Stein Mart 2014 Annual Report Download - page 20

18
affected if future claims differ from historical trends and other actuarial assumptions. As of January 31, 2015 and February 1, 2014,
insurance reserves of $16.4 million and $16.7 million, respectively, were included in Accrued expenses and other current liabilities and
Other liabilities in the accompanying Consolidated Balance Sheets. Historically, our actuarial estimates have not been materially different
from actual results.
Income Tax Reserves. We record liabilities for uncertain tax positions related to federal and state income taxes. These liabilities reflect
our best estimate of our ultimate income tax liability based on the tax code, regulations, and pronouncements of the jurisdictions in which
we do business. Estimating our ultimate tax liability involves significant judgments regarding the application of complex tax regulations
across many jurisdictions. If actual results differ from estimated results, our effective tax rate and tax balances could be affected. As such,
these estimates may require adjustment in the future as additional facts become known or as circumstances change.
For a complete listing of our significant accounting policies, see Note 1 of the Notes to Consolidated Financial Statements.
Recent Accounting Pronouncements
Recently issued accounting pronouncements are discussed in Note 1 of the Notes to the Consolidated Financial Statements.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to interest rate risk primarily through borrowings under our $100 million senior secured revolving credit facility (the Prior
Credit Agreement) which are at variable rates. The Prior Credit Agreement permitted debt commitments up to $100 million, which could
be increased to $150 million, had a February 2017 maturity date and bore interest at spreads over the prime rate and LIBOR. We had no
borrowings under our Prior Credit Agreement during 2014, other than fees charged by the lender and outstanding letters of credit. That
facility was entirely replaced during February 2015 by the Credit Facilities. See Note 13 of the Notes to the Consolidated Financial
Statements for further discussion.
Subsequent to January 31, 2015, we are exposed to fluctuations in interest rates through our borrowings from our $275 million Credit
Facilities executed in February 2015. The Credit Facilities are composed of a $250 million senior secured revolving credit facility and a
$25 million equipment term loan. We actively monitor changes in interest rates and consider interest hedging to mitigate interest rate risk.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements and the Report of Independent Registered Certified Public Accounting Firm thereon are filed
pursuant to this Item 8 and are included in this report beginning on page F-1.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
As disclosed in the Companys current report on Form 8-K filed with the SEC on July 10, 2013, the Company changed its independent
registered public accountants effective July 10, 2013.
ITEM 9A. Controls and Procedures
(a) Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, we
have evaluated the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and
15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act), as of the end of the period covered by this report.
Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and
procedures were effective as of January 31, 2015 to provide reasonable assurance that information required to be disclosed in our reports
under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SECs rules and forms,
and that such information is accumulated and communicated to our management as appropriate to allow timely decisions regarding
required disclosure.
(b) Managements Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined
in the Exchange Act Rules 13a-15(f) and 15d-15(f). Our internal control over financial reporting is designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of
any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may deteriorate.