What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-06-06 compared with 2022-12-07 · 127 added, 204 removed, 296 unchanged (53% of the section changed)

3 unchanged sentences

(Dollar amounts in thousands, except per share data)

October 29, 2022 January 29, 2022 October 30, 2021

April 29, 2023 January 28, 2023 April 30, 2022

CURRENT ASSETS:

29 unchanged sentences

Common stock, $ 0.01 par value, authorized 300,000,000 shares;

87,079,394 and 88,164,878 issued and outstanding as of October 29, 2022, January 29, 2022 and October 30, 2021, respectively.

76,711,720 and 85,071,234 issued and outstanding as of April 29, 2023, January 28, 2023 and April 30, 2022, respectively.

Additional paid-in capital 229,633 216,209 199,559

Retained earnings 1,450,565 1,411,330 1,328,099

Accumulated other comprehensive loss — — ( 1,488 )

Stockholders' equity 1,680,962 1,628,306 1,528,508

4 unchanged sentences

(Amounts in thousands, except per share data)

Thirteen Weeks Ended Thirty-Nine Weeks Ended

October 29, 2022 October 30, 2021 October 29, 2022 October 30, 2021

Thirteen Weeks Ended

April 29, 2023 April 30, 2022

NET SALES $ 1,383,609 $ 1,467,730

4 unchanged sentences

INTEREST EXPENSE, NET 11,230 10,920

LOSS ON EARLY RETIREMENT OF DEBT — — — 2,239

OTHER (INCOME), NET ( 3,713 ) ( 697 )

10 unchanged sentences

ACADEMY SPORTS AND OUTDOORS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Amounts in thousands)

Thirteen Weeks Ended Thirty-Nine Weeks Ended

October 29, 2022 October 30, 2021 October 29, 2022 October 30, 2021

COMPREHENSIVE INCOME:

Net income $ 131,741 $ 161,305 $ 470,348 $ 529,611

Recognized interest expense on interest rate swaps — 489 — 2,384

Tax expense — ( 115 ) — ( 548 )

Total comprehensive income $ 131,741 $ 161,679 $ 470,348 $ 531,447

See Condensed Notes to Consolidated Financial Statements

ACADEMY SPORTS AND OUTDOORS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Amounts in thousands, except per share data)

Paid-In Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Total Stockholders' Equity

Paid-In Capital Retained Earnings Total Stockholders' Equity

Shares Amount

3 unchanged sentences

Repurchase of common stock for retirement ( 750 ) ( 8 ) ( 2,450 ) ( 47,806 ) ( 50,264 )

Settlement of vested Restricted Stock Units 63 1 ( 1 ) — — —

Stock option exercises 201 2 3,292 — — 3,294

Settlement of vested Restricted Stock Units, net of shares withheld for taxes 93 1 ( 2,470 ) — ( 2,469 )

Stock option exercises, net of shares withheld for taxes 385 4 6,962 — 6,966

Cash dividends declared, $ 0.09 per share

1 unchanged sentence

Balances as of April 29, 2023 76,440 $ 764 $ 229,633 $ 1,450,565 $ 1,680,962

Net income — — — 188,801 — 188,801

Equity compensation — — 6,158 — — 6,158

Repurchase of common stock for retirement ( 5,551 ) ( 55 ) ( 13,391 ) ( 186,665 ) — ( 200,111 )

Settlement of vested Restricted Stock Units 29 0 ( 0 ) — — —

Issuance of common stock under employee stock purchase plan 93 1 2,796 — — 2,797

Stock option exercises 83 1 1,388 — — 1,389

Cash dividends declared, $ 0.075 per share

— — — ( 6,271 ) — ( 6,271 )

Balances as of July 30, 2022 79,725 $ 797 $ 196,510 $ 1,323,964 $ — $ 1,521,271

Net income — — — 131,741 — 131,741

Equity compensation — — 5,829 — — 5,829

Repurchase of common stock for retirement ( 2,176 ) ( 22 ) ( 5,477 ) ( 95,325 ) — ( 100,824 )

Settlement of vested Restricted Stock Units 3 0 ( 0 ) — — —

Stock option exercises 408 4 6,872 — — 6,876

Cash dividends declared, $ 0.075 per share

— — — ( 5,974 ) — ( 5,974 )

Balances as of October 29, 2022 77,960 $ 779 $ 203,734 $ 1,354,406 $ — $ 1,558,919

See Condensed Notes to Consolidated Financial Statements

ACADEMY SPORTS AND OUTDOORS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Amounts in thousands, except per share data)

Paid-In Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Total Stockholders' Equity

Paid-In Capital Retained Earnings Total Stockholders' Equity

Shares Amount

2 unchanged sentences

Equity compensation — — 3,499 — 3,499

Settlement of vested Restricted Stock Units 87 1 ( 1 ) — — —

Share-Based Award Payments adjustment for forfeitures — — 39 — — 39

Stock option exercises 2,686 27 17,230 — — 17,257

Recognized interest expense on interest rate swaps (net of tax impact of $ 270 )

— — — — 926 926

Balances as of May 1, 2021 93,887 $ 939 $ 150,370 $ 1,164,964 $ ( 2,398 ) $ 1,313,875

Net income — — — 190,510 — 190,510

Equity compensation — — 27,331 — — 27,331

Repurchase of common stock for retirement ( 2,272 ) ( 23 ) ( 5,247 ) ( 83,231 ) ( 88,501 )

Settlement of vested Restricted Stock Units 63 1 ( 1 ) — —

Issuance of common stock under employee stock purchase plan 35 — 945 — — 945

Stock option exercises 201 2 3,292 — 3,294

Recognized interest expense on interest rate swaps (net of tax impact of $ 163 )

— — — — 536 536

Balances as of July 31, 2021 92,884 $ 929 $ 187,746 $ 1,260,805 $ ( 1,862 ) $ 1,447,618

