Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | |
Jan. 29, 2016 | Apr. 28, 2016 | |
Document and Entity Information | ||
Entity Registrant Name | 99 CENTS ONLY STORES LLC | |
Entity Central Index Key | 1,011,290 | |
Document Type | 10-K | |
Document Period End Date | Jan. 29, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --01-29 | |
Entity Well-known Seasoned Issuer | No | |
Entity Voluntary Filers | Yes | |
Entity Current Reporting Status | No | |
Entity Filer Category | Non-accelerated Filer | |
Entity Public Float | $ 0 | |
Entity Common Stock, Shares Outstanding | 100 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | FY |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jan. 29, 2016 | Jan. 30, 2015 |
Current Assets: | ||
Cash | $ 2,312 | $ 12,463 |
Accounts receivable, net of allowance for doubtful accounts of $140 and $58 as of January 29, 2016 and January 30, 2015, respectively | 1,674 | 1,954 |
Income taxes receivable | 3,665 | 10,911 |
Deferred income taxes | 16,633 | 41,583 |
Inventories, net | 196,651 | 296,040 |
Assets held for sale | 2,308 | 3,094 |
Other | 18,603 | 19,039 |
Total current assets | 241,846 | 385,084 |
Property and equipment, net | 542,570 | 581,020 |
Deferred financing costs, net | 12,461 | 15,463 |
Intangible assets, net | 453,242 | 460,311 |
Goodwill | 387,772 | 479,745 |
Deposits and other assets | 7,319 | 7,543 |
Total assets | 1,645,210 | 1,929,166 |
Current Liabilities: | ||
Accounts payable | 79,197 | 139,287 |
Payroll and payroll-related | 18,421 | 20,004 |
Sales tax | 13,314 | 14,087 |
Other accrued expenses | 41,464 | 40,168 |
Workers' compensation | 76,389 | 70,491 |
Current portion of long-term debt | 6,138 | 6,138 |
Current portion of capital and financing lease obligation | 989 | 380 |
Total current liabilities | 235,912 | 290,555 |
Long-term debt, net of current portion | 887,388 | 901,395 |
Unfavorable lease commitments, net | 5,746 | 8,220 |
Deferred rent | 27,389 | 23,293 |
Deferred compensation liability | 709 | 724 |
Capital and financing lease obligation, net of current portion | 34,817 | 24,681 |
Long-term deferred income taxes | 179,678 | 170,678 |
Other liabilities | 5,118 | 1,868 |
Total liabilities | $ 1,376,757 | $ 1,421,414 |
Commitments and contingencies (Note 10) | ||
Member's Equity: | ||
Member units - 100 units issued and outstanding at January 29, 2016 and January 30, 2015 | $ 550,226 | $ 549,135 |
Investment in Number Holdings, Inc. preferred stock | (19,200) | (19,200) |
Accumulated deficit | (262,411) | (21,185) |
Other comprehensive loss | (162) | (998) |
Total equity | 268,453 | 507,752 |
Total liabilities and equity | $ 1,645,210 | $ 1,929,166 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Jan. 29, 2016 | Jan. 30, 2015 |
CONSOLIDATED BALANCE SHEETS | ||
Accounts receivable, allowance for doubtful accounts (in dollars) | $ 140 | $ 58 |
Member units, units issued | 100 | 100 |
Member units, units outstanding | 100 | 100 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 10 Months Ended | 12 Months Ended | |
Jan. 31, 2014 | Jan. 29, 2016 | Jan. 30, 2015 | |
Net Sales: | |||
99 Only Stores | $ 1,486,699 | $ 1,961,050 | $ 1,881,865 |
Bargain Wholesale | 42,044 | 42,945 | 45,084 |
Total sales | 1,528,743 | 2,003,995 | 1,926,949 |
Cost of sales | 1,033,077 | 1,441,631 | 1,308,849 |
Gross profit | 495,666 | 562,364 | 618,100 |
Selling, general and administrative expenses (includes asset impairment of $2,171, $149 and $0 for the years ended January 29, 2016, January 30, 2015 and January 31, 2014, respectively) | 481,449 | 614,026 | 546,259 |
Goodwill impairment | 91,973 | ||
Operating (loss) income | 14,217 | (143,635) | 71,841 |
Other (income) expense: | |||
Interest income | (16) | (4) | |
Interest expense | 50,820 | 65,653 | 62,734 |
Loss on extinguishment of debt | 4,391 | ||
Total other expense, net | 55,195 | 65,649 | 62,734 |
(Loss) income before provision for income taxes | (40,978) | (209,284) | 9,107 |
Provision (benefit) for income taxes | (28,493) | 31,942 | 3,605 |
Net (loss) income | (12,485) | (241,226) | 5,502 |
Other comprehensive income (loss), net of tax: | |||
Unrealized losses on interest rate cash flow hedge | (284) | (152) | (576) |
Less: reclassification adjustment included in net income (loss) | 145 | 988 | 969 |
Other comprehensive income (loss), net of tax | (139) | 836 | 393 |
Comprehensive (loss) income | $ (12,624) | $ (240,390) | $ 5,895 |
CONSOLIDATED STATEMENTS OF COM5
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Parenthetical) - USD ($) $ in Thousands | 10 Months Ended | 12 Months Ended | |
Jan. 31, 2014 | Jan. 29, 2016 | Jan. 30, 2015 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | |||
Asset impairment | $ 0 | $ 2,171 | $ 149 |
CONSOLIDATED STATEMENTS OF MEMB
CONSOLIDATED STATEMENTS OF MEMBER'S/SHAREHOLDERS' EQUITY - USD ($) $ in Thousands | Member Units | Additional Paid-In Capital | Investment in Number Holdings, Inc. Preferred Stock | Retained Earnings (Accumulated Deficit) | Accumulated Other Comprehensive Income (Loss) | Total |
BALANCE at Mar. 30, 2013 | $ 654,424 | $ (14,202) | $ (1,252) | $ 638,970 | ||
Increase (Decrease) in Equity | ||||||
Conversion from corporation to limited liability company | $ 654,424 | $ (654,424) | ||||
Net (loss) income | (12,485) | (12,485) | ||||
Investment in Number Holdings, Inc. preferred stock | $ (19,200) | (19,200) | ||||
Unrealized net gains (losses) on interest rate cash flow hedge, net of tax | (139) | (139) | ||||
Stock-based compensation | (4,766) | (4,766) | ||||
Dividend paid to Number Holdings, Inc | (95,512) | (95,512) | ||||
Payments to repurchase stock options of Number Holdings, Inc | (7,781) | (7,781) | ||||
BALANCE at Jan. 31, 2014 | 546,365 | (19,200) | (26,687) | (1,391) | 499,087 | |
Increase (Decrease) in Equity | ||||||
Net (loss) income | 5,502 | 5,502 | ||||
Unrealized net gains (losses) on interest rate cash flow hedge, net of tax | 393 | 393 | ||||
Stock-based compensation | 2,846 | 2,846 | ||||
Payments to repurchase stock options of Number Holdings, Inc | (76) | (76) | ||||
BALANCE at Jan. 30, 2015 | 549,135 | (21,185) | (998) | 507,752 | ||
BALANCE at Jan. 30, 2015 | (19,200) | |||||
Increase (Decrease) in Equity | ||||||
Net (loss) income | (241,226) | (241,226) | ||||
Unrealized net gains (losses) on interest rate cash flow hedge, net of tax | 836 | 836 | ||||
Stock-based compensation | 1,538 | 1,538 | ||||
Net settlement of stock options of Number Holdings, Inc. for tax withholdings | (57) | (57) | ||||
Payments to repurchase stock options of Number Holdings, Inc | (390) | (390) | ||||
BALANCE at Jan. 29, 2016 | $ 550,226 | $ (19,200) | $ (262,411) | $ (162) | $ 268,453 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 10 Months Ended | 12 Months Ended | |
Jan. 31, 2014 | Jan. 29, 2016 | Jan. 30, 2015 | |
Cash flows from operating activities: | |||
Net (loss) income | $ (12,485) | $ (241,226) | $ 5,502 |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||
Depreciation | 52,467 | 66,402 | 53,911 |
Amortization of deferred financing costs and accretion of OID | 3,681 | 4,820 | 4,344 |
Amortization of intangible assets | 1,500 | 1,789 | 1,787 |
Amortization of favorable/unfavorable leases, net | 438 | 1,704 | 735 |
Loss on extinguishment of debt | 4,391 | ||
(Gain) loss on disposal of fixed assets | (357) | (5,416) | (84) |
Loss (gain) on interest rate hedge | (92) | 1,402 | 1,504 |
Goodwill impairment | 91,973 | ||
Long-lived and intangible assets impairment | 0 | 2,171 | 149 |
Excess tax benefit from stock-based payment arrangements | (138) | ||
Deferred income taxes | (28,999) | 33,394 | 4,212 |
Stock-based compensation | (4,766) | 1,538 | 2,846 |
Changes in assets and liabilities associated with operating activities: | |||
Accounts receivable | 58 | 280 | (161) |
Inventories | (4,643) | 99,389 | (89,796) |
Deposits and other assets | (3,049) | 1,228 | (2,258) |
Accounts payable | 20,653 | (44,407) | 52,530 |
Accrued expenses | 12,682 | (2,081) | 7,586 |
Accrued workers' compensation | 34,420 | 5,898 | (3,427) |
Income taxes | (529) | 7,246 | (6,413) |
Deferred rent | 8,365 | 4,096 | 10,105 |
Other long-term liabilities | (2,673) | 1,457 | (4,801) |
Net cash provided by operating activities | 80,924 | 31,657 | 38,271 |
Cash flows from investing activities: | |||
Purchases of property and equipment | (62,090) | (65,950) | (111,387) |
Proceeds from sale of property and fixed assets | 1,473 | 31,436 | 39 |
Net cash used in investing activities | (60,617) | (34,514) | (111,348) |
Cash flows from financing activities: | |||
Investment in Number Holdings, Inc. preferred stock | (19,200) | ||
Dividend paid | (95,512) | ||
Proceeds from long-term debt | 100,000 | ||
Payments of long-term debt | (6,174) | (6,138) | (6,138) |
Proceeds under revolving credit facility | 471,350 | 305,500 | |
Payments under revolving credit facility | (480,550) | (248,500) | |
Payments of debt issuance costs | (2,343) | (487) | |
Proceeds from financing lease obligations | 9,359 | ||
Payments of capital and financing lease obligation | (69) | (381) | (88) |
Payments to repurchase stock options of Number Holdings, Inc. | (7,781) | (390) | (76) |
Excess tax benefit from stock-based payment arrangements | 138 | ||
Net settlement of stock options of Number Holdings, Inc. for tax withholdings | (57) | ||
Net cash (used in) provided by financing activities | (30,941) | (7,294) | 50,698 |
Net (decrease) increase in cash | (10,634) | (10,151) | (22,379) |
Cash - beginning of period | 45,476 | 12,463 | 34,842 |
Cash - end of period | 34,842 | 2,312 | 12,463 |
Supplemental cash flow information: | |||
Income taxes (refunded) paid | 485 | (8,700) | 6,358 |
Interest paid | 48,105 | 61,489 | 58,222 |
Non-cash investing activities for purchases of property and equipment | $ 393 | $ (15,683) | 15,700 |
Non-cash investment for building -leased facility | $ 24,600 |
Basis of Presentation and Summa
Basis of Presentation and Summary of Significant Accounting Policies | 12 Months Ended |
Jan. 29, 2016 | |
Basis of Presentation and Summary of Significant Accounting Policies | |
Basis of Presentation and Summary of Significant Accounting Policies | 1. Basis of Presentation and Summary of Significant Accounting Policies Nature of Business The Company is organized under the laws of the State of California. Effective October 18, 2013, 99¢ Only Stores converted from a California corporation to a California limited liability company, 99 Cents Only Stores LLC, that is managed by its sole member, Number Holdings, Inc., a Delaware corporation (“Parent”). The term “Company” refers to 99¢ Only Stores and its consolidated subsidiaries prior to the Conversion (as defined below) and to 99 Cents Only Stores LLC and its consolidated subsidiaries at the time of or after the Conversion. The Company is an extreme value retailer of consumable and general merchandise and seasonal products. As of January 29, 2016, the Company operated 391 retail stores with 283 in California, 49 in Texas, 38 in Arizona, and 21 in Nevada. The Company is also a wholesale distributor of various products. Merger On January 13, 2012, the Company was acquired through a merger (the “Merger”) with a subsidiary of Number Holdings, Inc., a Delaware corporation with the Company surviving. In connection with the Merger, the Company became a subsidiary of Parent, which is controlled by affiliates of Ares Management, L.P. (“Ares”), Canada Pension Plan Investment Board (“CPPIB”) (together, the “Sponsors”) and, prior to the Gold-Schiffer Purchase (as described in Note 9, “Related-Party Transactions”), the Rollover Investors (as described in Note 9, “Related-Party Transactions”). As a result of the Merger, the Company’s common stock was delisted from the New York Stock Exchange and the Company ceased to be a publicly held and traded equity company. Conversion to LLC On October 18, 2013, 99¢ Only Stores converted (the “Conversion”) from a California corporation to a California limited liability company, 99 Cents Only Stores LLC (“99 LLC”), that is managed by its sole member, Parent. In connection with the Conversion, each outstanding share of Class A common stock of 99¢ Only Stores, par value $0.01 per share, was converted into one membership unit of 99 LLC, and each outstanding share of Class B common stock of 99¢ Only Stores, par value $0.01 per share, was cancelled and forfeited. Pursuant to the laws of the State of California, all rights and property of 99¢ Only Stores were vested in 99 LLC and all debts, liabilities and obligations of 99¢ Only Stores continued as debts, liabilities and obligations of 99 LLC. 99 LLC has elected to be treated as a disregarded entity for United States federal income tax purposes. The Conversion did not have any effect on deferred tax assets or liabilities, and 99 LLC will continue to use the liability method of accounting for income taxes. 99 LLC computes its taxes on a separate return basis, but 99 LLC and Parent will continue to file consolidated or combined income tax returns with its subsidiaries in all jurisdictions. Parent is a holding company with no active business or operations and has no holdings in any business other than 99 LLC. Principles of Consolidation The consolidated financial statements include the accounts of the Company and its subsidiaries required to be consolidated in accordance with accounting principles generally accepted in the United States (“GAAP”). Intercompany accounts and transactions between the consolidated companies have been eliminated in consolidation. Change in Fiscal Year On December 16, 2013, the board of directors of the Company’s sole member, Parent, approved a resolution changing the end of the Company’s fiscal year. Prior to the change, the fiscal year of the Company ended on the Saturday closest to the last day of March. The Company’s new fiscal year end is the Friday closest to the last day of January, with each successive quarterly period ending the Friday closest to the last day of April, July, October or January, as applicable. The Company follows a fiscal calendar consisting of four quarters with 91 days, each ending on the Friday closest to the calendar quarter-end, and a 52-week fiscal year with 364 days, with a 53-week year every five to six years. Unless otherwise stated, references to years in this report relate to fiscal years rather than calendar years. The Company’s fiscal year 2016 (“fiscal 2016”) began on January 31, 2015, and ended on January 29, 2016 and consisted of 52 weeks. The Company’s fiscal year 2015 (“fiscal 2015”) began on February 1, 2014, and ended on January 30, 2015 and consisted of 52 weeks. The Company’s fiscal year 2014 (“transition fiscal 2014” or the “ten months ended January 31, 2014”) began on March 31, 2013 and ended on January 31, 2014 and consisted of 44 weeks. Use of Estimates The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Cash For purposes of reporting cash flows, cash includes cash on hand, cash at the stores and cash in financial institutions. The majority of payments due from financial institutions for the settlement of debit card and credit card transactions are processed within three business days and therefore are also classified as cash. Cash balances held at financial institutions are generally in excess of federally insured limits. These accounts are only insured by the Federal Deposit Insurance Corporation up to $250,000. The Company’s cash balances held at financial institutions and exceeding FDIC insurance totaled $3.9 million and $2.1 million as of January 29, 2016 and January 30, 2015, respectively. The Company historically has not experienced any losses in such accounts. The Company places its temporary cash investments with what it believes to be high credit, quality financial institutions. Under the Company’s cash management system, checks issued but not presented to the bank may result in book cash overdraft balances for accounting purposes. The Company reclassifies book overdrafts to accounts payable, which are reflected as an operating activity in its consolidated statements of cash flows. Book overdrafts included in accounts payable were $7.9 million and $16.5 million as of January 29, 2016 and January 30, 2015, respectively. Allowance for Doubtful Accounts In connection with its wholesale business, the Company evaluates the collectability of accounts receivable based on a combination of factors. In cases where the Company is aware of circumstances that may impair a specific customer’s or tenants ability to meet its financial obligations subsequent to the original sale, the Company will record an allowance against amounts due and thereby reduce the net recognized receivable to the amount the Company reasonably believes will be collected. For all other customers and tenants, the Company recognizes allowances for doubtful accounts based on the length of time the receivables are past due, industry and geographic concentrations, the current business environment and the Company’s historical experiences. Inventories Inventories are valued at the lower of cost or market. Inventory costs are established using a methodology that approximates first in, first out, which for store inventories is based on a retail inventory method. Valuation allowances for shrinkage as well as excess and obsolete inventory are also recorded. The Company includes spoilage, scrap and shrink in its definition of shrinkage. Shrinkage is estimated as a percentage of sales for the period from the last physical inventory date to the end of the applicable period. Such estimates are based on experience and the most recent physical inventory results. Physical inventory counts are completed at each of the Company’s retail stores at least once a year by an outside inventory service company. The Company performs inventory cycle counts at its warehouses throughout the year. The Company also performs inventory reviews and analysis on a quarterly basis for both warehouse and store inventory to determine inventory valuation allowances for excess and obsolete inventory. The valuation allowances for excess and obsolete inventory are based on the age of the inventory, sales trends and future merchandising plans. The valuation allowances for excess and obsolete inventory require management judgment and estimates that may impact the ending inventory valuation and valuation allowances that may have a material effect on the reported gross margin for the period. These estimates are subject to change based on management’s evaluation of, and response to, a variety of factors and trends, including, but not limited to, consumer preferences and buying patterns, age of inventory, increased competition, inventory management, merchandising strategies and historical sell through trends. The Company’s ability to adequately evaluate the impact of inventory management and merchandising strategies executed in response to such factors and trends in future periods could have a material impact on such estimates. At the end of the third quarter of transition fiscal 2014, based on new merchandising plans, the Company increased its valuation allowances for excess and obsolete inventory. The Company recorded a charge to cost of sales and a corresponding reduction in inventory of approximately $9.6 million. This was a prospective change and did not have an effect on prior periods. In the fourth quarter of fiscal 2015, the Company recorded a charge for additional inventory shrinkage based upon the results of annual physical inventory counts completed during the quarter. This resulted in a net charge to cost of sales and a corresponding reduction in inventory of approximately $10.0 million, which was primarily related to the implementation of certain strategic initiatives, including the “Go Taller” store remodeling program. The “Go Taller” store remodeling program increased the amount of shelving space at the stores by raising the height of store shelves. During the remodeling and startup phase of the program, retail stores remained open and many products were moved from the shelves to the floor to accommodate the remodeling, which the Company believes led to an increase in misplaced and damaged products. In anticipation of the extra shelf space, more inventory was shipped to stores, which we believe also increased shrinkage. A reduction in workforce during transition fiscal 2014 resulted in the outsourcing of the Company’s Loss Prevention department, which was not reinstated in-house until the third quarter of fiscal 2016. These initiatives collectively disrupted store operations, resulting in increased loss due to theft and misplaced and damaged inventory. In order to obtain inventory at attractive prices, t he Company takes advantage of large volume purchases, closeouts and other similar purchase opportunities. Consequently, the Company’s inventory fluctuates from period to period and the inventory balances vary based on the timing and availability of such opportunities. Property and Equipment Property and equipment are carried at cost and are depreciated or amortized on a straight-line basis over the following useful lives: Owned buildings and improvements Lesser of 30 years or the estimated useful life of the improvement Leasehold improvements Lesser of the estimated useful life of the improvement or remaining lease term Fixtures and equipment 3-5 years Transportation equipment 3-5 years Information technology systems For major corporate systems, estimated useful life up to 7 years; for functional standalone systems, estimated useful life up to 5 years The Company’s policy is to capitalize expenditures that materially increase asset lives and expense ordinary repairs and maintenance as incurred. Long-Lived Assets The Company assesses the impairment of depreciable long-lived assets when events or changes in circumstances indicate that the carrying value may not be recoverable. The Company groups and evaluates long-lived assets for impairment at the individual store level, which is the lowest level at which individual identifiable cash flows are available. Recoverability is measured by comparing the carrying amount of an asset to expected future net cash flows generated by the asset. If the carrying amount of an asset exceeds its estimated undiscounted future cash flows, the carrying amount is compared to its fair value and an impairment charge is recognized to the extent of the difference. Factors that the Company considers important that could individually or in combination trigger an impairment review include the following: (1) significant underperformance relative to expected historical or projected future operating results; (2) significant changes in the manner of the Company’s use of the acquired assets or the strategy for the Company’s overall business; and (3) significant changes in the Company’s business strategies and/or negative industry or economic trends. On a quarterly basis, the Company assesses whether events or changes in circumstances occur that potentially indicate that the carrying value of long-lived assets may not be recoverable (Level 3 measurement, see Note 8, “Fair Value of Financial Instruments”). Considerable management judgment is necessary to estimate projected future operating cash flows. Accordingly, if actual results fall short of such estimates, significant future impairments could result. During fiscal 2016, due to the underperformance of two stores in Texas and one store in California, the Company concluded that the carrying value of the long-lived assets relating to such stores were not recoverable and accordingly recorded an asset impairment charge of $0.8 million. During fiscal 2016, the Company also recorded impairment charges of $0.2 million related to equipment and fixtures that will be disposed of and for which the Company concluded the fair value was zero. During fiscal 2015, the Company wrote down the carrying value of a held for sale property to the estimated net realizable value, net of expected disposal costs, and accordingly recorded an asset impairment charge of $0.1 million. During transition fiscal 2014, the Company did not record any long-lived asset impairment charges. Goodwill and Other Intangible Assets In connection with the Merger purchase price allocation, the fair values of long-lived and intangible assets were determined based upon assumptions related to the future cash flows, discount rates and asset lives using then available information, and in some cases were obtained from independent professional valuation experts. The Company amortizes intangible assets over their estimated useful lives unless such lives are deemed indefinite. Amortizable intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable based on undiscounted cash flows, and, if impaired, written down to fair value based on either discounted cash flows or appraised values. Significant judgment is required in determining whether a potential indicator of impairment of long-lived assets exists and in estimating future cash flows used in the impairment tests (Level 3 measurement, see Note 8, “Fair Value of Financial Instruments”). Goodwill and indefinite-lived intangible assets are not amortized but instead tested annually for impairment or more frequently when events or changes in circumstances indicate that the assets might be impaired. Goodwill is tested for impairment by comparing the carrying amount of the reporting unit to the fair value of the reporting unit to which the goodwill is assigned. The Company has the option of performing a qualitative assessment before calculating the fair value of the reporting unit (i.e., step zero of the goodwill impairment test). If the Company does not perform a qualitative assessment, or determines, on the basis of qualitative factors, that the fair value of the reporting unit is more likely than not less than the carrying amount, the two-step impairment test would be required. The first step is to compare the fair value of the reporting unit with its carrying amount, including goodwill. If