-----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, U6p+xH1S/tIUemXf/KndmwTyqbmkXIf8JXKoNx6yQQZPxNeormBnkxHidU+x2sIi hMV+Kcnvfl6GGfPkPEk+vQ== 0000950134-02-008371.txt : 20020711 0000950134-02-008371.hdr.sgml : 20020711 20020711131229 ACCESSION NUMBER: 0000950134-02-008371 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20020601 FILED AS OF DATE: 20020711 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: 0228 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-07832 FILM NUMBER: 02700908 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: NEWCORP INC DATE OF NAME CHANGE: 19800423 FORMER COMPANY: FORMER CONFORMED NAME: PIER 1 IMPORTS INC/GA DATE OF NAME CHANGE: 19840729 FORMER COMPANY: FORMER CONFORMED NAME: PIER 1 INC DATE OF NAME CHANGE: 19860921 10-Q 1 d98257e10vq.txt FORM 10-Q FOR QUARTER ENDED JUNE 1, 2002 FORM 10-Q 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 June 1, 2002 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) 252-8000 - -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Sections 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 July 2, 2002 - ----------------------------- ------------------------------------- Common Stock, $1.00 par value 93,478,527 PART I Item 1. Financial Statements. PIER 1 IMPORTS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands except per share amounts) (unaudited)
Three Months Ended June 1, June 2, 2002 2001 --------------- --------------- Net sales $ 384,429 $ 325,387 Operating costs and expenses: Cost of sales (including buying and store occupancy costs) 220,436 190,473 Selling, general and administrative expenses 118,333 104,497 Depreciation and amortization 10,731 10,696 --------------- --------------- 349,500 305,666 --------------- --------------- Operating income 34,929 19,721 Nonoperating (income) and expenses: Interest and investment income (837) (471) Interest expense 558 608 --------------- --------------- (279) 137 --------------- --------------- Income before income taxes 35,208 19,584 Provision for income taxes 13,027 7,239 --------------- --------------- Net income $ 22,181 $ 12,345 =============== =============== Earnings per share: Basic $ .24 $ .13 =============== =============== Diluted $ .23 $ .13 =============== =============== Dividends declared per share: $ .05 $ .04 =============== =============== Average shares outstanding during period: Basic 93,708 95,826 =============== =============== Diluted 96,613 97,335 =============== ===============
The accompanying notes are an integral part of these financial statements. PIER 1 IMPORTS, INC. CONSOLIDATED BALANCE SHEETS (in thousands except share amounts)
June 1, March 2, June 2, 2002 2002 2001 ------------- ------------- ------------- (unaudited) (unaudited) ASSETS Current assets: Cash, including temporary investments of $183,788, $213,488 and $26,717, respectively $ 195,694 $ 235,609 $ 40,329 Beneficial interest in securitized receivables 40,880 44,620 81,468 Other accounts receivable, net 10,478 6,205 8,197 Inventories 303,394 275,433 304,814 Prepaid expenses and other current assets 46,927 43,286 34,647 ------------- ------------- ------------- Total current assets 597,373 605,153 469,455 Properties, net 224,295 209,954 208,365 Other noncurrent assets 47,162 47,565 46,078 ------------- ------------- ------------- $ 868,830 $ 862,672 $ 723,898 ============= ============= ============= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $ 728 $ 356 $ -- Accounts payable and accrued liabilities 193,595 208,040 132,001 ------------- ------------- ------------- Total current liabilities 194,323 208,396 132,001 Long-term debt 25,000 25,356 25,000 Other noncurrent liabilities 44,346 43,264 36,345 Shareholders' equity: Common stock, $1.00 par, 500,000,000 shares authorized, 100,779,000 issued 100,779 100,779 100,779 Paid-in capital 143,800 140,190 139,544 Retained earnings 447,379 429,910 353,299 Cumulative other comprehensive income (3,483) (4,702) (3,846) Less -- 7,046,000, 7,362,000 and 5,387,000 common shares in treasury, at cost, respectively (83,314) (80,521) (59,165) Less -- unearned compensation -- -- (59) ------------- ------------- ------------- 605,161 585,656 530,552 ------------- ------------- ------------- $ 868,830 $ 862,672 $ 723,898 ============= ============= =============
The accompanying notes are an integral part of these financial statements. PIER 1 IMPORTS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited)
Three Months Ended June 1, June 2, 2002 2001 ------------- ------------- Cash flow from operating activities: Net income $ 22,181 $ 12,345 Adjustments to reconcile to net cash (used in) provided by operating activities: Depreciation and amortization 10,731 10,696 Loss on disposal of fixed assets 475 250 Deferred compensation 1,193 1,256 Other 2,183 513 Changes in cash from: Inventories (27,961) 5,941 Other accounts receivable and other current assets (8,797) 92 Accounts payable and accrued expenses (10,141) (11,328) Other noncurrent assets (6) 209 Other noncurrent liabilities (500) -- ------------- ------------- Net cash (used in) provided by operating activities (10,642) 19,974 ------------- ------------- Cash flow from investing activities: Capital expenditures (25,606) (11,236) Proceeds from disposition of properties 380 4,105 Beneficial interest in securitized receivables 3,740 (6,065) ------------- ------------- Net cash used in investing activities (21,486) (13,196) ------------- ------------- Cash flow from financing activities: Cash dividends (4,712) (3,855) Purchases of treasury stock (12,657) (11,747) Proceeds from stock options exercised and stock purchase plan and other, net 9,582 2,312 ------------- ------------- Net cash used in financing activities (7,787) (13,290) ------------- ------------- Change in cash and cash equivalents (39,915) (6,512) Cash and cash equivalents at beginning of period 235,609 46,841 ------------- ------------- Cash and cash equivalents at end of period $ 195,694 $ 40,329 ============= =============
The accompanying notes are an integral part of these financial statements. PIER 1 IMPORTS, INC. CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY FOR THE THREE MONTHS ENDED JUNE 1, 2002 (in thousands except per share amounts) (unaudited)
Cumulative Other Total Common Stock Paid-in Retained Comprehensive Treasure Shareholders' Shares Amount Capital Earnings Income Stock Equity ---------- ---------- ---------- ---------- ------------ ---------- ------------- Balance March 2, 2002 93,389 $ 100,779 $ 140,190 $ 429,910 $ (4,702) $ (80,521) $ 585,656 Comprehensive income: Net income -- -- -- 22,181 -- -- 22,181 Other comprehensive income, net of tax: Currency translation adjustments -- -- -- -- 1,219 -- 1,219 ---------- Comprehensive income 23,400 ---------- Purchases of treasury stock (582) -- -- -- -- (12,657) (12,657) Exercise of stock options, stock purchase plan and other 890 -- 3,610 -- -- 9,864 13,474 Cash dividends ($.05 per share) -- -- -- (4,712) -- -- (4,712) ---------- ---------- ---------- ---------- ---------- ---------- ---------- Balance June 1, 2002 93,697 $ 100,779 $ 143,800 $ 447,379 $ (3,483) $ (83,314) $ 605,161 ========== ========== ========== ========== ========== ========== ==========
