Pier 1 2008 Annual Report Download - page 64

were cancelled. During fiscal 2007, 260,100 shares of restricted stock were granted, 65,340 shares of restricted
stock vested, and 74,690 shares of restricted stock were cancelled. The weighted average fair market value at
the date of grant of the restricted stock shares granted during fiscal 2008 pursuant to the 2006 Plan was $7.75
and is being expensed over the requisite vesting period of three years. As of fiscal 2008 year end, no shares
were available for future grant under the Management Restricted Stock Plan since all future grants, if any, will
be made from shares available under the 2006 Plan.
Compensation expense for restricted stock was $1,559,000, or $0.02 per share, and $970,000, or $0.01
per share, in fiscal 2008 and 2007, respectively. As of March 1, 2008, there was $2,970,000 of total
unrecognized compensation expense related to restricted stock that may be recognized over a weighted average
period of 1.01 years if all performance targets are met.
Director deferred stock units — The 2006 Plan and the 1999 Stock Plan also authorize director deferred
stock unit awards to be granted to non-employee directors. During a portion of fiscal 2008 and all of fiscal
2007, each director was required to defer a minimum of 50% and could elect to defer up to 100% of their
director’s cash fees into a deferred stock unit account. For the remainder of fiscal 2008, each director could
elect to defer up to 100% of their director’s cash fees into a deferred stock unit account. The annual retainer
fees deferred (other than committee chairman and chairman annual retainers) received a 25% matching
contribution from the Company in the form of director deferred stock units. As of March 1, 2008 and March 3,
2007, there were 360,939 shares and 246,208 shares deferred, but not delivered, under the 2006 Plan and the
1999 Stock Plan. All future grants will be awarded from shares available for grant under the 2006 Plan.
During fiscal 2008, approximately 186,555 director deferred stock units were granted, 71,823 were delivered,
and no shares were cancelled. Compensation expense for the director deferred stock awards was $1,084,000,
$557,000 and $465,000 in fiscal 2008, 2007 and 2006, respectively.
Stock purchase plan — Substantially all Company employees are eligible to participate in the Pier 1
Imports, Inc. Stock Purchase Plan under which the Company’s common stock is purchased on behalf of
employees at market prices through regular payroll deductions. Each participant may contribute up to 10% of
the eligible portions of compensation. The Company contributes from 10% to 100% of the participants’
contributions, depending upon length of participation and date of entry into the plan. Company contributions
to the plan were $786,000, $1,143,000 and $1,267,000 in fiscal years 2008, 2007 and 2006, respectively.
Shares reserved for future issuances — As of March 1, 2008, the Company had approximately
16,321,000 shares reserved for future issuances under the stock plans. This amount includes stock options
outstanding, director deferred units and shares available for future grant.
NOTE 11 — PROPRIETARY CREDIT CARD INFORMATION
On September 6, 2006, the Company allowed its agreement to securitize its proprietary credit card
receivables to expire. At the time of expiration, the Company purchased $144,007,000 of proprietary credit
card receivables, previously held by the Master Trust, an unconsolidated subsidiary, for $100,000,000 in cash
and in exchange for $44,007,000 of beneficial interest. The Master Trust, upon approval from the Class A
Certificate holders, paid $100,000,000 to redeem the Class A Certificates that were outstanding.
On November 21, 2006, the Company completed the sale of its proprietary credit card operations to
Chase. The sale was comprised of the Company’s proprietary credit card receivables, certain charged-off
accounts, and the common stock of Pier 1 National Bank. The Company received cash proceeds of
$157,583,000 and was entitled to receive additional proceeds of $10,750,000, plus any accrued interest, over
the life of the long-term program agreement, $1,500,000 of which was received in fiscal 2008. The net
deferred gain associated with this sale will be recognized in nonoperating income over the ten-year life of the
agreement described below. The Company recognized $1,551,000 and $0 deferred gain related to this
agreement in fiscal 2008 and 2007, respectively.
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Pier 1 Imports, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)