What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2024-03-15 compared with 2023-03-13 · 428 added, 542 removed, 1043 unchanged (48% of the section changed)

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Report of Independent Registered Public Accounting Firm

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

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

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

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

Consolidated Statements of Stockholders’

Equity for the fiscal years ended January 28, 2023, January 29, 2022 and January 30, 2021

Notes to Consolidated Financial Statements for the fiscal years ended January 28, 2023, January 29, 2022 and January 30, 2021

Consolidated Statements of Income for the fiscal years ended February 3, 2024, January 28, 2023 and January 30, 2021

Consolidated Statements of Comprehensive Income for the fiscal years ended February 3, 2024, January 28, 2023 and January 30, 2021

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

Consolidated Statements of Cash Flows for the fiscal years ended February 3, 2024, January 28, 2023 and January 30, 2021

Consolidated Statements of Stockholders’ Equity for the fiscal years ended February 3, 2024, January 28, 2023 and January 30, 2021

Notes to Consolidated Financial Statements for the fiscal years ended February 3, 2024, January 28, 2023 and January 30, 2021

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the Board of Directors of Burlington Stores, Inc.

Opinion on the Consolidated Financial Statements

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Burlington Stores, Inc.

and subsidiaries (the "Company") as of January 28, 2023 and January 29, 2022, the related consolidated statements of income (loss), comprehensive income (loss), stockholders’

equity, and cash flows, for each of the three years in the period ended January 28, 2023, and the related notes and the schedules listed in the Index at Item 15 (collectively referred to as the "financial statements").

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

Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 10 , 2023, expressed an unqualified opinion on the Company's internal control over financial reporting.

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

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

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of February 3, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 15, 2024, expressed an unqualified opinion on the Company's internal control over financial reporting.

Change in Accounting Principle

As discussed in Note 7 to the financial statements, on January 31, 2021, the Company adopted Financial Accounting Standards Board Accounting Standards Update (ASU) 2020-06, “Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity.”

Basis for Opinion

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

Such procedures included examining, on a test basis, evidence

regarding the amounts and disclosures in the financial statements.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

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The communication of critical audit matters does not alter in any way our opinion on the 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.

Retail Inventory Method—Impact of Markdowns—Refer to Note 1 to the financial statements

Critical Audit Matter Description

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The retail inventory method is an averaging method that results in valuing inventory at the lower of cost or market provided markdowns are taken timely to reduce the retail value of inventory.

Merchandise inventories as of January 28, 2023, were $1,182 million.

The judgments involved in determining when to record markdowns can significantly impact the ending inventory valuation and the resulting gross profit.

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Our audit procedures related to the timing of markdowns taken included the following, among others:

We tested the design and operating effectiveness of controls over inventory valuation, specifically those over the determination and execution of markdowns.

• We tested the effectiveness of management’s controls over inventory valuation, specifically those over the determination and execution of markdowns.

• We made a selection of markdowns recorded throughout the year to test the accuracy and timeliness of markdowns taken.

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/s/ Deloitte & Touche LLP

New York, New York

Morristown, New Jersey

March 15, 2024

We have served as the Company’s auditor since 1983.

BURLING TON STORES, INC.

CONSOLIDATED STATEMENTS OF INCOME (LOSS)

CONSOLIDATED STATEMENTS OF INCOME

(All amounts in thousands, except per share data)

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Selling, general and administrative expenses

Costs related to debt issuances and amendments

Costs related to debt amendments

Depreciation and amortization

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Total costs and expenses

Income (loss) before income tax expense (benefit)

Income tax expense (benefit)

Net income (loss)

Net income (loss) per common share:

Income before income tax expense

Income tax expense

Net income per common share:

Common stock - basic

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BURLINGT ON STORES, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(All amounts in thousands)

Fiscal Year Ended

Net income (loss)

Other comprehensive income (loss), net of tax:

Other comprehensive income, net of tax:

Interest rate derivative contracts:

Net unrealized gain (loss) arising during the period

Net unrealized gain arising during the period

Net reclassification into earnings during the period

Other comprehensive income (loss), net of tax

Total comprehensive income (loss)

Other comprehensive income, net of tax

Total comprehensive income

See Notes to Consolidated Financial Statements.

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Restricted cash and cash equivalents

Accounts receivable—net of allowance for doubtful accounts of $ 1,252 and $ 3,305 , respectively

Accounts receivable—net of allowance for doubtful accounts of $ 2,313 and $ 1,252 , respectively

Merchandise inventories

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Total current assets

Property and equipment—net

Operating lease assets

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Commitments and contingencies (Note 16)

Stockholders’

Stockholders’ equity:

Preferred stock, $ 0.0001 par value:

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Accumulated earnings

Accumulated other comprehensive income (loss)

Accumulated other comprehensive income

Treasury stock, at cost

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OPERATING ACTIVITIES

Net income (loss)

Adjustments to reconcile net income (loss) to net cash provided by operating activities

Adjustments to reconcile net income to net cash provided by operating activities

Depreciation and amortization

Impairment charges —

long-lived assets

Impairment charges — long-lived assets

Amortization of deferred financing costs

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Lease acquisition costs

Proceeds from insurance recoveries related to property and equipment

Proceeds from sale of property and equipment and assets held for sale

Other investing activities

Net cash used in investing activities

FINANCING ACTIVITIES

Proceeds from long term debt—ABL Line of Credit

Principal payments on long term debt—ABL Line of Credit

Proceeds from long term debt—Term B-6 Loans

Principal payments on long term debt—Term B-6 Loans

Principal payments on long term debt—Term B-5 Loans

Proceeds from long term debt—Convertible Notes

Principal payment on long term debt—Convertible Notes

Proceeds from long term debt—Secured Notes

Principal payments on long term debt—Secured Notes

Proceeds from long term debt—Term B-6 Loans

Principal payments on long term debt—Term B-6 Loans

Principal payments on long term debt—Term B-5 Loans

Proceeds from long term debt— 2027 Convertible Notes

Principal payment on long term debt— 2025 Convertible Notes

Principal payments on long term debt—Secured Notes

Purchase of treasury shares

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Other financing activities

Net cash (used in) provided by financing activities

(Decrease) increase in cash, cash equivalents, restricted cash and restricted cash equivalents

Net cash used in financing activities

Increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents

Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period

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Interest paid

Income tax (refund) payments - net

Income tax payments (refund) - net

Non-cash investing and financing activities:

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BURLINGTON STORES, INC.

CONSOLIDATED STATEMENTS O F STOCKHOLDERS’

CONSOLIDATED STATEMENTS O F STOCKHOLDERS’ EQUITY

(All dollar amounts in thousands)

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Treasury Stock

Balance at February 1, 2020

Loss (Income)

Balance at January 30, 2021

Stock options exercised

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Stock based compensation

Equity component of convertible notes issuance, net of related taxes of $ 44.1 million

Unrealized losses on interest rate derivative contracts, net of related taxes of $ 4.1 million

Shares issued to redeem convertible notes

Unrealized gains on interest rate derivative contracts, net of related taxes of $ 3.0 million

Amount reclassified into earnings, net of related taxes of $ 4.0 million

Adoption of ASU 2020-06

Balance at January 29, 2022

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Stock based compensation

Shares issued to redeem convertible notes

Unrealized gains on interest rate derivative contracts, net of related taxes of $ 10.1 million

Amount reclassified into earnings, net of related taxes of $ 2.0 million

Adoption of ASU 2020-06

Balance at January 28, 2023

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Shares used for tax withholding

Shares purchased as part of publicly announced programs

Vesting of restricted shares, net of forfeitures of 199 restricted shares

Shares purchased as part of publicly announced programs, inclusive of $ 1.9 million related to excise tax

Vesting of restricted shares

Stock based compensation

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Amount reclassified into earnings, net of related taxes of $ 2.1 million

Balance at January 28, 2023

Balance at February 3, 2024

See Notes to Consolidated Financial Statements.

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Summary of Significant Accounting Policies

As of January 28, 2023, Burlington Stores, Inc., a Delaware corporation (collectively with its subsidiaries, the Company), has expanded its store base to 927 retail stores in 46 states and Puerto Rico.

The Company sells in-season, fashion-focused merchandise at up to 60 % off other retailers’

prices, including:

women’s ready-to-wear apparel, menswear, youth apparel, baby, beauty, footwear, accessories, home, toys, gifts and coats.

As of January 28, 2023 , the Company operated stores under the names “Burlington Stores”

( 925 stores), and “Cohoes Fashions”

As of February 3, 2024, Burlington Stores, Inc., a Delaware corporation (collectively with its subsidiaries, the Company), has expanded its store base to 1007 retail stores in 46 states, Washington D.C.

and Puerto Rico.

The Company sells in-season, fashion-focused merchandise at up to 60 % off other retailers’ prices, including:

women’s ready-to-wear apparel, menswear, youth apparel, baby, beauty, footwear, accessories, home, toys, gifts and coats.

As of February 3, 2024 , the Company operated stores under the names “Burlington Stores” ( 1,006 stores), and “Cohoes Fashions” ( 1 store).

Cohoes Fashions offers products similar to those offered by Burlington Stores.

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The Company defines its fiscal year as the 52 or 53-week period ending on the Saturday closest to January 31.

The fiscal years ended January 28, 2023 (Fiscal 2022), January 29, 2022 (Fiscal 2021 ) and January 30, 2021 (Fiscal 2020) each consisted of 52 weeks.

The fiscal year ended February 3, 2024 (Fiscal 2023) consisted of 53 weeks, and the fiscal years ended January 28, 2023 (Fiscal 2022 ) and January 29, 2022 (Fiscal 2021) each consisted of 52 weeks.

Use of Estimates

Certain amounts included in the Consolidated Financial Statements are estimated based on historical experience, currently available information and management’s judgment as to the expected outcome of future conditions and circumstances.

While every effort is made to ensure the integrity of such estimates, actual results could differ from these estimates, and such differences could have a material impact on the Company’s Consolidated Financial Statements.

Results for Fiscal 2020 were significantly impacted by the COVID-19 pandemic.

All the Company’s stores were temporarily closed for a portion of Fiscal 2020, resulting in a sales decline and higher inventory markdowns.

These store closures did not repeat in Fiscal 2021 or Fiscal 2022.

However, certain lingering economic effects of the pandemic did continue to impact results, including supply chain disruptions.

Cash and Cash Equivalents

Cash and cash equivalents represent cash and short-term, highly liquid investments with maturities of three months or less at the time of purchase.

Book cash overdrafts are included in the line item “Accounts payable”

on the Company’s Consolidated Balance Sheets.

Book cash overdrafts are included in the line item “Accounts payable” on the Company’s Consolidated Balance Sheets.

Accounts Receivable

Accounts receivable consist of credit card receivables, insurance receivables, interest receivables, and other receivables.

Accounts receivable consist of credit card receivables, interest receivables, and other receivables.

Accounts receivable are recorded at net realizable value, which approximates fair value.

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The Company regularly records a provision for estimated shortage, thereby reducing the carrying value of merchandise inventory.

Complete physical inventories of all of the Company’s stores and warehouses are performed no less frequently than annually, with the recorded amount of merchandise inventory being adjusted to coincide with these physical counts.

The Company records its cost of merchandise (net of purchase discounts and certain vendor allowances), certain merchandise acquisition costs (primarily commissions and import fees), inbound freight, outbound freight from distribution centers, and freight on internally transferred merchandise in the line item “Cost of sales”

in the Company’s Consolidated Statements of Income (Loss).

Costs associated with the Company’s distribution, buying, and store receiving functions (product sourcing costs) are included in the line items “Selling, general and administrative expenses”

and “Depreciation and amortization”

in the Company’s Consolidated Statements of Income (Loss).

Product sourcing costs included within the line item “Selling, general and administrative expenses”

amounted to $ 677.6 million, $ 618.3 million and $ 433.8 million during Fiscal 2022, Fiscal 2021 and Fiscal 2020, respectively.

Costs associated with the Company’s distribution, buying, and store receiving functions (product sourcing costs) are included in the line items “Selling, general and administrative expenses” and “Depreciation and amortization” in the Company’s Consolidated Statements of Income.

Product sourcing costs included within the line item “Selling, general and administrative expenses” amounted to $ 780.3 million, $ 677.6 million and $ 618.3 million during Fiscal 2023, Fiscal 2022 and Fiscal 2021 , respectively.

Depreciation and amortization related to the distribution and purchasing functions for the same periods amounted to $ 68.8 million, $ 56.3 million and $ 45.0 million, respectively.

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Assets recorded under capital leases are recorded at the present value of minimum lease payments and are amortized over the lease term.

Amortization of assets recorded as capital leases is included in the line item “Depreciation and amortization”

in the Company’s Consolidated Statements of Income (Loss).

Amortization of assets recorded as capital leases is included in the line item “Depreciation and amortization” in the Company’s Consolidated Statements of Income.

The carrying value of all long-lived assets is reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable, in accordance with ASC Topic No.

Property, Plant, and Equipment”

Refer to Note 6, “Impairment Charges,”

for further discussion of the Company’s measurement of impairment of long-lived assets.

360 “ Property, Plant, and Equipment” (Topic No.

Refer to Note 6, “Impairment Charges,” for further discussion of the Company’s measurement of impairment of long-lived assets.

Impairment of Long-Lived Assets

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If the undiscounted future cash flows are not adequate to recover the carrying value of the asset, an impairment charge is recognized for the amount by which the carrying amount of the assets exceeds the fair value of such assets.

Refer to Note 6, “Impairment Charges,”

for further discussion of the Company’s measurement of impairment of long-lived assets.

Refer to Note 6, “Impairment Charges,” for further discussion of the Company’s measurement of impairment of long-lived assets.

Capitalized Computer Software Costs

The Company accounts for capitalized software in accordance with ASC Topic No.

350 “Intangibles—Goodwill and Other”

350 “Intangibles—Goodwill and Other” (Topic No.

350) which requires the capitalization of certain costs incurred in connection with developing or obtaining software for internal use.

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The Company accounts for intangible assets in accordance with Topic No.

The Company’s intangible assets represent tradenames.

The tradename asset “Burlington”

is expected to generate cash flows indefinitely and, therefore, is accounted for as an indefinite-lived asset not subject to amortization.

The Company’s intangible assets represent tradenames.

