Stein Mart 2011 Annual Report Download - page 41

Table of Contents
STEIN MART, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in tables in thousands, except per share amounts)
settlement and the settlement of other state examinations resulted in net income tax refunds which increased the UTBs by approximately $1.5
million.
We are currently open to audit under the statute of limitations by the Internal Revenue Service for the tax years 2009 through 2011. The
Company’s state tax returns are open to audit under similar statute 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 sharing portion of the plan, we can make discretionary
contributions which vest at a rate of 20 percent per year after two years of service. During 2010 and 2011, we matched 50 percent of an
employee’s voluntary pre-tax contributions up to a maximum of four percent of an employee’s compensation. Our matching portion vests in
accordance with the plan’s vesting schedule. The Company match was suspended for 2009. Total Company contributions to the retirement
plan, net of forfeitures, were $1.2 million for both 2011 and 2010.
We have an executive deferral plan providing officers, key executives and director-level employees with the opportunity to participate in an
unfunded, deferred compensation program. Under the program, participants may defer up to 100% of their base salary and bonuses earned.
During 2011, we matched contributions up to 10 percent of salary and bonus at a rate of 50 percent for officers and key executives and a rate of
25 percent for directors. If we had achieved the “target” performance level, as defined in our Management Incentive Plan for fiscal 2011, we
would have matched contributions up to an additional 50 percent for officers and key executives and up to an additional 25 percent for
directors. Our match was suspended for 2009 and 2010. A participant’s Company matching contributions and related investment earnings vest
at 20% per year in each of years four through eight, at which time a participant is fully vested. The liability to the employees for amounts
deferred was $2.9 million at January 28, 2012 and $2.7 million at January 29, 2011, and is included in Other liabilities in the Consolidated
Balance Sheets. The expense for this plan, net of forfeitures, was $0.4 million in 2011, $0.2 million in 2010 and $0.1 million in 2009.
We have an executive split-dollar life insurance plan wherein officers, key executives and director-level employees are provided with pre-
retirement life insurance protection based upon three to five times base salary. Upon retirement, the executive is provided with life insurance
protection based upon one and one-half to two and one-half times final base salary. The postretirement benefit liability pertaining to these life
insurance benefits was $9.2 million and $6.3 million at January 28, 2012 and January 29, 2011, respectively, and is classified in Other
liabilities. Accumulated other comprehensive (loss) income on the Consolidated Balance Sheets at January 28, 2012 and January 29, 2011
includes $(1.2) million and $0.6 million related to actuarial (losses) gains of this plan. The expense recorded in net income for this plan was
$1.4 million in 2011 and $1.1 million in both 2010 and 2009.
In connection with the executive deferral and executive split-dollar life insurance plans, whole life insurance contracts were purchased on the
related participants. At January 28, 2012 and January 29, 2011, the cash surrender value of these policies was $14.1 million and $11.9 million,
respectively, and is included in other assets in the Consolidated Balance Sheets.
We have a noncontributory executive retiree medical plan wherein eligible retired executives may continue their pre-retirement medical, dental
and vision benefits through age 65. The postretirement benefit liability was $0.4 million at January 28, 2012 and January 29, 2011.
Accumulated other comprehensive (loss) income on the Consolidated Balance Sheets includes $(0.2) million for this plan at January 28, 2012
and January 29, 2011. The expense recorded in net income for 2010 and 2011 was immaterial.
9. Shareholders’ Equity
Dividend
On November 10, 2010, the Board of Directors declared a special cash dividend of $0.50 per common share that was paid on December 22,
2010 to shareholders of record on December 8, 2010. There were no cash dividends declared or paid in fiscal 2011.
Stock Repurchase Plan
During 2011, 2010 and 2009, we repurchased 1,653,841 shares, 870,531 shares and 13,154 shares of our common stock in the open market at a
total cost of $12.1 million, $7.1 million and $0.1 million, respectively. Stock repurchases were for taxes due on the vesting of employee stock
awards and during 2011 included 1,566,910 shares purchased on the open market under a Board of Directors authorized plan. On June 14,
2011, the Board of Directors approved an increase of 2.5 million shares in the number of shares of the Company’s stock which the Company
would be authorized to re-purchase. As of January 28, 2012, there are 1,465,619 shares which can be repurchased pursuant to the Board of
Directors’ current authorization.
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