Net income — — — 161,305 — 161,305

Equity compensation — — 2,921 — — 2,921

Repurchase of common stock for retirement ( 5,723 ) ( 57 ) ( 11,941 ) ( 233,839 ) — ( 245,837 )

Stock option exercises 1,004 10 9,603 — — 9,613

Recognized interest expense on interest rate swaps (net of tax impact of $ 115 )

Cash dividends declared, $ 0.075 per share

— — — ( 6,536 ) ( 6,536 )

Balances as of October 30, 2021 88,165 $ 882 $ 188,329 $ 1,188,271 $ ( 1,488 ) $ 1,375,994

Balances as of April 30, 2022 85,071 $ 850 $ 199,559 $ 1,328,099 $ 1,528,508

See Condensed Notes to Consolidated Financial Statements

2 unchanged sentences

(Amounts in thousands)

Thirty-Nine Weeks Ended

October 29, 2022 October 30, 2021

Thirteen Weeks Ended

April 29, 2023 April 30, 2022

CASH FLOWS FROM OPERATING ACTIVITIES:

4 unchanged sentences

Equity compensation 11,382 3,499

Amortization of terminated interest rate swaps, deferred loan and other costs 2,328 4,787

Amortization of deferred loan and other costs 674 777

Deferred income taxes ( 1,923 ) 7,154

Non-cash loss on early retirement of debt — 2,239

Changes in assets and liabilities:

14 unchanged sentences

Repayment of Term Loan ( 750 ) ( 750 )

Debt issuance fees — ( 927 )

Share-Based Award Payments — ( 11,214 )

Proceeds from exercise of stock options 7,090 3,294

Proceeds from issuance of common stock under employee stock purchase program 2,797 945

Taxes paid related to net share settlement of equity awards ( 2,593 ) ( 895 )

2 unchanged sentences

Net cash used in financing activities ( 53,197 ) ( 93,388 )

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ( 167,831 ) 23,693

NET DECREASE IN CASH AND CASH EQUIVALENTS ( 41,609 ) ( 13,603 )

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 337,145 485,998

4 unchanged sentences

SUPPLEMENTAL DISCLOSURES OF NON-CASH ACTIVITIES:

Non-cash issuance of common shares $ — $ 501

Change in capital expenditures in accounts payable and accrued liabilities $ 603 $ 1,991

6 unchanged sentences

We conduct our operations primarily through our parent holding company's indirect subsidiary, Academy, Ltd., a Texas limited partnership doing business as "Academy Sports + Outdoors", or Academy, Ltd.

All of the Company's sales and business operations occur at Academy, Ltd., and Academy, Ltd.

is also the borrower and/or issuer of the Company's long-term debt and lessee of facilities.

Our fiscal year represents the 52 or 53 weeks ending on the Saturday closest to January 31.

On August 3, 2011, an investment entity owned by investment funds and other entities affiliated with Kohlberg Kravis Roberts & Co.

(collectively, "KKR"), acquired a majority interest in the Company.

On October 6, 2020, ASO, Inc.

completed an initial public offering and as of September 17, 2021, KKR no longer held an ownership interest in the Company.

The Company is one of the leading full-line sporting goods and outdoor recreational products retailers in the United States in terms of net sales.

As of October 29, 2022, we operated 265 "Academy Sports + Outdoors" retail locations in 17 states and three distribution centers located in Katy, Texas, Twiggs County, Georgia and Cookeville, Tennessee.

The Company is a leading full-line sporting goods and outdoor recreational products retailer in the United States in terms of net sales.

As of April 29, 2023, we operated 269 "Academy Sports + Outdoors" retail locations in 18 states and three distribution centers located in Katy, Texas, Twiggs County, Georgia and Cookeville, Tennessee.

We also sell merchandise to customers across most of the United States via our academy.com website.

Secondary Offering

On January 27, 2021, ASO, Inc.

entered into an Underwriting Agreement (the “Underwriting Agreement”), by and among ASO, Inc., Allstar LLC, Allstar Co-Invest Blocker L.P., KKR 2006 Allstar Blocker L.P., MSI 2011 LLC, MG Family Limited Partnership and the former management selling stockholder named therein (collectively, the “Selling Stockholders”), and Credit Suisse Securities (USA) LLC and J.P.

Morgan Securities LLC, as representatives of the several underwriters named therein (the “Underwriters”), relating to an underwritten offering of 12,000,000 shares of common stock (the “Secondary Offering”), pursuant to the Company’s Registration Statement on Form S-1 (File No.

333-252390), filed on January 25, 2021.

The Selling Stockholders granted the Underwriters the option to purchase, within 30 days from the date of the Underwriting Agreement, an additional 1,800,000 shares of common stock.

On January 29, 2021, the Underwriters exercised in full their option to purchase the additional shares.

The Secondary Offering was completed on February 1, 2021.

Pursuant to the Underwriting Agreement, the Underwriters purchased the shares from the Selling Stockholders at a price of approximately $ 20.69 per share.

The Company did no t receive any proceeds from the Secondary Offering.

May 2021 Secondary Offering and Stock Repurchase

On May 5, 2021, ASO, Inc.

entered into an underwriting agreement (the “May 2021 Underwriting Agreement”), by and among ASO, Inc., Allstar LLC, Allstar Co-Invest Blocker L.P., KKR 2006 Allstar Blocker L.P., MSI 2011 LLC and MG Family Limited Partnership (collectively, the “May 2021 Selling Stockholders”), and Credit Suisse Securities (USA) LLC and J.P.

Morgan Securities LLC, as representatives of the several underwriters named therein (the “May 2021 Underwriters”), relating to an underwritten offering of 14,000,000 shares of Common Stock at $ 30.96 per share (the “May 2021 Secondary Offering”), pursuant to the Company’s Registration Statement on Form S-1 (File No.

333-255720), filed on May 3, 2021.

