What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2021-03-19 compared with 2020-03-19 · 1009 added, 533 removed, 680 unchanged (69% of the section changed)

2 unchanged sentences

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets as of February 1, 2020 and February 2, 2019

Consolidated Statements of Operations and Comprehensive Income for the fiscal years ended February 1, 2020, February 2, 2019 and February 3, 2018

Consolidated Statements of Contingently Redeemable Common Stock and Stockholders' Deficit for the fiscal years ended February 1, 2020, February 2, 2019 and February 3, 2018

Consolidated Statements of Cash Flows for the fiscal years ended February 1, 2020, February 2, 2019 and February 3, 2018

Consolidated Balance Sheets as of January 30, 2021 and February 1, 2020

Consolidated Statements of Operations and Comprehensive Income for the Fiscal Years Ended January 30, 2021, February 1, 2020 and February 2, 2019

Consolidated Statements of Contingently Redeemable Common Stock and Stockholders' Equity (Deficit) for the Fiscal Years Ended January 30, 2021, February 1, 2020 and February 2, 2019

Consolidated Statements of Cash Flows for the Fiscal Years Ended January 30, 2021, February 1, 2020 and February 2, 2019

Notes to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of BJ’s Wholesale Club Holdings, Inc.

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of BJ’s Wholesale Club Holdings, Inc.

and its subsidiaries (the “Company”) as of February 1, 2020 and February 2, 2019, and the related consolidated statements of operations and comprehensive income, of contingently redeemable common stock and stockholders' deficit and of cash flows for each of the three years in the period ended February 1, 2020, including the related notes (collectively referred to as the “consolidated financial statements”).

We also have audited the Company's internal control over financial reporting as of February 1, 2020, 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 consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of February 1, 2020 and February 2, 2019, and the results of its operations and its cash flows for each of the three years in the period ended February 1, 2020 in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of February 1, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

We have audited the accompanying consolidated balance sheets of BJ’s Wholesale Club Holdings, Inc.

and its subsidiaries (the “Company”) as of January 30, 2021 and February 1, 2020, and the related consolidated statements of operations and comprehensive income, of contingently redeemable common stock and stockholders' equity (deficit) and of cash flows for each of the three years in the period ended January 30, 2021, including the related notes (collectively referred to as the “consolidated financial statements”).

We also have audited the Company's internal control over financial reporting as of January 30, 2021, 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 consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of January 30, 2021 and February 1, 2020, and the results of its operations and its cash flows for each of the three years in the period ended January 30, 2021 in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of January 30, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Change in Accounting Principle

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Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control Over Financial Reporting appearing under Item 9A.

Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

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We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

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Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

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The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Impairment Assessment of the Trade Name Intangible Asset

As described in Notes 2 and 8 to the consolidated financial statements, the Company’s indefinite-lived intangible asset for its trade name was valued at $90.5 million as of February 1, 2020.

Management conducts an impairment test annually in the fourth quarter of each year or whenever events or changes in circumstances indicate the trade name intangible asset may be impaired.

If the recorded carrying value of the intangible asset exceeds its estimated fair value, the Company records a charge to write the intangible asset down to its estimated fair value.

The fair value of the trade name is determined using the relief-from-royalty method.

Management’s calculation of the fair value includes assumptions, estimates and judgments, including estimated future cash flows, the discount rate used to discount such cash flows, and the estimated royalty rate.

The principal consideration for our determination that performing procedures relating to the impairment assessment of the trade name intangible asset is a critical audit matter is there was significant judgment by management when developing the fair value measurement of the trade name, which in turn led to a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating management’s significant assumptions, including the discount rate used to discount estimated future cash flows and the estimated royalty rate.

In addition, the audit effort involved the use of professionals with specialized skill and knowledge to assist in performing these procedures and evaluating the audit evidence obtained.

Workers ’

Compensation and General Liability Reserves

As described in Notes 2, 15 and 16 to the consolidated financial statements, the Company is primarily self-insured for workers’

compensation and general liability claims.

As of January 30, 2021, workers’

compensation and general liability reserves were approximately $89 million within other non-current liabilities and a significant portion of insurance reserves of $46 million within accrued expenses and other current liabilities.

The reported reserves for workers’

compensation and general liability claims are derived from estimated ultimate costs based upon individual claim file reserves and estimates for incurred but not reported claims.

The estimates are developed utilizing actuarial methods and are based on historical claims experience and other actuarial assumptions related to loss development factors.

The principal considerations for our determination that performing procedures relating to workers’

compensation and general liability reserves is a critical audit matter are (i) the significant judgment by management when developing the estimated workers’

compensation and general liability reserves;

(ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and in evaluating audit evidence related to the actuarial methods and significant assumptions related to loss development factors;

and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to the impairment assessment of the trade name intangible asset, including controls over the valuation of the Company’s trade name.

These procedures also included, among others, testing management’s process for developing the fair value estimate;

evaluating the appropriateness of the relief-from-royalty method;

testing the completeness, accuracy, and relevance of underlying data used in the method;

and evaluating the significant assumptions used by management, including the discount rate used to discount estimated future cash

flows and the estimated royalty rate.

Evaluating management’s significant assumptions, including the discount rate used to discount estimated future cash flows and the estimated royalty rate, involved evaluating whether the assumptions used by management were reasonable considering the current and past performance of the Company and whether these assumptions were consistent with evidence obtained in other areas of the audit.

Professionals with specialized skill and knowledge were used to assist in the evaluation of the Company’s method and certain significant assumptions, including the discount rate used to discount estimated future cash flows and the estimated royalty rate.

These procedures included testing the effectiveness of controls relating to management’s estimate of workers’

compensation and general liability reserves, including controls over the actuarial methods and significant assumptions related to the loss development factors.

These procedures also included, among others (i) the involvement of professionals with specialized skill and knowledge to assist in developing an independent estimate for the accrual for workers’

compensation and general liability reserves and (ii) comparing the independent estimate to management’s estimate to evaluate the reasonableness of management’s estimate.

Developing the independent estimate involved (i) testing the completeness and accuracy of underlying data provided by management and (ii) independently developing the loss development factors and applying actuarial methods.

/s/ PricewaterhouseCoopers LLP

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March 19, 2021

We have served as the Company’s auditor since 1996.

BJ’S WHOLESALE CLUB HOLDINGS, INC.

We have served as the Company’s auditor since 1996.

BJ’S WHOLESALE CLUB HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands)

February 1, 2020

January 30, 2021

February 1, 2020

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Cash and cash equivalents

$ 43,518  

$ 30,204  

Accounts receivable, net

172,719  

206,353  

Merchandise inventories

1,205,695  

1,081,502  

Prepaid expenses and other current assets

48,649  

41,961  

Total current assets

1,470,581  

1,360,020  

Operating lease right-of-use assets, net

2,058,763  

2,060,059  

Property and equipment:

Land and buildings

385,572  

375,375  

Leasehold costs and improvements

249,073  

214,209  

Furniture, fixtures and equipment

1,298,440  

1,135,892  

Construction in progress

23,633  

51,741  

1,956,718  

1,777,217  

accumulated depreciation and amortization

( 1,158,929 )  

( 1,017,009 )

Total property and equipment, net

797,789  

760,208  

924,134  

Intangibles, net

135,123  

146,985  

Deferred income taxes  

19,403  

18,374  

$ 5,411,530  

$ 5,269,780  

Current liabilities:

Current portion of long-term debt

$ 260,000  

$ 343,377  

Current portion of operating lease liabilities

131,513  

123,751  

Accounts payable

988,074  

786,412  

Accrued expenses and other current liabilities

651,625  

547,876  

Total current liabilities

2,031,212  

1,801,416  

Long-term operating lease liabilities

1,988,840  

1,986,790  

Long-term debt

846,175  

1,337,308  

Deferred income taxes

45,096  

46,200  

Other non-current liabilities

180,880  

152,410  

Commitments and contingencies (see Note 8)

STOCKHOLDERS’ DEFICIT

STOCKHOLDERS’

EQUITY (DEFICIT)

Preferred stock;

$ 0.01 par value;

5,000 shares authorized, and no shares issued or outstanding

5,000 shares authorized, no shares issued or outstanding

Common stock;

$ 0.01 par value;

300,000 shares authorized, 140,723 shares issued and 137,298 shares outstanding at February 1, 2020;

300,000 shares authorized, 143,428 shares issued and 137,192 shares outstanding at January 30, 2021;

300,000 shares authorized, 140,723 shares issued and 137,298 shares outstanding at February 1, 2020

Additional paid-in capital

826,377  

773,618  

Accumulated deficit

( 295,339 )  

Accumulated other comprehensive loss

Treasury stock, at cost, 3,425 shares at February 1, 2020 and 782 shares at February 2, 2019

Total stockholders’ deficit

Total liabilities and stockholders’ deficit

( 20,528 )  

Treasury stock, at cost, 6,236 shares at January 30, 2021 and 3,425 shares at February 1, 2020

( 192,617 )  

Total stockholders’

equity (deficit)

319,327  

Total liabilities and stockholders’

equity (deficit)

$ 5,411,530  

$ 5,269,780  

The accompanying notes are an integral part of the consolidated financial statements.

BJ’S WHOLESALE CLUB HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

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Fiscal Year Ended

February 1, 2020

Fiscal Year Ended

February 2, 2019

Fiscal Year Ended

January 30, 2021

February 1, 2020

February 2, 2019

$ 15,096,913  

$ 12,888,556  

$ 12,724,454  

Membership fee income

333,104  

302,151  

282,893  

Total revenues

15,430,017  

13,190,707  

13,007,347  

Cost of sales

12,451,061  

10,763,926  

10,646,452  

Selling, general and administrative expenses

2,326,755  

2,059,430  

2,051,324  

Pre-opening expense

15,152  

Operating income

642,392  

352,199  

303,453  

Interest expense, net

84,385  

108,230  

164,535  

Income from continuing operations before income taxes

Provision (benefit) for income taxes

558,007  

243,969  

138,918  

Provision for income taxes

136,825  

56,212  

11,826  

Income from continuing operations

421,182  

187,757  

127,092  

Income (loss) from discontinued operations, net of income taxes

Income per share attributable to common stockholders — basic:

( 152 )  

( 581 )  

$ 421,030  

$ 187,176  

$ 127,261  

Income per share attributable to common stockholders —

Income from continuing operations

$ 3.09  

$ 1.38  

$ 1.09  

Loss from discontinued operations

Income per share attributable to common stockholders — diluted:

( 0.01 )  

$ 3.09  

$ 1.37  

$ 1.09  

Income per share attributable to common stockholders —

Income from continuing operations

$ 3.03  

$ 1.35  

$ 1.05  

Loss from discontinued operations

$ 3.03  

$ 1.35  

$ 1.05  

Weighted-average number of common shares outstanding:

Other comprehensive income:

136,111  

136,174  

116,599  

138,876  

139,109  

121,135  

Other comprehensive income (loss):

Postretirement medical plan adjustment, net of income tax of $ 12 , $ 385 and $ 94 , respectively

Unrealized loss on cash flow hedge, net of income tax of $5,554, $5,454 and $0, respectively

Total other comprehensive loss

$ ( 33 )  

$ ( 990 )  

Amounts reclassified from other comprehensive income (loss), net of tax  

Unrealized gain (loss) on cash flow hedge, net of income tax of $ 4 , $ 5,554 and $ 5,454 , respectively

( 14,281 )  

Total other comprehensive income (loss)

( 15,271 )  

Total comprehensive income

$ 427,088  

$ 171,905  

$ 113,545  

The accompanying notes are an integral part of the consolidated financial statements.

BJ’S WHOLESALE CLUB HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CONTINGENTLY REDEEMABLE COMMON STOCK AND

STOCKHOLDERS’ DEFICIT

STOCKHOLDERS’

EQUITY (DEFICIT)

(Amount in thousands)

Comprehensive

Treasury Stock

Stockholders’

Balance, January 28, 2017

Postretirement medical plan adjustment, net of tax

Dividends paid

Stock compensation expense

Option exercises

Call of shares

Other equity transactions

Contingently Redeemable Common Stock  

Common Stock  

Additional Paid-in  

Accumulated  

Accumulated Other Comprehensive  

Treasury Stock  

Total Stockholders’

Equity  

Amount  

Capital  

Deficit  

Amount  

(Deficit)  

Balance, February 3, 2018

$ 10,438  

87,073  

$ 2,883  

$ ( 1,036,012 )  

$ 2,401  

$ ( 1,029,857 )

127,261  

Postretirement medical plan adjustment, net of tax

Unrealized loss on cash flow hedge, net of tax

( 13,956 )  

Dividends paid

( 25 )  

Common stock issued for public offering, net of related fees

43,125  

685,458  

685,889  

Common stock issued under stock incentive plans

( 49 )  

Stock reclassification as a result of public offering

( 1,736 )  

( 13,202 )  

13,185  

13,202  

Common stock issued related to follow-on offering

( 13 )  

Common stock repurchased upon vesting of stock awards

( 782 )  

( 19,109 )  

Stock compensation expense

57,677  

Options exercised prior to public offering

( 2,210 )  

Call of shares prior to public offering

( 28 )  

( 12 )  

Net shares used to pay tax withholdings upon option exercise

( 22,883 )  

Net cash received on option exercises

Cumulative effect of change in accounting principle

( 6,362 )  

Balance, February 2, 2019

138,099  

$ 1,381  

$ 742,072  

$ ( 915,113 )  

$ ( 11,315 )  

( 782 )  

$ ( 19,109 )  

$ ( 202,084 )

187,176  

Postretirement medical plan adjustment, net of tax

( 990 )  

Unrealized loss on cash flow hedge, net of tax

Dividend paid

( 14,281 )  

Dividends paid

( 25 )  

Common stock issued under stock incentive plans

( 25 )  

Common stock issued under ESPP plan

Stock compensation expense

18,796  

Net cash received on option exercises

11,072  

Treasury stock purchases

( 2,643 )  

( 67,305 )  

Cumulative effect of change in accounting principle

11,568  

Balance, February 1, 2020

140,723  

$ 1,407  

$ 773,618  

$ ( 716,369 )  

$ ( 26,586 )  

( 3,425 )  

$ ( 86,414 )  

421,030  

Postretirement medical plan adjustment, net of tax

( 33 )  

Unrealized loss on cash flow hedge, net of tax

Amounts reclassified from other comprehensive income, net of tax  

Dividends paid

( 25 )  

Common stock issued under stock incentive plans

( 26 )  

Common stock issued under ESPP plan

Stock compensation expense

32,150  

Net cash received on option exercises

17,985  

Treasury stock purchases

( 2,811 )  

( 106,203 )  

Balance, January 30, 2021

143,428  

$ 1,434  

$ 826,377  

$ ( 295,339 )  

$ ( 20,528 )  

( 6,236 )  

$ ( 192,617 )  

$ 319,327  

The accompanying notes are an integral part of the consolidated financial statements.

BJ’S WHOLESALE CLUB HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

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Fiscal Year Ended

February 1, 2020

Fiscal Year Ended

February 2, 2019

Fiscal Year Ended

January 30, 2021

February 1, 2020

February 2, 2019

CASH FLOWS FROM OPERATING ACTIVITIES

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Deferred income tax provision (benefit)

Other non-cash items, net

Changes in operating leases and other non-cash items

Increase (decrease) in cash due to changes in:

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Accounts payable

Change in book overdrafts

Accrued expenses

3 unchanged sentences

Additions to property and equipment, net of disposals

Proceeds from sale leaseback transaction

Proceeds from sale leaseback transactions

Net cash used in investing activities

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from long term debt

Payments on long term debt

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Net cash received from Employee Stock Purchase Program (ESPP)

Cash paid for share repurchases

Acquisition of treasury stock

Proceeds from Initial Public Offering, net of underwriters' discount and commission

Payment of Initial Public Offering costs

Proceeds from IPO, net of underwriters' discount and commission

Payment of IPO costs

Proceeds from financing obligations

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Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

Cash and cash equivalents, beginning of period

Cash and cash equivalents, end of period

Supplemental cash flow information:

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Non-cash financing and investing activities:

Lease liabilities arising from obtaining right-of-use assets

Conversion of contingently redeemable common stock into common stock

1 unchanged sentence

The accompanying notes are an integral part of the consolidated financial statements.

