What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2024-03-21 compared with 2023-03-16 · 392 added, 412 removed, 945 unchanged (46% of the section changed)

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Changes in Internal Control over Financial Reporting

No changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the Company's most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

We rely extensively on information systems to manage our business and report operating results.

During the 2023 second quarter, we completed the implementation of our new Enterprise Resource Planning ("ERP") system, which resulted in considerable changes to our processes and control environment, including modifications to existing applications and reports.

The new ERP replaced our legacy system, in which our business transactions are processed and recorded.

The new ERP is intended to facilitate transactional processing and enhance management tools and is expected to improve internal controls over financial reporting.

Other than as described above, no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the Company's most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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We have audited the internal control over financial reporting of Academy Sports and Outdoors, Inc.

and subsidiaries (the “Company”) as of January 28, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of January 28, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended January 28, 2023, of the Company and our report dated March 16, 2023 expressed an unqualified opinion on those financial statements.

and subsidiaries (the “Company”) as of February 3, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of February 3, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended February 3, 2024, of the Company and our report dated March 21, 2024, expressed an unqualified opinion on those financial statements.

Basis for Opinion

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Other Information

(a) Board of Directors Update

Appointment of Monique Picou to Board of Directors

On March 18, 2024, the Board of the Company approved an increase of the size of the Board of Directors from nine to ten directors and appointed Monique Picou, age 57, as an independent Class II director, effective immediately, to fill the vacancy created by such increase.

Picou’s initial term will expire on the date of the Company’s 2025 Annual Meeting of Stockholders and until her successor shall be elected and qualified or until her earlier death, resignation, retirement, disqualification or removal.

Picou serves as Global Executive - Vice President, Google Cloud Supply Chain and Operations at Alphabet, Inc.

since March 2023, and also served as Vice President, Google Product, Technology Strategy and Global Server Operations at Alphabet, Inc.

from February 2021 to April 2023.

Prior to Alphabet, Inc., Mrs.

Picou served as Senior Vice President, Sam’s Club Chief Strategy and Supply Chain Officer from March 2020 to February 2021, as Sam’s Club Senior Vice President Supply Chain Flow from February 2019 to February 2020, and Vice President, Supply Chain at Walmart, Inc.

from August 2018 to January 2019.

Picou held other senior leadership positions at Voyant Beauty, LLC and Procter & Gamble Company, where she spent more than 25 years and served in various positions, including Senior Vice President – Product Supply Global Health Care from December 2016 to August 2017.

Since November 2021, Mrs.

Picou has served on the board of directors of Ryan Companies US, Inc., a commercial real estate services company.

She is a graduate of Southern University with a Bachelor of Science in Electrical Engineering and earned a Master of Business Administration from Florida Institute of Technology.

The Board of Directors selected Mrs.

Picou because of her supply chain, logistics, strategic planning, operations, digital/technology, and engineering experience at technology, retail and manufacturing companies.

The Board of Directors has determined that Mrs.

Picou qualifies as an independent director under the corporate governance standards of Nasdaq, and that there are no arrangement or understanding between Mrs.

Picou and any other person pursuant to which she was elected as a director.

There are no transactions in which Mrs.

Picou has an interest requiring disclosure under Item 404(a) of Regulation S-K.

As compensation for her service on the Board, Mrs.

Picou will receive the cash and equity compensation provided by the Company’s Non-Employee Director Compensation Policy, as it may be adjusted by the Board of Directors from time to time, a copy of which is filed as Exhibit 10.66 to this Annual Report on Form 10-K.

In addition, the Company and Mrs.

Picou will enter into the Company’s standard form of indemnification agreement for directors.

Transition of Ken C.

Hicks to Chairman of the Board of Directors

In connection with a planned transition process, on March 19, 2024, the Company and Ken C.

Hicks, Executive Chairman of the Board of Directors of the Company, mutually agreed that Mr.

Hicks’s Amended and Restated Employment Agreement, dated April 26, 2023 would not be extended beyond its initial one-year term and that Mr.

Hicks will transition from Executive Chairman of the Board to non-employee Chairman of the Board of Directors, effective on June 1, 2024.

As compensation for his service as non-employee Chairman of the Board of Directors, Mr.

Hicks will receive annual cash retainers totaling $175,000 and equity compensation in the form of restricted stock units with an annualized grant value totaling $285,000, each as provided by the Company’s Non-Employee Director Compensation Policy, a copy of which is filed as Exhibit 10.66 to this Annual Report on Form 10-K.

(b) Trading Plans

During the quarter ended February 3, 2024, the following trading plan(s) intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) that are required to be disclosed under Item 408 of Regulation S-K was/were adopted or terminated :

Name Title Date Plan

Adopted/Terminated Duration of Plan Common Shares to be Purchased or Sold Comments

Tweedy Director Adopted January 19, 2024

April 19, 2024 through December 31, 2024 Sell up to 2,400 common shares, subject to certain conditions set forth in the trading plan.

Tweedy's previously disclosed trading plan was completed pursuant to the terms set forth in that trading plan.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

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Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The following table gives information about the Company's common stock that may be issued upon the exercise of options, warrants and rights under all of the Company's equity compensation plans as of January 28, 2023.

The table includes the 2011 Unit Incentive Plan, the 2020 Omnibus Incentive Plan and the 2020 Employee Stock Purchase Plan.

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Report of Independent Registered Public Accounting Firm (PCAOB ID No.

Consolidated Balance Sheets as of January 28, 2023 and January 29, 2022 68

Consolidated Statements of Income for the fiscal years ended January 28, 2023, January 29, 2022 and January 30, 2021 69

Consolidated Statements of Comprehensive Income for the fiscal years ended January 28, 2023, January 29, 2022 and January 30, 2021 70

Consolidated Statements of Stockholders'/Partners' Equity for the fiscal years ended January 28, 2023, January 29, 2022 and January 30, 2021 71

Consolidated Statements of Cash Flows for the fiscal years ended January 28, 2023, January 29, 2022 and January 30, 2021 72

Consolidated Balance Sheets as of February 3, 2024 and January 28, 2023 73

Consolidated Statements of Income for the fiscal years ended February 3, 2024, January 28, 2023 and January 29, 2022 74

Consolidated Statements of Comprehensive Income for the fiscal years ended February 3, 2024, January 28, 2023 and January 29, 2022 75

Consolidated Statements of Stockholders' Equity for the fiscal years ended February 3, 2024, January 28, 2023 and January 29, 2022 76

Consolidated Statements of Cash Flows for the fiscal years ended February 3, 2024, January 28, 2023 and January 29, 2022 77

Notes to the Consolidated Financial Statements 78

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We have audited the accompanying consolidated balance sheets of Academy Sports and Outdoors, Inc.

and subsidiaries (the "Company") as of January 28, 2023 and January 29, 2022, the related consolidated statements of income, comprehensive income, stockholders'/partners’ equity, and cash flows, for each of the three years in the period ended January 28, 2023, and the related notes and schedule listed in the Index at Item 15 (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of January 28, 2023 and January 29, 2022, and the results of its operations and its cash flows for each of the three years in the period ended January 28, 2023, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of January 28, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 16, 2023 expressed an unqualified opinion on the Company's internal control over financial reporting.

and subsidiaries (the "Company") as of February 3, 2024 and January 28, 2023, the related consolidated statements of income, comprehensive income, stockholders' equity, and cash flows, for each of the three years in the period ended February 3, 2024, and the related notes and schedule listed in the Index at Item 15 (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of February 3, 2024 and January 28, 2023, and the results of its operations and its cash flows for each of the three years in the period ended February 3, 2024, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of February 3, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 21, 2024 expressed an unqualified opinion on the Company's internal control over financial reporting.

Basis for Opinion

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Critical Audit Matter Description

At January 28, 2023, the Company’s merchandise inventories balance was $1.3 billion.

Merchandise inventories are valued at the lower of weighted average cost or last-in first-out ("LIFO") method.

Merchandise inventories include the direct cost of merchandise and capitalized costs related to procurement, warehousing and distribution and are reflected net of shrinkage, vendor allowances and other valuation accounts.

We identified merchandise inventories as a critical audit matter because of the high volume of transactions and because the Company has multiple systems to process and record inventory movements which are highly automated.

This required an increased extent of effort, including the need for us to involve professionals with expertise in information technology (IT), to identify, test and evaluate the Company’s systems, software applications and automated controls.

As described in Note 14 of the Consolidated Financial Statements, as of February 3, 2024, the Company is involved in a regulatory matter with the U.S.

Customs and Border Protection Agency (“CBP”) regarding additional duties relating to certain products that the Company imported from China which CBP believes are subject to certain anti-dumping and/or countervailing duties, as well as a legal matter regarding payment card interchange fees charged by financial institutions (the defendants) to the Company (the plaintiff).

The Company records a liability for legal proceedings and regulatory matters when management determines it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated.

The Company also discloses when it is reasonably possible that a material loss may be incurred.

In assessing the probability of occurrence and whether an estimate of loss can be reasonably estimated for a particular legal proceeding, management exercises judgment on matters relevant to each proceeding, such as whether sufficient participation in settlement proceedings will occur, or whether it can predict the number of claims that may be filed.

Similarly, the Company will record a contingency that might result in a gain when it is the plaintiff, when the gain is realized or realizable.

Auditing management's accounting for, and disclosure of, contingencies was complex and highly judgmental as it involved our assessment of the significant judgments made by management when assessing the probability of occurrence for loss contingencies, determining whether an estimate of the amount of contingencies could be made, and assessing whether a gain contingency was realized or realizable.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the Company’s systems to process merchandise inventory transactions included the following, among others:

• Identified the significant systems used to process inventory transactions and tested the general IT controls over each of these systems, including testing of user access controls, change management controls, and IT operations controls.

• Performed testing of system interface controls and automated controls, as well as the controls designed to ensure the accuracy and completeness of inventory.

• Obtained an understanding, completed risk assessment procedures and evaluated the design and tested the operating effectiveness of business process controls over the Company’s significant inventory processes.

• Agreed weighted average cost calculations to source information including third party vendor invoices.

• Performed store and distribution center physical inventory counts.

• We tested whether the underlying data used as key inputs in the Company’s LIFO calculation were consistent with gross inventory.

This included reconciling the inventory used for the LIFO calculation to the inventory subledger.

Our audit procedures related to the management’s judgment included the following, among others:

• We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over management’s identification, monitoring and evaluation of contingencies.

• We read documents provided to the Company by outside legal counsel, read letters received directly by us from internal and outside legal counsel, and evaluated the current status of contingencies based on discussions with internal and outside legal counsel.

• We inspected minutes of the meetings of the Board of Directors and committees of the Board of Directors to search for any contradictory evidence, which may indicate that the accounting and disclosures for contingencies might not be appropriate.

• We made inquiries of management, including the Company’s internal legal counsel, regarding the status of these contingencies and whether any settlement discussions had been held.

• We evaluated management's assumptions and calculations by, among other things, comparing those assumptions to underlying legal documents and to payments made during the year.

We also assessed the adequacy of the related disclosures.

• We tested the amounts of the gain contingency realizable as of year end, including consideration of any contrary evidence for events subsequent to year end.

• With the assistance of professionals in our firm having experience in accounting for contingencies, we evaluated the reasonableness of the judgements and accounting guidance utilized by the Company to record the gain contingency that was realizable as of year end.

/s/ Deloitte & Touche LLP

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(Dollar amounts in thousands, except per share data)

January 28, 2023 January 29, 2022

February 3, 2024 January 28, 2023

CURRENT ASSETS:

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Total assets $ 4,676,713 $ 4,595,439

LIABILITIES AND STOCKHOLDERS' / PARTNERS' EQUITY

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:

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COMMITMENTS AND CONTINGENCIES (NOTE 14)

STOCKHOLDERS' / PARTNERS' EQUITY:

STOCKHOLDERS' EQUITY:

Preferred stock, $ 0.01 par value, authorized 50,000,000 shares;

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

76,711,720 and 87,079,394 issued and outstanding as of January 28, 2023 and January 29, 2022, respectively

74,349,927 and 76,711,720 issued and outstanding as of February 3, 2024 and January 28, 2023, respectively

Additional paid-in capital 242,098 216,209

Retained earnings 1,711,809 1,411,330

Stockholders' / partners' equity 1,628,306 1,466,946

Total liabilities and stockholders' / partners' equity $ 4,595,439 $ 4,584,940

Stockholders' equity 1,954,650 1,628,306

Total liabilities and stockholders' equity $ 4,676,713 $ 4,595,439

See Notes to Consolidated Financial Statements

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Fiscal Year Ended

January 28, 2023 January 29, 2022 January 30, 2021

February 3, 2024 January 28, 2023 January 29, 2022

NET SALES $ 6,159,291 $ 6,395,073 $ 6,773,128

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INTEREST EXPENSE, NET 46,051 46,441 48,989

(GAIN) LOSS ON EARLY RETIREMENT OF DEBT, NET 1,963 2,239 ( 3,582 )

LOSS ON EARLY RETIREMENT OF DEBT 1,525 1,963 2,239

OTHER (INCOME), NET ( 32,877 ) ( 20,175 ) ( 2,821 )

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EARNINGS PER COMMON SHARE:

$ 7.70 $ 7.38 $ 3.96

$ 7.49 $ 7.12 $ 3.79

BASIC $ 6.89 $ 7.70 $ 7.38

DILUTED $ 6.70 $ 7.49 $ 7.12

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:

81,590 90,956 77,994

83,895 94,284 81,431

(1) See Retrospective Presentation of Ownership Exchange in Note 2.

