What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-03-25 compared with 2021-03-24 · 380 added, 234 removed, 452 unchanged (58% of the section changed)

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Index to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm ( KPMG LLP , Philadelphia, PA , Auditor Firm ID 185 )

Consolidated Financial Statements:

Consolidated Statements of Income for the fiscal years ended January 30, 2021, February 1, 2020 and February 2, 2019

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

Consolidated Statements of Stockholders’ Equity for the fiscal years ended January 30, 2021, February 1, 2020 and February 2, 2019

Consolidated Statements of Cash Flows for the fiscal years ended January 30, 2021, February 1, 2020 and February 2, 2019

Consolidated Statements of Income for the fiscal years ended January 29, 2022, January 30, 2021

and February 1, 2020

Consolidated Balance Sheets as of January 29, 2022 and January 30, 2021

Consolidated Statements of Stockholders’ Equity for the fiscal years ended January 29, 2022, January 30, 2021

and February 1, 2020

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

and February 1, 2020

Notes to Consolidated Financial Statements

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We have audited the accompanying consolidated balance sheets of Ollie’s Bargain Outlet Holdings, Inc.

and subsidiaries (the Company) as of January 30, 2021 and February 1, 2020, the related consolidated statements of income, stockholders’ equity, and cash flows for each of the fiscal years in the three-year period ended January 30, 2021, and the related notes and financial statement schedule I - condensed financial information of registrant (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of January 30, 2021 and February 1, 2020, and the results of its operations and its cash flows for each of the fiscal years in the three-year period ended January 30, 2021, in conformity with U.S.

and subsidiaries (the Company) as of January 29, 2022

and January 30, 2021, the related consolidated statements of income, stockholders’ equity, and cash flows for each of the fiscal years in the three-year period ended January 29, 2022, and the related notes and financial statement schedule I -

condensed financial information of registrant (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of January

29, 2022 and January 30, 2021 and the results of its operations and its cash flows for each of the fiscal years in the three-year period ended January 29, 2022, in conformity with U.S.

generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of January 30, 2021, 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 24, 2021 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Change in Accounting Principle

As discussed in Note 4 to the consolidated financial statements, the Company has changed its method of accounting for leases as of February 3, 2019 due to the adoption of Accounting Standards Update (ASU) 2016-02, Leases .

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal

control over financial reporting as of January 29, 2022, 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 25, 2022 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

Our responsibility is to express an opinion on these

consolidated financial statements based on our audits.

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.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

federal securities laws and the applicable

rules and regulations of the Securities and Exchange Commission and the PCAOB.

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

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

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

Those standards require that we plan and perform the audit to obtain reasonable

assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial

statements, whether due to error or fraud, and performing procedures that respond to those risks.

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

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

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

We believe that our audits provide a reasonable basis for

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

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

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was

communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex

on the critical audit matter or on the accounts or disclosures to which it relates.

Evaluation of excess inventories

As discussed in Note 1(h) to the consolidated financial statements, the Company utilizes the retail inventory method.

The retail inventory method involves the use of judgments and estimates, such as the timing of permanent markdowns, to account for excess inventory that may impact the valuation of ending inventory.

Factors considered in the determination of permanent markdowns include inventory obsolescence, excess inventories, current and anticipated demand, age of the merchandise and customer preferences.

inventory method involves the use of judgments and estimates, such as the timing of permanent markdowns, to account for excess inventory that may impact the valuation of ending inventory.

Factors considered in the determination of permanent markdowns

include inventory obsolescence, excess inventories, current and anticipated demand, age of the merchandise and customer preferences.

As of January 29, 2022, the Company’s inventory balance was $467.3 million.

We identified the evaluation of excess inventories as a critical audit matter.

Especially challenging auditor judgement was required to evaluate the timeliness of permanent markdowns due to the subjective nature of the audit procedures applied to evaluate the time period in which the excess inventories warranted a permanent markdown.

Especially challenging auditor judgement was required to

evaluate the timeliness of permanent markdowns due to the subjective nature of the audit procedures applied to evaluate the time period in which the excess inventories warranted a permanent markdown.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of certain internal controls related to the evaluation of excess inventories.

This included controls related to inventory permanent markdowns, including controls over the review of the excess inventory analysis, which provided the time period inventories have been outstanding in order to identify excess inventories.

To test the timeliness of permanent markdowns, we assessed the reliability of the excess inventory analysis, and we involved information technology professionals with specialized skills and knowledge, who assisted in evaluating the reliability of the aged inventory items by product type.

In addition, we evaluated the Company’s determination of timely permanent markdowns by analyzing the Company’s excess inventory analysis.

We evaluated the design and tested the

operating effectiveness of certain internal controls related to the evaluation of excess inventories.

This included controls related to inventory permanent markdowns, including controls over the review of the excess inventory analysis, which provided

the time period inventories have been outstanding, in order to identify excess inventories.

To test the timeliness of permanent markdowns, we assessed the reliability of the excess inventory analysis, and we involved information technology

professionals with specialized skills and knowledge, who assisted in evaluating the reliability of the aged inventory items by product type.

In addition, we evaluated the Company’s determination of timely permanent markdowns by analyzing the

Company’s excess inventory analysis.

We have served as the Company’s auditor since 2009.

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Operating income

Interest (income) expense, net

Loss on extinguishment of debt

Interest expense (income), net

Income before income taxes

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Common stock - 500,000 shares authorized at $ 0.001 par value;

66,165 and 63,712 shares issued, respectively

66,516 and 66,165 shares issued,

Additional paid-in capital

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Balance as of February 2 , 2019

Cumulative effect of adopting ASU 2014-09 (Note 2)

Stock-based compensation expense

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Common shares withheld for taxes

Shares repurchased

Balance as of February 1 , 2020

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Shares repurchased

Balance as of February 1, 2020

Balance as of January 30 , 2021

Stock-based compensation expense

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Amortization of debt issuance costs

Amortization of original issue discount

Loss on extinguishment of debt

Amortization of intangibles

Gain on sale of assets

Deferred income tax provision (benefit)

Deferred rent expense

Deferred income tax provision

Stock-based compensation expense

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Cash flows from financing activities:

Repayments on term loan and finance leases

Repayments on finance leases

Payment of debt issuance costs

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Payment for shares repurchased

Net cash provided by (used in) financing activities

Net increase in cash and cash equivalents

Net cash (used in) provided by financing activities

Net (decrease) increase in cash and cash equivalents

Cash and cash equivalents at the beginning of the year

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Ollie’s Bargain Outlet Holdings, Inc.

and subsidiaries (collectively referred to as the “Company” or “Ollie’s”) principally buys overproduced, overstocked and closeout merchandise from manufacturers, wholesalers and other retailers.

In addition, the Company augments its name-brand closeout deals with directly sourced private label products featuring names exclusive to Ollie’s in order to provide consistently value-priced goods in select key merchandise categories.

and subsidiaries (collectively referred to as the “Company” or “Ollie’s”) principally buys

overproduced, overstocked and closeout merchandise from manufacturers, wholesalers and other retailers.

In addition, the Company augments its name-brand closeout deals with directly sourced private label products featuring names exclusive to Ollie’s

in order to provide consistently value-priced goods in select key merchandise categories.

Since its first store opened in 1982, the Company has grown to 431 retail locations in 29 states as of January 29, 2022.

Ollie’s Bargain Outlet retail locations are located in Alabama, Arkansas, Connecticut, Delaware, Florida, Georgia, Indiana, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, Mississippi, New Jersey, New York, North Carolina, Ohio, Oklahoma, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, Virginia, and West Virginia.

Ollie’s Bargain Outlet retail locations are located in Alabama, Arkansas, Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, Kansas, Kentucky, Louisiana, Maryland, Massachusetts, Michigan,

Mississippi, Missouri, New Jersey, New York, North Carolina, Ohio, Oklahoma, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, Vermont, Virginia and West Virginia.

Ollie’s follows a 52/53-week fiscal year, which ends on the Saturday nearer January 31 of the following calendar year.