The accompanying notes are an integral part of these financial statements. PIER 1 IMPORTS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED JUNE 1, 2002 AND JUNE 2, 2001 (unaudited) The accompanying unaudited financial statements should be read in conjunction with the Company's Form 10-K for the year ended March 2, 2002. All adjustments that are, in the opinion of management, necessary for a fair statement of the financial position as of June 1, 2002, and the results of operations and cash flows for the three months ended June 1, 2002 and June 2, 2001 have been made and consist only of normal recurring adjustments. The results of operations for the three months ended June 1, 2002 and June 2, 2001 are not indicative of results to be expected for the fiscal year because of, among other things, seasonality factors in the retail business. The classifications of certain amounts previously reported in the Company's consolidated financial statements as of and for the three months ended June 2, 2001 have been modified to conform with the June 1, 2002 method of presentation. NOTE 1 - EARNINGS PER SHARE Basic earnings per share amounts were determined by dividing net income by the weighted average number of common shares outstanding for the period. Diluted earnings per share amounts were similarly computed, but included the effect, when dilutive, of the Company's weighted average number of stock options outstanding. Earnings per share for the three months ended June 1, 2002 and June 2, 2001 are calculated as follows (in thousands except per share amounts):
Three Months Ended June 1, June 2, 2002 2001 ---------- ---------- Net income (Basic and Diluted) $ 22,181 $ 12,345 ========== ========== Average shares outstanding during period: Basic 93,708 95,826 Plus assumed exercise of stock options 2,905 1,509 ---------- ---------- Diluted 96,613 97,335 ========== ========== Earnings per share: Basic $ .24 $ .13 ========== ========== Diluted $ .23 $ .13 ========== ==========
NOTE 2 - COMPREHENSIVE INCOME The components of comprehensive income, net of related tax, for the three months ended June 1, 2002 and June 2, 2001 were as follows (in thousands):
Three Months Ended June 1, June 2, 2002 2001 ------------ ------------ Net income $ 22,181 $ 12,345 Currency translation adjustments 1,219 (731) ------------ ------------ Comprehensive income $ 23,400 $ 11,614 ============ ============
NOTE 3 - ADOPTION OF NEW ACCOUNTING STANDARDS In the first quarter of fiscal 2003, the Company adopted Statement of Financial Accounting Standard ("SFAS") No. 142, "Goodwill and Other Intangible Assets," which supersedes Accounting Principles Board ("APB") Opinion No. 17, "Intangible Assets." This statement addresses the initial recognition and measurement of intangible assets acquired outside of a business combination and the accounting for goodwill and other intangible assets subsequent to their acquisition. SFAS No. 142 also provides that intangible assets with finite useful lives be amortized and that goodwill and intangible assets with indefinite lives will not be amortized, but will rather be tested for impairment upon adoption and on an annual basis thereafter. The Company is required to complete this initial impairment test of goodwill by August 31, 2002. The adoption of SFAS No. 142 during the first quarter of fiscal 2003 did not have a material impact on the Company's consolidated balance sheets or its statements of operations, shareholders' equity and cash flows. The impact of the non-amortization provisions of SFAS No. 142, if applied beginning in the first quarter of fiscal 2002, would have been net income of $12,389,000 versus reported net income of $12,345,000 and basic and diluted earnings per share would have remained at $0.13 per share. In the first quarter of fiscal 2003, the Company also adopted SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," which replaces SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." SFAS No. 144 retains the fundamental provisions of SFAS No. 121 with additional guidance on estimating cash flows when performing a recoverability test, requires that a long-lived asset to be disposed of, other than by sale, be classified as "held and used" until it is disposed of and establishes more restrictive criteria to classify an asset as "held for sale." SFAS No. 144 also supersedes APB Opinion No. 30, "Reporting the Results of Operations-Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions," regarding the disposal of a segment of a business and extends the reporting of a discontinued operation to a "component of an entity" and requires the operating losses thereon to be recognized in the period in which they occur. The adoption of SFAS No. 144 did not have a material impact on the Company's consolidated balance sheets or its statements of operations, shareholders' equity and cash flows. PART I Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. GENERAL Pier 1 Imports, Inc. (the "Company") is one of North America's largest specialty retailers of unique decorative home furnishings, gifts and related items for the home. The Company, through certain subsidiaries, operates stores in North America under the names "Pier 1 Imports" and "Cargokids!" ("Cargokids"). In the United Kingdom, retail locations operate under the name "The Pier." The Company has nearly 1,000 retail locations in 48 states, Canada, Puerto Rico, the United Kingdom and Mexico with merchandise directly imported from over 40 countries around the world. RESULTS OF OPERATIONS Net sales consisted almost entirely of sales to retail customers net of discounts and returns, but also included wholesale sales and royalties received from franchise stores and joint ventures, and delivery service revenues. Sales by retail concept during the period were as follows (in thousands):
Three Months Ended June 1, June 2, 2002 2001 ------------ ------------ Pier 1 Imports $ 369,564 $ 310,880 The Pier 8,995 8,512 Cargokids 2,633 2,077 Internet 909 527 Other(1) 2,328 3,391 ------------ ------------ Total Retail Sales $ 384,429 $ 325,387 ============ ============
(1) Other sales consisted of wholesale sales and royalties received from franchise stores, international joint ventures in Mexico and Puerto Rico, and Cargokids' contract and dealer sales. Fiscal 2002 amounts also included sales from the Company's franchise stores in Japan. Net sales for the first quarter of fiscal 2003 were up 18.1% to $384.4 million from $325.4 million for the same period a year ago. Same-store sales for the first quarter of fiscal 2003 increased 9.5% over last year's comparable period. The Company believes its marketing programs continue to drive sales and resulted in an increase in customer traffic of approximately 8% and an increased average ticket of 1% during the quarter when compared to the same quarter last year. The momentum from the latter half of fiscal 2002 carried over into the first quarter of fiscal 2003 and the Company benefited from increasing consumer confidence and a continued favorable response to its value-oriented merchandise. In addition, the increase in net sales was also attributable to the net increase of 93 new North American Pier 1 stores at the end of the first quarter of fiscal 2003 compared to the end of the same quarter of fiscal 2002. This increase in net sales was partially offset by a reduction in sales due to the Company's discontinued operations in Japan, the termination of one franchise store agreement, and lower contract sales at Cargokids as management shifted its focus to concentrate on retail sales. The North American Pier 1 store count totaled 925 at the end of the first quarter compared to 832 stores a year ago. During the first quarter, the Company opened 25 and closed ten North American Pier 1 stores, which resulted in an increase of 2.0% in total square footage during the quarter and an increase of 11.8% over the same quarter last year. Including Cargokids locations, the worldwide store count across North America, Puerto Rico, the United Kingdom and Mexico totaled 989 as of June 1, 2002. A summary reconciliation of the Company's stores open at the beginning of fiscal 2003 to the number open at the end of the first quarter follows (openings and closings include relocated stores):
