Pier 1 Imports 10-Q 6 Jul 16 2017 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	May 28, 2016	Jun. 30, 2016
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	May 28, 2016
Document Fiscal Year Focus	2,017
Document Fiscal Period Focus	Q1
Trading Symbol	PIR
Entity Registrant Name	PIER 1 IMPORTS INC/DE
Entity Central Index Key	278,130
Current Fiscal Year End Date	--02-25
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		83,299,329

Consolidated Statements of Oper

Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	May 28, 2016	May 30, 2015
Income Statement [Abstract]
Net sales	$ 418,370	$ 436,866
Cost of sales	269,403	267,327
Gross profit	148,967	169,539
Selling, general and administrative expenses	142,724	143,587
Depreciation	14,051	12,394
Operating income (loss)	(7,808)	13,558
Nonoperating (income) and expenses:
Interest, investment income and other	(781)	(279)
Interest expense	3,047	3,008
Nonoperating (income) and expenses	2,266	2,729
Income (loss) before income taxes	(10,074)	10,829
Income tax provision (benefit)	(4,054)	3,955
Net income (loss)	$ (6,020)	$ 6,874
Earnings (loss) per share:
Basic	$ (0.07)	$ 0.08
Diluted	(0.07)	0.08
Dividends declared per share:	$ 0.07	$ 0.07
Average shares outstanding during period:
Basic	81,663	88,295
Diluted	81,663	89,021

Consolidated Statements of Comp

Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands	3 Months Ended
	May 28, 2016	May 30, 2015
Statement of Comprehensive Income [Abstract]
Net income (loss)	$ (6,020)	$ 6,874
Other comprehensive income
Foreign currency translation adjustments	1,484	169
Pension adjustments	364	410
Other comprehensive income	1,848	579
Comprehensive income (loss), net of tax	$ (4,172)	$ 7,453

Consolidated Balance Sheets

Consolidated Balance Sheets - USD ($) $ in Thousands	May 28, 2016	Feb. 27, 2016	May 30, 2015
Current assets:
Cash and cash equivalents, including temporary investments of $122,494, $110,413 and $65,940, respectively	$ 128,031	$ 115,221	$ 97,029
Accounts receivable, net	25,631	22,639	25,938
Inventories	421,098	405,859	501,662
Prepaid expenses and other current assets	34,995	31,175	47,491
Total current assets	609,755	574,894	672,120
Properties and equipment, net of accumulated depreciation of $497,064, $481,758 and $454,345, respectively	199,331	207,633	209,912
Other noncurrent assets	36,738	36,664	39,195
Assets, Total	845,824	819,191	921,227
Current liabilities:
Accounts payable	117,067	72,570	130,219
Gift cards and other deferred revenue	66,093	64,081	65,165
Accrued income taxes payable		6,324	5,704
Current portion of long-term debt	2,000	2,000	2,000
Other accrued liabilities	103,228	101,712	111,595
Total current liabilities	288,388	246,687	314,683
Long-term debt	199,962	200,255	201,134
Other noncurrent liabilities	87,517	87,492	82,219
Commitments and contingencies
Shareholders' equity:
Common stock, $0.001 par, 500,000,000 shares authorized, 125,232,000 issued	125	125	125
Paid-in capital	186,757	211,019	207,120
Retained earnings	717,825	729,537	714,277
Cumulative other comprehensive loss	(8,789)	(10,637)	(9,406)
Less - 41,150,000, 41,760,000 and 35,682,000 common shares in treasury, at cost, respectively	(625,961)	(645,287)	(588,925)
Total shareholders' equity	269,957	284,757	323,191
Liabilities and Equity, Total	$ 845,824	$ 819,191	$ 921,227

