What changed in this filing

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Item 9A. Controls and Procedures

2024-05-06 compared with 2023-03-28 · 505 added, 343 removed, 846 unchanged (50% of the section changed)

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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, including our Chief Executive Officer and President and our Chief Operating Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of February 3, 2024.

Based on that evaluation, our Chief Executive Officer and President and our Chief Operating Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level, as of February 3, 2024, 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

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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.

Under the supervision and with the participation of our management, including our Chief Executive Officer and President and our Chief Operating Officer and 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 February 3, 2024.

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.

Remediation of Material Weakness

As previously reported in Item 4.

“Controls and Procedures” of our Quarterly Report on Form 10-Q for the quarter ended October 28, 2023, in connection with our assessment of the effectiveness of internal control over financial reporting as of October 28 2023, we identified a material weakness in the operation of our internal control related to the review of the borrowing base calculation provided to the Credit Agreement Lenders under our Credit Agreement, resulting in certain technical defaults for which we obtained a waiver, subject to certain temporary enhanced reporting requirements and temporary restrictions on certain payments.

We have completed execution of our remediation plan for this material weakness and, as of February 3, 2024, successfully remediated this material weakness by implementing additional review procedures over the accuracy of the borrowing base calculation, in consideration of any recent amendments to the Credit Agreement.

Changes in Internal Control Over Financial Reporting

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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).

and subsidiaries’ internal control over financial reporting as of February 3, 2024, 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.

and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of February 3, 2024, 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 February 3, 2024 and January 28, 2023, the related consolidated statements of operations, comprehensive income (loss), changes in stockholders’ equity (deficit) and cash flows for each of the three years in the period ended February 3, 2024, and the related notes and our report dated May 3, 2024 expressed an unqualified opinion thereon.

Basis for Opinion

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Iselin, New Jersey

March 28, 2023

OTHER INFORMATION.

On May 2, 2024, we entered into a commitment letter with Mithaq for a Shariah-compliant $40.0 million senior unsecured credit facility (the “Mithaq Credit Facility”).

Under the Mithaq Credit Facility, we may request for advances at any time up to July 1, 2025.

If any debt is incurred under the Mithaq Credit Facility, it shall require monthly payments equivalent to interest charged at the SOFR plus 5.000% per annum.

Additionally, such debt shall require no mandatory prepayments and shall mature no earlier than July 1, 2025.

The foregoing description of the Mithaq Credit Facility is qualified in its entirety by reference to the full text thereof, a copy of which is filed herewith as Exhibit 10.27 and is incorporated herein by reference.

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.

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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.

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 2024 annual meeting of stockholders to be filed with the SEC within 120 days after February 3, 2024 (the “Proxy Statement”) and is incorporated by reference herein.

EXECUTIVE COMPENSATION.

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Report of Independent Registered Public Accounting Firm (PCAOB ID:

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

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

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

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

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

Consolidated Balance Sheets as of February 3 , 202 4 and January 2 8 , 20 23

Consolidated Statements of Operations for the fiscal years ended February 3 , 202 4 , January 2 8 , 202 3 , and January 29 , 20 22

Consolidated Statements of Comprehensive Income (Loss) for the fiscal years ended February 3 , 202 4 , January 2 8 , 202 3 , and January 29 , 20 2 2

Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the fiscal years ended February 3, 2024 , January 2 8 , 202 3 , and January 29 , 20 22

Consolidated Statements of Cash Flows for the fiscal years ended February 3, 2024 , January 2 8 , 202 3 , and January 29 , 20 2 2

Notes to Consolidated Financial Statements

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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.

and subsidiaries (the Company) as of February 3, 2024 and January 28, 2023, the related consolidated statements of operations, comprehensive income (loss), changes in stockholders' equity (deficit) and cash flows for each of the three years in the period ended February 3, 2024, 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 February 3, 2024 and January 28, 2023, and the results of its operations and its cash flows for each of the three years in the period ended February 3, 2024, in conformity with 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.

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 February 3, 2024, 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 May 3, 2024 expressed an unqualified opinion thereon.

Basis for Opinion

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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.

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.

Critical Audit Matter

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

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

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

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.

At February 3, 2024, the Company’s Gymboree tradename had a carrying value of $41.0 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.

As discussed in Note 4 to the consolidated financial statements, the Company performed its annual impairment assessment of the Gymboree tradename as of December 31, 2023 and recorded an impairment charge of $29.0 million in Fiscal 2023, which reduced the carrying value to its fair value of $41.0 million as of February 3, 2024.

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.

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

How We Addressed the Matter in Our Audit

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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.

To test the estimated fair value of the Gymboree tradename, we performed audit procedures that included, among others, assessing the valuation methodology and significant assumptions discussed above used by the Company in its analysis.

We involved a valuation specialist to assist in our evaluation of the valuation model, royalty rates and the weighted average cost of capital used in the valuation.

Additionally, we evaluated the completeness and accuracy of the underlying data used by the Company supporting the significant assumptions in its analysis.

When evaluating the assumption related to the future net sales for the brand, we compared the forecasted information to historical results and current industry and economic trends.

We also performed a sensitivity analysis of the significant assumptions to evaluate the change in the fair values that would result from changes in the significant assumptions.

/S/ Ernst & Young LLP

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Iselin, New Jersey

March 28, 2023

THE CHILDREN’S PLACE, INC.

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Total assets $ 800,308 $ 986,281

LIABILITIES AND STOCKHOLDERS’ EQUITY

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

Current liabilities:

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Commitments and contingencies (see Note 10)

Stockholders’ equity:

Stockholders’ equity (deficit):

Preferred stock, $ 1.00 par value, 1,000 shares authorized, 0 shares issued and outstanding

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Accumulated other comprehensive loss ( 16,496 ) ( 16,247 )

Retained earnings 22,540 77,914

Total stockholders’ equity 158,478 225,472

Total liabilities and stockholders’ equity $ 986,281 $ 1,037,460

Retained earnings (deficit) ( 134,865 ) 22,540

Total stockholders’ equity (deficit) ( 9,019 ) 158,478

Total liabilities and stockholders’ equity (deficit) $ 800,308 $ 986,281

See accompanying notes to these consolidated financial statements.

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Net income (loss) $ ( 154,541 ) $ ( 1,138 ) $ 187,171

Other comprehensive income (loss):

Other comprehensive loss:

Foreign currency translation adjustment ( 249 ) ( 2,061 ) ( 370 )

Change in fair value of cash flow hedges, net of income taxes — — ( 748 )

Total comprehensive income (loss) $ ( 154,790 ) $ ( 3,199 ) $ 186,801

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AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS ’ EQUITY

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

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS ’ EQUITY (DEFICIT)

Accumulated Total

Additional Retained Other Stockholders'

Common Stock Paid-In Deferred Earnings Comprehensive Treasury Stock Equity

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

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

Vesting of stock awards 348 35 ( 35 ) —

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

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

Net income 187,171 187,171

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

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

Net income 187,171 187,171

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

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

Vesting of stock awards 503 51 ( 51 ) —

Stock-based compensation expense 29,150 29,150

Stock-based compensation benefit ( 5,576 ) ( 5,576 )

Purchase and retirement of common stock ( 210 ) ( 21 ) ( 4,246 ) ( 2,864 ) ( 7,131 )

Other comprehensive loss ( 249 ) ( 249 )

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

Distribution of common stock from deferred compensation plan, net of deferrals ( 827 ) 11 827 —

Net loss ( 154,541 ) ( 154,541 )

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

Balance, February 3, 2024 12,585 $ 1,259 $ 141,083 $ 2,909 $ ( 134,865 ) $ ( 16,496 ) ( 56 ) $ ( 2,909 ) $ ( 9,019 )

See accompanying notes to these consolidated financial statements.

