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Item 9A. Controls and Procedures

2022-03-25 compared with 2021-03-26 · 71 added, 53 removed, 98 unchanged (56% of the section changed)

CONTROLS AND PROCEDURES

Management’s Report on Internal Control Over Financial Reporting

The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended.

Internal control over financial reporting is a process designed by, or under the supervision of, the Company’s principal executive and principal financial officers and effected by the Company’s Board of Directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

Management’s Report on Internal Control Over Financial Reporting

Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;

Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and Directors of the Company;

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

Because of inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

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

Management assessed the effectiveness of the Company’s internal control over financial reporting as of January 30, 2021.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of January 29, 2022.

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

Based on its assessment, management believes that the Company’s internal control over financial reporting was effective as of January 30, 2021.

The Company’s internal control over financial reporting as of January 30, 2021 has been audited by its independent registered public accounting firm, Deloitte & Touche LLP, as stated in their report, which is included herein.

Based on its assessment, management believes that the Company’s internal control over financial reporting was effective as of January 29, 2022.

On December 3, 2021, the Company acquired the physical stores and substantially all of the other assets of Shoe Station, Inc.

(“Shoe Station”), a privately-held, family-owned shoe retailer.

Under the rules and regulations of the Securities and Exchange Commission, we have elected to exclude Shoe Station from management's assessment of the effectiveness of the Company’s internal control over financial reporting as of January 29, 2022.

This acquisition constitutes 1.3% of net sales in the consolidated statements of income and 11.9% of total assets in the consolidated balance sheets as of and for the year ended January 29, 2022.

In the Company's Annual Report on Form 10-K for the year ending January 28, 2023, management and the Company’s independent registered public accounting firm will be required to provide an assessment as to the effectiveness of the Company’s internal control over financial reporting, inclusive of the acquired assets of Shoe Station.

The Company’s internal control over financial reporting as of January 29, 2022 has been audited by its independent registered public accounting firm, Deloitte & Touche LLP, as stated in their report, which is included herein.

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures and Changes in Internal Control over Financial Reporting

Our Chief Executive Officer and Chief Financial Officer have concluded, based on their evaluation as of January 30, 2021, that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and include controls and procedures designed to ensure that information required to be disclosed by us in such reports is accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

There has been no significant change in our internal control over financial reporting that occurred during the quarter ended January 30, 2021 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Our Chief Executive Officer and Chief Financial Officer have concluded, based on their evaluation as of January 29, 2022, that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and include controls and procedures designed to ensure that information required to be disclosed by us in such reports is accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Except as noted in the following sentence, there has been no significant change in our internal control over financial reporting that occurred during the quarter ended January 29, 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

As a result of the acquisition of the physical stores and substantially all of the other assets of Shoe Station, we have incorporated internal controls over significant processes specific to the acquisition that we believe are appropriate and necessary in connection with accounting for the acquisition, consolidation, and financial reporting.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

2 unchanged sentences

We have audited the internal control over financial reporting of Shoe Carnival, Inc.

and subsidiaries (the “Company”) as of January 30, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of January 30, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

and subsidiaries (the “Company”) as of January 29, 2022, based on criteria established in Internal Control —

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

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of January 29, 2022, based on criteria established in Internal Control —

Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended January 29, 2022 , of the Company and our report dated March 25, 2022, expressed an unqualified opinion on those financial statements.

As described in Management’s Report on Internal Control Over Financial Reporting, management excluded from its assessment the internal control over financial reporting at Shoe Station, Inc., which was acquired on December 3, 2021, and whose financial statements constitute 11.9% of total assets and 1.3% of net sales of the consolidated financial statement amounts as of and for the year ended January 29, 2022.

Accordingly, our audit did not include the internal control over financial reporting at Shoe Station, Inc.

Basis for Opinion

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

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

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

5 unchanged sentences

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

4 unchanged sentences

OTHER INFORMATION

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

Not applicable.

DIRECTORS, EXECUTIVE OF FICERS AND CORPORATE GOVERNANCE

The information required by this Item concerning our Directors, nominees for Director, Code of Ethics, designation of the Audit Committee financial expert and identification of the Audit Committee, and concerning any disclosure of delinquent filers under Section 16(a) of the Exchange Act, is incorporated herein by reference to our definitive Proxy Statement for the 2022 Annual Meeting of Shareholders, to be filed with the Securities and Exchange Commission pursuant to Regulation 14A within 120 days after the end of our last fiscal year.

Information concerning our executive officers is included under the caption “Information about our Executive Officers” at the end of PART 1, ITEM 1.

BUSINESS of this Annual Report on Form 10-K.

Information concerning our executive officers is included under the caption “Information about our Executive Officers”

at the end of PART 1, ITEM 1, “Business”

of this Annual Report on Form 10-K.

