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Pier 1 Imports, Inc. Reports Third Quarter Fiscal 2018 Financial Results

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Provides Updated Financial Guidance

Declares Quarterly Cash Dividend

Pier 1 Imports, Inc. (NYSE:PIR) today reported financial results for the
third quarter ended November 25, 2017.

Third Quarter Fiscal 2018 Highlights

  • Net sales decreased 1.4% to $469.2 million;
  • Company comparable sales decreased 0.7% and reflect an estimated
    impact of approximately 100 basis points related to the hurricanes in
    Texas and Florida;
  • E-Commerce sales penetration reached 26%; and
  • Earnings per share of $0.09 compared to earnings per share of $0.17
    (GAAP) and adjusted earnings per share of $0.22 (non-GAAP) in the
    third quarter of fiscal 2017.

Alasdair James, President and CEO, stated, "Our third quarter financial
performance was impacted by the hurricanes in Texas and Florida, as well
as deeper than expected promotional activity in October and November. We
saw improved sales in November, including a solid Black Friday weekend,
driven by our strong promotional message. However, overall trends
dropped considerably during the first two weeks of December. We have
adjusted our promotional plans for the remainder of the holiday season,
and significantly revised our financial guidance to reflect the current
tone and volatility of business."

"We recently completed a rigorous strategic review of the Pier 1 Imports
brand and enterprise," continued James. "Importantly, we see compelling
go-forward opportunities to broaden the appeal of the brand, maximize
the role of stores and e-Commerce, and substantially improve our
operating margins. We are building a three-year strategic plan to
transform the business, and are beginning to set things in motion with
initiatives, testing and select organizational changes in the key areas
of sourcing, supply chain, real estate, marketing and promotional
effectiveness. We look forward to sharing our detailed blueprint in
early 2018."

Third Quarter Fiscal 2018 Results of Operations

Net sales for the third quarter of fiscal 2018 decreased 1.4% to $469.2
million, compared to $475.9 million in the same period last year.
Company comparable sales for the quarter decreased 0.7% versus the
year-ago period. E-Commerce represented approximately 26% of net sales
in the third quarter of fiscal 2018, as compared to approximately 20% of
net sales in the third quarter of fiscal 2017. Taking into account
e-Commerce orders placed in or picked up in-store, approximately 90% of
the Company's third quarter fiscal 2018 net sales directly touched a
store.

Gross profit for the third quarter of fiscal 2018 totaled $176.7
million, or 37.7% of net sales, compared to $196.4 million, or 41.3% of
net sales, in the third quarter of fiscal 2017. Third quarter
merchandise margin (the result of adding back delivery and fulfillment
net costs and store occupancy costs to gross profit) totaled $269.0
million, or 57.3% of net sales, compared to $286.4 million, or 60.2% of
net sales, in the third quarter of fiscal 2017. The year-over-year
decline is attributable to heightened promotional activity. For the
three months ended November 25, 2017, contribution from operations
(gross profit less compensation for operations and operational expenses)
totaled $94.0 million, compared to $111.4 million during the same period
last year.

Third quarter fiscal 2018 selling, general and administrative ("SG&A")
expenses were $150.4 million, or 32.1% of net sales, compared to $160.8
million, or 33.8% of net sales, in the year-ago period. The
year-over-year decline is primarily attributable to approximately $8.0
million of costs in the third quarter of fiscal 2017 associated with the
departure of the Company's former CEO. In the fiscal 2018 third quarter,
reductions in store compensation were partially offset by increases in
operational expenses and marketing. The following table details the
breakdown of SG&A expenses for the third quarter of fiscal 2018 as
compared to the same period last year (in millions).

    Three Months Ended
November 25, 2017       November 26, 2016
Expense     % Sales Expense     % Sales
 
Compensation for operations $ 59.6 12.7 % $ 63.5 13.3 %
Operational expenses 23.1 4.9 % 21.5 4.5 %
Marketing 34.0 7.2 % 32.5 6.8 %
Other selling, general and administrative   33.7 7.2 %   43.4 9.1 %
Total selling, general and administrative $ 150.4 32.1 % $ 160.8 33.8 %
 

Third quarter fiscal 2018 operating income was $13.4 million compared to
$22.3 million in the same period last year. Net income for the third
quarter ended November 25, 2017, was $7.4 million, or $0.09 per share.
This compares to net income of $13.6 million, or $0.17 per share, and
adjusted net income (non-GAAP) of $17.6 million, or $0.22 per share, in
the third quarter of fiscal 2017 (see reconciliation below of non-GAAP
measures to GAAP). 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. Third quarter EBITDA (earnings before interest,
taxes, depreciation and amortization) in fiscal 2018 was $26.7 million
compared to $35.9 million in the third quarter of fiscal 2017.