Pier 1 North American International(1) Cargokids Total ------------ ---------------- ------------ ------------ Open at March 2, 2002 910 46 18 974 Openings 25 -- -- 25 Closings (10) -- -- (10) ------------ -------------- ------------ ------------ Open at June 1, 2002 925 46 18 989 ============ ============== ============ ============
(1) International stores were located in Puerto Rico, the United Kingdom and Mexico. Net sales on the Company's proprietary credit card totaled $100.9 million for the first three months of fiscal 2003, an increase of $4.8 million, or 5.0%, over proprietary credit card sales of $96.1 million for the same period last fiscal year. Proprietary credit card sales accounted for 28.3% of total U.S. store sales in the first quarter of fiscal 2003 versus 32.0% of sales in the year earlier period. Although proprietary credit card sales declined as a percentage of total U.S. store sales, the proprietary cardholders spent an average of $166 per transaction during the quarter, an increase of 2.7% when compared to $162 per transaction during the same period last year. The Company continues to increase total sales on its proprietary credit card by opening new accounts and developing customer loyalty through marketing promotions targeted to cardholders, including deferred payment options on larger purchases. Gross profit, after related buying and store occupancy costs, expressed as a percentage of sales, improved 120 basis points to 42.7% for the first quarter of fiscal 2003. As a percentage of sales, merchandise margins for the quarter improved 65 basis points over last year's first quarter. Although the Company's promotional calendar during the first quarter of fiscal 2003 was similar to the same quarter last year, a higher percentage of sales was generated from regularly priced merchandise than from sale merchandise. Additionally, store occupancy costs as a percentage of sales improved 55 basis points for the quarter to 13.3% of sales as a result of leveraging relatively fixed rental costs over a higher sales base. Selling, general and administrative expenses, including marketing, were 30.8% of sales for the first quarter of fiscal 2003, a 130 basis point decrease from last year's first quarter expenses of 32.1% of sales. In total dollars, expenses for the quarter increased $13.8 million to $118.3 million from $104.5 million for the same quarter last year. Expenses that normally increase proportionately with sales and number of stores, such as store payroll, equipment rental, supplies and marketing expenses, were $82.5 million, an increase of $9.5 million over the same quarter last year. These variable expenses were well controlled and declined nearly 100 basis points to 21.5% of sales. Store payroll including bonus increased $10.2 million, or 70 basis points as a percentage of sales, which was largely the result of an increase in store bonuses, which are awarded based on sales gains over the prior year. This increase in store payroll was more than offset by the reduction and leveraging of marketing and leveraging of equipment rental and supplies expenses. Marketing expense was $21.8 million, or 5.7% of sales during the first quarter of fiscal 2003, compared to $22.6 million, or 6.9% of sales for the same quarter last year when the new television campaign featuring Kirstie Alley was launched. Although the timing of the Company's marketing expenditures fluctuates between fiscal quarters, the Company anticipates total expenditures for the year to be comparable to last year's levels as a percentage of sales at approximately 4.5% of sales. All other selling, general and administrative expenses increased $4.3 million over last year to $35.8 million for the first quarter, but declined approximately 35 basis points as a percentage of sales. Non-store bonuses, which are awarded based on Company profitability, increased $2.6 million and general liability and workers compensation insurance increased $1.5 million. All other non-variable expenses were leveraged as a percentage of sales during the quarter when compared to the same quarter last year. Operating income increased 77.1% to $34.9 million for the first quarter of fiscal 2003 from $19.7 million for the first quarter of fiscal 2002. For the first three months of fiscal 2003, operating income was 9.1% of sales compared to 6.1% a year ago. The Company's effective income tax rate for fiscal 2003 is estimated at 37%, consistent with fiscal 2002. Net income for the first quarter of fiscal 2003 was $22.2 million, representing 5.8% of sales or $.23 per diluted share, compared to net income of $12.3 million, representing 3.8% of sales or $.13 per diluted share, for the first quarter of fiscal 2002. LIQUIDITY AND CAPITAL RESOURCES The Company ended the first quarter of fiscal 2003 with $195.7 million of cash compared to $40.3 million a year ago. Net income, adjusted for non-cash and non-operating related items, was $36.8 million and served as the Company's primary source of operating cash for the three months ended June 1, 2002. Operating activities in the first quarter of fiscal 2003 used $10.6 million of cash versus providing $20.0 million during the same period last year. The change in cash flow was primarily the result of an increase of $28.0 million in inventories during the first three months of fiscal 2003 compared to a decline in inventory levels last year of $5.9 million in the comparable quarter. Inventory increased in the current year's first quarter as a result of 15 net new Pier 1 stores since the end of fiscal 2002 along with 93 net new Pier 1 stores from a year ago. The Company's ability to better manage its inventory levels resulted in comparable average inventory at the store level and a reduction at the distribution centers when compared to last year's inventory levels. The Company believes its current inventory levels are positioned to accommodate new store growth projections and comparable store gains projected for the second and third quarters of this fiscal year. The Company also used $10.1 million in operating cash for reductions in accounts payable and accrued liabilities primarily resulting from estimated tax payments made in the first quarter. During the first three months of the fiscal year, the Company spent a net of $21.5 million in investing activities as shown on the consolidated statement of cash flows. Capital expenditures were $25.6 million and consisted primarily of land purchases for the replacement of one of the Company's current distribution centers and for the Company's future headquarters along with new and existing store development