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Pier 1 Imports 10-Q 2012

Documents found in this filing:

  1. 10-Q
  2. Ex-31.1
  3. Ex-31.2
  4. Ex-32.1
  5. Ex-32.1
Form 10-Q
Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

 

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended November 26, 2011

November 26, 2011

OR

 

[    ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                     to                     

Commission file number 001-07832

 

PIER 1 IMPORTS, INC.

(Exact name of registrant as specified in its charter)

 

Delaware

   

75-1729843

(State or other jurisdiction of incorporation or organization)    

(I.R.S. Employer

Identification Number)

 

100 Pier 1 Place, Fort Worth, Texas 76102

(Address of principal executive offices, including zip code)

 

(817) 252-8000

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [ X ].  No [    ].

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [ X ]  No [    ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer     X    

    Accelerated filer             

Non-accelerated filer             

  (Do not check if a smaller reporting company)   Smaller reporting company             

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [    ]    No [  X ]

As of December 29, 2011, 109,623,572 shares of the registrant’s common stock, $0.001 par value, were outstanding.


Table of Contents

PIER 1 IMPORTS, INC.

INDEX TO QUARTERLY FORM 10-Q

 

PART I. FINANCIAL INFORMATION

     Page   

Item 1.     Financial Statements

  

Consolidated Statements of Operations for the Three and Nine Months Ended November 26, 2011 and November 27, 2010

     3   

Consolidated Balance Sheets as of November 26, 2011, February 26, 2011 and November 27, 2010

     4   

Consolidated Statements of Cash Flows for the Nine Months Ended November 26, 2011 and November 27, 2010

     5   

Consolidated Statement of Shareholders’ Equity for the Nine Months Ended November 26, 2011

     6   

Notes to Consolidated Financial Statements

     7   

Item 2.      Management’s Discussion and Analysis of Financial Condition and Results of Operations

     11   

Item 3.     Quantitative and Qualitative Disclosures about Market Risk

     20   

Item 4.     Controls and Procedures

     20   

PART II. OTHER INFORMATION

  

Item 1.     Legal Proceedings

     20   

Item 1A.     Risk Factors

     20   

Item 2.     Unregistered Sales of Equity Securities and Use of Proceeds

     21   

Item 3.     Defaults upon Senior Securities

     21   

Item 4.     [Removed and Reserved]

     21   

Item 5.     Other Information

     21   

Item 6.     Exhibits

     21   

Signatures

     22   

 

2


Table of Contents

PART I

 

Item 1. Financial Statements.

PIER I IMPORTS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands except per share amounts)

(unaudited)

 

     Three Months Ended     Nine Months Ended  
     November 26,
2011
    November 27,
2010
    November 26,
2011
    November 27,
2010
 

Net sales

   $ 382,699      $ 353,759      $ 1,056,854      $ 969,887   

Cost of sales (including buying and store occupancy costs)

     217,209        209,690        622,775        596,970   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     165,490        144,069        434,079        372,917   

Selling, general and administrative expenses

     127,514        117,524        342,416        312,917   

Depreciation and amortization

     5,104        4,666        15,171        14,653   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     32,872        21,879        76,492        45,347   

Nonoperating (income) and expenses:

        

Interest, investment income and other

     (3,238     (1,045     (8,441     (3,113

Interest expense

     739        1,424        2,279        4,516   
  

 

 

   

 

 

   

 

 

   

 

 

 
     (2,499     379        (6,162     1,403   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     35,371        21,500        82,654        43,944   

Income tax provision

     12,383        496        28,929        886   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 22,988      $ 21,004      $ 53,725      $ 43,058   
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings per share:

        

Basic

   $ 0.21      $ 0.18      $ 0.47      $ 0.37   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   $ 0.21      $ 0.18      $ 0.47      $ 0.37   
  

 

 

   

 

 

   

 

 

   

 

 

 

Average shares outstanding during period:

        

Basic

     108,713        116,479        113,767        116,363   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     110,306        117,680        115,490        117,202   
  

 

 

   

 

 

   

 

 

   

 

 

 

The accompanying notes are an integral part of these financial statements.

 

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Table of Contents

PIER 1 IMPORTS, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands except share amounts)

(unaudited)

 

     November 26,
2011
    February 26,
2011
    November 27,
2010
 
ASSETS   

Current assets:

      

Cash and cash equivalents, including temporary investments of $136,765, $261,274 and $164,066, respectively

   $ 179,296      $ 301,471      $ 209,781   

Accounts receivable, net

     26,561        14,814        24,313   

Inventories

     367,876        311,770        338,437   

Income tax receivable

     134        1,043        972   

Prepaid expenses and other current assets

     21,525        22,871        20,694   
  

 

 

   

 

 

   

 

 

 

Total current assets

     595,392        651,969        594,197   

Properties, net of accumulated depreciation of $458,375, $452,514 and $453,956, respectively

     87,029        64,773        59,171   

Other noncurrent assets

     30,405        26,835        31,008   
  

 

 

   

 

 

   

 

 

 
   $ 712,826      $ 743,577      $ 684,376   
  

 

 

   

 

 

   

 

 

 
LIABILITIES AND SHAREHOLDERS' EQUITY   

Current liabilities:

      

Accounts payable

   $ 68,437      $ 57,421      $ 61,445   

Current portion long-term debt

     -        -      $ 16,542   

Gift cards and other deferred revenue

     58,369        71,963        44,672   

Accrued income taxes payable

     11,731        232        2,313   

Other accrued liabilities

     115,342        106,739        116,931   
  

 

 

   

 

 

   

 

 

 

Total current liabilities

     253,879        236,355        241,903   

Long-term debt

     9,500        9,500        9,500   

Other noncurrent liabilities

     70,666        84,870        79,425   

Shareholders' equity:

      

Common stock, $0.001 par, 500,000,000 shares authorized, 125,232,000 issued

     125        125        125   

Paid-in capital

     230,524        243,051        244,134   

Retained earnings

     347,538        293,813        236,746   

Cumulative other comprehensive loss

     (2,174     (784     (262

Less — 15,574,000, 7,748,000 and 7,967,000 common shares in treasury, at cost, respectively

     (197,232     (123,353     (127,195
  

 

 

   

 

 

   

 

 

 
     378,781        412,852        353,548   

Commitments and contingencies

     -        -        -   
  

 

 

   

 

 

   

 

 

 
   $ 712,826      $ 743,577      $ 684,376   
  

 

 

   

 

 

   

 

 

 

The accompanying notes are an integral part of these financial statements.