The tradename asset “Burlington” is expected to generate cash flows indefinitely and, therefore, is accounted for as an indefinite-lived asset not subject to amortization.

The Company evaluates its intangible assets for possible impairment as follows:

Indefinite-lived intangible assets:

The Company tests identifiable intangible assets with an indefinite life for impairment on an annual basis, or when a triggering event occurs, relying on a number of factors that include operating results, business plans and projected future cash flows.

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The Company determines fair value through the relief of royalty method which is a widely accepted valuation technique.

On the first business day of the second quarter, the Company’s annual assessment date, the Company performed a quantitative analysis and determined that the fair values of each of the Company’s identifiable intangible assets are greater than their respective carrying values.

There were no impairment charges recorded during Fiscal 2023, Fiscal 2022 or Fiscal 2021 related to indefinite-lived intangible assets.

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These techniques use a variety of assumptions including projected market conditions, discount rates and future cash flows.

If the carrying value of the assets and liabilities exceeds the fair value of the reporting unit, the Company would calculate the implied fair value of its reporting unit goodwill as compared with the carrying value of its reporting unit goodwill to determine the appropriate impairment charge.

On the first business day of the second fiscal quarter, the Company’s annual assessment date, the Company performed a quantitative analysis and determined that the fair value of the Company’s reporting unit was greater than its carrying value.

If the carrying value of the assets and liabilities exceeds the fair

value of the reporting unit, the Company would calculate the implied fair value of its reporting unit goodwill as compared with the carrying value of its reporting unit goodwill to determine the appropriate impairment charge.

There were no impairment charges related to goodwill during Fiscal 2023, Fiscal 2022 or Fiscal 2021 .

Other assets consist primarily of landlord-owned store assets that the Company has paid for as part of its lease, deferred financing costs associated with the Company’s senior secured asset-based revolving credit facility (the ABL Line of Credit), and the fair value of derivative contracts.

Landlord-owned assets represent leasehold improvements at certain stores for which the Company has paid and derives a benefit, but the landlord has retained title.

These assets are amortized over the lease term inclusive of reasonably assured renewal options, and are included in the line item “Depreciation and amortization”

in the Company’s Consolidated Statements of Income (Loss).

These assets are amortized over the lease term inclusive of reasonably assured renewal options, and are included in the line item “Depreciation and amortization” in the Company’s Consolidated Statements of Income.

Deferred financing costs are amortized over the life of the ABL Line of Credit using the interest method of amortization.

Amortization of deferred financing costs is recorded in the line item “Interest expense”

in the Company’s Consolidated Statements of Income (Loss).

Amortization of deferred financing costs is recorded in the line item “Interest expense” in the Company’s Consolidated Statements of Income.

Other Current Liabilities

Other current liabilities primarily consist of accrued payroll costs, self-insurance reserves, customer liabilities, accrued operating expenses, sales tax payable, payroll taxes payable and other miscellaneous items.

Customer liabilities totaled $ 36.0 million and $ 35.5 million as of January 28, 2023 and January 29, 2022, respectively.

The Company has risk participation agreements with insurance carriers with respect to workers’

compensation, general liability insurance and health insurance.

Customer liabilities totaled $ 37.0 million and $ 36.0 million as of February 3, 2024 and January 28, 2023, respectively.

The Company has risk participation agreements with insurance carriers with respect to workers’ compensation, general liability insurance and health insurance.

Pursuant to these arrangements, the Company is responsible for paying individual claims up to designated dollar limits.

The amounts related to these claims are estimated and can vary based on changes in assumptions or claims experience included in the associated insurance programs.

An increase in workers’

compensation claims, health insurance claims or general liability claims may result in a corresponding increase in costs related to these claims.

Self-insurance reserves as of January 28, 2023 and January 29, 2022 were:

An increase in workers’ compensation claims, health insurance claims or general liability claims may result in a corresponding increase in costs related to these claims.

Self-insurance reserves as of February 3, 2024 and January 28, 2023 were:

(in thousands)

Short-term self-insurance reserve(a)

Long-term self-insurance reserve(b)

(a) Represents the portions of the self-insurance reserve expected to be paid in the next twelve months, which were recorded in the line item “Other current liabilities”

in the Company’s Consolidated Balance Sheets.

(b) Represents the portions of the self-insurance reserve expected to be paid in excess of twelve months, which was recorded in the line item “Other liabilities”

in the Company’s Consolidated Balance Sheets.

Short-term self-insurance reserve

Long-term self-insurance reserve

Other Liabilities

Other liabilities primarily consist of the long term portion of self-insurance reserves, the fair value of derivative contracts and tax liabilities associated with the uncertain tax positions recognized by the Company in accordance with ASC Topic No.

740 “Income Taxes”

Other liabilities primarily consist of the long term portion of self-insurance reserves and tax liabilities associated with the uncertain tax positions recognized by the Company in accordance with ASC Topic No.

740 “Income Taxes” (Topic No.

Revenue Recognition

The Company records revenue at the time control of the goods are transferred to the customer, which the Company determines to be at point of sale and delivery of merchandise, net of allowances for estimated future returns, which is estimated based on historical return rates.

The Company presents sales, net of sales taxes, in its Consolidated Statements of Income (Loss).

The Company presents sales, net of sales taxes, in its Consolidated Statements of Income.

The Company accounts for layaway sales in compliance with ASC Topic No.

606 “Revenue from Contracts with Customers”

606 “Revenue from Contracts with Customers” (Topic No.

Layaway sales are recognized upon delivery of merchandise to the customer.

The amount of cash received upon initiation of the layaway is recorded as a deposit liability in the line item “Other current liabilities”

in the Company’s Consolidated Balance Sheets.

The amount of cash received upon initiation of the layaway is recorded as a deposit liability in the line item “Other current liabilities” in the Company’s Consolidated Balance Sheets.

Stored value cards (gift cards and store credits issued for merchandise returns) are recorded as a liability at the time of issuance, and the related sale is recorded upon redemption.

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Breakage income is recognized monthly in proportion to the historical redemption patterns for those stored value cards for which the likelihood of redemption is remote.

The Company has a private label credit card program, in which customers earn reward points for purchases made using the card.

The Company reduces net sales for the dollar value of any points earned at the time of the initial transaction, and subsequently recognizes net sales at the time the points are redeemed or expired.

The Company receives royalty revenue based on a percentage of all purchases made on the card, which is recognized within net sales at the time of the initial transaction.

Other Revenue

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Subleased rental income and other

The Company has a private label credit card program, in which customers earn reward points for purchases made using the card.

The Company reduces net sales for the dollar value of any points earned at the time of the initial transaction, and subsequently recognizes net sales at the time the points are redeemed or expired.

The Company receives royalty revenue based on a percentage of all purchases made on the card, which is recognized within net sales at the time of the initial transaction.

The Company also receives a fee for each card activated.

Revenue from activation fees are deferred and amortized over the period the Company performs its obligations under the card to the customer.

Advertising Costs

The Company’s advertising costs consist primarily of video, audio and digital marketing.

Advertising costs are expensed the first time the advertising takes place, and are included in the line item “Selling, general and administrative expenses”

on the Company’s Consolidated Statements of Income (Loss).

The Company’s advertising costs consist primarily of video, audio and digital marketing.

Advertising costs are expensed the first time the advertising takes place, and are included in the line item “Selling, general and administrative expenses” on the Company’s Consolidated Statements of Income.

During Fiscal 2023, Fiscal 2022 and Fiscal 2021, advertising costs were $ 36.5 million, $ 33.8 million and $ 48.5 million, respectively.

The Company accounts for income taxes in accordance with Topic No.

The Company accounts for income taxes in accordance with ASC Topic No.

740, “Income Taxes ” (Topic No.

Deferred income taxes reflect the impact of temporary differences between amounts of assets and liabilities for financial reporting purposes and such amounts as measured by tax laws.

A valuation allowance against the Company’s deferred tax assets is recorded when it is more likely than not that some portion or all of the deferred tax assets will not be realized.

In determining the need for a valuation allowance, management is required to make assumptions and to apply judgment, including forecasting future earnings, taxable income, and the mix of earnings in the jurisdictions in which the Company operates.

Management periodically assesses the need for a valuation allowance based on the Company’s current and anticipated results of operations.

The need for and the amount of a valuation allowance can change in the near term if operating results and projections change significantly.

to be sustained upon examination by the relevant taxing authority, based on the technical merits of the position.

The tax benefits recognized in the Company’s Consolidated Financial Statements from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being

realized upon ultimate resolution.

740 requires the recognition in the Company’s Consolidated Financial Statements of the impact of a tax position taken or expected to be taken in a tax return, if that position is “more likely than not” to be sustained upon examination by the relevant taxing authority, based on the technical merits of the position.

The Company records interest and penalties related to unrecognized tax benefits as part of income taxes.

Other Income, Net

Other income, net, consists of gains and losses on insurance proceeds, interest income , net gains and losses on disposition of assets, gift card breakage, and other miscellaneous items .

The Company recognized $ 3.0 million, $ 1.5 million and $ 3.2 million of gain on insurance recoveries during Fiscal 2022, Fiscal 2021 and Fiscal 2020 , respectively.

The Company also recognized $ 3.7 million during Fiscal 2021 related to the sale of certain state tax credits.

There were no sales of tax credits during Fiscal 2022 or Fiscal 2020.

Comprehensive Income (Loss)

Comprehensive income (loss) is comprised of net income (loss) and the effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges, less amounts reclassified into earnings.

Other income, net, consists of interest income , gains and losses on insurance proceeds, net gains and losses on disposition of assets, gift card breakage, and other miscellaneous items .

The Company recognized $ 3.0 million and $ 1.5 million of gain on insurance recoveries during Fiscal 2022 and Fiscal 2021 , respectively, and no ne during Fiscal 2023 .

The Company also recognized $ 5.0 million and $ 3.7 million during Fiscal 2023 and Fiscal 2021, respectively, related to the sale of certain state tax credits.

There were no sales of tax credits during Fiscal 2022.

Comprehensive Income

Comprehensive income is comprised of net income and the effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges, less amounts reclassified into earnings.

Lease Accounting

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The Company accounts for these types of leases in accordance with ASC Topic No.

842, “Leases”

842, “Leases” (Topic No.

842), which requires that leases be evaluated and classified as operating or finance leases for financial reporting purposes.

The lease liability is calculated as the present value of the remaining future lease payments over the lease term, including reasonably assured renewal options.

The discount rates used in valuing the Company’s leases are not readily determinable, and are based on the Company’s incremental borrowing rate on a fully collateralized basis.

In calculating its incremental borrowing rate, the Company uses a retail industry yield curve, adjusted for the Company’s credit profile.

The discount rates used in valuing the Company’s leases are not readily determinable, and are based on the Company’s incremental borrowing rate on a fully

collateralized basis.

In calculating its incremental borrowing rate, the Company uses a retail industry yield curve, adjusted for the Company’s credit profile.

The right-of-use asset for operating leases is based on the lease liability plus initial direct costs and prepaid lease payments, less landlord incentives received.

The Company’s operating lease cost, included in the line item “Selling, general and administrative expenses”

on its Consolidated Statements of Income (Loss), includes amortization of right-of-use assets, interest on lease liabilities, as well as any variable and short-term lease cost.

The Company’s operating lease cost, included in the line item “Selling, general and administrative expenses” on its Consolidated Statements of Income, includes amortization of right-of-use assets, interest on lease liabilities, as well as any variable and short-term lease cost.

The Company commences recording operating lease cost when the underlying asset is made available for use.

Assets held under finance leases are included in the line item “Property and equipment—net of accumulated depreciation and amortization”

in the Company’s Consolidated Balance Sheets.

Assets held under finance leases are included in the line item “Property and equipment—net of accumulated depreciation and amortization” in the Company’s Consolidated Balance Sheets.

Stock-Based Compensation

The Company accounts for stock-based compensation in accordance with ASC Topic No.

718, “Stock Compensation”

718, “Stock Compensation” (Topic No.

718), which requires companies to record stock compensation expense for all non-vested and new awards beginning as of the grant date and through the end of the vesting period.

Refer to Note 11, “Stock-Based Compensation,”

for further details.

Net Income (Loss) Per Share

Net income (loss) per share is calculated using the treasury stock method.

Refer to Note 10, “Net Income (Loss) Per Share,”

for further details.

Refer to Note 11, “Stock-Based Compensation,” for further details.

Net Income Per Share

Net income per share is calculated using the treasury stock method.

Refer to Note 10, “Net Income Per Share,” for further details.

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash, cash equivalents and investments.

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The Company reports segment information in accordance with ASC Topic No.

280 “Segment Reporting.”

The Company has one reportable segment.

280 “Segment Reporting.” The Company has one reportable segment.

The Company is an off-price retailer that offers customers a complete line of value-priced apparel, including:

women’s ready-to-wear apparel, menswear, youth apparel, baby, beauty, footwear, accessories, home, toys, gifts and coats.

Sales percentage by major product category is as follows:

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Recent Accounting Pronouncements

There were no new accounting standards that had a material impact on the Company’s Consolidated Financial Statements during Fiscal 2022, and there were no new accounting standards or pronouncements that were issued but not yet effective as of January 28, 2023 that the Company expects to have a material impact on its financial position or results of operations upon becoming effective.

There were no new accounting standards that had a material impact on the Company’s Consolidated Financial Statements during Fiscal 2023.

Accounting Pronouncements Not Yet Adopted

In December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-09 "Income Taxes (Topic 740):

Improvements to Income Tax Disclosures" (ASU 2023-09) to expand the disclosure requirements for income taxes, specifically related to the rate reconciliation and income taxes paid.

ASU 2023-09 is effective for annual reporting periods beginning after December 15, 2024, with early adoption permitted and can be applied on either a prospective or retroactive basis.

The Company is currently determining the impact that ASU 2023-09 will have on its consolidated financial statement disclosures.

Restricted Cash and Cash Equivalents

At both January 28, 2023 and January 29, 2022, restricted cash and cash equivalents consisted of $ 6.6 million related to collateral for certain insurance contracts.

The Company has the ability to convert the restricted cash to a letter of credit at any time, which would reduce available borrowings on the ABL Line of Credit by a like amount.

At February 3, 2024 the Company had no restricted cash and cash equivalents.

