Pottery Barn 2008 Annual Report Download - page 65

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Note B: Property and Equipment
Property and equipment consists of the following:
Dollars in thousands Feb. 1, 2009 Feb. 3, 2008
Leasehold improvements $ 828,414 $ 800,658
Fixtures and equipment 578,259 544,152
Capitalized software 247,613 196,311
Land and buildings 133,406 133,435
Corporate systems projects in progress 166,469 96,493
Construction in progress 225,866 23,384
Corporate aircraft 11,503 48,668
Total 1,891,530 1,843,101
Accumulated depreciation and amortization (949,311) (862,026)
Property and equipment – net $ 942,219 $ 981,075
1Corporate systems projects in progress is primarily comprised of a new merchandising, inventory management and order
management system currently under development.
2Construction in progress is primarily comprised of leasehold improvements and furniture and fixtures related to new,
expanded or remodeled retail stores where construction had not been completed as of year-end.
Note C: Borrowing Arrangements
Long-term debt consists of the following:
Dollars in thousands Feb. 1, 2009 Feb. 3, 2008
Obligations under capital leases $ 573 $ –
Memphis-based distribution facilities obligation 11,238 12,822
Mississippi industrial development bonds 13,150 13,150
Total debt 24,961 25,972
Less current maturities 14,702 14,734
Total long-term debt $10,259 $11,238
Capital Leases
As of February 1, 2009, capital lease obligations of $573,000 consist primarily of leases for distribution center
equipment. As of February 3, 2008, we did not have any outstanding capital lease obligations.
Memphis-Based Distribution Facilities Obligation
See Note F for a discussion on our bond-related debt pertaining to our Memphis-based distribution facilities.
Mississippi Industrial Development Bonds
In June 2004, in an effort to utilize tax incentives offered to us by the state of Mississippi, we entered into an
agreement whereby the Mississippi Business Finance Corporation issued $15,000,000 in long-term variable rate
industrial development bonds, the proceeds, net of debt issuance costs, of which were loaned to us to finance the
acquisition and installation of leasehold improvements and equipment located in our Olive Branch, Mississippi,
distribution center. The bonds are marketed through a remarketing agent and are secured by a letter of credit
issued under our $300,000,000 line of credit facility. The bonds mature on June 1, 2024. The bond rate resets
each week based upon current market rates. The rate in effect at February 1, 2009 was 1.4%.
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 February 1, 2009, $13,150,000 remained
outstanding on these bonds and was classified as current debt. The bond proceeds were restricted for use in the
53
Form 10-K