-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IGq4K3uBgP6Blf+zy8Y8WRsM9rnIzrIIQOa+7TwSIVQwjKGYdlLH/C2BmYhXMKSh Uf0Cx5mc1JnSRK7txtqSxg== 0000897423-96-000064.txt : 19960726 0000897423-96-000064.hdr.sgml : 19960726 ACCESSION NUMBER: 0000897423-96-000064 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19930828 FILED AS OF DATE: 19960725 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PIER 1 IMPORTS INC/DE CENTRAL INDEX KEY: 0000278130 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-HOME FURNITURE, FURNISHINGS & EQUIPMENT STORES [5700] IRS NUMBER: 751729843 STATE OF INCORPORATION: DE FISCAL YEAR END: 0227 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-07832 FILM NUMBER: 96598731 BUSINESS ADDRESS: STREET 1: 301 COMMERCE ST STE 600 CITY: FORT WORTH STATE: TX ZIP: 76102 BUSINESS PHONE: 8178788000 MAIL ADDRESS: STREET 1: 301 COMMERCE STREET STREET 2: SUITE 600 CITY: FORT WORTH STATE: TX ZIP: 76102 FORMER COMPANY: FORMER CONFORMED NAME: PIER 1 INC DATE OF NAME CHANGE: 19860921 FORMER COMPANY: FORMER CONFORMED NAME: PIER 1 IMPORTS INC/GA DATE OF NAME CHANGE: 19840729 FORMER COMPANY: FORMER CONFORMED NAME: NEWCORP INC DATE OF NAME CHANGE: 19800423 10-Q/A 1 FORM 10-Q/A Amendment No. 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the quarterly period ended August 28, 1993 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the transition period from [ ] to [ ] Commission File Number 1-7832 PIER 1 IMPORTS, INC. ------------------------------------------------------ (Exact name of registrant as specified in its charter) Delaware 75-1729843 - ------------------------------- ---------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 301 Commerce Street, Suite 600, Fort Worth, Texas 76102 ------------------------------------------------------------ (Address of principal executive offices, including zip code) (817) 878-8000 ---------------------------------------------------- (Registrant's telephone number, including area code) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [ X ]. No [ ]. Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Shares outstanding as of September 27, 1993 - ----------------------------- ------------------------------------------- Common Stock, $1.00 par value 37,412,533 Items 1 and 2 of Part I of the Company's Quarterly Report on Form 10-Q for the quarter ended August 28, 1993 are amended and restated as set forth below. PART I Item 1. Financial Statements. -------------------- PIER 1 IMPORTS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands except per share amounts) (Unaudited) Three Months Ended Six Months Ended Aug. 28, Aug. 29, Aug. 28, Aug. 29, 1993 1992 1993 1992 -------- -------- -------- -------- (as restated) (as restated) Net sales $181,441 $166,416 $340,034 $318,499 Operating costs and expenses: Cost of sales (including buying and store occupancy) 115,607 104,868 212,510 197,218 Selling, general and administrative expenses 47,235 44,708 94,333 88,081 Depreciation and amortization 3,932 3,484 7,626 7,209 -------- -------- -------- -------- 166,774 153,060 314,469 292,508 -------- -------- -------- -------- Operating income 14,667 13,356 25,565 25,991 Nonoperating (income) and expense: Interest income (706) (1,243) (1,340) (2,136) Interest expense 5,018 5,298 9,928 9,803 Trading losses (Note 1) 6,227 -- 10,208 -- -------- -------- -------- -------- 10,539 4,055 18,796 7,667 -------- -------- -------- -------- Income before income taxes and equity in net income of subsidiary 4,128 9,301 6,769 18,324 Provision for income taxes 3,012 1,871 4,932 4,399 -------- -------- -------- -------- Income before equity in net income of subsidiary 1,116 7,430 1,837 13,925 Equity in net income of subsidiary -- 23 -- 1,583 -------- -------- -------- -------- Net income $ 1,116 $ 7,453 $ 1,837 $ 15,508 ======== ======== ======== ======== Net income per share: Primary $.03 $.19 $.05 $.40 ======== ======== ======== ======== Fully diluted $.03 $.18 $.05 $.38 ======== ======== ======== ======== Average shares outstanding during period, including common stock equivalents: Primary 39,403 39,043 39,478 39,081 ======== ======== ======== ======== Fully diluted 45,979 45,628 46,047 44,542 ======== ======== ======== ======== The accompanying notes are an integral part of these financial statements. PIER 1 IMPORTS, INC. CONSOLIDATED BALANCE SHEETS (In thousands except share data) (Unaudited) August 28, February 27, 1993 1993 ------------ ------------ (as restated) ASSETS Current assets: Cash, including temporary investments of $538 and $66,823, respectively $ 12,883 $ 73,585 Accounts receivable, net 53,400 34,920 Inventories 210,047 189,593 Other current assets 26,749 20,038 -------- -------- Total current assets 303,079 318,136 Properties, net 106,109 108,011 Other assets 34,204 34,350 -------- -------- $443,392 $460,497 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable and current portion of long-term debt $ 17,139 $ 33,139 Accounts payable and accrued liabilities 58,182 59,791 -------- -------- Total current liabilities 75,321 92,930 Long-term debt 147,385 147,246 Deferred income taxes 412 514 Other non-current liabilities 20,149 19,313 Stockholders' equity: Common stock, $1.00 par, 100,000,000 shares authorized, 37,617,000 and 37,607,000 issued, respectively 37,617 37,607 Paid-in capital 93,010 93,184 Retained earnings 74,375 74,413 Cumulative currency translation adjustments (699) (433) Less - 229,000 and 263,000 common shares in treasury, at cost, respectively (2,325) (2,599) Less - subscriptions receivable and unearned compensation (1,853) (1,678) -------- -------- 200,125 200,494 -------- -------- $443,392 $460,497 ======== ======== The accompanying notes are an integral part of these financial statements. PIER 1 IMPORTS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Six Months Ended August 28, August 29, 1993 1992 ---------- ---------- (as restated) Cash flow from operating activities: Net income $ 1,837 $15,508 Adjustments to reconcile to net cash (used in) provided by operating activities: Depreciation and amortization 7,626 7,209 Deferred taxes and other 2,222 1,914 Equity in undistributed earnings of subsidiary -- (1,583) Changes in cash from: Inventories (20,454) 13,180 Accounts receivable and other current assets (23,190) (5,816) Accounts payable and accrued expenses (237) (1,028) Other assets, liabilities and other, net 33 675 Net cash (used in) provided by operating ------- ------- activities (32,163) 30,059 ------- ------- Cash flow from investing activities: Capital expenditures (6,978) (5,392) Proceeds from disposition of properties 748 809 Other investing activities (4,189) (1,709) ------- ------- Net cash used in investing activities (10,419) (6,292) ------- ------- Cash flow from financing activities: Cash dividends (1,686) (1,107) Net (payments) borrowings under line of credit agreements (16,000) 9,983 Proceeds from issuance of long-term debt -- 72,432 Repayments of long-term debt -- (35,235) (Payments) proceeds from (purchases) sales of capital stock, treasury stock, and other, net (434) 1,806 Net cash (used in) provided by financing ------- ------- activities (18,120) 47,879 ------- ------- Change in cash and cash equivalents (60,702) 71,646 Cash and cash equivalents at beginning of period 73,585 9,001 ------- ------- Cash and cash equivalents at end of period $12,883 $80,647 ======= ======= The accompanying notes are an integral part of these financial statements. PIER 1 IMPORTS, INC. CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY FOR THE SIX MONTHS ENDED AUGUST 28, 1993 (In thousands) (Unaudited)
Cumulative Subscriptions Currency Receivable Total Common Paid-in Retained Translation Treasury and Unearned Stockholders' Stock Capital Earnings Adjustments Stock Compensation Equity ------- ------- -------- ----------- -------- ------------- ------------- Balance February 27, 1993 $37,607 $93,184 $74,413 $(433) $(2,599) $(1,678) $200,494 Restricted stock grant and amortization (66) 376 (175) 135 Stock Purchase Plan, exercise of stock options and other 10 (108) (189) (102) (389) Currency translation adjustments (266) (266) Cash dividends, declared or paid (1,686) (1,686) Net income, as restated 1,837 1,837 ------- ------- ------- ----- ------- ------- -------- Balance August 28, 1993, as restated $37,617 $93,010 $74,375 $(699) $(2,325) $(1,853) $200,125 ======= ======= ======= ===== ======= ======= ======== The accompanying notes are an integral part of these financial statements.
