Pottery Barn 2011 Annual Report Download - page 47

LIQUIDITY AND CAPITAL RESOURCES
As of January 29, 2012, we held $502,757,000 in cash and cash equivalent funds, the majority of which are held
in money market funds and highly liquid U.S. Treasury bills. As is consistent within our industry, our cash
balances are seasonal in nature, with the fourth quarter historically representing a significantly higher level of
cash than other periods.
Throughout the fiscal year, we utilize our cash balances to build our inventory levels in preparation for our fourth
quarter holiday sales. In fiscal 2012, we plan to use our cash resources to fund our inventory and inventory
related purchases, advertising and marketing initiatives, purchases of property and equipment, stock repurchases
and dividend payments. In addition to the current cash balances on hand, 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
March 23, 2015, 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. During fiscal 2011 and fiscal
2010, we had no borrowings under the credit facility, and no amounts were outstanding as of January 29, 2012 or
January 30, 2011. However, as of January 29, 2012, $9,420,000 in issued but undrawn standby letters of credit
was outstanding under the credit facility. Additionally, as of January 29, 2012, we had three unsecured letter of
credit reimbursement facilities for a total of $90,000,000, of which an aggregate of $23,544,000 was outstanding.
These letter of credit facilities represent only a future commitment to fund inventory purchases to which we had
not taken legal title. We are currently in compliance with all of our bank covenants and, based on our current
projections, we expect to remain in compliance throughout fiscal 2012. We believe our cash on hand, in addition
to our available credit facilities, will provide adequate liquidity for our business operations over the next 12
months.
In fiscal 2011, net cash provided by operating activities was $291,334,000 compared to $355,989,000 in fiscal
2010. Net cash provided by operating activities in fiscal 2011 was primarily attributable to net earnings. Net cash
provided by operating activities in fiscal 2011 decreased compared to fiscal 2010 primarily due to a decrease in
accounts payable and accrued liabilities and a decrease in income taxes payable, partially offset by an increase in
fiscal 2011 net earnings.
In fiscal 2010, net cash provided by operating activities was $355,989,000 compared to $490,718,000 in fiscal
2009. Net cash provided by operating activities in fiscal 2010 was primarily attributable to net earnings, and an
increase in accounts payable and accrued liabilities, partially offset by an increase in merchandise inventories.
Net cash provided by operating activities in fiscal 2010 decreased compared to fiscal 2009 primarily due to an
increase in merchandise inventories and a decrease in income taxes payable, partially offset by an increase in
fiscal 2010 net earnings.
Net cash used in investing activities was $157,704,000 for fiscal 2011 compared to $63,995,000 in fiscal 2010.
Fiscal 2011 purchases of property and equipment were $130,353,000, comprised of $53,679,000 for systems
development projects (including e-commerce websites), $42,263,000 for 5 new and 12 remodeled or expanded
stores and $34,411,000 for distribution center and other infrastructure projects. Net cash used in investing
activities for fiscal 2011 increased compared to fiscal 2010 primarily due to an increase in purchases of property
and equipment, as well as our acquisition of Rejuvenation in the fourth quarter of fiscal 2011.
Net cash used in investing activities was $63,995,000 for fiscal 2010 compared to $71,230,000 in fiscal 2009.
Fiscal 2010 purchases of property and equipment were $61,906,000, comprised of $35,311,000 for systems
development projects (including e-commerce websites), $18,348,000 for 4 new and 7 remodeled or expanded
stores and $8,247,000 for distribution center and other infrastructure projects. Net cash used in investing
activities for fiscal 2010 decreased compared to fiscal 2009 primarily due to a reduction in purchases of property
and equipment resulting from a decrease in the number of new and remodeled stores we opened during fiscal
2010, as well as proceeds from the sale of assets, partially offset by restricted cash deposits.
In fiscal 2012, we anticipate investing $200,000,000 to $220,000,000 in the purchase of property and equipment,
primarily for systems development projects (including e-commerce websites), the construction of 17 new stores
and 13 remodeled or expanded stores, and distribution center and other infrastructure projects.
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Form 10-K