and investments in information systems. Through the first quarter of fiscal 2003, the Company's beneficial interest in securitized receivables decreased $3.7 million. Financing activities for the first three months of fiscal 2003 used a net $7.8 million of the Company's cash resources. During the quarter, the Board of Directors authorized share repurchases of up to $150 million of the Company's common stock. This authorization replaced the previously authorized 2.8 million shares that were remaining for repurchase at the end of fiscal 2002. During the first quarter of fiscal 2003, the Company repurchased 581,500 shares of its common stock for $12.7 million including fees under this newly approved plan and as of July 2, 2002, the Company had repurchased an additional 290,000 shares for $6.2 million including fees leaving $131.1 million remaining authorized for repurchase. Dividend payments totaled $4.7 million for the first quarter, and other financing activities, primarily the exercise of stock options, provided cash of $9.6 million. At the end of the first quarter, the Company's minimum operating lease commitments remaining for fiscal 2003 were $125.6 million. The present value of total existing minimum operating lease commitments discounted at 10% was $757.6 million at the end of the first quarter of fiscal 2003. Working capital requirements are expected to continue to be funded through cash flow from operations, bank lines of credit and sales of proprietary credit card receivables. The Company's bank facilities consist of a $125 million revolving credit facility, which expires November 2003, all of which was available at the end of the first quarter of fiscal 2003. Additionally, the Company has other long-term and short-term bank facilities used principally for the issuance of letters of credit totaling $153.8 million, of which $34.7 million was available at June 1, 2002. The Company's current ratio was 3.1 to 1 at the end of the first quarter of fiscal 2003 compared to 2.9 to 1 at the end of fiscal year 2002. In June 2002, the Company declared a cash dividend of $.05 per share payable on August 21, 2002 to shareholders of record on August 7, 2002. The Company currently expects to continue to pay cash dividends in the future but to retain most of its future earnings for expansion of the Company's business. Management believes the funds provided from operations, available lines of credit and sales of the Company's proprietary credit card receivables will be sufficient to meet the Company's expected cash requirements for the next fiscal year. FORWARD-LOOKING STATEMENTS Certain matters discussed in this quarterly report, except for historical information contained herein, may constitute "forward-looking statements" that are subject to certain risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. The Company may also make forward-looking statements in other reports filed with the Securities and Exchange Commission and in material delivered to the Company's shareholders. Forward-looking statements provide current expectations of future events based on certain assumptions. These statements encompass information that does not directly relate to any historical or current fact and often may be identified with words such as "anticipates," "believes," "expects," "estimates," "intends," "plans," "projects" and other similar expressions. Management's expectations and assumptions regarding planned store openings, financing of Company obligations from operations and other future results are subject to risks, uncertainties and other factors that could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements. Risks and uncertainties that may affect Company operations and performance include, among others, terrorist attacks and other acts of war, labor strikes, weather conditions that may affect sales, the general strength of the economy and levels of consumer spending, the availability of new sites for expansion along with sufficient labor to facilitate growth, the strength of new home construction and sales of existing homes, the ability of the Company to import merchandise from foreign countries without significantly restrictive tariffs, duties or quotas and the ability of the Company to ship and deliver items from foreign countries to its U.S. distribution centers at reasonable rates and in a timely fashion. The foregoing risks and uncertainties are in addition to others discussed elsewhere in this quarterly report. The Company assumes no obligation to update or otherwise revise its forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied will not be realized. Additional information concerning these risks and uncertainties is contained in the Company's Annual Report on Form 10-K for the year ended March 2, 2002, as filed with the Securities and Exchange Commission. IMPACT OF INFLATION Inflation has not had a significant impact on the operations of the Company. PART II Item 4. Submission of Matters to a Vote of Security Holders. The Annual Meeting of Shareholders of the Company was held June 27, 2002 for the purpose of electing seven (7) Directors to hold office until the next Annual Meeting of Shareholders, to vote on the proposed amendment to the Company's 1999 Stock Plan, and to consider and vote upon the adoption of the Company's Senior Management Bonus Plan as amended. The result of the election follows: Director Election:
Director For Withheld - ------------------------ ------------------ ------------------ Marvin J. Girouard 84,079,689 570,005 James M. Hoak, Jr. 83,324,677 1,325,017 Tom M. Thomas 84,088,122 561,572 John H. Burgoyne 84,094,680 555,014 Michael R. Ferrari 83,327,448 1,322,246 James D. Carreker 82,864,880 1,784,814 Karen W. Katz 84,088,555 561,139
Proposed amendment to the Pier 1 Imports, Inc. 1999 Stock Plan:
For Against Abstain - ------------------------ ------------------- ------------------ 79,865,310 3,555,033 1,229,351
Proposed adoption of Pier 1 Imports, Inc. Senior Management Bonus Plan:
For Against Abstain - ------------------------ ------------------- ------------------ 79,637,985 3,811,362 1,200,347
Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits See Exhibit Index. (b) Reports on Form 8-K None. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. PIER 1 IMPORTS, INC. (Registrant) Date: July 11, 2002 By: /s/ Marvin J. Girouard --------------------------------------------- Marvin J. Girouard, Chairman of the Board and Chief Executive Officer Date: July 11, 2002 By: /s/ Charles H. Turner --------------------------------------------- Charles H. Turner, Executive Vice President, Chief Financial Officer and Treasurer Date: July 11, 2002 By: /s/ Susan E. Barley --------------------------------------------- Susan E. Barley, Principal Accounting Officer EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION - ------- ----------- 10.13.1 Senior Management Bonus Plan as Amended April 5, 2002, incorporated herein by reference to Appendix B, page B-1, of the Company's Proxy Statement for the fiscal year ended March 2, 2002. 10.14.3 Second Amendment to Credit Agreement dated April 6, 2000. 10.14.4 Third Amendment to Credit Agreement dated April 24, 2002. 10.15.1 The 1999 Stock Plan as Amended April 5, 2002, incorporated herein by reference to Appendix A, page A-1, of the Company's Proxy Statement for the fiscal year ended March 2, 2002.