This information is incorporated herein by reference.

EXECUTIVE COMPENSATION

EXECUTI VE COMPENSATION

The information required by this Item concerning remuneration of our officers and Directors and information concerning material transactions involving such officers and Directors and Compensation Committee interlocks, including the Compensation Committee Report and the Compensation Discussion and Analysis, is incorporated herein by reference to our definitive Proxy Statement for the 2022 Annual Meeting of Shareholders, which will be filed pursuant to Regulation 14A within 120 days after the end of our last fiscal year.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OW NERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information required by this Item concerning the stock ownership of management and five percent beneficial owners and securities authorized for issuance under equity compensation plans is incorporated herein by reference to our definitive Proxy Statement for the 2022 Annual Meeting of Shareholders, which will be filed pursuant to Regulation 14A within 120 days after the end of our last fiscal year.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

CERTAIN RELATIONSHIPS AND RELATE D TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by this Item concerning certain relationships and related transactions and the independence of our Directors is incorporated herein by reference to our definitive Proxy Statement for the 2022 Annual Meeting of Shareholders, which will be filed pursuant to Regulation 14A within 120 days after the end of our last fiscal year.

PRINCIPAL ACCOUNTING FEES AND SERVICES

PRINCIPAL ACCOU NTING FEES AND SERVICES

The information required by this Item concerning principal accountant fees and services is incorporated herein by reference to our definitive Proxy Statement for the 2022 Annual Meeting of Shareholders, which will be filed pursuant to Regulation 14A within 120 days after the end of our last fiscal year.

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

EXHIBITS AND FINA NCIAL STATEMENT SCHEDULES

Financial Statements:

2 unchanged sentences

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets at January 30, 2021 and February 1, 2020

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

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

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

Consolidated Balance Sheets at January 29, 2022 and January 30, 2021

Consolidated Statements of Income for the years ended January 29, 2022, January 30, 2021, and February 1, 2020

Consolidated Statements of Shareholders’

Equity for the years ended January 29, 2022, January 30, 2021, and February 1, 2020

Consolidated Statements of Cash Flows for the years ended January 29, 2022, January 30, 2021, and February 1, 2020

Notes to Consolidated Financial Statements

6 unchanged sentences

Second Amendment to Credit Agreement dated as of March 27, 2017, by and among Registrant, the financial institutions from time to time party thereto as Banks, and Wells Fargo Bank, N.A., as successor-by-merger to Wachovia Bank, National Association, as Agent

Third Amendment to Credit Agreement, dated as of April 16, 2020, by and among the Company, the financial institutions from time to time party thereto as Banks, and Wells Fargo Bank, N.A., as successor-by-merger to Wachovia Bank, National Association, as Agent

Security Agreement, dated as of April 16, 2020, by and among the Company, SCHC, Inc.

Third Amendment to Credit Agreement, dated as of April 16, 2020, by and among Registrant, the financial institutions from time to time party thereto as Banks, and Wells Fargo Bank, N.A., as successor-by-merger to Wachovia Bank, National Association, as Agent

Security Agreement, dated as of April 16, 2020, by and among Registrant, SCHC, Inc.

and SCLC, Inc., as Grantors, and Wells Fargo Bank, N.A., as administrative agent

Fourth Amendment to Credit Agreement, dated as of July 20, 2020, by and among the Registrant, the financial institutions from time to time party thereto as Banks, and Wells Fargo Bank, N.A., as successor-by-merger to Wachovia Bank, National Association, as Agent

Description of the Registrant’s Securities registered under Section 12 of the Securities Exchange Act of 1934

Fifth Amendment to Credit Agreement, dated as of November 30, 2021, by and among Registrant, the financial institutions from time to time party thereto as Banks, and Wells Fargo Bank, N.A., as successor-by-merger to Wachovia Bank, National Association, as Agent

Amended and Restated Credit Agreement, dated March 23, 2022, by and among Registrant, the financial institutions from time to time party thereto as Lenders, and Wells Fargo Bank, National Association, as administrative agent

Amended and Restated Security Agreement, dated March 23, 2022, by and between the Registrant and Wells Fargo Bank, National Association, as administrative agent

Description of the Registrant’s Securities registered under Section 12 of the Securities Exchange Act of 1934

Lease, dated as of February 8, 2006, by and between Registrant and Big-Shoe Properties, LLC

7 unchanged sentences

Amended and Restated 2016 Executive Incentive Compensation Plan

2000 Stock Option and Incentive Plan of Registrant, as amended

Form of Award Agreement for restricted stock with both performance-based and time-based restrictions granted under the Registrant’s 2000 Stock Option and Incentive Plan

Form of 2017 Award Agreement for service-based restricted stock granted to executive officers under the Registrant’s 2000 Stock Option and Incentive Plan

