Pottery Barn 2006 Annual Report Download - page 44

The bond agreement allows for each bondholder to tender their bonds to the trustee for repurchase, on demand,
with seven days advance notice. In the event the remarketing agent fails to remarket the bonds, the trustee will
draw upon the letter of credit to fund the purchase of the bonds. As of January 28, 2007, $14,200,000 remained
outstanding on these bonds and was classified as current debt. The bond proceeds were restricted for use in the
acquisition and installation of leasehold improvements and equipment located in our Olive Branch distribution
center. As of January 28, 2007, we had acquired and installed all $15,000,000 of leasehold improvements and
equipment associated with the facility.
Capital Leases
Our $163,000 of capital lease obligations consists primarily of leases for distribution center equipment used in
our normal course of business.
Other Contractual Obligations
We have other liabilities reflected in our consolidated balance sheets. The payment obligations associated with
these liabilities are not reflected in the table above due to the absence of scheduled maturities. The timing of
these payments cannot be determined, except for amounts estimated to be payable in fiscal 2007 which are
included in our current liabilities as of January 28, 2007.
Commercial Commitments
The following table provides summary information concerning our outstanding commercial commitments as of
January 28, 2007.
Amount of Outstanding Commitment Expiration By Period
Dollars in thousands Fiscal 2007
Fiscal 2008
to Fiscal 2010
Fiscal 2011
to Fiscal 2012 Thereafter Total
Credit facility — — — — —
Letter of credit facilities $124,860 — — — $124,860
Standby letters of credit 37,398 — — — 37,398
Total $162,258 — — — $162,258
Credit Facility
As of January 28, 2007, we have a credit facility that provides for a $300,000,000 unsecured revolving line of
credit that may be used for loans or letters of credit and contains certain financial covenants, including a
maximum leverage ratio (funded debt adjusted for lease and rent expense to EBITDAR). Prior to April 4, 2011,
we may, upon notice to the lenders, request an increase in the new credit facility of up to $200,000,000, to
provide for a total of $500,000,000 of unsecured revolving credit. The credit facility contains events of default
that include, among others, non-payment of principal, interest or fees, violation of covenants, inaccuracy of
representations and warranties, bankruptcy and insolvency events, material judgments, cross defaults to certain
other indebtedness and events constituting a change of control. The occurrence of an event of default will
increase the applicable rate of interest by 2.0% and could result in the acceleration of our obligations under the
credit facility and an obligation of any or all of our U.S. subsidiaries to pay the full amount of our obligations
under the credit facility. The credit facility matures on October 4, 2011, at which time all outstanding borrowings
must be repaid and all outstanding letters of credit must be cash collateralized.
We may elect interest rates calculated at Bank of America’s prime rate (or, if greater, the average rate on
overnight federal funds plus one-half of one percent) or LIBOR plus a margin based on our leverage ratio. No
amounts were borrowed under the credit facility during fiscal 2006 or fiscal 2005. However, as of January 28,
2007, $37,398,000 in issued but undrawn standby letters of credit was outstanding under the credit facility. The
standby letters of credit were issued to secure the liabilities associated with workers’ compensation, other
insurance programs and certain debt transactions. As of January 28, 2007, we were in compliance with our
financial covenants under the credit facility.
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