BJ’S WHOLESALE CLUB HOLDINGS, INC.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

Description of Business

BJ’s Wholesale Club Holdings, Inc.

and its wholly owned subsidiaries (the "Company" or "BJ’s") is a leading warehouse club operator in the eastern United States of America.

As of February 1, 2020 , BJ’s operated 217 warehouse clubs in 17 states.

BJ’s business, in common with the business of retailers generally, is subject to seasonal influences.

Sales and operating income have typically been strongest in the fourth quarter holiday season and lowest in the first quarter of each fiscal year.

BJ's Wholesale Club, Inc., the primary operating subsidiary of the registrant, was previously an independent publicly traded corporation until its acquisition on September 30, 2011, by a subsidiary of Beacon Holding Inc., a company incorporated on June 24, 2011 by investment funds affiliated with or advised by CVC Capital Partners ("CVC") and Leonard Green & Partners, L.P.

BJ’s Wholesale Club Holdings, Inc.

and its wholly-owned subsidiaries (the "Company" or "BJ’s") is a leading warehouse club operator concentrated primarily on the east coast of the United States of America.

As of January 

30, 2021, BJ’s operated 221  warehouse clubs in 17  states.

BJ’s business is moderately seasonal in nature.

Historically, the Company has realized a slightly higher portion of net sales, operating income and cash flows from operations in the second and fourth fiscal quarters, attributable primarily to the impact of the summer and year-end holiday season, respectively.

The quarterly results have been and will continue to be affected by the timing of new club openings and their associated pre-opening expenses.

As a result of these factors, the financial results for any single quarter or for periods of less than a year are not necessarily indicative of the results that may be achieved for a full fiscal year.

("Leonard Green") (the "Sponsors") for the purpose of the acquisition.

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On July 2, 2018, BJ's Wholesale Club Holdings, Inc.

became a publicly traded entity in connection with its initial public offering ("IPO") of common stock and listing on the New York Stock Exchange ("NYSE") under the ticker symbol "BJ."

became a publicly traded entity in connection with its IPO of common stock and listing on the New York Stock Exchange ("NYSE") under the ticker symbol "BJ".

The novel coronavirus ("COVID- 19" ) pandemic has severely impacted the economies of the U.S.

and other countries around the world.

In the preparation of these financial statements and related disclosures we have assessed the impact that COVID- 19 has had on our estimates, assumptions and accounting policies and made additional disclosures, as necessary.

Summary of Significant Accounting Policies

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All intercompany balances and transactions have been eliminated in consolidation.

The Company’s fiscal year ends on the Saturday closest to January 31.

Fiscal year 2019 ("2019") consists of the 52 weeks ended February 1, 2020 , fiscal year 2018 ("2018") consists of the 52 weeks ended February 2, 2019 and fiscal year 2017 ("2017") consists of the 53 weeks ended February 3, 2018 .

The Company’s fiscal year ends on the Saturday closest to January 

Fiscal year 2020  ( "2020" ) consists of the 52 weeks ended January 

30, 2021, fiscal year 2019  ( "2019" ) consists of the 52 weeks ended February 

1, 2020 and fiscal year 2018  ( "2018" ) consists of the 52  weeks ended February 

Reclassification

We adjusted the statement of cash flows for fiscal years 2019 and 2018  to reclassify the change in book overdraft amounts into the accounts payable and accrued expenses line items, all within net cash provided by operating activities.

Initial Public Offering and Secondary Offerings

On July 2, 2018, the Company completed its IPO, in which the Company issued and sold 43,125,000 shares of its common stock (including 5,625,000 shares of common stock that were subject to the underwriters’ option to purchase additional shares) at an initial public offering price of $17.00 per share.

The Company received total aggregate proceeds of $685.9 million net of underwriters’ discounts, commissions and other transaction expenses, which totaled $47.2 million .

On July 2, 2018, the Company used the net proceeds from the IPO to extinguish the total outstanding balance of $623.3 million of its senior secured second lien term loan facility (the "Second Lien Term Loan").

On July 

2, 2018, the Company completed its IPO, in which the Company issued and sold 43,125,000  shares of its common stock (including 5,625,000  shares of common stock that were subject to the underwriters’

option to purchase additional shares) at an initial public offering price of $ 17.00  per share.

The Company received total aggregate proceeds of $ 685.9  million, net of underwriters’

discounts, commissions and other transaction expenses, which totaled $ 47.2  million.

On July 

2, 2018, the Company used the net proceeds from the IPO to extinguish the total outstanding balance of $ 623.3  million of its senior secured second lien term loan facility (the "Second Lien Term Loan").

See Note 5, Debt and Credit Arrangements, for further discussion regarding the Second Lien Term Loan extinguishment.

On October 1, 2018, certain selling stockholders completed the registered sale of 32,200,000 shares of the Company’s common stock at a public offering price of $26.00 per share.

Of the 32,200,000 shares sold, 4,200,000 shares represented the underwriters’ exercise of their overallotment option.

The Company did not receive any proceeds from this offering or incur underwriters’ discounts or commissions on the sale.

The Company incurred transaction costs of $2.4 million primarily for legal, accounting and printer services related to the offering.

On March 11, 2019, certain selling stockholders completed a registered sale (the "March 2019 Secondary Offering") of 19,550,000 shares of the Company's common stock at a public offering price of $25.08 per share.

Of the 19,550,000 shares sold, 2,550,000 shares represented the underwriters' exercise of their overallotment option.

On October 

1, 2018, certain selling stockholders completed the registered sale of 32,200,000  shares of the Company’s common stock at a public offering price of $ 26.00  per share.

Of the 32,200,000  shares sold, 4,200,000  shares represented the underwriters’

exercise of their overallotment option.

The Company did not receive any proceeds from this offering or incur underwriters’

discounts or commissions on the sale.

The Company incurred transaction costs of $ 2.4  million primarily for legal, accounting and printer services related to the offering.

On March 11, 2019, certain selling stockholders completed a registered sale (the "March 2019 Secondary Offering") of 

19,550,000  shares of the Company's common stock at a public offering price of $ 25.08  per share.

Of the 19,550,000  shares sold, 

2,550,000  shares represented the underwriters' exercise of their overallotment option.

The Company did not receive any proceeds from the March 2019 Secondary Offering or incur underwriters' discounts or commissions on the sale.

The Company incurred transaction costs of $1.2 million primarily for legal, accounting and printer services related to the March 2019 Secondary Offering.

On June 6, 2019, certain selling stockholders completed a registered sale (the "June 2019 Secondary Offering") of 17,500,000 shares of the Company's common stock at a public offering price of $24.65 per share.

The Company did not receive any proceeds from the June 2019 Secondary Offering or incur underwriters’ discounts or commissions on the sale.

The Company incurred transaction costs of $ 1.2  million primarily for legal, accounting and printer services related to the March 2019 Secondary Offering.

On June 6, 2019, certain selling stockholders completed a registered sale (the "June 2019 Secondary Offering") of 17,500,000  shares of the Company's common stock at a public offering price of $ 24.65  per share.

The Company did not receive any proceeds from the June 2019 Secondary Offering or incur underwriters’

discounts or commissions on the sale.

The Company incurred immaterial transaction costs related to the June 2019 Secondary Offering.

On June 27, 2019, certain selling stockholders completed a registered sale (the "CVC June 2019 Secondary Offering") of 9,977,024 shares of the Company's common stock at a price of $25.41 per share.

In connection with this offering, the Company repurchased 2,500,000 shares at $25.41 per share.

The Company did not receive any proceeds from the CVC June 2019 Secondary Offering or incur underwriters’ discounts or commissions on the sale.

The Company incurred immaterial transaction costs related to the CVC June 2019 Secondary Offering.

Subsequent to the CVC June 2019 Secondary Offering, Leonard Green Partners sold its remaining shares through multiple open-market transactions.

As of February 1, 2020, the Sponsors, CVC and Leonard Green Partners no longer held any shares of the Company's common stock.

On June 15, 2018, the Company effected a seven -to-one stock split of its issued and outstanding shares of common stock and proportional adjustment to the existing conversion ratios for each series of the Company’s Contingently Redeemable Common Stock (see Note 10).

On June 27, 2019, the Company completed a registered sale of 9,977,024  shares of the Company's common stock at a price of $ 25.41  per share.

In connection with this offering, the Company repurchased 

2,500,000  shares at $ 25.41  per share.

The Company did not receive any proceeds from this offering or incur underwriters’

discounts or commissions on the sale.

The Company incurred immaterial transaction costs related to the June 27, 2019 offering. The Sponsors, CVC and Leonard Green Partners no longer hold any shares of the Company's common stock.

On June 

15, 2018, the Company effected a 

seven -to- one  stock split of its issued and outstanding shares of common stock and proportional adjustment to the existing conversion ratios for each series of the Company’s Contingently Redeemable Common Stock (see Note 9 ).

Accordingly, all shares and per share amounts for all periods presented in the accompanying consolidated financial statements and notes thereto have been adjusted retroactively, where applicable, to reflect this stock split and adjustment of the contingently redeemable common stock conversion ratios.

Deferred Offering Costs

The Company capitalized certain legal, professional, accounting and other third-party fees that were directly associated with the July 2, 2018 IPO as deferred offering costs.

Upon the consummation of the IPO, $47.2 million was recorded in stockholders’ deficit as a reduction of additional paid-in capital.

The Company capitalized certain legal, professional, accounting and other third -party fees that were directly associated with the IPO as deferred offering costs.

Upon the consummation of the IPO, $ 47.2  million was recorded in stockholders’

deficit as a reduction of additional paid-in capital.

Estimates Included in Financial Statements

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and stockholders’ equity, and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

Significant estimates relied upon in preparing these consolidated financial statements include, but are not limited to, revenue recognition;

vendor rebates and allowances;

estimating inventory reserves;

estimating impairment assessments of goodwill, intangible assets, and other long-lived assets;

estimating self-insurance reserves;

estimating income taxes and equity-based compensation.

Actual results could differ from those estimates.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and stockholders’

equity, and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

The significant estimates relied upon in preparing these consolidated financial statements are estimating workers' compensation and general liability self-insurance reserves.

The inherent uncertainty of future loss projections could cause actual claims to differ from our estimates.

Segment Reporting

The Company’s club retail operations, which represent substantially all of the Company’s consolidated total revenues, are the Company’s only reportable operating segment.

All of the Company’s identifiable assets are located in the United States.

The Company does not have significant sales outside the United States, nor does any customer represent more than 10% of total revenues for any period presented.

The Company’s club retail operations, which represent substantially all of the Company’s consolidated total revenues, are the Company’s only reportable operating segment.

All of the Company’s identifiable assets are located in the United States.

The Company does not have significant sales outside the United States, nor does any customer represent more than 10%  of total revenues for any period presented.

The following table summarizes the percentage of net sales by category:

2019 % of Total

2018 % of Total

2017 % of Total

Edible Grocery

Non-Edible Grocery

General Merchandise

Gasoline & Other Ancillary Services

General merchandise and services

Gasoline and other

( 1 ) Grocery includes the legacy perishables, edible grocery and non-edible grocery division.

Concentration Risk

An adverse change in the Company’s relationships with its key suppliers could have a material effect on the business and results of operations of the Company.

Currently, one distributor consolidates a substantial majority of perishables for shipment to the clubs.

While the Company believes that such a consolidation is in its best interest overall, a prolonged disruption in logistics processes could materially impact sales and profitability for the near term.

All of the warehouse clubs are located in the eastern United States.

Sales from the New York metropolitan area made up approximately 25% of net sales in 2019 , 2018 and 2017 .

The warehouse clubs are primarily located in the eastern United States.

Sales from the New York metropolitan area made up approximately 25 % of net sales in each of fiscal years 2020, 2019 and 2018.

Financial instruments that potentially subject the Company to concentrations of credit risk principally consist of cash held in financial institutions.

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Accounts Receivable

Accounts receivable consists primarily of credit card receivables and receivables from vendors related to rebates and coupons and is stated net of allowances for doubtful accounts of $0.9 million at February 1, 2020 and February 2, 2019 .

The determination of the allowance for doubtful accounts is based on BJ’s historical experience applied to an aging of accounts and a review of individual accounts with a known potential for write-off.

30, 2021 and February 

1, 2020, respectively.

Merchandise Inventories

Inventories are stated at the lower of cost, determined under the average cost method, or net realizable value.

Inventories are stated at the lower of cost and determined under the average cost method, or net realizable value.

The Company recognizes the write-down of slow-moving or obsolete inventory in cost of sales when such write-downs are probable and estimable.

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Interest related to the development of buildings is capitalized during the construction period.

Leasehold costs and improvements are amortized over the remaining lease term (which includes renewal periods that are reasonably assured) or the asset’s estimated useful life, whichever is shorter.

Furniture, fixtures and equipment are depreciated over estimated useful lives, ranging from three to ten years.

Depreciation expense was $143.5 million in 2019 , $140.4 million in 2018 and $138.0 million in 2017 .

Depreciation expense was $ 155.6  million in fiscal year 2020, $ 143.5  million in fiscal year 2019 and $ 140.4  million in fiscal year 

Certain costs incurred in connection with developing or obtaining computer software for internal use are capitalized.

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The Company defers costs directly associated with acquiring third -party financing.

Debt issuance costs related to the term loans are recorded as a direct deduction from the carrying amount of the debt and debt issuance costs associated with the ABL Facility (as defined in Note 5) are recorded within other assets.

Debt issuance costs related to the term loans are recorded as a direct deduction from the carrying amount of the debt.

Debt issuance costs associated with the ABL Facility (as defined in Note 5 ) are recorded within other assets.

Debt issuance costs are amortized over the term of the related financing arrangements on a straight-line basis, which is materially consistent with the effective interest method.

Amortization of deferred debt issuance costs is recorded in interest expense and was $2.7 million in 2019 , $3.3 million in 2018 and $4.1 million in 2017 .

Amortization of deferred debt issuance costs is recorded in interest expense and was $ 2.5  million in fiscal year 2020, $ 2.7  million in fiscal year 2019 and $ 3.3  million in fiscal year 2018.

Goodwill and Indefinite-Lived Intangible Assets

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The Company may assess its goodwill for impairment initially using a qualitative approach ("step zero") to determine whether conditions exist to indicate that it is more likely than not that the fair value of a reporting unit is less than its carrying value.

If management concludes, based on its assessment of relevant events, facts and circumstances that it is more likely than not that a reporting unit’s carrying value is greater than its fair value, then a quantitative analysis will be performed to determine if there is any impairment.

The Company may also elect to initially perform a quantitative analysis instead of starting with step zero.

The quantitative assessment for goodwill is a two-step assessment.

"Step one" requires comparing the carrying value of a reporting unit, including goodwill, to its fair value.

The quantitative assessment for goodwill is an assessment requires comparing the carrying value of a reporting unit, including goodwill, to its fair value.

If the fair value of the reporting unit exceeds its carrying amount, goodwill is not considered to be impaired and no further testing is required.

If the carrying amount of the reporting unit exceeds its fair value, the second step of the goodwill impairment test is to measure the amount of impairment loss, if any.

"Step two" compares the implied fair value of goodwill to the carrying amount of goodwill.

The implied fair value of goodwill is determined by a hypothetical purchase price allocation using the reporting unit’s fair value as the purchase price.

If the carrying amount of goodwill exceeds the implied fair value, an impairment charge is recorded to write down goodwill to its implied fair value and is recorded as a component of selling, general and administrative expense ("SG&A").

If the carrying amount of the reporting unit exceeds its fair value, an impairment charge is recorded to write down goodwill to its implied fair value and is recorded as a component of selling, general and administrative expenses ("SG&A").

The Company assessed the recoverability of goodwill in fiscal years 2020, 2019 and 2018 and determined that there was no impairment.

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If the recorded carrying value of the trade name exceeds its estimated fair value, the Company records a charge to write the intangible asset down to its estimated fair value as a component of SG&A.

The Company assessed the recoverability of the BJ’s trade name and determined that its estimated fair value exceeded its carrying value and that no impairment was necessary in fiscal years 2019 , 2018 or 2017 .