 

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Table of Contents

PIER 1 IMPORTS, INC

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

 

     Nine Months Ended  
     November 26,
2011
    November 27,
2010
 

Cash flow from operating activities:

    

Net income

   $ 53,725      $ 43,058   

Adjustments to reconcile to net cash (used in) provided by operating activities:

    

Depreciation and amortization

     23,078        24,178   

Gain (loss) on disposal of fixed assets

     388        (1,687

Stock-based compensation expense

     4,780        3,668   

Deferred compensation

     4,342        3,127   

Lease termination expense

     783        680   

Amortization of credit card deferred revenue

     (15,625     -   

Amortization of deferred gains

     (9,794     (5,683

Other

     (1,118     2,662   

Changes in cash from:

    

Inventories

     (56,106     (24,941

Accounts receivable, prepaid expenses and other assets

     (17,586     (10,460

Income tax receivable

     909        (411

Accounts payable and accrued expenses

     12,668        4,118   

Accrued income taxes payable

     11,499        (2,654
  

 

 

   

 

 

 

Net cash provided by operating activities

     11,943        35,655   
  

 

 

   

 

 

 

Cash flow from investing activities:

    

Capital expenditures

     (40,359     (19,659

Proceeds from disposition of properties

     1,341        10,619   

Proceeds from sale of restricted investments

     423        3,818   

Purchase of restricted investments

     (1,240     (3,815

Collection of notes receivable

     -        1,500   
  

 

 

   

 

 

 

Net cash used in investing activities

     (39,835     (7,537
  

 

 

   

 

 

 

Cash flow from financing activities:

    

Purchases of treasury stock

     (100,000     -   

Proceeds from stock options exercised, stock purchase plan and other, net

     8,814        3,251   

Repayment of long-term debt

     -        (9,500

Debt issuance costs

     (3,097     -   
  

 

 

   

 

 

 

Net cash used in financing activities

     (94,283     (6,249
  

 

 

   

 

 

 

Change in cash and cash equivalents

     (122,175     21,869   

Cash and cash equivalents at beginning of period

     301,471        187,912   
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 179,296      $ 209,781   
  

 

 

   

 

 

 

The accompanying notes are an integral part of these financial statements.

 

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Table of Contents

CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY

FOR THE NINE MONTHS ENDED NOVEMBER 26, 2011

(in thousands)

(unaudited)

 

    Common Stock     Paid-in
Capital
    Retained
Earnings
    Cumulative
Other

Comprehensive
Income (Loss)
    Treasury
Stock
    Total
Shareholders'
Equity
 
    Outstanding
Stock
    Amount            

Balance February 26, 2011

    117,484      $ 125      $ 243,051      $ 293,813      $ (784   $ (123,353   $ 412,852   

Comprehensive income:

             

Net income

    -        -        -        53,725        -        -        53,725   

Other comprehensive income (net of tax as applicable):

             

Pension adjustments

    -        -        -        -        752        -        752   

Currency translation adjustments

    -        -        -        -        (2,142     -        (2,142
             

 

 

 

Comprehensive income

                52,335   
             

 

 

 

Purchases of treasury stock

    (9,499     -        -        -        -        (100,000     (100,000

Stock-based compensation

    831        -        (8,443     -        -        13,223        4,780   

Exercise of stock options, stock purchase plan and other

    842        -        (4,084     -        -        12,898        8,814   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance November 26, 2011

    109,658      $ 125      $ 230,524      $ 347,538      $ (2,174   $ (197,232   $ 378,781   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

The accompanying notes are an integral part of these financial statements.

 

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Table of Contents

PIER 1 IMPORTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED NOVEMBER 26, 2011

AND NOVEMBER 27, 2010

(unaudited)

Throughout this report, references to the “Company” include Pier 1 Imports, Inc. and all its consolidated subsidiaries. The accompanying unaudited financial statements should be read in conjunction with the Company’s Form 10-K for the year ended February 26, 2011. All adjustments that are, in the opinion of management, necessary for a fair presentation of the consolidated financial statements contained in this report have been made and consist only of normal recurring adjustments, except as otherwise described herein, if any. The results of operations for the three and nine months ended November 26, 2011 and November 27, 2010, are not indicative of results to be expected for the fiscal year because of, among other things, seasonality factors in the retail business. Historically, the strongest sales of the Company’s products have occurred during the holiday season beginning in November and continuing through December. The Company conducts business as one operating segment. As of November 26, 2011, the Company had no financial instruments with fair market values that were materially different from their carrying values.

Note 1 – Earnings per share

Basic earnings per share amounts were determined by dividing net income by the weighted average number of common shares outstanding for the period. Diluted earnings per share amounts were similarly computed, but included the dilutive effect of the Company’s weighted average number of stock options outstanding and shares of unvested restricted stock. Stock options for which the exercise price was greater than the average market price of common shares were not included in the computation of diluted earnings per share as the effect would be antidilutive. There were 2,723,000 and 3,530,000 stock options outstanding with exercise prices greater than the average market price of the Company’s common shares for the three months ended November 26, 2011 and November 27, 2010, respectively. There were 2,986,000 and 5,003,000 stock options outstanding with exercise prices greater than the average market price of the Company’s common shares for the nine months ended November 26, 2011 and November 27, 2010, respectively. Earnings per share for the three and nine months ended November 26, 2011 and November 27, 2010 were calculated as follows (in thousands except per share amounts):

 

     Three Months Ended      Nine Months Ended  
     November 26,
2011
     November 27,
2010
     November 26,
2011
     November 27,
2010
 

