Pier 1 2009 Annual Report Download - page 128

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The board of directors has declared it advisable and unanimously recommends a vote ‘‘FOR’’
approval of the amendment of the Certificate of Incorporation of Pier 1 Imports, Inc. to effect a
reverse stock split of Pier 1 Imports’ common stock having a split ratio between, and including, 1-for-2
and 1-for-20, as will be selected by the board of directors prior to the time of filing such Certificate of
Amendment with the Delaware Secretary of State.
ITEM 3—Proposal to Approve an Amendment of the Certificate of Incorporation of Pier 1
Imports, Inc. to Reduce the Par Value of Pier 1 Imports’ Common Stock from $1.00 Per
Share to $0.001 Per Share
The board of directors has unanimously adopted a resolution seeking shareholder approval to
amend Pier 1 Imports’ Certificate of Incorporation to reduce the par value of Pier 1 Imports’ common
stock. The Certificate of Incorporation currently authorizes the issuance of shares of common stock
with a par value of $1.00 per share. The board of directors believes it is in the best interests of Pier 1
Imports to amend the Certificate of Incorporation to reduce the par value of Pier 1 Imports’ common
stock to $0.001 per share. The reduction in par value is intended to bring Pier 1 Imports in line with
the practice of other public companies with respect to par value.
We further believe that a change from a par value of $1.00 per share to $0.001 per share will
provide us with greater flexibility in utilizing Pier 1 Imports’ common stock for various corporate
purposes. We also believe that a reduction in par value will provide us with greater flexibility with
respect to the issuance of stock and stock-based compensation because Delaware law requires that we
receive at least the par value per share as consideration for the issuance of Pier 1 Imports’ common
stock.
Historically, the concept of par value served to protect creditors and senior security holders by
ensuring that a company received at least the par value as consideration for issuance of stock. Over
time, the concept of par value has lost its significance for the most part. Many companies that
incorporate today use a nominal par value or have no par value.
The reduction in the par value of Pier 1 Imports’ common stock would result in a reduction in the
stated capital on our balance sheet attributable to Pier 1 Imports’ common stock (approximately
$100.7 million) and a corresponding increase in the paid-in capital account (approximately
$100.7 million). The reduction in the par value would not change the number of authorized shares of
Pier 1 Imports’ common stock. The reduction in the par value would reduce the amount required to be
carried by Pier 1 Imports as stated capital, thereby potentially increasing our paid-in capital available
for other corporate purposes. The board of directors has not proposed the reduction in the par value
with the intention of declaring dividends on the common stock. The reduction in the par value should
have no effect on the rights of the holders of Pier 1 Imports’ common stock except for the minimum
amount per share Pier 1 Imports may receive upon the issuance of authorized but unissued shares.
The form of the proposed amendment to our Certificate of Incorporation to reduce the par value
of Pier 1 Imports’ common stock to $0.001 is attached to this proxy statement as Appendix B.
Appendix B will be appropriately modified to delete the proposed amendment if this proposal is not
approved by the requisite vote of the shareholders. The amendment to the Certificate of Incorporation
will become effective upon the filing of such amendment with the Secretary of State for the State of
Delaware. The approval of this proposal is not conditioned on the approval of Item 2 above or Item 4
below.
If this proposal is approved, certificates representing shares of Pier 1 Imports’ common stock,
$1.00 par value per share, issued and outstanding prior to the effective date of filing of the amendment
to the Certificate of Incorporation will be changed to represent the same number of shares of Pier 1
Imports’ common stock, $0.001 par value per share, as they did prior to such effective date. Existing
certificates will not be exchanged for new certificates in connection with this amendment.
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