Year-to-Date Results of Operations

Net sales for the nine months ended November 25, 2017, were $1.286
billion, a decrease of 1.1% from the same period last year. Company
comparable sales for the nine months ended November 25, 2017, increased
0.2%. For the nine months ended November 25, 2017, e-Commerce
represented approximately 26% of net sales, compared to approximately
20% for the same period last year.

Gross profit for the nine months ended November 25, 2017, totaled $468.4
million, or 36.4% of net sales, compared to $490.4 million, or 37.7% of
net sales, for the nine months ended November 26, 2016. Merchandise
margin for the nine months ended November 25, 2017, totaled $741.4
million, or 57.6% of net sales, compared to $748.7 million, or 57.6% of
net sales, for the same period last year. For the nine-month period
ended November 25, 2017, contribution from operations totaled $230.0
million, compared to $241.6 million during the same period last year.

SG&A expenses for the nine months ended November 25, 2017, were $428.7
million, or 33.3% of net sales, compared to $439.3 million, or 33.8% of
net sales, during the same period a year ago. The year-over-year decline
is primarily attributable to costs associated with the departure of the
Company's former CEO incurred in fiscal 2017. In the first nine months
of fiscal 2018, reductions in store compensation were offset by
marketing, legal and regulatory costs relating to a California
wage-and-hour matter and an ongoing Consumer Product Safety Commission
("CPSC") inquiry, and investments in brand consulting. The following
table details the breakdown of SG&A expenses for the nine months ended
November 25, 2017, as compared to the same period last year (in
millions).

    Nine Months Ended
November 25, 2017       November 26, 2016
Expense     % of Sales Expense     % of Sales
 
Compensation for operations $ 174.1 13.5 % $ 185.2 14.2 %
Operational expenses 64.4 5.0 % 63.6 4.9 %
Marketing 82.6 6.4 % 80.2 6.2 %
Other selling, general and administrative   107.6 8.4 %   110.4 8.5 %
Total selling, general and administrative (1) $ 428.7 33.3 % $ 439.3 33.8 %

(1) The period ended November 25, 2017 includes legal and regulatory
costs and investments in brand consulting totaling approximately $11
million incurred in the second and third quarters of fiscal 2018.

Operating loss for the nine months ended November 25, 2017 was $0.2
million, compared to operating income of $10.1 million for the nine
months ended November 26, 2016. Net loss for the nine months ended
November 25, 2017 was $3.4 million, or ($0.04) per share. Adjusted net
income for the nine months ended November 25, 2017, which excludes $6.6
million ($3.7 million, or $0.05 per share, net of tax) of expense
related to the legal and regulatory costs described above, totaled $0.3
million, or $0.01 per share, on an adjusted basis. This compares to net
income of $3.5 million, or $0.04 per share, and adjusted net income of
$7.5 million, or $0.09 per share, in the fiscal 2017 period. 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 nine months ended November 25, 2017, totaled $41.2
million, or $47.8 million as adjusted for the legal and regulatory costs
described above, compared to EBITDA of $52.1 million in the year-ago
period, or $60.1 million as adjusted for the former CEO departure costs
described above.

Balance Sheet Highlights and Share Repurchase Program

As of November 25, 2017, the Company had $80.2 million of cash and cash
equivalents, $193.5 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 the
third quarter of fiscal 2018 decreased 12.7% to $418.9 million, compared
to $479.8 million a year ago.

During the third quarter ended November 25, 2017, the Company
repurchased 1,302 shares of its common stock at a cost of approximately
$5,000. Of the Company's $200 million share repurchase program announced
in April 2014, $26.6 million remains available for repurchases.

Real Estate Optimization Initiative

During the third quarter of fiscal 2018, the Company closed one store.
The Company expects to close a total of approximately 17 stores in
fiscal 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 -
Fiscal 2018 Year-to-Date 1,018 1 (8) 1,011 1
 
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
Fiscal 2017 Year-to-Date 1,032 7 (17) 1,022 6

(1) Relocations are noted only in the period in which the new store
opens.