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Depreciation and amortization 47,186 51,464 58,417

Non-cash stock-based compensation expense 29,150 30,942 14,316

Non-cash stock-based compensation expense (benefit), net ( 5,576 ) 29,150 30,942

Asset impairment charges 34,543 3,256 1,506

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Cash and cash equivalents, end of period $ 13,639 $ 16,689 $ 54,787

See accompanying notes to these consolidated financial statements.

THE CHILDREN’S PLACE, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

Fiscal Years Ended

2023 January 29,

2022 January 30,

(in thousands)

OTHER CASH FLOW INFORMATION:

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Net cash paid (received) for income taxes $ 5,775 $ ( 14,969 ) $ 49,563

Cash paid for interest 29,038 12,354 14,774

Increase (decrease) in accrued capital expenditures 1,122 842 ( 811 )

Purchases of property and equipment not yet paid 7,156 9,801 8,447

See accompanying notes to these consolidated financial statements.

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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.

and its subsidiaries (collectively, the “Company”) operate an omni-channel children’s specialty portfolio of brands with an industry-leading digital-first operating model.

Its global retail and wholesale network includes two digital storefronts, more than 500 stores in North America, wholesale marketplaces and distribution in 16 countries through six international franchise partners.

The Company designs, contracts to manufacture, and sells fashionable, high-quality apparel, accessories and footwear predominantly at value prices, primarily under the Company’s proprietary brands “The Children’s Place”, “Gymboree”, “Sugar & Jade”, and “PJ Place”.

The Company classifies its business into two segments:

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

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

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

The Company also has social media channels on Instagram, Facebook, X, formerly known as Twitter, YouTube and Pinterest.

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 2023 - The fifty-three weeks ended February 3, 2024

• Fiscal 2022 - The fifty-two weeks ended January 28, 2023

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

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

• Fiscal 2024 - The Company’s next fiscal year representing the fifty-two weeks ending February 1, 2025

Securities and Exchange Commission

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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.

Fiscal 2023 was a 53-week year, Fiscal 2022 and 2021 were 52-week years.

THE CHILDREN’S PLACE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company incurred net losses in Fiscal 2023 and Fiscal 2022.

As of February 3, 2024, the Company had an accumulated deficit of $ 134.9 million, a working capital deficit of $ 164.3 million, which included borrowings of $ 226.7 million under its asset-based revolving credit facility, which do not mature until November 2026, and the Company had availability under its asset-based revolving credit facility of $ 24.3 million.

These conditions had raised concerns for the Company about its ability to fund its operations without additional liquidity.

Subsequent to February 3, 2024, the Company raised additional debt financing of $ 168.6 million from Mithaq Capital SPC, a Cayman segregated portfolio company (“Mithaq”).

The proceeds from these financings have been used to pay down the Company’s $ 50.0 million term loan that existed as of February 3, 2024, and the remaining proceeds were used to support the general operations of the business, including working capital.

The Company plans to alleviate its liquidity concerns with additional financing.

On May 2, 2024, the Company and Mithaq entered into a commitment letter pursuant to which Mithaq agreed to provide the Company an unsecured credit facility of up to $ 40.0 million in accordance with the terms described in “Note 18.

Subsequent Events” of the Consolidated Financial Statements, “Item 8.

Financial Statements and Supplementary Data” of this Form 10-K.

This credit facility will be available to draw on during the availability period to augment its liquidity position, if needed.

The Company concluded that its existing cash on hand, expected cash generated from operations, funds available to it through its asset-based revolving credit facility and the additional financings received from Mithaq subsequent to Fiscal 2023, including that to be provided pursuant to the commitment letter, will be sufficient to fund its capital and other cash requirements for at least the next twelve months from the date that the consolidated financial statements were issued.

Basis of Presentation

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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.

As of February 3, 2024 and January 28, 2023, 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.

Certain prior period financial statements disclosures have been conformed to the current period presentation.

Use of Estimates

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

THE CHILDREN’S PLACE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Cash and Cash Equivalents

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Accounts Receivable

Accounts receivable consists of credit and debit card receivables, franchisee and wholesale receivables, and other miscellaneous items.

Accounts receivable consists of credit and debit card receivables, wholesale and franchisee 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.

Wholesale and franchisee 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.

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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.

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

THE CHILDREN’S PLACE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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.

Deferred financing costs for the asset-based revolving credit facility are included in Other assets and deferred financing costs for the term loan are recorded in Long-term debt.

These costs are amortized as Interest expense over the term of the related indebtedness.

Property and Equipment, Net

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

Intangible assets with indefinite lives consist primarily of trademarks and acquired 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.

Intangible assets with an indefinite life consists of the acquired Gymboree tradename, which is 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 this intangible asset 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.

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

In reviewing for

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.

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

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

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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 inflationary pressures impacting our customer, and changes in product input costs, transporting costs, distribution costs and wage rates.

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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Insurance and Self-Insurance Reserves

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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 Company’s leases have remaining lease terms ranging from less than one year up to 13 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.

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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

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recognized as sales occur.

Contingent rent is 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.

Accumulated other comprehensive loss primarily consists of cumulative translation adjustments.

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.

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 (deficit).

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The Company utilizes the liability method of accounting for income taxes as set forth in FASB ASC 740— Income Taxes .

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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.

A valuation allowance is recorded when it is more likely than not that some 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 assumptions utilized in determining future taxable income require significant judgment.

Actual operating results in future years could differ from current assumptions, judgments and estimates.

If the Company determines that it would not be able to realize its 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.

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

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

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

The Company accounts for the tax effects of the tax on global intangible low-taxed income (“GILTI”) of certain foreign subsidiaries in the income tax provision in the period the tax arises.

Deferred Compensation Plan

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

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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 Deferred Compensation Plan does not allow for the deferral of the Company’s common stock by employee participants.

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.

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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.

During fiscal year 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.

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

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

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

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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.

Related translation adjustments are reported as a separate component of stockholders’ equity (deficit).

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

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 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.

The Company deferred sales of $ 3.1 million and $ 2.9 million within Accrued expenses and other current liabilities as of February 3, 2024 and January 28, 2023, 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.

For its wholesale business, the Company recognizes revenue, including shipping and handling fees billed to customers, when title of the goods passes to the customer, net of commissions, discounts, operational chargebacks, and cooperative advertising.

The allowance for wholesale revenue included within Accounts receivable was $ 9.0 million and $ 5.0 million as of February 3, 2024 and January 28, 2023, respectively.

For the sale of goods to retail customers 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 allowance for estimated sales returns, which is recorded in Accrued expenses and other current liabilities, was $ 1.7 million and $ 1.0 million as of February 3, 2024 and January 28, 2023, respectively.