EX-10.14.3 3 d98257exv10w14w3.txt SECOND AMENDMENT TO CREDIT AGREEMENT EXHIBIT 10.14.3 SECOND AMENDMENT TO CREDIT AGREEMENT THIS DOCUMENT is entered into as of April 6, 2000, between PIER 1 IMPORTS, INC., a Delaware corporation ("BORROWER", those Lenders (defined below) who have signed a signature page to this document, BANK OF AMERICA, N.A. (formerly NationsBank, N.A., as Administrative Agent for Lenders), and BANK ONE, N.A., (assignee of Bank One, Texas, N.A.) and WELLS FARGO BANK (TEXAS), NATIONAL ASSOCIATION, as Co-Agents for Lenders. Borrower, Lenders, Administrative Agent, and Co-Agents are party to the Credit Agreement (as it may have been renewed, extended, and amended through the date of this document, the "CREDIT AGREEMENT") dated as of November 12, 1998. Borrower and certain Lenders have agreed, upon the following terms and conditions, to amend the Credit Agreement as provided in PARAGRAPH 2 below. Accordingly, for adequate and sufficient consideration, Borrower, Required Lenders, and Administrative Agent agree as follows: 1. TERMS AND REFERENCES. Unless otherwise stated in this document (A) terms defined in the Credit Agreement have the same meanings when used in this document and (B) references to "SECTIONS," "SCHEDULES," and "EXHIBITS" are to the Credit Agreement's sections, schedules, and exhibits. 2. AMENDMENT. The definition of "Restricted Payment" in SECTION 1.1 is entirely amended as follows: "RESTRICTED PAYMENT" means (a) Distributions that are not Permitted Distributions, (b) Investments that are not Permitted Investments, (c) prepayments or purchases of any subordinated Debt of the Companies before the respective scheduled maturity dates that exceed a total of $50,000,000, and (d) payments of the purchase price for purchases of issued and outstanding common stock of Borrower in excess of the lesser of (i) 4,764,450 shares or (ii) the aggregate number of shares of stock which can be purchased for an aggregate purchase price not to exceed $50,000,000. 3. CONDITIONS PRECEDENT. Notwithstanding any contrary provision, the foregoing paragraph is not effective unless and until (A) the representations and warranties in this document are true and correct and (B) Administrative Agent receives (1) counterparts of this document executed by Borrower, Required Lenders, and each Guarantor, (2) officer's certificates executed by officers of Borrower and each Guarantor, certifying to incumbency of certain officers and certifying that there have been no changes to the articles of incorporation and bylaws, or other appropriate formation documents, as applicable, of each Company, (3) a $5,000.00 amendment fee for each Lender who has executed the document and delivered it to Administrative Agent by 1:00 p.m. Dallas time on April 6, 2000, which Administrative Agent shall promptly pay to such Lenders upon closing of this amendment, and (4) payment of fees of counsel to Administrative Agent. 4. RATIFICATIONS. To induce Lenders to enter into this document, Borrower (A) ratifies and confirms all provisions of the Credit Documents as amended by this document, (B) ratifies and confirms that all guaranties, and assurances granted, conveyed, or assigned to Administrative Agent or any Lender under the Credit Documents (as they may have been renewed, extended, and amended) are not released, reduced, or otherwise adversely affected by this document and continue to guarantee and assure full payment and performance of the present and future Obligation, and (C) agrees to perform those acts and duly authorize, execute, acknowledge, deliver, file, and record those additional documents, and certificates as Administrative Agent or any Lender may request in order to create, perfect, preserve, and protect those guaranties, and assurances. 5. REPRESENTATIONS. To induce Lenders to enter into this document, Borrower represents and warrants to Lenders that as of the date of this document (A) all representations and warranties in the Credit Documents are true and correct in all material respects except to the extent that (1) any of them speak to a different specific date or (2) the facts on which any of them were based have been changed by transactions contemplated or permitted by the Credit Agreement, and (B) no Material-Adverse Event, Event of Default, or Potential Default exists. 6. EXPENSES. Borrower shall pay all costs, fees, and expenses paid or incurred by Administrative Agent incident to this document, including, without limitation, the reasonable fees and expenses of Administrative Agent's counsel in connection with the negotiation, preparation, delivery, and execution of this document and any related documents. 7. MISCELLANEOUS. All references in the Credit Documents to the "Credit Agreement" refer to the Credit Agreement as amended by this document. This document is a "Credit Document" referred to in the Credit Agreement; therefore, the provisions relating to Credit Documents in SECTIONS 1 and 14 are incorporated in this document by reference. Except as specifically amended and modified in this document, the Credit Agreement is unchanged and continues in full force and effect. This document may be executed in any number of counterparts with the same effect as if all signatories had signed the same document. All counterparts must be construed together to constitute one and the same instrument. This document binds and inures to each of the undersigned and their respective successors and permitted assigns, subject to SECTION 