As used in this report, all references to “we,” “us,” “our,” and “the Company,” refer to Chico’s FAS, Inc. and all of its wholly-owned subsidiaries.

Our fiscal years end on the Saturday closest to January 31 and are designated by the calendar year in which the fiscal year commences. Operating results for the thirteen weeks and thirty-nine weeks ended May 2,October 31, 2015 are not necessarily indicative of the results that may be expected for the entire year.

Performance-based restricted stock unit activity for the thirteenthirty-nine weeks ended May 2,October 31, 2015 was as follows:

Earnings per share (“EPS”) is determined using the two-class method, as it is more dilutive than the treasury stock method. Basic EPS excludes dilution and is computed by dividing net income available to common stockholders by the weighted-average number of common shares outstanding during the period, including participating securities. Diluted EPS reflects the dilutive effect of potential common shares from non-participating securities such as stock options and PSUs.

For the thirteen weeks ended May 2,October 31, 2015 and May 3,November 1, 2014, 0.70.3 million and 0.70.5 million potential shares of common stock, respectively, were excluded from the diluted per share calculation relating to non-participating securities, because the effect of including these potential shares was antidilutive.

We consider all marketable securities available-for-sale, including those with maturity dates beyond 12 months, and therefore classify these securities within current assets on the condensed consolidated balance sheets as they are available to support current operational liquidity needs. Marketable securities are carried at fair value, with the unrealized holding gains and losses, net of income taxes, reflected in accumulated other comprehensive income until realized. For the purposes of computing realized and unrealized gains and losses, cost is determined on a specific identification basis.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. Entities are required to use a three-level hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability on the measurement date. The three levels are defined as follows: 

We measure certain financial assets at fair value on a recurring basis, including our marketable securities, which are classified as available-for-sale securities, certain cash equivalents, specifically our money market accounts, and assets held in our non-qualified deferred compensation plan. The money market accounts are valued based on quoted market prices in active markets. Our marketable securities are generally valued based on other observable inputs for those securities (including market corroborated pricing or other models that utilize observable inputs such as interest rates and yield curves) based on information provided by independent third party pricing entities, except for U.S. government securities which are valued based on quoted market prices in active markets. The investments in our non-qualified deferred compensation plan are valued using quoted market prices and are included in other assets on our condensed consolidated balance sheets.

Fair value calculations contain significant judgments and estimates, which may differ from actual results due to, among other things, economic conditions, changes to the business model or changes in operating performance.

During the quarter ended May 2,October 31, 2015, we did not make any transfers between Level 1 and Level 2 financial assets. Furthermore, as of May 2,October 31, 2015, January 31, 2015 and May 3,November 1, 2014, we did not have any Level 3 cash equivalents or marketable securities. We conduct reviews on a quarterly basis to verify pricing, assess liquidity, and determine if significant inputs have changed that would impact the fair value hierarchy disclosure.

In accordance with the provisions of the guidance, we categorized our financial assets, which are valued on a recurring basis, based on the priority of the inputs to the valuation technique for the instruments, as follows:

On May 4, 2015, we entered into a credit agreement (the "Agreement") among the Company, JPMorgan Chase Bank, N.A. as Administrative Agent, Bank of America, N.A., as Syndication Agent and the Lenders party hereto. Our obligations under the Agreement are guaranteed by certain of our material U.S. subsidiaries. The Agreement provides for a term loan commitment in the amount of $100.0 million, of which $100.0 million was drawn at closing, and matures on May 4, 2020, payable in quarterly installments, as defined in the Agreement, with the remainder due at maturity. The Agreement also provides for a $100.0 million revolving credit facility, of which $24.0 million was drawn at closing and is expected to bewas repaid within one year.in the second quarter of 2015. The revolving credit facility matures on May 4, 2020. The Agreement has borrowing options which accrue interest by reference, at our election, at either an adjusted eurodollar rate tied to LIBOR or an Alternate Base Rate plus an interest rate margin, as defined in the Agreement. The Agreement contains customary representations, warranties, and affirmative covenants, including the requirement to maintain certain financial ratios. The Company was in compliance with the applicable ratio requirements and other covenants at October 31, 2015.

On May 4, 2015, in connection with our entry into the Agreement, we repaid and terminated, with no prepayment penalties, the $124.0 million outstanding obligation under our Credit Facility.2011 revolving credit facility. We used the proceeds from the initial draw of the term loan and revolving credit facility of the Agreement to repay such obligations.