Net income, basic and diluted

   $ 22,988       $ 21,004       $ 53,725       $ 43,058   
  

 

 

    

 

 

    

 

 

    

 

 

 

Weighted average shares outstanding during period:

           

Basic

     108,713         116,479         113,767         116,363   

Effect of dilutive stock options

     1,100         494         1,139         260   

Effect of dilutive restricted stock

     493         707         584         579   
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted

     110,306         117,680         115,490         117,202   
  

 

 

    

 

 

    

 

 

    

 

 

 

Earnings per share:

           

Basic

   $ 0.21       $ 0.18       $ 0.47       $ 0.37   
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted

   $ 0.21       $ 0.18       $ 0.47       $ 0.37   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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Table of Contents

Note 2 – Comprehensive income

The components of comprehensive income, net of applicable taxes, for the three and nine months ended November 26, 2011 and November 27, 2010 were as follows (in thousands):

 

     Three Months Ended     Nine Months Ended  
     November 26,
2011
    November 27,
2010
    November 26,
2011
    November 27,
2010
 
        

Net income

   $ 22,988      $ 21,004      $ 53,725      $ 43,058   

Currency translation adjustments

     (1,993     579        (2,142     586   

Pension adjustments

     250        (420     752        (149
  

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income

   $ 21,245      $ 21,163      $ 52,335      $ 43,495   
  

 

 

   

 

 

   

 

 

   

 

 

 

Note 3 – Stock-based compensation

For the three and nine months ended November 26, 2011, the Company recorded stock-based compensation expense related to stock options and restricted stock of $1,440,000 and $4,780,000, respectively. For the three and nine months ended November 27, 2010, the Company recorded stock-based compensation expense related to stock options and restricted stock of $1,059,000 and $3,668,000, respectively.

As of November 26, 2011, there was approximately $265,000 of total unrecognized compensation expense related to unvested stock option awards that is expected to be recognized over a weighted average period of 1.2 years and $6,725,000 of total unrecognized compensation expense related to unvested restricted stock that may be recognized over a weighted average period of 1.5 years.

Note 4 – Costs associated with exit activities

As part of the ordinary course of business, the Company terminates leases prior to their expiration when certain stores or distribution center facilities are closed or relocated as deemed necessary by the evaluation of its real estate portfolio. These decisions are based on store profitability, lease renewal obligations, relocation space availability, local market conditions and prospects for future profitability. In connection with these lease terminations, the Company has recorded estimated liabilities to cover the termination costs. At the time of closure, neither the write-off of fixed assets nor the write-down of inventory related to such stores was material. Additionally, employee severance costs associated with these closures were not significant. The estimated liabilities were recorded based upon the Company’s remaining lease obligations less estimated subtenant rental income. Revisions during the periods presented related to changes in estimated buyout terms or subtenant receipts expected on closed facilities. Expenses related to lease termination obligations are included in selling, general and administrative expenses in the Company’s consolidated statements of operations.

 

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Table of Contents

The following table represents a rollforward of the liability balances for the nine months ended November 26, 2011 and November 27, 2010 related to these closures (in thousands):

 

     Nine Months Ended  
     November 26,
2011
    November 27,
2010
 

Beginning of period

   $ 3,731      $ 4,901   

Original charges

     -        155   

Revisions

     783        525   

Cash payments

     (1,524     (2,221
  

 

 

   

 

 

 

End of period

   $ 2,990      $ 3,360   
  

 

 

   

 

 

 

Note 5 – Defined benefit plans

The Company maintains supplemental retirement plans (the “Plans”) for certain of its executive officers. The Plans provide that upon death, disability, reaching retirement age, or certain termination events, a participant will receive benefits based on highest compensation, years of service and years of plan participation. Benefit costs are determined using actuarial cost methods to estimate the total benefits ultimately payable to executive officers and this cost is allocated to the respective service periods.

The Plans are not funded and thus have no plan assets. The actuarial assumptions used to calculate benefit costs are reviewed annually, or in the event of a material change in the Plans or participation in the Plans. The components of net periodic benefit costs for the three and nine months ended November 26, 2011 and November 27, 2010 were as follows (in thousands):

 

     Three Months Ended      Nine Months Ended  
     November 26,
2011
     November 27,
2010
     November 26,
2011
     November 27,
2010
 

Components of net periodic benefits cost:

           

Service cost

   $ 280       $ 290       $ 839       $ 832   

Interest cost

     195         152         584         522   

Amortization of unrecognized prior service costs

     102         103         307         308   

Amortization of net actuarial loss

     113         41         339         66   

Settlement charge

     -         145         -         145   
  

 

 

    

 

 

    

 

 

    

 

 

 

Net periodic benefit cost

   $ 690       $ 731       $ 2,069       $ 1,873   
  

 

 

    

 

 

    

 

 

    

 

 

 

Note 6 – Proprietary credit card information

During the third quarter of fiscal 2012, the Company entered into a private-label credit card plan agreement (“Agreement”) with World Financial Network Bank, a subsidiary of Alliance Data Systems Corporation (“ADS”). Under the terms of the Agreement, ADS will replace Chase Bank USA, N.A. (“Chase”) as the Company’s private-label credit card provider. The Agreement commencement date will be the date of the transfer of ownership to ADS of the private-label credit accounts issued under the Company’s current private-label credit card program agreement with Chase. The Company anticipates this transfer to ADS will be completed in the first quarter of fiscal 2013. The Agreement with ADS has an initial term of seven years that will automatically extend to a term of ten years if certain performance

 

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Table of Contents

targets are achieved. The Company will be entitled to future payments over the term of the Agreement based on revolving credit card sales and certain other credit and account related matters. As a result of this agreement, the Company has revised the amortization period for any remaining deferred gains related to prior transactions with Chase as appropriate.

