What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-03-29 compared with 2021-03-30 · 154 added, 349 removed, 949 unchanged (35% of the section changed)

2 unchanged sentences

Index to Consolidated Financial Statements

Reports of Independent Registered Public Accounting Firm

Consolidated Balance Sheets as of January 30, 2021, and February 1, 2020

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

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

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

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

Reports of Independent Registered Public Accounting Firm (PCAOB ID 34 )

Consolidated Balance Sheets as of January 29, 2022, and January 30, 2021,

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

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

Consolidated Statements of Shareholders’ Equity for the fiscal years ended January 29, 2022, January 30, 2021, and February 1, 2020

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

Notes to Consolidated Financial Statements

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We have audited the accompanying consolidated balance sheets of Vera Bradley, Inc.

and subsidiaries (the "Company") as of January 30, 2021 and February 1, 2020, the related consolidated statements of operations, comprehensive income, shareholders' equity, and cash flows, for each of the three years in the period ended January 30, 2021, and the related notes (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of January 30, 2021 and February 1, 2020, and the results of its operations and its cash flows for each of the three years in the period ended January 30, 2021, in conformity with accounting principles generally accepted in the United States of America.

and subsidiaries (the "Company") as of January 29, 2022 and January 30, 2021, the related consolidated statements of operations, comprehensive income, shareholders' equity, and cash flows, for each of the three years in the period ended January 29, 2022, and the related notes, (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of January 29, 2022 and January 30, 2021, and the results of its operations and its cash flows for each of the three years in the period ended January 29, 2022, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of January 29, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 29, 2022, expressed, an unqualified opinion on the Company's internal control over financial reporting.

Change in Accounting Principle

As discussed in Note 2 to the financial statements, effective February 3, 2019, the Company adopted FASB Accounting Standards Update 2016-02, Leases , using a modified retrospective approach.

Basis for Opinion

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

Goodwill and Intangible Assets – Refer to Notes 2 and 17 to the financial statements

Goodwill and Indefinite-Lived Intangible Assets – Refer to Notes 2 and 16 to the financial statements

Critical Audit Matter Description

The Company’s quantitative analysis of goodwill and the indefinite-lived Pura Vida brand for impairment involves the comparison of the fair value of the reporting unit or asset to its carrying value.

The fair value of the reporting unit was determined using an income-based approach and a market-based approach, which required management to make significant estimates and assumptions including the projected revenue growth, operating profit and discount rate.

The Company’s quantitative analysis of the Pura Vida reporting unit of goodwill (“goodwill”) and the indefinite-lived Pura Vida brand asset (“Pura Vida brand”) for impairment involves the comparison of the fair value of the goodwill or Pura Vida brand asset to its respective carrying value.

The fair value of goodwill was determined using an income-based approach and a market-based approach, which required management to make significant estimates and assumptions including the projected revenue growth, operating profit and discount rate.

The Company used the relief-from-royalty method to estimate the fair value of the Pura Vida brand, which required management to make significant estimates and assumptions related to the projected revenue growth, long-term growth rate, royalty rate and discount rate.

1 unchanged sentence

The carrying value of the Pura Vida brand was $36.7 million as of January 29, 2022.

The fair values of the Pura Vida reporting unit and the Pura Vida brand exceeded their carrying values as of the measurement date and, therefore, no impairment was recognized during fiscal 2021.

The fair values of goodwill and the Pura Vida brand exceeded their carrying values as of the measurement date and, therefore, no impairment was recognized during the year ended January 29, 2022.

We identified the impairment analysis of goodwill and the Pura Vida brand as a critical audit matter because of the significant judgments made by management to estimate the fair value of these indefinite-lived assets.

This required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists, when performing audit procedures to evaluate the reasonableness of management’s estimates and assumptions particularly related to the projected revenue growth and discount rate for the goodwill impairment analysis and the projected revenue growth, royalty rate, and discount rate for the Pura Vida brand impairment analysis.

This required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists, when performing audit procedures to evaluate the reasonableness of management’s estimates and assumptions particularly related to the projected revenue growth, operating profit growth and discount rate for the goodwill impairment analysis and the projected revenue growth, royalty rate, and discount rate for the Pura Vida brand impairment analysis .

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the projected revenue growth and discount rates for goodwill and Pura Vida brand as well as the royalty rate for the Pura Vida brand included the following, among others:

• We tested the effectiveness of controls over management’s goodwill and Pura Vida brand impairment analyses, including those over the determination of the fair value, such as controls related to management’s forecasts of projected revenue growth, selection of royalty rate and discount rates.

Our audit procedures related to the projected revenue growth, operating profit growth and discount rate for goodwill and Pura Vida brand as well as the royalty rate for the Pura Vida brand included the following, among others:

• We evaluated management’s ability to accurately forecast by comparing actual results to management’s historical forecasts.

• We evaluated the reasonableness of management’s projected revenue growth by comparing the forecasts to (1) historical revenue, (2) internal communications to management and the Board of Directors, and (3) forecasted information included in industry reports.

• With the assistance of our fair value specialists, we evaluated the reasonableness of the discount rates and royalty rate assumptions, including testing the underlying source information and the mathematical accuracy of the calculations, and developing a range of independent estimates and comparing those to the discount rates and royalty rate selected by management.

• We performed sensitivity analyses to evaluate the risk of impairment if key assumptions are changed.

• We evaluated the reasonableness of management’s projected revenue growth and operating profit growth by comparing the forecasts to (1) historical results, (2) internal communications to management and the Board of Directors, and (3) forecasted information included in industry reports.

• With the assistance of our fair value specialists, we evaluated the reasonableness of the discount rates and royalty rate assumptions by:

◦ Assessing the appropriateness of the valuation methodology used to determine the discount rates and royalty rate.

◦ Testing the underlying source information and the mathematical accuracy of the calculations.

◦ Developing a range of independent estimates and comparing those to the discount rates and royalty rate selected by management.

/s/ Deloitte & Touche LLP

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(in thousands)

2021 February 1,

2022 January 30,

Current assets:

10 unchanged sentences

Goodwill 44,254 44,254

Long-term investments — 14,912

Deferred income taxes 3,857 3,530

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Short-term operating lease liabilities 18,699 22,321

Earn-out liability — 18,448

Other accrued liabilities 16,422 14,043

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Retained earnings 334,364 316,526

Accumulated other comprehensive income 8 158

Accumulated other comprehensive (loss) income ( 29 ) 8

Treasury stock ( 114,802 ) ( 107,060 )

7 unchanged sentences

Fiscal Year Ended

2021 February 1,

2022 January 30,

2021 February 1,

3 unchanged sentences

Selling, general, and administrative expenses 261,993 252,588 253,425

Other income 135 1,098 498

Other income, net 961 135 1,098

Operating income 26,911 13,065 19,474

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Fiscal Year Ended

2021 February 1,

2022 January 30,

2021 February 1,

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Balance at February 2, 2019 34,347,420 6,935,623 $ 95,572 $ 291,994 $ ( 24 ) $ ( 92,839 ) $ 294,703

Net income — — 20,757 — — 20,757

Net income attributable to Vera Bradley, Inc.

— — — 16,047 — — 16,047

Translation adjustments — — — — 51 — 51

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Cumulative adjustment for ASC 842 adoption — — — ( 196 ) — — ( 196 )

Redeemable noncontrolling interest redemption value adjustment — — — ( 431 ) — — ( 431 )

Balance at February 1, 2020 33,503,249 8,011,372 $ 100,357 $ 307,414 $ 158 $ ( 104,159 ) $ 303,770

2 unchanged sentences

Translation adjustments — — — — 22 — 22

Unrealized gain on available for sale investments — — — — 131 — 131

Unrealized loss on available for sale investments — — — — ( 172 ) — ( 172 )

Restricted shares vested, net of repurchase for taxes 293,076 — ( 575 ) — — — ( 575 )

1 unchanged sentence

Treasury stock purchased ( 381,835 ) 381,835 — — — ( 2,901 ) ( 2,901 )

Cumulative adjustment for ASC 842 adoption — — — ( 196 ) — — ( 196 )

Redeemable noncontrolling interest redemption value adjustment — — — 431 — — 431

Balance at February 1, 2020 33,503,249 8,011,372 $ 100,357 $ 307,414 $ 158 $ ( 104,159 ) $ 303,770

Balance at January 30, 2021 33,414,490 8,393,207 $ 105,433 $ 316,526 $ 8 $ ( 107,060 ) $ 314,907

Net income attributable to Vera Bradley, Inc.

