Stein Mart 2012 Annual Report Download - page 50

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STEIN MART, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in tables in thousands, except per share amounts)
F-22
The components of income tax expense (benefit) are as follows:
2012 2011 2010
(Restated) (Restated)
Current:
Federal 7,358$ (837)$ 10,980$
State 697 805 (305)
8,055 (32) 10,675
Deferred:
Federal 2,512 11,989 (10,505)
State 404 258 (1,858)
2,916 12,247 (12,363)
Income tax expense (benefit) 10,971$ 12,215$ (1,688)$
During 2012, 2011 and 2010, we realized tax (deficiencies) benefits of $(0.5) million, $(0.4) million and $7.0 million, respectively, related to
share-based compensation plans that were recorded to additional paid-in-capital. The income tax provision differs from the amount of
income tax determined by applying the statutory U.S. corporate tax rate to pre-tax amounts due to the following items:
2012 2011 2010
(Restated) (Restated)
Federal tax at the statutory rate 35.0% 35.0% 35.0%
State income taxes, net of federal benefit 2.1% 4.5% 1.1%
Valuation allowance 0.0% 0.0% (39.1)%
Permanent differences and other (6.6)% (1.5)% (0.1)%
Effective tax rate 30.5% 38.0% (3.1)%
As of January 30, 2010, we had a valuation allowance on substantially all of our net deferred tax assets, established in 2008. During 2010,
the reversal of the remaining valuation allowance, based on changes in forecasts of future earnings and a return to profitability on a three-
year historical basis, favorably impacted the effective tax rate. For 2012, the effective tax rate was positively impacted by the impact of
favorable permanent differences which related primarily to the non-taxable income recognized related to a settlement gain from post-
retirement life insurance benefits described in Note 8.
The following is a reconciliation of the change in the amount of unrecognized tax benefits from January 31, 2010 to February 2, 2013:
2012 2011 2010
(Restated) (Restated)
Beginning balance 1,476$ 3,062$ 5,163$
Increases due to:
Tax positions taken in prior years - 587 526
Settlements with taxing authorities - - 12
Decreases due to:
Tax positions taken in prior years (765) - (2,553)
Settlements with taxing authorities - (2,101) -
Lapse of statute of limitations (80) (72) (86)
Ending balance 631$ 1,476$ 3,062$
As of February 2, 2013, there were no unrecognized tax benefits (“UTBs”) that, if recognized, would affect the effective tax rate. We
recognize interest and penalties related to UTBs in income tax expense. During the fiscal years ended February 2, 2013, January 28,
2012 and January 29, 2011, the amount of interest and penalties related to UTBs was insignificant. The total amount of accrued interest
and accrued penalties related to UTBs as of February 2, 2013 and January 28, 2012 was also insignificant.