Note 7 – Income taxes

During the third quarter and first nine months of fiscal 2012, the Company recorded a current income tax provision of $12,383,000 and $28,929,000, respectively. The Company’s federal net operating loss (“NOL”) carryforwards were fully utilized by the end of fiscal 2011. For the same periods in the prior year, because the NOL carryforwards had not yet been fully utilized, the Company did not record any current or deferred federal tax benefit or expense on its operations, and minimal provisions for state and foreign income tax were made. The Company continues to provide a valuation allowance against all deferred tax assets. However, given the improved performance and expectations for the remainder of the fiscal year, the Company believes it is probable that during the fourth quarter it will be able to conclude that the realization of all deferred tax assets is more likely than not. Accordingly, it is likely that the Company will reverse its valuation allowance and record a non-cash tax benefit of approximately $60,000,000, or an estimated $0.54 per share, during the fourth quarter of the current fiscal year.

Note 8 – New accounting pronouncement

In June 2011, the Financial Accounting Standards Board issued Accounting Standards Update 2011-05, “Comprehensive Income (Topic 220): Presentation of Comprehensive Income,” which amends current comprehensive income guidance. This accounting update eliminates the option to present the components of other comprehensive income as part of the statement of shareholders’ equity. Instead, the Company must report comprehensive income in either a single continuous statement of comprehensive income which contains two sections, net income and other comprehensive income, or in two separate but consecutive statements. This guidance will be effective for the Company beginning in fiscal 2013. The Company does not expect the guidance to impact its consolidated financial statements, as it only requires a change in the format of presentation.

 

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Table of Contents

PART I

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of financial condition, results of operations, and liquidity and capital resources should be read in conjunction with the Company’s consolidated financial statements as of February 26, 2011, and for the year then ended, and related Notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations, all contained in the Company’s Annual Report on Form 10-K for the year ended February 26, 2011.

Management Overview

Pier 1 Imports, Inc. (together with its consolidated subsidiaries, the “Company”) is a global importer and is one of North America’s largest specialty retailers of imported decorative home furnishings and gifts. The Company directly imports merchandise from many countries and sells a wide variety of decorative accessories, furniture collections, bed and bath products, candles, housewares, gifts and other seasonal assortments in its stores. The results of operations for the three and nine months ended November 26, 2011 and November 27, 2010 are not indicative of results to be expected for the fiscal year because of, among other things, seasonality factors in the retail business. Historically, the strongest sales of the Company’s products have occurred during the holiday season beginning in November and continuing through December. The Company conducts business as one operating segment and operates stores in the United States and Canada under the name Pier 1 Imports. As of November 26, 2011, the Company operated 1,054 stores in the United States and Canada.

During the first quarter of fiscal 2012, the Company announced a three-year growth plan to drive sales and further improve profitability in order to increase shareholder value. The plan includes investing in existing store improvements, expansion of the store portfolio, development of infrastructure and technology, and the acceleration of e-commerce initiatives. As part of the three-year growth plan, the Company’s Board of Directors also approved a share repurchase program.

During the first nine months of the year, the Company began executing the three-year growth plan by utilizing $40.4 million for capital expenditures. Approximately $26.2 million was invested in new and existing stores, primarily for new merchandise fixtures and investments made in refurbishments and remodels. The majority of the remaining capital expenditures was for technology projects and infrastructure initiatives to enhance business processes and efficiencies throughout the organization.

The Company continues to focus on enhancing its website and e-commerce initiative. Pier 1 To-Go is fully operational in both the United States and Canada. Pier 1 To-Go allows customers to order and reserve merchandise online for pick up and payment at any of the Company’s stores. The Company’s plan to have full e-commerce functionality by allowing customers to purchase merchandise online, Pier 1 To-You, is progressing and is still expected to launch during the summer of 2012.

As part of the three-year growth plan, the Company’s Board of Directors approved an initial share repurchase program that authorized the repurchase of up to $100 million of the Company’s common stock. This initial share repurchase program was completed on September 6, 2011, resulting in the repurchase of approximately 8% of the Company’s common stock outstanding. A total of 9,498,650 shares of its common stock were repurchased at a weighted average cost of $10.53 per share for a total cost of $100.0 million. On October 13, 2011, the Company’s Board of Directors authorized a new $100 million share repurchase program. At the end of the third quarter of fiscal 2012, no shares had been repurchased under the new program and $100 million remained available for repurchase.

For the third quarter of fiscal 2012, the Company reported net income of $23.0 million, or $0.21 per share,

 

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. (continued)

 

which included an income tax provision of $12.4 million. Net income for the third quarter last year was $21.0 million, or $0.18 per share, which included an income tax provision of only $0.5 million as a result of the Company’s federal net operating loss tax carryforward position. Income before income taxes was $35.4 million for the third quarter compared to income before income taxes of $21.5 million for the same period last year. For the first nine months of fiscal 2012, the Company reported net income of $53.7 million, or $0.47 per share, which included an income tax provision of $28.9 million. Net income for the same period last year was $43.1 million, or $0.37 per share, which included an income tax provision of only $0.9 million as a result of the Company’s federal net operating loss tax carryforward position. Income before income taxes was $82.7 million for the first nine months compared to income before income taxes of $43.9 million for the same period last year.

Total sales for the third quarter of fiscal 2012 were $382.7 million, a 8.2% increase from $353.8 million during the same period last year. Comparable store sales for the quarter increased 7.0%. The total increase in sales for the quarter was primarily the result of an increase in store traffic and average ticket over the same period last year. Total sales for the first nine months of fiscal 2012 were $1.1 billion, a 9.0% increase from last year’s $969.9 million, primarily as a result of increases in store traffic and average ticket. Comparable store sales increased 9.2% for the first nine months of fiscal 2012. Sales per retail square foot were $178 for the trailing twelve months ended November 26, 2011, compared to $163 for the same period last year.

During the third quarter of fiscal 2012, the Company entered into a private-label credit card plan agreement (“Agreement”) with a subsidiary of Alliance Data Systems Corporation (“ADS”). Under the terms of the Agreement, ADS will replace the Company’s existing private-label credit card provider. The Agreement commencement date will be the date of the transfer of ownership to ADS of the private-label credit accounts issued under the Company’s existing private-label credit card program agreement. The Company anticipates this transfer to ADS will be completed in the first quarter of fiscal 2013. The Agreement with ADS has an initial term of seven years that will automatically extend to a term of ten years if certain performance targets are achieved. The Company will be entitled to future payments over the term of the Agreement based on revolving credit card sales and certain other credit and account related matters.