5 unchanged sentences

Treasury stock purchased ( 865,534 ) 865,534 — — — ( 7,742 ) ( 7,742 )

Redeemable noncontrolling interest redemption value adjustment — — — 431 — — 431

Balance at January 29, 2022 33,170,430 9,258,741 $ 107,907 $ 334,364 $ ( 29 ) $ ( 114,802 ) $ 327,440

4 unchanged sentences

Fiscal Year Ended

2021 February 1,

2022 January 30,

2021 February 1,

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Proceeds from disposal of property, plant, and equipment 45 — —

Net cash provided by (used in) investing activities 17,680 ( 69,966 ) 17,955

Net cash (used in) provided by investing activities ( 4,154 ) 17,680 ( 69,966 )

Cash flows from financing activities

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Distributions to redeemable noncontrolling interest ( 1,215 ) ( 1,817 ) ( 1,789 )

Payments of debt-issuance costs — — ( 160 )

Borrowings under asset-based revolving credit agreement — 60,000 —

10 unchanged sentences

Fiscal Year Ended

2021 February 1,

2022 January 30,

2021 February 1,

5 unchanged sentences

Repurchase of common stock incurred but not yet paid

As of January 29, 2022, January 30, 2021 and February 1, 2020 $ — $ — $ 176

As of January 30, 2021, February 1, 2020 and February 2, 2019 $ — $ 176 $ 197

As of February 1, 2020, February 2, 2019 and February 3, 2018 $ 176 $ 197 $ —

Purchases of property, plant, and equipment incurred but not yet paid

As of January 29, 2022, January 30, 2021 and February 1, 2020 $ 250 $ 343 $ 559

As of January 30, 2021, February 1, 2020 and February 2, 2019 $ 343 $ 559 $ 1,065

As of February 1, 2020, February 2, 2019 and February 3, 2018 $ 559 $ 1,065 $ 1,183

Contingent consideration related to business acquisition $ — $ — $ 20,098

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• The VB Direct business consists of sales of Vera Bradley products through Vera Bradley full-line and factory outlet stores in the United States;

verabradley.com;

verabradley.com and verabradley.ca;

the Vera Bradley online outlet site;

and the Vera Bradley annual outlet sale in Fort Wayne, Indiana.

and typically the Vera Bradley annual outlet sale in Fort Wayne, Indiana.

As of January 29, 2022, the Company operated 70 full-line stores and 75 factory outlet stores.

In light of the COVID-19 pandemic, the Company cancelled its 2020 annual outlet sale.

In light of the COVID-19 pandemic, the Company cancelled its calendar year 2021 and 2020 annual outlet sales.

• The VB Indirect business consists of sales of Vera Bradley products to approximately 1,800 specialty retail locations, substantially all of which are located in the United States, as well as department stores, national accounts, third-party e-commerce sites, third-party inventory liquidators, and royalties recognized through licensing agreements related to the Vera Bradley brand.

• The Pura Vida segment represents revenues generated through the Pura Vida websites, www.puravidabracelets.com, www.puravidabracelets.eu, www.puravidabracelets.ca, and through the distribution of Pura Vida-branded products to wholesale retailers, substantially all of which are located in the United States.

The COVID-19 pandemic resulted in travel restrictions both domestically and internationally, community and self-quarantines, certain factory closures or reduced operations, as well as mall closures and reduced mall operating hours during fiscal 2021.

Although e-commerce operations remained open for both of our brands, the aforementioned items had a material adverse impact on overall consumer demand, traffic, and sales.

Beginning in mid-March 2020, the Company began taking several actions to navigate the COVID-19 pandemic, protect its financial position, maximize its liquidity, and to position the Company for a strong reopening and future.

These actions included:

• Temporarily closing all Vera Bradley store locations on March 19;

• Temporarily furloughing approximately 80 % of its workforce mid first quarter;

• Temporarily reducing base compensation for remaining salaried associates, with reductions on a graduated scale ranging from 15 % to 30 %, and 75 % for our Chief Executive Officer;

• Temporarily suspending cash compensation to the Company's Board of Directors;

• Temporarily suspending the share repurchase program;

• Drawing $ 60.0 million of our $ 75.0 million Credit Agreement;

• Temporarily eliminating the Company 401(k) and associate charitable contribution matches;

• Tightly managing inventory levels through the cancellation of purchase orders, delay of receipts, or seeking price concessions where possible;

Vera Bradley, Inc.

Notes to Consolidated Financial Statements

• Actively working with landlords on addressing rent abatement, payment terms, accelerating store closures, and delaying or cancelling certain planned new store openings;

• Reducing non-payroll operating expenses, including but not limited to, marketing and travel;

• Extending vendor payment terms.

On May 5, 2020, the Company began to open its Vera Bradley retail stores in a phased approach.

All factory and full line stores were opened as of the end of the fiscal year, although with reduced hours, lower staffing levels, reduced foot traffic, and greatly enhanced safety protocols.

The Company has brought back substantially all associates from furlough;

reinstated the base compensation reductions;

reinstated the cash compensation to the Board of Directors;

paid back $ 60.0 million of borrowings under its Credit Agreement;

and reinstated the 401(k) match in January 2021.

The Company continued to manage operating expenses and inventory levels, and work with landlords on rent abatement and payment terms.

In addition, the Company is leveraging elements of the Coronavirus Aid Relief and Economic Security (CARES) Act.

The CARES Act tax provisions include retention credits, the deferral of the employer portion of certain payroll taxes, and tax benefits related to a net operating loss carryback.

• The Pura Vida segment represents revenues generated through the Pura Vida websites, www.puravidabracelets.com, www.puravidabracelets.eu, and www.puravidabracelets.ca, the distribution of Pura Vida-branded products to wholesale retailers, substantially all of which are located in the United States, as well as through its first retail store which opened in August 2021.

Principles of Consolidation

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The Company utilizes a 52-53 week fiscal year ended on the Saturday closest to January 31.

As such, fiscal years 2021, 2020, and 2019, ending on January 30, 2021, February 1, 2020, and February 2, 2019 respectively, each reflected a 52-week period.

As such, fiscal years 2022, 2021, and 2020, ending on January 29, 2022, January 30, 2021, and February 1, 2020 respectively, each reflected a 52-week period.

Summary of Significant Accounting Policies

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The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of the Company’s assets, liabilities, revenues, and expenses, as well as the disclosures relating to contingent assets and liabilities at the date of the consolidated financial statements.

Significant areas requiring the use of management estimates include the valuation of inventories, valuation of long-lived assets, including operating right-of-use assets, valuation of goodwill and indefinite-lived intangible assets, accounts receivable valuation allowances, sales return allowances, and the useful lives of assets for depreciation or amortization.

Significant areas requiring the use of management estimates include the

Vera Bradley, Inc.

Notes to Consolidated Financial Statements

valuation of inventories, valuation of long-lived assets, including operating right-of-use assets, valuation of goodwill and indefinite-lived intangible assets, accounts receivable valuation allowances, sales return allowances, and the useful lives of assets for depreciation or amortization.

Actual results could differ from these estimates.

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corporate debt securities.

As of February 1, 2020, these investments consisted of U.S.

corporate debt securities, commercial paper, municipal securities, and U.S.

asset-backed securities.

Long-term investments consist of investments with a maturity of greater than one year from the balance sheet date.

There were no long-term investments as of January 30, 2021.

As of February 1, 2020, these investments consisted of U.S.

corporate debt securities, U.S.

asset-backed securities, and other foreign securities.

There were no short-term investments as of January 29, 2022.

