PIR
$3.10
Pier 1 Imports
$.02
.65%
Earnings Details
4th Quarter February 2018
Wednesday, April 18, 2018 4:15:00 PM
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Summary

Pier 1 Imports Beats

Pier 1 Imports (PIR) reported 4th Quarter February 2018 earnings of $0.21 per share on revenue of $512.2 million. The consensus earnings estimate was $0.18 per share on revenue of $538.9 million. The Earnings Whisper number was $0.20 per share. Revenue fell 3.1% compared to the same quarter a year ago.

Pier 1 Imports Inc is a specialty retailer of imported decorative home furnishings and gifts in the North America. It conducts business as one operating segment and operates stores in the United States and Canada under the name Pier 1 Imports.

Results
Reported Earnings
$0.21
Earnings Whisper
$0.20
Consensus Estimate
$0.18
Reported Revenue
$512.2 Mil
Revenue Estimate
$538.9 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Pier 1 Imports, Inc. Reports Fourth Quarter and Full Year Fiscal 2018 Financial Results

FORT WORTH, Texas--(BUSINESS WIRE)-- Pier 1 Imports, Inc. (NYSE:PIR) today reported financial results for the 14-week fourth quarter and 53-week fiscal year ended March 3, 2018. Except where indicated, fourth quarter and full year comparisons reflect the 14-week and 53-week periods ended March 3, 2018, and the 13-week and 52-week periods ended February 25, 2017.

Fourth Quarter Fiscal 2018 Highlights

  • Net sales decreased 3.1% to $512.2 million, which includes approximately $27.5 million from the 14th week in the Company’s fiscal 2018 fourth quarter;
  • Company comparable sales on a 13-week basis decreased 7.5%;
  • E-Commerce sales penetration reached approximately 25%; and
  • Earnings per share of $0.19 (GAAP) and adjusted earnings per share of $0.21 (non-GAAP), including an estimated benefit of approximately $0.04 per share from the 14th week in the Company’s fiscal 2018 fourth quarter.

Full Year Fiscal 2018 Highlights

  • Net sales decreased 1.6% to $1.8 billion;
  • Company comparable sales on a 52-week basis decreased 2.0%;
  • E-Commerce sales exceeded $450 million, with sales penetration reaching approximately 26%;
  • Earnings per share of $0.14 (GAAP) and adjusted earnings per share of $0.21 (non-GAAP);
  • Generated positive cash flow from operations of $66 million; and
  • Established new executive leadership team and developed three-year strategic plan now in initial phase of implementation.

“Our financial performance in fiscal 2018, and specifically the fourth quarter, underscores the urgent need for change, which we are addressing in the three-year strategic plan we will present tomorrow,” said Alasdair James, President and CEO. “In fiscal 2019, we will be investing in the tools and resources needed to execute against the plan. We are confident in the potential of the business to respond and have already begun implementing new initiatives across sourcing, supply chain, stores, merchandising, marketing and promotions. These investments will pressure profitability in the near-term, bringing us to an expected net loss for the full year in fiscal 2019, but are expected to drive sales growth and profitability in fiscal 2020 and 2021 and are necessary to help us return the business to a sustainable growth trajectory. We look forward to sharing our three-year strategic plan and financial outlook tomorrow at our Analyst Day.”

Fourth Quarter Fiscal 2018 Results of Operations

Net sales for the fourth quarter of fiscal 2018 decreased 3.1% to $512.2 million, compared to $528.4 million for the fourth quarter of fiscal 2017. Company comparable sales on a 13-week basis decreased 7.5% versus the year-ago period. E-Commerce represented approximately 25% of net sales in the fourth quarter of fiscal 2018, as compared to approximately 20% of net sales in the fourth quarter of fiscal 2017. Taking into account e-Commerce orders placed in or picked up in-store, approximately 90% of the Company’s fourth quarter fiscal 2018 net sales directly touched a store.

