Pier 1 Imports 10-Q 5 Oct 16 2017 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Aug. 27, 2016	Sep. 29, 2016
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Aug. 27, 2016
Document Fiscal Year Focus	2,017
Document Fiscal Period Focus	Q2
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		83,087,151

Consolidated Statements of Oper

Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Aug. 27, 2016	Aug. 29, 2015	Aug. 27, 2016	Aug. 29, 2015
Income Statement [Abstract]
Net sales	$ 405,823	$ 434,992	$ 824,193	$ 871,858
Cost of sales	260,787	280,438	530,190	547,765
Gross profit	145,036	154,554	294,003	324,093
Selling, general and administrative expenses	135,777	133,415	278,501	277,002
Depreciation	13,598	12,754	27,649	25,148
Operating income (loss)	(4,339)	8,385	(12,147)	21,943
Nonoperating (income) and expenses:
Interest, investment income and other	(458)	106	(1,239)	(173)
Interest expense	3,017	3,091	6,064	6,099
Nonoperating (income) and expenses	2,559	3,197	4,825	5,926
Income (loss) before income taxes	(6,898)	5,188	(16,972)	16,017
Income tax provision (benefit)	(2,829)	2,022	(6,883)	5,977
Net income (loss)	$ (4,069)	$ 3,166	$ (10,089)	$ 10,040
Earnings (loss) per share:
Basic	$ (0.05)	$ 0.04	$ (0.12)	$ 0.12
Diluted	(0.05)	0.04	(0.12)	0.11
Dividends declared per share:	$ 0.07	$ 0.07	$ 0.14	$ 0.14
Average shares outstanding during period:
Basic	80,437	86,038	81,050	87,167
Diluted	80,437	86,717	81,050	87,869

Consolidated Statements of Comp

Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Aug. 27, 2016	Aug. 29, 2015	Aug. 27, 2016	Aug. 29, 2015
Statement of Comprehensive Income [Abstract]
Net income (loss)	$ (4,069)	$ 3,166	$ (10,089)	$ 10,040
Other comprehensive income (loss)
Foreign currency translation adjustments	122	(2,371)	1,606	(2,202)
Pension adjustments	363	410	727	820
Other comprehensive income (loss)	485	(1,961)	2,333	(1,382)
Comprehensive income (loss), net of tax	$ (3,584)	$ 1,205	$ (7,756)	$ 8,658

Consolidated Balance Sheets

Consolidated Balance Sheets - USD ($) $ in Thousands	Aug. 27, 2016	Feb. 27, 2016	Aug. 29, 2015
Current assets:
Cash and cash equivalents, including temporary investments of $34,420, $110,413 and $36,979, respectively	$ 38,339	$ 115,221	$ 41,114
Accounts receivable, net	20,760	22,639	25,583
Inventories	481,297	405,859	533,614
Prepaid expenses and other current assets	43,555	31,175	35,624
Total current assets	583,951	574,894	635,935
Properties and equipment, net of accumulated depreciation of $506,160, $481,758 and $463,835, respectively	195,672	207,633	212,048
Other noncurrent assets	35,773	36,664	39,192
Assets, Total	815,396	819,191	887,175
Current liabilities:
Accounts payable	82,198	72,570	89,707
Gift cards and other deferred revenue	59,983	64,081	60,356
Borrowings under revolving line of credit	20,000	0	60,000
Accrued income taxes payable	54	6,324	995
Current portion of long-term debt	2,000	2,000	2,000
Other accrued liabilities	103,509	101,712	100,976
Total current liabilities	267,744	246,687	314,034
Long-term debt	199,667	200,255	200,841
Other noncurrent liabilities	89,975	87,492	84,073
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	187,779	211,019	206,823
Retained earnings	708,171	729,537	711,460
Cumulative other comprehensive loss	(8,304)	(10,637)	(11,367)
Less - 41,910,000, 41,760,000 and 38,185,000 common shares in treasury, at cost, respectively	(629,761)	(645,287)	(618,814)
Total shareholders' equity	258,010	284,757	288,227
Liabilities and Equity, Total	$ 815,396	$ 819,191	$ 887,175

Consolidated Balance Sheets (Pa

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Aug. 27, 2016	Feb. 27, 2016	Aug. 29, 2015
Statement of Financial Position [Abstract]
Cash and cash equivalents, temporary investments	$ 34,420	$ 110,413	$ 36,979
Properties and equipment, accumulated depreciation	$ 506,160	$ 481,758	$ 463,835
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	41,910,000	41,760,000	38,185,000