The Company’s objective with respect to these investments is to earn a higher rate of return, relative to deposit accounts, on funds that are otherwise not anticipated to be required to meet liquidity needs in the near-term while maintaining a low level of investment risk.

These debt securities are classified as available-for-sale;

therefore, unrealized

Vera Bradley, Inc.

Notes to Consolidated Financial Statements

gains and losses are recorded within other comprehensive income.

therefore, unrealized gains and losses are recorded within other comprehensive income.

Interest income earned is recorded within interest expense (income), net, in the Company's Consolidated Statements of Operations.

Refe r to Note 14 herein for ad ditional information regarding the Company's investments.

Inventories are stated at the lower of cost or net realizable value.

1 unchanged sentence

Appropriate consideration is given to obsolescence, excess quantities, and other factors, including the popularity of a pattern or product, in evaluating net realizable value.

The components of inventories were as follows:

2021 February 1,

Raw materials (1)

Finished goods 141,357 122,550

Total inventories $ 141,416 $ 123,606

(1) Relates solely to Pura Vida operations.

Substantially all inventory relates to finished goods.

Property, Plant, and Equipment

15 unchanged sentences

Routine maintenance and repair costs are expensed as incurred.

Vera Bradley, Inc.

Notes to Consolidated Financial Statements

The Company capitalizes certain costs incurred in connection with acquiring, modifying, and installing internal-use software.

1 unchanged sentence

Software costs that do not meet capitalization criteria are expensed as incurred.

Vera Bradley, Inc.

Notes to Consolidated Financial Statements

Revenue Recognition and Accounts Receivable

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Fiscal year ended January 29, 2022 $ 1,714 $ 17,043 $ ( 17,175 ) $ 1,582

Fiscal year ended February 1, 2020 1,911 15,467 ( 16,016 ) 1,362

Fiscal year ended January 30, 2021 1,362 14,284 ( 13,932 ) 1,714

Fiscal year ended February 1, 2020 1,911 15,467 ( 16,016 ) 1,362

The Company establishes an allowance for doubtful accounts based on historical experience and customer-specific identification and believes that collections of receivables, net of the allowance for doubtful accounts, are reasonably assured.

The allowance for doubtful accounts was approximately $ 1.1 million and $ 0.5 million as of January 30, 2021 and February 1, 2020, respectively.

The allowance for doubtful accounts was approximately $ 1.2 million and $ 1.1 million as of January 29, 2022 and January 30, 2021, respectively.

The provision for doubtful accounts is based upon the likelihood of default expected during the life of the receivable.

5 unchanged sentences

Operating right-of-use assets are based on the lease liability adjusted for prepaid rent, deferred rent, and tenant allowances received from certain of the Company’s landlords, primarily for its retail store locations.

Vera Bradley, Inc.

Notes to Consolidated Financial Statements

Operating lease liabilities are amortized based upon the effective interest method.

3 unchanged sentences

Operating right-of-use assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable.

The reviews are conducted at the lowest identifiable level of cash

Vera Bradley, Inc.

Notes to Consolidated Financial Statements

flows, which is at the retail store level for store-related assets.

The reviews are conducted at the lowest identifiable level of cash flows, which is at the retail store level for store-related assets.

If the estimated undiscounted future cash flows related to the operating right-of-use assets are less than the carrying value, the Company recognizes a loss equal to the difference between the carrying value and the fair value, as further defined below in “Fair Value of Financial Instruments.”

11 unchanged sentences

Upon an acquisition, the Company records the fair value of goodwill and the identifiable intangible assets.

As of January 30, 2021 and February 1, 2020, the identifiable intangible assets consisted of the Pura Vida brand, customer relationships, and non-competition agreements.

As of January 29, 2022 and January 30, 2021, the identifiable intangible assets consisted of the Pura Vida brand, customer relationships, and non-competition agreements.

Assets that are determined to have an indefinite life, including goodwill and the Pura Vida brand, are not amortized but are assessed for impairment at least annually or whenever events or circumstances indicate that the goodwill may be impaired .

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There was no impairment recorded for goodwill or the Pura Vida brand during fiscal 2022.

The estimated fair values of our Pura Vida reporting unit and the Pura Vida brand are subject to change as a result of many factors including changing economic conditions.

Should actual cash flows and our future estimates deteriorate from the estimates we used, impairment charges may be necessary in future years.

Vera Bradley, Inc.

Notes to Consolidated Financial Statements

The estimated fair values of our Pura Vida reporting unit and the Pura Vida brand are subject to change as a result of many factors including changing economic conditions.

Should actual cash flows and our future estimates deteriorate from the estimates we used, impairment charges may be necessary in future years.

Redeemable Noncontrolling Interest

22 unchanged sentences

Fiscal year ended January 29, 2022 $ 61,223

Fiscal year ended February 1, 2020 (1)

Fiscal year ended January 30, 2021 54,571

Fiscal year ended February 1, 2020 (1)

(1) Increase primarily as a result of the inclusion of Pura Vida beginning July 17, 2019.

Fiscal 2020 includes approximately six months of Pura Vida advertising expense whereas fiscal 2021 includes 12 months of expense.

(1) As a result of the July 2019 acquisition of Pura Vida, fiscal 2020 includes approximately six months of Pura Vida advertising expense.

Vera Bradley, Inc.

7 unchanged sentences

The classification of fair value measurements within the hierarchy is based upon the lowest level of input that is significant to the measurement.

The carrying amounts reflected on the Consolidated Balance Sheets for cash and cash equivalents, accounts receivable, and accounts payable as of January 30, 2021 and February 1, 2020, approximated their fair values.

The following table details the fair value measurements of the Company’s investments as of January 30, 2021 and February 1, 2020 (in thousands):

The carrying amounts reflected on the Consolidated Balance Sheets for cash and cash equivalents, accounts receivable, and accounts payable as of January 29, 2022 and January 30, 2021, approximated their fair values.

The following table details the fair value measurements of the Company’s investments as of January 29, 2022 and January 30, 2021 (in thousands):

Level 1 Level 2 Level 3

January 30, 2021 February 1, 2020 January 30, 2021 February 1, 2020 January 30, 2021 February 1, 2020

January 29, 2022 January 30, 2021 January 29, 2022 January 30, 2021 January 29, 2022 January 30, 2021

Cash equivalents (1)

2 unchanged sentences

corporate debt securities — — — 627 — —

Commercial paper — — — 2,489 — —

Municipal securities — — — 1,594 — —

corporate debt securities — — — 668 — —

asset-backed securities — — — 323 — —

Long-term investments:

corporate debt securities — — — 5,613 — —

asset-backed securities — — — 5,498 — —

corporate debt securities — — — 2,409 — —

Other foreign securities — — — 810 — —

asset-backed securities — — — 582 — —

(1) Cash equivalents include commercial paper and a money market fund that have a maturity of three months or less at the date of purchase.

Due to their short maturity, the Company believes the carrying value approximates fair value.

(1) Cash equivalents relate to a money market fund that has a maturity of three months or less at the date of purchase.

Due to its short maturity, the Company believes the carrying value approximates fair value.

The Company assesses potential impairments to its long-lived assets, which includes property, plant, and equipment and lease right-of-use assets, on a quarterly basis or whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable.

5 unchanged sentences

Level 3 inputs are derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

The Company recorded $ 7.4 million in impairment charges related to store assets including property, plant, and equipment and lease right-of-use assets during the fiscal year ended January 30, 2021.

There were no impairment charges for the fiscal years ended February 1, 2020 and February 2, 2019.

Vera Bradley, Inc.

Notes to Consolidated Financial Statements

The Company recorded $ 0.1 million and $ 7.4 million in impairment charges related to store assets including property, plant, and equipment and lease right-of-use assets during the fiscal years ended January 29, 2022 and January 30, 2021.

There were no impairment charges for the fiscal year ended February 1, 2020.

Assets recognized or disclosed at fair value on the consolidated financial statements on a nonrecurring basis include items such as property, plant, and equipment, including leasehold improvements, and operating lease assets, as well as assets related to the Pura Vida acquisition including goodwill and intangible assets.

