Stein Mart 2008 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 31,
2009
February 2,
2008
Fixtures, equipment and software $176,172 $200,998
Leasehold improvements 58,154 70,433
234,326 271,431
Accumulated depreciation and amortization 148,005 160,744
$ 86,321 $110,687
Depreciation and amortization expense for property and equipment totaled $24.6 million, $24.4 million and $22.0 million for 2008, 2007 and
2006, respectively.
During 2008, 2007 and 2006, the Company recorded net pre-tax asset impairment charges of $20.7 million, $4.0 million and $0.6 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 2009, 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.
3. Accrued Liabilities
The major components of accrued liabilities are as follows:
January 31,
2009
February 2,
2008
Compensation and employee benefits $20,340 $20,314
Unredeemed gift and returns cards 19,892 21,643
Property taxes 13,767 12,905
Payroll and other taxes 3,605 4,363
Other 22,190 16,283
$79,794 $75,508
4. Revolving Credit Agreement
The Company has a $150 million senior revolving secured credit agreement (the “Agreement”) with a group of lenders which extends
through January 2011. Borrowings under the Agreement are based on and collateralized primarily by eligible inventory. The Company
issues commercial and standby letters of credit for purposes of securing foreign sourced merchandise and certain insurance programs.
Outstanding letters of credit reduce availability under the credit agreement. The interest rates on borrowings under the Agreement range
from Prime (3.25% at January 31, 2009) to Prime plus .25% per annum for Prime Rate Loans and LIBOR (0.41% at January 31, 2009) 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 weighted-average interest rate on borrowings outstanding at January 31, 2009 was 1.91%. Because all borrowings bear interest at
variable rates that approximate current market rates, the carrying value of these borrowings approximates fair value.
During the third quarter of 2008, the Company borrowed an additional $75 million under the Agreement to increase its cash position while
building seasonal inventories and approaching peak borrowing needs and in light of uncertainties in the credit markets at that time. At
January 31, 2009, the Company had $100 million in direct borrowings, $8 million of outstanding standby letters of credit and $69.5 million
invested in short-term U.S. Treasury money market funds. Subsequent to year end, the Company liquidated these money market funds
and repaid that portion of its borrowings. Approximately $42 million was available under the Agreement at January 31, 2009 and the
Company is in compliance with the terms of the Agreement.