the fair value of the reporting unit exceeds its carrying amount, goodwill is considered not impaired; otherwise, goodwill is impaired and the loss is measured by performing step two. Under step two, the impairment loss is measured by comparing the implied fair value of the reporting unit’s goodwill with the carrying amount of goodwill. Management has determined that the Company has two reporting units, the retail reporting unit and the wholesale reporting unit. The Company, assisted by an independent third party valuation firm, performs the annual test for impairment in January of the fiscal year and determines fair value based on a combination of the income approach and the market approach. The income approach is based on discounted cash flows to determine fair value. The market approach uses a selection of comparable companies and transactions in determining fair value. The fair value of the trade name is also tested for impairment in the fourth quarter by comparing the carrying value to the fair value. Fair value of a trade name is determined using a relief from royalty method under the income approach, which uses projected revenue allocable to the trade name and an assumed royalty rate (Level 3 measurement, see Note 8, “Fair Value of Financial Instruments”). These approaches involve making key assumptions about future cash flows, discount rates and asset lives using then best available information. These assumptions are subject to a high degree of complexity and judgment and are subject to change. The amount of goodwill allocated to the retail reporting unit and wholesale reporting unit was $467.2 and $12.5 million, respectively, as of January 30, 2015. During the third quarter of fiscal 2016, the Company determined that indicators of impairment existed to require an interim impairment analysis of goodwill and trade name, including (i) overall performance deterioration reflected in decreased comparable same-store sales and cannibalization from stores opened in fiscal 2015 under an accelerated expansion program, (ii) increases in inventory shrinkage and buildup of excess inventory, (iii) decreased margin due to disappointing results from sales promotions and (iv) a decision to delay the pace of future store openings. The first step evaluation concluded that the fair value of the retail reporting unit was below its carrying value. The Company performed step two of the goodwill impairment test that requires the retail reporting unit’s fair value to be allocated to all of the assets and liabilities of the reporting unit, including any intangible assets, in a hypothetical analysis that calculates the implied fair value of goodwill in the same manner as if the reporting unit was being acquired in a business combination, including consideration of the fair value of tangible property and intangible assets. As a result of this preliminary analysis and based on best estimate, the Company recorded a $120.0 million non-cash goodwill impairment charge in the third quarter of fiscal 2016, which was reflected as goodwill impairment in the consolidated statements of comprehensive income (loss). The finalization of the preliminary goodwill impairment test was completed in the fourth quarter of fiscal 2016 and resulted in a $28.0 million adjustment in goodwill, lowering the third quarter of fiscal 2016 goodwill impairment charge from $120.0 million to $92.0 million. The remaining amount of goodwill allocated to the retail reporting unit and wholesale reporting unit was $375.2 and $12.5 million, respectively, as of January 29, 2016. During the fourth quarter of fiscal 2016, the Company completed step one of its annual goodwill impairment test for the two reporting units and determined that there was no impairment of goodwill since the fair value of the Company’s reporting units exceeded their carrying amounts. As discussed above, considerable management judgment is necessary in estimating future cash flows, market interest rates, discount rates and other factors affecting the valuation of goodwill . The Company’s forecasts used in its fiscal 2016 annual impairment test include growth in net sales, new store openings and same-store sales, positive trends in cost of sales and selling, general and administrative expense. In each case, these estimates and assumptions could be materially affected by factors such as unforeseen events or changes in general economic conditions, a decline in comparable company market multiples, changes to discount rates, increased competitive forces, inability to maintain pricing structure, deterioration of vendor relationships, failure to adequately manage and improve inventory processes and procedures and changes in customer behavior which could result in changes to management’s strategies. If operating results continue to change versus the Company’s expectations, additional impairment charges may be recorded in the future. Additionally, during the fourth quarter of fiscal 2016, the Company completed its annual indefinite-lived intangible asset impairment test and determined there was no impairment to the trade name since the fair value of the trade name exceeded its carrying amount. The results of this test showed that the fair value of trade name exceeded carrying value by approximately 12%. The relief from royalty method estimates our theoretical royalty savings from ownership of the intangible asset. Key assumptions used in this model included sales projections, discount rates and royalty rates, and considerable management judgment is necessary in developing and evaluating such assumptions. If future results are not consistent with current estimates and assumptions, impairment charges maybe recorded in future. Derivatives The Company accounts for derivative financial instruments in accordance with authoritative guidance for derivative instrument and hedging activities. Financial instrument positions taken by the Company are primarily intended to be used to manage risks associated with interest rate exposures. The Company’s derivative financial instruments are recorded on the balance sheet at fair value, and are recorded in either current or noncurrent assets or liabilities based on their maturity. Changes in the fair values of derivatives are recorded in net earnings or other comprehensive income (“OCI”), based on whether the instrument is designated and effective as a hedge transaction and, if so, the type of hedge transaction. Gains or losses on derivative instruments reported in accumulated other comprehensive income (“AOCI”) are reclassified to earnings in the period the hedged item affects earnings. Any ineffectiveness is recognized in earnings in the period incurred. Income Taxes The Company uses the liability method of accounting for income taxes. Under the liability method, deferred tax assets and liabilities are recognized using enacted tax rates for the effect of temporary differences between the book and tax bases of recorded assets and liabilities. Deferred tax assets are reduced by a valuation allowance if it is more likely than not that some portion or all of the net deferred tax assets will not be realized. The Company’s ability to realize deferred tax assets is assessed throughout the year and a valuation allowance is established accordingly. The Company recognizes the impact of a tax position only if it is more likely than not to be sustained upon examination based on the technical merits of the position. The Company recognizes potential interest and penalties related to uncertain tax positions in income tax expense. Refer to Note 5, “Income Tax Provision” for further discussion of income taxes. Stock-Based Compensation The Company accounts for stock-based payment awards based on their fair value. The value of the portion of the award that is ultimately expected to vest is recognized as an expense ratably over the requisite service periods. For awards classified as equity, the Company estimates the fair value for each option award as of the date of grant using the Black-Scholes option pricing model or other appropriate valuation models. The Black-Scholes model considers, among other factors, the expected life of the award and the expected volatility of the stock price. Stock options are generally granted to employees at exercise prices equal to or greater than the fair market value of the stock at the dates of grant. Former executive put rights were classified as equity awards and revalued using a binomial model at each reporting period with changes in the fair value recognized as stock-based compensation expense. The fair value of options that vest based on the Company’s and Parent’s achievement of certain performance hurdles was valued using a Monte Carlo simulation method. The fair value of options granted to the current Chief Executive Officer was valued using a binomial model and the Monte Carlo simulation method. Refer to Note 11, “Stock-Based Compensation Plans” for further discussion of stock-based compensation. Revenue Recognition The Company recognizes retail sales in its retail stores at the time the customer takes possession of merchandise. All sales are net of discounts and returns and exclude sales tax. Wholesale sales are recognized in accordance with the shipping terms agreed upon on the purchase order. Wholesale sales are typically recognized free on board origin, where title and risk of loss pass to the buyer when the merchandise leaves the Company’s distribution facility. The Company has a gift card program. The Company does not charge administrative fees on gift cards and the Company’s gift cards do not have expiration dates. The Company records the sale of gift cards as a current liability and recognizes a sale when a customer redeems a gift card. The liability for outstanding gift cards is recorded in accrued expenses. Cost of Sales Cost of sales includes the cost of inventory, freight in, obsolescence, spoilage, scrap and inventory shrinkage, and is net of discounts and allowances. Cost of sales also includes receiving, warehouse costs and distribution costs (which include payroll and associated costs, occupancy, transportation to and from stores and depreciation expense). Cash discounts for satisfying early payment terms are recognized when payment is made, and allowances and rebates based upon milestone achievements such as reaching a certain volume of purchases of a vendor’s products are included as a reduction of cost of sales when such contractual milestones are reached or based on other systematic and rational approaches where possible. Selling, General and Administrative Expenses Selling, general and administrative expenses include the costs of selling merchandise in stores (which include payroll and associated costs, occupancy and other store-level costs) and corporate costs (which include payroll and associated costs, occupancy, advertising, professional fees and other corporate administrative costs). Selling, general and administrative expenses also include depreciation and amortization expense relating to these costs. Leases The Company follows the policy of capitalizing allowable expenditures that relate to the acquisition and signing of its retail store leases. These costs are amortized on a straight-line basis over the applicable lease term. The Company recognizes rent expense for operating leases on a straight-line basis (including the effect of reduced or free rent and rent escalations) over the applicable lease term. The difference between the cash paid to the landlord and the amount recognized as rent expense on a straight-line basis is included in deferred rent. Cash reimbursements received from landlords for leasehold improvements and other cash payments received from landlords as lease incentives are recorded as deferred rent. Deferred rent related to landlord incentives is amortized as an offset to rent expense using the straight-line method over the applicable lease term. In certain lease arrangements, the Company can be involved with the construction of the building. If it is determined that the Company has substantially all of the risks of ownership during construction of the leased property and therefore is deemed to be the owner of the construction project, the Company records an asset for the amount of the total project costs and an amount related to the value attributed to the pre-existing leased building in property and equipment, net and the related financing obligation as part of current and non-current liabilities. Once construction is complete, if it is determined that the asset does not qualify for sale-leaseback accounting treatment, the Company amortizes the obligation over the lease term and depreciates the asset over the life of the lease. The Company does not report rent expense for the portion of the rent payment determined to be related to the assets which are owned for accounting purposes. Rather, this portion of the rent payment under the lease is recognized as a reduction of the financing obligation and interest expense. For store closures where a lease obligation still exists, the Company records the estimated future liability associated with the rental obligation on the cease use date (when the store is closed). Liabilities are established at the cease use date for the present value of any remaining operating lease obligations, net of estimated sublease income, and at the communication date for severance and other exit costs. Key assumptions in calculating the liability include the timeframe expected to terminate lease agreements, estimates related to the sublease potential of closed locations, and estimates of other related exit costs. If actual timing and potential termination costs or realization of sublease income differ from the Company’s estimates, the resulting liabilities could vary from recorded amounts. These liabilities are reviewed periodically and adjusted when necessary. During the second quarter of fiscal 2016, the Company sold and concurrently leased back two retail stores with a carrying value of $7.9 million and received net proceeds from these transactions of $8.7 million. The Company was deemed to have “continuing involvement,” which precluded the de-recognition of the assets from the consolidated balance sheet when the transactions closed. The resulting leases are accounted for as financing leases and the Company has recorded a corresponding financing lease obligation of $8.7 million (as a component of current and non-current liabilities). The Company will amortize the financing lease obligation over the lease term and depreciate the assets over their remaining useful lives. During the third quarter of fiscal 2016, the Company sold and concurrently leased back one store, and the resulting lease qualifies as and is accounted for as an operating lease. The net proceeds from the sale-leaseback transaction amounted to $9.0 million. The Company will amortize deferred gains of $2.6 million relating to the sale-leaseback transaction over the lease term. During the fourth quarter of fiscal 2016, the Company sold and concurrently leased back two stores, and the resulting leases qualify and are accounted for as operating leases. The net proceeds from these sale-leaseback transactions amounted to $9.1 million. The Company will amortize deferred gains of $1.5 million relating to the sale-leaseback transactions over the lease term. S elf-Insured Workers’ Compensation Liability The Company self-insures for workers’ compensation claims in California and Texas. The Company establishes a liability for losses from both estimated known and incurred but not reported insurance claims based on reported claims and actuarial valuations of estimated future costs of known and incurred but not yet reported claims. Should an amount of claims greater than anticipated occur, the liability recorded may not be sufficient and additional workers’ compensation costs, which may be significant, could be incurred. The Company has not discounted the projected future cash outlays for the time value of money for claims and claim-related costs when establishing its workers’ compensation liability in its financial reports for January 29, 2016 and January 30, 2015. Self-Insured Health Insurance Liability The Company self-insures for |
New Authoritative Standards
New Authoritative Standards | 12 Months Ended |
Jan. 29, 2016 | |
New Authoritative Standards. | |
New Authoritative Standards | 2. New Authoritative Standards In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers.” ASU 2014-09 is a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. The ASU also requires expanded disclosures about revenue recognition. In adopting ASU 2014-09, companies may use either a full retrospective or a modified retrospective approach. ASU 2014-09 was to be effective for the first interim period within annual reporting periods beginning after December 15, 2016, and early adoption is not permitted In August 2015, the FASB issued ASU No. 2015-14, “Revenue from Contracts with Customers: Deferral of the Effective Date”, which defers the effective date of ASU 2014-09 for all entities by one year. The Company is currently evaluating this guidance and the impact it will have on its consolidated financial statements. In June 2014, the FASB issued ASU No. 2014-12, “Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period.” This ASU requires that a performance target that affects vesting, and that could be achieved after the requisite service period, be treated as a performance condition. As such, the performance target should not be reflected in estimating the grant date fair value of the award. This update further clarifies that compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. The amendments in this ASU are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015, and early adoption is permitted. The Company will adopt ASU 2014-12 in the first quarter of fiscal 2017 and such adoption is not expected to have a material impact on the Company or its consolidated financial statements. In August 2014, the FASB issued ASU No. 2014-15, “Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern.” This ASU requires management to assess whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the financial statements are issued. If substantial doubt exists, additional disclosures are required. This ASU is effective for annual periods ending after December 15, 2016, and interim periods within those fiscal years, with early adoption permitted. The Company will adopt this standard in the first quarter of fiscal 2018 and such adoption is not expected to have a material impact on the Company or its consolidated financial statements. In January 2015, the FASB issued ASU No. 2015-01, “ Income Statement - Extraordinary and Unusual Items: Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items. ” This ASU eliminates the concept of extraordinary items under GAAP, which, among other things, required an entity to segregate extraordinary items considered to be unusual and infrequent from the results of ordinary operations and show the item separately in the income statement, net of tax, after income from continuing operations. This ASU is effective for annual periods ending after December 15, 2015, and interim periods within those fiscal years, with early adoption permitted. The Company will adopt this standard in the first quarter of fiscal 2017 and such adoption is not expected to have a material impact on the Company or its consolidated financial statements. In February 2015, the FASB issued ASU No. 2015-02, “Amendments to the Consolidation Analysis.” This ASU amended the process that a reporting entity must perform to determine whether it should consolidate certain types of legal entities. The amendment modifies the evaluation of whether limited partnerships and similar legal entities are variable interest entities (“VIEs”) or voting interest entities and affects the consolidation analysis of reporting entities that are involved with VIEs, particularly those that have fee arrangements and related party relationships, among other provisions. This ASU is effective for annual periods and interim periods within those annual periods beginning after December 15, 2015, and early adoption is permitted. The Company will adopt this standard in the first quarter of fiscal 2017 and such adoption is not expected to have a material impact on the Company or its consolidated financial statements. In April 2015, the FASB issued ASU No. 2015-03, “Simplifying the Presentation of Debt Issuance Costs.” This ASU requires companies to present debt issuance costs related to a recognized debt liability on the balance sheet as a direct deduction from the debt liability, similar to the presentation of debt discounts. Debt issuance costs will continue to be amortized to interest expense using the effective interest method. In August 2015, FASB issued ASU No. 2015-15, “ Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangement.” ASU 2015-15 clarifies the presentation and measurement of debt issuance costs incurred in connection with line-of-credit arrangements given the lack of guidance on this topic in ASU 2015-03. For line-of-credit arrangements, an entity can continue to present debt issuance costs as an asset and amortize the deferred debt issuance costs ratably over the term of the line-of-credit arrangement. These standards are effective for public companies for annual periods beginning after December 15, 2015 as well as interim periods within those annual periods using the retrospective approach. The Company will adopt this standard in the first quarter of fiscal 2017 and such adoption is not expected to have a material impact on the Company or its consolidated financial statements. In July 2015, the FASB issued ASU No. 2015-11, “Simplifying the Measurement of Inventory.” This ASU simplifies the subsequent measurement of inventories by replacing the lower of cost or market test with a lower of cost or net realizable value test. Net realizable value is defined as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. The guidance is effective for reporting periods beginning after December 15, 2016 and interim periods within those fiscal years, with early adoption permitted. This ASU should be applied prospectively. The Company is currently evaluating the impacts of the new guidance on its consolidated financial statements. In September 2015, the FASB issued ASU No. 2015-16, “Simplifying the Accounting for Measurement-Period Adjustments.” This ASU eliminates the requirement for an acquirer in a business combination to account for measurement-period adjustments retrospectively. This ASU is effective for fiscal years beginning after December 15, 2015, and early adoption is permitted. The Company will adopt this standard in the first quarter of fiscal 2017 and such adoption is not expected to have a material impact on the Company or its consolidated financial statements. In November 2015, the FASB issued ASU No. 2015-17, “Balance Sheet Classification of Deferred Taxes.” This ASU simplifies the presentation of deferred income taxes by requiring that all deferred tax liabilities and assets be classified as long-term on the balance sheet. This guidance is effective for fiscal years beginning after December 15, 2017, and allows for either prospective or retrospective adoption, with early adoption permitted. The Company is currently evaluating the impact of the adoption of this standard on its consolidated financial statements. In January 2016, the FASB issued ASU No. 2016-01, “ Recognition and Measurement of Financial Assets and Financial Liabilities.” This ASU revises an entity’s accounting on the classification and measurement of financial instruments. Although the ASU retains many current requirements, it significantly revises an entity’s accounting related to (1) the classification and measurement of investments in equity securities and (2) the presentation of certain fair value changes for financial liabilities measured at fair value. The ASU also amends certain disclosure requirements associated with the fair value of financial instruments. This ASU becomes effective for public entities in the fiscal year beginning after December 15, 2017 and for all other entities beginning after December 15, 2018. Early adoption is not permitted except for the provisions related to the presentation of certain fair value changes for financial liabilities measured at fair value. The Company is currently evaluating the impact of the adoption of this standard on its consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, “Leases,” which requires lessees to recognize right-of-use assets and lease liabilities, for all leases, with the exception of short-term leases, at the commencement date of each lease. This ASU requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. This ASU is effective for annual periods beginning after December 15, 2018 and interim periods within those annual periods. Early adoption is permitted. The amendments of this update should be applied using a modified retrospective approach, which requires lessees and lessors to recognize and measure leases at the beginning of the earliest period presented. The Company is currently evaluating the impact of the adoption of this standard on its consolidated financial statements. |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets and Liabilities | 12 Months Ended |
Jan. 29, 2016 | |
Goodwill and Other Intangible Assets and Liabilities | |