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 and www.gymboree.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 and promoting the program on behalf of the bank and the operation of the loyalty rewards program.

Included in the agreement with the third-party financial institution was an upfront bonus paid to the Company and an additional bonus to extend the term of the agreement.

These bonuses are recognized as revenue and allocated between brand and reward obligations.

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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.

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

In addition, the annual profit-sharing amount is estimated and recognized quarterly within an annual period when earned.

In addition, the annual profit-sharing amount is recognized quarterly within an annual period when it can be estimated reliably.

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.

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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 total contract liabilities related to this program were $ 1.7 million and $ 2.6 million as of February 3, 2024 and January 28, 2023, respectively.

The Company’s policy with respect to gift cards is to record revenue as and when the gift cards are redeemed for merchandise.

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

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

respectively.

The gift card liability balance was $ 6.8 million and $ 11.1 million as of February 3, 2024 and January 28, 2023, respectively.

During Fiscal 2023, the Company recognized Net sales of $ 9.3 million related to the gift card liability balance that existed at January 28, 2023.

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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.

The Company records net sales for royalties when the applicable franchisee sells the product to its customers.

Under certain agreements, the Company receives a fee from each franchisee for exclusive territorial rights and based on the opening of new stores.

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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.

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The Company accounts for stock-based compensation in accordance with the provisions of FASB ASC 718— Compensation—Stock Compensation .

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(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.

and (c) that compensation expense (benefit) 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.

The expense (benefit) 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

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Advertising and other marketing costs are recorded in Selling, general, and administrative expenses and amounted to $ 99.9 million, $ 55.5 million, and $ 44.3 million in Fiscal 2023, Fiscal 2022, and Fiscal 2021, 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.

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 $ 0.2 million and $ 1.4 million at February 3, 2024 and January 28, 2023, respectively, 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.

The Company reports its earnings (loss) 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 Deferred Awards and Performance Awards (as both terms are used in “Note 12.

Stock-Based Compensation” of the Consolidated Financial Statements, “Item 8.

Financial Statements and Supplementary Data” of this Form 10-K), 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 .

Recent Accounting Standards Updates

In November 2023, the FASB issued Accounting Standards Update No.

2023-07 “Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures,” (“ASU 2023-07”).

The amendments in ASU 2023-07 are designed to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses during interim and annuals periods.

ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

The Company is currently evaluating the impact of this update on its consolidated financial statements.

In December 2023, the FASB issued Accounting Standards Update No.

2023-09 “Income Taxes (Topic 740):

Improvements to Income Tax Disclosures,” (“ASU 2023-09”).

The amendments in ASU 2023-09 are designed to enhance the transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the rate reconciliation, and income taxes paid disaggregated by jurisdiction.

ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted.

The Company is currently evaluating the impact of this update on its consolidated financial statements.

THE CHILDREN’S PLACE, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

Fiscal Years Ended

2023 January 29,

2022 January 30,

(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.

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

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(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 .

RESTRUCTURING

In support of the Company’s ongoing structural transformation from a legacy store operating model to a digital-first retailer, during the second quarter of Fiscal 2023, the Company voluntarily entered into an early termination of its corporate office lease and implemented a workforce reduction.

The Company proactively accelerated the termination of its corporate office lease to capitalize on the prevailing tenant-favorable market conditions and subsequently executed an amendment to its corporate office lease in January 2024 with its current landlord at more favorable rates.

The amended lease will expire in May 2037, with a termination right after the seventh year, and two five-year renewal options at fair market value.

The Company expects to reduce its square footage at its corporate office in May 2024 when its current lease expires.

The Company also implemented a plan that encompassed multiple headcount reductions, which accounted for approximately 20 % of its salaried workforce, the substantial majority of whom were located at the Company’s corporate offices in Secaucus, New Jersey, with the balance at other domestic and international locations.

The associated workforce reduction was substantially completed as of the end of the first quarter of Fiscal 2024.

In addition, the lease for the Company’s distribution center in Toronto, Canada (“TODC”) expired in April 2024.

The Company moved these operations to the United States to its current distribution center in Alabama as of the end of the first quarter of Fiscal 2024.

THE CHILDREN’S PLACE, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As a result of these strategic actions associated with the voluntary early termination of its corporate office lease, the move from the TODC, and workforce reductions, the Company incurred non-operating charges of $ 11.8 million in restructuring costs during Fiscal 2023 on a pretax basis, summarized in the following table:

Fiscal Years Ended

2024 January 28,

(in thousands)

Employee-related costs

Lease termination costs (1)

Professional fees 268 —

Total restructuring costs (2)

___________________________________________

(1) Includes non-cash charges related to accelerated depreciation on certain assets in the corporate office over the reduced term, amounting to $ 1.8 million during Fiscal 2023.

(2) Restructuring costs are recorded within Selling, general and administrative expenses, except accelerated depreciation charges noted above, which are recorded within Depreciation and amortization, and are primarily recorded within The Children’s Place U.S.

The following table summarizes the restructuring costs that have been partially settled with cash payments and the remaining related liability as of February 3, 2024.

The remaining related liability is expected to be settled with cash payments in Fiscal 2024 and these costs are included in Accrued expenses and other current liabilities on the Consolidated Balance Sheets:

Employee-Related Costs Lease Termination Costs Professional Fees Total

(in thousands)

Balance at April 29, 2023 $ — $ — $ — $ —

Provision 5,433 4,040 186 9,659

Cash Payments ( 2,602 ) ( 4,040 ) — ( 6,642 )

Balance at July 29, 2023 2,831 — 186 3,017

Provision 674 — 82 756

Cash Payments ( 2,652 ) — ( 268 ) ( 2,920 )

Balance at October 28, 2023 853 — — 853

Provision 1,275 — — 1,275

Cash Payments ( 462 ) — — ( 462 )

Balance at February 3, 2024 $ 1,666 $ — $ — $ 1,666

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

INTANGIBLE ASSETS

On April 4, 2019, the Company acquired certain intellectual property and related assets (the “Gymboree Assets”) of Gymboree Group, Inc.

On April 4, 2019, the Company acquired certain intellectual property and related 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 performed its annual impairment assessment of the Gymboree tradename as of December 31, 2023 and recorded an impairment charge of $ 29.0 million in Fiscal 2023, which reduced the carrying value to its fair value of $ 41.0 million.

There were no impairment charges recorded in Fiscal 2022 or Fiscal 2021.

The Company’s intangible assets were as follows:

January 28, 2023

February 3, 2024

Useful Life Gross Amount Accumulated Amortization Net Amount

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5 years 4,000 ( 3,877 ) 123

Customer databases (2)

3 years 3,000 ( 3,000 ) —

Total intangible assets $ 45,000 $ ( 3,877 ) $ 41,123

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Property and equipment consisted of the following:

January 28, 2023 January 29, 2022

February 3, 2024 January 28, 2023

(in thousands)

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Property and equipment, net $ 124,750 $ 149,874

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.

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 analyses performed, the Company recorded asset impairment charges during Fiscal 2023, Fiscal 2022, and Fiscal 2021 of $ 5.6 million, $ 3.3 million, and $ 1.5 million, respectively, inclusive of ROU assets .

PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets consisted of the following:

January 28, 2023 January 29, 2022

February 3, 2024 January 28, 2023

(in thousands)

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Prepaid cloud computing 8,329 6,635

Prepaid insurance 2,679 3,305

Prepaid maintenance contracts 1,843 2,107

Prepaid property expense 323 1,678

Other 3,825 5,047

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Accrued expenses and other current liabilities consisted of the following:

January 28, 2023 January 29, 2022

February 3, 2024 January 28, 2023

(in thousands)

Accrued salaries and benefits $ 19,140 $ 16,191

Accrued freight 10,324 4,275

Sales taxes and other taxes payable 7,212 5,643

Customer liabilities 6,817 11,132

Accrued property expenses 10,799 18,990

Accrued legal costs 6,771 3,880

Accrued real estate expenses 6,366 10,799

Deferred revenue 4,832 3,954

Accrued outside services 4,044 7,235

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

Accrued information technology costs 4,676 3,586

Accrued insurance 3,786 4,277

Accrued IT costs 2,995 4,676

Accrued marketing 3,177 4,286

Insurance reserves 4,277 3,487

Accrued freight 4,275 4,196

Accrued store expenses 2,319 4,230

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 2,301 2,529

Loyalty points 1,686 2,626

Accrued construction-in-progress 1,045 3,613

Other 6,793 10,312

Total accrued expenses and other current liabilities $ 89,608 $ 99,658

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

February 3, 2024 January 28, 2023 January 29, 2022

(in thousands)

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____________________________________________

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

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

(1) 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 in Fiscal 2022 and Fiscal 2021 of $ 1.5 million and $ 12.1 million, respectively.

As of February 3, 2024, the weighted-average remaining operating lease term was 4.2 years, and the weighted-average discount rate for operating leases was 7.1 %.

Cash paid for amounts included in the measurement of operating lease liabilities in Fiscal 2023 was $ 93.4 million.

ROU assets obtained in exchange for new operating lease liabilities were $ 120.5 million in Fiscal 2023.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

January 28, 2023

As of February 3, 2024, the maturities of operating lease liabilities were as follows:

February 3, 2024

(in thousands)

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Present value of operating lease liabilities $ 187,308

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.

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

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

On June 5, 2023, the Company entered into a fifth amendment to its Credit Agreement, pursuant to which, among other things, (i) PNC Bank, National Association (“PNC Bank”) was added as a new lender, (ii) the ABL Credit Facility was increased to $ 445.0 million, (iii) the London InterBank Offered Rate (“LIBOR”) was replaced by the Secured Overnight Financing Rate (“SOFR”) as the interest rate benchmark, and (iv) the pricing grid for applicable margins on borrowings was updated.

All other material terms and conditions of the Credit Agreement remained unchanged.

THE CHILDREN’S PLACE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company became aware of an inadvertent calculation error contained in the June, July and August 2023 borrowing base certificates provided to the Credit Agreement Lenders under its Credit Agreement, all of which have since been remedied.

While the Credit Agreement Lenders determined the calculation error resulted in certain technical defaults under the Credit Agreement (including the Company not being in compliance with certain debt covenants), the Company and the Credit Agreement Lenders entered into a Waiver and Amendment Agreement (the “Waiver Agreement”) on October 24, 2023, pursuant to which the Credit Agreement Lenders waived all of the defaults and the Company agreed to certain temporary enhanced reporting requirements and temporary restrictions on certain payments.

These enhanced reporting requirements and restrictions will cease once the Company achieves certain excess availability thresholds.

At no time prior to or following entering into the Waiver Agreement was the Company prevented from borrowing under the Credit Agreement in the ordinary course in accordance with its terms.

During the first quarter of Fiscal 2024, Mithaq became a controlling shareholder of the Company and this change of control triggered an event of default under the Credit Agreement, thus subjecting the Company to cash dominion by the Credit Agreement Lenders.

Subsequently, the Credit Agreement Lenders agreed to forbear from enforcing certain other rights and remedies during a limited forbearance period.

The Company then entered into financing agreements with Mithaq for an initial $ 78.6 million term loan, and subsequently, a separate $ 90.0 million term loan.

On April 16, 2024, the Company and certain of its subsidiaries entered into a seventh amendment to the Credit Agreement (the “Seventh Amendment”) with the Credit Agreement Lenders that, among other things, provided a permanent waiver of the change of control event of default.

As of the effective date of the Seventh Amendment, the ABL Credit Facility was reduced to $ 433.0 million and the Term Loan was fully repaid, and until the Company achieves certain excess availability thresholds, the Seventh Amendment preserved the temporary enhanced reporting requirements under the Waiver Agreement and continued to impose cash dominion.

On May 2, 2024, the Company entered into a commitment letter with Mithaq for a Shariah-compliant $ 40.0 million senior unsecured credit facility.

See “Note 18.

Subsequent Events” of the Consolidated Financial Statements, “Item 8.

Financial Statements and Supplementary Data” of this Form 10-K for further information.

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;

(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.

As of February 3, 2024, the Company and certain of its subsidiaries maintained the $ 445.0 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., JPMorgan Chase Bank, N.A., and PNC Bank as lenders, and Wells Fargo, as Administrative Agent, Collateral Agent, Swing Line Lender and Term Agent.

Both the ABL Credit Facility and the Term Loan would mature in November 2026.

The ABL Credit Facility included a $ 25.0 million Canadian sublimit and a $ 50.0 million sublimit for standby and documentary letters of credit.

Under the ABL Credit Facility, based on the amount of the Company’s average daily excess availability under the facility, borrowings outstanding bore interest, at the Company’s option, at:

(i) the prime rate per annum, plus a margin of 1.250 % or 1.500 %;

(ii) the SOFR per annum, plus a margin of 2.000 % or 2.250 %.

The Company was charged a fee of 0.200 % on the unused portion of the commitments.

Letter of credit fees ranged from 1.000 % to 1.125 % for commercial letters of credit and ranged from 1.500 % to 1.750 % for standby letters of credit.

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

The amount available for loans and letters of credit under the ABL Credit Facility was 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.

Once the Company achieves a consolidated EBITDA of at least $ 200.0 million across four consecutive fiscal quarters, and based on the amount of the Company’s average daily excess availability under the facility, borrowings outstanding under the ABL Credit Facility would bear interest, at the Company’s option, at:

(i) the prime rate per annum, plus a margin of 0.625 % or 0.875 %;

(ii) the SOFR per annum, plus a margin of 1.375 % or 1.625 %.

Letter of credit fees would range from 0.688 % to 0.813 % for commercial letters of credit and would range from 0.8750 % to 1.125 % for standby letters of credit.

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

THE CHILDREN’S PLACE, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For Fiscal 2023, Fiscal 2022, and Fiscal 2021, the Company recognized $ 24.2 million, $ 10.2 million, and $ 7.0 million, respectively, in interest expense related to the ABL Credit Facility.

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.

The Company was not subject to any early termination fees.

The ABL Credit Facility contained 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 would become effective in the event that borrowings and other uses of credit exceeded the maximum borrowing availability (as reflected in the table below), based on the Company’s ability to maintain a certain amount of excess availability for borrowings (the “excess availability threshold”).