9 unchanged sentences

If economic conditions were to deteriorate, future impairment charges may be required which may be material.

Vera Bradley, Inc.

Notes to Consolidated Financial Statements

The Company accrues income taxes payable or refundable and recognizes deferred tax assets and liabilities based on differences between the book and tax bases of assets and liabilities.

7 unchanged sentences

The amortization expense is recorded in the same line item within the Company's Consolidated Statements of Operations as the related hosting fees.

The balance of the unamortized CCA implementation costs totaled $ 8.1 million and $ 3.8 million as of January 30, 2021 and February 1, 2020, respectively.

Of this total, $ 2.4 million and $ 0.3 million was recorded within prepaid expenses and other current assets and $ 5.7 million and $ 3.5 million was recorded within other assets on the Company's Consolidated Balance Sheets as of January 30, 2021 and February 1, 2020, respectively.

The balance of the unamortized CCA implementation costs totaled $ 8.0 million and $ 8.1 million as of January 29, 2022 and January 30, 2021, respectively.

Of this total, $ 2.8 million and $ 2.4 million was recorded within prepaid expenses and other current assets and $ 5.2 million and $ 5.7 million was recorded within other assets on the Company's Consolidated Balance Sheets as of January 29, 2022 and January 30, 2021, respectively.

The CCA implementation costs are recorded within operating activities in the Company's Consolidated Statements of Cash Flows.

Recently Issued Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases , which increases transparency and comparability among organizations by requiring lessees to recognize assets and liabilities on the balance sheet for the rights and obligations created by leases and disclosing key information about leasing arrangements.

This guidance is effective for interim and annual periods beginning on or after December 15, 2018.

In July 2018, the FASB issued ASU 2018-11 for targeted improvements, including the option of allowing entities to initially apply the new leases standard at the adoption date (February 3, 2019 for the Company) and recognize a cumulative-effect adjustment to the opening balance of retained earnings.

The Company adopted the standard using this adoption method on February 3, 2019 (the beginning of fiscal 2020) and recorded a $ 0.2 million beginning retained earnings adjustment.

In addition, the Company evaluated the usage of applicable transition relief practical expedients at the adoption date as follows:

Vera Bradley, Inc.

Notes to Consolidated Financial Statements

Practical Expedient Package The Company elected the practical expedient package and did not re-assess whether a contract was or contained a lease;

did not re-assess lease classification as an operating or financing lease for expired or existing leases;

and did not re-assess whether a lease contained initial direct costs for expired or existing leases.

Hindsight The Company did not elect the hindsight practical expedient, which allows for hindsight when assessing the lease term and impairment of right-of-use assets.

The Company has operating leases at all of its retail stores;

therefore, the adoption of this standard resulted in a material increase of assets and liabilities on the Company’s Consolidated Balance Sheets.

The opening balance of its operating lease liabilities was approximately $ 149 million and its operating right-of-use assets were approximately $ 126 million at transition on February 3, 2019.

The Consolidated Statements of Cash Flows also had material presentation changes within operating activities upon adoption.

The adoption of this standard had no impact on the Company's Consolidated Statements of Operations.

Refer to Note 4 herein for additional information regarding ASC Topic 842, including details of practical expedients related to policy elections.

In August 2018, the FASB issued ASU 2018-13, Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurements .

8 unchanged sentences

The adoption of this standard in the first quarter of fiscal 2021 did not have a material impact on the Company's consolidated financial statements.

Recently Issued Accounting Pronouncements Not Yet Adopted

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740):

3 unchanged sentences

Early adoption is permitted, with all amendments required to be adopted in the same period.

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

The adoption of this standard in the first quarter of fiscal 2022 did not have a material impact on the Company's consolidated financial statements.

Vera Bradley, Inc.

2 unchanged sentences

Disaggregation of Revenue

The following presents the Company's net revenues disaggregated by product category for the fifty-two weeks ended January 30, 2021, February 1, 2020, and February 2, 2019 (in thousands):

The following presents the Company's net revenues disaggregated by product category for the fifty-two weeks ended January 29, 2022, January 30, 2021, and February 1, 2020 (in thousands):

Fifty-Two Weeks Ended

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Accessories 65,219 10,021 111,248 186,488

Home 41,987 4,416 — 46,403

Apparel/Footwear (6)

18,592 2,406 4,110 25,108

Home 31,819 2,253 — 34,072

Other 7,660 (1) 3,883 (2) 3,245 (3) 14,788

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Fifty-Two Weeks Ended

February 1, 2020

January 30, 2021

VB Direct Segment VB Indirect Segment Pura Vida Segment Total

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Apparel/Footwear (6)

36,762 13,416 1,857 52,035

Other 6,312 (1) 3,718 (2) 4,077 (3) 14,107

Total net revenues $ 289,274 (4) $ 66,517 (5) $ 112,481 (4) $ 468,272

(1) Other net revenues have been recast to exclude Apparel/Footwear to conform with the current-year presentation.

(1) Primarily includes net revenues from stationery, freight, and gift card breakage.

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(5) $ 63.5 million of net revenues related to product sales recognized at a point in time and $ 3.0 million of net revenues related to sales-based royalties recognized over time.

(6) Includes mask sales.

Vera Bradley, Inc.

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(3) Primarily includes net revenues from licensing agreements, freight, and merchandising.

(4) Related to freight.

(5) Net revenues were related to product sales recognized at a point in time.

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Contract Balances

Contract liabilities as of January 30, 2021 and February 1, 2020, consisted of $ 4.1 million and $ 3.9 million, respectively.

Contract liabilities as of January 29, 2022 and January 30, 2021, were $ 3.9 million and $ 4.1 million, respectively.

The balance as of January 29, 2022 consisted of unearned revenue related to unredeemed gift cards, the monthly bracelet and jewelry clubs of the Pura Vida segment, Pura Vida loyalty club points, Pura Vida customer deposits and payments collected before shipment, and an immaterial amount of unearned revenue for pre-payments of royalties in certain of the Company’s licensing arrangements.

The balance as of January 30, 2021 consisted of unearned revenue related to the monthly bracelet and jewelry clubs of the Pura Vida segment, unredeemed gift cards, Pura Vida loyalty club points, Pura Vida customer deposits and payments collected before shipment, and an immaterial amount of unearned revenue for pre-payments of royalties in certain of the Company’s licensing arrangements.

The balance as of February 1, 2020 consisted of the monthly bracelet and jewelry clubs of the Pura Vida segment, unredeemed gift cards, Pura Vida payments collected before shipment, and an immaterial amount of unearn ed revenue for pre-payments of royalties in certain of the Company’s licensing arrangements.

These contract liabilities are recognized within other accrued liabilities on the Company’s Consolidated Balance Sheets.

Substantially all contract liabilities are recognized within one year.

The Company did no t have contract assets as of January 30, 2021 and February 1, 2020.

The balance for accounts receivable from contracts with customers, net of allowances, as of January 30, 2021 and February 1, 2020 was $ 26.0 million and $ 16.3 million, respectively, which is recognized within accounts receivable, net, on the Company’s Consolidated Balance Sheets.

The provision for doubtful accounts was $ 1.1 million and $ 0.5 million as of January 30, 2021 and February 1, 2020, respectively.

The Company did no t have contract assets as of January 29, 2022 and January 30, 2021.

The balance for accounts receivable from contracts with customers, net of allowances, as of January 29, 2022 and January 30, 2021 was $ 18.1 million and $ 26.0 million, respectively, which is recognized within accounts receivable, net, on the Company’s Consolidated Balance Sheets.

The provision for doubtful accounts was $ 1.2 million and $ 1.1 million as of January 29, 2022 and January 30, 2021, respectively.

The provision for doubtful accounts is based upon the likelihood of default expected during the life of the receivable.

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Product Sales

In the Vera Bradley retail stores (recognized within the VB Direct segment), control is transferred and net revenue is recognized at the point of sale.

Product shipments for the Company’s e-commerce channels (recognized within the VB Direct and Pura Vida segments) and shipments to its wholesale retailers (recognized within the VB Indirect segment and

In the Vera Bradley retail stores and the Pura Vida retail store (recognized within the VB Direct segment and the Pura Vida segments), control is transferred and net revenue is recognized at the point of sale.