Consolidated Balance Sheets (Pa

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	May 28, 2016	Feb. 27, 2016	May 30, 2015
Statement of Financial Position [Abstract]
Cash and cash equivalents, temporary investments	$ 122,494	$ 110,413	$ 65,940
Properties and equipment, accumulated depreciation	$ 497,064	$ 481,758	$ 454,345
Common stock, par value	$ 0.001	$ 0.001	$ 0.001
Common stock, shares authorized	500,000,000	500,000,000	500,000,000
Common stock, shares issued	125,232,000	125,232,000	125,232,000
Treasury stock, shares	41,150,000	41,760,000	35,682,000

Consolidated Statements of Cash

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	May 28, 2016	May 30, 2015
Cash flows from operating activities:
Net income (loss)	$ (6,020)	$ 6,874
Adjustments to reconcile to net cash provided by operating activities:
Depreciation	15,433	13,454
Stock-based compensation expense	1,684	2,246
Deferred compensation, net	1,409	1,522
Deferred income taxes	(2,496)	524
Excess tax benefit from stock-based awards		(518)
Amortization of deferred gains	(268)	(893)
Other	2,245	798
Changes in cash from:
Inventories	(15,239)	(22,819)
Prepaid expenses and other assets	(6,019)	1,975
Accounts payable and other liabilities	49,118	32,972
Accrued income taxes payable, net of payments	(6,324)	(7,796)
Net cash provided by operating activities	33,523	28,339
Cash flows from investing activities:
Capital expenditures	(10,044)	(9,389)
Proceeds from disposition of properties	3	13
Proceeds from sale of restricted investments	991	678
Purchase of restricted investments	(402)	(797)
Net cash used in investing activities	(9,452)	(9,495)
Cash flows from financing activities:
Cash dividends	(5,692)	(6,172)
Purchases of treasury stock	(5,515)	(16,136)
Proceeds from stock options exercised, stock purchase plan and other, net	446	411
Excess tax benefit from stock-based awards		518
Repayments of long-term debt	(500)	(500)
Net cash used in financing activities	(11,261)	(21,879)
Change in cash and cash equivalents	12,810	(3,035)
Cash and cash equivalents at beginning of period	115,221	100,064
Cash and cash equivalents at end of period	$ 128,031	$ 97,029

Consolidated Statement of Share

Consolidated Statement of Shareholders' Equity - 3 months ended May 28, 2016 - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock	Paid-in Capital	Retained Earnings	Cumulative Other Comprehensive Income (Loss)	Treasury Stock
Beginning Balance at Feb. 27, 2016	$ 284,757	$ 125	$ 211,019	$ 729,537	$ (10,637)	$ (645,287)
Beginning Balance, Common Stock at Feb. 27, 2016		83,472
Net loss	(6,020)			(6,020)
Other comprehensive income	1,848				1,848
Purchases of treasury stock	(6,109)					(6,109)
Purchases of treasury stock (in shares)		(989)
Stock-based compensation expense (in shares)		1,558
Stock-based compensation expense	1,684		(22,688)			24,372
Stock purchase plan and other	(511)		(1,574)			1,063
Stock purchase plan and other (in shares)		41
Cash dividends ($0.07 per share)	(5,692)			(5,692)
Ending Balance at May. 28, 2016	$ 269,957	$ 125	$ 186,757	$ 717,825	$ (8,789)	$ (625,961)
Ending Balance, Common Stock at May. 28, 2016		84,082

Consolidated Statement of Shar8

Consolidated Statement of Shareholders' Equity (Parenthetical)	3 Months Ended
	May 28, 2016$ / shares
Statement of Stockholders' Equity [Abstract]
Cash dividends, per share	$ 0.07