Form of 2017 Award Agreement for restricted stock with both performance-based and service-based restrictions granted to executive officers under the Registrant’s 2000 Stock Option and Incentive Plan

2017 Equity Incentive Plan of Registrant

INDEX TO EXHIBITS - Continued

Incorporated by Reference To

Form of Restricted Stock Award Agreement under the Registrant’s 2017 Equity Incentive Plan (Non-employee Directors)

Form of Service-Based Restricted Stock Unit Award Agreement under the Registrant’s 2017 Equity Incentive Plan (Executive Officers)

Form of 2018 Performance Stock Unit Award Agreement under the Registrant’s 2017 Equity Incentive Plan (Executive Officers)

Form of 2019 Performance Stock Unit Award Agreement under the Registrant’s 2017 Equity Incentive Plan (Executive Officers) as amended on July 17, 2019

Form of 2021 Performance Stock Unit Award Agreement under the Registrant’s 2017 Equity Incentive Plan (Executive Officers)

2017 Equity Incentive Plan of Registrant

Form of Restricted Stock Award Agreement under the Registrant’s 2017 Equity Incentive Plan (Non-employee Directors)

Form of Service-Based Restricted Stock Unit Award Agreement under the Registrant’s 2017 Equity Incentive Plan (Executive Officers)

Form of 2019 Performance Stock Unit Award Agreement under the Registrant’s 2017 Equity Incentive Plan (Executive Officers) as amended on July 17, 2019

Form of 2021 Performance Stock Unit Award Agreement under the Registrant’s 2017 Equity Incentive Plan (Executive Officers)

Form of Service-Based Restricted Stock Unit Award Agreement under the Registrant’s 2017 Equity Incentive Plan (Executive Officers)

Form of 2022 Performance Stock Unit Award Agreement under the Registrant’s 2017 Equity Incentive Plan (Executive Officers)

Amended and Restated Employment and Noncompetition Agreement dated December 11, 2008, between Registrant and Timothy Baker

Severance and Release Agreement dated March 18, 2021, between Registrant and Timothy Baker

Amended and Restated Employment and Noncompetition Agreement dated December 11, 2008, between Registrant and Clifton E.

Letter Agreement, dated September 30, 2021, between Registrant and Clifton E.

Amended and Restated Employment and Noncompetition Agreement dated December 11, 2008, between Registrant and W.

Kerry Jackson

First Amendment to Amended and Restated Employment and Noncompetition Agreement dated April 5 2021, between Registrant and W.

Kerry Jackson

Employment and Noncompetition Agreement dated December 4, 2012, between Registrant and Carl N.

Employment and Noncompetition Agreement dated September 10, 2018, between Registrant and Mark S.

Employment and Noncompetition Agreement dated April 4, 2021, between Registrant and Marc A.

Amended and Restated Employment and Noncompetition Agreement dated October 1, 2021, between Registrant and Mark J.

Shoe Carnival, Inc.

8 unchanged sentences

Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

The following materials from Shoe Carnival, Inc.’s Annual Report on Form 10-K for the year ended January 30, 2021, formatted in Inline XBRL (Inline Extensible Business Reporting Language):

(1) Consolidated Balance Sheets, (2) Consolidated Statements of Income, (3) Consolidated Statement of Shareholders’ Equity, (4) Consolidated Statements of Cash Flows, and (5) Notes to Consolidated Financial Statements.

INDEX TO EXHIBITS - Continued

The following materials from Shoe Carnival, Inc.’s Annual Report on Form 10-K for the year ended January 29, 2022, formatted in Inline XBRL (Inline Extensible Business Reporting Language):

(1) Consolidated Balance Sheets, (2) Consolidated Statements of Income, (3) Consolidated Statement of Shareholders’

Equity, (4) Consolidated Statements of Cash Flows, and (5) Notes to Consolidated Financial Statements.

Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).

* The indicated exhibit is a management contract, compensatory plan or arrangement required to be filed by Item 601 of Regulation S-K.

INDEX TO EXHIBITS - Continued

FORM 10-K SUMMARY

2 unchanged sentences

March 25, 2022

/s/ Clifton E.

Vice Chairman and Chief Executive Officer

President and Chief Executive Officer

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.

2 unchanged sentences

/s/ Clifton E.

Vice Chairman, Chief Executive Officer and Director

Vice Chairman and Director

March 25, 2022

President, Chief Executive Officer and Director

March 25, 2022

(Principal Executive Officer)

2 unchanged sentences

March 25, 2022

/s/ Diane Randolph

March 25, 2022

Diane Randolph

/s/ Charles B.

March 25, 2022

/s/ Joseph W.

March 26, 2021

Kerry Jackson

6 unchanged sentences

March 25, 2022

Corporate Controller and Assistant Secretary (Principal Accounting Officer)

Corporate Controller and Secretary (Principal Accounting Officer)

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