Product shipments for the Company’s e-

Vera Bradley, Inc.

Notes to Consolidated Financial Statements

Pura Vida segment) are generally shipped Free on Board (“FOB”) shipping point typically from its distribution center in Roanoke, Indiana, for Vera Bradley products and primarily from its third-party fulfillment center in Tijuana, Mexico for Pura Vida products.

commerce channels (recognized within the VB Direct and Pura Vida segments) and shipments to its wholesale retailers (recognized within the VB Indirect segment and Pura Vida segment) are generally shipped Free on Board (“FOB”) shipping point typically from its distribution center in Roanoke, Indiana, for Vera Bradley products and primarily from its third-party fulfillment center in Tijuana, Mexico for Pura Vida products.

Net revenue is recognized upon shipment consistent with when control is transferred to the customer.

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Other Practical Expedients

Remaining Performance Obligations

The Company does not disclose the remaining performance obligations for contracts with an original expected duration of one year or less or for contracts which it has the right to invoice.

Significant Financing Components

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Five customers represented approximately 40.0 % of the balance of accounts receivable, net as of January 29, 2022.

The Company temporarily closed its full-line and factory outlet stores on March 19, 2020, due to the COVID-19 pandemic.

As of the end of fiscal 2021, all stores have been reopened.

As a result of the temporary closures, certain rent payments have been deferred.

An immaterial am ount of rent abatements and deferrals were received as of January 30, 2021.

In the prior-year, the Company temporarily closed its full-line and factory outlet stores beginning on March 19, 2020, due to the COVID-19 pandemic, for various lengths of time (from several weeks to several months).

The stores began to re-open on May 5, 2020, with substantially all stores open by the end of July 2020.

All of the Company's stores were open during fiscal 2022.

As a result of the temporary closures in the prior-year, certain rent payments were deferred.

An immaterial amount of rent abatements were received as of January 29, 2022 and January 30, 2021.

An immaterial amount of rent deferrals were received as of January 30, 2021.

No additional rent deferrals were received during fiscal 2022.

In April 2020, the FASB issued guidance that allows a company to elect to account for COVID-19-related rent concessions as (1) if they were part of the enforceable rights and obligations under the existing lease contract or (2) lease modifications.

Leases that are eligible under this guidance include those that do not have a substantial increase of obligations to the lessee.

The Company has elected to treat COVID-19-related rent abatements as a reduction to its operating lease cost in the period the abatements are received for leases that do not have a substantial change in obligations.

The Company elected to treat COVID-19-related rent abatements as a reduction to its operating lease cost in the period the abatements are received for leases that do not have a substantial change in obligations.

Lease abatements received which were coupled with lease extensions of greater than a month, or a substantial change of future lease payments, were recorded as a lease modification under ASC 842.

The Company also received lease payment deferrals in some cases, extending the due date of the lease payments.

The Company did not remeasure the lease liability and continued to account for the lease following the rights and obligations of the existing lease.

Vera Bradley, Inc.

Notes to Consolidated Financial Statements

The Company also received lease payment deferrals in some cases, extending the due date of the lease payments.

The Company did not remeasure the lease liability and continued to account for the lease following the rights and obligations of the existing lease.

Nature of Leases

The Company has operating leases at all of its retail stores, as well as for its New York office, the California Pura Vida office, Asia sourcing office, and showrooms.

The Company has operating leases at all of its retail stores, including Pura Vida's retail store, as well as for its New York office, the California Pura Vida office, Asia sourcing office, and showrooms.

The Company also has operating leases for certain equipment and storage spaces.

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These leases generally have early termination rights when certain sales thresholds are not met for a specified measurement period.

The Company's other leases have remaining terms of up to approximately six years as of January 30, 2021.

The Company's other leases have remaining terms of up to approximately five years as of January 29, 2022.

If the lease contains a renewal period at the Company's option, the renewal period is included in the lease term if determined the option is reasonably certain to be exercised at lease commencement.

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All of the Company's retail store leases contain variable rental payments when the retail store's sales exceed a specified breakpoint.

In addition, certain of the Company's leases contain real estate taxes, common area maintenance, and similar items that are billed as pass-through charges from its landlords.

In addition, the majority of the Company's leases contain real estate taxes, common area maintenance, and similar items that are billed as pass-through charges from its landlords.

These rental payments are not included in the measurement of the lease liability, but are recognized as variable lease cost in the period incurred.

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Discount Rate

The weighted-average discount rate as of January 30, 2021 and February 1, 2020, was 4.8 % and 5.0 %, respectively.

The weighted-average discount rate as of January 29, 2022 and January 30, 2021, was 4.7 % and 4.8 %, respectively.

The discount rate is not readily determinable in the lease;

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Leases Not Yet Commenced

As of January 30, 2021, the Company did no t have leases which were executed but did it not have control of the underlying assets.

As of January 29, 2022, the Company had three leases which were executed but did it not have control of the underlying assets;

therefore, the lease liability and right-of-use asset are not recorded on the Condensed Consolidated Balance Sheet.

These leases contain undiscounted lease payments, which will be included in the determination of the lease liability, totaling approximately $ 5.3 million and have terms of approximately 10 years commencing in fiscal year 2023.

Practical Expedients (Policy Elections)

The Company has elected the following practical expedients as policy elections upon the adoption of ASC Topic 842.

Vera Bradley, Inc.

Notes to Consolidated Financial Statements

Short-Term Leases The Company elected to exclude leases with a term of 12 months or less from recognition on the balance sheet for all leases.

Not Separating Lease and Nonlease Components The Company elected to combine lease and nonlease components and recognize as a single lease component for all leases.

Refer to Note 2 herein for information regarding transition practical expedients elected.

Amounts Recognized in the Consolidated Financial Statements

The following l ease expense is recorded within cost of sales for the Asia sourcing office and certain equipment leases and within selling, general, and administrative expenses for all other leases, including retail store leases, in the Company's Consolidated Statements of Operations for the fiscal years ended January 30, 2021 and February 1, 2020 (in thousands):

Vera Bradley, Inc.

Notes to Consolidated Financial Statements

The following lease expense is recorded within cost of sales for the Asia sourcing office and certain equipment leases and within selling, general, and administrative expenses for all other leases, including retail store leases, in the Company's Consolidated Statements of Operations for the fiscal years ended January 29, 2022, January 30, 2021, and February 1, 2020 (in thousands):

Fifty-Two Weeks Ended

January 30, 2021 February 1, 2020

January 29, 2022 January 30, 2021 February 1, 2020

Operating lease cost $ 25,200 $ 26,112 $ 28,808

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Total lease cost $ 33,275 $ 32,378 $ 38,650

During the fiscal year ended February 2, 2019, the Company recognized rental expense for all leases of $ 34.3 million which included percentage rent expense of $ 3.4 million.

The weighted-average remaining lease term as of January 30, 2021 and February 1, 2020 was 5.4 years and 6.0 years, respectively.

The weighted-average remaining lease term as of January 29, 2022 and January 30, 2021 was 5.3 years and 5.4 years, respectively.

Supplemental operating cash flow information was as follows (in thousands):

Fifty-Two Weeks Ended

January 30, 2021 February 1, 2020

January 29, 2022 January 30, 2021 February 1, 2020

Cash paid for amounts included in the measurement of operating lease liabilities (1)

$ 33,517 $ 27,180 $ 32,702

Right-of-use assets increase as a result of new and modified operating lease liabilities, net $ 11,584 $ 1,268 $ 10,850

(1) $ 2.5 million of lease liabilities were recorded within accounts payable on the Company's Consolidated Balance Sheets as of January 30, 2021, and were paid in the first quarter of fiscal 2022.

Maturity Analysis of Operating Lease Liabilities

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Present value of lease liabilities $ 99,560

(1) $ 2.5 million of lease liabilities are recorded within accounts payable on the Company's Consolidated Balance Sheets as of January 30, 2021, and will be paid in fiscal 2022.