The May 2021 Selling Stockholders granted the May 2021 Underwriters the option to purchase, within 30 days from the date of the May 2021 Underwriting Agreement, an additional 2,100,000 shares of Common Stock.

On May 6, 2021, the May 2021 Underwriters exercised in full their option to purchase the additional shares.

The May 2021 Secondary Offering also included the Company's repurchase and simultaneous retirement of 3,229,974 shares out of the 14,000,000 shares at $ 30.96 per share, the same price granted to the underwriters, which was at a discount to the prevailing market price at the time of repurchase (see "Share Repurchases" in Note 2).

The May 2021 Secondary Offering was completed on May 10, 2021.

The Company did no t receive any proceeds from the May 2021 Secondary Offering.

The May 2021 Secondary Offering reduced the KKR ownership interest in the Company, resulting in a vesting event (the "2021 Vesting Event") for awards granted under the 2011 Unit Incentive Plan, whereby unvested time awards and performance-based awards which had previously met their performance targets vested and unvested performance-based awards which had not previously met their performance targets were forfeited.

As a result, we incurred approximately $ 24.9 million in non-cash expenses related to equity-based compensation and approximately $ 15.4 million of cash expenses related to taxes on equity-based compensation.

Additionally, approximately $ 8.2 million of Share-Based Award Payments (see Note 9) for equity-based compensation distributions were accelerated during the 2021 second quarter.

September 2021 Secondary Offering and Stock Repurchase

On September 14, 2021, ASO, Inc.

entered into an underwriting agreement (the “September 2021 Underwriting Agreement”), by and among ASO, Inc., Allstar LLC, Allstar Co-Invest Blocker L.P.

and KKR 2006 Allstar Blocker L.P.

(collectively, the “September 2021 Selling Stockholders”), and Credit Suisse Securities (USA) LLC, as representative of the several underwriters named therein (the “September 2021 Underwriters”), relating to an underwritten offering (the “September 2021 Secondary Offering”) of 18,645,602 shares of common stock at approximately $ 43.52 per share, pursuant to the Company’s Registration Statement on Form S-1 (File No.

333-259477), filed on September 13, 2021.

The September 2021 Secondary Offering also included the Company’s repurchase and simultaneous retirement of 4,500,000 shares out of the 18,645,602 shares of common stock at approximately $ 43.52 , the same price granted to the September 2021 Underwriters, which was at a discount to the prevailing market price at the time of repurchase (see "Share Repurchases" in Note 2).

The September 2021 Secondary Offering was completed on September 17, 2021.

The Company did no t receive any proceeds from the September 2021 Secondary Offering.

Summary of Significant Accounting Policies

4 unchanged sentences

The information furnished herein reflects all normal recurring adjustments which are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented.

The results of operations for the thirteen and thirty-nine weeks ended October 29, 2022 are not necessarily indicative of the results that will be realized for the fiscal year ending January 28, 2023 or any other period.

The results of operations for the thirteen weeks ended April 29, 2023 are not necessarily indicative of the results that will be realized for the fiscal year ending February 3, 2024 or any other period.

The balance sheet as of January 28, 2023 has been derived from our audited financial statements as of that date.

10 unchanged sentences

Our most significant estimates and assumptions that materially affect the financial statements involve difficult, subjective or complex judgments by management, including the valuation of merchandise inventories and performing goodwill, intangible and long-lived asset impairment analyses.

Given the global economic climate and the possibility of additional unforeseen effects from the COVID-19 pandemic, these estimates remain challenging, and actual results could differ materially from our estimates.

Given the global economic climate, these estimates remain challenging, and actual results could differ materially from our estimates.

Reclassifications

Within the merchandise division sales table presented in Note 3, certain products and categories were recategorized amongst various categories and divisions, respectively, to better align with our current merchandising strategy and view of the business.

As a result, we have reclassified sales between divisions in the thirteen weeks ended April 30, 2022 for comparability purposes.

This reclassification is in divisional presentation only and did not impact the overall net sales balances previously disclosed.

Change in Accounting Principle

Effective January 29, 2023, the Company changed the method of accounting for its inventories from the last-in-first-out (“LIFO”) method to the weighted average cost method.

The Company believes that this inventory method change is preferable because we believe it improves comparability with industry peers and is a more accurate representation of merchandise inventories, net and cost of goods sold.

Due to historical price deflation on the Company’s merchandise purchases, the Company was in a position where the LIFO merchandise inventories value exceeded the cost of its inventory for all periods presented in the consolidated financial statements.

In considering the lower of cost or market principle, merchandise inventories valued at LIFO, including necessary valuation adjustments, approximated the cost of such inventories using the weighted average inventory method.

As such, there is no impact to the prior periods from the retrospective presentation of the change.

The following tables show the pro forma effect to our consolidated financial statements as if the Company had remained on LIFO (amounts in thousands):

April 29, 2023

As Reported Effect of Change Pro Forma LIFO

Consolidated Balance Sheet:

Accrued expenses and other current liabilities $ 221,388 $ ( 4,456 ) $ 216,932

Total current liabilities 1,049,364 ( 4,456 ) 1,044,908

Deferred tax liabilities, net 257,120 4,456 261,576

Total liabilities 2,960,972 — 2,960,972

Total liabilities and stockholders' equity 4,641,934 — 4,641,934

Thirteen Weeks Ended April 29, 2023

As Reported Effect of Change Pro Forma LIFO

Consolidated Statements of Cash Flows:

Deferred income taxes $ ( 1,923 ) $ 4,456 $ 2,533

Income taxes payable 12,642 ( 4,456 ) 8,186

Net cash provided by operating activities 52,135 — 52,135

Share Repurchases

5 unchanged sentences

The Share Repurchase Programs do not obligate the Company to acquire any particular number of common shares, and the programs may be suspended, extended, modified or discontinued at any time.