Merchandise margins improved to 60.5% of sales for the third quarter of fiscal 2012 and 59.9% for the year-to-date period, compared to 58.9% and 58.6% for the same respective periods in the prior year. The increases in merchandise margins were the result of strong input margins, the right balance of regular and promotional pricing, and well-managed inventory levels. For fiscal 2012, the Company expects merchandise margins for the full year to be slightly above last year’s levels as a percentage of sales.

Inventory at the end of the third quarter was in line with the Company’s expectations and was $367.9 million compared to $338.4 million at the end of the third quarter last year. The increase in inventory resulted from slightly larger purchases of seasonal merchandise to support higher sales and early receipt of spring merchandise in order to enable the stores to transition and set earlier for spring. Management continues to strategically manage inventory purchases and monitor inventory levels to keep them in line with consumer demand.

Store occupancy costs for the first nine months of fiscal 2012 were $199.3 million, or 18.9% of sales, compared to $195.9 million, or 20.2% as a percentage of sales, for the same period a year ago. Gross profit for the first nine months of fiscal 2012 was 41.1% as a percentage of sales, compared to 38.4% for the same period last year. The Company plans to open two stores and close four stores during the fourth quarter resulting in a net of six store openings for the full fiscal year. The Company anticipates ending fiscal 2012 with 1,052 stores.

The Company increased marketing expenses during the current year to encourage existing customers to

 

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. (continued)

 

visit stores more frequently and attract new customers to stores. As a result, marketing expenditures increased $9.1 million for the year-to-date period compared to last year. Marketing expense for the full fiscal year is expected to be approximately $75 million.

Results of Operations

Management reviews a number of key performance indicators to evaluate the Company’s financial performance. The following table summarizes those key performance indicators for the three and nine months ended November 26, 2011 and November 27, 2010:

 

     Three Months Ended     Nine Months Ended  
     November 26,
2011
    November 27,
2010
    November 26,
2011
    November 27,
2010
 

Key Performance Indicators

        

Total sales growth

     8.2     8.2     9.0     8.4

Comparable stores sales growth

     7.0     10.2     9.2     11.8

Merchandise margins as a % of sales

     60.5     58.9     59.9     58.6

Gross profit as a % of sales

     43.2     40.7     41.1     38.4

Selling, general and administrative expenses as a % of sales

     33.3     33.2     32.4     32.3

Operating income as a % of sales

     8.6     6.2     7.2     4.7

Net income as a % of sales

     6.0     5.9     5.1     4.4

 

     For the period ended  
     November 26,
2011
    November 27,
2010
 

Inventory per retail square foot

   $ 44      $ 41   

Sales per average retail square foot (1)

   $ 178      $ 163   

Total retail square footage (in thousands)

     8,285        8,238   

Total retail square footage increase (decrease) from the same period last year

     0.6     (1.1 %) 

 

(1) 

Sales per average retail square foot is calculated using a rolling 12-month total of store sales over a 13-month retail square footage weighted average.

 

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. (continued)

 

Net Sales – Net sales consisted almost entirely of sales to retail customers, net of discounts and returns, but also included delivery service revenues and wholesale sales and royalties. Sales by retail concept during the period were as follows (in thousands):

 

     Three Months Ended      Nine Months Ended  
     November 26,
2011
     November 27,
2010
     November 26,
2011
     November 27,
2010
 

Stores

   $ 377,989       $ 349,180       $ 1,045,419       $ 958,620   

Other (1)

     4,710         4,579         11,435         11,267   
  

 

 

    

 

 

    

 

 

    

 

 

 

Net sales

   $ 382,699       $ 353,759       $ 1,056,854       $ 969,887   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(1)

Other sales consisted primarily of wholesale sales and royalties received from Grupo Sanborns, S.A. de C.V., and gift card breakage.

Net sales for the third quarter of fiscal 2012 were $382.7 million, an increase of $28.9 million from last year’s third quarter net sales of $353.8 million. Comparable store sales for the quarter increased 7.0%. The total sales increase for the quarter was primarily the result of an increase in store traffic and average ticket over the same period last year. Net sales during the year-to-date period increased $87.0 million, or 9.0%, to $1.057 billion when compared to the same period last year, primarily as a result of an increase in store traffic and average ticket. Comparable store sales increased 9.2% for the first nine months of fiscal 2012. The Canadian dollar continued to strengthen compared to the U.S. dollar, contributing to an increase in comparable store sales of approximately 10 basis points for the quarter and 50 basis points year to date. Net sales for the first nine months of fiscal 2012 included amortization of the deferred gain related to the renegotiation of the Company’s propriety credit card agreement with Chase Bank USA, N.A. (“Chase”) during the fourth quarter of fiscal 2011. The gain amortization in fiscal 2012 was consistent with the treatment of amounts received from Chase during the same period of fiscal 2011 for transaction level incentives. During both periods, the amounts were mostly offset by costs associated with the credit card program. As a result of its new agreement with ADS during the third quarter of fiscal 2012, the Company revised the amortization period for any remaining deferred gains related to prior transactions with Chase as appropriate.

Sales per retail square foot were $178 for the trailing twelve months ended November 26, 2011, up from $163 at the end of the third quarter last year. Total store count as of November 26, 2011 was 1,054 compared to 1,047 stores a year ago.

