Pier 1 2008 Annual Report Download - page 28

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The Company’s bank facilities include a $325 million credit facility expiring in May 2012, which was
secured by the Company’s eligible merchandise inventory, third-party credit card receivables and certain
Company-owned real estate at year end. During fiscal 2008, the Company had no cash borrowings against its
credit facility. As of March 1, 2008, the Company had approximately $120.9 million in letters of credit and
bankers acceptances utilized against its secured credit facility. The borrowing base was $325.0 million, of
which $171.6 million was available for cash borrowings. This credit facility may limit certain investments, and
in some instances, may limit the payment of dividends and repurchases of the Company’s common stock. The
Company was in compliance with all required debt covenants at fiscal 2008 year end. Subsequent to fiscal
2008, the Company entered into an agreement to sell its corporate headquarters building and land. As a result
of this transaction, the Company will remove the corporate headquarters as collateral, which could result in a
reduction of up to $50 million in the Company’s borrowing base.
The Company does not currently anticipate paying cash dividends in fiscal 2009, and its dividend policy
in the near term will depend upon the earnings, financial condition and capital needs of the Company and
other factors deemed relevant by the Company’s Board of Directors. Under the terms of the Company’s
secured credit facility, the Company will not be restricted from paying dividends unless the availability under
the credit facility is less than 30% of the Company’s calculated borrowing base.
During fiscal 2008, the Company did not make any repurchases of, and has no immediate plans to
repurchase, shares of its outstanding common stock.
A summary of the Company’s contractual obligations and other commercial commitments as of March 1,
2008 is listed below (in thousands):
Total
Less Than
1 Year
1to3
Years
3to5
Years
More Than
5 Years
Amount of Commitment per Period
Operating leases ..................... $1,066,593 $227,571 $ 389,257 $278,698 $171,067
Purchase obligations
(1)
................ 163,037 163,037 — — —
Convertible debt
(2)
................... 165,000 — 165,000 — —
Standby letters of credit
(3)
.............. 49,997 24,430 25,567 — —
Industrial revenue bonds
(3)
............. 19,000 — — — 19,000
Interest on convertible debt
(2)
........... 31,556 10,519 21,037 — —
Interest on industrial revenue bonds
(4)
..... 10,509 560 1,121 1,121 7,707
Interest and related fees on secured credit
facility
(5)
........................ 6,213 1,462 2,924 1,827 —
Other obligations
(6)(7)
................. 33,625 9,778 2,801 4,315 16,731
Total
(8)(9)
.......................... $1,545,530 $437,357 $ 607,707 $285,961 $214,505
Liabilities recorded on the balance sheet . . . $ 270,034
Commitments not recorded on the balance
sheet ........................... 1,275,496
Total ............................. $1,545,530
(1) As of March 1, 2008, the Company had approximately $163.0 million of outstanding purchase orders, which were primarily related to
merchandise inventory. Such orders are generally cancelable at the discretion of the Company until the order has been shipped. The
table above excludes certain executory contracts for goods and services that tend to be recurring in nature and similar in amount year
over year and includes $36.6 million in merchandise letters of credit.
(2) The Company’s convertible debt is subject to redemption in part or full on February 15, 2011, and the above amounts assume the
notes will be repaid or refinanced at that time. If all notes remain outstanding until maturity in 2036, the total interest paid would be
$284.2 million. See Note 7 of the Notes to Consolidated Financial Statements for further discussion of the Company’s convertible
senior notes.
(3) The Company also has outstanding standby letters of credit totaling $19.4 million related to the Company’s industrial revenue bonds.
This amount is excluded from the table above as it is not incremental to the Company’s total outstanding commitments.
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