Pier 1 2010 Annual Report Download - page 53

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
availability, local market conditions and prospects for future profitability. In connection with these lease
terminations, the Company has recorded estimated liabilities to cover the termination costs. At the time of
closure, neither the write-off of fixed assets nor the write-down of inventory related to such stores was material.
Additionally, employee severance costs associated with these closures were not significant. The estimated
liabilities were recorded based upon the Company’s remaining lease obligations less estimated subtenant rental
income. Revisions during the periods presented relate to changes in estimated buyout terms or subtenant receipts
expected on closed facilities. Expenses related to lease termination obligations are included in selling, general
and administrative expenses in the Company’s consolidated statements of operations. The write-off of fixed
assets and associated intangible assets related to Pier 1 Imports store closures, excluding clearance and Pier 1
Kids stores, was approximately $177,000, $56,000 and $751,000 in fiscal 2010, 2009 and 2008, respectively. The
following table represents a rollforward of the liability balances for the three fiscal years ended February 27,
2010 (in thousands):
Lease
Termination
Obligations
Balance at March 3, 2007 $ 2,436
Original charges 11,573
Revisions (1,133)
Cash payments (7,248)
Balance at March 1, 2008 5,628
Original charges 5,591
Revisions 483
Cash payments (6,704)
Balance at February 28, 2009 4,998
Original charges 4,942
Revisions 2,751
Cash payments (7,790)
Balance at February 27, 2010 $ 4,901
Included in the table above are lease termination costs related to the closure of all of the Company’s
clearance and Pier 1 Kids stores and the direct to consumer channel. These concepts were closed during fiscal
2008 since their aggregate performance was not in line with the Company’s profitability targets. Lease
termination costs associated with these closures were $1,636,000, or $0.02 per share, during fiscal 2010 and
$258,000, or less than $0.01 per share, during fiscal 2009 and $7,973,000, or $0.09 per share, during fiscal 2008.
Cash outflows related to these lease terminations were $1,187,000, $2,889,000 and $5,138,000 during fiscal
2010, 2009 and 2008, respectively. The net write-off of fixed assets, write-down of inventory and employee
severance costs associated with these closures was not material.
47