What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2020-08-27 compared with 2020-05-28 · 161 added, 84 removed, 260 unchanged (49% of the section changed)

22 unchanged sentences

Current operating lease liabilities

Accrued income taxes

Total current liabilities

9 unchanged sentences

56,323 , 56,609 and 57,810 shares outstanding;

at May 2, 2020 (unaudited), February 1, 2020, and May 4, 2019 (unaudited), respectively

at August 1, 2020 (unaudited), February 1, 2020, and August 3, 2019 (unaudited), respectively

Treasury stock-common, at cost

1 unchanged sentence

Retained earnings

Accumulated other comprehensive loss

Accumulated other comprehensive income

Total stockholders’ equity

4 unchanged sentences

13 Weeks Ended

26 Weeks Ended

(In thousands, except per share data)

1 unchanged sentence

Selling, general and administrative expenses

Impairment charges

Impairment charges, store closures and other costs

Pre-opening expenses

10 unchanged sentences

13 Weeks Ended

26 Weeks Ended

(In thousands)

Net income (loss)

Other comprehensive income (loss):

Other comprehensive income:

Foreign currency translation adjustments

10 unchanged sentences

Non-cash lease expense

Impairment charges

Impairment charges, store closures and other costs

Deferred income taxes

9 unchanged sentences

Other assets and liabilities

Net cash provided by (used in) operating activities

Net cash provided by operating activities

Investing activities

Purchases of short-term investments

Proceeds from short-term investments

Capital expenditures

Acquisitions, net of cash acquired

Purchases of equity investments

Net cash used in investing activities

Net cash provided by (used in) investing activities

Financing activities

19 unchanged sentences

(In thousands)

Income (Loss)

Balance – February 1, 2020

Stock-based compensation

Adoption of accounting standards - ASC 842

Foreign currency translation adjustments

Stock options exercised and other awards

2 unchanged sentences

Balance – May 2, 2020

Balance – February 1, 2020

Net income (loss)

Stock-based compensation

2 unchanged sentences

Purchase of treasury shares

Balance – August 1, 2020

See accompanying notes to consolidated financial statements.

Ulta Beauty, Inc.

Consolidated Statements of Stockholders’ Equity

Stockholders'

(In thousands)

Balance – February 2, 2019

Stock-based compensation

Adoption of accounting standards - ASC 842

Stock options exercised and other awards

Purchase of treasury shares

Repurchase of common shares

Balance – May 4, 2019

Stock-based compensation

Stock options exercised and other awards

Purchase of treasury shares

Repurchase of common shares

Balance – August 3, 2019

See accompanying notes to consolidated financial statements.

10 unchanged sentences

The stores also feature full-service salons.

As of May 2, 2020, the Company operated 1,264 stores across 50 states, as shown in the table below.

As of August 1, 2020, the Company operated 1,264 stores across 50 states, as shown in the table below.

New Hampshire

8 unchanged sentences

All significant intercompany accounts, transactions, and unrealized profit were eliminated in consolidation.

In the opinion of management, the accompanying unaudited consolidated financial statements reflect all adjustments, which are of a

normal recurring nature, necessary to fairly state the financial position and results of operations and cash flows for the interim periods presented.

Our operating results for the 13 weeks ended May 2, 2020 may not be indicative of the results that may be expected for the fiscal year ending January 30, 2021 because of the novel coronavirus (COVID-19) pandemic.

In the opinion of management, the accompanying consolidated financial statements reflect all adjustments, which are of a normal

recurring nature, necessary to fairly state the financial position and results of operations and cash flows for the interim periods presented.

The Company’s operating results for the 13 and 26 weeks ended August 1, 2020 may not be indicative of the results that may be expected for the fiscal year ending January 30, 2021 because of the novel coronavirus (COVID-19) pandemic.

As a result of the pandemic, the Company modified a number of its business practices, in part due to legislation, executive orders and guidance from government entities and healthcare authorities (including the temporary closing of businesses deemed “non-essential,” shelter in place orders, social distancing and quarantines).

