Stein Mart 2010 Annual Report Download - page 40

STEIN MART, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in tables in thousands, except per share amounts)
F-16
During fiscal 2006, 240,000 performance shares (“MP Performance Shares”) were granted to certain key employees in which vesting was
based on our common stock obtaining a certain market price (115,000 shares at $18 per share and 125,000 shares at $24 per share).
These MP Performance Shares expired in September 2010.
The following table summarizes non-vested stock activity for the three years ended January 29, 2011 (shares in thousands):
Restricted Stock Awards MP Performance Shares Performance Shares
Shares
Weighted-
Average
Grant Date
Fair Value Shares
Weighted-
Average
Grant Date
Fair Value Shares
Weighted-
Average
Grant Date
Fair Value
Non-vested at Februar
y
2, 2008 580 $14.39 240 $14.24
Granted 561 4.86
Vested
(
32
)
15.65
Cancelled or
f
orfeited
(
151
)
11.01
Non-vested at Januar
y
31, 2009 958 9.30 240 14.24
Granted 120 6.16 1,569 $1.43
Vested
(
52
)
16.02
Cancelled or
f
orfeited
(
151
)
10.90
(
93
)
1.25
Non-vested at Januar
y
30, 2010 875 8.59 240 14.24 1,476 1.44
Granted 116 8.72 829 9.56
Vested
(
253
)
8.58
(
1,349
)
1.53
Cancelled or
f
orfeited
(
127
)
8.37
(
240
)
14.24
(
433
)
1.20
Non-vested at Januar
y
29, 2011 611 $ 8.62 - - 523 $9.55
Total unreco
g
nized compensation cost $2,243 - $3,309
Wei
g
hted-avera
g
e expected life remainin
g
2.8
y
ears - 2.0
y
ears
The total fair value of restricted stock and performance awards vested during fiscal 2010 was $2.2 million and $11.7 million, respectively.
Share-Based Compensation Expense
For the years ended January 29, 2011, January 30, 2010 and January 31, 2009, pre-tax share-based compensation expense was recorded
as follows:
2010 2009 2008
Cost of merchandise sold $2,606 $2,951 $2,591
Sellin
g
,
g
eneral and administrative expenses 1,177 1,659 1,486
Total share-based compensation expense $3,783 $4,610 $4,077
The total tax benefit recognized in the Consolidated Statements of Operations was $1.5 million in 2010 and $0 in 2009 and 2008 due to the
valuation allowance against deferred tax assets in those years. Share-based compensation capitalized into inventory for fiscal 2010, 2009
and 2008 was not material.
9. Contingencies
We are involved in various routine legal proceedings incidental to the conduct of our business. Management, based upon the advice of
outside legal counsel, does not believe that any of these legal proceedings will have a material adverse effect on our financial condition,
results of operations or cash flows.
10. Store Closing Charges
We close under-performing stores in the normal course of business. We closed 5 stores during 2010, 11 stores during 2009 and 10 stores
during 2008 incurring pre-tax lease termination and severance costs. Lease termination costs are net of estimated sublease income that
could reasonably be obtained for the properties. In the event we are not successful in subleasing closed store locations when management
expects, additional reserves for store closing costs may be recorded. During 2010, 2009 and 2008, we recorded net pre-tax charges of
$1.9 million, $2.7 million and $4.7 million, respectively, for store closing charges, including adjustments to previously recorded store closing
reserves for changes in estimated sublease income. Fiscal 2010 net store closing charges include an offsetting $1.2 million gain on a lease
buyout by a landlord for the early termination of a lease. Store closing charges are included in SG&A expenses in the Consolidated
Statements of Operations.