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STEIN MART, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in tables in thousands, except per share amounts)
F-20
9. Commitments and Contingencies
In a September 2015 administrative proceeding, the SEC found that we had violated the reporting, books and records, and internal
controls provisions of the Securities Exchange Act of 1934 during the 2012 restatement period and ordered us to cease and desist from
committing or causing any violations and any future violations of such SEC rules. We agreed to a settlement with the SEC without
admitting or denying the findings of the SEC and also agreed to pay a civil monetary penalty of $0.8 million. We previously established an
accrual for the potential settlement of this matter, which did not require significant adjustment following the settlement. We recognized
$0.1 million and $4.1 million of legal and other expenses for this matter during 2015 and 2014, respectively, net of expected insurance
recoveries. The SEC did not allege fraud by us and did not bring charges against any individual. In connection with the settlement, the
SEC considered remedial acts undertaken by us, including enhancement of our internal controls, retention of additional accounting
personnel, and our cooperation with the SEC staff during the course of the investigation.
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 two stores in 2015 and three stores in 2014 and 2013,
incurring lease termination and severance costs. Lease termination costs are net of estimated sublease income that could reasonably be
obtained for the properties. During 2015, we recorded a nominal amount of store closing costs, net of impairments. During 2014 and
2013, we recorded net store closing costs of $1.0 million and $0.1 million, respectively, for store closing charges. Store closing charges
are included in SG&A in the Consolidated Statements of Income.
The following tables show the activity in the store closing reserve:
Lease- Sev erance
Related and Other Total
Balance at February 2, 2013 2,093$ 38$ 2,131$
Charges (56) 161 105
Payments (2,002) (130) (2,132)
Balance at February 1, 2014 35 69 104
Charges 1,385 47 1,432
Payments (1,365) (64) (1,429)
Balance at January 31, 2015 55 52 107
Charges 1 6 7
Payments (56) (58) (114)
Balance at January 30, 2016 - $ - $ - $
There is no store closing reserve at January 30, 2016. The store closing reserve at January 31, 2015 and February 1, 2014 is included in
accrued expenses and other current liabilities.