Stein Mart 2012 Annual Report Download - page 51

STEIN MART, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in tables in thousands, except per share amounts)
F-23
UTBs decreased in 2012 due to tax positions taken and lapse of statute of limitations. UTBs decreased in 2011 primarily due 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.
We are currently open to audit under the statute of limitations by the Internal Revenue Service for the tax years 2010 through 2012. The
Company’s state tax returns are open to audit under similar statute of limitations for the tax years 2008 through 2012.
See Note 2 for further information regarding the correcting adjustments made to previously reported Financial Statements.
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 2012, 2011 and 2010, 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. Total Company contributions to the retirement plan, net of
forfeitures, were $1.2 million for each of 2012, 2011 and 2010.
We have an executive deferral plan providing officers, key executives and director-level employees with the opportunity to defer receipt of
salary, bonus and other compensation. The plan allows for company discretionary contributions. During 2012, we matched contributions up
to 10 percent of salary and bonuses deferred at a rate of 100 percent for officers and key executives and a rate of 50 percent for directors.
In addition, during 2012, we made an additional discretionary contribution totaling $6.7 million related to the curtailment and settlement of
the split dollar retirement benefit described below. 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. There was no match for 2010.
Matching contributions for 2011 and 2012 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 additional discretionary contribution made in 2012 and related investment earnings cliff vest at
age 62. The executive deferral plan liability was $10.7 million and $2.9 million at February 2, 2013 and January 28, 2012, respectively, and
is included in Other liabilities in the Consolidated Balance Sheets. The expense for this plan, net of forfeitures, was $6.9 million, $0.4
million and $0.2 million in 2012, 2011 and 2010, respectively.
We provide an executive split-dollar life insurance benefit which provides officers, key executives and director-level employees with pre-
retirement life insurance benefits based upon three to five times base salary and post-retirement life insurance benefits based upon one
and one-half to two and one-half times final base salary. Effective December 31, 2012, active employees and substantially all retirees
were no longer eligible for the post-retirement life insurance benefit through an agreement between the company and the insureds
resulting in a curtailment and settlement of plan benefits as detailed below. In addition to the discretionary contribution to the executive
deferral plan described above, we made cash payments to retirees totaling $1.6 million as a result of this change. The gain due to
settlement of the post-retirement benefit of $7.7 million was more than offset by the cost of payments to retirees and executive deferral
plan contributions.
The curtailment and settlement resulted in a remeasurement of the benefit obligation on December 31, 2012 using a discount rate of 3.8%.
The following reflects the change in the post-retirement benefit obligation included in Other liabilities in the Consolidated Balance Sheets:
February 2, January 28,
2013 2012
Benefit obligation at beginning of year 9,212$ 6,307$
Service cost 790 655
Interest cost 404 366
Actuarial losses 1,979 1,884
Curtailment (1,272) -
Settlement (9,227) -
Benefit obligation at end of year 1,886$ 9,212$