BASIC 75,389 81,590 90,956

DILUTED 77,469 83,895 94,284

See Notes to Consolidated Financial Statements

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Fiscal Year Ended

January 28, 2023 January 29, 2022 January 30, 2021

February 3, 2024 January 28, 2023 January 29, 2022

COMPREHENSIVE INCOME:

Net income $ 519,190 $ 628,001 $ 671,381

Unrealized loss on interest rate swaps — — ( 6,653 )

Recognized interest expense on interest rate swaps — — 2,344

Loss on swaps from debt refinancing — — 1,330

Tax benefit (expense) — 980 ( 980 )

Tax benefit — — 980

Total comprehensive income $ 519,190 $ 628,001 $ 674,705

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ACADEMY SPORTS AND OUTDOORS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' / PARTNERS’ EQUITY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Amounts in thousands)

Redeemable Membership Units Stockholders' / Partners' Equity Total Membership Units / Common Stock

Partners' Equity Common Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Total Stockholders' / Partners' Equity

Amount Units (1)

Amount Shares (1)

Amount Amount Amount Amount Amount Units / Shares (1)

Balances as of February 1, 2020 162 $ 2,818 72,306 $ 996,285 — $ — $ — $ — $ ( 8,066 ) $ 988,219 72,468

Net income — — — 157,656 — — — 151,108 — 308,764 —

Equity compensation — — — 3,690 — — 27,927 — — 31,617 —

Adjustment to Redeemable Membership Units for settlement of vested Restricted Units 12 200 — ( 200 ) — — — — — ( 200 ) 12

Adjustment to Redeemable Membership Units for repurchase of units from Managers ( 2 ) ( 41 ) 2 41 — — — — — 41 —

Repurchase of Redeemable Membership Units — — ( 2 ) ( 37 ) — — — — — ( 37 ) ( 2 )

Distributions to holders of Membership Units — — — ( 257,000 ) — — — — — ( 257,000 ) —

Effect of the Reorganization Transactions ( 172 ) ( 2,977 ) ( 72,306 ) ( 900,435 ) 72,478 725 66,627 836,060 — 2,977 —

Issuance of common stock in IPO and Over-Allotment, net of Offering Costs — — — — 17,432 174 206,796 — — 206,970 17,432

Cumulative tax effect resulting from Reorganization Transactions — — — — — — ( 141,909 ) — — ( 141,909 ) —

Share-Based Award Payments — — — — — — ( 32,819 ) — — ( 32,819 ) —

Share-Based Award Payments adjustment for forfeitures — — — — — — 596 — — 596 —

Settlement of vested Restricted Stock Units — — — — 802 8 ( 8 ) — — — 802

Stock option exercises — — — — 402 4 18 — — 22 402

Unrealized loss on interest rate swaps (net of tax impact of $ 350 )

— — — — — — — — ( 6,303 ) ( 6,303 ) —

Loss on swaps from debt refinancing (net of tax impact of $ 330 )

— — — — — — — — 1,000 1,000 —

Recognized interest expense on interest rate swaps (net of tax expense of $ 1,000 )

— — — — — — — — 10,045 10,045 —

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

Shares Amount Amount Amount Amount Amount

Balances as of January 30, 2021 91,114 $ 911 $ 127,228 $ 987,168 $ ( 3,324 ) $ 1,111,983

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Balances as of January 28, 2023 76,712 $ 767 $ 216,209 $ 1,411,330 $ — $ 1,628,306

(1) See Retrospective Presentation of Ownership Exchange in Note 2.

Net income — — — 519,190 — 519,190

Equity compensation — — 24,377 — — 24,377

Repurchase of common stock for retirement ( 3,652 ) ( 36 ) ( 12,625 ) ( 191,493 ) — ( 204,154 )

Settlement of vested Restricted Stock Units, net of shares withheld 227 2 ( 5,538 ) — — ( 5,536 )

Issuance of common stock under employee stock purchase plan 124 1 5,483 — — 5,484

Stock option exercises, net of shares withheld 939 9 14,192 — — 14,201

Cash dividends declared, $ 0.09 per share

— — — ( 27,218 ) — ( 27,218 )

Balances as of February 3, 2024 74,350 $ 743 $ 242,098 $ 1,711,809 $ — $ 1,954,650

See Notes to Consolidated Financial Statements

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Fiscal Year Ended

January 28, 2023 January 29, 2022 January 30, 2021

February 3, 2024 January 28, 2023 January 29, 2022

CASH FLOWS FROM OPERATING ACTIVITIES:

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Amortization of deferred loan, terminated interest rate swaps and other costs 2,739 3,054 5,524

Loss on swaps from debt refinancing — — 1,330

Deferred income taxes ( 4,247 ) 41,831 79,490

Non-cash (gain) loss on early retirement of debt, net 1,963 2,239 ( 3,582 )

Casualty loss — — 194

Non-cash loss on early retirement of debt 1,525 1,963 2,239

Gain on disposal of property and equipment ( 388 ) — —

Changes in assets and liabilities:

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Purchases of intangible assets ( 520 ) ( 502 ) ( 215 )

Note receivable from member — — 8,125

Proceeds from the sale of property and equipment 2,151 — —

Net cash used in investing activities ( 206,139 ) ( 108,806 ) ( 76,017 )

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from ABL Facility — — 500,000

Repayment of ABL Facility — — ( 500,000 )

Proceeds from Term Loan, net of discount — — 396,000

Repayment of Term Loan ( 103,000 ) ( 103,000 ) ( 102,250 )

Proceeds from Notes — — 400,000

Debt issuance fees — — ( 927 )

Share-Based Award Payments — — ( 11,214 )

Distribution — — ( 257,000 )

Proceeds from exercise of stock options 16,636 21,249 48,587

Proceeds from issuance of common stock, net of Offering Costs — — 206,970

Proceeds from issuance of common stock under employee stock purchase program 5,484 5,043 3,777

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Repurchase of common stock for retirement ( 202,796 ) ( 489,475 ) ( 411,409 )

Repurchase of Redeemable Membership Units — — ( 37 )

Dividends paid ( 27,218 ) ( 24,633 ) —

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NON-CASH INVESTING AND FINANCING ACTIVITIES:

Non-cash issuance of common stock $ 34 $ 501 $ 2,646

Change in capital expenditures in accounts payable and accrued liabilities $ 4,046 $ 2,951 $ 1,065

Non-cash capital expenditures $ 6,687 $ 4,046 $ 2,951

See Notes to Consolidated Financial Statements

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Nature of Operations

All references to "we", "us," "our" or the "Company" in the financial statements refer to, (1) prior to October 1, 2020, New Academy Holding Company, LLC, a Delaware limited liability company ("NAHC") and the prior parent holding company for our operations, and its consolidated subsidiaries;

and (2) on and after October 1, 2020, Academy Sports and Outdoors, Inc., a Delaware corporation ("ASO, Inc.") and the current parent holding company of our operations, and its consolidated subsidiaries.

All references to "we", "us", "our" or the "Company" in the financial statements refer to Academy Sports and Outdoors, Inc., a Delaware corporation ("ASO, Inc.") and the current parent holding company of our operations, and its consolidated subsidiaries.

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.

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

Upon completion of the September 2021 Secondary Offering (as defined below), KKR no longer holds an ownership interest in the Company.

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

As of January 28, 2023, we operated 268 "Academy Sports + Outdoors" retail locations in 18 states and three distribution centers located in Katy, Texas, Twiggs County, Georgia and Cookeville, Tennessee.

The Company completed an initial public offering (the "IPO") on October 6, 2020, and upon completion of the September 2021 Secondary Offering (as defined below), KKR no longer holds an ownership interest in the Company.

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 February 3, 2024, we operated 282 "Academy Sports + Outdoors" retail locations in 18 states and three distribution centers located in Katy, Texas, Twiggs County, Georgia and Cookeville, Tennessee.

Our distribution centers receive, store and ship merchandise to our stores and customers.

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The Company’s fiscal year represents the 52 or 53 weeks ending on the Saturday closest to January 31 each year.

References herein to 2022, 2021 and 2020 relate to the 52-week fiscal years ended January 28, 2023, January 29, 2022, and January 30, 2021, respectively.

Initial Public Offering and Reorganization Transactions

On October 6, 2020, ASO, Inc.

completed an initial public offering (the "IPO") in which we issued and sold 15,625,000 shares of common stock, $ 0.01 par value for cash consideration of $ 12.22 per share (representing an initial public offering price of $ 13.00 per share, net of underwriting discounts) to a syndicate of underwriters led by Credit Suisse Securities (USA) LLC and J.P.

Morgan Securities LLC, as representatives, resulting in net proceeds of approximately $ 184.9 million after deducting underwriting discounts, which included approximately $ 2.7 million paid to KKR Capital Markets LLC ("KCM"), an affiliate of KKR, for underwriting services in connection with the IPO, and $ 6.1 million in costs directly associated with the IPO ("Offering Costs"), such as legal and accounting fees.

The shares sold in the offering were registered under the Securities Act of 1933, as amended (the "Securities Act"), pursuant to our registration statement on Form S-1 (File No.

333-248683) (the "Registration Statement"), which was declared effective by the Securities and Exchange Commission (the "SEC") on October 1, 2020.

In connection with our IPO, we completed a series of reorganization transactions (the "Reorganization Transactions") that resulted in:

• NAHC, the previous parent holding company for the Company, being contributed to ASO, Inc.

by its members and becoming a wholly-owned subsidiary of ASO, Inc., which thereupon became our parent holding company;

• one share of common stock of ASO, Inc.

issued to then-existing members of NAHC for every 3.15 membership units of NAHC contributed to ASO, Inc.

IPO Over-Allotment Exercise

On November 3, 2020, ASO, Inc.

issued and sold an additional 1,807,495 shares of the Company's common stock, par value $ 0.01 per share, for cash consideration of $ 12.22 per share (representing an initial public offering price of $ 13.00 per share, net of underwriting discounts) to the IPO underwriters, resulting in approximately $ 22.1 million in proceeds net of underwriting discounts, which included $ 0.3 million paid to KCM for underwriting services, pursuant to the partial exercise by the underwriters of their option to purchase up to 2,343,750 additional shares to cover over-allotments in connection with the IPO (the "IPO Over-Allotment Exercise").

The option expired with respect to the remaining shares.

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.

References herein to 2023 relate to the 53-week fiscal year ended February 3, 2024, and references herein to 2022 and 2021 relate to the 52-week fiscal years ended January 28, 2023, and January 29, 2022, respectively.

May 2021 Secondary Offering and Stock Repurchase

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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 Company did not 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.

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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.

The Company did not receive any proceeds from the September 2021 Secondary Offering.

Summary of Significant Accounting Policies

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These consolidated financial statements include the accounts of ASO, Inc.

and its subsidiaries, NAHC, Academy Managing Co., LLC, Associated Investors, LLC, Academy, Ltd., the Company's operating company, and Academy International Limited.

and its subsidiaries, New Academy Holding Company, LLC ("NAHC"), Academy Managing Co., LLC, Associated Investors, LLC, Academy, Ltd., the Company's operating company, and Academy International Limited.

NAHC, Academy Managing Co., LLC, and Associated Investors, LLC are intermediate holding companies.

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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.

Retrospective Presentation of Ownership Exchange

Prior to the IPO, ASO, Inc.

was a wholly-owned subsidiary of NAHC.

On the IPO pricing date (October 1, 2020), the then-existing members of NAHC contributed all of their membership units of NAHC to ASO, Inc.

and, in exchange, received one share of common stock of ASO, Inc.

for every 3.15 membership units of NAHC contributed to ASO, Inc.

(such 3.15 :1 contribution and exchange ratio, the "Contribution Ratio").