Earnings (Loss) Per Share

Earnings (Loss) Per Share	3 Months Ended
	May 28, 2016
Earnings Per Share [Abstract]
Earnings (Loss) Per Share	NOTE 1 – EARNINGS (LOSS) PER SHARE Basic earnings (loss) per share amounts were determined by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share amounts were similarly computed, and include the effect, if dilutive, of the Company’s weighted average number of stock options outstanding and shares of unvested restricted stock. As the effect would be antidilutive, 2,312,957 outstanding stock options and shares of unvested restricted stock were excluded from the computation of loss per share for the three months ended May 28, 2016. Outstanding stock options totaling 206,698 were excluded from the computation of diluted earnings per share for the three months ended May 30, 2015, as the effect would be antidilutive. Earnings (loss) per share were calculated as follows (in thousands except per share amounts): Three Months Ended May 28, May 30, Net income (loss) $ (6,020 ) $ 6,874 Weighted average shares outstanding: Basic 81,663 88,295 Effect of dilutive stock options — 569 Effect of dilutive restricted stock — 157 Diluted 81,663 89,021 Earnings (loss) per share: Basic $ (0.07 ) $ 0.08 Diluted $ (0.07 ) $ 0.08

Matters Concerning Shareholders

Matters Concerning Shareholders' Equity	3 Months Ended
	May 28, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Matters Concerning Shareholders' Equity	NOTE 2 – MATTERS CONCERNING SHAREHOLDERS’ EQUITY Restricted stock compensation - During the first quarter of fiscal 2017, the Company awarded 1,913,388 shares of restricted stock. Approximately 600,000 of the shares granted are service based and will vest ratably over a three-year service period. The Company began expensing these shares during the first quarter of fiscal 2017. The remaining shares are performance based and may vest following the end of fiscal 2019 if the Company achieves certain performance targets as determined by the Compensation Committee of the Board of Directors. The Company began expensing the performance-based shares awarded during the first quarter of fiscal 2017 when the performance metrics were established. The Company also began expensing performance-based shares that were awarded to employees in previous fiscal years, including the Company’s chief executive officer, during the first quarter of fiscal 2017 when the targets for the performance metrics were established. Share repurchase program -

Long-Term Debt and Available Cr

Long-Term Debt and Available Credit	3 Months Ended
	May 28, 2016
Debt Disclosure [Abstract]
Long-Term Debt and Available Credit	NOTE 3 – LONG-TERM DEBT AND AVAILABLE CREDIT Revolving Credit Facility - At the Company’s option, borrowings bear interest, payable quarterly or, if earlier, at the end of each interest period, at either (a) the LIBOR rate plus a spread varying from 125 to 175 basis points per year, depending on the amount then borrowed under the Revolving Credit Facility, or (b) the prime rate (as defined in the Revolving Credit Facility) plus a spread varying from 25 to 75 basis points per year, depending on the amount then borrowed under the Revolving Credit Facility. Term Loan Facility - The fair value of the Term Loan Facility was approximately $179,798,000 as of May 28, 2016, which was measured using the quoted market price. The Term Loan Facility was classified as Level 2 based on the frequency and volume of trading for which the price was readily available. Level 2 inputs include quoted prices in active markets for similar assets or liabilities; quoted prices for identical or similar assets or liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability.

Defined Benefit Plans

Defined Benefit Plans	3 Months Ended
	May 28, 2016
Compensation and Retirement Disclosure [Abstract]
Defined Benefit Plans	NOTE 4 – DEFINED BENEFIT PLANS The Company maintains supplemental retirement plans for certain of its executive officers. These 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. The plans are not funded and thus have no plan assets. 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 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 cost are shown in the table below (in thousands). The amortization of amounts related to unrecognized prior service cost and net actuarial loss was reclassified out of other comprehensive income (loss) as a component of net periodic benefit cost. Three Months Ended May 28, May 30, Components of net periodic benefit cost: Service cost $ 387 $ 367 Interest cost 193 158 Amortization of unrecognized prior service cost 15 15 Amortization of net actuarial loss 450 349 Net periodic benefit cost $ 1,045 $ 889

