Pier 1 2009 Annual Report Download - page 36

demand. The Company expects inventory levels to range from $300 million to $340 million with
seasonal fluctuations similar to prior years and to end fiscal 2010 at approximately $300 million.
During fiscal 2009, the Company’s investing activities provided $91.8 million. During the second
quarter of fiscal 2009, the Company sold its corporate headquarters building and accompanying land to
Chesapeake Plaza, L.L.C., an affiliate of Chesapeake Energy Corporation, for net proceeds of
approximately $102.4 million. The Company collected $1.5 million of a note receivable related to the
fiscal 2007 sale of Pier 1 National Bank. Proceeds from the sale of restricted investments used primarily
for the payment of defined benefit obligations provided $3.3 million, partially offset by contributions of
$2.0 million to purchase similar restricted investments. Capital expenditures were $13.4 million and
consisted primarily of $5.8 million for fixtures, equipment and leasehold improvements for stores,
$3.5 million related to home office leasehold improvements, $2.7 million for information systems
enhancements and $1.4 million related to the Company’s distribution centers.
Financing activities for fiscal 2009 provided a net $2.2 million, primarily related to the Company’s
stock purchase plan.
The Company’s bank facilities include a $325 million credit facility expiring in May 2012, which is
secured by the Company’s eligible merchandise inventory and third-party credit card receivables.
During fiscal 2009, the Company had no cash borrowings against its credit facility; however, in the
future, the Company may become dependent upon its secured credit facility to fund operations
including seasonal inventory purchases. As of February 28, 2009, the Company had no outstanding
borrowings and had utilized approximately $84.3 million in letters of credit and bankers acceptances.
Should the availability under such facility be less than $32.5 million, the Company will be required to
comply with a fixed charge coverage ratio as stated in the agreement. The Company does not anticipate
falling below this minimum availability in the foreseeable future. As of February 28, 2009, the
Company’s calculated borrowing base was $201.7 million. After excluding the required minimum of
$32.5 million and the $84.3 million in utilized letters of credit and bankers’ acceptances from the
borrowing base, $84.9 million remained available for cash borrowings. This borrowing base calculation
is subject to advance rates and commercially reasonable reserves. At the end of fiscal 2009, the
Company was in compliance with required debt covenants stated in the agreement.
The Company does not currently anticipate paying cash dividends in fiscal 2010, and its dividend
policy in the near term will depend upon the earnings, financial condition and capital needs of the
Company and other factors deemed relevant by the Company’s Board of Directors. Under the terms of
the Company’s secured credit facility, the Company will not be restricted from paying certain dividends
unless the availability under the credit facility over a specified period of time is projected to be less
than $97.5 million.
During fiscal 2009, the Company did not make any repurchases of, and has no immediate plans to
repurchase, shares of its outstanding common stock.
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