As a result of such contributions and exchanges, upon the IPO, NAHC became a wholly-owned subsidiary of ASO, Inc., which became our parent holding company.

The par value and authorized shares of the common stock of ASO, Inc.

of $ 0.01 and 300,000,000 , respectively, remain unchanged as a result of such contributions and exchanges.

All membership units and redeemable membership units in the financial statements and notes have been retrospectively adjusted to give effect to the Contribution Ratio, as if such contributions and exchanges occurred as of all pre-IPO periods presented, including the periods presented on the Statements of Income, Statements of Stockholders’ / Partners’ Equity, Note 9.

Share-Based Compensation, and Note 10.

Earnings per Common Share.

Redeemable Membership Units

Prior to October 1, 2020, Allstar Managers LLC, a Delaware limited liability company ("Managers"), owned membership units in NAHC (each, a "NAHC Membership Unit").

Managers was dissolved and its assets were distributed to its members on December 23, 2020.

Managers was 100% owned by certain current and former executives and directors of the Company and was formed to facilitate the purchase of indirect contingently redeemable ownership interests in NAHC.

Prior to October 1, 2020, certain executives and directors could acquire contingently redeemable membership units in Managers (the "Redeemable Membership Units"), either by (1) purchasing the Redeemable Membership Units with cash consideration, which was subsequently contributed to NAHC by Managers in exchange for a number of NAHC Membership Units equal to the number of Redeemable Membership Units purchased, or (2) by receiving the Redeemable Membership Units in settlement of vested restricted units awarded to the executive or director under the Company's 2011 Unit Incentive Plan (see Note 9).

Each outstanding Redeemable Membership Unit in Managers corresponded to an outstanding NAHC Membership Unit, on a unit-for-unit basis.

On October 1, 2020, Managers received one share of ASO, Inc.

common stock in exchange for every 3.15 membership units in NAHC that Managers contributed to ASO, Inc., and the Redeemable Membership Units in Managers that were held by its owners were reduced proportionately by the Contribution Ratio, so that the outstanding number of Redeemable Membership Units in Managers equaled the number of shares of ASO, Inc.

common stock held by Managers on a 1:1 basis.

NAHC was the sole managing member of Managers with a controlling voting interest, but no economic interest, in Managers.

As the sole managing member of Managers, NAHC operated and controlled all business affairs of Managers.

Reclassifications

Within the merchandise division sales table presented in Note 3, certain products and categories were recategorized among various categories and divisions, respectively, during 2023 to better align with our current merchandising strategy and view of the business.

As a result, we have reclassified sales between divisions for 2022 and 2021 for comparability purposes.

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

Cash and Cash Equivalents

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The fair value of debt is influenced by fluctuations in market conditions for interest rates (see Note 6).

We did not have any derivative financial instruments outstanding as of February 3, 2024 or January 28, 2023.

Accounts Receivable

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We purchase merchandise inventories from approximately 1,400 vendors.

In 2022, 2021 and 2020, purchases from our largest vendor represented approximately 11 %, 11 % and 12 % of our total inventory purchases, respectively.

In each of the years 2023, 2022 and 2021, purchases from our largest vendor represented approximately 11 % of our total inventory purchases.

No other vendor in any of the aforementioned years exceeded 10% of our purchases.

We typically do not enter into long-term inventory purchase commitments, and we did not have any such commitments as of January 28, 2023 or January 29, 2022.

We typically do not enter into long-term inventory purchase commitments, and we did not have any such commitments as of February 3, 2024 or January 28, 2023.

A significant portion of our inventory purchases are manufactured outside of the United States, primarily in Asia.

While we are not dependent on any single manufacturer outside of the United States, we could be adversely affected by political, health (including pandemic), safety, security, economic, tariff, climate or other disruptions affecting the business or operations of third-party manufacturers located outside of the United States.

The Company’s geographic concentration in the southeastern United States subjects us to certain regional risks, such as the state of local economies, including downturns in the housing market, increased unemployment and gas prices.

Other regional risks include severe weather conditions or man-made disasters (such as an oil spill closing large areas of hunting or fishing), fires, heat waves, freezes, hurricanes, tornadoes, large storms and floods and other natural disasters specific to the states in which the Company operates.

While we are not dependent on any single manufacturer outside of the United States, we could be adversely affected by political, health (including pandemic), safety, security, economic, tariff, climate, war or other disruptions affecting the business or operations of third-party manufacturers located outside of the United States.

The Company’s geographic concentration in the southern United States subjects us to certain regional risks, such as the state of regional economies, including downturns in the housing market, increased unemployment and gas prices.

Other regional risks include legislation, politics, cultural views, severe weather conditions or man-made disasters (such as an oil spill closing large areas of hunting or fishing), fires, heat waves, freezes, hurricanes, tornadoes, large storms and floods and other natural disasters specific to the states in which the Company operates.

Merchandise Inventories, net

Merchandise inventories are valued at the lower of weighted average cost or last-in first-out ("LIFO") method.

Merchandise inventories are stated at the lower of weighted average cost and net realizable value.

We record an inventory reserve for the estimated shrinkage between physical inventories on a by location basis.

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We regularly review inventories and record a valuation adjustment when necessary such as for inventory that has a carrying value in excess of the net realizable value or for slow moving or obsolete inventory.

Prior to 2023, we valued merchandise inventories at the lower of the weighted average cost method or LIFO method (see Change in Accounting Principle discussion below).

The application of the LIFO inventory method did not result in any LIFO charges or credits affecting cost of sales in 2022 or 2021.

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):

February 3, 2024

Consolidated Balance Sheet As Reported Effect of Change Pro Forma LIFO

Merchandise inventories, net $ 1,194,159 $ ( 2,615 ) $ 1,191,544

Total current assets 1,644,900 ( 2,615 ) 1,642,285

Total assets 4,676,713 ( 2,615 ) 4,674,098

Accrued expenses and other current liabilities 217,932 ( 27,219 ) 190,713

Total current liabilities 879,858 ( 27,219 ) 852,639

Deferred tax liabilities, net 254,796 26,609 281,405

Total liabilities 2,722,063 ( 610 ) 2,721,453

Retained earnings 1,711,809 ( 2,005 ) 1,709,804

Stockholders' equity 1,954,650 ( 2,005 ) 1,952,645

Total liabilities and stockholders' equity 4,676,713 ( 2,615 ) 4,674,098

Year Ended February 3, 2024

As Reported Effect of Change Pro Forma LIFO

Consolidated Statements of Income:

Cost of goods sold $ 4,049,080 $ 2,615 $ 4,051,695

Gross margin 2,110,211 ( 2,615 ) 2,107,596

Operating income 677,855 ( 2,615 ) 675,240

Income before income taxes 663,156 ( 2,615 ) 660,541

Income tax expense 143,966 ( 610 ) 143,356

Net income 519,190 ( 2,005 ) 517,185

Earnings per common share:

Basic $ 6.89 $ ( 0.03 ) $ 6.86

Diluted $ 6.70 $ ( 0.03 ) $ 6.67

Consolidated Statements of Cash Flows:

Net income $ 519,190 $ ( 2,005 ) $ 517,185

Deferred income taxes ( 4,247 ) 26,609 22,362

LIFO charge — 2,615 2,615

Income taxes payable 17,640 ( 27,219 ) ( 9,579 )

Net cash provided by operating activities 535,779 — 535,779

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.

The following table shows our liability associated with these arrangements, which is presented within accounts payable on the consolidated balance sheets, and the related activity for the periods presented (amounts in thousands):

February 3, 2024 January 28, 2023

Invoices outstanding at the beginning of the year $ 8,953 $ 4,430

Invoices added 44,673 50,791

Invoices paid ( 46,452 ) ( 46,268 )

Invoices outstanding at the end of the year $ 7,174 $ 8,953

Property and Equipment

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Furniture and fixtures

Buildings 40 years

When assets are retired or sold, the cost and accumulated depreciation are removed from our accounts, and the resulting gain or loss is reflected in the consolidated statements of income.

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The amounts capitalized were $ 33.3 million, $ 33.3 million and $ 36.7 million in 2023, 2022 and 2021, respectively.

Implementation costs for cloud-based information technology systems are capitalized in other non-current assets.

Amortization of cloud-based software implementation costs is recognized in selling, general and administrative expenses and amortized over the contract terms.

Implementation costs for cloud-based information systems are capitalized in other non-current assets.

Amortization of cloud-based software implementation costs is recognized in selling, general and administrative expenses and amortized over the longer of the contract term or expected benefit.

The amounts capitalized were $ 23.5 million, $ 12.3 million and $ 3.7 million in 2023, 2022 and 2021, respectively.

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The Trade Name is tested for impairment annually or whenever events or circumstances indicate that the carrying amount of the Trade Name may not be recoverable.

The annual Trade Name impairment test provides for the option of first performing a qualitative assessment to evaluate the existence of events and circumstances that would lead to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount.

If such a conclusion is reached, we would then be required to perform a quantitative impairment assessment for the Trade Name.

However, if the qualitative assessment leads to a determination that it is more likely than not that the fair value of a reporting unit is greater than its carrying amount, then no further assessments are required.

However, if the qualitative assessment leads to a determination that it is more likely than not that the fair value of an intangible asset is greater than its carrying amount, then no further assessments are required.

In 2023, 2022 and 2021, we performed a qualitative assessment and determined a quantitative assessment was not necessary.

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On January 19, 2021, we settled our three remaining outstanding interest rate swaps, which were scheduled to expire on various dates during 2021, for $ 4.1 million.

As of January 28, 2023, we do not have any derivative financial instruments outstanding.

As of February 3, 2024, we do not have any derivative financial instruments outstanding.

Self-Insurance

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We account for our leases in accordance with Accounting Standards Codification ("ASC") 842 which requires that lessees recognize assets and liabilities arising from operating leases on the balance sheet and disclose key information about leasing arrangements.

All of our stores, corporate office facilities, and warehouse and distribution centers are leased.

We may receive reimbursement from a landlord for some or all of the cost of a construction project, which may be structured as a tenant improvement allowance, construction allowance or landlord reimbursement.

Cash received from a landlord for tenant improvement allowances in store lease transactions not considered a sale-leaseback transaction are a reduction to the right-of-use assets on the balance sheet, which are amortized ratably over the remaining terms of the corresponding leases.

Nearly all of our store locations and all of our corporate office facilities, and warehouse and distribution centers are leased.

We may receive reimbursement from a landlord for some or all of the cost of a construction project, which may be structured as a tenant improvement allowance or a construction allowance.

Cash received from a landlord for tenant improvement allowances in store lease transactions are a reduction to the right-of-use assets on the balance sheet, which are amortized ratably over the remaining terms of the corresponding leases.

Cash received for construction allowances is a reimbursement of certain spend incurred in the construction of the premises on behalf of the landlord, where the landlord owns the assets.

We account for each lease and non-lease components for our building leases as a single lease component which allows certain costs such as common area maintenance associated with these leases to be included as rent expense.

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Non-capital expenditures associated with opening new stores and distribution centers prior to sales generation or start of operations, which consist primarily of occupancy costs, marketing, payroll and recruiting costs, are expensed as incurred.

Pre-opening expenses for our new stores were $ 5.5 million and $ 0.2 million in 2022 and 2021, respectively.

There were no pre-opening expenses in 2020.

The following table summarizes our pre-opening expense activity for the periods presented:

Fiscal Year Ended

February 3, 2024 January 28, 2023 January 29, 2022

Number of new stores opened 14 9 —

Pre-opening expenses (in millions) $ 8.3 $ 5.5 $ 0.2

Equity Compensation

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On September 2, 2021, the Board of Directors of the Company authorized a share repurchase program (the "2021 Share Repurchase Program") under which the Company may purchase up to $ 500 million of its outstanding shares during the three-year period ending September 2, 2024.

On June 2, 2022, the Board of Directors of the Company authorized a new share repurchase program (the "2022 Share Repurchase Program") under which the Company may purchase up to $ 600 million of its outstanding shares during the three-year period ending June 2, 2025.

The 2022 Share Repurchase Program and the 2021 Share Repurchase Program are collectively referred to as the "Share Repurchase Programs".

On June 2, 2022, the Board of Directors authorized a new share repurchase program (the "2022 Share Repurchase Program") under which the Company may purchase up to $ 600 million of its outstanding shares during the three-year period ending June 2, 2025.

On November 29, 2023, the Board of Directors authorized a new share repurchase program (the "2023 Share Repurchase Program") under which the Company may purchase up to $ 600 million of its outstanding shares during the three-year period ending November 29, 2026.

The 2023 Share Repurchase Program, the 2022 Share Repurchase Program and the 2021 Share Repurchase Program are collectively referred to as the "Share Repurchase Programs".

