Stein Mart 2010 Annual Report Download - page 34

STEIN MART, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in tables in thousands, except per share amounts)
F-10
2. Property and Equipment, Net
Property and equipment, net consists of the following:
January 29,
2011
January 30,
2010
Fixtures, equipment and software $199,118 $172,751
Leasehold improvements 60,361 56,158
259,479 228,909
A
ccumulated depreciation and amortization 179,515 160,494
$ 79,964 $ 68,415
Depreciation and amortization expense for property and equipment totaled $16.9 million, $18.9 million and $24.6 million for 2010, 2009 and
2008, respectively.
During 2010, 2009 and 2008, we recorded net pre-tax asset impairment charges of $1.2 million, $8.4 million and $20.7 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 2011, stores closed during those years, and certain other under-performing stores to their respective estimated fair value. The
charges were higher in 2009 and 2008 due to a greater number of stores with projected cash flows that did 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 29, 2011.
3. Accrued Liabilities
The major components of accrued liabilities are as follows:
January 29,
2011
January 30,
2010
Compensation and emplo
y
ee benefits $23,779 $19,838
Unredeemed
g
ift and returns cards 11,507 20,780
Propert
y
taxes 14,187 14,405
Othe
r
23,114 29,307
$72,587 $84,330
4. Revolving Credit Agreement
We have a $150 million senior revolving secured credit agreement (the “Agreement”) with a group of lenders which extends through
January 2012. We expect to enter into a new credit agreement before the end of 2011. 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 29, 2011) to Prime plus .25% per annum for
Prime Rate Loans and LIBOR (0.26% at January 29, 2011) 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.
The amount available for borrowing was $139.2 million at January 29, 2011 and is based on a percentage of eligible inventories less
reserves, as defined in the Agreement. Availability was further reduced to $130.6 million after deducting outstanding letters of credit of $8.6
million. We had no direct borrowings at January 29, 2011 and are in compliance with the terms of the Agreement.