What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2023-03-28 compared with 2022-03-25 · 198 added, 217 removed, 991 unchanged (30% of the section changed)

61 unchanged sentences

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

Consolidated Statements of Operations for the fiscal years ended January 29 , 202 2 , January 30, 2021 , and February 1, 2020

Consolidated Statements of Comprehensive Income (Loss) for the fiscal years ended January 29 , 202 2 , January 30, 2021 , and February 1, 2020

Consolidated Statements of Changes in Stockholders’ Equity for the fiscal years ended January 29 , 202 2 , January 30, 2021 , and February 1, 2020

Consolidated Statements of Cash Flows for the fiscal years ended January 29 , 202 2 , January 30, 2021 , and February 1, 2020

Consolidated Statements of Operations for the fiscal years ended January 2 8 , 202 3 , January 29 , 202 2 , and January 30 , 20 21

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

Consolidated Statements of Changes in Stockholders’ Equity for the fiscal years ended January 28, 2023, January 29, 2022, and January 30, 2021

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

Notes to Consolidated Financial Statements

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

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the 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 financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of the 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.

Impairment of Long-Lived Assets

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

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

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

Impairment Assessment of Long-Lived Assets

Description of the Matter

As discussed in Note 4 to the consolidated financial statements, during the year ending January 29, 2022, the Company recorded impairment charges of $1.5 million related to its retail stores.

The Company reviews its long-lived assets, including any right of use asset, for each store, and when events indicate that their carrying values may not be recoverable, the Company estimates future cash flows over the remaining lease term and compares the total undiscounted cash flows to the carrying value of the related long-lived assets.

As discussed in Note 4 to the consolidated financial statements, during the year ending January 28, 2023, the Company recorded impairment charges of $3.3 million on its store related long-lived assets.

The Company reviews its long-lived assets for each store, including any right of use asset for indicators of impairment.

When events indicate that their carrying values may not be recoverable, the Company estimates future cash flows over the remaining lease term and compares the total undiscounted cash flows to the carrying value of the related long-lived assets.

If the undiscounted cash flows are less than the related carrying value of the long-lived assets, they are written down to their fair values.

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We involved our internal valuation specialists to assist in evaluating the fair value of certain store long-lived assets, which included assessing the estimated market rental rates of the related leases by comparing them to rental rates for comparable leases and evaluating the applied discount rate.

Valuation of Gymboree Tradename

Description of the Matter

At January 28, 2023, the Company’s Gymboree tradename had a carrying value of $70.0 million.

As discussed in Note 1 to the consolidated financial statements, the Company tests the indefinite-lived tradename for impairment at least annually, or more frequently when events or changes in circumstances indicate that a decline in value may have occurred.

An impairment loss is recognized when the fair value of tradename is less than the carrying value.

Auditing management’s Gymboree tradename impairment test is complex and involves a high degree of subjectivity due to the level of management judgment and estimation necessary to determine the fair value of the tradename.

The significant assumptions used in management’s fair value analysis includes future net sales for the brand, royalty rates, and the weighted average cost of capital.

These assumptions are forward-looking and changes in market, industry and company-specific conditions could materially impact the determination of the fair value of these assets and the measurement of an impairment.

How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s valuation of the Gymboree tradename.

This included testing management’s review controls relating to the Company’s valuation model and significant assumptions, described above.

To test the fair value of the Gymboree tradename, we performed audit procedures that included, among others, assessing the methodology and significant assumptions used for the purposes of performing the impairment test and engaging our valuation specialist to assess the appropriateness of the valuation model, royalty rates and the reasonableness of the weighted average cost of capital used in the valuation.

We evaluated the Company’s revenue projections by considering their current business strategies as well as current and historical experience.

Further, we performed sensitivity analyses of the significant assumptions to evaluate the changes in the fair value of the Gymboree tradename that would result from changes in the assumptions.

/S/ Ernst & Young LLP

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Accumulated other comprehensive loss ( 16,247 ) ( 14,186 )

Retained earnings (deficit) 77,914 ( 42,790 )

Retained earnings 22,540 77,914

Total stockholders’ equity 158,478 225,472

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2023 January 29,

2021 February 1,

(in thousands, except earnings per share)

2022 January 30,

(in thousands, except earnings (loss) per common share)

Net sales $ 1,708,482 $ 1,915,364 $ 1,522,598

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2023 January 29,

2021 February 1,

2022 January 30,

(in thousands)

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Common Stock Paid-In Deferred Earnings Comprehensive Treasury Stock Stockholders ’

(in thousands) Shares Amount Capital Compensation (Deficit) Income (Loss) Shares Amount Equity

(in thousands) Shares Amount Capital Compensation (Deficit) Loss Shares Amount Equity

Balance, February 1, 2020 14,762 $ 1,476 $ 139,041 $ 2,956 $ 108,215 $ ( 13,545 ) ( 51 ) $ ( 2,956 ) $ 235,187

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Purchase and retirement of common stock ( 294 ) ( 29 ) ( 4,821 ) ( 10,640 ) ( 15,490 )

Dividends declared ($ 2.24 per share)

( 34,928 ) ( 34,928 )

Unvested dividends 1,275 ( 1,275 ) —

ASC Topic 842 Adjustment ( 1,667 ) ( 1,667 )

Change in cumulative translation adjustment 1,388 1,388

Change in fair value of cash flow hedges, net of income taxes 1 1

Other comprehensive loss ( 271 ) ( 271 )

Deferral of common stock into deferred compensation plan 209 ( 6 ) ( 209 ) —

Net income 73,300 73,300

Balance, February 1, 2020 14,762 $ 1,476 $ 139,041 $ 2,956 $ 108,215 $ ( 13,545 ) ( 51 ) $ ( 2,956 ) $ 235,187

Net loss ( 140,365 ) ( 140,365 )

Balance, January 30, 2021 14,641 $ 1,464 $ 148,519 $ 3,165 $ ( 42,790 ) $ ( 13,816 ) ( 57 ) $ ( 3,165 ) $ 93,377

Vesting of stock awards 348 35 ( 35 ) —

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Deferral of common stock into deferred compensation plan 278 ( 4 ) ( 278 ) —

Net loss ( 140,365 ) ( 140,365 )

Net income 187,171 187,171

Balance, January 29, 2022 13,964 $ 1,396 $ 160,348 $ 3,443 $ 77,914 $ ( 14,186 ) ( 61 ) $ ( 3,443 ) $ 225,472

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Deferral of common stock into deferred compensation plan 293 ( 6 ) ( 293 ) —

Net income 187,171 187,171

Net loss ( 1,138 ) ( 1,138 )

Balance, January 28, 2023 12,292 $ 1,229 $ 150,956 $ 3,736 $ 22,540 $ ( 16,247 ) ( 67 ) $ ( 3,736 ) $ 158,478

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2023 January 29,

2021 February 1,

2022 January 30,

(in thousands)

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Capital expenditures ( 45,577 ) ( 29,307 ) ( 30,585 )

Acquisition of intangible assets — — ( 76,951 )

Change in deferred compensation plan ( 371 ) 17 211

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Purchase and retirement of common stock, including shares surrendered for tax withholdings and transaction costs ( 94,616 ) ( 83,974 ) ( 15,490 )

Payment of dividends — — ( 34,928 )

Net cash provided by (used in) financing activities 17,056 ( 112,741 ) 60,929

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AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

Fiscal Years Ended

2023 January 29,

2021 February 1,

2022 January 30,

(in thousands)

OTHER CASH FLOW INFORMATION:

Net cash paid for income taxes $ 49,563 $ 3,643 $ 1,310

Net cash paid (received) for income taxes $ ( 14,969 ) $ 49,563 $ 3,643

Cash paid for interest 12,354 14,774 10,831

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and subsidiaries (collectively, the “Company”) is the largest pure-play children’s specialty apparel retailer in North America.