Impairment of Long-Lived Assets

The Company reviews the realizability of long-lived assets periodically and whenever a triggering event occurs that indicates an impairment loss may have been incurred using fair value measurements with unobservable inputs (Level 3 ).

Current and expected operating results and cash flows and other factors are considered in connection with management’s reviews.

For purposes of evaluating the recoverability of long-lived assets, the recoverability test is performed using undiscounted net cash flows of individual clubs and consolidated net cash flows for long-lived assets not identifiable to individual clubs.

Impairment losses are measured as the difference between the carrying amount and the estimated fair value of the assets being evaluated.

In fiscal year 2019, the Company recorded $13.3 million of impairment charges to lower the carrying value of the assets to their estimated fair value.

The total impairment charges consisted of $1.7 million related to IT assets, $2.0 million related to fixed assets and $9.6 million related to operating lease right of use ("ROU") assets.

In fiscal year 2020, the Company recorded 

no  impairment charges.

In fiscal year 2019, the Company recorded $ 13.3  million of impairment charges to lower the carrying value of the assets to their estimated fair value.

The total impairment charges consisted of $ 1.7  million related to IT assets, $ 2.0  million related to fixed assets and $ 9.6  million related to operating lease right of use ("ROU") assets.

The fixed asset impairment charges and operating lease ROU asset impairment charges related to four club locations.

The combined fixed assets and operating lease ROU asset carrying value of these four locations after the impairment charge was $10.5 million .

In fiscal year 2018, the Company recorded an impairment loss of $4.0 million on the fixed assets of one club to lower the carrying value of the fixed assets to their estimated fair value less cost to sell.

No impairment charges were recorded in fiscal year 2017 .

The combined fixed assets and ROU asset carrying value of these four locations after the impairment charge was $ 10.5  million.

In fiscal year 2018, the Company recorded an impairment loss of $ 4.0  million on one club to lower the carrying value of the fixed assets to their estimated fair value less cost to sell. 

Asset Retirement Obligations

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The associated estimated asset retirement costs are capitalized in leasehold improvements and depreciated over their useful life.

The Company’s asset retirement obligations relate to the future removal of gasoline tanks and solar panels installed at leased clubs and the related assets associated with the gas stations and solar panel locations.

See Note 15 for further information on the amounts accrued.

Self-Insurance Reserves

The Company is primarily self-insured for workers’ compensation, general liability claims and medical claims.

See Note 14  for further information on the amounts accrued.

Workers' Compensation and General Liability Self-insurance Reserves

We are primarily self-insured for workers’

compensation and general liability claims.

Amounts in excess of certain levels, which range from $ 0.3  million to $ 1.0  million per occurrence, are insured as a risk reduction strategy, to mitigate catastrophic losses.

Reported reserves for these claims are derived from estimated ultimate costs based upon individual claim file reserves and estimates for incurred but not reported claims.

The Company carries stop-loss insurance on its workers’ compensation and general liability claims to mitigate its exposure to large claims.

The estimates are developed utilizing actuarial methods and are based on historical claims experience and other actuarial assumptions related to loss development factors.

The inherent uncertainty of future loss projections could cause actual claims to differ from our estimates.

When historical losses are not a good measure of future liability, such as in the event of COVID- 19, we base our estimates of ultimate liability on our interpretation of current law, claims filed to date and other relevant factors which are subject to change.

These accruals are included in accrued expenses and other current liabilities and other non-current liabilities in the Company's Consolidated Balance Sheets.

Revenue Recognition - Performance Obligations

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The Company recognizes revenue as it satisfies a performance obligation by transferring control of the goods or services to the customer.

Merchandise sales—The Company recognizes sales of merchandise at clubs and gas stations when the customer takes possession of the goods and tenders payment.

Sales of merchandise at the Company’s clubs and gas stations, excluding sales taxes, represented approximately 96% of the Company’s net sales and approximately 93% of the Company’s total revenues for fiscal year 2019.

Merchandise sales—The Company recognizes sales of merchandise at clubs and gas stations when the customer takes possession of the goods and tenders payment.

Sales of merchandise at the Company’s clubs and gas stations, excluding sales taxes, represented approximately 95 % of the Company’s net sales and approximately 93 % of the Company’s total revenues for fiscal year 2020.

Sales taxes are recorded as a liability at the point of sale.

Revenue is recorded at the point of sale based on the transaction price on the shelf sign, net of any applicable discounts, sales taxes and expected refunds.

For e-commerce sales, the Company recognizes sales when control of the merchandise is transferred to the customer, which is typically at the shipping point.

BJ's Perks Rewards and My BJ's Perks programs— The Company’s BJ’s Perks Rewards ® membership program allows participating members to earn 2% cash back, up to a maximum of $500 per year, on qualified purchases made at BJ’s.

The Company also offers a co-branded credit card program, the My BJ’s Perks ® program, which allows My BJ’s Perks ® Mastercard credit card holders to earn up to 5% cash back on eligible purchases made at BJ’s up to 2% cash back on purchases made with the card outside of BJ’s.

Cash back is in the form of electronic awards issued in $20 increments that may be used online or in-club at the register and expire six months from the date issued.

For e-commerce sales, the Company recognizes sales when control of the merchandise is transferred to the customer, which is typically at the shipping point.

BJ's Perks Rewards and My BJ's Perks programs—

The Company’s BJ’s Perks Rewards ®

membership program allows participating members to earn 2 % cash back, up to a maximum of $ 500  per year, on qualified purchases made at BJ’s.

The Company also offers a co-branded credit card program, the My BJ’s Perks ®

program, which allows My BJ’s Perks ®

Mastercard credit card holders to earn up to 5 % cash back on eligible purchases made at BJ’s up to 2 % cash back on purchases made with the card outside of BJ’s.

Cash back is in the form of electronic awards issued in $ 10  increments that may be used online or in-club at the register and expire six months from the date issued.

Earned awards may be redeemed on future purchases made at the Company.

The Company recognizes revenue for earned awards when customers redeem such awards as part of a purchase at one of the Company’s clubs or the Company’s website.

The Company accounts for these transactions as multiple element arrangements and allocates the transaction price to separate performance obligations using their relative fair values.

The Company includes the fair value of award dollars earned in deferred revenue at the time the award dollars are earned.

This liability was $26.7 million at February 1, 2020 and $25.8 million at February 2, 2019.

Royalty revenue received in connection with the My BJ's Perks co-brand credit card program is variable consideration and is considered deferred until the card holder makes a purchase.

The Company's total deferred royalty revenue related to the outstanding My BJ's Perks credit card program was $14.8 million and $13.4 million at February 1, 2020 and February 2, 2019, respectively.

This liability was $ 25.5  million at January 30, 2021 and $ 26.7  million at February 1, 2020.

Royalty revenue received in connection with the My BJ's Perks co-brand credit card program is variable consideration and is considered deferred until the card holder makes a purchase.

The Company's total deferred royalty revenue related to the outstanding My BJ's Perks credit card program was $ 13.5  million and $ 14.8  million at January 30, 2021 and February 1, 2020, respectively.

The timing of revenue recognition of these awards is driven by actual customer activities, such as redemptions and expirations.

At February 1, 2020, the Company expects to recognize $12.5 million of the deferred revenue in fiscal year 2020, and expects the remainder will be recognized in the years thereafter.

Membership—The Company charges a membership fee to its customers.

That fee allows customers to shop in the Company’s clubs, shop on the Company’s website and purchase gasoline at the Company’s gas stations for the duration of the membership, which is generally 12 months .

At January 30, 2021, the Company expects to recognize $ 13.4  million of the deferred revenue in fiscal year 2021, and expects the remainder will be recognized in the years thereafter.

Membership—The Company charges a membership fee to its customers.

Because the Company has the obligation to provide access to its clubs, website and gas stations for the duration of the membership term, the Company recognizes membership fees on a straight-line basis over the life of the membership.

The Company’s deferred revenue related to membership fees was $144.0 million and $134.4 million at February 1, 2020 and February 2, 2019, respectively.

Gift Card Programs—The Company sells BJ’s gift cards that allow customers to redeem the card for future purchases equal to the amount of the original purchase price of the gift card.

Revenue from gift card sales is recognized upon redemption of the gift card because the Company’s performance obligation to redeem the gift card for merchandise is satisfied when the gift card is redeemed.

Historically, the Company recognized breakage under the remote model, which recognizes breakage income when the likelihood of the customer exercising its remaining rights becomes remote.

Under the current guidance, the Company recognizes breakage in proportion to its rate of gift card redemptions.

This change in breakage recognition model had an immaterial impact on the Company’s results of operations for fiscal years 2019 and 2018.

Deferred revenue related to gift cards was $10.3 million and $9.1 million at February 1, 2020 and February 2, 2019, respectively.

The Company recognized approximately $49.1 million and $50.0 million of revenue from gift card redemptions in the fiscal years ended February 1, 2020 and February 2, 2019, respectively.

The Company’s deferred revenue related to membership fees was $ 155.6  million and $ 144.0  million at January 30, 2021 and February 1, 2020, respectively.

Gift Card Programs—The Company sells BJ’s gift cards that allow customers to redeem the card for future purchases equal to the amount of the original purchase price of the gift card.

Deferred revenue related to gift cards was $ 10.3  million at both January 30, 2021 

and February 1, 2020.

The Company recognized approximately $ 39.7  million, $ 49.1  million and $ 50.0  million of revenue from gift card redemptions in the fiscal years ended January 30, 2021, February 1, 2020 and February 2, 2019, respectively.

Warranty Programs

The Company passes on any manufacturers’ warranties to members.

In addition, BJ’s includes an extended warranty on tires sold at the clubs, under which BJ’s customers receive tire repair services or tire replacement in certain circumstances.

The Company passes on any manufacturers’

warranties to members.

In addition, BJ’s includes an extended warranty on tires sold at the clubs, under which BJ’s customers receive tire repair services or tire replacement in certain circumstances.

This warranty is included in the sale price of the tire and it cannot be declined by the customers.

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Extended warranties are also offered on certain types of products such as appliances, electronics and jewelry.

These warranties are provided by a third party at fixed prices to BJ’s.

No liability is retained to satisfy warranty claims under these arrangements.

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The Company has significant experience with return patterns and relies on this experience to estimate expected returns when determining the transaction price.

Returns and Refunds — The Company’s products are generally sold with a right of return and may provide other credits or incentives, which are accounted for as variable consideration when estimating the amount of revenue to recognize.

Returns and Refunds —

The Company’s products are generally sold with a right of return and may provide other credits or incentives, which are accounted for as variable consideration when estimating the amount of revenue to recognize.

The Company records an allowance for returns based on current period revenues and historical returns experience.

The Company analyzes actual historical returns, current economic trends and changes in sales volume and acceptance of the Company’s products when evaluating the adequacy of the sales returns allowance in any accounting period.

The sales returns reserve, which reduces sales and cost of sales for the estimated impact of returns, was $6.5 million in 2019 , $6.8 million in 2018 and $1.5 million in 2017 .

Customer Discounts — Discounts given to customers are usually in the form of coupons and instant markdowns and are recognized as redeemed and recorded in contra revenue accounts, as they are part of the transaction price of the merchandise sale.

The Company analyzes actual historical returns, current economic trends, changes in sales volume and acceptance of the Company’s products when evaluating the adequacy of the sales returns allowance in any accounting period.

The sales returns reserve, which reduces sales and cost of sales for the estimated impact of returns, was $ 7.2  million in fiscal year 2020, $ 6.5  million in fiscal year 2019 and $ 6.8  million in fiscal year 2018.

Customer Discounts —

Discounts given to customers are usually in the form of coupons and instant markdowns and are recognized as redeemed and recorded in contra-revenue accounts, as they are part of the transaction price of the merchandise sale.

Manufacturer coupons that are available for redemption at all retailers are not reduced from the sale price of merchandise.

Agent Relationships

The Company enters into certain agreements with service providers that offer goods and services to the Company’s members.

These service providers sell goods and services including home improvement services and cell phones to the Company’s customers.

The Company enters into certain agreements with service providers that offer goods and services to the Company’s members.

These service providers sell goods and services including home improvement services and cell phones to the Company’s customers.

In exchange, the Company receives payments in the form of commissions and other fees.

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Significant Judgments

Standalone Selling Prices—For arrangements that contain multiple performance obligations, the Company allocates the transaction price to each performance obligation on a relative standalone selling price basis.

Policy Elections

In addition to those previously disclosed, the Company has made the following accounting policy elections and practical expedients:

Portfolio Approach—The Company uses the portfolio approach when multiple contracts or performance obligations are involved in the determination of revenue recognition.

Taxes—The Company excludes from the transaction price any taxes collected from customers that are remitted to taxing authorities.

Shipping and Handling Charges—Charges that are incurred before and after the customer obtains control of goods are deemed to be fulfillment costs.

Time Value of Money—The Company’s payment terms are less than one year from the transfer of goods.

In addition to those previously disclosed, the Company made the following accounting policy elections and practical expedients:

Portfolio Approach—The Company uses the portfolio approach when multiple contracts or performance obligations are involved in the determination of revenue recognition.

Taxes—The Company excludes from the transaction price any taxes collected from customers that are remitted to taxing authorities.

Shipping and Handling Charges—Charges that are incurred before and after the customer obtains control of goods are deemed to be fulfillment costs.

Time Value of Money—The Company’s payment terms are less than one year from the transfer of goods.

Therefore, the Company does not adjust promised amounts of consideration for the effects of the time value of money.

Disclosure of Remaining Performance Obligations—The Company does not disclose the aggregate amount of the transaction price allocated to remaining performance obligations for contracts that are one year or less in term.

Additionally, the Company does not disclose the aggregate amount of the transaction price allocated to remaining performance obligations when the transaction price is allocated entirely to a wholly unsatisfied performance obligation or to a wholly unsatisfied promise to transfer a good or service that forms part of a series of distinct goods or services.

Cost of Sales

The Company’s cost of sales includes the direct costs of sold merchandise, which includes customs, taxes, duties and inbound shipping costs, inventory shrinkage and adjustments and reserves for excess, aged and obsolete inventory.

Cost of goods sold also includes certain distribution center costs and allocations of certain indirect costs, such as occupancy, depreciation, amortization, labor and benefits.

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The Company receives various types of cash consideration from vendors, principally in the form of rebates, based on purchasing or selling certain volumes of product, time-based rebates or allowances, which may include product placement allowances or exclusivity arrangements covering a predetermined period of time, price protection rebates and allowances for retail price reductions on certain merchandise and salvage allowances for product that is damaged, defective or becomes out-of-date.

Such vendor rebates and allowances are recognized based on a systematic and rational allocation of the cash consideration offered to the underlying transaction that results in progress by BJ’s toward earning the rebates and allowances, provided the amounts to be earned are probable and reasonably estimable.

Otherwise, rebates and allowances are recognized only when predetermined milestones are met.

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All other vendor rebates and allowances are recognized as a reduction of cost of sales when the merchandise is sold or otherwise disposed.

Cash consideration is also received for advertising products in publications sent to BJ’s members.

Such cash consideration is recognized as a reduction of SG&A to the extent it represents a reimbursement of specific, incremental and identifiable SG&A costs incurred by BJ’s to sell the vendors’ products.

Cash consideration is also received for advertising products in publications sent to BJ’s members.

Such cash consideration is recognized as a reduction of SG&A to the extent it represents a reimbursement of specific, incremental and identifiable SG&A costs incurred by BJ’s to sell the vendors’

If the cash consideration exceeds the costs being reimbursed, the excess is characterized as a reduction of cost of sales.

Cash consideration for advertising vendors’ products is recognized in the period in which the advertising takes place.

Manufacturers’ Incentives Tendered by Consumers

Consideration from manufacturers’ incentives (such as rebates or coupons) is recorded gross in net sales when the incentive is generic and can be tendered by a consumer at any reseller and the Company receives direct reimbursement from the manufacturer, or clearinghouse authorized by the manufacturer, based on the face value of the incentive.

Cash consideration for advertising vendors’

products is recognized in the period in which the advertising takes place.