These covenants also limited 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 was 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:

The table below presents the components of the Company’s ABL Credit Facility as of the end of Fiscal 2023 and Fiscal 2022:

2024 January 28,

(in millions)

Credit facility maximum $ 350.0 $ 350.0

Borrowing base (1)

Total borrowing base availability, net of the excess availability threshold, as applicable $ 258.4 $ 363.8

Credit facility maximum, net of the excess availability threshold, as applicable 400.5 315.0

Maximum borrowing availability (1)

Outstanding borrowings 226.7 287.0

4 unchanged sentences

Interest rate at end of period 8.1 % 5.9 %

Fiscal Years Ended

2024 January 28,

4 unchanged sentences

____________________________________________

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

(2) The sub-limit availability for letters of credit was $ 42.6 million 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.

(1) Lower of the credit facility maximum and the total borrowing base availability, both net of the excess availability threshold.

(2) The sub-limit availability for letters of credit was $ 42.6 million at February 3, 2024, January 28, 2023, and January 29, 2022.

The Term Loan bore interest, payable monthly, at (a) the SOFR per annum plus 2.750 % for any portion that was a SOFR loan, or (b) the base rate per annum plus 2.000 % for any portion that was a base rate loan.

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

For Fiscal 2023, Fiscal 2022, and Fiscal 2021, the Company recognized $ 4.0 million, $ 2.3 million, and $ 5.9 million respectively, in interest expense related to the Term Loan.

THE CHILDREN’S PLACE, INC.

1 unchanged sentence

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.

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

Both the ABL Credit Facility and the Term Loan contained customary events of default, which included (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, such as a change of control.

As of February 3, 2024 and January 28, 2023, unamortized deferred financing costs amounted to $ 2.4 million and $ 2.3 million, of which $ 2.2 million and $ 2.0 million related to the Company's ABL Credit Facility.

As described above, during the first quarter of Fiscal 2024, the Company entered into financing agreements with its new majority shareholder, Mithaq, and on April 16, 2024, among other things, the Company and certain of its subsidiaries entered into a Seventh Amendment to the Credit Agreement with the Credit Agreement Lenders.

As of the effective date of the Seventh Amendment, the ABL Credit Facility was reduced to $ 433.0 million and the Term Loan was fully repaid.

See “Note 18.

Subsequent Events” of the Consolidated Financial Statements, “Item 8.

Financial Statements and Supplementary Data” of this Form 10-K for further information.

COMMITMENTS AND CONTINGENCIES

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.

As of February 3, 2024, the Company entered into various purchase commitments for the next 12 months for merchandise for re-sale of approximately $ 229.8 million and approximately $ 34.0 million for equipment, construction, and other non-merchandise commitments.

The Company also has operating lease and standby letters of credit commitments of $ 227.3 million and $ 7.4 million, respectively.

14 unchanged sentences

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.

Vouchers were distributed to class members on November 15, 2021 and they were eligible for redemption in multiple rounds through November 2023.

On February 23, 2024, a hearing on motion for preliminary injunction and permanent injunction and to enforce judgement and settlement agreement was held.

Pending receipt of the court’s ruling, upon the court’s order, the plaintiff filed a renewed motion for attorneys’ fees, costs and incentive awards on March 4, 2024, to which the Company filed a statement of non-opposition on April 1, 2024.

Because the plaintiff was seeking less than the maximum amount agreed to in the settlement, the Company requested that such difference in amount be distributed as vouchers to authorized class members, pursuant to the settlement agreement.

The hearing for the motion for attorneys’ fees, costs, and incentive awards is set for May 3, 2024.

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.

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.

THE CHILDREN’S PLACE, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Similar to the Rael case above, the Company is also a defendant in Gabriela Gonzalez v.

The Children’s Place, Inc.

, a purported class action, pending in the U.S.

District Court, Central District of California.

The plaintiff alleged that the Company had falsely advertised discounts that do not exist, in violation of California’s Unfair Competition Laws, False Advertising Law and the California Consumer Legal Remedies Act.

The Company filed a motion to compel arbitration, which the plaintiff did not oppose, and the court granted the motion on August 17, 2022—staying the case pending the outcome of the arbitration.

The demand for arbitration was filed on October 4, 2022, in connection with the individual claim of the plaintiff.

A mass arbitration firm associated with plaintiff’s counsel then conducted an advertising campaign for claimants to conduct a mass arbitration.

In part, to avoid the mass arbitration, the parties stipulated to return the original plaintiff’s claim to court to proceed as a class action.

Accordingly, the arbitration would not be proceeding and the Company’s response to the original plaintiff’s complaint in court was filed on July 20, 2023.

On August 16, 2023, however, the Company began to receive notices regarding approximately 1,300 individual demands that were filed with Judicial Arbitration and Mediation Services, Inc.

as part of a related mass arbitration claim.

The parties participated in mediation proceedings on November 15, 2023 and February 9, 2024.

The parties agreed to further discuss settlement options in May 2024.

As of February 2024, the Company is also a defendant in Randeep Singh Khalsa v.

The Children’s Place, Inc.

et al., a purported class action, pending in the United States District Court of New Jersey.

The complaint purports to assert claims under the federal securities laws, alleging that between March 16, 2023, and February 8, 2024, the Company made materially false and/or misleading statements, and failed to disclose material adverse facts to its investors, which the complaint alleges led to a drop in the price of the Company’s common stock.

The Company intends to defend this case vigorously and it is currently too early to assess the possible outcome of this case.

The Company is also involved in various legal proceedings arising in the normal course of business.

STOCKHOLDERS’ EQUITY (DEFICIT)

Share Repurchase Program

In November 2021, the Board of Directors authorized a $ 250.0 million share repurchase program (the “Share Repurchase Program”).

Under this program, 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 the 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 program at any time and may thereafter reinstitute purchases, all without prior announcement.

Currently, pursuant to the terms of the Company’s Credit Agreement as amended by its Seventh Amendment described above, the Company is not expecting to repurchase any shares in Fiscal 2024, except as described below, pursuant to our practice as a result of our insider trading policy.

As of February 3, 2024, there was $ 157.2 million remaining availability under the Share Repurchase Program.

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.

3 unchanged sentences

Fiscal Years Ended

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

February 3, 2024 January 28, 2023 January 29, 2022

Shares Amount Shares Amount Shares Amount

3 unchanged sentences

Shares acquired and held in treasury 8 245 6 293 4 278

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 CHILDREN’S PLACE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In accordance with the 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 (deficit).

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.

For all shares retired in Fiscal 2023, Fiscal 2022, and Fiscal 2021, $ 2.9 million, $ 54.2 million, and $ 66.5 million was charged to Retained earnings (deficit), respectively.

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.

Currently, pursuant to the terms of the Company’s Credit Agreement as amended by its Seventh Amendment described above, the Company is not expecting to pay any cash dividends in Fiscal 2024.

STOCK-BASED COMPENSATION

3 unchanged sentences

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.

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, and each Performance Award has a defined number of shares that an employee can earn (the “Target Shares”).

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.

For Performance Awards granted in Fiscal 2023 and Fiscal 2022, employees may earn from 0 % to 200 % of their Target Shares, and for Performance Awards granted in Fiscal 2021, employees may earn from 0 % to 300 % 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 .

