Exhibit 99.1
Pier 1 Imports Reports Fiscal 2007 Third Quarter Results
FORT WORTH, Texas--(BUSINESS WIRE)--Dec. 14, 2006--Pier 1 Imports,
Inc. (NYSE:PIR) today announced a net loss from continuing operations
of $72,718,000, or $0.83 per share, for the third quarter ended
November 25, 2006. Excluding unusual charges and the effect of the
adoption of the new accounting pronouncement (see reconciliation table
below), the net loss from continuing operations on a non-GAAP basis
for the third quarter of fiscal year 2007 amounted to $46,101,000, or
$0.53 per share, versus $5,233,000, or $0.06 loss per share, on a
non-GAAP basis in the third quarter of fiscal year 2006. Total sales
declined 11.8% for the third fiscal quarter to $402,714,000 from
$456,690,000 in the year-ago quarter, and comparable store sales
declined 12.9%.
For the first nine months of fiscal 2007, the Company's net loss
from continuing operations was $168,542,000, or $1.93 per share,
compared to a loss per share of $0.23 for the year-ago period.
Year-to-date sales were $1,149,504,000, down 9.5% from $1,270,679,000
in the year-ago period, and comparable store sales declined 11.6%.
Reconciliation and Discussion of 3rd Quarter GAAP to Non-GAAP Loss
per Share from Continuing Operations
Third Quarter
FY07 FY06
-------- --------
Loss per Share from Continuing Operations, less: ($0.83) ($0.06)
Effect of store-level asset impairments (0.28) -
Effect of new accounting pronouncement
SFAS 123R - stock-based compensation (0.01) -
Effect of one-time charges related to
sale of private-label credit card (0.01) -
-------- --------
Non-GAAP Loss per Share
from Continuing Operations ($0.53) ($0.06)
======== ========
Unusual charges reported during the third quarter included the
following: a non-cash charge of $24.8 million or $0.28 per share for
store-level asset impairment charges; a non-cash charge of $0.7
million or $0.01 per share for stock-based compensation expense in
compliance with SFAS 123R; and a one-time charge of $1.2 million or
$0.01 per share related to net costs incurred in connection with the
sale of the Company's private-label credit card.
Operating Results
Merchandise margins declined to 49.7% from 52.5% in the year-ago
quarter due to increased promotional and markdown activity. The
increase in promotions and markdowns was a direct result of the
Company's focus on maintaining appropriate inventory levels. Store
occupancy costs increased $2.8 million to 18.7% of sales in the third
quarter versus 15.9% for the year-ago quarter. Selling, general and
administrative costs were 45.6% of sales compared to 34.0% of sales in
the third quarter last year. In addition to unusual charges, the
increase in SG&A can be attributed to additional marketing efforts,
including catalog and television advertising. Marketing costs were
9.5% of sales compared to 6.6% in the year-ago period.
Marvin J. Girouard, the Company's Chairman and Chief Executive
Officer, said, "Trends so far in December are better than the trends
seen in October and November. Despite weak sales in the home
furnishing categories, early sales of our holiday merchandise have
been encouraging.
"Our efforts during the coming weeks will be concentrated on the
holiday selling season. We plan to continue the aggressive marketing
program scheduled, while actively monitoring inventory levels so that
they remain on plan as we head into fiscal 2008."
This release references non-GAAP loss per share information that
includes 1) impairment charges on store-level assets, 2) the impact of
SFAS 123R for recording stock-based compensation, and 3) net costs
incurred in connection with the sale of the Company's private-label
credit card.
The Company believes that the non-GAAP financial measures allow
management and investors to understand and compare the Company's
operating results in a more consistent manner for the third quarter of
fiscal year 2007. These non-GAAP measures should be considered
supplemental and not a substitute for the Company's financial results
that are recorded in accordance with generally accepted accounting
principles for the periods presented.
The Company will host a conference call to discuss fiscal 2007
third quarter results at 10:00 a.m. Central Time today. A web cast is
available on our web site at www.pier1.com linking through to the
"Investor Relations" page and the "Events" page, or you can dial into
the conference at 800-498-7872, ID 4640986. The teleconference will be
held in a "listen-only" mode for all participants other than the
Company's current sell-side and buy-side investment professionals.
