Pier 1 2009 Annual Report Download - page 73

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 7—EMPLOYEE BENEFIT PLANS (Continued)
Net periodic benefit cost included the following actuarially determined components during fiscal
2009, 2008 and 2007 (in thousands):
2009 2008 2007
Service cost ................................. $ 923 $ 498 $ 2,405
Interest cost ................................. 923 764 1,931
Amortization of unrecognized prior service cost ....... 551 361 804
Amortization of net actuarial loss ................. 445 125 3,203
Settlement charges ............................ — 1,399 5,257
Curtailment charge ............................ 368 364 1,512
Net periodic benefit cost ...................... $3,210 $3,511 $15,112
As of February 28, 2009 and March 1, 2008, accumulated other comprehensive loss included
amounts that had not been recognized as components of net periodic benefit cost related to prior
service cost of $3,398,000 and $4,317,000, and net actuarial loss of $834,000 and $1,993,000,
respectively. The estimated prior service cost and net actuarial loss that will be amortized from
accumulated other comprehensive loss into net periodic cost in fiscal 2010 are $498,000 and $67,000,
respectively.
In September 2006, the Financial Accounting Standards Board (‘‘FASB’’) issued SFAS No. 158,
‘‘Employers Accounting for Defined Benefit Pension and Other Postretirement Pension Plans, an
amendment of FASB Statements No. 87, 88, 106, and 132(R)’’ (‘‘SFAS 158’’). SFAS 158 requires
companies to recognize the funded status of postretirement benefit plans as an asset or liability in the
financial statements. The Company adopted the funded status recognition portion of SFAS 158 as of
March 3, 2007, and recorded an additional liability with an offset to other comprehensive income of
$1,631,000. In addition, SFAS 158 requires an employer to measure its postretirement benefit plan
assets and benefit obligations as of the date of the employer’s fiscal year end. This portion of the
statement was effective for the Company for fiscal 2009 and did not have a material impact on the
Company’s consolidated financial statements.
NOTE 8—MATTERS CONCERNING SHAREHOLDERS’ EQUITY
On March 23, 2006, the Board of Directors approved the adoption of the Pier 1 Imports, Inc. 2006
Stock Incentive Plan (the ‘‘2006 Plan’’). The 2006 Plan was approved by the shareholders on June 22,
2006. The aggregate number of shares available for issuance under the 2006 Plan included a new
authorization of 1,500,000 shares, plus shares (not to exceed 560,794 shares) that remained available for
grant under the Pier 1 Imports, Inc. 1999 Stock Plan (the ‘‘1999 Stock Plan’’) and the Pier 1
Imports, Inc. Management Restricted Stock Plan, increased by the number of shares (not to exceed
11,186,150 shares) subject to outstanding awards on March 23, 2006, under these prior plans that cease
to be subject to such awards. As of February 28, 2009, there was a total of 1,505,812 shares available
for grant under the 2006 Plan.
Stock option grants—On January 27, 2007, the Board of Directors approved an employment
agreement for the Company’s President and Chief Executive Officer (the ‘‘CEO’’). The employment
agreement set forth that on February 19, 2007, the CEO would be granted two options to purchase an
aggregate of 3,000,000 shares of the Company’s common stock. The exercise price per share would be
the fair market value of the Company’s common stock on the following day, which was $6.69. The
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