Manufacturers’

Incentives Tendered by Consumers

Consideration from manufacturers’

incentives (such as rebates or coupons) is recorded gross in net sales when the incentive is generic and can be tendered by a consumer at any reseller and the Company receives direct reimbursement from the manufacturer, or clearinghouse authorized by the manufacturer, based on the face value of the incentive.

If these conditions are not met, such consideration is recorded as a decrease in cost of sales.

In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-2, Leases (FASB Accounting Standards Codification ("ASC") Topic 842, Leases) which requires recognition on the balance sheet for the rights and obligations created by leases with terms greater than twelve months.

In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016 - 2,  Leases (FASB Accounting Standards Codification ("ASC") Topic 842,  Leases) which requires recognition on the balance sheet for the rights and obligations created by leases with terms greater than twelve months.

Consistent with prior GAAP, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee will depend primarily on its classification as a finance or operating lease.

However, unlike prior GAAP—which required only finance (formerly capital) leases to be recognized on the balance sheet—the new ASU requires both types of leases to be recognized on the balance sheet.

The Company adopted ASC 842 using the modified retrospective method at the beginning of fiscal year 2019.

In accordance with ASC 842, the Company did not recast comparative periods in transition to ASC 842 and instead reported comparative periods under ASC 840.

Adoption of the standard resulted in the initial recognition of $2.040 billion of operating lease right-of-use ("ROU") assets and $2.071 billion of operating lease liabilities as of February 3, 2019.

Adoption of the standard resulted in the initial recognition of $ 2.040  billion of operating lease right-of-use ("ROU") assets and $ 2.071  billion of operating lease liabilities as of February 3, 2019.

The difference between the assets and liabilities is attributable to the reclassification of certain existing lease-related assets and liabilities as an adjustment to the ROU assets.

Finance leases were not impacted by the adoption of the new guidance as finance lease liabilities and the corresponding assets were recorded on the consolidated balance sheet under the previous guidance.

The adoption of this standard did not have a material impact on the Company’s annual audited consolidated statements of operations and comprehensive income, statements of contingently redeemable common stock and stockholders’ deficit or cash flows, and had a $11.6 million impact on beginning retained earnings in fiscal year 2019 primarily associated with the impact of the Company's deferred gain on prior years' sale leaseback transactions, net of tax.

The adoption of this standard did not have a material impact on the Company’s annual audited Consolidated Statements of Operations and Comprehensive Income, Statements of Contingently Redeemable Common Stock and Stockholders’

Equity (Deficit) or Cash Flows, and had a $ 11.6  million impact on beginning retained earnings in fiscal year 2019 primarily associated with the impact of the Company's deferred gain on prior years' sale leaseback transactions, net of tax.

The Company elected the transition package of practical expedients permitted within the new standard which, among other things, allowed it to carry-forward the historical lease classification.

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Advertising costs generally consist of efforts to acquire new members and typically include media advertising (some of which is vendor-funded).

BJ’s expenses advertising as incurred as a component of SG&A.

Advertising expenses were approximately 0.6% , 0.7% and 0.6% of net sales in 2019 , 2018 and 2017 , respectively.

BJ’s expenses advertising as incurred as a component of SG&A.

Advertising expenses were approximately 0.6 %, 0.6 % and 0.7 % of net sales in fiscal years 2020, 2019 and 2018, respectively.

Stock-based Compensation

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Subsequent to the IPO date, the Company's common stock was listed on the NYSE and its value is determined by the market price on the NYSE.

See our Note 11 for additional description of the accounting for stock-based awards.

See Note 10  for additional description of the accounting for stock-based awards.

Earnings Per Share

Basic net income per share attributable to common stockholders is calculated by dividing net income available to common stockholders by the weighted average number of common shares outstanding for the period, including contingently redeemable common stock recorded outside of stockholders’ equity.

Basic income from continuing operations per share attributable to common stockholders is calculated by dividing income from continuing operations available to common stockholders by the weighted average number of common shares outstanding for the period, including contingently redeemable common stock recorded outside of stockholders’ equity.

Basic loss from discontinuing operations per share attributable to common stockholders is calculated by dividing loss from discontinuing operations available to common stockholders by the weighted average number of common shares outstanding for the period, including contingently redeemable common stock recorded outside of stockholders’ equity.

Basic net income per share attributable to common stockholders is calculated by dividing net income available to common stockholders by the weighted-average number of common shares outstanding for the period, including contingently redeemable common stock recorded outside of stockholders’

Basic income from continuing operations per share attributable to common stockholders is calculated by dividing income from continuing operations available to common stockholders by the weighted-average number of common shares outstanding for the period, including contingently redeemable common stock recorded outside of stockholders’

Basic loss from discontinuing operations per share attributable to common stockholders is calculated by dividing loss from discontinuing operations available to common stockholders by the weighted-average number of common shares outstanding for the period, including contingently redeemable common stock recorded outside of stockholders’

Diluted net income per share attributable to common stockholders is calculated by dividing net income available to common stockholders by the diluted weighted-average number of common shares outstanding for the period.

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The actual benefits ultimately realized may differ from the estimates.

In future periods, changes in facts, circumstances and new information may require the Company to change the recognition and measurement estimates with regard to individual tax positions.

In future periods, changes in facts, circumstances and new information may require the Company to change the recognition and measurement estimates regarding individual tax positions.

Changes in recognition and measurement estimates are recorded in income tax expense and liability in the period in which such changes occur.

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Derivative Financial Instruments

All derivatives are recognized as either assets or liabilities on the consolidated balance sheet and measurement of these instruments is at fair value.

All derivatives are recognized as either assets or liabilities on the Consolidated Balance Sheets and measurement of these instruments is at fair value.

If the derivative is designated as a cash flow hedge, the effective portions of changes in the fair value of the derivative are recorded as a component of accumulated other comprehensive income and are recognized in the consolidated statement of operations when the hedged item affects earnings.

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Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable:

Level 1, quoted market prices in active markets for identical assets or liabilities.

Level 2, observable inputs other than quoted market prices included in Level 1 such as quoted market prices for markets that are not active or other inputs that are observable or can be corroborated by observable market data.

Level 3, unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities, including certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

1 - Quoted market prices in active markets for identical assets or liabilities.

2 - Observable inputs other than quoted market prices included in Level 

1 such as quoted market prices for markets that are not active or other inputs that are observable or can be corroborated by observable market data.

3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities, including certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

Comprehensive Income

Comprehensive income is a measure of net income and all other changes in equity that result from transactions other than with equity holders, and would normally be recorded in the consolidated statements of stockholders’ equity and the consolidated statements of comprehensive income.

Other comprehensive income consists of unrealized gains and losses from derivative instruments designated as cash flow hedges, and postretirement medical plan adjustments.

equity and the consolidated statements of comprehensive income.

Other comprehensive income consists of unrealized gains and losses from derivative instruments designated as cash flow hedges and postretirement medical plan adjustments.

Recently Issued Accounting Pronouncements

Reference Rate Reform (ASU 2021 - 01 and ASU 2020 - 04 )

On January 7, 2021, the FASB issued ASU 2021 - 01,  Reference Rate Reform (Topic 848 ).

The amendments clarify that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition.

Specifically, certain provisions in Topic 848, if elected by an entity, apply to derivative instruments that use an interest rate for margining, discounting, or contract price alignment that is modified as a result of reference rate reform.

Amendments to the expedients and exceptions in Topic 848 capture the incremental consequences of the scope clarification and tailor the existing guidance to derivative instruments affected by the discounting transition.

The amendments are effective immediately for all entities.

An entity may elect to apply the amendments on a full retrospective basis as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or on a prospective basis to new modifications from any date within an interim period that includes or is subsequent to the date of the issuance of a final Update, up to the date that financial statements are available to be issued.

If an entity elects to apply any of the amendments for an eligible hedging relationship, any adjustments as a result of those elections must be reflected as of the date the entity applies the election.

The amendments do not apply to contract modifications made after December 31, 2022, new hedging relationships entered into after December 31, 2022, and existing hedging relationships evaluated for effectiveness in periods after December 31, 2022, except for hedging relationships existing as of December 31, 2022, that apply certain optional expedients in which the accounting effects are recorded through the end of the hedging relationship (including periods after December 31, 2022).

The Company has determined the adoption of this standard will 

not have a material impact on the Company's consolidated financial statements.

In March 2020, the FASB issued ASU No.

2020 - 04,  Reference Rate Reform (Topic 848 ), which provides optional expedients and exceptions to the current guidance on contract modifications and hedging relationships to ease the financial reporting burdens of the expected market transition from London Interbank Offered Rate ("LIBOR") and other interbank offered rates to alternative reference rates.

The guidance was effective upon issuance and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022.

The Company has determined the adoption of this standard will 

not have a material impact on the Company's consolidated financial statements.

Recently Adopted Accounting Pronouncements

Leases (ASU 2016-2)

In February 2016, the FASB issued ASU 2016-2, Leases (FASB ASC Topic 842, Leases) which requires recognition on the balance sheet for the rights and obligations created by leases with terms greater than twelve months.

The Company adopted ASC 842 using the modified retrospective method at the beginning of fiscal year 2019.

In accordance with ASC 842, the Company did not recast comparative periods in transition to ASC 842 and instead reported comparative periods under ASC 840.

Adoption of the standard resulted in the initial recognition of $2.040 billion of operating lease ROU assets and $2.071 billion of operating lease liabilities as of February 3, 2019.

The difference between the assets and liabilities is attributable to the reclassification of certain existing lease-related assets and liabilities as an adjustment to the ROU assets.

The Company elected the transition package of practical expedients permitted within the new standard which, among other things, allowed it to carry-forward the historical lease classification.

The Company did not elect the practical expedient to use hindsight in determining the lease term and in assessing impairment of ROU assets and therefore continued to utilize lease terms determined under previous lease guidance.

Please refer to Note 4 for further discussion on the Company's leases.

Non-Employee Share-Based Compensation (ASU 2018-07)

In June 2018, the FASB issued ASU 2018-07, Improvements to Non-employee Share-Based Payment Accounting , which updates the guidance to Compensation—Stock Compensation (Topic 718).

The updated guidance aligns the measurement and classification guidance for share-based payments to non-employees with the guidance for share-based payments to employees, with certain exceptions.

The Company adopted ASU 2018-07 at the beginning of fiscal year 2019 and the adoption of this standard did not have a material impact on the Company's consolidated financial statements.

Recent Accounting Pronouncements

Income Taxes (ASU 2019-12)

In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes (Topic 740).

This standard simplifies the accounting for income taxes by eliminating certain exceptions to the guidance in ASC 740 related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences.

The standard also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill.

The standard is effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2021.

Early adoption is permitted.

The Company is currently evaluating the effect that implementation of this standard will have on the Company's consolidated financial statements.

Fair Value Measurement (ASU 2018 - 13 )

In August 2018, the FASB issued ASU 2018-13, Changes to the Disclosure Requirements for Fair Value Measurement, which updates the guidance to Fair Value Measurement (Topic 820).

In August 2018, the FASB issued ASU 

2018 - 13, Changes to the Disclosure Requirements for Fair Value Measurement which updates the guidance to Fair Value Measurement (Topic 

The updated guidance modifies the disclosure requirements for fair value measurements by removing, modifying or adding certain disclosures.

The updated guidance is effective for fiscal periods beginning after December 15, 2019, including interim periods within those fiscal years, with early adoption permitted.

The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption.

All other amendments should be applied retrospectively to all periods presented upon their effective date.

The Company does not believe adoption of this standard will have a material impact on the Company's consolidated financial statements.

Goodwill Impairment (ASU 2017-04)

In January 2017, the FASB issued ASU 2017-04.

ASU 2017-04 provides amendments to ASC 350, "Intangibles - Goodwill and Other", which eliminate Step 2 from the goodwill impairment test.

Entities should perform their goodwill impairment tests by comparing the fair value of a reporting unit with its carrying amount and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value.

The amendments in this update are effective prospectively during interim and annual periods beginning after December 15, 2019, with early adoption permitted.

The Company does not believe adoption of this standard will have a material impact on the Company's consolidated financial statements.

The amendments on changes in unrealized gains and losses, the range and weighted-average of significant unobservable inputs used to develop Level 

3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption.

All other amendments should be applied retrospectively to all periods presented upon their effective date. The Company adopted ASU 2018 - 13 at the beginning of fiscal year 2020 on a prospective basis and the adoption of this standard did not have a material impact on the Company's consolidated financial statements.

Intangibles-Goodwill and Other-Internal-Use Software (ASU 2018 - 15 )

In August 2018, the FASB issued ASU 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40).

The update related to accounting for implementation costs incurred in a cloud computing arrangement that is a service contract.

In August 2018, the FASB issued ASU 2018 - 15,  Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 

350 - 40 ). The update related to accounting for implementation costs incurred in a cloud computing arrangement that is a service contract.

The update allows entities who are customers in hosting arrangements that are service contracts to apply the existing internal-use software guidance to determine which implementation costs to capitalize as an asset related to the service contract and which costs to expense.

The update specifies classification for capitalizing implementation costs and related amortization expense within the financial statements and requires additional disclosures.

The updated guidance is effective for fiscal reporting periods, including interim reporting within those periods, beginning after December 15, 2019.

Early adoption is permitted and can be applied either retrospectively or prospectively.

The Company adopted this standard on February 2, 2020 on a prospective basis.

The adoption of this standard had no material impact on the Company's consolidated financial statements.

The updated guidance is effective for fiscal reporting periods, including interim reporting within those periods, beginning after December 

The Company adopted this standard at the beginning of fiscal year 2020 on a prospective basis.

The adoption of this standard did not have a material impact on the Company's consolidated financial statements.

Goodwill Impairment (ASU 2017 - 04 )

In January 2017, the FASB issued ASU 2017 - 04, which provides amendments to Accounting Standards Codification 350, Intangibles - Goodwill and Other, to eliminate Step 2 from the goodwill impairment test.

The Company adopted ASU 2017 - 04 at the beginning of fiscal year 2020 on a prospective basis and the adoption of this standard did not have a material impact on the Company's consolidated financial statements.

Credit Losses (ASU 2016 - 13 )

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments.

This new guidance will change how entities account for credit impairment for trade and other receivables, as well as for certain financial assets and other instruments.

ASU 2016-13 will replace the current "incurred loss" model with an "expected loss" model.

In June 2016, the FASB issued ASU 2016 - 13,  Financial Instruments-Credit Losses (Topic 326 ):

Measurement of Credit Losses on Financial Instruments (ASU 2016 - 13 ). This new guidance changes how entities account for credit impairment for trade and other receivables, as well as for certain financial assets and other instruments.

ASU 2016 - 13 replaces the current "incurred loss" model with an "expected loss" model.

Under the "incurred loss" model, a loss (or allowance) is recognized only when an event has occurred (such as a payment delinquency) that causes the entity to believe that a loss is probable (i.e., that it has been "incurred").

Under the "expected loss" model, an entity will recognize a loss (or allowance) upon initial recognition of the asset that reflects all future events that will lead to a loss being realized, regardless of whether it is probable that the future event will occur.

Under the "expected loss" model, an entity recognizes a loss (or allowance) upon initial recognition of the asset that reflects all future events that will lead to a loss being realized, regardless of whether it is probable that the future event will occur.

The "incurred loss" model considers past events and current conditions, while the "expected loss" model includes expectations for the future which have yet to occur.

ASU 2016-13 is effective for public companies for fiscal years beginning after December 15, 2019 with early adoption permitted for fiscal years beginning after December 15, 2018, including interim periods therein.

The adoption of this standard will not have a material impact on the Company's consolidated financial statements.

The Company adopted ASU 2016 - 13 at the beginning of fiscal year 2020 and the adoption of this standard did not have a material impact on the Company's consolidated financial statements.

Related Party Transactions

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The Company had a management services agreement with the Sponsors for ongoing consulting and advisory services that terminated upon consummation of the Company's IPO.

The management services agreement provided for the aggregate payment of management fees to the Sponsors (or advisory affiliates thereof) of $8.0 million per year, plus out of pocket expenses.