The COVID-19 pandemic has had, and will continue to have, a negative impact on our business, financial condition, profitability, cash flows and supply chain, although the full extent is uncertain.

As the pandemic continues to rapidly evolve, the extent of the impact on our business, financial condition, profitability, cash flows and supply chain will depend on future developments, including, but not limited to, the duration of the temporary closing of our stores, the duration of quarantines, shelter-in-place and other travel restrictions within U.S.

and other affected countries, the duration and spread of the pandemic (including any relapses), its severity, the actions to contain the virus and/or treat its impact, the duration, timing and severity of the impact on consumer spending (including any recession resulting from the pandemic), and how quickly and to what extent normal economic and operating conditions can resume, all of which are highly uncertain and cannot be predicted.

In addition, as the Company’s business is subject to seasonal fluctuation, with significant portions of the Company’s net sales and net income being realized during the fourth quarter of the fiscal year due to the holiday selling season.

As a result, the results for the 13 weeks ended May 2, 2020 are not necessarily indicative of the results to be expected for the fiscal year ending January 30, 2021, or for any other future interim period or for any future year.

These unaudited interim consolidated financial statements and the related notes should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended February 1, 2020.

The COVID-19 pandemic has had, and will continue to have, a negative impact on the Company’s business, financial condition, profitability, cash flows and supply chain, although the full extent is uncertain.

As the pandemic continues to evolve, the extent of the impact on the Company’s business, financial condition, profitability, cash flows and supply chain will depend on future developments, including, but not limited to, the duration and extent of any temporary closing of certain of our stores, the duration of quarantines, shelter-in-place and other travel restrictions within the U.S.

and other affected countries, the duration and spread of the pandemic (including any relapses), its severity, the actions to contain the virus and/or treat its impact, the duration, timing and severity of the impact on consumer spending (including the recession resulting from the pandemic), and how quickly and to what extent normal economic and operating conditions can resume, all of which are highly uncertain and cannot be predicted.

In addition, the Company’s business is subject to seasonal fluctuation, with significant portions of the Company’s net sales and net income being realized during the fourth quarter of the fiscal year due to the holiday selling season.

As a result, the results for the 13 and 26 weeks ended August 1, 2020 are not necessarily indicative of the results to be expected for the fiscal year ending January 30, 2021, or for any other future interim period or for any future year.

These interim consolidated financial statements and the related notes should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended February 1, 2020.

All amounts are stated in thousands, with the exception of per share amounts and number of stores.

4 unchanged sentences

The Company’s quarterly periods are the 13 weeks ending on the Saturday closest to April 30, July 31, October 31, and January 31.

The Company’s first quarter in fiscal 2020 and 2019 ended on May 2, 2020 and May 4, 2019, respectively.

The Company’s second quarter in fiscal 2020 and 2019 ended on August 1, 2020 and August 3, 2019, respectively.

Use of estimates

1 unchanged sentence

generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the accounting period.

The Company considers its accounting policies relating to inventory valuations, vendor allowances, impairment of long-lived tangible assets, loyalty program and income taxes to be the most significant accounting policies that involve management estimates and judgments.

The Company considers its accounting policies relating to inventory valuations, vendor allowances, impairment of long-lived tangible and operating lease assets, loyalty program and income taxes to be the most significant accounting policies that involve management estimates and judgments.

The COVID-19 pandemic has created and may continue to create significant uncertainty in macroeconomic conditions, which may cause further business disruptions and adversely impact the Company’s results of operations.

While the full impact of the COVID-19 pandemic is unknown and cannot be reasonably estimated, the Company has made accounting estimates based on the facts and circumstances available as of the reporting date.

Actual amounts could differ from these estimates, and such differences could be material.

Impairment of long-lived tangible assets

The asset group is defined as the lowest level for which identifiable cash flows are available and largely independent of the cash flows of other groups of assets.

The asset group identified is at the store level and includes both property and equipment and operating lease assets.

Fair values of the asset group are estimated using an income approach based on management’s forecast of future cash flows derived from continued retail operations and the fair value of individual operating lease assets determined using estimated market rental rates.

