Pier 1 2012 Annual Report Download - page 51

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
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 following table
represents a rollforward of the liability balances for the three fiscal years ended February 25, 2012 (in
thousands):
Lease
Termination
Obligations
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
Original charges 154
Revisions 1,445
Cash payments (2,769)
Balance at February 26, 2011 3,731
Original charges -
Revisions 1,889
Cash payments (2,058)
Balance at February 25, 2012 $ 3,562
NOTE 5 – LONG-TERM DEBT AND AVAILABLE CREDIT
Long-term debt consisted entirely of industrial revenue bonds at February 25, 2012 and February 26,
2011. The Company’s industrial revenue bond loan agreements have been outstanding since 1987. Proceeds were
used to construct warehouse/distribution facilities. The loan agreements and related tax-exempt bonds mature in
the year 2026. During fiscal 2011, the Company repaid $9,500,000 of industrial revenue bonds related to the
distribution center near Chicago, Illinois with proceeds received from the sale of that facility earlier in the year.
The Company’s interest rates on the loans are based on the bond interest rates, which are market driven, reset
weekly and are similar to other tax-exempt municipal debt issues. The Company’s weighted average effective
interest rate, including standby letter of credit fees, was 2.7%, 3.8% and 3.2% for fiscal 2012, 2011 and 2010,
respectively.
In February 2006, the Company issued $165,000,000 of convertible debt. During fiscal 2010, the
Company completed several transactions related to this convertible debt which reduced the total balance to
$16,435,000 at the end of fiscal 2010. These transactions included the repurchase of a portion of the debt, an
exchange of the debt for new convertible debt, and the subsequent voluntary conversion of the new debt into
common stock. As a result, the Company recorded gains of $49,654,000 and issued 24,453,065 shares of its
common stock. The Company also incurred non-operating charges of $18,308,000 and paid cash of $13,782,000
for make-whole interest in connection with the conversion. During the fourth quarter of fiscal 2011, the
remaining convertible debt and any accrued interest were paid in full. As of February 25, 2012 and February 26,
2011, the Company had no outstanding convertible debt.
43