Pier 1 2009 Annual Report Download - page 56

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 1—DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (Continued)
Loss per share amounts were calculated as follows (in thousands except per share amounts):
2009 2008 2007
Loss from continuing operations, basic and
diluted .............................. $(129,253) $(96,011) $(227,238)
Loss from discontinued operations, basic and
diluted .............................. — — (407)
Net loss, basic and diluted ................. $(129,253) $(96,011) $(227,645)
Average shares outstanding:
Basic and diluted ........................ 88,912 88,083 87,395
Loss per share from continuing operations:
Basic and diluted ........................ $ (1.45) $ (1.09) $ (2.59)
Loss per share from discontinued operations:
Basic and diluted ........................ — — $ (.01)
Net loss per share:
Basic and diluted ........................ $ (1.45) $ (1.09) $ (2.60)
All 12,302,323, 13,102,360 and 13,991,195 outstanding stock options and shares of unvested
restricted stock were excluded from the computation of the fiscal 2009, 2008 and 2007, respectively, loss
per share as the effect would be antidilutive. In addition, incremental net shares for the conversion
feature of the Company’s 6.375% senior convertible notes due 2036 have not been included in the
Company’s diluted earnings per share calculations for those periods as the average common stock price
has not exceeded the initial conversion price of $15.19 per share.
Stock-based compensation—The Company grants stock options and restricted stock for a fixed
number of shares to employees with stock option exercise prices equal to the fair market value of the
shares on the date of the grant. The Company accounts for stock-based compensation under the
provisions of SFAS No. 123 (Revised 2004), ‘‘Share-Based Payment’’ (‘‘SFAS 123R’’). SFAS 123R
requires all companies to measure and recognize compensation expense at an amount equal to the fair
value of share-based payments granted under compensation arrangements.
The Company adopted SFAS 123R at the beginning of fiscal 2007 using the modified prospective
method. Under the modified prospective method, the Company records stock-based compensation
expense for all awards granted on or after the date of adoption and for the portion of previously
granted awards that remained unvested at the date of adoption. Currently, the Company’s stock-based
compensation relates to stock options, restricted stock awards and director deferred stock units.
Compensation expense is recognized for any unvested stock option awards outstanding as of the date of
adoption on a straight-line basis over the remaining vesting period. The fair values of the options are
calculated using a Black-Scholes option pricing model. The Company records compensation expense for
stock-based awards with a performance condition when it is probable that the condition will be
achieved. The compensation expense ultimately recognized, if any, related to these awards will equal
the grant date fair value for the number of shares for which the performance condition has been
satisfied.
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