The Company provides apparel, footwear, accessories, and other items for children and ‘tweens.’ The Company designs, contracts to manufacture, sells at retail and wholesale, and licenses to sell trend right, high-quality merchandise predominantly at value prices, primarily under the Company’s proprietary “The Children’s Place”, “Place”, “Baby Place”, “Gymboree”, and “Sugar & Jade” brand names.

The Company classifies its business into two segments:

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Included in The Children’s Place International segment are its Canadian-based stores, revenue from the Company’s Canadian-based wholesale business, as well as revenue from international franchisees.

Each segment includes an e-commerce business located at www.childrensplace.com, www.gymboree.com, and www.sugarandjade.com .

Each segment includes an e-commerce business located at www.childrensplace.com, www.gymboree.com, www.sugarandjade.com, and www.pjplace.com.

Terms that are commonly used in the notes to the Company’s consolidated financial statements are defined as follows:

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• Fiscal 2021 - The fifty-two weeks ended January 29, 2022

• Fiscal 2019 - The fifty-two weeks ended February 1, 2020

• Fiscal 2022 - The Company’s next fiscal year representing the fifty-two weeks ending January 28, 2023

• Fiscal 2020 - The fifty-two weeks ended January 30, 2021

• Fiscal 2023 - The Company’s next fiscal year representing the fifty-three weeks ending February 3, 2024

Securities and Exchange Commission

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Actual results could differ from the assumptions used and estimates made by management, which could have a material impact on the Company’s financial position or results of operations.

Critical accounting estimates inherent in the preparation of the consolidated financial statements include impairment of long-lived assets, income taxes, stock-based compensation, and inventory valuation.

Critical accounting estimates inherent in the preparation of the consolidated financial statements include impairment of long-lived assets, impairment of indefinite-lived intangible assets, income taxes, stock-based compensation, and inventory valuation.

THE CHILDREN’S PLACE, INC.

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Inventory shrinkage is estimated in interim periods based upon the historical results of physical inventory counts in the context of current year facts and circumstances.

Derivative Instruments

The Company is exposed to gains and losses resulting from fluctuations in foreign currency exchange rates attributable to inventory purchases denominated in a foreign currency.

Specifically, the functional currency of the Company’s Canadian subsidiary is the Canadian dollar, but it purchases inventory from suppliers in U.S.

In order to mitigate the variability of cash flows associated with certain of these forecasted inventory purchases, the Company enters, from time to time, into foreign exchange forward contracts.

These contracts typically mature within 12 months.

The Company does not use forward contracts to engage in currency speculation, and it does not enter into derivative financial instruments for trading purposes.

The Company accounts for all of its derivatives and hedging activity under FASB ASC 815— Derivatives and Hedging .

Under the Company’s risk management policy and in accordance with guidance under the topic, in order to qualify for hedge accounting treatment, a derivative must be considered highly effective at offsetting changes in either the hedged item’s cash flows or fair value.

Additionally, the hedge relationship must be documented to include the risk management objective and strategy, the hedging instrument, the hedged item, the risk exposure, and how hedge effectiveness will be assessed prospectively and retrospectively.

The Company formally measures effectiveness of its hedging relationships both at the hedge inception and on an ongoing basis.

The Company discontinues hedge accounting under a foreign exchange forward contract prospectively:

(i) if management determines that the derivative is no longer highly effective in offsetting changes in the cash flows of a hedged item, (ii) when the derivative expires or is terminated, (iii) if the forecasted transaction being hedged by the derivative is no longer probable of occurring, or (iv) if management determines that designation of the derivative as a hedge instrument is no longer appropriate.

All derivative instruments are presented at gross fair value on the Consolidated Balance Sheets within either Prepaid expenses and other current assets or Accrued expenses and other current liabilities.

As of January 29, 2022 and January 30, 2021, the Company did not have any open foreign exchange forward contracts.

For derivative instruments that are designated and qualify as cash flow hedges, the effective portion of the gain or loss on the derivative is reported as a component of other comprehensive income (“OCI”) and reclassified into earnings within Cost of sales (exclusive of depreciation and amortization) in the same period or periods during which the hedged transaction affects earnings.

Gains and losses on the derivative representing hedge ineffectiveness are recognized in earnings within Selling, general, and administrative expenses, consistent with where the Company records realized and unrealized foreign currency gains and losses on transactions denominated in foreign currencies.

There were no losses related to hedge ineffectiveness during Fiscal 2021 or Fiscal 2020.

Changes in fair value associated with derivatives that are not designated and qualify as cash flow hedges are recognized in earnings within Selling, general, and administrative expenses.

During Fiscal 2021, there were no derivatives that qualified as cash flow hedges.

THE CHILDREN’S PLACE, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Deferred Financing Costs

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The Company’s intangible assets include both indefinite-lived and finite-lived assets.

Intangible assets with indefinite lives consist primarily of trademarks and acquired trade names, which are tested for impairment annually at the end of December or whenever circumstances indicate that a decline in value may have occurred.

Intangible assets with indefinite lives consist primarily of trademarks and acquired tradenames, which are tested for impairment annually at the end of December or whenever circumstances indicate that a decline in value may have occurred.

The Company estimates the fair value of these intangible assets based on an income approach using the relief-from-royalty method.

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Such events include historical trends or projected trends of cash flow losses or a future expectation that the Company will sell or dispose of an asset significantly before the end of its previously estimated useful life.

In reviewing for impairment, the Company groups its long-lived assets at the lowest possible level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities.

In reviewing for

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

impairment, the Company groups its long-lived assets at the lowest possible level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities.

The Company reviews all stores that have reached comparable sales status for impairment on at least an annual basis, or sooner if circumstances so dictate.

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If the undiscounted cash flows are less than the related net book value of the long-lived assets, they are written down to their fair market value.

The Company primarily uses discounted future cash flows directly associated with those assets, which consist principally of property and equipment and right-of-use assets, to determine their fair market values.

The Company primarily uses discounted future cash flows directly associated with those assets, which consist principally of property and equipment and right-of-use (“ROU”) assets, to determine their fair market values.

In evaluating future cash flows, the Company considers external and internal factors.

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Internal factors include the Company’s ability to gauge the fashion taste of its customers, control variable costs such as cost of sales and payroll, and in certain cases, its ability to renegotiate lease costs.

