Pier 1 2009 Annual Report Download - page 79

Download and view the complete annual report

Please find page 79 of the 2009 Pier 1 annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 173

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160
  • 161
  • 162
  • 163
  • 164
  • 165
  • 166
  • 167
  • 168
  • 169
  • 170
  • 171
  • 172
  • 173

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 9—PROPRIETARY CREDIT CARD INFORMATION (Continued)
received cash and retained a residual interest in the Master Trust. These cash payments were funded
from undistributed principal collections on the Receivables that were previously sold to the Master
Trust.
Funding was capitalized by the Company as a special-purpose wholly owned subsidiary and was
subject to certain covenants and restrictions, including a restriction from engaging in any business or
activity unrelated to acquiring and selling interests in receivables. The Master Trust issued beneficial
interests that represented undivided interests in the assets of the Master Trust. Neither Funding nor the
Master Trust was consolidated in the Company’s financial statements. Under U.S. generally accepted
accounting principles, if the structure of a securitization meets certain requirements, such transactions
are accounted for as sales of receivables. As the Company’s securitizations met such requirements, they
were accounted for as sales. Gains or losses resulting from the daily sales of Receivables to Funding
were not material during fiscal 2007. The Company’s exposure to deterioration in the performance of
the Receivables was limited to its retained beneficial interest in the Master Trust. As such, the
Company had no corporate obligation to reimburse Funding, the Master Trust or purchasers of any
certificates issued by the Master Trust for credit losses from the Receivables.
As a result of the securitization, the Master Trust had $100,000,000 of outstanding 2001-1 Class A
Certificates issued to a third party through September 6, 2006. The 2001-1 Class A Certificates bore
interest at a floating rate equal to the rate on commercial paper issued by the third party plus a credit
spread. Since the securitization agreement expired in September 2006, there were no outstanding
2001-1 Class A Certificates or 2001-1 Class B Certificates at the end of fiscal 2009 or 2008, as all
amounts were settled.
Cash flows received by the Company from the Master Trust during fiscal 2007 were as follows (in
thousands):
2007
Proceeds from collections reinvested in revolving securitizations ........ $212,653
Servicing fees received ...................................... $ 1,190
Cash flows received on retained interests ........................ $ 32,592
72