Gross profit for the fourth quarter of fiscal 2018 totaled $189.7 million, or 37.0% of net sales, compared to $206.9 million, or 39.2% of net sales, for the fourth quarter of fiscal 2017. Merchandise margin (the result of adding back delivery and fulfillment net costs and store occupancy costs to gross profit) for the fourth quarter of fiscal 2018 totaled $284.8 million, or 55.6% of net sales, compared to $299.5 million, or 56.7% of net sales, for the fourth quarter of fiscal 2017, reflecting increased promotional activity. Contribution from operations (gross profit less compensation for operations and operational expenses) for the fourth quarter of fiscal 2018 totaled $99.5 million, compared to $118.5 million last year.

Selling, general and administrative (“SG&A”) expenses for the fourth quarter of fiscal 2018 were $148.2 million, or 28.9% of net sales, compared to $148.5 million, or 28.1% of net sales, for the fourth quarter of fiscal 2017. The following table details the breakdown of SG&A expenses for the fourth quarter of fiscal 2018 as compared to last year (in millions).

  14 Weeks Ended   13 Weeks Ended
March 3, 2018 February 25, 2017
Expense   % Sales Expense   % Sales
 
Compensation for operations $ 65.8 12.9 % $ 64.5 12.2 %
Operational expenses 24.4 4.8 % 24.0 4.5 %
Marketing 23.0 4.5 % 24.2 4.6 %
Other selling, general and administrative   35.0 6.8 %   35.8 6.8 %
Total selling, general and administrative $ 148.2 28.9 % $ 148.5 28.1 %
 

Operating income for the fourth quarter of fiscal 2018 was $27.9 million compared to $44.8 million last year. Net income for the fourth quarter of fiscal 2018 totaled $15.1 million, or $0.19 per share. Adjusted net income (non-GAAP) for the fourth quarter of fiscal 2018 was $16.6 million, or $0.21 per share, and excludes $1.5 million, or $0.02 per share related to the tax effect of regulatory costs relating to an ongoing Consumer Product Safety Commission (“CPSC”) inquiry. In the fourth quarter of fiscal 2017, net income was $26.6 million, or $0.33 per share, and adjusted net income (non-GAAP) was $27.8 million, or $0.34 per share. Adjusted net income in the fiscal 2017 period excludes costs related to the departure of the Company’s former CEO and the related tax benefit. EBITDA (earnings before interest, taxes, depreciation and amortization) in the fourth quarter of fiscal 2018 was $41.5 million compared to $58.5 million in the fourth quarter of fiscal 2017. A reconciliation of non-GAAP measures to GAAP is provided below.

Full-Year Results of Operations

Net sales for the fiscal year ended March 3, 2018, were $1.8 billion, a decrease of 1.6% from fiscal 2017. Company comparable sales on a 52-week basis decreased 2.0%. E-Commerce represented approximately 26% of net sales in fiscal 2018, compared to approximately 20% in fiscal 2017.

Gross profit for the fiscal year ended March 3, 2018, totaled $658.1 million, or 36.6% of net sales, compared to $697.3 million, or 38.1% of net sales, for the fiscal year ended February 25, 2017. Merchandise margin for fiscal year 2018 totaled $1.0 billion, or 57.1% of net sales, compared to $1.0 billion, or 57.3% of net sales, for fiscal year 2017, reflecting increased promotional activity, partially offset by supply chain cost savings. Contribution from operations totaled $329.5 million for fiscal year 2018, compared to $360.1 million last year.

Fiscal 2018 SG&A expenses were $576.9 million, or 32.1% of net sales, compared to $587.8 million, or 32.1% of net sales, during fiscal 2017, reflecting ongoing cost control measures. The following table details the breakdown of SG&A expenses for the fiscal year ended March 3, 2018, as compared to last year (in millions).

