What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2023-03-24 compared with 2022-03-25 · 124 added, 147 removed, 810 unchanged (25% of the section changed)

5 unchanged sentences

Our management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company.

personnel, to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for external purposes in accordance with U.S generally accepted accounting principles.

Under the supervision and with the participation of our principal executive officer and our principal financial officer, management evaluated the effectiveness of our internal control over financial reporting as of January 29, 2022, based on the criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO).

Internal control over financial reporting is a process designed by, or under the supervision of, the principal executive officer and principal financial officer and effected by the Board of Directors, management, and other personnel, to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for external purposes in accordance with U.S generally accepted accounting principles.

the criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO).

Based on this evaluation, our principal executive officer and principal financial officer concluded that our internal controls over financial reporting were effective as of January 28, 2023.

1 unchanged sentence

Changes in internal control over financial reporting

There were no changes to our internal controls over financial reporting during the 13 weeks ended January 29, 2022 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

In the fourth quarter of 2022, we implemented a new payroll system.

This implementation resulted in changes to our internal control over financial reporting by automating and accelerating payment processing, reducing the risk of errors, and simplifying payroll management.

Implementation of the new payroll system was part of the next phase in a multi-year rollout to upgrade our internal systems.

Additional phases of the project will continue to be implemented over the next few years.

We will continue to monitor our internal control over financial reporting, including evaluating the operating effectiveness of related key controls.

Except as described above, there were no changes to our internal controls over financial reporting during the 13 weeks ended January 28, 2023 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

Other Information

8 unchanged sentences

Executive Compensation

The information required by this item is included under the captions “Compensation Discussion and Analysis,” “Corporate Governance – Compensation Committee,” “Corporate Governance – Report of the Compensation Committee of the Board of Directors,” and “Corporate Governance – Non-Executive Director Compensation for Fiscal 2021” in the Proxy Statement and is hereby incorporated herein by reference.

of the Board of Directors,” and “Corporate Governance – Non-Executive Director Compensation for Fiscal 2022” in the Proxy Statement and is hereby incorporated herein by reference.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required by this item with respect to security ownership of certain beneficial owners and management is included under the caption "Stock Ownership” in the Proxy Statement and is hereby incorporated by reference.

The information required by this item with respect to compensation plans under which our equity securities are authorized for issuance as of January 28, 2023 is set forth in Item 5 of this Annual Report on Form 10-K under the caption “Securities authorized for issuance under equity compensation plans.”

2 unchanged sentences

Principal Accountant Fees and Services

The information required by this item is included under the caption “Corporate Governance – Proposal Two – Ratification of Appointment of Independent Registered Public Accounting Firm – Fees to Independent Registered Public Accounting Firm” in the Proxy Statement and is hereby incorporated by reference.

The information required by this item is included under the caption “Corporate Governance – Proposal Six – Ratification of Appointment of Independent Registered Public Accounting Firm – Fees to Independent Registered Public Accounting Firm” in the Proxy Statement and is hereby incorporated by reference.

Exhibits and Financial Statement Schedules

34 unchanged sentences

The Company maintains a loyalty program, Ultamate Rewards, which offers members the ability to earn and redeem points on purchases of products and services.

As described in Note 2 to the consolidated financial statements, revenue from the loyalty program is recognized when the members redeem points or points expire.

As described in Note 2 to the consolidated financial statements, revenue from the loyalty program is recognized when members redeem points or points expire.

The Company estimates the amount of revenue to defer using the standalone selling price of the points earned and the expected redemption percentage.

9 unchanged sentences

To audit the redemption rate, we tested redemption activity and compared the results of that testing to the redemption rate used by management in its estimate.

In addition, we tested the value of points redeemed was complete and accurate.

We also considered recent trends in redemption activity and the impact on the redemption rate.

