Pottery Barn 2008 Annual Report Download - page 47

these payments cannot be determined, except for amounts estimated to be payable in fiscal 2009 which are
included in our current liabilities as of February 1, 2009.
Commercial Commitments
The following table provides summary information concerning our outstanding commercial commitments as of
February 1, 2009:
Amount of Outstanding Commitment Expiration By Period
Dollars in thousands Fiscal 2009
Fiscal 2010
to Fiscal 2012
Fiscal 2013
to Fiscal 2014 Thereafter Total
Credit facility $ — — — — $ —
Letter of credit facilities 28,518 — — — 28,518
Standby letters of credit 39,559 — — — 39,559
Total $68,077 — — — $68,077
Credit Facility
As of February 1, 2009, we have an amended credit facility that provides for a $300,000,000 unsecured revolving
line of credit 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. The amended revolving line of credit facility contains certain financial covenants,
including a maximum leverage ratio (funded debt adjusted for lease and rent expense to Earnings Before Interest,
Income Tax, Depreciation, Amortization and Rent Expense, or “EBITDAR”), a minimum fixed charge coverage
ratio (calculated as EBITDAR to total fixed charges), and covenants limiting our ability to repurchase shares of
stock or increase our dividend, in addition to covenants limiting our ability to dispose of assets, make
acquisitions, be acquired (if a default would result from the acquisition), incur indebtedness, grant liens and make
investments. 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 material 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 subsidiaries that
have guaranteed our credit facility to pay the full amount of our obligations under the credit facility. The
amended 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 (i) Bank of America’s prime rate (or, if greater, the average rate on
overnight federal funds plus one-half of one percent, or a rate based on LIBOR plus one percent) plus a margin
based on our leverage ratio, or (ii) LIBOR plus a margin based on our leverage ratio. During fiscal 2008 and
fiscal 2007, we had cumulative borrowings under the credit facility of $195,800,000 and $189,000,000,
respectively, of which the maximum amount of borrowings outstanding at any one time were $78,000,000 and
$98,000,000 during fiscal 2008 and fiscal 2007, respectively. No amounts were outstanding under the credit
facility as of February 1, 2009 or February 3, 2008. As of February 1, 2009, $39,559,000 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 1, 2009, we were in compliance with our financial covenants under the credit
facility and, based on our current projections, expect to be in compliance throughout 2009.
Letter of Credit Facilities
We have five unsecured commercial letter of credit reimbursement facilities, each of which expires on
September 4, 2009. The aggregate credit available under all letter of credit facilities is $165,000,000. 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
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Form 10-K