Pottery Barn 2007 Annual Report Download - page 61

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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
similar events of default as the credit facility. Interest on amounts outstanding under the letter of credit facilities
accrues at the lender’s prime rate (or if greater, the average rate on overnight federal funds plus one-half of one
percent). As of February 3, 2008, an aggregate of $134,717,000 was outstanding under the letter of credit
facilities. Such letters of credit represent only a future commitment to fund inventory purchases to which we had
not taken legal title as of February 3, 2008. The latest expiration possible for any future letters of credit issued
under the facilities is February 4, 2009.
Interest Expense
Interest expense was $2,099,000 (net of capitalized interest of $1,389,000), $2,125,000 (net of capitalized interest
of $699,000) and $1,975,000 (net of capitalized interest of $1,200,000) for fiscal 2007, fiscal 2006 and fiscal
2005, respectively.
Note D: Income Taxes
The components of earnings before income taxes, by tax jurisdiction, are as follows:
Fiscal Year Ended
Dollars in thousands
Feb. 3, 2008
(53 Weeks)
Jan. 28, 2007
(52 Weeks)
Jan. 29, 2006
(52 Weeks)
United States $ 299,235 $ 319,732 $ 337,468
Foreign 17,105 17,454 11,330
Total earnings before income taxes $ 316,340 $ 337,186 $ 348,798
The provision for income taxes consists of the following:
Fiscal Year Ended
Dollars in thousands
Feb. 3, 2008
(53 Weeks)
Jan. 28, 2007
(52 Weeks)
Jan. 29, 2006
(52 Weeks)
Current
Federal $ 126,219 $ 148,125 $ 131,242
State 19,254 24,645 19,002
Foreign 7,061 6,299 4,479
Total current 152,534 179,069 154,723
Deferred
Federal (26,494) (44,573) (18,912)
State (4,796) (5,802) (1,538)
Foreign (661) (376) (341)
Total deferred (31,951) (50,751) (20,791)
Total provision $ 120,583 $ 128,318 $ 133,932
Except where required by U.S. tax law, we have historically elected not to provide for U.S. income taxes with
respect to the undistributed earnings of our foreign subsidiaries as we have intended to utilize those earnings in
the foreign operations for an indefinite period of time. In the second quarter of fiscal 2007, we assessed our
anticipated future cash needs and the overall financial position of our Canadian subsidiary and concluded that the
remaining undistributed earnings were in excess of our future cash requirements for the on-going operations of
our Canadian subsidiaries. Accordingly, our Canadian subsidiary repatriated $26,100,000 to our U.S. operations
in the second quarter of fiscal 2007. These repatriated earnings were offset by foreign tax credits that reduced the
51
Form 10-K