Consolidated Statements of Cash

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Aug. 27, 2016	Aug. 29, 2015
Cash flows from operating activities:
Net income (loss)	$ (10,089)	$ 10,040
Adjustments to reconcile to net cash used in operating activities:
Depreciation	30,457	27,495
Stock-based compensation expense	2,778	3,405
Deferred compensation, net	2,885	2,909
Deferred income taxes	(1,586)	27
Excess tax benefit from stock-based awards		(558)
Amortization of deferred gains	(536)	(1,370)
Other	3,935	311
Changes in cash from:
Inventories	(75,438)	(54,771)
Prepaid expenses and other assets	(9,430)	13,668
Accounts payable and other liabilities	9,689	(21,037)
Accrued income taxes payable, net of payments	(6,270)	(12,465)
Net cash used in operating activities	(53,605)	(32,346)
Cash flows from investing activities:
Capital expenditures	(22,781)	(26,065)
Proceeds from disposition of properties	49	16
Proceeds from sale of restricted investments	1,913	8,615
Purchase of restricted investments	(765)	(8,177)
Net cash used in investing activities	(21,584)	(25,611)
Cash flows from financing activities:
Cash dividends	(11,277)	(12,155)
Purchases of treasury stock	(10,566)	(50,000)
Proceeds from stock options exercised, stock purchase plan and other, net	1,150	1,604
Excess tax benefit from stock-based awards		558
Repayments of long-term debt	(1,000)	(1,000)
Borrowings under revolving line of credit	23,000	63,000
Repayments of borrowings under revolving line of credit	(3,000)	(3,000)
Net cash used in financing activities	(1,693)	(993)
Change in cash and cash equivalents	(76,882)	(58,950)
Cash and cash equivalents at beginning of period	115,221	100,064
Cash and cash equivalents at end of period	$ 38,339	$ 41,114

Consolidated Statement of Share

Consolidated Statement of Shareholders' Equity - 6 months ended Aug. 27, 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	(10,089)			(10,089)
Other comprehensive income	2,333				2,333
Purchases of treasury stock	(10,566)					(10,566)
Purchases of treasury stock (in shares)		(1,794)
Stock-based compensation expense (in shares)		1,509
Stock-based compensation expense	2,778		(20,812)			23,590
Stock purchase plan and other	74		(2,428)			2,502
Stock purchase plan and other (in shares)		135
Cash dividends ($0.14 per share)	(11,277)			(11,277)
Ending Balance at Aug. 27, 2016	$ 258,010	$ 125	$ 187,779	$ 708,171	$ (8,304)	$ (629,761)
Ending Balance, Common Stock at Aug. 27, 2016		83,322

Consolidated Statement of Shar8

Consolidated Statement of Shareholders' Equity (Parenthetical)	6 Months Ended
	Aug. 27, 2016$ / shares
Statement of Stockholders' Equity [Abstract]
Cash dividends, per share	$ 0.14

Earnings (Loss) Per Share

Earnings (Loss) Per Share	6 Months Ended
	Aug. 27, 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, 2,214,000 and 2,263,000 outstanding stock options and shares of unvested restricted stock were excluded from the computation of loss per share for the three and six months ended August 27, 2016. Outstanding stock options totaling 132,000 and 169,000 were excluded from the computation of diluted earnings per share for the three and six months ended August 29, 2015, as the effect would be antidilutive. Earnings (loss) per share amounts were calculated as follows (in thousands except per share amounts): Three Months Ended Six Months Ended August 27, August 29, August 27, August 29, Net income (loss) $ (4,069 ) $ 3,166 $ (10,089 ) $ 10,040 Weighted average shares outstanding: Basic 80,437 86,038 81,050 87,167 Effect of dilutive stock options — 500 — 534 Effect of dilutive restricted stock — 179 — 168 Diluted 80,437 86,717 81,050 87,869 Earnings (loss) per share: Basic $ (0.05 ) $ 0.04 $ (0.12 ) $ 0.12 Diluted $ (0.05 ) $ 0.04 $ (0.12 ) $ 0.11

Matters Concerning Shareholders

Matters Concerning Shareholders' Equity	6 Months Ended
	Aug. 27, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Matters Concerning Shareholders' Equity	NOTE 2 – MATTERS CONCERNING SHAREHOLDERS’ EQUITY Restricted stock compensation - Share repurchase program -

Long-Term Debt and Available Cr

Long-Term Debt and Available Credit	6 Months Ended
	Aug. 27, 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 $182,035,000 as of August 27, 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	6 Months Ended
	Aug. 27, 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 Six Months Ended August 27, August 29, August 27, August 29, Components of net periodic benefit cost: Service cost $ 386 $ 367 $ 773 $ 734 Interest cost 194 159 387 317 Amortization of unrecognized prior service cost 15 15 30 30 Amortization of net actuarial loss 450 348 900 697 Net periodic benefit cost $ 1,045 $ 889 $ 2,090 $ 1,778

New Accounting Pronouncements

New Accounting Pronouncements	6 Months Ended
	Aug. 27, 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).” “Revenue from Contracts with Customers: Principal versus Agent Considerations.” “Identifying Performance Obligations and Licensing,” In April 2015, the FASB issued ASU 2015-05, “Customers Accounting for Cloud Computing Costs.” In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230).”

