Exhibit 99.1
Pier 1 Imports, Inc. Reports Fourth
Quarter and Fiscal 2007 Financial Results
FORT WORTH, Texas--(BUSINESS WIRE)--April 12, 2007--Pier 1
Imports, Inc. (NYSE:PIR) today announced results for the fourth
quarter and fiscal year ended March 3, 2007. For the fourth quarter,
the Company reported a net loss from continuing operations of
$58,696,000, or $0.67 per share. For the fiscal year, the Company
reported a net loss from continuing operations of $227,238,000, or
$2.59 per share. Results for both periods included unusual charges and
the effects of adopting a new accounting pronouncement, which are
detailed below. Excluding these charges, the Company's net loss from
continuing operations on a non-GAAP basis for the quarter would have
been $12,937,000 or $0.14 per share and $113,121,000, or $1.28 per
share for the fiscal year.
Fourth Quarter Results
Fourth quarter sales were $473,712,000, down 6.4% from last year's
sales of $506,022,000, and comparable store sales declined 11.0%. For
the fourth quarter, merchandise margins decreased 610 basis points
from the year-ago period related primarily to an inventory valuation
charge of approximately $32.5 million, or 690 basis points. This
inventory charge was required to value certain excess inventory at the
lower of cost or market based on a strategic decision to expedite the
process to clear out the inventory by the end of the first quarter.
This merchandise is comprised primarily of modern craftsman style
items. Gross profit, after store occupancy costs, declined 740 basis
points versus last year. Selling, general and administrative costs
increased 4.5% from the same period last year primarily as a result of
increased marketing expenses and the effects of unusual and other
one-time charges. During the quarter, the Company incurred settlement
and curtailment charges of $6.8 million in connection with its
retirement plans. The charges were incurred as a result of write-offs
of prior service cost and unamortized actuarial gains and losses in a
defined benefit pension plan that was left with no active participants
after the retirement of two senior executives whose obligations were
settled in fiscal 2007.
The Company's reported net loss of $58.7 million or $0.67 per
share for the fourth quarter included $45.8 million in unusual and
other one-time charges. The charges consisted of the following: a
non-cash charge of $32.5 million or $0.37 per share for excess
inventory write-down; one-time charges of $6.8 million or $0.08 per
share in settlement and curtailment charges incurred in connection
with retirement plans; a non-cash charge of $4.1 million or $0.05 per
share in connection with goodwill impairment of Pier 1 Kids; and a
non-cash charge of $2.4 million or $0.03 per share for store-level
asset impairment charges.
Reconciliation of 4th Quarter GAAP to Non-GAAP Loss per Share from
Continuing Operations
Fourth Quarter
FY07 FY06
------- -------
Loss per Share from Continuing Operations, less impact
of: ($0.67) ($0.08)
Write-down of excess inventory (0.37) -
Settlement and curtailment charges, retirement plan (0.08) -
Goodwill impairment for Pier 1 Kids (0.05) -
Store-level asset impairments (0.03) (0.04)
------- -------
Non-GAAP Loss per Share from Continuing Operations ($0.14) ($0.04)
======= =======
Full Year Fiscal 2007 Results
Total fiscal 2007 sales were $1,623,216,000, a decrease of 8.6%
from last year's sales of $1,776,701,000, and comparable store sales
declined 11.3%. Merchandise margins decreased 230 basis points from
the prior year and gross profit, after store occupancy costs, declined
470 basis points versus last year. Selling, general and administrative
costs increased 10.3% primarily due to increases in marketing
expenses, impairment charges and other one-time or unusual charges.
Federal income tax benefit recorded for the year was related only to
losses that can be carried back to offset income in prior years.
Although any additional losses may be carried forward for several
years to offset future income, no tax benefit will be provided until
such future earnings are realized.
