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STEIN MART INC
FORM 10-K
(Annual Report)
Filed 04/12/12 for the Period Ending 01/28/12
Address 1200 RIVERPLACE BLVD
JACKSONVILLE, FL 32207
Telephone 9043461500
CIK 0000884940
Symbol SMRT
SIC Code 5651 - Family Clothing Stores
Industry Retail (Apparel)
Sector Services
Fiscal Year 01/28
http://www.edgar-online.com
© Copyright 2012, EDGAR Online, Inc. All Rights Reserved.
Distribution and use of this document restricted under EDGAR Online, Inc. Terms of Use.

Table of contents

  • Page 1
    STEIN MART INC FORM 10-K (Annual Report) Filed 04/12/12 for the Period Ending 01/28/12 Address Telephone CIK Symbol SIC Code Industry Sector Fiscal Year 1200 RIVERPLACE BLVD JACKSONVILLE, FL 32207 9043461500 0000884940 SMRT 5651 - Family Clothing Stores Retail (Apparel) Services 01/28 http://www....

  • Page 2
    ... STEIN MART, INC. (Exact name of registrant as specified in its charter) Florida (State or other jurisdiction of incorporation or organization) 64-0466198 (I.R.S. Employer Identification Number) 1200 Riverplace Blvd., Jacksonville, Florida (Address of principal executive offices) 32207 (Zip Code...

  • Page 3
    ... by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). The aggregate market value of the voting common stock held by non-affiliates of the Registrant as of July 30, 2011 was $266,983,611. For purposes of this response, executive officers and directors are...

  • Page 4
    ... of Operations Quantitative and Qualitative Disclosures about Market Risk Financial Statements and Supplementary Data Changes in and Disagreements With Accountants on Accounting and Financial Disclosure Controls and Procedures Other Information PART III Directors, Executive Officers and Corporate...

  • Page 5
    ...OVERVIEW Headquartered in Jacksonville, Florida, Stein Mart is a national retailer offering the fashion merchandise, service and presentation of a better department or specialty store. Our focused assortment of merchandise features current-season, moderate to better fashion apparel for women and men...

  • Page 6
    ... SERVICE Our stores offer many services typically found in better department or specialty stores, such as a liberal merchandise return policy, merchandise locator service, a Preferred Customer program, a Stein Mart Platinum MasterCard ® and electronic gift cards. Each store is staffed with a number...

  • Page 7
    ... for the Stein Mart Platinum MasterCard ® , sign up to be Preferred Customers, sign up for email, purchase gift cards and/or purchase a narrow selection of merchandise. COMPETITION Our primary competitors are department and specialty stores, as well as conventional off-price retail chains. From our...

  • Page 8
    ...their price points. Certain department stores and certain of our vendors have opened outlet stores which offer merchandise at prices that are competitive with ours. Many of our competitors also have significant Internet sales. While we maintain an Internet site, we currently only sell gift cards and...

  • Page 9
    ... and retain qualified employees to meet our needs especially as we are currently in a search for a new Chief Executive Officer. The seasonality of our business and fluctuations in sales and operating results could cause volatility in the price of our common stock . Our business is seasonal with...

  • Page 10
    ... California Colorado Florida Georgia Illinois Indiana Kansas Kentucky Louisiana Massachusetts Michigan Mississippi 9 8 2 20 3 45 13 4 7 2 2 8 1 1 6 8 Missouri Nevada New Jersey New York North Carolina Ohio Oklahoma Pennsylvania South Carolina Tennessee Texas Utah Virginia Wisconsin 3 4 4 3 20...

  • Page 11
    ... three percent of our merchandise on a dollar basis), both in Jacksonville, FL. As of January 28, 2012, the current terms of our store leases (assuming we exercise all lease renewal options) were as follows: Number of Leases Years Lease Term Expire Expiring (a) 2012 2013-2016 2017-2021 2022...

  • Page 12
    ...1,560,293 1,507,826 1,465,619 1,465,619 Our Open Market Repurchase Program is conducted pursuant to authorizations made from time to time by our Board of Directors. Equity Compensation Plan Information The following table presents information about our common stock that may be issued under equity...

  • Page 13
    ... believes that the companies that comprise the S&P 500 Apparel Retail Index, as a group, more closely match the Company in terms of customer base and gross revenues. 2/3/2007 2/2/2008 1/31/2009 1/30/2010 1/29/2011 1/28/2012 Stein Mart, Inc. NASDAQ Composite S&P 500 Apparel Retail Dow Jones US...

  • Page 14
    ... in our reported net sales. Sales per store is calculated by dividing (a) total sales including shoe department sales by (b) the number of stores open at the end of such period, exclusive of stores open for less than 12 months. Sales per square foot includes shoe department sales and selling space...

  • Page 15
    ... adjusted using the 2011 annual ETR of 38 percent. ITEM 7. Overview We are a national retailer offering the fashion merchandise, service and presentation of a better department or specialty store at prices comparable to off-price retail chains. Our focused assortment of merchandise features current...