In December 2013, we announced a $300.0 million share repurchase authorization, and immediately prior to the execution of the accelerated stock repurchase agreements ("ASR AgreementsAgreements") described below, we had $290.0 million remaining under the existing authority.

In March 2015, we entered into ASR Agreements with each of Merrill Lynch, Pierce, Fenner and Smith Incorporated ("MerillMerrill Lynch"), as agent for Merrill Lynch International, and J.P. Morgan Securities, LLC ("JP Morgan"), as agent for JPMorgan Chase Bank, N.A., to purchase $250.0 million in outstanding shares of our common stock. Under the ASR Agreements, we made a payment of approximately $125.0 million to each of Merrill Lynch and JP Morgan and received from each of them an initial delivery of approximately 5.35 million common shares, which represents approximately 75% of the number of shares expected to be repurchased based on the share price on the date of the agreement.shares. The value of the initial shares received on the date of purchase was approximately $187.5 million. In the second quarter of fiscal 2015, Merrill Lynch and JP Morgan delivered an additional 3.9 million reflecting a $17.50 price per share.shares upon completion of the ASR Agreements, valued at approximately $62.5 million.

We accounted for the ASR Agreements as treasury stock repurchase transactions, reducing the shares outstanding by the 10.7 million common shares initially repurchased and resulted in an immediate reduction of the outstanding shares used to calculate the weighted-average common shares outstanding for basic and diluted earnings per share. In accordance with authoritative guidance, we recordedThe additional 3.9 million shares delivered resulted in a reduction of the remaining $62.5 million as a forward contract indexed to our common stock within additional paid-in capital since it met the criteria for equity classification. The specific final number ofoutstanding shares to be repurchased will be based on the volume-weighted average share pricedate of our common stock duringdelivery in the calculation periodsecond quarter of the ASR Agreements. In the unlikely event we are required to deliver value to Merrill Lynch and/or JP Morgan at the end of the purchase period, we, at our option, may elect to settle in shares or cash. The ASR Agreements are scheduled to expire no later than Octoberfiscal 2015.

Following the consummation of the ASR Agreements, we had approximately $40.0 million remaining under our share repurchase program. The repurchase program has no specific termination date and will expire when we have repurchased all securities authorized for repurchase thereunder, unless terminated earlier by our Board of Directors. There were no share repurchases during the third quarter of fiscal 2015.

We utilize an integrated omni-channel approach to managing our business. We want our customers to experience our brands, not a channel within our brands, and view our various sales channels as a single, integrated process rather than as separate sales channels operating independently. This approach allows our customers to browse, purchase, return, or exchange our merchandise through whatever sales channel and at whatever time is most convenient for her. As a result, we track total sales and comparable sales on a combined basis.

Net sales for the firstthird quarter of fiscal 2015 were $693.3$641.2 million, an increasea decrease of 1.7%3.7% compared to $681.6$665.6 million in last year's firstthird quarter. The increasedecrease reflected 56 net new stores for a 3.3% square footage increase since last year’s first quarter, partially offset by a 0.1% decrease in comparable sales.sales and a 0.8% net decrease in selling square footage. The 0.1%3.3% decrease in comparable sales for the firstthird quarter was following a 2.6%1.6% decrease in last year’s firstthird quarter, reflecting approximately flata decrease in average dollar sale and transaction count.

Net sales for the year-to-date period of fiscal 2015 were $2.015 billion, a decrease of 0.2% compared to $2.018 billion in last year’s year-to-date period. Net income for the year-to-date period of fiscal 2015 was $23.0 million, or $0.16 per diluted share, compared to net income of $96.5 million, or $0.63 per diluted share, in last year's year-to-date period. Results for the year-to-date period of fiscal 2015 include the impact of Boston Proper non-cash goodwill and intangible impairment charges of $71.0 million after-tax, or $0.50 per diluted share, restructuring and strategic charges primarily related to property and equipment impairment charges, employee-related costs and lease termination charges of $9.3$21.2 million after-tax, or $0.15 per diluted share, a tax benefit related to the expected disposition of Boston Proper's stock of $23.8 million, or $0.17 per diluted share, and the impact of Boston Proper's operating loss of $8.2 million after tax, or $0.06 per diluted share. The change in earnings per share also reflects a decrease in net income, partially offset by the impact of approximately 11.314.6 million shares repurchased since the end of the firstthird quarter last year, all of which 10.7 million were repurchased in the first quarter of fiscal 2015.