Under the Share Repurchase Programs, repurchases can be made using a variety of methods, which may include open market purchases, block trades, privately negotiated transactions, accelerated share repurchase programs and/or a non-discretionary trading plan, all in compliance with the rules of the SEC and other applicable legal requirements.

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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.

In 2022 and 2021, we repurchased and concurrently retired 11,903,636 and 10,566,796 shares of ASO, Inc.

common stock for an aggregate amount of $ 489.5 million and $ 411.4 million, respectively, which includes purchases that were made pursuant to the Share Repurchase Programs and those that were made prior to our Share Repurchase Programs.

As of January 28, 2023, we no longer had availability under the 2021 Share Repurchase Program, and we had $ 299.4 million available for share repurchases pursuant to the 2022 Share Repurchase Program.

The following table summarizes our share repurchases for the periods presented:

Fiscal Year Ended

February 3, 2024 January 28, 2023 January 29, 2022

Shares Repurchased (1)

3,651,231 11,903,636 10,566,796

Aggregate amount paid (amounts in millions) (2)

$ 204.2 $ 489.5 $ 411.4

(1) Purchases for the fiscal year ended January 29, 2022, include purchases that were made prior to our Share Repurchase Programs.

(2) Includes estimated excise tax fees of $ 1.4 million for the fiscal year ended February 3, 2024.

The Company allocates the excess of the repurchase price over the par value of shares acquired to Retained Earnings and Additional Paid-in Capital.

The portion allocated to Additional Paid-in Capital is determined by dividing the number of shares to be retired by the number of shares issued multiplied by the balance of Additional Paid-in Capital as of the retirement date.

As of February 3, 2024, we no longer had availability under the 2021 Share Repurchase Program, and we had $ 696.7 million available for share repurchases pursuant to the combined 2023 Share Repurchase Program and 2022 Share Repurchase Program.

The Company is subject to U.S.

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Interest and penalties from income tax matters are recognized in income tax expense.

Insurance Proceeds

During the fiscal year ended January 28, 2023, the Company received and recognized approximately $ 7.2 million in business interruption proceeds due to the suspension of normal operations at some of our Texas store locations, as well as our e-commerce platform, for several days in February of 2021 as a result of a winter storm which had a significant impact on the energy infrastructure in the state of Texas.

These proceeds are included in Other (income), net on the Consolidated Statements of Income.

During the fourth quarter of 2022, the Company received and recognized approximately $ 7.2 million in business interruption proceeds due to the suspension of normal operations at some of our Texas store locations, as well as our e-commerce platform, for several days in February of 2021 as a result of a winter storm which had a significant impact on the energy infrastructure in the state of Texas.

Additionally, during the fourth quarter of 2022 the Company completed a sale in which we factored rights to pursue a legal matter pertaining to the overpayment of certain tariffs and we received and recognized net proceeds of approximately $ 3.7 million.

The proceeds for both events are included in Other (income), net on the Consolidated Statements of Income.

During the fourth quarter of 2023, the Company settled a legal matter with credit card companies pertaining to the overcharge of credit card interchange fees for prior periods dating back to 2004.

In connection with this settlement, we recognized a net gain of approximately $ 15.9 million in Other (income), net on the Consolidated Statements of Income.

Comprehensive Income

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

The Company intends to utilize certain expedients provided by this amendment upon our transition from LIBOR.

Supplier Finance Programs

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

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

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 elected to utilize these optional expedients in connection with the amendments to our ABL Facility and Term Loan, which transitioned from LIBOR to the Secured Overnight Financing Rate (“SOFR”) on March 30, 2023 and August 1, 2023, respectively (see Note 4).

Improvements to Income Tax Disclosures

In December 2023, the FASB issued ASU 2023-09:

Improvements to Income Tax Disclosures.

This pronouncement is intended to enhance the transparency and decision usefulness of income tax disclosures and establishes new income tax disclosure requirements, including requiring disaggregation of a reporting entity’s effective tax rate reconciliation and disaggregation of the income taxes paid based on the applicable tax jurisdiction.

The new guidance is effective for fiscal years beginning after December 15, 2024 and should be applied on a prospective basis with the option to apply the standard retrospectively.

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

Segment Reporting

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures, which is intended to enhance the disclosures on reportable segments.

Under this pronouncement, all public entities (including those with a single reporting segment) are required to include incremental disclosures related to a public entity’s reportable segments, including disclosure of disaggregated expense information that is regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss.

The new guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and should be adopted retrospectively.

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

The following table sets forth the approximate amount of sales (all of which are based in the U.S.) by merchandise divisions for the periods presented (amounts in thousands):

Fiscal Year Ended

January 28, 2023 January 29, 2022 January 30, 2021

February 3, 2024 January 28, 2023 January 29, 2022

Merchandise division sales (1)

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Net sales $ 6,159,291 $ 6,395,073 $ 6,773,128

(1) Certain products and categories were re-categorized among various categories and divisions, respectively, during 2023 to better align with our current merchandising strategy and view of the business.

As a result, we have reclassified sales between divisions for 2022 and 2021 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 10.7 %, 10.7 % and 9.3 % of merchandise sales for 2023, 2022 and 2021, respectively.

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Fiscal Year Ended

January 28, 2023 January 29, 2022 January 30, 2021

February 3, 2024 January 28, 2023 January 29, 2022

Gift card liability, beginning balance $ 90,650 $ 86,568 $ 74,253

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

January 28, 2023 January 29, 2022

February 3, 2024 January 28, 2023

ABL Facility, due November 2025 (1)

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Notes, due November 2027 400,000 400,000

594,750 697,750

Total debt 491,750 594,750

Less current maturities ( 3,000 ) ( 3,000 )

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Long-term debt, net $ 484,551 $ 584,456

(1) On March 8, 2024, the Company issued a press release announcing that the Company had entered into an amendment to the First Amended and Restated ABL Credit Agreement which, among other things, extended the maturity of our asset-based revolving credit facility to March 8, 2029.

See Note 17 to the accompanying financial statements for further disclosures regarding the amendment.

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

As of January 28, 2023 and January 29, 2022, the balance in deferred loan costs related to the ABL Facility (as defined below) was approximately $ 3.2 million and $ 4.3 million, respectively, and was included in other noncurrent assets on our consolidated balance sheets.

As of February 3, 2024 and January 28, 2023, the balance in deferred loan costs related to the ABL Facility (as defined below) was approximately $ 2.1 million and $ 3.2 million, respectively, and was included in other noncurrent assets on our consolidated balance sheets.

Total amortization of deferred loan costs was $ 2.4 million, $ 2.6 million and $ 2.7 million in 2023, 2022 and 2021, respectively.

Total expenses related to accretion of original issuance discount were $ 0.3 million, $ 0.4 million and $ 0.5 million in 2023, 2022 and 2021, respectively.

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.

On November 6, 2020, the Company issued the Notes (as defined below), entered into the 2020 Term Loan (as defined below), and entered into the 2020 ABL Facility (the "Refinancing Transactions").

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On May 25, 2021, the Company refinanced its 2020 Term Loan and paid down approximately $ 99.0 million of the 2020 Term Loan.

On December 15, 2022, the Company utilized cash on hand to voluntarily prepay $ 100.0 million of outstanding borrowings of the Term Loan.

We refer to the 2015 Term Loan, the 2020 Term Loan and the Amendment collectively as the "Term Loan".

On July 2, 2015, Academy, Ltd.

entered into a seven-year $ 1.8 billion senior secured term loan (the "2015 Term Loan") with Morgan Stanley Senior Funding, Inc., as the administrative and collateral agent, and other lenders, and a five-year $ 650 million secured asset-based revolving credit facility (the "2015 ABL Facility") with JPMorgan Chase Bank, N.A., as administrative agent, and other lenders.

Academy, Ltd.

received proceeds from the 2015 Term Loan of $ 1.8 billion, which was net of discount of $ 9.1 million.

The 2015 Term Loan bore interest at our election, at either (1) LIBOR rate with a floor of 1.00 %, plus a margin of 4.00 %, or (2) a base rate equal to the highest of (a) the federal funds rate plus 0.50 %, (b) Morgan Stanley Senior Funding, Inc.'s "prime rate", or (c) the one-month LIBOR rate plus 1.00 %, plus a margin of 3.00 %.

Quarterly principal payments of approximately $ 4.6 million were required through June 30, 2022, with the balance due in full on the maturity date of July 2, 2022.

Prior to the Refinancing Transactions, we repurchased $ 23.9 million of principal on our Term Loan for $ 16.0 million, resulting in a net gain of $ 7.8 million.

In connection to the Refinancing Transactions, the Company also recognized an offsetting non-cash loss on early retirement of debt of $ 4.2 million from the write-off of deferred loan costs associated with the early retirement of the 2015 Term Loan.

The net result of these transactions resulted in a $ 3.6 million gain on early retirement of debt in 2020.

On December 15, 2022 and February 1, 2024, the Company utilized cash on hand to voluntarily prepay $ 100.0 million of outstanding borrowings of the Term Loan, respectively.

We refer to the 2020 Term Loan and then amendments thereto collectively as the "Term Loan".

On November 6, 2020, as a part of the Refinancing Transactions, 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.

In connection with the 2020 Term Loan, the Company capitalized related professional fees of $ 5.8 million as deferred loan costs.

On May 25, 2021, Academy, Ltd.

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(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 January 28, 2023, the weighted average interest rate was 8.12 %, 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.

In connection with the 2020 Term Loan and the Amendment, the Company capitalized related professional fees of $ 5.8 million as deferred loan costs.

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

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

On December 15, 2022, the Company utilized cash on hand to voluntarily prepay $ 100.0 million of outstanding borrowings under the Term Loan.

In connection with this principal payment, the Company recognized a non-cash loss on early retirement of debt of $ 2.0 million from the write-off of deferred loan costs related to the original issuance discount associated with the Term Loan.

In connection with this principal payment, the Company recognized a non-cash loss on early retirement of debt of $ 2.0 million in 2022 from the write-off of deferred loan costs related to the original issuance discount associated with the Term Loan.

On May 17, 2023, Academy, Ltd.

entered into a Conforming Changes Amendment (the "2023 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 and the several lenders party thereto and the several other parties named therein, which updated the Term Loan benchmark base interest rate from LIBOR to Adjusted Term SOFR (as defined in the Conforming Changes Amendment to the Second Amended and Restated Credit Agreement).

The transition of our Term Loan to Adjusted Term SOFR became effective on August 1, 2023.

Borrowings under the Term Loan bear interest, at our election, at either (1) Adjusted Term SOFR with a floor of 0.75 % rate 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) the U.S.

"prime rate" announced by the administrative agent, or (c) the one-month Adjusted Term SOFR with a floor of 0.75 % rate, plus a margin of 3.75 %.

As of February 3, 2024, the weighted average interest rate was 9.19 %, with interest payable monthly.

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

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

On February 1, 2024, the Company utilized cash on hand to voluntarily prepay $ 100.0 million of outstanding borrowings under the Term Loan.

In connection with this principal payment, the Company recognized a non-cash loss on early retirement of debt of $ 1.5 million in 2023 from the write-off of deferred loan costs related to the original issuance discount associated with the Term Loan.

The Amended Credit Agreement contains customary events of default such as failure to pay principal or interest, breaches of representations and warranties, violations of affirmative or negative covenants, cross-defaults to other material indebtedness, a bankruptcy or similar proceeding, rendering of certain monetary judgments, invalidity of collateral documents and changes of control.

As of January 28, 2023, no prepayment was due under the terms and conditions of the Term Loan.

As of February 3, 2024, no prepayment was due under the terms and conditions of the Term Loan.

On November 6, 2020, as a part of the Refinancing Transactions, Academy, Ltd.

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the Guarantors (as defined below) and The Bank of New York Mellon Trust Company, N.A., as trustee and collateral agent (in such capacity, the "Notes Collateral Agent").

The Notes pay interest semi-annually in arrears in cash on May 15 and November 15 of each year at a rate of 6.00 % per year, commencing on May 15, 2021.

The Notes pay interest semi-annually in arrears in cash on May 15 and November 15 of each year at a rate of 6.00 % per year, which commenced on May 15, 2021.

In connection with issuance of the Notes, the Company capitalized related professional fees of $ 5.2 million as deferred loan costs.

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The Indenture provides for events of default which include (subject in certain cases to customary grace and cure periods), among others, nonpayment of principal or interest, breach of other agreements in respect of the Notes, acceleration of certain other indebtedness, failure to pay certain final judgments, failure of certain guarantees to be enforceable, failure to perfect certain collateral securing the Notes and certain events of bankruptcy or insolvency, which events of default, if any occur, would permit or require the principal, premium, if any, interest and any other monetary obligations on all the then-outstanding Notes to be due and payable immediately.

