Pier 1 2008 Annual Report Download - page 69

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Subsequent to fiscal 2008 year end, the Company entered into an agreement to sell its corporate
headquarters building and accompanying land. As part of the transaction, the Company will enter into an
agreement to rent office space in the building. See Note 3 of the Notes to Consolidated Financial Statements
for further discussion.
Legal matters — During fiscal 2008, the Company paid $4,376,000, for the settlement of a class action
lawsuit regarding compensation matters, which was included in selling, general and administrative expenses in
fiscal 2007.
There are various claims, lawsuits, investigations and pending actions against the Company and its
subsidiaries incident to the operations of its business. The Company considers them to be ordinary and routine
in nature. The Company maintains liability insurance against most of these claims. It is the opinion of
management, after consultation with counsel, that the ultimate resolution of such litigation will not have a
material adverse effect, either individually or in aggregate, on the Company’s financial position, results of
operations or liquidity.
NOTE 14 — DISCONTINUED OPERATIONS
During the fourth quarter of fiscal 2006, the Company’s Board of Directors authorized management to
sell its operations of The Pier with stores located in the United Kingdom and Ireland. The Company met the
criteria of SFAS 144 that allowed it to classify The Pier as held for sale and present its results of operations as
discontinued for all years presented. In the fourth quarter of fiscal 2006, the Company recorded an impairment
charge of $7,441,000 to write down $918,000 of goodwill and $6,523,000 related to properties to their fair
values less costs to sell. On March 20, 2006, the Company sold The Pier to Palli Limited for approximately
$15,000,000. Palli Limited is a wholly owned subsidiary of Lagerinn ehf (“Lagerinn”), an Iceland corporation
owned by Jakup a Dul Jacobsen. Collectively Lagerinn and Mr. Jacobsen beneficially owned approximately
9.9% of the Company’s common stock as of the date of the sale. Expenses incurred by the Company in
March 2006 related to The Pier were $407,000, net of taxes, which included an insignificant gain on the sale.
The Company recorded net sales from these discontinued operations of $3,323,000 and $74,196,000, for fiscal
2007 and 2006, respectively.
NOTE 15 — SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
Summarized quarterly financial data for the years ended March 1, 2008 and March 3, 2007 are set forth
below (in thousands except per share amounts):
Fiscal 2008
(1)
6/2/2007 9/1/2007 12/1/2007 3/1/2008
Three Months Ended
Net sales................................ $356,375 $344,566 $374,181 $436,710
Gross profit ............................. 87,178 87,524 125,895 138,955
Net income (loss) ......................... (56,378) (43,409) (9,962) 13,738
Basic and diluted income (loss) per share ....... (.64) (.49) (.11) .16
67
Pier 1 Imports, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)