Pier 1 2009 Annual Report Download - page 120

exchange agent of a properly completed and duly executed transmittal letter, in an amount equal to the
proceeds attributable to the sale of such fractional shares following the aggregation and sale by the
exchange agent of all fractional shares otherwise issuable.
At the close of business on May 4, 2009, Pier 1 Imports had 90,489,276 shares of common stock
issued and outstanding. Based on the number of shares of common stock currently issued and
outstanding, immediately following the completion of the reverse stock split, and, for illustrative
purposes only, assuming a 1-for-10 reverse stock split, we would have approximately 9,048,928 shares of
common stock issued and outstanding (without giving effect to the treatment of fractional shares). The
actual number of shares outstanding after giving effect to the reverse stock split will depend on the
reverse split ratio that is ultimately selected by the board of directors. We do not expect the reverse
stock split itself to have any economic effect on the shareholders, debt holders or holders of options or
restricted stock, except to the extent the reverse stock split will result in fractional shares as discussed
below.
Reasons for the Reverse Stock Split
The board of directors authorized the resolution to seek shareholder approval to effect the reverse
split of Pier 1 Imports’ common stock with the primary intent of increasing the price of Pier 1 Imports’
common stock in order to meet the NYSE’s price criteria for continued listing on that exchange. Pier 1
Imports’ common stock is publicly traded and listed on the NYSE under the symbol ‘‘PIR.’’ The board
of directors believes that, in addition to increasing the price of Pier 1 Imports’ common stock, the
reverse stock split would also reduce certain of our costs, such as NYSE listing fees, and make Pier 1
Imports’ common stock more attractive to a broader range of institutional and other investors. The
combination of lower transaction costs and increased interest from institutional investors and
investment funds may ultimately improve the trading liquidity of Pier 1 Imports’ common stock.
Accordingly, we believe that authority granted to the board of directors to effect the reverse stock split
is in Pier 1 Imports’ and the shareholders’ best interests.
On December 15, 2008, we were notified in writing by NYSE Regulation, Inc. that the trading
price of Pier 1 Imports’ common stock was below the price criteria of the NYSE’s continued listing
standards, as the average per share closing price of Pier 1 Imports’ common stock over a consecutive
30 trading-day period was less than $1.00. The letter stated that in the event a $1.00 share price and a
$1.00 average share price over the preceding 30 trading-days are not attained at the expiration of a
six-month cure period, the NYSE would commence suspension and delisting procedures. Under NYSE
rules, Pier 1 Imports originally had six months from December 15, 2008 to achieve compliance with the
NYSE’s continued listing standard. On February 26, 2009, the NYSE temporarily suspended its $1.00
minimum price requirement until June 30, 2009. The suspension extended the time that Pier 1 Imports
had to comply with the NYSE’s continued listing standards to approximately October 15, 2009 because
the duration of the suspension did not count against the original six-month cure period. On May 2,
2009, NYSE Regulation, Inc. notified us that Pier 1 Imports had regained compliance with the $1.00
minimum price requirement since as of April 30, 2009 Pier 1 Imports’ common stock had a closing
price above $1.00 per share and had maintained a consecutive 30 trading-day average above $1.00 as of
that date. Failure to maintain the NYSE’s minimum price requirement in the future, however, could
result in the removal of Pier 1 Imports’ common stock from the NYSE.
In addition to establishing a mechanism for the price of Pier 1 Imports’ common stock to meet the
NYSE’s minimum price requirement, we also believe that the reverse stock split will make Pier 1
Imports’ common stock more attractive to a broader range of institutional and other investors. It is our
understanding that the current market price of Pier 1 Imports’ common stock may affect its
acceptability to certain institutional investors, professional investors and other members of the investing
public. It is also our understanding that many brokerage houses and institutional investors have internal
policies and practices that either prohibit them from investing in low-priced stocks or tend to
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