New Accounting Pronouncements

New Accounting Pronouncements	3 Months Ended
	May 28, 2016
Accounting Changes and Error Corrections [Abstract]
New Accounting Pronouncements	NOTE 5 – NEW ACCOUNTING PRONOUNCEMENTS In May 2014, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers (Topic 606).” During fiscal 2017, additional ASUs were issued related to this revenue guidance. In March 2016, the FASB issued ASU 2016-08, “Revenue from Contracts with Customers: Principal versus Agent Considerations.” This amendment is intended to improve the operability and understandability of the implementation guidance on principal versus agent considerations. In April 2016, the FASB issued ASU 2016-10, “Identifying Performance Obligations and Licensing,” which clarifies the implementation guidance on identifying performance obligations. The above ASUs are effective for the Company beginning in fiscal 2019. Early adoption is permitted in fiscal 2018. The Company is continuing to evaluate the impact of the adoption of this guidance on its financial statements. In April 2015, the FASB issued ASU 2015-05, “Customers Accounting for Cloud Computing Costs.” The standard provides more specific guidance related to how companies account for cloud computing costs. The Company adopted this guidance on a prospective basis in the first quarter of fiscal 2017. The adoption of this standard does not currently have a material impact on the Company’s financial statements.

New Accounting Pronouncements (

New Accounting Pronouncements (Policies)	3 Months Ended
	May 28, 2016
Accounting Changes and Error Corrections [Abstract]
New Accounting Pronouncements	In May 2014, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers (Topic 606).” During fiscal 2017, additional ASUs were issued related to this revenue guidance. In March 2016, the FASB issued ASU 2016-08, “Revenue from Contracts with Customers: Principal versus Agent Considerations.” This amendment is intended to improve the operability and understandability of the implementation guidance on principal versus agent considerations. In April 2016, the FASB issued ASU 2016-10, “Identifying Performance Obligations and Licensing,” which clarifies the implementation guidance on identifying performance obligations. The above ASUs are effective for the Company beginning in fiscal 2019. Early adoption is permitted in fiscal 2018. The Company is continuing to evaluate the impact of the adoption of this guidance on its financial statements. In April 2015, the FASB issued ASU 2015-05, “Customers Accounting for Cloud Computing Costs.” The standard provides more specific guidance related to how companies account for cloud computing costs. The Company adopted this guidance on a prospective basis in the first quarter of fiscal 2017. The adoption of this standard does not currently have a material impact on the Company’s financial statements.

Earnings (Loss) Per Share (Tabl

Earnings (Loss) Per Share (Tables)	3 Months Ended
	May 28, 2016
Earnings Per Share [Abstract]
Calculation of Earnings (Loss) Per Share	Earnings (loss) per share were calculated as follows (in thousands except per share amounts): Three Months Ended May 28, May 30, Net income (loss) $ (6,020 ) $ 6,874 Weighted average shares outstanding: Basic 81,663 88,295 Effect of dilutive stock options — 569 Effect of dilutive restricted stock — 157 Diluted 81,663 89,021 Earnings (loss) per share: Basic $ (0.07 ) $ 0.08 Diluted $ (0.07 ) $ 0.08

Defined Benefit Plans (Tables)

Defined Benefit Plans (Tables)	3 Months Ended
	May 28, 2016
Compensation and Retirement Disclosure [Abstract]
Components of Net Periodic Benefit Cost	The components of net periodic benefit cost are shown in the table below (in thousands). The amortization of amounts related to unrecognized prior service cost and net actuarial loss was reclassified out of other comprehensive income (loss) as a component of net periodic benefit cost. Three Months Ended May 28, May 30, Components of net periodic benefit cost: Service cost $ 387 $ 367 Interest cost 193 158 Amortization of unrecognized prior service cost 15 15 Amortization of net actuarial loss 450 349 Net periodic benefit cost $ 1,045 $ 889

Earnings (Loss) Per Share - Add

Earnings (Loss) Per Share - Additional Information (Detail) - shares	3 Months Ended
	May 28, 2016	May 30, 2015
Outstanding Stock Options and Unvested Restricted Stock
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings (loss) per share	2,312,957
Employee Stock Option
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings (loss) per share		206,698

Calculation of Earnings (Loss)