The Company incurred no management fees and out of pocket expenses in fiscal year 2019 , and $3.3 million and $8.0 million in fiscal years 2018 and 2017 , respectively.

The management services agreement provided for the aggregate payment of management fees to the Sponsors (or advisory affiliates thereof) of $ 8.0  million per year, plus out of pocket expenses.

The Company incurred no  management fees or out of pocket expenses in fiscal years 2020 and 2019,  and $ 3.3  million of such fees in fiscal year 

Management fees and expenses are reported in SG&A in the Consolidated Statements of Operations and Comprehensive Income.

Other Relationships

One of the Company’s suppliers, Advantage Solutions Inc., is controlled by affiliates of the Sponsors.

Advantage Solutions Inc.

is principally a provider of in-club product demonstration and sampling services, and the Company also engages them from time to time to provide ancillary support services, including for example, seasonal gift wrapping, on-floor sales assistance and display maintenance.

The Company incurred approximately $42.6 million , $43.9 million and $44.8 million of costs payable to Advantage Solutions for services rendered during fiscal years 2019 , 2018 and 2017 , respectively.

is a provider of in-club product demonstration and sampling services.

Currently, the Company engages them from time to time to provide ancillary support services, including temporary club labor as needed.

The Company incurred approximately $ 13.5  million, $ 42.6  million and $ 43.9  million of costs payable to Advantage Solutions for services rendered during fiscal years 2020, 2019 and 2018, respectively.

The demonstration and sampling service fees are fully funded by merchandise vendors who participate in the program.

The Company believes the terms obtained or consideration paid or received, as applicable, in connection with the transactions were comparable to terms available or amounts that would be paid or received, as applicable, in arms’-length transactions with unrelated parties.

length transactions with unrelated parties.

The Company adopted ASC 842 as of February 3, 2019, using the modified retrospective method and applying transitional relief allowing entities to initially apply the requirements at the adoption date by recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption.

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A practical expedient that would allow the Company to use hindsight in determining the lease term and to assess impairment of the entity's ROU assets, since election of this expedient could make adoption more complex given that re-evaluation of the lease term.

A practical expedient allowing the Company to not separate lease components from nonlease components (e.g., common area maintenance costs) since currently the Company does not combine lease and nonlease components for any of its real estate leases.

A practical expedient allowing the Company to not separate lease components from non-lease components (e.g., common area maintenance costs) since currently the Company does not combine lease and non-lease components for any of its real estate leases.

In accordance with ASC 842, the Company determines if an arrangement is a lease at inception or modification of a contract and classifies each lease as either an operating or finance lease at commencement.

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The Company has operating and finance leases for the Company's clubs, and operating leases for the Company's distribution centers, corporate office, and stand-alone gas stations.

Operating leases, net of accumulated amortization, are included in operating lease ROU assets, and current and non-current operating lease liabilities, on the consolidated balance sheet.

Operating leases, net of accumulated amortization, are included in operating lease ROU assets, and current and non-current operating lease liabilities, on the Consolidated Balance Sheets.

Finance leases are included in property and equipment, accrued expenses and other current liabilities, and other non-current liabilities on the Consolidated Balance Sheets.

Lease liabilities are calculated using the effective interest method, regardless of classification, while the amortization of the ROU assets varies depending upon classification.

Finance lease classification results in a front-loaded expense recognition pattern over the lease term, which amortizes the ROU asset by recognizing interest expense and amortization expense as separate components of lease expense and calculates the amortization expense component on a straight-line basis.

Conversely, operating lease classification results in a straight-line expense recognition pattern over the lease term and recognizes lease expense as a single expense component, which results in amortization of the ROU asset that equals the difference between lease expense and interest expense.

Lease expense for finance and operating leases are included in selling general and administrative expense on the consolidated statement of operations and comprehensive income.

Leases with an initial term of twelve months or less are not recorded on the balance sheet.

Finance lease classification results in a front-loaded expense recognition pattern over the lease term, which amortizes the ROU assets by recognizing interest expense and amortization expense as separate components of lease expense and calculates the amortization expense component on a straight-line basis.

Conversely, operating lease classification results in a straight-line expense recognition pattern over the lease term and recognizes lease expense as a single expense component, which results in amortization of the ROU assets that equals the difference between lease expense and interest expense.

Lease expense for finance and operating leases are included in SG&A on the Consolidated Statement of Operations and Comprehensive Income.

Leases with an initial term of twelve months or less are not recorded on the Consolidated Balance Sheets.

The Company is generally obligated for the cost of property taxes, insurance, and maintenance relating to its leases, which are often variable lease payments.

Such costs are presented as occupancy costs for finance and operating leases included in SG&A expense on the consolidated statement of operations and comprehensive income.

Such costs are presented as occupancy costs for finance and operating leases included in SG&A on the Consolidated Statement of Operations and Comprehensive Income.

Certain of the Company's lease agreements provide for lease payments based on future sales volumes at the leased location, or include rental payments adjusted periodically for inflation or based on an index, which are not measurable at the inception of the lease.

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In calculating the present value of the lease payments, the Company has elected to utilize its estimated IBR based on the original lease term and not the remaining lease term.

The initial primary term of the Company's operating leases ranges from 5 to 44 years , with most of these leases having an initial term of 20 years .

The initial primary term of the Company's two finance leases are 20 years .

The adoption of ASC 842 resulted in the initial recognition of $2.040 billion of operating lease ROU assets and $2.071 billion of operating lease liabilities as of February 3, 2019.

The difference between the assets and liabilities is attributable to the reclassification of certain existing lease-related assets and liabilities as an adjustment to the right-of-use assets.

The Company derecognized assets and liabilities of $94.7 million and $125.8 million , respectively, in connection with the non-cash transitional adjustment.

As a result of adopting ASC 842, the Company also recorded a benefit to retained earnings of $11.6 million , primarily associated with the net of tax impact of the Company's deferred gain on prior years' sale leaseback transactions.

Finance leases were not impacted by the adoption of the new guidance, as finance lease liabilities and the corresponding assets were recorded on the consolidated balance sheet under the previous guidance.

The adoption of this standard did not materially impact the Company's consolidated statements of operations and comprehensive income, or the Company's consolidated statements of cash flows.

As of February 1, 2020 , assets recorded under finance leases were $19.3 million and accumulated amortization associated with finance leases was $9.5 million , while ROU assets recorded as operating leases were $2.209 billion and accumulated amortization associated with operating leases was $148.7 million .

As of February 1, 2020 , the Company also recorded non-cash increases of $176.2 million to ROU assets and liabilities resulting from lease reassessments and decreases of $9.6 million to ROU assets resulting from lease impairment charges.

The following table is a summary of the Company’s components of total lease costs for the year ended February 1, 2020 (in thousands):

The initial primary term of the Company's operating leases ranges from 5  to 44  years, with most of these leases having an initial term of 20  years.

The initial primary term of the Company's two finance leases are 20  years.

As of both January 

30, 2021 and February 1, 2020, assets recorded under finance leases were $ 19.3  million and accumulated amortization associated with finance leases was $ 10.6  million and $ 9.5  million, respectively.

ROU assets recorded as operating leases were $ 2.363  billion and $ 2.209  billion, respectively. Accumulated amortization associated with operating leases was $ 304.7  million and $ 148.7  million, respectively.

As of January 

30, 2021 and February 1, 2019, the Company also recorded non-cash increases of $ 154.7  million and $ 176.2  million to ROU assets and liabilities resulting from lease reassessments, respectively. There was no  decrease in fiscal year 2020 and a decrease of $ 9.6  million to ROU assets resulting from lease impairment charges in fiscal year 

The following table is a summary of the Company’s components of total lease costs for the years ended January 

30, 2021 and February 1, 2020 ( in thousands):

January 30, 2021

February 1, 2020

Operating lease cost

$ 327,325  

$ 322,346  

Finance lease cost:

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Total finance lease costs

Sublease income  

( 251 )  

Variable lease costs

Net lease costs

The weighted average remaining lease term and weighted average discount rate for operating and finance leases as of February 1, 2020 were as follows:

$ 331,833  

$ 326,075  

The weighted-average remaining lease term and weighted-average discount rate for operating and finance leases as of January 

30, 2021 were as follows:

Operating Leases

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Operating cash flows paid for operating leases

$ 317,997  

Operating cash flows paid for interest portion of finance leases

Financing cash flows paid for principal portion of finance leases

Future lease commitments to be paid by the Company as of February 1, 2020 were as follows (in thousands):

Future lease commitments to be paid by the Company as of January 

30, 2021 were as follows (in thousands):

Operating Leases

Finance Leases

$ 329,095  

$ 3,439  

331,441  

322,620  

303,559  

286,256  

1,958,707  

13,076  

Total future minimum lease payments

3,531,678  

30,598  

imputed interest

( 1,411,325 )  

Present value of lease liabilities

As of February 1, 2020 , the Company had certain executed real estate and gas station leases that have not yet commenced and therefore are not reflected in the tables above.

These leases are expected to commence between fiscal year 2020 and fiscal year 2021 with lease terms ranging from 13 years to 20 years .

The following table represents the Company's lease commitments under its previous presentation of its operating and finance lease agreements as of February 2, 2019 (in thousands):

Operating Leases

Finance Leases

Dividend Recapitalization

On February 3, 2017, the Company distributed a $735.5 million dividend to its common stockholders.

In conjunction with the dividend, the Company paid $67.5 million to stock option holders of the Company as required under the Fourth Amended and Restated 2011 Stock Option Plan of BJ’s Wholesale Club Holdings, Inc.

(f/k/a Beacon Holding Inc.), as amended (the "2011 Plan"), and the 2012 Director Stock Option Plan of BJ’s Wholesale Club Holdings, Inc.

(f/k/a Beacon Holding Inc.) (the "2012 Director Plan").

The payments to option holders were recorded as compensation expense in SG&A in fiscal year 2017.

The Company also paid $5.4 million to employees under retention bonus arrangements, of which $4.6 million was accrued in 2016 and the remaining $0.8 million was recognized as compensation expense in fiscal year 2017.

$ 2,120,353  

$ 15,220  

As of January 

30, 2021, the Company had certain executed real estate and gas station leases that have not yet commenced and therefore are not reflected in the tables above.

These leases are expected to commence in fiscal year 2021 with lease terms ranging from 15  years to 20  years.

Debt and Credit Arrangements

Debt consisted of the following at February 1, 2020 and February 2, 2019 (in thousands):

February 1, 2020

Debt consisted of the following at January 

30, 2021 and February 

1, 2020 (in thousands):

January 30, 2021

February 1, 2020

$ 310,000  

$ 378,000  

First Lien Term Loan

801,920  

1,315,216  

Unamortized debt discount and debt issuance costs

( 5,745 )  

Current portion

( 260,000 )  

Long-term debt

On August 17, 2018, the Company amended its ABL Facility to extend the maturity date from February 3, 2022 to August 17, 2023 and reduce the applicable interest rates and letter of credit fees on the facility.

Total fees associated with the refinancing were approximately $1.0 million .

The Company capitalized approximately $0.9 million of new debt issuance costs and had immaterial write-offs of previously capitalized debt issuance costs and third-party fees.

The ABL Facility is comprised of a $950.0 million revolving credit facility and a $50.0 million term loan.

$ 846,175  

$ 1,337,308  

On August 17, 2018, the Company amended its ABL Facility to extend the maturity date from February 

3, 2022 to August 17, 2023 and reduce the applicable interest rates and letter of credit fees on the facility.

Total fees associated with the refinancing were approximately $ 1.0  million.

The Company capitalized approximately $ 0.9  million of new debt issuance costs and had immaterial write-offs of previously capitalized debt issuance costs and third -party fees.

The ABL Facility is comprised of a $ 950.0  million revolving credit facility and a $ 50.0  million term loan.

The ABL Facility is secured on a senior basis by certain "liquid assets" of the Company and secured on a junior basis by certain "fixed assets" of the Company.

The $50.0 million term loan payment terms are restricted in that the term loan cannot be repaid unless all loans outstanding under the ABL Facility are repaid, and once repaid, cannot be re-borrowed.

The availability under the $950.0 million revolving credit facility is restricted based on eligible monthly merchandise inventories and receivables as defined in the facility agreement.

As amended, interest on the revolving credit facility is calculated either at LIBOR plus a range of 125 to 175 basis points or a base rate plus a range of 25 to 75 basis points;

and interest on the term loan is calculated at LIBOR plus a range of 200 to 250 basis points or a base rate plus a range of 100 to 150 basis points, in all cases based on excess availability.

The applicable spread of LIBOR and base rate loans at all levels of excess availability steps down by 12.5 basis points upon achieving total net leverage of 3.00 to 1.00.

The availability under the $950.0  million revolving credit facility is restricted based on eligible monthly merchandise inventories and receivables as defined in the facility agreement.

As amended, interest on the revolving credit facility is calculated either at LIBOR plus a range of 125  to 175  basis points or a base rate plus a range of 25  to 75  basis points;

and interest on the term loan is calculated at LIBOR plus a range of 200  to 250  basis points or a base rate plus a rang e of 100  to 150  bas is points, in all cases based on excess availability.

The applicable spread of LIBOR and base rate loans at all levels of excess availability steps down by 12.5  basis points upon achieving total net leverage of 3.00  to 1.00 .

The ABL Facility also provides a sub-facility for issuance of letters of credit subject to certain fees defined in the ABL Facility agreement.

The ABL Facility is subject to various commitment fees during the term of the facility based on utilization of the revolver.

At February 2, 2019 , there was $289.0 million outstanding in loans under the ABL Facility and $41.2 million in outstanding letters of credit.

As of February 2, 2019 , the interest rate on the revolving credit facility was 3.76% and unused capacity was $545.6 million .

At February 1, 2020 , there was $378.0 million outstanding in borrowings under the ABL Facility and $17.5 million in outstanding letters of credit.

As of February 1, 2020 , the interest rate on the revolving credit facility was 2.78% and unused capacity was $496.3 million .

The ABL Facility is subject to various commitment fees during the term of the facility based on utilization of the revolving credit facility, which is scheduled to mature on August 17, 2023.

At January 

30, 2021, there was $ 310.0  million outstanding in borrowings under the ABL Facility and $ 15.0  million in outstanding letters of credit.

The agreement governing the ABL Facility provides for a step down in the interest rate upon the achievement of certain debt ratings upgrades, which were achieved in July 

As of January 

30, 2021, the interest rate on the revolving credit facility was 1.25 % and unused capacity was $ 641.1  million.

February 

1, 2020, there was $ 378.0  million outstanding in borrowings under the ABL Facility and $ 17.5  million in outstanding letters of credit.

As of February 

1, 2020, the interest rate on the revolving credit facility was 2.78 % and unused capacity was $ 496.3  million.

First Lien Term Loan

On August 13, 2018, the Company amended its First Lien Term Loan to reduce the applicable interest rates and reduce the principal on the loan.

The Company drew $350 million under its ABL Facility to fund the transaction.

As amended, the First Lien Term Loan had an initial principal amount of $1,537.7 million and interest was calculated either at LIBOR plus 275 to 300 basis points or a base rate plus 175 to 200 basis points based on the Company achieving a net leverage ratio of 3.00 to 1.00.

Total fees associated with the refinancing were approximately $1.8 million .

The Company wrote-off $4.4 million of previously capitalized debt issuance costs and OID and expensed $1.8 million of new third-party fees.

Principal payments on the First Lien Term Loan are required in quarterly installments of 0.25% of the original principal amount with the balance due upon maturity on February 3, 2024.

The Company drew $ 350.0  million under its ABL Facility to fund the transaction.

As amended, the First Lien Term Loan had an initial principal amount of $ 1,537.7  million and interest was calculated either at LIBOR plus 275  to 300  basis points or a base rate plus 175  to 200  basis points based on the Company achieving a net leverage ratio of 3.00  to 1.00 , which was achieved in July 

 Total fees associated with the refinancing were approximately $ 1.8  million and were expensed.

The Company wrote off $ 4.4  million of previously capitalized debt issuance costs and original issue discounts.

The Company's First Lien Term Loan matures on February 

Voluntary prepayments are permitted.

