Stein Mart 2011 Annual Report Download - page 36

Table of Contents
STEIN MART, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in tables in thousands, except per share amounts)
may or may not cover all the costs, we make a judgment as to the classification between lessor and lessee assets. We consider an asset to be a
lessor asset if all of the following criteria are met:
If any of the above criteria are not met, we consider the assets to be lessee assets, which are recorded as leasehold improvements in the balance
sheet. Payments received from the lessor to fund any portion of the cost of lessee assets are accounted for as lease incentives. Assets considered
to be lessor assets are not reflected in Property and equipment, net in the Consolidated Balance Sheets. To the extent that we paid for such
lessor assets and were not reimbursed through construction allowances, such net payments are recorded as prepaid rent, which is amortized to
rent expense over the lease term.
Advertising Expense. Advertising costs are expensed as incurred. Advertising expenses of $56.6 million, $53.8 million and $50.2 million are
reflected in SG&A expenses in the Consolidated Statements of Income for 2011, 2010 and 2009, respectively.
Income Taxes. We follow the guidance in ASC Topic 740, Income Taxes , which requires recognition of deferred tax assets and liabilities for
the expected future income tax consequences of events that have been included in the consolidated financial statements or tax returns. Under
this method, deferred tax assets and liabilities are determined based on the differences between the financial statement carrying amounts and
the tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax
assets are reduced by a valuation allowance for amounts that do not satisfy required realization criteria. See Note 7 for further discussion.
Share-Based Compensation. We follow the guidance in ASC Topic 718, Stock Compensation , to record share-based compensation. Pursuant
to the guidance, we recognize expense in the financial statements for the 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 dividend equivalents (whether paid or unpaid) are participating securities
and are to be included in the computation of earnings per share (“EPS”) under the two-
class method. Our restricted stock awards are considered
“participating securities” because they contain non-forfeitable rights to dividends. Under the two-class method, EPS is computed by dividing
earnings allocated to common shareholders by the weighted-average number of common shares outstanding for the period. In applying the two-
class method, earnings are allocated to both common stock shares and participating securities based on their respective weighted-average
shares outstanding for the period.
The following table presents the calculation of basic and diluted income per common share (shares in thousands):
F
-
9
•
the lease specifically requires the lessee to make the improvement,
•
the improvement is fairly generic,
•
the improvement increases the fair value of the property to the lessor, and
•
the useful life of the improvement is longer than our lease term.
2011
2010
2009
Numerator:
Net income
$
19,828
$
48,753
$
23,553
Income allocated to participating securities
533
1,492
511
Net income available to common shareholders
$
19,295
$
47,261
$
23,042
Denominator:
Basic weighted
-
average shares outstanding
43,482
42,780
41,822
Incremental shares from share
-
based compensation plans
239
812
1,260
Diluted weighted
-
average shares outstanding
43,721
43,592
43,082
Net income per share:
Basic
$
0.44
$
1.10
$
0.55
Diluted
$
0.44
$
1.08
$
0.54