  53 Weeks Ended   52 Weeks Ended
March 3, 2018 February 25, 2017
Expense   % Sales Expense   % Sales
 
Compensation for operations $ 239.9 13.3 % $ 249.7 13.7 %
Operational expenses 88.8 4.9 % 87.6 4.8 %
Marketing 105.6 5.9 % 104.4 5.7 %
Other selling, general and administrative   142.5 7.9 %   146.1 8.0 %
Total selling, general and administrative (1) $ 576.9 32.1 % $ 587.8 32.1 %
 
(1)   The period ended March 3, 2018, includes legal and regulatory costs and investments in brand consulting totaling approximately $12 million. The period ended February 25, 2017, includes $17 million, primarily related to CEO departure-related expenses and legal and advisory fees.
 

Operating income for the fiscal year ended March 3, 2018, was $27.7 million, compared to $54.9 million for fiscal 2017. Fiscal 2018 net income was $11.6 million, or $0.14 per share. Adjusted net income (non-GAAP) for fiscal 2018 was $16.8 million, or $0.21 per share and excludes $6.6 million ($5.2 million, or $0.07 per share, net of tax) of expense related to legal and regulatory costs related to California wage-and-hour litigation and the CPSC matter noted above. The Company estimates that the 53rd week contributed approximately $27.5 million to net sales and $0.04 to earnings per share. Fiscal 2017 net income totaled $30.1 million, or $0.37 per share, and adjusted net income (non-GAAP) was $35.7 million, or $0.44 per share. Adjusted net income for the fiscal 2017 period excludes costs related to the departure of the Company’s former CEO and the related tax benefit. EBITDA for the fiscal year ended March 3, 2018, totaled $82.7 million, or $89.3 million as adjusted for legal and regulatory costs, compared to EBITDA of $110.6 million last year, or $120.4 million as adjusted for the former CEO departure costs noted above.

Balance Sheet Highlights and Share Repurchase Program

As of March 3, 2018, the Company had $135.4 million of cash and cash equivalents, $193.0 million outstanding under its senior secured term loan and no working capital borrowings outstanding under its $350 million secured revolving credit facility. Inventories at the end of fiscal 2018 decreased 13.4% to $347.4 million, compared to $401.0 million a year ago.

The Company did not repurchase any shares under its common stock repurchase plan during the quarter ended March 3, 2018. Of the Company’s $200 million share repurchase program announced in April 2014, $26.6 million remains available for repurchases. The Board of Directors has determined to discontinue share repurchases at the present time under the Company’s existing share repurchase program.

Real Estate Optimization Initiative

During the fourth quarter of fiscal 2018, the Company opened 1 and closed 9 stores. The Company closed a total of 15 net stores in fiscal year 2018.

Store Statistics

  Store Count
Three Months Ended Start   Openings   Closures   End  

Relocations (1)

 
May 27, 2017 1,018 1 (3) 1,016 1
August 26, 2017 1,016 - (4) 1,012 -
November 25, 2017 1,012 - (1) 1,011 -
March 3, 2018 1,011 1 (9) 1,003 1
Full-Year Fiscal 2018 1,018 2 (17) 1,003 2
 
May 28, 2016 1,032 3 (8) 1,027 3
August 27, 2016 1,027 2 (6) 1,023 2
November 26, 2016 1,023 2 (3) 1,022 1
February 25, 2017 1,022 - (4) 1,018 -
Full-Year Fiscal 2017 1,032 7 (21) 1,018 6
 
(1) Relocations are noted only in the period in which the new store opens.
 

Company Discontinues Common Stock Dividend

The Board of Directors has determined to discontinue the common stock dividend, which will enable the Company to allocate greater resources toward implementing its three-year strategic plan to drive sales and earnings growth and increase shareholder value. Discontinuing the quarterly cash dividend of $0.07 per share is expected to contribute approximately $22 million of incremental cash flow in fiscal 2019.

