Pier 1 2008 Annual Report Download - page 14

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Risks Relating to Liquidity
Insufficient cash flows from operations could result in the substantial utilization of the Company’s
secured credit facility, which may impose certain financial covenants.
The Company maintains a secured credit facility to enable it to issue merchandise and special purpose
standby letters of credit as well as to occasionally fund working capital requirements. Borrowings under the
credit facility are subject to a borrowing base calculation consisting of a percentage of certain eligible assets
of the Company. Substantial utilization of the availability under the borrowing base will result in various
restrictions on the Company including: restricting the ability of the Company to repurchase its common stock
or pay dividends, dominion over the Company’s cash accounts, and requiring compliance with a minimum
fixed charge coverage ratio. Significant decreases in cash flow from operations and investing could result in
the Company’s borrowing increased amounts under the credit facility to fund operational needs. Increases in
utilization of letters of credit and/or increased cash borrowings could result in the Company’s being subject to
these limitations.
Item 1B. Unresolved Staff Comments.
None.
Item 2. Properties.
The Company is headquartered in Fort Worth, Texas. In August 2004, the Company completed
construction of its corporate facilities, which contain approximately 460,000 square feet of office space.
Subsequent to fiscal 2008 year end, the Company entered into an agreement to sell its headquarters building
and accompanying land. As part of the transaction, the Company will enter into a lease agreement to rent
approximately 250,000 square feet of office space in the building for a primary term of seven years beginning
on the closing date, with one three-year renewal option, and a right to terminate the lease at the end of the
fifth lease year. The transaction is expected to close no later than June 30, 2008.
The Company leases the majority of its retail stores, its warehouses and regional space. At March 1,
2008, the present value of the Company’s minimum future operating lease commitments discounted at 10%
totaled approximately $813.4 million. The Company currently owns and leases distribution center space of
approximately 4.5 million square feet. The Company also acquires temporary distribution center space from
time to time through short-term leases.
The following table sets forth the distribution of Pier 1 Imports’ U.S. and Canadian stores by state and
province as of March 1, 2008:
United States
Alabama 15 Louisiana 15 Ohio 33
Alaska 1 Maine 1 Oklahoma 9
Arizona 26 Maryland 25 Oregon 14
Arkansas 8 Massachusetts 25 Pennsylvania 39
California 116 Michigan 34 Rhode Island 3
Colorado 22 Minnesota 20 South Carolina 17
Connecticut 21 Mississippi 7 South Dakota 2
Delaware 4 Missouri 19 Tennessee 19
Florida 78 Montana 6 Texas 84
Georgia 32 Nebraska 3 Utah 10
Hawaii 4 Nevada 9 Virginia 35
Idaho 6 New Hampshire 6 Washington 28
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