References to the fiscal year ended January 30, 2021 refer to the 52-week period from February 2, 2020 to January 30, 2021 (“2020”).

References to the fiscal year ended February 1, 2020 refer to the 52-week period from February 3, 2019 to February 1, 2020 (“2019”).

References to the fiscal year ended January 29, 2022 refer to the 52-week period from January 31, 2021 to January 29, 2022 (“2021”).

References to the fiscal year ended January 30, 2021 refer to the 52-week period

from February 2, 2020 to January 30, 2021 (“2020”).

References to the fiscal year ended February 1, 2020 refer to the 52-week period from February 3, 2019 to February 1, 2020 (“2019”) .

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The consolidated financial statements include the accounts of the Company and its subsidiaries.

Intercompany transactions have been eliminated in consolidation.

Intercompany transactions have been

eliminated in consolidation.

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S.

Generally Accepted Accounting Principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.

generally accepted accounting principles (“GAAP”) requires

management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and

expenses during the reporting period.

Actual results could differ from those estimates.

Fair Value Disclosures

Fair value is defined as the price which the Company would receive to sell an asset or pay to transfer a liability (an exit price) in an orderly transaction between market participants on the measurement date.

Fair value is defined as the price which the Company would receive to sell an asset or pay to transfer a liability (an exit price) in an

orderly transaction between market participants on the measurement date.

In determining fair value, GAAP establishes a three-level hierarchy used in measuring fair value, as follows:

Level 1 inputs are quoted prices available for identical assets and liabilities in active markets.

Level 2 inputs are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets and liabilities in active markets or other inputs that are observable or can be corroborated by observable market data.

Level 2 inputs are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets and liabilities in active markets or

other inputs that are observable or can be corroborated by observable market data.

Level 3 inputs are less observable and reflect the Company’s assumptions.

Ollie’s financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable and the Company’s credit facilities.

Ollie’s financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable and the Company’s credit

The carrying amounts of cash and cash equivalents, accounts receivable and accounts payable approximate fair value because of their short maturities.

The carrying amount of the Company’s credit facilities approximates its fair value because the interest rates are adjusted regularly based on current market conditions.

The carrying amount of the Company’s credit facilities approximates its fair value

because the interest rates are adjusted regularly based on current market conditions.

OLLIE’S BARGAIN OUTLET HOLDINGS, INC.

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Cash and Cash Equivalents

The Company considers cash on hand in stores, bank deposits, credit card receivables, and all highly liquid investments with remaining maturities of three months or less at the date of acquisition to be cash and cash equivalents.

The Company considers cash on hand in stores, bank deposits, credit card receivables, and all highly liquid investments with remaining

maturities of three months or less at the date of acquisition to be cash and cash equivalents.

Amounts receivable from credit card issuers are typically converted to cash within one to two business days of the original sales transaction.

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A financial instrument which potentially subjects the Company to a concentration of credit risk is cash.

Ollie’s currently maintains its day-to-day operating cash balances with major financial institutions.

Ollie’s currently maintains its

day-to-day operating cash balances with major financial institutions.

The Company’s operating cash balances are in excess of the Federal Deposit Insurance Corporation (“FDIC”) insurance limit.

From time to time, Ollie’s invests temporary excess cash in overnight investments with expected minimal volatility, such as money market funds.

Although the Company maintains balances which exceed the FDIC insured limit, it has not experienced any losses related to these balances, and Ollie’s believes the credit risk to be minimal.

From time to time, Ollie’s invests temporary excess cash

in overnight investments with expected minimal volatility, such as money market funds.

Although the Company maintains balances which exceed the FDIC insured limit, it has not experienced any losses related to these balances, and Ollie’s believes the

credit risk to be minimal.

Inventories are stated at the lower of cost or market determined using the retail inventory method on a first-in, first-out basis.

The cost of inventories includes the merchandise cost, transportation costs, and certain distribution and storage costs.

cost of inventories includes the merchandise cost, transportation costs, and certain distribution and storage costs.

Such costs are thereafter expensed as cost of sales upon the sale of the merchandise.

Inherent in the retail inventory method are certain management judgments and estimates including, among others, merchandise markups, the amount and timing of permanent markdowns, and shrinkage, which may significantly impact both the ending inventory valuation and gross profit.

Factors considered in the determination of permanent markdowns include inventory obsolescence, excess inventories, current and anticipated demand, age of the merchandise and customer preferences.

Pursuant to the retail inventory method, permanent markdowns result in the devaluation of inventory and the resulting gross profit reduction is recognized in the period in which the markdown is recorded.

Inherent in the retail inventory method are certain management judgments and estimates including, among others, merchandise markups, the

amount and timing of permanent markdowns, and shrinkage, which may significantly impact both the ending inventory valuation and gross profit.

Factors considered in the determination of permanent markdowns include inventory obsolescence, excess inventories, current and

anticipated demand, age of the merchandise and customer preferences.

Pursuant to the retail inventory method, permanent markdowns result in the devaluation of inventory and the resulting gross profit reduction is recognized in the period in which the

markdown is recorded.

Property and Equipment

Property and equipment are stated at original cost less accumulated depreciation and amortization.

Depreciation and amortization are calculated over the estimated useful lives of the related assets, or in the case of leasehold improvements, the lesser of the useful lives or the remaining term of the lease.

Depreciation and amortization are

calculated over the estimated useful lives of the related assets, or in the case of leasehold improvements, the lesser of the useful lives or the remaining term of the lease.

Expenditures for additions, renewals, and betterments are capitalized;

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The Company amortizes intangible assets over their useful lives unless it determines such lives to be indefinite.

Goodwill and intangible assets having indefinite useful lives are not amortized to earnings, but instead are subject to annual impairment testing or more frequently if events or circumstances indicate that the value of goodwill or intangible assets having indefinite useful lives might be impaired.

intangible assets having indefinite useful lives are not amortized to earnings, but instead are subject to annual impairment testing or more frequently if events or circumstances indicate that the value of goodwill or intangible assets having

indefinite useful lives might be impaired.

Goodwill and intangible assets having indefinite useful lives are tested for impairment annually in the fiscal month of October.

The Company has the option to evaluate qualitative factors to determine if it is more likely than not that the carrying amount of its sole reporting unit or its nonamortizing intangible assets (consisting of a tradename) exceed their implied respective fair value and whether it is necessary to perform a quantitative analysis to determine impairment.

As part of this qualitative assessment, the Company weighs the relative impact of factors that are specific to its sole reporting unit or its nonamortizing intangible assets as well as industry, regulatory and macroeconomic factors that could affect the inputs used to determine the fair value of the assets.

If management determines a quantitative goodwill impairment test is required, or it elects to perform a quantitative test, the test is performed by determining the fair value of the Company’s sole reporting unit.

Fair value is determined based upon the Company’s public market capitalization.

The carrying value of goodwill is considered impaired when the reporting unit’s fair value is less than its carrying value and the Company would record an impairment loss equal to the difference, not to exceed the total amount of goodwill allocated to the reporting unit .

For 2020, 2019 and 2018, the Company completed an impairment test of its goodwill and determined that no impairment of goodwill existed.

If management determines a quantitative analysis of intangible assets having indefinite useful lives is required, the test is performed using the discounted cash flow method based on management’s projections of future revenues and an estimated royalty rate to determine the fair value of the asset, specifically, the Company’s tradename.

An impairment loss is recognized for any excess of the carrying amount of the asset over the implied fair value of that asset.

For 2020, 2019 and 2018, the Company completed an impairment test of its tradename and determined that no impairment of the asset existed.

For 2018, intangible assets with determinable useful lives were amortized over their estimated useful lives and reviewed for impairment whenever events or changes in circumstances indicated that the carrying amount may not be recoverable.

Due to the adoption of Accounting Standards Update 2016-02, Leases (“ASU 2016-02”), as of February 3, 2019, favorable leases are now included in the operating lease right-of-use assets on the consolidated balance sheets.

Company has the option to evaluate qualitative factors to determine if it is more likely than not that the carrying amount of its sole reporting unit or its nonamortizing intangible assets (consisting of a tradename) exceed their implied respective

fair value and whether it is necessary to perform a quantitative analysis to determine impairment.