At January 28, 2023 , restricted cash and cash equivalents consisted of $ 6.6 million related to collateral for certain insurance contracts.

Property and Equipment

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depreciation and amortization

As of January 28, 2023 and January 29, 2022 , assets, net of accumulated amortization of $ 13.6 million and $ 13.3 million, respectively, held under finance leases amounted to approximately $ 25.3 million and $ 34.2 million, respectively, and are included in the line item “Buildings”

in the foregoing table.

Amortization expense related to finance leases is included in the line item “Depreciation and amortization”

in the Company’s Consolidated Statements of Income (Loss).

As of February 3, 2024 and January 28, 2023 , assets, net of accumulated amortization of $ 17.1 million and $ 13.6 million, respectively, held under finance leases amounted to approximately $ 21.8 million and $ 25.3 million, respectively, and are included in the line item “Buildings” in the foregoing table.

Amortization expense related to finance leases is included in the line item “Depreciation and amortization” in the Company’s Consolidated Statements of Income.

The total amount of depreciation expense during Fiscal 2023, Fiscal 2022 and Fiscal 2021 was $ 273.5 million, $ 237.8 million and $ 218.1 million, respectively.

Internally developed software is amortized on a straight line basis over three to ten years and is recorded in the line item “Depreciation and amortization”

in the Company’s Consolidated Statements of Income (Loss).

Internally developed software is amortized on a straight line basis over three to ten years and is recorded in the line item “Depreciation and amortization” in the Company’s Consolidated Statements of Income.

Amortization of internally developed software amounted to $ 23.0 million, $ 21.2 million and $ 18.9 million during Fiscal 2023, Fiscal 2022 and Fiscal 2021, respectively.

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These assets are amortized over the lease term inclusive of reasonably assured renewal options.

Amortization of landlord-owned assets was $ 11.4 million, $ 12.2 million and $ 14.0 million, during Fiscal 2022, Fiscal 2021 and Fiscal 2020, respectively, and was included in the line item “Depreciation and amortization”

in the Company’s Consolidated Statements of Income (Loss).

Amortization of landlord-owned assets was $ 10.6 million, $ 11.4 million and $ 12.2 million, during Fiscal 2023, Fiscal 2022 and Fiscal 2021, respectively, and was included in the line item “Depreciation and amortization” in the Company’s Consolidated Statements of Income.

During Fiscal 2023, Fiscal 2022 and Fiscal 2021 , the Company recorded impairment charges related to property and equipment of $ 3.7 million, $ 20.1 million and $ 7.5 million, respectively.

These charges are recorded in the line item “Impairment charges—long-lived assets”

in the Company’s Consolidated Statements of Income (Loss).

Refer to Note 6, “Impairment Charges,”

for further discussion.

These charges are recorded in the line item “Impairment charges—long-lived assets” in the Company’s Consolidated Statements of Income.

Refer to Note 6, “Impairment Charges,” for further discussion.

Intangible Assets

Intangible assets at January 28, 2023 and January 29, 2022 consist primarily of tradenames.

Intangible assets at February 3, 2024 and January 28, 2023 consist primarily of tradenames.

(in thousands)

January 28, 2023

February 3, 2024

January 28, 2023

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Impairment charges recorded during Fiscal 2023, Fiscal 2022 and Fiscal 2021 amounted to $ 6.4 million, $ 21.4 million and $ 7.7 million, respectively.

Impairment charges are primarily related to sales of owned properties in Fiscal 2022, as well as declines in revenues and operating results of certain stores in Fiscal 2022, Fiscal 2021, and Fiscal 2020.

Impairment charges are primarily related to declines in revenues and operating results of certain stores in Fiscal

2023, Fiscal 2022, and Fiscal 2021, as well as sales of owned properties in Fiscal 2022.

Impairment charges during these periods related to the following:

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Operating lease assets

The Company recorded impairment charges related to store-level assets for 16 stores during Fiscal 2022, nine stores during Fiscal 2021 , and 14 stores during Fiscal 2020.

The Company recorded impairment charges related to store-level assets for 11 stores during Fiscal 2023 , 16 stores during Fiscal 2022 , and nine stores during Fiscal 2021.

Long-lived assets are measured at fair value on a non-recurring basis for purposes of calculating impairment using the fair value hierarchy of ASC Topic No.

820 “Fair Value Measurements”

Refer to Note 15, “Fair Value of Financial Instruments,”

for further discussion of the Company’s fair value hierarchy.

The fair value of the Company’s long-lived assets is calculated us ing a discounted cash-flow model that used level 3 inputs.

In calculating future cash flows, the Company makes estimates regarding future operating results and market rent rates, based on its experience and knowledge of market factors in which the retail

location is located.

820 “Fair Value Measurements” (Topic No.

Refer to Note 15, “Fair Value of Financial Instruments,” for further discussion of the Company’s fair value hierarchy.

The fair value of the Company’s long-lived assets is calculated us ing a discounted cash-flow model that used level 3 inputs.

In calculating future cash flows, the Company makes estimates regarding future operating results and market rent rates, based on its experience and knowledge of market factors in which the retail location is located.

The assets impaired had a remaining carrying value after impairments of $ 73.0 million, $ 99.0 million, and $ 63.4 million during Fiscal 2023, Fiscal 2022, and Fiscal 2021, respectively, primarily related to the right-of-use assets.

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(in thousands)

Senior secured term loan facility (Term B-6 Loans), LIBOR (with a floor of 0.00 %) plus 2.00 %, matures on June 24, 2028

Convertible senior notes, 2.25 %, matures on April 15, 2025

Senior secured term loan facility (Term B-6 Loans), adjusted SOFR (with a floor of 0.00 %) plus 2.00 %, matures on June 24, 2028

Convertible senior notes, 2.25 %, mature on April 15, 2025

Convertible senior notes, 1.25 %, mature on December 15, 2027

ABL senior secured revolving facility, SOFR plus spread based on average outstanding balance, matures on December 22, 2026

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This amendment also requires quarterly principal payments of $ 2.4 million.

In connection with the execution of the Ninth Amendment, the Company incurred fees of $ 3.3 million, primarily related to legal and placement fees, which were recorded in the line item “Costs related to debt issuances and amendments”

in the Company’s Consolidated Statement of Income (Loss).

Additionally, the Company recognized a loss on the extinguishment of debt of $ 1.2 million, representing the write-off of unamortized deferred financing costs and original issue discount, which was recorded in the line item “Loss on extinguishment of debt”

in the Company’s Consolidated Statement of Income (Loss).

The Term Loan Facility is collateralized by a first lien on the Company's favorable leases, real estate and property & equipment and a second lien on the Company's inventory and receivables.

On May 11, 2023, the Company amended the Term Loan Credit Agreement to, effective as of June 30, 2023, change one of the reference interest rates for borrowings under the Term Loan Facility from the Term Loan Adjusted LIBOR Rate to the Adjusted Term SOFR Rate (as defined in the Term Loan Credit Agreement).

The Adjusted Term SOFR Rate includes a credit spread adjustment of 0.11 % for an interest period of one-month’s duration, 0.26 % for an interest period of three-months’ duration and 0.43 % for an interest period of six-months’ duration, with a floor of 0.00 %.

In connection with the execution of this amendment, the Company incurred fees of $ 0.1 million, primarily related to legal fees, which were recorded in the line item “Costs related to debt amendments” in the Company’s Consolidated Statement of Income.

Interest rates for the Term Loan Facility are based on:

(i) for LIBOR rate loans for any interest period, at a rate per annum equal to the greater of (x) the LIBOR rate, as determined by the Term Loan Facility Administrative Agent, for such interest period multiplied by the Statutory Reserve Rate (as defined in the Term Loan Credit Agreement), and (y) 0.00 % (the Term Loan Adjusted LIBOR Rate), plus an applicable margin;

(i) for SOFR rate loans, a rate per annum equal to the Adjusted Term SOFR Rate for the applicable interest period, plus an applicable margin;

and (ii) for prime rate loans, a rate per annum equal to the highest of (a) the variable annual rate of interest then announced by JPMorgan Chase Bank, N.A.

at its head office as its “prime rate,”

(b) the federal reserve bank of New York rate in effect on such date plus 0.50 % per annum, and (c) the Term Loan Adjusted LIBOR Rate for the applicable class of term loans for one-month plus 1.00 %, plus, in each case, an applicable margin.

As of January 28, 2023 , the Company’s borrowing rate related to the Term Loan Facility was 6.4 %.

at its head office as its “prime rate,” (b) the federal reserve bank of New York rate in effect on such date plus 0.50 % per annum, and (c) the Adjusted Term SOFR Rate for the applicable class of term loans for one-month plus 1.00 %, plus, in each case, an applicable margin.

As of February 3, 2024 and January 28, 2023, the Company’s borrowing rate related to the Term Loan Facility was 7.4 % and 6.4 %, respectively.

2025 Convertible Notes

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The 2025 Convertible Notes are general unsecured obligations of the Company.

The Convertible Notes bear interest at a rate of 2.25 % per year, payable semi-annually in cash, in arrears, on April 15 and October 15 of each year, beginning on October 15, 2020 .

The 2025 Convertible Notes bear interest at a rate of 2.25 % per year, payable semi-annually in cash, in arrears, on April 15 and October 15 of each year.

The 2025 Convertible Notes will mature on April 15, 2025 , unless earlier converted, redeemed or repurchased.

On August 5, 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2020-06, “Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity”

(ASU 2020-06), which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments.

On August 5, 2020, the FASB issued ASU 2020-06, “Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity” (ASU 2020-06), which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments.

The Company elected to early adopt this ASU as of the beginning of Fiscal 2021, using the modified retrospective method of transition.

As a result of adopting the guidance, the Company is no longer separating the Convertible Notes into debt and equity components, and is instead accounting for it wholly as debt.

Prior periods have not been

Prior periods have not been restated.

During the second half of Fiscal 2021, the Company entered into separate, privately negotiated exchange agreements with certain holders of the 2025 Convertible Notes.

Under the terms of the exchange agreements, the holders exchanged $ 232.7 million in aggregate principal amount of 2025 Convertible Notes held by them for a combination of an aggregate of $ 199.8 million in cash and 513,991 shares of the Company's common stock.

These exchanges resulted in aggregate pre-tax debt extinguishment charges of $ 124.6 million.

During the first quarter of Fiscal 2022, the Company entered into separate, privately negotiated exchange agreements with certain holders of the 2025 Convertible Notes.

Under the terms of the exchange agreements, the holders exchanged $ 64.6 million in aggregate principal amount of 2025 Convertible Notes held by them for $ 78.2 million in cash.

These exchanges resulted in aggregate pre-tax debt extinguishment charges of $ 14.7 million and $12 4.6 million during Fiscal 2022 and Fiscal 2021, respectively.

Subsequent to January 28, 2023 (March 7, 2023), the Company entered into separate, privately negotiated exchange agreements with certain holders of its Convertible Notes.

Under the terms of the exchange agreements, the holders have agreed to exchange $ 110.3 million in aggregate principal amount of Convertible Notes held by them for $ 133.3 million in cash.

These exchanges resulted in aggregate pre-tax debt extinguishment charges of $ 14.7 million.

During the first quarter of Fiscal 2023, the Company entered into separate, privately negotiated exchange agreements with certain holders of the 2025 Convertible Notes.

Under the terms of the exchange agreements, the holders exchanged $ 110.3 million in aggregate principal amount of 2025 Convertible Notes held by them for $ 133.3 million in cash.

These exchanges resulted in aggregate pre-tax debt extinguishment charges of $ 24.6 million.

Prior to the close of business on the business day immediately preceding January 15, 2025, the 2025 Convertible Notes will be convertible at the option of the holders only upon the occurrence of certain events and during certain periods.

Thereafter, the 2025 Convertible Notes will be convertible at the option of the holders at any time until the close of business on the second scheduled trading day immediately preceding the maturity date.

The Convertible Notes have an initial conversion rate of 4.5418 shares per $ 1,000 principal amount of Convertible Notes (equivalent to an initial conversion price of approximately $ 220.18 per share of the Company’s common stock), subject to adjustment if certain events occur.

The initial conversion price represents a conversion premium of approximately 32.50 % over $ 166.17 per share, the last reported sale price of the Company’s common stock on April 13, 2020 (the pricing date of the offering) on the New York Stock Exchange.

The 2025 Convertible Notes have an initial conversion rate of 4.5418 shares per $ 1,000 principal amount of 2025 Convertible Notes (equivalent to an initial conversion price of approximately $ 220.18 per share of the Company’s common stock), subject to adjustment if certain events occur.

During the first quarter of Fiscal 2021, the Company made an irrevocable settlement election for any conversions of the 2025 Convertible Notes.

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For any excess above principal, the Company will deliver shares of its common stock.

The Company may not redeem the Convertible Notes prior to April 15, 2023.

On or after April 15, 2023, the Company will be able to redeem for cash all or any portion of the Convertible Notes, at its option, if the last reported sale price of the Company’s common stock is equal to or greater than 130 % of the conversion price for a specified period of time, at a redemption price equal to 100 % of the principal aggregate amount of the Convertible Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.

The Company was not permitted to redeem the 2025 Convertible Notes prior to April 15, 2023.

From and after April 15, 2023, the Company is able to redeem for cash all or any portion of the 2025 Convertible Notes, at its option, if the last reported sale price of the Company’s common stock is equal to or greater than 130 % of the conversion price for a specified period of time, at a redemption price equal to

100 % of the principal aggregate amount of the 2025 Convertible Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.

Holders of the 2025 Convertible Notes may require the Company to repurchase their 2025 Convertible Notes upon the occurrence of certain events that constitute a fundamental change under the indenture governing the 2025 Convertible Notes at a purchase price equal to 100 % of the principal amount thereof, plus accrued and unpaid interest to, but excluding, the date of repurchase.

1 unchanged sentence

The effective interest rate is 2.8 %.

The Convertible Notes consist of the following components as of the dates indicated:

(in thousands)

Unamortized deferred debt costs

Net carrying amount

Interest expense related to the Convertible Notes consists of the following as of the periods indicated:

(in thousands)

Fiscal Year Ended

January 28, 2023

January 29, 2022

January 30, 2021

Coupon interest

Amortization of debt discount

Amortization of deferred debt costs

Convertible Notes interest expense

2027 Convertible Notes

On September 12, 2023, the Company closed the issuance of approximately $ 297.1 million aggregate principal amount of its 1.25 % Convertible Senior Notes due 2027 (2027 Convertible Notes) pursuant to separate, privately negotiated exchange and subscription agreements with a limited number of holders of its 2025 Convertible Notes and certain investors, in each case pursuant to exemptions from registration under the Securities Act of 1933.