During the thirteen and thirty-nine weeks ended October 29, 2022, we repurchased and concurrently retired 2,176,463 and 9,999,704 shares of ASO, Inc.

common stock for an aggregate amount of $ 100.8 million and $ 389.4 million, respectively, pursuant to the Share Repurchase Programs.

During the thirteen and thirty-nine weeks ended October 30, 2021, we repurchased and concurrently retired 5,722,892 and 8,952,866 shares of ASO, Inc.

common stock for an aggregate amount of $ 245.8 million and $ 345.8 million, respectively, which includes purchases that were made pursuant to the Share Repurchase Programs and those that were made prior to the Share Repurchase Programs.

As of October 29, 2022, we no longer had availability under the 2021 Share Repurchase Program and we had approximately $ 399.4 million available for share repurchases pursuant to the 2022 Share Repurchase Program.

During the thirteen weeks ended April 29, 2023, we repurchased and concurrently retired 750,010 shares of ASO, Inc.

common stock for an aggregate amount of $ 50.3 million, which includes an accrual for excise taxes of $ 0.3 million, pursuant to our Share Repurchase Programs.

During the thirteen weeks ended April 30, 2022, we repurchased and concurrently retired 2,272,349 shares of ASO, Inc.

common stock for an aggregate amount of $ 88.5 million, pursuant to the Share Repurchase Programs.

As of April 29, 2023, we no longer had availability under the 2021 Share Repurchase Program, and we had approximately $ 249.4 million available for share repurchases pursuant to the 2022 Share Repurchase Program.

Supplier Finance Programs

In September 2022, the FASB issued ASU 2022-04:

Liabilities - Supplier Finance Programs Disclosure of Supplier Finance Program Obligations.

This pronouncement requires that a buyer in a supplier finance program disclose sufficient information about the program to allow a user of the financial statements to understand the program's nature, activity during the period, changes from period to period and potential magnitude.

The Company adopted the new guidance as of January 29, 2023.

We have previously entered into a supply chain financing arrangement with a third-party financial institution, whereby certain suppliers have the ability to settle outstanding payment obligations earlier than the due date required by our original supplier terms.

Subsequently, we settle invoices with the financial institution within 45 days, which approximates our original supplier terms.

The Company does not have an economic interest in suppliers’ voluntary participation, does not provide any guarantees or pledge assets under these arrangements, and our rights and obligations to our suppliers, including amounts due, are not impacted.

Our liability associated with these arrangements, which is presented within accounts payable on the consolidated balance sheets, was $ 8.9 million, $ 9.0 million, and $ 10.0 million as of April 29, 2023, January 28, 2023 and April 30, 2022, respectively.

Recent Accounting Pronouncements

Reference Rate Reform

In March 2020, the FASB issued ASU 2020-04, "Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting." This pronouncement provides temporary optional expedients and exceptions to the current guidance on contract modifications and hedge accounting to ease the financial reporting burden related to the expected market transition from the London Interbank Offered Rate ("LIBOR") and other interbank offered rates to alternative reference rates.

The adoption of this guidance is effective for all entities as of March 12, 2020 through December 31, 2022.

The Company is currently evaluating the expedients and exceptions provided by this amendment as it relates to our transition from LIBOR to another reference rate to determine the impact.

Supplier Finance Programs

In September 2022, the FASB issued ASU 2022-04, "Liabilities - Supplier Finance Programs (Subtopic 405-50):

Disclosure of Supplier Finance Program Obligations." This pronouncement requires that a buyer in a supplier finance program disclose sufficient information about the program to allow a user of the financial statements to understand the program's nature, activity during the period, changes from period to period and potential magnitude.

The adoption of these amendments is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, except the amendment on roll-forward information, which is effective for fiscal years beginning after December 15, 2023.

Early adoption is permitted.

The Company is currently evaluating the impact that the adoption of this accounting standard will have on its financial disclosures.

In March 2020, the FASB issued ASU 2020-04:

Facilitation of the Effects of Reference Rate Reform on Financial Reporting.

This pronouncement provides temporary optional expedients and exceptions to the current guidance on contract modifications and hedge accounting to ease the financial reporting burden related to the expected market transition from the London Interbank Offered Rate ("LIBOR") and other interbank offered rates to alternative reference rates.

In December 2022, the FASB issued ASU 2022-06 which extended the effectiveness of this guidance to December 31, 2024.

The Company elected to utilize these optional expedients in connection with the amendment to our ABL Facility, which transitioned the facility from LIBOR to the Secured Overnight Financing Rate (“SOFR”) on March 30, 2023 (see Note 4).

Revenue from merchandise sales is recognized, net of sales tax, when the Company’s performance obligation to the customer is met, which is when the Company transfers control of the merchandise to the customer.

1 unchanged sentence

The following table sets forth the approximate amount of sales by merchandise divisions for the periods presented (amounts in thousands):

Thirteen Weeks Ended Thirty-Nine Weeks Ended

October 29, 2022 October 30, 2021 October 29, 2022 October 30, 2021

Thirteen Weeks Ended

April 29, 2023 April 30, 2022

Merchandise division sales (1)

6 unchanged sentences

Other sales (3)

8,461 8,223 26,369 25,047

Net Sales $ 1,383,609 $ 1,467,730

(1) E-commerce sales consisted of 9.5 % and 9.7 % of merchandise sales for the thirteen and thirty-nine weeks ended October 29, 2022, respectively, and 8.0 % for the thirteen and thirty-nine weeks and October 30, 2021.

(2) Other sales consisted primarily of the sales return allowance, gift card breakage income, credit card bounties and royalties, shipping income, net hunting and fishing license income and other items.

(1) Certain products and categories were recategorized amongst various categories and divisions, respectively, to better align with our current merchandising strategy and view of the business.

As a result, we have reclassified sales between divisions in the thirteen weeks ended April 30, 2022, for comparability purposes.

This reclassification is in divisional presentation only and did not impact the overall net sales balances previously disclosed (see Note 2).

