-----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, JUKOi9UN36sdZyDp05o0RlIpMCwpvsXhHLqWKuIIXA33G+G7UG3m6dJtWWpBaoXg Gt0JO2XRtfEkZPzt3k1GxQ== 0000897423-96-000068.txt : 19960812 0000897423-96-000068.hdr.sgml : 19960812 ACCESSION NUMBER: 0000897423-96-000068 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19921128 FILED AS OF DATE: 19960809 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: 96607538 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 November 28, 1992 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 December 16, 1992 - ----------------------------- ------------------------------------------ Common Stock, $1.00 par value 37,173,357 Items 1 and 2 of Part I of the Company's Quarterly Report on Form 10-Q for the quarter ended November 28, 1992 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 Nine Months Ended Nov. 28, Nov. 30, Nov. 28, Nov. 30, 1992 1991 1992 1991 -------- -------- -------- -------- (as restated) (as restated) Net sales $144,923 $130,707 $463,422 $437,578 Operating costs and expenses: Cost of sales (including buying and store occupancy) 88,268 77,604 285,486 264,220 Selling, general and administrative expenses 43,982 42,354 132,063 129,923 Depreciation and amortization 3,551 3,833 10,760 11,665 -------- -------- -------- -------- 135,801 123,791 428,309 405,808 -------- -------- -------- -------- Operating income 9,122 6,916 35,113 31,770 Nonoperating (income) and expense: Interest income (683) (323) (2,819) (634) Interest expense 5,013 4,875 14,816 13,247 Trading losses (Note 1) 2,419 -- 2,419 -- Gain on sale of subsidiary stock -- (5,800) -- (5,800) -------- -------- -------- -------- 6,749 1,248 14,416 6,813 -------- -------- -------- -------- Income before income taxes and equity in net income (loss) of subsidiary 2,373 8,164 20,697 24,957 Provision for income taxes 1,146 3,246 5,545 8,829 -------- -------- -------- -------- Income before equity in net income (loss) of subsidiary 1,227 4,918 15,152 16,128 Equity in net income (loss) of subsidiary (1,399) (235) 184 5,609 -------- -------- -------- -------- Net income (172) 4,683 15,336 21,737 Cumulative dividends on preferred stock -- 1 -- 11 -------- -------- -------- -------- Net income available to common stockholders $ (172) $ 4,682 $ 15,336 $ 21,726 ======== ======== ======== ======== Net income per common share $.00 $.12 $.39 $.56 ======== ======== ======== ======== Average shares outstanding during period, including common stock equivalents 39,232 39,099 39,131 38,826 ======== ======== ======== ======== The accompanying notes are an integral part of these financial statements. PIER 1 IMPORTS, INC. CONSOLIDATED BALANCE SHEETS (In thousands except share data) (Unaudited) November 28, February 29, 1992 1992 ------------ ------------ (as restated) ASSETS Current assets: Cash, including temporary investments of $58,216 at November 28, 1992 $ 71,992 $ 9,001 Accounts receivable, net 38,117 33,519 Inventories 177,973 181,392 Other current assets 23,209 16,161 -------- -------- Total current assets 311,291 240,073 Properties, net 108,965 114,512 Investment in and advances to subsidiary 23,128 23,804 Other assets 11,612 8,016 -------- -------- $454,996 $386,405 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable and current portion of long-term debt $ 33,211 $ 23,228 Accounts payable and accrued liabilities 60,321 56,884 -------- -------- Total current liabilities 93,532 80,112 Long-term debt 146,996 106,787 Deferred income taxes 3,871 4,854 Other non-current liabilities 18,150 17,521 Stockholders' equity: Common stock, $1.00 par, 100,000,000 shares authorized, 37,225,000 issued 37,225 37,225 Paid-in capital 91,781 92,303 Retained earnings 67,479 53,844 Cumulative currency translation adjustments (286) 570 Less - 223,000 and 471,000 common shares in treasury, at cost, respectively (2,067) (4,551) Less - subscriptions receivable and unearned compensation (1,685) (2,260) -------- -------- 192,447 177,131 -------- -------- $454,996 $386,405 ======== ======== The accompanying notes are an integral part of these financial statements. PIER 1 IMPORTS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Nine Months Ended November 28, November 30, 1992 1991 ------------ ------------ (as restated) Cash flow from operating activities: Net income $15,336 $21,737 Adjustments to reconcile to net cash provided by operating activities: Depreciation and amortization 10,760 11,665 Deferred taxes and other (141) 7,641 Equity in undistributed earnings of subsidiary (184) (5,609) Gain on sale of subsidiary stock -- (5,800) Changes in cash from: Inventories 3,419 (2,776) Accounts receivable and other current assets (10,115) (4,854) Accounts payable and accrued expenses 4,425 1,070 Other assets, liabilities and other, net 633 (43) ------- ------- Net cash provided by operating activities 24,133 23,031 ------- ------- Cash flow from investing activities: Capital expenditures (8,429) (4,698) Proceeds from disposition of properties 1,077 13,978 Other investing activities (1,636) -- ------- ------- Net cash (used in) provided by investing activities (8,988) 9,280 ------- ------- Cash flow from financing activities: Cash dividends (1,662) (11) Proceeds from issuance of long-term debt 72,432 24,344 Repayments of long-term debt (35,331) (45,790) Proceeds from sale of subsidiary stock -- 18,072 Net borrowings (payments) under line of credit agreements 9,983 (34,000) Proceeds from sales of capital stock, treasury stock, and other 2,424 