Pier 1 2008 Annual Report Download - page 24

decrease in building operating expenses and the amortization of the deferred gain on the sale, for a portion of
fiscal 2009.
Depreciation and amortization for fiscal 2008 was $39.8 million, representing a decrease of approximately
$11.4 million from last year’s depreciation and amortization expense of $51.2 million. This decrease was
primarily the result of lower net book values on certain store-level long-lived assets because of impairment
charges taken during and since the end of fiscal 2007, certain assets’ becoming fully depreciated, store
closures, and lower capital expenditures. Beginning in fiscal 2009, the Company expects depreciation expense
to decrease approximately $4.7 million annually as a result of the anticipated sale of the Company’s
headquarters.
In fiscal 2008, the Company recorded an operating loss of $88.1 million compared to $226.2 million for
fiscal 2007.
During fiscal 2008, the Company recorded a $1.8 million charge to tax expense to adjust its federal and
state income tax refunds estimated at fiscal 2007 year end to the actual tax refunds filed for. The federal tax
benefit was entirely offset by provision of a full valuation allowance on the deferred assets arising from the
benefit, and only minimal state and foreign tax provisions were recorded on results for fiscal 2008. Net
deferred tax assets of $125.7 million were fully reserved at year end through a valuation allowance. The
Company has tax loss carryforwards of approximately $203.0 million. These loss carryforwards, with
expirations beginning in fiscal year 2027, can be utilized to offset future income for U.S. federal tax purposes.
Net Loss
Net loss in fiscal 2008 was $96.0 million or $1.09 per share, an improvement of $131.6 million when
compared to fiscal 2007’s net loss (including discontinued operations) of $227.6 million, or $2.60 per share.
See Note 14 of the Notes to Consolidated Financial Statements for additional information regarding
discontinued operations in fiscal 2007.
FISCAL YEARS ENDED MARCH 3, 2007 AND FEBRUARY 25, 2006
Net Sales
Net sales consisted almost entirely of sales to retail customers, net of discounts and returns, but also
included delivery revenues and wholesale sales and royalties received from franchise stores and Sears Roebuck
de Mexico, S.A. de C.V. Sales by retail concept during fiscal years 2007, 2006 and 2005 were as follows (in
thousands):
2007 2006 2005
Stores ....................................... $1,590,854 $1,753,927 $1,807,441
Direct to consumer .............................. 18,943 15,345 10,408
Other
(1)
...................................... 13,419 7,429 7,494
Net sales ................................... $1,623,216 $1,776,701 $1,825,343
(1) Other sales consisted primarily of wholesale sales and royalties received from franchise stores and from Sears Roebuck de Mexico,
S.A. de C.V.
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