Stein Mart 2011 Annual Report Download - page 40

Table of Contents
STEIN MART, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in tables in thousands, except per share amounts)
The components of income tax provision are as follows:
During 2011, 2010 and 2009, we realized tax (deficiencies) benefits of $(0.4) million, $6.9 million and $0.2 million, respectively, related to
share-based compensation plans that were recorded to additional 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:
As of January 30, 2010, we had a valuation allowance on substantially all of our net deferred tax assets, established in 2008. During 2009, the
reduction of the valuation allowance, based on realization of certain net deferred tax assets, favorably impacted the effective tax rate. During
2010, the reversal of the remaining valuation allowance, based on changes in forecasts of future earnings and a return to profitability on a three-
year historical basis, also favorably impacted the effective tax rate. During 2011, there was no valuation allowance impact and as a result we
returned to a normalized effective tax rate.
The following is a reconciliation of the change in the amount of unrecognized tax benefits from February 1, 2009 to January 28, 2012:
As of January 28, 2012, the amount of unrecognized tax benefits (“UTBs”) that, if recognized, would affect the effective tax rate was $0.6
million. We recognize interest and penalties related to UTBs in income tax expense. During the fiscal years ended January 28,
2012, January 29, 2011 and January 30, 2010, we recognized approximately $0, $(0.7) million and $0.5 million in interest and penalties
expense (income) related to UTBs. The total amount of accrued interest and accrued penalties related to UTBs as of January 28, 2012 and
January 29, 2011 was $0.2 million and $0.3 million, respectively.
UTBs decreased in 2011 related primarily to settlements related to the completion of federal examinations for 2007 and 2008. UTBs decreased
$2.5 million in 2010 related primarily to favorable settlements of state tax examinations and the resolution of protective federal credit claims
filed for prior tax years. UTBs increased $4.3 million in 2009 related primarily to certain tax positions for income tax returns filed in 2009 and
changes in judgment and estimates related to certain state income tax uncertainties due to changes in circumstances. In addition, the IRS
completed its examination of our 2005 and 2006 federal income tax returns during 2009 and we settled with the IRS. This
F
-
13
2011
2010
2009
Current:
Federal
$
(1,428
)
$
10,751
$
10,209
State
805
(305
)
361
(623
)
10,446
10,570
Deferred:
Federal
12,461
(4,727
)
286
State
305
(1,280
)
—
12,766
(6,007
)
286
Income tax provision
$
12,143
$
4,439
$
10,856
2011
2010
2009
Federal tax at the statutory rate
35.0
%
35.0
%
35.0
%
State income taxes, net of federal benefit
4.4
1.0
3.8
Valuation allowance
—
(
27.6
)
(6.2
)
Permanent differences and other
(1.4
)
(0.1
)
(1.0
)
Income tax provision
38.0
%
8.3
%
31.6
%
2011
2010
2009
Beginning balance
$
2,821
$
5,151
$
715
Increases due to:
Tax positions taken in prior years
1
297
4,292
Settlements with taxing authorities
—
12
1,498
Decreases due to:
Tax positions taken in prior years
—
(
2,553
)
(1,123
)
Settlements with taxing authorities
(2,101
)
—
—
Lapse of statute limitations
(72
)
(86
)
(231
)
Ending balance
$
649
$
2,821
$
5,151