Significant estimates are used in determining future cash flows of each store over its remaining lease term including our expectations of future projected cash flows including revenues, operating expenses, and market conditions.

An impairment loss is recorded if the carrying amount of the long-lived asset exceeds its fair value.

As a result of the COVID-19 pandemic, we experienced lower than projected revenues and identified indicators of impairment for certain stores.

We performed undiscounted cash flow analyses over the long-lived assets associated with certain stores.

Based on these undiscounted cash flow analyses, we determined that certain long-lived assets had carrying values that exceeded their estimated undiscounted cash flows.

We estimated fair values of these long-lived assets based on our discounted cash flows or market rent assessments.

Our analysis indicated that the carrying values of our long-lived assets exceeded their respective fair values.

As a result, we recognized an impairment charge of $ 19,542 for the 13 weeks ended May 2, 2020.

The charge is recorded in impairment charges in the consolidated statements of operations.

These impairment charges were primarily driven by lower than projected revenues and the effect of store closures as a result of the COVID-19 pandemic.

The determination of estimated market rent used in the fair value estimate of the Company’s operating lease assets included within the respective store asset group requires significant management judgment.

Changes in these estimates could have a significant impact on whether long-lived store assets should be further evaluated for impairment and could have a significant impact on the resulting impairment charge.

The significant estimates, all of which are considered Level 3 inputs, used in the fair value methodology include:

the Company’s expectations for future operations and projected cash flows, including revenues, operating expenses, and market conditions.

Inventory valuation

Merchandise inventories are carried at the lower of cost or market (net realizable value).

Cost is determined using the moving average cost method and includes costs incurred to purchase and distribute goods as well as related vendor allowances including co-op advertising, markdowns, and volume discounts.

We record valuation adjustments to our inventories if the cost of a specific product on hand exceeds the amount we expect to realize from the ultimate sale or disposal of the inventory.

These estimates are based on management’s judgment regarding future demand, age of inventory, and analysis of historical experience.

If actual demand or market conditions are different than those projected by management, future merchandise margin rates may be unfavorably or favorably affected by adjustments to these estimates.

During the 13 and 26 weeks ended August 1, 2020, the Company increased inventory reserves $ 16,523 and $ 17,745 , respectively, to adjust for slow turning and discontinued makeup SKUs and permanently closed stores.

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security (CARES) Act was enacted.

The CARES Act, among other things, includes provisions relating to refundable payroll tax, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property.

The most significant relief measures which the Company qualifies for are the employee retention credit, tax deferral, and technical corrections to tax depreciation.

The Company recognizes government grants for which there is a reasonable assurance of compliance with grant conditions and receipt of credits.

We believe there is a reasonable assurance that the Company will comply with the relevant conditions of the employee retention credit provision of the CARES Act, and that we will receive the credits for which we have applied.

We will continue to assess our treatment of the CARES Act to the extent additional guidance and regulations are issued, the further applic ability of the CARES Act to the Company, and the potential impacts on our business.

Employee retention credit (ERC) and payroll tax deferral.

The ERC allows for a refundable tax credit against certain employment taxes equal to 50% of the first ten thousand dollars in qualified wages paid to each employee commencing on March 13, 2020 and through January 1, 2021.

To be eligible, the Company must (i) have had operations fully or partially suspended because of a shut-down order from a governmental authority related to COVID-19, or (ii) have had gross receipts decline by more than 50% in a calendar quarter when compared to the same quarter in 2019.

Qualified wages are limited to wages paid to employees who were not providing services due to the COVID-19 pandemic.

During the 13 and 26 weeks ended August 1, 2020, the Company recognized $ 48,181 related to the CARES Act ERC as a reduction of the associated costs within selling, general and administrative expenses on the Company’s consolidated statements of operations and within accounts receivable, net on the Company's consolidated balance sheets.

Additionally, the CARES Act contains provisions for deferral of the employer portion of social security taxes incurred through the end of calendar 2020 .

