gross leased store space, as of January 29, 2006, totaled approximately 5,035,000 square feet for 570 stores
compared to approximately 4,637,000 square feet for 552 stores, as of January 30, 2005. All of the existing stores
are leased by us with original terms ranging generally from 5 to 22 years. Certain leases contain renewal options
for periods of up to 20 years. The rental payment requirements in our store leases are typically structured as
either minimum rent, minimum rent plus additional rent based on a percentage of store sales if a specified store
sales threshold is exceeded, or rent based on a percentage of store sales if a specified store sales threshold or
contractual obligations of the landlord have not been met. See Notes A and E to our Consolidated Financial
Statements for more information.
We lease distribution facility space in the following locations:
Location Square Footage (Approximate)
Olive Branch, Mississippi 2,885,000 square feet
Memphis, Tennessee 1,523,000 square feet
Cranbury, New Jersey 781,000 square feet
During fiscal 2005, we exercised our rights under an option to lease an additional 390,000 square feet of
distribution space in connection with one of our Olive Branch, Mississippi distribution center agreements. As of
January 29, 2006, however, we had not occupied this space and have thus excluded it from the table above.
Two of our distribution facilities in Memphis, Tennessee are leased from two partnerships whose partners
include a Director and a Director Emeritus, both of whom are significant shareholders. Both partnerships were
consolidated by us as of February 1, 2004. See Note F to our Consolidated Financial Statements for more
information.
Our Cranbury, New Jersey distribution center agreement requires us to lease an additional 219,000 square feet of
the facility in the event the current tenant vacates the premises. As of January 29, 2006, the current tenant had not
yet vacated the premises.
We contract with a third party who provides furniture delivery and storage facilities in a 662,000 square foot
distribution facility in Ontario, California. This distribution square footage is not included in the table above.
In addition to the above long-term contracts, we enter into other agreements to meet our offsite storage needs
both for our distribution centers and our retail store locations. As of January 29, 2006, we had approximately
731,000 square feet of leased space relating to these agreements. This square footage is not included in the table
above.
We lease call center space in the following locations:
Location Square Footage (Approximate)
Las Vegas, Nevada 36,000 square feet
Oklahoma City, Oklahoma 36,000 square feet
Camp Hill, Pennsylvania 38,000 square feet
Our corporate facilities are located in San Francisco, California. Our primary headquarters, consisting of 122,000
square feet, was purchased in 1993. In February 2000, we purchased a 204,000 square foot facility in San
15
Form 10-K