form11k.htm
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
 
Form 11-K

(Mark One)
 
þ
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2011

or

 
¨
TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                     to

Commission file number 1-14035


A.  Full title of the plan and the address of the plan, if different from that of the issuer named below:

Stage Stores, Inc. Nonqualified Deferred Compensation Plan


B.  Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:

Stage Stores, Inc.
10201 Main Street
Houston, Texas 77025


 
 
 
 
 


       
       
     
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Schedules I, II and III have been omitted because the required information is shown in the financial statements or notes, or the information is not applicable to this Plan.
    
       
 
13
       
Exhibit 23 - Consent of Independent Registered Public Accounting Firm
    



 
2

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 
Stage Stores, Inc. Nonqualified Deferred Compensation Plan
Houston, Texas
 
We have audited the accompanying statements of financial condition of the Stage Stores, Inc. Nonqualified Deferred Compensation Plan (the "Plan") as of December 31, 2011 and 2010, and the related statements of income and changes in plan equity for each of the three years in the period ended December 31, 2011.  These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits.
 
We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Plan is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plan's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
 
In our opinion, such financial statements present fairly, in all material respects, the financial condition of the Plan at December 31, 2011 and 2010, and the income and changes in plan equity for each of the three years in the period ended December 31, 2011, in conformity with accounting principles generally accepted in the United States of America. 
 
 
/s/ Deloitte & Touche LLP
Houston, Texas
March 28, 2012

 
3


 
STATEMENTS OF FINANCIAL CONDITION
  
As of December 31, 2011 and 2010
  
             
             
             
   
2011
    
2010
  
             
Assets
            
      Investments, at fair value:
            
 
Mutual funds
   $ 11,060,299     $ 10,230,572  
 
Stage Stores, Inc. common stock, as determined by quoted market prices - 66,406 and 58,555 shares with a cost basis of $829,790 and $695,409, respectively
     922,377       1,015,360  
Total investments
     11,982,676       11,245,932  
      Cash
    76,191       65,351  
Total assets and plan equity
   $ 12,058,867     $ 11,311,283  
 
 

 
The accompanying notes are an integral part of these financial statements.
 
4

 
STATEMENTS OF INCOME AND CHANGES IN PLAN EQUITY
  
For the Years Ended December 31, 2011, 2010 and 2009
  
                   
                   
   
2011
    
2010
    
2009
  
Additions
                  
Contributions:
                  
Participant
   $ 1,510,866     $ 1,223,407     $ 923,654  
Employer
     1,029,020       1,054,820       650,405  
Net investment income:
                        
Interest income
     48,597       34,528       64,097  
Dividend income on investments in:
                        
Mutual funds
     146,755       124,549       103,813  
Stage Stores, Inc. common stock
     20,812       14,279       9,724  
Net (depreciation) appreciation in fair value of investments
     (1,199,129 )     1,174,054       1,708,772  
Total additions
     1,556,921       3,625,637       3,460,465  
                         
Deductions
                        
Distributions to participants
     809,337       1,553,006       2,944,494  
Net increase in plan equity
     747,584       2,072,631       515,971  
                         
Plan equity at beginning of year
     11,311,283       9,238,652       8,722,681  
Plan equity at end of year
   $ 12,058,867     $ 11,311,283     $ 9,238,652  
 

 

The accompanying notes are an integral part of these financial statements.
 
5

Stage Stores, Inc. Nonqualified Deferred Compensation Plan
Notes to Financial Statements
December 31, 2011, 2010 and 2009
 

1.           Plan Description
 
The following brief description of the Stage Stores, Inc. Nonqualified Deferred Compensation Plan (the “Plan”) is provided for general information purposes only.  Participants should refer to the Plan document for more complete information.
 
General
 
The Plan is a defined contribution plan and was established on January 1, 2002 by Stage Stores, Inc. (the “Company”) for the purpose of attracting and retaining highly qualified individuals for the successful conduct of the Company’s business by helping to provide for the retirement of the Company’s key employees selected to participate in the Plan.
 
Eligibility and Vesting
 
The Plan covers key employees (“Participants”), the selection of which remains at the sole discretion of the Plan Administrative Committee (the “Committee”) of the Company, as defined in the Plan document.  Participation is voluntary and Participants can elect to contribute up to fifty percent (50%) of the Participant’s compensation and up to one hundred percent (100%) of the Participant’s bonus.  Employer matching contributions are determined by the Committee from year to year.  The Participant and employer matching contributions are vested 100% in the Plan at all times.
 