Any forward-looking projections or statements made in this press
release should be considered in conjunction with the cautionary
statements contained in the Company's most recently filed report on
Form 10-Q. Management's expectations and assumptions regarding planned
store openings, financing of Company obligations from operations,
results from its new 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 general strength of the
economy and levels of consumer spending, consumer confidence, the
availability of new sites for expansion along with sufficient labor to
facilitate growth, 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 from foreign countries to its U.S. distribution centers
at reasonable prices and rates and in a timely fashion. Refer to the
Company's most recent SEC filings for discussion of these and other
risks and uncertainties that may affect the Company's 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.
Pier 1 Imports, Inc. is North America's largest specialty retailer
of imported decorative home furnishings and gifts with Pier 1
Imports(R) stores in 49 states, Puerto Rico, Canada, and Mexico and
Pier 1 kids(R) stores in the United States. Information about the
Company is available on www.pier1.com.
(Financial Tables Follow)
Pier 1 Imports, Inc.
- ----------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except per share amounts)
(unaudited)
Three Months Ended Nine Months Ended
Nov. 25, Nov. 26, Nov. 25, Nov. 26,
2006 2005 2006 2005
---------- --------- ----------- -----------
Net sales $ 402,714 $456,690 $1,149,504 $1,270,679
Operating costs and
expenses:
Cost of sales
(including buying and
store occupancy
costs) 278,131 289,374 792,172 830,776
Selling, general and
administrative
expenses 183,442 155,430 484,170 430,583
Depreciation and
amortization 12,110 14,050 39,338 42,144
---------- --------- ----------- -----------
473,683 458,854 1,315,680 1,303,503
---------- --------- ----------- -----------
Operating
loss (70,969) (2,164) (166,176) (32,824)
Nonoperating (income) and
expenses:
Interest and
investment income (947) (464) (6,655) (2,226)
Interest expense 4,218 884 11,113 1,663
Other income (1,477) - (1,477) -
---------- --------- ----------- -----------
1,794 420 2,981 (563)
---------- --------- ----------- -----------
Loss from continuing
operations before income
taxes (72,763) (2,584) (169,157) (32,261)
Income tax expense
(benefit) (45) 3,073 (615) (11,775)
---------- --------- ----------- -----------
Loss from
continuing
operations (72,718) (5,657) (168,542) (20,486)
Discontinued operations:
Loss from
discontinued
operations before
income taxes - (1,524) (638) (9,342)
Income tax benefit - - (231) -
---------- --------- ----------- -----------
Loss from
discontinued
operations - (1,524) (407) (9,342)
Net loss ($72,718) ($7,181) ($168,949) ($29,828)
========== ========= =========== ===========
Loss per share from
continuing operations:
Basic and diluted ($0.83) ($0.06) ($1.93) ($0.23)
========== ========= =========== ===========
Loss per share from
discontinued operations:
Basic and diluted - ($0.02) ($0.01) ($0.11)
========== ========= =========== ===========
Loss per share:
Basic and diluted ($0.83) ($0.08) ($1.94) ($0.34)
========== ========= =========== ===========
Average shares
outstanding during
period:
Basic and diluted 87,503 86,747 87,302 86,544
========== ========= =========== ===========
Pier 1 Imports, Inc.
