Pottery Barn 2007 Annual Report Download - page 39

LIQUIDITY AND CAPITAL RESOURCES
As of February 3, 2008, we held $118,950,000 in cash and cash equivalent funds. Consistent with our industry,
our cash balances are seasonal in nature, with the fourth quarter representing a significantly higher level of cash
than other periods.
Throughout the fiscal year, we utilize our cash balances to build our inventory levels in preparation for our fourth
quarter holiday sales. In fiscal 2008, we plan to utilize our cash resources to fund our inventory and inventory
related purchases, catalog advertising and marketing initiatives, purchases of property and equipment and share
repurchases and dividends. In addition to the current cash balances on-hand, we have a $300,000,000 credit facility
available as of February 3, 2008 that may be used for loans or letters of credit. Prior to April 4, 2011, we may, upon
notice to the lenders, request an increase in the credit facility of up to $200,000,000, to provide for a total of
$500,000,000 of unsecured revolving credit. During fiscal 2007, we had borrowings under the credit facility of
$189,000,000, however, no amounts were outstanding under our credit facility as of February 3, 2008. Additionally,
as of February 3, 2008, $36,229,000 in issued but undrawn standby letters of credit was outstanding under the credit
facility. We believe our cash on-hand, in addition to our available credit facilities, will provide adequate liquidity
for our business operations and growth opportunities over the next 12-month period.
In fiscal 2007, net cash provided by operating activities was $245,539,000 compared to net cash provided by
operating activities of $309,114,000 in fiscal 2006. Cash provided by operating activities in fiscal 2007 was
primarily attributable to net earnings, an increase in deferred rent and lease incentives due to new store openings
and an increase in customer deposits due to growth in unredeemed gift cards. This was partially offset by an
increase in merchandise inventories due to inventories growing at a faster rate than sales, in addition to the
purchase of new inventory to support the increase in sales in our core and emerging brands and an increase in our
leased square footage of 5.3%.
In fiscal 2006, net cash provided by operating activities was $309,114,000 compared to net cash provided by
operating activities of $348,373,000 in fiscal 2005. Cash provided by operating activities in fiscal 2006 was
primarily attributable to net earnings, an increase in deferred rent and lease incentives due to new store openings,
an increase in income taxes payable and an increase in customer deposits due to growth in unredeemed gift cards.
This was partially offset by an increase in merchandise inventories due to inventories growing at a faster rate
than sales, in addition to the purchase of new inventory to support the increase in sales in our core and emerging
brands and an increase in our leased square footage of 8.3%.
Net cash used in investing activities was $197,250,000 for fiscal 2007 compared to $189,287,000 in fiscal 2006.
Fiscal 2007 purchases of property and equipment were $212,024,000, comprised of $120,325,000 for 23 new and
26 remodeled or expanded stores, $69,286,000 for systems development projects (including e-commerce
websites) and $22,413,000 for distribution, facility infrastructure and other projects. Net cash used in investing
activities was partially offset by a $14,770,000 reimbursement from a software developer.
Net cash used in investing activities was $189,287,000 for fiscal 2006 compared to $151,788,000 in fiscal 2005.
Fiscal 2006 purchases of property and equipment were $190,980,000, comprised of $119,245,000 for 28 new and
28 remodeled or expanded stores, $51,199,000 for systems development projects (including e-commerce
websites) and $20,536,000 for distribution, facility infrastructure and other projects.
In fiscal 2008, we anticipate investing $215,000,000 to $235,000,000 in the purchase of property and equipment,
primarily for the construction of 31 new stores and 20 remodeled or expanded stores, systems development
projects (including e-commerce websites), and distribution, facility infrastructure and other projects.
For fiscal 2007, cash used in financing activities was $208,482,000 compared to $206,027,000 in fiscal 2006,
comprised primarily of $190,378,000 for the repurchase of our common stock and $48,863,000 for the payment
of dividends, partially offset by $28,362,000 in net proceeds from the exercise of stock options.
For fiscal 2006, cash used in financing activities was $206,027,000 compared to $75,808,000 in fiscal 2005,
comprised primarily of $185,508,000 for the repurchase of our common stock and $34,435,000 for the payment
of dividends, partially offset by $13,935,000 in net proceeds from the exercise of stock options.
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Form 10-K