What changed in this filing

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Item 1. Financial Statements

2020-09-04 compared with 2020-06-04 · 155 added, 84 removed, 289 unchanged (45% of the section changed)

3 unchanged sentences

(In thousands, except share data)

August 1, 2020

February 1, 2020

August 3, 2019

Current Assets:

29 unchanged sentences

(In thousands, except per share data)

August 1, 2020

August 3, 2019

August 1, 2020

August 3, 2019

Cost of sales (including buying, distribution

1 unchanged sentence

Selling, general and administrative expenses

Operating (loss)/income

Operating income/(loss)

Interest income

Interest expense

(Loss)/income before income taxes

Income tax (benefit)/expense

Net (loss)/income

Net (loss)/income per share:

Income/(loss) before income taxes

Income tax expense/(benefit)

Net income/(loss)

Net income/(loss) per share:

Weighted average shares:

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

Thirteen Weeks Ended

(In thousands, except per share data)

Balance at February 1, 2020

Balance at May 2, 2020

Dividends declared ($ 0.090 per share)

4 unchanged sentences

Stock-based compensation expense

Balance at August 1, 2020

Balance at May 4, 2019

Dividends declared ($ 0.085 per share)

Employee stock purchase plan purchases

Restricted stock awards

Stock-based compensation expense

Balance at August 3, 2019

Twenty-six Weeks Ended

(In thousands, except per share data)

Balance at February 1, 2020

Dividends declared ($ 0.175 per share)

Employee stock purchase plan purchases

Restricted stock awards

Shares surrendered by employees to pay taxes

on restricted stock

Stock-based compensation expense

Balance at August 1, 2020

Balance at February 2, 2019

Adoption of Accounting Standards Codification

7 unchanged sentences

Stock-based compensation expense

Balance at May 4, 2019

Balance at August 3, 2019

See notes to Condensed Consolidated Financial Statements.

2 unchanged sentences

(In thousands)

August 1, 2020

August 3, 2019

Cash Flows From Operating Activities

Net (loss)/income

Adjustments to reconcile net (loss)/income to net cash used in operating activities:

Net income/(loss)

Adjustments to reconcile net income/(loss) to net cash provided by operating activities:

Depreciation and amortization

6 unchanged sentences

Merchandise inventories

Operating lease liabilities

Operating leases

Accounts payable and accrued liabilities

Net cash used in operating activities

Net cash provided by operating activities

Cash Flows From Investing Activities

9 unchanged sentences

Net cash used in financing activities

Net decrease in cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of period

2 unchanged sentences

Cash paid during period for interest

Cash (received)/paid during period for income taxes

Cash paid during period for income taxes

Capital expenditures incurred but not yet paid

15 unchanged sentences

The Unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and the notes thereto contained in our Annual Report on Form 10-K for the fiscal year ended February 1, 2020.

Note 2 - Net (Loss)/Income Per Share

The following tables set forth the computation of basic and diluted net (loss)/income per share as shown on the face of the accompanying Condensed Consolidated Statements of Income:

Note 2 - Net Income/(Loss) Per Share

The following tables set forth the computation of basic and diluted net income/(loss) per share as shown on the face of the accompanying Condensed Consolidated Statements of Income:

Thirteen Weeks Ended

August 1, 2020

August 3, 2019

(In thousands, except per share data)

Basic Net (Loss)/Income per Share:

(Loss)/Income

Net (loss)/income

Basic Net Income per Share:

Conversion of share-based compensation

Net (loss)/income available for basic common shares

and basic net (loss)/income per share

Diluted Net (Loss)/Income per Share:

Net (loss)/income

Net income available for basic common shares

and basic net income per share

Diluted Net Income per Share:

Conversion of share-based compensation

Net (loss)/income available for diluted common

shares and diluted net (loss)/income per share

The computation of basic net (loss)/income per share of common stock is based on the weighted average number of common shares outstanding during the period.

The computation of diluted net (loss)/income per share is based on the weighted average number of shares outstanding plus the dilutive incremental shares that would be outstanding assuming the vesting of restricted stock awards, restricted stock units and performance stock units, of which a small portion have a non-forfeitable right to dividends.

The computation of diluted net (loss)/income per share excluded approximately 198,000 unvested share-settled equity awards for the first quarter of fiscal 2020 because the impact would be anti-dilutive.

During the first quarter of fiscal 2019 all unvested share-settled equity awards were dilutive.

