Pottery Barn 2009 Annual Report Download - page 63

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.
Note D: Income Taxes
The components of earnings before income taxes, by tax jurisdiction, are as follows:
Fiscal Year Ended
Dollars in thousands
Jan. 31, 2010
(52 Weeks)
Feb. 1, 2009
(52 Weeks)
Feb. 3, 2008
(53 Weeks)
United States $ 111,689 $ 33,376 $ 299,235
Foreign 8,600 8,577 17,105
Total earnings before income taxes $ 120,289 $ 41,953 $ 316,340
The provision for income taxes consists of the following:
Fiscal Year Ended
Dollars in thousands
Jan. 31, 2010
(52 Weeks)
Feb. 1, 2009
(52 Weeks)
Feb. 3, 2008
(53 Weeks)
Current
Federal $ 55,563 $ 5,143 $ 126,219
State 8,122 (1,096) 19,254
Foreign 2,757 2,775 7,061
Total current 66,442 6,822 152,534
Deferred
Federal (21,636) 4,817 (26,494)
State (2,280) (83) (4,796)
Foreign 321 373 (661)
Total deferred (23,595) 5,107 (31,951)
Total provision $ 42,847 $ 11,929 $ 120,583
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Form 10-K