As part of this qualitative assessment, the Company weighs the relative impact of factors that are specific to its sole reporting unit or its

nonamortizing intangible assets as well as industry, regulatory and macroeconomic factors that could affect the inputs used to determine the fair value of the assets.

If management determines a quantitative goodwill impairment test is required, or it elects to perform a quantitative test, the test is

performed by determining the fair value of the Company’s sole reporting unit.

Fair value is determined based on the Company’s public market capitalization.

value of goodwill is considered impaired when the reporting unit’s fair value is less than its carrying value and the Company would record an impairment loss equal to the difference, not to exceed the total amount of goodwill allocated to the

reporting unit .

For 2021, 2020 and 2019, the Company completed an impairment

test of its goodwill and determined that no impairment of goodwill existed.

If management determines a quantitative analysis of intangible assets having indefinite useful lives is required, the test is performed

using the discounted cash flow method based on management’s projections of future revenues and an estimated royalty rate to determine the fair value of the asset, specifically, the Company’s tradename.

An impairment loss is recognized for any excess

of the carrying amount of the asset over the implied fair value of that asset.

For 2021, 2020 and 2019, the Company completed an impairment

test of its tradename and determined that no impairment of the asset existed.

Impairment of Long-Lived Assets

Long-lived assets, such as property and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that

the carrying amount of an asset may not be recoverable.

If circumstances require a long-lived asset or asset group be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset

group to its carrying value.

If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, impairment is recognized to the extent that the carrying value exceeds its fair value.

Fair value is

determined through various valuation techniques, including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary.

OLLIE’S BARGAIN OUTLET HOLDINGS, INC.

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Notes to Consolidated Financial Statements

Impairment of Long-Lived Assets

Long-lived assets, such as property and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

If circumstances require a long-lived asset or asset group be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying value.

Fair value is determined through various valuation techniques, including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary.

Stock-Based Compensation

The Company measures the cost of employee services received in exchange for stock-based compensation based on the grant date fair value of the employee stock award.

The Company measures the cost of employee services received in exchange for stock-based compensation based on the grant date fair value

of the employee stock award.

For stock option awards, the Company estimates grant date fair value using the Black-Scholes option pricing model.

For restricted stock unit awards, grant date fair value is determined based on the closing trading value of the Company’s stock on the date of grant.

For restricted stock unit awards, grant date fair value is determined based on the closing trading value

of the Company’s stock on the date of grant.

In both cases, stock-based compensation is recorded on a straight-line basis over the vesting period for the entire award.

Cost of Sales

Cost of sales includes merchandise costs, inventory markdowns, shrinkage and transportation, distribution and warehousing costs, including depreciation.

Cost of sales includes merchandise costs, inventory markdowns, shrinkage and transportation, distribution and warehousing costs,

including depreciation and amortization .

Selling, General and Administrative Expenses

Selling, general and administrative expenses (“SG&A”) are comprised of payroll and benefits for stores, field support and support center associates.

Selling, general and administrative expenses (“SG&A”) are comprised of payroll and benefits for stores, field support and support

center associates.

SG&A also include marketing and advertising expense, occupancy costs for stores and the store support center, insurance, corporate infrastructure, and other general expenses.

Advertising Costs

Advertising costs primarily consist of newspaper circulars, email campaigns, media broadcasts and prominent advertising at professional and collegiate sporting events and are generally expensed the first time the advertising occurs.

Advertising expense for 2020, 2019 and 2018 was $ 41.4 million, $ 42.4 million and $ 36.7 million, respectively.

time the advertising occurs.

Advertising expense for 2021, 2020 and 2019 was $ 52.2 million, $ 41.4 million and $ 42.4 million,

respectively .

Operating Leases

The Company generally leases its store locations, distribution centers and office facilities.

Many of the lease agreements contain rent holidays, rent escalation clauses and contingent rent provisions – or some combination of these items.

Many of the lease agreements contain rent

holidays, rent escalation clauses and contingent rent provisions – or some combination of these items.

For leases of store locations and the store support centers, the Company recognizes rent expense in SG&A.

For leases of distribution centers, the Company recognizes rent expense within cost of sales.

For leases of distribution centers,

the Company recognizes rent expense within cost of sales.

All rent expense is recorded on a straight-line basis over the accounting lease term, which includes lease renewals determined to be reasonably certain.

The Company recognizes operating lease assets and liabilities at the lease commencement date in accordance with ASU 2016-02.

The Company recognizes operating lease assets and

liabilities at the lease commencement date in accordance with Accounting Standards Update 2016-02, Leases (“ASU 2016-02”) .

Operating lease liabilities represent the present value of lease payments not yet paid.

Operating lease assets represent the Company’s right to use an underlying asset for the lease term.

The Company’s lessors do not provide an implicit rate, nor is one readily available, therefore the Company uses its incremental borrowing rate based on the portfolio approach, which applies one rate to leases within a given period.

The incremental borrowing rate is used to discount future cash flows and is an estimate which is determined by an analysis of the rate of interest it would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms and current market conditions.

Company’s lessors do not provide an implicit rate, nor is one readily available, therefore the Company uses its incremental borrowing rate based on the portfolio approach, which applies one rate to leases within a given period.

incremental borrowing rate is used to discount future cash flows and is an estimate which is determined by an analysis of the rate of interest it would have to pay on a collateralized basis to borrow an amount equal to the lease payments under

similar terms and current market conditions.

OLLIE’S BARGAIN OUTLET HOLDINGS, INC.

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Pre-opening expenses consist of expenses of opening new stores and distribution centers, as well as store closing costs.

For opening new stores, pre-opening expenses include grand opening advertising costs, payroll expenses, travel expenses, employee training costs, rent expenses and store setup costs.

Pre-opening expenses for new stores are expensed as they are incurred, which is typically within 30 to 45 days of opening a new store.

For opening new

stores, pre-opening expenses include grand opening advertising costs, payroll expenses, travel expenses, employee training costs, rent expenses and store setup costs.

Pre-opening expenses for new stores are expensed as they are incurred, which is

typically within 30 to 45 days

of opening a new store.

For opening distribution centers, pre-opening expenses primarily include inventory transportation costs, employee travel expenses and occupancy costs.

Store closing costs primarily consist of insurance deductibles, rent and store payroll.

Store closing costs primarily consist of insurance deductibles, rent and

store payroll.

Debt Issuance Costs

Debt issuance costs are amortized to interest expense using the effective interest method over the life of the related debt.

As of January 30, 2021 and February 1, 2020, debt issuance costs, net of accumulated amortization, were $ 0.8 million and $ 1.1 million, respectively.

The amortization expense for debt issuance costs was $ 0.3 million, $ 0.3 million and $ 0.5 million for 2020, 2019 and 2018, respectively.

The write-off of unamortized debt issuance costs recorded in loss on extinguishment of debt on the consolidated statement of income totaled $ 0.2 million for 2018.

As of January 29, 2022 and January 30, 2021, debt issuance costs, net of accumulated amortization, were $ 0.5

million and $ 0.8 million, respectively.

The amortization expense for debt issuance costs was $ 0.3 million in each of 2021, 2020 and 2019 .

Self ‑ Insurance Liabilities

Under a number of the Company’s insurance programs, which include the Company’s employee health insurance program, its workers’ compensation and general liability insurance programs, the Company is liable for a portion of its losses.

Under a number of the Company’s insurance programs, which include the Company’s employee health insurance program, its workers’

compensation and general liability insurance programs, the Company is liable for a portion of its losses.

The Company estimates the accrued liabilities for its self-insurance programs using historical claims experience and loss reserves.

To limit the Company’s exposure to losses, a stop-loss coverage is maintained through third-party insurers.

Company’s exposure to losses, a stop-loss coverage is maintained through third-party insurers.

Income taxes are accounted for under the asset and liability method.

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating losses and tax credit carryforwards.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained.

Deferred tax assets and liabilities are recognized for the future

tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating losses and tax credit carryforwards.