Sales for the nine-month period were comprised of the following incremental components (in thousands):

 

     Net Sales  

Net sales for the nine months ended November 27, 2010

   $ 969,887   

Incremental sales growth (decline) from:

  

New stores opened during fiscal 2012

     3,036   

Comparable stores

     87,946   

Closed stores and other

     (4,015
  

 

 

 

Net sales for the nine months ended November 26, 2011

   $ 1,056,854   
  

 

 

 

 

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. (continued)

 

A summary reconciliation of the Company’s stores open at the beginning of fiscal 2012 to the number open at the end of the third quarter is as follows:

 

     United States     Canada      Total  

Open at February 26, 2011

     967        79         1,046   

Openings

     11        2         13   

Closings

     (5     —           (5
  

 

 

   

 

 

    

 

 

 

Open at November 26, 2011 (1)

     973        81         1,054   
  

 

 

   

 

 

    

 

 

 

 

(1) 

The Company supplies merchandise and licenses the Pier 1 Imports name to Grupo Sanborns, S.A. de C.V., which sells Pier 1 Imports merchandise primarily in a “store within a store” format. At November 26, 2011, there were 44 locations in Mexico and one in El Salvador. These locations were excluded from the table above.

Gross Profit – Gross profit, which is calculated by deducting store occupancy costs from merchandise margin dollars, was 43.2% as a percentage of sales for the third quarter of fiscal 2012 compared to 40.7% for the same period last year, a 250 basis point improvement. For the first nine months of fiscal 2012, gross profit was 41.1% as a percentage of sales, compared to 38.4% last year. Merchandise margins increased 160 basis points to 60.5% of sales for the third quarter and increased 130 basis points to 59.9% of sales for the nine-month period ended November 26, 2011, from the comparable periods a year ago. Merchandise margins continue to be positively impacted by strong input margins, the right balance of regular and promotional pricing, and well-managed inventory levels.

Store occupancy costs for the quarter were $66.2 million, or 17.3% of sales, compared to $64.4 million, or 18.2% of sales in the same quarter last year. Compared to the third quarter last year, overall rent expense increased slightly in dollars primarily due to the increase in new store openings, but decreased as a percent of sales. Year to date, store occupancy costs were $199.3 million, or 18.9% of sales, compared to $195.9 million, or 20.2% of sales for the same period last year. The increase in dollars for the period was the result of increased rent, property taxes, and repairs and maintenance expenses.

Operating Expenses – Selling, general and administrative expenses for the third quarter of fiscal 2012 were $127.5 million, or 33.3% of sales, compared to $117.5 million, or 33.2% of sales, for the same quarter last year. Year-to-date selling, general and administrative expenses were $342.4 million, or 32.4% of sales, compared to $312.9 million, or 32.3% of sales, for the same period last year.

Selling, general and administrative expenses for the quarter and year-to-date periods included the following charges summarized in the tables below (in thousands):

 

     November 26, 2011     November 27, 2010        

Third Quarter Ended

   Expense      % of Sales     Expense      % of Sales     Increase  

Store payroll

   $ 58,508         15.3   $ 56,909         16.1   $ 1,599   

Marketing

     26,361         6.9     23,579         6.7     2,782   

Store supplies, services and other

     6,636         1.7     6,034         1.7     602   
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Variable costs

     91,505         23.9     86,522         24.5     4,983   

Administrative payroll

     25,684         6.7     21,522         6.1     4,162   

Other relatively fixed expenses

     10,325         2.7     9,480         2.6     845   
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Relatively fixed costs

     36,009         9.4     31,002         8.7     5,007   
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 
   $ 127,514         33.3   $ 117,524         33.2   $ 9,990   
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

 

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. (continued)

 

     November 26, 2011    

November 27, 2010

    Increase /  

Year-to-Date

   Expense      % of Sales     Expense      % of Sales     (Decrease)  

Store payroll

   $ 170,265         16.1   $ 159,867         16.5   $ 10,398   

Marketing

     56,377         5.3     47,289         4.9     9,088   

Store supplies, services and other

     17,904         1.7     18,453         1.9     (549
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Variable costs

     244,546         23.1     225,609         23.3     18,937   

Administrative payroll

     66,025         6.3     58,710         6.1     7,315   

Other relatively fixed expenses

     31,845         3.0     28,599         2.9     3,246   
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Relatively fixed costs

     97,870         9.3     87,309         9.0     10,561   
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 
   $ 342,416         32.4   $ 312,918         32.3   $ 29,498   
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Expenses that tend to fluctuate proportionately with sales and number of stores, such as store payroll, marketing, store supplies and other related expenses, increased $5.0 million from the same quarter last year and $18.9 million year to date, but were leveraged as a percentage of sales for both periods. Store payroll increased $1.6 million for the quarter and $10.4 million year to date primarily as a result of additional associate hours at the stores and increased store bonuses, both the result of the higher sales volume. In addition, the increase also related to the opening of 11 new stores during the quarter and 13 new stores year to date. The Company increased marketing expenses during the current year to encourage existing customers to visit stores more frequently and attract new customers to stores. As a result, marketing expenditures increased $2.8 million for the quarter and $9.1 million year to date. Other variable expenses, primarily supplies and equipment rental, increased $0.6 million from the same quarter last year but decreased $0.5 million year to date from the same periods last year.

Relatively fixed selling, general and administrative expenses increased $5.0 million for the third quarter and $10.6 million year to date compared to the same periods last year. Administrative payroll increased $4.2 million for the quarter and $7.3 million for the first nine months of fiscal 2012, primarily as a result of the planned hiring of incremental headcount in support of e-commerce and other growth initiatives and additional expense for performance related pay and other items. All other relatively fixed expenses increased $0.8 million for the quarter and $3.2 million for the year-to-date period. These increases primarily resulted from other administrative expenses related to the Company’s strategic initiatives and a decrease in deferred gain amortization related to the sale of the home office building. In addition, the year-to-date expenses also increased as a result of a $1.6 million gain in the prior year related to the sale of a distribution center near Chicago, with no similar gain in the current year.

Operating income for the third quarter of fiscal 2012 was $32.9 million compared to $21.9 million last year. For the first nine months of fiscal 2012, operating income totaled $76.5 million compared to $45.3 million for the same period last year.

