(d) Recently Issued Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-09, "Revenue from Contracts with ~~Customers.~~Customers (Topic 606)." ASU 2014-09 clarifies the principles for recognizing revenue from contracts with ~~customers. The update~~customers and outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. ~~In August 2015, the FASB issued ASU 2015-14, "Revenue from Contracts with Customers: Deferral of the Effective Date." ASU 2015-14 deferred the~~The effective date of ~~ASU 2014-09 to~~this pronouncement is for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted for annual reporting periods beginning after December 15, 2016, including interim periods within those annual periods. In the first six months of fiscal 2016, the FASB issued guidance clarifying the interpretation of certain principles of ASU 2014-09. On ~~the effective date,~~February 4, 2018, the Company ~~may use either a full retrospective approach or a~~adopted the pronouncement using the modified retrospective ~~approach to adopt ASU 2014-09. While~~method by recognizing the ~~Company is currently evaluating the impact of this ASU, it is not expected to materially impact our consolidated financial statements. Other areas which could be impacted, including the recognition~~cumulative effect of gift card breakage ~~income, may be identified~~ as an adjustment to retained earnings resulting in a $0.5 million increase to retained earnings. The comparative information for the ~~Company continues its evaluation of~~years ended prior to February 4, 2018 were not restated to comply with the ~~ASU.~~pronouncement.

In February 2016, the FASB issued ASU 2016-02, “Leases.” ASU 2016-02 requires that lease arrangements longer than 12 months result in an entity recognizing an asset and a liability. The updated guidance is effective for interim and annual periods beginning after December 15, 2018, and early adoption is permitted. The standard requires use of the modified retrospective transition approach. While the Company is currently evaluating this standard, given the significant amount of leases the Company is party to, the Company expects this standard will have a significant impact on the Company's consolidated financial statements from the recognition of right of use assets and related liabilities. The Company plans to adopt this ~~standard~~pronouncement in the first quarter of fiscal 2019, coinciding with the ~~standard’s~~pronouncement's effective date. The Company’s ability to adopt this standard depends on various factors including system readiness and completing an analysis of information necessary to quantify the financial statement impact. The Company has established a cross-functional team to implement the pronouncement and the Company is finalizing its implementation of a leasing software solution, its assessment of the practical expedients and policy elections offered by the standard, and changes to the business processes, systems and controls to support the adoption of this standard. While the Company is still evaluating the impact of this new guidance on its consolidated financial statements, it expects it will result in a significant increase in total assets and total liabilities on the Company’s balance sheet given that the Company has a significant number of leases for its stores.

In ~~March 2016,~~August 2018, the FASB issued ASU ~~2016-09, "Improvements to Employee Share-Based Payment Accounting.~~2018-15, "Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract." ASU ~~2016-09 affects all entities~~2018-15 requires implementation costs incurred by customers in cloud computing arrangements to be deferred over the noncancellable term of the cloud computing arrangements plus any optional renewal periods (1) that ~~issue share-based payment awards~~are reasonably certain to ~~their employees. This accounting standards update makes several modifications to~~be exercised by the ~~accounting~~customer or (2) for ~~employee share-based payment transactions, including~~which exercise of the ~~requirement that~~renewal option is controlled by the ~~excess income tax benefits or deficiencies that arise when the tax consequences~~cloud service provider. The effective date of share-based compensation differ from amounts previously recognized in the consolidated statement of operations be recognized as income tax benefit or expense in the consolidated statement of operations rather than as additional paid-in capital in the consolidated balance sheets. The guidance also clarifies the classification of components of share-based awards on the consolidated statement of cash flows such that excess income tax benefits should not be presented separately from other income taxes in the consolidated statement of cash flows and, thus, should be classified as an operating activity rather than a financing activity as they are under the current guidance. ASU 2016-09this pronouncement is ~~effective~~ for ~~financial statements issued for annual reporting periods~~fiscal years beginning after December 15, ~~2016~~2019, and interim periods within those ~~years.~~fiscal years, and early adoption is permitted. The standard can be adopted either using the prospective or retrospective transition approach. During the thirteen weeks ended November 3, 2018, the Company adopted ~~this standard prospectively in~~ the ~~first quarter of fiscal 2017. This standard will result in~~pronouncement using the prospective transition method and it did not have a ~~decrease or increase~~significant impact to the Company's effective tax rate, net income, and earnings per share based upon the requirement to recognize the excess income tax benefits or deficiencies in the consolidated statements of operations and change the Company's earnings per share calculation to exclude excess tax benefits previously assumed under the treasury stock method. No changes were required related to the classification of employee taxes paid for withheld shares in the Company's consolidated statements of cash flows since the Company has historically classified these within financing cash flows.financial statements.

(e) Use of Estimates

The preparation of the consolidated financial statements requires management of the Company to make estimates and assumptions that affect the reported amount of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include the carrying amount of property and equipment, valuation allowances for inventories, income taxes and share-based compensation expense.

(f) Fair Value of Financial Instruments

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities measured at fair value are classified using the following hierarchy, which is based upon the transparency of inputs to the valuation at the measurement date:

Level 1: Quoted market prices in active markets for identical assets or liabilities.

Level 2: Inputs, other than Level 1, that are either directly or indirectly observable.

Level 3: Unobservable inputs developed using the Company’s estimates and assumptions which reflect those that market participants would use.

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

The Company’s financial instruments consist primarily of cash equivalents, short-term and long-term investment securities, accounts payable, and borrowings, if any, under a line of credit. The Company believes that: (1) the carrying value of cash equivalents and accounts payable are representative of their respective fair value due to the short-term nature of these instruments; and (2) the carrying value of the borrowings, if any, under the line of credit approximates fair value because the line of credit’s interest rates vary with market interest rates. Under the fair value hierarchy, the fair market values of the short-term and long-term investments in corporate bonds are level 1 while the short-term and long-term investments in ~~certificates of deposits and municipals~~municipal bonds are level 2. The fair market values of level 2 instruments are determined by management with the assistance of a third party pricing service. Since quoted prices in active markets for identical assets are not available, these prices are determined by the third party pricing service using observable market information such as quotes from less active markets and quoted prices of similar securities.

As of November 3, 2018, February 3, 2018, and October 28, 2017, ~~January 28, 2017, and October 29, 2016,~~ the Company had cash equivalents of ~~$16.7~~$84.9 million, ~~$36.3~~$91.2 million and ~~$35.8~~$16.7 million, respectively. The Company’s cash equivalents consist of credit and debit card receivables, money market funds, ~~certificates of deposit, and short-term municipal bonds~~ and corporate ~~bonds.~~bonds, which mature in less than 90 days. Fair value for cash equivalents was determined based on ~~Level~~level 1 inputs.

As of November 3, 2018, February 3, 2018, and October 28, 2017, ~~January 28, 2017, and October 29, 2016,~~ the Company's short-term and long-term investment securities are classified as held-to-maturity since the Company has the intent and ability to hold the investments to maturity. Such securities are carried at amortized cost plus accrued interest and consist of the following (in thousands):


	As of October 28, 2017								As of November 3, 2018
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Market Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Market Value
Short-term:
Corporate bonds	$	50,778	$	—	$	46	$	50,732	$	82,710	$	—	$	194	$	82,516
Municipal bonds	5,900		—		—		5,900		2,319		—		7		2,312
Total	$	56,678	$	—	$	46	$	56,632	$	85,029	$	—	$	201	$	84,828

Long-term:
Corporate bonds	$	23,177	$	—	$	98	$	23,079
Total	$	23,177	$	—	$	98	$	23,079

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion together with “Selected Financial Data,” and the consolidated financial statements and related notes included in our Annual Report on Form 10-K for our fiscal year ended ~~January 28, 2017~~February 3, 2018 and referred to herein as the "Annual Report," and the consolidated financial statements and related notes as of and for the thirteen and thirty-nine weeks ended~~October 28, 2017~~ November 3, 2018 included in Part I, Item I of this Quarterly Report on Form 10-Q. The statements in this discussion regarding expectations of our future performance, liquidity and capital resources and other non-historical statements are forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, the risks and uncertainties described below in “Special Note Regarding Forward-Looking Statements” and in Part II, Item 1A "Risk Factors." Our actual results may differ materially from those contained in or implied by any forward-looking statements.