We refer to the 2015 ABL Facility and the 2020 ABL Facility collectively as the "ABL Facility".

On July 2, 2015, Academy, Ltd.

entered into a five-year $ 650 million secured asset-based revolving credit facility (the "2015 ABL Facility").

On May 22, 2018, the Company amended the agreement governing the 2015 ABL Facility, to increase the commitment on the facility from $ 650 million to $ 1 billion.

In connection with the amendment to the 2015 ABL Facility, the Company capitalized related professional fees of $ 2.8 million as deferred loan costs and wrote off $ 0.1 million in previously capitalized deferred loan costs.

The 2015 ABL Facility was scheduled to mature on May 22, 2023.

On November 6, 2020, as a part of the Refinancing Transactions, Academy, Ltd., as borrower, and the Guarantors, as guarantors, amended the 2015 ABL 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".

On November 6, 2020, as a part of the Refinancing Transactions, Academy, Ltd., as borrower, and the Guarantors, as 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.

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

In connection with the 2020 ABL Facility, the Company capitalized related professional fees of $ 3.1 million as deferred loan costs.

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 January 28, 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 the available borrowing capacity under the ABL Facility of $ 947.8 million.

Borrowings under the ABL Facility bear interest, at our election, at either of (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 February 3, 2024, we had outstanding letters of credit of approximately $ 11.6 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 $ 881.4 million.

Borrowings under the ABL Facility bear interest, at our election, at either of (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 January 28, 2023, no future prepayments of outstanding loans have been triggered under the terms and conditions of the ABL Facility.

As of February 3, 2024, no future prepayments of outstanding loans have been triggered under the terms and conditions of the ABL Facility.

On March 8, 2024, the Company issued a press release announcing that the Company had entered into an amendment to the First Amended and Restated ABL Credit Agreement which, among other things, extended the maturity of our asset-based revolving credit facility to March 8, 2029.

See Note 17 to the accompanying financial statements for further disclosures regarding the amendment.

Liens and guarantees.

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These covenants are subject to certain qualifications and limitations.

We were in compliance with these covenants as of January 28, 2023.

As of January 28, 2023, scheduled principal payments on our debt are as follows (amounts in thousands):

We were in compliance with these covenants as of February 3, 2024.

As of February 3, 2024, scheduled principal payments on our debt are as follows (amounts in thousands):

Total $ 491,750

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

On October 28, 2020, we determined that a portion of the underlying cash flows related to $ 100.0 million of swap notional principal amount was no longer probable of occurring over the remaining term of the interest rate swaps as a result of the Company's Refinancing Transactions.

As a result, we reclassified approximately $ 1.3 million of losses from accumulated other comprehensive loss ("AOCI") to other (income) expense, net in the third quarter of 2020 related to the portion of the forecasted transaction no longer considered probable of occurring.

On January 19, 2021, we settled our three remaining outstanding interest rate swaps in full, which were scheduled to expire on various dates during 2021, for $ 4.1 million.

As of January 28, 2023, we do not have any derivative financial instruments outstanding.

On January 19, 2021, we settled our three outstanding interest rate swaps in full, which were scheduled to expire on various dates during 2021, for $ 4.1 million.

As of February 3, 2024, we do not have any derivative financial instruments outstanding.

For derivatives previously designated as hedging instruments, amounts included in AOCI were reclassified to interest expense in the same period during which the hedged transaction affected earnings, which is as interest expense was recorded on the underlying Term Loan.

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Fiscal Year Ended

January 28, 2023 January 29, 2022 January 30, 2021

Accumulated Other Comprehensive Income (Loss), beginning $ — $ ( 3,324 ) $ ( 8,066 )

Loss deferred into AOCI (net of tax impact of $ 0 , $ 0 , and $ 350 for the years ended January 28, 2023, January 29, 2022, and January 30, 2021, respectively)

— — ( 6,303 )

Increase to interest expense (net of tax benefit (expense) of $ 0 , $ 980 and $( 1,000 ) for the years ended January 28, 2023, January 29, 2022, and January 30, 2021, respectively)

— 3,324 10,045

Loss on swaps from debt refinancing in other (income) expense, net (net of tax benefit of $ 0 , $ 0 , and $ 330 for the years ended January 28, 2023, January 29, 2022, and January 30, 2021, respectively)

February 3, 2024 January 28, 2023 January 29, 2022

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

Increase to interest expense (net of tax benefit of $ 980.0 million for the year ended January 29, 2022)

Accumulated Other Comprehensive Loss, ending $ — $ — $ —

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

We held investments in money market funds of $ 95.6 million and $ 401.0 million as of January 28, 2023 and January 29, 2022, respectively.

We held investments in money market funds of $ 303.4 million and $ 95.6 million as of February 3, 2024 and January 28, 2023, 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 January 28, 2023 and January 29, 2022, the estimated fair value of the Term Loan and Notes was $ 0.6 billion and $ 0.7 billion, respectively.

As of February 3, 2024 and January 28, 2023, the estimated fair value of the Term Loan and Notes was $ 0.5 billion and $ 0.6 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.

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

January 28, 2023 January 29, 2022

February 3, 2024 January 28, 2023

Leasehold improvements $ 571,785 $ 484,930

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Construction in progress 38,873 23,159

Land 3,698 3,698

Building and land 14,919 3,698

Total property and equipment 1,712,135 1,513,273

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

January 28, 2023 January 29, 2022

February 3, 2024 January 28, 2023

Accrued interest $ 6,717 $ 7,015

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

Concurrent with the adoption of the 2020 Omnibus Incentive Plan, the NAHC 2011 Unit Incentive Plan (the "2011 Unit Incentive Plan") was frozen and no further issuances will be permitted as part of the 2011 Unit Incentive Plan.

As of January 28, 2023, there were 2,430,900 shares that were authorized and available for grant under the 2020 Omnibus Incentive Plan.

Concurrent with the adoption of the 2020 Omnibus Incentive Plan, the previously existing share-based compensation plan, the NAHC 2011 Unit Incentive Plan (the "2011 Unit Incentive Plan"), was frozen and no further issuances will be permitted as part of the 2011 Unit Incentive Plan.

On June 1, 2023, our stockholders approved the First Amendment to the 2020 Omnibus Incentive Plan, which, among other changes, increased the number of shares available for issuance thereunder by 2,600,000 shares.

As of February 3, 2024, there were 4,534,051 shares that were authorized and available for grant 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 and as of January 28, 2023, there were 1,717,411 shares authorized and available for future issuance under the ESPP.

We have reserved a total of 2,000,000 shares and as of February 3, 2024, there were 1,593,760 shares authorized and available for future issuance under the ESPP.

The following table provides total stock-based compensation recognized in the consolidated statements of income (amounts in thousands):

Fiscal Year Ended

January 28, 2023 January 29, 2022 January 30, 2021

February 3, 2024 January 28, 2023 January 29, 2022

Equity compensation expense (1)

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

(2) These costs include approximately $ 24.9 million in non-cash expenses related to the 2021 Vesting Event, which occurred during the 2021 second quarter.

(3) These costs include approximately $ 19.9 million of equity compensation expense associated with the expensing of certain outstanding restricted stock units as a result of the liquidity condition being achieved upon completion of our IPO.

As of January 28, 2023, unrecognized compensation cost related to Unit Options and Restricted Units of $ 28.6 million is expected to be recognized over a weighted average life of 2.4 years.

The grant date fair value of Restricted Units vested was $ 3.9 million, $ 24.4 million and $ 14.4 million for 2022, 2021 and 2020, respectively.

(2) These costs include approximately $ 24.9 million in non-cash expenses related to the 2021 Vesting Event, which occurred during the 2021 second quarter (see Note 1).

As of February 3, 2024, unrecognized compensation cost related to non-vested share-based compensation awards of $ 28.6 million is expected to be recognized over a weighted average life of two years .

The grant date fair value of Restricted Units and Restricted Stock Units vested was $ 11.7 million, $ 3.9 million and $ 24.4 million for 2023, 2022 and 2021, respectively.

2011 Unit Incentive Plan

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common stock (each, a "Restricted Stock Unit") to our directors, executives, and eligible employees of the Company.

Stock Options granted under the 2020 Omnibus Incentive Plan consist of Stock Options that vest upon the satisfaction of time-based requirements (each, a "Service Stock Option" and Service Unit Options and Service Stock Options together are "Service Options").

Stock Options granted under the 2020 Omnibus Incentive Plan consist of Stock Options that vest upon the satisfaction of time-based requirements, each, a "Service Stock Option" (Service Unit Options and Service Stock Options together are "Service Options").

Restricted Stock Units granted under the 2020 Omnibus Incentive Plan consist of Restricted Stock Units that vest upon the satisfaction of time-based requirements (each, a "Service Restricted Stock Unit") and Restricted Stock Units that vest upon the satisfaction of a time-based requirement and performance-based and/or market-based requirements (each, a "Performance Restricted Stock Unit").

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Board of Directors.

On August 28, 2020, NAHC paid a $ 257.0 million, or $ 1.1257 per unit (or $ 3.5460 as converted using the Contribution Ratio), distribution to its members of record as of August 25, 2020.

Cash on hand was used to fund $ 248.0 million of the distribution, with the remainder distributed through an offset of outstanding loans receivable from one member and state income tax withholding made on behalf of NAHC's members.

Holders of the outstanding granted equity Awards were entitled to receive value equal to $ 1.1257 per Award (or $ 3.5460 as converted using the Contribution Ratio), which was made in the form of cash payments, additional Restricted Unit grants or Unit Option exercise price adjustments.

On August 28, 2020, NAHC paid a $ 257.0 million distribution to its members of record as of August 25, 2020.

Holders of the outstanding granted equity Awards were entitled to receive value equal to $ 3.546 per share on a post-IPO basis, which was made in the form of cash payments, additional Restricted Unit grants or Unit Option exercise price adjustments.

Cash payments due for unvested Awards were paid upon vesting of such Awards.

In accordance with the terms of the 2011 Unit Incentive Plan, the Company made the following adjustments to each outstanding Award (per unit components, shares and exercise prices shown above and below are converted using the Contribution Ratio as described in the Retrospective Presentation of Ownership Exchange in Note 2):

• Exercise price reductions of $ 0.28 for 9,788,000 Unit Options (or $ 0.89 for 3,107,301 Stock Options, as converted);

• Exercise price reductions of $ 1.12 for 1,746,594 Unit Options (or $ 3.53 for 554,474 Stock Options, as converted);

• Additional Restricted Unit grants of 159,362 units (or 50,590 Liquidity Event Restricted Units, as converted);

Cash payments for vested Unit Options and vested Restricted Units ("Share-Based Award Payments") of $ 32.2 million were paid in-full as of July 31, 2021.

No further Share-Based Award Payments relative to the distribution are payable as of January 29, 2022.

These exercise price adjustments did not increase the value of the Unit Options and no related additional equity compensation expense was incurred.

Service Option Fair Value Assumptions

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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 Unit Options.

Expected price volatility was determined based on our own volatility and the implied volatilities of comparable companies over a historical period that matches the expected life of the Service Options.

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

Treasury rate over the expected life.

In 2022, the dividend yield was based on the most recent annualized quarterly dividend and the valuation date closing stock price.

In 2021 and 2020, the dividend yield was based on the expectation that no dividends will be paid.

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

In 2022 and 2023, the dividend yield was based on the most recent annualized quarterly dividend and the valuation date closing stock price.

In 2021, the dividend yield was based on the expectation that no dividends will be paid.

The assumptions used to calculate the fair value of Service Options 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 2023, 2022 and 2021:

Fiscal Year Ended

January 28, 2023 January 29, 2022 January 30, 2021 (1)

February 3, 2024 January 28, 2023 January 29, 2022

Expected life in years 6.0 6.2 6.2

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Weighted-average grant date fair value - Service Options $ 27.60 $ 16.36 $ 11.92

(1) See Retrospective Presentation of Ownership Exchange in Note 2.

Option Activity

The Company’s outstanding and unvested Service Options typically vest ratably over a four-year period, on each anniversary of their grant date.

In the event of certain Company change of control transactions, the Company’s then-outstanding and unvested Service Options will become fully vested and exercisable.

There have been no Performance Options granted under the 2020 Omnibus Incentive Plan to date.

Prior to the 2021 Vesting Event, the Company’s outstanding Performance Options typically vested ratably over a four-year period, after the conclusion of each fiscal year and upon our board of managers’ determination that the Company had achieved certain pre-determined annual earnings before interest, taxes, depreciation and amortization ("EBITDA") targets for such fiscal year.