The Company exchanged approximately $ 241.2 million in aggregate principal amount of the 2025 Convertible Notes for approximately $ 255.0 million in aggregate principal amount of the 2027 Convertible Notes.

This exchange resulted in aggregate pre-tax debt extinguishment charges of $ 13.6 million.

The Company also issued approximately $ 42.1 million in aggregate principal amount of 2027 Convertible Notes in a private placement to certain investors.

An aggregate of up to 1,422,568 shares of common stock may be issued upon conversion of the 2027 Convertible Notes, which number is subject to adjustment up to an aggregate of 1,911,372 shares following certain corporate events that occur prior to the maturity date or if the Company issues a notice of redemption, and which is also subject to certain anti-dilution adjustments.

The 2027 Convertible Notes bear interest at a rate of 1.25 % per year, payable semi-annually in arrears on June 15 and December 15 of each year, beginning on December 15, 2023.

The 2027 Convertible Notes will mature on December 15, 2027, unless earlier converted, redeemed or repurchased.

Prior to the close of business on the business day immediately preceding September 15, 2027, the 2027 Convertible Notes will be convertible at the option of the holders only upon the occurrence of certain events and during certain periods.

Thereafter, the 2027 Convertible Notes will be convertible at the option of the holders at any time until the close of business on the second scheduled trading day immediately preceding the maturity date.

The 2027 Convertible Notes have an initial conversion rate of 4.8560 shares per $ 1,000 principal amount of 2027 Convertible Notes (equivalent to an initial conversion price of approximately $ 205.93 per share of the Company’s common stock), subject to adjustment if certain events occur.

The initial conversion price represents a conversion premium of approximately 32.50 % over $ 155.42 per share, the last reported sale price of the Company’s common stock on September 7, 2023 on The New York Stock Exchange.

Upon conversion, the Company will pay cash up to the aggregate principal amount of 2027 Convertible Notes being converted, and pay (and deliver, if applicable) cash, shares of the Company’s common stock or a combination thereof, at its election, in respect of the remainder (if any) of the Company’s conversion obligation in excess of such aggregate principal amount.

The Company will not be able to redeem the 2027 Convertible Notes prior to December 20, 2025.

On or after December 20, 2025 and prior to the 21st scheduled trading day immediately preceding December 15, 2027, the Company will be able to redeem for cash all or any portion of the 2027 Convertible Notes, at its option, if the last reported sale price of the Company’s common stock is equal to or greater than 130 % of the conversion price for a specified period of time, at a redemption price equal to 100 % of the aggregate principal amount of the 2027 Convertible Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.

If the Company undergoes a fundamental change, subject to certain conditions, holders of the 2027 Convertible Notes may require the Company to repurchase for cash all or any portion of their 2027 New Convertible Notes.

The fundamental change repurchase price will be 100 % of the aggregate principal amount of the 2027 Convertible Notes to be repurchased plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date.

The effective interest rate is 1.7 %.

Secured Notes

2 unchanged sentences

The Secured Notes were guaranteed on a senior secured basis by Burlington Coat Factory Holdings, LLC, Burlington Coat Factory Investments Holdings, Inc.

and BCFWC’s subsidiaries that guarantee the loans under the Term Loan Facility.

On June 11, 2021, BCFWC redeemed the full $ 300.0 million aggregate principal amount of the Secured Notes.

4 unchanged sentences

The interest rate margin applicable under the Amended ABL Credit Agreement in the case of loans drawn at the Secured Overnight Financing Rate (SOFR) is 1.125 % to 1.375 % in the case of a daily SOFR rate or a term SOFR rate (in each case, plus a credit spread adjustment of 0.10 %), and 0.125 % to 0.375 % in the case of a prime rate, depending on the average daily availability of the lesser of (a) the total commitments or (b) the borrowing base.

The ABL Line of Credit is collateralized by a first priority lien on the Company’s and each guarantor's inventory, receivables, bank accounts, and certain related assets and proceeds thereof (subject to certain exceptions), and a second priority lien on the Company's and each guarantor's other assets and proceeds thereof (other than real estate and subject to certain exceptions).

The Company believes that the Amended ABL Credit Agreement provides the liquidity and flexibility to meet its operating and capital requirements over the remaining term of the ABL Line of Credit.

Further, the calculation of the borrowing base under the Amended ABL Credit Agreement allows for increased availability with respect to inventory during the period from (i) August 1st through November 30th of each year or (ii) after 2023, a 120 day period selected by the Company commencing after February 15 of the applicable year and ending on or before December 15 of such year.

On March 17, 2020, the Company borrowed $ 400.0 million under the ABL Line of Credit as a precautionary measure in order to increase the Company’s cash position and facilitate financial flexibility in light of the uncertainty resulting from COVID-19.

The Company repaid $ 150.0 million of this amount during the second quarter of Fiscal 2020, and the remaining $ 250.0 million during the fourth quarter of Fiscal 2020.

On December 22, 2021, the Company finalized an extension of its current ABL line of credit.

This extension increased the aggregate principal amount of the commitments from $ 600 million to $ 650 million, extended the maturity date to December 22, 2026 , and reduced the interest rate margins applicable to the Company’s ABL facility.

On July 20, 2022, BCFWC entered into a Fourth Amendment to Second Amended and Restated Credit Agreement (the “Amendment”).

The Amendment increased the aggregate principal amount of the commitments of its ABL Line of Credit from $ 650.0 million to $ 900.0 million and replaced the LIBOR-based interest rate benchmark provisions with interest rate benchmark provisions based on a term secured overnight financing rate (SOFR) or a daily SOFR rate (in the case of daily SOFR, available for borrowings up to $ 100 million, or up to the full amount of the commitments if the term SOFR rate is not available ).

On July 20, 2022, BCFWC entered into a Fourth Amendment to the Second Amended and Restated Credit Agreement (the Amendment).

The Amendment increased the aggregate principal amount of the commitments of its current asset-based lending facility (the ABL Line of Credit) from $ 650.0 million to $ 900.0 million and replaced the LIBOR-based interest rate benchmark provisions with interest rate benchmark provisions based on a term secured overnight financing rate (SOFR) or a daily SOFR rate (in the case of daily SOFR, available for borrowings up to $ 100 million, or up to the full amount of the commitments if the term SOFR rate is not available).

The applicable SOFR rate includes a credit spread adjustment of 0.10 %.

On June 26, 2023, BCFWC entered into a Fifth Amendment to the Second Amended and Restated Credit Agreement, which increased the sublimit for letters of credit thereunder from $ 150 million to $ 250 million.

The letter of credit sublimit will automatically be reduced to (i) $ 237.5 million on April 1, 2024, (ii) $ 225 million on July 1, 2024, (iii) $ 212.5 million on October 1, 2024, and (iv) $ 200 million on January 1, 2025.

BCFWC and the agent may extend the foregoing dates under clauses (i) through (iii), as long as the sublimit is reduced to $ 200 million no later than January 1, 2025.

At January 28, 2023 , the Company had $ 795.7 million available under the ABL Line of Credit.

The Company did not have any borrowings during Fiscal 2022.

At January 28, 2023 , the Company had $ 795.7 million available under the ABL Line of Credit.

At February 3, 2024 , the Company had $ 708.8 million available under the ABL Line of Credit.

The Company did no t have any borrowings during Fiscal 2023.

Deferred Financing Costs

The Company had $ 2.8 million in deferred financing costs associated with its ABL Line of Credit as of both January 28, 2023 and January 29, 2022 , which are recorded in the line item “Other assets”

in the Company’s Consolidated Balance Sheets.

In addition, the Company had $ 7.4 million and $ 11.5 million of deferred financing costs associated with its Term Loan Facility and Convertible

Notes, recorded in the line item “Long term debt”

in the Company’s Consolidated Balance Sheets as of January 28, 2023 and January 29, 2022, respectively.

Amortization of deferred financing costs amounted to $ 3.6 million, $ 5.3 million and $ 4.5 million during Fiscal 2022, Fiscal 2021 and Fiscal 2020, respectively, which was included in the line item “Interest expense”

in the Company’s Consolidated Statements of Income (Loss).

Amortization expense related to the deferred financing costs as of January 28, 2023 for each of the next five fiscal years and thereafter is estimated to be as follows:

The Company had $ 2.1 million and $ 2.8 million in deferred financing costs associated with its ABL Line of Credit as of February 3, 2024 and January 28, 2023 , respectively, which are recorded in the line item “Other assets” in the Company’s Consolidated Balance Sheets.

In addition, the Company had $ 7.0 million and $ 7.4 million of deferred financing costs associated with its Term Loan Facility and Convertible Notes, recorded in the line item “Long term debt” in the Company’s Consolidated Balance Sheets as of February 3, 2024 and January 28, 2023, respectively.

Amortization of deferred financing costs amounted to $ 3.2 million, $ 3.6 million and $ 5.3 million during Fiscal 2023, Fiscal 2022 and Fiscal 2021, respectively, which was included in the line item “Interest expense” in the Company’s Consolidated Statements of Income.

Amortization expense related to deferred financing costs as of February 3, 2024 for each of the next five fiscal years and thereafter is estimated to be as follows:

(in thousands)

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Scheduled Maturities

Scheduled maturities of the Company’s long term debt obligations, as they exist as of January 28, 2023, in each of the next five fiscal years and thereafter are as follows:

Scheduled maturities of the Company’s long term debt obligations, as they exist as of February 3, 2024, in each of the next five fiscal years and thereafter are as follows:

(in thousands)

2 unchanged sentences

unamortized deferred financing costs

Finance lease liabilities

Derivative Instruments and Hedging Activities

The Company accounts for derivatives and hedging activities in accordance with ASC Topic No.

815 “Derivatives and Hedging”

815 “Derivatives and Hedging” (Topic No.

815 provides the disclosure requirements for derivatives and hedging activities with the intent to provide users of financial statements with an enhanced understanding of:

(i) how and why an entity uses derivative instruments, (ii) how the entity accounts for derivative instruments and related hedged items, and (iii) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows.

Further, qualitative disclosures are required that explain the Company’s objectives and strategies for using derivatives, as well as quantitative disclosures about the fair value of gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative instruments.

As required by Topic No.

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Although the Company has determined that the majority of the inputs used to value its derivative fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivative utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by the Company and its counterparties.

However, as of January 28, 2023 and January 29, 2022, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustment is not significant to the overall valuation of its derivative portfolios.

However, as of February 3, 2024 and January 28, 2023, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustment is not significant to the overall valuation of its derivative portfolios.

As a result, the Company classifies its derivative valuations in Level 2 of the fair value hierarchy.

3 unchanged sentences

Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the payment of future known and uncertain cash amounts, the value of which are determined by interest rates.

The Company uses derivative financial instruments to manage differences in the amount, timing, and duration of the Company’s known or expected cash payments principally related to the Company’s borrowings.

Cash Flow Hedges of Interest Rate Risk

1 unchanged sentence

This derivative contract was designated as a cash flow hedge.

During the second quarter of Fiscal 2023, the Company amended its interest rate swap to be based on SOFR rather than LIBOR, which resulted in an updated swap rate of 2.16 %.

This amendment was covered under the guidance in ASU 2020-04, Reference Rate Reform (“ASC 848”) and did not impact the hedge accounting relationship.

The amount of loss deferred for the previous interest rate swap was $ 26.9 million.

The Company is amortizing this amount from accumulated other comprehensive loss into interest expense over the original life of the previous interest rate swap, which had an original maturity date of December 29, 2023 .

The Company amortized this amount from accumulated other comprehensive income into interest expense over the original life of the previous interest rate swap, which had an original maturity date of December 29, 2023 .

The current interest rate swap had a liability fair value at inception of $ 26.9 million.

The Company will accrete this amount into accumulated other comprehensive income as a benefit to interest expense over the life of the new interest rate swap, which has a maturity date of June 24, 2028 .

During Fiscal 2022, the Company’s derivative was used to hedge the variable cash flows associated with existing variable-rate debt.

The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges are recorded in the line item “Accumulated other comprehensive loss”

on the Company’s Consolidated Balance Sheets and are subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings.

Amounts reported in accumulated other comprehensive income related to the Company’s derivative contracts will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt.

As of January 28, 2023 , the Company estimates that $ 5.7 million will be reclassified as a reduction to interest expense during the next twelve months.

As of January 28, 2023, the Company had the following outstanding interest rate derivative that was designated as a cash flow hedge of interest rate risk:

The Company is accreting this amount into accumulated other comprehensive income as a benefit to interest expense over the life of the new interest rate swap, which has a maturity date of June 24, 2028 .

During Fiscal 2023, the Company’s derivative was used to hedge the variable cash flows associated with existing variable-rate debt.

The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges are recorded in the line item “Accumulated other comprehensive income” on the Company’s Consolidated Balance Sheets and are subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings.

As of February 3, 2024 , the Company estimates that $ 15.4 million will be reclassified as a reduction to interest expense during the next twelve months.

As of February 3, 2024, the Company had the following outstanding interest rate derivative that was designated as a cash flow hedge of interest rate risk:

Interest Rate Derivative

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Tabular Disclosure

The tables below present the fair value of the Company’s derivative financial instruments on a gross basis, as well as their classification on the Company’s Consolidated Balance Sheets:

(in thousands)

Fair Values of Derivative Instruments

January 28, 2023

February 3, 2024

January 28, 2023

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Interest rate swap contracts

Other liabilities

The following table presents the unrealized losses deferred to accumulated other comprehensive loss resulting from the Company’s derivative instruments designated as cash flow hedging instruments for each of the reporting periods.

The following table presents the unrealized gains deferred to accumulated other comprehensive income resulting from the Company’s derivative instruments designated as cash flow hedging instruments for each of the reporting periods.