Deferred tax assets and liabilities are

measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

The Company recognizes the effect of income tax positions only if those positions are more

likely than not of being sustained.

Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized.

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federal income tax examinations.

State income tax returns are filed in various state tax jurisdictions, as appropriate, with varying statutes of limitation and remain subject to examination for varying periods up to three to four years depending on the state.

OLLIE’S BARGAIN OUTLET HOLDINGS, INC.

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

Diluted earnings per common share is computed by dividing net income by the weighted average number of common shares outstanding, after giving effect to the potential dilution, if applicable, from the assumed exercise of stock options into shares of common stock as if those stock options were exercised and the assumed lapse of restrictions on restricted stock units.

The following table summarizes those effects for the diluted earnings per common share calculation (in thousands, except per share amounts):

earnings per common share is computed by dividing net income by the weighted average number of common shares outstanding, after giving effect to the potential dilution, if applicable, from the assumed exercise of stock options into shares of common

stock as if those stock options were exercised and the assumed lapse of restrictions on restricted stock units.

The following table summarizes those effects for the diluted earnings per common share calculation (in thousands, except per share

Fiscal year ended

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Earnings per common share – Diluted

The effect of the weighted average assumed exercise of stock options outstanding totaling 322,238 , 359,801 and 100,183 as of January 30, 2021, February 1, 2020 and February 2, 2019, respectively, were excluded from the calculation of diluted weighted average common shares outstanding because the effect would have been antidilutive.

The effect of weighted average non-vested restricted stock units outstanding totaling 12,047 , 34,673 and 6,800 as of January 30, 2021, February 1, 2020 and February 2, 2019, respectively, were excluded from the calculation of diluted weighted average common shares outstanding because the effect would have been antidilutive.

The effect of the weighted average assumed exercise of stock options outstanding totaling 425,718 , 322,238 and 359,801 as of January 29, 2022, January 30, 2021 and February 1, 2020, respectively , were excluded from the calculation of diluted weighted

average common shares outstanding because the effect would have been antidilutive.

The effect of weighted average non-vested restricted stock units outstanding totaling 22,546 , 12,047 and 34,673 as of January 29, 2022, January 30, 2021 and February 1, 2020, respectively , were excluded from the calculation of diluted weighted

average common shares outstanding because the effect would have been antidilutive.

Impact of the Novel Coronavirus (“COVID-19” )

The outbreak of the novel coronavirus COVID-19, which was declared a global pandemic by the World Health Organization on March 11, 2020, has led to adverse impacts on the U.S.

The outbreak of the novel coronavirus COVID-19, which was declared a

global pandemic by the World Health Organization on March 11, 2020, has led to adverse impacts on the U.S.

and global economies.

The outbreak of COVID-19 and related measures to quell the outbreak have impacted the Company’s inventory supply chain, operations and customer demand.

The Company’s stores and distribution centers have continued to operate as an essential business during the COVID-19 pandemic and the Company is committed to maintaining a safe work and shopping environment.

The COVID-19 pandemic could further affect the Company’s operations and the operations of its suppliers and vendors as a result of continuing or renewed restrictions and limitations on travel, shelter-in-place orders, limitations on store or facility operations up to and including closures, and other governmental, business or consumer actions.

The outbreak of COVID-19 and related measures to quell the outbreak have impacted the Company’s inventory supply chain,

operations and customer demand.

The Company is continuing to experience labor pressures in its stores and distribution centers as well as supply chain disruptions due to the ongoing impacts of COVID-19 and related measures.

The COVID-19 pandemic

could further affect the Company’s operations and the operations of its suppliers and vendors as a result of continuing or renewed restrictions and limitations on travel, limitations on store or facility operations up to and including closures, and

other governmental, business or consumer actions.

The extent to which the COVID-19 pandemic will impact the Company’s operations, liquidity or financial results in subsequent periods is uncertain, but such impact could be material.

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Ollie’s recognizes retail sales in its stores when merchandise is sold and the customer takes possession of merchandise.

Also included in net sales is revenue allocated to certain redeemed discounts earned via the Ollie’s Army loyalty program and gift card breakage.

included in net sales is revenue allocated to certain redeemed discounts earned via the Ollie’s Army loyalty program and gift card breakage.

Net sales are presented net of returns and sales tax.

The Company provides an allowance for estimated retail merchandise returns based on prior experience.

Adoption of ASU 2014-09, Revenue from Contracts with Customers

In May 2014, the Financial Accounting Standards Board issued ASU 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers.

The Company adopted ASU 2014-09 as of February 4, 2018 using the modified retrospective transition method.

At the time of adoption, the Company recorded a net reduction to the opening balance of retained earnings of $ 5.6 million due to the cumulative impact of adopting ASU 2014-09, with the impact primarily related to the changes in revenue recognition associated with the Company’s customer loyalty program and gift card breakage.

The Company provides an allowance for estimated retail

merchandise returns based on prior experience.

Revenue Recognition

Revenue is deferred for the Ollie’s Army loyalty program where members accumulate points that can be redeemed for discounts on future purchases.

Revenue is deferred for the Ollie’s Army loyalty program

where members accumulate points that can be redeemed for discounts on future purchases.

The Company has determined it has an additional performance obligation to Ollie’s Army members at the time of the initial transaction.

The Company allocates the transaction price to the initial transaction and the discount awards based upon their relative standalone selling price, which considers historical redemption patterns for the award.

The Company allocates

the transaction price to the initial transaction and the discount awards based upon its relative standalone selling price, which considers historical redemption patterns for the award.

Revenue is recognized as those discount awards are redeemed.

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Unless temporarily extended, the maximum redemption period is 45 days .

At the end of each fiscal period, unredeemed discount awards and accumulated points to earn a future discount award are reflected as a liability.

At the end of each fiscal period, unredeemed discount awards and accumulated points to earn a future

discount award are reflected as a liability.

Discount awards are combined in one homogeneous pool and are not separately identifiable.

Therefore, the revenue recognized consists of discount awards redeemed that were included in the deferred revenue balance at the beginning of the period as well as discount awards issued during the current period.

Therefore, the revenue recognized consists of discount awards redeemed that were included in the deferred

revenue balance at the beginning of the period as well as discount awards issued during the current period.

The following table is a reconciliation of the liability related to this program (in thousands):

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Ending balance

Gift card breakage for gift card liabilities not subject to escheatment is recognized as revenue in proportion to the redemption of gift cards.

Gift card breakage for gift card liabilities not subject to escheatment is recognized as revenue in proportion to the redemption of gift

Gift cards do not expire.

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Gift cards are combined in one homogenous pool and are not separately identifiable.

Therefore, the revenue recognized consists of gift cards that were included in the liability at the beginning of the period as well as gift cards that were issued during the period.

Therefore, the revenue recognized consists of gift cards

that were included in the liability at the beginning of the period as well as gift cards that were issued during the period.

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

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Leasehold improvements

Construction in progress

Accumulated depreciation and amortization

Depreciation and amortization expense of property and equipment was $ 22.5 million, $ 17.5 million and $ 14.0 million for 2020, 2019, and 2018, respectively, of which $ 16.7 million, $ 14.6 million and $ 11.7 million is included in the depreciation and amortization expenses for 2020, 2019, and 2018, respectively, on the consolidated statements of income.

The remainder, as it relates to the Company’s distribution centers, is included within cost of sales on the consolidated statements of income.

Depreciation and amortization expense of property and

equipment was $ 24.9 million, $ 22.5 million and $ 17.5 million in 2021, 2020 and 2019,

respectively , of which $ 19.4 million, $ 16.7 million and $ 14.6 million is included in the depreciation and amortization expenses in 2021, 2020 and 2019, respectively , on the consolidated statements of income.

The remainder, as it relates to the Company’s distribution centers, is included within cost of sales on the consolidated statements

Commitments and Contingencies

On February 3, 2019, the first day of Ollie’s fiscal year 2019, the Company adopted ASU 2016-02, which requires that lessees recognize right-of-use assets and lease liabilities for all leases on the balance sheet.