Net income available for diluted common

shares and diluted net income per share

Twenty-six Weeks Ended

August 1, 2020

August 3, 2019

(In thousands, except per share data)

Basic Net Income/(Loss) per Share:

Net income/(loss)

Conversion of share-based compensation

Net income/(loss) available for basic common shares

and basic net income/(loss) per share

Diluted Net Income/(Loss) per Share:

Net income/(loss)

Conversion of share-based compensation

Net income/(loss) available for diluted common

shares and diluted net income/(loss) per share

The computation of basic net income/(loss) per share of common stock is based on the weighted average number of common shares outstanding during the period.

The computation of diluted net income/(loss) per share is based on the weighted average number of shares outstanding plus the dilutive incremental shares that would be outstanding assuming the vesting of restricted stock awards, restricted stock units and performance stock units, of which a small portion have a non-forfeitable right to dividends.

The computation of diluted net income/(loss) per share excluded approximately 162,000 unvested share-settled equity awards for the first six months of fiscal 2020 because the impact would be anti-dilutive.

For the other periods presented, all unvested share-settled equity awards were dilutive.

Note 3 – COVID-19 Impacts

4 unchanged sentences

Impacts included the temporary closure of our brick-and-mortar stores effective March 19, 2020, reduced foot traffic and sales, deteriorating economic conditions for our customer base and some disruption to our global supply chain.

As a result, substantially all of our brick-and-mortar stores were closed for approximately 50 % of the first quarter of fiscal 2020 and our net sales and gross profit significantly decreased year-over-year.

Our website and mobile app continued to process e-commerce orders, which were generally fulfilled at our store locations.

We began re-opening stores in accordance with applicable public health guidelines in late April, and as of June 4, 2020 , approximately 97 % of our stores have re-opened.

As a result, substantially all of our brick-and-mortar stores were closed for approximately 50 % of the first quarter of fiscal 2020.

We reopened stores in accordance with applicable public health guidelines, and by the beginning of our second quarter, approximately 50 % of our stores were reopened.

By early June of fiscal 2020 , substantially all stores had reopened.

As a result of these temporary closures, our year-to-date net sales and gross profit significantly declined compared to fiscal 2019.

Our website and mobile app continued to process e-commerce orders and have been fully operational during the pandemic.

These orders were generally fulfilled at our store locations.

The COVID-19 pandemic will likely continue to impact our financial condition and results of operations for the foreseeable future.

12 unchanged sentences

Fair Value of Financial Instruments

The following table presents financial instruments that are measured at fair value on a recurring basis at May 2, 2020, February 1, 2020 and May 4, 2019.

The following table presents financial instruments that are measured at fair value on a recurring basis at August 1, 2020, February 1, 2020 and August 3, 2019.

Fair Value Measurements

(In thousands)

As of May 2, 2020

As of August 1, 2020

Cash equivalents - money market mutual funds

1 unchanged sentence

Cash equivalents - money market mutual funds

As of May 4, 2019

As of August 3, 2019

Cash equivalents - money market mutual funds

15 unchanged sentences

Changes in sales and operating income assumptions or unfavorable changes in external factors can significantly impact the estimated future cash flows.

An increase or decrease in the projected cash flow can significantly decrease or increase the fair value of these assets, which may have an effect on the impairment recorded.

An increase or decrease in the projected cash flow can significantly impact the fair value of these assets, which may have an effect on the impairment recorded.

If actual operating results or market conditions differ from those anticipated, the carrying value of certain of our assets may prove unrecoverable and we may incur additional impairment charges in the future.

During the thirteen weeks ended May 2, 2020 and May 4, 2019, we recorded impairment charges of $ 2.3 million and $ 40,000 associated with seven stores and one store, respectively.

During the thirteen weeks ended August 1, 2020, we recorded an impairment charge of $ 182,000 associated with one store.

During the twenty-six weeks ended August 1, 2020, we recorded impairment charges of $ 2.5 million associated with eight stores.

There were no impairments recorded during the thirteen weeks ended August 3, 2019.

During the twenty-six weeks ended August 3, 2019, we recorded an impairment charge of $ 40,000 associated with one store.

These charges were included in selling, general and administrative expenses.

No impairments of operating right-of-use assets were recorded in either period.

No impairments of operating right-of-use assets have been recorded in any of these periods.