66 unchanged sentences

Retained earnings

Accumulated other comprehensive income

Total stockholders’ equity

10 unchanged sentences

Operating income

Interest expense (income), net

Interest (income) expense, net

Income before income taxes

33 unchanged sentences

Investing activities

Purchases of short-term investments

Proceeds from short-term investments

29 unchanged sentences

Stock-based compensation

Adoption of accounting standards - ASC 842

Foreign currency translation adjustments

Stock options exercised and other awards

1 unchanged sentence

Repurchase of common shares

Balance – February 1, 2020

Balance – January 30, 2021

Stock-based compensation

3 unchanged sentences

Repurchase of common shares

( 1,521,883 )

( 1,521,925 )

Balance – January 29, 2022

Stock-based compensation

Foreign currency translation adjustments

Stock options exercised and other awards

1 unchanged sentence

Repurchase of common shares

( 1,521,883 )

( 1,521,925 )

Balance – January 28, 2023

6 unchanged sentences

was founded in 1990 to operate specialty retail stores selling cosmetics, fragrance, haircare and skincare products, and related accessories and services.

The stores also feature full-service salons.

Nearly every store features a full-service salon.

As used in these notes and throughout this Annual Report on Form 10-K, all references to “we,” “us,” “our,” “Ulta Beauty,” or the “Company” refer to Ulta Beauty, Inc.

5 unchanged sentences

The Company’s fiscal year is the 52 or 53 weeks ending on the Saturday closest to January 31.

The Company’s fiscal years ended January 29, 2022 (fiscal 2021), January 30, 2021 (fiscal 2020), and February 1, 2020 (fiscal 2019) were 52-week years.

The Company’s fiscal years ended January 28, 2023 (fiscal 2022), January 29, 2022 (fiscal 2021), and January 30, 2021 (fiscal 2020) were 52-week years.

Consolidation

6 unchanged sentences

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

Significant changes, if any, in those estimates and assumptions resulting from continuing changes in the economic environment, including those related to the impacts of the COVID-19 pandemic, will be reflected in the consolidated financial statements in future periods.

Reclassifications

Certain prior year amounts have been reclassified to conform to the current year presentation.

Significant changes, if any, in those estimates and assumptions resulting from continuing changes in the economic environment will be reflected in the consolidated financial statements in future periods.

Cash and cash equivalents

9 unchanged sentences

There was no outstanding debt as of January 28, 2023 and January 29, 2022.

Receivables primarily include amounts due from vendors for allowances, amounts related to the employee retention credit (ERC), and amounts due from third-party gift card providers.

Receivables primarily include amounts due from vendors for allowances, amounts due from third-party gift card providers, royalties and other credit card amounts, and amounts related to the employee retention credit (ERC).

The Company does not require collateral on its receivables and does not accrue interest.

3 unchanged sentences

Vendor allowances

Royalties and other credit card

Employee retention credit (1)

1 unchanged sentence

Receivables, net

(1) During the fiscal years ended January 29, 2022 and January 30, 2021, the Company qualified for various relief measures resulting from the Coronavirus Aid, Relief and Economic Security (CARES) Act, including the ERC which allowed for a refundable tax credit against certain employment taxes on qualified wages.

During the fiscal years ended January 29, 2022 and January 30, 2021, there was $ 4,021 and $ 52,405 , respectively, related to the ERC recognized as a reduction of the associated costs within selling, general and administrative expenses on the consolidated statements of income .

(1) The Company qualified for various relief measures resulting from the Coronavirus Aid, Relief and Economic Security (CARES) Act, including the ERC which allowed for a refundable tax credit against certain employment taxes on qualified wages.

During the fiscal year ended January 29, 2022, there was $ 4,021 related to the ERC recognized as a reduction of the associated costs within selling, general and administrative expenses on the consolidated statements of income .

Vendor allowances

14 unchanged sentences

Electronic equipment and software

3 to 15 years

Costs incurred to obtain or develop internal use software that are capitalized are amortized on a straight-line basis over the estimated useful life of the software.

Cloud computing arrangements

Cloud computing arrangements (software-as-a-service contracts) and related implementation costs that are capitalized are amortized on a straight-line basis over the contract term ( 1 month to 5 years ).

48 unchanged sentences

The expected redemption percentage is based on historical redemption patterns and considers current information or trends.

The standalone selling price of points earned and the estimated redemption rate is evaluated each reporting period.

When a guest redeems points or the points expire, the Company recognizes revenue in net sales on the consolidated statements of income.

3 unchanged sentences

The Company’s performance obligation is to maintain the Ultamate Rewards loyalty program as only guests enrolled in the loyalty program can apply for the Credit Cards.