THE CHILDREN’S PLACE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table summarizes the Company’s stock-based compensation expense:

The following table summarizes the Company’s stock-based compensation expense (benefit):

Fiscal Years Ended

4 unchanged sentences

Performance Awards (1)

Total stock-based compensation expense (1)

( 12,195 ) 19,213 17,881

Total stock-based compensation expense (benefit) (2)

$ ( 5,576 ) $ 29,150 $ 30,942

(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.

____________________________________________

(1) Included within the Performance Awards benefit for Fiscal 2023 was a combination of ongoing expense associated with existing grants and $ 13.5 million of credits resulting from (a) a change in estimate based on revised expectations of the attainment levels for performance metrics of certain awards, and (b) the reversal of unvested expense related to forfeited awards for employees no longer with the Company.

(2) Stock-based compensation expense (benefit) recorded within Cost of sales (exclusive of depreciation and amortization) amounted to $ 0.4 million, $ 2.2 million, and $ 3.3 million in Fiscal 2023, Fiscal 2022, and Fiscal 2021, 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.

The Company recognized a tax benefit related to stock-based compensation expense (benefit) of $ 0.3 million, $ 2.5 million, and $ 2.6 million for Fiscal 2023, Fiscal 2022, and Fiscal 2021, respectively.

At February 3, 2024, the Company had 470,805 shares available for grant under the Equity Plan.

THE CHILDREN’S PLACE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Changes in the Company’s Unvested Stock Awards

1 unchanged sentence

Fiscal Years Ended

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

February 3, 2024 January 28, 2023 January 29, 2022

Shares Weighted

9 unchanged sentences

Unvested Deferred Awards at end of year 238 $ 31.99 282 $ 49.78 467 $ 57.60

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.

Total unrecognized stock-based compensation expense related to unvested Deferred Awards was $ 4.7 million as of February 3, 2024, which will be recognized over a weighted average period of approximately 1.9 years.

The fair value of Deferred Awards that vested during Fiscal 2023, Fiscal 2022, and Fiscal 2021 was $ 4.7 million, $ 11.4 million, and $ 14.6 million, respectively.

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

February 3, 2024 January 28, 2023 January 29, 2022

Fair Value Number of

3 unchanged sentences

Granted 131 21.55 90 48.84 164 75.01

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

Shares earned in excess of (below) Target Shares — — 192 48.17 ( 22 ) 65.34

Vested shares, including shares earned in excess of Target Shares ( 300 ) 44.71 ( 58 ) 101.62 ( 119 ) 89.44

Forfeited ( 18 ) 55.01 ( 107 ) 59.86 ( 7 ) 90.22

3 unchanged sentences

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 cumulative expense (benefit) 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 $ 1.9 million as of February 3, 2024, which will be recognized over a weighted average period of approximately 2.3 years.

The fair value of Performance Awards that vested during Fiscal 2023, Fiscal 2022, and Fiscal 2021 was $ 11.8 million, $ 3.0 million, and $ 10.6 million, respectively.

THE CHILDREN’S PLACE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As discussed in “Note 18.

Subsequent Events” of the Consolidated Financial Statements, “Item 8.

Financial Statements and Supplementary Data” of this Form 10-K, there was a change of control of the Company in February 2024, which triggered a conversion of all Performance Awards into service-based Performance Awards.

As a result, the Fiscal 2023, Fiscal 2022, and Fiscal 2021 Performance Awards are all expected to vest at their Target Shares on their respective vesting dates without regard to the achievement of any of the performance metrics associated with those awards.

EARNINGS (LOSS) PER COMMON SHARE

The following table reconciles net income (loss) and share amounts utilized to calculate basic and diluted earnings (loss) per common share:

Fiscal Years Ended

2024 January 28,

2023 January 29,

(in thousands)

Net income (loss) $ ( 154,541 ) $ ( 1,138 ) $ 187,171

Basic weighted average common shares outstanding 12,501 13,041 14,597

Dilutive effect of stock awards — — 273

Diluted weighted average common shares outstanding 12,501 13,041 14,870

Anti-dilutive shares excluded from diluted earnings (loss) per common share calculation 114 184 —

FAIR VALUE MEASUREMENT

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

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.

The Company’s Deferred Compensation Plan assets and liabilities 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.

Impairment of Long-Lived Assets

The fair value of the Company’s long-lived assets is primarily calculated using a discounted cash-flow model directly associated with those assets, which consist principally of property and equipment and ROU assets.

These assets are tested for impairment when events indicate that their carrying value may not be recoverable.

THE CHILDREN’S PLACE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company performed periodic quantitative impairment assessments of its long-lived assets, inclusive of ROU assets and recorded impairment charges of $ 5.6 million, $ 3.3 million, and $ 1.5 million during Fiscal 2023, Fiscal 2022, and Fiscal 2021, respectively, primarily due to reductions in Gymboree sales forecasts.

Impairment charges were primarily recorded in The Children’s Place U.S.

Impairment of Indefinite-Lived Intangible Assets

The Company estimates the fair value of its indefinite-lived Gymboree tradename based on an income approach using the relief-from-royalty method.

Estimating fair value using this method requires management to estimate future revenues, royalty rates, discount rates, long-term growth rates, and other factors in order to project future cash flows.

The Company performed its annual tradename impairment assessment of the Gymboree tradename as of December 31, 2023, in accordance with FASB ASC 350— Intangibles – Goodwill and Other .

Based on this assessment, the Company recorded an impairment charge of $ 29.0 million, primarily due to an increase in the discount rate used to value the tradename and reductions in Gymboree sales forecasts, which reduced the carrying value to its fair value of $ 41.0 million.

The impairment charge was recorded in The Children’s Place U.S.

The components of Income (loss) before provision (benefit) for income taxes were as follows:

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Total income (loss) before provision (benefit) for income taxes $ ( 113,798 ) $ ( 14,762 ) $ 257,030

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:

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Effective tax rate ( 35.8 ) % 92.3 % 27.2 %

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.

THE CHILDREN’S PLACE, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

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

During the first quarter of Fiscal 2022, the Company received $ 22.0 million of this income tax refund and the remaining balance of $ 19.1 million as of February 3, 2024 is included within Prepaid expenses and other current assets on the Consolidated Balance Sheets.

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

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Federal tax credits ( 3,242 ) ( 2,934 ) ( 2,882 )

CARES Act Carryback (2)

— — ( 20,954 )

Other ( 606 ) 609 ( 1,923 )

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The Company’s foreign effective tax rate for Fiscal 2023, Fiscal 2022, and Fiscal 2021 was 11.6 %, 9.8 %, and 16.6 %, 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.

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

The assessment of the amount of value assigned to the Company’s deferred tax assets under the applicable accounting rules is judgmental.

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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.

The Company believes that it is not more likely than not that future taxable income will be sufficient to allow it to recover substantially all of the value assigned to the Company’s deferred tax assets.

Thus, in the fourth quarter of Fiscal 2023, the Company increased its valuation allowance accordingly.

THE CHILDREN’S PLACE, INC.