Participant Accounts
 
The Company maintains a Participant Account (“Account”) for each Participant deferring compensation to the Plan.  The Account is adjusted for the Participant deferral/contribution, employer match and any investment gain or loss (on investments in which the Account balance is placed) and any payment or distribution attributable to that Account.
 
Effective June 5, 2008, the Company amended the Plan to include a stock investment option wherein Participants can elect to invest a portion of their deferrals in the Company’s common stock (the “Company Stock Investment Option”).  Participant contributions and employer matching contributions are invested in a money market account and are applied to the purchase of Company stock in the open market on the last trading day of the calendar month.  These shares are held in a grantor trust.  Once Company stock has been credited to the Participant’s Account, it may not be transferred or liquidated by the Participant and shall remain in the Account until such date as the Participant is no longer an employee of the Company and for a period of six months thereafter, at which time the Company stock shall be transferred to the Participant’s personal brokerage account, as designated at that time by the Participant; hence, the Company Stock Investment Option portion of the Account cannot be settled in cash.  The number of shares of common stock credited to a Participant’s Account shall be adjusted, as appropriate, to reflect any stock split, any dividends or deemed dividends, any recapitalization of the Company, or any reorganization of the Company.  Shares of common stock will be issued in the name of the Plan.  During the period the common stock is held by the Plan, Participants will not have the right to vote those shares of common stock and Participants will not have any other incidents of ownership or rights as a shareholder with respect to those shares of common stock.
 
Payment of Benefits
 
On termination of service, a participant may generally elect to receive either a lump sum amount equal to the value of the participant’s vested interest in his or her account, or annual installments over a 2 to 5 year period.
 
 
6
 
Plan Termination
 
The Company retains the unilateral power to amend or terminate the Plan at any time.  No such amendment or termination shall adversely affect any Participant or their beneficiaries with respect to their right to receive the value of their vested Accounts, determined as of the later of the date that the Plan amendment or termination is adopted or by its terms to be effective, without the consent of affected Participants or their beneficiaries.
 
2.           Significant Accounting Policies
 
Basis of Accounting.  The financial statements are prepared using the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America.
 
Investment Valuation and Income Recognition.  Pen-Cal Administrators, Inc. and UBS Financial Services, Inc., which administer all mutual funds and Stage Stores common stock investment, execute all investment transactions, while Wilmington Trust Retirement and Institutional Services Company serves as the Plan’s trustee and holds the Plan assets.  Prior to July 1, 2010, Compass Consulting and Wells Fargo administered and executed all investment transactions and held the Plan assets.  The Plan’s investments include publicly traded mutual funds and shares of Company stock both of which are valued based on quoted market prices on the last business day of the Plan year.  The change in market value of the investments is reflected in the Statements of Income and Changes in Plan Equity as appreciation /depreciation in the fair market value of investments.  Refer to Note 4 for further details related to the Plan’s fair value valuation methods.  Realized gains and losses on investments are calculated using average cost.  Purchases and sales of securities are recorded on a trade-date basis.  Dividends are recorded on the ex-dividend date.  Interest is recorded as earned.
 
Distributions.  Distributions to participants are recorded when paid.
 
Use of Estimates.  The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the Committee to make estimates and assumptions that affect the reported amounts of assets and changes therein, and disclosure of contingent assets at the date of the financial statements.  Actual results could differ from those estimates.
 
Risks and Uncertainties. Investment securities, in general, are exposed to various risks, such as interest rate, liquidity risk, credit and overall market volatility risk.  Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in the values of investment securities will occur in the near term and that such a change could materially affect the amount reported in the Statements of Financial Condition.
 
 
7
 
3.            Investments
 
The Plan’s investments that represented 5% or more of the Plan’s net assets available for plan benefits as of December 31, 2011 and 2010 are as follows:
 
 
   
2011
    
2010
  
Fidelity Advisor Treasury Money Market CI T
   $ 2,121,317     $ -  
Fidelity Advisor New Insights A
     1,994,202       -  
John Hancock Global Opportunities CL A
     1,408,680       -  
Stage Stores, Inc. common stock (1)
     922,377       1,015,360  
American Century Equity Income A
     907,941       -  
Columbia Balanced A
     857,429       -  
Oppenheimer Developing Markets A
     743,439       -  
Blackrock International Opportunities Portfolio A
     699,957       -  
The Growth Fund of America A
     -       1,264,597  
AMCAP Fund A
     -       1,188,197  
New World Fund A
     -       1,048,028  
Washington Mutual Investors Fund A
     -       990,990  
SMALLCAP World Fund A
     -       988,073  
American Balanced Fund A
     -       927,541  
American Funds Money Market Fund A
     -       902,664  
Capital World Growth and Income Fund A
     -       893,973  
EuroPacific Growth Fund A
     -       756,360  
The Investment Company of America A
     -       620,295  
Total
     9,655,342       10,596,078  
                 