Tax Reform

On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the “Tax Act”) was signed into law. The Tax Act revised many aspects of the U.S. corporate income tax including, but not limited to, a decrease in the corporate income tax rate from 35% to 21%, effective for tax years beginning after December 31, 2017. Based on Pier 1’s fiscal calendar, the Company is subject to a blended U.S. corporate income tax rate of 32.7% for fiscal year 2018 ended March 3, 2018. The lower federal tax rate for fiscal year 2018, combined with our provisional estimate of the remeasurement of our federal deferred tax assets and liabilities at the new lower U.S. corporate income tax rate, resulted in a net tax benefit of $0.5 million in the fourth quarter of fiscal 2018. The Company expects to complete its analysis within the one-year measurement period allowed by the SEC, and any necessary adjustment to the provisional estimate of the remeasurement of our federal deferred tax assets and liabilities will be recorded in tax expense in fiscal year 2019.

Fourth Quarter Fiscal 2018 Financial Results Conference Call

The Company will hold a conference call to discuss fourth quarter and full year fiscal 2018 financial results at 4:00 p.m. Central Time/5:00 p.m. Eastern Time on Wednesday, April 18, 2018. A live audio webcast will be accessible at the Company’s website at https://investors.pier1.com. The call can also be accessed domestically at (866) 378-2926 and internationally at (409) 350-3152, conference ID 1199178.

Outlook

The Company will present its three-year strategic plan and outlook, and provide financial guidance for the first quarter and full year of fiscal 2019 at its Analyst Day being held Thursday, April 19, 2018, from 8:00 a.m. to 12:00 p.m. Eastern Time. The event will be webcast live and archived on the Company’s investor relations website at https://investors.pier1.com.

Financial Disclosure Advisory

The Company reports its financial results in accordance with U.S. generally accepted accounting principles (“GAAP”). This press release references non-GAAP financial measures including merchandise margin, contribution from operations, EBITDA, adjusted EBITDA, adjusted net income and adjusted earnings per share.

The Company believes that the non-GAAP financial measures included in this press release allow management and investors to understand and compare results in a more consistent manner for the 14-week and 53-week periods ended March 3, 2018, and the 13-week and 52-week periods ended February 25, 2017. Non-GAAP financial measures should be considered supplemental and not a substitute for the Company’s results reported in accordance with GAAP for the periods presented.

Merchandise margin represents the result of adding back delivery and fulfillment net costs and store occupancy costs to gross profit. Contribution from operations represents gross profit less compensation for operations (which includes store and customer service payroll) and operational expenses. EBITDA represents earnings before interest, taxes, depreciation and amortization. Management believes merchandise margin, contribution from operations and EBITDA are meaningful indicators of the Company’s performance which provide useful information to investors regarding its financial condition and results of operations. Management uses merchandise margin, contribution from operations and EBITDA, together with financial measures prepared in accordance with GAAP, to assess the Company’s operating performance, to enhance its understanding of core operating performance and to compare the Company’s operating performance to other retailers. These non-GAAP financial measures should not be considered in isolation or used as an alternative to GAAP financial measures and do not purport to be an alternative to net income or gross profit as a measure of operating performance. A reconciliation of net income to EBITDA to contribution from operations to merchandise margin is shown below for the periods indicated (in millions).

  14 Weeks Ended   13 Weeks Ended   53 Weeks Ended   52 Weeks Ended
March 3, 2018 February 25, 2017 March 3, 2018 February 25, 2017
$ Amount   % of Sales $ Amount   % of Sales $ Amount   % of Sales $ Amount   % of Sales
 
Merchandise margin (non-GAAP) $ 284.8 55.6 % $ 299.5 56.7 % $ 1,026.2 57.1 % $ 1,048.2 57.3 %
 

Less:

Delivery and fulfillment net costs

21.6 4.2 % 20.3 3.8 % 77.6 4.3 % 59.0 3.2 %
Store occupancy costs   73.5 14.3 %   72.3   13.7 %   290.5   16.2 %   291.9   16.0 %
Gross profit (GAAP) 189.7 37.0 % 206.9 39.2 % 658.1 36.6 % 697.3 38.1 %
 