Updated Financial Guidance

Fiscal 2018 fourth quarter and full year financial guidance is being
provided on a 14-week and 53-week basis, respectively, with the
exception of company comparable sales growth, which is being provided on
a 13-week and 52-week basis. Earnings per share (GAAP) guidance for the
full year is $0.10 to $0.18 versus prior guidance of $0.31 to $0.41 and
adjusted earnings per share (non-GAAP) guidance is $0.17 to $0.25 versus
prior guidance of $0.38 to $0.48, reflecting the current tone and
volatility of the business in the first two weeks of December.

Guidance Metric     Fourth Quarter     Full Year Fiscal 2018
· Comparable sales growth % (52 weeks):     (3.5%) to (1.5%)     (1%) to flat
· Net sales growth % (53 weeks):     1% to 3%     Approximately flat
· Merchandise margin (% of net sales):     Approximately 54%     Approximately 56.5%
· SG&A expenses:     $150 million to $155 million     Approximately 32% of net sales
· Marketing spend (% of net sales):           Approximately 6% of net sales
· Depreciation:           Approximately $54 million
· Effective tax rate:           Approximately 41%
· Earnings per share (GAAP):     $0.14 to $0.22     $0.10 to $0.18
· Adjusted earnings per share (non-GAAP):     $0.16 to $0.24     $0.17 to $0.25
· Fully diluted share count:           Approximately 80.3 million shares
· Capital expenditures:           Approximately $60 million
       

The Company's adjusted earnings per share guidance excludes the
following: legal costs, net of tax, related to a California
wage-and-hour matter recorded during the second quarter of fiscal 2018;
and regulatory costs recorded in the second quarter for an ongoing CPSC
matter and the related income tax effects in the second, third and
fourth quarters of fiscal 2018. The Company's full year fiscal 2018
effective tax rate will be negatively impacted by the non-deductibility
of the CPSC matter.

Declaration of Quarterly Cash Dividend

The Company announced that its Board of Directors declared a $0.07 per
share quarterly cash dividend on the Company's outstanding shares of
common stock. The $0.07 quarterly cash dividend will be paid on January
31, 2018, to shareholders of record on January 17, 2018. As of December
12, 2017, approximately 83.6 million shares of the Company's common
stock were outstanding.

Third Quarter Fiscal 2018 Financial Results Conference Call

The Company will host a conference call to discuss third quarter fiscal
2018 financial results at 4:00 p.m. Central Time/5:00 p.m. Eastern Time
on Wednesday, December 13, 2017. 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 4954519.

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, adjusted earnings per share and forward-looking 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 three- and
nine-month periods ended November 25, 2017, and November 26, 2016.
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
(loss) or gross profit as a measure of operating performance. A
reconciliation of net income (loss) to EBITDA to contribution from
operations to merchandise margin is shown below for the periods
indicated (in millions).

        Three Months Ended       Nine Months Ended
November 25, 2017     November 26, 2016 November 25, 2017     November 26, 2016
$ Amount   % of Sales $ Amount   % of Sales $ Amount   % of Sales $ Amount   % of Sales
 
Merchandise margin (non-GAAP) $ 269.0 57.3 % $ 286.4 60.2 % $ 741.4 57.6 % $ 748.7 57.6 %
 
Less: Delivery and fulfillment net costs 20.5 4.4 % 17.3 3.6 % 55.9 4.3 % 38.8 3.0 %
Store occupancy costs   71.8   15.3 %   72.7   15.3 %   217.0   16.9 %   219.6   16.9 %
Gross profit (GAAP) 176.7 37.7 % 196.4 41.3 % 468.4 36.4 % 490.4 37.7 %
 
Less: Compensation for operations 59.6 12.7 % 63.5 13.3 % 174.1 13.5 % 185.2 14.2 %
Operational expenses   23.1   4.9 %   21.5   4.5 %   64.4   5.0 %   63.6   4.9 %
Contribution from operations (non-GAAP) 94.0 20.0 % 111.4 23.4 % 230.0 17.9 % 241.6 18.6 %
 
Less: Other nonoperating income (0.4 ) (0.1 )% (0.3 ) (0.1 )% (1.4 ) (0.1 )% (1.1 ) (0.1 )%
Marketing and other SG&A   67.7   14.4 %   75.9   15.9 %   190.2   14.8 %   190.6   14.7 %
EBITDA (non-GAAP) 26.7 5.7 % 35.9 7.5 % 41.2 3.2 % 52.1 4.0 %
 