Note 5 - Stock-Based Compensation

5 unchanged sentences

In addition, any shares of our common stock subject to an award granted under the 2017 Plan, or to an award granted under the 2000 Plan that was outstanding on the date our shareholders approved the 2017 Plan, that expires, is cancelled or forfeited, or is settled for cash will, to the extent of such cancellation, forfeiture, expiration or cash settlement, automatically become available for future awards under the 2017 Plan.

Stock-based compensation includes restricted stock units and performance stock units, restricted stock awards, and cash-settled stock appreciation rights (“SARs”).

Stock-based compensation includes restricted stock units and performance stock units, restricted stock awards, and cash-settled stock appreciation rights.

Additionally, we recognize stock-based compensation expense for the discount on shares sold to employees through our employee stock purchase plan.

Stock-based compensation expense for the employee stock purchase plan was $ 11,000 before the income tax benefit of $ 3,000 and $ 11,000 before the income tax benefit of $ 1,000 for the thirteen weeks ended May 2, 2020 and May 4, 2019, respectively.

For the thirteen and twenty-six weeks ended August 1, 2020, stock-based compensation expense for the employee stock purchase plan was $ 7,000 before the income tax benefit of $ 2,000 and $ 18,000 before the income tax benefit of $ 6,000 , respectively.

For the thirteen and twenty-six weeks ended August 3, 2019, stock-based compensation expense for the employee stock purchase plan was $ 7,000 before the income tax benefit of $ 2,000 and $ 18,000 before the income tax benefit of $ 3,000 , respectively.

Share-Settled Equity Awards

5 unchanged sentences

Restricted stock units and performance stock units at

The total fair value at grant date of restricted stock units and performance stock units that vested during the thirteen-week periods ended May 2, 2020 and May 4, 2019 was $ 4.4 million and $ 2.0 million, respectively.

The weighted-average grant date fair value of restricted stock units and performance stock units granted during the thirteen-week periods ended May 2, 2020 and May 4, 2019 was $ 14.88 and $ 31.36 , respectively.

August 1, 2020

The total fair value at grant date of restricted stock units and performance stock units that vested during the twenty-six weeks ended August 1, 2020 and August 3, 2019 was $ 4.4 million and $ 2.0 million, respectively.

The weighted-average grant date fair value of restricted stock units and performance stock units granted during the twenty-six weeks ended August 1, 2020 and August 3, 2019 was $ 14.88 and $ 31.28 , respectively.

The following table summarizes transactions for our restricted stock awards pursuant to our stock-based compensation plans:

3 unchanged sentences

Forfeited or expired

Restricted stock at May 2, 2020

There were no restricted stock awards granted during the thirteen-week periods ended May 2, 2020 or May 4, 2019.

The total fair value at grant date of restricted stock awards that vested during the thirteen-week periods ended May 2, 2020 and May 4, 2019 was $ 1.2 million and $ 16.9 million, respectively.

Restricted stock at August 1, 2020

The weighted-average grant date fair value of restricted stock awards granted during the twenty-six weeks ended August 1, 2020 and August 3, 2019 was $ 24.91 and $ 26.58 , respectively.

The total fair value at grant date of restricted stock awards that vested during the twenty-six weeks ended August 1, 2020 and August 3, 2019 was $ 1.3 million and $ 16.9 million, respectively.

The following table summarizes information regarding stock-based compensation expense recognized for all share-settled equity awards (restricted stock units, performance stock units and restricted stock awards):

(In thousands)

Weeks Ended May 2, 2020

Weeks Ended May 4, 2019

Weeks Ended August 1, 2020

Weeks Ended August 3, 2019

Weeks Ended August 1, 2020

Weeks Ended August 3, 2019

Stock-based compensation expense before the

1 unchanged sentence

Income tax effect

Included in the thirteen-week period ended May 2, 2020 was a tax expense of $ 45,000 in connection with the vesting of equity-based compensation.

The thirteen-week period ended May 4, 2019 included a tax benefit in connection with the vesting of equity-based compensation of approximately $ 1.9 million.

As of May 2, 2020, there was approximately $ 3.8 million of unrecognized compensation expense remaining related to both our restricted stock units and performance stock units and performance-based and service-based restricted stock awards.

Included in the twenty-six week period ended August 1, 2020 was a tax expense of $ 79,000 in connection with the vesting of equity-based compensation.

The twenty-six week period ended August 3, 2019 included a tax benefit in connection with the vesting of equity-based compensation of approximately $ 1.9 million.

As of August 1, 2020, there was approximately $ 3.4 million of unrecognized compensation expense remaining related to our restricted stock units, performance stock units and service-based restricted stock awards.