Option activity is as follows:

Service Options

Weighted Average Exercise Price (2)

Weighted Average Remaining Contractual Life

Options Weighted Average Exercise Price Weighted Average Remaining Contractual Life

(in years) Aggregate Intrinsic Value (in thousands)

Outstanding as of February 1, 2020 5,790,308 $ 12.76 5.5 $ 28,855

Outstanding as of January 30, 2021 6,282,782 $ 13.53 5.5 $ 50,055

Granted or modified 915,017 27.41

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Exercised ( 988,682 ) 20.00 $ 36,277

Outstanding as of January 28, 2023 (3)

Outstanding as of February 3, 2024 (1)

2,615,798 $ 27.99 6.7 $ 95,479

Exercisable as of January 28, 2023 2,161,345 $ 18.68 6.4 $ 79,914

(1) The fair value of a membership unit (2) / share price as of each period end was $ 17.61 , $ 21.50 , $ 37.66 and $ 55.65 for the fiscal years 2019, 2020, 2021 and 2022, respectively.

(2) See Retrospective Presentation of Ownership Exchange in Note 2.

Exercisable as of February 3, 2024 1,633,434 $ 21.53 5.9 $ 70,154

(1) The Company has elected to recognize forfeitures as they occur.

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Performance Unit Options

Weighted Average Exercise Price (2)

Weighted Average Remaining Contractual Life

(in years) Aggregate Intrinsic Value (in thousands)

Outstanding as of February 1, 2020 3,246,849 $ 9.51 3.6 $ 26,838

Options Weighted Average Exercise Price Weighted Average Remaining Contractual Life (in years) Aggregate Intrinsic Value (in thousands)

Outstanding as of January 30, 2021 2,948,621 $ 8.81 2.5 $ 37,422

Granted or modified — —

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Exercised ( 95,915 ) 16.63 $ 3,656

Outstanding as of January 28, 2023 (3)

Outstanding as of February 3, 2024 (1)

122,562 $ 16.55 5.0 $ 5,874

Exercisable as of January 28, 2023 218,477 $ 16.59 5.5 $ 8,534

(1) The fair value of a membership unit (2) / share price as of each period end was $ 17.61 , $ 21.50 , $ 37.66 and $ 55.65 for the fiscal years 2019, 2020, 2021 and 2022, respectively.

(2) See Retrospective Presentation of Ownership Exchange in Note 2.

Exercisable as of February 3, 2024 122,562 $ 16.55 5.0 $ 5,874

(1) The Company has elected to recognize forfeitures as they occur.

Therefore, the number of awards vested and expected to vest is equal to the awards outstanding.

The total income tax benefit recognized from the exercise of stock options was $ 4.2 million, $ 18.5 million and $ 0.5 million for the fiscal years ended January 28, 2023, January 29, 2022 and January 30, 2021, respectively.

The total income tax benefit recognized from the exercise of stock options was $ 3.9 million, $ 4.2 million and $ 18.5 million for the fiscal years ended February 3, 2024, January 28, 2023 and January 29, 2022, respectively.

Restricted Unit Activity

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Service Restricted Units Liquidity Event Restricted Units Performance Restricted Units

Weighted Average Grant Date Fair Value (1)

Non-vested as of February 1, 2020 12,071 $ 16.57 1,044,813 $ 17.36 — $ —

Units Weighted Average Grant Date Fair Value Units Weighted Average Grant Date Fair Value Units Weighted Average Grant Date Fair Value

Non-vested as of January 30, 2021 32,049 $ 17.01 1,339,330 $ 17.74 16,328 $ 13.87

Granted 358,960 36.64 — — 196,056 27.41

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Forfeited ( 92,151 ) 51.32 — — ( 88,301 ) 47.94

Non-vested as of January 28, 2023 437,108 $ 39.11 — $ — 298,929 $ 32.55

(1) See Retrospective Presentation of Ownership Exchange in Note 2.

The Company’s outstanding and unvested Service Restricted Units typically vest either (i) 100 % on the first anniversary of the grant date, or, if earlier, the business day immediately preceding the following annual meeting of stockholders, or (ii) over a four-year period at rates of 25 %, 25 %, 25 % and 25 % on the anniversary of their grant date.

In the event of certain Company change of control transactions, the Company’s then-outstanding and unvested Service Restricted Units will become fully vested.

The Company’s outstanding and unvested Liquidity Event Restricted Units began being expensed on October 6, 2020, concurrent with the completion of the IPO and the performance objective was met in accordance with ASC 718.

Additionally, in connection with the completion of the IPO, the Company issued performance restricted units to key team members which will vest 25 % on the first anniversary of the grant date and 75 % on the second anniversary of the grant date.

The Company’s outstanding and unvested Performance Restricted Units typically vest either (i) over a four-year period at rates of 25 %, 25 %, 25 % and 25 % per anniversary of the Performance Restricted Unit holder’s vesting commencement date, so long as the Company achieves (a) the performance metric for the grant year, (b) achieves a stated target share price, or (c) a change of control occurring during the grant year, or (ii) immediately at a rate of 100 %, upon the completion of certain Company change of control transactions, so long as during the twenty-four month period following such change of control the unit holder's service is terminated without cause or they submit their resignation for good reason, as defined in the award agreement.

Non-vested as of February 3, 2024 564,863 $ 51.80 — $ — 311,822 $ 48.85

The Company's outstanding and unvested Service Options typically vest ratably over a three or four-year period, on each anniversary of their grant date.

The Company’s outstanding and unvested Service Restricted Units generally vest ratably over a three of four-year period on each anniversary of their grant date.

In more limited grants, Service Restricted Units vest 100 % on the first anniversary of the grant date, or, if earlier, the business day immediately preceding the following annual meeting of stockholders.

The Company’s outstanding and unvested Performance Restricted Units typically vest either (i) if granted during 2023, on the third anniversary of the Performance Restricted Unit holder's vesting commencement date, or (ii) if granted prior to 2023, ratably over a four-year period on each anniversary of the Performance Restricted Unit holder’s vesting commencement date, so long as the Company achieved (a) the performance metric for the performance period or (b) achieves a stated target share price.

In the event of certain Company change of control transactions, the Company's then-outstanding and unvested Awards will become fully vested and exercisable subject to certain criteria (as defined in the award agreements).

For certain Awards granted in 2022 and all Awards granted in 2023, for team members that meet the age and service requirement for retirement eligibility (as defined in the award agreement), such Awards do not require the continued employment of the team member for vesting eligibility.

In such cases, expensing of Awards is accelerated through the retirement eligibility date.

Earnings per Common Share

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Fiscal Year Ended

January 28, 2023 January 29, 2022 January 30, 2021

February 3, 2024 January 28, 2023 January 29, 2022

Net income $ 519,190 $ 628,001 $ 671,381

Weighted average common shares outstanding - basic 75,389 81,590 90,956

81,590 90,956 77,994

Dilutive effect of Service Restricted Units and Service Restricted Stock Units 327 165 70

Dilutive effect of Performance Restricted Stock Units and Liquidity Event Restricted Units 165 207 313

207 313 1,224

Dilutive effect of Service Options 1,439 1,678 2,300

1,678 2,300 773

Dilutive effect of Performance Unit Options 112 202 637

202 637 1,433

Dilutive effect of ESPP Shares 37 53 8

Weighted average common shares outstanding - diluted 77,469 83,895 94,284

83,895 94,284 81,431

Earnings per common share - basic $ 6.89 $ 7.70 $ 7.38

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Anti-dilutive stock-based awards excluded from diluted calculation 128 24 24

(1) See Retrospective Presentation of Ownership Exchange in Note 2

Prior to October 1, 2020, the Company, was treated as a flow through entity for U.S.

federal income tax purposes and thus no federal income tax expense was recorded in our statements of income for periods prior to October 1, 2020.

Our tax rate prior to October 1, 2020 was almost entirely the result of state income taxes.

In connection with our IPO, as a result of the Reorganization Transactions completed on October 1, 2020, as described further in the Prospectus, on and after October 1, 2020, the Company is treated as a U.S.

corporation for U.S.

federal, state, and local income tax purposes and accordingly, a provision for income taxes has been recorded for the anticipated tax consequences of our reported results of operations for federal, state and local income taxes since October 1, 2020.

As a result of the Reorganization Transactions, the Company recorded a net deferred tax liability position of $ 137.3 million, which consisted of the Company’s difference between the Company's financial statement carrying value and the outside tax basis in its NAHC membership units, immediately following the completion of the Reorganization Transactions, measured at the enacted federal and state income tax rates.

Additionally, $ 4.6 million in current tax liability was assumed by the Company as part of the Reorganization Transactions.

The combined entry was recorded as a cumulative adjustment to additional paid-in capital for 2020 equal to $ 141.9 million, as reflected in the statement of stockholders' equity.

Effective January 31, 2021, NAHC discontinued partnership treatment for tax purposes.

As a result, our deferred tax liability was no longer measured by reference to membership units in NAHC and instead was measured by reference to the underlying assets and liabilities of our operations.

No change in the total reported deferred tax liability occurred as a result of the change in tax structure.

The income tax provision consists of the following (amounts in thousands) as of:

Fiscal Year Ended

January 28, 2023 January 29, 2022 January 30, 2021

February 3, 2024 January 28, 2023 January 29, 2022

Current expense:

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Fiscal Year Ended

January 28, 2023 January 29, 2022 January 30, 2021

February 3, 2024 January 28, 2023 January 29, 2022

Federal income tax at the statutory rate 21.0 % 21.0 % 21.0 %

State income tax, net of federal benefit 2.5 2.5 2.6

Effect of pre-IPO pass-through income allocated to our members — — ( 13.7 )

Nondeductible excess compensation 0.5 0.6 1.3

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Effective income tax rate 21.7 % 23.3 % 21.9 %

The effective tax rate for the period ending January 30, 2021, is less than the U.S.

federal tax rate on corporations primarily as a result of the Company’s status as a flow-through entity prior to October 1, 2020.

The fiscal year ended January 30, 2021 includes four months of activity subject to U.S.

federal and state income tax in addition to the historically reported Texas franchise tax as a result of the Reorganization Transactions.

For complete annual periods on and after October 1, 2020, no portion of the Company’s income remains flow-through to the prior members of NAHC.

NAHC continued to operate as a tax partnership through January 30, 2021.

Components of deferred tax assets and liabilities consist of the following (amounts in thousands) as of:

January 28, 2023 January 29, 2022

February 3, 2024 January 28, 2023

Deferred tax assets:

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Management evaluates the realizability of the deferred tax assets and the need for additional valuation allowances annually.

As of January 28, 2023, based on current facts and circumstances, management believes that it is more likely than not that the Company will realize benefit for its gross deferred tax assets.

As of January 28, 2023, we had no unrecognized tax benefits and we do not anticipate that unrecognized tax benefits will significantly increase or decrease over the next twelve months.

As of February 3, 2024, based on current facts and circumstances, management believes that it is more likely than not that the Company will realize benefit for its gross deferred tax assets.

As of February 3, 2024, we had no unrecognized tax benefits and we do not anticipate that unrecognized tax benefits will significantly increase or decrease over the next twelve months.

The Company files a consolidated federal income tax return and files tax returns in various state and local jurisdictions.

The statute of limitations is open for federal and state tax audits for the tax fiscal years ending 2021 through 2023, and 2020 through 2023, respectively.

We lease all of our retail stores, distribution centers and corporate offices.

With the exception of one retail store which we own, we lease all of our retail stores, distribution centers and corporate offices.

Our leases primarily relate to building leases, which generally include options to renew at our sole discretion for five years or more.

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Additionally, we have certain agreements for equipment rentals, which are typically 12 months or less in duration.

As of January 28, 2023, all of our leases are classified as operating leases.

As of February 3, 2024, all of our leases are classified as operating leases.

In addition, in certain situations, we may sublease real estate to third parties.

Our sublease portfolio consists mainly of former store locations for which we are still under lease and existing store leases in which we have excess or unused space.

In April 2020, the Financial Accounting Standards Board issued Staff Q&A - Topic 842 and Topic 840:

Accounting For Lease Concessions Related to the Effects of the COVID-19 Pandemic .

This guidance provides entities with the option to elect to account for certain lease concessions as though the enforceable rights and obligations had existed in the original lease.

As a result, an entity will not need to reassess each existing contract to determine whether enforceable rights and obligations for concessions exist and an entity can elect to apply or not to apply the lease modification guidance in Accounting Standards Codification Topic 842, Leases , to those contracts.

During the year ended January 30, 2021, the Company received $ 2.5 million in lease expense credit related to landlord abated rent as a result of the elections made under this guidance.

