Pottery Barn 2009 Annual Report Download - page 47

these payments cannot be determined, except for amounts estimated to be payable in fiscal 2010 which are
included in our current liabilities as of January 31, 2010.
Commercial Commitments
The following table provides summary information concerning our outstanding commercial commitments as of
January 31, 2010:
Amount of Outstanding Commitment Expiration By Period
Dollars in thousands Fiscal 2010
Fiscal 2011
to Fiscal 2013
Fiscal 2014
to Fiscal 2015 Thereafter Total
Credit facility $ — — — — $ —
Letter of credit facilities 30,625 — — — 30,625
Standby letters of credit 26,112 — — — 26,112
Total $56,737 — — — $56,737
Credit Facility
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. 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
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 “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 also 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. As of January 31, 2010, we were in compliance with our
financial covenants under the credit facility and, based on current projections, expect to be in compliance
throughout fiscal 2010. 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 (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. No amounts were
outstanding under the credit facility as of January 31, 2010 or February 1, 2009. Additionally, as of January 31,
2010, $26,112,000 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 and other
insurance programs.
Letter of Credit Facilities
We have four unsecured commercial letter of credit reimbursement facilities, each of which matures on
September 3, 2010. The aggregate credit available under all letter of credit facilities is $125,000,000. The letter
of credit facilities contain covenants and provide for events of default that are consistent with our unsecured
revolving line of credit. Interest on unreimbursed amounts 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) plus
2.0%. As of January 31, 2010, an aggregate of $30,625,000 was outstanding under the letter of credit facilities,
which represent only a future commitment to fund inventory purchases to which we had not taken legal title. The
latest expiration possible for any future letters of credit issued under the facilities is January 31, 2011.
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Form 10-K