The cost is expected to be recognized over a weighted average period of approximately 1.7 years.

5 unchanged sentences

SARs granted during the first quarter of fiscal 2019 vested and became fully exercisable on March 31, 2020 and any unexercised SARs will expire on March 31, 2022.

The SARs issued have a defined maximum gain of $ 10.00 over the exercise price of $ 13.79 for awards granted in fiscal 2020 and over the exercise price of $ 34.95 for awards granted in fiscal 2019.

SARs issued have a defined maximum gain of $ 10.00 over the exercise price of $ 13.79 for awards granted in fiscal 2020 and over the exercise price of $ 34.95 for awards granted in fiscal 2019 .

The following table summarizes the SARs activity:

1 unchanged sentence

Outstanding at February 1, 2020

Outstanding at May 2, 2020

Outstanding at August 1, 2020

The fair value of these liability awards are remeasured, using a trinomial lattice model, at each reporting period until the date of settlement.

Increases or decreases in stock-based compensation expense are recognized over the vesting period, or immediately for vested awards.

The weighted-average fair value of outstanding, non-vested SAR awards as of May 2, 2020 was $ 4.27 .

The weighted-average fair value of outstanding, non-vested SAR awards as of August 1, 2020 was $ 4.95 .

The fair value was estimated using a trinomial lattice model with the following assumptions:

August 1, 2020

August 3, 2019

Risk free interest rate yield curve

3 unchanged sentences

Expected volatility

1.91 - 2.91 Years

Exercise multiple

6 unchanged sentences

The exercise multiple and employee exit rate were calculated based on historical option data.

The following table summarizes information regarding stock-based compensation (benefit)/expense recognized for SARs:

The following table summarizes information regarding stock-based compensation expense recognized for SARs:

(In thousands)

Weeks Ended May 2, 2020

Weeks Ended May 4, 2019

Stock-based compensation (benefit)/expense before the

Weeks Ended August 1, 2020

Weeks Ended August 3, 2019

Weeks Ended August 1, 2020

Weeks Ended August 3, 2019

Stock-based compensation expense before the

recognized income tax effect

Income tax effect

As of May 2, 2020, approximately $ 219,000 in unrecognized compensation expense remained related to non-vested SARs.

As of August 1, 2020, approximately $ 182,000 in unrecognized compensation expense remained related to non-vested SARs.

This expense is expected to be recognized over a period of approximately 0.7 years.

2 unchanged sentences

Revenue is disaggregated by product category below.

Net sales and percentage of net sales for the thirteen weeks ended May 2, 2020 and May 4, 2019 were as follows:

Net sales and percentage of net sales for the thirteen and twenty-six weeks ended August 1, 2020 and August 3, 2019 were as follows:

(In thousands)

Thirteen Weeks

Ended May 2, 2020

Ended August 1, 2020

Thirteen Weeks

Ended May 4, 2019

Ended August 3, 2019

Non-Athletics:

Accessories and Other

(In thousands)

Twenty-six Weeks

Ended August 1, 2020

Twenty-six Weeks

Ended August 3, 2019

Non-Athletics:

Accessories and Other

Accounting Policy and Performance Obligations

11 unchanged sentences

Gift card revenue is recognized at the time of redemption.

When a customer makes a purchase as part of our rewards program, we allocate the transaction price between the goods purchased and the loyalty reward points and recognize the loyalty revenue based on estimated customer redemptions.

When a customer makes a purchase as part of our

rewards program, we allocate the transaction price between the goods purchased and the loyalty reward points and recognize the loyalty revenue based on estimated customer redemptions.

Transaction Price and Payment Terms

11 unchanged sentences

We recognize the related revenue when control has been transferred to the customer (i.e., when the product is picked up by the customer or shipped to the customer).

Unearned revenue related to our Shoes 2U program was not material to our Condensed Consolidated Financial Statements at May 2, 2020, February 1, 2020 and May 4, 2019.

Unearned revenue related to our Shoes 2U program was not material to our Condensed Consolidated Financial Statements at August 1, 2020, February 1, 2020 and August 3, 2019.

Returns and Refunds

3 unchanged sentences

The estimated cost of merchandise inventory is recorded as a reduction to cost of sales and an increase in merchandise inventories.

Approximately $ 718,000 of refund liabilities and $ 500,000 of right of return assets associated with estimated product returns were recorded in our Condensed Consolidated Balance Sheets at each of May 2, 2020 and February 1, 2020.