As of August 1, 2020, the Company has deferred $ 18,709 in social security tax payments, of which 50% are required to be remitted by December 2021 and the remaining 50% by December 2022.

The deferred amounts are recorded as a liability within other long-term liabilities on the Company’s consolidated balance sheets.

Technical corrections to tax depreciation.

The CARES Act also includes a technical correction of tax depreciation methods for qualified improvement property, which changes 39-year property to 15-year property eligible for 100% tax bonus depreciation.

This provision of the CARES Act resulted in a cash tax refund of $ 4,600 relating to property and equipment, from filing an amended federal income tax return, as of August 1, 2020.

Furthermore, t he Company expects the changes to qualified impairment property depreciation to result in reductions to estimated income tax payments for fiscal 2020.

Recent accounting pronouncements not yet adopted

2 unchanged sentences

In December 2019, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2019-12, Income Taxes – Simplifying the Accounting for Income Taxes.

The guidance removes certain exceptions for recognizing deferred taxes for equity method investments, performing intraperiod allocation, and calculating income taxes in interim periods.

The guidance removes certain exceptions for recognizing deferred taxes for equity

method investments, performing intraperiod allocation, and calculating income taxes in interim periods.

The ASU also adds guidance to reduce complexity in certain areas, including recognizing deferred taxes for goodwill and allocating taxes to members of a consolidated group, among others.

15 unchanged sentences

13 Weeks Ended

26 Weeks Ended

(Percentage of net sales)

August 1, 2020

August 3, 2019

August 1, 2020

August 3, 2019

Skincare, bath, and fragrance

6 unchanged sentences

13 Weeks Ended

26 Weeks Ended

August 1, 2020

August 3, 2019

August 1, 2020

August 3, 2019

Beginning balance

4 unchanged sentences

(2) Revenue recognized in the current period related to the beginning liability.

Other amounts included in deferred revenue were $ 9,677 and $ 9,072 at May 2, 2020 and May 4, 2019, respectively.

Other amounts included in deferred revenue were $ 8,799 and $ 10,401 at August 1, 2020 and August 3, 2019, respectively.

Impairment charges, store closures and other costs

Impairment of long-lived tangible assets.

The asset group is defined as the lowest level for which identifiable cash flows are available and largely independent of the cash flows of other groups of assets.

The asset group identified is at the store level and includes both property and equipment and operating lease assets.

An impairment loss is recorded if the carrying amount of the long-lived asset exceeds its fair value.

The Company evaluates long-lived assets for indicators of impairment quarterly or when events or changes in circumstances indicate that their carrying amounts may not be recoverable.

As a result of the COVID-19 pandemic, the Company experienced lower than projected revenues and identified indicators of impairment for certain stores.

The Company performed undiscounted cash flow analyses over the long-lived assets associated with those stores.

Based on these undiscounted cash flow analyses, the Company determined that certain long-lived assets had carrying values that exceeded their estimated undiscounted cash flows.

Asset groups are written down only to the extent that their carrying value is lower than their respective fair value.

Fair values of the asset group are determined by discounting the cash flows at a rate that approximates the cost of capital of a market participant.

Management’s forecast of future cash flows is based on the income approach.

The fair value of individual operating lease assets is determined using estimated market rent assessments.

The Company’s analysis indicated that the carrying values of certain long-lived assets exceeded their respective fair values.

As a result, the Company recognized an impairment charge of $ 20,886 and $ 40,428 for the 13 and 26 weeks ended August 1, 2020, respectively.

Additional impairments were recorded in the second quarter as a result of continued business disruption and certain macroeconomic factors associated with the COVID-19 pandemic.

These charges are recorded in impairment charges, store closures and other costs in the consolidated statements of operations.

These impairment charges were primarily driven by lower than projected revenues, lower market rate assessments, and the effect of temporary store closures as a result of the COVID-19 pandemic.

Changes in these estimates

could have a significant impact on whether long-lived store assets should be further evaluated for impairment and could have a significant impact on the resulting impairment charge.

Store closures and other costs.

