Pottery Barn 2010 Annual Report Download - page 48

Contractual Obligations
The following table provides summary information concerning our future contractual obligations as of
January 30, 2011:
Payments Due by Period1
Dollars in thousands Fiscal 2011
Fiscal 2012
to Fiscal 2014
Fiscal 2015
to Fiscal 2016 Thereafter Total
Memphis-based distribution facilities
obligation $ 1,414 $ 4,955 $ 1,969 $ — $ 8,338
Capital leases 128 206 — — 334
Interest2836 1,580 191 — 2,607
Operating leases3,4 225,180 559,336 270,676 438,305 1,493,497
Purchase obligations5527,962 4,565 — — 532,527
Total $755,520 $570,642 $272,836 $438,305 $2,037,303
1This table excludes $15.7 million of liabilities for unrecognized tax benefits associated with uncertain tax positions as we
are not able to reasonably estimate when and if cash payments for these liabilities will occur. This amount, however, has
been recorded as a liability in the accompanying Consolidated Balance Sheet as of January 30, 2011.
2Represents interest expected to be paid on our long-term debt and our capital leases.
3Projected payments include only those amounts that are fixed and determinable as of the reporting date.
4Includes rent expense on the lease of our corporate aircraft through May 2011. See Note K to our Consolidated Financial
Statements.
5Represents estimated commitments at year-end to purchase inventory and other goods and services in the normal course of
business to meet operational requirements.
Memphis-Based Distribution Facilities Obligation
As of January 30, 2011, total debt of $8,338,000 consists entirely of bond-related debt pertaining to the
consolidation of one of our Memphis-based distribution facilities due to its related party relationship and our
obligation to renew the lease until the bonds are fully repaid. See discussion of our Memphis-based distribution
facilities at Note F to our Consolidated Financial Statements.
Capital Leases
As of January 30, 2011, capital lease obligations of $334,000 consist primarily of leases for distribution center
equipment.
Operating Leases
We lease store locations, distribution centers, customer care centers, corporate facilities and certain equipment for
original terms ranging generally from 2 to 22 years. Certain leases contain renewal options for periods up to 20
years. The rental payment requirements in our store leases are typically structured as either minimum rent,
minimum rent plus additional rent based on a percentage of store sales if a specified store sales threshold is
exceeded, or rent based on a percentage of store sales if a specified store sales threshold or contractual obligations
of the landlord has not been met. Contingent rental payments, including rental payments that are based on a
percentage of sales, cannot be predicted with certainty at the onset of the lease term. Accordingly, any contingent
rental payments are recorded as incurred each period when the sales threshold is probable of being met and are
excluded from our calculation of deferred rent liability. See Notes A and E to our Consolidated Financial
Statements.
We are party to a variety of contractual agreements under which we may be obligated to indemnify the other
party for certain matters. These contracts primarily relate to our commercial contracts, operating leases,
trademarks, intellectual property, financial agreements and various other agreements. Under these contracts, we
may provide certain routine indemnification relating to representations and warranties or personal injury matters.
The terms of these indemnities range in duration and may not be explicitly defined. Historically, we have not
made significant payments for these indemnities. We believe that if we were to incur a loss in any of these
matters, the loss would not have a material effect on our financial condition or results of operations.
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