Loyalty members earn points through purchases at Ulta Beauty and anywhere the co-branded credit card is accepted, including Ulta Beauty at Target.

Loyalty members earn points through purchases at Ulta Beauty, Ulta Beauty at Target, and anywhere the co-branded credit card is accepted.

The third parties reimburse the Company for certain credit card program costs such as advertising and loyalty points, which help promote the credit card program.

25 unchanged sentences

State sales taxes are presented on a net basis as the Company considers itself a pass-through conduit for collecting and remitting state sales tax.

Company coupons and other incentives are recorded as a reduction of net sales.

Advertising costs primarily consist of print, digital and social media, and television and radio advertising.

Company coupons and other incentives are recorded as a reduction of net sales at the point of sale.

Advertising costs primarily consist of print, digital and social media, and television and radio advertising, net of vendor income that is a reimbursement of specific, incremental, and identifiable costs.

Costs related to advertising are expensed in the period the related promotional event occurs.

1 unchanged sentence

(In thousands)

Advertising expense

Advertising expense as a percentage of net sales

Advertising expense, net

Advertising expense, net as a percentage of net sales

Prepaid advertising costs included in prepaid expenses and other current assets on the consolidated balance sheets were $ 9,466 and $ 7,612 as of January 28, 2023 and January 29, 2022, respectively.

2 unchanged sentences

Cost of sales

Cost of sales includes the cost of merchandise sold, including substantially all vendor allowances, which are treated as a reduction of merchandise costs;

Cost of sales includes the cost of merchandise sold, offset by vendor income that is not a reimbursement of specific, incremental, and identifiable costs;

distribution costs including labor and related benefits, freight, rent, depreciation and amortization, real estate taxes, utilities, and insurance;

4 unchanged sentences

Selling, general and administrative expenses

Selling, general and administrative (SG&A) expenses includes payroll, bonus, and benefit costs for retail and corporate employees;

advertising and marketing costs;

Selling, general and administrative (SG&A) expenses includes payroll, bonus, and benefit costs for retail store and corporate employees;

advertising and marketing costs, offset by vendor income that is a reimbursement of specific, incremental, and identifiable costs;

occupancy costs related to our corporate office facilities;

stock-based compensation expense;

depreciation and amortization for all assets, except those related to our retail store and distribution operations, which are included in cost of sales;

stock-based compensation

depreciation and amortization for all assets, except those related to our retail stores and distribution operations, which are included in cost of sales;

and legal, finance, information systems, and other corporate overhead costs.

18 unchanged sentences

Diluted net income per common share includes dilutive common stock equivalents, using the treasury stock method (see Note 17, “Net income per common share”).

Recently adopted accounting pronouncements

Taxes – Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes.

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 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.

This guidance is effective for interim and annual reporting periods beginning after December 15, 2020.

Early adoption of the standard is permitted, including adoption in interim or annual periods for which financial statements have not yet been issued.

The transition requirements are dependent upon each amendment within this update and will be applied either prospectively or retrospectively.

The Company adopted the new guidance as of January 31, 2021, and its adoption had no impact on the Company’s consolidated financial position, results of operations, or cash flows.

Net sales include retail stores and e-commerce merchandise sales as well as salon services and other revenue.

Other revenue sources include the private label and co-branded credit card programs and royalties derived from the partnership with Target, as well as deferred revenue related to the loyalty program and gift card breakage.

Other revenue includes the private label and co-branded credit card programs, royalties derived from the partnership with Target Corporation, and deferred revenue related to the loyalty program and gift card breakage.

Disaggregated revenue

2 unchanged sentences

(Percentage of net sales)

Cosmetics (1)

Haircare products and styling tools

1 unchanged sentence

Accessories and other

(1) Certain sales departments were reclassified between categories in the prior year to conform to current year presentation .

Deferred revenue

Deferred revenue primarily represents contract liabilities for the Company’s obligation to transfer additional goods or services to a guest for which the Company has received consideration, such as unredeemed Ultamate Rewards loyalty points and unredeemed Ulta Beauty gift cards.

Deferred revenue primarily represents contract liabilities for the obligation to transfer additional goods or services to a guest for which the Company has received consideration, such as unredeemed Ultamate Rewards loyalty points and unredeemed Ulta Beauty gift cards.