Goodwill and Other Intangible Assets and Liabilities | 3 . Goodwill and Other Intangible Assets and Liabilities As a result of the Merger, the Company recognized goodwill, and other intangible assets and liabilities. The following table sets forth the value of the goodwill and other intangible assets and liabilities, and the amortization of finite lived intangible assets and liabilities (in thousands): January 29, 2016 January 30, 2015 Remaining Amortization Life (Years) Gross Carrying Amount Impairment Losses Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Indefinite lived intangible assets: Goodwill $ $ ) $ — $ $ $ — $ Trade name — — — Total indefinite lived intangible assets $ $ ) $ — $ $ $ — $ Finite lived intangible assets: Trademarks 16 $ $ ) $ ) $ $ $ ) $ Bargain Wholesale customer relationships 8 — ) ) Favorable leases 1 to 13 ) ) ) Total finite lived intangible assets ) ) ) Total goodwill and other intangible assets $ $ ) $ ) $ $ $ ) $ As of January 29, 2016 Estimated amortization of finite lived intangible assets (a) (b): Trademarks Bargain Wholesale Customer Relationships Favorable Leases FY 2017 $ $ $ FY 2018 FY 2019 FY 2020 FY 2021 Thereafter $ $ $ As of January 29, 2016 As of January 30, 2015 Remaining Amortization Life (Years) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Remaining Amortization Life (Years) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Unfavorable leases 1 to 14 $ $ ) $ Unfavorable leases 1 to 15 $ $ ) $ Estimated amortization of unfavorable leases (b): FY 2017 $ FY 2018 FY 2019 FY 2020 FY 2021 Thereafter $ (a) Amortization of trademarks and Bargain Wholesale customer relationships is recognized in selling, general and administrative expenses on the Consolidated Statement of Comprehensive Income (Loss). (b) Amortization of favorable and unfavorable leases is recognized in rent expense, as a component of selling, general and administrative expenses on the Consolidated Statement of Comprehensive Income (Loss). The Company recorded a goodwill impairment charge of $120.0 million in the third quarter of fiscal 2016. The finalization of the preliminary goodwill impairment test was completed in the fourth quarter of fiscal 2016 and resulted in a $28.0 million adjustment in goodwill, lowering the third quarter of fiscal 2016 goodwill impairment charge from $120.0 million to $92.0 million. The reduction is due to a refinement of the estimates underlying the initial charge. See Note 1, “Basis of Presentation and Summary of Significant Accounting Policies”. In fiscal 2016, the Company recorded a favorable lease impairment charge of $0.6 million relating one store as part of selling, general and administrative expenses. In fiscal 2016, the Company recorded an impairment charge of $0.6 million relating to its trademarks as part of selling, general and administrative expenses. |
Property and Equipment, net
Property and Equipment, net | 12 Months Ended |
Jan. 29, 2016 | |
Property and Equipment, net | |
Property and Equipment, net | 4. Property and Equipment, net The following table provides details of property and equipment (in thousands): January 29, 2016 January 30, 2015 Property and equipment Land $ $ Buildings Buildings improvements Leasehold improvements Fixtures and equipment Transportation equipment Construction in progress Total property and equipment Less: accumulated depreciation and amortization ) ) Property and equipment, net $ $ As of January 29, 2016 and January 30, 2015, buildings include $24.6 million that represents the estimated fair market value of a building under a build-to-suit lease in which the Company is the deemed owner for accounting purposes. See Note 10, “Commitments and Contingencies.” As of January 29, 2016, land, buildings and building improvements include $8.8 million relating to two sale-leaseback transactions completed in fiscal 2016 in which the Company was deemed to have “continuing involvement,” which precluded the de-recognition of the assets from the consolidated balance sheet when the transactions closed. See Note 1, “Basis of Presentation and Summary of Significant Accounting Policies.” |
Income Tax Provision
Income Tax Provision | 12 Months Ended |
Jan. 29, 2016 | |
Income Tax Provision | |
Income Tax Provision | 5. Income Tax Provision The provision (benefit) for income taxes consists of the following (in thousands): Year Ended Year Ended Ten Months Ended January 29, 2016 January 30, 2015 January 30, 2014 Current: Federal $ ) $ ) $ ) State ) Foreign — ) ) Deferred - federal and state ) Provision (benefit) for income taxes $ $ $ ) Differences between the provision (benefit) for income taxes and income taxes at the statutory federal income tax rate are as follows (in thousands): Year Ended Year Ended Ten Months Ended January 29, 2016 January 30, 2015 January 31, 2014 Amount Percent Amount Percent Amount Percent Income taxes at statutory federal rate $ ) % $ % $ ) )% State income taxes, net of federal income tax effect ) ) ) Goodwill impairment ) — — — — Valuation allowance ) — — — — Effect of permanent differences ) Welfare to work, and other job credits ) ) ) ) ) Other ) $ )% $ % $ ) )% The difference between the statutory rate of 35% and the effective tax rate for fiscal 2016 was driven primarily due to the tax effect of the non-deductible goodwill impairment charge and the establishment of a valuation allowance against deferred tax assets as discussed below. The difference between the statutory rate of 35% and the effective tax rate for fiscal 2015 was driven primarily by the impact of state income taxes and the non-deductibility of certain costs. The difference between the statutory rate of 35% and the effective tax rate for transition fiscal 2014 was driven primarily by the release of valuation allowance on the California Enterprise Zone (“EZ”) credit carry-forward, deductibility of federal hiring credits and other discrete items recognized during transition fiscal 2014. The components of deferred tax assets and liabilities were as follows (in thousands): January 29, 2016 January 30, 2015 DEFERRED TAX ASSETS Workers’ compensation $ $ Uniform inventory capitalization Leases Stock-based compensation Net operating loss carry-forwards Inventory Accrued liabilities Amortization Debt extinguishment State taxes Credits Other Total Gross Deferred Tax Assets Less: Valuation Allowances — Total Net Deferred Tax Assets DEFERRED TAX LIABILITIES Depreciation ) ) Intangibles ) ) Prepaid expenses ) ) Other ) ) Total Deferred Tax Liabilities ) ) Net Deferred Tax Liabilities $ ) $ ) The Company assesses its ability to realize deferred tax assets throughout the fiscal year. As a result of this assessment during the second quarter of fiscal 2016, the Company concluded that it was more likely than not that the Company would not realize its deferred tax assets. In the quarters prior to the recording of a valuation allowance in the second quarter of fiscal 2016, the Company weighed all available positive and negative evidence and determined that it was more likely than not that the deferred tax assets were fully realizable. In fiscal 2016, the Company’s management had begun to take meaningful steps to focus on the operational execution of the initiatives launched in fiscal 2015, which were expected to drive performance improvements over the second and third quarters of fiscal 2016. However, in the second quarter of fiscal 2016, the Company’s experienced (i) margin declines due to short-term sales promotions, (ii) delays in sales growth due to cannibalization from new store openings, (iii) increased inventory shrinkage from a buildup of inventory levels, and (iv) increases in support costs as a percentage of sales. As a result of these second quarter of fiscal 2016 events, the Company decided to adjust merchandise pricing strategies, delay the pace of future store openings for the remainder of fiscal 2016, revise inventory shrinkage processes and establish selling, general and administrative cost control measures. The Company concluded that until the performance issues identified in the second quarter of fiscal 2016 showed improvement, it was more likely than not that the Company would not realize its net deferred tax assets, and therefore the Company recorded a $31.7 million increase to provision for income taxes in order to establish a valuation allowance against such net deferred tax assets. As of January 29, 2016, the valuation allowance increased to $81.8 million, which was primarily related to increase in losses incurred during fiscal 2016. The Company will continue to evaluate all of the positive and negative evidence in future periods and will make a determination as to whether it is more likely than not that all or a portion of its deferred tax assets will be realized in such future periods. At such time as the Company determines that it is more likely than not that all or a portion of its deferred tax assets are realizable, the valuation allowance will be reduced or released in its entirety, and the corresponding benefit will be reflected in the Company’s tax provision. Deferred tax liabilities associated with indefinite-lived intangibles cannot be considered a source of taxable income to support the realization of deferred tax assets because these deferred tax liabilities will not reverse until some indefinite future period when these assets are either sold or impaired for book purposes. The establishment of a valuation allowance does not have any impact on cash, nor does such an allowance preclude the Company from using its loss carryforwards or utilizing other deferred tax assets in the future. The Company previously maintained a valuation allowance to reduce certain deferred tax assets to amounts that were, in management’s estimation, more likely than not to be realized. During the second quarter of transition fiscal 2014, the legislation that eliminated the EZ hiring credits after December 31, 2013 was signed into law. As a result of the law change, the Company released the valuation allowance associated with its $11.6 million of California EZ credit carryforwards as a discrete item in the second quarter of transition fiscal 2014. As of January 29, 2016, the Company had federal and state net operating loss (“NOL”), which will expire between fiscal 2018 and fiscal 2036. The Company’s credit carryforwards will expire between fiscal 2024 and fiscal 2036. As of January 29, 2016 and January 30, 2015, the Company had not accrued any liabilities related to unrecognized tax benefits, and had also not accrued any interest and penalties related to uncertain tax positions for the relevant periods. The Company files income tax returns in the U.S. federal jurisdiction and in various states. The Company is subject to examinations by the major tax jurisdictions in which it files for the tax years 2011 forward. |
Debt
Debt | 12 Months Ended |
Jan. 29, 2016 | |
Debt | |
Debt | 6. Debt Short and long-term debt consists of the following (in thousands): January 29, 2016 January 30, 2015 ABL Facility agreement $ $ First Lien Term Loan Facility agreement, maturing on January 13, 2019, payable in quarterly installments of $1,535, plus interest through December 31, 2019, with unpaid principal and accrued interest due January 13, 2019, net of unamortized OID of $4,724 and $5,606 as of January 29, 2016 and January 30, 2015, respectively Senior Notes (unsecured) maturing December 15, 2019, unpaid principal and accrued interest due on December 15, 2019 Total debt Less: current portion Long-term debt, net of current portion $ $ As of January 29, 2016 the scheduled maturities of debt for each of the five succeeding fiscal years are as follows (in thousands): January 29, 2016 Future maturities Maturities of Long-term Debt FY 2017(a) $ FY 2018 FY 2019 FY 2020 Thereafter — Long-term debt, current and non-current $ (a) Reflects planned maturity of $47.8 million under the ABL Facility on January 13, 2017, prior to amendment of the ABL Facility (as described below) that extended the maturity to April 8, 2021. As of January 29, 2016 and January 30, 2015, the current and non-current net deferred financing costs are as follows (in thousands): January 29, 2016 January 30, 2015 Deferred financing costs Net Amount Net Amount ABL Facility $ $ First Lien Term Loan Facility Senior Notes Total deferred financing costs $ $ On January 13, 2012 (the “Original Closing Date”), in connection with the Merger, the Company obtained Credit Facilities (as defined below) provided by a syndicate of lenders arranged by Royal Bank of Canada as administrative agent, as well as other agents and lenders that are parties to the agreements governing these Credit Facilities. The Credit Facilities include (a) a first lien based revolving credit facility (as amended, the “ABL Facility”), and (b) a first lien term loan facility (as amended, the “First Lien Term Loan Facility” and together with the ABL Facility, the “Credit Facilities”). First Lien Term Loan Facility Under the First Lien Term Loan Facility, (i) $525.0 million of term loans were incurred on the Original Closing Date and (ii) $100.0 million of additional term loans were incurred pursuant to an incremental facility effected through an amendment entered into on October 8, 2013 (the “Second Amendment”) (all such term loans, collectively, the “Term Loans”). The First Lien Term Loan Facility has a maturity date of January 13, 2019. All obligations under the First Lien Term Loan Facility are guaranteed by Parent and the Company’s direct or indirect 100% owned domestic subsidiaries (with customary exceptions, including immaterial subsidiaries) (collectively, the “Credit Facilities Guarantors”). In addition, the First Lien Term Loan Facility is secured by substantially all of the Company’s assets and the assets of the Credit Facilities Guarantors, including a first priority pledge of all of the Company’s equity interests and the equity interests of the Credit Facilities Guarantors and a first priority security interest in certain other fixed assets, and a second priority security interest in certain current assets. The Company is required to make scheduled quarterly payments each equal to 0.25% of the principal amount of the Term Loans, with the balance due on the maturity date. Borrowings under the First Lien Term Loan Facility bear interest at an annual rate equal to an applicable margin plus, at the Company’s option, either (i) a base rate (the “Base Rate”) determined by reference to the highest of (a) the interest rate in effect determined by the administrative agent as the “Prime Rate” (3.50% as of January 29, 2016), (b) the federal funds effective rate plus 0.50% and (c) an adjusted Eurocurrency rate for one month (determined by reference to the greater of the Eurocurrency rate for the interest period subject to certain adjustments) plus 1.00%, or (ii) a Eurocurrency rate determined by reference to the London Interbank Offered Rate (“LIBOR”), adjusted for statutory reserve requirements, for the interest period relevant to such borrowing. On April 4, 2012, the Company amended the terms of the First Lien Term Loan Facility (the “First Amendment”) and incurred related refinancing costs of $11.2 million. The First Amendment, among other things, (i) decreased the applicable margin from LIBOR plus 5.50% (or Base Rate plus 4.50%) to LIBOR plus 4.00% (or Base Rate plus 3.00%) and (ii) decreased the LIBOR floor from 1.50% to 1.25%. On October 8, 2013, the Company entered into the Second Amendment, which among other things, (i) provided $100.0 million of additional term loans as described above, (ii) decreased the applicable margin from LIBOR plus 4.00% (or Base Rate plus 3.00%) to LIBOR plus 3.50% (or Base Rate plus 2.50%) and (iii) decreased the LIBOR floor from 1.25% to 1.00%. Upon the occurrence of the Second Amendment, the Company’s obligation to make scheduled quarterly payments on the Term Loans was increased to require the Company to make scheduled quarterly payments each equal to 0.25% of the amended principal amount of the Term Loans (approximately $1.5 million). In connection with the Second Amendment and in the third quarter of transition fiscal 2014, the Company recognized a loss on debt extinguishment of approximately $4.4 million related to a portion of the unamortized debt issuance costs, unamortized original issue discount (“OID”) and other repricing costs. The Company recorded $1.6 million as deferred debt issuance costs in connection with the Second Amendment in transition fiscal 2014. In addition, the Second Amendment (i) amended certain restricted payment provisions, (ii) removed the maximum capital expenditures covenant from the agreement governing the First Lien Term Loan Facility, (iii) modified the existing provision restricting the Company’s ability to make dividend and other payments so that from and after March 31, 2013, the permitted payment amount represents the sum of (a) a calculation based on 50% of Consolidated Net Income (as defined in the First Lien Term Loan Facility agreement), if positive, or a deficit of 100% of Consolidated Net Income, if negative, and (b) $20.0 million, and (iv) permitted proceeds of any sale leasebacks of any assets acquired after January 13, 2012, to be reinvested in the Company’s business without restriction. As of January 29, 2016 and January 30, 2015, the interest rate charged on the First Lien Term Loan Facility was 4.50% (1.00% Eurocurrency rate, plus the Eurocurrency loan margin of 3.50%). As of January 29, 2016 and January 30, 2015 amount outstanding under the First Lien Term Loan Facility was $595.7 million and $600.5 million, respectively. Following the end of each fiscal year, the Company is required to make prepayments on the First Lien Term Loan Facility in an amount equal to (i) 50% of Excess Cash Flow (as defined in the agreement governing the First Lien Term Loan Facility), with the ability to step down to 25% and 0% upon achievement of specified total leverage ratios, minus (ii) the amount of certain voluntary prepayments made on the First Lien Term Loan Facility and/or the ABL Facility during such fiscal year. There was no Excess Cash Flow payment required for fiscal 2016, fiscal 2015 or transition fiscal 2014. The First Lien Term Loan Facility includes certain customary restrictions, among other things, on the Company’s ability and the ability of Parent, the Credit Facilities Guarantors (including 99 Cents Texas) and certain future subsidiaries of the Company to incur or guarantee additional indebtedness, make certain restricted payments, acquisitions or investments, materially change the Company’s business, incur or permit to exist certain liens, enter into transactions with affiliates, sell assets, make capital expenditures or merge or consolidate with or into, another company. As of January 29, 2016, the Company was in compliance with the terms of the First Lien Term Loan Facility. During the first quarter of fiscal 2013, the Company entered into an interest rate swap agreement to limit the variability of cash flows associated with interest payments on the First Lien Term Loan Facility that result from fluctuations in the LIBOR rate. See Note 7, “Derivative Financial Instruments” for more information on the Company’s interest rate swap agreement. ABL Facility The ABL Facility initially was to mature on January 13, 2017 and provided for up to $175.0 million of borrowings, subject to certain borrowing base limitations. Subject to certain conditions, the Company could increase the commitments under the ABL Facility by up to $50.0 million. All obligations under the ABL Facility are guaranteed by Parent and the other Credit Facilities Guarantors. The ABL Facility is secured by substantially all of the Company’s assets and the assets of the Credit Facilities Guarantors, including a first priority security interest in certain current assets, and a second priority pledge of all of the Company’s equity interests and the equity interest of the Credit Facilities Guarantors and a second priority security interest in certain other fixed assets. Borrowings under the ABL Facility bear interest at a rate based, at the Company’s option, on (i) LIBOR plus an applicable margin to be determined (1.75% as of January 29, 2016) or (ii) the determined Base Rate plus an applicable margin to be determined (0.75% at January 29, 2016), in each case based on a pricing grid depending on average daily excess availability for the most recently ended quarter. The weighted average interest rate for borrowings under the ABL Facility was 2.53% as of January 29, 2016 and 1.99% as of January 30, 2015. In addition to paying interest on outstanding principal under the Credit Facilities, the Company is required to pay a commitment fee to the lenders under the ABL Facility on unused commitments. The commitment fee is adjusted at the beginning of each quarter based upon the average historical excess availability of the prior quarter (0.50% for the quarter ended January 29, 2016 and January 30, 2015). The Company must also pay customary letter of credit fees and agency fees. As of January 29, 2016, borrowings under the ABL Facility were $47.8 million, outstanding letters of credit were $2.5 million and availability under the ABL Facility subject to the borrowing base, was $90.9 million as of January 29, 2016, prior to giving effect to a subsequent amendment to the ABL Facility on April 8, 2016 (the “Fourth Amendment”) that decreased commitments available under the ABL Facility by $25.0 million. As of January 30, 2015, borrowings under the ABL Facility were $57.0 million, outstanding letters of credit were $2.5 million, and availability under the ABL Facility subject to the borrowing base, was $115.5 million. The ABL Facility includes restrictions on the Company’s ability, and the ability of Parent and certain of the Company’s restricted subsidiaries to incur or guarantee additional indebtedness, pay dividends on, or redeem or repurchase, its capital stock, make certain acquisitions or investments, materially change its business, incur or permit to exist certain liens, enter into transactions with affiliates, sell assets or merge or consolidate with or into another company. On October 8, 2013, the ABL Facility was amended to, among other things, modify the provision restricting the Company’s ability to make dividend and other payments. Such payments are subject to achievement of Excess Availability (as defined in the agreement governing the ABL Facility) and a ratio of EBITDA (as defined in the agreement governing the ABL Facility) to fixed charges. On August 24, 2015, the Company amended its ABL Facility to increase commitments available under the ABL Facility by $10.0 million, resulting in an aggregate ABL Facility size of $185.0 million. The additional commitments implemented pursuant to the amendment have terms identical to the existing commitments under the ABL Facility, including as to interest rate and other pricing terms. The Company paid amendment fees of $0.5 million to lenders under the ABL Facility. In addition, the amendment to the ABL Facility (i) modified certain springing covenants triggered by reference to excess availability under the ABL Facility agreement so that, from August 24, 2015 to April 30, 2016, the occurrence of any such excess availability trigger is determined solely by reference to the available borrowing base under the ABL Facility rather than by reference to the lesser of the available borrowing base and the available aggregate commitments under the ABL Facility, (ii) increased the inventory advance rate during such period for purposes of calculating the borrowing base from 90% to 92.5%, (iii) provided for certain additional inspection rights by the administrative agent if there is a material increase in the amount of inventory that is not eligible inventory for purposes of the borrowing base and (iv) provided for certain additional technical waivers and amendments in order to effect the foregoing. As of January 29, 2016, the Company was in compliance with the terms of the ABL Facility. On April 8, 2016, the Company amended its ABL Facility to, among other things, decrease the commitments available under the ABL Facility by $25.0 million, resulting in an aggregate facility size of $160.0 million, and extend the maturity date of the ABL Facility to April 8, 2021; provided however, the ABL Facility will mature on the earlier of (i) the date that is 90 days prior to the stated maturity date in respect of the First Lien Term Loan Facility and (ii) the date that is 90 days prior to the stated maturity date in respect of the Senior Notes, unless the First Lien Term Loan Facility and Senior Notes have been repaid or refinanced in full or amended to extend the final maturity dates thereof to a date that is at least 180 days after April 8, 2021 (the date of such repayment or refinancing, the “Term/Notes Refinancing Date”). The Fourth Amendment also modified the interest rate margins payable under the ABL Facility. The initial applicable margin for borrowings under the ABL Facility is 2.0% with respect to base rate borrowings and 3.0% with respect to Eurocurrency rate borrowings. Commencing with the first day of the first fiscal quarter commencing after the closing of the Fourth Amendment, the applicable margin for borrowings thereunder is subject to adjustment each fiscal quarter, based on average historical excess availability during the preceding fiscal quarter. Furthermore, the applicable margin will be reduced by 0.50% after the Term/Notes Refinancing Date. In addition, the Fourth Amendment (i) reduced the incremental revolving commitment capacity from $50.0 million to $25.0 million, but provides that any such incremental revolving commitment may take the form of a “last-out” term loan, (ii) added restrictions on certain negative covenants in respect of investments, restricted payments and prepayments of indebtedness, including the First Lien Term Loan Facility and the Senior Notes, in each case, until the occurrence of Term/Notes Refinancing Date, (iii) reduced the letter of credit sublimit from $50.0 million to $45.0 million and (iv) provided for certain additional technical waivers and amendments in order to effect the foregoing. The Company paid amendment fees of $4.6 million to lenders under the ABL Facility. Senior Notes On December 29, 2011, the Company issued $250.0 million aggregate principal amount of 11% Senior Notes that mature on December 15, 2019 (the “Senior Notes”). The Senior Notes are guaranteed by the same subsidiaries that guarantee the Credit Facilities (the “Subsidiary Guarantors”). Pursuant to the terms of the indenture governing the Senior Notes (the “Indenture”), the Company may redeem all or a part of the Senior Notes at certain redemption prices that vary based on the date of redemption. The Company is not required to make any mandatory redemptions or sinking fund payments, and may at any time or from time to time purchase notes in the open market. The Indenture contains covenants that, among other things, limit the Company’s ability and the ability of certain of its subsidiaries to incur or guarantee additional indebtedness, create or incur certain liens, pay dividends or make other restricted payments and investments, incur restrictions on the payment of dividends or other distributions from restricted subsidiaries, sell assets, engage in transactions with affiliates, or merge or consolidate with other companies. As of January 29, 2016, the Company was in compliance with the terms of the Indenture. The significant components of interest expense are as follows (in thousands): Year Ended January 29, 2016 Year Ended January 30, 2015 Ten Months Ended January 31, 2014 First lien term loan facility $ $ $ ABL facility Senior notes Amortization of deferred financing costs and OID Other interest expense Interest expense $ $ $ |
