Pier 1 2008 Annual Report Download - page 66

exposure to deterioration in the performance of the Receivables was limited to its retained beneficial interest
in the Master Trust. As such, the Company had no corporate obligation to reimburse Funding, the Master Trust
or purchasers of any certificates issued by the Master Trust for credit losses from the Receivables.
As a result of the securitization, the Master Trust had $100,000,000 of outstanding 2001-1 Class A
Certificates issued to a third party through September 6, 2006. The 2001-1 Class A Certificates bore interest at
a floating rate equal to the rate on commercial paper issued by the third party plus a credit spread. Since the
securitization agreement expired in September 2006, there were no outstanding 2001-1 Class A Certificates or
2001-1 Class B Certificates at the end of fiscal 2008 or 2007, as all amounts were settled.
Cash flows received by the Company from the Master Trust during fiscal years 2007 and 2006 were as
follows (in thousands):
2007 2006
Proceeds from collections reinvested in revolving securitizations.......... $212,653 $436,034
Servicing fees received ........................................ $ 1,190 $ 2,189
Cash flows received on retained interests ........................... $ 32,592 $ 95,444
NOTE 12 — INCOME TAXES
The provision (benefit) for income taxes for each of the last three fiscal years consists of (in thousands):
2008 2007 2006
Federal:
Current ........................................... $ 521 $(25,442) $ (2,402)
Deferred .......................................... — 22,980 (13,972)
State:
Current ........................................... 1,623 (365) 1,880
Deferred .......................................... — 1,596 (510)
Foreign:
Current ........................................... 450 346 577
Deferred .......................................... — — (14)
Provision (benefit) for income taxes from continuing operations . . . 2,594 (885) (14,441)
Provision (benefit) for income taxes from discontinued
operations ......................................... — (231) (5,250)
Total provision (benefit) for income taxes ................... $2,594 $ (1,116) $(19,691)
The Company files a federal income tax return and income tax returns in various states and foreign
jurisdictions. The Company has settled and closed all Internal Revenue Service (“IRS”) examinations of the
Company’s tax returns for all years through fiscal 2002. Certain refund claims have been through appeals and
subsequent to year end the Company received a refund of $12,429,000, including interest. With only a few
exceptions, and other than changes to state taxable income required by the IRS adjustments from the fiscal
years 2000 through 2002 audit, the Company is no longer subject to state, local and non-U.S. income tax
examinations by tax authorities for years before fiscal 2003. The IRS began an examination of fiscal years
2003 through 2006 during fiscal 2008 and is expected to be completed during fiscal 2009.
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Pier 1 Imports, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)