The Company's reported fiscal 2007 net loss from continuing
operations of $227.2 million or $2.59 per share included the effects
of $114.1 million in unusual charges. These charges recorded during
the year included the following: a non-cash charge of $32.5 million or
$0.37 per share for excess inventory write-downs; a non-cash charge of
$32.3 million or $0.37 per share for store-level asset impairment
charges; a non-cash charge of $24.6 million or $0.28 per share to
establish a valuation allowance against the Company's net deferred
income tax assets that arose in prior years; one-time charges of $6.8
million or $0.08 per share in settlement and curtailment charges
incurred in connection with retirement plans; a charge of $4.9 million
or $0.06 per share attributable to litigation settlements and related
costs; a non-cash charge of $4.5 million or $0.05 per share for stock
option expense in compliance with SFAS 123R; a $4.5 million or $0.05
per share charge for relocation and integration of the Pier 1 Kids'
headquarters and warehouse into Pier 1 facilities; and a non-cash
charge of $4.1 million or $0.05 per share in connection with goodwill
impairment of Pier 1 Kids.
Reconciliation of Full Year GAAP to Non-GAAP Loss per Share from
Continuing Operations
Full Year
FY07 FY06
------- -------
Loss per Share from Continuing Operations, less impact
of: ($2.59) ($0.32)
Write-down of excess inventory (0.37) -
Store-level asset impairments (0.37) (0.04)
Deferred tax asset valuation allowance (0.28) -
Settlement and curtailment charges, retirement plan (0.08) -
Litigation settlements and legal fees (0.06) -
SFAS 123R stock option expense (0.05) -
Pier 1 Kids relocation and integration (0.05) -
Goodwill impairment for Pier 1 Kids (0.05) -
------- -------
Non-GAAP Loss per Share from Continuing Operations ($1.28) ($0.28)
======= =======
The Company ended the year with cash and cash equivalents of
$167.2 million and no cash borrowings under its line of credit.
Inventories at the end of the year were $360.1 million, down $8.9
million, or 2.4% from last year's $369.0 million.
Returning to Profitability and Beyond
The Company will host a conference call to discuss the fourth
quarter and fiscal year 2007 results, at 10:00 a.m. Central Time
today. During the call, President and CEO, Alex Smith intends to
outline the Company's business priorities and initiatives for fiscal
2008.
Board of Directors
At this year's annual shareholders' meeting, the number of seats
on the Company's Board of Directors will increase from seven to eight.
In addition to each current director, other than James M. Hoak, Jr.,
the Company's Board of Directors has nominated Cece Smith and Robert
B. Holland, III, to stand for election to the Board of Directors. On
March 21, 2007, James M. Hoak, Jr. announced his desire to not stand
for re-election.
The Company's annual meeting for shareholders of record as of
April 30, 2007 will be held in Fort Worth, Texas on June 28, 2007.
More information about the meeting will be provided in the Company's
notice and proxy statement for its annual meeting of shareholders
which the Company plans to mail to shareholders of record on or about
May 24, 2007.
Sales Reporting Schedule Changes
Going forward, the Company will no longer release sales
information on a monthly basis and will shift to a quarterly reporting
schedule. The Company believes that a quarterly reporting schedule
will be more beneficial to its shareholders during this transition
period by allowing more meaningful comparisons of sales results within
the context of merchandise margins, selling, general and
administrative expenses, and other performance criteria. Additionally,
this move will reduce confusion in comparative reporting caused this
year by the shift in the fiscal calendar.
Conference Call Information
Today's conference call is available on our website at
www.pier1.com by linking through to the "Investor Relations" page and
the "Events" page. You can dial into the conference at 1-800-498-7872
or, if international, dial 1-706-643-0435 and the conference ID number
is 4249632. The teleconference will be held in a "listen-only" mode
for all participants other than the Company's current sell-side
analysts and buy-side investors.
The replay will be available at about 12:00 p.m. (Central) for 24
hours and replay access can be dialed at 800-642-1687 or if
international dial 706-645-9291 and reference the conference ID number
4249632.