(2) E-commerce sales consisted of 8.2 % and 9.5 % of merchandise sales for the thirteen weeks ended April 29, 2023 and April 30, 2022, respectively.

(3) Other sales consisted primarily of the gift card breakage income, credit card bounties and royalties, shipping income, net hunting and fishing license income, sales return allowance and other items.

We sell gift cards in stores, online and in third-party retail locations.

1 unchanged sentence

The following is a reconciliation of the gift card liability (amounts in thousands):

Thirteen Weeks Ended Thirty-Nine Weeks Ended

October 29, 2022 October 30, 2021 October 29, 2022 October 30, 2021

Thirteen Weeks Ended

April 29, 2023 April 30, 2022

Gift card liability, beginning balance $ 90,650 $ 86,568

5 unchanged sentences

Our debt consisted of the following (amounts in thousands) as of:

October 29, 2022 January 29, 2022 October 30, 2021

April 29, 2023 January 28, 2023 April 30, 2022

ABL Facility, due November 2025 $ — $ — $ —

8 unchanged sentences

(1) Deferred loan costs are related to the Term Loan and Notes.

As of October 29, 2022, January 29, 2022 and October 30, 2021, the balance in deferred loan costs related to the ABL Facility (as defined below) was approximately $ 3.5 million, $ 4.3 million and $ 4.6 million, respectively, and was included in other noncurrent assets on our consolidated balance sheets.

Total amortization of deferred loan costs was $ 0.7 million and $ 2.0 million for the thirteen and thirty-nine weeks ended October 29, 2022, respectively, and $ 0.6 million and $ 2.0 million for the thirteen and thirty-nine weeks ended October 30, 2021, respectively.

Total expenses related to accretion of original issuance discount were $ 0.1 million and $ 0.3 million for the thirteen and thirty-nine weeks ended October 29, 2022, respectively, and $ 0.1 million and $ 0.4 million for the thirteen and thirty-nine weeks ended and October 30, 2021, respectively.

As of April 29, 2023, January 28, 2023 and April 30, 2022, the balance in deferred loan costs related to the ABL Facility (as defined below) was approximately $ 2.9 million, $ 3.2 million and $ 4.0 million, respectively, and was included in other noncurrent assets on our consolidated balance sheets.

Total amortization of deferred loan costs was $ 0.6 million and $ 0.7 million for the thirteen weeks ended April 29, 2023 and April 30, 2022, respectively.

Total expenses related to accretion of original issuance discount were $ 0.1 million for the thirteen weeks ended April 29, 2023 and April 30, 2022.

The expenses related to amortization of deferred loan costs and accretion of original issuance discount are included in interest expense, net on the consolidated statements of income.

1 unchanged sentence

On November 6, 2020, Academy, Ltd.

entered into a seven-year $ 400.0 million senior secured term loan (the "2020 Term Loan") with Credit Suisse AG, Cayman Island Branch ("Credit Suisse"), as the administrative agent and collateral agent and the several other lenders and parties.

The 2020 Term Loan will mature on November 6, 2027.

The 2020 Term Loan bore interest, at Academy, Ltd.’s election, at either (1) LIBOR rate with a floor of 0.75 %, plus a margin of 5.00 %, or (2) a base rate equal to the highest of (a) the federal funds rate plus 0.50 %, (b) Credit Suisse’s "prime rate", or (c) the one-month LIBOR rate plus 1.00 %, plus a margin of 4.00 %.

Quarterly principal payments of approximately $ 1.0 million were required through September 30, 2027, with the balance due in full on the maturity date of November 6, 2027.

entered into a seven-year $ 400.0 million senior secured term loan (the "2020 Term Loan").

On May 25, 2021, Academy, Ltd.

entered into Amendment No.

4 (the “Amendment”) to the Second Amended and Restated Credit Agreement, dated as of November 6, 2020, among Academy, Ltd., as Borrower, Credit Suisse AG, Cayman Islands Branch, as the administrative agent and collateral agent, the several lenders party thereto and the several other parties named therein (as previously amended, the “Existing Credit Agreement” and as amended by the Amendment, the “Amended Credit Agreement”).

Pursuant to the terms of the Amendment, Academy, Ltd.

(i) reduced the applicable margin on LIBOR borrowings under the Existing Credit Agreement from 5.00 % to 3.75 % and (ii) utilized cash on hand to repay $ 99.0 million of outstanding borrowings under the Existing Credit Agreement, leaving an outstanding principal balance of $ 300.0 million under the Amended Credit Agreement.

Quarterly principal payments of $ 750.0 thousand are required through September 30, 2027 and borrowings under the Amended Credit Agreement will continue to mature on November 6, 2027.

All other material terms and provisions of the 2020 Term Loan remain substantially the same as the terms and provisions in place immediately prior to the effectiveness of the Amendment.

As of October 29, 2022, the weighted average interest rate was 6.88 %, with interest payable monthly.

Under the Amendment, the Term Loan bears interest, at Academy, Ltd.'s election, at either (1) LIBOR rate with a floor of 0.75 %, plus a margin of 3.75 %, or (2) a base rate equal to the highest of (a) the federal funds rate plus 0.50 %, (b) Credit Suisse's "prime rate", or (c) the one-month LIBOR rate plus 1.00 %, plus a margin of 4.00 %.

Quarterly principal payments of $ 750.0 thousand are required through September 30, 2027 and borrowings mature on November 6, 2027.

As of April 29, 2023, the weighted average interest rate was 8.60 %, with interest payable monthly.

The terms and conditions of the Amendment also require that the outstanding balance under the Term Loan is prepaid under certain circumstances.

As of October 29, 2022, no prepayment was due under the terms and conditions of the Term Loan.

In connection with the Amendment, the Company recognized a non-cash loss on early retirement of debt of $ 2.2 million in the thirty-nine weeks ended October 30, 2021 from the write-off of deferred loan costs and expense related to the original issuance discount associated with our 2020 Term Loan.