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CONSOLIDATED BALANCE SHEETS
(in thousands except per share amounts)
(unaudited)
November 25, February 25, November 26,
2006 2006 2005
------------ ------------ ------------
ASSETS
Current assets:
Cash and cash
equivalents, including
temporary investments of
$159,843, $238,463 and
$6,545, respectively $ 172,252 $ 246,115 $ 21,291
Beneficial interest in
securitized receivables - 50,000 59,567
Other accounts
receivable, net 30,018 13,916 29,355
Inventories 392,407 368,978 438,782
Income tax receivable 43,447 18,011 22,810
Assets of discontinued
operations - 32,359 40,971
Prepaid expenses and
other current assets 77,913 45,544 40,284
------------ ------------ ------------
Total current assets 716,037 774,923 653,060
Properties, net 251,326 298,922 309,960
Other noncurrent assets 50,518 96,016 78,280
------------ ------------ ------------
$ 1,017,881 $ 1,169,861 $ 1,041,300
============ ============ ============
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable $ - $ - $ 9,500
Accounts payable 121,622 105,916 99,788
Gift cards and other
deferred revenue 64,685 63,835 57,425
Accrued income taxes
payable 2,361 4,763 3,758
Liabilities related to
discontinued operations - 16,841 17,421
Other accrued liabilities 139,456 97,493 113,156
------------ ------------ ------------
Total current
liabilities 328,124 288,848 301,048
Long-term debt 184,000 184,000 19,000
Other noncurrent liabilities 96,222 107,031 110,287
Shareholders' equity:
Common stock, $1.00 par,
500,000,000 shares
authorized, 100,779,000
issued 100,779 100,779 100,779
Paid-in capital 126,890 132,075 138,863
Retained earnings 395,797 582,221 600,892
Cumulative other
comprehensive loss (2,726) (583) (2,147)
Less -- 13,076,000,
13,761,000 and
13,919,000 common shares
in treasury, at cost,
respectively (211,205) (222,254) (224,804)
Less unearned
compensation - (2,256) (2,618)
------------ ------------ ------------
409,535 589,982 610,965
------------ ------------ ------------
$ 1,017,881 $ 1,169,861 $ 1,041,300
============ ============ ============
Pier 1 Imports, Inc.
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CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Nine Months Ended
November 25, November 26,
2006 2005
-------------- --------------
Cash flow from operating activities:
Net loss $ (168,949) $ (29,828)
Adjustments to reconcile to net cash
used in operating activities:
Depreciation and amortization 48,087 58,433
Loss on disposal of fixed assets 231 360
Loss on impairment of fixed
assets 29,839 964
Stock-based compensation expense 4,233 417
Deferred compensation 5,551 6,764
Lease termination expense 2,859 2,148
Deferred income taxes 23,869 -
Other (3,486) 1,454
Changes in cash from:
Sale of receivables in exchange for
beneficial interest in securitized
receivables (15,914) (68,947)
Purchase of proprietary credit card
receivables and other (97,740) -
Proceeds from the sale of
proprietary credit card operations 142,788 -
Inventories (22,587) (74,553)
Other accounts receivable, prepaid
expenses and other current assets (28,077) (31,386)
Income taxes receivable (25,555) (22,810)
Accounts payable and accrued
expenses 22,523 7,799
Accrued income taxes payable (2,539) (7,974)
Other noncurrent assets 643 (1,094)
Other noncurrent liabilities (217) -
-------------- --------------
Net cash used in operating
activities (84,441) (158,253)
-------------- --------------
Cash flow from investing activities:
Capital expenditures (25,234) (40,180)
Proceeds from disposition of
properties 104 1,369
Proceeds from sale of discontinued
operations (net of $3,397 cash
included in sale of discontinued
operations) 11,601 -
Proceeds from sale of Pier 1 National
Bank (net of $2,208 cash included in
sale of Pier 1 National Bank) 10,754 -
Proceeds from sale of restricted
investments 217 -
Purchase of restricted investments (2,000) -
Collections of principal on beneficial
interest in securitized receivables 21,907 45,070
-------------- --------------
Net cash provided by
investing activities 17,349 6,259
-------------- --------------
Cash flow from financing activities:
Cash dividends (17,475) (25,972)
Purchases of treasury stock - (4,047)
Proceeds from stock options exercised,
stock purchase plan and other, net 3,887 5,999
Notes payable borrowings 69,000 86,500
Repayments of notes payable (69,000) (77,000)
Debt issuance costs (283) (1,276)
-------------- --------------
Net cash used in financing
activities (13,871) (15,796)
-------------- --------------
Change in cash and cash equivalents (80,963) (167,790)
Cash and cash equivalents at beginning
of period (including cash held for
sale of $7,100 and $3,359,
respectively) 253,215 189,081
-------------- --------------
Cash and cash equivalents at end of
period $ 172,252 $ 21,291
============== ==============
CONTACT: Pier 1 Imports, Inc.
Cary Turner, 817-252-8400