Pier 1 Imports, Inc. Reports Second Quarter Financial Results

Management’s expectations and assumptions regarding 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 included in this press release. Any forward-looking projections or statements should be considered in conjunction with the cautionary statements and risks contained in the Company’s Annual Report on Form 10-K. Refer to the Company’s most recent SEC filings for any updates concerning these and other risks and uncertainties that may affect the Company’s operations and performance. The Company assumes no obligation to update or 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.

Pier 1 Imports, Inc. is the original global importer of imported decorative home furnishings and gifts. Information about the Company is available on www.pier1.com.

Pier 1 Imports, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except per share amounts)
(unaudited)
						Three Months Ended
						August 25,				% of				August 27,				% of
							2012			Sales					2011			Sales
Net sales						$	367,615			100.0	%			$	339,552			100.0	%
Cost of sales							216,066			58.8	%				205,031			60.4	%
Gross Profit							151,549			41.2	%				134,521			39.6	%
Selling, general and administrative expenses							112,021			30.5	%				105,752			31.1	%
Depreciation and amortization							7,214			1.9	%				5,035			1.5	%
Operating income							32,314			8.8	%				23,734			7.0	%
Nonoperating (income) and expenses:
Interest, investment income and other							(443	)							(2,573	)
Interest (income) expense							(2,107	)							714
							(2,550	)		-0.7	%				(1,859	)		-0.5	%
Income before income taxes							34,864			9.5	%				25,593			7.5	%
Income tax provision							8,633			2.4	%				8,955			2.6	%
Net income						$	26,231			7.1	%			$	16,638			4.9	%
Earnings per share:
Basic						$	0.25							$	0.14
Diluted						$	0.24							$	0.14
Dividends declared per share:						$	0.04							$	0.00
Average shares outstanding during period:
Basic							105,786								115,288
Diluted							107,447								117,085

Pier 1 Imports, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except per share amounts)
(unaudited)
						Six Months Ended
						August 25,				% of				August 27,				% of
							2012			Sales					2011			Sales
Net sales						$	728,734			100.0	%			$	674,155			100.0	%
Cost of sales							426,911			58.6	%				405,567			60.2	%
Gross Profit							301,823			41.4	%				268,588			39.8	%
Selling, general and administrative expenses							228,351			31.3	%				214,902			31.9	%
Depreciation and amortization							13,745			1.9	%				10,066			1.5	%
Operating income							59,727			8.2	%				43,620			6.5	%
Nonoperating (income) and expenses:
Interest, investment income and other							(1,871	)							(5,202	)
Interest (income) expense							(1,293	)							1,539
							(3,164	)		-0.4	%				(3,663	)		-0.6	%
Income before income taxes							62,891			8.6	%				47,283			7.0	%
Income tax provision							18,835			2.6	%				16,546			2.4	%
Net income						$	44,056			6.0	%			$	30,737			4.6	%
Earnings per share:
Basic						$	0.41							$	0.26
Diluted						$	0.40							$	0.26
Dividends declared per share:						$	0.08							$	0.00
Average shares outstanding during period:
Basic							107,192								116,294
Diluted							109,154								118,270

Pier 1 Imports, Inc.
CONSOLIDATED BALANCE SHEETS
(in thousands except share amounts)
(unaudited)
						August 25,				February 25,				August 27,
						2012				2012				2011
ASSETS
Current assets:
Cash and cash equivalents, including temporary investments
of $75,536, $248,624 and $151,000, respectively						$	115,138			$	287,868			$	190,805
Accounts receivable, net							21,736				16,282				14,093
Inventories							420,801				322,482				370,668
Prepaid expenses and other current assets							24,799				23,682				20,507
Total current assets							582,474				650,314				596,073
Properties, net							125,659				103,640				73,882
Other noncurrent assets							71,714				69,409				30,237
						$	779,847			$	823,363			$	700,192
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable						$	91,430			$	63,827			$	79,076
Gift cards and other deferred revenue							48,544				53,123				66,024
Accrued income taxes payable							10,859				16,759				6,920
Other accrued liabilities							98,882				111,679				101,238
Total current liabilities							249,715				245,388				253,258
Long-term debt							9,500				9,500				9,500
Other noncurrent liabilities							60,647				74,832				72,805
Shareholders' equity:
Common stock, $0.001 par, 500,000,000 shares authorized,
125,232,000 issued							125				125				125
Paid-in capital							229,002				231,919				229,683
Retained earnings							498,248				462,751				324,550
Cumulative other comprehensive loss							(3,687	)			(4,473	)			(431	)
Less -- 19,244,000, 15,512,000 and 14,828,000
common shares in treasury, at cost, respectively							(263,703	)			(196,679	)			(189,298	)
							459,985				493,643				364,629
						$	779,847			$	823,363			$	700,192

Pier 1 Imports, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
									Six Months Ended
									August 25,				August 27,
									2012				2011
Cash flow from operating activities:
	Net income								$	44,056			$	30,737
	Adjustments to reconcile to net cash (used in) provided by
	operating activities:
	Depreciation and amortization									17,649				16,569
	Stock-based compensation expense									5,989				3,340
	Deferred compensation									3,312				3,046
	Amortization of credit card deferred revenue									(2,843	)			(9,226	)
	Amortization of deferred gains									(2,618	)			(6,248	)
	Change in reserve for uncertain tax positions									(7,352	)			386
	Other									(1,807	)			579
	Changes in cash from:
	Inventories									(98,319	)			(58,898	)
	Proprietary credit card receivables									(2,130	)			330
	Prepaid expenses and other assets									(6,680	)			(1,804	)
	Accounts payable and accrued expenses									11,476				9,952
	Accrued income taxes payable, net of payments									(9,546	)			6,688
	Net cash used in operating activities									(48,813	)			(4,549	)
Cash flow from investing activities:
	Capital expenditures									(37,858	)			(21,255	)
	Proceeds from disposition of properties									38				1,331
	Proceeds from sale of restricted investments									1,176				311
	Purchase of restricted investments									(2,784	)			(822	)
	Net cash used in investing activities									(39,428	)			(20,435	)
Cash flow from financing activities:
	Cash dividends									(8,559	)			-
	Purchases of treasury stock									(79,281	)			(89,254	)
	Proceeds from stock options exercised,
	stock purchase plan and other, net									3,351				6,601
	Debt issuance costs									-				(3,029	)
	Net cash used in financing activities									(84,489	)			(85,682	)
Change in cash and cash equivalents										(172,730	)			(110,666	)
Cash and cash equivalents at beginning of period										287,868				301,471
Cash and cash equivalents at end of period									$	115,138			$	190,805

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