14.10. THIS DOCUMENT AND THE OTHER CREDIT DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES IN RESPECT OF THE MATTERS COVERED BY THE CREDIT DOCUMENTS AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. REMAINDER OF PAGE INTENTIONALLY BLANK. SIGNATURE PAGES FOLLOW. EXECUTED as of the date first stated above in this Second Amendment to Credit Agreement. PIER 1 IMPORTS, INC., as Borrower BANK OF AMERICA, N.A., (formerly NationsBank, N.A.), as Administrative Agent and a Lender By /s/ Charles H. Turner By /s/ Kimberley Whitney Charles H. Turner, Kimberley Whitney, Managing Director SVP-Finance/CFO/Treasurer BANK ONE, N.A., (assignee of Bank One, Texas, WELLS FARGO BANK (TEXAS), NATIONAL ASSOCIATION, as N.A.), as a Co-Agent and a Lender a Co-Agent and a Lender By /s/ David E. Williams By /s/ Susan B. Sheffield David E. Williams, First Vice President Susan Sheffield, Vice President THE BANK OF TOKYO-MITSUBISHI, LTD., as a Lender CHASE BANK OF TEXAS, NATIONAL ASSOCIATION, as a Lender By /s/ John M. Mearns By /s/ B.B. Wuthrich John M. Mearns, Vice President B.B. Wuthrich, Vice President FLEET NATIONAL BANK, as a Lender CREDIT LYONNAIS, NEW YORK BRANCH, as a Lender By /s/ Judith C.E. Kelly By /s/ Philippe Soustra Judith C.E. Kelly, Vice President Philippe Soustra, Senior Vice President
CONSENT AND AGREEMENT To induce Lenders to enter into this document, the undersigned jointly and severally (a) consent and agree to this document's execution and delivery, (b) ratify and confirm that all guaranties, assurances, and subordinations granted, conveyed, or assigned to Administrative Agent or any Lender under the Credit Documents (as they may have been renewed, extended, and amended) are not released, diminished, impaired, reduced, or otherwise adversely affected by this document and continue to guarantee, assure, and subordinate other debt to the full payment and performance of all present and future Obligation, (c) agree to perform those acts and duly authorize, execute, acknowledge, deliver, file, and record those additional guaranties, and other agreements, documents, instruments, and certificates as Lender may reasonably deem necessary or appropriate in order to create, perfect, preserve, and protect those guaranties, assurances, and subordinations, and (d) waive notice of acceptance of this consent and agreement, which consent and agreement binds the undersigned and their successors and permitted assigns and inures to each Lender and its successors and permitted assigns. PIER 1 SERVICES COMPANY, PIER 1 ASSETS, N.C. as a Guarantor PIER 1 LICENSING, INC. PIER 1 HOLDINGS, INC. By: PIER 1 HOLDINGS, INC., PIER 1 IMPORTS, (U.S.), INC., as Guarantor Managing Trustee By /s/ Charles H. Turner By /s/ Charles H. Turner Charles H. Turner, Charles H. Turner, Senior VP and CFO Senior VP and CFO
EX-10.14.4 4 d98257exv10w14w4.txt THIRD AMENDMENT TO CREDIT AGREEMENT EXHIBIT 10.14.4 THIRD AMENDMENT TO CREDIT AGREEMENT THIS DOCUMENT is entered into as of April 24, 2002, between PIER 1 IMPORTS, INC., a Delaware corporation ("BORROWER"), those Lenders (defined below) who have signed a signature page to this document, BANK OF AMERICA, N.A. (as Administrative Agent for Lenders), and BANK ONE, N.A., (assignee of Bank One, Texas, N.A.) and WELLS FARGO BANK (TEXAS), NATIONAL ASSOCIATION, as Co-Agents for Lenders. Borrower, Lenders, Administrative Agent, and Co-Agents are party to the Credit Agreement (as it may have been renewed, extended, and amended through the date of this document, the "CREDIT AGREEMENT") dated as of November 12, 1998. Borrower and certain Lenders have agreed, upon the following terms and conditions, to amend the Credit Agreement as provided in PARAGRAPH 2 below. Accordingly, for adequate and sufficient consideration, Borrower, Required Lenders, and Administrative Agent agree as follows: 1. TERMS AND REFERENCES. Unless otherwise stated in this document (A) terms defined in the Credit Agreement have the same meanings when used in this document and (B) references to "SECTIONS," "SCHEDULES," and "EXHIBITS" are to the Credit Agreement's sections, schedules, and exhibits. 2. AMENDMENT. (i) The table included in the definition of "Applicable Percentage" is entirely amended to read as follows:
BASED UPON THE BETTER OF APPLICABLE PERCENTAGE -------------------------------------- -------------------------------- HIGHER OF DEBT COMMITMENT CATEGORY RATINGS BY EURODOLLAR-RATE FEES UNDER Y LEVERAGE RATIO S&P/MOODY'S BORROWINGS SECTION 4.3 -------- -------------- -------------- --------------- ----------- 1 N/A BBB/BAA2 OR HIGHER 0.900% 0.15% 2 LESS THAN 1.5 TO 1.0 BBB-/BAA3 1.000% 0.17% GREATER THAN OR EQUAL TO 1.5 TO 1.0 BUT LESS THAN 3 2.0 TO 1.0 BB+/BA1 1.125% 0.20% GREATER THAN OR EQUAL TO 2.0 TO 1.0 BUT LESS THAN 4 2.5 TO 1.0 BB/BA2 1.250% 0.25% GREATER THAN OR EQUAL TO 2.5 TO 1.0 BUT LESS THAN 5 3.0 TO 1.0 BB-/BA3 1.500% 0.30% GREATER THAN OR EQUAL TO 6 3.0 TO 1.0 NA 1.750% 0.35%