Other, individually representing less than 5% of total
     2,327,334       649,854  
Investments, at fair value
   $ 11,982,676     $ 11,245,932  
                 
     (1) Indicates party in interest to the Plan
                
 
 
During the years ended December 31, 2011, 2010 and 2009, the Plan’s investments, including gains and losses on investments bought and sold as well as held during the year, (depreciated) appreciated in value as follows:
 
   
2011
    
2010
    
2009
  
Realized (loss) gain on investments in mutual funds
   $ (611,200 )   $ 61,868     $ -  
Unrealized gain (loss) on investments in
                        
Mutual funds
                        
Domestic equities
     53,196       431,788       616,128  
International equities
     (395,350 )     387,246       796,250  
Bond
     (19,532 )     10,730       108,610  
Stage Stores, Inc. common stock
     (226,243 )     282,422       187,784  
Net (depreciation) appreciation in fair value of investments
   $ (1,199,129 )   $ 1,174,054     $ 1,708,772  

 
 
8
 
The following tables set forth the detailed investment activities by individual fund for the following periods:
 
           
Net Investment Income
              
   
Investments at 1/1/11
  
Contributions
  
Interest Income
  
Dividend Income
  
Realized (Loss) Gain on Investment
  
Unrealized (Loss) Gain
on Investment
  
Distributions
  
Transfers
  
Investments at 12/31/11
  
                                       
Mutual funds:
                                      
American Century Equity Income A
   $ -   $ 38,680   $ -   $ 14,722   $ (6,034 ) $ 38,419   $ (42,777 ) $ 864,931   $ 907,941  
AMCAP Fund A
     1,188,197     177,456     -     4,970     (50,253 )   -     (18,462 )   (1,301,908 )   -  
American Balanced Fund A
     927,541     145,754     -     11,115     (9,867 )   -     -     (1,074,543 )   -  
American High-Income Trust A
     181,326     48,525     10,219     -     (9,301 )   -     (4,766 )   (226,003 )   -  
Capital World Bond Fund A
     245,358     44,160     3,930     -     11,606     -     (46,599 )   (258,455 )   -  
Intermediate Bond Fund of America A
     223,170     66,300     3,549     -     4,721     -     (30,792 )   (266,948 )   -  
New World Fund A
     1,048,028     184,513     -     -     (75,221 )   -     (34,082 )   (1,123,238 )   -  
SMALLCAP World Fund A
     988,073     165,722     -     -     (102,077 )   -     (8,806 )   (1,042,912 )   -  
Washington Mutual Investors Fund A
     990,990     152,747     -     11,650     (15,925 )   -     (54,409 )   (1,085,053 )   -  
Capital World Growth and Income Fund A
     893,973     127,848     -     14,303     (70,955 )   -     (44,057 )   (921,112 )   -  
American Century Mid Cap Value A
     -     2,443     -     109     -     (56 )   -     -     2,496  
EuroPacific Growth Fund A
     756,360     153,561     -     -     (65,598 )   -     (23,320 )   (821,003 )   -  
The Growth Fund of America A
     1,264,597     201,759     -     -     (76,418 )   -     (48,544 )   (1,341,394 )   -  
The Investment Company of America A
     620,295     94,722     -     6,131     (47,735 )   -     -     (673,413 )   -  
American Funds Money Market Fund
     902,664     261,821     -     -     -     -     (260,327 )   (904,158 )   -  
Blackrock Equity Dividend A
     -     3,362     -     19     6,462     (46 )   -     (6,322 )   3,475  
Blackrock Intl Opportunities Port A
     -     48,427     -     12,486     (8,131 )   (70,058 )   (4,916 )   722,149     699,957  
Columbia Balanced A
     -     45,232     -     33,272     (2,221 )   (8,257 )   (5,143 )   794,546     857,429  
Dreyfus S&P 500 Index
     -     155     -     3     -     (1 )   -     -     157  
Fidelity Adv Mid Cap II A
     -     6,076     -     -     -     (146 )   -     -     5,930  
Fidelity Adv New Insights A
     -     111,161     -     -     (26,470 )   13,488     (46,146 )   1,942,169     1,994,202  
Fidelity Adv Small Cap A
     -     6,076     -     424     -     (312 )   -     -     6,188  
Fidelity Adv Treasury Money Mkt CI T
     -     81,728     41     -     -     -     -     2,039,546     2,121,315  
Fidelity Advisor Income A
     -     667     2,750     -     -     (2,107 )   -     211,724     213,034  
Fidelity Contrafund
     -     15,500     -     110     11,936     3,323     -     45,250     76,119  
Franklin High Inc A
     -     19,354     7,570     -     99     9,680     (19,274 )   540,107     557,536  
Heartland Value Plus
     -     5,876     -     586     9,379     2,258     -     14,751     32,850  
John Hancock Global Opp CL A
     -     73,613     -     7,025     (48,033 )   (236,216 )   (45,259 )   1,657,550     1,408,680  
Lord Abbett AII Value A
     -     32,037     -     16,001     (15,064 )   4,526     (5,605 )   451,466     483,361  
Oppenheimer Developing Markets A
     -     55,738     -     13,829     (23,351 )   (89,076 )   (23,177 )   809,476     743,439  
Pimco Total Return A
     -     25,144     6,402     -     (7 )   (2,330 )   (812 )   477,039     505,436  
Templeton Global Bond A
     -     16,873     14,136     -     (2,742 )   (24,775 )   (38,496 )   475,758     440,754  
Stage Stores, Inc. common stock
     1,015,360     116,016     -     20,812     -     (226,243 )   (3,568 )   -     922,377  
    $ 11,245,932   $ 2,529,046   $ 48,597   $ 167,567   $ (611,200 ) $ (587,929 ) $ (809,337 ) $ -   $ 11,982,676  

