Pier 1 2008 Annual Report Download - page 60

Net periodic benefit cost included the following actuarially determined components during fiscal 2008,
2007 and 2006 (in thousands):
2008 2007 2006
Service cost ........................................... $ 498 $ 2,405 $2,043
Interest cost ........................................... 764 1,931 1,590
Amortization of unrecognized prior service cost ................. 361 804 830
Amortization of net actuarial loss ........................... 125 3,203 3,463
Settlement charges ...................................... 1,399 5,257 1,008
Curtailment charge ...................................... 364 1,512 —
Net periodic benefit cost ................................ $3,511 $15,112 $8,934
As of March 1, 2008 and March 3, 2007, accumulated other comprehensive loss included amounts that
had not been recognized as components of net periodic benefit cost related to prior service cost of $4,317,000
and $2,030,000, and net actuarial loss of $1,993,000 and $1,293,000, respectively. The estimated prior service
cost and net actuarial loss that will be amortized from accumulated other comprehensive loss into net periodic
cost in fiscal 2009 are $551,000 and $209,000, respectively.
In September 2006, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 158, “Employ-
ers Accounting for Defined Benefit Pension and Other Postretirement Pension Plans, an amendment of FASB
Statements No. 87, 88, 106, and 132(R)” (“SFAS 158”). SFAS 158 requires companies to recognize the funded
status of postretirement benefit plans as an asset or liability in the financial statements. The Company adopted
the funded status recognition portion of SFAS 158 as of March 3, 2007, and recorded an additional liability
with an offset to other comprehensive income of $1,631,000. In addition, SFAS 158 requires an employer to
measure its postretirement benefit plan assets and benefit obligations as of the date of the employer’s fiscal
year end. This portion of the statement is effective for the Company for fiscal 2009 and is not expected to
have a material impact on the Company’s consolidated financial statements.
NOTE 10 — MATTERS CONCERNING SHAREHOLDERS’ EQUITY
On March 23, 2006, the Board of Directors approved the adoption of the Pier 1 Imports, Inc. 2006 Stock
Incentive Plan (the “2006 Plan”). The 2006 Plan was approved by the shareholders on June 22, 2006. The
aggregate number of shares available for issuance under the 2006 Plan included a new authorization of
1,500,000 shares, plus shares that remained available for grant under the Pier 1 Imports, Inc. 1999 Stock Plan
(the “1999 Stock Plan”) and the Pier 1 Imports, Inc. Management Restricted Stock Plan (not to exceed
560,794 shares), increased by the number of shares (not to exceed 11,186,150 shares) subject to outstanding
awards on March 23, 2006, under these prior plans that cease to be subject to such awards. As of March 1,
2008, there was a total of 1,382,124 shares available for grant under the 2006 Plan. Subsequent to year end,
the Company’s Board of Directors approved a grant under the 2006 Plan, which resulted in awards of stock
options and restricted stock totaling 986,700 shares.
Stock option grants — On January 27, 2007, the Board of Directors approved an employment agreement
for the Company’s new President and Chief Executive Officer (the “CEO”). The employment agreement set
forth that on February 19, 2007, the CEO would be granted two options to purchase an aggregate of
3,000,000 shares of the Company’s common stock. The exercise price per share would be the fair market
value of the Company’s common stock on the following day, which was $6.69. The options were granted as
an employment inducement award, and not under any stock option or other equity incentive plan adopted by
the Company. The first option for 1,000,000 shares vested on February 19, 2008. If the CEO fails to be
employed between February 19, 2008 and February 28, 2009 due to certain reasons, he forfeits 50% of the
grant. The second option for 2,000,000 shares will vest up to 1,000,000 shares based on the Company’s
58
Pier 1 Imports, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)