(ii) The definitions of "Permitted Distributions", "Permitted Investment" and "Restricted Payment" in SECTION 1.1 are entirely amended as follows: "PERMITTED DISTRIBUTIONS" MEANS DISTRIBUTIONS THAT ARE DECLARED, MADE, OR PAID (a) IN THE FORM OF ADDITIONAL EQUITY THAT IS NOT MANDATORILY REDEEMABLE, (b) TO BORROWER BY ANY OF ITS SUBSIDIARIES, (c) TO ANY GUARANTOR BY ANY OF ITS SUBSIDIARIES, (d) TO ANY UNRESTRICTED COMPANY BY ANY OTHER UNRESTRICTED COMPANY, (e) IN THE FORM OF BORROWER'S REDEMPTION OF ITS OWN STOCK FOR VESTED BUT UNEXERCISED EMPLOYEE STOCK OPTIONS AND EMPLOYEE STOCK OPTIONS VESTING WITHIN ONE YEAR AND THE REQUIREMENTS OF THE PIER 1 IMPORTS EMPLOYEE STOCK PURCHASE PLAN AND THE PIER 1 IMPORTS DIRECT STOCK PURCHASE AND DIVIDEND REINVESTMENT PLAN, OR (f) OTHERWISE BY BORROWER IN CASH IF (i) THE TOTAL OF SUCH DISTRIBUTIONS DOES NOT EXCEED $20,000,000 ACTUALLY PAID DURING ANY FISCAL YEAR OF BORROWER, (ii) SUCH DISTRIBUTIONS ARE PAID WITHIN 90 DAYS AFTER BEING DECLARED, AND (iii) SUCH DISTRIBUTIONS ARE NOT DECLARED WHILE A DEFAULT CONDITION EXISTED. "PERMITTED INVESTMENT" MEANS THE FOLLOWING: (a) GOVERNMENT SECURITIES. (b) COLLECTIVE INVESTMENT FUNDS CREATED PURSUANT TO REGULATION 9 OF THE OFFICE OF THE COMPTROLLER OF THE CURRENCY OF THE UNITED STATES, RATED AAA BY S&P OR Aaa BY MOODY'S AND IN COMPLIANCE WITH SECURITIES AND EXCHANGE COMMISSION RULE 2(a)7, THAT ARE INVESTED SOLELY IN ONE OR MORE SECURITIES OF THE UNITED STATES GOVERNMENT, SECURITIES ISSUED BY ONE OR MORE AGENCIES OF THE UNITED STATES GOVERNMENT, REPURCHASE AGREEMENTS, REVERSE REPURCHASE AGREEMENTS, AND INDIVIDUAL CORPORATE SECURITIES RATED AAA BY S&P OR Aaa BY MOODY'S. (c) CERTIFICATES OF DEPOSIT, EURODOLLAR CERTIFICATES OF DEPOSIT, DEMAND AND TIME DEPOSITS, AND PRIME BANKERS ACCEPTANCES ISSUED BY ANY FINANCIAL INSTITUTION ORGANIZED AND EXISTING UNDER THE LAWS OF THE UNITED STATES OF AMERICA OR ANY OF ITS STATES AND HAVING ON THE DATE OF THE INVESTMENT AN S&P RATING OF AT LEAST A- OR A-1 OR A MOODY'S RATING OF AT LEAST A-3 OR P-1, IN EACH CASE DUE WITHIN ONE YEAR AFTER THE DATE OF THE MAKING OF THE INVESTMENT. (d) FULLY COLLATERALIZED REPURCHASE AGREEMENTS, WITH A FINANCIAL INSTITUTION DESCRIBED IN CLAUSE (c) ABOVE, HAVING A DEFINED TERMINATION DATE, FULLY SECURED BY OBLIGATIONS OF THE UNITED STATES GOVERNMENT, OR ITS AGENCIES, AND DUE WITHIN ONE YEAR AFTER THE DATE OF THE MAKING OF THE INVESTMENT. (e) TAX-EXEMPT MUTUAL FUNDS THAT INVEST IN MUNICIPAL SECURITIES RATED A1 OR HIGHER OR AA OR HIGHER BY S&P OR P1 OR HIGHER OR AA OR HIGHER BY MOODY'S AND IN COMPLIANCE WITH SECURITIES AND EXCHANGE COMMISSION RULE 2(a)7. (f) VARIABLE-RATE TAX-EXEMPT DEMAND NOTES ISSUED BY MUNICIPALITIES AND RATED AA OR HIGHER BY S&P OR AA OR HIGHER BY MOODY'S AND DUE WITHIN ONE YEAR AFTER THE DATE OF THE MAKING OF THE INVESTMENT. (g) COMMERCIAL PAPER ISSUED BY CORPORATIONS AND RATED A2 OR HIGHER BY S&P OR P2 OR HIGHER BY MOODY'S AND CORPORATE DEBT OBLIGATIONS RATED BBB OR HIGHER BY S&P OR BAA2 OR HIGHER BY MOODY'S. SO LONG AS THE INSTRUMENT IS RATED A1 OR HIGHER OR A- OR HIGHER BY S&P OR P1 OR HIGHER OR A3 OR HIGHER BY MOODY'S IT MUST BE DUE WITHIN ONE YEAR AFTER THE DATE OF THE MAKING OF THE INVESTMENT, OTHERWISE IT SHALL BE DUE WITHIN 90 DAYS AFTER THE DATE OF THE MAKING OF THE INVESTMENT. (h) LOAN PARTICIPATIONS THROUGH A FINANCIAL INSTITUTION DESCRIBED IN CLAUSE (c) ABOVE PROVIDED THE UNDERLYING CORPORATE CREDIT IS RATED A2 OR HIGHER BY S&P AND P2 OR HIGHER BY MOODY'S AND PROVIDED SUCH LOAN PARTICIPATIONS ARE LIMITED IN DURATION TO OVERNIGHT INVESTMENTS. (i) PURCHASES OF A MAJORITY OF THE OUTSTANDING CAPITAL STOCK OF ANY CORPORATION. (j) INVESTMENTS BY ANY ONE OR MORE COMPANIES IN BORROWER OR ANY GUARANTOR IF THERE IS NO RELATED DEFAULT CONDITION. (k) WORKING-CAPITAL ADVANCES FROM BORROWER TO THE PIER RETAIL GROUP LIMITED THAT ARE NOT OUTSTANDING MORE THAN 90 DAYS AND THAT NEVER EXCEED A TOTAL OF $5,000,000 PRINCIPAL AMOUNT OUTSTANDING AT ANY TIME. (l) BORROWER'S OWNERSHIP OF BENEFICIAL INTERESTS IN SECURITIZED RECEIVABLES OR IN ANY MASTER TRUST ESTABLISHED IN CONNECTION WITH THE SALE OF ACCOUNTS RECEIVABLE FOR AN ACCOUNTS RECEIVABLE FINANCING OR SECURITIZATION FACILITY. (m) LOANS OR ADVANCES TO DIRECTORS, OFFICERS, AND EMPLOYEES OF THE COMPANIES THAT NEVER EXCEED A TOTAL OF $10,000,000 OUTSTANDING FOR ALL OF THE COMPANIES. (n) INDEBTEDNESS OF CUSTOMERS CREATED IN ANY COMPANY'S ORDINARY COURSE OF BUSINESS IN A MANNER CONSISTENT WITH ITS PRESENT PRACTICES. (o) HEDGING AGREEMENTS. "RESTRICTED PAYMENT" means (a) Distributions that are not Permitted Distributions, (b) Investments that are not Permitted Investments, and (c) prepayments or purchases of any subordinated Debt of the Companies before the respective scheduled maturity dates that exceed a total of $50,000,000. (iii) SECTION 9.2 is entirely amended to read as follows: 9.2 RESTRICTED PAYMENTS. No Company may declare, make, or pay any Restricted Payment (a) while any Default Condition exists or (b) that would cause the total Restricted Payments by all Companies during any fiscal year of the Companies to exceed $80,000,000 for all of the Companies. 3. CONDITIONS PRECEDENT. Notwithstanding any contrary provision, the foregoing paragraph is not effective unless and until (A) the representations and warranties in this document are true and correct and (B) Administrative Agent receives (1) counterparts of this document executed by Borrower, Required Lenders, and each Guarantor, (2) officer's certificates executed by officers of Borrower and each Guarantor, certifying to incumbency of certain officers and certifying that there have been no changes to the articles of incorporation and bylaws, or other appropriate formation documents, as applicable, of each Company, (3) an amendment fee for each Lender who has executed the document and delivered it to Administrative Agent by 5:00 p.m. Dallas time on April 30, 2002, in an amount equal to the product of (i) such Lender's Commitment and (ii) 0.05, which amendment fees Administrative Agent shall promptly pay to such Lenders upon closing of this amendment, and (4) payment of fees of counsel to Administrative Agent. 