Derivative Financial Instrument
Derivative Financial Instruments | 12 Months Ended |
Jan. 29, 2016 | |
Derivative Financial Instruments | |
Derivative Financial Instruments | 7. Derivative Financial Instruments The Company entered into derivative instruments for risk management purposes and uses these derivatives to manage exposure to fluctuation in interest rates. Interest Rate Swap In May 2012, the Company entered into a floating-to-fixed interest rate swap agreement for an initial aggregate notional amount of $261.8 million to limit exposure to interest rate increases related to a portion of the Company’s floating rate indebtedness once the Company’s interest rate cap agreement expires. The swap agreement, effective November 2013, hedges a portion of contractual floating rate interest commitments through the expiration of the swap agreement in May 2016. As a result of the agreement, the Company’s effective fixed interest rate on the notional amount of floating rate indebtedness will be 1.36% plus an applicable margin of 3.50%. The Company designated the interest rate swap agreement as a cash flow hedge. The interest rate swap agreement is highly correlated to the changes in interest rates to which the Company is exposed. Unrealized gains and losses on the interest rate swap are designated as effective or ineffective. The effective portion of such gains or losses is recorded as a component of AOCI or loss, while the ineffective portion of such gains or losses is recorded as a component of interest expense. Future realized gains and losses in connection with each required interest payment will be reclassified from AOCI or loss to interest expense. Covert Transition Payments In September 2015, the Company entered into an employment agreement with Geoffrey J. Covert as the President and Chief Executive Officer of each of the Company and Parent. In connection with this agreement, Mr. Covert is entitled to receive amounts under a transition program based on the value of certain equity awards from his former employer that he forfeited in connection with his previous employment. The maximum amount of payments due under this agreement is approximately $5.0 million, payable over a period of four years. The Company accounts for these transition payments as derivatives that are not designated as hedging instruments and has measured the obligation at fair value at January 29, 2016. The Company recognizes the expense associated with these payments over the requisite service period. Fair Value The fair value of the interest rate swap agreement is estimated using industry standard valuation models using market-based observable inputs, including interest rate curves (Level 2, as defined in Note 8, “Fair Value of Financial Instruments”). The fair value of Mr. Covert’s transition payments is estimated using a valuation model that includes unobservable inputs (Level 3, as defined in Note 8, “Fair Value of Financial Instruments”). A summary of the recorded amounts included in the consolidated balance sheet is as follows (in thousands): January 29, 2016 January 30, 2015 Derivatives designated as cash flow hedging instruments Interest rate swap (included in other current liabilities) $ $ Interest rate swap (included in other liabilities) $ — $ Accumulated other comprehensive loss, net of tax (included in member’s equity) $ $ Derivatives not designated as hedging instruments Transition payments (included in other current liabilities) $ $ — Transition payments (included in other liabilities) $ $ — A summary of recorded amounts included in the consolidated statements of comprehensive income (loss) is as follows (in thousands): Year Ended Year Ended Ten Months Ended January 29 , 2016 January 30, 2015 January 31 2014 Derivatives designated as cash flow hedging instruments: Loss related to effective portion of derivative recognized in OCI $ $ $ Loss related to effective portion of derivatives reclassified from AOCI to interest expense $ $ $ (Gain) loss related to ineffective portion of derivative recognized in interest expense $ ) $ ) $ ) Derivatives not designated as hedging instruments: Loss recognized in selling, general and administrative expenses $ $ — $ — |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 12 Months Ended |
Jan. 29, 2016 | |
Fair Value of Financial Instruments | |
Fair Value of Financial Instruments | 8. Fair Value of Financial Instruments The Company complies with authoritative guidance for fair value measurement and disclosures which establish a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below: Level 1: Defined as observable inputs such as quoted prices in active markets for identical assets or liabilities. Level 2: Defined as observable inputs other than Level 1 prices. These include quoted prices for similar assets or liabilities in an active market, quoted prices for identical assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3: Defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. The Company uses the best available information in measuring fair value. The following table summarizes, by level within the fair value hierarchy, the financial assets and liabilities recorded at fair value on a recurring basis (in thousands) as of January 29, 2016: January 29, 2016 Total Level 1 Level 2 Level 3 ASSETS Other assets — assets that fund deferred compensation $ $ $ — $ — LIABILITIES Other current liabilities — interest rate swap $ $ — $ $ — Other current liabilities — transition payments $ $ — $ — $ Other long-term liabilities — transition payments $ $ — $ — $ Other long-term liabilities — deferred compensation $ $ $ — $ — Level 1 measurements include $0.7 million of deferred compensation assets that fund the liabilities related to the Company’s deferred compensation, including investments in trust funds. The fair values of these funds are based on quoted market prices in an active market. Level 2 measurements include interest rate swap agreement estimated using industry standard valuation models using market-based observable inputs, including interest rate curves . Level 3 measurements include transition payments to Mr. Covert (See Note 7 , “Derivative Financial Instruments”) estimated using a valuation model that includes Level 3 unobservable inputs. Significant assumptions used in the analysis include projected stock prices, stock volatility and the Company’s credit spread. The Company did not have any transfers of investments in and out of Levels 1 and 2 during fiscal 2016. The following table summarizes, by level within the fair value hierarchy, the financial assets and liabilities recorded at fair value on a recurring basis (in thousands) as of January 30, 2015: January 30, 2015 Total Level 1 Level 2 Level 3 ASSETS Other assets — assets that fund deferred compensation $ $ $ — $ — LIABILITES Other current liabilities — interest rate swap $ $ — $ $ — Other long-term liabilities — interest rate swap $ $ — $ $ — Other long-term liabilities — deferred compensation $ $ $ — $ — Level 1 measurements include $0.7 million of deferred compensation assets that fund the liabilities related to the Company’s deferred compensation, including investments in trust funds. The fair values of these funds are based on quoted market prices in an active market. Level 2 measurements include interest rate swap agreement estimated using industry standard valuation models using market-based observable inputs, including interest rate curves. There were no Level 3 assets or liabilities as of January 30, 2015. The Company did not have any transfers of investments in and out of Levels 1 and 2 during fiscal 2015. The following table summarizes the activity for the period of changes in fair value of the Company’s Level 3 instruments (in thousands): Transition Payments Year Ended January 29, 2016 Year Ended January 30, 2015 Ten Months Ended January 31, 2014 Description Beginning balance $ — $ — $ — Transfers in and/or out of Level 3 — — — Total realized/unrealized gains (loss): Included in earnings (1) ) — — Included in other comprehensive loss — — — Purchases, redemptions and settlements: Settlements — — Ending balance $ ) $ — $ — Total amount of unrealized gains (losses) for the period included in earnings relating to liabilities held at the reporting period $ ) $ — $ — (1) Losses are included in selling, general and administrative expenses. The outstanding debt under the Credit Facilities and the Senior Notes is recorded in the financial statements at historical cost, net of applicable unamortized discounts. The fair value of the First Lien Term Loan Facility was estimated at $393.0 million, or $207.0 million lower than its carrying value, as of January 29, 2016, based on quoted market prices of the debt (Level 1 inputs). The fair value of the First Lien Term Loan Facility approximated its carrying value, as of January 30, 2015, based on quoted market prices of the debt (Level 1 inputs). The fair value of the Senior Notes was estimated at $103.1 million, or $146.9 million lower than the carrying value, as of January 29, 2016, based on quoted market prices of the debt (Level 1 inputs). The fair value of the Senior Notes was estimated at $264.7 million, or $14.7 million greater than the carrying value, as of January 30, 2015, based on quoted market prices of the debt (Level 1 inputs). See Note 6, “Debt” for more information on the Company’s debt. Assets and Liabilities that are Measured at Fair Value on a Nonrecurring Basis In fiscal 2016, the Company recorded a goodwill impairment charge of $92.0 million. The valuation methodologies incorporate unobservable inputs reflecting significant estimates and assumptions made by management (Level 3 inputs). See Note 1, “Basis of Presentation and Summary of Significant Accounting Policies.” In fiscal 2016, the Company recorded an impairment charge of $0.6 million relating to its trademarks, primarily as a result of change in merchandising strategy and resulting lower projected cash flows than previously estimated. The fair value measurements used in these impairment evaluations were based on relief from royalty method using unobservable inputs (Level 3). See Note 2, “Goodwill and Other Intangible Assets and Liabilities.” During fiscal 2016, due to the underperformance of two stores in Texas and one store in California, the Company concluded that the carrying value of the long-lived assets relating to such stores were not recoverable and accordingly recorded an asset impairment charge of $0.8 million. The remaining net book value of assets measured at fair value was $0.3 million. During fiscal 2016, the Company also recorded impairment charges of $0.2 million related to equipment and fixtures that will be disposed of and for which the Company concluded the fair value was zero. The fair value measurements used in these impairment evaluations were based on discounted cash flow estimates using unobservable inputs (Level 3). During fiscal 2015, the Company wrote down the carrying value of property held for sale to its fair value of $1.4 million from $1.5 million, resulting in an asset impairment charge of $0.1 million. Fair value was determined on the basis of a purchase agreement, less estimated cost to sell. |
Related-Party Transactions
Related-Party Transactions | 12 Months Ended |
Jan. 29, 2016 | |
Related-Party Transactions | |
Related-Party Transactions | 9. Related-Party Transactions Stockholders Agreement Upon completion of the Merger, Parent entered into a stockholders agreement with each of its stockholders, which included certain of the Company’s former directors, employees and members of management and the Company’s principal stockholders. The stockholders agreement gives (i) Ares the right to designate four members of the board of directors of Parent (the “Parent Board”), (ii) Ares the right to designate up to three independent members of the Parent Board, which directors shall be approved by CPPIB, and (iii) CPPIB the right to designate two members of the Parent Board, in each case for so long as they or their respective affiliates beneficially own at least 15% of the then outstanding shares of Class A Common Stock. The stockholders agreement provides for the election of the current Chief Executive Officer of Parent to the Parent Board. Under the terms of the stockholders agreement, certain significant corporate actions require the approval of a majority of directors on the board of directors, including at least one director designated by Ares and one director designated by CPPIB. These actions include the incurrence of additional indebtedness over $20 million in the aggregate outstanding at any time, the issuance or sale of any of our capital stock over $20 million in the aggregate, the sale, transfer or acquisition of any assets with a fair market value of over $20 million, the declaration or payment of any dividends, entering into any merger, reorganization or recapitalization, amendments to our charter or bylaws, approval of our annual budget and other similar actions. The stockholders agreement contains significant transfer restrictions and certain rights of first offer, tag-along, and drag-along rights. In addition, the stockholders agreement contains registration rights that, among other things, require Parent to register common stock held by the stockholders who are parties to the stockholders agreement in the event Parent registers for sale, either for its own account or for the account of others, shares of its common stock. Under the stockholders agreement, certain affiliate transactions, including certain affiliate transactions between Parent, on the one hand, and Ares, CPPIB or any of their respective affiliates, on the other hand, require the approval of a majority of disinterested directors. Management Services Agreements Upon completion of the Merger, the Company and Parent entered into management services agreements with affiliates of the Sponsors (the “Management Services Agreements”). Under each of the Management Services Agreements, the Company and Parent agreed to, among other things, retain and reimburse affiliates of the Sponsors for certain expenses incurred in connection with the provision by Sponsors of certain management and financial services and provide customary indemnification to the Sponsors and their affiliates. In transition fiscal 2014, the Company reimbursed affiliates of the Sponsors their expenses in the amount of less than $0.1 million. In fiscal 2015, the Company did not reimburse affiliates of the Sponsors for any expenses. In fiscal 2016, the Company reimbursed affiliates of the Sponsors their expenses in the amount of $0.4 million. The Sponsors provided no services to us during fiscal 2016 or fiscal 2015. Parent Stock Purchase Agreements In March 2015, in connection with Mr. Michael Kvitko’s resignation as Executive Vice President and Chief Merchandising Officer of the Company and all positions held at Parent, Parent purchased all of the vested options to purchase shares of Class A Common Stock and Class B Common Stock held by Mr. Kvitko, for an aggregate consideration of $0.4 million. In July 2014, in connection with Mr. Frank School’s resignation as Senior Vice President, Chief Financial Officer and Treasurer of the Company and Parent, Parent purchased all of the shares of Class A Common Stock and Class B Common Stock held by the Frank Schools Living Trust (of which Mr. Schools is the trustee) and all of the vested options to purchase shares of Class A Common Stock and Class B Common Stock held by Mr. Schools, for an aggregate consideration of $0.2 million. Mr. Schools, through the Trust, initially purchased (i) these shares of Class A Common Stock and Class B Common Stock in October 2013 pursuant to a Stock Purchase Agreement between Parent and the Trust and (ii) these options to purchase shares of Class A Common Stock and Class B Common Stock in September and November 2012 pursuant to certain Non-Qualified Stock Option Agreements between Parent and the Trust. In April 2014, in connection with Mr. Rick Anicetti’s service as Interim Chief Executive Officer of the Company and Parent, Parent entered into a Stock Purchase Agreement with From One to Many Leadership Consulting, LLC. From One to Many Leadership Consulting, LLC is wholly owned by, and employs, Mr. Anicetti. Pursuant to the terms of this agreement, Mr. Anicetti purchased an aggregate 354 shares of Class A Common Stock and 354 shares of Class B Common Stock for an aggregate purchase price of $0.5 million. Mr. Anicetti resigned as a member of the Parent Board on September 1, 2015. In April 2014, in connection with Mr. Michael Fung’s service as Interim Executive Vice President and Chief Administrative Officer of the Company and Parent, Parent entered into a Stock Purchase Agreement with Mr. Fung. Pursuant to the terms of this agreement, Mr. Fung purchased an aggregate 310 shares of Class A Common Stock and 310 shares of Class B Common Stock of for an aggregate purchase price of $0.4 million. In October 2013, Parent entered into a Stock Purchase Agreement with Andrew Giancamilli, a director of Parent. Pursuant to the terms of this agreement, Mr. Giancamilli purchased an aggregate 410 shares of Class A Common Stock and 410 shares of Class B Common Stock for an aggregate purchase price of $0.5 million. In September 2013, in connection with Mr. Gonthier’s employment as President and Chief Executive Officer of the Company and Parent, Parent entered into a Stock Purchase Agreement with Avenue of the Stars Investments LLC, a Delaware limited liability company (“Avenue of the Stars Investments”). Mr. Gonthier is the manager of Avenue of the Stars Investments and the trustee of a member of Avenue of the Stars Investments. Pursuant to the terms of this agreement, Mr. Gonthier purchased an aggregate 4,922 shares of Class A Common Stock and 4,922 shares of Class B Common Stock for an aggregate purchase price of $6.0 million. Mr. Gonthier resigned as President and Chief Executive Officer of the Company and all positions, including as a director, with Parent and each of its subsidiaries effective May 25, 2015. Repurchase Transaction with Rollover Investors On October 15, 2013, Parent and the Company entered into an agreement with Eric Schiffer, the Company’s former Chief Executive Officer, Jeff Gold, the Company’s former President and Chief Operating Officer, Howard Gold, the Company’s former Executive Vice President, Karen Schiffer and The Gold Revocable Trust dated October 26, 2005 (collectively, the “Rollover Investors”) , pursuant to which (a)(i) Parent purchased from each Rollover Investor all of the shares of Class A Common Stock and Class B Common Stock, owned by such Rollover Investor and (ii) all of the options to purchase shares of Class A Common Stock and Class B Common Stock held by such Rollover Investor were repurchased, for aggregate consideration of approximately $129.7 million (the “Gold-Schiffer Purchase”) and (b) the Company agreed to certain amendments to the Non-Competition, Non-Solicitation and Confidentiality Agreements and the Separation and Release Agreements with the Rollover Investors who were former management of the Company. The Gold-Schiffer Purchase was completed on October 21, 2013. Prior to completion of the transaction, Howard Gold resigned from the board of directors of each of Parent and the Company. The Gold-Schiffer Purchase was funded through a combination of borrowings of $100 million of incremental term loans under the First Lien Term Loan Facility and cash on hand of Parent. In connection with the Gold-Schiffer Purchase, the Company made a distribution to Parent of $95.5 million and an investment in shares of preferred stock of Parent of $19.2 million. In addition, the Company made a payment of $7.8 million to the Rollover Investors for repurchase of all options to purchase Class A Common Stock and Class B Common Stock held by the Rollover Investors . Credit Facility In connection with the Merger, the Company entered into the First Lien Term Loan Facility, under which various funds affiliated with Ares are lenders. As of January 30, 2015 these affiliates held approximately $1.4 million of term loans under the First Lien Term Loan Facility. The terms of the term loans are the same as those held by unaffiliated third party lenders under the First Lien Term Loan Facility. As of January 29, 2016, these affiliates no longer held any term loans under the First Lien Term Loan Facility. Senior Notes Various funds affiliated with Ares and CPPIB have collectively acquired $102.1 million as of January 29, 2016 aggregate principal amount of the Company’s Senior Notes in open market transactions. From time to time, these or other affiliated funds may acquire additional Senior Notes. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Jan. 29, 2016 | |
Commitments and Contingencies | |