Principal payments must be made on the First Lien Term Loan pursuant to an annual excess cash flow calculation when the net leverage ratio exceeds 3.50 to 1.00 .

Principal payments must be made on the First Lien Term Loan pursuant to an annual excess cash flow calculation when the net leverage ratio exceeds 3.50  to 1.00 .

The First Lien Term Loan is subject to certain affirmative and negative covenants but no financial covenants.

It is secured on a senior basis by certain "fixed assets" of the Company and on a junior basis by certain "liquid" assets of the Company.

On November 1, 2019, the Company borrowed $200.0 million from the ABL Facility.

On November 1, 2019, the Company borrowed $ 200.0  million from the ABL Facility.

The proceeds from the Company's borrowing were used to pay a portion of the principal amount due on the First Lien Term Loan.

In connection with the payment, the Company expensed $2.0 million of previously capitalized deferred debt issuance costs and original issue discount.

In connection with the payment, the Company expensed $ 2.0  million of previously capitalized deferred debt issuance costs and original issue discount.

On January 29, 2020, the Company amended its First Lien Term Loan to reduce the applicable interest rates.

As amended, the First Lien Term Loan has an initial principal amount of $1,315.2 million and interest is calculated either at LIBOR plus 225 basis points basis or a base rate plus 125 basis points.

Total fees associated with the refinancing were approximately $1.7 million .

The Company wrote-off $0.1 million of previously capitalized debt issuance costs and OID and expensed $1.7 million of new third-party fees.

At February 1, 2020 , there was $1,315.2 million outstanding on the First Lien Term Loan.

At February 2, 2019 , there was $1,530.0 million outstanding on the First Lien Term Loan.

At February 1, 2020 , the Company's net leverage ratio was less than 3.00 and the interest rate for the First Lien Term Loan was 3.90% .

At February 2, 2019 , the interest rate for the First Lien Term Loan was 5.51% .

As amended, the First Lien Term Loan has an initial principal amount of $ 1,315.2  million and interest is calculated either at LIBOR plus 225  basis points basis or a base rate plus 125  basis points and provided for a 

25  basis point step down in the interest rate upon the achievement of certain debt ratings upgrades.

Total fees associated with the refinancing were approximately $ 1.7  million.

The Company wrote off $ 0.1  million of previously capitalized debt issuance costs and original issue discount and expensed $ 1.7  million of new third -party fees.

On July 13, 2020, the Company paid $ 150.0  million of the principal amount due on the First Lien Term Loan.

In connection with the payment, the Company expensed $ 1.3  million of previously capitalized deferred debt issuance costs and original issue discount.

On July 29, 2020, due to upgrades in credit ratings, the base rate was reduced to LIBOR plus 

200  basis points.

On October 30, 2020, the Company borrowed $ 260.0  million from the ABL Facility.

The proceeds from the Company's borrowing, as well as $ 100.0  million of the Company's cash and cash equivalents, were used to pay $ 360.0  million of the principal amount due on the First Lien Term Loan.

In connection with the payment, the Company expensed $ 2.8  million of previously capitalized deferred debt issuance costs and original issue discount.

At January 

30, 2021, there was $ 801.9 million outstanding on the First Lien Term Loan.

The agreement governing the First Lien Term Loan provides for a step down in the interest rate upon the achievement of certain debt ratings upgrades, which were achieved in July 2020.

At January 

30, 2021, the interest rate for the First Lien Term Loan was 2.13 % and at February 

1, 2020, there was $ 1,315.2  million outstanding on the First Lien Term Loan and at February 

1, 2020, the interest rate for the First Lien Term Loan was 3.90 %. 

Second Lien Term Loan

On July 2, 2018, the Company paid off the Second Lien Term Loan by extinguishing the entire outstanding amount of $623.2 million .

In connection with the debt extinguishment, the Company paid a $6.2 million prepayment premium.

The Company recorded debt extinguishment charges of $19.2 million in conjunction with the paydown, of which $13.0 million represents write-off of previously capitalized deferred debt issuance costs associated with the Second Lien Term Loan.

On July 2, 2018, the Company paid off the Second Lien Term Loan by extinguishing the entire outstanding amount of $ 623.3  million.

In connection with the debt extinguishment, the Company paid a $ 6.2  million prepayment premium.

The Company recorded debt extinguishment charges of $ 19.2  million in conjunction with the paydown, of which $ 13.0  million represents write-off of previously capitalized deferred debt issuance costs associated with the Second Lien Term Loan.

Future minimum payments

Scheduled future minimum principal payments on debt as of February 1, 2020 are as follows:

Scheduled future minimum principal payments on debt as of January 

30, 2021 are as follows (in thousands):

Principal Payments

$ 260,000  

851,920  

$ 1,111,920  

Interest Expense, Net

1 unchanged sentence

Fiscal Year Ended

February 1, 2020

Fiscal Year Ended

February 2, 2019

Fiscal Year Ended

January 30, 2021

February 1, 2020

February 2, 2019

Interest on debt

3 unchanged sentences

Loss on debt extinguishment

Loss on cash flow hedge

Capitalized interest

2 unchanged sentences

Intangible assets and liabilities consist of the following (in thousands):

February 1, 2020

Gross Carrying

January 30, 2021

Gross Carrying Amount

Accumulated Amortization

Intangible Assets Not Subject to Amortization:

BJ’s trade name

Intangible Assets Subject to Amortization:

3 unchanged sentences

February 1, 2020

Gross Carrying

Gross Carrying Amount

Accumulated Amortization

Intangible Assets Not Subject to Amortization:

BJ’s trade name

Intangible Assets Subject to Amortization:

1 unchanged sentence

Private label brands

Below market leases (1)

Total intangible assets

Intangible Liabilities Subject to Amortization:

Above market leases (1)

Upon adoption of ASU 2016-02, Leases, the Company's above and below market leases were reclassified as adjustments to the ROU asset.

Refer to Note 4 "Leases" for additional information on the adoption of ASU 2016-02.

The Company records amortization expenses of intangible assets as a component of SG&A.

Member relationships are amortized over a period of 15.3 years , Private label brands are amortized over 12 years .

The Company recorded amortization expense of $13.5 million , $21.8 million and $26.0 million as a component of SG&A for the fiscal years ended February 1, 2020 , February 2, 2019 and February 3, 2018 , respectively.

The Company estimates that amortization expense related to intangible assets will be as follows in each of the next five fiscal years (in thousands):

Member relationships are amortized over 

15.3  years and private label brands are amortized over 12  years.

The Company recorded amortization expenses of $ 11.9  million, $ 13.5  million and $ 21.8  million as a component of SG&A for the fiscal years ended January 

30, 2021, February 

1, 2020 and February 

2, 2019, respectively.

The Company estimates that amortization expenses related to intangible assets will be as follows in each of the next five fiscal years (in thousands):

Intangible Assets

4 unchanged sentences

Contingently Redeemable Common Stock

The Company and certain current and former management employees were parties to the Management Stockholders Agreement (the "MSA").

Grants of equity by the Company to employees were governed by the terms of individual equity award agreements and the MSA.

The Company and certain current and former management employees were parties to the Management Stockholders Agreement (the "MSA"). Grants of equity by the Company to employees were governed by the terms of individual equity award agreements and the MSA.

The MSA specified certain transfer restrictions, tag-along and drag-along rights, put and call rights and various other rights and restrictions applicable to any equity held by employees.

The call right permitted the Company to repurchase common stock held by an employee stockholder following a minimum holding period and prior to the expiration of a specified time period following the later of the employee’s termination of employment with the Company or acquisition of the common stock.

If the employee’s employment was terminated for cause, the repurchase price was the least of (a) the fair market value as of the repurchase date, (b) the fair market value at issuance or (c) the price paid by the employee stockholder for such shares.

If the employee’s employment was terminated other than for cause, the repurchase price was the fair market value as of the repurchase date.

The MSA also gave employees the ability to put any shares back to the Company at fair market value upon death or disability while actively employed.

As neither death nor disability while actively employed is a certainty, the shares of common stock held by the employee stockholders were considered to be contingently redeemable common stock and were accounted for outside of stockholders’ equity until the shares of common stock were either repurchased by the Company or the put right terminated.

Both the Company’s repurchase right and the employee stockholder’s put right terminated upon the consummation the IPO.

If the employee’s employment was terminated for cause, the repurchase price was the least of (a) the fair market value as of the repurchase date, (b) the fair market value at issuance or (c) the price paid by the employee stockholder for such shares.

If the employee’s employment was terminated other than for cause, the repurchase price was the fair market value as of the repurchase date.

The MSA also gave employees the ability to put any shares back to the Company at fair market value upon death or disability while actively employed. As neither death nor disability while actively employed is a certainty, the shares of common stock held by the employee stockholders were considered to be contingently redeemable common stock and were accounted for outside of stockholders’

equity until the shares of common stock were either repurchased by the Company or the put right terminated.

Both the Company’s repurchase right and the employee stockholder’s put right terminated upon the consummation the IPO.

The contingently redeemable common stock was recorded at fair value of the common stock at the date of issuance.

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When the Company executed its IPO in 2018, all remaining grants under the MSA were reclassified to common stock.

As of February 1, 2020 and February 2, 2019 there is no contingently redeemable common stock recorded on the consolidated balance sheet.

The Company recorded $10.4 million of contingently redeemable common stock on its consolidated balance sheet related to these agreements as of February 3, 2018 .

Prior to the IPO, when the Company exercised its call option to repurchase shares classified outside of stockholders’ equity, it was deemed to be a constructive retirement of the contingently redeemable share for accounting purposes.

As of both January 30, 2021 and 

February 1, 2020, there is no contingently redeemable common stock recorded on the Consolidated Balance Sheet.

Prior to the IPO, when the Company exercised its call option to repurchase shares classified outside of stockholders’

equity, it was deemed to be a constructive retirement of the contingently redeemable share for accounting purposes.

The Company recorded the excess of the fair value paid to repurchase the share over the carrying value of the contingently redeemable share within additional paid-in capital, as the Company had an accumulated deficit.

Stock Incentive Plans

On June 13, 2018, the Company’s board of directors adopted, and its stockholders approved, the BJ's Wholesale Club Holdings, Inc.

On June 

13, 2018, the Company’s board of directors adopted, and its stockholders approved, the BJ's Wholesale Club Holdings, Inc.

2018 Incentive Award Plan (the "2018 Plan").

The 2018 Plan provides for the grant of stock options, restricted stock, dividend equivalents, stock payments, restricted stock units, performance shares, other incentive awards, stock appreciation rights, and cash awards.

Prior to the adoption of the 2018 Plan, the Company granted stock-based compensation to employees and non-employee directors, respectively, under the 2011 Plan and the 2012 Director Plan.

Prior to the adoption of the 2018 Plan, the Company granted stock-based compensation to employees and non-employee directors, respectively, under the Fourth Amended and Restated 2011 Stock Option Plan of BJ's Wholesale Club Holdings, Inc.

(f/k/a Beacon Holdings, Inc.), as amended (the "2011 Plan"), and the 2012 Director Stock Option Plan of BJ's Wholesale Club Holdings, Inc.

(f/k/a Beacon Holding Inc.), as amended (the "2012 Director Plan").

No further grants will be made under 2011 Plan or the 2012 Director Plan.

The 2018 Plan authorizes the issuance of 13,148,058 shares, including 985,369 shares that were reserved but not issued under the 2011 Plan and the 2012 Director Plan.

The 2018 Plan authorizes the issuance of 13,148,058  shares, including 985,369  shares that were reserved but not issued under the 2011 Plan and the 2012 Director Plan.

If an award under the 2018 Plan, 2011 Plan or 2012 Director Plan is forfeited, expires or is settled for cash, any shares subject to such award may, to the extent of such forfeiture, expiration or cash settlement, be used again for new grants under the 2018 Plan.

1 unchanged sentence

The following shares may not be used again for grant under the 2018 Plan:

(1) shares subject to a stock appreciation right ("SAR"), that are not issued in connection with the stock settlement of the SAR on its exercise and (2) shares purchased on the open market with the cash proceeds from the exercise of options under the 2018 Plan, 2011 Plan or 2012 Director Plan.

As of February 1, 2020 , there were 7,205,543 shares available for future issuance under the 2018 Plan.

( 1 ) shares subject to a stock appreciation right ("SAR"), that are not issued in connection with the stock settlement of the SAR on its exercise and ( 2 ) shares purchased on the open market with the cash proceeds from the exercise of options under the 2018 Plan, 2011 Plan or 2012 Director Plan.

As of January 

30, 2021, there were 5,835,226  shares available for future issuance under the 2018 Plan.

Stock option awards are generally granted with vesting periods of three years.

All options have a contractual term of ten years.

The Company recognized $18.8 million ( $13.5 million post-tax), $57.7 million ( $41.5 million post-tax) and $9.1 million ( $5.4 million post-tax) of total stock-based compensation for 2019 , 2018 and 2017 , respectively.

As of February 1, 2020 , there was approximately $34.9 million of unrecognized compensation cost, which is expected to be recognized over the next three years .

The Company recognized $ 32.2  million ($ 23.2  million post-tax), $ 18.8  million ($ 13.5  million post-tax) and $ 57.7  million ($ 41.5  million post-tax) of total stock-based compensation for fiscal years 2020, 2019 and 2018, respectively.

As of January 

30, 2021, there was approximately $ 40.8  million of unrecognized compensation cost, which is expected to be recognized over the next three years.

The fair value of the options was estimated using the Black-Scholes option pricing model with the following weighted-average assumptions ( no dividends were expected):

Fiscal Year Ended

February 1, 2020

Fiscal Year Ended

February 2, 2019

Fiscal Year Ended

January 30, 2021

February 1, 2020

February 2, 2019

Risk-free interest rate range

2.36% - 2.36%

2.56% - 2.73%

1.40% - 1.40%

Expected volatility factor

Weighted-average expected option life (yrs.)

0.44 %- 0.44 %  

2.36 % - 2.36 %  

2.56 % - 2.73 %  

Expected volatility

25.0 %  

25.8 %  

Weighted-average expected option life (in years)

Weighted-average grant-date fair value

The Company historically has been a private company and lacks certain company-specific historical and implied volatility information.

Expected volatility was determined based on the historical and implied volatilities of comparable public companies.

$ 6.29  

$ 8.37  

$ 5.16  

The risk-free interest rate was based on United States Treasury yields in effect at the time of the grant for notes with terms comparable to the awards.

1 unchanged sentence

Forfeitures are recorded as incurred.

Presented below is a summary of stock option activity and weighted-average exercise prices for fiscal year ended February 1, 2020 :

Presented below is a summary of the stock option activity and weighted-average exercise prices for fiscal year ended January 

(Options in thousands)

Weighted-average

life (in years)

Number of Securities to be Issued Upon Exercise of Outstanding Options

Weighted- average Exercise Price

Weighted-average Remaining Contractual Life (in years)

Outstanding, beginning of period

$ 14.00  

( 91 )  

( 1,890 )  

Outstanding, end of period

1 unchanged sentence

Exercisable, end of period

The total intrinsic value of options exercised in 2019 , 2018 and 2017 was $37.1 million , $88.2 million and $7.6 million , respectively.

The Company received a tax benefit related to these option exercises of approximately $10.4 million , $24.8 million and $3.1 million in 2019 , 2018 and 2017 , respectively.

As of February 1, 2020 , the total intrinsic value of options vested and expected to vest was $39.1 million .

Presented below is a summary of our non-vested restricted shares and restricted stock units and weighted-average grant-date fair values for the period ended February 1, 2020 :

The total intrinsic value of options exercised in fiscal years 2020, 2019 and 2018 was $ 45.0  million, $ 37.1  million and $ 88.2  million, respectively.

The Company received a tax benefit related to these option exercises of approximately $ 12.6  million, $ 10.4  million and $ 24.8  million in fiscal years 2020, 2019 and 2018, respectively.

As of January 

30, 2021, the total intrinsic value of options vested and expected to vest was $ 90.2 million.