As of April 29, 2023, no prepayment was due under the terms and conditions of the Term Loan.

On November 6, 2020, Academy, Ltd.

1 unchanged sentence

The Notes require cash interest payments semi-annually in arrears on May 15 and November 15 of each year at a rate of 6.00 % per year.

On November 6, 2020, Academy, Ltd., as borrower, and the guarantors, amended the previously existing secured asset-based revolving credit facility by entering into an amendment to the First Amended and Restated ABL Credit Agreement, dated as of July 2, 2015, with JPMorgan Chase Bank, N.A.

We refer to the 2020 ABL Facility and the amendments thereto collectively as the "ABL Facility".

as the administrative agent and collateral agent, letter of credit issuer and swingline lender and the several lenders party thereto, which ABL amendment, among other things, extended the maturity of Academy, Ltd.’s asset-based revolving credit facility thereunder to November 6, 2025 (the "2020 ABL Facility").

On March 30, 2023, Academy, Ltd., as borrower, and the guarantors, amended the 2020 ABL Facility by entering into an amendment to the First Amended and Restated ABL Credit Agreement, dated as of July 2, 2015, with JP Morgan Chase Bank, N.A.

as the ABL Agent and the several lenders party thereto, which ABL amendment updated its benchmark base interest rate from LIBOR to Adjusted Term SOFR.

The ABL Facility is used to provide financing for working capital and other general corporate purposes, as well as to support certain letters of credit requirements, and availability is subject to customary borrowing base and availability provisions.

During the normal course of business, we periodically utilize letters of credit primarily for the purchase of import goods and in support of insurance contracts.

As of October 29, 2022, we had outstanding letters of credit of approximately $ 17.4 million, all of which were issued under the ABL Facility, and we had no borrowings outstanding under the ABL Facility, leaving the available borrowing capacity under the ABL Facility of $ 982.6 million.

Borrowings under the ABL Facility bear interest, at our election, at either (1) LIBOR plus a margin of 1.25 % to 1.75 %, or (2) a base rate equal to the highest of (a) the federal funds rate plus 0.50 %, (b) JPMorgan Chase Bank, N.A.'s "prime rate", or (c) the one-month LIBOR rate plus 1.00 %, plus a margin of 0.25 % to 0.75 %.

As of April 29, 2023, we had outstanding letters of credit of approximately $ 13.9 million, all of which were issued under the ABL Facility, and we had no borrowings outstanding under the ABL Facility, leaving an available borrowing capacity under the ABL Facility of $ 986.1 million.

Borrowings under the ABL Facility bear interest, at our election, at either (1) Adjusted Term SOFR plus a margin of 1.25 % to 1.75 %, or (2) a base rate equal to the highest of (a) the federal funds rate plus 0.50 %, (b) JPMorgan Chase Bank, N.A.'s "prime rate", or (c) the one-month Adjusted Term SOFR rate plus 1.00 %, plus a margin of 0.25 % to 0.75 %.

The ABL Facility also provides a fee applicable to the unused commitments of 0.25 %.

The terms and conditions of the ABL Facility also require that we prepay outstanding loans under the ABL Facility under certain circumstances.

As of October 29, 2022, no future prepayments of outstanding loans have been triggered under the terms and conditions of the ABL Facility.

The ABL Facility, Term Loan and Notes agreements contain covenants, including, among other things, covenants that restrict Academy, Ltd.'s ability to incur certain additional indebtedness, create or permit liens on assets, engage in mergers or consolidations, pay dividends, make other restricted payments, make loans or advances, engage in transactions with affiliates or amend material documents.

As of April 29, 2023, no future prepayments of outstanding loans have been triggered under the terms and conditions of the ABL Facility.

The ABL Facility, Term Loan and Notes agreements contain covenants, including, among other things, covenants that may restrict Academy, Ltd.'s ability to incur certain additional indebtedness, create or permit liens on assets, engage in mergers or consolidations, pay dividends, make other restricted payments, make loans or advances, engage in transactions with affiliates or amend material documents.

Additionally, at certain times, the ABL Facility is subject to a minimum adjusted fixed charge coverage ratio.

These covenants are subject to certain qualifications and limitations.

We were in compliance with these covenants as of October 29, 2022.

Derivative Financial Instruments

We have historically used interest rate swap agreements to hedge market risk relating to possible adverse changes in interest rates.

All interest rate swaps had been designated as cash flow hedges of variable rate interest payments on borrowings under the Term Loan.

As of October 29, 2022, we do not have any derivative financial instruments outstanding.

For derivatives which were designated as hedging instruments, amounts included in Accumulated Other Comprehensive Income (Loss) ("AOCI") were reclassified to interest expense in the same period during which the hedged transaction affected earnings, which was as interest expense was recorded on the underlying Term Loan.

The impact of gains and losses related to interest rate swaps that were deferred into AOCI and subsequently reclassified into expense are as follows (amounts in thousands):

Thirteen Weeks Ended Thirty-Nine Weeks Ended

October 29, 2022 October 30, 2021 October 29, 2022 October 30, 2021

Accumulated Other Comprehensive Loss, beginning $ — $ ( 1,862 ) $ — $ ( 3,324 )

Increase to interest expense (net of tax impact of $ 115 and $ 548 in the thirteen and thirty-nine weeks ended October 30, 2021, respectively)

— 374 — 1,836

Accumulated Other Comprehensive Loss, ending $ — $ ( 1,488 ) $ — $ ( 1,488 )

We were in compliance with these covenants as of April 29, 2023.

Fair Value Measurements

10 unchanged sentences

Government treasury bills and securities, which are classified as cash and redeemable on demand.

As of October 29, 2022, January 29, 2022 and October 30, 2021, we held $ 264.7 million, $ 401.0 million and $ 294.0 million in money market funds, respectively.