Commitments and Contingencies | 10. Commitments and Contingencies Credit Facilities The Company’s Credit Facilities and commitments are discussed in detail in Note 6, “Debt”. Lease Commitments The Company leases various facilities under operating leases (except for one location which is classified as a capital lease and four locations classified as financing leases) expiring at various dates through fiscal year 2035. Most of the lease agreements contain renewal options and/or provide for fixed rent escalations or increases based on the Consumer Price Index. Total minimum lease payments under each of these lease agreements, including scheduled increases, are charged to expenses on a straight-line basis over the term of each respective lease. Certain leases require the payment of property taxes, maintenance and insurance. Rental expenses (including property taxes, maintenance and insurance) charged to expense in fiscal 2016 were $97.5 million, of which $0.3 million was paid as percentage rent, based on sales volume for fiscal 2016. Rental expenses (including property taxes, maintenance and insurance) charged to expense in fiscal 2015 were $85.5 million, of which $0.3 million was paid as percentage rent, based on sales volume for fiscal 2015. Rental expenses (including property taxes, maintenance and insurance) charged to expense in transition fiscal 2014 were $60.8 million, of which $0.2 million was paid as percentage rent, based on sales volume for transition fiscal 2014. Sub-lease income earned in fiscal 2016, fiscal 2015 and transition fiscal 2014 was $0.4 million, $0.5 million and $0.4 million, respectively. As of January 29, 2016, the minimum annual rentals payable and future minimum sub-lease income under all non-cancelable leases was as follows (amounts in thousands): Fiscal Year: Operating leases Financing leases Capital lease Future Minimum Sub-lease Income 2017 $ $ $ $ 2018 — 2019 — 2020 — 2021 — — Thereafter — — Future minimum lease payments $ $ $ $ Less amount representing interest ) ) Unamortized balance of financing obligations at end of lease term — Total capital and financing obligations $ $ The capital lease relates to a building for one of the Company’s retail stores. The gross asset amount recorded under the capital lease was $0.3 million as of each of January 29, 2016 and January 30, 2015. Accumulated depreciation was $0.3 million as of January 29, 2016 and $0.2 million as January 30, 2015. Two of the financing leases relate to sale-leaseback transactions in fiscal 2016 in which the Company was deemed to have “continuing involvement,” which precluded the de-recognition of the assets from the consolidated balance sheet when the transactions closed with the financing obligations equal to the amount of proceeds received. See Note 1, “Basis of Presentation and Summary of Significant Accounting Policies.” As of January 29, 2016, the Company has also recorded a financing lease obligation and related construction in progress for one store. The Company has concluded that it is the “deemed owner” of the construction project (for accounting purposes) during the construction period. Upon completion of construction, the Company will evaluate the de-recognition of the asset and liability under sale-leaseback accounting guidance. The Company believes it will have “continuing involvement,” which will preclude the de-recognition of the asset and the financing obligations from the consolidated balance sheet when construction is complete. As of January 29, 2016, the Company has recorded an asset of $1.0 million, representing the amount of construction in progress, and a financing lease obligation of $0.6 million recorded as a component of non-current liabilities. In May 2014, the Company entered into a lease agreement for office and warehouse space in the City of Commerce, California that expires in February 2030. In order for the leased space to meet the Company’s operating specifications, both the landlord and the Company would make structural changes to the property, and as a result, the Company concluded that it was the “deemed owner” of the construction project (for accounting purposes) during the construction period. Accordingly, the Company recorded an asset representing the estimated fair market value of the building (a Level 2 measurement) and a corresponding construction financing obligation. Upon completion of construction, the Company evaluated the de-recognition of the asset and liability under sale-leaseback accounting guidance. The Company was deemed to have “continuing involvement,” which precluded the de-recognition of the asset from the consolidated balance sheet when construction was complete. Accordingly, as of January 30, 2015, the Company has recorded an asset of $24.6 million, representing the estimated fair market value of the building, and a financing lease obligation of $24.9 million (including accrued interest), recorded as a component of current and non-current liabilities. Workers’ Compensation The Company self-insures its workers’ compensation claims in California and Texas and provides for losses of estimated known and incurred but not reported insurance claims. The Company does not discount the projected future cash outlays for the time value of money for claims and claim related costs when establishing its workers’ compensation liability. In transition fiscal 2014, the Company experienced a significant increase in the severity of its open claims, the majority of which are litigated. As a result of the increase in severity of open claims, the Company significantly increased its workers’ compensation liability reserves in the third quarter of transition fiscal 2014. In the fourth quarter of fiscal 2016, the Company increased worker’s compensation liability reserve by $7.2 million, primarily as a result of higher incurred and projected expenses associated with fiscal 2016 workers’ compensation claims. As of January 29, 2016 and January 30, 2015, the Company had recorded a liability of $76.3 million and $70.4 million, respectively, for estimated workers’ compensation claims in California. The Company has limited self-insurance exposure in Texas and had recorded a liability of less than $0.1 million as of each of January 29, 2016 and January 30, 2015 for workers’ compensation claims in Texas. The Company purchases workers’ compensation insurance coverage in Arizona and Nevada and is not self-insured in those states. Self-Insured Health Insurance Liability The Company self-insures for a portion of its employee medical benefit claims. At January 29, 2016 and January 30, 2015, the Company had recorded a liability of $0.4 million and $0.5 million, respectively, for estimated health insurance claims. The Company maintains stop loss insurance coverage to limit its exposure for the self-funded portion of its health insurance program. The following table summarizes the changes in the reserves for self-insurance for the periods indicated (in thousands): Workers’ Compensation Health Insurance Balance as of 3/30/13 $ $ Claims Payments $ ) $ ) Reserve Accruals Balance as of 1/31/14 $ $ Claims Payments $ ) $ ) Reserve Accruals Balance as of 1/30/15 $ $ Claims Payments $ ) $ ) Reserve Accruals Balance as of 1/29/16 $ $ Legal Matters Wage and Hour Matters Shelley Pickett v. 99¢ Only Stores. Plaintiff Shelley Pickett, a former cashier for the Company, filed a representative action complaint against the Company on November 4, 2011 in the Superior Court of the State of California, County of Los Angeles alleging a PAGA claim that the Company violated section 14 of Wage Order 7-2001 by failing to provide seats for its cashiers behind checkout counters. Pickett seeks civil penalties of $100 to $200 per violation, per each pay period for each affected employee, and attorney’s fees. The court denied the Company’s motion to compel arbitration of Pickett’s individual claims or, in the alternative, to strike the representative action allegations in the Complaint, and the Court of Appeals affirmed the trial court’s ruling. On June 27, 2013, Pickett entered into a settlement agreement and release with the Company in another matter. Payment has been made to the plaintiff under that agreement and the other action has been dismissed. The Company’s position is that the release Pickett executed in that matter waives the claims she asserts in this action, waives her right to proceed on a class or representative basis or as a private attorney general and requires her to dismiss this action with prejudice as to her individual claims. The Company notified Pickett of its position by a letter dated as of July 30, 2013, but she refused to dismiss the lawsuit. On February 11, 2014, the Company answered the complaint, denying all material allegations, and filed a cross-complaint against Pickett seeking to enforce her agreement to dismiss this action. Through the cross-complaint, the Company seeks declaratory relief, specific performance and damages. Pickett has answered the cross-complaint, asserting a general denial of all material allegations and various affirmative defenses. On September 30, 2014, the court denied the Company’s motion for judgment on the pleadings as to its cross-complaint and granted leave to Pickett to amend her complaint to add another representative plaintiff, Tracy Humphrey. Plaintiffs filed their amended complaint on October 8, 2014, and the Company answered on October 10, 2014, denying all material allegations. On April 4, 2016, in an unrelated matter involving similar claims against a different employer, the California Supreme Court issued a ruling that provides guidance to lower courts as to California’s employee seating requirement, which is a largely untested area of law. The instant action had been stayed pending the issuance of the California Supreme Court ruling, and litigation is expected to resume on or around May 16, 2016, when the matter is set for a non-appearance case review. The Company cannot predict the outcome of this lawsuit or the amount of potential loss, if any, that it could face as a result of such lawsuit. Sofia Wilton Barriga v. 99¢ Only Stores. Plaintiff, a former store associate, filed an action against the Company on August 5, 2013, in the Superior Court of the State of California, County of Riverside alleging on behalf of the plaintiff and all others allegedly similarly situated under the California Labor Code that the Company failed to pay wages for all hours worked, provide meal periods, pay wages timely upon termination, and provide accurate wage statements. The plaintiff also asserted a derivative claim for unfair competition under the California Business and Professions Code. The plaintiff seeks to represent a class of all non-exempt employees who were employed in California in the Company’s retail stores who worked the graveyard shift at any time from January 1, 2012, through the date of trial or settlement. Although the class period as originally pled would extend back to August 5, 2009, the parties have agreed that any class period would run beginning January 1, 2012, because of the preclusive effect of a judgment in a previous matter. The plaintiff seeks to recover alleged unpaid wages, statutory penalties, interest, attorney’s fees and costs, and restitution. On September 23, 2013, the Company filed an answer denying all material allegations. A case management conference was held on October 4, 2013, at which the court ordered that discovery may proceed as to class certification issues only. After discovery commenced, a mediation was held on March 12, 2015, resulting in a confidential mediator’s proposal, which the parties verbally accepted. The parties were unable to negotiate and finalize a written settlement agreement. Subsequent settlement discussions directly and through the mediator, as well as a court-ordered settlement conference, were unsuccessful. Discovery has resumed and plaintiff’s motion for class certification was filed on April 13, 2016. The Company’s opposition is due on June 13, 2016. Following the close of briefing, there is a further status conference set for August 8, 2016, at which the Court will set a class certification hearing date. On October 26, 2015, plaintiffs’ counsel filed another action in Los Angeles Superior Court, entitled Ivan Guerra v. 99 Cents Only Stores LLC (Case No. BC599119), which asserts PAGA claims based in part on the allegations at issue in the Barriga action. By stipulation of the parties, the Guerra action has been transferred to Riverside Superior Court and will be consolidated with the Barriga action. The Company cannot predict the outcome of this lawsuit or the amount of potential loss, if any, that it could face as a result of such lawsuit. Environmental Matters People of the State of California v. 99 Cents Only Stores LLC. This is a hazardous waste enforcement action that was brought by the San Joaquin District Attorney and a number of other public prosecutors against the Company alleging that the Company had violated hazardous waste statutory and regulatory requirements at its retail stores in California. The Company settled this case through the entry of a stipulated judgment in December 2014 which contained injunctive relief requiring the Company to comply with applicable hazardous waste requirements at its California retail stores. During a March 2015 inspection of a recently-opened store in Sonora, Tuolumne County inspectors identified a number of alleged hazardous waste violations. On June 29, 2015, the District Attorney informed the Company that these alleged violations had been referred to their office and asked that the Company meet with them to discuss the alleged violations. Since that time, the Company has been working cooperatively with the District Attorney to provide information regarding the alleged violations. The District Attorney has demanded that the Company pay $187,500 to resolve this matter and to agree to additional injunctive relief in the existing settlement. The Company is now engaged in negotiations with the District Attorney seeking to resolve the District Attorney’s demands. Other Matters The Company is also subject to other private lawsuits, administrative proceedings and claims that arise in its ordinary course of business. A number of these lawsuits, proceedings and claims may exist at any given time. While the resolution of such a lawsuit, proceeding or claim may have an impact on the Company’s financial results for the period in which it is resolved, and litigation is inherently unpredictable, in management’s opinion, none of these matters arising in the ordinary course of business is expected to have a material adverse effect on the Company’s financial position, results of operations or overall liquidity. |
Stock-Based Compensation Plans
Stock-Based Compensation Plans | 12 Months Ended |
Jan. 29, 2016 | |
Stock-Based Compensation Plans | |
Stock-Based Compensation Plans | 11. Stock-Based Compensation Plans Number Holdings, Inc. 2012 Equity Incentive Plan On February 27, 2012, the Parent Board adopted the Number Holdings, Inc. 2012 Stock Incentive Plan (the “2012 Plan”). The 2012 Plan authorizes equity awards to be granted for up to 85,000 shares of Class A Common Stock of Parent and 85,000 shares of Class B Common Stock of Parent. As of January 29, 2016, options for 69,585 shares of each of Class A Common Stock and Class B Common Stock were issued to certain members of management and directors. Options upon vesting may be exercised only for units consisting of an equal number of Class A Common Stock and Class B Common Stock. Class B Common Stock has de minimis economic rights and the right to vote solely for election of directors. Employee Option Grants Options granted to employees generally become exercisable over a four or five year service period and have terms of ten years from date of the grant. Under the standard form of option award agreement for the 2012 Plan, Parent has a right to repurchase from the participant all or a portion of (i) Class A and Class B Common Stock issued upon the exercise of the options awarded to a participant and (ii) fully vested but unexercised options. The repurchase price for the shares of Class A and Class B Common Stock is the fair market value of such shares as of the date of such termination, and, for the fully vested but unexercised options, the repurchase price is the difference between the fair market value of the Class A and Class B Common Stock as of the date of termination of employment and the exercise price of the option. However, upon (i) a termination of employment for cause, (ii) a voluntary resignation without good reason, or (iii) upon discovery that the participant engaged in detrimental activity, the repurchase price is the lesser of the exercise price paid by the participant to exercise the option or the fair market value of the Class A and Class B Common Stock. If Parent elects to exercise its repurchase right for any shares acquired pursuant to the exercise of an option, it must do so no later than 180 days after the date of participant’s termination of employment, or (ii) for any unexercised option no later than 90 days from the latest date that such option can be exercised. The options also contain transfer restrictions that lapse upon registration of an offering of Parent common stock under the Securities Act of 1933 (a “liquidity event”). The Company defers recognition of substantially all of the stock-based compensation expense related to these stock options. The nature of repurchase rights and transfer restrictions create a performance condition that is not considered probable of being achieved until a liquidity event or certain employment termination events are probable of occurrence. These options are accounted for as equity-based awards. The fair value of these stock options was estimated at the date of grant using the Black-Scholes pricing model. There were 23,085 of time-based employee options outstanding as of January 29, 2016. In the first quarter of fiscal 2016, 1,250 options were granted to Mr. Brad Lukow, the Company’s now-former Chief Financial Officer, that would have vested subject to the Company’s and Parent’s achievement of performance hurdles. The Company deferred recognition of the stock-based compensation expense for these performance-based options until it was probable that that the performance hurdles would be achieved. The fair value of these performance-based options was estimated at the date of grant using a Monte Carlo simulation method. These performance-based options were forfeited in the second quarter of fiscal 2016 in connection with Mr. Lukow’s resignation. In the fourth quarter of fiscal 2016, 5,000 options were granted to the Company’s new Chief Merchandising Officer of the Company and Parent, which will vest based on the achievement of certain performance targets. The Company has deferred recognition of the stock-based compensation expense for these performance-based stock options due to repurchase rights and transfer restrictions included in the terms of the award. The nature of the repurchase rights and transfer restrictions create a performance condition that is not considered probable of being achieved until a liquidity event or certain employment termination events are probable of occurrence. Additionally, the Company has deferred recognition of the stock-based compensation expense for these performance-based options until it is probable that the performance targets will be achieved. The fair value of these performance-based options was estimated at the date of grant using the Black-Scholes pricing model. Director Option Grants Options granted to certain executives and board members generally become exercisable over a three, four or five year service period and have terms of ten years from date of the grant. Options granted to these board members do not contain repurchase rights that would allow the Parent to repurchase these options at less than fair value. The Company recognizes stock-based compensation expense for these option grants over the service period. These options are accounted for as equity awards. The fair value of these stock options was estimated at the date of grant using the Black-Scholes pricing model. Chief Financial Officer Equity Awards In October 2015, the Company entered into an employment agreement with Felicia Thornton as the Chief Financial Officer and Treasurer of each of the Company and Parent. In connection with this agreement, Ms. Thornton was granted options to purchase 10,000 shares of Class A and Class B Common Stock of Parent . One-half of the options vest on each of the first four anniversaries of Ms. Thornton’s start date, and the other half of the options vest based on the achievement of certain performance targets. Options granted to Ms. Thornton contain repurchase rights as described above that would allow the Parent to repurchase these options at less than fair value, except that repurchase rights at less than fair value in the case of voluntary resignation without good reason lapse after November 2, 2017. The Company records stock-based compensation for the time-based options in accordance with the four year vesting period. The Company has deferred recognition of the stock-based compensation expense for the performance-based options until it is probable that the performance targets will be achieved and repurchase goes away. The time-based and performance-based options are accounted for as equity awards. The fair value of these time-based and performance-based options was estimated at the date of grant using the Black-Scholes pricing model. New Chief Executive Officer Equity Awards In September 2015, the Company entered into an employment agreement with Geoffrey J. Covert as the President and Chief Executive Officer of each of the Company and Parent. In connection with this agreement, Mr. Covert was granted two options, each to purchase 15,500 shares of Class A and Class B Common Stock of Parent . One of the grants has an exercise price of $1,000 per share. The other grant has an exercise price equal to $750 per share plus the amount by which the fair market value of the underlying share exceeds $1,000 on the date of exercise. One-half of each grant vests on each of the first four installments of the grant date, and the other half of each grant vests based on the achievement of certain performance targets. The vesting of the options is subject to Mr. Covert’s continued employment through the applicable vesting date. The options are subject to the terms of the 2012 Plan and the award agreements under which they were granted. The Company has deferred recognition of the stock-based compensation expense for these time-based and performance-based stock options due to repurchase rights and transfer restrictions included in terms of the award. The nature of the repurchase rights and transfer restrictions create a performance condition that is not considered probable of being achieved until a liquidity event or certain employment termination events are probable of occurrence. Additionally, the Company has deferred recognition of the stock-based compensation expense for performance-based options until it is probable that the performance targets will be achieved. The fair value of the grant with an exercise price of $1,000 per share was estimated at the date of grant using a binomial model. The fair value of the other grant was estimated at the date of grant using a Monte Carlo simulation method. Former Chief Executive Officer Equity Awards On October 9, 2013, in connection with Stéphane Gonthier’s employment as President and Chief Executive Officer of the Company and Parent, the Compensation Committee of the Parent Board granted to Mr. Gonthier stock options to purchase an aggregate of 21,505 shares of each of the Class A and Class B Common Stock. Subject to the continued employment of Mr. Gonthier, (a) 75% of the options would have vested according to a timetable of 30% on the first anniversary of the grant date, 20% on the second anniversary of the grant date and 25% on each of the third and fourth anniversaries of the grant date and (b) 25% of these options would have vested subject to the Company’s and Parent’s achievement of performance hurdles. These options are subject to the terms of the 2012 Plan and the award agreement under which they were granted. On May 25, 2015, Mr. Gonthier resigned from his positions as a director and as the President and Chief Executive Officer of the Company, Parent, and each of the Company’s subsidiaries. Twenty percent of the options to purchase common stock of Parent held by Mr. Gonthier that are subject to time-based vesting accelerated and vested as of the date of Mr. Gonthier’s resignation. All of Mr. Gonthier’s time-based options were forfeited (including those options which accelerated and vested as of the date of Mr. Gonthier’s resignation) on August 24, 2015. All of Mr. Gonthier’s performance-based options were forfeited on November 21, 2015. The Company recorded stock-based compensation for the time-based options in accordance with the four year vesting period. The Company had deferred recognition of performance-based options until it was probable that the performance hurdles would be achieved. The time-based and performance-based options were accounted for as equity awards. The fair value of these time-based options was estimated at the date of grant using the Black-Scholes pricing model. The fair value of performance-based options was estimated at the date of grant using a Monte Carlo simulation method. Former Executive Put Rights Pursuant to the employment agreements between the Company and each of Eric Schiffer, Jeff Gold and Howard Gold, in connection with their separation from the Company, for a period of one year following such separation, each executive had a right to require Parent to repurchase the shares of Class A and Class B Common Stock owned by such executive (a “put right”) at the greater of (i) $1,000 per combined share of Class A and Class B Common Stock less any distributions made with respect to such shares and (ii) the fair market value of such shares as of the date the executive exercised the put right. The put right applied to the lesser of (i) 20,000 shares of each of Class A and Class B Common Stock and (ii) $12.5 million in value (unless Parent agreed to purchase a higher value). If exercising the put right was prohibited (e.g., under the First Lien Term Loan Facility, the ABL Facility and the Indenture), then the put right would have been extended up to three additional years until Parent was no longer prohibited from repurchasing the shares. If, during the four years following termination, Parent was at no time able to make the required payments, the put right would have expired and deemed unexercised. For payout after the first year, the put right was only at the fair market value as of the date the exercising the put right. The Company did not record stock-based compensation expense for the put rights until it became probable that the put rights would become exercisable. On January 23, 2013, Messrs. Schiffer, J. Gold and H. Gold separated from their positions as Chief Executive Officer, Chief Administrative Officer and Executive Vice President of Special Projects, respectively, of the Company and Parent, and as directors of the Company and Parent. As such, for a period of one year from January 23, 2013, each executive could exercise the put right as described above. The fair value of these put rights was estimated using a binomial model to be $1.2 million and $6.5 million as of September 28, 2013 and March 30, 2013, respectively. In the third quarter of transition fiscal 2014, these put rights were repurchased and all claims under the employment agreements were released as a result of the Gold-Schiffer Purchase, and there was no fair value associated with these put rights as of January 31, 2014. Changes in the fair value for these put rights have been included in selling, general and administrative expenses. See Note 9, “Related-Party Transactions” for more information regarding the Gold-Schiffer Purchase. Accounting for stock-based compensation Determining the fair value of options at the grant date requires judgment, including estimating the expected term that stock options will be outstanding prior to exercise and the associated volatility. At the grant date, the Company estimates an amount of forfeitures that will occur prior to vesting. During fiscal 2016, the Company recorded stock-based compensation expense of $1.5 million. The income tax benefit was $0.2 million for fiscal 2016. During fiscal 2015, the Company recorded stock-based compensation expense of $2.8 million. The income tax benefit was $1.1 million for fiscal 2015. During transition fiscal 2014, as result of a decrease in the fair value of former executive put rights, the Company recorded negative stock-based compensation expense of $(4.8) million. The income tax charge was $3.9 million for transition fiscal 2014. The fair value of stock options was estimated at the date of grant using the Black-Scholes pricing model with the following assumptions: Year Ended Year Ended Ten Months Ended January 29, 2016 January 30, 2015 January 31, 2014 Weighted-average fair value of options granted $ $ $ Risk free interest rate % % % Expected life (in years) Expected stock price volatility % % % Expected dividend yield None None None The risk-free interest rate is based on the U.S. treasury yield curve in effect at the time of grant with an equivalent remaining term. Expected life represents the estimated period of time until exercise and is calculated by using “simplified method.” Expected stock price volatility is based on average historical volatility of stock prices of companies in a peer group analysis. The Company