Pier 1 2007 Annual Report Download - page 47

Download and view the complete annual report

Please find page 47 of the 2007 Pier 1 annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 133

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133

Earnings (loss) per share amounts were calculated as follows (in thousands except per share amounts):
2007 2006 2005
Income (loss) from continuing operations, basic and diluted .... $(227,238) $(27,471) $62,765
Income (loss) from discontinued operations, basic and diluted. . . (407) (12,333) (2,308)
Net income (loss), basic and diluted ...................... $(227,645) $(39,804) $60,457
Average shares outstanding:
Basic ............................................ 87,395 86,629 87,037
Plus assumed exercise of stock options .................. — — 1,801
Diluted ........................................... 87,395 86,629 88,838
Earnings (loss) per share from continuing operations:
Basic ............................................ $ (2.59) $ (.32) $ .72
Diluted ........................................... $ (2.59) $ (.32) $ .71
Loss per share from discontinued operations:
Basic ............................................ $ (.01) $ (.14) $ (.03)
Diluted ........................................... $ (.01) $ (.14) $ (.03)
Net earnings (loss) per share:
Basic ............................................ $ (2.60) $ (.46) $ .69
Diluted ........................................... $ (2.60) $ (.46) $ .68
Stock options for which the exercise price was greater than the average market price of common shares
were not included in the computation of diluted earnings per share as the effect would be antidilutive. All
13,991,195 and 12,941,025 outstanding stock options and shares of unvested restricted stock were excluded
from the computation of the fiscal 2007 and 2006, respectively, loss per share as the effect would be
antidilutive. At the end of fiscal year 2005, there were 5,210,600 stock options outstanding with exercise
prices greater than the average market price of the Company’s common shares. In addition, incremental net
shares for the conversion feature of the Company’s 6.375% senior convertible notes will be included in the
Company’s future diluted earnings per share calculations for those periods in which the average common stock
price exceeds the initial conversion price of $15.19 per share.
Stock-based compensation — The Company grants stock options and restricted stock for a fixed number
of shares to employees with stock option exercise prices equal to the fair market value of the shares on the
date of the grant. On February 26, 2006, the Company adopted the provisions of SFAS No. 123 (Revised
2004), “Share-Based Payment” (“SFAS 123R”). SFAS 123R requires all companies to measure and recognize
compensation expense at an amount equal to the fair value of share-based payments granted under compensa-
tion arrangements. Prior to February 26, 2006, the Company accounted for stock option grants using the
intrinsic value method in accordance with Accounting Principles Board Opinion No. 25, “Accounting for Stock
Issued to Employees,” and recognized no compensation expense for stock option grants since all options
granted had an exercise price equal to the market value of the underlying common stock on the date of grant.
The Company adopted SFAS 123R using the modified prospective method. Under the modified prospec-
tive method, the Company records stock-based compensation expense for all awards granted on or after the
date of adoption and for the portion of previously granted awards that remained unvested at the date of
adoption. Accordingly, prior period amounts have not been restated. Currently, the Company’s stock-based
compensation relates to stock options, restricted stock awards and director deferred stock units. Compensation
45
Pier 1 Imports, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)