PIER 1 IMPORTS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED AUGUST 28, 1993 AND AUGUST 29, 1992 (Unaudited) The accompanying unaudited financial statements should be read in conjunction with the Form 10-K, and Amendment No. 1 to Form 10-K, for the year ended February 27, 1993. All adjustments that are, in the opinion of management, necessary for a fair statement of the financial position as of August 28, 1993 and the results of operations and cash flows for the interim periods ended August 28, 1993, as restated, and August 29, 1992 have been made and consist only of normal recurring adjustments except for net trading losses described in Note 1. The results of operations for the three and six months ended August 28, 1993, as restated, and August 29, 1992 are not indicative of results to be expected for the fiscal year because of, among other things, seasonality factors in the retail business. Note 1 - Trading losses In late December 1995, the Company was made aware of losses of $19.3 million resulting from trading activities in a discretionary account by a financial consultant retained to manage the Company's excess cash and short- term investments. Net trading losses recorded in fiscal years 1996 and 1995 totalled $16.5 million and $2.8 million, respectively. The Company has restated its financial statements for the first and second quarters of fiscal 1994 to record net trading losses of $4.0 million for the quarter ended May 29, 1993 and $6.2 million for the quarter ended August 28, 1993. The Company's restatements had no effect on net income for the full 1994 and 1993 fiscal years; however, during the first, second and third quarters of fiscal 1994, the Company incurred net trading losses of $4.0 million, $6.2 million and $4.6 million, respectively, and attained a net trading gain of $14.8 million in the fourth quarter. During fiscal 1993, the Company incurred net trading losses of $2.4 million in the third quarter and attained a net trading gain of $3.4 million in the fourth quarter. The financial statements for the first and second quarters of fiscal 1993 do not require restatement. The Company has not recorded any tax benefit on these trading losses since the realization of such benefit is not considered likely based on the information available at this time. The effect of the net trading losses on net income for the three and six months ended August 28, 1993 was a reduction of $0.16 per share and $0.26 per share, respectively. Note 2 - Net income per share Primary net income per share was determined by dividing net income by applicable average shares outstanding. Fully diluted net income per share amounts are similarly computed, but include the effect, when dilutive, of the Company's potentially dilutive securities. To determine fully diluted net income, interest and debt issue costs, net of any applicable taxes, have been added back to net income to reflect assumed conversions. The computation of fully diluted net income per share for the three and six months ended August 28, 1993 was antidilutive; therefore, the amounts reported for primary and fully diluted net income per share are the same. Primary average shares include common shares outstanding and common stock equivalents attributable to outstanding stock options. In addition to common and common equivalent shares, fully diluted average shares include common shares that would be issuable upon conversion of the Company's convertible securities. Three Months Ended Six Months Ended Aug. 28, Aug. 29, Aug. 28, Aug. 29, 1993 1992 1993 1992 -------- -------- -------- -------- (as restated) (as restated) (in thousands except per share amounts) Net income $1,116 $7,453 $1,837 $15,508 Assumed conversion of 6 7/8% subordinated notes as of date of issuance, April 1992: Plus interest and debt issue costs, net of tax 812 812 1,624 1,353 ------ ------ ------ ------- Fully diluted net income $1,928 $8,265 $3,461 $16,861 ====== ====== ====== ======= Average shares outstanding during period, including common stock equivalents: Primary 39,403 39,043 39,478 39,081 Plus assumed exercise of stock options 14 23 7 16 Plus assumed conversion of 6 7/8% subordinated notes to common stock as of date of issuance, April 1992 6,562 6,562 6,562 5,445 ------ ------ ------ ------ Fully diluted 45,979 45,628 46,047 44,542 ====== ====== ====== ====== Net income per share: Primary $.03 $.19 $.05 $.40 ==== ==== ==== ==== Fully diluted $.03 $.18 $.05 $.38 ==== ==== ==== ==== PART I ------ Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Results of Operations Pier 1 Imports, Inc. ("the Company") had a net sales increase of 9.0% to $181.4 million and 6.8% to $340.0 million for the second quarter and six- month periods of the 1994 fiscal year compared to the same periods last year. Comparable store sales improved 6.2% during the second quarter and 3.7% for the first half of fiscal 1994. The Company has grown to a total of 612 North American retail locations as of the end of the second fiscal quarter compared to 597 a year earlier. Gross profit, after related buying and store occupancy costs, as a percentage of sales, declined 0.7% to 36.3% for the second quarter and 