Presented below is a summary of our non-vested restricted shares, restricted stock units and performance stock and weighted-average grant-date fair values for the fiscal year ended January 

Restricted Stock

Restricted Stock Units

Performance Stock

(Shares in thousands)

1 unchanged sentence

Weighted-average Grant-Date Fair Value

Outstanding, beginning of period

$ 25.22  

$ 25.83  

( 98 )  

( 545 )  

( 32 )  

Outstanding, end of period

$ 26.29  

$ 34.54  

$ 23.96  

2018 Employee Stock Purchase Plan

On June 14, 2018, the Company’s board of directors adopted and its stockholders approved the BJ's Wholesale Club Holdings, Inc.

2018 Employee Stock Purchase Plan (the "ESPP"), which became effective the day prior to the first day of public trading of the Company’s equity securities.

The aggregate number of shares of common stock that was be reserved for issuance under our ESPP was be equal to the sum of (i) 973,014 shares and (ii) an annual increase on the first day of each calendar year beginning in 2019 and ending in 2028 equal to the lesser of (A) 486,507 shares, (B) 0.5% of the shares outstanding (on an as converted basis) on the last day of the immediately preceding fiscal year and (C) such smaller number of shares as determined by the board of directors.

On June 

14, 2018, the Company’s board of directors adopted and its stockholders approved the BJ's Wholesale Club Holdings, Inc.

2018 Employee Stock Purchase Plan (the "ESPP"), which became effective the day prior to the first day of public trading of the Company’s equity securities.

486,507  shares, (B) 0.5 % of the shares outstanding (on an as converted basis) on the last day of the immediately preceding fiscal year and (C) such smaller number of shares as determined by the board of directors.

The offering under the ESPP commenced on January 1, 2019.

The amount of expense recognized in the fiscal year ended February 1, 2020 was $0.4 million and the amount recognized in the fiscal year ended February 2, 2019 was immaterial.

The amount of expense recognized in the fiscal years ended January 30, 2021 and February 1, 2020 

was $ 0.6  million and $ 0.4  million respectively.

Treasury Shares Acquired on Restricted Stock Awards

On June 27, 2019, the Company completed the CVC June 2019 Secondary Offering of 9,977,024 shares of the Company's common stock and, in connection with the offering, the Company repurchased 2,500,000 shares of common stock at a price of $25.41 per share.

On June 27, 2019, the Company completed an offering of 

9,977,024  shares of the Company's common stock and, in connection with the offering, the Company repurchased 

2,500,000  shares of common stock at a price of $ 25.41  per share.

These repurchased shares are being held in treasury.

In addition, 143,205 and 781,866 shares were reacquired to satisfy employees’ tax withholding obligations upon the vesting of restricted stock awards in fiscal year 2019 and fiscal year 2018, respectively.

These reacquired shares were recorded as $3.8 million and $19.1 million of treasury stock in fiscal years 2019 and 2018, respectively.

In addition, 212,173  shares and 143,205  shares were reacquired to satisfy employees’

tax withholding obligations upon the vesting of restricted stock awards in fiscal year 2020  and fiscal year 2019, respectively.

These reacquired shares were recorded as $ 6.5 million and $ 3.8  million of treasury stock in fiscal years 2020  and 2019, respectively.

Share Repurchase Program

On December 19, 2019, the Company's board of directors authorized the repurchase of up to $250.0 million of the Company's outstanding common stock from time to time as market conditions warrant (the "Program").

On December 19, 2019, the Company's board of directors authorized the repurchase of up to $ 250.0  million of the Company's outstanding common stock from time to time as market conditions warrant (the "Program").

The Program expires at the end of fiscal year 2021.

We initiated the Program to mitigate potentially dilutive effects of stock options and shares of restricted stock granted by the Company, in addition to enhancing shareholder value.

As of February 1, 2020, $250.0 million remained available to purchase under the Program.

The Company repurchased no shares during fiscal year 2019.

The provision (benefit) for income taxes from continuing operations includes the following (in thousands):

As of January 30, 2021, $ 150.3  million remained available to purchase under the Program.

The Company repurchased 2,599,282  shares during fiscal year 

2020 and 

no shares in fiscal year 2019.

The provision for income taxes from continuing operations includes the following (in thousands):

Fiscal Year Ended

February 1, 2020

Fiscal Year Ended

February 2, 2019

Fiscal Year Ended

January 30, 2021

February 1, 2020

Total income tax provision (benefit)

A reconciliation of the statutory federal income tax rate with the Company’s effective income tax rate is as follows:

Fiscal Year Ended

February 2, 2019

$ 94,947  

$ 29,187  

$ 14,641  

( 1,130 )  

51,074  

16,780  

11,877  

( 8,066 )  

Total income tax provision

$ 136,825  

$ 56,212  

$ 11,826  

A reconciliation of the statutory federal income tax rate with the Company’s effective income tax rate is as follows:

Fiscal Year Ended

February 2, 2019

Fiscal Year Ended

January 30, 2021

February 1, 2020

February 2, 2019

Statutory federal income tax rates

21.0 %  

State income taxes, net of federal tax benefit

1 unchanged sentence

Work opportunity and solar energy tax credit

( 0.6 )  

( 1.0 )  

Charitable contributions

( 0.2 )  

Prior year adjustments

( 0.2 )  

Share-based compensation

( 1.5 )  

( 2.7 )  

( 0.1 )  

Effective income tax rate

On December 22, 2017, the Tax Cuts and Jobs Act ("TCJA") was signed into law.

The TCJA includes significant changes to the Internal Revenue Code impacting the taxation of business entities.

The most significant change in the TCJA that impacts the Company is the reduction in the corporate federal income tax rate from 35% to 21% for tax years (or portions thereof) beginning after December 31, 2017.

Significant components of the Company’s deferred tax assets and liabilities as of February 1, 2020 and February 2, 2019 were as follows (in thousands):

February 1, 2020

24.5 %  

23.0 %  

Significant components of the Company’s deferred tax assets and liabilities as of January 

30, 2021 and February 

1, 2020 are as follows (in thousands):

January 30, 2021

February 1, 2020

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Operating lease liability

$ 593,699  

$ 590,952  

Self-insurance reserves

34,272  

28,459  

Rental step liabilities

Compensation and benefits

28,549  

14,583  

Capital lease and financing obligations

Interest rate swap

Deferred gain amortization

Intangible liabilities

10,988  

Environment clean up reserve

Startup costs

Lease incentive gain

Closed store obligations

18,412  

16,959  

Total deferred tax assets

$ 693,296  

$ 675,414  

Deferred tax liabilities:

Operating lease right-of-use asset

Operating lease right-of-use assets

$ 576,425  

$ 576,787  

104,458  

90,317  

Intangible assets

Capital lease and financings obligations

37,834  

41,156  

Lease incentive gain

11,564  

Total deferred tax liabilities

732,655  

721,614  

Net deferred tax liabilities

The ultimate realization of deferred tax assets is dependent upon the Company’s ability to generate sufficient taxable income

during the periods in which the temporary differences become deductible.

The Company has determined that it is more likely than

not that the results of future operations and the reversals of existing taxable temporary differences will generate sufficient taxable

income to realize the deferred tax assets;

$ ( 39,359 )  

The ultimate realization of deferred tax assets is dependent upon the Company’s ability to generate sufficient taxable income during the periods in which the temporary differences become deductible.

The Company has determined that it is more likely than not that the results of future operations and the reversals of existing taxable temporary differences will generate sufficient taxable income to realize the deferred tax assets.

Therefore, no valuation allowance has been recorded.

In making this determination, the

Company considered historical levels of income as well as projections for future periods.

In making this determination, the Company considered historical levels of income as well as projections for future periods.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):

Fiscal Year Ended

February 1, 2020

Fiscal Year Ended

January 30, 2021

February 1, 2020

Balance at the beginning of the period

Balance, beginning of period

$ 2,161  

$ 2,524  

Reductions for tax positions taken during prior years

1 unchanged sentence

Lapses in statute of limitations

( 57 )  

Audit resolution

Balance at the end of the period

The total amount of unrecognized tax benefits, reflective of federal tax benefits at February 1, 2020 and February 2, 2019 that, if recognized, would favorably affect the effective tax rate was $1.9 million and $2.2 million , respectively.

As of February 1, 2020 , management has determined it is reasonably possible that the total amount of unrecognized tax benefits could decrease within the next twelve months by less than $0.1 million , due to the expected resolution of state tax audits and the expiration of statute of limitations.

The Company’s tax years from 2015 forward remain open and are subject to examination by the Internal Revenue Service or various state taxing jurisdictions.

Balance, end of period

$ 2,201  

$ 2,161  

The total amount of unrecognized tax benefits, reflective of federal tax benefits at both January 

30, 2021 and February 

1, 2020 that, if recognized, would favorably affect the effective tax rate was $ 1.9  million.

As of January 

30, 2021, management has determined it is reasonably possible that the total amount of unrecognized tax benefits could decrease within the next twelve months by less than $ 0.1  million, due to the expected resolution of state tax audits and the expiration of statute of limitations.

The Company’s tax years from 2016  forward remain open and are subject to examination by the Internal Revenue Service or various state taxing jurisdictions.

The Company classifies interest expense and any penalties related to income tax uncertainties as a component of income tax expense, which is consistent with the recognition of these items in prior reporting periods.

For the period ended February 1, 2020 , the Company recognized $0.3 million in interest income.

For the periods ended February 2, 2019 and February 3, 2018 , the Company recognized $0.4 million and $0.7 million in interest income and interest expense, respectively.

As of February 1, 2020 and February 2, 2019 , the Company had $0.2 million and $0.5 million , respectively, of accrued interest related to income tax uncertainties.

For the period ended January 30, 2021, the Company recognized 

no  interest expense.

For the periods ended February 1, 2020 and February 2, 2019, the Company recognized $ 0.3  million and $ 0.4  million in interest income, respectively.

As of both January 

30, 2021 and February 

1, 2020, the Company had $ 0.2  million of accrued interest related to income tax uncertainties.

Retirement Plans

Under BJ’s 401(k) savings plans, participating employees may make pretax contributions up to 50% of covered compensation subject to federal limits.

Under BJ’s 401 (k) savings plans, participating employees may make pretax contributions up to 50 % of covered compensation subject to federal limits.

The Company matches employee contributions at 50 % of the first six percent of covered compensation.

The Company’s expense under these plans was $10.0 million , $9.3 million and $9.6 million for 2019 , 2018 and 2017 , respectively.

The Company’s expense under these plans was $ 11.6  million, $ 10.0  million and $ 9.3  million for fiscal years 2020, 2019 and 2018, respectively.

The Company has a non-contributory defined contribution retirement plan for certain key employees.

Under this plan, the Company funds annual retirement contributions for the designated participants on an after-tax basis.

The Company’s contributions equaled 5% of the participants’ base salary.

The Company’s contributions equaled 5 % of the participants’

Participants become fully vested in their contribution accounts at the end of the fiscal year in which they complete four full fiscal years of service.

Pretax expense under this plan was $2.6 million , $2.4 million and $2.4 million in 2019 , 2018 and 2017 , respectively.

Pretax expense under this plan was $ 2.8  million, $ 2.6  million and $ 2.4  million in fiscal years 2020, 2019 and 2018, respectively.

Postretirement Medical Benefits

2 unchanged sentences

Amounts contributed by retired employees under this plan are based on years of service prior to retirement.

The plan was amended in 2015 to limit eligibility to only those who meet the eligibility criteria, of age and years of service, by June 30, 2017.

The plan can no longer accept any new enrollees, with estimated future benefit payments ending by June 30, 2027.

The Company recognizes the funded status of the postretirement medical plan in the balance sheet.

The funded status represents the difference between the projected benefit liability obligation of the plan and the fair value of the plan’s assets.

The plan was amended in 2015 to limit eligibility to only those who met the eligibility criteria, of age and years of service, by June 

The plan can no longer accept any new enrollees, with estimated future benefit payments ending by June 

The Company recognizes the funded status of the postretirement medical plan in the Consolidated Balance Sheets. The funded status represents the difference between the projected benefit liability obligation of the plan and the fair value of the plan’s assets.

Previously unrecognized deferred amounts such as actuarial gains and losses and the impact of plan changes are included in accumulated other comprehensive income.

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Obligation and Funded Status

The change in obligation and funded status of the plan at February 1, 2020 and February 2, 2019 was as follows (in thousands):

The changes in obligation and funded status of the plan at January 

30, 2021 and February 

1, 2020 were as follows (in thousands):

Fiscal Year Ended

February 1, 2020

Fiscal Year Ended

January 30, 2021

February 1, 2020

Change in Obligation

Projected benefit obligation at beginning of period

Projected benefit obligation, beginning of period

$ 3,606  

$ 4,174  

Company service cost

Interest cost

Plan participants’ contributions

Plan participants’

contributions

Net actuarial loss

( 271 )  

Benefit payments made directly by the Company

Projected benefit obligation at end of period

( 901 )  

Projected benefit obligation, end of period

$ 2,746  

$ 3,606  

Change in Plan Assets

Fair value of plan assets at beginning of period

Fair value of plan assets, beginning of period

Company contributions

Plan participants’ contributions

Plan participants’

contributions

Benefit payments made directly by the Company

Fair value of plan assets at end of period

Funded status at end of year

The funded status of the plan as of February 1, 2020 is recognized as a net liability in other non-current liabilities on the consolidated balance sheet.

The Company expects to contribute approximately $0.7 million to the postretirement plan in 2020 .

Components of Net Periodic Benefit Cost and Amounts Recognized in Other Comprehensive Income

( 901 )  

Fair value of plan assets, end of period

Funded status, end of year

$ ( 2,746 )  

The funded status of the plan as of January 

30, 2021 is recognized as a net liability in other non-current liabilities on the Consolidated Balance Sheets.

The Company expects to contribute approximately $ 0.6  million to the postretirement plan in fiscal year 2021.

Components of Net Periodic Benefit Cost and Amounts Recognized in Other Comprehensive Income (Loss)

Net periodic postretirement benefit cost for the last three fiscal years consists of the following (in thousands):

Fiscal Year Ended

February 1, 2020

Fiscal Year Ended

February 2, 2019

Fiscal Year Ended

January 30, 2021

February 1, 2020

Company service cost

February 2, 2019

Interest cost

Net prior service credit amortization

( 48 )  

( 693 )  

Amortization of unrecognized gain

( 638 )  

( 962 )  

Net periodic postretirement benefit cost

$ ( 571 )  

$ ( 1,452 )  

Discount rate used to determine cost

1.74 %  

3.04 %  

Health care cost trend rates

The change in accumulated other comprehensive income ("AOCI"), gross of tax, consists of the following (in thousands):

6.00 %  

6.50 %  

The change in accumulated other comprehensive loss ("AOCL"), gross of tax, consists of the following (in thousands):

Fiscal Year Ended

February 1, 2020

Fiscal Year Ended

January 30, 2021

February 1, 2020

AOCI at the beginning of period

AOCL, the beginning of period

$ ( 2,282 )  

Net prior service credit amortization

Amortization of net actuarial gain

Net actuarial loss for the period

AOCI at the end of the period

The Company expects to amortize approximately $0.8 million of net actuarial gain from AOCI into net periodic postretirement benefit cost in fiscal year 2020 .

Net actuarial loss

( 271 )  

AOCL, the end of the period

$ ( 1,867 )  

The Company expects to amortize approximately $ 0.8  million of net actuarial gain from AOCL into net periodic postretirement benefit cost in fiscal year 2021.

The following weighted-average assumptions were used to determine the postretirement benefit obligations:

February 1, 2020

January 30, 2021

February 1, 2020

Discount rate

1.74 %  

Health care cost trend rate assumed for next year

6.00 %  

Ultimate trend rate

5.00 %  

Year that the rate reaches the ultimate trend rate

Assumed health care cost trend rates have a significant effect on the amounts reported for the postretirement health care plans.