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(in thousands)

Deferred tax assets:

Operating lease liabilities $ 48,122 $ 48,079

Right-of-use assets ( 43,576 ) ( 51,617 )

Stock-based compensation 2,461 2,863

Capitalized research and development, net 23,653 17,856

Net operating loss carryforward 13,704 3,453

Reserves 10,167 12,038

Interest expense carryforward

Inventory 3,333 4,612

Property and equipment, net ( 2,407 ) ( 6,296 )

Capitalized research and development, net 17,856 3,569

Tradenames and customer databases, net 3,304 —

Charitable contributions 1,084 —

Stock-based compensation 924 2,461

Subtotal 120,901 92,332

valuation allowance ( 69,898 ) ( 1,273 )

Total deferred tax assets 51,003 91,059

Deferred tax liabilities:

Right-of-use assets ( 44,844 ) ( 43,576 )

Property and equipment, net ( 3,149 ) ( 2,407 )

Prepaid expenses ( 2,038 ) ( 3,704 )

Foreign and state tax on unremitted earnings ( 1,554 ) ( 1,554 )

Net operating loss carryforward 3,453 2,900

Interest expense carryforward

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

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

The Company has state NOL carryforwards of $ 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.

Tradenames and customer databases, net — ( 3,202 )

Total deferred tax liabilities ( 51,585 ) ( 54,443 )

Total deferred tax assets (liabilities), net $ ( 582 ) $ 36,616

The Company has gross federal NOL carryforwards of approximately $ 24.5 million which do not expire, state NOL carryforwards of approximately $ 133.3 million which either expire between two and twenty years , or carryforward indefinitely, and foreign NOL carryforwards of approximately $ 3.7 million which expire between five and twenty years .

The Company also has an Alternative Minimum Tax credit (“AMT”) in Puerto Rico of approximately $ 0.6 million.

The Company has concluded that it is not more likely than not that its deferred tax assets, including NOLs, can be utilized in the foreseeable future.

Thus, the Company’s valuation allowance increased $ 68.6 million to $ 69.9 million in Fiscal 2023, primarily related to deferred tax assets in the U.S, compared to $ 1.3 million in Fiscal 2022.

However, to the extent that tax benefits related to these deferred tax assets are realized in the future, the reduction of the valuation allowance will reduce income tax expense accordingly.

As discussed in “Note 18.

Subsequent Events” of the Consolidated Financial Statements, “Item 8.

Financial Statements and Supplementary Data” of this Form 10-K, subsequent to the end of Fiscal 2023, there was a change of control of the Company.

This change of control constitutes an “ownership change” under Internal Revenue Code Section 382, where the Company will be subject to an annual limitation on its ability to utilize its existing NOLs and tax credits as of the ownership change date to offset future taxable income.

The application of such limitation may cause U.S.

federal income taxes to be paid by the Company earlier than they otherwise would be paid if such limitation was not in effect, which would adversely affect the Company’s operating results and cash flows if it has taxable income in the future.

In addition to the aforementioned federal income tax implications pursuant to Section 382 of the Code, most U.S.

states follow the general provision of Section 382 of the Code, either explicitly or implicitly resulting in separate state NOL limitations.

This could cause state income taxes to be paid earlier than otherwise would be paid if such limitation was not in effect and could cause such NOLs to expire unused.

THE CHILDREN’S PLACE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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.

government passed the Tax Cuts and Jobs Act (the “Tax Act”).

The Tax Act is a comprehensive tax legislation that implements 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 requires U.S.

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

The remaining unpaid transition tax, which had begun to be repaid in Fiscal 2023, amounted to $ 17.1 million at February 3, 2024.

This balance is shown as $ 9.5 million as long-term Income taxes payable and $ 7.6 million is shown net in Prepaid expenses and other current assets on the Consolidated Balance Sheet as of February 3, 2024.

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.

The unremitted foreign earnings earned subsequent to the transition tax, which are permanently reinvested, were $ 255.5 million at February 3, 2024.

Unrecognized Tax Benefits

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

THE CHILDREN’S PLACE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

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Reductions for prior year tax positions — ( 6,322 )

Impact of foreign currency translation — ( 28 )

Ending Balance $ 6,990 $ 3,626

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.

Unrecognized tax benefits of $ 6.5 million, excluding accrued interest and penalties, at February 3, 2024 would affect the Company’s effective tax rate in future periods, if recognized.

The Company believes that it is reasonably possible that the total amount of unrecognized tax benefits as of February 3, 2024 could decrease by up to $ 0.6 million 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.

At February 3, 2024 and January 28, 2023, accrued interest and penalties of $ 0.6 million and $ 0.4 million, respectively, were included in unrecognized tax benefits.

Interest, penalties, and reversals thereof, net of taxes, amounted to an expense of $ 0.3 million in Fiscal 2023 and a benefit of $( 0.1 ) million in Fiscal 2022.

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

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federal, state and local or foreign tax authorities for tax years 2015 and prior.

The IRS is currently conducting an examination of the Company’s tax return for Fiscal 2020 in conjunction with its review of the CARES Act NOL carryback to fiscal year 2015 through fiscal year 2019.

The Company believes that its reserves for uncertain tax positions are adequate to cover existing risks or exposures.

THE CHILDREN’S PLACE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

RETIREMENT AND SAVINGS PLANS

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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 $ 4.0 million in Fiscal 2023, $ 4.5 million in Fiscal 2022, and $ 3.5 million in Fiscal 2021.

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.

THE CHILDREN’S PLACE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Deferred Compensation Plan liability, excluding Company stock, was $ 1.2 million and $ 1.3 million at February 3, 2024 and January 28, 2023, respectively.

The value of the assets held in the rabbi trust was $ 1.2 million and $ 1.3 million at February 3, 2024 and January 28, 2023, respectively.

The cost of the Company’s stock repurchased was $ 2.9 million and $ 3.7 million at February 3, 2024 and January 28, 2023, respectively.

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

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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 .

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

Included in The Children’s Place U.S.

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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.

Net sales to external customers are derived from merchandise sales, and the Company has no customer that individually accounted for more than 10% of its net sales.

As of February 3, 2024, The Children’s Place U.S.

had 460 stores and The Children’s Place International had 63 stores.

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had 540 stores and The Children’s Place International had 73 stores.

THE CHILDREN’S PLACE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following tables provide segment level financial information for Fiscal 2023, Fiscal 2022, and Fiscal 2021:

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Total capital expenditures $ 27,559 $ 45,577 $ 29,307

THE CHILDREN’S PLACE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

____________________________________________

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Total assets $ 800,308 $ 986,281

THE CHILDREN’S PLACE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Geographic Information

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(1) The Company’s long-lived assets are comprised of net Property and equipment, ROU assets, Tradenames, and Other assets.

SUBSEQUENT EVENTS

As of February 12, 2024, Mithaq had acquired more than 50 % of the Company’s outstanding shares of common stock.

Mithaq’s acquisition of the Company’s common stock resulted in a change of control of the Company, thereby triggering an event of default under the Credit Agreement.

As a result of this event of default, the Company became subject to cash dominion by the Credit Agreement Lenders.

On February 29, 2024, the Company and the Credit Agreement Lenders entered into a forbearance agreement, pursuant to which, among other things, the Credit Agreement Lenders agreed to forbear from enforcing certain rights and remedies (other than cash dominion and increasing the interest rate payable on borrowings outstanding under the Credit Agreement to the default interest rate) under the Credit Agreement during a limited forbearance period, and which contemplated a permanent waiver of the change of control default upon the satisfaction of certain conditions.