During the second quarter of fiscal 2020, the Company announced that after evaluating its store portfolio, it would permanently close 19 stores in the third quarter of fiscal 2020.

Accordingly, for the 13 and 26 weeks ended August 1, 2020, the Company recognized $ 19,569 of long-lived asset and right-of-use asset impairment charges and $ 303 in related severance charges in impairment charges, store closures and other costs in the consolidated statements of operations.

The impairment charges reduced the carrying value of the lease asset to its estimated fair value.

Fair value was estimated using an income-approach based on management's forecast of future cash flows expected to be derived from the property based on current sublease market rent.

There were no related asset impairment charges for the 13 or 26 weeks ended August 3, 2019.

The significant estimates, all of which are considered Level 3 inputs, used in the fair value methodology include:

the Company’s expectations for future operations and projected cash flows, including revenues, operating expenses, and market conditions.

Goodwill and other intangible assets

Goodwill, which represents the excess of cost over the fair value of net assets acquired, amounted to $ 10,870 at May 2, 2020, February 1, 2020, and May 4, 2019.

No additional goodwill was recognized during the 13 weeks ended May 2, 2020.

Goodwill, which represents the excess of cost over the fair value of net assets acquired, amounted to $ 10,870 at August 1, 2020, February 1, 2020, and August 3, 2019.

No additional goodwill was recognized during the 13 and 26 weeks ended August 1, 2020.

The Company reviews the recoverability of goodwill annually during the fourth quarter or more frequently if an event occurs or circumstances change that would indicate that impairment may exist.

1 unchanged sentence

The Company reviews the recoverability of long-lived assets whenever events or changes in circumstances indicate the carrying amount of such assets may not be recoverable.

As a result of the COVID-19 pandemic and decline in the macroeconomic environment, the Company performed an interim impairment analysis as of May 2, 2020, which indicated that no impairment existed for goodwill or other intangible assets.

The Company leases retail stores, distribution and fast fulfillment centers, corporate offices, and certain equipment under non-cancelable operating leases with various expiration dates through 2032.

Leases generally have initial lease terms of 10 years and include renewal options under substantially the same terms and conditions as the original leases.

As a result of the COVID-19 pandemic and decline in the macroeconomic environment, the Company performed an interim impairment analysis as of August 1, 2020, which indicated that no impairment existed for goodwill or other intangible assets.

The Company leases retail stores, distribution and fast fulfillment centers, corporate offices, and certain equipment under non-cancellable operating leases with various expiration dates through 2033.

Leases generally have an initial lease term of 10 years and include renewal options under substantially the same terms and conditions as the original leases.

Leases do not contain any material residual value guarantees or material restrictive covenants.

4 unchanged sentences

Operating lease cost from the control date through store opening date is classified within pre-opening expenses.

Operating lease cost was $ 77,533 and $ 71,342 for the 13 weeks ended May 2, 2020 and May 4, 2019, respectively.

Operating lease cost was $ 75,699 and $ 71,579 for the 13 weeks ended August 1, 2020 and August 3, 2019, respectively.

Operating lease cost was $ 153,232 and $ 142,921 for the 26 weeks ended August 1, 2020 and August 3, 2019, respectively.

Other information

2 unchanged sentences

(In thousands)

August 1, 2020

August 3, 2019

Cash paid for operating lease liabilities (1)

Operating lease assets obtained in exchange for operating lease liabilities (non-cash)

(1) Excludes cash received for tenant incentives of $ 12,075 and $ 18,175 for the 13 weeks ended May 2, 2020 and May 4, 2019, respectively.

(1) Excludes cash received for tenant incentives of $ 18,149 and $ 36,445 for the 26 weeks ended August 1, 2020 and August 3, 2019, respectively.

Commitments and contingencies

2 unchanged sentences

On March 11, 2020, the Company entered into Amendment No.