The Company used the modified retrospective transition method, including the option to not restate comparative periods.

Pursuant to the adoption of the new standard, the Company elected the practical expedients upon transition that did not require it to reassess existing contracts to determine if they contain leases under the new definition of a lease, or to reassess historical lease classification or initial direct costs.

The Company also adopted the practical expedient to not separate lease and non-lease components for new leases after adoption of the new standard.

In addition, the Company applied a policy election to exclude leases with an initial term of 12 months or less from balance sheet recognition.

The Company did not adopt the hindsight practical expedient and, therefore, will continue to utilize lease terms determined under previous lease guidance for leases existing at the date of adoption that are not subsequently modified.

Adoption of the standard had a material impact on the consolidated balance sheet and related disclosures and resulted in recognition of right-of-use assets of $ 268.2 million and lease liabilities for operating leases of $ 269.1 million as of February 3, 2019, while eliminating pre-existing balances for other assets of $ 6.9 million, deferred rent and tenant improvement allowances of $ 9.5 million and intangible assets related to favorable leases of $ 1.7 million which were reclassified to the operating lease right-of-use asset.

The standard did not have a material impact on the Company’s consolidated statement of income, stockholders’ equity or cash flows.

On February 3, 2019, the first day of Ollie’s fiscal year

2019, the Company adopted ASU 2016-02, which requires that lessees recognize right-of-use assets and lease liabilities for all leases on the balance sheet.

Pursuant to the adoption of the new standard, the Company elected the practical expedients

upon transition that did not require it to reassess existing contracts to determine if they contain leases under the new definition of a lease, or to reassess historical lease classification or initial direct costs.

The Company also adopted the

practical expedient to not separate lease and non-lease components for new leases after adoption of the new standard.

In addition, the Company applied a policy election to exclude leases with an initial term of 12 months or less from balance

sheet recognition.

subsequently modified.

OLLIE’S BARGAIN OUTLET HOLDINGS, INC.

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Notes to Consolidated Financial Statements

Ollie’s generally leases its stores, offices and distribution facilities under operating leases that expire at various dates through 2034.

Ollie’s generally leases its stores, offices and

distribution facilities under operating leases that expire at various dates through 2034.

These leases generally provide for fixed annual rentals;

however, several provide for minimum annual rentals plus contingent rentals based on a percentage of annual sales.

A majority of the Company’s leases also require a payment for all or a portion of common-area maintenance, insurance, real estate taxes, water and sewer costs and repairs, on a fixed or variable payment basis, the cost of which, for leases existing as of the adoption of ASU 2016-02, is charged to the related expense category rather than being accounted for as rent expense.

For leases entered into after the adoption of ASU 2016-02, the Company accounts for lease components together with non-lease components as a single component for all classes of underlying assets.

however, several provide for minimum annual rentals plus contingent rentals based on a percentage

of annual sales.

for leases existing as of the adoption of ASU 2016-02, is charged to the related expense category rather than being accounted for as rent expense.

For leases entered into after the adoption of ASU 2016-02, the Company accounts for lease

components together with non-lease components as a single component for all classes of underlying assets.

Most of the leases contain options to renew for three to five successive five-year periods.

The Company is generally not reasonably certain to exercise renewal options;

therefore the options are not considered in determining the lease term, and associated potential option payments are excluded from the lease payments.

therefore, the options are not considered in determining the lease term, and associated potential option

payments are excluded from the lease payments.

Ollie’s lease agreements generally do not contain any material residual value guarantees or material restrictive covenants.

Store and office lease costs are classified in SG&A and distribution center lease costs are classified in cost of sales on the consolidated statements of income.

Lease costs for operating leases for 2020, 2019 and 2018 were $ 77.8 million, $ 67.4 million and $ 49.8 million, respectively.

The following table summarizes the maturity of the Company’s operating lease liabilities by fiscal year as of January 30, 2021 (in thousands):

Store and office lease costs are classified in SG&A

and distribution center lease costs are classified in cost of sales on the consolidated statements of income.

The following table summarizes the maturity of the Company’s operating lease liabilities by fiscal year as of January 29, 2022 (in

Total undiscounted lease payments (1)

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Long-term lease obligations

Lease obligations exclude $ 42.2 million of minimum lease payments for leases signed, but not commenced.

The following table summarizes other information related to the Company’s operating leases as of and for the respective periods (dollars in thousands):

obligations exclude $ 46.7 million of minimum

lease payments for leases signed, but not commenced.

The following table summarizes other information related to the Company’s operating leases as of and for the respective periods (dollars

in thousands):

Fiscal Year Ended

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for marketing services.

This agreement has a guaranteed spend commitment of $ 23.0 million over a two-year period ending on May 28, 2022.

This agreement has a guaranteed

spend commitment of $ 23.0 million over a two-year

period ending on May 28, 2022.

As of January 29, 2022, the Company has met its guaranteed spend commitment of $ 23.0 million .

OLLIE’S BARGAIN OUTLET HOLDINGS, INC.

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Notes to Consolidated Financial Statements

Related Party Leases

The Company has entered into five non-cancelable operating leases with related parties for office and store locations that expire at various dates through 2033.

Ollie’s made $ 1.7 million, $ 1.5 million, and $ 1.3 million in rent payments to such related parties during 2020, 2019 and 2018, respectively.

The annual lease payments are between $ 1.0 million and $ 1.7 million for the next five years and the total remaining payments after the next five years are $ 4.8 million.

These lease payments are included in the operating lease disclosures stated above.

Contingencies

From time to time the Company may be involved in claims and legal actions that arise in the ordinary course of its business.

From time to time the Company may be involved in claims and legal actions that arise in the ordinary course of its

The Company cannot predict the outcome of any litigation or suit to which it is a party.

However, the Company does not believe that an unfavorable decision of any of the current claims or legal actions against it, individually or in the aggregate, will have a material adverse effect on its financial position, results of operations, liquidity or capital resources.

However, the Company does not believe that an unfavorable decision of any of the current claims or legal actions against it, individually or in

the aggregate, will have a material adverse effect on its financial position, results of operations, liquidity or capital resources.

Sale-Leaseback

On May 31, 2019, OBO Ventures, Inc.

(“OBO”), a wholly owned subsidiary of the Company, entered into a sale-leaseback transaction with an unaffiliated third-party involving 12 former Toys “R” Us store locations which were acquired by OBO on August 29, 2018.

(“OBO”), a wholly

owned subsidiary of the Company, entered into a sale-leaseback transaction with an unaffiliated third-party involving 12 former Toys “R” Us store locations which were acquired by OBO on August 29, 2018.

OBO received approximately $ 42.0 million for the 12 locations, which resulted in no net gain or loss.

Each of the 12 leased locations has 15 -year lease terms with options for renewal and are included in operating lease liabilities in the accompanying consolidated balance sheets .

Each of the 12 leased locations has 15 -year lease terms with options for renewal and are included in

operating lease liabilities in the accompanying consolidated balance sheets .

Accrued Expenses

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Deferred revenue

Sales and use taxes

Real estate related

Sales and use taxes

Debt Obligations and Financing Arrangements

Long-term debt consists of finance leases as of January 30, 2021 and February 1, 2020.

The Company’s prior credit facilities consisted of a $ 200.0 million term loan, which was fully paid as of February 2, 2019, and a $ 100.0 million revolving credit facility, which included a $ 25.0 million sub-facility for letters of credit and a $ 25.0 million sub-facility for swingline loans.

Loans under the prior credit facilities would have matured January 29, 2021 ;

however, the Company made voluntary prepayments under the prior term loan facility totaling $ 48.8 million during 2018, paying the balance in full.

Long-term debt consists of finance leases as of January

29, 2022 and January 30, 2021.

On May 22, 2019, the Company completed a transaction in which it refinanced its credit facility (the “Credit Facility”).

The Credit Facility provides for a five-year $ 100.0 million revolving credit facility, which includes a $ 45.0 million sub-facility for letters of credit and a $ 25.0 million sub-facility for swingline loans (the “Revolving Credit Facility”).

