Pottery Barn 2014 Annual Report Download - page 60

create common revenue recognition guidance between U.S. Generally Accepted Accounting Principles and
International Financial Reporting Standards. This ASU is effective retrospectively for fiscal years and interim
periods within those years beginning after December 15, 2016. We are currently assessing the potential impact of
this ASU on our Consolidated Financial Statements.
Note B: Property and Equipment
Property and equipment consists of the following:
In thousands Feb. 1, 2015 Feb. 2, 2014
Leasehold improvements $ 852,372 $ 847,351
Fixtures and equipment 691,001 698,275
Capitalized software 431,259 419,432
Land and buildings 192,841 188,498
Corporate systems projects in progress 191,885 72,693
Construction in progress 210,119 5,519
Total 2,269,477 2,231,768
Accumulated depreciation (1,386,465) (1,382,475)
Property and equipment, net $ 883,012 $ 849,293
1Corporate systems projects in progress as of February 1, 2015 and February 2, 2014 include approximately $56.8 million
and $40.1 million, respectively, for the portion of our new inventory and order management system currently under
development and not ready for its intended use.
2Construction in progress primarily consists 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:
In thousands Feb. 1, 2015 Feb. 2, 2014
Memphis-based distribution facility obligation (see Note F) $ 1,968 $ 3,753
Less current maturities (1,968) (1,785)
Total long-term debt $ 0 $ 1,968
Credit Facility
We have a $500,000,000 unsecured revolving line of credit (“credit facility”) that may be used to borrow
revolving loans or request the issuance of letters of credit. We may, upon notice to the administrative agent,
request existing or new lenders to increase the credit facility by up to $250,000,000, at such lenders’ option, to
provide for a total of $750,000,000 of unsecured revolving credit. As of February 1, 2015, we were in
compliance with our financial covenants under the credit facility and, based on current projections, we expect to
remain in compliance throughout fiscal 2015. The credit facility matures on November 19, 2019, 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. During fiscal 2014, we had
borrowings of $90,000,000 under the credit facility, all of which were repaid in the fourth quarter of fiscal 2014,
and no amounts were outstanding as of February 1, 2015. During fiscal 2013, we had no borrowings under the
credit facility, and no amounts were outstanding as of February 2, 2014. Additionally, as of February 1, 2015,
$14,760,000 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.
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