A one -percentage point change in assumed health care cost trend rates would have the following effects as of February 1, 2020 (in thousands):

Effect of 1% Increase in Medical Trend Rates

Postretirement benefit obligation increases by

Total of service and interest cost increases by

Effect of 1% Decrease in Medical Trend Rates

Postretirement benefit obligation decreases by

Total of service and interest cost decreases by

The estimated future benefit payments for the postretirement health care plan at February 1, 2020 are (in thousands):

The estimated future benefit payments for the postretirement health care plan at January 

30, 2021 are (in thousands):

Future Minimum Payments

2026 to 2030  

$ 2,861  

Asset Retirement Obligations

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Fiscal Year Ended

February 1, 2020

Fiscal Year Ended

February 2, 2019

Fiscal Year Ended

January 30, 2021

February 1, 2020

February 2, 2019

Balance, beginning of period

4 unchanged sentences

The major components of accrued expenses and other current liabilities are as follows (in thousands):

February 1, 2020

January 30, 2021

February 1, 2020

Deferred membership fee income

Outstanding checks and payables

$ 155,580  

$ 143,969  

Employee compensation

132,341  

70,481  

Outstanding checks and payables

119,761  

97,610  

Insurance reserves

BJ’s Perks rewards

46,042  

48,457  

Sales, property, use and other taxes

43,803  

32,442  

BJ’s Perks rewards

34,452  

35,952  

23,429  

17,599  

Utilities, advertising and accrued interest

22,809  

16,166  

Deferred revenues

18,118  

30,697  

Fixed asset accruals

13,131  

11,247  

Membership fee income sales and legal reserves

12,360  

10,858  

Repairs and maintenance

Accrued federal and state income taxes

11,347  

Gift cards  

10,293  

10,298  

Professional services

Accrued federal and state income taxes

$ 651,625  

$ 547,876  

The following table summarizes membership fee income activity for each of the last two fiscal years (in thousands):

Fiscal Year Ended

February 1, 2020

Fiscal Year Ended

January 30, 2021

February 1, 2020

Deferred membership fee income, beginning of period

$ 143,969  

$ 134,415  

Cash received from members

344,715  

311,705  

Revenue recognized in earnings

( 333,104 )  

Deferred membership fee income, end of period

$ 155,580  

$ 143,969  

Other Non-current Liabilities

The major components of other non-current liabilities are as follows (in thousands):

February 1, 2020

January 30, 2021

February 1, 2020

Workers’ compensation and general liability

Workers’

compensation and general liability

Co-brand deferred revenue and other

Interest rate swap liability

Asset retirement obligations

Postretirement medical benefit and other

Capital leases and financing obligations

Rent escalation liability

Deferred gain on sale leasebacks

Lease incentives

Above market leases

Total non-current liabilities

Book Overdrafts

Banking arrangements provide for the daily replenishment of vendor payable bank accounts as checks are presented.

The balances of checks outstanding in these bank accounts, which represent book overdrafts, totaled approximately $38.2 million at February 1, 2020 and approximately $50.3 million at February 2, 2019 .

Amounts payable to merchandise vendors are included in accounts payable on the consolidated balance sheets and were approximately $22.5 million and $32.1 million at the end of 2019 and 2018 , respectively.

Amounts payable to non-merchandise vendors are included in accrued expenses and other current liabilities on the consolidated balance sheets and were approximately $15.7 million and $18.2 million at the end of 2019 and 2018 , respectively.

Changes in these balances are reflected in operating activities in the consolidated statements of cash flows.

Deferred wage taxes

Total other non-current liabilities

Derivative Financial Instruments

Interest Rate Swaps

On November 13, 2018, the Company entered into three forward starting interest rate swaps (the "Interest Rate Swaps"), which were effective starting on February 13, 2019.

The Company has fixed the LIBOR component of $1.2 billion of its floating rate debt at a rate of approximately 3.0% from February 13, 2019 until February 13, 2022.

The Interest Rate Swaps are recorded as a liability of $40.0 million and $19.4 million in 2019 and 2018, respectively, with the net of tax amount recorded in other comprehensive income.

On November 13, 2018, the Company entered into three forward starting interest rate swaps (the "Interest Rate Swaps"), which were effective starting on February 13, 2019 and fixed the LIBOR component of $ 1.2  billion of its floating rate debt at a rate of approximately 3.0 % from February 13, 2019 until February 13, 2022.

On October 30, 2020, the Company borrowed $ 260.0  million from the ABL Facility.

Due to the payment of debt principal on the First Lien Term Loan, the Company determined that certain interest payments are no longer probable and that a portion of 

one  of the interest rate swap agreements would be ineffective as a result of the payment of debt principal, and as such reclassified $ 5.1  million of losses recorded in other comprehensive income to interest expense.

On November 10, 2020, the Company terminated one of the Interest Rate Swaps, which fixed $ 360.0  million of its floating rate debt at a rate of approximately 3.0 %. An additional interest rate swap, which fixed $ 240.0  million of its floating rate debt at 3.0 % was determined to be ineffective.

Gains and losses on the ineffective interest rate swap agreement will be recorded as interest expense.

The Interest Rate Swaps are recorded as a liability of $ 26.4  million in fiscal year 2020, with the net of tax amount for the effective and ineffective Interest Rate Swaps recorded in other comprehensive income and interest expense, respectively. The Interest Rate Swaps are recorded as a liability of $ 40.0  million in fiscal year 2019,  with the net of tax amount for the effective Interest Rate Swaps recorded in other comprehensive income.

The Company elected hedge accounting for the interest rate swap agreements, and as such, the effective portion of the losses was recorded as a component of other comprehensive income.

There were $20.6 million and $19.4 million of unrealized losses recorded in 2019 and 2018, respectively.

There were $ 1.7  million in unrealized gains and $ 20.6  million of unrealized losses recorded in fiscal years 2020  and 2019, respectively.

The fair value of derivative instruments included on the Consolidated Balance Sheets are as follows (in thousands):

Fair Value at

Accounting for Cash Flow Hedges

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Balance Sheet Classification

January 30, 2021

February 1, 2020

Interest rate swap

$ 600,000  

3.00 %  

Other non-current liabilities

$ ( 18,828 )  

Interest rate swap

360,000  

3.00 %  

Other non-current liabilities

Interest rate swap

240,000  

3.00 %  

Other non-current liabilities

( 7,525 )  

Net carrying amount

$ 1,200,000  

Total liabilities

$ ( 26,353 )  

Fair Value Measurements

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The fair values of the Company’s derivative instruments are based on quotes received from third-party banks and represent the estimated amount the Company would pay to terminate the agreements taking into consideration current interest rates as well as the creditworthiness of the counterparties.

These inputs are considered to be Level 2.

The fair values of the Company’s derivative instruments are based on quotes received from third -party banks and represent the estimated amount the Company would pay to terminate the agreements taking into consideration current interest rates as well as the creditworthiness of the counterparties.

These inputs are considered to be Level 

Financial Assets and Liabilities

The gross carrying amount and fair value of the Company’s debt at February 1, 2020 are as follows (in thousands):

The gross carrying amount and fair value of the Company’s debt at January 

30, 2021 are as follows (in thousands):

Carrying Amount

First Lien Term Loan

The fair value of debt was determined based on quoted market prices and on borrowing rates available to the Company at February 1, 2020 .

These inputs are considered to be Level 2.

The gross carrying amount and fair value of the Company’s debt at February 2, 2019 are as follows (in thousands):

$ 801,920  

$ 802,256  

310,000  

$ 1,111,920  

$ 1,112,256  

The fair value of debt was determined based on quoted market prices and on borrowing rates available to the Company at January 

These inputs are considered to be Level 

The gross carrying amount and fair value of the Company’s debt at February 

1, 2020 are as follows (in thousands):

Carrying Amount

First Lien Term Loan

The fair value of debt was determined based on quoted market prices and on borrowing rates available to the Company at February 2, 2019 .

These inputs are considered to be Level 2.

$ 1,315,216  

$ 1,319,990  

378,000  

$ 1,693,216  

$ 1,697,990  

The fair value of debt was determined based on quoted market prices and borrowing rates available to the Company at February 

These inputs are considered to be Level 

Assets and Liabilities Measured at Fair Value on a Non-recurring Basis

5 unchanged sentences

Fiscal Year Ended

February 1, 2020

Fiscal Year Ended

February 2, 2019

Fiscal Year Ended

January 30, 2021

February 1, 2020

Weighted-average common shares outstanding, used for basic computation

February 2, 2019

Weighted-average common shares outstanding

Incremental shares of potentially dilutive securities

1 unchanged sentence

Weighted-average number of common and dilutive potential common shares outstanding

Stock options and restricted shares of 626,976 and 466,778 , respectively, were excluded from the computation of diluted earnings for fiscal year 2019 because their inclusion would have been anti-dilutive.

Similarly, stock incentive awards of 1,190,597 and 811,272 were excluded from the computation of diluted earnings for the end of fiscal years 2018 and 2017 , respectively.

Stock options of 

276,415  and 626,976  shares were excluded from the computation of diluted earnings for fiscal years 2020 and 2019,  respectively, because their inclusion would have been anti-dilutive. Restricted shares of 206,698  and 466,778  were excluded from the computation of diluted earnings for fiscal years 2020 and 2019,  respectively, because their inclusion would have been anti-dilutive.

Similarly, stock incentive awards of 

1,190,597  shares were excluded from the computation of diluted earnings for the end of fiscal year 

Condensed Financial Information of Registrant (Parent Company Only)

BJ’S WHOLESALE CLUB HOLDINGS, INC.

(PARENT COMPANY ONLY)

2 unchanged sentences

Fiscal Year Ended

February 1, 2020

Fiscal Year Ended

January 30, 2021

February 1, 2020

Investment in subsidiaries

STOCKHOLDERS’ DEFICIT

$ 319,327  

STOCKHOLDERS’

EQUITY (DEFICIT)

Preferred stock;

3 unchanged sentences

$ 0.01 par value;

300,000 shares authorized, 140,723 shares issued and 137,298 shares outstanding at February 1, 2020;

300,000 shares authorized, 143,428 shares issued and 137,192 shares outstanding at January 30, 2021;

300,000 shares authorized, 140,723 shares issued and 137,298 shares outstanding at February 1, 2020

Additional paid-in capital

805,849  

747,032  

Accumulated deficit

Treasury stock, at cost, 3,425 shares at February 1, 2020 and 782 shares at February 2, 2019

Total stockholders’ deficit

BJ’S WHOLESALE CLUB HOLDINGS, INC.

( 295,339 )  

Treasury stock, at cost, 6,236 shares at January 30, 2021 and 3,425 shares at February 1, 2020

( 192,617 )  

Total stockholders’

equity (deficit)

$ 319,327  

BJ’S WHOLESALE CLUB HOLDINGS, INC.

(PARENT COMPANY-ONLY)

CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Amounts in thousands, except per share amounts)

Fiscal Year Ended

February 1, 2020

Fiscal Year Ended

February 2, 2019

Fiscal Year Ended

January 30, 2021

February 1, 2020

February 2, 2019

Equity in net income of subsidiaries

Net income per share attributable to common stockholders’:

$ 421,030  

$ 187,176  

$ 127,261  

421,030  

187,176  

127,261  

Net income per share attributable to common stockholders’:

$ 3.09  

$ 1.37  

$ 1.09  

Weighted-average number of common shares outstanding:

A statement of cash flows has not been presented as BJ’s Wholesale Club Holdings, Inc.

did not have any cash as of, or for, the years ended February 1, 2020 , February 2, 2019 or February 3, 2018 .

See Note 5 for dividends paid to stockholders.

136,111  

136,174  

116,599  

138,876  

139,109  

121,135  

A statement of cash flows has not been presented as BJ’s Wholesale Club Holdings, Inc.

did not have any cash as of, or for, the years ended January 

30, 2021, February 

1, 2020 or February 

Basis of Presentation

These condensed parent company-only financial statements have been prepared in accordance with Rule 12-04, Schedule I of Regulation S-X, as the restricted net assets of the subsidiaries of BJ’s Wholesale Club Holdings, Inc.

These condensed parent company-only financial statements have been prepared in accordance with Rule 12 - 04, Schedule I of Regulation S- X, as the restricted net assets of the subsidiaries of BJ’s Wholesale Club Holdings, Inc.

(as defined in Rule 4 - 08 (e)( 3 ) of Regulation S- X ) exceed 25% of the consolidated net assets of the Company.

The ability of BJ’s Wholesale Club Holdings, Inc.’s operating subsidiaries to pay dividends may be restricted due to terms of the subsidiaries’ first lien term loan and ABL credit agreements, as defined in Note 6.

For example, the covenants of the ABL credit agreement restrict the payment of dividends to, among other exceptions, (i) a $25.0 million general basket, (ii) a basket for unlimited dividends and distributions if there is no event of default, availability under the ABL credit agreement is greater than 12.5% of the lesser of the commitments under the ABL credit agreement and the borrowing base under the ABL credit agreement for 6 months following such dividend or distribution and, if availability is less than 20% of the lesser of the commitments under the ABL credit agreement and the borrowing base under the ABL credit agreement, a 1.00 to 1.00 (or higher) fixed charge coverage ratio for 12 months after giving effect to such dividend or distribution, and (iii) a basket for up to 6.0% per annum of the net proceeds received by or contributed to the borrower’s common stock from certain of such public offerings.

The covenants of the first term loan facility restrict the payment of dividends and distributions to, among other exceptions, (i) a $25.0 million general basket, (ii) a basket for unlimited dividends and distributions if no event of default exists and the pro-forma total net leverage ratio is less than or equal to 4.25 to 1.00, (iii) a "growing" basket based on, among other things, retained excess cash flow subject to no event of default and compliance with a pro-forma interest coverage ratio of greater than or equal to 2.00 to 1.00, and (iv) a basket for 6% per annum of the net cash proceeds received from such qualified IPO that are contributed to the borrower in cash.

As of February 1, 2020, the amount of net income free of such restrictions and available for payment by BJ’s Wholesale Club Holdings, Inc.

as dividends was $187.2 million , and the total amount of restricted net assets of consolidated subsidiaries of BJ’s Wholesale Club Holdings, Inc.

was $126.8 million .

All subsidiaries of BJ’s Wholesale Club, Inc.

The ability of BJ’s Wholesale Club Holdings, Inc.’s operating subsidiaries to pay dividends may be restricted due to terms of the subsidiaries’

First Lien Term Loan and ABL Facility, as defined in Note 5.

For example, the covenants of the ABL Facility restrict the payment of dividends to, among other exceptions, (i) a $25.0  million general basket, (ii) a basket for unlimited dividends and distributions if there is no event of default, availability under the ABL Facility is greater than 12.5%  of the lesser of the commitments under the ABL Facility and the borrowing base under the ABL Facility for 6 months following such dividend or distribution and, if availability is less than 20%  of the lesser of the commitments under the ABL Facility and the borrowing base under the ABL Facility, a 1.00  to 1.00  (or higher) fixed charge coverage ratio for 12 months after giving effect to such dividend or distribution, and (iii) a basket for up to 6.0%  per annum of the net proceeds received by or contributed to the borrower’s common stock from certain of such public offerings.

The covenants of the First Lien Term Loan restrict the payment of dividends and distributions to, among other exceptions, (i) a $25.0  million general basket, (ii) a basket for unlimited dividends and distributions if no event of default exists and the pro-forma total net leverage ratio is less than or equal to 4.25  to 1.00 , (iii) a "growing" basket based on, among other things, retained excess cash flow subject to no event of default and compliance with a pro-forma interest coverage ratio of greater than or equal to 2.00  to 1.00 , and (iv) a basket for 6.0%  per annum of the net cash proceeds received from such qualified IPO that are contributed to the borrower in cash.

As of January 30, 2021, the amount of net income free of such restrictions and available for payment by BJ’s Wholesale Club Holdings, Inc.

as dividends was $ 421.0  million, and the total amount of restricted net assets of consolidated subsidiaries of BJ’s Wholesale Club Holdings, Inc.

was $ 122.3  million.

All subsidiaries of BJ’s Wholesale Club, Inc.

are consolidated.

3 unchanged sentences

(In thousands, except per share amounts)

Fiscal Year Ended February 1, 2020

First Quarter

Second Quarter

Third Quarter

Fourth Quarter

Fiscal Year Ended January 30, 2021

Total revenue

3 unchanged sentences

Total revenue

Net income (loss)

Basic earnings (loss) per share

Diluted earnings (loss) per share

Basic earnings per share

Diluted earnings per share

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

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 8. Financial Statements and Supplementary Data