0.6% to 37.5% for the six-month period ended August 28, 1993 compared to the same periods last year. Strong sales promotions in June and July generated sales increases but caused a slight deterioration in gross profit as a percent of sales. In addition, clothing sales lowered gross margins due to clearance markdowns taken in the spring and summer lines. Store occupancy costs, as a percentage of sales, improved 0.6% for the second quarter and 0.4% for the first six months of fiscal 1994 versus last year's comparable periods. Selling, general, and administrative expenses, as a percentage of sales, for the second quarter of fiscal 1994 improved 0.9% to 26.0% from 26.9% during the same period last year. In total dollars, selling, general and administrative expenses during the second fiscal quarter increased $2.5 million compared to a year ago. These increased expenses were primarily due to higher payroll and other store-related costs associated with new store growth (15 net new North American stores), and new point-of-sale equipment leased for the stores, offset partially by improved experience on the Company's proprietary credit card bad debts. Selling, general and administrative expenses for the first six months of the fiscal year were up $6.3 million but flat as a percentage of sales compared to the same period last year. Net interest expense of $4.3 million for the second quarter and $8.6 million for the six-month period ended August 28, 1993 increased $0.3 million and $0.9 million, respectively, compared to the same periods last year. The increases resulted from lower interest income earned on reduced cash and temporary investment balances this year compared to last year. In late December 1995, the Company was made aware of trading losses of $19.3 million resulting from trading activities in a discretionary account. The Company has regularly designated a portion of its excess cash and short- term investments for management by a financial consultant in the discretionary account. The amount of funds has varied during each year, and the funds were generally withdrawn near the end of each fiscal year. According to statements of the account provided by brokerage firms that executed trading activity at the financial consultant's instructions, the funds were invested in treasury bonds, treasury bond futures contracts and options on treasury bond futures contracts. The futures and options contracts were often used in a manner that provided a high degree of speculation and leverage to the invested funds. As a result of the investigations of the net trading losses, the Company recorded $16.5 million of the net trading losses in fiscal 1996 and restated its fiscal 1995 financial statements to record $2.8 million of the net trading losses during that year. Fiscal 1996, 1995 and 1994 financial statements and fiscal 1993 third and fourth quarter interim financial statements have been restated to reflect the net trading losses and gains during those periods based on information available to the Company. The restatements of the first, second, third, and fourth quarters of fiscal 1994 and the third and fourth quarters of fiscal 1993 have no effect on net income for the full 1994 and 1993 fiscal years, respectively. The financial statements for the first and second quarters of fiscal 1993 do not require restatement. To the extent trading losses are not offset by trading gains, the Company has not recorded any tax benefit on these losses since the realization of such benefit is not considered likely based on the information available at this time. The Company and a Special Committee of the Board of Directors investigated the matter and found no evidence to suggest that the Company's net losses from these trading activities will exceed the $19.3 million recorded in fiscal years 1996 and 1995. In April 1993, the Company sold its 49.5% ownership interest in Sunbelt Nursery Group, Inc. ("Sunbelt") to General Host Corporation ("General Host"). The Company received as the purchase price for the Sunbelt shares 1,940,000 shares of common stock of General Host which represents approximately 9.7% of General Host's outstanding common stock. This transaction resulted in no gain or loss after taxes. Due to the Company's sale of Sunbelt, the equity in earnings and losses of Sunbelt are not presented in the Company's current year financial results. The Company's effective tax rate for the interim periods of fiscal 1994 exclusive of the aforementioned trading losses increased to 29% compared to 24% for fiscal 1993, primarily due