Facility provides for a five-year $ 100.0

million revolving credit facility, which includes a $ 45.0 million sub-facility for letters of credit and a $ 25.0 million sub-facility for swingline loans (the “Revolving Credit Facility”).

Loans under the Revolving Credit Facility mature on May 22, 2024 .

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The interest rates for the Credit Facility are calculated as follows:

for Base Rate Loans, the higher of the Prime Rate, the Federal Funds Effective Rate plus 0.50 % or the Eurodollar Rate plus 1.0 %, plus the Applicable Margin, or, for Eurodollar Loans, the Eurodollar Rate plus the Applicable Margin.

The Applicable Margin will vary from 0.00 % to 0.50 % for a Base Rate Loan and 1.00 % to 1.50 % for a Eurodollar Loan, based on availability under the Credit Facility.

for Base Rate Loans, the higher of the Prime Rate, the Federal

Funds Effective Rate plus 0.50 % or the Eurodollar Rate plus 1.0 %, plus the Applicable Margin, or, for Eurodollar Loans, the Eurodollar Rate plus the Applicable Margin.

The Applicable Margin will vary from 0.00 % to 0.50 % for a Base Rate Loan and

1.00 % to 1.50 % for a

Eurodollar Loan, based on availability under the Credit Facility.

The Eurodollar Rate is subject to a 0 % floor.

Under the terms of the Revolving Credit Facility, as of January 30, 2021, the Company could borrow up to 90.0 % of the most recent appraised value (valued at cost, discounted for the current net orderly liquidation value) of its eligible inventory, as defined, up to $ 100.0 million.

As of January 30, 2021, the Company had no outstanding borrowings under the Revolving Credit Facility, with $ 92.0 million of borrowing availability, outstanding letters of credit commitments of $ 7.8 million and $ 0.2 million of rent reserves.

Under the terms of the Revolving Credit Facility, as of January 29, 2022, the Company could borrow up to 90.0 % of the most recent appraised value (valued at cost, discounted for the current net orderly liquidation value) of its eligible inventory, as

defined, up to $ 100.0 million.

As of January 29, 2022, the Company had no

outstanding borrowings under the Revolving Credit Facility, with $ 84.7 million of borrowing availability, outstanding letters of credit

commitments of $ 15.1 million and $ 0.2

million of rent reserves.

The Revolving Credit Facility also contains a variable unused line fee ranging from 0.125 % to 0.250 % per annum.

The Company incurred unused line fees of $ 0.1 million, $ 0.2 million and $ 0.2 million in 2020, 2019 and 2018, respectively.

The Credit Facility is collateralized by the Company’s assets and equity and contains a financial covenant, as well as certain business covenants, including restrictions on dividend payments, which the Company must comply with during the term of the agreement.

The financial covenant is a consolidated fixed charge coverage ratio test of at least 1.0 to 1.0 applicable during a covenant period, based on reference to availability.

The Company incurred unused line fees of $ 0.1

million, $ 0.1 million and $ 0.2

million in 2021, 2020 and 2019, respectively.

The Credit Facility is collateralized by the Company’s

assets and equity and contains a financial covenant, as well as certain business covenants, including restrictions on dividend payments, which the Company must comply with during the term of the agreement.

The financial covenant is a consolidated

fixed charge coverage ratio test of at least 1.0

to 1.0 applicable during a covenant period, based on reference to availability.

The Company was in compliance with all terms of the Credit Facility during 2021.

The provisions of the Credit Facility restrict all of the net assets of the Company’s consolidated subsidiaries, which constitutes all of the net assets on the Company’s consolidated balance sheet as of January 30, 2021, from being used to pay any dividends or make other restricted payments to the Company without prior written consent from the financial institutions that are a party to the Credit Facility, subject to material exceptions including proforma compliance with the applicable conditions described in the Credit Facility.

The provisions of the Credit Facility restrict all of the net assets of the Company’s consolidated subsidiaries, which constitutes all

of the net assets on the Company’s consolidated balance sheet as of January 29, 2022, from being used to pay any dividends or make other restricted payments to the Company without prior written consent from the financial institutions that are a

party to the Credit Facility, subject to material exceptions including proforma compliance with the applicable conditions described in the Credit Facility.

The components of income tax provision (benefit) are as follows (in thousands):

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Fiscal year ended

Statutory federal rate

State taxes, net of federal benefit

Impact from tax law changes

Excess tax benefits related to stock-based compensation

Deferred income taxes reflect the effect of temporary differences between the carrying amounts of the assets and liabilities for financial reporting purposes and the carrying amounts used for income tax reporting purposes.

taxes, net of federal benefit

tax benefits related to stock-based compensation

Deferred income taxes reflect the effect of temporary differences between the carrying amounts of the assets and liabilities for

financial reporting purposes and the carrying amounts used for income tax reporting purposes.

Significant components of deferred tax assets and liabilities are as follows (in thousands):

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Net deferred tax liabilities

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or

all of the deferred tax assets will not be realized.

The ultimate realization of deferred tax assets is dependent on the generation of future taxable income during the periods in which those temporary differences become deductible.

Management considers the scheduled reversal of deferred tax liabilities (including the impact of available carryback and carryforward periods), projected future taxable income and tax-planning strategies in making this assessment.

Based on the level of historical taxable income and projections for future taxable income and the scheduled reversal of deferred liabilities over the periods in which the deferred tax assets are deductible, management believes it is more likely than not that the Company will realize the benefits of these deductible differences as of January 30, 2021 and February 1, 2020.

Ollie’s has no material accrual for uncertain tax positions or interest or penalties related to income taxes on the Company’s consolidated balance sheets as of January 30, 2021 or February 1, 2020, and has no t recognized any material uncertain tax positions or interest or penalties related to income taxes in the consolidated statements of income for 2020, 2019 or 2018.

considers the scheduled reversal of deferred tax liabilities (including the impact of available carryback and carryforward periods), projected future taxable income and tax-planning strategies in making this assessment.

Based on the level of

historical taxable income and projections for future taxable income and the scheduled reversal of deferred liabilities over the periods in which the deferred tax assets are deductible, management believes it is more likely than not that the Company

will realize the benefits of these deductible differences as of January 29, 2022 and January 30, 2021 .

Ollie’s has no material accrual for uncertain tax

positions or interest or penalties related to income taxes on the Company’s consolidated balance sheets as of January 29, 2022 or January 30, 2021, and has no t recognized any material uncertain tax positions or interest or penalties related to income taxes in the consolidated statements of income for

2021, 2020 or 2019 .

OLLIE’S BARGAIN OUTLET HOLDINGS, INC.

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Equity Incentive Plans

During 2012, Ollie’s established an equity incentive plan (the “2012 Plan”) under which stock options were granted to executive officers and key employees as deemed appropriate under the provisions of the 2012 Plan, with an exercise price at the fair value of the underlying stock on the date of grant.

During 2012, Ollie’s established an equity incentive plan (the “2012 Plan”) under which stock options were granted to executive officers

and key employees as deemed appropriate under the provisions of the 2012 Plan, with an exercise price at the fair value of the underlying stock on the date of grant.

The vesting period for options granted under the 2012 Plan is five years ( 20 % ratably per year).

Options granted under the 2012 Plan are subject to employment for vesting, expire 10 years from the date of grant, and are not transferable other than upon death.

Options granted under the 2012 Plan are subject to employment for vesting, expire 10 years from the date of grant, and are not

transferable other than upon death.

As of July 15, 2015, the date of the pricing of the Company’s initial public offering (the “IPO”), no additional equity grants will be made under the 2012 Plan.

In connection with the IPO, the Company adopted the 2015 equity incentive plan (the “2015 Plan”) pursuant to which the Company’s Board of Directors may grant stock options, restricted shares or other awards to employees, directors and consultants.

In connection with the IPO, the Company adopted the 2015 equity incentive plan (the “2015 Plan”) pursuant to which the Company’s Board

of Directors may grant stock options, restricted shares or other awards to employees, directors and consultants.

The 2015 Plan allows for the issuance of up to 5,250,000 shares.