1 to the Second Amended and Restated Loan Agreement (as so amended, the Loan Agreement) with Wells Fargo Bank, National Association, as Administrative Agent, Collateral Agent and a Lender thereunder, Wells Fargo Bank, National Association and JPMorgan Chase Bank, N.A., as Lead Arrangers and Bookrunners, JPMorgan Chase Bank, N.A., as Syndication Agent and a Lender, PNC Bank, National Association, as Documentation Agent and a Lender, and the other lenders party thereto.

1 to the Second Amended and Restated Loan Agreement (as so amended, the Loan Agreement) with Wells Fargo Bank, National Association, as Administrative Agent, Collateral Agent and a Lender thereunder;

Wells Fargo Bank, National Association and JPMorgan Chase Bank, N.A., as Lead Arrangers and Bookrunners;

JPMorgan Chase Bank, N.A., as Syndication Agent and a Lender;

PNC Bank, National Association, as Documentation Agent and a Lender;

and the other lenders party thereto.

The Loan Agreement matures on March 11, 2025, provides maximum revolving loans equal to the lesser of $ 1,000,000 or a percentage of eligible owned inventory and eligible owned receivables (which borrowing base may, at the election of the Company and satisfaction of certain conditions, include a percentage of qualified cash), contains a $ 50,000 subfacility for letters of credit and allows the Company to increase the revolving facility by an additional $ 100,000 , subject to the consent by each lender and other conditions.

1 unchanged sentence

Substantially all of the Company’s assets are pledged as collateral for outstanding borrowings under the Loan Agreement.

Outstanding borrowings bear interest, at the Company’s election, at either a base rate plus a margin of 0 % to 0.125 % or the London

Interbank Offered Rate plus a margin of 1.125 % to 1.250 %, with such margins based on the Company’s borrowing availability, and the unused line fee is 0.20 % per annum.

As of May 2, 2020, the Company had $ 800,000 outstanding under the credit facility and the weighted average interest rate was 1.94 %.

As of February 1, 2020 and May 4, 2019, the Company had no borrowings outstanding under the credit facility.

As of May 2, 2020, February 1, 2020, and May 4, 2019, the Company was in compliance with all terms and covenants of the Loan Agreement.

Outstanding borrowings bear interest, at the Company’s election, at either a base rate plus a margin of 0 % to 0.125 % or the London Interbank Offered Rate plus a margin of 1.125 % to 1.250 %, with such margins based on the Company’s borrowing availability, and the unused line fee is 0.20 % per annum.

As of August 1, 2020, the Company had $ 800,000 outstanding under the credit facility and the weighted average interest rate was 1.59 % for the 26 weeks ended August 1, 2020.

As of February 1, 2020 and August 3, 2019, the Company had no borrowings outstanding under the credit facility.

As of August 1, 2020, the Company was in compliance with all terms and covenants of the Loan Agreement.

Fair value measurements

5 unchanged sentences

● Level 3 – unobservable inputs in which there is little or no market data, which would require the Company to develop its own assumptions.

As of May 2, 2020, February 1, 2020 and May 4, 2019, the Company held financial liabilities included in other long-term liabilities on the consolidated balance sheets of $ 23,330 , $ 29,442 , and $ 25,648 , respectively, related to its non-qualified deferred compensation plan.

As of August 1, 2020, February 1, 2020, and August 3, 2019, the Company held financial liabilities included in other long-term liabilities on the consolidated balance sheets of $ 27,283 , $ 29,442 , and $ 26,848 , respectively, related to its non-qualified deferred compensation plan.

The liabilities have been categorized as Level 2 as they are based on third-party reported values, which are based primarily on quoted market prices of underlying assets of the funds within the plan.

3 unchanged sentences

Short-term investments typically consist of certificates of deposit and are carried at cost, which approximates fair value and are recorded in the consolidated balance sheets in short-term investments.

The Company’s short-term investments were $ 110,000 , $ 110,000 , and $ 195,000 as of May 2, 2020, February 1, 2020, and May 4, 2019 consist, respectively.

The Company did not have short-term investments as of August 1, 2020.

The Company’s short-term investments were $ 110,000 and $ 150,000 as of February 1, 2020, and August 3, 2019, respectively.

The Company’s investments in renewable energy projects are accounted for under the equity method of accounting.