currently does not anticipate the payment of any cash dividends. Compensation expense is recognized only for those options expected to vest, with forfeitures estimated based on the Company’s historical experience and future expectations. The fair value of performance-based options was estimated at the date of grant using a Monte Carlo simulation method by a third-party valuation firm. Key assumptions used include those described above for determining the fair value of options with service-based conditions only and in addition the simulation utilizes a range of possible future stock values to construct a distribution of where future stock prices might be. The simulations and resulting distributions will give a statistically acceptable range of future stock prices. The Company also has to assume a time horizon to when the performance conditions of the options will be met. The fair value of the grant to the current President and Chief Executive Officer of the Company and Parent that have an exercise price equal to $750 per share plus the amount by which the fair market value of the underlying share exceeds $1,000 on the date of exercise was valued using a third-party valuation firm that used a binomial model to capture early exercise behaviors. The binomial model captures the optimal exercise timing as a function of the future stock price over the full contractual life of the options. Other key assumptions used include those described above for determining the fair value of options with service-based conditions. The Company also has to assume a time horizon to when the performance conditions of the options will be met. The fair value of the grant to the current President and Chief Executive Officer of the Company and Parent that have an exercise price equal to $1,000 per share was valued by a third-party valuation firm using a Monte Carlo simulation method. Key assumptions used include those described above for determining the fair value of options with service-based conditions and in addition the simulation utilizes a range of possible future stock values to construct a distribution of where future stock prices might be relative to the assumed exercise threshold. The simulations and resulting distributions will give a statistically acceptable range of future stock prices. The expected life of an option is derived from the Monte Carlo simulation model, and is based on several factors, including the contract life, exercise factor and volatility. The Company also has to assume a time horizon to when the performance targets of the options will be met. As of January 29, 2016, there were $19.1 million of total unrecognized compensation costs related to non-vested options and options subject to repurchase rights for which no compensation has been recorded. During fiscal 2016, 8,623 options vested and the fair value of these vested options was $4.0 million. During fiscal 2015, 8,226 options vested and the fair value of these vested options was $3.8 million. During transition fiscal 2014, 1,139 options vested and the fair value of these vested options was $0.4 million. The aggregate pre-tax intrinsic value of options exercised in fiscal 2016 was $0.1 million. The aggregate pre-tax intrinsic value of options exercised in fiscal 2015 was less than $0.1 million. No options were exercised during transition fiscal 2014. The following summarizes stock option activity during the year ended January 29, 2016: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life (Year) Aggregate Intrinsic Value Options outstanding at the beginning of the period $ Granted $ Exercised ) $ Cancelled ) $ Outstanding at the end of the period $ $ — Exercisable at the end of the period $ $ — Exercisable and expected to vest at the end of the period $ $ — The following table summarizes the stock awards available for grant under the 2012 Plan as of January 29, 2016: Number of Shares Available for grant as of January 30, 2015 Authorized — Granted ) Cancelled Available for grant at January 29, 2016 |
Operating Segments
Operating Segments | 12 Months Ended |
Jan. 29, 2016 | |
Operating Segments | |
Operating Segments | 12. Operating Segments The Company manages its business on the basis of one reportable segment. The Company’s sales through Bargain Wholesale are not material to the Company’s consolidated financial statements; therefore, Bargain Wholesale is not presented as a separate segment. The Company had no customers representing more than ten percent of net sales. Substantially all of the Company’s net sales were to customers located in the United States. All of the Company’s operations are located in the United States with the exception of certain sourcing entities located in Asia. The foreign operations solely support domestic operations and are not material. |
Employee Benefit Plans
Employee Benefit Plans | 12 Months Ended |
Jan. 29, 2016 | |
Employee Benefit Plans | |
Employee Benefit Plans | 13. Employee Benefit Plans 401(k) Plan In 1998, the Company adopted a 401(k) Plan (the “Plan”). All full-time employees are eligible to participate in the Plan after 30 days of service and are eligible to receive matching contributions from the Company after one year of service. The Company contributed $2.0 million, $1.9 million and $1.6 million during fiscal year 2016, fiscal year 2015 and transition fiscal 2014. The Company matches 100% of the first 3% of compensation that an employee contributes and 50% of the next 2% of compensation that the employee contributes with immediate vesting. Deferred Compensation Plan The Company has a deferred compensation plan to provide certain key management employees the ability to defer a portion of their base compensation and/or bonuses. The plan is an unfunded nonqualified plan. The deferred amounts and earnings thereon are payable to participants, or designated beneficiaries, at specified future dates, upon retirement or death. The Company does not make contributions to this plan or guarantee earnings. The assets and liabilities of a rabbi trust are accounted for as if they are assets and liabilities of the Company. The assets held in the rabbi trust are not available for general corporate purposes. The rabbi trust is subject to creditor claims in the event of insolvency. The deferred compensation liability and related long-term assets were $0.7 million and $0.7 million as of January 29, 2016 and January 30, 2015, respectively. |
Assets Held for Sale
Assets Held for Sale | 12 Months Ended |
Jan. 29, 2016 | |
Assets Held for Sale | |
Assets Held for Sale | 14. Assets Held for Sale Assets held for sale as of January 29, 2016 consisted of vacant land in Rancho Mirage, California and land in Bullhead, Arizona with a total carrying value of $2.3 million. Assets held for sale as of January 30, 2015 consisted of vacant land in Rancho Mirage, California and property containing land and a building in Pasadena-Shaver, Texas with a total carrying value of $3.1 million. In April 2015, the Company completed the sale of the property in Pasadena-Shaver, Texas and received net proceeds of $1.4 million. The carrying value of the Pasadena-Shaver property was $1.4 million. In September 2015, the Company completed the sale of a cold storage distribution center in City of Commerce, California and received net proceeds of $11.8 million. The carrying value of the cold storage distribution center was $6.5 million. The gain on the sale is recorded as part of selling, general and administrative expenses. |
Other Current Assets and Other
Other Current Assets and Other Accrued Expenses | 12 Months Ended |
Jan. 29, 2016 | |
Other Current Assets and Other Accrued Expenses | |
Other Current Assets and Other Accrued Expenses | 15. Other Current Assets and Other Accrued Expenses Other current assets as of January 29, 2016 and January 30, 2015 are as follows (in thousands): January 29, 2016 January 30, 2015 Prepaid expenses $ $ Other Total other current assets $ $ Other accrued expenses as of January 29, 2016 and January 30, 2015 are as follows (in thousands): January 29, 2015 January 30, 2015 Accrued interest $ $ Accrued occupancy costs Accrued legal reserves and fees Accrued interest swap Accrued California Redemption Value Other Total other accrued expenses $ $ |
Financial Guarantees
Financial Guarantees | 12 Months Ended |
Jan. 29, 2016 | |
Financial Guarantees | |
Financial Guarantees | 16. Financial Guarantees On December 29, 2011, the Company (the “Issuer”) issued $250 million principal amount of the Senior Notes. The Senior Notes are irrevocably and unconditionally guaranteed, jointly and severally, by each of the Company’s existing and future restricted subsidiaries that are guarantors under the Credit Facilities and certain other indebtedness. As of January 29, 2016 and January 30, 2015, the Senior Notes are fully and unconditionally guaranteed by the Subsidiary Guarantors. The tables in the following pages present the condensed consolidating financial information for the Company and the Subsidiary Guarantors together with consolidating entries, as of and for the periods indicated. The subsidiaries that are not Subsidiary Guarantors are minor. The condensed consolidating financial information may not necessarily be indicative of the financial position, results of operations or cash flows had the Company, and the Subsidiary Guarantors operated as independent entities. CONDENSED CONSOLIDATING BALANCE SHEETS As of January 29, 2016 (In thousands) Issuer Subsidiary Guarantors Non- Guarantor Subsidiaries Consolidating Adjustments Consolidated ASSETS Current Assets: Cash $ $ $ $ — $ Accounts receivable, net — — Income taxes receivable — — — Deferred income taxes — — — Inventories, net — — Assets held for sale — — — Other — Total current assets — Property and equipment, net — Deferred financing costs, net — — — Equity investments and advances to subsidiaries ) — Intangible assets, net — — Goodwill — — — Deposits and other assets — Total assets $ $ $ $ ) $ LIABILITIES AND MEMBER’S EQUITY Current Liabilities: Accounts payable $ $ $ — $ — $ Intercompany payable ) — Payroll and payroll-related — — Sales tax — — Other accrued expenses — Workers’ compensation — — Current portion of long-term debt — — — Current portion of capital and financing lease obligation — — — Total current liabilities ) Long-term debt, net of current portion — — — Unfavorable lease commitments, net — — Deferred rent — Deferred compensation liability — — — Capital and financing lease obligation, net of current portion — — — Long-term deferred income taxes — — — Other liabilities — — — Total liabilities ) Member’s Equity: Member units — ) Additional paid-in capital — — ) — Investment in Number Holdings, Inc. preferred stock ) — — — ) Accumulated deficit ) ) ) ) Other comprehensive loss ) — — — ) Total equity ) ) Total liabilities and equity $ $ $ $ ) $ CONDENSED CONSOLIDATING BALANCE SHEETS As of January 30, 2015 (Amounts in thousands) Issuer Subsidiary Guarantors Non- Guarantor Subsidiaries Consolidating Adjustments Consolidated ASSETS Current Assets: Cash $ $ $ $ — $ Accounts receivable, net — — Income taxes receivable — — — Deferred income taxes — — — Inventories, net — — Assets held for sale — — Other — Total current assets — Property and equipment, net — Deferred financing costs, net — — — Equity investments and advances to subsidiaries — ) — Intangible assets, net — — Goodwill — — — Deposits and other assets — — Total assets $ $ $ $ ) $ LIABILITIES AND MEMBER’S EQUITY Current Liabilities: Accounts payable $ $ $ — $ — $ Intercompany payable ) — Payroll and payroll-related — — Sales tax — — Other accrued expenses — Workers’ compensation — — Short-term debt and current portion of long-term debt — — — Current portion of capital and financing lease obligation — — — Total current liabilities ) Long-term debt, net of current portion — — — Unfavorable lease commitments, net — — Deferred rent — — Deferred compensation liability — — — Capital and financing lease obligation, net of current portion — — — Long-term deferred income taxes — — — Other liabilities — — — Total liabilities ) Member’s Equity: Member units — ) Additional paid-in capital — — ) — Investment in Number Holdings, Inc. preferred stock ) — — — ) Accumulated deficit ) ) ) ) Other comprehensive loss ) — — — ) Total equity ) ) Total liabilities and equity $ $ $ $ ) $ CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) Year Ended January 29, 2016 (Amounts in thousands) Issuer Subsidiary Guarantor Non- Guarantor Subsidiaries Consolidating Adjustments Consolidated Net Sales: Total sales $ $ $ $ ) $ Cost of sales — — Gross profit ) Selling, general and administrative expenses ) Goodwill impairment — — — Operating (loss) income ) ) — ) Other (income) expense: Interest income ) — — — ) Interest expense — — — Equity in (earnings) loss of subsidiaries — — ) — Total other expense, net — — ) (Loss) income before provision for income taxes ) ) ) Provision for income taxes — — Net (loss) income $ ) $ ) $ $ $ ) Comprehensive (loss) income $ ) $ ) $ $ $ ) CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) Year Ended January 30, 2015 (Amounts in thousands) Issuer Subsidiary Guarantor Non- Guarantor Subsidiaries Consolidating Adjustments Consolidated Net Sales: Total sales $ $ $ — $ — $ Cost of sales — — Gross profit — — Selling, general and administrative expenses — Operating income (loss) ) ) — Other (income) expense: Interest expense — — — Equity in loss of subsidiaries — — ) — Total other expense, net — — ) Income (loss) before provision for income taxes ) ) Provision for income taxes — — Net income (loss) $ $ ) $ ) $ $ Comprehensive income (loss) $ $ ) $ ) $ $ CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) Ten Months Ended January 31, 2014 (Amounts in thousands) Issuer Subsidiary Guarantor Consolidating Adjustments Consolidated Net Sales: Total sales $ $ $ — $ Cost of sales — Gross profit — Selling, general and administrative expenses — Operating income (loss) ) — Other (income) expense: Interest income ) — — ) Interest expense — — Equity in loss of subsidiaries — ) — Loss on extinguishment of debt — — Total other expense, net — ) Loss before provision for income taxes ) ) ) Benefit for income taxes ) — — ) Net loss $ ) $ ) $ $ ) Comprehensive loss $ ) $ ) $ $ ) CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS For the Year Ended January 29, 2016 (In thousands) Issuer Subsidiary Guarantor Non- Guarantor Subsidiary Consolidating Adjustments Consolidated Cash flows from operating activities: Net cash provided by operating activities $ $ $ $ — $ Cash flows from investing activities: Purchases of property and equipment ) ) ) — ) Proceeds from sales of property and fixed assets — — Net cash used in investing activities ) ) ) — ) Cash flows from financing activities: Payments of long-term debt ) — — — ) Proceeds under revolving credit facility — — — Payments under revolving credit facility ) — — — ) Payments of debt issuance costs ) — — — ) Proceeds from financing lease obligations — — — Payments of capital and financing lease obligations ) — — — ) Payments to repurchase stock options of Number Holdings, Inc ) — — — ) Net settlement of stock options of Number Holdings, Inc. for tax withholdings ) — — — ) Net cash used in financing activities ) — — — ) Net (decrease) increase in cash ) ) — ) Cash — beginning of period — Cash — end of period $ $ $ $ — $ CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended January 30, 2015 (Amounts in thousands) Issuer Subsidiary Guarantor Non- Guarantor Subsidiaries Consolidating Adjustments Consolidated Cash flows from operating activities: Net cash provided by operating activities $ $ $ $ — $ Cash flows from investing activities: Purchases of property and equipment ) ) ) — ) Proceeds from sale of fixed assets — — Investment in subsidiary ) — — — Net cash used in investing activities ) ) ) ) Cash flows from financing activities: Payments of long-term debt ) — — — ) Proceeds under revolving credit facility — — — Payments under revolving credit facility ) — — — ) Payments of capital lease obligation ) — — — ) Payments to repurchase stock options of Number Holdings, Inc. ) — — — ) Capital contributions — — ) — Net cash provided by financing activities — ) Net (decrease) increase in cash ) ) — ) Cash — beginning of period — — Cash - end of period $ $ $ $ — $ CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Ten Months Ended January 31, 2014 (Amounts in thousands) Issuer Subsidiary Guarantor Consolidating Adjustments Consolidated Cash flows from operating activities: Net cash provided by operating activities $ $ $ $ Cash flows from investing activities: Purchases of property and equipment ) ) — ) Proceeds from sale of fixed assets — Net cash used in investing activities ) ) — ) Cash flows from financing activities: Investment in Number Holdings, Inc. preferred stock ) — — ) Dividend paid ) — — ) Payments of debt ) — — ) Payments of debt issuance costs ) — — ) Payments of capital lease obligation ) — — ) Payments to repurchase stock options of Number Holdings, Inc. ) — — ) Proceeds from debt — — Excess tax benefit from stock-based payment arrangements — — Net cash used in financing activities ) — — ) Net (decrease) increase in cash ) ) Cash — beginning of period ) Cash - end of period $ $ $ — $ |
Subsequent Events
Subsequent Events | 12 Months Ended |
Jan. 29, 2016 | |
Subsequent Events. | |
Subsequent Events | 17. Subsequent Events On April 8, 2016, the Company amended its ABL Facility to, among other things, decrease the commitments available under the ABL Facility by $25.0 million, resulting in an aggregate facility size of $160.0 million, and extend the maturity date of the ABL Facility to April 8, 2021; provided however, the ABL Facility will mature on the earlier of (i) the date that is 90 days prior to the stated maturity date in respect of the First Lien Term Loan Facility and (ii) the date that is 90 days prior to the stated maturity date in respect of the Senior Notes, unless the First Lien Term Loan Facility and Senior Notes have been repaid or refinanced in full or amended to extend the final maturity dates thereof to a date that is at least 180 days after April 8, 2021 (the date of such repayment or refinancing, the “Term/Notes Refinancing Date”). The Fourth Amendment also modified the interest rate margins payable under the ABL Facility. The initial applicable margin for borrowings under the ABL Facility is 2.0% with respect to base rate borrowings and 3.0% with respect to Eurocurrency rate borrowings. Commencing with the first day of the first fiscal quarter commencing after the closing of the Fourth Amendment, the applicable margin for borrowings thereunder is subject to adjustment each fiscal quarter, based on average historical excess availability during the preceding fiscal quarter. Furthermore, the applicable margin will be reduced by 0.50% after the Term/Notes Refinancing Date. In addition, the Fourth Amendment (i) reduced the incremental revolving commitment capacity from $50.0 million to $25.0 million, but provides that any such incremental revolving commitment may take the form of a “last-out” term loan, (ii) added restrictions on certain negative covenants in respect of investments, restricted payments and prepayments of indebtedness, including the First Lien Term Loan Facility and the Senior Notes, in each case, until the occurrence of Term/Notes Refinancing Date, (iii) reduced the letter of credit sublimit from $50.0 million to $45.0 million and (iv) provided for certain additional technical waivers and amendments in order to effect the foregoing. The Company paid amendment fees of $4.6 million to lenders under the ABL Facility. |
SCHEDULE II - VALUATION AND QUA
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS | 12 Months Ended |
Jan. 29, 2016 | |
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS | |
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS | 99 Cents Only Stores LLC SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS (Amounts in thousands) Beginning of Period Addition Reduction End of Period For the year ended January 29, 2016 Allowance for doubtful accounts $ $ Tax valuation allowance $ — — $ For the year ended January 30, 2015 Allowance for doubtful accounts $ $ Tax valuation allowance $ — — — $ — For the ten months ended January 31, 2014 Allowance for doubtful accounts $ $ Tax valuation allowance $ — $ — |
Basis of Presentation and Sum26
Basis of Presentation and Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Jan. 29, 2016 | |
Basis of Presentation and Summary of Significant Accounting Policies | |
Conversion to LLC | Conversion to LLC On October 18, 2013, 99¢ Only Stores converted (the “Conversion”) from a California corporation to a California limited liability company, 99 Cents Only Stores LLC (“99 LLC”), that is managed by its sole member, Parent. In connection with the Conversion, each outstanding share of Class A common stock of 99¢ Only Stores, par value $0.01 per share, was converted into one membership unit of 99 LLC, and each outstanding share of Class B common stock of 99¢ Only Stores, par value $0.01 per share, was cancelled and forfeited. Pursuant to the laws of the State of California, all rights and property of 99¢ Only Stores were vested in 99 LLC and all debts, liabilities and obligations of 99¢ Only Stores continued as debts, liabilities and obligations of 99 LLC. 99 LLC has elected to be treated as a disregarded entity for United States federal income tax purposes. The Conversion did not have any effect on deferred tax assets or liabilities, and 99 LLC will continue to use the liability method of accounting for income taxes. 99 LLC computes its taxes on a separate return basis, but 99 LLC and Parent will continue to file consolidated or combined income tax returns with its subsidiaries in all jurisdictions. Parent is a holding company with no active business or operations and has no holdings in any business other than 99 LLC. |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of the Company and its subsidiaries required to be consolidated in accordance with accounting principles generally accepted in the United States (“GAAP”). Intercompany accounts and transactions between the consolidated companies have been eliminated in consolidation. |
Change in Fiscal Year | Change in Fiscal Year On December 16, 2013, the board of directors of the Company’s sole member, Parent, approved a resolution changing the end of the Company’s fiscal year. Prior to the change, the fiscal year of the Company ended on the Saturday closest to the last day of March. The Company’s new fiscal year end is the Friday closest to the last day of January, with each successive quarterly period ending the Friday closest to the last day of April, July, October or January, as applicable. The Company follows a fiscal calendar consisting of four quarters with 91 days, each ending on the Friday closest to the calendar quarter-end, and a 52-week fiscal year with 364 days, with a 53-week year every five to six years. Unless otherwise stated, references to years in this report relate to fiscal years rather than calendar years. The Company’s fiscal year 2016 (“fiscal 2016”) began on January 31, 2015, and ended on January 29, 2016 and consisted of 52 weeks. The Company’s fiscal year 2015 (“fiscal 2015”) began on February 1, 2014, and ended on January 30, 2015 and consisted of 52 weeks. The Company’s fiscal year 2014 (“transition fiscal 2014” or the “ten months ended January 31, 2014”) began on March 31, 2013 and ended on January 31, 2014 and consisted of 44 weeks. |
Use of Estimates | Use of Estimates The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Cash | Cash For purposes of reporting cash flows, cash includes cash on hand, cash at the stores and cash in financial institutions. The majority of payments due from financial institutions for the settlement of debit card and credit card transactions are processed within three business days and therefore are also classified as cash. Cash balances held at financial institutions are generally in excess of federally insured limits. These accounts are only insured by the Federal Deposit Insurance Corporation up to $250,000. The Company’s cash balances held at financial institutions and exceeding FDIC insurance totaled $3.9 million and $2.1 million as of January 29, 2016 and January 30, 2015, respectively. The Company historically has not experienced any losses in such accounts. The Company places its temporary cash investments with what it believes to be high credit, quality financial institutions. Under the Company’s cash management system, checks issued but not presented to the bank may result in book cash overdraft balances for accounting purposes. The Company reclassifies book overdrafts to accounts payable, which are reflected as an operating activity in its consolidated statements of cash flows. Book overdrafts included in accounts payable were $7.9 million and $16.5 million as of January 29, 2016 and January 30, 2015, respectively. |
Allowance for Doubtful Accounts | Allowance for Doubtful Accounts In connection with its wholesale business, the Company evaluates the collectability of accounts receivable based on a combination of factors. In cases where the Company is aware of circumstances that may impair a specific customer’s or tenants ability to meet its financial obligations subsequent to the original sale, the Company will record an allowance against amounts due and thereby reduce the net recognized receivable to the amount the Company reasonably believes will be collected. For all other customers and tenants, the Company recognizes allowances for doubtful accounts based on the length of time the receivables are past due, industry and geographic concentrations, the current business environment and the Company’s historical experiences. |
