SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
Amendment No. 1
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended May 28, 1994
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 1-7832
PIER 1 IMPORTS, INC.
(Exact name of registrant as specified in its charter)
Delaware 75-1729843
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
301 Commerce Street, Suite 600, Fort Worth, Texas 76102
(Address of principal executive offices including zip code)
(817) 878-8000
(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 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 the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Shares outstanding as of June 10, 1994
Common Stock, $1.00 par value 37,653,580
Item 2 of Registrant's Quarterly Report on Form 10-Q for the quarter
ended May 28, 1994, is amended and restated as set forth below.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
Pier 1 Imports, Inc. ("the Company") had a net sales increase of $2.9 million
to $161.5 million, or 1.8% for the three-month period ended May 28, 1994 over
the same period of the prior year. Current year results of the Company
exclude the operations of approximately 50 Pier 1 Imports stores scheduled
for closing during fiscal 1995, as the operating results of these stores were
included in the store closing provision recorded in fiscal 1994. Nine stores
were closed through the store-closing program during the first quarter of
fiscal 1995. Same-store sales during the quarter increased approximately 4%
over the first quarter of fiscal 1994. This resulted from an increase in
hard goods' sales such as furniture and decorative accessories of
approximately 7% offset partially by a decline of 19% in soft goods' sales
including clothing, jewelry and accessories. Four new stores were opened
during the fiscal 1995 first quarter bringing the total number of stores to
590 compared to 605 at the end of the first quarter of fiscal 1994.
Gross profit, after related buying and store occupancy costs, expressed as
percentage of net sales, improved 160 basis points to 40.5% for the first
quarter of fiscal 1995 from 38.9% for the comparable period in fiscal 1994.
As a percent of sales, occupancy costs improved 100 basis points and
merchandise margins improved 60 basis points. Product categories with margin
improvements over the first quarter of fiscal 1994 included furniture and
decorative accessories.
Selling, general and administrative expenses, expressed as a percentage of
net sales, increased 1.4% from 29.7% for the first quarter of fiscal 1994 to
31.1% for the comparable period in fiscal 1995. In total dollars, expenses
during the first quarter of fiscal 1995 increased $3.1 million compared to
the same period of the prior year, primarily due to an increase in management
bonus accruals, last year's recognition of favorable medical and general
liability insurance trends and slightly higher general and administrative
expenses.
Net interest expense during the first quarter of fiscal 1995 declined $1.0
million over the same period the prior year due to lower short-term debt,
offset slightly by lower interest income on lower cash balances.
The Company's effective tax rate for the first quarter of fiscal 1995
increased to 31% compared to 29% for the last fiscal year.
Operating income increased $0.4 million to $11.3 million during the first
quarter of fiscal 1995 compared to $10.9 million in the first quarter of
fiscal 1994. Net income for the fiscal 1995 first quarter aggregated $5.5
million with earnings per share of $.15 compared to fiscal 1994 first quarter
net income of $4.7 million and earnings per share of $.12.
Based upon market prices at quarter-end, the value of the Company's
holdings of General Host common stock was $3.4 million less than the
Company's cost and $0.8 million less than its market value at February 26,
1994. The Company has identified certain factors that may have contributed
to this decline: poor past earnings performance by General Host and a general
decline in market conditions. In January 1994, General Host announced a
store closing and cost reduction program, the results of which are intended
to improve General Host's earnings performance and stock price. Accordingly,
the Company continues to believe the decline in the price of General Host
common stock to be temporary. The Company reduced the carrying amount of its
holdings of General Host common stock to market value during the quarter by
increasing the valuation allowance by $0.8 million to $3.4 million through a
charge to stockholders' equity representing the net unrealized loss.
Liquidity and Capital Resources
Cash increased $3.8 million during the first quarter of fiscal 1995
compared to a $7.5 million cash decline during the first quarter of fiscal
1994. Cash provided by operations improved $13.7 million compared to the
first quarter of fiscal 1994 due to planned inventory growth during the first
quarter of fiscal 1994 which was not repeated during the first quarter of
fiscal 1995. Additionally, the improvement in cash provided by operations
resulted from higher earnings partially offset by an increase in accounts
receivable related to the Pier 1 preferred card. Cash used in investing
activities includes the purchase from banks of $9.6 million of Sunbelt
Nursery Group, Inc. ("Sunbelt") debt that had been previously guaranteed by
the Company. A total of $11.6 million in working capital loans due from
Sunbelt is included in the balance sheet caption "Other current assets."
During fiscal 1995, the Company paid a quarterly cash dividend of $.025
per share and declared a dividend of $.025 per share payable on August 16,
1994. The Company currently expects to continue paying modest cash dividends
in fiscal 1995 and intends to retain most of its future earnings for growth
of the Company's business.
Cash requirements to close the 50 stores in fiscal 1995 in the store-
closing program are estimated to aggregate $16 million and will be funded
through working capital and operations. A total of 50 new stores are planned
for the 1995 fiscal year. Financing for new store land and building costs
will be provided by operating leases and inventory and fixtures are estimated
to cost approximately $14 million, which will be funded by operations,
working capital and bank lines of credit.
The minimum future operating lease commitments for fiscal 1995 are $65
million and the present value of all existing operating lease commitments is
$357 million.
Working capital requirements will continue to be provided by cash and
$165 million in available short-term revolving lines of credit. Under these
lines of credit, $22 million is outstanding in the form of short-term
borrowings and an additional $60 million is committed under letters of credit
at May 28, 1994. The Company's current ratio at the end of the first quarter
of fiscal 1995 was 3.3 to 1 compared to 3.5 to 1 at 1994 fiscal year end, and
3.3 to 1 at the first quarter of fiscal 1994.
In connection with the Company's sale of its investment in Sunbelt to
General Host Corporation, the Company is currently providing Sunbelt a line
of credit aggregating $11.6 million, all of which was outstanding at May 28,
1994. To enable Sunbelt to raise funds to refinance the $11.6 million debt,
the Company has granted Sunbelt an extension of the credit facility until
September 21, 1994. The Company is also committed to provide Sunbelt $22.8
million of non-revolving store development financing which expires in stages
from September 1994 to October 1995 and the Company guarantees approximately
$4.5 million of Sunbelt store lease obligations.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
Registrant has duly caused this amendment to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: January 12, 1995
PIER 1 IMPORTS, INC.
By: /s/ J. Rodney Lawrence
J. Rodney Lawrence
Senior Vice President