Pier 1 2009 Annual Report Download - page 20

issuance of the Company’s securities. A continued decline in economic conditions could also result in
continued difficulties for financial institutions and other parties that the Company does business with,
which could potentially affect the Company’s ability to access financing under existing arrangements or
to otherwise recover amounts as they become due under the Company’s contractual agreements. The
inability of the Company to obtain financing as needed, on acceptable terms in order to finance its
operations may have a material adverse impact on the Company’s business, financial condition and
results of operations.
Insufficient cash flows from operations could result in the substantial utilization of the Company’s
secured credit facility, which may impose certain financial covenants.
The Company maintains a secured credit facility to enable it to issue merchandise and special
purpose standby letters of credit as well as to occasionally fund working capital requirements.
Borrowings under the credit facility are subject to a borrowing base calculation consisting of a
percentage of certain eligible assets of the Company and is subject to advance rates and commercially
reasonable reserves. Substantial utilization of the availability under the borrowing base will result in
various restrictions on the Company including: restricted ability of the Company to repurchase its
common stock or pay dividends, dominion over the Company’s cash accounts, and compliance with a
minimum fixed charge coverage ratio. The minimum fixed charge coverage ratio, assuming availability
below the required minimum, would not have been met during fiscal 2009. See Note 5 to the Notes to
Consolidated Financial Statements for additional discussion regarding the Company’s secured credit facility.
Significant decreases in cash flow from operations and investing could result in the Company’s
borrowing increased amounts under the credit facility to fund operational needs. Increases in utilization
of letters of credit and/or increased cash borrowings could result in the Company being subject to these
limitations.
Risks Relating to Common Stock
The Company must remain in compliance with the New York Stock Exchange’s requirements for the
continued listing of its common stock on the exchange.
The Company’s common stock is traded on the New York Stock Exchange (‘‘NYSE’’). Continued
listing on the NYSE is contingent upon the Company’s ability to meet certain listing criteria including,
among others, an average closing share price over a consecutive 30 trading-day period of at least $1.00.
On May 4, 2009, the Company received notice from NYSE Regulation, Inc. (‘‘NYSE Regulation’’) that
the Company was in compliance with this requirement. Previously on December 15, 2008, the Company
had received notice from NYSE Regulation that the Company was not in compliance with this
requirement. The Company notified NYSE Regulation within the required ten business days that it
intended to cure the deficiency and that its Board of Directors had met and was considering all
strategic measures to cure the non-compliance with the listing standard.
Another criteria for continued listing on the NYSE is an average global market capitalization over
a consecutive 30 trading-day period of at least $25 million. The NYSE will promptly initiate suspension
and delisting procedures with respect to a company if it is not in compliance with this standard. As of
May 1, 2009, the Company’s average global market capitalization over a consecutive 30 trading-day
period was greater than $25 million.
On February 26, 2009, the Company received notice from the NYSE that it had suspended its
$1.00 minimum price requirement on a temporary basis, initially through June 30, 2009. On January 23,
2009, the NYSE temporarily changed to $15 million from $25 million the consecutive 30 trading-day
average global market capitalization required of listed issues. On February 26, 2009, this temporary
change was extended by the NYSE until June 30, 2009.
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