Inventories | Inventories Inventories are valued at the lower of cost or market. Inventory costs are established using a methodology that approximates first in, first out, which for store inventories is based on a retail inventory method. Valuation allowances for shrinkage as well as excess and obsolete inventory are also recorded. The Company includes spoilage, scrap and shrink in its definition of shrinkage. Shrinkage is estimated as a percentage of sales for the period from the last physical inventory date to the end of the applicable period. Such estimates are based on experience and the most recent physical inventory results. Physical inventory counts are completed at each of the Company’s retail stores at least once a year by an outside inventory service company. The Company performs inventory cycle counts at its warehouses throughout the year. The Company also performs inventory reviews and analysis on a quarterly basis for both warehouse and store inventory to determine inventory valuation allowances for excess and obsolete inventory. The valuation allowances for excess and obsolete inventory are based on the age of the inventory, sales trends and future merchandising plans. The valuation allowances for excess and obsolete inventory require management judgment and estimates that may impact the ending inventory valuation and valuation allowances that may have a material effect on the reported gross margin for the period. These estimates are subject to change based on management’s evaluation of, and response to, a variety of factors and trends, including, but not limited to, consumer preferences and buying patterns, age of inventory, increased competition, inventory management, merchandising strategies and historical sell through trends. The Company’s ability to adequately evaluate the impact of inventory management and merchandising strategies executed in response to such factors and trends in future periods could have a material impact on such estimates. At the end of the third quarter of transition fiscal 2014, based on new merchandising plans, the Company increased its valuation allowances for excess and obsolete inventory. The Company recorded a charge to cost of sales and a corresponding reduction in inventory of approximately $9.6 million. This was a prospective change and did not have an effect on prior periods. In the fourth quarter of fiscal 2015, the Company recorded a charge for additional inventory shrinkage based upon the results of annual physical inventory counts completed during the quarter. This resulted in a net charge to cost of sales and a corresponding reduction in inventory of approximately $10.0 million, which was primarily related to the implementation of certain strategic initiatives, including the “Go Taller” store remodeling program. The “Go Taller” store remodeling program increased the amount of shelving space at the stores by raising the height of store shelves. During the remodeling and startup phase of the program, retail stores remained open and many products were moved from the shelves to the floor to accommodate the remodeling, which the Company believes led to an increase in misplaced and damaged products. In anticipation of the extra shelf space, more inventory was shipped to stores, which we believe also increased shrinkage. A reduction in workforce during transition fiscal 2014 resulted in the outsourcing of the Company’s Loss Prevention department, which was not reinstated in-house until the third quarter of fiscal 2016. These initiatives collectively disrupted store operations, resulting in increased loss due to theft and misplaced and damaged inventory. In order to obtain inventory at attractive prices, t he Company takes advantage of large volume purchases, closeouts and other similar purchase opportunities. Consequently, the Company’s inventory fluctuates from period to period and the inventory balances vary based on the timing and availability of such opportunities. |
Property and Equipment | Property and Equipment Property and equipment are carried at cost and are depreciated or amortized on a straight-line basis over the following useful lives: Owned buildings and improvements Lesser of 30 years or the estimated useful life of the improvement Leasehold improvements Lesser of the estimated useful life of the improvement or remaining lease term Fixtures and equipment 3-5 years Transportation equipment 3-5 years Information technology systems For major corporate systems, estimated useful life up to 7 years; for functional standalone systems, estimated useful life up to 5 years The Company’s policy is to capitalize expenditures that materially increase asset lives and expense ordinary repairs and maintenance as incurred. |
Long-Lived Assets | Long-Lived Assets The Company assesses the impairment of depreciable long-lived assets when events or changes in circumstances indicate that the carrying value may not be recoverable. The Company groups and evaluates long-lived assets for impairment at the individual store level, which is the lowest level at which individual identifiable cash flows are available. Recoverability is measured by comparing the carrying amount of an asset to expected future net cash flows generated by the asset. If the carrying amount of an asset exceeds its estimated undiscounted future cash flows, the carrying amount is compared to its fair value and an impairment charge is recognized to the extent of the difference. Factors that the Company considers important that could individually or in combination trigger an impairment review include the following: (1) significant underperformance relative to expected historical or projected future operating results; (2) significant changes in the manner of the Company’s use of the acquired assets or the strategy for the Company’s overall business; and (3) significant changes in the Company’s business strategies and/or negative industry or economic trends. On a quarterly basis, the Company assesses whether events or changes in circumstances occur that potentially indicate that the carrying value of long-lived assets may not be recoverable (Level 3 measurement, see Note 8, “Fair Value of Financial Instruments”). Considerable management judgment is necessary to estimate projected future operating cash flows. Accordingly, if actual results fall short of such estimates, significant future impairments could result. During fiscal 2016, due to the underperformance of two stores in Texas and one store in California, the Company concluded that the carrying value of the long-lived assets relating to such stores were not recoverable and accordingly recorded an asset impairment charge of $0.8 million. During fiscal 2016, the Company also recorded impairment charges of $0.2 million related to equipment and fixtures that will be disposed of and for which the Company concluded the fair value was zero. During fiscal 2015, the Company wrote down the carrying value of a held for sale property to the estimated net realizable value, net of expected disposal costs, and accordingly recorded an asset impairment charge of $0.1 million. During transition fiscal 2014, the Company did not record any long-lived asset impairment charges. |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets In connection with the Merger purchase price allocation, the fair values of long-lived and intangible assets were determined based upon assumptions related to the future cash flows, discount rates and asset lives using then available information, and in some cases were obtained from independent professional valuation experts. The Company amortizes intangible assets over their estimated useful lives unless such lives are deemed indefinite. Amortizable intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable based on undiscounted cash flows, and, if impaired, written down to fair value based on either discounted cash flows or appraised values. Significant judgment is required in determining whether a potential indicator of impairment of long-lived assets exists and in estimating future cash flows used in the impairment tests (Level 3 measurement, see Note 8, “Fair Value of Financial Instruments”). Goodwill and indefinite-lived intangible assets are not amortized but instead tested annually for impairment or more frequently when events or changes in circumstances indicate that the assets might be impaired. Goodwill is tested for impairment by comparing the carrying amount of the reporting unit to the fair value of the reporting unit to which the goodwill is assigned. The Company has the option of performing a qualitative assessment before calculating the fair value of the reporting unit (i.e., step zero of the goodwill impairment test). If the Company does not perform a qualitative assessment, or determines, on the basis of qualitative factors, that the fair value of the reporting unit is more likely than not less than the carrying amount, the two-step impairment test would be required. The first step is to compare the fair value of the reporting unit with its carrying amount, including goodwill. If the fair value of the reporting unit exceeds its carrying amount, goodwill is considered not impaired; otherwise, goodwill is impaired and the loss is measured by performing step two. Under step two, the impairment loss is measured by comparing the implied fair value of the reporting unit’s goodwill with the carrying amount of goodwill. Management has determined that the Company has two reporting units, the retail reporting unit and the wholesale reporting unit. The Company, assisted by an independent third party valuation firm, performs the annual test for impairment in January of the fiscal year and determines fair value based on a combination of the income approach and the market approach. The income approach is based on discounted cash flows to determine fair value. The market approach uses a selection of comparable companies and transactions in determining fair value. The fair value of the trade name is also tested for impairment in the fourth quarter by comparing the carrying value to the fair value. Fair value of a trade name is determined using a relief from royalty method under the income approach, which uses projected revenue allocable to the trade name and an assumed royalty rate (Level 3 measurement, see Note 8, “Fair Value of Financial Instruments”). These approaches involve making key assumptions about future cash flows, discount rates and asset lives using then best available information. These assumptions are subject to a high degree of complexity and judgment and are subject to change. The amount of goodwill allocated to the retail reporting unit and wholesale reporting unit was $467.2 and $12.5 million, respectively, as of January 30, 2015. During the third quarter of fiscal 2016, the Company determined that indicators of impairment existed to require an interim impairment analysis of goodwill and trade name, including (i) overall performance deterioration reflected in decreased comparable same-store sales and cannibalization from stores opened in fiscal 2015 under an accelerated expansion program, (ii) increases in inventory shrinkage and buildup of excess inventory, (iii) decreased margin due to disappointing results from sales promotions and (iv) a decision to delay the pace of future store openings. The first step evaluation concluded that the fair value of the retail reporting unit was below its carrying value. The Company performed step two of the goodwill impairment test that requires the retail reporting unit’s fair value to be allocated to all of the assets and liabilities of the reporting unit, including any intangible assets, in a hypothetical analysis that calculates the implied fair value of goodwill in the same manner as if the reporting unit was being acquired in a business combination, including consideration of the fair value of tangible property and intangible assets. As a result of this preliminary analysis and based on best estimate, the Company recorded a $120.0 million non-cash goodwill impairment charge in the third quarter of fiscal 2016, which was reflected as goodwill impairment in the consolidated statements of comprehensive income (loss). The finalization of the preliminary goodwill impairment test was completed in the fourth quarter of fiscal 2016 and resulted in a $28.0 million adjustment in goodwill, lowering the third quarter of fiscal 2016 goodwill impairment charge from $120.0 million to $92.0 million. The remaining amount of goodwill allocated to the retail reporting unit and wholesale reporting unit was $375.2 and $12.5 million, respectively, as of January 29, 2016. During the fourth quarter of fiscal 2016, the Company completed step one of its annual goodwill impairment test for the two reporting units and determined that there was no impairment of goodwill since the fair value of the Company’s reporting units exceeded their carrying amounts. As discussed above, considerable management judgment is necessary in estimating future cash flows, market interest rates, discount rates and other factors affecting the valuation of goodwill. The Company’s forecasts used in its fiscal 2016 annual impairment test include growth in net sales, new store openings and same-store sales, positive trends in cost of sales and selling, general and administrative expense. In each case, these estimates and assumptions could be materially affected by factors such as unforeseen events or changes in general economic conditions, a decline in comparable company market multiples, changes to discount rates, increased competitive forces, inability to maintain pricing structure, deterioration of vendor relationships, failure to adequately manage and improve inventory processes and procedures and changes in customer behavior which could result in changes to management’s strategies. If operating results continue to change versus the Company’s expectations, additional impairment charges may be recorded in the future. Additionally, during the fourth quarter of fiscal 2016, the Company completed its annual indefinite-lived intangible asset impairment test and determined there was no impairment to the trade name since the fair value of the trade name exceeded its carrying amount. The results of this test showed that the fair value of trade name exceeded carrying value by approximately 12%. The relief from royalty method estimates our theoretical royalty savings from ownership of the intangible asset. Key assumptions used in this model included sales projections, discount rates and royalty rates, and considerable management judgment is necessary in developing and evaluating such assumptions. If future results are not consistent with current estimates and assumptions, impairment charges maybe recorded in future. |
Derivatives | Derivatives The Company accounts for derivative financial instruments in accordance with authoritative guidance for derivative instrument and hedging activities. Financial instrument positions taken by the Company are primarily intended to be used to manage risks associated with interest rate exposures. The Company’s derivative financial instruments are recorded on the balance sheet at fair value, and are recorded in either current or noncurrent assets or liabilities based on their maturity. Changes in the fair values of derivatives are recorded in net earnings or other comprehensive income (“OCI”), based on whether the instrument is designated and effective as a hedge transaction and, if so, the type of hedge transaction. Gains or losses on derivative instruments reported in accumulated other comprehensive income (“AOCI”) are reclassified to earnings in the period the hedged item affects earnings. Any ineffectiveness is recognized in earnings in the period incurred. |
Income Taxes | Income Taxes The Company uses the liability method of accounting for income taxes. Under the liability method, deferred tax assets and liabilities are recognized using enacted tax rates for the effect of temporary differences between the book and tax bases of recorded assets and liabilities. Deferred tax assets are reduced by a valuation allowance if it is more likely than not that some portion or all of the net deferred tax assets will not be realized. The Company’s ability to realize deferred tax assets is assessed throughout the year and a valuation allowance is established accordingly. The Company recognizes the impact of a tax position only if it is more likely than not to be sustained upon examination based on the technical merits of the position. The Company recognizes potential interest and penalties related to uncertain tax positions in income tax expense. Refer to Note 5, “Income Tax Provision” for further discussion of income taxes. |
Stock-Based Compensation | Stock-Based Compensation The Company accounts for stock-based payment awards based on their fair value. The value of the portion of the award that is ultimately expected to vest is recognized as an expense ratably over the requisite service periods. For awards classified as equity, the Company estimates the fair value for each option award as of the date of grant using the Black-Scholes option pricing model or other appropriate valuation models. The Black-Scholes model considers, among other factors, the expected life of the award and the expected volatility of the stock price. Stock options are generally granted to employees at exercise prices equal to or greater than the fair market value of the stock at the dates of grant. Former executive put rights were classified as equity awards and revalued using a binomial model at each reporting period with changes in the fair value recognized as stock-based compensation expense. The fair value of options that vest based on the Company’s and Parent’s achievement of certain performance hurdles was valued using a Monte Carlo simulation method. The fair value of options granted to the current Chief Executive Officer was valued using a binomial model and the Monte Carlo simulation method. Refer to Note 11, “Stock-Based Compensation Plans” for further discussion of stock-based compensation. |
Revenue Recognition | Revenue Recognition The Company recognizes retail sales in its retail stores at the time the customer takes possession of merchandise. All sales are net of discounts and returns and exclude sales tax. Wholesale sales are recognized in accordance with the shipping terms agreed upon on the purchase order. Wholesale sales are typically recognized free on board origin, where title and risk of loss pass to the buyer when the merchandise leaves the Company’s distribution facility. The Company has a gift card program. The Company does not charge administrative fees on gift cards and the Company’s gift cards do not have expiration dates. The Company records the sale of gift cards as a current liability and recognizes a sale when a customer redeems a gift card. The liability for outstanding gift cards is recorded in accrued expenses. |
Cost of Sales | Cost of Sales Cost of sales includes the cost of inventory, freight in, obsolescence, spoilage, scrap and inventory shrinkage, and is net of discounts and allowances. Cost of sales also includes receiving, warehouse costs and distribution costs (which include payroll and associated costs, occupancy, transportation to and from stores and depreciation expense). Cash discounts for satisfying early payment terms are recognized when payment is made, and allowances and rebates based upon milestone achievements such as reaching a certain volume of purchases of a vendor’s products are included as a reduction of cost of sales when such contractual milestones are reached or based on other systematic and rational approaches where possible. |
Selling, General and Administrative Expenses | Selling, General and Administrative Expenses Selling, general and administrative expenses include the costs of selling merchandise in stores (which include payroll and associated costs, occupancy and other store-level costs) and corporate costs (which include payroll and associated costs, occupancy, advertising, professional fees and other corporate administrative costs). Selling, general and administrative expenses also include depreciation and amortization expense relating to these costs. |
Leases | Leases The Company follows the policy of capitalizing allowable expenditures that relate to the acquisition and signing of its retail store leases. These costs are amortized on a straight-line basis over the applicable lease term. The Company recognizes rent expense for operating leases on a straight-line basis (including the effect of reduced or free rent and rent escalations) over the applicable lease term. The difference between the cash paid to the landlord and the amount recognized as rent expense on a straight-line basis is included in deferred rent. Cash reimbursements received from landlords for leasehold improvements and other cash payments received from landlords as lease incentives are recorded as deferred rent. Deferred rent related to landlord incentives is amortized as an offset to rent expense using the straight-line method over the applicable lease term. In certain lease arrangements, the Company can be involved with the construction of the building. If it is determined that the Company has substantially all of the risks of ownership during construction of the leased property and therefore is deemed to be the owner of the construction project, the Company records an asset for the amount of the total project costs and an amount related to the value attributed to the pre-existing leased building in property and equipment, net and the related financing obligation as part of current and non-current liabilities. Once construction is complete, if it is determined that the asset does not qualify for sale-leaseback accounting treatment, the Company amortizes the obligation over the lease term and depreciates the asset over the life of the lease. The Company does not report rent expense for the portion of the rent payment determined to be related to the assets which are owned for accounting purposes. Rather, this portion of the rent payment under the lease is recognized as a reduction of the financing obligation and interest expense. For store closures where a lease obligation still exists, the Company records the estimated future liability associated with the rental obligation on the cease use date (when the store is closed). Liabilities are established at the cease use date for the present value of any remaining operating lease obligations, net of estimated sublease income, and at the communication date for severance and other exit costs. Key assumptions in calculating the liability include the timeframe expected to terminate lease agreements, estimates related to the sublease potential of closed locations, and estimates of other related exit costs. If actual timing and potential termination costs or realization of sublease income differ from the Company’s estimates, the resulting liabilities could vary from recorded amounts. These liabilities are reviewed periodically and adjusted when necessary. During the second quarter of fiscal 2016, the Company sold and concurrently leased back two retail stores with a carrying value of $7.9 million and received net proceeds from these transactions of $8.7 million. The Company was deemed to have “continuing involvement,” which precluded the de-recognition of the assets from the consolidated balance sheet when the transactions closed. The resulting leases are accounted for as financing leases and the Company has recorded a corresponding financing lease obligation of $8.7 million (as a component of current and non-current liabilities). The Company will amortize the financing lease obligation over the lease term and depreciate the assets over their remaining useful lives. During the third quarter of fiscal 2016, the Company sold and concurrently leased back one store, and the resulting lease qualifies as and is accounted for as an operating lease. The net proceeds from the sale-leaseback transaction amounted to $9.0 million. The Company will amortize deferred gains of $2.6 million relating to the sale-leaseback transaction over the lease term. During the fourth quarter of fiscal 2016, the Company sold and concurrently leased back two stores, and the resulting leases qualify and are accounted for as operating leases. The net proceeds from these sale-leaseback transactions amounted to $9.1 million. The Company will amortize deferred gains of $1.5 million relating to the sale-leaseback transactions over the lease term. |
Self-Insured Workers' Compensation Liability | S elf-Insured Workers’ Compensation Liability The Company self-insures for workers’ compensation claims in California and Texas. The Company establishes a liability for losses from both estimated known and incurred but not reported insurance claims based on reported claims and actuarial valuations of estimated future costs of known and incurred but not yet reported claims. Should an amount of claims greater than anticipated occur, the liability recorded may not be sufficient and additional workers’ compensation costs, which may be significant, could be incurred. The Company has not discounted the projected future cash outlays for the time value of money for claims and claim-related costs when establishing its workers’ compensation liability in its financial reports for January 29, 2016 and January 30, 2015. |
Self-Insured Health Insurance Liability | Self-Insured Health Insurance Liability The Company self-insures for a portion of its employee medical benefit claims. The liability for the self-funded portion of the Company health insurance program is determined actuarially, based on claims filed and an estimate of claims incurred but not yet reported. The Company maintains stop loss insurance coverage to limit its exposure for the self-funded portion of its health insurance program. |
Pre-Opening Costs | Pre-Opening Costs The Company expenses, as incurred, pre-opening costs such as payroll, rent and marketing related to the opening of new retail stores. |