Our overall business strategy is focused on building and cultivating a portfolio of high-performing retail brands serving the fashion needs of women 35 years and older. In the near term, we are focused on increasing the sales volume and profitability of our existing brands. Over the long term, we may build our brand portfolio by considering the organic development or acquisition of other specialty retail concepts when our research indicates that the opportunity complements our current brands and is appropriate and in the best interest of the shareholders.

We pursue the growth of the brands in our portfolio by building our omni-channel capabilities, which includes managing our store base and our growing online presence, executing innovative marketing plans, effectively leveraging expenses and optimizing the potential of each of our four brands. As part of our continuous efforts to improve our overall strategy while seeking to enhance and support our long-term growth, in the fourth quarter offiscal 2014, we initiated new capital allocation and cost reduction initiatives that are focused on advancing our omni-channel capabilities in order to improve the overall customer experience, reducing overall capital expenditures, re-balancing our store fleet, effectively managing other expenses and improving our inventory management.

Net sales for the firstthird quarter increased 1.7%decreased 3.7% to $693.3$641.2 million from $681.6$665.6 million in last year’s firstthird quarter, primarily reflecting 56 net new stores for a 3.3% decrease in comparable sales and a 0.8% net decrease in selling square footage increase since last year's first quarter, partially offset by a 0.1% decrease in comparable sales.third quarter. The 0.1%3.3% decrease in comparable sales for the firstthird quarter was following a 2.6%1.6% decrease in last year’s firstthird quarter, reflecting approximately flata decrease in average dollar sale and transaction count.

The following table depicts comparable sales percentages by Chico's, WH|BM and Soma for the thirteen weeks ended May 2,October 31, 2015 and May 3,November 1, 2014:

For the firstthird quarter of fiscal 2015, gross margin was $395.8$350.5 million compared to $382.9$363.8 million in last year’s firstthird quarter. Gross margin was 57.1%54.7% of net sales, a 90 basis point increase fromin line with the same period last year’s first quarter, primarily reflecting a decrease in promotional activity in response to improved inventory management, partially offset by the impact of product delayed by port issues in 2015 and the return to accrued incentive compensation at a target level.year.

These statements, including those in this Form 10-Q and those in press releases or made orally, relate to expectations concerning matters that are not historical fact and may include the words or phrases such as “expects,” “believes,” “anticipates,” “plans,” “estimates,” “approximately,” “our planning assumptions,” “future outlook,” and similar expressions. Except for historical information, matters discussed in such oral and written statements, including this Form 10-Q, are forward-looking statements. These forward-looking statements are based largely on information currently available to our management and on our current expectations, assumptions, plans, estimates, judgments and projections about our business and our industry, and are subject to various risks and uncertainties that could cause actual results to differ materially from historical results or those currently anticipated. Although we believe our expectations are based on reasonable estimates and assumptions, they are not guarantees of performance and there are a number of known and unknown risks, uncertainties, contingencies, and other factors (many of which are outside our control) that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. Accordingly, there is no assurance that our expectations will, in fact, occur or that our estimates or assumptions will be correct, and we caution investors and all others not to place undue reliance on such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those described in Item 1A, “Risk Factors” in our Annual Report on Form 10-K filed with the SEC on March 9, 2015 and the following:

These potential risks and uncertainties include: the financial strength of retailing in particular and the economy in general; the extent of financial difficulties that may be experienced by customers; our ability to secure and maintain customer acceptance of styles and store concepts; the ability to maintain an appropriate level of inventory; the extent and nature of competition in the markets in which we operate; the extent of the market demand and overall level of spending for women’s private branded clothing and related accessories; the effectiveness of our brand awareness and marketing programs; the adequacy and perception of customer service; the ability to respond to actions of activist shareholders and others; the ability to coordinate product development with buying and planning; the quality of merchandise received from suppliers; the ability to efficiently, timely and successfully execute significant shifts in the countries from which merchandise is supplied; the ability of

All written or oral forward-looking statements that are made or attributable to us are expressly qualified in their entirety by this cautionary notice. The forward-looking statements included herein are only made as of the date of this Quarterly Report on Form 10-Q. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Our exposure to interest rate risk relates in part to our revolving line of credit with our bank. On May 4, 2015, we entered into a new credit agreement, and repaid, with no prepayment penalties, the $124.0 million outstanding obligation under our existing Credit Facility, as further discussed in Note 7.11. The new agreement,Agreement, which matures on May 4, 2020, has borrowing options which accrue interest by reference, at our election, at either an adjusted eurodollar rate tied to LIBOR or an Alternate Base Rate plus an interest rate margin, as defined in the Agreement. An increase or decrease in market interest rates of 100 basis points would not have a material effect on annual interest expense.