We operate on a fiscal calendar widely used by the retail industry that results in a given fiscal year consisting of a 52- or 53-week period ending on the Saturday closest to January 31 of the following year. References to "fiscal year 2018" or "fiscal 2018" refer to the period from February 4, 2018 to February 2, 2019, which is a 52-week fiscal year. References to "fiscal year 2017" or "fiscal 2017" refer to the period from January 29, 2017 to February 3, 2018, ~~and consists of~~which is a 53-week ~~fiscal year. References to "fiscal year 2016" or "fiscal 2016" refer to the period from January 31, 2016 to January 28, 2017 and consists of a 52-week~~ fiscal year. The fiscal quarters ended November 3, 2018 and October 28, 2017 ~~and October 29, 2016~~ refer to the thirteen weeks ended as of those dates. The year-to-date periods ended November 3, 2018 and October 28, 2017 ~~and October 29, 2016~~ refer to the thirty-nine weeks ended as of those dates. Historical results are not necessarily indicative of the results to be expected for any future period and results for any interim period may not necessarily be indicative of the results that may be expected for a full year.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts or present facts or conditions, such as statements regarding our future financial condition or results of operations, our prospects and strategies for future growth, the introduction of new merchandise, and the implementation of our marketing and branding strategies. In many cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or the negative of these terms or other comparable terminology.

The forward-looking statements contained in this Quarterly Report on Form 10-Q reflect our views as of the date of this report about future events and are subject to risks, uncertainties, assumptions and changes in circumstances that may cause events or our actual activities or results to differ significantly from those expressed in any forward-looking statement. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future events, results, actions, levels of activity, performance or achievements. A number of important factors could cause actual results to differ materially from those indicated by the forward-looking statements, including, but not limited to, those factors described in Part I, Item 1A “Risk Factors” in our Annual Report, as amended by the risk factors included in Part II, Item 1A "Risk Factors" in this Quarterly Report on Form 10-Q. These factors include without limitation:

•failure to successfully implement our growth strategy;

•disruptions in our ability to select, obtain, distribute and market merchandise profitably;

•reliance on merchandise manufactured outside of the United States;

•dependence on a volume of traffic to our stores;

•inability to attract and retain qualified employees;

•inability to successfully build, operate or expand our distribution centers or network capacity;

•disruptions to our distribution network or the timely receipt of inventory;

•extreme weather conditions in the areas in which our stores are located could negatively affect our business and results of operations;

•failure to secure customers’ confidential or credit card information, or other private data relating to our employees or our company;

•increased operating costs or exposure to fraud or theft due to customer payment-related ~~risk;~~risks;

•inability to increase sales and improve the efficiencies, costs and effectiveness of our operations;

•dependence on our executive officers, senior management and other key personnel or inability to hire additional qualified personnel;

•inability to successfully manage our inventory balances and inventory shrinkage;

•inability to meet our lease obligations;

•changes in our competitive environment, including increased competition from other retailers and the presence of online retailers;

•increasing costs due to inflation, increased operating costs, wage rate increases or energy prices;

•the seasonality of our business;

•inability to successfully implement our expansion tointo online retail;

•disruptions to our information technology systems in the ordinary course, including data breaches by online attackers, or as a result of system upgrades;

•the impact of damage, breaches or interruptions to our technology systems;

failure to maintain adequate internal controls;

•complications with the design or implementation of the new enterprise resource system;

•natural disasters, adverse weather conditions, pandemic outbreaks, global political events, war and terrorism;

•the impact of changes in tax legislation;

current economic conditions and other economic factors;

•

the impact of governmental laws and regulations;

•the direct and indirect impact of recent and potential tariffs imposed and proposed by the United States on foreign imports, including, without limitation, the tariffs themselves, any counter-measures thereto and any indirect effects on consumer discretionary spending, which could increase the cost to us of certain products, lower our margins, increase our import related expenses, and reduce consumer spending for discretionary items, each of which could have a material adverse effect on our business, financial condition and results of future operations;

the impact of changes in accounting standards;

the impact to our financial performance related to insurance programs;

the costs and consequences of legal proceedings;

•inability to protect our brand name, trademarks and other intellectual property rights;

•the impact of product and food safety claims and effects of legislation;

•inability to obtain additional financing, if needed;

•restrictions imposed by our indebtedness on our current and future operations; and

•regulations related to conflict minerals.

Readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on these forward-looking statements. All of the forward-looking statements we have included in this Quarterly Report on Form 10-Q are based on information available to us on the date of this report. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as otherwise required by law.

Overview

Five Below, Inc. (collectively referred to herein with its wholly owned subsidiary as "we," "us," or "our") is a rapidly growing specialty value retailer offering a broad range of trend-right, high-quality merchandise targeted at the teen and pre-teen customer. We offer a dynamic, edited assortment of exciting products, ~~all~~ priced at $5 and below, including select brands and licensed merchandise across our category worlds. As of ~~October 28, 2017,~~November 3, 2018, we operated ~~625~~745 stores in 3233 states.

In August 2016, we commenced selling merchandise on the internet, through our fivebelow.com e-commerce website. We launched our e-commerce operation as an additional channel to service our customers. All e-commerce sales, which includes shipping and handling revenue, are included in net sales and beginning with the third fiscal quarter of 2016, are included in comparable sales. Our e-commerce expenses will have components classified as both cost of goods sold and selling, general and administrative expenses.

On December 22, 2017, the Tax Cuts and Jobs Act (the "TCJA") was enacted. The TCJA includes a numbers of changes to existing U.S. tax laws that impact us, most notably a reduction of the U.S. corporate tax rate from 35% to 21% for tax years beginning after December 31, 2017. We will continue to analyze additional information and guidance related to the TCJA as supplemental legislation, regulatory guidance, or evolving technical interpretations become available. See discussion below under "Income Tax Expense" for further information about the tax benefits and expenses that we recognized this year. In fiscal 2018 and future years, we may invest a portion of any savings generated by the TCJA into expenses that could significantly increase and impact the comparability between periods of Cost of Goods Sold and Gross Profit, Selling, General and Administrative Expenses and Operating Income.

How We Assess the Performance of Our Business

In assessing the performance of our business, we consider a variety of performance and financial measures. These key measures include net sales, comparable sales, cost of goods sold and gross profit, selling, general and administrative expenses and operating income.

Net Sales

Net sales constitute gross sales net of merchandise returns for damaged or defective goods. Net sales consist of sales from comparable stores, non-comparable stores, and e-commerce, which includes shipping and handling revenue. Revenue from the sale of gift cards is deferred and not included in net sales until the gift cards are redeemed to purchase ~~merchandise.~~merchandise or as breakage revenue in proportion to the pattern of redemption of the gift cards by the customer.

Our business is seasonal and as a result, our net sales fluctuate from quarter to quarter. Net sales are usually highest in the fourth fiscal quarter due to the year-end holiday season.

Comparable Sales

Comparable sales include net sales from stores that have been open for at least 15 full months from their opening date, and e-commerce sales. Comparable stores include the following:

Stores that have been remodeled while remaining open;

Stores that have been relocated within the same trade area, to a location that is not significantly different in size, in which the new store opens at about the same time as the old store closes; and

Stores that have expanded, but are not significantly different in size, within their current locations.

For stores that are relocated or expanded, the following periods are excluded when calculating comparable sales:

The period beginning when the closing store receives its last merchandise delivery from one of our distribution centers through:


▪	the last day of the fiscal year in which the store was relocated or expanded (for stores that increased significantly in size); or


▪	the last day of the fiscal month in which the store re-opens (for all other stores); and

The period beginning on the first anniversary of the date the store received its last merchandise delivery from one of our distribution centers through the first anniversary of the date the store re-opened.

Comparable sales exclude the 53rd week of sales for 53-week fiscal years. In the 52-week fiscal year subsequent to a 53-week fiscal year, we exclude the sales in the non-comparable week from the same-store sales calculation.

Due to the 53rd week in fiscal 2017, comparable sales for the thirteen and thirty-nine weeks ended November 3, 2018 are reported on a restated calendar basis. Reference to the "restated calendar” is based on using the National Retail Federation's restated calendar comparing similar weeks, which are the thirteen weeks from August 5, 2018 to November 3, 2018 as compared to the thirteen weeks from August 6, 2017 to November 4, 2017 and the thirty-nine weeks from February 4, 2018 to November 3, 2018 as compared to the thirty-nine weeks from February 5, 2017 to November 4, 2017.

There may be variations in the way in which some of our competitors and other retailers calculate comparable or “same store” sales. As a result, data in this Quarterly Report on Form 10-Q regarding our comparable sales may not be comparable to similar data made available by other retailers. Non-comparable sales are comprised of new store sales, sales for stores not open for a full 15 months, and sales from existing store relocation and expansion projects that were temporarily closed (or not receiving deliveries) and not included in comparable sales.