Less:

Compensation for operations

65.8 12.9 % 64.5 12.2 % 239.9 13.3 % 249.7 13.7 %
Operational expenses   24.4 4.8 %   24.0   4.5 %   88.8   4.9 %   87.6   4.8 %
Contribution from operations (non-GAAP) 99.5 19.4 % 118.5 22.4 % 329.5 18.3 % 360.1 19.7 %
 

Less:

Other nonoperating income

- 0.0 % (0.1 ) 0.0 % (1.5 ) (0.1 )% (1.1 ) (0.1 )%
Marketing and other SG&A   58.0 11.3 %   60.1   11.4 %   248.2   13.8 %   250.6   13.7 %
EBITDA (non-GAAP) 41.5 8.1 % 58.5 11.1 % 82.7 4.6 % 110.6 6.0 %
 

Less:

Income tax provision

10.5 2.0 % 16.0 3.1 % 6.3 0.4 % 15.1 0.9 %
Interest expense, net 2.4 0.5 % 2.2 0.4 % 11.2 0.6 % 10.7 0.6 %
Depreciation   13.6 2.7 %   13.6   2.6 %   53.6   3.0 %   54.6   3.0 %
Net income (GAAP) $ 15.1 2.9 % $ 26.6   5.0 % $ 11.6   0.6 % $ 30.1   1.6 %
 

This press release also references adjusted EBITDA, adjusted net income and adjusted earnings per share, each of which excludes legal and regulatory costs related to California wage-and-hour litigation and an ongoing CPSC inquiry in fiscal 2018, and CEO departure-related costs in fiscal 2017. Management believes these non-GAAP financial measures are useful in comparing the Company’s year-over-year operating performance and should be considered supplemental and not a substitute for the Company’s net income or earnings per share results reported in accordance with GAAP for the periods presented.

  14 Weeks Ended   13 Weeks Ended   53 Weeks Ended   52 Weeks Ended
March 3, February 25, March 3, February 25,
2018 2017 2018 2017
 
EBITDA (non-GAAP) $ 41.5 $ 58.5 $ 82.7 $ 110.6
Add back:
CEO departure-related costs - 1.9 - 9.8
Legal and regulatory matters   -   -   6.6   -
Adjusted EBITDA (non-GAAP) $ 41.5 $ 60.4 $ 89.3 $ 120.4
 
 
Net income (GAAP) $ 15.1 $ 26.6 $ 11.6 $ 30.1
Add back:
CEO departure-related costs, net of tax - 1.2 - 5.6
Legal and regulatory matters, net of tax   1.5   -   5.2   -
Adjusted net income (non-GAAP) $ 16.6 $ 27.8 $ 16.8 $ 35.7
 
 
Earnings per share (GAAP) $ 0.19 $ 0.33 $ 0.14 $ 0.37
Add back:
CEO departure-related costs, net of tax - 0.01 - 0.07
Legal and regulatory matters, net of tax   0.02   -   0.07   -
Adjusted earnings per share (non-GAAP) $ 0.21 $ 0.34 $ 0.21 $ 0.44
 

Except for historical information contained herein, the statements in this press release or otherwise made by our management in connection with the subject matter of this press release are forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995) and involve risks and uncertainties and are subject to change based on various important factors. This press release includes forward-looking statements that are based on management’s current estimates or expectations of future events or future results. These statements are not historical in nature and can generally be identified by such words as “believe,” “expect,” “estimate,” “anticipate,” “plan,” “may,” “will,” “intend” and similar expressions. 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. These risks and uncertainties include, but are not limited to: the impact of new initiatives implemented in connection with the Company’s three-year strategic plan; the effectiveness of the Company’s marketing campaigns, merchandising and promotional strategies and customer databases; consumer spending patterns; inventory levels and values; the Company’s ability to implement planned cost control measures; expected benefits from the real estate optimization initiative, including cost savings and increases in efficiency; risks related to U.S. import policy; and changes in foreign currency values relative to the U.S. Dollar. These and other factors that could cause results to differ materially from those described in the forward-looking statements contained in this press release can be found in the Company’s Annual Report on Form 10-K and in other filings with the SEC. 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. Undue reliance should not be placed on forward-looking statements, which are only current as of the date they are made. The Company assumes no obligation to update or revise its forward-looking statements.