Nonoperating Income and Expense – During the third quarter of fiscal 2012, nonoperating income was $2.5 million, compared to nonoperating expense of $0.4 million for the same period in fiscal 2011. Nonoperating income year to date was $6.2 million, compared to nonoperating expense of $1.4 million in the same period last year. The increases in income were primarily the result of an increase in deferred gain recognition related to the renegotiation of the Company’s proprietary credit card agreement with Chase

 

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. (continued)

 

during the fourth quarter of fiscal 2011. As a result of its agreement with ADS during the third quarter of fiscal 2012, the Company also revised the amortization period for any remaining deferred gains related to prior transactions with Chase as appropriate. In addition, interest expense for both the quarter and year-to-date periods of fiscal 2012 decreased primarily as a result of a lower debt balance.

Income Taxes – During the third quarter and first nine months of fiscal 2012, the Company recorded a current income tax provision of $12.4 million and $28.9 million, respectively. The Company’s federal net operating loss (“NOL”) carryforwards were fully utilized by the end of fiscal 2011. For the same periods in the prior year, because the NOL carryforwards had not yet been fully utilized, the Company did not record any current or deferred federal tax benefit or expense on its operations, and minimal provisions for state and foreign income tax were made. The Company continues to provide a valuation allowance against all deferred tax assets. However, given the improved performance and expectations for the remainder of the fiscal year, the Company believes it is probable that during the fourth quarter it will be able to conclude that the realization of all deferred tax assets is more likely than not. Accordingly, it is likely that the Company will reverse its valuation allowance and record a non-cash tax benefit of approximately $60 million, or an estimated $0.54 per share, during the fourth quarter of the current fiscal year.

Net Income – During the third quarter of fiscal 2012, the Company recorded net income of $23.0 million, or $0.21 per share, compared to $21.0 million, or $0.18 per share, for the same period last year. Net income for the first nine months of fiscal 2012 was $53.7 million, or $0.47 per share, compared to $43.1 million, or $0.37 per share, for the first nine months of fiscal 2011.

Liquidity and Capital Resources

The Company ended the first nine months of fiscal 2012 with $179.3 million in cash and temporary investments compared to $209.8 million a year ago and $301.5 million at the end of fiscal 2011. The decrease from fiscal 2011 year end was primarily the result of the utilization of cash to support the Company’s three-year growth plan, including capital expenditures of $40.4 million and $100.0 million to repurchase shares of the Company’s common stock.

Operating activities in the first nine months of fiscal 2012 provided $11.9 million of cash, primarily as a result of net income offset by seasonal increases in inventory. Inventory levels at the end of the third quarter of fiscal 2012 were $367.9 million, an increase of $29.4 million from the third quarter of fiscal 2011. The increase in inventory resulted from slightly larger purchases of seasonal merchandise to support higher sales and early receipt of spring merchandise in order to enable the stores to transition and set earlier for spring. At the end of the third quarter of fiscal 2012, inventory per retail square foot was $44 compared to $41 per square foot for the same period last year. The Company continues to focus on strategically managing inventory levels and closely monitoring merchandise purchases to keep inventory in line with consumer demand. Total inventory at the end of fiscal 2012 is expected to be 3% to 5% above the levels at the end of fiscal 2011.

During the first nine months of fiscal 2012, investing activities used $39.8 million compared to $7.5 million during the same period last year. Capital expenditures were $40.4 million and consisted of $26.2 million for new and existing stores, $11.5 million for information systems enhancements, and $2.7 million for home office and distribution centers. Capital expenditures for fiscal 2012 are expected to be approximately $60 million.

During the first nine months of fiscal 2012, financing activities used $94.3 million, primarily related to the Company using $100 million to repurchase shares of the Company’s common stock under the initial Board approved share repurchase program and $3.1 million in debt issuance costs for the Company’s amended and restated secured credit facility. The cash outflows were partially offset by the receipt of $8.8 million in proceeds related primarily to employee stock option exercises and the Company’s employee stock purchase plan.

 

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. (continued)

 

The present value of total existing minimum operating lease commitments discounted at 10% was $631.1 million at the fiscal 2012 third quarter end compared to $588.4 million at the fiscal 2011 third quarter end.

During the first quarter of fiscal 2012, the Company amended and restated its $300 million secured credit facility. The amended and restated facility effectively refinanced the Company’s existing facility, and has a five-year term which will expire in April 2016, an initial line of $300 million and includes a $100 million accordion feature. As of November 26, 2011, the Company had no cash borrowings. Approximately $43.8 million in letters of credit and bankers’ acceptances were outstanding, resulting in $256.2 million available for additional borrowings. As of the end of the third quarter of fiscal 2012, the Company was in compliance with all required covenants stated in the agreement.

Working capital requirements are expected to be funded with cash from operations, available cash balances, and if required, borrowings against lines of credit. Given the Company’s cash position and the various liquidity options available, the Company believes it has sufficient liquidity to fund operational obligations, capital expenditure requirements and share repurchases.

Forward-looking Statements

Certain matters discussed in this quarterly report, except for historical information contained herein, may constitute “forward-looking statements” that are subject to certain risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. The Company may also make forward-looking statements in other reports filed with the SEC and in material delivered to the Company’s shareholders. Forward-looking statements provide current expectations of future events based on certain assumptions. These statements encompass information that does not directly relate to any historical or current fact and often may be identified with words such as “anticipates,” “believes,” “expects,” “estimates,” “intends,” “plans,” “projects” and other similar expressions. Management’s expectations and assumptions regarding planned store openings and closings, financing of Company obligations from operations, success of its marketing, merchandising and store operations strategies, and other future results are subject to risks, uncertainties and other factors that could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements. Risks and uncertainties that may affect Company operations and performance include, among others, the effects of terrorist attacks or other acts of war, conflicts or war involving the United States or its allies or trading partners, labor strikes, weather conditions or natural disasters, volatility of fuel and utility costs, the actions taken by the United States and other countries to stimulate the economy, the general strength of the economy and levels of consumer spending, consumer confidence, suitable store sites and distribution center locations, the availability of a qualified labor force and management, the availability and proper functioning of technology and communications systems supporting the Company’s key business processes, the ability of the Company to import merchandise from foreign countries without significantly restrictive tariffs, duties or quotas, and the ability of the Company to source, ship and deliver items of acceptable quality to its U.S. distribution centers at reasonable prices and rates and in a timely fashion. The foregoing risks and uncertainties are in addition to others discussed elsewhere in this report which may also affect Company operations and performance. The Company assumes no obligation to update or otherwise revise its forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied will not be realized. Additional information concerning these risks and uncertainties is contained in the Company’s Annual Report on Form 10-K for the year ended February 26, 2011, as filed with the Securities and Exchange Commission.