Subsequent Events

Subsequent Events	6 Months Ended
	Aug. 27, 2016
Subsequent Events [Abstract]
Subsequent Events	NOTE 6 – SUBSEQUENT EVENTS Termination Agreement - Rights Agreement - In general terms, the Rights restrict any person or group from acquiring beneficial ownership of 10% or more of the Company’s outstanding common stock (including certain derivative securities whose value is based on the common stock) after the date of the announcement of the adoption of the Rights Agreement. The Rights will not prevent a takeover of the Company, but may cause substantial dilution to acquirers of 10% or more of the Company’s common stock, which may block or render more difficult a merger, tender offer or other business combination involving the Company that is not supported by the Board of Directors. Each Right entitles the holder to purchase a fraction of a share of the Company’s participating junior preferred stock having economic and voting terms similar to one share of the Company’s common stock at an exercise price of $17.50 per Right after the Rights become exercisable or, in the alternative, to purchase a number of shares of common stock from the Company having an aggregate market value (as defined in the Rights Agreement) equal to twice the exercise price for an amount in cash equal to the exercise price. The Rights become exercisable if any person or group acquires 10% or more of the Company’s common stock (in which case, they would become an “acquiring person”) or announces a tender offer for the Company, subject to certain exceptions set forth in the Rights Agreement. Shareholders who beneficially owned 10% or more of the Company’s common stock immediately prior to the announcement of the Rights Agreement will not be an “acquiring person” unless they acquire beneficial ownership of an additional 1% of the Company’s outstanding common stock. The Rights will expire on the close of business following the Company’s 2017 annual shareholders meeting, unless earlier redeemed or exchanged, and unless the Rights Agreement is approved for extension by the shareholders, in which case the Rights would expire on a later date approved by the shareholders.

New Accounting Pronouncements (

New Accounting Pronouncements (Policies)	6 Months Ended
	Aug. 27, 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).” “Revenue from Contracts with Customers: Principal versus Agent Considerations.” “Identifying Performance Obligations and Licensing,” In April 2015, the FASB issued ASU 2015-05, “Customers Accounting for Cloud Computing Costs.” In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230).”

Earnings (Loss) Per Share (Tabl

Earnings (Loss) Per Share (Tables)	6 Months Ended
	Aug. 27, 2016
Earnings Per Share [Abstract]
Calculation of Earnings (Loss) Per Share Amounts	Earnings (loss) per share amounts were calculated as follows (in thousands except per share amounts): Three Months Ended Six Months Ended August 27, August 29, August 27, August 29, Net income (loss) $ (4,069 ) $ 3,166 $ (10,089 ) $ 10,040 Weighted average shares outstanding: Basic 80,437 86,038 81,050 87,167 Effect of dilutive stock options — 500 — 534 Effect of dilutive restricted stock — 179 — 168 Diluted 80,437 86,717 81,050 87,869 Earnings (loss) per share: Basic $ (0.05 ) $ 0.04 $ (0.12 ) $ 0.12 Diluted $ (0.05 ) $ 0.04 $ (0.12 ) $ 0.11

Defined Benefit Plans (Tables)

Defined Benefit Plans (Tables)	6 Months Ended
	Aug. 27, 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 Six Months Ended August 27, August 29, August 27, August 29, Components of net periodic benefit cost: Service cost $ 386 $ 367 $ 773 $ 734 Interest cost 194 159 387 317 Amortization of unrecognized prior service cost 15 15 30 30 Amortization of net actuarial loss 450 348 900 697 Net periodic benefit cost $ 1,045 $ 889 $ 2,090 $ 1,778

Earnings (Loss) Per Share - Add

Earnings (Loss) Per Share - Additional Information (Detail) - shares	3 Months Ended		6 Months Ended
	Aug. 27, 2016	Aug. 29, 2015	Aug. 27, 2016	Aug. 29, 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	2,214,000		2,263,000
Employee Stock Option
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings (loss) per share		132,000		169,000

Calculation of Earnings (Loss)