On February 29, 2024, the Company and certain of its subsidiaries also entered into an interest-free unsecured subordinated promissory note with Mithaq, providing for up to $ 78.6 million in term loans (the “Initial Mithaq Term Loan”).

The Company received $ 30 million on February 29, 2024 and $ 48.6 million on March 8, 2024.

The Initial Mithaq Term Loan matures on February 15, 2027.

On April 16, 2024, the Company and certain of its subsidiaries entered into a new financing agreement with Mithaq for a Shariah-compliant unsecured and subordinated $ 90.0 million term loan (the “New Mithaq Term Loan”).

The New Mithaq Term Loan matures on April 16, 2027, and requires monthly payments equivalent to interest charged at the SOFR plus 4.00 % per annum, with such monthly payments to Mithaq deferred until April 30, 2025.

The Company received the funds from the New Mithaq Term Loan on April 18, 2024 and a portion of those funds were used to repay the Company’s $ 50 million term loan under the Credit Agreement.

On April 16, 2024, the Company and certain of its subsidiaries also entered into a Seventh Amendment to the Credit Agreement with the Credit Agreement Lenders that, among other things, provided a permanent waiver of the change of control event of default.

The Seventh Amendment reduced the ABL Credit Facility to $ 433.0 million and, until the Company achieves certain excess availability thresholds, preserved the temporary enhanced reporting requirements under the Waiver Agreement and continued to impose cash dominion.

The Seventh Amendment also modified certain existing requirements to restrict certain payments, including the repurchase of shares and the payment of dividends.

On May 2, 2024, the Company entered into a commitment letter with Mithaq for a Shariah-compliant $ 40.0 million senior unsecured credit facility (the “Mithaq Credit Facility”).

Under the Mithaq Credit Facility, the Company may request for advances at any time up to July 1, 2025.

If any debt is incurred under the Mithaq Credit Facility, it shall require monthly payments equivalent to interest charged at the SOFR plus 5.000 % per annum.

Additionally, such debt shall require no mandatory prepayments and shall mature no earlier than July 1, 2025.

(a)(3) Exhibits.

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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.

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.

Seventh Amended and Restated Bylaws of The Children’s Place, Inc.

filed as Exhibit 3.1 to the registrant’s Current Report of Form 8-K filed on November 14, 2023, is incorporated by reference herein.

Amendment to the Seventh Amended and Restated Bylaws of The Children’s Place, Inc.

filed as Exhibit 3.1 to the registrant’s Current Report on Form 8-K filed on March 4, 2024, is incorporated by reference herein.

Amendment No.

2 to the Seventh Amended and Restated Bylaws of The Children’s Place, Inc.

filed as Exhibit 3.2 to the registrant’s Current Report on Form 8-K filed on March 14, 2024, is incorporated by reference herein.

Form of Certificate for Common Stock of the Company filed as an exhibit to the registrant’s Registration Statement No.

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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.

Sixth Modification Agreement, dated as of January 23, 2024, by and between Hancock S-REIT SECA LLC and The Children’s Place Services Company, LLC.

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.

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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.

Exhibit Description

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

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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.

Exhibit Description

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.

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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.

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

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

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.

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 Credit Agreement Lenders and Wells Fargo Bank, National Association (successor by merger to Wells Fargo Retail Finance, LLC), as Administrative Agent and Collateral Agent, L/C Issuer, Swing Line Lender and as a lender, filed as Exhibit 4.2 to the registrant’s Current Report on Form 8-K filed on October 6, 2020, is incorporated by reference herein.

Third Amendment to Amended and Restated Credit Agreement, dated as of April 23, 2021, by and among the Company, the Borrowers identified on Schedule I thereto, the Guarantors identified on Schedule II thereto, the Credit Agreement 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.

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 Credit Agreement 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.

Joinder and Fifth Amendment to the Amended and Restated Credit Agreement and Other Loan Documents, dated as of June 5, 2023, among the Company, the Borrowers identified on Schedule I thereto, the Guarantors identified on Schedule II thereto, the Credit Agreement Lenders and Wells Fargo Bank, National Association, as Administrative Agent, Collateral Agent, L/C Issuer, Swing Line Lender and Term Agent filed as Exhibit 10.1 to the registrant’s Quarterly Report on Form 10-Q for the quarterly period ended April 29, 2023, is incorporated by reference herein.

Exhibit Description

Waiver and Amendment Agreement to the Credit Agreement, dated as of October 24, 2023, among the Company, the Borrowers identified on Schedule I thereto, the Guarantors identified on Schedule II thereto, the Credit Agreement 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 28, 2023, is incorporated by reference herein.

Seventh Amendment to Amended and Restated Credit Agreement, dated April 16, 2024, among the Company, certain subsidiaries of the Company, the Credit Agreement Lenders and Wells Fargo Bank, National Association, as Administrative Agent, Collateral Agent, L/C Issuer and Swing Line Lender.

Promissory Note, dated February 29, 2024, among the Company, certain subsidiaries of the Company, and Mithaq Capital SPC filed as Exhibit 4.1 to the registrant’s Current Report on Form 8-K filed on March 4, 2024, is incorporated by reference herein.

Unsecured Promissory Note, dated April 16, 2024, among the Company, certain subsidiaries of the Company, and Mithaq Capital SPC.

Commitment Letter for $40 Million Senior Unsecured Credit Facility (Third), dated as of May 2, 2024, among the Company, certain subsidiaries of the Company, and Mithaq Capital SPC.

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

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

Exhibit Description

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

Updated Letter Agreement dated August 1, 2023 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 quarterly period ended July 29, 2023, is incorporated by reference herein.

Updated Letter Agreement dated August 1, 2023 between The Children’s Place Services Company, LLC and Maegan Markee filed as Exhibit 10.3 to the registrant’s Quarterly Report on Form 10-Q for the quarterly period ended July 29, 2023, is incorporated by reference herein.

Subsidiaries of the Company.

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(Principal Executive Officer)

March 28, 2023

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

Elfers Director, Chief Executive Officer and President March 28, 2023

/S/ Turki Saleh A.

AlRajhi Chairman of the Board May 3, 2024

Turki Saleh A.

Elfers Director, Chief Executive Officer and President May 3, 2024

Elfers (Principal Executive Officer)

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

/S/ Sheamus Toal Chief Operating Officer and Chief Financial Officer May 3, 2024

Sheamus Toal (Principal Financial Officer and Principal Accounting Officer)

/S/ Joseph Alutto Director March 28, 2023

Joseph Alutto

Bachman Director March 28, 2023

/S/ Marla Beck Director March 28, 2023

/S/ Elizabeth Boland Director March 28, 2023

Elizabeth Boland

Frascotti Director March 28, 2023

/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

/S/ Douglas Edwards Director May 3, 2024

Douglas Edwards

/S/ Hussan Arshad Director May 3, 2024

Hussan Arshad

/S/ Muhammad Asif Seemab Director May 3, 2024

Muhammad Asif Seemab

/S/ Muhammad Umair Director May 3, 2024

Muhammad Umair

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

What changed 10-K

Item 9A. Controls and Procedures