  • Page 16
    ... to $3.0 million in reduced credit card income from our new co-brand and private label credit card agreement, the $1.6 million one-time payment received from GE Capital Retail Bank in the third quarter of 2011 and the phasing out of our magazine program. The tax rate for the year is expected to be...

  • Page 17
    ... (in thousands): 2011 Operating Income Net Income Operating Income Net Income 2010 2009 Operating Income Net Income Income - (GAAP basis) Adjustments: Asset impairment and store closing charges Correction of reward breakage income related to prior years Cumulative gift and return card breakage gain...

  • Page 18
    ...in 2011 from the credit card program, including a $1.6 million performance-based incentive related to the final program year of our prior co-brand program agreement, and higher leased shoe department income. Under our October 2011 amended credit card agreement, we are no longer receiving new account...

  • Page 19
    ... at the end of fiscal 2009. Advertising spend was higher to increase our marketing impact. Asset impairment charges were $7.3 million higher in 2009 due to more store closings and a greater number of stores with projected cash flows that did not support the carrying value of their long-lived assets...

  • Page 20
    ... by other operating activities, offset by $12.8 million less cash provided by net income plus non-cash charges. Although inventories were lower at the end of this year compared to the end of last year, accounts payable was higher due to our lengthened vendor payment terms implemented during 2011 to...

  • Page 21
    ...- $60,901 Represent open purchase orders with vendors for merchandise not yet received and recorded on our Consolidated Balance Sheet. The above table does not include long-term debt as we did not have any direct borrowings under our senior revolving credit facility at January 28, 2012. Other long...

  • Page 22
    ... closed or relocated in 2011. Insurance Reserves. We use a combination of insurance and self-insurance for various risks including workers' compensation, general liability and associate-related health care benefits, a portion of which is paid by the covered employees. We are responsible for paying...

  • Page 23
    ... in the Perpetual System unit balances and analyzing the potential impact related to permanent markdowns on a timely basis. The above information technology control deficiency resulted in an adjustment in the third quarter to the cost of merchandise sold and inventory accounts by not recording all...

  • Page 24
    ... that certain reconciling items lacked sufficient support. This control deficiency resulted in an adjustment in the fourth quarter to the credit card receivables and selling, general and administrative expense by failing to correct errors in the account balance on a timely basis. Additionally, these...

  • Page 25
    ... Company's internal control over financial reporting. ITEM 9B. None. PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE The information required by this item is incorporated herein by reference to the disclosure found in the Proxy Statement for our June 19, 2012 Annual Meeting...

  • Page 26
    ... ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES (a) The following financial statements and exhibits are filed as part of this report or are incorporated herein as indicated. 1. List of Financial Statements Page Report of Independent Registered Certified Public Accounting Firm Consolidated Balance...

  • Page 27
    ... of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. STEIN MART, INC. Date: April 12, 2012 By: /s/ Jay Stein Jay Stein Chairman of the Board and Interim Chief Executive Officer Pursuant to the requirements of the Securities...

  • Page 28
    ...consolidated balance sheets and the related consolidated statements of income, stockholders' equity, and cash flows, present fairly, in all material respects, the financial position of Stein Mart, Inc. and its subsidiaries at January 28, 2012 and January 29, 2011, and the results of their operations...

  • Page 29
    Table of Contents Stein Mart, Inc. Consolidated Balance Sheets (In thousands, except for share data) January 28, 2012 January 29, 2011 ASSETS Current assets: Cash and cash equivalents Inventories Prepaid expenses and other current assets Total current assets Property and equipment, net Other assets...

  • Page 30
    ... Mart, Inc. Consolidated Statements of Income (In thousands, except for per share amounts) Year Ended January 28, 2012 Year Ended January 29, 2011 Year Ended January 30, 2010 Net sales Cost of merchandise sold Gross profit Selling, general and administrative expenses Other income, net Operating...

  • Page 31
    ... shares issued under employee stock purchase plan Reacquired shares Issuance of restricted stock, net Share-based compensation Tax benefit from equity issuances Cash dividends paid Balance at January 29, 2011 Comprehensive income: Net income Unrecognized postretirement plan adjustments, net of tax...

  • Page 32
    ... Stein Mart, Inc. Consolidated Statements of Cash Flows (In thousands) Year Ended January 28, 2012 Year Ended January 29, 2011 Year Ended January 30, 2010 Cash flows from operating activities: Net income Adjustments to reconcile net income to net cash provided by operating activities: Depreciation...

  • Page 33
    ... of Significant Accounting Policies and Other Information As of January 28, 2012 we operated a chain of 262 retail stores in 29 states that offers the fashion merchandise, service and presentation of a better department or specialty store at prices competitive with off-price retail chains. As used...

  • Page 34
    ... shoe department inventory is owned by a single supplier under a supply agreement. Our percentage of net revenue per the supply agreement is included in Other income, net in the Consolidated Statements of Income. We offer electronic gift cards and electronic merchandise return cards to our customers...