In addition, breakage on gift cards is recognized proportionately as redemption occurs.

The following table provides a summary of the changes included in deferred revenue during fiscal 2022 and 2021:

Fiscal year ended

(In thousands)

13 unchanged sentences

Lease termination costs

Severance (2)

Total store closures

2 unchanged sentences

Lease termination costs

Severance (2)

Total suspension of Canadian expansion

Other severance

(1) Amount included in the non-cash $ 72,533 long-lived asset impairment charge on the consolidated statements of cash flows for the fiscal year ended January 30, 2021.

(2) As of January 30, 2021, there was $ 9,476 in accrued liabilities on the consolidated balance sheets for restructuring and was primarily for severance.

There was no liability for restructuring as of January 29, 2022.

(1) Amount is included in the $ 72,533 non-cash long-lived asset impairment charge on the consolidated statements of cash flows for the fiscal year ended January 30, 2021.

(2) There were no impairment, restructuring and other costs recognized during fiscal 2022 or fiscal 2021.

18 unchanged sentences

As a result, severance expense was recognized during fiscal 2020.

Property and equipment and internal use software

Prepaid expenses and other assets

Prepaid expenses and other current assets consist of the following:

(In thousands)

Prepaid supplies

Cloud computing costs (1)

Prepaid advertising

Prepaid expenses and other current assets

Other long-term assets consist of the following:

(In thousands)

Cloud computing costs (1)

Other long-term assets

(1) Expense related to cloud computing arrangements was $ 87,593 , $ 62,215 , and $ 49,615 in fiscal 2022, fiscal 2021, and fiscal 2020, respectively, and was included in SG&A expenses in the consolidated statements of income.

Property and equipment

9 unchanged sentences

Property and equipment, net

Internal use software

As of January 29, 2022, capitalized costs related to cloud computing arrangements of $ 23,379 was classified as prepaid expenses and other current assets and $ 22,596 was classified as other long-term assets in the consolidated balance sheets.

As of January 30, 2021, capitalized costs related to cloud computing arrangements of $ 18,773 was classified as prepaid expenses and other current assets and $ 16,694 was classified as other long-term assets in the consolidated balance sheets.

Expense related to cloud computing arrangements was $ 62,215 , $ 49,615 , and $ 38,034 in fiscal 2021, fiscal 2020, and fiscal 2019, respectively, and was included in SG&A expenses in the consolidated statements of income.

The changes in the carrying amounts of goodwill during the fiscal 2022 and 2021 are as follows:

(In thousands)

Balance at beginning of the period

Balance at the end of the period

Beginning balance

Ending balance

Other intangible assets

7 unchanged sentences

Developed technology

Amortization expense related to intangible assets was $ 926 in fiscal 2021, fiscal 2020, and fiscal 2019.

Amortization expense related to intangible assets was $ 1,014 , $ 926 , and $ 926 in fiscal 2022, fiscal 2021, and fiscal 2020, respectively.

Estimated amortization expense related to intangible assets for the next five years and thereafter is as follows:

1 unchanged sentence

2028 and thereafter

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

The Company leases retail stores, distribution centers, fast fulfillment centers, market fulfillment centers, corporate offices, and certain equipment under non-cancelable operating leases with various expiration dates through 2035.

All leases are classified as operating leases and generally have initial lease terms of 10 years and when determined applicable, include renewal options under substantially the same terms and conditions as the original leases.

21 unchanged sentences

Short-term lease cost

Selling, general and administrative expenses

SG&A expenses

Sublease income

Total lease cost

(1) The majority of operating lease cost relates to retail stores, distribution centers, and fast fulfillment centers and is classified within cost of sales.

Operating lease cost for corporate offices is classified within the selling,

general and administrative expenses.

(1) The majority of operating lease cost relates to retail stores, distribution centers, fast fulfillment centers, and market fulfillment centers and is classified within cost of sales.

Operating lease cost for corporate offices is classified within the SG&A expenses.

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

5 unchanged sentences

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

(1) Excludes $ 28,591 , $ 33,092 , and $ 71,294 related to cash received for tenant incentives as of January 29, 2022, January 30, 2021, and February 1, 2020, respectively.

