Stein Mart 2011 Annual Report Download - page 38

Table of Contents
STEIN MART, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in tables in thousands, except per share amounts)
or closing stores to their respective estimated fair value. The charges were higher in 2009 due to a greater number of stores with projected cash
flows that did not support the carrying value of their long-lived assets and are included in SG&A expenses in the Consolidated Statements of
Income.
Store assets are considered Level 3 assets in the fair value hierarchy as the inputs for calculating the fair value of these assets are based on the
best information available, including prices for similar assets. In 2011, 2010 and 2009, store assets with a carrying value of $1.8 million, $1.2
million and $8.4 million were written down to their fair value of $0.6 million, $0 and $0.
4. Accrued Expenses and Other Current Liabilities
The major components of accrued expenses and other current liabilities are as follows:
5. Revolving Credit Agreement
In October 2011, we entered into an amended and restated revolving credit agreement (the “Credit Agreement”) with Wells Fargo Bank, N.A.
The Credit Agreement provides for a $100 million senior secured revolving credit facility which can be increased to $150 million. The Credit
Agreement matures on February 28, 2017 and replaces our existing $150 million revolving credit facility which was to mature in early 2012.
Borrowings under the Credit Agreement are based on and collateralized by eligible credit card receivables and inventory. Proceeds may be
used for general corporate purposes, including issuing standby and commercial letters of credit.
Borrowings under the Credit Agreement shall be either Base Rate Loans or LIBO Rate Loans (all terms as defined in the Credit Agreement).
Base Rate Loans bear interest equal to the highest of (a) the Federal Funds Rate plus one-half of one percent (0.50%), (b) the Adjusted LIBO
Rate plus one percent (1.00%), or (c) the rate of interest in effect for such day as publicly announced from time to time by Wells Fargo as its
“prime rate”, plus the Applicable Margin. LIBO Rate Loans shall bear interest equal to the Adjusted LIBO Rate plus the Applicable Margin.
The Adjusted LIBO Rate with respect to any LIBO Rate Loan is the interest rate per annum equal to the LIBOR Rate for such Interest Period
multiplied by the Statutory Reserve Rate. The Adjusted LIBO Rate with respect to any Base Rate Loan is the interest rate per annum equal to
the LIBOR Rate for an Interest Period commencing on the date of such calculation and ending on the date that is thirty (30) days thereafter
multiplied by the Statutory Reserve Rate. The Applicable Margin is based upon a pricing grid depending on the Average Daily Availability.
The amount available for borrowing was $91.4 million at January 28, 2012 and is based on 90% of eligible credit card receivables and
inventories less reserves, as defined in the Credit Agreement. The amount available for borrowing represents the capped borrowing base of
$100 million reduced by outstanding letters of credit of $8.6 million. The Credit Agreement contains customary affirmative and negative
covenants, including limitations on granting of liens, certain investments, additional indebtedness, prepayments on indebtedness and
disposition of inventory. We had no direct borrowings at January 28, 2012 and are in compliance with the terms of the Credit Agreement.
6. Leases and Commitments
We lease all of our retail stores, support facilities and certain equipment under operating leases. Our store leases are generally for 10 years with
options to extend the lease term for two or more 5-year periods. 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:
F
-
11
January 28,
2012
January 29,
2011
Compensation and employee benefits
$
21,505
$
23,779
Unredeemed gift and returns cards
11,277
11,507
Property taxes
11,845
14,187
Other
28,104
23,114
$
72,731
$
72,587
2011
2010
2009
Minimum rentals
$
75,605
$
76,797
$
80,724
Contingent rentals
1,014
1,015
430
$
76,619
$
77,812
$
81,154