 

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. (continued)

 

Impact of Inflation

Inflation has not had a significant impact on the operations of the Company. However, the Company’s management cannot be certain of the effect inflation may have on the Company’s operations in the future.

 

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PART I

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

There are no material changes to the Company’s market risk as disclosed in its Form 10-K filed for the fiscal year ended February 26, 2011.

 

Item 4. Controls and Procedures.

The Company maintains disclosure controls and procedures, as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended, (the “Exchange Act”), that are designed to ensure that information required to be disclosed by the Company in its reports filed or furnished under the Exchange Act is (a) recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is (b) accumulated and communicated to the Company’s management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding the required disclosure.

As required by Rules 13a-15 and 15d-15 under the Exchange Act, an evaluation was conducted under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of November 26, 2011. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded, with reasonable assurance, that the Company’s disclosure controls and procedures were effective as of such date.

There has not been any change in the Company’s internal control over financial reporting during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II

 

Item 1. Legal Proceedings.

The Company is a party to various legal proceedings and claims in the ordinary course of its business. The Company believes that the outcome of these matters will not have a material adverse effect on its consolidated financial position, results of operations or liquidity.

 

Item 1A. Risk Factors.

There are no material changes from risk factors previously disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended February 26, 2011.

 

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

The following table provides information with respect to purchases of common stock of the Company made during the three months ended November 26, 2011, by Pier 1 Imports, Inc. or any “affiliated purchaser” of Pier 1 Imports, Inc. as defined in Rule 10b-18(a)(3) under the Exchange Act:

 

Period

   Total
Number of
Shares
Purchased
     Average
Price
Paid per
Share
(including
fees)
     Number of
Shares
Purchased
as Part of
Publicly
Announced
Plans or
Programs (1)
     Approximate
Dollar Value of
Shares that

May Yet Be
Purchased
Under the

Plans or
Programs (1)
 

August 28, 2011 through October 1, 2011

     970,423       $ 11.07         970,423       $ —     

October 2, 2011 through October 29, 2011

     —           —           —           100,000,000   

October 30, 2011 through November 26, 2011

     —           —           —           100,000,000   
  

 

 

    

 

 

    

 

 

    

 

 

 
     970,423       $ 11.07         970,423       $ 100,000,000   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(1) 

On March 25, 2011, the Board of Directors authorized an initial $100.0 million for repurchases of the Company’s common stock. As of September 6, 2011, the Company had completed this $100.0 million share repurchase program and purchased a total of 9,498,650 shares of its common stock at a weighted average cost of $10.53 per share. On October 13, 2011, the Board of Directors authorized a new $100.0 million share repurchase program and $100.0 million remained available for repurchase at the end of the third quarter of fiscal 2012. There is no expiration date on the current authorization and during the period covered by the table, no determination was made by the Company to suspend or cancel purchases under the program.

During the third quarter of fiscal 2012, the Company did not acquire any shares of the Company’s common stock from employees to satisfy tax withholding obligations that arose upon vesting of restricted stock granted pursuant to approved plans.

 

Item 3. Defaults upon Senior Securities.

None.

 

Item 4. [Removed and Reserved.]

 

Item 5. Other Information.

None.

 

Item 6. Exhibits.

The Exhibit Index following the signature page to this Quarterly Report on Form 10-Q lists the exhibits furnished as required by Item 601 of Regulation S-K and is incorporated herein by reference.

 

21


Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

    PIER 1 IMPORTS, INC. (Registrant)
Date: January 4, 2012   By:  

/s/ Alexander W. Smith

      Alexander W. Smith, President and
      Chief Executive Officer
Date: January 4, 2012   By:  

/s/ Charles H. Turner

      Charles H. Turner, Executive Vice President and
      Chief Financial Officer
Date: January 4, 2012   By:  

Darla D. Ramirez

      Darla D. Ramirez, Principal Accounting Officer

 

22


Table of Contents

EXHIBIT INDEX

 

Exhibit No.

 

Description

3(i)   Restated Certificate of Incorporation of Pier 1 Imports, Inc. as filed with the Delaware Secretary of State on October 12, 2009, incorporated herein by reference to Exhibit 3(i) to the Company’s Form 10-Q for the quarter ended November 28, 2009.
3(ii)   Amended and Restated Bylaws of Pier 1 Imports, Inc. (as amended through October 9, 2009), incorporated herein by reference to Exhibit 3(ii) to the Company’s Form 8-K filed October 16, 2009.
10.1   Private Label Credit Card Plan Agreement by and between World Financial Network Bank and Pier 1 Imports (U.S.), Inc., dated October 5, 2011, incorporated herein by reference to Exhibit 10.1 to the Company’s Form 8-K filed on October 7, 2011. Some of the schedules and an exhibit to this agreement have been omitted pursuant to a request for confidential treatment.
31.1*   Certification of the Chief Executive Officer Pursuant to Exchange Act Rule 13a-14(a)/15d-14(a).
31.2*   Certification of the Chief Financial Officer Pursuant to Exchange Act Rule 13a-14(a)/15d-14(a).
32.1*   Section 1350 Certifications.
101.INS**+   XBRL Instance Document
101.SCH**+   XBRL Taxonomy Extension Schema Document
101.CAL**+   XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF**+   XBRL Taxonomy Extension Definition Linkbase Document
101.LAB**+   XBRL Taxonomy Extension Label Linkbase Document
101.PRE**+   XBRL Taxonomy Extension Presentation Linkbase Document

 

* Filed herewith
** Furnished herewith
+ Submitted electronically with this Quarterly Report.
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