As of April 29, 2023, January 28, 2023 and April 30, 2022, we held $ 42.3 million, $ 95.6 million and $ 357.1 million in money market funds, respectively.

The fair value of the Term Loan and Notes is estimated using a discounted cash flow analysis based on quoted market prices for the instrument in an inactive market and is therefore classified as Level 2 within the fair value hierarchy.

As of October 29, 2022, January 29, 2022, and October 30, 2021 the estimated fair value of the Term Loan and Notes was $ 0.7 billion.

As of April 29, 2023, January 28, 2023, and April 30, 2022 the estimated fair value of the Term Loan and Notes was $ 0.6 billion, $ 0.6 billion and $ 0.7 billion, respectively.

As borrowings on the ABL Facility are generally repaid in less than 12 months, we believe that fair value approximates the carrying value.

1 unchanged sentence

Property and equipment consists of the following (amounts in thousands) as of:

October 29, 2022 January 29, 2022 October 30, 2021

April 29, 2023 January 28, 2023 April 30, 2022

Leasehold improvements $ 491,112 $ 484,930 $ 458,752

6 unchanged sentences

Property and equipment, net $ 365,024 $ 351,424 $ 339,529

Depreciation expense was $ 27.0 million and $ 78.9 million in the thirteen and thirty-nine weeks ended October 29, 2022, respectively, and $ 26.5 million and $ 77.8 million in the thirteen and thirty-nine weeks ended October 30, 2021, respectively.

These costs are included in selling, general and administrative expenses on the consolidated statements of income.

Depreciation expense was $ 26.3 million and $ 25.6 million in the thirteen weeks ended April 29, 2023 and April 30, 2022, respectively.

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consist of the following (amounts in thousands) as of:

October 29, 2022 January 29, 2022 October 30, 2021

April 29, 2023 January 28, 2023 April 30, 2022

Accrued interest $ 13,197 $ 7,015 $ 12,804

17 unchanged sentences

The plan reserved a total of 5,150,000 shares of common stock for issuance.

As of October 29, 2022, there were 2,410,059 shares that were authorized and available for future issuance under the 2020 Omnibus Incentive Plan.

As of April 29, 2023, there were 1,965,467 shares that were authorized and available for future issuance under the 2020 Omnibus Incentive Plan.

On September 29, 2020, the ASO, Inc.

Board of Directors adopted the 2020 Employee Stock Purchase Plan (the "ESPP"), which became effective on October 1, 2020.

We have reserved a total of 2,000,000 shares under the ESPP and as of October 29, 2022, there were 1,792,945 shares authorized and available for future issuance under the ESPP.

Equity compensation expense was $ 5.8 million and $ 15.5 million for the thirteen and thirty-nine weeks ended October 29, 2022, respectively.

Equity compensation expense was $ 2.9 million and $ 36.1 million for the thirteen and thirty-nine weeks ended October 30, 2021, respectively, which includes approximately $ 24.9 million in non-cash expenses related to the 2021 Vesting Event which occurred during the 2021 second quarter.

We have reserved a total of 2,000,000 shares under the ESPP and as of April 29, 2023, there were 1,717,411 shares authorized and available for future issuance under the ESPP.

Equity compensation expense was $ 11.4 million and $ 3.5 million for the thirteen weeks ended April 29, 2023, and April 30, 2022, respectively.

These costs are included in selling, general and administrative expenses in the consolidated statements of income.

On August 28, 2020, New Academy Holding Company, LLC, the parent holding company for our operations prior to our initial public offering, paid a $ 257.0 million distribution to its members of record as of August 25, 2020.

Cash payments ("Share-Based Award Payments") of $ 32.2 million for unvested Awards were paid upon vesting of such Awards, which was completed and paid in-full as of July 31, 2021.

Service Option Fair Value Assumptions

1 unchanged sentence

The expected lives of the Service Options granted were based on the "SEC simplified" method.

Expected price volatility was determined based on the implied volatilities of comparable companies over a historical period that matches the expected life of the Award.

Expected price volatility was determined based on a time-weighted average of the historical volatility for the Company and implied volatilities of comparable companies over a historical period that matches the expected life of the Award.

The risk-free interest rate was based on the expected U.S.

2 unchanged sentences

The assumptions used to calculate the fair value of Awards granted are evaluated and modified, as necessary, to reflect current market conditions and experience.

The following table presents the assumptions and grant date fair values for Service Options granted in the thirty-nine weeks ended October 29, 2022:

The following table presents the assumptions and grant date fair values for Service Options granted in the thirteen weeks ended April 29, 2023:

Expected life in years 6.0

Expected volatility 42.9 % to 44.8 %

Expected volatility 45.7 %

Weighted-average volatility 45.7 %

Risk-free interest rate 2.4 % to 4.1 %

Risk-free interest rate 3.7 %

Dividend yield 0.6 %

The following table presents the Award grants during the thirty-nine weeks ended October 29, 2022:

The following table presents the Award grants during the thirteen weeks ended April 29, 2023:

Service Options Service Restricted Stock Units Performance Restricted Stock Units

2 unchanged sentences

Weighted average exercise price per Award $ 64.67 N/A N/A

The following table presents the unrecognized compensation cost as of October 29, 2022:

The following table presents the unrecognized compensation cost as of April 29, 2023:

Service Options Service Restricted Stock Units Performance Restricted Stock Units

4 unchanged sentences

Diluted weighted average common shares outstanding is based on the basic weighted average common shares outstanding plus any potential dilutive effect of stock-based awards outstanding during the period using the treasury stock method, which assumes the potential proceeds received from the dilutive stock options are used to purchase treasury stock.

Anti-dilutive stock-based awards do not include awards which have a performance or liquidity event target which has yet to be achieved.

Anti-dilutive stock-based awards do not include awards which have a performance target which has yet to be achieved.