2,068 ------- ------- Net cash provided by (used in) financing activities 47,846 (35,317) ------- ------- Change in cash and cash equivalents 62,991 (3,006) Cash and cash equivalents at beginning of period 9,001 16,452 ------- ------- Cash and cash equivalents at end of period $71,992 $13,446 ======= ======= The accompanying notes are an integral part of these financial statements. PIER 1 IMPORTS, INC. CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY FOR THE NINE MONTHS ENDED NOVEMBER 28, 1992 (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 29, 1992 $37,225 $92,303 $53,844 $ 570 $(4,551) $(2,260) $177,131 Restricted stock grant and amortization (18) (511) 575 46 Stock purchase plan, exercise of stock options and other (504) (39) 2,995 2,452 Currency translation adjustments (856) (856) Cash dividends, declared or paid (1,662) (1,662) Net income, as restated 15,336 15,336 ------- ------- ------- ----- ------- ------- -------- Balance November 28, 1992, as restated $37,225 $91,781 $67,479 $(286) $(2,067) $(1,685) $192,447 ======= ======= ======= ===== ======= ======= ======== The accompanying notes are an integral part of these financial statements. /TABLE PIER 1 IMPORTS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED NOVEMBER 28, 1992 AND NOVEMBER 30, 1991 (Unaudited) The accompanying unaudited financial statements should be read in con- junction with the Annual Report on Form 10-K for the year ended February 29, 1992, as amended by Form 8, filed September 17, 1992. All adjustments that are, in the opinion of management, necessary for a fair statement of the financial position as of November 28, 1992, as restated, and the results of operations and cash flows for the interim periods ended November 28, 1992, as restated, and November 30, 1991 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 nine months ended November 28, 1992, as restated, and November 30, 1991 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's restatements had no effect on net income for the full 1993 fiscal year; however, during the 1993 fiscal year, 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 Company engaged in no trading activities during fiscal 1992. The financial statements for fiscal 1992 and the first and second quarters of fiscal 1993 do not require restatement. The Company has not recorded any tax benefit on these net 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 nine months ended November 28, 1992 was a reduction of $.06 per share. 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 net sales increases of 10.9% to $144.9 million and 5.9% to $463.4 million for the third quarter and nine-month periods ended November 28, 1992 compared to the same periods last year. Comparable store sales improved 7.2% during the quarter and 2.7% for the nine- month period. The Company has grown to a total of 606 retail locations at November 28, 1992 compared to 587 a year ago. Sales trends improved during the quarter due to improving overall economy and continued in-store and credit card coupon promotions. The Company's expectations for sales increases during fiscal 1993 are 7% and for same-store sales are approximately 4%. Gross profit, after related buying and store occupancy costs, as a percentage of sales, fell 1.5% for the third quarter and 1.2% for the nine-month period of fiscal 1993 compared to the same periods last year. These declines resulted mostly from higher sales of lower margin items, primarily furniture, and increased in-store promotions in October and November. Gross profit for the nine-month period ended November 28, 1992 continues to reflect higher sales but lower margins due to merchandise mix, lower retail prices on selected items, credit card promotions and other selected price promotions. Store occupancy costs, as a percentage of sales, improved 0.4% for the quarter and were unchanged for the first nine months of fiscal 1993. Selling, general, and administrative expenses, as a percentage of sales, during the third quarter improved 2.1% to 30.3% of sales from last year's 32.4% and for the nine-month period ended November 28, 1992 declined 1.2% to 28.5% of sales. In total dollars, selling, general and administrative expenses during the third quarter increased $1.6 million due to new store growth (19 net new stores) and higher advertising costs that were offset partially by favorable medical insurance and workers' compensation claim experience and improved Pier 1 credit card experience. Expenses for the first nine months of fiscal 1993 increased as a result of higher payroll and other store-related costs associated with new store openings, higher advertising primarily in the first and third quarters of fiscal 1993, offset by cost containments in physical inventory costs, medical insurance and workers' compensation claims and litigation costs, and favorable Pier 1 credit card results. Depreciation and amortization expenses declined due to a slowdown in new store growth since fiscal 1991. Net interest expense of $4.3 million for the third quarter and $12.0 million for the nine-month period ended November 28, 1992 were down $0.2 million and $0.6 million, respectively, from last year. This reduction resulted from a decrease in the Company's debt (net of cash balances) position of $20.7 million from a year ago, coupled with this year's interest income on short-term investments and a slight decrease in the effective rate. In late December 1995, the Company was made aware of 