Less: Income tax provision (benefit) 3.7 0.8 % 6.0 1.2 % (4.2 ) (0.3 )% (0.9 ) (0.1 )%
Interest expense, net 2.8 0.6 % 3.0 0.6 % 8.9 0.7 % 8.6 0.7 %
Depreciation   12.8   2.7 %   13.3   2.8 %   40.0   3.1 %   41.0   3.1 %
Net income (loss) (GAAP) $ 7.4   1.6 % $ 13.6   2.9 % $ (3.4 ) (0.3 )% $ 3.5   0.3 %
 

This press release also references adjusted EBITDA, adjusted net income,
adjusted earnings per share and forward-looking adjusted earnings per
share, each of which excludes legal and regulatory costs relating to a
California wage-and-hour matter 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, net
loss, loss per share, earnings per share or forward-looking earnings per
share results reported in accordance with GAAP for the periods presented.

    Three Months Ended       Nine Months Ended
November 25, 2017     November 26, 2016 November 25, 2017     November 26, 2016
 
EBITDA (Non-GAAP) $ 26.7 $ 35.9 $ 41.2 $ 52.1
Add back:
CEO departure-related costs - 8.0 - 8.0
Legal and regulatory matters   -   -   6.6     -
Adjusted EBITDA (Non-GAAP) $ 26.7 $ 43.9 $ 47.8   $ 60.1
 
 
Net income (loss) (GAAP) $ 7.4 $ 13.6 $ (3.4 ) $ 3.5
Add back:
CEO departure-related costs, net of tax (1) - 4.0 - 4.0
Legal and regulatory matters, net of tax (2)   0.1   -   3.7     -
Adjusted net income (Non-GAAP) $ 7.5 $ 17.6 $ 0.3   $ 7.5
 
 
Earnings (loss) per share (GAAP) $ 0.09 $ 0.17 $ (0.04 ) $ 0.04
Add back:
CEO departure-related costs, net of tax (1) - 0.05 - 0.05
Legal and regulatory matters, net of tax (2)   -  

-

  0.05    

-

Adjusted earnings per share (Non-GAAP) $ 0.09 $ 0.22 $ 0.01   $ 0.09

(1) For the three and nine months ended November 26, 2016,
costs related to the departure of the former Chief Executive Officer
totaled $8.0 million, or $4.0 million after adjusting for the tax impact.

(2) For the nine months ended November 25, 2017, legal and
regulatory costs relating to a California wage-and-hour matter and an
ongoing CPSC inquiry totaled $6.6 million, or $3.7 million after
adjusting for the tax impact.

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 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 and its three-year
strategic plan; 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)
 
Three Months Ended
November 25, % of November 26, % of
2017 Sales 2016 Sales
 
Net sales $ 469,161 100.0 % $ 475,901 100.0 %
 
Cost of sales   292,485   62.3 %   279,508   58.7 %
 
Gross profit 176,676 37.7 % 196,393 41.3 %
 
Selling, general and administrative expenses 150,395 32.1 % 160,833 33.8 %
Depreciation   12,833   2.7 %   13,307   2.8 %
 
Operating income 13,448 2.9 % 22,253 4.7 %
 
Nonoperating (income) and expenses:
Interest, investment income and other (597 ) (438 )
Interest expense   2,960       3,113    
  2,363   0.5 %   2,675   0.6 %
 
Income before income taxes 11,085 2.4 % 19,578 4.1 %
Income tax provision   3,704   0.8 %   6,001   1.2 %
 
Net income $ 7,381   1.6 % $ 13,577   2.9 %
 
Earnings per share:
Basic $ 0.09   $ 0.17  
 
Diluted $ 0.09   $ 0.17  
 
Dividends declared per share: $ 0.07   $ 0.07  
 
Average shares outstanding during period:
Basic   79,658     80,680  
 
Diluted   79,658     80,683  
 

 

Pier 1 Imports, Inc.

                 
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except per share amounts)
(unaudited)
 
Nine Months Ended
November 25, % of November 26, % of
2017 Sales 2016 Sales
 
Net sales $ 1,286,293 100.0 % $ 1,300,094 100.0 %
 
Cost of sales   817,856   63.6 %   809,698   62.3 %
 
Gross profit 468,437 36.4 % 490,396 37.7 %
 
Selling, general and administrative expenses 428,677 33.3 % 439,334 33.8 %
Depreciation   39,973   3.1 %   40,956   3.1 %
 
Operating income (loss) (213 ) 0.0 % 10,106 0.8 %
 
Nonoperating (income) and expenses:
Interest, investment income and other (1,575 ) (1,677 )
Interest expense   8,991       9,177    
  7,416   0.6 %   7,500   0.6 %
 
Income (loss) before income taxes (7,629 ) (0.6 %) 2,606 0.2 %
Income tax benefit   (4,201 ) (0.3 %)   (882 ) (0.1 %)
 
Net income (loss) $ (3,428 ) (0.3 %) $ 3,488   0.3 %
 
Earnings (loss) per share:
Basic $ (0.04 ) $ 0.04  
 
Diluted $ (0.04 ) $ 0.04  
 
Dividends declared per share: $ 0.21   $ 0.21  
 
Average shares outstanding during period:
Basic   80,363     80,926  
 
Diluted   80,363     80,927  
 

 

Pier 1 Imports, Inc.

