Stein Mart 2009 Annual Report Download - page 34

STEIN MART, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in tables in thousands, except per share amounts)
F-10
on a non-recurring basis. The adoption of this guidance had no impact on our consolidated financial statements.
2. Property and Equipment, Net
Property and equipment, net consists of the following:
January 30,
2010
January 31,
2009
Fixtures, equipment and software $172,751 $176,172
Leasehold improvements 56,158 58,154
228,909 234,326
Accumulated depreciation and amortization 160,494 148,005
$68,415 $ 86,321
Depreciation and amortization expense for property and equipment totaled $18.9 million, $24.6 million and $24.4 million for 2009, 2008 and
2007, respectively.
During 2009, 2008 and 2007, we recorded net pre-tax asset impairment charges of $8.4 million, $20.7 million and $4.0 million, respectively,
to reduce the carrying value of furniture, fixtures, equipment and leasehold improvements held for use and certain other assets in stores
closing in 2010, stores closed during those years, and certain other under-performing stores to their respective estimated fair value. The
charges were higher in 2008 due to a greater number of stores with projected cash flows that do not support the carrying value of their
long-lived assets. These charges are included in SG&A expenses in the Consolidated Statements of Operations.
Fair value, as used in our asset impairment calculations, is the price that would be received to sell an asset in an orderly transaction
between market participants at the measurement date. Store-related assets are considered Level 3 assets in the fair value hierarchy as the
inputs for calculating the fair value of these assets are based on historical transactions for similar assets. Based on our historical
experience, the resale value of used fixtures and equipment is de minimis and since we lease all our store locations, our leasehold
improvements cannot be sold in a market transaction, and therefore have little to no fair value. Therefore, there is no remaining fair value
of impaired store-related assets at January 30, 2010.
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3. Accrued Liabilities
The major components of accrued liabilities are as follows:
January 30,
2010
January 31,
2009
Compensation and employee benefits $19,838 $20,340
Unredeemed gift and returns cards 20,780 19,892
Property taxes 14,405 13,767
Other 29,307 25,795
$84,330 $79,794
4. Revolving Credit Agreement
We have a $150 million senior revolving secured credit agreement (the “Agreement”) with a group of lenders. In January 2010, we
extended the Agreement for one additional year through January 2012. Borrowings under the Agreement are based on and collateralized
primarily by eligible inventory. We issue standby and commercial letters of credit for certain insurance programs and securing foreign
sourced merchandise. Outstanding letters of credit and other reserves as defined in the Agreement reduce availability. The interest rates
on borrowings under the Agreement range from Prime (3.25% at January 30, 2010) to Prime plus .25% per annum for Prime Rate Loans
and LIBOR (0.23% at January 30, 2010) plus 1.00% to LIBOR plus 1.75% per annum for Eurodollar Rate Loans and are established
quarterly, based on excess availability as defined in the Agreement. An unused line fee of .20% is charged on the unused portion of the
revolving credit facility, based on excess availability.
As of January 30, 2010, availability under the Agreement was $127.1 million and was reduced by outstanding letters of credit of $13.7
million to $113.4 million available for borrowings. We had no direct borrowings at January 30, 2010 and we are in compliance with the
terms of the Agreement.