Calculation of Earnings (Loss) Per Share (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	May 28, 2016	May 30, 2015
Earnings Per Share Disclosure [Line Items]
Net income (loss)	$ (6,020)	$ 6,874
Basic	81,663	88,295
Diluted	81,663	89,021
Basic	$ (0.07)	$ 0.08
Diluted	$ (0.07)	$ 0.08
Employee Stock Option
Earnings Per Share Disclosure [Line Items]
Effect of dilutive stock		569
Restricted Stock Awards
Earnings Per Share Disclosure [Line Items]
Effect of dilutive stock		157

Matters Concerning Shareholde19

Matters Concerning Shareholders' Equity - Additional Information (Detail) - USD ($)	Jun. 30, 2016	May 29, 2016	May 28, 2016	May 30, 2015
Share Based Compensation Arrangements and Share Repurchase Plan [Line Items]
Cost of shares repurchased			$ 6,109,000
Share Repurchase Program April 2014
Share Based Compensation Arrangements and Share Repurchase Plan [Line Items]
Common stock repurchased under Share repurchase plan			989,053
Weighted average cost			$ 6.18
Amount remained for repurchase			$ 41,067,000
Cost of shares repurchased			6,109,000
Subsequent Event | Share Repurchase Program April 2014
Share Based Compensation Arrangements and Share Repurchase Plan [Line Items]
Common stock repurchased under Share repurchase plan	805,000
Weighted average cost	$ 5.54
Amount remained for repurchase	$ 36,610,000
Cost of shares repurchased	$ 4,457,000
Subsequent Event | Share Repurchase Program April 2014 | Non-cash Financing Activities Settlement
Share Based Compensation Arrangements and Share Repurchase Plan [Line Items]
Cost of shares repurchased		$ 594,000
Restricted Stock Awards
Share Based Compensation Arrangements and Share Repurchase Plan [Line Items]
Recorded stock-based compensation expense			1,650,000	$ 2,220,000
Total unrecognized compensation expense related to unvested stock awards			$ 28,752,000
Weighted average period for recognizing unrecognized compensation expense, in years			2 years
Shares awarded			1,913,388
Service-Based Awards
Share Based Compensation Arrangements and Share Repurchase Plan [Line Items]
Shares awarded			600,000
Vesting period, years			3 years

Long-Term Debt and Available 20

Long-Term Debt and Available Credit - Additional Information (Detail) - USD ($)	3 Months Ended
	May 28, 2016	Feb. 27, 2016	May 30, 2015
Term Loan Facility
Debt Instrument [Line Items]
Borrowings under term loan facility	$ 196,500,000	$ 197,000,000	$ 198,500,000
Carrying value of long term debt	192,568,000	$ 192,865,000	$ 193,750,000
Fair Value, Inputs, Level 2 | Term Loan Facility
Debt Instrument [Line Items]
Fair value of term loan facility	179,798,000
Revolving Credit Facility
Debt Instrument [Line Items]
Credit facility , maximum borrowing capacity	350,000,000
Credit facility accordion feature	100,000,000
Credit facility borrowing base	321,907,000
Borrowings outstanding	0
Remaining borrowing	$ 281,302,000
Revolving Credit Facility | LIBOR | Minimum
Debt Instrument [Line Items]
Basis points	1.25%
Revolving Credit Facility | LIBOR | Maximum
Debt Instrument [Line Items]
Basis points	1.75%
Revolving Credit Facility | Prime Rate | Minimum
Debt Instrument [Line Items]
Basis points	0.25%
Revolving Credit Facility | Prime Rate | Maximum
Debt Instrument [Line Items]
Basis points	0.75%
Letters of Credit And Bankers' Acceptances
Debt Instrument [Line Items]
Borrowings outstanding	$ 40,605,000

Components of Net Periodic Bene

Components of Net Periodic Benefit Cost (Detail) - USD ($) $ in Thousands	3 Months Ended
	May 28, 2016	May 30, 2015
Components of net periodic benefit cost:
Service cost	$ 387	$ 367
Interest cost	193	158
Amortization of unrecognized prior service cost	15	15
Amortization of net actuarial loss	450	349
Net periodic benefit cost	$ 1,045	$ 889