(1) Excludes $ 30,927 , $ 28,591 , and $ 33,092 related to cash received for tenant incentives as of January 28, 2023, January 29, 2022, and January 30, 2021, respectively.

Maturity of lease liabilities

9 unchanged sentences

A majority of these agreements are due within three years and are recorded as liabilities when the goods are received or the services are rendered.

Payments under these agreements were $ 17,370 as of January 29, 2022.

Payments under these agreements were $ 67,456 in fiscal 2022.

General litigation – The Company is involved in various legal proceedings that are incidental to the conduct of the business including both class action and single plaintiff litigation.

4 unchanged sentences

Accrued payroll, bonus, and employee benefits

Accrued advertising

Accrued taxes

Accrued capital expenditures

Accrued advertising

Other accrued liabilities

Accrued liabilities

(1) Includes $ 43,845 in social security tax payments deferred related to the CARES Act as of January 30, 2021.

There was no deferral related to the CARES Act as of January 29, 2022 .

The provision for income taxes consists of the following:

11 unchanged sentences

Effective tax rate

On August 16, 2022, the Inflation Reduction Act of 2022 was enacted into law, which, among other things, introduced a 15 % corporate alternative minimum tax on book income of certain large corporations and created a 1 % excise tax on net share repurchases.

The corporate alternative minimum tax will be effective in fiscal 2024, and the excise tax applies to share repurchases made after December 31, 2022.

The corporate alternative minimum tax and the excise tax are not expected to have a material impact on the consolidated financial statements.

Significant components of deferred tax assets and liabilities are as follows:

8 unchanged sentences

NOL carryforwards

Inventory valuation

Total deferred tax assets

4 unchanged sentences

Inventory valuation

Property and equipment

Total deferred tax liabilities

1 unchanged sentence

At January 28, 2023, the Company had $ 428 of credit carryforwards for state income tax purposes that expire between 2023 and 2026.

The Company also had $ 95 of state net operating loss (NOL) carryforwards that expire by 2040 and $ 825 of federal and $ 163 of state NOL carryforwards that do not expire.

The Company had $ 41 of state net operating loss (NOL) carryforwards that expire by 2038 and $ 118 of state NOL carryforwards that do not expire.

The Company also had $ 665 of federal NOL carryforwards that do not expire.

The Company accounts for uncertainty in income taxes in accordance with Accounting Standards Codification 740-10.

The reserve for uncertain tax positions was $ 3,389 and $ 2,783 at January 29, 2022 and January 30, 2021, respectively, which represents the best estimate of the potential liability.

The reserve for uncertain tax positions was $ 4,158 and $ 3,389 at January 28, 2023 and January 29, 2022, respectively,

which represents the best estimate of the potential liability.

A reconciliation of unrecognized tax benefits, excluding interest and penalties, is as follows:

(In thousands)

Balance at beginning of the year

Beginning balance

Increase due to a prior year tax position

Decrease due to a prior year tax position

Balance at end of the year

Ending balance

The Company acknowledges that the amount of unrecognized tax benefits may change in the next twelve months.

7 unchanged sentences

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;

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;

6 unchanged sentences

As of January 28, 2023 and January 29, 2022, the Company had no borrowings outstanding under the credit facility.

The weighted average interest rate was 1.56 % for fiscal 2020.

As of January 28, 2023, the Company was in compliance with all terms and covenants of the Loan Agreement.

6 unchanged sentences

As of January 28, 2023 and January 29, 2022, there were liabilities related to the non-qualified deferred compensation plan included in other long-term liabilities on the consolidated balance sheets of $ 37,501 and $ 40,839 , respectively.

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.

Some assets are not measured at fair value on an ongoing basis but are subject to fair value adjustments only in certain circumstances.

These assets can include long-lived assets and goodwill that are reduced to fair value when impaired.

Assets that are written down to fair value when impaired are not subsequently adjusted to fair value unless further impairment occurs.

The liabilities are 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.

Investments in renewable energy projects are accounted for under the equity method of accounting.

The balance of these investments was $ 2,316 and $ 2,671 as of January 28, 2023 and January 29, 2022, respectively, and is included in other long-term assets on the consolidated balance sheets.

The Company did not contribute capital or receive investment tax credits during fiscal 2021.

The Company contributed capital of $ 5,665 and received distributions including $ 1,689 of investment tax credits during fiscal 2020.