Measuring the change in fiscal year-over-year comparable sales allows us to evaluate how our store base is performing. Various factors affect comparable sales, including:

consumer preferences, buying trends and overall economic trends;

our ability to identify and respond effectively to customer preferences and trends;

our ability to provide an assortment of high-quality, trend-right and everyday product offerings that generate new and repeat visits to our stores;

the customer experience we provide in our stores and online;

the level of traffic near our locations in the power, community and lifestyle centers in which we operate;

competition;

changes in our merchandise mix;

pricing;

our ability to source and distribute products efficiently;

the timing of promotional events and holidays;

the timing of introduction of new merchandise and customer acceptance of new merchandise;

our opening of new stores in the vicinity of existing stores;

the number of items purchased per store visit; and

weather conditions.

Opening new stores is an important part of our growth strategy. As we continue to pursue our growth strategy, we expect that a significant percentage of our net sales will continue to come from new stores not included in comparable sales. Accordingly, comparable sales is only one measure we use to assess the success of our growth strategy.

Cost of Goods Sold and Gross Profit

Gross profit is equal to our net sales less our cost of goods sold. Gross margin is gross profit as a percentage of our net sales. Cost of goods sold reflects the direct costs of purchased merchandise and inbound freight, as well as shipping and handling costs, store occupancy, distribution and buying expenses. Shipping and handling costs include both internal and third-party fulfillment and shipping costs related to our e-commerce operations. Store occupancy costs include rent, common area maintenance, utilities and property taxes for all store locations. Distribution costs include costs for receiving, processing, warehousing and shipping of merchandise to or from our distribution centers and between store locations. Buying costs include compensation expense and other costs for our internal buying organization, including our merchandising and product development team and our planning and allocation group. These costs are significant and can be expected to continue to increase as our company grows.

The components of our cost of goods sold may not be comparable to the components of cost of goods sold or similar measures of our competitors and other retailers. As a result, data in this Quarterly Report on Form 10-Q regarding our gross profit and gross margin may not be comparable to similar data made available by our competitors and other retailers.

The variable component of our cost of goods sold is higher in higher volume quarters because the variable component of our cost of goods sold generally increases as net sales increase. We regularly analyze the components of gross profit as well as gross margin. Any inability to obtain acceptable levels of initial markups, a significant increase in our use of markdowns, and a significant increase in inventory shrinkage or inability to generate sufficient sales leverage on the store occupancy, distribution and buying components of cost of goods sold could have an adverse impact on our gross profit and results of operations. Changes in the mix of our products may also impact our overall cost of goods sold.

Selling, General and Administrative Expenses

Selling, general and administrative, or SG&A, expenses are composed of payroll and other compensation, marketing and advertising expense, depreciation and amortization expense and other selling and administrative expenses. SG&A expenses as a percentage of net sales are usually higher in lower sales volume quarters and lower in higher sales volume quarters.

The components of our SG&A expenses may not be comparable to those of other retailers. We expect that our SG&A expenses will increase in future periods due to our continuing store growth. In addition, any increase in future share-based grants or modifications will increase our share-based compensation expense included in SG&A expenses.

Operating Income

Operating income equals gross profit less SG&A expenses. Operating income excludes interest expense or income, and income tax expense or benefit. We use operating income as an indicator of the productivity of our business and our ability to manage SG&A expenses. Operating income percentage measures operating income as a percentage of our net sales.

Results of Consolidated Operations

The following tables summarize key components of our results of consolidated operations for the periods indicated, both in dollars and as a percentage of our net sales.


	Thirteen Weeks Ended						Thirty-Nine Weeks Ended						Thirteen Weeks Ended						Thirty-Nine Weeks Ended
	October 28, 2017			October 29, 2016			October 28, 2017			October 29, 2016			November 3, 2018			October 28, 2017			November 3, 2018			October 28, 2017
	(in millions, except percentages and total stores)
Consolidated Statements of Operations Data ⁽¹⁾:
Net sales	$	257.2		$	199.5		$	773.4		$	612.3		$	312.8		$	257.2		$	956.9		$	773.4
Cost of goods sold	173.5			135.5			517.5			414.7			210.7			173.5			635.8			517.5
Gross profit	83.6			64.0			255.9			197.6			102.1			83.6			321.1			255.9
Selling, general and administrative expenses	68.8			55.4			202.0			162.5			86.5			68.8			250.4			202.0
Operating income	14.8			8.6			53.9			35.1			15.5			14.8			70.7			53.9
Interest income, net	0.3			0.1			0.9			0.2			1.1			0.3			3.1			0.9
Income before income taxes	15.1			8.7			54.8			35.3			16.6			15.1			73.8			54.8
Income tax expense	5.3			3.2			19.7			13.3			3.1			5.3			13.4			19.7
Net income	$	9.9		$	5.4		$	35.1		$	22.1		$	13.5		$	9.9		$	60.4		$	35.1
Percentage of Net Sales ⁽¹⁾:
Net sales	100.0		%	100.0		%	100.0		%	100.0		%	100.0		%	100.0		%	100.0		%	100.0		%
Cost of goods sold	67.5			67.9			66.9			67.7			67.4			67.5			66.4			66.9
Gross profit	32.5			32.1			33.1			32.3			32.6			32.5			33.6			33.1
Selling, general and administrative expenses	26.8			27.8			26.1			26.5			27.7			26.8			26.2			26.1
Operating income	5.8			4.3			7.0			5.7			5.0			5.8			7.4			7.0
Interest income, net	0.1			—			0.1			—			0.3			0.1			0.3			0.1
Income before income taxes	5.9			4.4			7.1			5.8			5.3			5.9			7.7			7.1
Income tax expense	2.0			1.6			2.6			2.2			1.0			2.0			1.4			2.6
Net income	3.8		%	2.7		%	4.5		%	3.6		%	4.3		%	3.8		%	6.3		%	4.5		%
Operational Data:
Total stores at end of period	625			517			625			517			745			625			745			625
Comparable sales growth	8.5		%	(0.2		)%	6.9		%	2.6		%	4.8		%	8.5		%	3.6		%	6.9		%
Average net sales per store ⁽²⁾	$	0.4		$	0.4		$	1.3		$	1.3		$	0.4		$	0.4		$	1.4		$	1.3


⁽¹⁾	Components may not add to total due to rounding.


⁽²⁾	Only includes stores open during the full thirteen and thirty-nine weeks ended.

Thirteen Weeks Ended ~~October 28, 2017~~November 3, 2018 Compared to the Thirteen Weeks Ended October ~~29, 2016~~28, 2017

Net Sales

Net sales increased to $312.8 million in the thirteen weeks ended November 3, 2018 from $257.2 million in the thirteen weeks ended October 28, 2017, ~~from $199.5 million in the thirteen weeks ended October 29, 2016,~~ an increase of ~~$57.7~~$55.6 million, or ~~28.9%~~21.6%. The increase was the result of a non-comparable sales increase of ~~$42.4~~$47.5 million and a comparable sales increase of ~~$15.3~~$8.1 million. The increase in non-comparable sales was primarily driven by new stores that opened in fiscal ~~2017~~2018 and the number of stores that opened in fiscal ~~2016~~2017 but have not been open for 15 full months. We plan to open ~~103~~approximately 125 net new stores in fiscal ~~2017.~~2018.

Comparable sales, based on the restated calendar, increased ~~8.5% for the thirteen weeks ended October 28, 2017 compared to the thirteen weeks ended October 29, 2016.~~4.8%. This increase resulted from an increase of approximately ~~7.1%~~2.8% in the ~~number~~average dollar value of transactions ~~in our stores~~ and an increase of approximately ~~1.4%~~2.0% in the ~~average dollar value~~number of transactions.

Cost of Goods Sold and Gross Profit

Cost of goods sold increased to $210.7 million in the thirteen weeks ended November 3, 2018 from $173.5 million in the thirteen weeks ended October 28, 2017, ~~from $135.5 million in the thirteen weeks ended October 29, 2016,~~ an increase of ~~$38.0~~$37.2 million, or ~~28.1%~~21.4%. The increase in cost of goods sold was primarily the result of an increase in the merchandise cost of goods resulting from the increase in net sales. Also contributing to the increase in cost of goods sold ~~were~~was an increase in store occupancy costs resulting from new store openings.