The balance of these investments was $ 6,437 , $ 3,936 , and $ 9,977 as of May 2, 2020, February 1, 2020 and May 4, 2019, respectively, and is included in other long-term assets on the consolidated balance sheets.

The Company contributed capital of $ 5,386 and received distributions including $ 1,250 of investment tax credits during the 13 weeks ended May 2, 2020.

The Company contributed capital of $ 12,736 and received distributions including $ 4,864 of investment tax credits during the 13 weeks ended May 4, 2019.

The balance of these investments was $ 5,110 , $ 3,936 , and $ 17,449 as of August 1, 2020, February 1, 2020, and August 3, 2019, respectively, and is included in other long-term assets on the consolidated balance sheets.

The Company contributed capital of $ 5,386 and received distributions including $ 1,291 of investment tax credits during the 26 weeks ended August 1, 2020.

The Company contributed capital of $ 33,339 and received distributions including $ 17,370 of investment tax credits during the 26 weeks ended August 3, 2019.

Stock-based compensation

6 unchanged sentences

Dividend yield

The Company granted 248 and 97 stock options during the 13 weeks ended May 2, 2020 and May 4, 2019, respectively.

The stock-based compensation expense against operating income for stock options was $ 2,475 and $ 2,120 for the 13 weeks ended May 2, 2020 and May 4, 2019, respectively.

The weighted-average grant date fair value of these stock options was $ 54.40 and $ 89.91 for the 13 weeks ended May 2, 2020 and May 4, 2019, respectively.

At May 2, 2020, there was approximately $ 26,649 of unrecognized stock-based compensation expense related to unvested stock options.

The Company issued 152 and 39 restricted stock units during the 13 weeks ended May 2, 2020 and May 4, 2019, respectively.

The stock-based compensation expense charged against operating income for restricted stock units was $ 4,187 and $ 2,821 for the 13 weeks ended May 2, 2020 and May 4, 2019, respectively.

At May 2, 2020, there was approximately $ 42,550 of unrecognized stock-based compensation expense related to restricted stock units.

The Company issued 21 performance-based restricted stock units during the 13 weeks ended May 4, 2019.

The Company did not issue any performance-based restricted stock units during the 13 weeks ended May 2, 2020.

The stock-based compensation benefit included in operating income for performance-based restricted stock units was $ 480 for the 13 weeks ended May 2, 2020.

The stock-based compensation expense charged against operating income for performance-based restricted stock units was and $ 1,711 for the 13 weeks ended May 4, 2019.

At May 2, 2020, there was approximately $ 2,123 of unrecognized stock-based compensation expense related to performance-based restricted stock units.

The Company granted 248 and 97 stock options during the 26 weeks ended August 1, 2020 and August 3, 2019, respectively.

The stock-based compensation expense for stock options was $ 2,872 and $ 2,199 for the 13 weeks ended August 1, 2020 and August 3, 2019, respectively.

The stock-based compensation expense for stock options was $ 5,347 and $ 4,319 for the 26 weeks ended August 1, 2020 and August 3, 2019, respectively.

The weighted-average grant date fair value of these stock options was $ 54.40 and $ 89.91 for the 26 weeks ended August 1, 2020 and August 3, 2019, respectively.

At August 1, 2020, there was approximately $ 23,696 of unrecognized stock-based compensation expense related to unvested stock options.

The Company issued 158 and 47 restricted stock units during the 26 weeks ended August 1, 2020 and August 3, 2019, respectively.

The stock-based compensation expense for restricted stock units was $ 5,161 and $ 3,422 for the 13 weeks ended August 1, 2020 and August 3, 2019, respectively.

The stock-based compensation expense for restricted stock units was $ 9,348 and $ 6,243 for the 26 weeks ended August 1, 2020 and August 3, 2019, respectively.

At August 1, 2020, there was approximately $ 38,743 of unrecognized stock-based compensation expense related to restricted stock units.

The Company did not issue any performance-based restricted stock units during the 26 weeks ended August 1, 2020.