In addition, the Company utilizes market-corroborated inputs, including sales per square foot and cost of occupancy rates, in its calculation of the fair value of its ROU assets and any necessary discounting required for rent rates based on macroeconomic conditions or local mall conditions.

Insurance and Self-Insurance Reserves

The Company self-insures and purchases insurance policies to provide for workers’ compensation, general liability and property losses, cyber-security coverage, as well as director and officers’ liability, vehicle liability, and employee medical benefits.

The Company estimates risks and records a liability based on historical claim experience, insurance deductibles,

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

severity factors, and other actuarial assumptions.

The Company estimates risks and records a liability based on historical claim experience, insurance deductibles, severity factors, and other actuarial assumptions.

The Company records the current portions of employee medical benefits, workers compensation, and general liability reserves within Accrued expenses and other current liabilities.

The Company has operating leases for retail stores, corporate offices, distribution facilities, and certain equipment.

The Company’s leases have remaining lease terms ranging from less than one year up to nine years , some of which include options to extend the leases for up to five years , and some of which include options to terminate the lease early.

The Company’s leases have remaining lease terms ranging from less than one year up to ten years , some of which include options to extend the leases for up to five years , and some of which include options to terminate the lease early.

The lease liability is initially and subsequently measured at the present value of the unpaid lease payments at the lease commencement date.

For operating leases, the right-of-use (“ROU”) asset is initially and subsequently measured throughout the lease term at the carrying amount of the lease liability, plus initial direct costs, less any accrued lease payments and unamortized lease incentives.

For operating leases, the ROU asset is initially and subsequently measured throughout the lease term at the carrying amount of the lease liability, plus initial direct costs, less any accrued lease payments and unamortized lease incentives.

For finance leases, the ROU asset is initially measured at cost and subsequently amortized using the straight-line method, generally from the lease commencement date to the earlier of the end of its useful life or the end of the lease term.

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In certain leases, the Company has the right to exercise lease renewal options.

Renewal option periods are included in the measurement of lease liability and related right-of-use asset where the exercise is reasonably certain to occur.

Renewal option periods are included in the measurement of lease liability and related ROU asset where the exercise is reasonably certain to occur.

As of the periods presented, the Company’s finance leases were not material to the Consolidated Balance Sheets, Consolidated Statements of Operations, or Consolidated Statements of Cash Flows.

The Company has certain lease agreements structured with both fixed base rent and contingent rent based on a percentage of sales over contractual levels, others with only contingent rent based on a percentage of sales, and some with a fixed base rent adjusted periodically for inflation or changes in fair market value of the underlying real estate.

Contingent rent is recognized as sales occur.

Contingent rent is

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

recognized as sales occur.

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

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Rather, the Company accounts for COVID-19 lease concessions as reductions to variable lease cost.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Accumulated Other Comprehensive Income (Loss)

Accumulated other comprehensive income (loss) primarily consists of cumulative translation adjustments as well as changes in the value of cash flow hedges, net of income taxes.

Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss primarily consists of cumulative translation adjustments as well as changes in the value of cash flow hedges, net of income taxes.

Treasury Stock

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For those income tax positions where it is not more likely than not that a tax benefit will be sustained, no tax benefit has been recognized in the consolidated financial statements.

The Company recognizes accrued interest and penalties for our unrecognized tax benefits as a component of tax expense.

Deferred Compensation Plan

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Under the Deferred Compensation Plan, a participant may elect to defer up to 80 % of his or her base salary and/or up to 100 % of his or her bonus to be earned for the year following the year in which the deferral election is made.

In addition, eligible employees and directors of the Company may elect to defer payment of any shares of Company stock that are earned with respect to deferred stock awards.

The Deferred Compensation Plan also permits members of the Board of Directors to elect to defer payment of all or a portion of their retainer and other fees to be earned for the year following the year in which a deferral election is made, and they may elect to defer payment of any shares of Company stock that are earned with respect to deferred stock awards.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Directors may elect to have all or a portion of their fees earned for their service on the Board invested in shares of the Company’s common stock.

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Earlier distributions are not permitted, except in the case of an unforeseen hardship.

During Fiscal 2022, the Deferred Compensation Plan was amended to no longer allow for the deferral of the Company’s common stock by employee participants.

The Company has established a rabbi trust that serves as an investment to shadow the Deferred Compensation Plan liability.

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The Deferred Compensation Plan liability, excluding Company common stock, is included within Other long-term liabilities, and changes in the balance, except those relating to payments, are recognized as compensation expense within Selling, general, and administrative expenses.

The value of the mutual funds in the rabbi trust is included in Other assets and related earnings

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

and losses are recognized as investment income or loss, within Selling, general, and administrative expenses.

The value of the mutual funds in the rabbi trust is included in Other assets and related earnings and losses are recognized as investment income or loss, within Selling, general, and administrative expenses.

Company stock deferrals are included within the equity section of the Company’s Consolidated Balance Sheets as Treasury stock and as Deferred compensation.

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The Company also transacts certain business in foreign denominated currencies primarily with its Canadian subsidiary purchasing inventory in U.S.

dollars, and there are inter-company charges between various subsidiaries.

dollars, and there are intercompany charges between various subsidiaries.

Fair Value Measurement and Financial Instruments

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• Level 3 - inputs to the valuation techniques that are unobservable for the assets or liabilities

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company’s cash and cash equivalents, accounts receivable, investments in the rabbi trust, accounts payable, and revolving loan are all short-term in nature.

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The Company stock included in the Deferred Compensation Plan is not subject to fair value measurement.

The Company’s derivative assets and liabilities include foreign exchange forward contracts that are measured at fair value using observable market inputs such as forward rates, the Company’s credit risk, and counterparties’ credit risks.

Based on these inputs, the Company’s derivative assets and liabilities are classified within Level 2 of the fair value hierarchy.

The Company’s assets measured at fair value on a nonrecurring basis include long-lived assets, such as intangible assets, fixed assets, and ROU assets.

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Sales tax collected from customers is excluded from revenue.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the sale of goods with a right of return, the Company recognizes revenue for the consideration it expects to be entitled to and calculates an allowance for estimated sales returns based upon the Company’s sales return experience.

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The allowance for estimated sales returns, which is recorded in Accrued expenses and other current liabilities, was $ 1.0 million as of January 28, 2023 and January 29, 2022.

The Company’s private label credit card is issued to customers for use exclusively at The Children’s Place stores and online at www.childrensplace.com, www.gymboree.com , and www.sugarandjade.com , and credit is extended to such customers by a third-party financial institution on a non-recourse basis to the Company.

The Company’s private label credit card is issued to customers for use exclusively at The Children’s Place stores and online at www.childrensplace.com, www.gymboree.com , www.sugarandjade.com , and www.pjplace.com, and credit is extended to such customers by a third-party financial institution on a non-recourse basis to the Company.

The private label credit card includes multiple performance obligations for the Company, including marketing, promoting the program on behalf of the bank and the operation of a loyalty rewards program.

