Pier 1 2009 Annual Report Download - page 38

(6) Other obligations include the Company’s liability under various unfunded retirement plans. See
Note 7 of the Notes to Consolidated Financial Statements for further discussion of the Company’s
employee benefit plans.
(7) Other obligations also include approximately $8.0 million of reserves for uncertain tax positions,
including interest and penalties, under Financial Accounting Standards Board Interpretation
No. 48, ‘‘Accounting for Uncertainty in Income Taxes—An Interpretation of FASB Statement
No. 109’’, which has been classified as a current liability. Excluded from this table is the
noncurrent portion of reserves for uncertain tax positions of $9.0 million for which the Company is
not reasonably able to estimate the timing of future cash flows.
(8) The above amounts do not include payments that may be due under employment agreement(s)
with certain employee(s).
The present value of the Company’s minimum future operating lease commitments discounted at
10% was $736.4 million at fiscal 2009 year end and as a result of the Company’s on-going rent
negotiations was $713.4 million as of April 15, 2009. The Company plans to fund these commitments
from cash generated from the operations of the Company and, if needed, from borrowings against lines
of credit.
Total capital expenditures for fiscal 2010 are expected to be approximately $7 million. On
February 3, 2009, the Company announced that it hired an outside firm to assist in negotiations with its
landlords to achieve rental reductions across its store portfolio. To date, the Company has reached
agreements in principal to terminate the leases on 22 stores and has decided to close 3 additional
stores for which termination or rental reduction agreements were unable to be reached. The Company
estimates total charges of approximately $7 million of cash and non-cash termination charges related to
these closures, of which, $4 million will be incurred in the first quarter of fiscal 2010. The cash portion
of these charges will be partially offset by the liquidation of inventory in the closing stores. As a result
of its efforts to date, the Company has achieved approximately $7 million in rental savings for fiscal
2010 and now estimates it will close no more than 80 locations in fiscal 2010. Actual expenses related
to these closures cannot be estimated as they will largely depend upon the results of on-going
negotiations.
As part of the sale of the Company’s home office building and accompanying land, the Company
entered into a lease agreement to rent office space in the building. The lease has a primary term of
seven years beginning on June 9, 2008, with one three-year renewal option and provisions for
terminating the lease at the end of the fifth lease year.
On May 4, 2009, the Company received notice from NYSE Regulation, Inc. (‘‘NYSE Regulation’’)
that the Company was in compliance with the New York Stock Exchange (‘‘NYSE’’) continued listing
standards. Previously on December 15, 2008, the Company had received notice from NYSE Regulation
that the Company was not in compliance with the NYSE continued listing standard under
Section 802.01C of the NYSE Listed Company Manual due to the fact that the average closing share
price of the Company’s common stock over a consecutive 30-day trading period was less than $1.00.
The Company notified NYSE Regulation within the required ten business days that it intended to cure
the deficiency and that its Board of Directors had met and was considering all strategic measures to
cure the non-compliance with the listing standard.
On February 26, 2009, the Company received notice from the NYSE that it had suspended the
NYSE’s $1.00 minimum price requirement on a temporary basis, initially through June 30, 2009. The
notice also extends until June 30, 2009, the NYSE’s current easing of the average global market
capitalization standard, calculated over a consecutive 30 trading-day period, from $25 million to
$15 million. According to section 802.01B of the NYSE Listed Company Manual, the NYSE will
promptly initiate suspension and delisting procedures with respect to a company if a company is
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