Pottery Barn 2006 Annual Report Download - page 28

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. We
began occupying this space in fiscal 2006 and have included it in the table above.
Two of our distribution facilities in Memphis, Tennessee are leased from two partnerships whose partners
include W. Howard Lester, our Chairman of the Board of Directors and Chief Executive Officer, and James A.
McMahan, 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 allows us to lease an additional 219,000 square feet of
the facility in the event the current tenant vacates the premises. As of January 28, 2007, the current tenant had not
vacated the premises.
On May 5, 2006, we entered into an agreement to lease a 418,000 square foot distribution facility located in
South Brunswick, New Jersey. The lease has an initial term of two years, with two optional two-year renewals.
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 28, 2007, we had approximately
368,000 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
Francisco, California for the purpose of consolidating certain headquarters staff and to provide for future growth.
In addition, we own a 13,000 square foot data center located in Memphis, Tennessee.
We believe that our facilities are adequate for our current needs and that suitable additional or substitute space
will be available in the future to replace our existing facilities, if necessary, or to accommodate the expansion of
our operations.
We also lease office, design studio, photo studio, warehouse and data center space in the following locations:
Location Square Footage (Approximate)
Brisbane, California 194,000 square feet
San Francisco, California 148,000 square feet
New York City, New York 52,000 square feet
Rocklin, California 14,000 square feet
ITEM 3. LEGAL PROCEEDINGS
We are involved in lawsuits, claims and proceedings incident to the ordinary course of our business. These
disputes, which are not currently material, are increasing in number as our business expands and our company
grows larger. Litigation is inherently unpredictable. Any claims against us, whether meritorious or not, could be
time consuming, result in costly litigation, require significant amounts of management time and result in the
diversion of significant operational resources. The results of these lawsuits, claims and proceedings cannot be
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