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 deposited by the Company 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 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 third and fourth quarters of fiscal 1993 have no effect on net income for the full 1993 fiscal year. The Company engaged in no trading activities during fiscal 1992. The financial statements for fiscal 1992 and 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. During the third quarter of fiscal year 1992, the Company's ownership of Sunbelt Nursery Group, Inc. ("Sunbelt") was reduced from 100% to 56.6% in Sunbelt's initial public offering. Net proceeds of the offering were used to pay an $18 million dividend to the Company and to finance Sunbelt's on-going store renovations and expansion program. The Company's pre-tax gain on the sale aggregated $5.8 million. The Company's effective tax rate for fiscal 1993 exclusive of the aforementioned trading losses is estimated at 24%, compared to last year's rate of 35.4% for the first nine months of fiscal 1992. The decrease is due to the benefit of lower tax rates on income from foreign subsidiaries, tax-free investment income and targeted job tax credits. The Company recorded equity in losses of Sunbelt for the third quarter of fiscal 1993 totalling $1.4 million versus a $0.2 million loss a year ago. For the nine months ended November 28, 1992, the Company's equity in income of Sunbelt declined $5.4 million to $0.2 million from last year's $5.6 million income as of November 30, 1991. The declines are partially due to a reduction in the Company's ownership interest from 100% during most of fiscal 1992 through the third quarter, compared to a 49.5% ownership during fiscal 1993. Additionally, Sunbelt's same-store sales declined 6.7% and total store sales declined 4.3% during the first nine months of Sunbelt's fiscal 1993. Operating income improved $2.2 million and $3.3 million during the third quarter and first nine months of fiscal 1993, respectively. Net losses of $0.2 million or $.00 per share for the fiscal 1993 third quarter and net income of $15.3 million or $.39 per share for the nine months ended November 28, 1992 were below the prior year due to the trading losses of $2.4 million recorded in the third quarter of fiscal 1993, the $5.8 million Sunbelt-related gain recorded in fiscal 1992 and the resultant reduction in the Company's ownership interest in Sunbelt's earnings compared to fiscal 1992, coupled with Sunbelt's weak results during fiscal 1993 compared to a year ago. Liquidity and Capital Resources The Company's debt (net of cash balances) position declined $12.8 million during the first nine months of fiscal 1993 and $20.7 million since November 30, 1991. Cash increased $63.0 million during the first nine months of fiscal 1993. This change was comprised of cash from operations of $24.1 million, net proceeds from the issuance of long-term debt of $72.4 million, net borrowings on short- term notes of $10.0 million and other investing and financing activities of $0.2 million that were partially offset by payments on long-term debt of $35.3 million and capital expenditures of $8.4 million. Cash from operations was positively impacted by a decrease in inventory ($3.4 million) and increases in accounts payable and accrued expenses ($4.4 million), partially offset by an increase ($4.6 million) in the Pier 1 credit card receivable during fiscal 1993 and trading losses ($2.4 million) during the period as discussed in Note 1. The current ratio of 3.3 to 1 at November 28, 1992 improved over the 3.0 to 1 ratio at February 29, 1992 and at November 30, 1991. In fiscal 1993, the Company has paid three quarterly cash dividends of $0.015 each per share and has subsequently declared a cash dividend of $.02 per share payable on February 17, 1993, but continues to retain most earnings for expansion of the Company's business. The Company opened 25 (net 21) new stores as part of its expansion program during the first nine months of fiscal 1993 with 1 additional store to be opened by fiscal year-end. Funds for new store development remaining in fiscal 1993 and the estimated 40 new stores (net 27) anticipated for fiscal 1994 are expected to be provided by operating leases and $12 million of cash. The minimum future operating lease commitments for fiscal 1993 are $84 million with a total of $725 million at November 28, 1992. Current and future operating leases are expected to be funded by cash flow from operations. During the last quarter of fiscal 1993 and during fiscal 1994, the Company's sources of funds will be operations, bank revolving credit and letters of credit facilities, and operating leases. Currently, the Company has a total of $155.5 million of short-term revolving credit and letter of credit agreements of which $33 million is outstanding as short-term borrowings and an additional $47.5 million is outstanding as letters of credit at November 28, 1992. In the opinion of Company management, funds available from the sources previously described above 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: August 9, 1996 By: /s/ Clark A. Johnson -------------- --------------------------------------- Clark A. Johnson, Chairman of the Board and Chief Executive Officer (Principal Executive Officer) Date: August 9, 1996 By: /s/ Susan E. Barley -------------- --------------------------------------- Susan E. Barley, Vice President and Controller (Principal Accounting Officer) -----END PRIVACY-ENHANCED MESSAGE-----