Calculation of Earnings (Loss) Per Share Amounts (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Aug. 27, 2016	Aug. 29, 2015	Aug. 27, 2016	Aug. 29, 2015
Earnings Per Share Disclosure [Line Items]
Net income (loss)	$ (4,069)	$ 3,166	$ (10,089)	$ 10,040
Basic	80,437	86,038	81,050	87,167
Diluted	80,437	86,717	81,050	87,869
Basic	$ (0.05)	$ 0.04	$ (0.12)	$ 0.12
Diluted	$ (0.05)	$ 0.04	$ (0.12)	$ 0.11
Employee Stock Option
Earnings Per Share Disclosure [Line Items]
Effect of dilutive stock		500		534
Restricted Stock Awards
Earnings Per Share Disclosure [Line Items]
Effect of dilutive stock		179		168

Matters Concerning Shareholde20

Matters Concerning Shareholders' Equity - Additional Information (Detail) - USD ($)	3 Months Ended		6 Months Ended
	Aug. 27, 2016	Aug. 29, 2015	Aug. 27, 2016	Aug. 29, 2015	Sep. 29, 2016
Share Based Compensation Arrangements and Share Repurchase Plan [Line Items]
Cost of shares repurchased			$ 10,566,000
Share Repurchase Program April 2014
Share Based Compensation Arrangements and Share Repurchase Plan [Line Items]
Common stock repurchased under Share repurchase plan			1,794,053
Weighted average cost			$ 5.89
Amount remained for repurchase	$ 36,610,000		$ 36,610,000
Cost of shares repurchased			10,566,000
Subsequent Event | Share Repurchase Program April 2014
Share Based Compensation Arrangements and Share Repurchase Plan [Line Items]
Amount remained for repurchase					$ 36,610,000
Restricted Stock Awards
Share Based Compensation Arrangements and Share Repurchase Plan [Line Items]
Recorded stock-based compensation expense	1,079,000	$ 1,139,000	2,729,000	$ 3,359,000
Total unrecognized compensation expense related to unvested stock awards	$ 27,206,000		$ 27,206,000
Weighted average period for recognizing unrecognized compensation expense, in years			1 year 8 months 12 days

Long-Term Debt and Available 21

Long-Term Debt and Available Credit - Additional Information (Detail) - USD ($)	6 Months Ended
	Aug. 27, 2016	Feb. 27, 2016	Aug. 29, 2015
Debt Instrument [Line Items]
Borrowings outstanding	$ 20,000,000	$ 0	$ 60,000,000
Term Loan Facility
Debt Instrument [Line Items]
Borrowings under term loan facility	196,000,000	197,000,000	198,000,000
Carrying value of long term debt	192,271,000	$ 192,865,000	$ 193,456,000
Fair Value, Inputs, Level 2 | Term Loan Facility
Debt Instrument [Line Items]
Fair value of term loan facility	182,035,000
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	388,196,000
Borrowings outstanding	20,000,000
Remaining borrowing	$ 289,399,000
Weighted average cost of borrowings under revolving line of credit	2.10%
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	$ 40,601,000

Components of Net Periodic Bene

Components of Net Periodic Benefit Cost (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Aug. 27, 2016	Aug. 29, 2015	Aug. 27, 2016	Aug. 29, 2015
Components of net periodic benefit cost:
Service cost	$ 386	$ 367	$ 773	$ 734
Interest cost	194	159	387	317
Amortization of unrecognized prior service cost	15	15	30	30
Amortization of net actuarial loss	450	348	900	697
Net periodic benefit cost	$ 1,045	$ 889	$ 2,090	$ 1,778

Subsequent Events - Additional

Subsequent Events - Additional Information (Detail) $ / shares in Units, $ in Thousands	Sep. 27, 2016Right$ / shares	Sep. 02, 2016USD ($)	Aug. 27, 2016
Subsequent Event [Line Items]
Rights exercisable conditions			The Rights become exercisable if any person or group acquires 10% or more of the Company’s common stock (in which case, they would become an “acquiring person”) or announces a tender offer for the Company, subject to certain exceptions set forth in the Rights Agreement. Shareholders who beneficially owned 10% or more of the Company’s common stock immediately prior to the announcement of the Rights Agreement will not be an “acquiring person” unless they acquire beneficial ownership of an additional 1% of the Company’s outstanding common stock.
Subsequent Event
Subsequent Event [Line Items]
Number of dividend right declared to common stock holders | Right	1
Dividend right payable record date	Oct. 7, 2016
Exercise price per right | $ / shares	$ 17.50
Additional conditions for beneficial ownership percentage	1.00%
Conditions for beneficial ownership percentage	10.00%
Subsequent Event | Maximum
Subsequent Event [Line Items]
Maximum acquiring beneficial ownership percentage without right restrictions	10.00%
Subsequent Event | Termination Agreement | President and Chief Executive Officer
Subsequent Event [Line Items]
Restricted stock awards, vesting		$ 3,900
Severance cost		2,500
Curtailment expense related to revised defined benefit plan		1,500
Defined benefit plan settlement expense		2,500
Defined benefit plan payout		$ 24,000