Approximately $ 600,000 of refund liabilities and $ 410,000 of right of return assets associated with estimated product returns were recorded in our Condensed Consolidated Balance Sheet at May 4, 2019.

Contract Liabilities

3 unchanged sentences

We do not record breakage revenue when escheat liability to relevant jurisdictions exists.

At May 2, 2020, February 1, 2020 and May 4, 2019, approximately $ 1.3 million, $ 1.5 million and $ 1.3 million of contract liabilities associated with unredeemed gift cards were recorded in our Condensed Consolidated Balance Sheets, respectively.

At August 1, 2020, February 1, 2020 and August 3, 2019, approximately $ 1.3 million, $ 1.5 million and $ 1.2 million of contract liabilities associated with unredeemed gift cards were recorded in our Condensed Consolidated Balance Sheets, respectively.

We expect the revenue associated with these liabilities to be recognized in proportion to the pattern of customer redemptions within two years.

Breakage revenue associated with our gift cards of $ 19,000 and $ 33,000 was recognized in net sales during the thirteen-weeks ended May 2, 2020 and May 4, 2019, respectively.

Breakage revenue associated with our gift cards of $ 23,000 and $ 42,000 was recognized in net sales during the thirteen and twenty-six weeks ended August 1, 2020, respectively.

Breakage revenue associated with our gift cards of $ 30,000 and $ 63,000 was recognized in net sales during the thirteen and twenty-six weeks ended August 3, 2019, respectively.

Our Shoe Perks rewards program allows customers to accrue points and provides customers with the opportunity to earn rewards.

4 unchanged sentences

We then recognize revenue based on an estimate of when customers redeem rewards, which incorporates an estimate of points expected to expire using historical rates.

During the thirteen-weeks ended May 2, 2020 and May 4, 2019, approximately $ 957,000 and $ 406,000 , respectively, of loyalty rewards were recognized in net sales.

At May 2, 2020, February 1, 2020 and May 4, 2019, approximately $ 406,000 , $ 679,000 and $ 293,000 , of contract liabilities associated with loyalty rewards were recorded in our Condensed Consolidated Balance Sheets, respectively.

During the thirteen and twenty-six weeks ended August 1, 2020, approximately $ 922,000 and $ 1.9 million, respectively, of loyalty rewards were recognized in net sales.

During the thirteen and twenty-six weeks ended August 3, 2019, approximately $ 448,000 and $ 854,000 , respectively, of loyalty rewards were recognized in net sales.

At August 1, 2020, February 1, 2020 and August 3, 2019, approximately $ 827,000 , $ 679,000 and $ 352,000 , of contract liabilities associated with loyalty rewards were recorded in our Condensed Consolidated Balance Sheets, respectively.

We expect the revenue associated with these liabilities to be recognized in proportion to the pattern of customer redemptions in less than one year.

5 unchanged sentences

In addition, the Third Amendment, among other things, increased certain LIBOR margins applicable to borrowings under the Credit Agreement, increased the commitment fee charged on the unused portion of the lenders’ commitment and made customary updates to certain representations, covenants and other terms contained in the Credit Agreement.

The Credit Agreement expires on March 27, 2022 .

On July 20, 2020, we entered into a fourth amendment (the “Fourth Amendment”) to our Credit Agreement.

Pursuant to the Fourth Amendment, we (1) eliminated the covenant involving the ratio of funded debt plus three times rent expense to EBITDA (as defined in the Credit Agreement) plus rent expense for the fiscal quarters ending on or about July 31, 2020;

October 31, 2020;

and January 31, 2021;

(2) amended the definition of LIBOR to establish a minimum LIBOR rate of 0.75% per annum;

and (3) established increased reporting requirements to the lenders through January 31, 2021.

The Credit Agreement, as amended, contains covenants which stipulate:

(1) Total Shareholders’ Equity (as defined in the Credit Agreement) will not fall below $250.0 million at the end of each fiscal quarter;

(2) the ratio of funded debt plus three times rent to EBITDA (as defined in the Credit Agreement) plus rent will not exceed 3.0 to 1.0;

(2) the ratio of funded debt plus three times rent expense to EBITDA (as defined in the Credit Agreement) plus rent expense will not exceed 3.0 to 1.0, except for the fiscal quarters ending on or about July 31, 2020;

October 31, 2020;

and January 31, 2021;

(3) the aggregate amount of cash dividends for a fiscal year will not exceed $10.0 million;

1 unchanged sentence

Should a default condition be reported, the lenders may preclude additional borrowings and call all loans and accrued interest at their discretion.