The Company made other investments of $ 4,297 during fiscal 2021.

The Company did no t contribute capital or receive investment tax credits during fiscal 2022 and 2021.

The Company made other investments of $ 2,458 and $ 4,297 during fiscal 2022 and 2021, respectively.

Stock-based compensation

35 unchanged sentences

At January 28, 2023, there was approximately $ 10,203 of unrecognized stock-based compensation expense related to unvested stock options.

The unrecognized stock-based compensation expense is expected to be recognized over a weighted-average period of approximately two years .

The unrecognized stock-based compensation expense is expected to be recognized over a weighted-average period of approximately one and a half years .

A summary of stock option activity is presented in the following table (shares in thousands):

22 unchanged sentences

Restricted stock units

Restricted stock units are granted to certain employees and directors.

Restricted stock units (RSUs) are granted to certain employees and directors.

Employee grants generally cliff vest after three years and director grants cliff vest after one year .

The grant date fair value of restricted stock units is based on the closing market price of shares of the Company’s common stock on the date of grant.

Restricted stock units are expensed on a straight-line basis over the requisite service period.

Forfeitures of restricted stock units are estimated at the grant

date based on historical rates of stock award activity and reduce the stock-based compensation expense recognized.

At January 29, 2022, unrecognized stock-based compensation expense related to restricted stock units was $ 22,179 .

The unrecognized stock-based compensation expense is expected to be recognized over a weighted-average period of approximately one and a half years.

A summary of restricted stock units activity is presented in the following table (shares in thousands):

The grant date fair value of RSUs is based on the closing market price of shares of the Company’s common stock on the date of grant.

RSUs are expensed on a straight-line basis over the requisite service period.

Forfeitures of RSUs are estimated at the grant date based on historical rates of stock award activity and reduce the stock-based compensation expense recognized.

At January 28, 2023, unrecognized stock-based compensation expense related to RSUs was $ 24,215 .

The unrecognized stock-based compensation expense is expected to be recognized over a weighted-average period of approximately one year .

A summary of RSU activity is presented in the following table (shares in thousands):

average grant

7 unchanged sentences

Performance-based restricted stock units

Performance-based restricted stock units are granted to certain employees.

Units granted prior to 2021 cliff vest after three years based upon achievement of pre-established net sales and earnings before tax goals at the end of the second year of the term.

The grant date fair value of these performance-based restricted stock units is based on the closing market price of shares of the Company’s common stock on the date of grant.

Performance-based restricted stock units granted in 2021 cliff vest after three years based upon achievement of pre-established net sales and earnings before tax goals for each of the first two years .

The performance is then capped at 100% if the total shareholder return over a three-year period is not positive.

The grant date fair value of the 2021 performance-based restricted stock units are measured using a Monte Carlo simulation.

Performance-based restricted stock units are expensed on a straight-line basis over the requisite service period, based on the probability of achieving the performance goal, with changes in expectations recognized as an adjustment to earnings in the period of the change.

Performance-based restricted stock units (PBSs) are granted to certain employees.

PBSs granted prior to 2021 cliff vest after three years based upon achievement of pre-established net sales and earnings before tax goals at the end of the second year of the term.

The grant date fair value of these PBSs is based on the closing market price of shares of the Company’s common stock on the date of grant.

PBSs granted in 2021 cliff vest after three years based upon achievement of pre-established net sales and earnings before tax goals for each of the first two years .

The performance is then subject to a three year total shareholder return modifier.

The grant date fair value of the 2022 and 2021 PBSs are measured using a Monte Carlo simulation.

PBSs are expensed on a straight-line basis over the requisite service period, based on the probability of achieving the performance goal, with changes in expectations recognized as an adjustment to earnings in the period of the change.

If the performance goal is not met, no stock-based compensation expense is recognized and any previously recognized stock-based compensation expense is reversed.

Forfeitures of performance-based restricted stock units are estimated at the grant date based on historical rates of stock award activity and reduce the stock-based compensation expense recognized.

At January 29, 2022, unrecognized stock-based compensation expense related to performance-based restricted stock units was $ 13,990 .

Forfeitures of PBSs are estimated at the grant date based on historical rates of stock award activity and reduce the stock-based compensation expense recognized.