 
           
Net Investment Income
              
   
Investments at 1/1/10
  
Contributions
  
Interest Income
  
Dividend Income
  
Realized Gain on Investment
  
Unrealized Gain on Investment
  
Distributions
  
Transfers
  
Investments at 12/31/10
  
                                       
Mutual funds:
                                      
AMCAP Fund - A
   $ 637,314   $ 165,754   $ -   $ 4,518   $ -   $ 117,623   $ -   $ 262,988   $ 1,188,197  
EuroPacific Growth Fund - A
     776,690     176,985     -     10,278     8,711     49,437     (87,024 )   (178,717 )   756,360  
The Growth Fund of America - A
     813,578     291,327     -     10,097     4,753     115,293     (78,196 )   107,745     1,264,597  
New World Fund - A
     907,230     210,288     -     14,688     17,814     128,330     (155,385 )   (74,937 )   1,048,028  
SMALLCAP World Fund - A
     722,673     158,031     -     13,070     11,786     163,648     (109,165 )   28,030     988,073  
Capital World Growth and Income Fund - A
     825,952     170,854     -     21,525     1,400     45,831     (15,552 )   (156,037 )   893,973  
The Investment Company of America - A
     382,060     96,296     -     11,005     -     45,121     -     85,813     620,295  
Washington Mutual Investors Fund - A
     635,848     79,657     -     22,428     978     78,519     -     173,560     990,990  
American Balanced Fund - A
     586,197     161,794     -     16,940     2,823     75,232     (51,474 )   136,029     927,541  
American High-Income Trust - A
     8,903     46,160     9,141     -     -     3,263     -     113,859     181,326  
Capital World Bond Fund - A
     1,398,020     163,661     21,325     -     13,603     4,950     (235,606 )   (1,120,595 )   245,358  
Intermediate Bond Fund of America - A
     110,612     78,537     4,062     -     -     2,517     -     27,442     223,170  
American Funds Money Market Fund
     779,175     320,049     -     -     -     -     (791,380 )   594,820     902,664  
Stage Stores, Inc. common stock
     654,400     93,483     -     14,279     -     282,422     (29,224 )   -     1,015,360  
    $ 9,238,652   $ 2,212,876   $ 34,528   $ 138,828   $ 61,868   $ 1,112,186   $ (1,553,006 ) $ -   $ 11,245,932  
                                                         
                                                         
               
Net Investment Income
                    
   
Investments at 1/1/09
  
Contributions
  
Interest Income
  
Dividend Income
  
Realized Gain on Investment
  
Unrealized Gain on Investment
  
Distributions
  
Transfers
  
Investments at 12/31/09
  
                                                         
Mutual funds:
                                                        