(in thousands)

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Interest Rate Derivatives:

January 28, 2023

February 3, 2024

January 28, 2023

January 29, 2022

Unrealized gains (losses), before taxes

Income tax (expense) benefit

Unrealized gains (losses), net of taxes

The following table presents information about the reclassification of losses from accumulated other comprehensive loss into earnings related to the Company’s derivative instruments designated as cash flow hedging instruments for each of the reporting periods.

Unrealized gains, before taxes

Income tax expense

Unrealized gains, net of taxes

The following table presents information about the reclassification of losses from accumulated other comprehensive income into earnings related to the Company’s derivative instruments designated as cash flow hedging instruments for each of the reporting periods.

(in thousands)

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Component of Earnings:

January 28, 2023

February 3, 2024

January 28, 2023

January 29, 2022

Interest expense

Income tax benefit

Interest (benefit) expense

Income tax expense (benefit)

Net reclassification into earnings

Capital Stock

As of January 28, 2023 , the total amount of the Company’s authorized capital stock consisted of 500,000,000 shares of common stock, par value $ 0.0001 per share, and 50,000,000 shares of undesignated preferred stock, par value of $ 0.0001 per share.

The Company’s common stock is not entitled to preemptive or other similar subscription rights to purchase any of the Company’s securities.

The Company’s common stock is neither convertible nor redeemable.

Unless the Company’s Board of Directors determines otherwise, the Company will issue all of the Company’s capital stock in uncertificated form.

As of February 3, 2024 , the total amount of the Company’s authorized capital stock consisted of 500,000,000 shares of common stock, par value $ 0.0001 per share, and 50,000,000 shares of undesignated preferred stock, par value of $ 0.0001 per share.

The Company’s common stock is not entitled to preemptive or other similar subscription rights to purchase any of the Company’s securities.

The Company’s common stock is neither convertible nor redeemable.

Unless the Company’s Board of Directors determines otherwise, the Company will issue all of the Company’s capital stock in uncertificated form.

Preferred Stock

The Company does not have any shares of preferred stock issued or outstanding.

The Company’s Board of Directors has the authority to issue shares of preferred stock from time to time on terms it may determine, to divide shares of preferred stock into one or more series and to fix the designations, preferences, privileges, and restrictions of preferred stock, including dividend rights, conversion rights, voting rights, terms of redemption, liquidation preference, sinking fund terms, and the number of shares constituting any series or the designation of any series to the fullest extent permitted by the General Corporation Law of the State of Delaware.

The issuance of the Company’s preferred stock could have the effect of decreasing the trading price of the Company’s common stock, restricting dividends on the Company’s capital stock, diluting the voting power of the Company’s common stock, impairing the liquidation rights of the Company’s capital stock, or delaying or preventing a change in control of the Company.

any series or the designation of any series to the fullest extent permitted by the General Corporation Law of the State of Delaware.

Dividend Rights

Each holder of shares of the Company’s capital stock will be entitled to receive such dividends and other distributions in cash, stock or property as may be declared by the Company’s Board of Directors from time to time out of the Company’s assets or funds legally available for dividends or other distributions.

These rights are subject to the preferential rights of any other class or series of the Company’s preferred stock.

Treasury Stock

The Company accounts for treasury stock under the cost method.

During Fiscal 2022, the Company acquired 75,710 shares of common stock from employees for approximately $ 14.2 million to satisfy their minimum statutory tax withholdings related to the vesting of restricted stock awards, which was recorded in the line item “Treasury stock”

on the Company’s Consolidated Balance Sheets, and the line item “Purchase of treasury shares”

on the Company’s Consolidated Statements of Cash Flows.

During Fiscal 2023 , the Company acquired 62,894 shares of common stock from employees for approximately $ 11.3 million to satisfy their minimum statutory tax withholdings related to the vesting of restricted stock awards, which was recorded in the line item “Treasury stock” on the Company’s Consolidated Balance Sheets, and the line item “Purchase of treasury shares” on the Company’s Consolidated Statements of Cash Flows.

Share Repurchase Program

On August 18, 2021, the Company’s Board of Directors authorized the repurchase of up to $ 400.0 million of common stock, which was authorized to be executed through August 2023 .

This authorization was completed during the second quarter of Fiscal 2022.

On February 16, 2022, the Company's Board of Directors authorized the repurchase of up to $ 500.0 million of common stock, which is authorized to be executed through February 2024 .

These repurchase programs are funded using the Company’s available cash and borrowings under the ABL Line of Credit.

On February 16, 2022, the Company's Board of Directors authorized the repurchase of up to $ 500.0 million of common stock, which was authorized to be executed through February 2024 .

As of the end of Fiscal 2023, the Company had $ 115.4 million remaining under this share repurchase authorization.

On August 15, 2023, the Company's Board of Directors authorized the repurchase of up to an additional $ 500.0 million of common stock, which is authorized to be executed through August 2025 .

As of the end of Fiscal 2023, the Company had $ 500.0 million remaining under this share repurchase authorization.

These repurchase programs are funded using the Company’s available cash and borrowings under the ABL Line of Credit.

During Fiscal 2023 , the Company repurchased 1,354,031 shares of common stock for $ 231.9 million under its share repurchase program.

As of January 28, 2023, the Company had $ 347.3 million remaining under its share repurchase authorization.

Net Income (Loss) Per Share

Basic net income (loss) per share is calculated by dividing net income (loss) by the weighted-average number of common shares outstanding.

Dilutive net income (loss) per share is calculated by dividing net income (loss) by the weighted-average number of common shares and potentially dilutive securities outstanding during the period using the treasury stock method for the Company’s stock option, restricted stock and restricted stock unit awards, and the if-converted method for the Convertible Notes.

Net Income Per Share

Basic net income per share is calculated by dividing net income by the weighted-average number of common shares outstanding.

Dilutive net income per share is calculated by dividing net income by the weighted-average number of common shares and potentially dilutive securities outstanding during the period using the treasury stock method for the Company’s stock option,

restricted stock and restricted stock unit awards, and the if-converted method for the 2025 Convertible Notes and 2027 Convertible Notes.

(in thousands, except per share data)

Fiscal Year Ended

Basic net income (loss) per share

Net income (loss)

Weighted average number of common shares –

Net income (loss) per common share –

Basic net income per share

Weighted average number of common shares – basic

Net income per common share – basic

Diluted net income per share

Net income (loss)

Shares for basic and diluted net income (loss) per share:

Weighted average number of common shares –

Shares for basic and diluted net income per share:

Weighted average number of common shares – basic

Assumed exercise of stock options and vesting of restricted stock

Assumed conversion of convertible debt

Weighted average number of common shares –

Net income (loss) per common share –

All of the Company’s stock option, restricted stock and restricted stock unit awards have an anti-dilutive effect while in a net loss position.

Approximately 1,068,000 shares, 177,000 shares and 1,960,000 shares were excluded from diluted net income (loss) per share for Fiscal 2022, Fiscal 2021 and Fiscal 2020 , respectively, since their effect was anti-dilutive.

Weighted average number of common shares – diluted

Net income per common share – diluted

Approximately 1,524,000 shares, 1,068,000 shares and 177,000 shares were excluded from diluted net income per share for Fiscal 2023, Fiscal 2022 and Fiscal 2021 , respectively, since their effect was anti-dilutive.

Stock-Based Compensation

The Company’s 2013 Omnibus Incentive Plan (the 2013 Plan), originally adopted effective prior to and in connection with the Company’s initial public offering, was amended and restated effective May 17, 2017.

On May 18, 2022, the Company's stockholders approved the Company's 2022 Omnibus Incentive Plan (the 2022 Plan), which replaced the 2013 Plan.

The 2013 Plan provided, prior to its termination, and the 2022 Plan provides for the granting of stock options, restricted stock and other forms of awards to key employees and directors of the Company or its affiliates.

On May 18, 2022, the Company's stockholders approved the Company's 2022 Omnibus Incentive Plan (the 2022 Plan).

The 2022 Plan provides for the granting of stock options, restricted stock and other forms of awards to key employees and directors of the Company or its affiliates.

The Company accounts for awards issued under the Plans in accordance with Topic No.

As of January 28, 2023 , there were 6,281,887 shares of common stock available for issuance under the Company's 2022 Omnibus Incentive Plan.

As of February 3, 2024 , there were 5,214,963 shares of common stock available for issuance under the Company's 2022 Omnibus Incentive Plan.

Non-cash stock compensation expense is as follows:

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Type of Non-Cash Stock Compensation

Restricted stock and restricted stock unit grants (a)

Restricted stock unit grants (a)

Stock option grants (a)

Performance stock unit grants (a)

(a) Included in the line item “Selling, general and administrative expenses”

in the Company’s Consolidated Statements of Income (Loss).

(a) Included in the line item “Selling, general and administrative expenses” in the Company’s Consolidated Statements of Income.

(b) The amounts presented in the table above exclude the effect of income taxes.

The tax benefit related to the Company’s non-cash stock compensation was $ 12.5 million, $ 10.3 million and $ 9.1 million during Fiscal 2022, Fiscal 2021 and Fiscal 2020 , respectively.

The tax benefit related to the Company’s non-cash stock compensation was $ 15.5 million, $ 12.5 million and $ 10.3 million during Fiscal 2023, Fiscal 2022 and Fiscal 2021 , respectively.

Stock Options

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The final exercise date for any option granted is the tenth anniversary of the grant date.

Options granted during Fiscal 2022, Fiscal 2021 and Fiscal 2020 become exercisable if the grantee’s employment is terminated without cause or, in some instances, the recipient resigns with good reason, within a certain period of time following a change in control.

Options granted during Fiscal 2023, Fiscal 2022 and Fiscal 2021 become exercisable if the grantee’s employment is terminated without cause or, in some instances, the recipient resigns with good reason, within a certain period of time following a change in control.

Unless determined otherwise by the plan administrator, upon cessation of employment other than for cause, the majority of options that have not vested will terminate immediately, and unexercised vested options will be exercisable for a period of 60 to 180 days .

As of January 28, 2023, the Company had 1,218,101 options outstanding to purchase shares of common stock, and there was $ 35.9 million of unearned non-cash stock-based option compensation that the Company expects to recognize as expense over a weighted average period of 2.6 years.

As of February 3, 2024, the Company had 1,356,258 options outstanding to purchase shares of common stock, and there was $ 37.3 million of unearned non-cash stock-based option compensation that the Company expects to recognize as expense over a weighted average period of 2.6 years.

The awards are expensed on a straight-line basis over the requisite service period.

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Options forfeited

Options outstanding, January 28, 2023

Options outstanding, February 3, 2024

(a) Options exercised during Fiscal 2023 had a total intrinsic value of $ 11.7 million.

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During Fiscal 2023, the fair value of each stock option granted was estimated on the date of grant using the Black Scholes option pricing model.

The fair value of each stock option granted during Fiscal 2022 was estimated using the following assumptions:

The fair value of each stock option granted during Fiscal 2023 was estimated using the following assumptions on a weighted average basis:

Fiscal Year Ended

Risk-free interest rate

1.13 % - 2.78 %

Expected volatility

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Expected dividend yield

Weighted average grant date fair value of options issued

The expected dividend yield was based on the Company’s expectation of not paying dividends in the near term.

To evaluate its volatility factor, the Company uses the historical volatility of its stock price, as well as the historical volatility of the stock price of peer companies that are publicly traded over the expected life of the options.

Grant date fair value of options issued

The expected dividend yield was based on the Company’s expectation of not paying dividends in the near term.

To evaluate its volatility factor, the Company uses the historical volatility of its stock price over the expected life of the options.

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

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Treasury zero-coupon bonds with maturities similar to those of the expected term of the awards being valued.

For grants issued during Fiscal 2022, Fiscal 2021 and Fiscal 2020, the expected life of the options was calculated using the simplified method.

The simplified method defines the life as the average of the contractual term of the options and the weighted average vesting period for all option tranches.

This methodology was utilized due to the relatively short length of time the Company’s common stock has been publicly traded.

The expected life of the options was estimated using historical exercise rates.

Restricted Stock Awards

Restricted stock awards granted during Fiscal 2023 were all service-based awards.

The fair value of each unit of restricted stock granted during Fiscal 2022 was based upon the closing price of the Company’s common stock on the grant date.

Certain awards outstanding as of January 28, 2023 cliff vest at the end of a designated service period, ranging from two years to four years from the grant date.

Awards granted to non-employee members of the Company’s Board of Directors vest 100 % on the first anniversary of the grant date.

The remaining awards outstanding as of January 28, 2023 have graded vesting provisions that generally vest in one-fourth annual increments or one-third annual increments (subject to continued employment through the applicable vesting date).

Following a change of control, all unvested restricted stock awards shall remain unvested, provided, however, that 100 % of such shares shall vest

if, following such change of control, the employment of the recipient is terminated without cause or, in some instances, the recipient resigns with good reason, within a certain period of time following a change in control.

As of January 28, 2023 , there was approximately $ 69.9 million of unearned non-cash stock-based compensation related to restricted stock awards that the Company expects to recognize as expense over a weighted average period of 2.4 years.

The fair value of each unit of restricted stock granted during Fiscal 2023 was based upon the closing price of the Company’s common stock on the grant date.

Most of the awards outstanding as of February 3, 2024 have graded vesting provisions that generally vest in one-fourth annual increments (subject to continued employment through the applicable vesting date).

Certain awards outstanding as of February 3, 2024 cliff vest at the end of a designated service period, ranging from two years to four years from the grant date.

Awards granted to non-employee members of the Company’s Board of Directors vest 100 % on the first anniversary of the grant date.

Following a change of control, all unvested restricted stock awards shall remain unvested, provided, however, that 100 % of such shares shall vest if, following such change of control, the employment of the recipient is terminated without cause or, in some instances, the recipient resigns with good reason, within a certain period of time following a change in control.

As of February 3, 2024 , there was approximately $ 74.8 million of unearned non-cash stock-based compensation related to restricted stock awards that the Company expects to recognize as expense over a weighted average period of 2.4 years.

The awards are expensed on a straight-line basis over the requisite service periods.

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Awards forfeited

Non-vested awards outstanding, January 28, 2023

Non-vested awards outstanding, February 3, 2024

(a) Restricted stock awards vested during Fiscal 2023 had a total intrinsic value of $ 30.8 million.

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The Company grants performance-based restricted stock units to its senior executives.

The fair value of each unit of performance stock granted during Fiscal 2022 was based upon the closing price of the Company’s common stock on the grant date.