4. RATIFICATIONS. To induce Lenders to enter into this document, Borrower (A) ratifies and confirms all provisions of the Credit Documents as amended by this document, (B) ratifies and confirms that all guaranties, and assurances granted, conveyed, or assigned to Administrative Agent or any Lender under the Credit Documents (as they may have been renewed, extended, and amended) are not released, reduced, or otherwise adversely affected by this document and continue to guarantee and assure full payment and performance of the present and future Obligation, and (C) agrees to perform those acts and duly authorize, execute, acknowledge, deliver, file, and record those additional documents, and certificates as Administrative Agent or any Lender may request in order to create, perfect, preserve, and protect those guaranties, and assurances. 5. REPRESENTATIONS. To induce Lenders to enter into this document, Borrower represents and warrants to Lenders that as of the date of this document (A) all representations and warranties in the Credit Documents are true and correct in all material respects except to the extent that (1) any of them speak to a different specific date or (2) the facts on which any of them were based have been changed by transactions contemplated or permitted by the Credit Agreement, and (B) no Material-Adverse Event, Event of Default, or Potential Default exists. 6. EXPENSES. Borrower shall pay all costs, fees, and expenses paid or incurred by Administrative Agent incident to this document, including, without limitation, the reasonable fees and expenses of Administrative Agent's counsel in connection with the negotiation, preparation, delivery, and execution of this document and any related documents. 7. MISCELLANEOUS. All references in the Credit Documents to the "Credit Agreement" refer to the Credit Agreement as amended by this document. This document is a "Credit Document" referred to in the Credit Agreement; therefore, the provisions relating to Credit Documents in SECTIONS 1 and 14 are incorporated in this document by reference. Except as specifically amended and modified in this document, the Credit Agreement is unchanged and continues in full force and effect. This document may be executed in any number of counterparts with the same effect as if all signatories had signed the same document. All counterparts must be construed together to constitute one and the same instrument. This document binds and inures to each of the undersigned and their respective successors and permitted assigns, subject to SECTION 14.10. THIS DOCUMENT AND THE OTHER CREDIT DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES IN RESPECT OF THE MATTERS COVERED BY THE CREDIT DOCUMENTS AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. REMAINDER OF PAGE INTENTIONALLY BLANK. SIGNATURE PAGES FOLLOW. EXECUTED as of the date first stated above in this Third Amendment to Credit Agreement. PIER 1 IMPORTS, INC., as Borrower BANK OF AMERICA, N.A., (formerly NationsBank, N.A.), as Administrative Agent and a Lender By /s/ Charles H. Turner By /s/ Amy Krovocheck Charles H. Turner Amy A. Krovocheck, Vice President Executive VP Finance, CFO and Treasurer BANK ONE, N.A., (assignee of Bank One, Texas, WELLS FARGO BANK (TEXAS), N.A.), as a Co-Agent and a Lender NATIONAL ASSOCIATION, as a Co-Agent and a Lender By /s/ Robert Humphreys By /s/ Steve Melton Robert Humphreys Steve Melton Vice President Vice President THE BANK OF TOKYO-MITSUBISHI, JPMORGAN CHASE BANK, as a Lender LTD., as a Lender By /s/ Brenda Trader Brenda Trader By /s/ Teri Streusand Banking Officer Teri Streusand Vice President /s/ John M. Mearns VP & Manager FLEET NATIONAL BANK, as a Lender CREDIT LYONNAIS, NEW YORK BRANCH, as a Lender By /s/ Attila Koc By /s/ Judith Kelly Attila Koc Judith Kelly Senior Vice President Director
CONSENT AND AGREEMENT To induce Lenders to enter into this document, the undersigned jointly and severally (a) consent and agree to this document's execution and delivery, (b) ratify and confirm that all guaranties, assurances, and subordinations granted, conveyed, or assigned to Administrative Agent or any Lender under the Credit Documents (as they may have been renewed, extended, and amended) are not released, diminished, impaired, reduced, or otherwise adversely affected by this document and continue to guarantee, assure, and subordinate other debt to the full payment and performance of all present and future Obligation, (c) agree to perform those acts and duly authorize, execute, acknowledge, deliver, file, and record those additional guaranties, and other agreements, documents, instruments, and certificates as Lender may reasonably deem necessary or appropriate in order to create, perfect, preserve, and protect those guaranties, assurances, and subordinations, and (d) waive notice of acceptance of this consent and agreement, which consent and agreement binds the undersigned and their successors and permitted assigns and inures to each Lender and its successors and permitted assigns. PIER 1 SERVICES COMPANY, PIER 1 ASSETS, N.C. as a Guarantor PIER 1 LICENSING, INC. PIER 1 HOLDINGS, INC. By: PIER 1 HOLDINGS, INC., PIER 1 IMPORTS, (U.S.), INC., as Guarantor Managing Trustee By /s/ Charles H. Turner By /s/ Charles H. Turner Charles H. Turner Charles H. Turner Executive VP and CFO Executive VP and CFO
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