Pier 1 2013 Annual Report Download - page 31

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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.
LIQUIDITY AND CAPITAL RESOURCES
The Company’s cash and cash equivalents totaled $231.6 million at the end of fiscal 2013, a decrease of
$56.3 million from the fiscal 2012 year-end balance of $287.9 million. The decrease was primarily the result of
the utilization of cash to support the Company’s three-year growth plan, including capital expenditures of
$80.4 million, $100.0 million to repurchase shares of the Company’s common stock, and cash dividends of
$18.0 million. These expenditures were mostly offset by cash provided by operating activities of $124.0 million.
The Company’s cash and cash equivalents totaled $287.9 million at the end of fiscal 2012, a decrease of
$13.6 million from the fiscal 2011 year-end balance of $301.5 million. The decrease was primarily the result of
the utilization of cash to support the Company’s three-year growth plan, including capital expenditures of
$62.3 million and $100.0 million to repurchase shares of the Company’s common stock. These expenditures
were mostly offset by cash provided by operating activities of $142.2 million.
Cash Flows from Operating Activities
Operating activities provided $124.0 million of cash in fiscal 2013, primarily as a result of $129.4 million
of net income, and a $5.7 million increase in income taxes payable, partially offset by a $31.6 million increase in
prepaid expenses and other assets, primarily due to timing of rent payments, and a $33.6 million increase in
inventory. Inventory increased 10.4% from the end of fiscal 2012 due to additional inventory to support the new
e-Commerce business and slightly larger purchases of select merchandise to support higher sales in the first
quarter of fiscal 2014. The Company continues to focus on strategically managing inventory levels and closely
monitoring merchandise purchases to keep inventory in line with consumer demand.
During fiscal 2012, operating activities provided $142.2 million of cash, primarily as a result of
$168.9 million of net income, partially offset by increases in inventory. Inventory levels at the end of fiscal 2012
were $322.5 million, an increase of $10.7 million, or 3.4%, from the end of fiscal 2011, due to increased
inventory purchases to support higher sales.
Cash Flows from Investing Activities
During fiscal 2013, the Company’s investing activities used $82.4 million, compared to $62.1 million
during fiscal 2012. Total capital expenditures were $80.4 million, which included approximately $48.5 million
for the opening of 22 new stores, four major remodels, new merchandise fixtures and lighting, and other
leasehold improvements and equipment. The Company also invested in the build-out of the e-Commerce
fulfillment space located in one of the Company’s distribution centers. The remaining capital expenditures were
for technology and infrastructure initiatives, including e-Commerce and the new point-of-sale system.
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