Pier 1 2012 Annual Report Download - page 30

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In fiscal 2012, the Company recorded operating income of $154.8 million, or 10.1% of sales, compared to
$103.7 million, or 7.4% of sales, for fiscal 2011.
Nonoperating Income and Expense
Nonoperating income for fiscal 2012 was $9.3 million, compared to expense of $0.2 million in fiscal
2011. The increase in net interest income was primarily the result of an increase in deferred gain recognition
related to the renegotiation of the Company’s proprietary credit card agreement with Chase during the fourth
quarter of fiscal 2011. As a result of its agreement with ADS during the third quarter of fiscal 2012, the Company
also revised the amortization period for any remaining deferred gains related to prior transactions with Chase as
appropriate. See Note 8 to the Notes to Consolidated Financial Statements for further discussion. In addition,
interest expense decreased primarily as a result of a lower debt balance in fiscal 2012.
Income Taxes
The Company recorded an income tax benefit of $4.8 million in fiscal 2012 compared to a provision of
$3.4 million in the prior year. During the fourth quarter of fiscal 2012, the Company was able to conclude that
given its improved performance, the realization of its deferred tax assets was more likely than not and
accordingly reversed its valuation allowance and recorded a tax benefit during the period. This benefit was
partially offset by tax expense. During fiscal 2012, the Company recognized federal income tax expense
compared to only minimal amounts of state and foreign tax during fiscal 2011 due to the full valuation
allowance.
Net Income
Net income in fiscal 2012 was $168.9 million, or $1.48 per share, which included the tax benefit resulting
from the change in the Company’s tax valuation allowance during the fourth quarter of fiscal 2012. Before
non-recurring tax benefits of $61.5 million, primarily resulting from the change in the Company’s tax valuation
allowance, earnings per share were $0.94 for fiscal 2012. Net income for fiscal 2011 was $100.1 million, or
$0.85 per share.
Net income for the fourth quarter of fiscal 2012 was $115.2 million, or $1.04 per share. Before
non-recurring tax benefits of $61.5 million, primarily resulting from the change in the Company’s tax valuation
allowance, earnings per share were $0.48 for the fourth quarter of fiscal 2012. Net income for the fourth quarter
of fiscal 2011 was $57.1 million, or $0.48 per share.
FISCAL YEARS ENDED FEBRUARY 26, 2011 AND FEBRUARY 27, 2010
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 2011 and 2010
were as follows (in thousands):
2011 2010
Stores $ 1,381,944 $ 1,279,742
Other (1) 14,526 11,110
Net sales $ 1,396,470 $ 1,290,852
(1) Other sales consisted primarily of wholesale sales and royalties received from subsidiaries of Grupo Sanborns, S.A. de C.V.
and gift card breakage.
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