Vesting of the performance stock units granted in Fiscal 2020 and Fiscal 2021 is based on continued service and the achievement of pre-established EBIT margin expansion and sales compounded annual growth rate (CAGR) goals (each weighted equally) over a three-year performance period.

Vesting of the performance stock units granted in Fiscal 2022 will be based on continued service and the achievement of pre-established adjusted net income per share growth over a three-year performance period.

Based on the Company’s achievement of these goals, each award may be earned up to 200 % of the target award.

In the event that actual performance is below threshold, no award will be made.

Vesting of the performance stock units granted in Fiscal 2021 is based on continued service and the achievement of pre-established adjusted EBIT margin expansion and sales compounded annual growth rate (CAGR) goals (each weighted equally) over a three-year performance period.

Vesting of the performance stock units granted in Fiscal 2022 and Fiscal 2023 are based on continued service and the achievement of specified pre-established adjusted net income per share growth over a three-year performance period, as applicable for each grant.

Based on the Company’s achievement of these goals, each award may be earned up to 200 % of the target award.

In the event that actual

performance is below threshold, no award will be made.

Compensation costs recognized on the performance stock units are adjusted, as applicable, for performance above or below the target specified in the award.

As of January 28, 2023 , there was approximately $ 20.4 million of unearned non-cash stock-based compensation related to performance share units that the Company expects to recognize as expense over a weighted average period of 1.8 years.

As of February 3, 2024 , there was approximately $ 32.9 million of unearned non-cash stock-based compensation related to performance share units that the Company expects to recognize as expense over a weighted average period of 1.9 years.

The awards are expensed on a straight-line basis over the requisite service periods.

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Non-vested awards outstanding, January 28, 2023

Awards granted (a)

Awards vested (a) (b)

Awards granted

Awards vested (a)

Awards forfeited

Non-vested awards outstanding, January 28, 2023

(a) Inclusive of awards distributed in connection with the final settlement of the performance-based stock awards granted in Fiscal 2019.

(b) Performance-based stock awards vested during Fiscal 2022 had a total intrinsic value of $ 15.4 million.

Non-vested awards outstanding, February 3, 2024

(a) Performance-based stock awards vested during Fiscal 2023 had a total intrinsic value of $ 5.9 million.

Lease Commitments

The Company’s leases primarily consist of stores, distribution facilities and office space under operating and finance leases that will expire principally during the next 30 years.

The leases typically include renewal options at five-year intervals and escalation clauses.

Lease renewals are only included in the lease liability to the extent that they are reasonably assured of being exercised.

Company’s leases typically provide for contingent rentals based on a percentage of gross sales.

The Company’s leases typically provide for contingent rentals based on a percentage of gross sales.

Contingent rentals are not included in the lease liability, and they are recognized as variable lease cost when incurred.

The following is a schedule of the Company’s future lease payments:

(in thousands)

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Weighted average remaining lease term (years)

The above schedule excludes approximately $ 409.5 million for 75 stores that the Company has committed to open or relocate but has not yet taken possession of the space.

The above schedule excludes approximately $ 696.3 million for 84 stores and one warehouse that the Company has committed to open or relocate but has not yet taken possession of the space.

The discount rates used in valuing the Company’s leases are not readily determinable, and are based on the Company’s incremental borrowing rate on a fully collateralized basis.

The Company has entered into a lease agreement for a new distribution center in Ellabell, GA, which is expected to commence in May 2025.

The Company does not have control of the asset during construction, but it is involved in the design and construction of the related asset.

Additionally, the lease agreement has a purchase option, which can be exercised beginning after the earlier of (a) substantial completion of construction or (b) the date the Company commences business operations in the premises.

The following is a schedule of net lease costs for the years indicated:

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Fiscal Year Ended

January 28, 2023

February 3, 2024

January 28, 2023

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Total net rent expense (e)

(a) Included in the line item “Depreciation and amortization”

in the Company’s Consolidated Statements of Income (Loss).

(b) Included in the line item “Interest expense”

in the Company’s Consolidated Statements of Income (Loss).

(a) Included in the line item “Depreciation and amortization” in the Company’s Consolidated Statements of Income.

(b) Included in the line item “Interest expense” in the Company’s Consolidated Statements of Income.

Included in the line item “Selling, general and administrative expenses”

in the Company’s Consolidated Statements of Income (Loss).

(d) Included in the line item “Other revenue”

in the Company’s Consolidated Statements of Income (Loss).

Included in the line item “Selling, general and administrative expenses” in the Company’s Consolidated Statements of Income.

(d) Included in the line item “Other revenue” in the Company’s Consolidated Statements of Income.

(e) Excludes an immaterial amount of short-term lease cost.

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Fiscal Year Ended

January 28, 2023

February 3, 2024

January 28, 2023

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Operating lease liabilities arising from obtaining right-of-use assets

(a) Included within operating activities in the Company’s Consolidated Statements of Cash Flows.

(b) Included within financing activities in the Company’s Consolidated Statements of Cash Flows.

(a) Included within operating activities in the Company’s Consolidated Statements of Cash Flows.

(b) Included within financing activities in the Company’s Consolidated Statements of Cash Flows.

Employee Retirement Plans

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Participating employees can voluntarily elect to contribute a percentage of their earnings to the 401(k) component of the plans (up to certain prescribed limits) through a cash or deferred (salary deferral) feature qualifying under Section 401(k) of the Internal Revenue Code (401(k) Plan).

The Company recorded $ 15.6 million, $ 11.4 million and $ 10.2 million of 401(k) Plan match expense during Fiscal 2022, Fiscal 2021 and Fiscal 2020 respectively, which is included in the line item “Selling, general and administrative expenses”

on the Company’s Consolidated Statements of Income (Loss).

Income (loss) before income taxes was as follows for Fiscal 2022, Fiscal 2021 and Fiscal 2020:

The Company recorded $ 15.6 million, $ 15.6 million and $ 11.4 million of 401(k) Plan match expense during Fiscal 2023, Fiscal 2022 and Fiscal 2021 respectively, which is included in the line item “Selling, general and administrative expenses” on the Company’s Consolidated Statements of Income.

Income before income taxes was as follows for Fiscal 2023, Fiscal 2022 and Fiscal 2021:

(in thousands)

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Excess tax benefit from stock compensation

Carryback tax rate differential

Non-deductible expenses

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(in thousands)

January 28, 2023

February 3, 2024

January 28, 2023

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Operating lease asset

Intangibles—indefinite-lived

Employee benefit compensation

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Net deferred tax liability

As of January 28, 2023 , the Company has a deferred tax asset related to net operating losses of $ 11.3 million, inclusive of $ 11.0 million of state net operating losses which will expire at various dates between 2023 and 2041 and $ 0.3 million of deferred tax assets recorded for Puerto Rico net operating loss carry-forwards that will expire in 2025 .

As of January 28, 2023 , the Company had tax credit carry-forwards of $ 11.1 million, inclusive of state tax credit carry-forwards of $ 10.4 million that will begin to expire in 2023 and $ 0.7 million of Puerto Rico alternative minimum tax (AMT) credits that have an indefinite life .

As of February 3, 2024 , the Company has a deferred tax asset related to net operating losses of $ 5.7 million, inclusive of $ 5.4 million of state net operating losses which will expire at various dates between 2024 and 2041 and $ 0.3 million of deferred tax assets recorded for Puerto Rico net operating loss carry-forwards that will expire in 2025 .

As of February 3, 2024 , the Company had tax credit carry-forwards of $ 10.8 million, inclusive of state tax credit carry-forwards of $ 10.4 million that will begin to expire in 2024 and $ 0.4 million of Puerto Rico alternative minimum tax (AMT) credits that have an indefinite life .

As of January 28, 2023 , the Company had a deferred tax asset related to net operating losses of $ 11.3 million, inclusive of $ 11.0 million of state net operating losses, and $ 0.3 million of deferred tax assets recorded for Puerto Rico net operating loss carry-forwards.

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As a result, it has provided for a full valuation allowance of $ 0.3 million.

If the Company's assumptions change and it determines it will be able to realize these net operating losses or credits, the tax benefits relating to any reversal of the valuation allowance on deferred tax assets as of January 28, 2023 will be recorded to the Company’s Consolidated Statement of Income (Loss).

As of January 29, 2022 , the Company provided a total valuation allowance of $ 12.9 million, inclusive of $ 5.3 of valuation allowance related to state net operating losses, $ 7.3 million related to tax credit carry-forwards and $ 0.3 million related to Puerto Rico.

If the Company's assumptions change and it determines it will be able to realize these net operating losses or credits, the tax benefits relating to any reversal of the valuation allowance on deferred tax assets as of February 3, 2024 will be recorded to the Company’s Consolidated Statement of Income.

As of January 28, 2023 , the Company provided a total valuation allowance of $ 13.1 million, inclusive of $ 3.3 million of valuation allowance related to state net operating losses, $ 9.5 million related to tax credit carry-forwards and $ 0.3 million related to Puerto Rico.

A reconciliation of the beginning and ending amount of gross unrecognized tax benefits (exclusive of interest and penalties) is as follows:

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Tax Benefits,

Balance at February 1, 2020

Balance at January 30, 2021

Additions for tax positions of the current year

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Lapse of statute of limitations

Balance at January 28, 2023

As of January 28, 2023 , the Company reported total unrecognized benefits of $ 3.9 million, of which $ 3.1 million would affect the Company’s effective tax rate if recognized.

As a result of previous positions taken and current period activity, the Company recorded a net benefit of $ 0.9 million of interest and penalties during Fiscal 2022 in the line item “Income tax expense (benefit)”

in the Company’s Consolidated Statements of Income (Loss).

Cumulative interest and penalties of $ 8.0 million are recorded in the line item “Other liabilities”

in the Company’s Consolidated Balance Sheet as of January 28, 2023.

Balance at February 3, 2024

As of February 3, 2024 , the Company reported total unrecognized benefits of $ 3.1 million, of which $ 2.5 million would affect the Company’s effective tax rate if recognized.

As a result of previous positions taken and current period activity, the Company recorded a net benefit of $ 0.8 million of interest and penalties during Fiscal 2023 in the line item “Income tax expense” in the Company’s Consolidated Statements of Income.

Cumulative interest and penalties of $ 7.0 million are recorded in the line item “Other liabilities” in the Company’s Consolidated Balance Sheet as of February 3, 2024.

The Company recognizes interest and penalties related to unrecognized tax benefits as part of income taxes.

Within the next twelve months, the Company does not expect any significant changes in its unrecognized tax benefits.

As of January 29, 2022 , the Company reported total unrecognized benefits of $ 4.8 million, of which $ 3.8 million would affect the Company’s effective tax rate if recognized.

As a result of previous positions taken, the Company recorded a net benefit of $ 1.2 million of interest and penalties during Fiscal 2021 in the line item “Income tax expense (benefit)”

in the Company’s Consolidated Statements of Income (Loss).

Cumulative interest and penalties of $ 9.1 million are recorded in the line item “Other liabilities”

in the Company’s Consolidated Balance Sheets as of January 29, 2022.

As of January 28, 2023 , the Company reported total unrecognized benefits of $ 3.9 million, of which $ 3.1 million would affect the Company’s effective tax rate if recognized.

As a result of previous positions taken, the Company recorded a net benefit of $ 0.9 million of interest and penalties during Fiscal 2022 in the line item “Income tax expense” in the Company’s Consolidated Statements of Income.

Cumulative interest and penalties of $ 8.0 million are recorded in the line item “Other liabilities” in the Company’s Consolidated Balance Sheets as of January 28, 2023.

The Company files tax returns in the U.S.

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The Company is open to examination by the IRS under the applicable statutes of limitations for Fiscal Years 2020 through 2023 .

The Company or its subsidiaries’

state and Puerto Rico income tax returns are open to audit for Fiscal Years 2018 through 2022 with a few exceptions, under the applicable statutes of limitations.

The Company or its

subsidiaries’ state and Puerto Rico income tax returns are open to audit for Fiscal Years 2019 through 2023 with a few exceptions, under the applicable statutes of limitations.

There are ongoing state audits in several jurisdictions, and the Company has accrued for possible exposures as required under Topic No.

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820 which defines fair value, establishes a framework for measurement and expands disclosure about fair value measurements.

820 defines fair value as the price that

would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price), and classifies the inputs used to measure fair value into the following hierarchy:

820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price), and classifies the inputs used to measure fair value into the following hierarchy:

Quoted prices for identical assets or liabilities in active markets.

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The carrying amounts of cash equivalents, accounts receivable and accounts payable approximate fair value due to the short-term nature of these instruments.

Refer to Note 8, “Derivative Instruments and Hedging Activities,”

for further discussion regarding the fair value of the Company’s interest rate swap contract.

Refer to Note 6, “Impairment Charges,”

for further discussion regarding the fair value of the Company's long-lived assets after impairment.

Refer to Note 8, “Derivative Instruments and Hedging Activities,” for further discussion regarding the fair value of the Company’s interest rate swap contract.

Refer to Note 6, “Impairment Charges,” for further discussion regarding the fair value of the Company's long-lived assets after impairment.

Financial Assets

The fair values of the Company’s financial assets and the hierarchy of the level of inputs as of January 28, 2023 and January 29, 2022 are summarized below:

The fair values of the Company’s financial assets and the hierarchy of the level of inputs as of February 3, 2024 and January 28, 2023 are summarized below:

(in thousands)

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Financial Liabilities

The fair values of the Company’s financial liabilities are summarized below:

(in thousands)

January 28, 2023

February 3, 2024

January 28, 2023

1 unchanged sentence

2025 Convertible Notes

2027 Convertible Notes

ABL Line of Credit (a)

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The fair values presented herein are based on pertinent information available to management as of the respective year end dates.

The estimated fair values of the Company’s debt are classified as Level 2 in the fair value hierarchy, and are based on current market quotes received from inactive markets.

Although management is not aware of any factors that could significantly affect the estimated fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial statements since that date, and current estimates of fair value may differ from amounts presented herein.

Commitments and Contingencies

General Act and various other lawsuits and regulatory proceedings from time to time including, among others, commercial, product, employee, customer, intellectual property, privacy and other claims.