These lease liabilities are not included in the table above.

Vera Bradley, Inc.

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Property, plant, and equipment consisted of the following (in thousands):

2021 February 1,

2022 January 30,

Land and land improvements $ 5,981 $ 5,981

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Fiscal year ended January 29, 2022 $ 9,315

Fiscal year ended February 1, 2020 18,447

Fiscal year ended January 30, 2021 13,483

Fiscal year ended February 1, 2020 18,447

As of January 30, 2021 and February 1, 2020, the Company had no borrowings outstanding and availability of $ 75.0 million under its Credit Agreement.

As of January 29, 2022 and January 30, 2021, the Company had no borrowings outstanding and availability of $ 75.0 million under its Credit Agreement.

Credit Agreement

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The components of income tax expense were as follows (in thousands):

2021 February 1,

2022 January 30,

2021 February 1,

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A breakdown of the Company’s income before income taxes is as follows (in thousands):

2021 February 1,

2022 January 30,

2021 February 1,

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A reconciliation of income tax expense to the amount computed at the federal statutory rate is as follows (in thousands):

2021 February 1,

2022 January 30,

2021 February 1,

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Significant components of deferred tax assets and liabilities were as follows (in thousands):

2021 February 1,

2022 January 30,

Deferred tax assets:

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A reconciliation of the beginning and ending gross amount of unrecognized tax benefits (excluding interest and penalties) is as follows (in thousands):

2021 February 1,

2022 January 30,

2021 February 1,

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Total unrecognized tax benefits are currently not expected to decrease by a significant amount in the next twelve months.

The Company recognized an immaterial amount of interest only, no penalties, related to unrecognized tax benefits in the fiscal years ended February 1, 2020 and February 2, 2019.

The Company recognized an immaterial amount of interest only, no penalties, related to unrecognized tax benefits in the fiscal years ended January 30, 2021 and February 1, 2020.

Unrecognized tax benefits are included within other long-term liabilities in the Company's Consolidated Balance Sheets.

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The Company’s stock-based compensation consists of awards of restricted stock and restricted stock units.

The Company recognized stock-based compensation expense of $ 5.7 million, $ 5.9 million, and $ 4.9 million in the fiscal years ended January 30, 2021, February 1, 2020, and February 2, 2019, respectively.

The Company recognized stock-based compensation expense of $ 4.9 million, $ 5.7 million, and $ 5.9 million in the fiscal years ended January 29, 2022, January 30, 2021, and February 1, 2020, respectively.

Awards of Restricted-Stock Units

The Company reserved 3,000,000 shares of common stock for issuance or transfer under the 2020 Equity and Incentive Plan, which allows for grants of restricted stock units, as well as other equity awards.

There were no restricted stock units granted under the 2020 Equity and Incentive Plan during fiscal 2021.

The Company maintains the 2010 Equity and Incentive Plan for awards granted prior to the effectiveness of the 2020 Equity and Incentive Plan.

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Units Weighted-

Nonvested units outstanding at February 1, 2020 433 $ 12.03 671 $ 11.08

Nonvested units outstanding at January 30, 2021 1,049 $ 5.73 896 $ 8.34

Granted 369 10.22 283 10.24

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In November 2019, the Company filed a counterclaim against the principals of Vesi as personal guarantors for monies owed to the Company by Vesi.

The cases are currently in discovery.

The Company has filed a motion for summary judgement asking the Court to dismiss all claims with prejudice and grant judgement on its counterclaim.

The motion is fully briefed and the Company is awaiting a decision from the Court.

At this time, we are not able to estimate a possible loss or range of loss that may result from this matter or to determine whether such loss, if any, would have a material adverse effect on our financial condition or results of operations due to the fact that the Company is vigorously defending itself and management believes that the Company has a number of meritorious legal defenses.

In April of 2020, Chidimma Igboakaeze filed suit seeking class certification for all current and former hourly-paid employees who worked for the Company within the state of California during the four years preceding the filing until final judgement.

The complaint alleges various violations of the California Labor Code related to wages, overtime, meal and rest breaks, non-compliant wage statements and records and other similar allegations related to employment.

The Plaintiff has also filed a Private Attorney General Act claim with the state of California regarding the same allegations.

The Company denies all liability and intends to vigorously defend itself in the case.

The case is currently in discovery.

The complaint alleged various violations of the California Labor Code related to wages, overtime, meal and rest breaks, non-compliant wage statements and records and other similar allegations related to employment.

The Plaintiff also filed a Private Attorney General Act claim with the state of California regarding the same allegations.

This case was settled in the first quarter of fiscal 2022 for an immaterial amount.

Vera Bradley, Inc.

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Additionally, the Company has the option of making discretionary profit sharing payments to the plan as approved by the board of directors.

As of January 30, 2021, February 1, 2020, and February 2, 2019, no discretionary profit sharing payments had been approved.

As of January 29, 2022, January 30, 2021, and February 1, 2020, no discretionary profit sharing payments had been approved.

The 401(k) contribution match was temporarily suspended beginning in March 2020 as a result of the COVID-19 pandemic and resumed in January 2021.

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Fiscal year ended January 29, 2022 $ 1,929

Fiscal year ended February 1, 2020 1,732

Fiscal year ended January 30, 2021 723

Fiscal year ended February 1, 2020 1,732

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Charitable Contributions .

During each of the fiscal years ended January 30, 2021, February 1, 2020, and February 2, 2019 the Company made charitable contributions of approximately $ 0.1 million to the Vera Bradley Foundation for Breast Cancer (the “Foundation”).

The Foundation was founded by one of the Company’s directors, who is also on the board of directors of the Foundation.

The liability associated with commitments to the Foundation was approximately $ 0.2 million and $ 0.3 million as of January 30, 2021 and February 1, 2020, respectively.

The Vera Bradley Foundation for Breast Cancer (the “Foundation”) was founded by one of the Company’s directors, who is also on the board of directors of the Foundation.

The liability associated with commitments to the Foundation was approximately $ 0.1 million and $ 0.2 million as of January 29, 2022 and January 30, 2021, respectively.

The liability consisted of pass-through donations from customers and is included in other accrued liabilities in the Consolidated Balance Sheets.

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Fiscal year ended January 29, 2022 $ 160

Fiscal year ended February 1, 2020 101

Fiscal year ended January 30, 2021 53

Fiscal year ended February 1, 2020 101

Share Repurchases .

During the fiscal year ended February 2, 2019, the Company repurchased a total of 400,000 shares of common stock from related-parties as described below.

Each transaction was approved by the Company's Audit Committee and effected as part of the 2015 Share Repurchase Program.

R efer to Note 13 h erein for details regarding the Company's current and prior share repurchase programs.

On June 26, 2018, the Company agreed to repurchase 200,000 shares of common stock from the Barbara B Baekgaard 2009 Grantor Retained Annuity Trust (the “Baekgaard Trust”) at a price of $ 14.43 per share, representing an approximate four percent ( 4 %) discount from the closing price of $ 15.03 on June 25, 2018.

The Baekgaard Trust was established by the Company’s co-founder, Barbara Bradley Baekgaard, and is managed by two of Ms.

Baekgaard’s children, Joan Byrne Hall (who is also the spouse of the Company’s chairman) and James Bradley Byrne.

On September 27, 2018, the Company agreed to repurchase 200,000 shares of common stock from the Patricia R.

Miller 2007 Family Trust (the “Miller Trust”) at a price of $ 15.04 per share, representing an approximate three and one half percent ( 3.5 %) discount from the closing price of $ 15.58 on September 26, 2018.

Michael Miller is the trustee of the Miller Trust and is a director of the Company.

Michael Miller and Patricia Miller, the Company's co-founder, are husband and wife.

Vera Bradley, Inc.

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Fiscal Year Ended

2021 February 1,

2022 January 30,

2021 February 1,

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Diluted $ 0.52 $ 0.26 $ 0.47

As of January 30, 2021, February 1, 2020, and February 2, 2019, there were an immaterial number of additional shares issuable upon the vesting of restricted stock units that were excluded from the diluted share calculations because they were anti-dilutive.