Additionally, during the year ended January 30, 2021, the Company signed 46 lease extensions requiring lease modification accounting treatment.

There were no lease expense credits or extensions requiring lease modification accounting treatment related to COVID-19 during the fiscal years ended January 28, 2023 and January 29, 2022, respectively.

The components of lease expense and sublease income included in selling, general and administrative ("SG&A") expenses on our statement of income is as follows (amounts in thousands):

Fiscal Year Ended

January 28, 2023 January 29, 2022 January 30, 2021

February 3, 2024 January 28, 2023 January 29, 2022

Operating lease expense $ 214,672 $ 201,398 $ 197,321

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Fiscal Year Ended

January 28, 2023 January 29, 2022 January 30, 2021

February 3, 2024 January 28, 2023 January 29, 2022

Right-of-use assets obtained in exchange for new operating lease liabilities $ 134,181 $ 116,652 $ 26,253

Cash paid for amounts included in the measurement of operating lease liabilities $ 213,860 $ 204,159 $ 203,554

January 28, 2023 January 29, 2022

February 3, 2024 January 28, 2023

Weighted-average remaining lease term in years 9.5 9.8

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As most of our leases do not provide an implicit rate of interest, we use our incremental borrowing rate, which is based on the market lending rates for companies with comparable credit ratings, to determine the present value of lease payments on lease commencement or remeasurement.

The remaining maturities of lease liabilities by fiscal year as of January 28, 2023 are as follows (amounts in thousands):

The remaining maturities of lease liabilities by fiscal year as of February 3, 2024 are as follows (amounts in thousands):

2024 $ 200,494

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(1) Minimum lease payments have not been reduced by sublease rentals of $ 2.3 million due in the future under non-cancelable subleases.

The Company has entered into operating leases related to future store locations for which we have not yet taken possession of the location.

As of February 3, 2024, the future minimum lease payments on these leases approximated $ 159.3 million.

Related Party Transactions

Monitoring Agreement

On August 3, 2011 (the "Effective Date"), we entered into a monitoring agreement (the "Monitoring Agreement"), with Kohlberg Kravis Roberts & Co.

(the "Adviser") pursuant to which the Adviser provided advisory, consulting and financial services to us.

In accordance with the terms of the Monitoring Agreement, we paid an aggregate annual advisory fee which increased by 5.0 % annually on each anniversary of the Effective Date.

The Adviser also charged us a customary fee for services rendered in connection with securing, structuring and negotiating equity and debt financings by us.

Additionally, we were required to reimburse the Adviser for any out-of-pocket expenses in connection with these services.

The Monitoring Agreement continued in effect from year-to-year, unless amended or terminated by the Adviser and us.

Upon the completion of the IPO, in the third quarter of 2020 the Monitoring Agreement terminated, and we recognized the final termination fee of $ 12.3 million.

The termination fee was equal to the net present value of the advisory fees that would have been paid from the termination date through the twelfth anniversary of the Effective Date of the Monitoring Agreement.

We recognized advisory fees related to the Monitoring Agreement, including reimbursement of expenses, of approximately $ 14.8 million in 2020.

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

Transaction and Other Fee Arrangements

On October 6, 2020, ASO, Inc.

completed the IPO.

The Company paid $ 2.7 million in fees to KKR Capital Markets LLC ("KCM"), an affiliate of KKR, for underwriting services in connection with the IPO.

On November 3, 2020, ASO, Inc.

completed the IPO Over-Allotment Exercise.

The Company paid $ 0.3 million in fees to KCM for underwriting services in connection with the IPO Over-Allotment Exercise.

On November 6, 2020, the Company issued the Notes, entered into the 2020 Term Loan, and entered into the 2020 ABL Facility.

The Company paid $ 2.5 million in fees to KCM in connection with the Refinancing Transactions.

These fees are recorded as deferred loan costs, net of amortization, within the long-term debt on the consolidated balance sheets.

Other Related Party Transactions

On January 27, 2021, May 5, 2021, and September 14, 2021, in connection with the Secondary Offering, the May 2021 Secondary Offering, and the September 2021 Secondary Offering, respectively, the Company entered into 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.

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

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

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

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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).

Additionally, KKR has ownership interest in a broad range of portfolio companies and we may have entered into commercial transactions for goods or services in the ordinary course of business with these companies.

We do not believe such transactions are material to our business.

Upon completion of the September 2021 Secondary Offering, KKR no longer holds an ownership interest in the Company.

Investments in Managers

During the year ended January 30, 2021, Managers repurchased at fair market value approximately $ 37.0 thousand of Redeemable Membership Units from a director of the Company for cash.

NAHC concurrently repurchased from Managers for cash, at fair market value, a number of NAHC membership units equal to the number of Redeemable Membership Units repurchased from the director.

Managers was dissolved and its assets were distributed to its members on December 23, 2020.

Note Receivable from Member and Distribution

Prior to October 1, 2020, under NAHC's LLC agreement, certain members could require the Company to provide a tax loan on their behalf under certain circumstances.

On April 10, 2019, the Company loaned $ 4.0 million with a note receivable issued to a member of NAHC.

The note receivable bore semi-annual compounding interest at 2.5 % with outstanding principal and interest due on April 10, 2022.

This note receivable was recorded in other non-current assets on the balance sheet.

On April 5, 2018, the Company loaned $ 4.1 million with a note receivable issued to a member of NAHC.

The note receivable bore semi-annual compounding interest at 2.1 %, with outstanding principal and interest due on April 5, 2021, and was recorded in prepaid expenses and other non-current assets on the balance sheet.

On August 28, 2020, the Company made a distribution to its members of record as of August 25, 2020, of $ 257.0 million (see Note 9).

Of the $ 257.0 million, $ 8.5 million was used to offset and satisfy the remaining balances of the notes receivable and related interest receivable from a member of NAHC.

Commitments and Contingencies

Freight, Technology Related Commitments and Other

As of January 28, 2023, we have obligations under freight, technology-related, construction and other contractual commitments in the amount of $ 117.4 million.

Technology Related Commitments and Other

As of February 3, 2024, we have obligations under technology-related, construction and other contractual commitments in the amount of $ 68.0 million.

Of such commitments, approximately $ 40.9 million is payable in the next 12 months.

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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 consolidated 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.

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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.

In May and December 2023, U.S.

Customs and Border Protection ("CBP") notified us that 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 were required to deposit with CBP an amount of duties relating to these products, which are included in prepaid expenses and other current assets on the Company’s consolidated balance sheet while this matter is pending.

We anticipate that this matter will be resolved without 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 CBP's determination or that we will not need to accrue or pay additional amounts in the future.

During 2023, the Company settled a legal matter pertaining to the overcharge of interchange feeds with certain financial institutions for prior periods dating back to 2004.

In connection with this settlement, we recognized a net gain of approximately $ 15.9 million in Other (income), net on the Consolidated Statements of Income, when the gain became realizable.

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

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

As of January 28, 2023, we have $ 17.9 million in related commitments through 2027, of which $ 5.5 million is payable in next 12 months.

As of February 3, 2024, we have $ 13.7 million in related commitments through 2027, of which $ 5.6 million is payable in next 12 months.

Employee Benefit Plans

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Selected Quarterly Financial Data (Unaudited)

The summarized quarterly financial information for the fiscal years ended 2022 and 2021 are reflected in the table below (in thousands, except earnings per share data):

The summarized quarterly financial information for the fiscal years ended 2023 and 2022 are reflected in the table below (amounts in thousands, except earnings per share data):

1st 2nd 3rd 4th

(amounts in thousands) Quarter Quarter Quarter Quarter

Quarter Quarter Quarter Quarter

Net sales $ 1,383,609 $ 1,583,077 $ 1,397,777 $ 1,794,828

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Net income (1)

93,970 157,075 99,978 168,167

Earnings per common share:

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Operating income 205,493 256,734 179,522 204,800

Loss on early retirement of debt — 2,239 — —

Net income (2)

$ 149,806 $ 188,801 $ 131,741 $ 157,653

Earnings per common share:

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Diluted 88,614 84,906 81,379 80,074

(1) Net income for the quarter ended February 3, 2024, includes a $ 15.9 million net gain relative to a credit card fee litigation settlement which occurred in the fourth quarter of 2023 (see Note 2).

(2) Net income for the year ended January 28, 2023, included a $ 7.2 million gain from a business interruption insurance recovery and a $ 3.7 million gain from the sale of a tariff relief litigation claim, both of which occurred in the fourth quarter of 2022 (see Note 2).

Subsequent Events

Our management evaluated events or transactions that occurred after January 28, 2023 through March 16, 2023, the issuance date of the consolidated financial statements, and identified the following matter to report:

Our management evaluated events or transactions that occurred after February 3, 2024 through March 21, 2024, the issuance date of the consolidated financial statements, and identified the following matter to report:

On March 7, 2024, the Company's Board of Directors declared a quarterly cash dividend in the amount of $ 0.11 per share on the Company's common stock, payable on April 18, 2024 to stockholders of record as of the close of business on March 26, 2024.

On March 8, 2024 Academy, Ltd.

(“Academy”), a wholly-owned subsidiary of Academy Sports and Outdoors, Inc., as borrower, New Academy Holding Company, LLC, Associated Investors, L.L.C.

and Academy Managing Co., L.L.C., each a direct or indirect, wholly-owned subsidiary of the Company, as guarantors, entered into an amendment (the “ABL Amendment”) to the First Amended and Restated ABL Credit Agreement, dated as of July 2, 2015, with JPMorgan Chase Bank, N.A.

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’s asset-based revolving credit facility (the “ABL Credit Facility”) to March 8, 2029, unless if (i) more than $ 100 million of the aggregate principal amount of the 2027 Senior Notes (as defined in the ABL Amendment) or the Term Loans (as defined in the ABL Amendment), or any refinancing thereof, in each case, is outstanding on the date that is 91 days prior to the earliest maturity date of any such indebtedness or (ii) equal to or less than $ 100 million of the aggregate principal amount of the 2027 Senior Notes or the Term Loans, in either case, is outstanding on the date that is 91 days prior to the earliest maturity date of any such indebtedness and a Reserve (as defined in the ABL Amendment) in the ABL Credit Facility has not been taken for such amount, then the maturity date of the ABL Credit Facility will be the date that is 91 days earlier than the earlier maturity date of the 2027 Senior Notes and the Term Loans.

Form 10–K Summary

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Amended and Restated Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on October 6, 2020).

Certificate of Change of Registered Agent and/or Registered Office of the Registrant (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on June 1, 2023).

Amended and Restated Bylaws of the Registrant (incorporated by reference to Exhibit 3.2 to the Registrant’s Quarterly Report on Form 10-Q filed on December 6, 2022).

Indenture, dated as of November 6, 2020, by and among Academy, Ltd., as issuer, the guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as trustee and notes collateral agent (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed on November 6, 2020).

Description of Securities Registered Under Section 12 of the Exchange Act.

Description of Securities Registered Under Section 12 of the Exchange Act (incorporated by reference to Exhibit 4.2 to the Registrant’s Annual Report on Form 10-K filed on March 16, 2023).

Second Amended and Restated Credit Agreement, dated as of November 6, 2020, among Academy, Ltd., as Borrower, New Academy Holding Company, LLC, as Holdings, Associated Investors L.L.C.

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4, dated May 25, 2021, to the Second Amended and Restated Credit Agreement 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 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on May 25, 2021).

Conforming Changes Amendment to the Credit Agreement, dated May 17, 2023, which amends that certain Second Amended and Restated Credit Agreement, dated November 6, 2020 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time), by and among Academy, Ltd., as Borrower, New Academy Holding Company, LLC, as Holdings, Associated Investors, L.L.C.

and Academy Managing Co., L.L.C., as Texas Intermediate Holdcos, the lending institutions from time to time party thereto and Credit Suisse AG, Cayman Island Branch, as the Administrative Agent and the Collateral Agent and the several other parties named therein (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed on August 31, 2023).

Amended and Restated Term Loan Security Agreement, dated as of July 2, 2015, among Academy, Ltd., as Borrower, each of the subsidiaries listed on the signature pages thereto, and Morgan Stanley Senior Funding, Inc., as collateral agent for the benefit of the secured parties (incorporated by reference to Exhibit 10.2 to the Registrant’s Registration Statement on Form S-1 filed on September 23, 2020).

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Joinder to ABL Intercreditor Agreement, dated November 6, 2020, among JPMorgan Chase Bank, N.A., as agent for the ABL Secured Parties referred to therein, Credit Suisse AG, Cayman Islands Branch, as agent for the Term Loan Secured Parties referred to therein, and The Bank of New York Mellon Trust Company, N.A., as collateral agent for the Additional Debt Secured Parties referred to therein (incorporated by reference to Exhibit 10.5 to the Registrant’s Registration Statement on Form S-1 filed on January 25, 2021).