Gross profit increased to $102.1 million in the thirteen weeks ended November 3, 2018 from $83.6 million in the thirteen weeks ended October 28, 2017, ~~from $64.0 million in the thirteen weeks ended October 29, 2016,~~ an increase of ~~$19.6~~$18.5 million, or ~~30.7%~~22.1%. Gross margin increased to 32.6% for the thirteen weeks ended November 3, 2018 from 32.5% ~~for~~in the thirteen weeks ended October 28, 2017, ~~from 32.1% in the thirteen weeks ended October 29, 2016,~~ an increase of approximately 4010 basis points. The increase in gross margin was primarily the result of a decrease as a percentage of net sales in store occupancy costs.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased to $86.5 million in the thirteen weeks ended November 3, 2018 from $68.8 million in the thirteen weeks ended October 28, 2017, ~~from $55.4 million in the thirteen weeks ended October 29, 2016,~~ an increase of ~~$13.4~~$17.7 million, or ~~24.3%~~25.8%. As a percentage of net sales, selling, general and administrative expenses ~~decreased~~increased approximately ~~100~~90 basis points to 27.7% in the thirteen weeks ended November 3, 2018 compared to 26.8% in the thirteen weeks ended October 28, ~~2017 compared to 27.8% in the thirteen weeks ended October 29, 2016.~~2017. The increase in selling, general and administrative expenses was primarily the result of increases of ~~$9.6~~$14.0 million in store-related expenses to support new store growth and ~~$3.8~~$3.7 million of corporate-related expenses.

Income Tax Expense

Income tax expense ~~increased~~decreased to $3.1 million in the thirteen weeks ended November 3, 2018 from $5.3 million in the thirteen weeks ended October 28, 2017, ~~from $3.2 million in the thirteen weeks ended October 29, 2016, an increase~~a decrease of ~~$2.1~~$2.2 million, or ~~62.2%~~41.3%. The ~~increase~~decrease in income tax expense was primarily the result of the impact of tax reform as a ~~$6.5~~result of the TCJA and due to discrete items, which include the recognition of net excess income tax benefits related to ASU 2016-09, "Improvements to Employee Share-Based Payment Accounting." These decreases were partially offset by a $1.5 million increase in pre-tax income.

Our effective tax rate for the thirteen weeks ended ~~October 28, 2017~~November 3, 2018 was ~~34.8%~~18.6% compared to ~~37.4%~~34.8% in the thirteen weeks ended October ~~29, 2016.~~28, 2017. Our effective tax rate for the thirteen weeks ended ~~October 28, 2017~~November 3, 2018 was lower than the comparable period primarily due to the impact of tax reform as a result of the TCJA and discrete items, which include the impact of the adoption of ASU 2016-09, "Improvements to Employee Share-Based Payment ~~Accounting,~~Accounting." with respect to the requirement to recognize excess income tax benefits or deficiencies as income tax benefit or expense in the consolidated statements of operations rather than as additional paid-in capital in the consolidated balance sheets.

Net Income

As a result of the foregoing, net income increased to $13.5 million in the thirteen weeks ended November 3, 2018 from $9.9 million in the thirteen weeks ended October 28, 2017, ~~from $5.4 million in the thirteen weeks ended October 29, 2016,~~ an increase of ~~$4.5~~$3.6 million or ~~81.4%~~36.8%.

Thirty-Nine Weeks Ended ~~October 28, 2017~~November 3, 2018 Compared to the Thirty-Nine Weeks Ended October ~~29, 2016~~28, 2017

Net Sales

Net sales increased to $956.9 million in the thirty-nine weeks ended November 3, 2018 from $773.4 million in the thirty-nine weeks ended October 28, 2017, ~~from $612.3 million in the thirty-nine weeks ended October 29, 2016,~~ an increase of ~~$161.1~~$183.5 million, or ~~26.3%~~23.7%. The increase was the result of a non-comparable sales increase of ~~$122.4~~$151.7 million and a comparable sales increase of ~~$38.7~~$31.8 million. The increase in non-comparable sales was primarily driven by new stores that opened in fiscal ~~2017~~2018 and the number of stores that opened in fiscal ~~2016~~2017 but have not been open for 15 full months. We plan to open ~~103~~approximately 125 net new stores in fiscal ~~2017.~~2018.

Comparable sales, based on the restated calendar, increased ~~6.9% for the thirty-nine weeks ended October 28, 2017 compared to the thirty-nine weeks ended October 29, 2016.~~3.6%. This increase resulted from an increase of approximately ~~6.7%~~3.3% in the ~~number~~average dollar value of transactions ~~in our stores~~ and an increase of approximately ~~0.2%~~0.3% in the ~~average dollar value~~number of transactions.

Cost of Goods Sold and Gross Profit

Cost of goods sold increased to $635.8 million in the thirty-nine weeks ended November 3, 2018 from $517.5 million in the thirty-nine weeks ended October 28, 2017, ~~from $414.7 million in the thirty-nine weeks ended October 29, 2016,~~ an increase of ~~$102.8~~$118.3 million, or ~~24.8%~~22.9%. The increase in cost of goods sold was primarily the result of an increase in the merchandise cost of goods resulting from the increase in net sales. Also contributing to the increase in cost of goods sold ~~were~~was an increase in store occupancy costs resulting from new store openings.

Gross profit increased to $321.1 million in the thirty-nine weeks ended November 3, 2018 from $255.9 million in the thirty-nine weeks ended October 28, 2017, ~~from $197.6 million in the thirty-nine weeks ended October 29, 2016,~~ an increase of ~~$58.3~~$65.2 million, or ~~29.5%~~25.5%. Gross margin increased to 33.6% for the thirty-nine weeks ended November 3, 2018 from 33.1% ~~for~~in the thirty-nine weeks ended October 28, 2017, ~~from 32.3% in the thirty-nine weeks ended October 29, 2016,~~ an increase of approximately 8050 basis points. The increase in gross margin was primarily the result of ~~decreases~~a decrease as a percentage of net sales in ~~merchandise cost of goods sold and~~ store occupancy costs.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased to $250.4 million in the thirty-nine weeks ended November 3, 2018 from $202.0 million in the thirty-nine weeks ended October 28, 2017, ~~from $162.5 million in the thirty-nine weeks ended October 29, 2016,~~ an increase of ~~$39.5~~$48.4 million, or ~~24.3%~~23.9%. As a percentage of net sales, selling, general and administrative expenses ~~decreased~~increased approximately 4010 basis points to 26.2% in the thirty-nine weeks ended November 3, 2018 compared to 26.1% in the thirty-nine weeks ended October 28, ~~2017 compared to 26.5% in the thirty-nine weeks ended October 29, 2016.~~2017. The increase in selling, general and administrative expenses was primarily the result of increases of ~~$26.5~~$39.2 million in store-related expenses to support new store growth and ~~$13.0~~$9.2 million of corporate-related expenses.

Income Tax Expense

Income tax expense ~~increased~~decreased to $13.4 million in the thirty-nine weeks ended November 3, 2018 from $19.7 million in the thirty-nine weeks ended October 28, 2017, ~~from $13.3 million in the thirty-nine weeks ended October 29, 2016, an increase~~a decrease of ~~$6.4~~$6.3 million, or ~~48.8%~~32.0%. The ~~increase~~decrease in income tax expense was primarily the result of the impact of tax reform as a ~~$19.5~~result of the TCJA and due to discrete items, which include the recognition of net excess income tax benefits related to ASU 2016-09, "Improvements to Employee Share-Based Payment Accounting." These decreases were partially offset by a $19.0 million increase in pre-tax income.

Our effective tax rate for the thirty-nine weeks ended ~~October 28, 2017~~November 3, 2018 was ~~36.0%~~18.2% compared to ~~37.5%~~36.0% in the thirty-nine weeks ended October ~~29, 2016.~~28, 2017. Our effective tax rate for the thirty-nine weeks ended ~~October 28, 2017~~November 3, 2018 was lower than the comparable period primarily due to the impact of tax reform as a result of the TCJA and discrete items, which include the impact of the adoption of ASU 2016-09, "Improvements to Employee Share-Based Payment ~~Accounting,~~Accounting." with respect to the requirement to recognize excess income tax benefits or deficiencies as income tax benefit or expense in the consolidated statements of operations rather than as additional paid-in capital in the consolidated balance sheets.

Net Income

As a result of the foregoing, net income increased to $60.4 million in the thirty-nine weeks ended November 3, 2018 from $35.1 million in the thirty-nine weeks ended October 28, 2017, ~~from $22.1 million in the thirty-nine weeks ended October 29, 2016,~~ an increase of ~~$13.0~~$25.3 million or ~~59.1%~~72.2%.

Liquidity and Capital Resources

Overview

Our primary source of liquidity is cash flows from operations. Our primary cash needs are for capital expenditures and working capital.