AMCAP Fund - A
   $ 405,013   $ 75,205   $ -   $ 5,921   $ -   $ 168,077   $ -   $ (16,902 ) $ 637,314  
EuroPacific Growth Fund - A
     524,905     103,678     -     12,328     -     187,570     -     (51,791 )   776,690  
The Growth Fund of America - A
     578,187     120,440     -     6,191     -     182,688     -     (73,928 )   813,578  
New World Fund - A
     586,543     108,882     -     10,729     -     244,657     -     (43,581 )   907,230  
SMALLCAP World Fund - A
     392,762     60,839     -     4,448     -     187,636     -     76,988     722,673  
Capital World Growth and Income Fund - A
     763,331     128,896     -     21,980     -     176,387     -     (264,642 )   825,952  
The Investment Company of America - A
     283,645     41,585     -     8,163     -     74,235     -     (25,568 )   382,060  
Washington Mutual Investors Fund - A
     458,396     108,244     -     17,210     -     87,678     -     (35,680 )   635,848  
American Balanced Fund - A
     621,543     88,564     -     16,843     -     103,450     -     (244,203 )   586,197  
American High-Income Trust - A
     -     6,527     358     -     -     1,241     -     777     8,903  
Capital World Bond Fund - A
     1,463,619     139,909     58,641     -     -     103,231     -     (367,380 )   1,398,020  
Intermediate Bond Fund of America - A
     51,200     33,746     2,658     -     -     4,138     -     18,870     110,612  
American Funds Money Market Fund
     -     184,894     -     -     -     -     (706,799 )   1,301,080     779,175  
The Cash Management Trust of America - A
     2,315,743     184,772     2,440     -     -     -     (2,228,915 )   (274,040 )   -  
Stage Stores, Inc. common stock
     277,794     187,878     -     9,724     -     187,784     (8,780 )   -     654,400  
    $ 8,722,681   $ 1,574,059   $ 64,097   $ 113,537   $ -   $ 1,708,772   $ (2,944,494 ) $ -   $ 9,238,652  
 
 
10

4.            Fair Value Measurements
 
In accordance with Accounting Standards Codification (“ASC”) No. 820, Fair Value Measurements and Disclosures, the Plan defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.  When determining the fair value measurements for assets and liabilities which are required to be recorded at fair value, the Plan considers the principal or most advantageous market in which the Plan would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as inherent risk, transfer restrictions and credit risk.
 
The Plan applies the following fair value hierarchy, which prioritizes the inputs used to measure fair value into three levels, and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:
 
 
Level 1 -
Quoted prices in active markets for identical assets or liabilities.
 
 
Level 2 -
Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
 
 
Level 3 -
Inputs that are generally unobservable and typically reflect the Plan Administrator’s estimates of assumptions that market participants would use in pricing the asset or liability.
 
        Using the market approach, the following table presents the Plan’s assets measured at fair value on a recurring basis as of December 31, 2011 and 2010:
 
   
2011
  
   
Balance
    
Quoted Prices in Active Markets for Identical Instruments
(Level 1)
    
Significant Other Observable Inputs
(Level 2)
    
Significant Unobservable Inputs
(Level 3)
  
Assets
                        
Mutual funds:
                                
Domestic equities
   $ 4,370,148     $  4,370,148     $  -     $  -  
International equities
     2,852,076       2,852,076       -       -  
Bond
     1,716,760       1,716,760       -       -  
Money market
     2,121,315       2,121,315       -       -  
Stage Stores, Inc. common stock
     922,377       922,377       -       -  
    $ 11,982,676     $ 11,982,676     $ -     $ -  
                                 
 
 
   
2010
  
   
Balance
    
Quoted Prices in Active Markets for Identical Instruments
(Level 1)
    
Significant Other Observable Inputs
(Level 2)
    
Significant Unobservable Inputs
(Level 3)
  
Assets
                        
Mutual funds:
                        
Domestic equities
   $ 4,991,620     $ 4,991,620     $ -     $ -  
International equities
     3,686,434       3,686,434       -       -  
Bond
     649,854       649,854       -       -  
Money market
     902,664       902,664       -       -  
Stage Stores, Inc. common stock
     1,015,360       1,015,360       -       -  
    $ 11,245,932     $ 11,245,932     $ -     $ -  
                                 
 
       For the years ended December 31, 2011 and 2010, there were no transfers in or out of Levels 1, 2 or 3.
 
5.            Administrative Expenses
 
All administrative expenses of the Plan are paid by the Company.
 
6.            Income Tax Status
 
The Plan, being operated as a nonqualified deferred compensation plan, is not subject to Federal income tax.  A nonqualified deferred compensation arrangement effectively defers compensation for individual Participants.
 

 
SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the members of the Plan Administrative Committee, which is the administrative committee for the Stage Stores, Inc. Nonqualified Deferred Compensation Plan, have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.



 
  STAGE STORES, INC. NONQUALIFIED
  DEFERRED COMPENSATION PLAN
   
 March 28, 2012     /s/ Oded Shein
      (Date)    Oded Shein
  Plan Administrative Committee
  Stage Stores, Inc.
   
 
 
 
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