Exhibit Number Description of Exhibit

Joinder to ABL Intercreditor Agreement, dated November 6, 2020, among JPMorgan Chase Bank, N.A., as agent for the ABL Secured Parties referred to therein, and Credit Suisse AG, Cayman Islands Branch, as agent for the Term Loan Secured Parties referred to therein (incorporated by reference to Exhibit 10.6 to the Registrant’s Registration Statement on Form S-1 filed on January 25, 2021).

First Lien Intercreditor Agreement, dated November 6, 2020, among Credit Suisse AG, Cayman Islands Branch, as First Lien Collateral Agent and Authorized Representative for the Credit Agreement Secured Parties referred to therein, The Bank of New York Mellon Trust (incorporated by reference to Exhibit 10.7 to the Registrant’s Registration Statement on Form S-1 filed on January 25, 2021).

Exhibit Number Description of Exhibit

Amended and Restated ABL Security Agreement, dated as of July 2, 2015, among Academy, Ltd., as Borrower, each of the subsidiaries listed on the signature pages thereto, and JPMorgan Chase Bank, N.A., as collateral agent for the benefit of the secured parties (incorporated by reference to Exhibit 10.7 to the Registrant’s Registration Statement on Form S-1 filed on September 23, 2020).

Amended and Restated ABL Pledge Agreement, dated July 2, 2015, among New Academy Holding Company, LLC, as Holdings, Associated Investors L.L.C.

and Academy Managing Co., L.L.C, as Texas Intermediate Holdcos, Academy, Ltd., as Borrower, each of the subsidiaries listed on the signature pages thereto and JPMorgan Chase Bank, N.A., as collateral agent for the benefit of the secured parties (incorporated by reference to Exhibit 10.8 to the Registrant’s Registration Statement on Form S-1 filed on September 23, 2020).

First Amended and Restated ABL Credit Agreement, dated July 2, 2015, among Academy, Ltd., as Borrower, New Academy Holding Company, LLC, as Holdings, Associated Investors L.L.C.

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and Academy Managing Co., L.L.C., as Texas Intermediate Holdcos, the several lenders from time to time party thereto, JPMorgan Chase Bank, N.A., as the letter of credit issuer, administrative agent and collateral agent (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on November 6, 2020).

Amended and Restated ABL Pledge Agreement, dated July 2, 2015, among New Academy Holding Company, LLC, as Holdings, Associated Investors L.L.C.

Amendment No.

3, dated March 30, 2023, to First Amended and Restated ABL Credit Agreement, among Academy, Ltd., as Borrower, New Academy Holding Company, LLC, as Holdings, Associated Investors, L.L.C.

and Academy Managing Co., L.L.C., as Texas Intermediate Holdcos, the lending institutions from time to time party thereto and JPMorgan Chase Bank, N.A., as the Administrative Agent, the Collateral Agent, the Letter of Credit Issuer and the Swingline Lender (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed on June 6, 2023)

Amendment No.

4, dated March 8, 2024, to the First Amended and Restated ABL Credit agreement, dated as of July 2, 2015, among Academy, Ltd., as borrower, New Academy Holding Company, LLC, Associated Investors, L.L.C., and Academy Managing Co., L.L.C., as guarantors, the several lenders from time to time party thereto and JPMorgan Chase Bank, N.A., as the letter of credit issuer, swingline lender, administrative agent and collateral agent (incorporated by reference to Exhibit 10.1 of the Registrant's Current Report on Form 8-K filed on March 8, 2024).

Notes Security Agreement, dated as of November 6, 2020, among Academy, Ltd., as Issuer, each of the guarantors listed on the signature pages thereto, and The Bank of New York Mellon Trust Company, N.A., as collateral agent for the benefit of the Secured Parties referred to therein (incorporated by reference to Exhibit 10.13 to the Registrant’s Registration Statement on Form S-1 filed on January 25, 2021).

Notes Pledge Agreement, dated as of November 6, 2020, among Academy, Ltd., as Issuer, each of the guarantors listed on the signature pages thereto, and The Bank of New York Mellon Trust Company, N.A., as collateral agent for the benefit of the Secured Parties referred to therein (incorporated by reference to Exhibit 10.14 to the Registrant’s Registration Statement on Form S-1 filed on January 25, 2021).

Amendment to the Registration Rights Agreement, dated as of October 6, 2020, by and among the Registrant, Allstar LLC and New Academy Holding Company, LLC (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed on October 6, 2020).

Exhibit Number Description of Exhibit

Form of Non-Employee Director Time-Based Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q filed on September 7, 2022).

Form of Q1 2023 CEO Performance-Based Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10.5 to the Registrant’s Quarterly Report on Form 10-Q filed on August 31, 2023).

Form of Q1 2023 CEO Time-Based Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10.6 to the Registrant’s Quarterly Report on Form 10-Q filed on August 31, 2023).

Form of Q1 2023 CEO Time-Based Option Agreement (incorporated by reference to Exhibit 10.7 to the Registrant’s Quarterly Report on Form 10-Q filed on August 31, 2023).

Form of 2022 CEO Performance-Based Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed on June 7, 2022).

Form of 2022 CEO Time-Based Option Agreement (incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q filed on June 7, 2022).

Form of Q2 2023 Executive Performance-Based Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q filed on August 31, 2023).

Form of Q2 2023 Executive Time-Based Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q filed on August 31, 2023).

Form of Q2 2023 Executive Time-Based Option Agreement (incorporated by reference to Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q filed on August 31, 2023).

Form of 2023 Executive Performance-Based Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q filed on June 6, 2023).

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Form of 2023 Executive Time-Based Option Agreement (incorporated by reference to Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q filed on June 6, 2023).

Form of 2022 Executive Performance-Based Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q filed on June 7, 2022).

Form of 2022 Executive Time-Based Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q filed on June 7, 2022).

Form of 2022 Executive Time-Based Option Agreement (incorporated by reference to Exhibit 10.5 to the Registrant’s Quarterly Report on Form 10-Q filed on June 7, 2022).

Form of 2021 RSU Executive Retention Award Agreement (incorporated by reference to Exhibit 10.01 to the Registrant's Quarterly Report on From 10-Q filed on December 10, 2021).

Exhibit Number Description of Exhibit

2021 Form of Performance-Based Restricted Stock Unit Agreement under the 2020 Omnibus Incentive Plan.

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2020 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q filed on December 10, 2020).

2020 Omnibus Incentive Plan, as amended by the First Amendment (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on June 1, 2023).

Form of Time-Based Option Agreement under 2020 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.10 to Amendment No.

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Form of 2020 CEO Option Agreement under 2011 Unit Incentive Plan (incorporated by reference to Exhibit 10.14 to the Registrant’s Registration Statement on Form S-1 filed on September 23, 2020).

Exhibit Number Description of Exhibit

Form of 2020 Executive Option Agreement under 2011 Unit Incentive Plan (incorporated by reference to Exhibit 10.15 to the Registrant’s Registration Statement on Form S-1 filed on September 23, 2020).

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Form of 2018 CEO Restricted Unit Agreement under 2011 Unit Incentive Plan (as amended) (incorporated by reference to Exhibit 10.26 to the Registrant’s Registration Statement on Form S-1 filed on September 23, 2020).

Exhibit Number Description of Exhibit

Form of Independent Non-Employee Director Restricted Unit Agreement under 2011 Unit Incentive Plan (incorporated by reference to Exhibit 10.27 to the Registrant’s Registration Statement on Form S-1 filed on September 23, 2020).

Form of 2018 Executive Restricted Unit Agreement under 2011 Unit Incentive Plan (incorporated by reference to Exhibit 10.28 to the Registrant’s Registration Statement on Form S-1 filed on September 23, 2020).

Hicks Employment Agreement, dated August 2, 2018 (incorporated by reference to Exhibit 10.29 to the Registrant’s Registration Statement on Form S-1 filed on September 23, 2020).

Mullican Employment Agreement, dated January 6, 2017 and amended on December 21, 2017 (incorporated by reference to Exhibit 10.30 to the Registrant’s Registration Statement on Form S-1 filed on September 23, 2020).

Hicks Amended and Restated Employment Agreement, dated April 26, 2023 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on April 27, 2023).

Mullican Amended and Restated Employment Agreement, dated April 26, 2023 (incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K filed on April 27, 2023).

Steven (Steve) P.

Lawrence Employment Agreement, dated January 29, 2019 (incorporated by reference to Exhibit 10.31 to the Registrant’s Registration Statement on Form S-1 filed on September 23, 2020).

Lawrence Amended and Restated Employment Agreement, dated April 26, 2023 (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on April 27, 2023).

Samuel (Sam) J.

Johnson Employment Agreement, dated April 17, 2017 (incorporated by reference to Exhibit 10.32 to the Registrant’s Registration Statement on Form S-1 filed on September 23, 2020).

Jamey Traywick Rutherford Employment Agreement, dated October 1, 2018 (incorporated by reference to Exhibit 10.41 to the Registrant’s Annual Report on Form 10-K filed on April 7, 2021).

Johnson Amended and Restated Employment Agreement, dated October 23, 2023 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on October 23, 2023).

Earl Carlton (Carl) Ford, IV Employment Agreement, dated July 6, 2023 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on July 11, 2023).

Exhibit Number Description of Exhibit

Manish Maini Employment Agreement, dated May 25, 2017 (incorporated by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q filed on September 7, 2022).

Form of 2020 Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.34 to Amendment No.

2020 Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.34 to Amendment No.

1 to the Registrant’s Registration Statement on Form S-1 filed on September 23, 2020).

Stockholders Agreement, dated as of October 6, 2020, by and among the Registrant, Allstar LLC, KKR 2006 Allstar Blocker L.P.

and Allstar Co-Invest Blocker L.P.

(incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on October 6, 2020).

Form of Director and Officer Indemnification Agreement (incorporated by reference to Exhibit 10.37 to Amendment No.

1 to the Registrant’s Registration Statement on Form S-1 filed on September 23, 2020).

Non-Employee Director Compensation Policy (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed on September 7, 2022).

Non-Employee Director Compensation Policy, effective March 18, 2024.

Subsidiaries of the Registrant.

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Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Policy Relating to Recovery of Erroneously Awarded Compensation.

101.INS XBRL Instance Document - The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

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101.PRE Inline XBRL Taxonomy Presentation Linkbase Document

104 The cover page for the Company’s Annual Report on Form 10-K for the fiscal year ended January 28, 2023 has been formatted in Inline XBRL.

104 The cover page for the Company’s Annual Report on Form 10-K for the fiscal year ended February 3, 2024 has been formatted in Inline XBRL.

* Filed herewith

Exhibit Number Description of Exhibit

** This certification accompanies each report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

4 unchanged sentences

ACADEMY SPORTS AND OUTDOORS, INC.

/s/ HEATHER A.

Senior Vice President of Accounting, Treasury and Tax

(principal accounting officer)

/s/ EARL CARLTON FORD, IV

Earl Carlton Ford, IV

Executive Vice President and Chief Financial Officer

(principal financial officer and principal accounting officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report on Form 10-K has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:

Signature Title Date

HICKS Chairman, President and Chief Executive Officer March 16, 2023

Hicks (principal executive officer)

/s/ MICHAEL P.

MULLICAN Executive Vice President and Chief Financial Officer March 16, 2023

Mullican (principal financial officer)

/s/ HEATHER A.

DAVIS Senior Vice President of Accounting, Treasury and Tax March 16, 2023

Davis (principal accounting officer)

/s/ STEVEN LAWRENCE Chief Executive Officer and Director March 21, 2024

Steven Lawrence (principal executive officer)

/s/ EARL CARLTON FORD, IV Executive Vice President and Chief Financial Officer March 21, 2024

Earl Carlton Ford, IV (principal financial officer and principal accounting officer)

HICKS Executive Chairman March 21, 2024

BECK Director March 21, 2024

5 unchanged sentences

TURNER Director March 21, 2024

/s/ SHAREN J.

TURNEY Director March 16, 2023

TWEEDY Director March 21, 2024

3 unchanged sentences

Balance at beginning of period Charged to costs and expenses Deductions Balance at end of period

January 28, 2023:

February 3, 2024:

Allowance for doubtful accounts $ 2,004 $ 1,107 $ ( 894 ) (1) $ 2,217

16 unchanged sentences

(4) Represents claim payments for self-insured claims.

(5) The reduction represents net collections on previously written-off balances.

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-K

Item 9A. Controls and Procedures