~~Capital~~Cash capital expenditures typically vary depending on the timing of new store openings and infrastructure-related investments. We plan to make cash capital expenditures of approximately ~~$75~~$130 million in fiscal ~~2017,~~2018, which exclude the impact of tenant allowances, and which we expect to fund from cash generated from operations. We expect to incur approximately ~~$35~~$38 million of our cash capital expenditure budget in fiscal ~~2017~~2018 to construct and open ~~103~~approximately 125 net new stores, with the remainder projected to be spent on our distribution facilities, including the new ~~corporate headquarters, store relocations~~distribution center in Georgia, existing stores, and ~~remodels, distribution centers, and~~our corporate infrastructure.

Our primary working capital requirements are for the purchase of store inventory and payment of payroll, rent, other store operating costs and distribution costs. Our working capital requirements fluctuate during the year, rising in the third and fourth fiscal quarters as we take title to increasing quantities of inventory in anticipation of our peak, year-end holiday shopping season in the fourth fiscal quarter. Fluctuations in working capital are also driven by the timing of new store openings.

Historically, we have funded our capital expenditures and working capital requirements during the fiscal year with cash on hand, net cash provided by operating activities and borrowings under our Amended Revolving Credit Facility. When we have used our Amended Revolving Credit Facility, the amount of indebtedness outstanding under it has tended to be the highest in the beginning of the fourth quarter of each fiscal year. ~~Over the past three fiscal years, to~~To the extent that we have drawn on the facility, we have paid down the borrowings before the end of the fiscal year with cash generated during our peak selling season in the fourth quarter. We did not have any direct borrowings under our Amended Revolving Credit Facility during the thirty-nine weeks ended ~~October 28, 2017.~~November 3, 2018. As of ~~October 28, 2017,~~November 3, 2018, we had approximately $20.0 million available on the line of credit.

On March 20, 2018, our board of directors approved a share repurchase program authorizing the repurchase of up to $100 million of our common stock through March 31, 2021, on the open market, in privately negotiated transactions, or otherwise. There can be no assurances that any such repurchases will be completed, or as to the timing or amount of any repurchases. For the thirty-nine weeks ended November 3, 2018, we did not execute any repurchases.

Based on our growth plans, we believe that our cash position, which includes our cash equivalents and short-term investments, net cash provided by operating activities and availability under our Amended Revolving Credit Facility will be adequate to finance our planned capital expenditures, authorized share repurchases and working capital requirements over the next 12 months and for the foreseeable future thereafter. If cash flows from operations and borrowings under our Amended Revolving Credit Facility are not sufficient or available to meet our requirements, then we will be required to obtain additional equity or debt financing in the future. There can be no assurance that equity or debt financing will be available to us when we need it or, if available, that the terms will be satisfactory to us and not dilutive to our then-current shareholders.

Cash Flows

A summary of our cash flows from operating, investing and financing activities is presented in the following table (in millions):

Thirty-Nine Weeks Ended
October 28, 2017 October 29, 2016
Net cash provided by (used in) operating activities $ 17.0
$ (2.9 )
Net cash (used in) provided by investing activities (41.1 ) 0.7
Net cash provided by financing activities 2.9
2.6
Net (decrease) increase during period in cash and cash equivalents ⁽¹⁾
$ (21.2 ) $ 0.5



	Thirty-Nine Weeks Ended
	November 3, 2018			October 28, 2017
Net cash provided by operating activities	$	1.6		$	17.0
Net cash used in investing activities	(7.4		)	(41.1		)
Net cash (used in) provided by financing activities	(3.6		)	2.9
Net decrease during period in cash and cash equivalents ⁽¹⁾	$	(9.4	)	$	(21.2	)

⁽¹⁾ Components may not add to total due to rounding.

Cash Provided by ~~(Used in)~~ Operating Activities

Net cash provided by operating activities for the thirty-nine weeks ended ~~October 28, 2017~~November 3, 2018 was ~~$17.0~~$1.6 million, ~~an increase~~a decrease of ~~$19.9~~$15.4 million compared to the thirty-nine weeks ended October ~~29, 2016.~~28, 2017. The ~~increase~~decrease was primarily due to changes in working capital partially offset by an increase in operating cash flows from store ~~performance partially offset by an increase in income taxes paid and changes in overall working capital.~~performance.

Cash ~~(Used in) Provided by~~Used in Investing Activities

Net cash used in investing activities for the thirty-nine weeks ended ~~October 28, 2017~~November 3, 2018 was ~~$41.1~~$7.4 million, ~~an increase~~a decrease of ~~$41.8~~$33.7 million compared to the thirty-nine weeks ended October ~~29, 2016.~~28, 2017. The ~~increase~~decrease was primarily due to ~~increases~~an increase in net sales, maturities, and redemptions of investment securities ~~and~~partially offset by an increase in capital expenditures. The increase in capital expenditures was primarily for our new store construction, our ~~corporate infrastructure,~~distribution facilities, and our ~~distribution facilities.~~corporate infrastructure.

Cash (Used in) Provided by Financing Activities

Net cash ~~provided by~~used in financing activities for the thirty-nine weeks ended ~~October 28, 2017~~November 3, 2018 was ~~$2.9~~$3.6 million, an increase of ~~$0.3~~$6.5 million compared to the thirty-nine weeks ended October ~~29, 2016.~~28, 2017. The increase was primarily the result of an increase in the ~~proceeds from the exercise of options to purchase common stock and a decrease in the~~ common shares withheld for taxes offset by a decrease in excess tax benefits related to exercises of stock options and the vesting of restricted stock units and performance-based restricted stock units driven by the impact of the adoption of ASU 2016-09, "Improvements to Employee Share-Based Payment Accounting," with respect to excess income tax benefits and deficiencies being classified as an operating activity rather than a financing activity.taxes.

Line of Credit

On May 10, 2017, we entered into a Fourth Amended and Restated Loan and Security Agreement (the “Amended Loan and Security Agreement”), among Five Below Inc., Five Below Merchandising, Inc. and Wells Fargo Bank, National Association. The Amended Loan and Security Agreement amends and restates the Third Amended and Restated Loan and Security Agreement, dated June 12, 2013, among Five Below Inc., Five Below Merchandising, Inc. and Wells Fargo Bank, National Association, which governed the Revolving Credit Facility.

The Amended Loan and Security Agreement includes a revolving line of credit in the amount of up to $20.0 million (the “Amended Revolving Credit Facility”). Pursuant to the Amended Loan and Security Agreement, advances under the Amended Revolving Credit Facility are no longer tied to a borrowing base; however, we are required to maintain eligible inventory at all times in an amount equal to at least $100.0 million. The Amended Revolving Credit Facility expires on the earliest to occur of (i) May 10, 2022 or (ii) an event of default. The Amended Revolving Credit Facility may be increased to up to $50.0 million, subject to certain conditions. The Amended Revolving Credit Facility also includes a $20.0 million ~~sub limit~~sub-limit for the issuance of letters of credit.

The Amended Loan and Security Agreement reduces the interest rate payable on borrowings to be, at our option, a per annum rate equal to (a) a prime rate or (b) a LIBOR-based rate plus a margin of 1.00%. Letter of credit fees are equal to the interest rate payable on LIBOR-based loans. The interest rate and letter of credit fees under the Amended Loan and Security Agreement are subject to an increase of 2.00% per annum upon an event of default.

The Amended Loan and Security Agreement removes restrictions related to our ability to pay or make dividends and ~~distributions~~distribute or repurchase our stock, but the Amended Loan and Security Agreement continues to include other customary negative and affirmative covenants including, among other things, limitations on our ability to (i) incur additional debt; (ii) create liens; (iii) make certain investments, loans and advances; (iv) sell assets; (v) engage in mergers or consolidations; or (vi) change our business.

The Amended Loan and Security Agreement also removes the provisions that required us to make prepayments on outstanding Amended Revolving Credit Facility balances upon the receipt of certain proceeds, including those from the sale of certain assets. Amounts under the Amended Revolving Credit Facility may become due upon certain events of default including, among other things, our failure to comply with the Amended Revolving Credit Facility’s covenants, bankruptcy, default on certain other indebtedness or a change in control.

Under the Amended Loan and Security Agreement, all obligations under the Amended Revolving Credit Facility continue to be guaranteed by our subsidiary and are secured by substantially all of our and our subsidiary's assets.

As of ~~October 28, 2017,~~November 3, 2018, we had approximately $20.0 million available on the line of credit.

All obligations under the Amended Revolving Credit Facility are secured by substantially all of our assets and are guaranteed by our subsidiary. As of November 3, 2018 and October 28, 2017, ~~and October 29, 2016,~~ we were in compliance with the covenants applicable to us under the Amended Revolving Credit Facility.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions. Predicting future events is inherently an imprecise activity and, as such, requires the use of judgment. Actual results may vary from estimates in amounts that may be material to the financial statements. An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact our consolidated financial statements. Our critical accounting policies and estimates are discussed in the Annual Report. We believe that there have been no significant changes to our critical accounting policies during the thirty-nine weeks ended ~~October 28, 2017.~~November 3, 2018.