In the course of business, the Company is party to class or collective actions alleging violations of federal and state wage and hour and other labor statutes, representative claims under the California Private Attorneys’ General Act and various other lawsuits and regulatory proceedings from time to time including, among others, commercial, product, employee, customer, intellectual property and other claims.

Actions against us are in various procedural stages.

Many of these proceedings raise factual and legal issues and are subject to uncertainties.

While no assurance can be given as to the ultimate outcome of these matters, the Company believes that the final resolution of these actions will not have a material adverse effect on the Company’s results of operations, financial position, liquidity or capital resources.

Letters of Credit

The Company had irrevocable letters of credit in the amounts of $ 51.1 million and $ 55.4 million as of January 28, 2023 and January 29, 2022, respectively.

Letters of credit outstanding as of January 28, 2023 and January 29, 2022 amounted to $ 47.4 million and $ 48.4 million, respectively, guaranteeing performance under various lease agreements, insurance contracts, and utility agreements.

The Company also had outstanding letters of credit arrangements in the aggregate amount of $ 3.7 million and $ 7.1 million at January 28, 2023 and January 29, 2022 , respectively, related to certain merchandising agreements.

The Company had $ 795.7 million and $ 594.6 million available under the ABL Line of Credit as of January 28, 2023 and January 29, 2022, respectively.

The Company had irrevocable letters of credit in the amounts of $ 75.8 million and $ 51.1 million as of February 3, 2024 and January 28, 2023, respectively.

Letters of credit outstanding as of February 3, 2024 and January 28, 2023 amounted to $ 75.8 million and $ 47.4 million, respectively, guaranteeing performance under various lease agreements, insurance contracts, and utility agreements.

The Company also had outstanding letters of credit arrangements in the aggregate amount of $ 3.7 million at January 28, 2023 , related to certain merchandising agreements, and none at February 3, 2024 .

Based on the terms of the agreement governing the ABL Line of Credit, the Company had the ability to enter into letters of credit up to $ 174.2 million and $ 98.9 million as of February 3, 2024 and January 28, 2023, respectively.

Inventory Purchase Commitments

The Company had $ 1,049.0 million of purchase commitments related to goods that were not received as of January 28, 2023.

The Company had $ 1,304.5 million of purchase commitments related to goods that were not received as of February 3, 2024.

Death Benefits

In November 2005, the Company entered into agreements with three of the Company’s former executives whereby, upon each of their deaths, the Company will pay $ 1.0 million to each respective designated beneficiary.

CONDENSED FINANCIAL INFORMATION

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Burlington Stores, Inc.

Condensed Statements of Income (Loss) and Comprehensive Income (Loss)

Condensed Statements of Income and Comprehensive Income

Fiscal Years Ended

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Earnings from equity investment, net of income taxes

Net income (loss)

Other comprehensive income (loss), net of tax:

Other comprehensive income, net of tax:

Interest rate derivative contracts:

Net unrealized gains (losses) arising during the period

Net unrealized gains arising during the period

Net reclassification into earnings during the period

Total comprehensive income (loss)

Total comprehensive income

See Notes to Condensed Financial Statements

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Investment in subsidiaries

LIABILITIES AND STOCKHOLDERS’

LIABILITIES AND STOCKHOLDERS’ EQUITY:

Current liabilities

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Commitments and contingencies

Total stockholders’

Total liabilities and stockholders’

Total stockholders’ equity

Total liabilities and stockholders’ equity

See Notes to Condensed Financial Statements

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INVESTING ACTIVITIES:

Net contribution from (payment to) subsidiaries

Net cash provided by (used in) investing activities

Net contribution from subsidiaries

Net cash provided by investing activities

FINANCING ACTIVITIES:

Proceeds from long term debt - 2027 Convertible Notes

Principal payment on long term debt—Convertible Notes

Principal payment on long term debt— 2025 Convertible Notes

Purchase of treasury shares

Proceeds from stock option exercises

Deferred financing costs

Net cash provided by (used in) financing activities

Increase (Decrease) in cash and cash equivalents

Net cash used in financing activities

(Decrease) increase in cash and cash equivalents

Cash and cash equivalents at beginning of period

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(the Parent Company) is a holding company that conducts substantially all of its business operations through its subsidiaries.

The Parent Company’s ability to pay dividends on Parent Company’s common stock will be limited by restrictions on the ability of Parent Company's subsidiaries to pay dividends or make distributions under the terms of current and future agreements governing the indebtedness of Parent Company’s subsidiaries.

Capitalized terms not otherwise defined in this Schedule I shall have the meanings ascribed to them in the Notes to Consolidated Financial Statements.

In addition to other baskets under the agreements governing its indebtedness, the Parent Company and its subsidiaries are permitted to make dividends and distributions under the Term Loan Facility so long as there is no event of default and the consolidated leverage ratio of the Parent Company and its subsidiaries does not exceed 3.50 to 1.00, and under the ABL Line of Credit as long as certain restricted payment conditions are satisfied.

The accompanying Condensed Financial Statements include the accounts of the Parent Company and, on an equity basis, its consolidated subsidiaries and affiliates.

Accordingly, these Condensed Financial Statements have been presented on a “parent-only”

Under a parent-only presentation, the Parent Company’s investments in its consolidated subsidiaries are presented under the equity method of accounting.

Other than debt related costs, the Parent Company incurs certain corporate costs which are borne by the Parent Company’s subsidiaries.

Accordingly, these Condensed Financial Statements have been presented on a “parent-only” basis.

Under a parent-only presentation, the Parent Company’s investments in its consolidated subsidiaries are presented under the equity method of accounting.

Other than debt related costs, the Parent Company incurs certain corporate costs which are borne by the Parent Company’s subsidiaries.

Such costs are not significant.

These parent-only financials statements are not the general-purpose financial statements of Burlington Stores, Inc., and they should be read in conjunction with Burlington Stores, Inc.’s audited Consolidated Financial Statements included elsewhere herein.

As discussed above, the terms of current and future agreements governing the indebtedness of the Parent Company and its subsidiaries include, or may include, limitations on the ability of such subsidiaries and the Parent Company to pay dividends, subject to certain exceptions set forth in such agreements.

Stock-Based Compensation

Non-cash stock compensation expense of $ 67.5 million, $ 58.5 million and $ 55.8 million has been pushed down to Parent Company’s subsidiaries for Fiscal 2022, Fiscal 2021 and Fiscal 2020, respectively.

Non-cash stock compensation expense of $ 83.9 million, $ 67.5 million and $ 58.5 million has been pushed down to Parent Company’s subsidiaries for Fiscal 2023, Fiscal 2022 and Fiscal 2021, respectively.

Long Term Debt

On April 16, 2020, the Parent Company issued $ 805.0 million of 2025 Convertible Notes.

The 2025 Convertible Notes are general unsecured obligations of the Parent Company.

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The 2025 Convertible Notes will mature on April 15, 2025 , unless earlier converted, redeemed or repurchased.

BCFWC and Burlington Merchandising Corporation, a Delaware corporation, wholly owned subsidiaries of the Company, have entered into a promissory note, in which they jointly and severally have promised to pay to the Parent an amount equal to the principal of the Convertible Notes.

In connection with the promissory note, there was a $ 507.7 million and $ 572.3 million intercompany note receivable as of January 28, 2023 and January 29, 2022, respectively, related to the cash transferred to Parent subsidiaries for the Convertible Notes, which is included in the line item "Investment in subsidiaries" in the Condensed Balance Sheets.

The interest rate and repayment terms of the intercompany note receivable are consistent with that of the Convertible Notes.

The Convertible Notes consist of the following components as of the dates indicated:

(in thousands)

Unamortized deferred debt costs

Net carrying amount

During the second half of Fiscal 2021, the Parent Company entered into separate, privately negotiated exchange agreements with certain holders of the 2025 Convertible Notes.

Under the terms of the exchange agreements, the holders exchanged $ 232.7 million in aggregate principal amount of Convertible Notes held by them for a combination of an aggregate of $ 199.8 million in cash and 513,991 shares of the Parent Company's common stock.

These exchanges resulted in aggregate pre-tax debt extinguishment charges of $ 124.6 million.

During the first quarter of Fiscal 2022, the Parent Company entered into separate, privately negotiated exchange agreements with certain holders of the 2025 Convertible Notes.

Under the terms of the exchange agreements, the holders exchanged $ 64.6 million in aggregate principal amount of 2025 Convertible Notes held by them for $ 78.2 million in cash.

These exchanges resulted in aggregate pre-tax debt extinguishment charges of $ 14.7 million and $ 124.6 million during Fiscal 2022 and Fiscal 2021, respectively.

Furthermore, the intercompany note receivable was extinguished for the same terms, resulting in an offsetting gain on extinguishment, as reflected in the table below.

Subsequent to January 28, 2023 (March 7, 2023), the Parent Company entered into separate, privately negotiated exchange agreements with certain holders of its Convertible Notes.

Under the terms of the exchange agreements, the holders have agreed to exchange $ 110.3 million in aggregate principal amount of Convertible Notes held by them for $ 133.3 million in cash.

Included in the Condensed Statements of Income (Loss) and Comprehensive Income (Loss) is the following for each of the periods indicated:

These exchanges resulted in aggregate pre-tax debt extinguishment charges of $ 14.7 million.

During the first quarter of Fiscal 2023, the Parent Company entered into separate, privately negotiated exchange agreements with certain holders of the 2025 Convertible Notes.

Under the terms of the exchange agreements, the holders exchanged $ 110.3 million in aggregate principal amount of 2025 Convertible Notes held by them for $ 133.3 million in cash.

These exchanges resulted in aggregate pre-tax debt extinguishment charges of $ 24.6 million.

On September 12, 2023, the Parent Company closed the issuance of approximately $ 297.1 million aggregate principal amount of our 2027 Convertible Notes pursuant to separate, privately negotiated exchange and subscription agreements with a limited number of holders of our 2025 Convertible Notes and certain investors, in each case pursuant to exemptions from registration under the Securities Act of 1933.

The Parent Company exchanged approximately $ 241.2 million in aggregate principal amount of the 2025 Convertible Notes for approximately $ 255.0 million in aggregate principal amount of the 2027 Convertible Notes.

The Parent Company also issued approximately $ 42.1 million in aggregate principal amount of 2027 Convertible Notes in a private placement to certain investors.

An aggregate of up to 1,422,568 shares of common stock may be issued upon conversion of the 2027 Convertible Notes, which number is subject to adjustment up to an aggregate of 1,911,372 shares following certain corporate events that occur prior to the maturity date or if we issue a notice of redemption, and which is also subject to certain anti-dilution adjustments.

The 2027 Convertible Notes bear interest at a rate of 1.25 % per year, payable semi-annually in arrears on June 15 and December 15 of each year, beginning on December 15, 2023 .

The 2027 Convertible Notes will mature on December 15, 2027 , unless earlier converted, redeemed or repurchased.

In connection with the promissory note, there was a $ 453.2 million and $ 507.7 million intercompany note receivable as of February 3, 2024 and January 28, 2023, respectively, related to the cash transferred to Parent subsidiaries for the Convertible Notes, which is included in the line item "Investment in subsidiaries" in the Condensed Balance Sheets.

The interest rate and repayment terms of the intercompany note receivable are consistent with that of the 2025 Convertible Notes and 2027 Convertible Notes.

Included in the Condensed Statements of Income and Comprehensive Income is the following for each of the periods indicated:

(in thousands)

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The Parent Company accounts for treasury stock under the cost method.

During Fiscal 2022, the Parent Company acquired 75,710 shares of common stock from employees for approximately $ 14.2 million to satisfy their minimum statutory tax withholdings related to the vesting of restricted stock awards, which was recorded in the line item “Purchase of treasury shares”

on the Parent Company’s Condensed Statements of Cash Flows.

During Fiscal 2023 , the Parent Company acquired 62,894 shares of common stock from employees for approximately $ 11.3 million to satisfy their minimum statutory tax withholdings related to the vesting of restricted stock awards, which was recorded in the line item “Purchase of treasury shares” on the Parent Company’s Condensed Statements of Cash Flows.

Share Repurchase Program

On August 18, 2021, the Parent Company’s Board of Directors authorized the repurchase of up to $ 400.0 million of common stock, which was authorized to be executed through August 2023.

This authorization was completed during the second quarter of Fiscal 2022.

On February 16, 2022, the Parent Company's Board of Directors authorized the repurchase of up to an additional $ 500.0 million of common stock, which is authorized to be executed through February 2024.

On February 16, 2022, the Parent Company's Board of Directors authorized the repurchase of up to an additional $ 500.0 million of common stock, which was authorized to be executed through February 2024.

As of the end of Fiscal 2023, the Parent Company had $ 115.4 million remaining under this share repurchase authorization.

On August 15, 2023, the Parent Company's Board of Directors authorized the repurchase of up to an additional $ 500 million of common stock, which is authorized to be executed through August 2025.

As of the end of Fiscal 2023, the Parent Company had $ 500.0 million remaining under this share repurchase authorization.

During Fiscal 2023 , the Parent Company repurchased 1,354,031 shares of common stock for $ 231.9 million under its share repurchase program.

As of January 28, 2023, the Parent Company had $ 347.3 million remaining under its share repurchase authorization.

BURLINGTON STORES, INC.

Schedule II—Valuation and Qualifying Accounts and Reserves

(All amounts in thousands)

Deductions(2)

Year ended January 28, 2023

Year ended February 3, 2024

Allowance for doubtful accounts

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Evaluation of Disclosure Controls and Procedures

Our management team, under the supervision and with the participation of our principal executive officer and our principal financial officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as such term is defined under Rule 13a-15(e) promulgated under the Exchange Act, as of the last day of the fiscal period covered by this Annual Report, January 28, 2023.

The term disclosure controls and procedures means our controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms.

Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to management, including our principal executive and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Based on this evaluation, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were effective as of January 28, 2023.

Management’s Annual Report on Internal Control Over Financial Reporting

Based on this evaluation, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were effective as of February 3, 2024.

Management’s Annual Report on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting.

Internal control over financial reporting is defined in Rule 13a-15(f) and Rule 15d-15(f) under the Exchange Act as a process designed by, or under the supervision of, the issuer’s principal executive and principal financial officers, or persons performing similar functions, and effected by the issuer’s Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP and includes those policies and procedures that:

• pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the issuer;

• provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the issuer are being made only in accordance with authorizations of management and directors of the issuer;

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

• provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the issuer’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.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In accordance with the internal control reporting requirement of the SEC, management completed an assessment of the adequacy of our internal control over financial reporting as of January 28, 2023.