As of January 29, 2022, January 30, 2021, and February 1, 2020, there were an immaterial number of additional shares issuable upon the vesting of restricted stock units that were excluded from the diluted share calculations because they were anti-dilutive.

The diluted share calculations include performance-based restricted stock units for completed performance periods.

On December 8, 2015, the Company's board of directors approved a share repurchase program (the “2015 Share Repurchase Program”) authorizing up to $ 50.0 million of repurchases of shares of the Company's common stock.

On November 30, 2017, the board of directors authorized the Company to extend the 2015 Share Repurchase Plan to December 31, 2018.

The 2015 Share Repurchase program was completed on November 27, 2018.

On November 29, 2018, the Company's board of directors approved a new share repurchase plan (the “2018 Share Repurchase Program”) authorizing up to $ 50.0 million of repurchases of shares of the Company's common stock.

On November 29, 2018, the Company's board of directors approved a share repurchase plan (the “2018 Share Repurchase Program”) authorizing up to $ 50.0 million of repurchases of shares of the Company's common stock.

On December 3, 2020, the 2018 Share Repurchase Program was extended through December 11, 2021.

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The board of directors authorized the resumption of the share repurchase program beginning on March 11, 2021.

In December 2021, the Company's board of directors approved a new share repurchase plan (the “2021 Share Repurchase Program”) which authorized Company management to utilize up to $ 50.0 million of available cash for repurchases of shares of the Company's common stock.

The 2021 Share Repurchase Program went into effect beginning December 13, 2021 and expires in December 2024.

During the fiscal year ended January 29, 2022, the Company purchased and held 865,534 shares at an average price of $ 8.94 per share, excluding commissions, for an aggregate amount of $ 7.7 million, under the 2018 and 2021 Share Repurchase Programs.

During the fiscal year ended January 30, 2021, the Company purchased and held 381,835 shares at an average price of $ 7.60 per share, excluding commissions, for an aggregate amount of $ 2.9 million, under the 2018 Share Repurchase Program.

During the fiscal year ended February 1, 2020, the Company purchased and held 1,075,749 shares at an average price of $ 10.52 per share, excluding commissions, for an aggregate amount of $ 11.3 million, under the 2018 Share Repurchase Program.

During the fiscal year ended February 2, 2019, the Company purchased and held 1,293,138 shares at an average price of $ 12.58 per share, excluding commissions, for an aggregate amount of $ 16.3 million.

Of these purchases, 320,296 shares at an average price of $ 8.86 per share, for an aggregate amount of $ 2.8 million, were purchased under the 2018 Share Repurchase Plan.

Vera Bradley, Inc.

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The Company’s treasury shares may be issued under the 2010 Equity and Incentive Plan (with respect to outstanding awards under that plan), under the 2020 Equity and Incentive Plan, or for other corporate purposes.

The Company held $ 1.3 million and $ 9.0 million in short-term investments as of January 30, 2021 and February 1, 2020, respectively.

The following table summarizes the Company’s short-term investments (in thousands):

January 30, 2021 February 1, 2020

corporate debt securities $ 627 $ 3,435

Commercial paper — 2,489

Municipal securities — 1,594

corporate debt securities 668 1,136

asset-backed securities — 323

Total short-term investments $ 1,295 $ 8,977

The Company held $ 14.9 million in long-term investments as of February 1, 2020.

There were no long-term investments as of January 30, 2021.

The following table summarizes the Company’s long-term investments (in thousands):

January 30, 2021 February 1, 2020

corporate debt securities $ — $ 5,613

asset-back securities — 5,498

corporate debt securities — 2,409

Other foreign securities — 810

asset-backed securities — 582

Total long-term investments $ — $ 14,912

There were no material gross unrealized gains or losses on available-for-sale debt securities as of January 30, 2021 and February 1, 2020.

Acquisition of Pura Vida

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Pre-tax Transaction costs totaled $ 2.7 million for the fiscal year ended February 1, 2020.

These costs are recorded within selling, general, and administrative expenses in the Consolidated Statements of Operations and within

Vera Bradley, Inc.

Notes to Consolidated Financial Statements

corporate unallocated expenses.

There were no Transaction costs for the fiscal years ended January 30, 2021 and February 2, 2019.

These costs are recorded within selling, general, and administrative expenses in the Consolidated Statements of Operations and within corporate unallocated expenses.

There were no Transaction costs for the fiscal years ended January 29, 2022 and January 30, 2021.

On July 16, 2019, as contemplated by the Interest Purchase Agreement, the Company and certain of its subsidiaries and the owners of the remaining twenty-five percent ( 25 %) ownership interest in Pura Vida which was not acquired by the Company entered into a Put/Call Agreement.

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The operations of Pura Vida are recorded in the Company’s Consolidated Statements of Operations for the fiscal year ended February 1, 2020, beginning on July 17, 2019, which represents the first full day following the acquisition.

As such, the Company’s financial statements are not comparable with the prior-year period pre sented.

Refer to Note 17 herein for segment-level financial information associated with Pura Vida.

The following unaudited pro forma financial information is

Vera Bradley, Inc.

Notes to Consolidated Financial Statements

intended to provide a sense for what the Company's operating results may have been if the Pura Vida acquisition had occurred at the beginning of fiscal 2019.

The pro forma financial information is not indicative of the results that would have been reflected had the transaction actually occurred as of that date, nor is it necessarily indicative of the Company’s future results.

The financial information includes expense related to supplemental officer wages and fully indemnified state sales tax matters for time periods before the acquisition date.

The Company does not expect these items to have a continuing impact on its consolidated financial statements.

The following adjustments have been made:

• Short-term purchase accounting items, such as the inventory step-up adjustment and earn-out liability adjustment, have been excluded due to their non-recurring nature;

• Definite-lived intangible amortization that exceed s one year has been reflected as if it occurred at the beginning of fiscal 2019;

• Transaction costs have been excluded;

• Tax expense has been estimated at a statutory rate of 25.0 %.

Fifty-Two Weeks Ended

in thousands, except per share data February 1,

2020 February 2,

Pro forma net revenues $ 538,576 $ 484,376

Pro forma net income 23,786 16,708

Pro forma net income attributable to Vera Bradley, Inc.

22,193 18,081

Pro forma basic net income per share attributable to Vera Bradley, Inc.

$ 0.65 $ 0.51

Pro forma diluted net income per share attributable to Vera Bradley, Inc.

$ 0.65 $ 0.51

Redeemable Noncontrolling Interest

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Refer to Note 2 herein for additional information.

Changes in redeemable noncontrolling interest for the fifty-two weeks ended January 30, 2021 and February 1, 2020, were as follows (in thousands):

Changes in redeemable noncontrolling interest for the fifty-two weeks ended January 29, 2022, January 30, 2021, and February 1, 2020 were as follows (in thousands):

Balance at February 2, 2019 $ —

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Balance at January 30, 2021 $ 29,809

Net income attributable to redeemable noncontrolling interest 2,380

Distributions to redeemable noncontrolling interest ( 1,215 )

Balance at January 29, 2022 $ 30,974

Vera Bradley, Inc.

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(1) Amortization expense is recorded within the Pura Vida segment.

February 1, 2020

January 30, 2021

in thousands Gross Basis Accumulated Amortization (1)

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Fiscal 2025 1,409

Total $ 7,555

The total amount of the goodwill as of January 30, 2021, was $ 44.3 million recorded within the Pura Vida segment upon acquisition.

Goodwill is expected to be deductible for tax purposes, limited to the Company's 75 % majority ownership interest.

Refer to Note 2 herein for addition information regarding goodwill.

There were no changes in goodwill for the

The total amount of the goodwill as of January 29, 2022 and January 30, 2021, was $ 44.3 million recorded within the Pura Vida segment upon acquisition.

Goodwill is deductible for tax purposes, limited to the Company's 75 % majority ownership

Vera Bradley, Inc.

Notes to Consolidated Financial Statements

fiscal year ended January 30, 2021.