The Company issued 21 performance-based restricted stock units during the 26 weeks ended August 3, 2019.

The stock-based compensation expense for performance-based restricted stock units was $ 380 and $ 1,390 for the 13 weeks ended August 1, 2020 and August 3, 2019, respectively.

The stock-based compensation benefit for performance-based restricted stock units was $ 100 for the 26 weeks ended August 1, 2020.

The stock-based compensation expense for performance-based restricted stock units was $ 3,101 for the 26 weeks ended August 3, 2019.

At August 1, 2020, there was approximately $ 1,019 of unrecognized stock-based compensation expense related to performance-based restricted stock units.

Income tax expense reflects the federal statutory tax rate and the weighted average state statutory tax rate for the states in which the Company operates stores.

Income tax benefit of $ 24,247 for the 13 weeks ended May 2, 2020 represents an effective tax rate of 23.6 %, compared to $ 47,365 of tax expense representing an effective tax rate of 19.8 % for the 13 weeks ended May 4, 2019.

The higher effective tax rate is due to a reduction of tax deductible stock option expense in first quarter of fiscal 2020.

On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief and Economic Security (CARES) Act.

The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property.

The Company is continuing to evaluate the impact the CARES act will have on the Company’s financials and required disclosures.

Income tax expense of $ 2,086 for the 13 weeks ended August 1, 2020 represents an effective tax rate of 20.6 %, compared to $ 48,431 of tax expense representing an effective tax rate of 23.1 % for the 13 weeks ended August 3, 2019.

The lower effective tax rate is primarily due to a decrease in operating income.

Income tax benefit of $ 22,161 for the 26 weeks ended August 1, 2020 represents an effective tax rate of 23.9 %, compared to $ 95,796 of tax expense representing an effective tax rate of 21.3 % for the 26 weeks ended August 3, 2019.

The higher effective tax rate is due to a reduction of tax-deductible stock option expense in the first 26 weeks of fiscal 2020.

Net income (loss) per common share

1 unchanged sentence

13 Weeks Ended

26 Weeks Ended

(In thousands, except per share data)

4 unchanged sentences

Net income (loss) per common share:

The denominator for diluted net income (loss) per common share for the 13 weeks ended May 2, 2020 and May 4, 2019 excludes 732 and 152 employee stock options and restricted stock units, respectively, due to their anti-dilutive effects.

The denominator for diluted net income per common share for the 13 weeks ended August 1, 2020 and August 3, 2019 excludes 553 and 101 employee stock options and restricted stock units, respectively, due to their anti-dilutive effects.

The denominator for diluted net income (loss) per common share for the 26 weeks ended August 1, 2020 and August 3, 2019 excludes 711 and 164 employee stock options and restricted stock units, respectively, due to their anti-dilutive effects.

Outstanding performance-based restricted stock units are included in the computation of dilutive shares only to the extent that the underlying performance conditions are satisfied prior to the end of the reporting period or would be considered satisfied if the end of the reporting period were the end of the related contingency period and the results would be dilutive under the treasury stock method.

Share repurchase program

On March 15, 2018, the Company announced that the Board of Directors authorized a share repurchase program (the 2018 Share Repurchase Program) pursuant to which the Company could repurchase up to $ 625,000 of the Company’s common stock.

common stock.

The 2018 Share Repurchase Program authorization revoked the previously authorized but unused amount of $ 41,317 from the earlier share repurchase program.

10 unchanged sentences

(In thousands)

August 1, 2020

August 3, 2019

Shares repurchased

Total cost of shares repurchased

Subsequent events

On May 7, 2020, the Company announced plans to reopen select stores that were temporarily closed amid the COVID-19 pandemic, as well as the implementation of its new curbside pickup service and increased safety measures and processes.

As of May 28, 2020, the Company has 333 stores open for guests and 840 stores available for curbside pickup service.

Store re-openings are being done on a phased timeline, taking a thoughtful, measured approach based on a variety of criteria, including state and local guidelines and the adoption of the Company’s new Shop Safe Standards related safety protocols.

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