Pier 1 2009 Annual Report Download - page 60

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 4—COSTS ASSOCIATED WITH EXIT ACTIVITIES (Continued)
cannot be reached, the Company may elect to close those locations. Currently, the Company expects to
close no more than 80 locations in connection with these negotiation efforts. Actual expenses related to
these closures cannot be estimated as they will largely depend upon the results of on going
negotiations.
NOTE 5—LONG-TERM DEBT AND AVAILABLE CREDIT
Long-term debt is summarized as follows at February 28, 2009 and March 1, 2008 (in thousands):
2009 2008
Industrial revenue bonds ............................ $ 19,000 $ 19,000
6.375% convertible senior notes due 2036 ................ 165,000 165,000
184,000 184,000
Less—portion due within one year ..................... — —
Long-term debt ................................. $184,000 $184,000
The Company has $19,000,000 in industrial revenue bond loan agreements, which have been
outstanding since 1987. Proceeds were used to construct warehouse/distribution facilities. The loan
agreements and related tax-exempt bonds mature in the year 2026. The Company’s interest rates on the
loans are based on the bond interest rates, which are market driven, reset weekly and are similar to
other tax-exempt municipal debt issues. The Company’s weighted average effective interest rate,
including standby letter of credit fees, was 3.5% for fiscal 2009 and 5.2% for both fiscal 2008 and 2007.
In February 2006, the Company issued $165,000,000 of 6.375% convertible senior notes due 2036
(the ‘‘Notes’’) in a private placement, and subsequently registered the Notes with the Securities and
Exchange Commission in June 2006. The Notes are governed by an Indenture dated February 14, 2006
(the ‘‘Indenture’’). The Notes bear interest at a rate of 6.375% per year until February 15, 2011 and at
a rate of 6.125% per year thereafter. Interest is payable semiannually in arrears on February 15 and
August 15 of each year, and commenced August 15, 2006. The Notes are convertible into cash and, if
applicable, shares of the Company’s common stock based on an initial conversion rate, subject to
adjustments, of 65.8328 shares per $1,000 principal amount of Notes (which represents an initial
conversion price of approximately $15.19 per share representing a 40% conversion premium at
issuance). Holders of the Notes may convert their Notes only under the following circumstances:
(1) during any fiscal quarter (and only during such fiscal quarter) commencing after May 27, 2006, if
the last reported sale price of the Company’s common stock for at least 20 trading days during the
period of 30 consecutive trading days ending on the last trading day of the preceding fiscal quarter is
greater than or equal to 130% of the applicable conversion price on such last trading day; (2) if the
Company has called the Notes for redemption; or (3) upon the occurrence of specified corporate
transactions. In general, upon conversion of a Note, a holder will receive cash equal to the lesser of the
principal amount of the Note or the conversion value of the Note, plus common stock of the Company
for any conversion value in excess of the principal amount. As of February 28, 2009, the maximum
number of shares that could be required to be issued to net share settle the conversion of the Notes
was 10,862,412 shares. The Company may redeem the Notes at its option on or after February 15, 2011
for cash at 100% of the principal amount. The Notes are fully and unconditionally guaranteed, on a
joint and several basis, by all of the Company’s material domestic consolidated subsidiaries.
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