Pier 1 Imports is dedicated to offering customers exclusive, one-of-a-kind products that reflect high quality at a great value. Starting with a single store in 1962, Pier 1 Imports’ product is now available in retail stores throughout the U.S. and Canada and online at pier1.com. For more information about Pier 1 Imports or to find the nearest store, please visit pier1.com.

       

Pier 1 Imports, Inc.

 
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except per share amounts)
(unaudited)
 
14 Weeks Ended 13 Weeks Ended
March 3, % of February 25, % of
2018 Sales 2017 Sales
 
Net sales $ 512,229 100.0 % $ 528,352 100.0 %
 
Cost of sales   322,516   63.0 %   321,440   60.8 %
 
Gross profit 189,713 37.0 % 206,912 39.2 %
 
Selling, general and administrative expenses 148,201 28.9 % 148,509 28.1 %
Depreciation   13,630   2.7 %   13,647   2.6 %
 
Operating income 27,882 5.4 % 44,756 8.5 %
 
Nonoperating (income) and expenses:
Interest, investment income and other (1,015 ) (793 )
Interest expense   3,371         2,896      
  2,356   0.5 %   2,103   0.4 %
 
Income before income taxes 25,526 4.9 % 42,653 8.1 %
Income tax provision   10,472   2.0 %   16,012   3.1 %
 
Net income $ 15,054   2.9 % $ 26,641   5.0 %
 
Earnings per share:
Basic $ 0.19   $ 0.33  
 
Diluted $ 0.19   $ 0.33  
 
Dividends declared per share: $ 0.07   $ 0.07  
 
Average shares outstanding during period:
Basic   79,835     80,898  
 
Diluted   79,854     81,156  
 

       

Pier 1 Imports, Inc.

 
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except per share amounts)
(unaudited)
 
53 Weeks Ended 52 Weeks Ended
March 3, % of February 25, % of
2018 Sales 2017 Sales
 
Net sales $ 1,798,522 100.0 % $ 1,828,446 100.0 %
 
Cost of sales   1,140,372   63.4 %   1,131,138   61.9 %
 
Gross profit 658,150 36.6 % 697,308 38.1 %
 
Selling, general and administrative expenses 576,878 32.1 % 587,843 32.1 %
Depreciation   53,603   3.0 %   54,603   3.0 %
 
Operating income 27,669 1.5 % 54,862 3.0 %
 
Nonoperating (income) and expenses:

Interest, investment income and other

(2,590 ) (2,470 )
Interest expense   12,362         12,073      
  9,772   0.5 %   9,603   0.5 %
 
Income before income taxes 17,897 1.0 % 45,259 2.5 %
Income tax provision   6,271   0.4 %   15,130   0.9 %
 
Net income $ 11,626   0.6 % $ 30,129   1.6 %
 
Earnings per share:
Basic $ 0.14   $ 0.37  
 
Diluted $ 0.14   $ 0.37  
 
Dividends declared per share: $ 0.28   $ 0.28  
 
Average shares outstanding during period:
Basic   80,223     80,919  
 
Diluted   80,254     80,984  
 

   

Pier 1 Imports, Inc.