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The amount allocated to the reward obligation is recognized on a point-in-time basis as redemptions under the loyalty program occur.

In measuring revenue and determining the consideration the Company is entitled to as part of a contract with a customer, the Company takes into account the related elements of variable consideration, such as additional bonuses, including profit-sharing, over the life of the program.

Similar to the upfront bonus, the usage-based royalties and bonuses are recognized as revenue and allocated between the brand and reward obligations.

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The liability is estimated based on expected breakage that considers historical patterns of redemption.

The gift card liability balance was $ 11.1 million and $ 12.1 million as of January 28, 2023 and January 29, 2022,

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

respectively.

During Fiscal 2022, the Company recognized Net sales of $ 5.5 million related to the gift card liability balance that existed at January 29, 2022.

The Company has an international program of territorial agreements with franchisees.

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The Company’s stock-based compensation plans are administered by the Human Capital & Compensation Committee of the Board of Directors.

The Human Capital & Compensation Committee is comprised of independent members of the Board of

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Human Capital & Compensation Committee is comprised of independent members of the Board of Directors.

Effective May 20, 2011, the shareholders approved the 2011 Equity Incentive Plan (the “Equity Plan”).

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Advertising and Marketing Costs

The Company expenses the cost of advertising over the period the advertising is run or displayed.

The Company defers costs associated with the production of advertising until the first time the advertising takes place.

Costs associated with communicating advertising that has been produced are expensed when the advertising event takes place.

Advertising and other marketing costs are recorded in Selling, general, and administrative expenses and amounted to $ 55.5 million, $ 44.3 million, and $ 31.1 million in Fiscal 2022, Fiscal 2021, and Fiscal 2020, respectively.

Deferred advertising, marketing, and promotional costs, which principally relate to advertisements that have not yet been exhibited or services that have not yet been received, were $ 1.4 million and $ 0.8 million at January 29, 2022 and January 30, 2021, respectively, and were recorded within Prepaid expenses and other current assets in the Company’s Consolidated Balance Sheets.

Earnings per Common Share

Deferred advertising, marketing, and promotional costs, which principally relate to advertisements that have not yet been exhibited or services that have not yet been received, were $ 1.4 million at January 28, 2023 and January 29, 2022, and were recorded within Prepaid expenses and other current assets in the Company’s Consolidated Balance Sheets.

Earnings (Loss) per Common Share

The Company reports its earnings per share in accordance with FASB ASC 260— Earnings Per Share , which requires the presentation of both basic and diluted earnings per share on the Consolidated Statements of Operations.

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Anti-dilutive stock awards are comprised of unvested deferred, restricted, and performance shares which would have been anti-dilutive in the application of the treasury stock method in accordance with FASB ASC 260— Earnings Per Share .

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In accordance with this topic, the following table reconciles share amounts utilized to calculate basic and diluted net income per common share:

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2023 January 29,

2021 February 1,

2022 January 30,

(in thousands)

Basic weighted average common shares 14,597 14,631 15,547

Basic weighted average common shares outstanding 13,041 14,597 14,631

Dilutive effect of stock awards — 273 —

Diluted weighted average common shares 14,870 14,631 15,653

Recently Issued Accounting Updates

Adopted in Fiscal 2021

In December 2019, the FASB issued guidance related to the accounting for income taxes.

The guidance aims to simplify the accounting for income taxes by removing certain exceptions to the general principles within the previous guidance and by clarifying and amending the previous guidance.

The guidance was effective for annual reporting periods, and interim periods within those years, beginning after December 15, 2020.

The Company adopted this guidance in the first quarter of Fiscal 2021.

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Diluted weighted average common shares outstanding 13,041 14,870 14,631

Anti-dilutive shares excluded from diluted earnings (loss) per common share calculation 184 — 48

Recent Accounting Standards Updates

There are no pending accounting standards updates that are currently expected to have a material impact on the Company’s consolidated financial statements.

The following table presents the Company’s revenues disaggregated by geography:

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2023 January 29,

2021 February 1,

2022 January 30,

(in thousands)

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International and other (1)

308,770 258,650 200,743

Total net sales $ 1,708,482 $ 1,915,364 $ 1,522,598

As discussed in “Note 1.

Basis of Presentation and Summary of Significant Accounting Policies”, gift cards are recorded as a liability within Accrued expenses and other current liabilities.

The following table provides the reconciliation of the contract liability related to gift cards:

(in thousands)

Balance at January 30, 2021

Gift cards sold 25,085

Gift cards redeemed ( 23,617 )

Gift card breakage ( 3,031 )

Balance at January 29, 2022

____________________________________________

(1) Includes retail and e-commerce sales in Canada and Puerto Rico, wholesale and franchisee sales, and certain amounts earned under the Company’s private label credit card program

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

INTANGIBLE ASSETS

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3 years 3,000 ( 3,000 ) —

Total intangibles, net $ 76,953 $ ( 5,088 ) $ 71,865

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AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Total intangible assets $ 76,953 $ ( 6,062 ) $ 70,891

January 29, 2022

7 unchanged sentences

3 years 3,000 ( 2,827 ) 173

Total intangibles, net $ 76,953 $ ( 3,288 ) $ 73,665

Total intangible assets $ 76,953 $ ( 5,088 ) $ 71,865

____________________________________________

1 unchanged sentence

(2) Included within Other assets on the Consolidated Balance Sheets.

THE CHILDREN’S PLACE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

PROPERTY AND EQUIPMENT, NET

14 unchanged sentences

During Fiscal 2022, the Company reviewed its store related long-lived assets for indicators of impairment, and performed a recoverability test if indicators were identified.

Based on the results of the analysis performed, the Company recorded asset impairment charges of $ 1.5 million, inclusive of ROU assets, primarily related to the impairment of two stores during Fiscal 2021.

During Fiscal 2020, the Company reviewed its store related long-lived assets for 749 stores with a total net book value of $ 43.6 million for indicators of impairment, and performed a recoverability test if indicators were identified.

Based on the results of the analysis performed, the Company recorded asset impairment charges of $ 38.5 million, inclusive of ROU assets, primarily related to the impairment of 419 stores during Fiscal 2020.

Based on the results of the analysis performed, the Company recorded asset impairment charges of $ 3.3 million, inclusive of ROU assets, during Fiscal 2022.

During Fiscal 2021, the Company reviewed its store related long-lived assets for indicators of impairment, and performed a recoverability test if indicators were identified.

Based on the results of the analysis performed, the Company recorded asset impairment charges of $ 1.5 million, inclusive of ROU assets, during Fiscal 2021.

Based on the results of the analysis performed, the Company recorded asset impairment charges of $ 6.0 million during Fiscal 2019, of which $ 3.2 million related to the impairment of 29 stores, and $ 2.8 million related to the write-down of information technology systems.

THE CHILDREN’S PLACE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Based on the results of the analysis performed, the Company recorded asset impairment charges of $ 38.5 million, inclusive of ROU assets, during Fiscal 2020.

PREPAID EXPENSES AND OTHER CURRENT ASSETS

8 unchanged sentences

Total Prepaid expenses and other current assets $ 47,875 $ 76,075

THE CHILDREN’S PLACE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

3 unchanged sentences

Accrued salaries and benefits $ 16,191 $ 44,494

Accrued property expenses 18,990 5,756

Customer liabilities 11,132 11,354

Accrued capital expenditures 5,277 3,443

Deferred revenue for MyPlace Rewards loyalty program 4,971 2,669

Deferred revenue 4,613 6,306

Accrued freight 4,196 4,811

Accrued property expenses 10,799 18,990

Accrued outside services 7,235 3,306

Sales taxes and other taxes payable 5,643 4,147

Accrued information technology costs 4,676 3,586

Accrued marketing 4,286 4,015

Insurance reserves 4,277 3,487

Accrued freight 4,275 4,196

Accrued store expenses 4,230 2,696

Deferred revenue 3,954 4,613

Accrued capital expenditures 3,613 5,277

Deferred revenue for MyPlace Rewards loyalty program 2,626 4,971

Accrued professional fees 2,529 2,114

3 unchanged sentences

Fiscal Years Ended

January 29, 2022 January 30, 2021 February 1, 2020

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

(in thousands)

3 unchanged sentences

Total operating lease cost $ 151,893 $ 153,392 $ 172,458

THE CHILDREN’S PLACE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

____________________________________________

(1) Includes short term leases with lease periods of less than 12 months as well as lease abatements accounted for as reductions to variable lease costs under the COVID-19 expedient of $ 12.1 million and $ 12.9 million for Fiscal 2021 and Fiscal 2020, respectively.

(1) Includes short term leases with lease periods of less than 12 months as well as lease abatements accounted for as reductions to variable lease costs under the COVID-19 expedient of $ 1.5 million, $ 12.1 million, and $ 12.9 million for Fiscal 2022, Fiscal 2021, and Fiscal 2020, respectively.

As of January 28, 2023, the weighted-average remaining operating lease term was 3.8 years, and the weighted-average discount rate for operating leases was 5.0 %.

1 unchanged sentence

ROU assets obtained in exchange for new operating lease liabilities were $ 60.9 million in Fiscal 2022.

THE CHILDREN’S PLACE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As of January 28, 2023, the maturities of operating lease liabilities were as follows:

3 unchanged sentences

Thereafter 17,816

Total lease payments 249,625

Total operating lease payments 191,629

imputed interest ( 16,571 )

Present value of operating lease liabilities $ 175,058

On November 16, 2021, the Company completed the refinancing of its previous $ 360.0 million asset-based revolving credit facility (“Previous ABL Credit Facility”) and previous $ 80.0 million term loan with a new lending group led by an affiliate of Wells Fargo Bank, National Association (“Wells Fargo”) by entering into a fourth amendment to its Credit Agreement, dated as of May 9, 2019, with the lenders party thereto.

The new debt consists of a revolving credit facility with $ 350.0 million of availability (the “ABL Credit Facility”) and a $ 50.0 million term loan (the “Term Loan”).

In connection with the refinancing, the Company recorded a charge of $ 3.7 million, which is included within Interest expense on the Consolidated Statements of Operations and consists of a prepayment penalty and the write-off of unamortized deferred financing costs and debt discount.

On November 16, 2021, the Company completed the refinancing of its previous $ 360.0 million asset-based revolving credit facility (the “Previous ABL Credit Facility”) and previous $ 80.0 million term loan (the “Previous Term Loan”) with a new lending group led by an affiliate of Wells Fargo Bank, National Association (“Wells Fargo”) by entering into a fourth amendment to its Credit Agreement, dated as of May 9, 2019, with the lenders party thereto.

The new debt consists of a $ 350.0 million asset-based revolving credit facility (the “ABL Credit Facility”) and a $ 50.0 million term loan (the “Term Loan”).

In connection with the refinancing, the Company recorded a charge of $ 3.7 million in Fiscal 2021, which is included within Interest expense on the Consolidated Statements of Operations and consists of a prepayment penalty and the write-off of unamortized deferred financing costs and debt discount.

ABL Credit Facility and Term Loan

5 unchanged sentences

(ii) the London InterBank Offered Rate, or “LIBOR”, for an interest period of one, three, or six months, as selected by the Company, plus a margin of 1.125 % or 1.375 % based on the amount of the Company’s average excess availability under the facility.

For Fiscal 2022, Fiscal 2021, and Fiscal 2020, the Company recognized $ 10.2 million, $ 7.0 million, and $ 8.2 million, respectively, in interest expense related to the ABL Credit Facility and Previous ABL Credit Facility.

The Company is charged a fee of 0.20 % on the unused portion of the commitments.

Letter of credit fees range from 0.563 % to 0.683 % for commercial letters of credit and range from 0.625 % to 0.875 % for standby letters of credit.

Letter of credit fees are determined based on the amount of the Company’s average excess availability under the facility.

The amount available for loans and letters of credit under the ABL Credit Facility is determined by a borrowing base consisting of certain credit card receivables, certain trade receivables, certain inventory, and the fair market value of certain real estate, subject to certain reserves.

THE CHILDREN’S PLACE, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company is charged an unused line fee of 0.20 % on the unused portion of the commitments.

Letter of credit fees range from 0.563 % to 0.683 % for commercial letters of credit and range from 0.625 % to 0.875 % for standby letters of credit.

Letter of credit fees are determined based on the amount of the Company’s average excess availability under the facility.

The amount available for loans and letters of credit under the Credit Agreement is determined by a borrowing base consisting of certain credit card receivables, certain trade receivables, certain inventory, and the fair market value of certain real estate, subject to certain reserves.

The outstanding obligations under the ABL Credit Facility may be accelerated upon the occurrence of certain events, including, among others, non-payment, breach of covenants, the institution of insolvency proceedings, defaults under other material indebtedness, and a change of control, subject, in the case of certain defaults, to the expiration of applicable grace periods.

The Company is not subject to any early termination fees.

The ABL Credit Facility contains covenants, which include conditions on stock buybacks and the payment of cash dividends or similar payments.

The ABL Credit Facility contains covenants, which include conditions on stock buybacks and the payment of cash dividends or similar payments, and a fixed-charge coverage ratio covenant, which only becomes effective in the event that borrowings exceed $ 315.0 million.

These covenants also limit the ability of the Company and its subsidiaries to incur certain liens, to incur certain indebtedness, to make certain investments, acquisitions, or dispositions, or to change the nature of its business.

14 unchanged sentences

2023 January 29,

(in millions)

Average end of day loan balance during the period $ 274.9 $ 187.0

3 unchanged sentences

(1) Lower of the credit facility maximum or the total borrowing base collateral.

(2) The sub-limit availability for letters of credit was $ 42.6 million and $ 41.8 million at January 29, 2022 and January 30, 2021, respectively.

(2) The sub-limit availability for letters of credit was $ 42.6 million at January 28, 2023 and January 29, 2022.

(3) The ABL Credit Facility contains an excess availability requirement which would effectively reduce this amount to $ 20.6 million.

The Term Loan bears interest, payable monthly, at (a) the LIBOR Rate plus 2.50 % for any portion that is a LIBOR loan, or (b) the base rate plus 1.75 % for any portion that is a base rate loan.

The Term Loan is pre-payable at any time without penalty, and does not require amortization.

For Fiscal 2021, the Company recognized $ 5.9 million in interest expense related to the Term Loan and the Previous Term Loan.

The Term Loan is secured by a first priority security interest in the Company’s intellectual property, certain furniture, fixtures, equipment, and pledges of subsidiary capital stock, and a second priority security interest in the collateral securing the

For Fiscal 2022, Fiscal 2021, and Fiscal 2020, the Company recognized $ 2.3 million, $ 5.9 million, and $ 2.6 million, respectively in interest expense related to the Term Loan and Previous Term Loan.

The Term Loan is guaranteed by each of the Company’s subsidiaries that guarantees the ABL Credit Facility and contains substantially the same covenants as provided in the ABL Credit Facility.

THE CHILDREN’S PLACE, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

ABL Credit Facility on a first-priority basis.

The Term Loan is guaranteed by each of the Company’s subsidiaries that guarantee the ABL Credit Facility and shares substantially the same covenants as provided in the ABL Credit Facility.

Both the ABL Credit Facility and the Term Loan contain customary events of default, which include (subject in certain cases to customary grace and cure periods), nonpayment of principal or interest, breach of other covenants, failure to pay certain other indebtedness, and certain events of bankruptcy, insolvency or reorganization.

Both the ABL Credit Facility and the Term Loan contain customary events of default, which include (subject in certain cases to customary grace and cure periods), nonpayment of principal or interest, breach of covenants, failure to pay certain other indebtedness, and certain events of bankruptcy, insolvency or reorganization.

COMMITMENTS AND CONTINGENCIES

23 unchanged sentences

In March 2018, the Board of Directors authorized a $ 250.0 million share repurchase program (the “2018 Share Repurchase Program”).

In November 2021, the Board of Directors approved another $ 250.0 million share repurchase program, which added to the remaining availability under the 2018 Share Repurchase Program.

In November 2021, the Board of Directors approved another $ 250.0 million share repurchase program (the “2021 Share Repurchase Program”), which added to the then remaining availability under the 2018 Share Repurchase Program.

Under these programs, the Company may repurchase shares on the open market at current market prices at the time of purchase or in privately negotiated transactions.

1 unchanged sentence

The Company may suspend or discontinue the programs at any time and may thereafter reinstitute purchases, all without prior announcement.

As of January 29, 2022, there was $ 257.3 million remaining under these programs.

As of January 28, 2023, the 2018 Share Repurchase Program was exhausted, and there was $ 164.4 million remaining under the 2021 Share Repurchase Program.

From March 2020 through July 2021, the Company suspended share repurchases, other than to satisfy withholding tax requirements of equity award recipients, due to the COVID-19 pandemic.

7 unchanged sentences

Fiscal Years Ended

January 29, 2022 January 30, 2021 February 1, 2020

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

Shares Amount Shares Amount Shares Amount

6 unchanged sentences

For all shares retired in Fiscal 2022, Fiscal 2021, and Fiscal 2020, $ 54.2 million, $ 66.5 million, and $ 10.6 million was charged to Retained earnings, respectively.

In March 2020, the Company announced it had temporarily suspended its dividend payments due to the COVID-19 pandemic.

Future declarations of quarterly dividends and the establishment of future record and payment dates are subject to approval by the Company’s Board of Directors based on a number of factors, including business and market conditions, the Company’s financial performance, and other investment priorities.

6 unchanged sentences

With the approval of the Human Capital & Compensation Committee, the Company may settle vested Deferred Awards and Performance Awards to the employee in shares, in a cash amount equal to the market value of such shares at the time all requirements for delivery of the award have been met, or in part shares and cash.

For Performance Awards granted in Fiscal 2021, employees may earn from 0 % to 300 % of their target shares and for Performance Awards granted in Fiscal 2020 and Fiscal 2019, employees may earn from 0 % to 250 % of their Target Shares, based on the terms of the award and the Company’s achievement of certain performance goals established at the beginning of the applicable service period.

For Performance Awards granted in Fiscal 2022, employees may earn from 0 % to 200 % of their target shares, for Performance Awards granted in Fiscal 2021, employees may earn from 0 % to 300 % of their Target Shares, and for Performance Awards granted in Fiscal 2020, employees may earn from 0 % to 250 % of their Target Shares, based on the terms of the award and the Company’s achievement of certain performance goals established at the beginning of the applicable service period.

Performance Awards cliff vest, if earned, after completion of the applicable service period, which is generally three years .

5 unchanged sentences

2023 January 29,

2021 February 1,

2022 January 30,

(in thousands)

11 unchanged sentences

Fiscal Years Ended

January 29, 2022 January 30, 2021 February 1, 2020

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

Shares Weighted

16 unchanged sentences

Fiscal Years Ended

January 29, 2022 January 30, 2021 February 1, 2020

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

Fair Value Number of

11 unchanged sentences

The cumulative expense recognized for Performance Awards reflects changes in the probability that the performance criteria will be achieved as they occur.

Based on the current number of Performance Awards expected to be earned, total unrecognized stock-based compensation expense related to unvested Performance Awards was $ 13.2 million as of January 29, 2022, which will be recognized over a weighted average period of approximately 1.8 years.

Based on the current number of Performance Awards expected to be earned, total u nrecognized stock-based compensation expense related to unvested Performance Awards was $ 10.2 million as of January 28, 2023, which will be recognized over a weighted average period of approximately 1.4 years.

The fair value of Performance Awards that vested during Fiscal 2022, Fiscal 2021, and Fiscal 2020 was $ 3.0 million, $ 10.6 million, and $ 0.1 million, respectively.

2 unchanged sentences

2023 January 29,

2021 February 1,

2022 January 30,

(in thousands)

8 unchanged sentences

2023 January 29,

2021 February 1,

2022 January 30,

(in thousands)

9 unchanged sentences

Effective tax rate 92.3 % 27.2 % 33.7 %

On March 27, 2020, the CARES Act was enacted in response to the COVID-19 pandemic.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), was enacted in response to the COVID-19 pandemic.

The CARES Act allows net operating losses (“NOLs”) incurred in taxable years 2018, 2019, and 2020 to be carried back to each of the five preceding taxable years to offset 100 % of taxable income and to generate a refund of previously paid income taxes.

Pursuant to the CARES Act, the Company carried back the Fiscal 2020 tax loss of approximately $ 150.0 million to prior years and the resulting income tax receivable of $ 41.1 million is included within Prepaid expenses and other current assets on the Consolidated Balance Sheets.

Pursuant to the CARES Act, the Company carried back the Fiscal 2020 tax loss of approximately $ 150.0 million to prior years.

During Fiscal 2022, the Company received $ 22.0 million of the related income tax refund and the remaining balance of $ 19.1 million as of January 28, 2023 is included within Prepaid expenses and other current assets on the Consolidated Balance Sheets.

THE CHILDREN’S PLACE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

A reconciliation between the calculated tax provision (benefit) based on the U.S.

2 unchanged sentences

2023 January 29,

2021 February 1,

2022 January 30,

(in thousands)

19 unchanged sentences

This rate fluctuates from year to year in response to changes in the mix of income by country, as well as changes in tax laws in foreign jurisdictions.

THE CHILDREN’S PLACE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(2) The CARES Act permits NOL carryovers and carrybacks to offset 100 % of taxable income for taxable years beginning before 2021.

7 unchanged sentences

However, if future events cause the Company to conclude that it is not more likely than not that it will be able to recover all of the value assigned to its deferred tax assets, the valuation allowance would be adjusted accordingly.

THE CHILDREN’S PLACE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The tax effects of temporary differences which give rise to deferred tax assets and liabilities were as follows:

12 unchanged sentences

Net operating loss carryforward 3,453 2,900

Charitable contributions

Interest expense carryforward

Valuation allowance ( 1,273 ) ( 1,149 )

Total deferred tax asset, net $ 36,616 $ 23,109

The Company has state NOL carryforwards of $ 41.4 million which expire within four and nineteen years , foreign NOL carryforwards of $ 0.7 million which does not expire and $ 1.2 million which expires in five years .

The Company has state NOL carryforwards of $ 48.8 million which expire within five to twenty years , and foreign NOL carryforwards of $ 1.9 million which expire in five years .

The Company also has an Alternative Minimum Tax credit (“AMT”) in Puerto Rico of $ 0.7 million.

6 unchanged sentences

companies to pay a mandatory one-time transition tax on historical offshore earnings that had not been repatriated to the U.S.

The remaining unpaid transition tax, which begins to be repaid in 2024, amounted to $ 14.9 million at January 29, 2022, and is shown as Long-term income taxes payable on the Consolidated Balance Sheets.

While the Company is no longer permanently reinvested to the extent earnings were subject to the transition tax under the Tax Act, no additional income taxes have been provided on any earnings subsequent to the transition tax or for any additional outside basis differences inherent in the Company’s foreign subsidiaries, as these amounts continue to be

THE CHILDREN’S PLACE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

permanently reinvested in foreign operations.

The remaining unpaid transition tax, which begins to be repaid in Fiscal 2023, amounted to $ 18.8 million at January 28, 2023, of whic h $ 17.2 million is shown as long-term Income taxes payable and $ 1.6 million is shown net in Prepaid expenses and other current assets on the Consolidated Balance Sheet as of January 28, 2023.

Determining the amount of the unrecognized deferred tax liability related to any additional outside basis differences in the Company’s foreign subsidiaries (i.e., basis differences in excess of that subject to the one-time transition tax) is not practicable.

The unremitted foreign earnings earned subsequent to the transition tax, which are permanently reinvested, were $ 220.2 million as of January 28, 2023.

Uncertain Tax Benefits

Unrecognized Tax Benefits

Tax positions are evaluated in a two-step process.

2 unchanged sentences

The tax position is measured as the largest amount of benefit that is greater than 50% likely to be realized upon ultimate settlement.

THE CHILDREN’S PLACE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

A reconciliation of the gross amounts of unrecognized tax benefits, excluding accrued interest and penalties, is as follows:

9 unchanged sentences

Unrecognized tax benefits of $ 3.3 million, excluding accrued interest and penalties, at January 28, 2023 would affect the Company’s effective tax rate in future periods, if recognized.

The Company expects to reverse reserves for unrecognized tax benefits of approximately $ 6.7 million in the next 12 months as a result of settlements with taxing authorities or the expiration of statutes of limitations.

The Company does not expect to reverse reserves for unrecognized tax benefits in the next 12 months as a result of settlements with taxing authorities or the expiration of statutes of limitations.

The Company accrues interest and penalties related to unrecognized tax benefits as part of the provision for income taxes.

At January 28, 2023 and January 29, 2022, accrued interest and penalties of $ 0.4 million and $ 0.5 million, respectively, were included in unrecognized tax benefits.

Interest, penalties, and reversals thereof, net of taxes, amounted to expense of $ 0.3 million in Fiscal 2021 and $ 0.1 million in Fiscal 2020.

Interest, penalties, and reversals thereof, net of taxes, amounted to a benefit of $ 0.1 million in Fiscal 2022 and expense of $ 0.3 million in Fiscal 2021.

The Company is subject to tax in the U.S.

3 unchanged sentences

The Company is no longer subject to income tax examinations by U.S.

federal, state and local or foreign tax authorities for tax years 2016 and prior, with the exception of Hong Kong, which is open through tax year 2013 due to an ongoing tax examination.

federal, state and local or foreign tax authorities for tax years 2016 and prior.

RETIREMENT AND SAVINGS PLANS

6 unchanged sentences

For non-highly compensated associates, the Company matches the first 3 % of the participant’s contributions and 50 % of the next 2 % of the participant’s contributions, and the Company match contribution vests immediately.

For highly compensated associates, the Company has the discretion to match the lesser of 50 % of the participant’s contributions or 2.5 % of the participant’s covered compensation and the Company

THE CHILDREN’S PLACE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

match contribution vests over five years .

For highly compensated associates, the Company has the discretion to match the lesser of 50 % of the participant’s contributions or 2.5 % of the participant’s covered compensation and the Company match contribution vests over five years .

Due to the COVID-19 pandemic, the Company suspended the Company's portion of the 401(k) match on June 1, 2020, which was subsequently reinstated on January 1, 2021.

1 unchanged sentence

Deferred Compensation Plan

The Deferred Compensation Plan liability, excluding Company stock, was $ 2.2 million at January 29, 2022 and January 30, 2021.

The value of the assets held in the rabbi trust was $ 2.2 million at January 29, 2022 and January 30, 2021.

The Deferred Compensation Plan liability, excluding Company stock, was $ 1.3 million and $ 2.2 million at January 28, 2023 and January 29, 2022, respectively.

The value of the assets held in the rabbi trust was $ 1.3 million and $ 2.2 million at January 28, 2023 and January 29, 2022, respectively.

The cost of the Company’s stock repurchased was $ 3.7 million and $ 3.4 million at January 28, 2023 and January 29, 2022, respectively.

THE CHILDREN’S PLACE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Under statutory requirements, the Company contributes to retirement plans for its operations in Canada, Puerto Rico, and Asia.

4 unchanged sentences

and The Children’s Place International.

Each segment includes an e-commerce business located at www.childrensplace.com , www.gymboree.com , and www.sugarandjade.com .

Each segment includes an e-commerce business located at www.childrensplace.com , www.gymboree.com , www.sugarandjade.com, and www.pjplace.com .

Included in The Children’s Place U.S.

13 unchanged sentences

had 589 stores and The Children’s Place International had 83 stores.