Awards will be made pursuant to agreements and may be subject to vesting and other restrictions as determined by the Board of Directors or the Compensation Committee of the Board.

The Company uses authorized and unissued shares to satisfy share award exercises.

As of January 30, 2021, there were 2,853,979 shares available for grant under the 2015 Plan.

The Company uses

authorized and unissued shares to satisfy share award exercises.

As of January 29, 2022, there were 2,644,914 shares available for grant

under the 2015 Plan.

Stock Options

The exercise price for stock options is determined at the fair value of the underlying stock on the date of grant.

The vesting period for awards granted under the 2015 Plan is generally set at four years ( 25 % ratably per year).

The vesting period

for awards granted under the 2015 Plan is generally set at four years ( 25 % ratably per year).

Awards are subject to employment for vesting, expire 10 years from the date of grant, and are not transferable other than upon death.

A summary of the Company’s stock option activity and related information follows for 2018, 2019 and 2020 (in thousands, except share and per share amounts):

A summary of the Company’s stock option activity and related information follows for 2019, 2020 and 2021 (in thousands, except share and

per share amounts):

intrinsic value

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Outstanding at February 1 , 2020

Outstanding at February 1, 2020

Outstanding at January 30 , 2021

Outstanding at January 29 , 2022

Exercisable at January 29 , 2022

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Notes to Consolidated Financial Statements

In December 2019, the Company announced the unexpected passing of Mark Butler, the then-Chairman of the Board, President and Chief Executive Officer of the Company.

During 2020, the estate of Mark Butler exercised 1.9 million vested stock options and the Company received $ 17.1 million in proceeds.

During 2020, the estate of a former executive of the Company exercised 1.9 million vested stock options and the Company received $ 17.1

million in proceeds.

The intrinsic value of stock options exercised for 2021, 2020 and 2019 was $ 17.0 million, $ 145.3 million and $ 44.6 million, respectively.

The weighted average grant date fair value per option for options granted during 2021, 2020 and 2019 was $ 33.38 , $ 13.27 and $ 23.67 , respectively.

The fair value of each option award is estimated on the date of grant using the Black-Scholes option-pricing model that used the weighted average assumptions in the following table:

The fair value of each option award is estimated on the date of grant using the Black-Scholes option-pricing model that used the

weighted average assumptions in the following table:

Fiscal Year Ended

Risk-free interest rate

Expected dividend yield

Expected life (years)

Expected volatility

The expected life of stock options is estimated using the “simplified method,” as the Company does not have sufficient historical information to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior for its stock option grants.

The simplified method is based on the average of the vesting tranches and the contractual life of each grant.

For stock price volatility, the Company uses its historical information since its IPO as well as comparable public companies as a basis for its expected volatility to calculate the fair value of option grants.

interest rate

dividend yield

The expected life of stock options is estimated using the “simplified method,” as the Company does not have sufficient historical

information to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior for its stock option grants.

The simplified method is based on the average of the vesting tranches and the contractual

life of each grant.

For stock price volatility through January 29, 2022, the Company uses its historical information since its IPO as well as comparable public companies as a basis for its expected volatility to calculate the fair value of option

The risk-free interest rate is based on U.S.

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Restricted stock units (“RSUs”) are issued at a value not less than the fair value of the common stock on the date of the grant.

RSUs outstanding vest ratably over four years or cliff vest in one or four years .

Awards are subject to employment for vesting and are not transferable other than upon death.

outstanding vest ratably over four years or cliff vest in one or four years .

Awards are subject to employment for vesting and are not transferable other than

A summary of the Company’s RSU activity and related information for 2019, 2020 and 2021 is as follows:

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Nonvested balance at February 1, 2020

Nonvested balance at January 30, 2021

Nonvested balance at January 29, 2022

OLLIE’S BARGAIN OUTLET HOLDINGS, INC.

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Stock-Based Compensation Expense

The compensation cost for stock options and RSUs which has been recorded within SG&A was $ 6.5 million, $ 7.3 million and $ 7.3 million for 2020, 2019 and 2018, respectively.

As of January 30, 2021, there was $ 13.8 million of total unrecognized compensation cost related to non-vested stock-based compensation arrangements.

The compensation cost for stock options and RSUs which has

been recorded within SG&A was $ 8.0 million, $ 6.5 million and $ 7.3 million for 2021, 2020 and 2019, respectively.

As of January 29, 2022, there was $ 17.0

million of total unrecognized compensation cost related to non-vested stock-based compensation arrangements.

That cost is expected to be recognized over a weighted average period of 2.6 years.

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Employee Benefit Plans

Ollie’s sponsors a defined contribution plan (the “Plan”), qualified under Internal Revenue Code (“IRC”) Section 401(k), for the benefit of employees.

Ollie’s sponsors a defined contribution plan (the “Plan”), qualified under Internal Revenue Code (“IRC”) Section 401(k), for the benefit

of employees.

An employee becomes eligible to participate in the Plan upon attaining at least 21 years of age and completing three months of full-time employment.

An employee may elect to contribute annual compensation up to the maximum allowable under the IRC.

The Company assumes all administrative costs of the Plan and matches the employee’s contribution up to 25 % of the first 6 % of their annual compensation.

assumes all administrative costs of the Plan and matches the employee’s contribution up to 25 % of the first 6 % of their annual compensation.

The portion that the Company matches is vested ratably over six years .

The employer matching contributions to the Plan were $ 0.2 million in each of 2020, 2019 and 2018.

The employer matching contributions to the Plan were $ 0.2

million in each of the years ended 2021, 2020 and 2019.

In addition to the regular matching contribution, the Company may elect to make a discretionary matching contribution.

Discretionary contributions shall be allocated as a percentage of compensation of eligible participants for the Plan year.

There were no discretionary contributions in 2020, 2019 or 2018.

Discretionary

contributions shall be allocated as a percentage of compensation of eligible participants for the Plan year.

There were no

discretionary contributions in 2021, 2020 or 2019.

The Company’s capital structure consists of a single class of common stock with one vote per share.

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Additionally, the Company has authorized 50,000,000 shares of preferred stock at $ 0.001 par value per share;

to date, however, no preferred shares have been issued.

however, no preferred shares have been issued.

Treasury stock, which consists of the Company’s common stock, is accounted for using the cost method.

Share Repurchase Program

On March 26, 2019, the Board of Directors of the Company authorized the repurchase of up to $ 100.0 million of shares of the Company’s common stock.

The program is authorized to be executed through March 2021.

On December 15, 2020, the Board of Directors authorized a $ 100.0 million increase in its share repurchase program.

This second authorization expires in January 2023.

Shares under both authorizations may be purchased from time to time in open market transactions (including blocks), privately negotiated transactions, accelerated share repurchase programs or other derivative transactions, issuer self-tender offers or any combination of the foregoing.

The timing of repurchases and the actual amount purchased will depend on a variety of factors, including the market price of the Company’s shares, general market and economic conditions, and other corporate considerations.

In addition, the authorizations are subject to extension or earlier termination by the Board of Directors at any time .

During 2020, the Company repurchased 3,885 shares of its common stock for $ 0.3 million , inclusive of transaction costs, pursuant to its share repurchase program.

During 2019, the Company repurchased 689,457 shares of its common stock for $ 40.0 million, inclusive of transaction costs, pursuant to its share repurchase program.

On March 26, 2019, the Board of Directors of the Company

authorized the repurchase of up to $ 100.0 million of shares of the Company’s common stock.

This initial tranche expired on March 26,

The Board authorized the repurchase of another $ 100.0 million of the Company’s common stock on December 15, 2020 and a $ 100.0 million increase on March 16, 2021, resulting in $ 200.0

million approved for share repurchases through January 13, 2023.

On November 30, 2021, the Board authorized an additional $ 200.0 million

to repurchase stock pursuant to the Company’s share repurchase program, expiring on December 15, 2023.

The shares to be repurchased may be purchased from time to time in open market conditions (including blocks), privately negotiated transactions,

accelerated share repurchase programs or other derivative transactions, issuer self-tender offers or any combination of the foregoing.