 
CONSOLIDATED BALANCE SHEETS
(in thousands except share amounts)
(unaudited)
 
March 3, February 25,
2018 2017
ASSETS
 
Current assets:

Cash and cash equivalents, including temporary investments of $115,456 and $149,375, respectively

$ 135,379 $ 154,460
Accounts receivable, net of allowance for doubtful accounts of $236 and $338, respectively 22,149 22,945
Inventories 347,440 400,976
Prepaid expenses and other current assets   48,794     31,607  
Total current assets 553,762 609,988
 
Properties and equipment, net 178,767 191,476
Other noncurrent assets   39,790     41,618  
$ 772,319   $ 843,082  
 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
Current liabilities:
Accounts payable $ 71,279 $ 68,981
Gift cards and other deferred revenue 55,281 60,398
Accrued income taxes payable 2,301 26,058
Current portion of long-term debt 2,000 2,000
Other accrued liabilities   106,268     133,866  
Total current liabilities 237,129 291,303
 
Long-term debt 197,906 199,077
Other noncurrent liabilities 59,714 60,674
 
Shareholders' equity:

Common stock, $0.001 par, 500,000,000 shares authorized, 125,232,000 issued

125 125
Paid-in capital 168,424 191,501
Retained earnings 726,232 737,165
Cumulative other comprehensive loss (7,477 ) (7,414 )

Less - 41,974,000 and 42,050,000 common shares in treasury, at cost, respectively

  (609,734 )   (629,349 )
Total shareholders' equity   277,570     292,028  
$ 772,319   $ 843,082  
 

     

Pier 1 Imports, Inc.

 
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
 
53 Weeks Ended 52 Weeks Ended 52 Weeks Ended
March 3, February 25, February 27,
2018 2017 2016
 
Cash flows from operating activities:
Net income $ 11,626 $ 30,129 $ 39,634

Adjustments to reconcile to net cash provided by operating activities:

Depreciation 61,430 60,504 55,830
Stock-based compensation expense 3,809 8,228 5,065
Deferred compensation, net 2,414 8,438 5,641
Deferred income taxes 6,012 (19,645 ) 4,617
Excess tax benefit from stock-based awards - (312 ) (585 )
Amortization of deferred gains (1,072 ) (1,073 ) (1,907 )
Other 3,183 9,374 2,928
Changes in cash from:
Inventories 53,536 4,883 72,984
Prepaid expenses and other assets (17,546 ) 863 20,560
Accounts payable and other liabilities (33,829 ) (5,697 ) (33,611 )
Accrued income taxes payable, net of payments   (23,757 )   20,046     (7,109 )
Net cash provided by operating activities   65,806     115,738     164,047  
 
Cash flows from investing activities:
Capital expenditures (53,249 ) (44,181 ) (51,813 )
Proceeds from disposition of properties 160 74 18
Proceeds from sale of restricted investments 27,562 3,409 9,020
Purchase of restricted investments   (26,082 )   (2,375 )   (8,914 )
Net cash used in investing activities   (51,609 )   (43,073 )   (51,689 )
 
Cash flows from financing activities:
Cash dividends (22,294 ) (22,501 ) (23,672 )
Purchases of treasury stock (10,000 ) (10,566 ) (75,000 )
Stock purchase plan and other, net 2,307 1,329 2,886
Excess tax benefit from stock-based awards - 312 585
Repayments of long-term debt (2,000 ) (2,000 ) (2,000 )
Debt issuance costs (1,291 ) - -
Borrowings under revolving line of credit 8,000 38,000 63,000
Repayments of borrowings under revolving line of credit   (8,000 )   (38,000 )   (63,000 )
Net cash used in financing activities   (33,278 )   (33,426 )   (97,201 )
 
Change in cash and cash equivalents (19,081 ) 39,239 15,157
 
Cash and cash equivalents at beginning of period   154,460     115,221     100,064  
 
Cash and cash equivalents at end of period $ 135,379   $ 154,460   $ 115,221  

The Blueshirt Group
Christine Greany, 858-523-1732
christine@blueshirtgroup.com

Source: Pier 1 Imports, Inc.