At January 28, 2023, unrecognized stock-based compensation expense related to PBSs was $ 25,689 .

The unrecognized stock-based compensation expense is expected to be recognized over a weighted-average period of approximately one and a half years .

A summary of performance-based restricted stock unit activity is presented in the following table (shares in thousands):

A summary of PBS activity is presented in the following table (shares in thousands):

Beginning of year

1 unchanged sentence

Expected to vest

The number of performance-based restricted stock units granted is based on achieving the targeted performance goals as defined in the performance-based restricted stock unit agreements.

The number of PBSs granted is based on achieving the targeted performance goals as defined in the PBS agreements.

As of January 28, 2023, the maximum number of units that could vest under the provisions of the agreements was 145 .

1 unchanged sentence

Market-based restricted stock units totaling 28 shares were granted to the former Chief Executive Officer in fiscal 2018 and settled during fiscal 2021.

Compensation expense for liability awards was $ 7,671 , $ 879 , and $ 597 for the fiscal years ended January 29, 2022, January 30, 2021, and February 1, 2020, respectively.

Compensation expense for liability awards was $ 7,671 and $ 879 in fiscal 2021 and fiscal 2020, respectively.

There was no compensation expense for liability awards in fiscal 2022.

Net income per common share

10 unchanged sentences

The Company provides a 401(k) retirement plan covering all employees who qualify as to age and length of service.

The plan is funded through employee contributions and a Company match.

In fiscal 2021, 2020, and 2019, the Company match was 100 % of the first 3 % of eligible compensation and an additional 50 % match for the next 2 % of eligible compensation.

The plan is funded through employee contributions and a Company match of 100 % of the first 3 % of eligible compensation and an additional 50 % match for the next 2 % of eligible compensation.

Total expense recorded under this plan is included in SG&A expenses in the consolidated statements of income as follows:

1 unchanged sentence

(In thousands)

401(k) plan matching contribution expense

401(k) plan match

The Company also has a non-qualified deferred compensation plan for highly compensated employees whose contributions are limited under qualified defined contribution plans.

The plan is funded through employee contributions and a Company match.

In fiscal 2021, 2020, and 2019, the Company match was 100 % of the first 3 % of salary.

The plan is funded through employee contributions and a Company match of 100 % of the first 3 % of salary.

Amounts contributed and deferred under the plan are credited or charged with the performance of investment options offered under the plan as elected by the participants.

In the event of bankruptcy, the assets of this plan are available to satisfy the claims of general creditors.

The Company manages the risk of changes in the fair value of the liability for deferred compensation by electing to match its liability under the plan with investment vehicles that offset a substantial portion of

its exposure.

The Company manages the risk of changes in the fair value of the liability for deferred compensation by electing to match its liability under the plan with

investment vehicles that offset a substantial portion of its exposure.

Total expense recorded under this plan is included in SG&A expenses in the consolidated statements of income and was insignificant during fiscal 2022, 2021, and 2020.

1 unchanged sentence

(In thousands)

Deferred compensation plan liability

Deferred compensation plan assets

Deferred compensation plan liability

Share repurchase program

In March 2020, the Board of Directors authorized a share repurchase program (the 2020 Share Repurchase Program) pursuant to which the Company could repurchase up to $ 1,600,000 of the Company’s common stock.

The 2019 Share Repurchase Program authorization revoked the previously authorized but unused amount of $ 25,435 from the earlier share repurchase program.

The 2019 Share Repurchase Program did not have an expiration date but provided for suspension or discontinuation at any time.

In March 2020, the Board of Directors authorized a new share repurchase program (the 2020 Share Repurchase Program) pursuant to which the Company could repurchase up to $ 1,600,000 of the Company’s common stock.

The 2020 Share Repurchase Program authorization revoked the previously authorized but unused amount of $ 177,805 from the 2019 Share Repurchase Program.

The 2020 Share Repurchase Program authorization revoked the previously authorized but unused amounts from the earlier share repurchase program.

The 2020 Share Repurchase Program did not have an expiration date but provided for suspension or discontinuation at any time.

During fiscal 2020, the share repurchase program was suspended in order to strengthen its liquidity and preserve cash while navigating the COVID-19 pandemic.