to an increase in the state tax effective rate. Operating income improved $1.3 million to $14.7 million during the second quarter of fiscal 1994 compared to the same period in fiscal 1993. The Company recorded net income of $1.1 million or $0.03 per primary share in the second quarter of fiscal 1994 compared to last year's second quarter of $7.5 million or $0.19 per primary share. Operating income for the first six months of fiscal 1994 was $25.6 million versus $26.0 million for the same period last year. Net income for the first six months of fiscal 1994 was $1.8 million or $0.05 per primary share compared to $15.5 million or $0.40 per primary share for the first six months of fiscal 1993. Liquidity and Capital Resources The Company's cash decreased $60.7 million during the first six months of fiscal 1994 compared to an increase of $71.6 million for the same period in the prior year. Operational working capital uses of cash during the first half of fiscal 1994 consisted of a $20.5 million increase in inventory due to anticipated sales gains in the third and fourth quarters, the arrival of seasonal goods for Christmas, and an additional $23.2 million increase in accounts receivable primarily as a result of strong credit sales utilizing the Company's proprietary credit card. In addition, $10.2 million of trading losses was recognized for the six months ended August 28, 1993 that negatively impacted operating cash. Other uses of cash include net capital expenditures and other investing activities of $10.4 million, net payments on short-term borrowings of $16.0 million and cash dividend payments of $1.7 million. These uses of cash were offset partially by net income adjusted for non-cash expenses totalling $11.7 million. To fund these expenditures, the Company's debt (net of cash balances) increased $44.8 million since fiscal 1993 year-end and $52.2 million since August 29, 1992. The current ratio of 4.0 to 1 at August 28, 1993 improved over the 3.4 to 1 ratio at February 27, 1993 and at August 29, 1992. The total debt to equity ratio was 0.82 to 1 at August 28, 1993, an improvement over the 0.90 to 1 ratio at fiscal 1993 year- end and the 0.93 to 1 ratio at August 29, 1992. For the first six months of fiscal 1994, the Company paid cash dividends aggregating $.045 per share, and has subsequently declared a cash dividend of $.025 per share payable on November 17, 1993. During the second quarter of fiscal 1994, the Board of Directors voted an increase in the quarterly cash dividend to $.025 per share from the previously paid $.02 per share. The Company opened 14 new North American stores and closed seven stores during the first six months of fiscal 1994. A total of approximately 45 new North American stores are planned for this fiscal year. Inventory and fixtures for the new store development in fiscal 1994 are anticipated to cost $11 million, which will be funded by working capital, operations, and bank lines of credit. The remaining new stores to be opened in fiscal 1994 will be funded through operating leases. The minimum future operating lease commitments for fiscal 1994 are $91 million with total minimum future operating lease commitments of approximately $691 million. Current and future operating leases are expected to be funded by cash flow from operations. During the remainder of fiscal 1994, the Company's sources of funds will be operations and bank revolving credit facilities. The Company has two committed bank revolving lines of credit aggregating to $30 million as well as other short-term revolving credit and letter of credit facilities amounting to $98.5 million, for a total of $128.5 million. At August 28, 1993, $17 million was outstanding as short-term borrowings and an additional $53 million was used to support letters of credit. In the opinion of Company management, these facilities will be adequate to provide financial flexibility for expansion and seasonal working capital requirements for the foreseeable future. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this amended report to be signed on its behalf by the undersigned thereunto duly authorized. PIER 1 IMPORTS, INC. Date: July 24, 1996 By: /s/ Clark A. Johnson ------------- ---------------------------------------- Clark A. Johnson, Chairman of the Board and Chief Executive Officer (Principal Executive Officer) Date: July 24, 1996 /s/ Susan E. Barley ------------- ---------------------------------------- Susan E. Barley, Vice President and Controller (Principal Accounting Officer) -----END PRIVACY-ENHANCED MESSAGE-----