Pier 1 2007 Annual Report Download - page 69

Download and view the complete annual report

Please find page 69 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

50% and were granted more than one year earlier. These options were granted between September 26, 2002,
and June 28, 2004, and had exercise prices ranging from $17.25 to $20.38 per share. Of the 3,806,375 options
that became exercisable immediately as a result of the vesting acceleration, 1,859,000 were scheduled to vest
over the next 12 months. Because these stock options had exercise prices significantly in excess of the
Company’s current stock price, the Company believed that the future charge to earnings that would be required
under SFAS 123R for the remaining original fair value of the stock options was not an accurate reflection of
the economic value to the employees holding the options and that the options were not fully achieving their
original objectives of employee retention and satisfaction. The Company also believed that the reduction in the
Company’s stock option compensation expense for fiscal years 2007 and 2008 would enhance comparability
of the Company’s financial statements with those of prior and subsequent years. SFAS 123R was effective for
the Company at the beginning of fiscal 2007.
A summary of stock option transactions related to the stock option plans during the three fiscal years
ended March 3, 2007 is as follows:
Shares
Weighted
Average
Exercise
Price
Weighted
Average
Fair Value
at Date
of Grant
Number of
Shares
Weighted
Average
Exercise Price
Exercisable Shares
Outstanding at February 28, 2004 . ...... 10,961,117 $14.37 4,568,117 $10.46
Options granted ................... 3,030,000 17.25 $6.16
Options exercised ................. (994,517) 7.86
Options cancelled or expired . . . ...... (723,275) 17.84
Outstanding at February 26, 2005 . ...... 12,273,325 15.40 5,746,450 12.76
Options granted ................... 1,477,000 14.26 4.75
Options exercised ................. (397,100) 7.92
Options cancelled or expired . . . ...... (615,200) 17.36
Outstanding at February 25, 2006 . ...... 12,738,025 15.41 11,438,025 15.54
Options granted ................... 2,745,500 7.24 3.33
Options exercised ................. (98,950) 7.77
Options cancelled or expired . . . ...... (1,716,450) 14.42
Outstanding at March 3, 2007 .......... 13,668,125 13.95 10,797,625 15.31
For shares outstanding at March 3, 2007:
Ranges of Exercise Prices
Total
Shares
Weighted
Average
Exercise
Price
Weighted
Average
Remaining
Contractual
Life
Shares
Currently
Exercisable
Weighted
Average
Exercise Price-
Exercisable
Shares
$ 5.81 - $ 8.50 .............. 4,643,225 $ 7.42 6.98 2,440,725 $ 7.66
$ 9.31 - $17.25 .............. 4,697,750 14.97 6.37 4,034,750 15.09
$18.49 - $21.00 .............. 4,327,150 19.84 5.97 4,322,150 19.84
As of March 3, 2007, the weighted average remaining contractual term for outstanding and exercisable
options was 6.45 years and 5.69 years, respectively. The aggregate intrinsic value for outstanding and
exercisable options was $417,250 and $417,250, respectively, at fiscal 2007 year end. The total intrinsic value
of options exercised for the fiscal years ended 2007, 2006 and 2005 was approximately $372,000, $2,303,000
and $10,581,000, respectively. The intrinsic value of a stock option is the amount by which the market value
of the underlying stock exceeds the exercise price of the option.
67
Pier 1 Imports, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)