           
CONSOLIDATED BALANCE SHEETS
(in thousands except share amounts)
(unaudited)
 
November 25, February 25, November 26,
2017 2017 2016
ASSETS
 
Current assets:
Cash and cash equivalents, including temporary investments
of $67,719, $149,375 and $78,302, respectively $ 80,234 $ 154,460 $ 86,207
Accounts receivable, net 43,062 22,945 39,089
Inventories 418,868 400,976 479,832
Prepaid expenses and other current assets   43,960     31,607     36,378  
Total current assets 586,124 609,988 641,506
 
Properties and equipment, net of accumulated depreciation
of $547,520, $505,555 and $498,174, respectively 178,481 191,476 189,787
Other noncurrent assets   39,006     41,618     36,113  
$ 803,611   $ 843,082   $ 867,406  
 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
Current liabilities:
Accounts payable $ 94,279 $ 68,981 $ 96,511
Gift cards and other deferred revenue 57,280 60,398 61,078
Borrowings under revolving line of credit - - 25,000
Accrued income taxes payable - 26,058 3,964
Current portion of long-term debt 2,000 2,000 2,000
Other accrued liabilities   120,274     133,866     145,198  
Total current liabilities 273,833 291,303 333,751
 
Long-term debt 198,188 199,077 199,373
Other noncurrent liabilities 64,058 60,674 66,050
 
Shareholders' equity:
Common stock, $0.001 par, 500,000,000 shares authorized,
125,232,000 issued 125 125 125
Paid-in capital 162,677 191,501 192,917
Retained earnings 716,719 737,165 716,154
Cumulative other comprehensive loss (6,599 ) (7,414 ) (8,871 )
Less -- 41,710,000, 42,050,000 and 42,218,000
common shares in treasury, at cost, respectively   (605,390 )   (629,349 )   (632,093 )
Total shareholders' equity   267,532     292,028     268,232  
$ 803,611   $ 843,082   $ 867,406  
 

 

Pier 1 Imports, Inc.

 
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
       
Nine Months Ended
November 25, November 26,
2017 2016
 
Cash flows from operating activities:
Net income (loss) ($3,428 ) $3,488
Adjustments to reconcile to net cash (used in) provided by
operating activities:
Depreciation 45,934 45,250
Stock-based compensation expense 3,087 7,436
Deferred compensation, net 1,940 5,738
Deferred income taxes 5,663 (5,694 )
Amortization of deferred gains (814 ) (804 )
Other 2,982 4,240
Changes in cash from:
Inventories (17,892 ) (73,973 )
Prepaid expenses and other assets (33,366 ) (20,194 )
Accounts payable and other liabilities 14,914 41,946
Accrued income taxes payable, net of payments (26,058 ) (2,360 )
Net cash (used in) provided by operating activities (7,038 ) 5,073  
 
Cash flows from investing activities:
Capital expenditures (41,057 ) (32,019 )
Proceeds from disposition of properties 71 66
Proceeds from sale of restricted investments 27,428 2,058
Purchase of restricted investments (25,742 ) (1,043 )
Net cash used in investing activities (39,300 ) (30,938 )
 
Cash flows from financing activities:
Cash dividends (16,753 ) (16,871 )
Purchases of treasury stock (10,000 ) (10,566 )
Stock purchase plan and other, net 1,626 788
Repayments of long-term debt (1,500 ) (1,500 )
Debt issuance costs (1,261 ) -
Borrowings under revolving line of credit 8,000 38,000
Repayments of borrowings under revolving line of credit (8,000 ) (13,000 )
Net cash used in financing activities (27,888 ) (3,149 )
 
Change in cash and cash equivalents (74,226 ) (29,014 )
 
Cash and cash equivalents at beginning of period 154,460   115,221  
 
Cash and cash equivalents at end of period $80,234   $86,207  
 

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