Pier 1 2015 Annual Report Download - page 52

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Term Loan Facility includes restrictions on the Company’s ability to, among other things, incur or guarantee additional
indebtedness, pay dividends on, or redeem or repurchase shares of the Company’s capital stock, make certain acquisitions or
investments, materially change the business of the Company, incur or permit to exist certain liens, enter into transactions with
affiliates or sell the Company’s assets to, or merge or consolidate with or into, another company, in each case subject to certain
exceptions. The Term Loan Facility does not require the Company to comply with any financial maintenance covenants, but
contains certain customary representations and warranties, affirmative covenants and provisions relating to events of default. The
Term Loan Facility provides for incremental facilities, subject to certain conditions, including the meeting of certain leverage ratio
requirements as defined therein, to the extent such facilities exceed an incremental $200,000,000.
The Term Loan Facility matures as follows (in thousands):
Fiscal Year Amount
2016 $ 2,000
2017 2,000
2018 2,000
2019 2,000
Thereafter 191,000
Total 199,000
Debt Discount (1,754)
Total Debt $197,246
NOTE 5 — EMPLOYEE BENEFIT PLANS
The Company offers a qualified defined contribution employee retirement plan (“Qualified Plan”) to all of its full- and part-time
personnel who are at least 18 years old and have been employed for a minimum of six months. During fiscal 2015, 2014 and
2013, employees contributing 1% to 5% of their compensation received a matching Company contribution of up to 3%.
Company contributions to the plan were $2,455,000, $2,071,000 and $2,119,000 in fiscal 2015, 2014 and 2013, respectively.
In addition, the Company offers non-qualified deferred compensation plans (“Non-Qualified Plans”) for the purpose of providing
deferred compensation for certain employees whose benefits under the Qualified Plan may be limited under Section 401(k) of the
Internal Revenue Code. The Company’s expense for the Non-Qualified Plans was $1,269,000, $1,381,000 and $1,051,000 for
fiscal 2015, 2014 and 2013, respectively. The Company has trusts established for the purpose of setting aside funds to be used
to settle certain obligations of the Non-Qualified Plans, and contributed $3,192,000 and used $1,715,000 to satisfy a portion of
retirement obligations during fiscal 2015. The Company also contributed $3,196,000 and used $758,000 to satisfy a portion of
retirement obligations during fiscal 2014. The trusts’ assets included investments and life insurance policies on the lives of former
key executives. As of February 28, 2015 and March 1, 2014, the trusts’ investments had an aggregate value of $10,571,000
and $6,673,000, respectively. The investments were held primarily in mutual funds and are classified as other noncurrent assets.
All investments held in the trusts are valued at fair value using Level 1 Inputs, which are unadjusted quoted prices in active
markets for identical assets or liabilities. The Company has accounted for the restricted investments as trading securities. The life
insurance policies held in the trusts are carried at fair value and were classified as other noncurrent assets. The policies had cash
surrender values of $5,736,000 and $6,728,000, and death benefits of $11,336,000 and $13,127,000 as of February 28,
2015 and March 1, 2014, respectively. The decreases compared to prior year resulted from the recognition of the death benefit
value of certain policies during fiscal 2015. The trusts’ assets are restricted and may only be used to satisfy obligations to the
Non-Qualified Plans’ participants.
The Company also owns and is the beneficiary of a number of life insurance policies on the lives of former key executives that are
unrestricted as to use. At the discretion of the Board of Directors such policies could be contributed to the trusts described
above or to the trusts established for the purpose of setting aside funds to be used to satisfy obligations arising from
supplemental retirement plans described below. The cash surrender value of the unrestricted policies was $13,096,000 and
$18,068,000, and the death benefit was $19,927,000 and $26,362,000 as of February 28, 2015 and March 1, 2014,
respectively. The cash surrender value of these policies is included in other noncurrent assets. The decreases compared to prior
year resulted from the recognition of the death benefit value of certain policies during fiscal 2015.
The Company maintains supplemental retirement plans for certain of its current and former executive officers. These plans
provide that upon death, disability, reaching retirement age or certain termination events, a participant will receive benefits based
46 PIER 1 IMPORTS, INC. 2015 Form 10-K