During fiscal 2020, the share repurchase program was suspended in order to strengthen liquidity and preserve cash while navigating the COVID-19 pandemic.

The program resumed during the fourth quarter of fiscal 2020.

In March 2022, the Board of Directors authorized a new share repurchase program (the 2022 Share Repurchase Program) pursuant to which the Company may repurchase up to $ 2,000,000 of the Company’s common stock.

The 2022 Share Repurchase Program revokes the previously authorized but unused amounts from the 2020 Share Repurchase Program.

The 2022 Share Repurchase Program does not have an expiration date and may be suspended or discontinued at any time.

A summary of common stock repurchase activity is presented in the following table:

3 unchanged sentences

Total cost of shares repurchased

Subsequent event

On March 7, 2022, the Board of Directors authorized a new share repurchase program (the 2022 Share Repurchase Program) pursuant to which the Company may repurchase up to $ 2,000,000 of the Company’s common stock.

The 2022 Share Repurchase Program does not have an expiration date and may be suspended or discontinued at any time.

Exhibits and Financial Statement Schedules (Continued)

35 unchanged sentences

Non-qualified Deferred Compensation Plan*

Letter Agreement dated June 20, 2013 between Ulta Salon, Cosmetics & Fragrance, Inc.

Incorporated by Reference

Description of document

Letter Agreement dated September 13, 2013 between Ulta Inc.

and Jeffrey J.

Letter Agreement dated January 6, 2014 between Ulta Inc.

1 unchanged sentence

Form of Option Agreement under the 2011 Incentive Award Plan*

Incorporated by Reference

Description of document

Form of Restricted Stock Unit Award Agreement under the 2011 Incentive Award Plan*

2 unchanged sentences

Executive Change in Control and Severance Plan*

Restricted Stock Unit Award Agreement dated March 29, 2018, with Mary Dillon*

Amendment to Employment Letter Regarding Severance Entitlements, dated March 29, 2018, between Ulta Beauty, Inc.

and Mary Dillon*

New Form of Restricted Stock Unit Award Agreement—PSUs—under the Amended and Restated Ulta Beauty, Inc.

2 unchanged sentences

2011 Incentive Award Plan*

Restricted Stock Unit Award Agreement—PSUs—dated March 25, 2021, with Mary Dillon*

Stock Option Agreement dated March 25, 2021, with Mary Dillon*

Restricted Stock Unit Award Agreement dated March 25, 2021, with Mary Dillon*

Confidential Information & Restrictive Covenants Agreement with Mary Dillon*

Alternative Form of Restricted Stock Unit Award Agreement—PSUs—under the Amended and Restated Ulta Beauty, Inc.

2 unchanged sentences

2011 Incentive Award Plan*

Incorporated by Reference

Description of document

Alternative Form of Restricted Stock Unit Award Agreement under the Amended and Restated Ulta Beauty, Inc.

2011 Incentive Award Plan*

2023 Form of Restricted Stock Unit Award Agreement—PSUs—under the Amended and Restated Ulta Beauty, Inc.

2011 Incentive Award Plan*

2023 Form of Stock Option Agreement under the Amended and Restated Ulta Beauty, Inc.

2011 Incentive Award Plan*

2023 Form of Restricted Stock Unit Award Agreement under the Amended and Restated Ulta Beauty, Inc.

2011 Incentive Award Plan*

List of Significant Subsidiaries

1 unchanged sentence

Certification of the Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002

Incorporated by Reference

Description of document

Certification of the Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002

12 unchanged sentences

Inline XBRL Taxonomy Extension Definition

Incorporated by Reference

Description of document

Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101).

11 unchanged sentences

and Assistant Secretary (Principal Financial and Accounting Officer)

March 25, 2022

/s/ Michelle L.

March 24, 2023

Executive Chair of the Board of Directors

March 24, 2023

March 25, 2022

/s/ Catherine Halligan

1 unchanged sentence

Catherine Halligan

/s/ Charles Heilbronn

March 25, 2022

Charles Heilbronn

/s/ Patricia A.

5 unchanged sentences

George Mrkonic

Lead Independent Director of the Board of Directors

Non-Executive Chair of the Board of Directors

March 24, 2023

/s/ Gisel Ruiz

3 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-K

Item 9A. Controls and Procedures