The timing of repurchases and the actual amount purchased will depend on a variety of factors, including the

market price of the Company’s shares, general market, economic and business conditions, and other corporate considerations.

Repurchases may be made pursuant to plans intended to comply with Rule 10b5-1 under the Securities Exchange Act of 1934,

which could allow the Company to purchase its shares during periods when it otherwise might be prevented from doing so under insider trading laws or because of self-imposed trading blackout periods.

Repurchases are expected to be funded from cash

on hand or through the utilization of the Company’s Revolving Credit Facility.

The repurchase authorization does not require the purchase of a specific number of shares and is subject to suspension or termination by the Company’s Board of

Directors at any tim e .

During 2021, the Company repurchased 3,113,981 shares of its common stock for $ 220.0

million, inclusive of transaction costs, pursuant to its share repurchase program.

During 2020, the Company repurchased 3,885 shares of

its common stock for $ 0.3 million, inclusive of transaction costs, and during 2019, it repurchased 689,457 shares of its common stock for $ 40.0

million, inclusive of transaction costs.

These expenditures were funded by cash generated from operations.

As of January 30, 2021, the Company had $ 159.7 million remaining under its share repurchase authorization.

There can be no assurance that any additional repurchases will be completed, or as to the timing or amount of any repurchases.

The share repurchase program may be discontinued at any time.

See Note 13 for additional information.

As of January 29, 2022, the Company had $ 180.0

million remaining under its share repurchase authorization.

There can be no assurances that any additional repurchases will be completed, or as to the timing or amount of any repurchases.

OLLIE’S BARGAIN OUTLET HOLDINGS, INC.

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Segment Reporting and Entity-Wide Information

For purposes of the disclosure requirements for segments of a business enterprise, it has been determined that the Company is comprised of one operating segment.

For purposes of the disclosure requirements for segments of a business enterprise, it has been determined that the Company is comprised

of one operating segment.

The following table summarizes the percentage of net sales by merchandise category for each year presented:

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Floor coverings

Health and beauty aids

Books and stationery

Health and beauty aids

Quarterly Results of Operations and Seasonality (Unaudited)

The following table reflects quarterly financial results for 2021 and 2020 (in thousands, except for per share data).

Each quarterly period listed below consisted of a 13-week period.

Each quarterly

period listed below consisted of a 13-week period.

The sum of the four quarters for any given year may not equal annual totals due to rounding.

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Diluted earnings per common share

Beginning in the second quarter of fiscal 2020, the Company’s financial results benefited from increased consumer spending associated with federal stimulus funds for the COVID- 19 pandemic and the Company’s response to changing consumer needs as a result of the pandemic.

The Company’s business is seasonal in nature and demand is generally the highest in the fourth fiscal quarter due to the holiday sales season.

Beginning in the second quarter of 2020 through the first quarter of 2021, the Company’s financial results benefited from increased

consumer spending associated with federal stimulus funds for the COVID- 19 pandemic.

The Company’s business is seasonal in nature and demand is generally the highest in the fourth fiscal quarter due to the holiday sales

To prepare for the holiday sales season, Ollie’s must order and keep in stock more merchandise than is carried during other times of the year and generally engage in additional marketing efforts.

The Company expects inventory levels, along with accounts payable and accrued expenses, to reach their highest levels in the third and fourth fiscal quarters in anticipation of increased net sales during the holiday sales season.

As a result of this seasonality, and generally because of variation in consumer spending habits, the Company experiences fluctuations in net sales and working capital requirements during the year.

The Company expects inventory levels, along

with accounts payable and accrued expenses, to reach their highest levels in the third and fourth fiscal quarters in anticipation of increased net sales during the holiday sales season.

As a result of this seasonality, and generally because of

variation in consumer spending habits, the Company experiences fluctuations in net sales and working capital requirements during the year.

OLLIE’S BARGAIN OUTLET HOLDINGS, INC.

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Notes to Consolidated Financial Statements

Transactions with Affiliated and Related Parties

The Company has entered into five

non-cancelable operating leases with related parties for office and store locations that expire at various dates through 2033.

Ollie’s made $ 1.7

million, $ 1.7 million and $ 1.5

million in rent payments to such related parties during 2021, 2020 and 2019, respectively.

The annual lease payments are $ 1.7

million for the next five years and the total remaining payments after the next five years are $ 4.5 million.

These lease payments are

included in the operating lease disclosures in Note 4 .

During the fiscal year 2021, the Company purchased pallets totaling $ 0.2 million from a company affiliated with a member of its Board of Directors.

Additionally, during 2021 the Company has sold damaged pallets to the aforementioned company totaling $ 0.1 million.

Subsequent Event

On March 16, 2021, the Board of Directors of the Company authorized an increase of $ 100.0 million in the Company’s share repurchase program.

This third authorization expires in January 2023 and is subject to the same considerations regarding timing and amount of repurchases as the two prior authorizations.

See Note 10 for additional information.

In 2022, the Company plans to expand its York, PA distribution center by 200,000 square feet.

In connection with this expansion, on March 7, 2022, the Company entered into a construction agreement totaling $ 12.3 million.

Schedule I - Condensed Financial Information of Registrant

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Basis of presentation

In the parent-company-only condensed financial statements, Ollie’s Bargain Outlet Holdings, Inc.’s (the “Company”) investment in subsidiaries is stated at cost plus equity in undistributed earnings of subsidiaries since the date of acquisition.

In the parent-company-only condensed financial statements, Ollie’s Bargain Outlet Holdings, Inc.’s (the “Company”) investment in subsidiaries is stated

at cost plus equity in undistributed earnings of subsidiaries since the date of acquisition.

The parent-company-only condensed financial statements should be read in conjunction with the Company’s consolidated financial statements.

A condensed statement of cash flows was not presented because Ollie’s Bargain Outlet Holdings, Inc.

had no cash flow activities during 2020, 2019 or 2018.

statement of cash flows was not presented because Ollie’s Bargain Outlet Holdings, Inc.

had no cash flow activities during 2021,

2020 or 2019.

Guarantees and restrictions

On May 22, 2019, Ollie’s Bargain Outlet, Inc., a subsidiary of the Company, completed a transaction in which it refinanced its credit facility (the “Credit Facility”).

On May 22, 2019, Ollie’s Bargain Outlet, Inc., a subsidiary of the Company,

completed a transaction in which it refinanced its credit facility (the “Credit Facility”).

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In addition, Ollie’s Bargain Outlet, Inc.

may at any time add term loan facilities or additional revolving commitments up to $ 150.0 million pursuant to the terms and conditions set out in the Credit Facility.

may at any time add term loan facilities or additional

revolving commitments up to $ 150.0 million pursuant

to the terms and conditions set out in the Credit Facility.

Under the terms of the Credit Facility, Bargain Parent, Inc., a subsidiary of the Company, guaranteed the payment of all principal and interest.

In the event of a default under the Credit Facility, Bargain Parent, Inc.

In the event of a default under the Credit

Facility, Bargain Parent, Inc.

will be directly liable to the debt holders .

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had $ 84.7 million available for borrowing under its Revolving Credit Facility.

The Revolving Credit Facility matures on May 22, 2024 .

The Credit Facility is collateralized by the Company’s assets and equity and contains a financial covenant, as well as certain business covenants,

including restrictions on dividend payments, which the Company must comply with during the term of the agreement.

The Company was in compliance with all terms of the agreement during and as of the fiscal year ended January 29, 2022.

The provisions of the Credit Facility restrict all of the net assets of the Company’s consolidated subsidiaries, which constitutes all of the net assets on the Company’s consolidated balance sheet as of January 30, 2021 , from being used to pay any dividends or make other restricted payments without prior written consent from the lenders under the Credit Facility, subject to certain exceptions.

The provisions of the Credit Facility restrict all of the net assets of the Company’s consolidated subsidiaries, which constitutes all of the net assets on

the Company’s consolidated balance sheet as of January 29, 2022 , from being used to pay any dividends or make other restricted payments without prior written consent

from the lenders under the Credit Facility, subject to certain exceptions.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data