Contractual Obligations

Except as set forth below, there have been no material changes to our contractual obligations as disclosed in the Annual Report, other than those which occur in the ordinary course of business.

From ~~January 29, 2017~~February 4, 2018 to ~~October 28, 2017,~~November 3, 2018, we have entered into 87118 new fully executed retail leases with terms of 10 to 15 years and other lease modifications that have future minimum lease payments of approximately ~~$158.2~~$225.3 million.

In ~~September 2016,~~June 2018, we signed a ~~fifteen-year lease~~purchase agreement for ~~a new corporate headquarters location~~land and building construction for an approximate 700,000 square foot distribution center located in ~~Philadelphia, Pennsylvania~~Georgia for approximately $42 million to ~~accommodate~~support our ~~current and~~ anticipated ~~future~~ growth. We expect to ~~initially~~ occupy ~~approximately 115,000 square feet of office~~the space in early 2018 and expect to expand into approximately 20,000 square feet of additional office space by no later than 2023. The lease agreement has future minimum lease payments of approximately $50 million and expires in early 2033 with three successive options to renew for additional term up to approximately fifteen years.2019.

Off-Balance Sheet Arrangements

For the quarterly period ended ~~October 28, 2017~~November 3, 2018, except for operating leases entered into in the normal course of business, we were not party to any material off-balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, net sales, expenses, results of operations, liquidity, capital expenditures or capital resources.

Recently Issued Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-09, "Revenue from Contracts with ~~Customers.~~Customers (Topic 606)." ASU 2014-09 clarifies the principles for recognizing revenue from contracts with ~~customers. The update~~customers and outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. ~~In August 2015, the FASB issued ASU 2015-14, "Revenue from Contract with Customers: Deferral of the Effective Date." ASU 2015-14 deferred the~~The effective date of ~~ASU 2014-09 to~~this pronouncement is for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. ~~Early adoption is permitted for annual reporting periods beginning after December 15, 2016, including interim periods within those annual periods. In~~On February 4, 2018, we adopted the ~~first six months of fiscal 2016,~~pronouncement using the ~~FASB issued guidance clarifying the interpretation of certain principles of ASU 2014-09. On the effective date, we may use either a full retrospective approach or a~~ modified retrospective ~~approach to adopt ASU 2014-09. While we are currently evaluating~~method by recognizing the ~~impact of this ASU, it is not expected to materially impact our consolidated financial statements. Other areas which could be impacted, including the recognition~~cumulative effect of gift card breakage ~~income, may be identified~~ as ~~we continue our evaluation of~~an adjustment to retained earnings resulting in a $0.5 million increase to retained earnings. The comparative information for the ~~ASU.~~years ended prior to February 4, 2018 were not restated to comply with the pronouncement.

In February 2016, the FASB issued ASU 2016-02, “Leases.” ASU 2016-02 requires that lease arrangements longer than 12 months result in an entity recognizing an asset and a liability. The updated guidance is effective for interim and annual periods beginning after December 15, 2018, and early adoption is permitted. The standard requires use of the modified retrospective transition approach. While we are currently evaluating this standard, given the significant amount of leases that we are party to, we expect this standard will have a significant impact on our consolidated financial statements from the recognition of right to use assets and related liabilities. We plan to adopt this ~~standard~~pronouncement in the first quarter of fiscal 2019, coinciding with the ~~standard’s~~pronouncement’s effective date. Our ability to adopt this standard depends on various factors including system readiness and completing an analysis of information necessary to quantify the financial statement impact. We have established a cross-functional team to implement the pronouncement and we are finalizing our implementation of a leasing software solution, our assessment of the practical expedients and policy elections offered by the standard, and changes to our business processes, systems and controls to support the adoption of this standard. While we are still evaluating the impact of this new guidance on our consolidated financial statements, we expect it will result in a significant increase in total assets and total liabilities on our balance sheet given that we have a significant number of leases for our stores.

In ~~March 2016,~~August 2018, the FASB issued ASU ~~2016-09, "Improvements to Employee Share-Based Payment Accounting.~~2018-15, "Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract." ASU ~~2016-09 affects all entities~~2018-15 requires implementation costs incurred by customers in cloud computing arrangements to be deferred over the noncancellable term of the cloud computing arrangements plus any optional renewal periods (1) that ~~issue share-based payment awards~~are reasonably certain to ~~their employees. This accounting standards update makes several modifications to~~be exercised by the ~~accounting~~customer or (2) for ~~employee share-based payment transactions, including~~which exercise of the ~~requirement that~~renewal option is controlled by the ~~excess income tax benefits or deficiencies that arise when the tax consequences~~cloud service provider. The effective date of share-based compensation differ from amounts previously recognized in the consolidated statement of operations be recognized as income tax benefit or expense in the consolidated statement of operations rather than as additional paid-in capital in the consolidated balance sheet. The guidance also clarifies the classification of components of share-based awards on the consolidated statement of cash flows such that excess income tax benefits should not be presented separately from other income taxes in the consolidated statement of cash flows and, thus, should be classified as an operating activity rather than a financing activity as they are under the current guidance. ASU 2016-09this pronouncement is ~~effective~~ for ~~financial statements issued for annual reporting periods~~fiscal years beginning after December 15, ~~2016~~2019, and interim periods within those ~~years. We~~fiscal years, and early adoption is permitted. The standard can be adopted ~~this standard prospectively in~~either using the ~~first quarter of fiscal 2017. This standard will result in~~prospective or retrospective transition approach. During the thirteen weeks ended November 3, 2018, we adopted the pronouncement using the prospective transition method and it did not have a ~~decrease or increase~~significant impact to our effective tax rate, net income, and earnings per share based upon the requirement to recognize the excess income tax benefits or deficiencies in the consolidated statements of operations and change our earnings per share calculation to exclude excess tax benefits previously assumed under the treasury stock method. No changes were required related to the classification of employee taxes paid for withheld shares in our consolidated statements of cash flows since we have historically classified these within financing cash flows.financial statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

Our principal market risk relates to interest rate sensitivity, which is the risk that future changes in interest rates will reduce our net income or net assets. We have short-term investment securities that are interest-bearing securities and if there are changes in interest rates, those changes would affect the interest income we earn on these investments and, therefore, impact our cash flows and results of operations. However, due to the short term nature of our investment portfolio, we do not believe an immediate 100 basis point increase or decrease in interest rates would have a material effect on the fair market value of our portfolio, and accordingly we do not expect our operating results or cash flows to be materially affected by a sudden change in market interest rates.

We also have an Amended Revolving Credit Facility which includes a revolving line of credit, which bears interest at a variable rate. Because our Amended Revolving Credit Facility bears interest at a variable rate, we will be exposed to market risks relating to changes in interest rates.

As of ~~October 28, 2017,~~November 3, 2018, we had approximately ~~$20~~$20.0 million available on the line of credit. The Amended Revolving Credit Facility reduces the interest rate payable on borrowings to be, at ~~the~~ our option, a per annum rate equal to (a) a prime rate or (b) a LIBOR-based rate plus a margin of 1.00%. Letter of credit fees are equal to the interest rate payable on LIBOR-based loans. The interest rate and letter of credit fees under the Amended Revolving Credit Facility are subject to an increase of 2.00% per annum upon an event of default. We do not use derivative financial instruments for speculative or trading purposes, but this does not preclude our adoption of specific hedging strategies in the future.

Impact of Inflation

Our results of operations and financial condition are presented based on historical cost. While it is difficult to accurately measure the impact of inflation due to the imprecise nature of the estimates required, we believe the effects of inflation, if any, on our historical results of operations and financial condition have been immaterial. We cannot assure you, however, that our results of operations and financial condition will not be materially impacted by inflation in the future.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management has evaluated, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness of our disclosure controls and procedures, as defined in Rule 13(a)-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”), as of the end of the period covered by this Quarterly Report on Form 10-Q pursuant to Rule 13a-15(b) of the Exchange Act. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q are effective at a reasonable assurance level in ensuring that information required to be disclosed in our Exchange Act reports is (1) recorded, processed, summarized and reported in a timely manner and (2) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures will prevent or detect all errors and all fraud. While our disclosure controls and procedures are designed to provide reasonable assurance of their effectiveness, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.

