Pier 1 2007 Annual Report Download - page 50

of discontinued operations and liabilities related to discontinued operations were comprised of the following
components as of February 25, 2006 (in thousands):
2006
Cash and cash equivalents ................................................ $ 7,100
Accounts receivable ..................................................... 1,441
Inventory ............................................................. 10,870
Prepaid expenses and other current assets ..................................... 2,270
Properties, net ......................................................... 10,678
Assets of discontinued operations ......................................... $32,359
Accounts payable ....................................................... $ 5,728
Deferred revenue ....................................................... 415
Accrued income taxes payable ............................................. 137
Other accrued liabilities .................................................. 7,210
Other noncurrent liabilities ................................................ 3,351
Liabilities related to discontinued operations . . ............................... $16,841
2007 2006 2005
Net sales from discontinued operations....................... $3,323 $74,196 $72,510
Also included in assets of discontinued operations were deferred tax assets of $8,096,000 at February 25,
2006, which were fully reserved through a valuation allowance.
NOTE 3 — PROPRIETARY CREDIT CARD INFORMATION
On September 6, 2006, the Company allowed its agreement to securitize its proprietary credit card
receivables to expire. At the time of expiration, the Company purchased $144,007,000 of proprietary credit
card receivables, previously held by the Master Trust, an unconsolidated subsidiary, for $100,000,000 in cash
and in exchange for $44,007,000 of beneficial interest. The Master Trust, upon approval from the Class A
Certificate holders, paid $100,000,000 to redeem the Class A Certificates that were outstanding.
On November 21, 2006, the Company completed the sale of its proprietary credit card operations to
Chase. The sale was comprised of the Company’s proprietary credit card receivables, certain charged-off
accounts and the common stock of Pier 1 National Bank. The Company received cash proceeds of
$157,583,000 and will receive additional proceeds of $10,750,000, plus any accrued interest, over the life of
the agreement. The net deferred gain associated with this sale will be recognized in nonoperating income over
the ten-year life of the agreement described below and is not expected to have a material impact in any
accounting period.
In addition, the Company and Chase have entered into a long-term program agreement. Under this
agreement, the Company will continue to support the card through marketing programs and will receive
additional payments over the life of the agreement for transaction level incentives, marketing support and other
program terms. These payments are not expected to have a material impact in any accounting period.
Prior to the sale of its proprietary credit card operations in November 2006, the Company’s proprietary
credit card receivables were generated under open-ended revolving credit accounts issued by its subsidiary,
Pier 1 National Bank, to finance purchases of merchandise and services offered by the Company. These
accounts had various billing and payment structures, including varying minimum payment levels. The
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Pier 1 Imports, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)