In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework (2013) .

Based on this assessment and the criteria in the COSO framework, management has concluded that, as of January 28, 2023, our internal control over financial reporting was effective.

Deloitte & Touche LLP, the independent registered public accounting firm that audited and reported on our consolidated financial statements contained herein, has audited the effectiveness of our internal control over financial reporting as of January 28, 2023, and has issued an attestation report on the effectiveness of our internal control over financial reporting included herein.

In accordance with the internal control reporting requirement of the SEC, management completed an assessment of the adequacy of our internal control over financial reporting as of February 3, 2024.

In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework (2013) .

Based on this assessment and the criteria in the COSO framework, management has concluded that, as of February 3, 2024, our internal control over financial reporting was effective.

Deloitte & Touche LLP, the independent registered public accounting firm that audited and reported on our consolidated financial statements contained herein, has audited the effectiveness of our internal control over financial reporting as of February 3, 2024, and has issued an attestation report on the effectiveness of our internal control over financial reporting included herein.

Changes in Internal Control Over Financial Reporting

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We have audited the internal control over financial reporting of Burlington Stores, Inc.

and subsidiaries (the “Company”) as of January 28, 2023, based on criteria established in Internal Control —

Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of January 28, 2023, based on criteria established in Internal Control —

Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended January 28, 2023, of the Company and our report dated March 13, 2023 expressed an unqualified opinion on those financial statements and included an explanatory paragraph regarding the Company's adoption of (ASU) 2020-06, “Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity.”

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

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

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended February 3, 2024, of the Company and our report dated March 15, 2024 expressed an unqualified opinion on those financial statements and included an explanatory paragraph regarding the Company’s adoption of (ASU) 2020-06, “Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity.”

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting.

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

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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 (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) 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 (3) 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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/s/ Deloitte & Touche LLP

New York, New York

Morristown, New Jersey

March 15, 2024

Other Information.

During the fiscal quarter ended February 3, 2024, no director or officer of the Company adopted , modified or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408 of Regulation S-K.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

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Directors, Executive Off icers and Corporate Governance

For the information required by this Item 10, see “Election of Directors,”

“Information About Our Executive Officers,”

“Corporate Governance,”

and “Board Committees,”

in the Proxy Statement for our 2023 Annual Meeting of Stockholders (the “Proxy Statement”), which information is incorporated herein by reference.

For the information required by this Item 10, see “Election of Directors,” “Information About Our Executive Officers,” “Corporate Governance,” and “Board Committees,” in the Proxy Statement for our 2024 Annual Meeting of Stockholders (the “Proxy Statement”), which information is incorporated herein by reference.

The Proxy Statement will be filed within 120 days of the close of our 2023 fiscal year.

Executi ve Compensation

For the information required by this Item 11, see “Executive Compensation”

and “Director Compensation”

in the Proxy Statement, which information (excluding the information under the subheading "Pay Versus Performance") is incorporated herein by reference.

For the information required by this Item 11, see “Executive Compensation” and “Director Compensation” in the Proxy Statement, which information (excluding the information under the subheading "Pay Versus Performance") is incorporated herein by reference.

Security Ownership of Certain Beneficial Ow ners and Management and Related Stockholder Matters

For the information required by this Item 12, see “Ownership of Securities”

and “Securities Authorized for Issuance Under Equity Compensation Plans”

in the Proxy Statement, which information is incorporated herein by reference.

For the information required by this Item 12, see “Ownership of Securities” and “Securities Authorized for Issuance Under Equity Compensation Plans” in the Proxy Statement, which information is incorporated herein by reference.

Certain Relationships and Relate d Transactions, and Director Independence

For the information required by this Item 13, see “Certain Relationships and Related Party Transactions”

and “Corporate Governance”

in the Proxy Statement, which information is incorporated herein by reference.

For the information required by this Item 13, see “Certain Relationships and Related Person Transactions” and “Corporate Governance” in the Proxy Statement, which information is incorporated herein by reference.

Principal Accou ntant Fees and Services

For the information required by this Item 14, see “Principal Accountant Fees and Services”

and “Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services”

in the Proxy Statement, which information is incorporated herein by reference.

For the information required by this Item 14, see “Principal Accountant Fees and Services” and “Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services” in the Proxy Statement, which information is incorporated herein by reference.

Exhibits and Finan cial Statement Schedules

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(2) Financial Statement Schedules .

Schedule I—Condensed Financial Information of Registrant filed as part of this Annual Report is starting on page 72 .

Schedule II—Valuation and Qualifying Accounts filed as part of this Annual Report is set forth on page 78 of this Annual Report.

Schedule I—Condensed Financial Information of Registrant filed as part of this Annual Report is starting on page 71 .

Schedule II—Valuation and Qualifying Accounts filed as part of this Annual Report is set forth on page 77 of this Annual Report.

All other financial statement schedules have been omitted here because they are not applicable, not required, or the information is shown in the Consolidated Financial Statements or notes thereto.

13 unchanged sentences

November 22, 2022

Description of the Registrant’s Securities.

Annual Report on Form 10-K

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April 16, 2020

Indenture, dated as of September 12, 2023, between the Company and Wilmington Trust, National Association, as trustee (including form of 1.25% Convertible Senior Notes due 2027)

Current Report on Form 8-K

September 18, 2023

Credit Agreement, dated February 24, 2011, by and among Burlington Coat Factory Warehouse Corporation, as borrower, the facility guarantors signatory thereto, JPMorgan Chase Bank, N.A., as administrative agent and as collateral agent, Goldman Sachs Lending Partners LLC, the lenders party thereto, and J.P.

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June 25, 2021

Amendment No.

10, dated as of May 11, 2023, to the Credit Agreement dated as of February 24, 2011, by and among Burlington Coat Factory Warehouse Corporation, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders and facility guarantors party thereto.

Quarterly Report on Form 10-Q

Second Amended and Restated Credit Agreement, dated September 2, 2011, among Burlington Coat Factory Warehouse Corporation, as lead borrower, the borrowers named therein and the facility guarantors party thereto, Bank of America, N.A., as administrative agent and as collateral agent, Wells Fargo Capital Finance, LLC and JPMorgan Chase Bank, N.A., as co-syndication agents, and Suntrust Bank and U.S.

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September 9, 2011

First Amendment to Second Amended and Restated Credit Agreement, dated August 13, 2014, by and among Burlington Coat Factory Warehouse Corporation, as lead borrower, the other borrowers party thereto, the facility guarantors thereto, the lenders party thereto and Bank of America, N.A., as administrative agent and collateral agent.

First Amendment to Second Amended and Restated Credit Agreement, dated August 13, 2014, by and among

Current Report on Form 8-K

August 18, 2014

Second Amendment to Second Amended and Restated Credit Agreement, dated June 29, 2018, by and among Burlington Coat Factory Warehouse Corporation, as lead borrower, the other borrowers party thereto, the facility guarantors thereto, the lenders party thereto and Bank of

Burlington Coat Factory Warehouse Corporation, as lead borrower, the other borrowers party thereto, the facility guarantors thereto, the lenders party thereto and Bank of America, N.A., as administrative agent and collateral agent.

Current Report on Form 8-K

America, N.A., as administrative agent and collateral agent.

Consent and Technical Modification Agreement, dated December 3, 2018, by and between Burlington Coat Factory Warehouse Corporation, as lead borrower, and Bank of America, N.A., as administrative agent

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July 22, 2022

Revolving Credit Note, dated April 13, 2006, by the borrowers party thereto in favor of PNC Bank, National Association.

Registration Statement on Form S-4

October 10, 2006

Revolving Credit Note, dated April 13, 2006, by the borrowers party thereto in favor of Siemens Financial Services, Inc.

Registration Statement on Form S-4

October 10, 2006

Amended and Restated Revolving Credit Note, dated January 15, 2010, by the borrowers party thereto in favor of Wells Fargo Retail Finance, LLC.

Transition Report on Form 10-K/T

April 30, 2010

Revolving Credit Note, dated April 13, 2006, by the borrowers party thereto in favor of National City Business Credit, Inc.

Registration Statement on Form S-4

October 10, 2006

Revolving Credit Note, dated April 13, 2006, by the borrowers party thereto in favor of Citizens Bank of Pennsylvania.

Registration Statement on Form S-4

October 10, 2006

Revolving Credit Note, dated April 13, 2006, by the borrowers party thereto in favor of HSBC Business Credit (USA), Inc.

Registration Statement on Form S-4

October 10, 2006

Revolving Credit Note, dated April 13, 2006, by the borrowers party thereto in favor of Sovereign Bank.

Registration Statement on Form S-4

October 10, 2006

Amended and Restated Revolving Credit Note, dated January 15, 2010, by the borrowers party thereto in favor of Capital One Leverage Finance Corp.

Transition Report on Form 10-K/T

April 30, 2010

Form of Swingline Note, dated April 12, 2006.

Registration Statement on Form S-4

October 10, 2006

Fifth Amendment to Second Amended and Restated Credit Agreement, dated as of June 26, 2023, by and among Burlington Coat Factory Warehouse Corporation, as lead borrower, the other borrowers party thereto, the facility guarantors party thereto, each lender party thereto, and Bank of America, N.A., as administrative agent and collateral agent.

Quarterly Report on Form 10-Q

August 24, 2023

Guaranty, dated April 13, 2006, by the facility guarantors party thereto in favor of Bank of America, N.A., as administrative Agent and Bank of America, N.A., as Collateral Agent.

7 unchanged sentences

October 10, 2006

Pledge Agreement, dated April 13, 2006, by and between Burlington Coat Factory Holdings, Inc., Burlington Coat Factory Investments Holdings, Inc., Burlington Coat Factory Warehouse Corporation, Burlington Coat Factory Realty Corp., Burlington Coat Factory Purchasing, Inc., K&T Acquisition Corp., Burlington Coat Factory of New York, LLC, Burlington Coat Factory Warehouse of Baytown, Inc., Burlington Coat Factory of Texas, Inc., as the pledgors, and Bank of America, N.A., as collateral agent.

Registration Statement on Form S-4

October 10, 2006

Coat Factory of New York, LLC, Burlington Coat Factory Warehouse of Baytown, Inc., Burlington Coat Factory of Texas, Inc., as the pledgors, and Bank of America, N.A., as collateral agent.

Amended and Restated Employment Agreement, dated July 28, 2015, by and among Burlington Coat Factory Warehouse Corporation and Jennifer Vecchio.

8 unchanged sentences

Employment Agreement, dated as of April 23, 2019, by and between Burlington Stores, Inc.

and Michael O’Sullivan.

Current Report on Form 8-K

April 23, 2019

Employment Agreement, dated as of March 23, 2011, by and between Burlington Coat Factory Warehouse Corporation and John Crimmins

Annual Report on Form 10-K

March 13, 2020

Letter Agreement, dated April 4, 2022, by and between Burlington Stores, Inc.

and John Crimmins.

and Michael O’Sullivan.

Current Report on Form 8-K

3 unchanged sentences

Current Report on Form 8-K

Burlington Coat Factory Holdings, Inc.

2006 Management Incentive Plan (Amended and Restated June 15, 2013).

Registration Statement on Form S-1/A

September 6, 2013

Form of Directors and Officers Indemnification Agreement.

8 unchanged sentences

Form of Non-Qualified Stock Option Agreement between Burlington Stores, Inc.

and Employees with Employment Agreements pursuant to Burlington Stores, Inc.

2013 Omnibus Incentive Plan, as amended and restated May 17, 2017 (for grants made from and after November 2016 and prior to May 2017).

Quarterly Report on Form 10-Q

November 23, 2016

Form of Non-Qualified Stock Option Agreement between Burlington Stores, Inc.

and Employees without Employment Agreements pursuant to Burlington Stores, Inc.

2013 Omnibus Incentive Plan, as amended and restated May 17, 2017 (for grants made from and after November 2016 and prior to May 2017).

Quarterly Report on Form 10-Q

November 23, 2016

Form of Non-Qualified Stock Option Agreement between Burlington Stores, Inc.

and Employees with Employment Agreements or Subject to the Executive Severance Plan pursuant to Burlington Stores, Inc.

76 unchanged sentences

Form of Restricted Stock Unit Award Notice and Agreement between Burlington Stores, Inc.

and non-employee directors pursuant to the Burlington Stores, Inc.

2022 Omnibus Incentive Plan.

Quarterly Report on Form 10-Q

August 25, 2022

non-employee directors pursuant to the Burlington Stores, Inc.

2022 Omnibus Incentive Plan.

Security Agreement, dated as of April 16, 2020, among Burlington Coat Factory Warehouse Corporation, the Grantors party thereto and Wilmington Trust, National Association, in its capacity as collateral agent under the Indenture

10 unchanged sentences

April 16, 2020

Pari Passu Intercreditor Agreement, dated as of April 16, 2020, among Burlington Coat Factory Warehouse Corporation, the Guarantors party thereto, JPMorgan Chase Bank, N.A., as collateral agent under the Term Loan Facility, and Wilmington Trust, National

Current Report on Form 8-K

April 16, 2020

Association, in its capacity as collateral agent under the Indenture

Form of Restricted Stock Unit Award Notice and Agreement between Burlington Stores, Inc.

61 unchanged sentences

1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Inline XBRL Instance Document –

the instance document does not appear in Interactive Data File, because its XBRL tags are embedded within the Inline XBRL document.

Burlington Stores, Inc.

Policy on Recoupment of Incentive Compensation

Inline XBRL Instance Document – the instance document does not appear in Interactive Data File, because its XBRL tags are embedded within the Inline XBRL document.

Inline XBRL Taxonomy Extension Schema Document

9 unchanged sentences

BURLINGTON STORES, INC.

/s/ Michael O’Sullivan

Michael O’Sullivan

/s/ Michael O’Sullivan

Michael O’Sullivan

Chief Executive Officer

1 unchanged sentence

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on the 15 th day of March 2024.

/s/ Michael O’Sullivan

Chief Executive Officer and Director

(Principal Executive Officer)

Michael O’Sullivan

/s/ Kristin Wolfe

20 unchanged sentences

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