Changes in Internal Control over Financial Reporting

There were no changes to our internal control over financial reporting during the thirteen weeks ended ~~October 28, 2017~~November 3, 2018 that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are subject to various proceedings, lawsuits, disputes, and claims arising in the ordinary course of our business. Many of these actions raise complex factual and legal issues and are subject to uncertainties. Actions filed against us from time to time include commercial, intellectual property, customer, and employment actions, including class action lawsuits. The plaintiffs in some actions seek unspecified damages or injunctive relief, or both. Actions are in various procedural stages, and some are covered in part by insurance. We cannot predict with assurance the outcome of actions brought against us. Accordingly, adverse developments, settlements, or resolutions may occur and negatively impact income in the quarter of such development, settlement or resolution. If a potential loss arising from these lawsuits, claims and pending actions is probable and reasonably estimable, we record the estimated liability based on circumstances and assumptions existing at the time. Although the outcome of these and other claims cannot be predicted with certainty, management does not believe that the ultimate resolution of these matters will have a material adverse effect on our financial condition or results of operations.

ITEM 1A. RISK FACTORS

Risk factors that affect our business and financial results are discussed in Part I, Item 1A "Risk Factors” in our Annual Report and in Part II, Item 1A “Risk Factors” in our ~~Annual Report.~~Form 10-Q for the quarter ended August 4, 2018 (“2^nd Quarter 10-Q”). There have been no material changes in our risk factors from those previously disclosed in our Annual ~~Report.~~Report and 2^nd Quarter 10-Q. You should carefully consider the risks described in our Annual Report and 2^nd Quarter 10-Q, which could materially affect our business, financial condition or future results. The risks described in our Annual Report and 2^nd Quarter 10-Q are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, and/or operating results. If any of the risks actually occur, our business, financial condition, and/or results of operations could be negatively affected.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6.EXHIBITS

(a)Exhibits



No.		Description

~~10.1~~3.1		~~Employment Letter, dated October 29, 2017, by~~Amended and ~~between David Makuen and~~Restated Bylaws of Five Below Inc. , effective October 2, 2018 (incorporated by reference to Exhibit 3.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on October 5, 2018).

~~10.2~~10.1†		~~Fourth Amended and Restated Loan and Security~~Form of Award Agreement ~~dated May 10, 2017, among the Company, Five Below Merchandising, Inc. and Wells Fargo Bank, National Association~~for Restricted Stock Units (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on ~~May~~October 5, 2018).

10.2†		Form of Award Agreement for Performance-Based Restricted Stock Units (incorporated by reference to Exhibit 10.2 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on October 5, 2018).

31.1		Certification of Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101*		The following financial information from this Quarterly Report on Form 10-Q for the fiscal quarter ended November 3, 2018, formatted in XBRL (Extensible Business Reporting Language) and furnished electronically herewith: (i) the Unaudited Consolidated Balance Sheets as of November 3, 2018, February 3, 2018 and October 28, 2017; (ii) the Unaudited Consolidated Statements of Operations for the Thirteen Weeks Ended and Thirty-Nine Weeks Ended November 3, 2018 and October 28, 2017; (iii) the Unaudited Consolidated Statement of Shareholders’ Equity for the Thirty-Nine Weeks Ended November 3, 2018; (iv) the Unaudited Consolidated Statements of Cash Flows for the Thirty-Nine Weeks Ended November 3, 2018 and October 28, 2017 and (v) the Notes to Unaudited Consolidated Financial Statements, tagged in detail.



*	Pursuant to applicable securities laws and regulations, this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of sections 11 ~~2017)~~or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of section 18 of the Exchange Act of 1934, as amended, and otherwise is not subject to liability under those sections.
†	Management contract or compensatory plan or arrangement

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



		FIVE BELOW, INC.

Date: December 6, 2018		/s/ Joel D. Anderson
		Joel D. Anderson
		President and Chief Executive Officer (Principal Executive Officer)

Date: December 6, 2018		/s/ Kenneth R. Bull
		Kenneth R. Bull
		Chief Financial Officer and Treasurer (Principal Financial Officer and Principal Accounting Officer)

EXHIBIT INDEX



No.		Description

3.1		Amended and Restated Bylaws of Five Below Inc., effective October 2, 2018 (incorporated by reference to Exhibit 3.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on October 5, 2018).

10.1†		Form of Award Agreement for Restricted Stock Units (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on October 5, 2018).

10.2†		Form of Award Agreement for Performance-Based Restricted Stock Units (incorporated by reference to Exhibit 10.2 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on October 5, 2018).

31.1		Certification of Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

~~101†~~101*		The following financial information from this Quarterly Report on Form 10-Q for the fiscal quarter ended ~~October 28, 2017,~~November 3, 2018, formatted in XBRL (Extensible Business Reporting Language) and furnished electronically herewith: (i) the Unaudited Consolidated Balance Sheets as of November 3, 2018, February 3, 2018 and October 28, ~~2017, January 28, 2017 and October 29, 2016;~~2017; (ii) the Unaudited Consolidated Statements of Operations for the Thirteen Weeks Ended and Thirty-Nine Weeks Ended November 3, 2018 and October 28, ~~2017 and October 29, 2016;~~2017; (iii) the Unaudited Consolidated Statement of Shareholders’ Equity for the Thirty-Nine Weeks Ended ~~October 28, 2017;~~November 3, 2018; (iv) the Unaudited Consolidated Statements of Cash Flows for the Thirty-Nine Weeks Ended November 3, 2018 and October 28, 2017 ~~and October 29, 2016~~ and (v) the Notes to Unaudited Consolidated Financial Statements, tagged in detail.



†*	Pursuant to applicable securities laws and regulations, this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of section 18 of the Exchange Act of 1934, as amended, and otherwise is not subject to liability under those sections.

~~SIGNATURES~~

~~Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.~~



		~~FIVE BELOW, INC.~~

~~Date: December 1, 2017~~		~~/s/ Joel D. Anderson~~
		~~Joel D. Anderson~~
		~~President and Chief Executive Officer (Principal Executive Officer)~~

~~Date: December 1, 2017~~		~~/s/ Kenneth R. Bull~~
		~~Kenneth R. Bull~~
		~~Chief Financial Officer and Treasurer (Principal Financial Officer and Principal Accounting Officer)~~

~~EXHIBIT INDEX~~



~~No.~~		~~Description~~

~~10.1~~		~~Employment Letter, dated October 29, 2017, by and between David Makuen and Five Below, Inc.~~

~~31.1~~		~~Certification of Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.~~

~~31.2~~		~~Certification of Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.~~

~~32.1~~		~~Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.~~

~~32.2~~		~~Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.~~

~~101†~~		The following financial information from this Quarterly Report on Form 10-Q for the fiscal quarter ended October 28, 2017, formatted in XBRL (Extensible Business Reporting Language) and furnished electronically herewith: (i) the Unaudited Consolidated Balance Sheets as of October 28, 2017, January 28, 2017 and October 29, 2016; (ii) the Unaudited Consolidated Statements of Operations for the Thirteen Weeks Ended and Thirty-Nine Weeks Ended October 28, 2017 and October 29, 2016; (iii) the Unaudited Consolidated Statement of Shareholders’ Equity for the Thirty-Nine Weeks Ended October 28, 2017; (iv) the Unaudited Consolidated Statements of Cash Flows for the Thirty-Nine Weeks Ended October 28, 2017 and October 29, 2016 and (v) the Notes to Unaudited Consolidated Financial Statements, tagged in detail.



†	~~Pursuant to applicable securities laws and regulations, this interactive data file is deemed not filed~~Management contract or ~~part of a registration statement~~compensatory plan or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of section 18 of the Exchange Act of 1934, as amended, and otherwise is not subject to liability under those sections.arrangement



Pennsylvania		75-3000378
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

~~1818~~701 Market Street, Suite ~~2000~~300
Philadelphia, PA		~~19103~~19106
(Address of Principal Executive Offices)		(Zip Code)



INDEX

PART I - FINANCIAL INFORMATION		Page
Item 1.	Consolidated Financial Statements (unaudited)	4
	Unaudited Consolidated Balance Sheets as of November 3, 2018, February 3, 2018 and October 28, 2017 ~~January 28, 2017 and October 29, 2016~~	4
	Unaudited Consolidated Statements of Operations for the Thirteen and Thirty-Nine Weeks Ended November 3, 2018 and October 28, 2017 ~~and October 29, 2016~~	5
	Unaudited Consolidated Statement of Shareholders' Equity for the Thirty-Nine Weeks Ended ~~October 28, 2017~~November 3, 2018	6
	Unaudited Consolidated Statements of Cash Flows for the Thirty-Nine Weeks Ended November 3, 2018 and October 28, 2017 ~~and October 29, 2016~~	7
	Notes to Unaudited Consolidated Financial Statements	8
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	1514
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	24
Item 4.	Controls and Procedures	25

PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	26
Item 1A.	Risk Factors	27
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27
Item 3.	Defaults Upon Senior Securities	27
Item 4.	Mine Safety Disclosures	27
Item 5.	Other Information	27
Item 6.	Exhibits	28


	October 28, 2017		January 28, 2017		October 29, 2016			November 3, 2018		February 3, 2018		October 28, 2017
Assets
Current assets:
Cash and cash equivalents	$	54,917	$	76,088	$	53,537		$	103,262	$	112,669	$	54,917
Short-term investment securities	56,678		77,791		9,912			85,029		131,958		56,678
Inventories	271,685		154,448		228,175			339,898		187,037		271,685
Prepaid income taxes	4,891		1,552		5,789			11,443		2,264		4,891
Prepaid expenses and other current assets	41,894		29,910		33,200			59,500		45,434		41,894
Total current assets	430,065		339,789		330,613			599,132		479,362		430,065
Property and equipment, net of accumulated depreciation and amortization of $123,248, $100,200 and $93,312, respectively.	177,903		138,376		135,939
Property and equipment, net of accumulated depreciation and amortization of $157,575, $127,679 and $123,248, respectively.								245,631		180,349		177,903
Deferred income taxes	10,512		11,039		9,045			3,243		6,676		10,512
Long-term investment securities	23,177		10,514		—			—		27,702		23,177
Other assets	1,659		818		1,312			1,730		1,619		1,659
	$	643,316	$	500,536	$	476,909		$	849,736	$	695,708	$	643,316

Liabilities and Shareholders’ Equity
Current liabilities:
Line of credit	$	—	$	—	$	—		$	—	$	—	$	—
Accounts payable	124,187		51,178		104,684			155,986		73,033		124,187
Income taxes payable	55		23,939		126			281		25,275		55
Accrued salaries and wages	14,770		10,794		8,677			11,139		22,906		14,770
Other accrued expenses	55,154		30,652		32,051			72,019		43,246		55,154
Total current liabilities	194,166		116,563		145,538			239,425		164,460		194,166
Deferred rent and other	67,839		52,568		53,220			85,240		72,690		67,839
Total liabilities	262,005		169,131		198,758			324,665		237,150		262,005
Commitments and contingencies (note 4)
Commitments and contingencies (note 5)
Shareholders’ equity:
Common stock, $0.01 par value. Authorized 120,000,000 shares; issued and outstanding 55,235,031, 54,904,954 and 54,879,306 shares, respectively.	552		549		549
Common stock, $0.01 par value. Authorized 120,000,000 shares; issued and outstanding 55,760,985, 55,438,089 and 55,235,031 shares, respectively.								557		554		552
Additional paid-in capital	336,432		321,603		318,137			351,941		346,300		336,432
Retained earnings (accumulated deficit)	44,327		9,253		(40,535		)
Retained earnings								172,573		111,704		44,327
Total shareholders’ equity	381,311		331,405		278,151			525,071		458,558		381,311
	$	643,316	$	500,536	$	476,909		$	849,736	$	695,708	$	643,316


	Thirteen Weeks Ended				Thirty-Nine Weeks Ended				Thirteen Weeks Ended				Thirty-Nine Weeks Ended
	October 28, 2017		October 29, 2016		October 28, 2017		October 29, 2016		November 3, 2018		October 28, 2017		November 3, 2018		October 28, 2017
Net sales	$	257,175	$	199,475	$	773,376	$	612,320	$	312,823	$	257,175	$	956,879	$	773,376
Cost of goods sold	173,544		135,472		517,453		414,700		210,733		173,544		635,799		517,453
Gross profit	83,631		64,003		255,923		197,620		102,090		83,631		321,080		255,923
Selling, general and administrative expenses	68,818		55,372		202,027		162,523		86,542		68,818		250,404		202,027
Operating income	14,813		8,631		53,896		35,097		15,548		14,813		70,676		53,896
Interest income, net	334		64		902		211		1,058		334		3,120		902
Income before income taxes	15,147		8,695		54,798		35,308		16,606		15,147		73,796		54,798
Income tax expense	5,268		3,248		19,724		13,256		3,090		5,268		13,413		19,724
Net income	$	9,879	$	5,447	$	35,074	$	22,052	$	13,516	$	9,879	$	60,383	$	35,074
Basic income per common share	$	0.18	$	0.10	$	0.64	$	0.40	$	0.24	$	0.18	$	1.08	$	0.64
Diluted income per common share	$	0.18	$	0.10	$	0.63	$	0.40	$	0.24	$	0.18	$	1.07	$	0.63
Weighted average shares outstanding:
Basic shares	55,215,850		54,871,172		55,148,316		54,809,768		55,742,854		55,215,850		55,731,098		55,148,316
Diluted shares	55,608,035		55,170,686		55,493,452		55,100,534		56,228,305		55,608,035		56,185,305		55,493,452


þ	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



	Common stock				Additional paid-in capital			Retained earnings		Total shareholders’ equity
	Common stock
	Shares		Amount
Balance, January 28, 2017	54,904,954		$	549	$	321,603		$	9,253	$	331,405
Share-based compensation expense	—		—		11,785			—		11,785
Issuance of unrestricted stock awards	3,472		—		176			—		176
Exercise of options to purchase common stock	138,312		1		3,796			—		3,797
Vesting of restricted stock units and performance-based restricted stock units	211,810		2		—			—		2
Common shares withheld for taxes	(26,117	)	—		(1,063		)	—		(1,063		)
Issuance of common stock to employees under employee stock purchase plan	2,600		—		135			—		135
Net income	—		—		—			35,074		35,074
Balance, October 28, 2017	55,235,031		$	552	$	336,432		$	44,327	$	381,311


	As of January 28, 2017								As of February 3, 2018
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Market Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Market Value
Short-term:
Corporate bonds	$	45,558	$	—	$	98	$	45,460	$	117,373	$	—	$	177	$	117,196
Municipal bonds	32,233		—		14		32,219		14,585		—		—		14,585
Total	$	77,791	$	—	$	112	$	77,679	$	131,958	$	—	$	177	$	131,781

Long-term:
Corporate bonds	$	6,265	$	—	$	11	$	6,254	$	25,465	$	—	$	170	$	25,295
Municipal bonds	4,249		8		—		4,257		2,237		—		2		2,235
Total	$	10,514	$	8	$	11	$	10,511	$	27,702	$	—	$	172	$	27,530


	As of October 29, 2016								As of October 28, 2017
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Market Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Market Value
Short-term:
Corporate bonds	$	6,366	$	—	$	7	$	6,359	$	50,778	$	—	$	46	$	50,732
Municipal bonds	3,546				1		3,545		5,900		—		—		5,900
Total	$	9,912	$	—	$	8	$	9,904	$	56,678	$	—	$	46	$	56,632

Long-term:
Corporate bonds									$	23,177	$	—	$	98	$	23,079
Total									$	23,177	$	—	$	98	$	23,079



	Options Outstanding		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)
Balance as of January 28, 2017	866,637		$	29.60	6.7
Forfeited	(18,972	)	37.11
Exercised	(138,312	)	27.45
Balance as of October 28, 2017	709,353		29.82		6.0
Exercisable as of October 28, 2017	564,365		$	28.69	5.6


	Restricted Stock Units				Performance-Based Restricted Stock Units				Restricted Stock Units				Performance-Based Restricted Stock Units
	Number		Weighted-Average Grant Date Fair Value		Number		Weighted-Average Grant Date Fair Value		Number		Weighted-Average Grant Date Fair Value		Number		Weighted-Average Grant Date Fair Value
Non-vested balance as of January 28, 2017	275,176		$	36.27	504,556		$	36.91
Non-vested balance as of February 3, 2018									309,554		$	38.48	495,659		$	37.43
Granted	153,915		39.99		147,552		39.65		111,123		76.35		121,333		69.59
Vested	(70,807	)	34.17		(141,003	)	38.15		(90,218	)	38.68		(197,534	)	35.69
Forfeited	(25,327	)	42.40		(9,541	)	33.40		(23,496	)	43.07		(3,258	)	69.03
Non-vested balance as of October 28, 2017	332,957		$	37.97	501,564		$	37.43
Non-vested balance as of November 3, 2018									306,963		$	51.78	416,200		$	47.38


(b)	Fiscal Year


(3)	Income Per Common Share


~~(4)~~(5)	Commitments and Contingencies


~~(5)~~(6)	Share-Based Compensation

Large accelerated filer

Accelerated filer

Non-accelerated filer

¨~~(Do not check if a smaller reporting company)~~

Smaller reporting company

Emerging growth company