Basic and diluted weighted average common shares outstanding and basic and diluted earnings per common share are calculated as follows (amounts in thousands except per share amounts):

Thirteen Weeks Ended Thirty-Nine Weeks Ended

October 29, 2022 October 30, 2021 October 29, 2022 October 30, 2021

Thirteen Weeks Ended

April 29, 2023 April 30, 2022

Net income $ 93,970 $ 149,806

Weighted average common shares outstanding - basic 76,862 86,658

Dilutive effect of Service Restricted Units and Service Restricted Stock Units 144 72 123 14

Dilutive effect of Performance Restricted Stock Units and Liquidity Event Restricted Units 105 109 96 401

Dilutive effect of Service Restricted Stock Units 247 36

Dilutive effect of Performance Restricted Stock Units 186 101

Dilutive effect of Service Options 1,841 1,607

Dilutive effect of Performance Unit Options and Performance Stock Options 205 316 209 757

Dilutive effect of Performance Unit Options 152 212

Dilutive effect of ESPP Shares — —

3 unchanged sentences

Anti-dilutive stock-based awards excluded from diluted calculation 64 311

Related Party Transactions

On January 27, 2021, May 5, 2021 and September 14, 2021, in connection with the Secondary Offering, May 2021 Secondary Offering and September 2021 Secondary Offering, respectively, the Company entered into three separate underwriting agreements with affiliates of KKR (as selling stockholders), the several other selling stockholders named therein, and the several underwriters named therein, including KCM (as underwriter).

The Secondary Offering, May 2021 Secondary Offering and September 2021 Secondary Offering were completed on February 1, 2021, May 10, 2021, and September 17, 2021, respectively.

The Company did not pay KCM any fees in connection with these secondary offerings.

In connection with the May 2021 Secondary Offering, we repurchased from the underwriters 3,229,974 shares of ASO, Inc.

common stock at $ 30.96 per share for approximately $ 100.0 million.

In connection with the September 2021 Secondary Offering, we repurchased from the underwriters 4,500,000 shares of ASO, Inc.

common stock at $ 43.52 for approximately $ 195.8 million.

The shares repurchased in both the May 2021 Secondary Offering and the September 2021 Secondary Offering were immediately retired by the Company (see Note 1 and Note 2).

Commitments and Contingencies

Freight, Technology Related and Other Commitments

As of October 29, 2022, we have obligations under freight, technology-related, construction and other contractual commitments in the amount of $ 92.0 million.

As of April 29, 2023, we have obligations under freight, technology-related, construction and other contractual commitments in the amount of $ 101.1 million.

Of such commitments, approximately $ 66.0 million is payable in the next 12 months.

5 unchanged sentences

We are a defendant or co-defendant in lawsuits, claims and demands brought by various parties relating to matters normally incident to our business.

No individual case, or group of cases presenting substantially similar issues of law or fact, is expected to have a material effect on the manner in which we conduct our business or on our results of operations, financial position or liquidity.

No individual case, or group of cases against us, presenting substantially similar issues of law or fact, is expected to have a material effect on the manner in which we conduct our business or on our consolidated results of operations, financial position or liquidity.

The majority of these cases are alleging product, premises, employment and/or commercial liability.

1 unchanged sentence

however, the ultimate outcome of these cases cannot be determined at this time.

We believe, taking into consideration our indemnities, insurance and reserves, the ultimate resolution of these matters will not have a material impact on our financial position, results of operations or cash flows.

We believe, taking into consideration our indemnities, defenses, insurance and reserves, the ultimate resolution of these matters will not have a material impact on our financial position, results of operations or cash flows.

In addition, government agencies and self-regulatory organizations have the ability to conduct periodic examinations of and administrative proceedings regarding our business.

On May 9, 2023, the U.S.

Customs and Border Protection (CBP) notified us we owed additional duties relating to certain products that we imported from China that CBP believes are subject to certain anti-dumping and/or countervailing duties.

We do not believe that these products are subject to such duties and are contesting CBP’s determination vigorously.

While we contest CBP’s determination, we will be required to deposit with CBP an amount of duties relating to these products, which will be included in prepaid expenses and other current assets on the Company’s consolidated balance sheet while this matter is pending.

We do not believe this matter will have a material adverse effect on our financial position, results of operations or cash flows.

However, the ultimate outcome of this matter cannot be determined at this time and we cannot assure you that we will be successful in contesting it or that we will not need to accrue or pay additional amounts in the future.

There have been no material developments during the fiscal quarter ended April 29, 2023, with respect to any of the matters discussed under the heading "Legal Proceedings" in the Annual Report.

We are not currently party to any other legal proceedings that we believe would have a material adverse effect on our financial position, results of operations or cash flows.

Sponsorship Agreement and Intellectual Property Commitments

2 unchanged sentences

These agreements typically contain a one to three-year term and contractual payment amounts required to be paid by the Company.

As of October 29, 2022, we have $ 14.9 million in related commitments through 2027, of which $ 4.9 million is payable in the next 12 months.

As of April 29, 2023, we have $ 17.4 million in related commitments through 2027, of which $ 5.3 million is payable in the next 12 months.

Subsequent Events

Our management evaluated events or transactions that occurred after October 29, 2022 through December 7, 2022, the issuance date of the consolidated financial statements, and identified the following matter to report:

On December 6, 2022, the Company's Board of Directors declared a quarterly cash dividend with respect to the fiscal quarter ended October 29, 2022, of $ 0.075 per share of the Company's common stock, payable on January 13, 2023, to stockholders of record as of the close of business on December 20, 2022.

Our management evaluated events or transactions that occurred after April 29, 2023 through June 6, 2023, the issuance date of the consolidated financial statements, and identified the following matter to report:

On June 1, 2023, the Company's Board of Directors declared a quarterly cash dividend with respect to the fiscal quarter ended April 29, 2023, of $ 0.09 per share of the Company's common stock, payable on July 13, 2023, to stockholders of record as of the close of business on June 15, 2023.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements