Childrens Place, Inc. 10-K

ITEM 9A. CONTROLS AND PROCEDURES. Evaluation of Disclosure Controls and Procedures Disclosure controls and procedures are designed only to provide “reasonable assurance” that the controls and procedures will meet their objectives. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our Company have been detected. Management, including our Chief Executive Officer and President and our Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e) of the Exchange Act, as of January 28, 2023. Based on that evaluation, our Chief Executive Officer and President and our Chief Financial Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level, as of January 28, 2023, to ensure that all information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and is accumulated and communicated to our management, including our principal executive, principal accounting, and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Management’s Report on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act Rule 13a-15(f). Internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of our financial reporting for external purposes in accordance with accounting principles generally accepted in the U.S. Because of its inherent limitations, internal control over financial reporting is not intended to provide absolute assurance that a misstatement of our financial statements would be prevented or detected. Under the supervision and with the participation of our management, including our Chief Executive Officer and President and our Chief Financial Officer, we conducted an evaluation of the design and effectiveness of our internal control over financial reporting based on the criteria set forth in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on our evaluation under the Internal Control-Integrated Framework, our management concluded that our internal control over financial reporting was effective as of January 28, 2023. Our independent registered public accounting firm that audited the consolidated financial statements included in this annual report has issued an attestation report on our internal control over financial reporting, which is included herein. Changes in Internal Control Over Financial Reporting There have been no changes in our internal control over financial reporting that occurred during our most recently completed fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 41 Table of Contents Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of The Children’s Place, Inc. Opinion on Internal Control Over Financial Reporting We have audited The Children’s Place, Inc. and subsidiaries’ internal control over financial reporting as of January 28, 2023, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, The Children’s Place, Inc. and subsidiaries (the “Company”) maintained, in all material respects, effective internal control over financial reporting as of January 28, 2023, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of January 28, 2023, and January 29, 2022, the related consolidated statements of operations, comprehensive income (loss), changes in stockholders’ equity and cash flows for each of the three years in the period ended January 28, 2023, and the related notes and our report dated March 28, 2023 expressed an unqualified opinion thereon. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /S/ Ernst & Young LLP Iselin, New Jersey March 28, 2023 42 Table of Contents ITEM 9B. OTHER INFORMATION. None. ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS. Not applicable. 43 Table of Contents PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE. The information required to be included by Item 10 of Form 10-K will be set forth in the Company’s proxy statement for its 2023 annual meeting of stockholders to be filed with the SEC within 120 days after January 28, 2023 (the “Proxy Statement”) and is incorporated by reference herein. ITEM 11. EXECUTIVE COMPENSATION. The information required to be included by Item 11 of Form 10-K will be set forth in the Proxy Statement and is incorporated by reference herein. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS. The information required to be included by Item 12 of Form 10-K will be set forth in the Proxy Statement and is incorporated by reference herein. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE. The information required to be included by Item 13 of Form 10-K will be set forth in the Proxy Statement and is incorporated by reference herein. ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES. The information required to be included by Item 14 of Form 10-K will be set forth in the Proxy Statement and is incorporated by reference herein. 44 Table of Contents PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. (a)(1) Financial Statements The following documents are filed as part of this report: Report of Independent Registered Public Accounting Firm (PCAOB ID: 42 ) 46 Consolidated Balance Sheets as of January 28, 2023 and January 29, 2022 49 Consolidated Statements of Operations for the fiscal years ended January 2 8 , 202 3 , January 29 , 202 2 , and January 30 , 20 21 50 Consolidated Statements of Comprehensive Income (Loss) for the fiscal years ended January 28, 2023, January 29, 2022, and January 30, 2021 51 Consolidated Statements of Changes in Stockholders’ Equity for the fiscal years ended January 28, 2023, January 29, 2022, and January 30, 2021 52 Consolidated Statements of Cash Flows for the fiscal years ended January 28, 2023, January 29, 2022, and January 30, 2021 53 Notes to Consolidated Financial Statements 55 45 Table of Contents Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of The Children’s Place, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of The Children’s Place, Inc. and subsidiaries (the “Company”) as of January 28, 2023 and January 29, 2022, the related consolidated statements of operations, comprehensive income (loss), changes in stockholders' equity and cash flows for each of the three years in the period ended January 28, 2023, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at January 28, 2023 and January 29, 2022, and the results of its operations and its cash flows for each of the three years in the period ended January 28, 2023, in conformity with 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 28, 2023, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated March 28, 2023, expressed an unqualified opinion thereon. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s 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. 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 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 financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. 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. 46 Table of Contents 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 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. Auditing the Company’s long-lived asset impairment assessments involved subjective auditor judgment due to the estimation involved in determining the forecasted cash flows used to evaluate the recoverability and estimate the fair values of long-lived assets for which impairment was indicated. Significant assumptions used in determining the fair value of certain operating lease right-of-use assets include the current market rent for the remaining lease term of the related stores. These assumptions are subjective in nature and are affected by expectations about future market or economic conditions. 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 long-lived asset impairment review process. These procedures included testing controls over management’s review of the data used in the cash flow projections and valuation models, as well as the review of significant assumptions including estimates of future revenue and gross margin. We performed audit procedures which included, among others, analyzing significant assumptions about future revenue and operating costs for the relevant retail stores based on historical results and trends by store and testing the data used in the calculations. We tested the assumed revenue growth and margin rates in comparison to recent actual results and expectations about future market conditions. We tested assumptions about related operating costs based on historical costs and the existing relationships between costs and revenues. We compared the assumptions used in the forecasted cash flows with the Company’s strategic plans. 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. 47 Table of Contents 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 We have served as the Company’s auditor since 2018. Iselin, New Jersey March 28, 2023 48 Table of Contents THE CHILDREN’S PLACE, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS January 28, 2023 January 29, 2022 (in thousands, except par value) ASSETS Current assets: Cash and cash equivalents $ 16,689 $ 54,787 Accounts receivable 49,584 21,863 Inventories 447,795 428,813 Prepaid expenses and other current assets 47,875 76,075 Total current assets 561,943 581,538 Long-term assets: Property and equipment, net 149,874 155,006 Right-of-use assets 155,481 194,653 Tradenames, net 70,891 71,692 Deferred income taxes 36,616 23,109 Other assets 11,476 11,462 Total assets $ 986,281 $ 1,037,460 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Revolving loan $ 286,990 $ 175,318 Accounts payable 177,147 183,758 Current portion of operating lease liabilities 78,576 91,097 Income taxes payable 6,014 10,984 Accrued expenses and other current liabilities 99,658 130,669 Total current liabilities 648,385 591,826 Long-term liabilities: Long-term debt 49,752 49,685 Long-term portion of operating lease liabilities 96,482 134,761 Income taxes payable 17,199 14,939 Other tax liabilities 2,757 8,689 Other long-term liabilities 13,228 12,088 Total liabilities 827,803 811,988 Commitments and contingencies (see Note 9) Stockholders’ equity: Preferred stock, $ 1.00 par value, 1,000 shares authorized, 0 shares issued and outstanding — — Common stock, $ 0.10 par value, 100,000 shares authorized; 12,292 and 13,964 issued; 12,225 and 13,903 outstanding 1,229 1,396 Additional paid-in capital 150,956 160,348 Treasury stock, at cost ( 67 and 61 shares) ( 3,736 ) ( 3,443 ) Deferred compensation 3,736 3,443 Accumulated other comprehensive loss ( 16,247 ) ( 14,186 ) Retained earnings 22,540 77,914 Total stockholders’ equity 158,478 225,472 Total liabilities and stockholders’ equity $ 986,281 $ 1,037,460 See accompanying notes to these consolidated financial statements. 49 Table of Contents THE CHILDREN’S PLACE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS Fiscal Years Ended January 28, 2023 January 29, 2022 January 30, 2021 (in thousands, except earnings (loss) per common share) Net sales $ 1,708,482 $ 1,915,364 $ 1,522,598 Cost of sales (exclusive of depreciation and amortization) 1,194,320 1,120,624 1,189,347 Gross profit 514,162 794,740 333,251 Selling, general, and administrative expenses 460,972 459,169 428,234 Depreciation and amortization 51,464 58,417 66,405 Asset impairment charges 3,256 1,506 38,527 Operating income (loss) ( 1,530 ) 275,648 ( 199,915 ) Interest expense ( 13,324 ) ( 18,634 ) ( 11,906 ) Interest income 92 16 63 Income (loss) before provision (benefit) for income taxes ( 14,762 ) 257,030 ( 211,758 ) Provision (benefit) for income taxes ( 13,624 ) 69,859 ( 71,393 ) Net income (loss) $ ( 1,138 ) $ 187,171 $ ( 140,365 ) Earnings (loss) per common share Basic $ ( 0.09 ) $ 12.82 $ ( 9.59 ) Diluted $ ( 0.09 ) $ 12.59 $ ( 9.59 ) Weighted average common shares outstanding Basic 13,041 14,597 14,631 Diluted 13,041 14,870 14,631 See accompanying notes to these consolidated financial statements. 50 Table of Contents THE CHILDREN’S PLACE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) Fiscal Years Ended January 28, 2023 January 29, 2022 January 30, 2021 (in thousands) Net income (loss) $ ( 1,138 ) $ 187,171 $ ( 140,365 ) Other comprehensive income (loss): Foreign currency translation adjustment ( 2,061 ) ( 370 ) 477 Change in fair value of cash flow hedges, net of income taxes — — ( 748 ) Total comprehensive income (loss) $ ( 3,199 ) $ 186,801 $ ( 140,636 ) See accompanying notes to these consolidated financial statements. 51 Table of Contents THE CHILDREN’S PLACE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS ’ EQUITY Accumulated Additional Retained Other Total Common Stock Paid-In Deferred Earnings Comprehensive Treasury Stock Stockholders ’ (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 Vesting of stock awards 173 17 ( 17 ) — Stock-based compensation expense 14,316 14,316 Purchase and retirement of common stock ( 294 ) ( 29 ) ( 4,821 ) ( 10,640 ) ( 15,490 ) Other comprehensive loss ( 271 ) ( 271 ) Deferral of common stock into deferred compensation plan 209 ( 6 ) ( 209 ) — 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 ) — Stock-based compensation expense 30,942 30,942 Purchase and retirement of common stock ( 1,025 ) ( 103 ) ( 19,078 ) ( 66,467 ) ( 85,648 ) Other comprehensive loss ( 370 ) ( 370 ) Deferral of common stock into deferred compensation plan 278 ( 4 ) ( 278 ) — 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 Vesting of stock awards 281 28 ( 28 ) — Stock-based compensation expense 29,150 29,150 Purchase and retirement of common stock ( 1,953 ) ( 195 ) ( 38,514 ) ( 54,236 ) ( 92,945 ) Other comprehensive loss ( 2,061 ) ( 2,061 ) Deferral of common stock into deferred compensation plan 293 ( 6 ) ( 293 ) — 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 See accompanying notes to these consolidated financial statements. 52 Table of Contents THE CHILDREN’S PLACE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Fiscal Years Ended January 28, 2023 January 29, 2022 January 30, 2021 (in thousands) CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ ( 1,138 ) $ 187,171 $ ( 140,365 ) Reconciliation of net income (loss) to net cash provided by (used in) operating activities: Non-cash portion of operating lease expense 88,936 100,564 113,145 Depreciation and amortization 51,464 58,417 66,405 Non-cash stock-based compensation expense 29,150 30,942 14,316 Asset impairment charges 3,256 1,506 38,527 Deferred income tax provision (benefit) ( 13,675 ) 25,846 ( 32,660 ) Loss on extinguishment of debt — 3,679 — Other non-cash charges, net 601 1,387 821 Changes in operating assets and liabilities: Inventories ( 20,741 ) ( 40,870 ) ( 61,080 ) Accounts receivable and other assets ( 28,143 ) 16,200 ( 3,616 ) Prepaid expenses and other current assets 10,440 ( 7,191 ) 7,081 Income taxes payable, net of prepayments 14,690 ( 5,982 ) ( 43,306 ) Accounts payable and other current liabilities ( 41,734 ) ( 58,334 ) 71,720 Lease liabilities ( 102,522 ) ( 172,454 ) ( 69,294 ) Other long-term liabilities 1,198 ( 7,605 ) 2,589 Net cash provided by (used in) operating activities ( 8,218 ) 133,276 ( 35,717 ) CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures ( 45,577 ) ( 29,307 ) ( 30,585 ) Change in deferred compensation plan ( 371 ) 17 211 Net cash used in investing activities ( 45,948 ) ( 29,290 ) ( 30,374 ) CASH FLOWS FROM FINANCING ACTIVITIES: Borrowings under revolving credit facility 713,718 758,681 500,872 Repayments under revolving credit facility ( 602,046 ) ( 753,140 ) ( 501,902 ) Proceeds from issuance of term loan, net of discount — 50,000 78,637 Repayment of term loan — ( 81,840 ) — Payment of debt issuance costs — ( 2,468 ) ( 1,188 ) Purchase and retirement of common stock, including shares surrendered for tax withholdings and transaction costs ( 94,616 ) ( 83,974 ) ( 15,490 ) Net cash provided by (used in) financing activities 17,056 ( 112,741 ) 60,929 Effect of exchange rate changes on cash and cash equivalents ( 988 ) ( 6 ) 223 Net decrease in cash and cash equivalents ( 38,098 ) ( 8,761 ) ( 4,939 ) Cash and cash equivalents, beginning of period 54,787 63,548 68,487 Cash and cash equivalents, end of period $ 16,689 $ 54,787 $ 63,548 See accompanying notes to these consolidated financial statements. 53 Table of Contents THE CHILDREN’S PLACE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) Fiscal Years Ended January 28, 2023 January 29, 2022 January 30, 2021 (in thousands) OTHER CASH FLOW INFORMATION: Net cash paid (received) for income taxes $ ( 14,969 ) $ 49,563 $ 3,643 Cash paid for interest 12,354 14,774 10,831 Increase (decrease) in accrued capital expenditures 1,122 842 ( 811 ) See accompanying notes to these consolidated financial statements. 54 Table of Contents THE CHILDREN’S PLACE, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Description of Business The Children’s Place, Inc. 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”, “Sugar & Jade”, and “PJ Place” brand names. The Company classifies its business into two segments: The Children’s Place U.S. and The Children’s Place International. Included in The Children’s Place U.S. segment are the Company’s U.S. and Puerto Rico-based stores and revenue from its U.S.-based wholesale business. 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, 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: • Fiscal 2022 - The fifty-two weeks ended January 28, 2023 • Fiscal 2021 - The fifty-two weeks ended January 29, 2022 • 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 • SEC - U.S. Securities and Exchange Commission • U.S. GAAP - Generally Accepted Accounting Principles in the United States • FASB - Financial Accounting Standards Board • FASB ASC - FASB Accounting Standards Codification, which serves as the source for authoritative U.S. GAAP, except that rules and interpretive releases by the SEC are also sources of authoritative U.S. GAAP for SEC registrants Fiscal Year The Company’s fiscal year is a 52-week or 53-week period ending on the Saturday on or nearest to January 31. Fiscal 2022, 2021, and 2020 were 52-week years. Basis of Presentation The consolidated financial statements and accompanying notes to consolidated financial statements are prepared in accordance with U.S. GAAP and include the accounts of the Company and its wholly owned subsidiaries. Intercompany balances and transactions have been eliminated. As of January 28, 2023 and January 29, 2022, the Company did not have any investments in unconsolidated affiliates. FASB ASC 810— Consolidation is considered when determining whether an entity is subject to consolidation. Certain reclassifications have been made to prior period financial statements to conform to the current period presentation. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and amounts of revenues and expenses reported during the period. 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, impairment of indefinite-lived intangible assets, income taxes, stock-based compensation, and inventory valuation. 55 Table of Contents THE CHILDREN’S PLACE, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. Accounts Receivable Accounts receivable consists of credit and debit card receivables, franchisee and wholesale receivables, and other miscellaneous items. Credit and debit card receivables represent credit and debit card sales, inclusive of private label credit card sales, for which the respective third-party service company has yet to remit the cash. The unremitted balance approximates the last few days of related credit and debit card sales for each reporting period. Franchisee and wholesale receivables represent product sales and sales royalties in which cash has not yet been remitted by our partners. Bad debt associated with all sales has not been material. Inventories Inventories, which consist primarily of finished goods, are stated at the lower of cost or net realizable value, with cost determined on an average cost basis. The Company capitalizes certain buying, design, and supply chain costs in inventory, and these costs are reflected within Cost of sales as the inventories are sold. 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. Deferred Financing Costs The Company capitalizes costs directly associated with acquiring third-party financing. Deferred financing costs for the asset-based revolving credit facility are included in Other assets and are amortized as Interest expense over the term of the related indebtedness. As of January 28, 2023 and January 29, 2022, unamortized deferred financing costs amounted to $ 2.3 million and $ 2.9 million, respectively, of which $ 2.0 million and $ 2.6 million, respectively, related to the Company’s asset-based revolving credit facility. Property and Equipment, Net Property and equipment are stated at cost. Leasehold improvements are depreciated on a straight-line basis over the shorter of the life of the lease or the estimated useful life of the asset. All other property and equipment is depreciated on a straight-line basis based upon estimated useful lives, with furniture and fixtures and equipment generally ranging from 3 to 10 years and buildings and improvements generally ranging from 20 to 25 years. Repairs and maintenance are expensed as incurred. The Company accounts for internally developed software intended for internal use in accordance with provisions of FASB ASC 350— Intangibles-Goodwill and Other . The Company capitalizes development-stage costs such as direct external costs and direct payroll related costs. When development is substantially complete and the software is ready for its intended use, the Company amortizes the cost of the software on a straight-line basis over the expected life of the software, which is generally 3 to 10 years. Preliminary project costs and post-implementation costs such as training, maintenance, and support are expensed as incurred. Intangible Assets The Company’s intangible assets include both indefinite-lived and finite-lived assets. 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. The Company’s finite-lived intangible assets consist primarily of customer lists and other acquisition-related assets. Finite-lived intangible assets are amortized over their estimated useful economic lives and are reviewed for impairment when factors indicate that an impairment may have occurred. The Company recognizes an impairment charge when the estimated fair value of the intangible asset is less than the carrying value. Impairment of Long-Lived Assets The Company periodically reviews its long-lived assets for impairment when events indicate that their carrying value may not be recoverable. 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 56 Table of Contents THE CHILDREN’S PLACE, INC. AND SUBSIDIARIES 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. The Company believes waiting this period of time allows a store to reach a maturity level where a more comprehensive analysis of financial performance can be performed. For each store that shows indications of impairment, the Company performs a recoverability test comparing estimated undiscounted future cash flows to the carrying value of the related long-lived assets. 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 (“ROU”) assets, to determine their fair market values. In evaluating future cash flows, the Company considers external and internal factors. External factors comprise the local environment in which the store resides, including mall traffic, competition, and their effect on sales trends, as well as macroeconomic factors, such as the global COVID-19 pandemic. 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, 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. Leases 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 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 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. The discount rate is the rate implicit in the lease, unless that rate cannot be readily determined. In that case, the Company is required to use its incremental borrowing rate. The discount rate for a lease is determined based on the information available at lease commencement. The Company accounts for the underlying leased asset and applies a discount rate at the lease level. However, there are certain non-real estate leases for which the Company utilizes the portfolio method by aggregating similar leased assets based on the underlying lease term. The Company has made an accounting policy election by class of underlying asset to not apply the recognition requirements of FASB ASC 842— Leases (“Topic 842”) to leases with an initial term of 12 months or less. Leases with an initial lease term of 12 months or less are not recorded on the balance sheet. The Company recognizes lease expense for these leases on a straight-line basis over the lease term. The Company has lease agreements with lease and non-lease components. The Company has elected a policy to account for lease and non-lease components as a single component for all asset classes. 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 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 57 Table of Contents THE CHILDREN’S PLACE, INC. AND SUBSIDIARIES 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. The Company records all occupancy costs in Cost of sales, except costs for administrative office buildings, which are recorded in Selling, general, and administrative expenses. In April 2020, the FASB staff released guidance regarding rent concessions related to the effects of the COVID-19 pandemic to allow for a temporary practical expedient (the “COVID-19 expedient”) to account for rent concessions as though enforceable rights and obligations for those concessions existed in the lease agreements. The election is available for concessions related to the effects of the COVID-19 pandemic that result in the total payments required by the modified contract being substantially the same as or less than total payments required by the original contract. Upon the temporary closure of the Company’s store fleet in March 2020, the Company began negotiating for concessions of certain rent payments for the time the stores were impacted. These discussions and negotiations were substantially completed at the end of the second quarter of Fiscal 2021. For the lease concessions that have been agreed upon and executed, the Company did not reassess each existing contract to determine whether enforceable rights and obligations for concessions existed and elected not to apply the lease modification guidance in ASC 842 to those contracts that shared similar characteristics. Rather, the Company accounts for COVID-19 lease concessions as reductions to variable lease cost. 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 Treasury stock is recorded at acquisition cost. Gains and losses on disposition are recorded as increases or decreases to Additional paid-in capital with losses in excess of previously recorded gains charged directly to Retained earnings. When treasury shares are retired and returned to authorized but unissued status, the carrying value in excess of par is allocated to Additional paid-in capital and Retained earnings on a pro rata basis. Income Taxes The Company utilizes the liability method of accounting for income taxes as set forth in FASB ASC 740— Income Taxes . Under the liability method, deferred taxes are determined based on the temporary differences between the financial statement and tax basis of assets and liabilities, as well as for net operating losses and tax credit carryforwards. Deferred tax assets and liabilities are measured using currently enacted tax rates applied to taxable income in effect for the years in which the basis differences and tax assets are expected to be realized. A valuation allowance is recorded when it is more likely than not that any of the deferred tax assets will not be realized. In determining the need for valuation allowances, the Company considers projected future taxable income, the availability of tax planning strategies, taxable income in prior carryback years, and future reversals of existing taxable temporary differences. If, in the future, the Company determines that it would not be able to realize recorded deferred tax assets, an increase in the valuation allowance would decrease earnings in the period in which such determination is made. The Company assesses income tax positions and records tax benefits for all years subject to examination based upon the Company’s evaluation of the facts, circumstances, and information available at the reporting date. For those tax positions where it is more likely than not that a tax benefit will be sustained, the Company has recorded the largest amount of tax benefit with a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. 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 The Company has a deferred compensation plan (the “Deferred Compensation Plan”), which is a nonqualified, unfunded plan, for eligible senior level employees. 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. 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. 58 Table of Contents THE CHILDREN’S PLACE, INC. AND SUBSIDIARIES 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. The Company is not required to contribute to the Deferred Compensation Plan, but at its sole discretion, can make additional contributions on behalf of the participants. Deferred amounts are not subject to forfeiture and are deemed invested among investment funds offered under the Deferred Compensation Plan, as directed by each participant. Payments of deferred amounts (as adjusted for earnings and losses) are payable following separation from service or at a date or dates elected by the participant at the time the deferral is elected. Payments of deferred amounts are generally made in either a lump sum or in annual installments over a period not exceeding 15 years. During fiscal 2010, the Deferred Compensation Plan was amended to allow for cash deferrals made by members of the Board of Directors to be invested in shares of the Company’s common stock. Such elections are irrevocable and will be settled in shares of common stock. All deferred amounts are payable in the form in which they were made, except for Board of Directors fees invested in shares of the Company’s common stock, which are settled in shares of Company common stock. 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. The assets of the rabbi trust are general assets of the Company and, as such, would be subject to the claims of creditors in the event of bankruptcy or insolvency. Investments of the rabbi trust consist of mutual funds and Company common stock. 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 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. Deferred stock is recorded at fair market value at the time of deferral, and any subsequent changes in fair market value are not recognized. Legal Contingencies The Company reserves for the outcome of litigation and contingencies when it determines an adverse outcome is probable and can estimate losses. Estimates are adjusted as facts and circumstances require. The Company expenses the costs to resolve litigation as incurred, net of amounts, if any, recovered through insurance coverage. Foreign Currency Translation and Transactions The Company has determined that the local currencies of its Canadian and Asian subsidiaries are their functional currencies. In accordance with FASB ASC 830— Foreign Currency Matters , the assets and liabilities denominated in foreign currencies are translated into U.S. dollars at the current rates of exchange existing at period-end, and revenues and expenses are translated at average monthly exchange rates. Related translation adjustments are reported as a separate component of stockholders’ equity. The Company also transacts certain business in foreign denominated currencies primarily with its Canadian subsidiary purchasing inventory in U.S. dollars, and there are intercompany charges between various subsidiaries. Fair Value Measurement and Financial Instruments FASB ASC 820— Fair Value Measurement provides a single definition of fair value, together with a framework for measuring it, and requires additional disclosure about the use of fair value to measure assets and liabilities. This topic defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date and establishes a three-level hierarchy, which encourages an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of the hierarchy are defined as follows: • Level 1 - inputs to the valuation techniques that are quoted prices in active markets for identical assets or liabilities • Level 2 - inputs to the valuation techniques that are other than quoted prices, but are observable for the assets or liabilities, either directly or indirectly • Level 3 - inputs to the valuation techniques that are unobservable for the assets or liabilities 59 Table of Contents THE CHILDREN’S PLACE, INC. AND SUBSIDIARIES 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. As such, their carrying amounts approximate fair value and fall within Level 1 of the fair value hierarchy. The Company stock included in the Deferred Compensation Plan is not subject to fair value measurement. 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. The Company reviews the carrying amounts of such assets when events indicate that their carrying amounts may not be recoverable. Any resulting asset impairment would require that the asset be recorded at its fair value. The resulting fair value measurements of the assets are considered to fall within Level 3 of the fair value hierarchy. Revenues Revenues are recognized when control of the promised goods or services is transferred to the Company’s customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. The Company recognizes revenue, including shipping and handling fees billed to customers, upon purchase at the Company’s retail stores or when received by the customer if the product was purchased via e-commerce, net of coupon redemptions and anticipated sales returns. The Company deferred sales of $ 2.9 million and $ 3.6 million within Accrued expenses and other current liabilities as of January 28, 2023 and January 29, 2022, respectively, based upon estimated time of delivery, at which point control passes to the customer. Sales tax collected from customers is excluded from revenue. 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. Adjustments to the allowance for estimated sales returns in subsequent periods have not been material based on historical data, thereby reducing the uncertainty inherent in such estimates. 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 , 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. Included in the agreement with the third-party financial institution was an upfront bonus paid to the Company. The upfront bonus is recognized as revenue and allocated between brand and reward obligations. As the license of the Company’s brand is the predominant item in the performance obligation, the amount allocated to the brand obligation is recognized on a straight-line basis over the initial term. 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 private label credit card program. Similar to the upfront bonus, the usage-based royalties and bonuses are recognized as revenue and allocated between the brand and reward obligations. The amount allocated to the brand obligation is recognized on a straight-line basis over the initial term. The amount allocated to the reward obligation is recognized on a point-in-time basis as redemptions under the loyalty program occur. In addition, the annual profit-sharing amount is estimated and recognized quarterly within an annual period when earned. The additional bonuses are amortized over the contract term based on anticipated progress against future targets and level of risk associated with achieving the targets. The Company has a points-based customer loyalty program in which customers earn points based on purchases and other promotional activities. These points can be redeemed for coupons to discount future purchases. A contract liability is estimated based on the standalone selling price of benefits earned by customers through the program and the related redemption experience under the program. The value of each point earned is recorded as deferred revenue and is included within Accrued expenses and other current liabilities. The total contract liabilities related to this program were $ 2.6 million and $ 5.0 million as of January 28, 2023 and January 29, 2022, respectively. The Company’s policy with respect to gift cards is to record revenue as and when the gift cards are redeemed for merchandise. The Company recognizes gift card breakage income in proportion to the pattern of rights exercised by the customer when the Company expects to be entitled to breakage and the Company determines that it does not have a legal obligation to remit the value of the unredeemed gift card to the relevant jurisdiction as unclaimed or abandoned property. Gift card breakage is recorded within Net sales. Prior to their redemption, gift cards are recorded as a liability within Accrued expenses and other current liabilities. 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, 60 Table of Contents THE CHILDREN’S PLACE, INC. AND SUBSIDIARIES 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. The Company generates revenues from the franchisees from the sale of product and, in certain cases, sales royalties. The Company recognizes revenue on the sale of product to franchisees when the franchisee takes ownership of the product. The Company records net sales for royalties when the applicable franchisee sells the product to customers. Under certain agreements, the Company receives a fee from each franchisee for exclusive territorial rights and based on the opening of new stores. The Company records these territorial fees as deferred revenue and amortizes the fee into Net sales over the life of the territorial agreement. Cost of Sales (exclusive of depreciation and amortization) In addition to the cost of inventory sold, the Company includes certain buying, design, and distribution expenses, shipping and handling costs on merchandise sold directly to customers, and letter of credit fees in Cost of sales. The Company records all occupancy costs in Cost of sales, except for administrative office buildings, which are recorded in Selling, general, and administrative expenses. All depreciation is reported on a separate line in the Company’s Consolidated Statements of Operations. Stock-based Compensation 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 Directors. Effective May 20, 2011, the shareholders approved the 2011 Equity Incentive Plan (the “Equity Plan”). The Equity Plan allows the Human Capital & Compensation Committee to grant multiple forms of stock-based compensation, such as stock options, stock appreciation rights, restricted stock awards, deferred stock awards, and performance stock awards. The Company accounts for stock-based compensation in accordance with the provisions of FASB ASC 718— Compensation —Stock Compensation. These provisions require, among other things: (a) the fair value at grant date of all stock awards be expensed over their respective vesting periods; (b) the amount of cumulative compensation cost recognized at any date must at least be equal to the portion of the grant-date value of the award that is vested at that date; and (c) that compensation expense include a forfeiture estimate for those shares not expected to vest. The fair value of all stock awards is based on the closing price of the Company’s common stock on the grant date. Also, in accordance with these provisions, for those awards with multiple vest dates, the Company recognizes compensation cost on a straight-line basis over the requisite service period for the entire award. The expense recognized for Performance Awards throughout the service period and the number of shares that are projected to ultimately vest, are based on the estimated degree to which the related performance metrics are expected to be achieved. Advertising and Marketing Costs 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 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. The diluted weighted average common shares include adjustments for the potential effects of outstanding stock options, Deferred Awards, and Performance Awards (as both terms are used in “Note 11. Stock-Based Compensation” to these consolidated financial statements), but only in the periods in which such effect is dilutive under the treasury stock method. Included in basic and diluted weighted average common shares are those shares, due to participants in the Deferred Compensation Plan, which are held in treasury stock. 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 . 61 Table of Contents THE CHILDREN’S PLACE, INC. AND SUBSIDIARIES 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: Fiscal Years Ended January 28, 2023 January 29, 2022 January 30, 2021 (in thousands) Basic weighted average common shares outstanding 13,041 14,597 14,631 Dilutive effect of stock awards — 273 — 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. 2. REVENUES The following table presents the Company’s revenues disaggregated by geography: Fiscal Years Ended January 28, 2023 January 29, 2022 January 30, 2021 (in thousands) Net sales: South $ 633,430 $ 724,375 $ 579,348 Northeast 339,072 412,785 325,124 West 231,135 277,162 219,686 Midwest 196,075 242,392 197,697 International and other (1) 308,770 258,650 200,743 Total net sales $ 1,708,482 $ 1,915,364 $ 1,522,598 ____________________________________________ (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 62 Table of Contents THE CHILDREN’S PLACE, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 3. INTANGIBLE ASSETS On April 4, 2019, the Company acquired certain intellectual property and related assets (the “Gymboree Assets”) of Gymboree Group, Inc. and related entities, which included the worldwide rights to the names “Gymboree” and “Crazy 8” and other intellectual property, including trademarks, domain names, copyrights, and customer databases. These intangible assets, inclusive of acquisition costs, are recorded in the long-term assets section of the Consolidated Balance Sheets. The Company’s intangible assets were as follows: January 28, 2023 Useful Life Gross Amount Accumulated Amortization Net Amount (in thousands) Gymboree tradename (1) Indefinite $ 69,953 $ — $ 69,953 Crazy 8 tradename (1) 5 years 4,000 ( 3,062 ) 938 Customer databases (2) 3 years 3,000 ( 3,000 ) — Total intangible assets $ 76,953 $ ( 6,062 ) $ 70,891 January 29, 2022 Useful Life Gross Amount Accumulated Amortization Net Amount (in thousands) Gymboree tradename (1) Indefinite $ 69,953 $ — $ 69,953 Crazy 8 tradename (1) 5 years 4,000 ( 2,261 ) 1,739 Customer databases (2) 3 years 3,000 ( 2,827 ) 173 Total intangible assets $ 76,953 $ ( 5,088 ) $ 71,865 ____________________________________________ (1) Included within Tradenames, net on the Consolidated Balance Sheets. (2) Included within Other assets on the Consolidated Balance Sheets. 63 Table of Contents THE CHILDREN’S PLACE, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 4. PROPERTY AND EQUIPMENT, NET Property and equipment consisted of the following: January 28, 2023 January 29, 2022 (in thousands) Property and equipment: Land and land improvements $ 3,403 $ 3,403 Building and improvements 36,187 36,045 Material handling equipment 71,404 64,989 Leasehold improvements 196,302 197,436 Store fixtures and equipment 210,413 212,613 Capitalized software 336,336 320,716 Construction in progress 23,959 8,170 878,004 843,372 Less accumulated depreciation and amortization ( 728,130 ) ( 688,366 ) Property and equipment, net $ 149,874 $ 155,006 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 $ 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. 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, during Fiscal 2020. 5. PREPAID EXPENSES AND OTHER CURRENT ASSETS Prepaid expenses and other current assets consisted of the following: January 28, 2023 January 29, 2022 (in thousands) Prepaid income taxes $ 30,781 $ 54,043 Prepaid cloud computing 6,635 7,187 Prepaid maintenance contracts 2,107 3,709 Prepaid property expense 323 1,678 Other 8,029 9,458 Total Prepaid expenses and other current assets $ 47,875 $ 76,075 64 Table of Contents THE CHILDREN’S PLACE, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 6. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES Accrued expenses and other current liabilities consisted of the following: January 28, 2023 January 29, 2022 (in thousands) Accrued salaries and benefits $ 16,191 $ 44,494 Customer liabilities 11,132 11,354 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 Other 14,192 13,423 Total Accrued expenses and other current liabilities $ 99,658 $ 130,669 7. LEASES The following components of lease expense were recognized in the Company’s Consolidated Statements of Operations: Fiscal Years Ended January 28, 2023 January 29, 2022 January 30, 2021 (in thousands) Fixed operating lease cost $ 99,988 $ 113,681 $ 128,373 Variable operating lease cost (1) 51,905 39,711 44,085 Total operating lease cost $ 151,893 $ 153,392 $ 172,458 ____________________________________________ (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 %. Cash paid for amounts included in the measurement of operating lease liabilities in Fiscal 2022 was $ 102.5 million. ROU assets obtained in exchange for new operating lease liabilities were $ 60.9 million in Fiscal 2022. 65 Table of Contents 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: January 28, 2023 (in thousands) 2023 $ 85,250 2024 40,596 2025 19,265 2026 15,533 2027 13,169 Thereafter 17,816 Total operating lease payments 191,629 Less: imputed interest ( 16,571 ) Present value of operating lease liabilities $ 175,058 8. DEBT 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 The Company and certain of its subsidiaries maintain the $ 350.0 million ABL Credit Facility and the $ 50.0 million Term Loan with Wells Fargo, Truist Bank, Bank of America, N.A., HSBC Business Credit (USA) Inc., and JPMorgan Chase Bank, N.A., as lenders (collectively, the “Lenders”) and Wells Fargo, as Administrative Agent, Collateral Agent, Swing Line Lender and Term Agent. Both the ABL Credit Facility and the Term Loan mature in November 2026, and both of these debt facilities have lower interest rates, reduced reporting requirements, and increased flexibility under the covenants compared to the Previous ABL Credit Facility and Previous Term Loan. The ABL Credit Facility includes a $ 25.0 million Canadian sublimit and a $ 50.0 million sublimit for standby and documentary letters of credit. Borrowings outstanding under the ABL Credit Facility bear interest, at the Company’s option, at: (i) the prime rate plus a margin of 0.375 % or 0.625 % based on the amount of the Company’s average excess availability under the facility; or (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. 66 Table of Contents THE CHILDREN’S PLACE, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 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, 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. Credit extended under the ABL Credit Facility is secured by a first priority security interest in substantially all of the Company’s U.S. and Canadian assets other than intellectual property, certain furniture, fixtures, equipment, and pledges of subsidiary capital stock, and a second priority security interest in the Company’s intellectual property, certain furniture, fixtures, equipment, and pledges of subsidiary capital stock. The table below presents the components of the Company’s ABL Credit Facility and Previous ABL Credit Facility: January 28, 2023 January 29, 2022 (in millions) Credit facility maximum $ 350.0 $ 350.0 Borrowing base (1) 350.0 279.7 Outstanding borrowings 287.0 175.3 Letters of credit outstanding—standby 7.4 7.4 Utilization of credit facility at end of period 294.4 182.7 Availability (2) (3) $ 55.6 $ 97.0 Interest rate at end of period 5.9 % 1.6 % Fiscal Years Ended January 28, 2023 January 29, 2022 (in millions) Average end of day loan balance during the period $ 274.9 $ 187.0 Highest end of day loan balance during the period $ 297.7 $ 269.7 Average interest rate 3.7 % 3.6 % ____________________________________________ (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 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 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 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 ABL Credit Facility on a first-priority basis. 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. 67 Table of Contents THE CHILDREN’S PLACE, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 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. 9. COMMITMENTS AND CONTINGENCIES Commitments As of January 28, 2023, the Company entered into various purchase commitments for the next 12 months for merchandise for re-sale of approximately $ 284.5 million and approximately $ 10.6 million for equipment, construction, and other non-merchandise commitments. The Company also has operating lease and standby letters of credit commitments of $ 191.6 million and $ 7.4 million, respectively. Legal and Regulatory Matters The Company is a defendant in Rael v. The Children’s Place, Inc. , a purported class action, pending in the U.S. District Court, Southern District of California. In the initial complaint filed in February 2016, the plaintiff alleged that the Company falsely advertised discount prices in violation of California’s Unfair Competition Law, False Advertising Law, and Consumer Legal Remedies Act. The plaintiff filed an amended complaint in April 2016, adding allegations of violations of other state consumer protection laws. In August 2016, the plaintiff filed a second amended complaint, adding an additional plaintiff and removing the other state law claims. The plaintiffs’ second amended complaint sought to represent a class of California purchasers and sought, among other items, injunctive relief, damages, and attorneys’ fees and costs. The Company engaged in mediation proceedings with the plaintiffs in December 2016 and April 2017. The parties reached an agreement in principle in April 2017, and signed a definitive settlement agreement in November 2017, to settle the matter on a class basis with all individuals in the U.S. who made a qualifying purchase at The Children’s Place from February 11, 2012 through January 28, 2020, the date of preliminary approval by the court of the settlement. The Company submitted its memorandum in support of final approval of the class settlement on March 2, 2021. On March 29, 2021, the court granted final approval of the class settlement and denied plaintiff’s motion for attorney’s fees, with the amount of attorney’s fees to be decided after the class recovery amount has been determined. The settlement provides merchandise vouchers for qualified class members who submit valid claims, as well as payment of legal fees and expenses and claims administration expenses. Vouchers were distributed to class members on November 15, 2021 and they will be eligible for redemption in multiple rounds through November 2023. In connection with the settlement, the Company recorded a reserve for $ 5.0 million in its consolidated financial statements in the first quarter of 2017. The Company is also involved in various legal proceedings arising in the normal course of business. In the opinion of management, any ultimate liability arising out of these proceedings will not have a material adverse effect on the Company’s financial position, results of operations, or cash flows. 10. STOCKHOLDERS’ EQUITY Share Repurchase Programs 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 (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. The timing and actual number of shares repurchased under a program will depend on a variety of factors, including price, corporate and regulatory requirements, and other market and business conditions. The Company may suspend or discontinue the programs at any time and may thereafter reinstitute purchases, all without prior announcement. 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. 68 Table of Contents THE CHILDREN’S PLACE, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Pursuant to the Company’s practice, including due to restrictions imposed by the Company’s insider trading policy during black-out periods, the Company withholds and repurchases shares of vesting stock awards and makes payments to taxing authorities as required by law to satisfy the withholding tax requirements of all equity award recipients. The Company’s payment of the withholding taxes in exchange for the surrendered shares constitutes a repurchase of its common stock. The Company also acquires shares of its common stock in conjunction with liabilities owed under the Company’s Deferred Compensation Plan, which are held in treasury. The following table summarizes the Company’s share repurchases: Fiscal Years Ended January 28, 2023 January 29, 2022 January 30, 2021 Shares Amount Shares Amount Shares Amount (in thousands) Share repurchases related to: Share repurchase program 1,953 92,945 1,025 85,648 294 15,490 Shares acquired and held in treasury 6 293 4 278 6 209 In accordance with FASB ASC 505— Equity , the par value of the shares retired is charged against Common stock and the remaining purchase price is allocated between Additional paid-in capital and Retained earnings. The portion charged against Additional paid-in capital is determined using a pro-rata allocation based on total shares outstanding. 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. Dividends 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. 11. STOCK-BASED COMPENSATION The Company generally grants time vesting stock awards (“Deferred Awards”) and performance-based stock awards (“Performance Awards”) to employees at management levels. The Company also grants Deferred Awards to its non-employee directors. Deferred Awards are granted in the form of restricted stock units that require each recipient to complete a service period. Deferred Awards generally vest ratably over three years , except for those granted to non-employee directors, which generally vest over one year . Performance Awards are granted in the form of restricted stock units which have performance criteria that must be achieved for the awards to vest in addition to a service period requirement. 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 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 . 69 Table of Contents THE CHILDREN’S PLACE, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The following table summarizes the Company’s stock-based compensation expense: Fiscal Years Ended January 28, 2023 January 29, 2022 January 30, 2021 (in thousands) Deferred Awards $ 9,937 $ 13,061 $ 14,100 Performance Awards 19,213 17,881 216 Total stock-based compensation expense (1) $ 29,150 $ 30,942 $ 14,316 ____________________________________________ (1) Stock-based compensation expense recorded within Cost of sales (exclusive of depreciation and amortization) amounted to $ 2.2 million, $ 3.3 million, and $ 3.4 million in Fiscal 2022, Fiscal 2021, and Fiscal 2020, respectively. All other stock-based compensation expense is included in Selling, general, and administrative expenses. The Company recognized a tax benefit related to stock-based compensation expense of $ 2.5 million, $ 2.6 million, and $ 3.8 million for Fiscal 2022, Fiscal 2021, and Fiscal 2020, respectively. At January 28, 2023, the Company had 599,906 shares available for grant under the Equity Plan. Changes in the Company’s Unvested Stock Awards Deferred Awards Fiscal Years Ended January 28, 2023 January 29, 2022 January 30, 2021 Number of Shares Weighted Average Grant Date Fair Value Number of Shares Weighted Average Grant Date Fair Value Number of Shares Weighted Average Grant Date Fair Value (in thousands) (in thousands) (in thousands) Unvested Deferred Awards at beginning of year 467 $ 57.60 550 $ 55.43 377 $ 97.88 Granted 159 46.56 157 76.59 410 41.73 Vested ( 222 ) 62.13 ( 229 ) 63.73 ( 161 ) 107.55 Forfeited ( 122 ) 53.09 ( 11 ) 92.10 ( 76 ) 82.07 Unvested Deferred Awards at end of year 282 $ 49.78 467 $ 57.60 550 $ 55.43 Total unrecognized stock-based compensation expense related to unvested Deferred Awards was $ 7.7 million as of January 28, 2023, which will be recognized over a weighted average period of approximately 1.8 years. The fair value of Deferred Awards that vested during Fiscal 2022, Fiscal 2021, and Fiscal 2020 was $ 11.4 million, $ 14.6 million, and $ 5.3 million, respectively. 70 Table of Contents THE CHILDREN’S PLACE, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Performance Awards Fiscal Years Ended January 28, 2023 January 29, 2022 January 30, 2021 Number of Shares (1) Weighted Average Grant Date Fair Value Number of Shares (1) Weighted Average Grant Date Fair Value Number of Shares (1) Weighted Average Grant Date Fair Value (in thousands) (in thousands) (in thousands) Unvested Performance Awards at beginning of year 366 $ 70.01 350 $ 74.37 342 $ 99.97 Granted 90 48.84 164 75.01 144 52.16 Shares earned in excess of (below) target 192 48.17 ( 22 ) 65.34 ( 101 ) 118.00 Vested shares, including shares earned in excess of target ( 58 ) 101.62 ( 119 ) 89.44 ( 4 ) 107.51 Forfeited ( 107 ) 59.86 ( 7 ) 90.22 ( 31 ) 107.24 Unvested Performance Awards at end of year 483 $ 55.85 366 $ 70.01 350 $ 74.37 ____________________________________________ (1) For awards for which the performance period is complete, the number of unvested shares is based on actual shares that will vest upon completion of the service period. For awards for which the performance period is not yet complete, the number of unvested shares is based on the participants earning their target shares at 100 %. 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 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. 12. INCOME TAXES The components of Income (loss) before provision (benefit) for income taxes were as follows: Fiscal Years Ended January 28, 2023 January 29, 2022 January 30, 2021 (in thousands) Domestic $ ( 61,065 ) $ 198,173 $ ( 250,876 ) Foreign 46,303 58,857 39,118 Total income (loss) before provision (benefit) for income taxes $ ( 14,762 ) $ 257,030 $ ( 211,758 ) 71 Table of Contents THE CHILDREN’S PLACE, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The components of the Company’s Provision (benefit) for income taxes consisted of the following: Fiscal Years Ended January 28, 2023 January 29, 2022 January 30, 2021 (in thousands) Current: Federal $ 4,172 $ 29,406 $ ( 45,072 ) State and local ( 1,193 ) 7,389 212 Foreign ( 2,842 ) 7,218 5,728 137 44,013 ( 39,132 ) Deferred: Federal ( 12,030 ) 14,517 ( 14,274 ) State and local ( 2,712 ) 8,780 ( 15,968 ) Foreign 981 2,549 ( 2,019 ) ( 13,761 ) 25,846 ( 32,261 ) Total provision (benefit) for income taxes $ ( 13,624 ) $ 69,859 $ ( 71,393 ) Effective tax rate 92.3 % 27.2 % 33.7 % 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. 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. 72 Table of Contents 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. federal statutory rate of 21.0% and the effective tax rate for Fiscal 2022, Fiscal 2021, and Fiscal 2020 follows: Fiscal Years Ended January 28, 2023 January 29, 2022 January 30, 2021 (in thousands) Calculated income tax provision (benefit) at U.S. federal statutory rate $ ( 3,100 ) $ 53,976 $ ( 44,471 ) State and local income taxes, net of federal benefit ( 3,812 ) 14,394 ( 12,447 ) Foreign tax rate differential (1) ( 5,498 ) ( 3,598 ) ( 5,791 ) Non-deductible expenses 3,696 7,301 2,654 Excess tax detriment (benefit) related to stock compensation 816 ( 293 ) 2,051 Unrecognized tax benefits ( 5,324 ) 1,050 1,150 Change in valuation allowance 163 358 ( 10 ) Global intangible low-taxed income 1,760 1,476 7,815 Federal tax credits ( 2,934 ) ( 2,882 ) ( 1,422 ) CARES Act Carryback (2) — — ( 20,954 ) Other 609 ( 1,923 ) 32 Total provision (benefit) for income taxes $ ( 13,624 ) $ 69,859 $ ( 71,393 ) ____________________________________________ (1) The Company has substantial operations in Hong Kong, which has a lower statutory income tax rate as compared to the U.S. The Company’s foreign effective tax rate for Fiscal 2022, Fiscal 2021, and Fiscal 2020 was 9.8 %, 16.6 %, and 7.7 %, respectively. 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. (2) The CARES Act permits NOL carryovers and carrybacks to offset 100 % of taxable income for taxable years beginning before 2021. The Fiscal 2020 tax loss of approximately $ 150.0 million was carried back to earlier tax years when the corporate tax rate was 35.0%, compared to the current corporate tax rate of 21.0%, resulting in a tax benefit of $ 21.0 million. The assessment of the amount of value assigned to the Company’s deferred tax assets under the applicable accounting rules is judgmental. The Company is required to consider all available positive and negative evidence in evaluating the likelihood that it will be able to realize the benefit of the Company’s deferred tax assets in the future. Such evidence includes scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies, and the results of recent operations. Since this evaluation requires consideration of events that may occur some years into the future, there is an element of judgment involved. Realization of the Company’s deferred tax assets is dependent on generating sufficient taxable income in future periods. The Company believes that it is more likely than not that future taxable income will be sufficient to recover substantially all of the value assigned to the Company’s deferred tax assets. 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. 73 Table of Contents 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: January 28, 2023 January 29, 2022 (in thousands) Operating lease liabilities $ 48,079 $ 59,283 Right-of-use assets ( 43,576 ) ( 51,617 ) Stock-based compensation 2,461 2,863 Reserves 12,038 12,475 Inventory 4,612 4,570 Property and equipment, net ( 2,407 ) ( 6,296 ) Capitalized research and development, net 17,856 3,569 Tradenames and customer databases, net ( 3,202 ) ( 2,200 ) Prepaid expenses ( 3,704 ) ( 1,481 ) Foreign and state tax on unremitted earnings ( 1,554 ) ( 1,554 ) Net operating loss carryforward 3,453 2,900 Tax credits 2,727 1,746 Interest expense carryforward 1,106 — Valuation allowance ( 1,273 ) ( 1,149 ) Total deferred tax asset, net $ 36,616 $ 23,109 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. The Company has concluded that it is more likely than not that certain deferred tax assets cannot be used in the foreseeable future, principally the foreign net operating loss carryforwards and the AMT credit in Puerto Rico. Accordingly, a valuation allowance has been established for these tax benefits. However, to the extent these tax benefits are realized in the future, the reduction of the valuation allowance will reduce income tax expense accordingly. On December 22, 2017, the U.S. government passed the Tax Cuts and Jobs Act (the “Tax Act”), which resulted in complex changes to the U.S. tax code including, but not limited to, the reduction of the corporate tax rate from 35% to 21% and a move from a global tax regime to a modified territorial regime which required U.S. 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 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. 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 permanently reinvested in foreign operations. 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. Unrecognized Tax Benefits Tax positions are evaluated in a two-step process. First, the Company determines whether it is more-likely-than-not that a tax position will be sustained upon examination. Second, if a tax position meets the more-likely-than-not recognition threshold, it is measured to determine the amount of benefit to recognize in the financial statements. The tax position is measured as the largest amount of benefit that is greater than 50% likely to be realized upon ultimate settlement. 74 Table of Contents 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: Fiscal Years Ended January 28, 2023 January 29, 2022 (in thousands) Beginning Balance $ 8,937 $ 8,060 Additions for current year tax positions 750 1,155 Additions for prior year tax positions 261 67 Reductions for prior year tax positions ( 6,322 ) ( 317 ) Impact of foreign currency translation — ( 28 ) Ending Balance $ 3,626 $ 8,937 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 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 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. and foreign jurisdictions, including Canada and Hong Kong. The Company files a consolidated U.S. income tax return for federal income tax purposes. 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. 13. RETIREMENT AND SAVINGS PLANS 401(k) Plan The Company has adopted The Children’s Place 401(k) Savings Plan (the “401(k) Plan”), which qualifies under Section 401(k) of the Internal Revenue Code of 1986, as amended (the “Code”). The 401(k) Plan is a defined contribution plan established to provide retirement benefits for employees. The 401(k) Plan is employee funded up to an elective annual deferral amount and also provides for Company matching contributions up to a certain percentage of the employee’s salary. The 401(k) Plan is available for all U.S. employees of the Company. Following guidance in IRS Notice 98-52 related to the design-based alternative, or “safe harbor,” 401(k) plan method, the Company modified its 401(k) Plan for Company match contributions for non-highly compensated associates, as defined in the Code. 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 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. The Company’s matching contributions were $ 4.5 million in Fiscal 2022, $ 3.5 million in Fiscal 2021, and $ 1.4 million in Fiscal 2020. Deferred Compensation Plan 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. 75 Table of Contents THE CHILDREN’S PLACE, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Other Plans Under statutory requirements, the Company contributes to retirement plans for its operations in Canada, Puerto Rico, and Asia. Contributions under these plans were $ 0.6 million, $ 0.6 million, and $ 0.7 million in Fiscal 2022, Fiscal 2021, and Fiscal 2020, respectively. 14. SEGMENT INFORMATION In accordance with FASB ASC 280— Segment Reporting , the Company reports segment data based on geography: The Children’s Place U.S. and The Children’s Place International. 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. segment are the Company’s U.S. and Puerto Rico-based stores and revenue from the Company’s U.S.-based wholesale business. Included in The Children’s Place International segment are the Company’s Canadian-based stores, revenue from the Company’s Canadian-based wholesale business, and revenue from international franchisees. The Company measures its segment profitability based on operating income, defined as income before interest and taxes. Net sales and direct costs are recorded by each segment. Certain inventory procurement functions, such as production and design, as well as corporate overhead, including executive management, finance, real estate, human resources, legal, and information technology services, are managed by The Children’s Place U.S. segment. Expenses related to these functions, including depreciation and amortization, are allocated to The Children’s Place International segment based primarily on net sales. The assets related to these functions are not allocated. The Company periodically reviews these allocations and adjusts them based upon changes in business circumstances. Net sales to external customers are derived from merchandise sales, and the Company has no customers that individually account for more than 10% of its net sales. As of January 28, 2023, The Children’s Place U.S. had 540 stores and The Children’s Place International had 73 stores. As of January 29, 2022, The Children’s Place U.S. had 589 stores and The Children’s Place International had 83 stores. The following tables provide segment level financial information for Fiscal 2022, Fiscal 2021, and Fiscal 2020: Fiscal Years Ended January 28, 2023 January 29, 2022 January 30, 2021 (in thousands) Net sales: The Children’s Place U.S. $ 1,533,934 $ 1,723,887 $ 1,372,079 The Children’s Place International (1) 174,548 191,477 150,519 Total net sales $ 1,708,482 $ 1,915,364 $ 1,522,598 Operating income (loss): The Children’s Place U.S. $ ( 8,781 ) $ 253,419 $ ( 196,565 ) The Children’s Place International 7,251 22,229 ( 3,350 ) Total operating income (loss) $ ( 1,530 ) $ 275,648 $ ( 199,915 ) Operating income (loss) as a percentage of net sales: The Children’s Place U.S. ( 0.6 ) % 14.7 % ( 14.3 ) % The Children’s Place International 4.2 % 11.6 % ( 2.2 ) % Total operating income (loss) as a percentage of net sales ( 0.1 ) % 14.4 % ( 13.1 ) % Depreciation and amortization: The Children’s Place U.S. $ 47,612 $ 53,984 $ 61,074 The Children’s Place International 3,852 4,433 5,331 Total depreciation and amortization $ 51,464 $ 58,417 $ 66,405 Capital expenditures: The Children’s Place U.S. $ 44,970 $ 28,551 $ 29,955 The Children’s Place International 607 756 630 Total capital expenditures $ 45,577 $ 29,307 $ 30,585 76 Table of Contents THE CHILDREN’S PLACE, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) ____________________________________________ (1) Net sales from The Children’s Place International are primarily derived from Canadian operations. The Company’s foreign subsidiaries, primarily in Canada, have operating results based in foreign currencies and are thus subject to the fluctuations of the corresponding translation rates into U.S. dollars. January 28, 2023 January 29, 2022 (in thousands) Total assets: The Children’s Place U.S. $ 922,120 $ 951,401 The Children’s Place International 64,161 86,059 Total assets $ 986,281 $ 1,037,460 Geographic Information The Company’s long-lived assets were located in the following countries: January 28, 2023 January 29, 2022 (in thousands) Long-lived assets (1) : United States $ 377,388 $ 415,548 Canada 9,883 16,868 Asia 451 397 Total long-lived assets $ 387,722 $ 432,813 ____________________________________________ (1) The Company’s long-lived assets are comprised of net Property and equipment, ROU assets, Tradenames, and Other assets. 77 Table of Contents (a)(3) Exhibits. Exhibit Description 3.1 Amended and Restated Certificate of Incorporation of the Company dated May 31, 2016 filed as Exhibit 3.1 to the registrant’s Current Report on Form 8-K filed on June 7, 2016 is incorporated by reference herein. 3.2 Sixth Amended and Restated By-Laws of the Company filed as Exhibit 3.2 to the registrant’s Form 8-K filed on June 7, 2016, is incorporated by reference herein. 4.1 (1) Form of Certificate for Common Stock of the Company filed as an exhibit to the registrant’s Registration Statement No. 333‑31535 on Form S-1, is incorporated by reference herein. 4.2 (1) Amended Form of Certificate for Common Stock of the Company filed as Exhibit 4.2 to the registrant’s Annual Report on Form 10-K for the period ended January 28, 2017, is incorporated by reference herein. 4.3 Description of capital stock of the Company filed as Exhibit 4.3 to the registrant’s Annual Report on Form 10-K for the period ended February 1, 2020, is incorporated by reference herein. 10.1 Lease Agreement as of August 12, 2003 between Orlando Corporation and The Children’s Place (Canada), LP, together with Indemnity Agreement as of August 12, 2003 between the Company and Orlando Corporation, together with Surrender of Lease as of August 12, 2003 between the Company and Orlando Corporation and Orion Properties Ltd. (Canadian Distribution Center) filed as Exhibit 10.2 to the registrant’s Quarterly Report on Form 10‑Q for the period ended November 1, 2003, is incorporated by reference herein. 10.2 Form of Indemnity Agreement between the Company and certain members of management and the Board of Directors filed as Exhibit 10.7 to registrant’s Quarterly Report on Form 10-Q for the period ended August 2, 2008, is incorporated by reference herein. 10.3 Lease Agreement between The Children’s Place Services Company, LLC and 500 Plaza Drive Corp. effective as of March 12, 2009 (500 Plaza Drive), Secaucus, New Jersey filed as Exhibit 10.67 to the registrant’s Annual Report on Form 10-K for the period ended January 31, 2009, is incorporated by reference herein. 10.4 Guaranty between the Company and 500 Plaza Drive Corp. effective as of March 12, 2009 filed as Exhibit 10.68 to the registrant’s Annual Report on Form 10-K for the period ended January 31, 2009, is incorporated by reference herein. 10.5 The First Lease Modification Agreement, dated as of August 27, 2009, between The Children’s Place Services Company, LLC and 500 Plaza Drive Corp. filed as Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q for the period ended August 1, 2009, is incorporated by reference herein. 10.6 The Company Nonqualified Deferred Compensation Plan effective January 1, 2010 filed as Exhibit 10.82 to the registrant’s Annual Report on Form 10-K for the period ended January 30, 2010, is incorporated by reference herein. 10.7 (*) Amended and Restated Employment Agreement, dated as of March 28, 2011, by and between the Company and Jane T. Elfers filed as Exhibit 10.1 to the registrant’s Quarterly Report on Form 10-Q for the quarterly period ended April 30, 2011, is incorporated by reference herein. 10.8 (*) Amendment No. 1 as of March 23, 2012 to Amended and Restated Employment Agreement dated as of March 28, 2011, by and between the Company and Jane T. Elfers filed as Exhibit 10.31 to the Registrant’s Annual Report on Form 10-K for the period ended January 28, 2012, is incorporated by reference herein. 10.9 Form of Amended and Restated Change in Control Agreement filed as Exhibit 10.41 to the registrant’s Annual Report on Form 10-K for the period ended January 29, 2011, is incorporated by reference herein. 10.10 Agreement dated May 22, 2015, by and among The Children’s Place, Inc., Macellum SPV II, LP, Barington Companies Equity Partners, L.P., Jonathan Duskin, James A. 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 by reference herein . 10.1 1 (*) The Company Profit Sharing/401(k) Plan Adoption Agreement No.#001 for use with Fidelity Basic Plan Document No. 17 entered into by the Company and Fidelity Management Trust Company on September 11, 2015 as filed as Exhibit 10.28 to the registrant’s Annual Report on Form 10-K for the period ended January 30, 2016, is incorporated by reference herein. 10.1 2 The Children’s Place, Inc. Fourth Amended and Restated 2011 Equity Incentive Plan filed as Annex B to the registrant’s Definitive Proxy Statement on Schedule 14A filed on April 2, 2021, is incorporated by reference herein. 10.1 3 (*) Form of Performance-Based Restricted Stock Unit Award Agreement under the 2011 Equity Incentive Plan (Senior Vice President & above) filed as Exhibit 10.1 to the registrant’s Quarterly Report on Form 10-Q for the period ended May 4, 2019, is incorporated by reference herein. 78 Table of Contents Exhibit Description 10.1 4 (*) Form of Performance-Based Restricted Stock Unit Award Agreement under the 2011 Equity Incentive Plan (below Senior Vice President) filed as Exhibit 10.2 to the registrant’s Quarterly Report on Form 10-Q for the period ended May 4, 2019, is incorporated by reference herein. 10.15 (*) 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. 10. 1 6 (*) 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. 10. 1 7 First Amendment to Amended and Restated Credit Agreement, dated April 24, 2020, 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 HSBC Bank USA, N.A. and JPMorgan Chase Bank, N.A., as lenders, filed as Exhibit 10.1 to the registrant’s Quarterly Report on Form 10-Q for the period ended May 2, 2020, is incorporated by reference herein. 10. 1 8 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. 10.19 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 filed as Exhibit 10.23 to the registrant’s Annual Report on Form 10-K for the period ended January 29, 2022, is incorporated by reference herein . 10.20 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, is incorporated by reference herein. 10.21 Asset Purchase Agreement, dated March 1, 2019, by and among TCP Brands, LLC, as buyer, and Gymboree Group, Inc. and its subsidiaries, as sellers, filed as Exhibit 10.6 to the registrant’s Quarterly Report on Form 10-Q for the period ended May 4, 2019, is incorporated by reference herein. 10.22 (*) Form of Performance-Based Restricted Stock Unit Award Agreement under the 2011 Equity Incentive Plan (Senior Vice President & above), filed as Exhibit 10.3 to the registrant’s Quarterly Report on Form 10-Q for the period ended May 2, 2020, is incorporated by reference herein. 10.23 The Fifth Lease Modification Agreement, dated as of January 29, 2021, by and between The Children’s Place Services Company, LLC and Hancock S-REIT SECA LLC filed as Exhibit 10.24 to the registrant’s Annual Report on Form 10-K for the period ended January 30, 2021, is incorporated by reference herein. 10.24 (*) 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. 10.25 (*) 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. 10.26 (*) 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. 79 Table of Contents Exhibit Description 1 0. 2 7 (*) 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. 21.1(+) Subsidiaries of the Company. 23.1(+) Consent of Independent Registered Public Accounting Firm Ernst & Young, LLP. 31.1(+) Certificate of Principal Executive Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002. 31.2(+) Certificate of Principal Financial Officer and Principal Accounting Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002. 32(+) Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 101.SCH* XBRL Taxonomy Extension Schema. 101.CAL* XBRL Taxonomy Extension Calculation Linkbase. 101.DEF* XBRL Taxonomy Extension Definition Linkbase. 101.LAB* XBRL Taxonomy Extension Label Linkbase. 101.PRE* XBRL Taxonomy Extension Presentation Linkbase. ________________________________________ (1) Exhibit numbers are identical to the exhibit numbers incorporated by reference to such registration statement. (*) Compensation Arrangement. (+) Filed herewith. * Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability. (b) Exhibits . The exhibits required by Item 601 of Regulation S-K are filed herewith or incorporated by reference. (c) Financial Statement Schedules and Other Financial Statements . All other financial statement schedules are omitted from this Annual Report on Form 10-K, as they are not required or applicable or the required information is included in the financial statements or notes thereto. ITEM 16. FORM 10-K SUMMARY. Omitted at registrant’s option. 80 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. THE CHILDREN’S PLACE, INC. By: /S/ Jane T. Elfers Jane T. Elfers Chief Executive Officer and President (Principal Executive Officer) March 28, 2023 81 Table of Contents Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Signature Title Date /S/ Norman Matthews Chairman of the Board March 28, 2023 Norman Matthews /S/ Jane T. Elfers Director, Chief Executive Officer and President March 28, 2023 Jane T. Elfers (Principal Executive 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 Joseph Alutto /S/ John E. Bachman Director March 28, 2023 John E. Bachman /S/ Marla Beck Director March 28, 2023 Marla Beck /S/ Elizabeth Boland Director March 28, 2023 Elizabeth Boland /S/ John A. Frascotti Director March 28, 2023 John A. Frascotti /S/ Tracey Griffin Director March 28, 2023 Tracey Griffin /S/ Katherine Kountze Director March 28, 2023 Katherine Kountze /S/ Debby Reiner Director March 28, 2023 Debby Reiner 82