  • Page 35
    ... account applications and accepting credit cards through our retail locations. GE will extend credit directly to cardholders under the Program to finance purchases from Stein Mart and, for co-brand cardholders, from other retailers. GE will provide all servicing for the credit card accounts...

  • Page 36
    ... fair values of all share-based payments to employees over the employees' requisite service periods. Earnings Per Share ("EPS"). We follow the guidance of ASC Topic 260, Earnings Per Share , which clarifies that unvested share-based payment awards that contain non-forfeitable rights to dividends or...

  • Page 37
    ... with buying inventory; and costs related to the consolidation centers and distribution warehouses. SG&A expenses include store operating expenses, such as payroll and benefit costs, advertising, store supplies, depreciation and other direct selling costs, and costs associated with our corporate...

  • Page 38
    .... Annual store rent is generally comprised of a fixed minimum amount plus a contingent amount based on a percentage of sales in excess of specified levels. Most store leases also require additional payments covering real estate taxes, common area costs and insurance. Rent expense is as follows: 2011...

  • Page 39
    Table of Contents STEIN MART, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in tables in thousands, except per share amounts) At January 28, 2012, future contractual minimum lease payments under both operating and capital leases are: Operating Capital Total 2012 2013 2014 2015 2016 ...

  • Page 40
    ...paid-in-capital. The income tax provision differs from the amount of income tax determined by applying the statutory U.S. corporate tax rate to pre-tax amounts due to the following items: 2011 2010 2009 Federal tax at the statutory rate State income taxes, net of federal benefit Valuation allowance...

  • Page 41
    ... of limitations for the tax years 2007 through 2011. 8. Employee Benefit Plans We have a defined contribution retirement plan (a 401(k) plan) covering employees who are at least 21 years of age, have completed at least one year of service and who work at least 1,000 hours annually. Under the profit...

  • Page 42
    ... employment and who work on a full-time basis or are regularly scheduled to work more than 20 hours per week are eligible to participate in the Stock Purchase Plan. Participants in the Stock Purchase Plan may purchase shares of the Company's common stock at 85% of the lower of the fair market value...

  • Page 43
    Table of Contents STEIN MART, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in tables in thousands, except per share amounts) The fair value of each stock option granted during 2011, 2010 and 2009 was estimated at the date of grant using the Black-Scholes options pricing model with the ...

  • Page 44
    ...the Consolidated Statements of Income. The following tables show the activity in the store closing reserve: LeaseRelated Severance Total Balance at January 31, 2009 Charges Payments Balance at January 30, 2010 Charges Payments Balance at January 29, 2011 Charges Payments Balance at January 28, 2012...

  • Page 45
    ... also participated in our 2011, 2010 and 2009 Incentive Plans related to his role as general counsel to the Company. We leased three locations in 2011 and 2010 and four locations in 2009 from a company for which one of our directors is Chairman and Chief Executive Officer. We paid approximately...

  • Page 46
    ... by reference to the Company's Form S-1 Registration Statement No. 33-46322 Amended and Restated Stein Mart, Inc. Employee Stock Purchase Plan, incorporated by reference to the Company's Form S-8 Registration Statement filed on June 26, 2009 Form of Director's and Officer's Indemnification Agreement...

  • Page 47
    ... Stein Mart, Inc., Wachovia Bank, National Association and Fleet Retail Finance, Inc. as Co-Arrangers, Congress Financial Corporation (Florida) as Administrative and Collateral Agent, General Electric Capital Corporation as Documentation Agent and the Lenders (as such terms are defined in the Credit...

  • Page 48
    ... the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 (filed herein) Interactive data files from Stein Mart, Inc.'s Annual Report on Form 10-K for the year ended January 28, 2012, formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets, (ii...

  • Page 49
    ... 333-67034, 333-67038, 333-148007 and 333-160248) of Stein Mart, Inc. of our report dated April 12, 2012 relating to financial statements and the effectiveness of internal control over financial reporting, which appears in this Form 10-K. /s/ PricewaterhouseCoopers LLP Jacksonville, Florida April 12...

  • Page 50
    ... information; and Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting. /s/ Jay Stein Jay Stein Chairman of the Board and Interim Chief Executive Officer Date: April 12, 2012

  • Page 51
    ... Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 I, Gregory W. Kleffner, certify that: 1. 2. I have reviewed this Annual Report on Form 10-K of Stein Mart, Inc.; Based on my knowledge, this report does not contain any untrue statement of a material...

  • Page 52
    ... 1350, I, the undersigned Chairman of the Board and Interim Chief Executive Officer of Stein Mart, Inc. (the "Company"), hereby certify that: 1. 2. the Annual Report on Form 10-K of the Company for the 52 weeks ended January 28, 2012 (the "Report") fully complies with the requirements of Section...

  • Page 53
    ...18 U.S.C. Section 1350, I, the undersigned Executive Vice President and Chief Financial Officer of Stein Mart, Inc. (the "Company"), hereby certify that: 1. 2. the Annual Report on Form 10-K of the Company for the 52 weeks ended January 28, 2012 (the "Report") fully complies with the requirements of...