We were in compliance with these covenants at May 2, 2020.

We were in compliance with these covenants at August 1, 2020.

The credit facility bears interest, at our option, at (1) the agent bank’s prime rate as defined in the Credit Agreement plus 1.0%, with the prime rate defined as the greater of (a) the Federal Fund rate plus 0.50% or (b) the interest rate announced from time to time by the agent bank as its “prime rate” or (2) LIBOR plus 1.50% to 2.50%, depending on our achievement of certain performance criteria.

If the stated LIBOR rate is less than 0.75%, the LIBOR rate for purposes of calculating the interest rate under the credit facility shall be 0.75%.

A commitment fee is charged at 0.30 % to 0.40 % per annum, depending on our achievement of certain performance criteria, on the unused portion of the lenders’ commitment.

No borrowings were outstanding under the Credit Agreement as of May 2, 2020, February 1, 2020 or May 4, 2019.

The maximum borrowings outstanding during the thirteen weeks ended May 2, 2020 was $ 8.7 million and no borrowings were outstanding during the thirteen weeks ended May 4, 2019.

As of May 2, 2020, there were $ 1.2 million in letters of credit outstanding and $ 94.9 million available to us for borrowing under the Credit Agreement.

Our ratio of funded debt plus three times rent to EBITDA plus rent is currently limiting our utilization of the Credit Agreement’s full capacity.

The Credit Agreement expires on March 27, 2022 .

No borrowings were outstanding under the Credit Agreement as of August 1, 2020, February 1, 2020 or August 3, 2019.

The maximum borrowings outstanding during the thirteen weeks ended August 1, 2020 and August 3, 2019 were $ 7.0 million and $ 20.0 million, respectively.

The maximum borrowings outstanding during the twenty-six weeks ended August 1, 2020 and August 3, 2019 were $ 8.7 million and $ 20.0 million, respectively.

As of August 1, 2020, there were $ 1.2 million in letters of credit outstanding and $ 98.8 million available to us for borrowing under the Credit Agreement.

Note 8 – Leases

2 unchanged sentences

All of our leases are operating leases.

Leases with terms of twelve months or less are immaterial and are expensed as incurred, and we did not have any leases with related parties as of May 2, 2020.

Leases with terms of twelve months or less are immaterial and are expensed as incurred, and we did not have any leases with related parties as of August 1, 2020.

In response to the COVID-19 pandemic and related government restrictions impacting our operations, we began seeking relief from our landlords while our stores were temporarily closed to customers.

1 unchanged sentence

Such guidance allows lessees to make an election to forgo the evaluation of the enforceable rights and obligations of the original lease contract and whether a lease concession provided by a lessor should be accounted for as a lease modification in the event the concession does not result in a substantial increase in the rights of the lessor or the obligations of the lessee.

Based on the nature of the agreements reached with many of our landlords, we have accounted for rent concessions as if they were part of the enforceable rights and obligations of the existing lease contracts and did not account for the concessions as lease modifications.

When agreements with landlords to defer rent payments were reached, amounts that would have otherwise been due were reclassified as operating lease liabilities, all of which are reflected in the current portion of operating lease liabilities on our Condensed Consolidated Balance Sheet as of May 2, 2020.

For negotiations with landlords that did not result in rent concessions, we have increased accounts payable for rents that are due.

Based on the nature of the agreements reached with many of our landlords, we have accounted for lease concessions as if they were part of the enforceable rights and obligations of the existing lease contracts and did not account for the concessions as lease modifications.

For negotiations with landlords that did not result in lease concessions, we have increased accounts payable for rents that are due.

We have continued to recognize lease expense on a straight-line basis for our leases over the related lease terms.

Lease-related costs reported in our Condensed Consolidated Statements of Income were as follows for the thirteen weeks ended May 2, 2020 and May 4, 2019, respectively:

Lease-related costs reported in our Condensed Consolidated Statements of Income were as follows for the thirteen and twenty-six weeks ended August 1, 2020 and August 3, 2019:

(In thousands)

Weeks Ended May 2, 2020

Weeks Ended May 4, 2019

Weeks Ended August 1, 2020

Weeks Ended August 3, 2019

Weeks Ended August 1, 2020

Weeks Ended August 3, 2019

Operating lease cost

2 unchanged sentences

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

What changed 10-Q

Item 1. Financial Statements