THE CHILDREN’S PLACE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following tables provide segment level financial information for Fiscal 2022, Fiscal 2021, and Fiscal 2020:

1 unchanged sentence

2023 January 29,

2021 February 1,

2022 January 30,

(in thousands)

24 unchanged sentences

Total capital expenditures $ 45,577 $ 29,307 $ 30,585

THE CHILDREN’S PLACE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

____________________________________________

8 unchanged sentences

Total assets $ 986,281 $ 1,037,460

THE CHILDREN’S PLACE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Geographic Information

34 unchanged sentences

Mitarotonda, certain of their affiliates listed on Schedule A to the Agreement, and Robert L.

Mettler filed as Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed on May 29, 2015, is incorporated herein by reference.

Mettler filed as Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed on May 29, 2015, is incorporated by reference herein .

The Company Profit Sharing/401(k) Plan Adoption Agreement No.#001 for use with Fidelity Basic Plan Document No.

6 unchanged sentences

Letter Agreement dated February 13, 2019 between The Children’s Place Services Company, LLC and Claudia Lima-Guinehut filed as Exhibit 10.3 to the registrant’s Quarterly Report on Form 10-Q for the period ended May 4, 2019, is incorporated by reference herein.

Letter Agreement dated May 25, 2020 between The Children’s Place Services Company, LLC and Leah Swan filed as Exhibit 10.2 to the registrant’s Quarterly Report on Form 10-Q for the period ended May 2, 2020, is incorporated by reference herein.

Amended and Restated Credit Agreement, dated as of May 9, 2019, by and among the Company and The Children’s Place Services Company, LLC, as borrowers, The Children’s Place (International), LLC, The Children’s Place Canada Holdings, Inc., the childrensplace.com, inc., TCP IH II, LLC, TCP International IP Holdings, LLC and TCP International Product Holdings, LLC, as guarantors, Wells Fa rgo Bank, National Association (successor by merger to Wells Fargo Retail Finance, LLC), as Administrative Agent and Collateral Agent, L/C Issuer, Swing Line Lender and as a lender and Bank of America, N.A., HSBC Bank USA, N.A.

Amended and Restated Credit Agreement, dated as of May 9, 2019, by and among the Company and The Children’s Place Services Company, LLC, as borrowers, The Children’s Place (International), LLC, The Children’s Place Canada Holdings, Inc., the childrensplace.com, inc., TCP IH II, LLC, TCP International IP Holdings, LLC and TCP International Product Holdings, LLC, as guarantors, Wells Fargo Bank, National Association (successor by merger to Wells Fargo Retail Finance, LLC), as Administrative Agent and Collateral Agent, L/C Issuer, Swing Line Lender and as a lender and Bank of America, N.A., HSBC Bank USA, N.A.

and JPMorgan Chase Bank, N.A., as lenders, filed as Exhibit 10.5 to the registrant’s Quarterly Report on Form 10-Q for the period ended May 4, 2019, is incorporated by reference herein.

2 unchanged sentences

Joinder and Second Amendment to Amended and Restated Credit Agreement and Other Loan Documents, dated as of October 5, 2020, among the Company, the Borrowers identified on Schedule I thereto, TCP Brands, LLC, TCP Investment Canada I Corp., collectively, the New Guarantors, the Guarantors identified on Schedule II thereto, the Lenders and Wells Fargo Bank, National Association (successor by merger to Wells Fargo Retail Finance, LLC), as Administrative Agent and Collateral Agent, L/C Issuer, Swing Line Lender and as a lender, filed as Exhibit 4.2 to the registrant’s Current Report on Form 8-K filed on October 6, 2020, is incorporated by reference herein.

Third Amendment to Amended and Restated Credit Agreement, dated as of April 23, 2021, by and among the Company, the Borrowers identified on Schedule I thereto, the Guarantors identified on Schedule II thereto, the Lenders and Wells Fargo Bank, National Association (successor by merger to Wells Fargo Retail Finance, LLC), as Administrative Agent, Collateral Agent, L/C Issuer, and Swing Line Lender.

Joinder and Fourth Amendment to Amended and Restated Credit Agreement and Other Loan Documents, dated as of November 15, 2021, among the Company, the Borrowers identified on Schedule I thereto, TCP Brands, LLC, The Children’s Place International, LLC, collectively the New Borrowers, the Guarantors identified on Schedule II thereto, the Lenders and Wells Fargo Bank, National Association, as Administrative Agent, Collateral Agent, L/C Issuer, Swing Line Lender and Term Agent, filed as Exhibit 10.4 to the registrant’s Quarterly Report on Form 10-Q for the period ended October 30, 2021.

Asset Purchase Agreement, dated March 1, 2019, by and among TCP Brands, LLC, as buyer, and Gymboree Group, Inc.

3 unchanged sentences

Form of Performance-Based Restricted Stock Unit Award Agreement under the 2011 Equity Incentive Plan (Senior Vice President & above) filed as Exhibit 10.25 to the registrant’s Annual Report on Form 10-K for the period ended January 30, 2021, is incorporated by reference herein.

Form of Time-Based Restricted Stock Unit Award Agreement under the 2011 Equity Incentive Plan (Senior Vice President & above).

Letter Agreement dated February 16, 2021 between The Children’s Place Services Company, LLC and Robert Helm filed as Exhibit 10.27 to the registrant’s Annual Report on Form 10-K for the period ended January 30, 2021, is incorporated by reference herein.

Exhibit Description

Form of Time-Based Restricted Stock Unit Award Agreement under the 2011 Equity Incentive Plan (Senior Vice President & above) filed as Exhibit 10.29 to the registrant’s Annual Report on Form 10-K for the period ended January 29, 2022, is incorporated by reference herein.

Letter Agreement dated July 21, 2021 between The Children’s Place Services Company, LLC and Jared Shure filed as Exhibit 10.2 to the registrant’s Quarterly Report on Form 10-Q for the period ended July 31, 2021, is incorporated by reference herein.

Exhibit Description

Letter Agreement dated October 16, 2022 between The Children’s Place Services Company, LLC and Sheamus Toal filed as Exhibit 10.2 to the registrant’s Quarterly Report on Form 10-Q for the period ended October 29, 2022, is incorporated by reference herein.

Subsidiaries of the Company.

1 unchanged sentence

Certificate of Principal Executive Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002.

Certificate of Principal Financial Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002.

Certificate of Principal Financial Officer and Principal Accounting Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002.

Certification pursuant to 18 U.S.C.

19 unchanged sentences

Chief Executive Officer and President

(Principal Executive Officer)

March 28, 2023

5 unchanged sentences

Elfers (Principal Executive Officer)

/S/ Robert Helm Chief Financial Officer March 25, 2022

Robert Helm (Principal Financial Officer)

/S/ Michael Rinaldo Chief Accounting Officer March 25, 2022

Michael Rinaldo (Principal Accounting Officer)

/S/ Sheamus Toal Chief Financial Officer March 28, 2023

Sheamus Toal (Principal Financial Officer and Principal Accounting Officer)

/S/ Joseph Alutto Director March 28, 2023

7 unchanged sentences

Tracey Griffin

/S/ Joseph Gromek Director March 25, 2022

Joseph Gromek

/S/ Katherine Kountze Director March 28, 2023

2 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 9A. Controls and Procedures