Pier 1 2011 Annual Report Download - page 30

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Nonoperating Income and Expense
Nonoperating expense for fiscal 2011 was $0.2 million, compared to income of $35.3 million in fiscal 2010.
The decrease in income was primarily attributable to a $49.7 million gain related to the repurchase and exchange of
the Company’s convertible debt and the recovery of $10.0 million as a result of a foreign litigation settlement in the
prior year. These gains were partially offset by $18.3 million in charges taken during the prior year related to the
debt transactions. The remaining variance resulted from an increase in deferred gain recognition related to the
renegotiation of the Company’s proprietary credit card agreement with Chase Bank USA, N.A. (“Chase”) during
the fourth quarter of fiscal 2011, partially offset by lower interest expense during the current year.
Income Taxes
The Company recorded an income tax provision of $3.4 million, compared to a benefit of $54.8 million in
the prior year. The Company continues to provide a valuation allowance against deferred tax assets. As a result,
minimal federal tax benefit was recorded on the results of fiscal 2011 and only minimal state and foreign tax
provisions were made during the year. The prior year benefit was the result of the Company recording a federal
income tax refund of $55.9 million resulting from the Worker, Homeownership, and Business Assistance Act of
2009. As of February 26, 2011, the Company had utilized all federal tax loss carryforwards.
Net Income
Net income in fiscal 2011 was $100.1 million, or $0.85 per share, compared to $86.8 million, or $0.86 per
share for fiscal 2010.
FISCAL YEARS ENDED FEBRUARY 27, 2010 AND FEBRUARY 28, 2009
Net Sales
Net sales consisted primarily of sales to retail customers, net of discounts and returns, but also included
delivery revenues and wholesale sales and royalties. Sales by retail concept during fiscal years 2010, 2009 and
2008 were as follows (in thousands):
2010 2009 2008
Stores $ 1,279,742 $ 1,308,331 $ 1,486,147
Direct to consumer - - 8,366
Other (1) 11,110 12,346 17,319
Net sales $ 1,290,852 $ 1,320,677 $ 1,511,832
(1) Other sales consisted primarily of wholesale sales and royalties received from franchise stores,
Grupo Sanborns, S.A. de C.V., other third parties and gift card breakage.
Net sales during fiscal 2010 were $1,290.9 million, a decrease of $29.8 million or 2.3%, from $1,320.7
million for the prior fiscal year. The decrease in sales for the fiscal year was comprised of the following
components (in thousands):
2010
Comparable stores $ 19,044
Closed stores and other (48,869)
Net decrease in sales $ (29,825)
24