Pier 1 2008 Annual Report Download - page 29

(4) The interest rates on the Company’s industrial revenue bonds are variable and reset weekly. The estimated interest payments included
in the table were calculated based upon the rate in effect at fiscal 2008 year end.
(5) Represents estimated commitment fees for trade and standby letters of credit, and unused fees on the Company’s $325 million secured
credit facility, which expires in May 2012, calculated based upon balances and rates in effect at fiscal 2008 year end.
(6) Other obligations represent the Company’s liability under various unfunded retirement plans. See Note 9 of the Notes to Consolidated
Financial Statements for further discussion of the Company’s employee benefit plans.
(7) Other obligations also include approximately $8.5 million of reserves for uncertain tax positions, including interest and penalties,
under Financial Accounting Standards Board Interpretation No. 48, “Accounting for Uncertainty in Income Taxes — An Interpretation
of FASB Statement No. 109”, which has been classified as a current liability. Excluded from this table is the noncurrent portion of
reserves for uncertain tax positions of $12.3 million for which the Company is not reasonably able to estimate the timing of future
cash flows.
(8) The above amounts do not include payments that may be due under employment agreements and post employment consulting agree-
ments with certain employees. The terms and amounts under such agreements are disclosed in the Proxy Statement for the Company’s
2008 Annual Meeting of Shareholders. Subsequent to year end, all post employment consulting agreements were mutually terminated.
(9) Subsequent to fiscal 2008 year end, the Company entered into an agreement to sell its corporate headquarters. As part of the transac-
tion, the Company will also enter into a lease agreement to rent office space in the building. See Note 3 of the Notes to Consolidated
Financial Statements for further discussion.
The present value of the Company’s minimum future operating lease commitments discounted at 10%
was $813.4 million at fiscal 2008 year end. The Company plans to fund these commitments from cash
generated from the operations of the Company and, if needed, from borrowings against lines of credit.
As part of the transaction subsequent to fiscal 2008 year end to sell the Company’s corporate
headquarters, the Company will also enter into a lease agreement to rent space in the building. The lease has a
primary term of seven years from the closing date with one three-year renewal option and a right to terminate
the lease at the end of the fifth lease year.
At the beginning of fiscal 2008, the Company adopted the provisions of Financial Accounting
Standards Board (“FASB”) Interpretation No. 48, Accounting for Uncertainty in Income Taxes — An Interpre-
tation of FASB Statement No. 109 (“FIN 48”), which clarified the accounting for uncertainty in tax positions.
As of March 1, 2008, the Company had $8.5 million of its reserves for uncertain tax positions, including
interest and penalties, classified as current. The Company is not able to reasonably estimate when the cash
payments of the remaining reserve for uncertain tax positions will be made. See Note 12 of the Notes to
Consolidated Financial Statements for further discussion.
During fiscal 2009, the Company plans to open up to three new stores and close approximately
25 stores as leases expire or are otherwise ended. The new store locations will be financed primarily through
operating leases. Total capital expenditures for fiscal 2009 are expected to be approximately $15 to $18 million.
Of this amount, the Company expects to spend approximately $9 million on store development, $4 million on
information systems enhancements and approximately $2 million primarily related to the Company’s distribu-
tion centers. Additionally, the Company may spend approximately $3 million related to the office space the
Company will lease upon the anticipated sale of the Company’s headquarters.
The Company has an umbrella trust, currently consisting of four sub-trusts (the “Trusts”), which was
established for the purpose of setting aside funds to be used to settle certain benefit plan obligations. Two of
the sub-trusts are restricted to satisfy obligations to certain participants of the Company’s supplemental
retirement plans. These trusts consisted of interest bearing investments of less than $0.1 million and
$6.1 million at March 1, 2008 and March 3, 2007, respectively, and were included in other noncurrent assets
in fiscal 2008 and in other current assets in fiscal 2007. The remaining two sub-trusts are restricted to meet
the funding requirements of the Company’s non-qualified retirement savings plans. These trusts’ assets
consisted of interest bearing investments totaling $1.5 million at March 1, 2008 and at March 3, 2007, and
were included in other noncurrent assets. These trusts also own and are the beneficiaries of life insurance
policies with cash surrender values of approximately $7.2 million at March 1, 2008, and death benefits of
approximately $17.1 million. In addition, the Company owns and is the beneficiary of a number of insurance
policies on the lives of current and former key executives that are unrestricted as to use. The cash surrender
value of these unrestricted policies was approximately $13.8 million at March 1, 2008, and included in other
noncurrent assets. The death benefit related to the unrestricted policies was approximately $21.1 million. At
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