This release references non-GAAP loss per share information that
includes 1) the write-down of excess inventory, 2) impairment charges
on store-level assets, 3) the deferred tax valuation allowance, 4)
settlement and curtailment charges related to retirement plans, 5)
charges for litigation settlements and legal fees, 6) SFAS 123R stock
option expense, 7) the relocation and integration of Pier 1 Kids, and
8) the impairment of Pier 1 Kids' goodwill.
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 fourth quarter
and full year of fiscal 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.
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 quarterly
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 that may affect sales, volatility of fuel and utility costs,
the general strength of the economy and levels of consumer spending,
consumer confidence, the availability of appropriate sites for
locating stores and distribution centers, 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 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 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.
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CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except per share amounts)
(unaudited)
Three Months Ended Twelve Months Ended
March 3, February 25, March 3, February 25,
2007 2006 2007 2006
--------- ------------ ----------- ------------
Net sales $473,712 $506,022 $1,623,216 $1,776,701
Operating costs and
expenses:
Cost of sales
(including buying
and store occupancy
costs) 357,085 344,235 1,149,257 1,175,011
Selling, general and
administrative
expenses 164,835 157,690 649,005 588,273
Depreciation and
amortization 11,846 14,085 51,184 56,229
--------- ------------ ----------- ------------
533,766 516,010 1,849,446 1,819,513
--------- ------------ ----------- ------------
Operating
loss (60,054) (9,988) (226,230) (42,812)
Nonoperating (income)
and expenses:
Interest and
investment income (5,801) (1,284) (12,456) (3,510)
Interest expense 5,003 947 16,116 2,610
Other income (290) - (1,767) -
--------- ------------ ----------- ------------
(1,088) (337) 1,893 (900)
--------- ------------ ----------- ------------
Loss from continuing
operations before
income taxes (58,966) (9,651) (228,123) (41,912)
Income tax benefit (270) (2,666) (885) (14,441)
--------- ------------ ----------- ------------
Loss from continuing
operations (58,696) (6,985) (227,238) (27,471)
Discontinued
operations:
Loss from discontinued
operations before
income taxes - (8,241) (638) (17,583)
Income tax benefit - (5,250) (231) (5,250)
--------- ------------ ----------- ------------
Loss from
discontinued
operations - (2,991) (407) (12,333)
Net loss $(58,696) $(9,976) $(227,645) $(39,804)
========= ============ =========== ============
Loss per share from
continuing operations:
Basic and diluted ($0.67) ($0.08) ($2.59) ($0.32)
========= ============ =========== ============
Loss per share from
discontinued
operations:
Basic and diluted - ($0.03) ($0.01) ($0.14)
========= ============ =========== ============
Loss per share:
Basic and diluted ($0.67) ($0.11) ($2.60) ($0.46)
========= ============ =========== ============
Average shares
outstanding during
period:
Basic and diluted 87,654 86,883 87,395 86,629
========= ============ =========== ============
Pier 1 Imports, Inc.
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CONSOLIDATED BALANCE SHEETS
(in thousands except per share amounts)
(unaudited)
March 3, February 25,
2007 2006
--------- ------------
ASSETS
Current assets:
Cash and cash equivalents, including
temporary investments of $160,721 and
$238,463, respectively $167,178 $246,115
Beneficial interest in securitized
receivables - 50,000
Other accounts receivable, net 21,437 13,916
Inventories 360,063 368,978
Income tax receivable 34,966 18,011
Assets of discontinued operations - 32,359
Prepaid expenses and other current assets 50,324 45,544
--------- ------------
Total current assets 633,968 774,923
Properties, net 239,548 298,922
Other noncurrent assets 42,954 96,016
--------- ------------
$916,470 $1,169,861
========= ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $95,609 $105,916
Gift cards and other deferred revenue 66,130 63,835
Accrued income taxes payable 3,305 4,763
Liabilities related to discontinued
operations - 16,841
Other accrued liabilities 119,541 97,493
--------- ------------
Total current liabilities 284,585 288,848
Long-term debt 184,000 184,000
Other noncurrent liabilities 86,768 107,031
Shareholders' equity:
Common stock, $1.00 par, 500,000,000 shares
authorized, 100,779,000 issued 100,779 100,779
Paid-in capital 130,416 132,075
Retained earnings 337,178 582,221
Cumulative other comprehensive income (loss) 2,408 (583)
Less -- 12,981,000 and 13,761,000 common
shares in treasury, at cost, respectively (209,664) (222,254)
Less unearned compensation - (2,256)
--------- ------------
361,117 589,982
--------- ------------
$916,470 $1,169,861
========= ============
Pier 1 Imports, Inc.
