Pottery Barn 2007 Annual Report Download - page 41

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, Mississippi
distribution center.
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 2008 which are
included in our current liabilities as of February 3, 2008.
Commercial Commitments
The following table provides summary information concerning our outstanding commercial commitments as of
February 3, 2008:
Amount of Outstanding Commitment Expiration By Period
Dollars in thousands Fiscal 2008
Fiscal 2009
to Fiscal 2011
Fiscal 2012
to Fiscal 2013 Thereafter Total
Credit facility — — — — —
Letter of credit facilities $134,717 — — — $134,717
Standby letters of credit 36,229 — — — 36,229
Total $170,946 — — — $170,946
Credit Facility
As of February 3, 2008, 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), and covenants limiting
our ability to dispose of assets, make acquisitions, be acquired, incur indebtedness, grant liens and make
investments. 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.
During fiscal 2007, we had borrowings under the credit facility of $189,000,000, however, no amounts were
outstanding under the credit facility as of February 3, 2008. No amounts were borrowed under the credit facility
in fiscal 2006. As of February 3, 2008, $36,229,000 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 February 3, 2008, we
were in compliance with our financial covenants under the credit facility.
Letter of Credit Facilities
On September 8, 2007, we amended our five unsecured commercial letter of credit reimbursement facilities, each
of which expires on September 7, 2008, to increase the aggregate available under all letter of credit facilities to
$175,000,000. The letter of credit facilities contain substantially similar covenants and provide for substantially
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Form 10-K