Changes in goodwill for the fiscal year ended February 1, 2020, were as follows (in thousands):

Balance at February 2, 2019 $ —

Goodwill at acquisition 41,310

Measurement period adjustment 2,944

Balance at February 1, 2020 $ 44,254

Refer to Note 2 herein for addition information regarding goodwill.

There were no changes in goodwill for the fiscal years ended January 29, 2022 and January 30, 2021.

Future impacts of COVID-19, including but not limited to the duration and magnitude of the pandemic, may have an impact on the triggering event assessment or future fair value estimate of goodwill, brand intangible asset, and definite-lived intangible assets, which could lead to material impairment charges.

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These operating segments are components of the Company for which separate financial information is available and for which operating results are evaluated on a regular basis by the chief operating decision maker in deciding how to allocate resources and in assessing the performance of the segments.

The VB Direct segment includes Vera Bradley full-line and factory outlet stores, the Vera Bradley website, verabradley.com, the Vera Bradley online outlet site, and the Vera Bradley annual outlet sale.

The VB Direct segment includes Vera Bradley full-line and factory outlet stores, the Vera Bradley websites, verabradley.com and verabradley.ca, the Vera Bradley online outlet site, and the Vera Bradley annual outlet sale.

Revenues generated through this segment are driven through the sale of Vera Bradley-branded products from Vera Bradley to end consumers.

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No customer accounted for 10% or more of the Company’s net revenues during fiscal years 2022, 2021, and 2020.

The Pura Vida segment represents revenues generated through the Pura Vida websites, www.puravidabracelets.com, www.puravidabracelets.eu, and www.puravidabracelets.ca, and through the distribution of Pura Vida-branded products to wholesale retailers, substantially all of which are located in the United States.

The Pura Vida segment represents revenues generated through the Pura Vida websites, www.puravidabracelets.com, www.puravidabracelets.eu, and www.puravidabracelets.ca, the Pura Vida retail store, and through the distribution of Pura Vida-branded products to wholesale retailers, substantially all of which are located in the United States.

Corporate costs represent the Company’s administrative expenses, which include, but are not limited to:

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Fiscal Year Ended

2021 February 1,

2022 January 30,

2021 February 1,

16 unchanged sentences

Other revenues from Vera Bradley external customers primarily include revenues associated with our stationery, freight, licensing, merchandising, and gift card breakage.

Revenues from external customers for Pura Vida brand products are attributable to sales of accessories and apparel.

Revenues from external customers for Pura Vida brand products are primarily attributable to sales of accessories and apparel.

Other revenues from Pura Vida external customers include revenues associated with freight.

Refer to Note 3 herein for disaggregation of net revenues by reportable segment.

As of January 30, 2021 and February 1, 2020, substantially all of the Company’s long-lived assets were located in the United States.

Vera Bradley, Inc.

Notes to Consolidated Financial Statements

Quarterly Financial Information (Unaudited)

The tables below set forth selected quarterly financial data for each of the last two fiscal years (in thousands, except per share data).

Each of the quarters presented was thirteen weeks in duration.

Fiscal Year Ended January 30, 2021

(unaudited) (unaudited) (unaudited) (unaudited)

Net revenues $ 69,284 $ 131,770 $ 124,849 $ 142,369

Gross profit 34,188 79,621 73,831 77,878

Operating (loss) income ( 25,574 ) 17,499 12,164 8,976

Net (loss) income ( 15,537 ) 8,327 8,974 8,925

Net (loss) income attributable to Vera Bradley, Inc.

( 15,337 ) 7,216 8,874 7,928

Basic net (loss) income per share available to Vera Bradley, Inc.

common shareholders ( 0.66 ) 0.42 0.27 0.24

Diluted net (loss) income per share available to Vera Bradley, Inc.

common shareholders ( 0.66 ) 0.42 0.26 0.23

Reconciliation of net (loss) income available to Vera Bradley, Inc.

common shareholders

Net (loss) income attributable to Vera Bradley, Inc.

$ ( 15,337 ) $ 7,216 $ 8,874 $ 7,928

Excess portion of redeemable noncontrolling interest redemption value adjustment ( 6,800 ) 6,800 — —

Net (loss) income available to Vera Bradley, Inc.

common shareholders $ ( 22,137 ) $ 14,016 $ 8,874 $ 7,928

(1) Includes $ 3.8 million of store impairment charges, $ 2.7 million of intangible asset amortization and an adjustment of the Pura Vida purchase-related earn-out liability, $ 1.5 million of technology re-platforming charges, $ 1.3 million for charges related to the cancellation of certain purchase orders as a result of COVID-19, and $ 0.2 million of department store exit costs as a result of COVID-19.

These adjustments totaled $ 5.1 million collectively attributable to Vera Bradley, Inc.

after the associated tax benefit.

(2) Includes $ 2.3 million of intangible asset amortization and $ 1.3 million of technology-related re-platforming charges ($ 3.7 million collectively attributable to Vera Bradley, Inc.

after the associated tax benefit).

(3) Includes $ 2.3 million of intangible asset amortization ($ 1.4 million attributable to Vera Bradley, Inc, after the associated tax benefit).

(4) Includes $ 3.6 million of store impairment charges and $ 2.0 million of intangible asset amortization ($ 2.6 million collectively attributable to Vera Bradley, Inc.

after the associated tax benefit).

Fiscal Year Ended February 1, 2020

(unaudited) (unaudited) (unaudited) (unaudited)

Net revenues $ 91,003 $ 119,785 $ 127,501 $ 156,923

Gross profit 50,468 67,333 67,870 86,130

Operating (loss) income ( 3,645 ) 7,348 ( 1,476 ) 17,247

Net (loss) income ( 2,405 ) 5,718 ( 982 ) 12,913

Net (loss) income attributable to Vera Bradley, Inc.

( 2,405 ) 5,854 139 12,459

Basic net (loss) income per share available to Vera Bradley, Inc.

common shareholders ( 0.07 ) 0.17 0.00 0.37

Diluted net (loss) income per share available to Vera Bradley, Inc.

common shareholders ( 0.07 ) 0.17 0.00 0.37

(1) Includes $ 0.8 million ($ 0.6 million after the associated tax benefit) for Pura Vida transaction costs.

Refer to Note 15 herein for additional information.

(2) Pura Vida operating results included beginning July 17, 2019, the first full business day following the acquisition of a majority interest.

Includes $ 1.9 million of Pura Vida transaction costs, Pura Vida purchase accounting adjustments of

Vera Bradley, Inc.

Notes to Consolidated Financial Statements

$ 1.4 million (consisting of inventory step-up amortization and intangible asset amortization), and $ 0.7 million of technology re-platforming charges ($ 2.9 million collectively attributable to Vera Bradley, Inc.

after the associated tax benefit).

Refer to Note 15 herein for additional information regarding the Pura Vida acquisition.

(3) Includes Pura Vida purchase accounting adjustments of $ 10.5 million (consisting of inventory step-up amortization, intangible asset amortization, and accretion expense associated with the earn-out liability), and $ 1.1 million of technology re-platforming charges ($ 6.8 million collectively attributable to Vera Bradley, Inc.

after the associated tax benefit).

Refer to Note 15 herein for additional information regarding the Pura Vida acquisition.

(4) Includes $ 1.6 million related to incremental stock-based compensation associated with Pura Vida performance and Pura Vida transaction bonuses, $ 1.2 million of technology re-platforming charges, and Pura Vida purchase accounting net adjustments of $ 0.1 million (consisting of intangible asset amortization and inventory step-up amortization, partially offset by an adjustment to reduce the earn-out liability).

The adjustments totaled $ 1.9 million collectively attributable to Vera Bradley, Inc.

after the associated tax benefit.

Refer to Note 15 herein for additional information regarding the Pura Vida acquisition.

Information in any one quarterly period should not be considered indicative of annual results due to the effect of seasonality of the business.

Fiscal 2021 quarterly data was impacted by the COVID-19 pandemic.

As of January 29, 2022 and January 30, 2021, substantially all of the Company’s long-lived assets were located in the United States.

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

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 8. Financial Statements and Supplementary Data