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CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
March 3, February 25, February 26,
2007 2006 2005
---------- ------------ ------------
Cash flow from operating
activities:
Net income (loss) $(227,645) $(39,804) $60,457
Adjustments to reconcile to net
cash provided by
(used in) operating activities:
Depreciation and amortization 63,496 78,781 75,624
Loss on disposal of fixed assets 187 1,781 315
Loss on impairment of fixed
assets and long-lived assets 36,369 6,024 741
Write-down of assets held for
sale - 7,441 -
Stock-based compensation expense 5,464 636 -
Deferred compensation 16,915 10,766 7,710
Lease termination expense 4,003 4,176 2,243
Deferred income taxes 24,576 (14,496) 2,035
Other (3,121) 236 3,446
Changes in cash from:
Sale of receivables in exchange
for beneficial interest in
securitized receivables (15,914) (74,550) (91,071)
Purchase of proprietary credit
card receivables and other (97,740) - -
Proceeds from the sale of
proprietary credit card
operations 144,622 - -
Inventories 9,757 882 (6,860)
Other accounts receivable,
prepaid expenses and other
current assets (14,428) (22,778) (11,302)
Income tax receivable (16,955) (18,011) -
Accounts payable and accrued
expenses (5,388) 7,369 21,572
Income taxes payable (1,595) (6,966) (14,116)
Other noncurrent assets 566 (2,558) 336
Other noncurrent liabilities (28,074) (3,226) -
---------- ------------ ------------
Net cash provided by (used
in) operating activities (104,905) (64,297) 51,130
---------- ------------ ------------
Cash flow from investing
activities:
Capital expenditures (28,600) (50,979) (99,239)
Proceeds from disposition of
properties 173 1,401 3,852
Proceeds from sale of
discontinued operation (net of
$3,397 cash included in sale of
discontinued operation) 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 25,707 3,226 -
Purchase of restricted
investments (9,712) (3,500) (10,807)
Collections of principal on
beneficial interests in
securitized receivables 21,907 60,240 99,712
---------- ------------ ------------
Net cash provided by (used
in) investing activities 31,830 10,388 (6,482)
---------- ------------ ------------
Cash flow from financing
activities:
Cash dividends (17,398) (34,667) (34,762)
Purchases of treasury stock - (4,047) (58,210)
Proceeds from stock options
exercised, stock purchase plan
and other, net 4,719 7,641 12,473
Issuance of long-term debt - 165,000 -
Notes payable borrowings 69,000 86,500 -
Repayment of notes payable (69,000) (86,500) -
Debt issuance costs (283) (6,739) (169)
Purchase of call option - (9,145) -
---------- ------------ ------------
Net cash provided by (used
in) financing activities (12,962) 118,043 (80,668)
---------- ------------ ------------
Change in cash and cash
equivalents (86,037) 64,134 (36,020)
Cash and cash equivalents at
beginning of period (including
cash at discontinued operation of
$7,100, $3,359, and $6,148,
respectively) 253,215 189,081 225,101
---------- ------------ ------------
Cash and cash equivalents at end
of period (including cash at
discontinued operation of $0,
$7,100, and $3,359, respectively) $167,178 $253,215 $189,081
========== ============ ============
CONTACT: Pier 1 Imports, Inc.
Cary Turner, 817-252-8400