Advertising | Advertising The Company expenses advertising costs as incurred. Advertising expenses were $8.2 million for the fiscal year ended January 29, 2016. Advertising expenses were $6.2 million for the fiscal year ended January 30, 2015. Advertising expenses were $4.4 million for the ten months ended January 31, 2014. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company’s financial instruments consist principally of cash, accounts receivable, interest rate and other derivatives, accounts payable, accruals, debt, and other liabilities. Cash and derivatives are measured and recorded at fair value. Accounts receivable and other receivables are financial assets with carrying values that approximate fair value. Accounts payable and other accrued expenses are financial liabilities with carrying values that approximate fair value. Refer to Note 8, “Fair Value of Financial Instruments” for further discussion of the fair value of debt. The Company uses the authoritative guidance for fair value, which includes the definition of fair value, the framework for measuring fair value, and disclosures about fair value measurements. Fair value is an exit price, representing the amount that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants. Fair value measurements reflect the assumptions market participants would use in pricing an asset or liability based on the best information available. Assumptions include the risks inherent in a particular valuation technique (such as a pricing model) and/or the risks inherent in the inputs to the model. |
Comprehensive Income | Comprehensive Income Other comprehensive income (“OCI”) includes unrealized gains or losses on investments and interest rate derivatives designated as cash flow hedges. The following table sets forth the calculation of comprehensive income, net of tax effects, for the periods indicated (in thousands): Year Ended Year Ended Ten Months Ended January 29, 2016 January 30, 2015 January 31, 2014 Net (loss) income $ ) $ $ ) Unrealized losses on interest rate cash flow hedge, net of tax effects of $(102) in fiscal 2016, $(384) in fiscal 2015 and $(190) in transition fiscal 2014 ) ) ) Reclassification adjustment, net of tax effects of $658 in fiscal 2016, $647 in fiscal 2015 and $97 in transition fiscal 2014 Total unrealized gains (losses), net ) Total comprehensive (loss) income $ ) $ $ ) Amounts in accumulated other comprehensive gain/loss as of January 29, 2016 and January 30, 2015 consisted of unrealized gains/losses on interest rate cash flow hedges. Reclassifications out of AOCI in fiscal 2016, fiscal 2015 and transition fiscal 2014 are presented in Note 7, “Derivative Financial Instruments.” |
Basis of Presentation and Sum27
Basis of Presentation and Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Jan. 29, 2016 | |
Basis of Presentation and Summary of Significant Accounting Policies | |
Schedule of property and equipment useful lives | Owned buildings and improvements Lesser of 30 years or the estimated useful life of the improvement Leasehold improvements Lesser of the estimated useful life of the improvement or remaining lease term Fixtures and equipment 3-5 years Transportation equipment 3-5 years Information technology systems For major corporate systems, estimated useful life up to 7 years; for functional standalone systems, estimated useful life up to 5 years |
Schedule of comprehensive income | The following table sets forth the calculation of comprehensive income, net of tax effects, for the periods indicated (in thousands): Year Ended Year Ended Ten Months Ended January 29, 2016 January 30, 2015 January 31, 2014 Net (loss) income $ ) $ $ ) Unrealized losses on interest rate cash flow hedge, net of tax effects of $(102) in fiscal 2016, $(384) in fiscal 2015 and $(190) in transition fiscal 2014 ) ) ) Reclassification adjustment, net of tax effects of $658 in fiscal 2016, $647 in fiscal 2015 and $97 in transition fiscal 2014 Total unrealized gains (losses), net ) Total comprehensive (loss) income $ ) $ $ ) |
Goodwill and Other Intangible28
Goodwill and Other Intangible Assets and Liabilities (Tables) | 12 Months Ended |
Jan. 29, 2016 | |
Goodwill and Other Intangible Assets and Liabilities | |
Schedule of goodwill and other intangible assets and liabilities | The following table sets forth the value of the goodwill and other intangible assets and liabilities, and the amortization of finite lived intangible assets and liabilities (in thousands): January 29, 2016 January 30, 2015 Remaining Amortization Life (Years) Gross Carrying Amount Impairment Losses Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Indefinite lived intangible assets: Goodwill $ $ ) $ — $ $ $ — $ Trade name — — — Total indefinite lived intangible assets $ $ ) $ — $ $ $ — $ Finite lived intangible assets: Trademarks 16 $ $ ) $ ) $ $ $ ) $ Bargain Wholesale customer relationships 8 — ) ) Favorable leases 1 to 13 ) ) ) Total finite lived intangible assets ) ) ) Total goodwill and other intangible assets $ $ ) $ ) $ $ $ ) $ |
Schedule of estimated amortization of finite lived intangible assets | As of January 29, 2016 Estimated amortization of finite lived intangible assets (a) (b): Trademarks Bargain Wholesale Customer Relationships Favorable Leases FY 2017 $ $ $ FY 2018 FY 2019 FY 2020 FY 2021 Thereafter $ $ $ |
Schedule of unfavorable leases | As of January 29, 2016 As of January 30, 2015 Remaining Amortization Life (Years) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Remaining Amortization Life (Years) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Unfavorable leases 1 to 14 $ $ ) $ Unfavorable leases 1 to 15 $ $ ) $ |
Schedule of estimated amortization of unfavorable leases | Estimated amortization of unfavorable leases (b): FY 2017 $ FY 2018 FY 2019 FY 2020 FY 2021 Thereafter $ (a) Amortization of trademarks and Bargain Wholesale customer relationships is recognized in selling, general and administrative expenses on the Consolidated Statement of Comprehensive Income (Loss). (b) Amortization of favorable and unfavorable leases is recognized in rent expense, as a component of selling, general and administrative expenses on the Consolidated Statement of Comprehensive Income (Loss). |
Property and Equipment, net (Ta
Property and Equipment, net (Tables) | 12 Months Ended |
Jan. 29, 2016 | |
Property and Equipment, net | |
Schedule of details of property and equipment | The following table provides details of property and equipment (in thousands): January 29, 2016 January 30, 2015 Property and equipment Land $ $ Buildings Buildings improvements Leasehold improvements Fixtures and equipment Transportation equipment Construction in progress Total property and equipment Less: accumulated depreciation and amortization ) ) Property and equipment, net $ $ |
Income Tax Provision (Tables)
Income Tax Provision (Tables) | 12 Months Ended |
Jan. 29, 2016 | |
Income Tax Provision | |
Schedule of provision (benefit) for income taxes | The provision (benefit) for income taxes consists of the following (in thousands): Year Ended Year Ended Ten Months Ended January 29, 2016 January 30, 2015 January 30, 2014 Current: Federal $ ) $ ) $ ) State ) Foreign — ) ) Deferred - federal and state ) Provision (benefit) for income taxes $ $ $ ) |
Schedule of differences between the provision (benefit) for income taxes and income taxes at the statutory federal income tax rate | Differences between the provision (benefit) for income taxes and income taxes at the statutory federal income tax rate are as follows (in thousands): Year Ended Year Ended Ten Months Ended January 29, 2016 January 30, 2015 January 31, 2014 Amount Percent Amount Percent Amount Percent Income taxes at statutory federal rate $ ) % $ % $ ) )% State income taxes, net of federal income tax effect ) ) ) Goodwill impairment ) — — — — Valuation allowance ) — — — — Effect of permanent differences ) Welfare to work, and other job credits ) ) ) ) ) Other ) $ )% $ % $ ) )% |
Schedule of components of deferred tax assets and liabilities | The components of deferred tax assets and liabilities were as follows (in thousands): January 29, 2016 January 30, 2015 DEFERRED TAX ASSETS Workers’ compensation $ $ Uniform inventory capitalization Leases Stock-based compensation Net operating loss carry-forwards Inventory Accrued liabilities Amortization Debt extinguishment State taxes Credits Other Total Gross Deferred Tax Assets Less: Valuation Allowances — Total Net Deferred Tax Assets DEFERRED TAX LIABILITIES Depreciation ) ) Intangibles ) ) Prepaid expenses ) ) Other ) ) Total Deferred Tax Liabilities ) ) Net Deferred Tax Liabilities $ ) $ ) |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Jan. 29, 2016 | |
Debt | |
Schedule of short and long-term debt | Short and long-term debt consists of the following (in thousands): January 29, 2016 January 30, 2015 ABL Facility agreement $ $ First Lien Term Loan Facility agreement, maturing on January 13, 2019, payable in quarterly installments of $1,535, plus interest through December 31, 2019, with unpaid principal and accrued interest due January 13, 2019, net of unamortized OID of $4,724 and $5,606 as of January 29, 2016 and January 30, 2015, respectively Senior Notes (unsecured) maturing December 15, 2019, unpaid principal and accrued interest due on December 15, 2019 Total debt Less: current portion Long-term debt, net of current portion $ $ |
Schedule of maturities of debt | As of January 29, 2016 the scheduled maturities of debt for each of the five succeeding fiscal years are as follows (in thousands): January 29, 2016 Future maturities Maturities of Long-term Debt FY 2017(a) $ FY 2018 FY 2019 FY 2020 Thereafter — Long-term debt, current and non-current $ (a) Reflects planned maturity of $47.8 million under the ABL Facility on January 13, 2017, prior to amendment of the ABL Facility (as described below) that extended the maturity to April 8, 2021. |
Schedule of net deferred financing costs | As of January 29, 2016 and January 30, 2015, the current and non-current net deferred financing costs are as follows (in thousands): January 29, 2016 January 30, 2015 Deferred financing costs Net Amount Net Amount ABL Facility $ $ First Lien Term Loan Facility Senior Notes Total deferred financing costs $ $ |
Schedule of significant components of interest expense | The significant components of interest expense are as follows (in thousands): Year Ended January 29, 2016 Year Ended January 30, 2015 Ten Months Ended January 31, 2014 First lien term loan facility $ $ $ ABL facility Senior notes Amortization of deferred financing costs and OID Other interest expense Interest expense $ $ $ |
Derivative Financial Instrume32
Derivative Financial Instruments (Tables) | 12 Months Ended |
Jan. 29, 2016 | |
Derivative Financial Instruments | |
Summary of the recorded amounts included in the consolidated balance sheet | A summary of the recorded amounts included in the consolidated balance sheet is as follows (in thousands): January 29, 2016 January 30, 2015 Derivatives designated as cash flow hedging instruments Interest rate swap (included in other current liabilities) $ $ Interest rate swap (included in other liabilities) $ — $ Accumulated other comprehensive loss, net of tax (included in member’s equity) $ $ Derivatives not designated as hedging instruments Transition payments (included in other current liabilities) $ $ — Transition payments (included in other liabilities) $ $ — |
Summary of recorded amounts included in the consolidated statements of comprehensive income (loss) | A summary of recorded amounts included in the consolidated statements of comprehensive income (loss) is as follows (in thousands): Year Ended Year Ended Ten Months Ended January 29 , 2016 January 30, 2015 January 31 2014 Derivatives designated as cash flow hedging instruments: Loss related to effective portion of derivative recognized in OCI $ $ $ Loss related to effective portion of derivatives reclassified from AOCI to interest expense $ $ $ (Gain) loss related to ineffective portion of derivative recognized in interest expense $ ) $ ) $ ) Derivatives not designated as hedging instruments: Loss recognized in selling, general and administrative expenses $ $ — $ — |
Fair Value of Financial Instr33
Fair Value of Financial Instruments (Tables) | 12 Months Ended |
Jan. 29, 2016 | |
Fair Value of Financial Instruments | |
Schedule of financial assets and liabilities recorded at fair value on a recurring basis, by level within the fair value hierarchy | The following table summarizes, by level within the fair value hierarchy, the financial assets and liabilities recorded at fair value on a recurring basis (in thousands) as of January 29, 2016: January 29, 2016 Total Level 1 Level 2 Level 3 ASSETS Other assets — assets that fund deferred compensation $ $ $ — $ — LIABILITIES Other current liabilities — interest rate swap $ $ — $ $ — Other current liabilities — transition payments $ $ — $ — $ Other long-term liabilities — transition payments $ $ — $ — $ Other long-term liabilities — deferred compensation $ $ $ — $ — The following table summarizes, by level within the fair value hierarchy, the financial assets and liabilities recorded at fair value on a recurring basis (in thousands) as of January 30, 2015: January 30, 2015 Total Level 1 Level 2 Level 3 ASSETS Other assets — assets that fund deferred compensation $ $ $ — $ — LIABILITES Other current liabilities — interest rate swap $ $ — $ $ — Other long-term liabilities — interest rate swap $ $ — $ $ — Other long-term liabilities — deferred compensation $ $ $ — $ — |
Summary of activity for the period of changes in fair value of the Company's Level 3 investments | The following table summarizes the activity for the period of changes in fair value of the Company’s Level 3 instruments (in thousands): Transition Payments Year Ended January 29, 2016 Year Ended January 30, 2015 Ten Months Ended January 31, 2014 Description Beginning balance $ — $ — $ — Transfers in and/or out of Level 3 — — — Total realized/unrealized gains (loss): Included in earnings (1) ) — — Included in other comprehensive loss — — — Purchases, redemptions and settlements: Settlements — — Ending balance $ ) $ — $ — Total amount of unrealized gains (losses) for the period included in earnings relating to liabilities held at the reporting period $ ) $ — $ — (1) Losses are included in selling, general and administrative expenses. |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Jan. 29, 2016 | |
Commitments and Contingencies | |
Schedule of the minimum annual rentals payable and future minimum sub-lease income under all non-cancelable operating leases | As of January 29, 2016, the minimum annual rentals payable and future minimum sub-lease income under all non-cancelable leases was as follows (amounts in thousands): Fiscal Year: Operating leases Financing leases Capital lease Future Minimum Sub-lease Income 2017 $ $ $ $ 2018 — 2019 — 2020 — 2021 — — Thereafter — — Future minimum lease payments $ $ $ $ Less amount representing interest ) ) Unamortized balance of financing obligations at end of lease term — Total capital and financing obligations $ $ |
Summary of the changes in the reserves for self-insurance | The following table summarizes the changes in the reserves for self-insurance for the periods indicated (in thousands): Workers’ Compensation Health Insurance Balance as of 3/30/13 $ $ Claims Payments $ ) $ ) Reserve Accruals Balance as of 1/31/14 $ $ Claims Payments $ ) $ ) Reserve Accruals Balance as of 1/30/15 $ $ Claims Payments $ ) $ ) Reserve Accruals Balance as of 1/29/16 $ $ |
Stock-Based Compensation Plans
Stock-Based Compensation Plans (Tables) | 12 Months Ended |
Jan. 29, 2016 | |
Stock-Based Compensation Plans | |
Schedule of assumptions made for estimating the fair value of time-based stock options at the date of grant using the Black-Scholes pricing model | Year Ended Year Ended Ten Months Ended January 29, 2016 January 30, 2015 January 31, 2014 Weighted-average fair value of options granted $ $ $ Risk free interest rate % % % Expected life (in years) Expected stock price volatility % % % Expected dividend yield None None None |
Summary of stock option activity | The following summarizes stock option activity during the year ended January 29, 2016: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life (Year) Aggregate Intrinsic Value Options outstanding at the beginning of the period $ Granted $ Exercised ) $ Cancelled ) $ Outstanding at the end of the period $ $ — Exercisable at the end of the period $ $ — Exercisable and expected to vest at the end of the period $ $ — |
Summary of stock awards available for grant | Number of Shares Available for grant as of January 30, 2015 Authorized — Granted ) Cancelled Available for grant at January 29, 2016 |
Other Current Assets and Othe36
Other Current Assets and Other Accrued Expenses (Tables) | 12 Months Ended |
Jan. 29, 2016 | |
Other Current Assets and Other Accrued Expenses | |
Schedule of other current assets | Other current assets as of January 29, 2016 and January 30, 2015 are as follows (in thousands): January 29, 2016 January 30, 2015 Prepaid expenses $ $ Other Total other current assets $ $ |
Schedule of other accrued expenses | Other accrued expenses as of January 29, 2016 and January 30, 2015 are as follows (in thousands): January 29, 2015 January 30, 2015 Accrued interest $ $ Accrued occupancy costs Accrued legal reserves and fees Accrued interest swap Accrued California Redemption Value Other Total other accrued expenses $ $ |
Financial Guarantees (Tables)
Financial Guarantees (Tables) | 12 Months Ended |
Jan. 29, 2016 | |
Financial Guarantees | |
Schedule of condensed consolidating balance sheets | CONDENSED CONSOLIDATING BALANCE SHEETS As of January 29, 2016 (In thousands) Issuer Subsidiary Guarantors Non- Guarantor Subsidiaries Consolidating Adjustments Consolidated ASSETS Current Assets: Cash $ $ $ $ — $ Accounts receivable, net — — Income taxes receivable — — — Deferred income taxes — — — Inventories, net — — Assets held for sale — — — Other — Total current assets — Property and equipment, net — Deferred financing costs, net — — — Equity investments and advances to subsidiaries ) — Intangible assets, net — — Goodwill — — — Deposits and other assets — Total assets $ $ $ $ ) $ LIABILITIES AND MEMBER’S EQUITY Current Liabilities: Accounts payable $ $ $ — $ — $ Intercompany payable ) — Payroll and payroll-related — — Sales tax — — Other accrued expenses — Workers’ compensation — — Current portion of long-term debt — — — Current portion of capital and financing lease obligation — — — Total current liabilities ) Long-term debt, net of current portion — — — Unfavorable lease commitments, net — — Deferred rent — Deferred compensation liability — — — Capital and financing lease obligation, net of current portion — — — Long-term deferred income taxes — — — Other liabilities — — — Total liabilities ) Member’s Equity: Member units — ) Additional paid-in capital — — ) — Investment in Number Holdings, Inc. preferred stock ) — — — ) Accumulated deficit ) ) ) ) Other comprehensive loss ) — — — ) Total equity ) ) Total liabilities and equity $ $ $ $ ) $ CONDENSED CONSOLIDATING BALANCE SHEETS As of January 30, 2015 (Amounts in thousands) Issuer Subsidiary Guarantors Non- Guarantor Subsidiaries Consolidating Adjustments Consolidated ASSETS Current Assets: Cash $ $ $ $ — $ Accounts receivable, net — — Income taxes receivable — — — Deferred income taxes — — — Inventories, net — — Assets held for sale — — Other — Total current assets — Property and equipment, net — Deferred financing costs, net — — — Equity investments and advances to subsidiaries — ) — Intangible assets, net — — Goodwill — — — Deposits and other assets — — Total assets $ $ $ $ ) $ LIABILITIES AND MEMBER’S EQUITY Current Liabilities: Accounts payable $ $ $ — $ — $ Intercompany payable ) — Payroll and payroll-related — — Sales tax — — Other accrued expenses — Workers’ compensation — — Short-term debt and current portion of long-term debt — — — Current portion of capital and financing lease obligation — — — Total current liabilities ) Long-term debt, net of current portion — — — Unfavorable lease commitments, net — — Deferred rent — — Deferred compensation liability — — — Capital and financing lease obligation, net of current portion — — — Long-term deferred income taxes — — — Other liabilities — — — Total liabilities ) Member’s Equity: Member units — ) Additional paid-in capital — — ) — Investment in Number Holdings, Inc. preferred stock ) — — — ) Accumulated deficit ) ) ) ) Other comprehensive loss ) — — — ) Total equity ) ) Total liabilities and equity $ $ $ $ ) $ |
Schedule of condensed consolidated statements of comprehensive income (loss) | CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) Year Ended January 29, 2016 (Amounts in thousands) Issuer Subsidiary Guarantor Non- Guarantor Subsidiaries Consolidating Adjustments Consolidated Net Sales: Total sales $ $ $ $ ) $ Cost of sales — — Gross profit ) Selling, general and administrative expenses ) Goodwill impairment — — — Operating (loss) income ) ) — ) Other (income) expense: Interest income ) — — — ) Interest expense — — — Equity in (earnings) loss of subsidiaries — — ) — Total other expense, net — — ) (Loss) income before provision for income taxes ) ) ) Provision for income taxes — — Net (loss) income $ ) $ ) $ $ $ ) Comprehensive (loss) income $ ) $ ) $ $ $ ) CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) Year Ended January 30, 2015 (Amounts in thousands) Issuer Subsidiary Guarantor Non- Guarantor Subsidiaries Consolidating Adjustments Consolidated Net Sales: Total sales $ $ $ — $ — $ Cost of sales — — Gross profit — — Selling, general and administrative expenses — Operating income (loss) ) ) — Other (income) expense: Interest expense — — — Equity in loss of subsidiaries — — ) — Total other expense, net — — ) Income (loss) before provision for income taxes ) ) Provision for income taxes — — Net income (loss) $ $ ) $ ) $ $ Comprehensive income (loss) $ $ ) $ ) $ $ CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) Ten Months Ended January 31, 2014 (Amounts in thousands) Issuer Subsidiary Guarantor Consolidating Adjustments Consolidated Net Sales: Total sales $ $ $ — $ Cost of sales — Gross profit — Selling, general and administrative expenses — Operating income (loss) ) — Other (income) expense: Interest income ) — — ) Interest expense — — Equity in loss of subsidiaries — ) — Loss on extinguishment of debt — — Total other expense, net — ) Loss before provision for income taxes ) ) ) Benefit for income taxes ) — — ) Net loss $ ) $ ) $ $ ) Comprehensive loss $ ) $ ) $ $ ) |
Schedule of condensed consolidated statements of cash flows | CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS For the Year Ended January 29, 2016 (In thousands) Issuer Subsidiary Guarantor Non- Guarantor Subsidiary Consolidating Adjustments Consolidated Cash flows from operating activities: Net cash provided by operating activities $ $ $ $ — $ Cash flows from investing activities: Purchases of property and equipment ) ) ) — ) Proceeds from sales of property and fixed assets — — Net cash used in investing activities ) ) ) — ) Cash flows from financing activities: Payments of long-term debt ) — — — ) Proceeds under revolving credit facility — — — Payments under revolving credit facility ) — — — ) Payments of debt issuance costs ) — — — ) Proceeds from financing lease obligations — — — Payments of capital and financing lease obligations ) — — — ) Payments to repurchase stock options of Number Holdings, Inc ) — — — ) Net settlement of stock options of Number Holdings, Inc. for tax withholdings ) — — — ) Net cash used in financing activities ) — — — ) Net (decrease) increase in cash ) ) — ) Cash — beginning of period — Cash — end of period $ $ $ $ — $ CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended January 30, 2015 (Amounts in thousands) Issuer Subsidiary Guarantor Non- Guarantor Subsidiaries Consolidating Adjustments Consolidated Cash flows from operating activities: Net cash provided by operating activities $ $ $ $ — $ Cash flows from investing activities: Purchases of property and equipment ) ) ) — ) Proceeds from sale of fixed assets — — Investment in subsidiary ) — — — Net cash used in investing activities ) ) ) ) Cash flows from financing activities: Payments of long-term debt ) — — — ) Proceeds under revolving credit facility — — — Payments under revolving credit facility ) — — — ) Payments of capital lease obligation ) — — — ) Payments to repurchase stock options of Number Holdings, Inc. ) — — — ) Capital contributions — — ) — Net cash provided by financing activities — ) Net (decrease) increase in cash ) ) — ) Cash — beginning of period — — Cash - end of period $ $ $ $ — $ CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Ten Months Ended January 31, 2014 (Amounts in thousands) Issuer Subsidiary Guarantor Consolidating Adjustments Consolidated Cash flows from operating activities: Net cash provided by operating activities $ $ $ $ Cash flows from investing activities: Purchases of property and equipment ) ) — ) Proceeds from sale of fixed assets — Net cash used in investing activities ) ) — ) Cash flows from financing activities: Investment in Number Holdings, Inc. preferred stock ) — — ) Dividend paid ) — — ) Payments of debt ) — — ) Payments of debt issuance costs ) — — ) Payments of capital lease obligation ) — — ) Payments to repurchase stock options of Number Holdings, Inc. ) — — ) Proceeds from debt — — Excess tax benefit from stock-based payment arrangements — — Net cash used in financing activities ) — — ) Net (decrease) increase in cash ) ) Cash — beginning of period ) Cash - end of period $ $ $ — $ |
Basis of Presentation and Sum38
Basis of Presentation and Summary of Significant Accounting Policies - General Information (Details) | 3 Months Ended | 10 Months Ended | 12 Months Ended | |||||||
Jan. 29, 2016USD ($)item | Oct. 30, 2015 | Jul. 31, 2015 | May. 01, 2015 | Jan. 30, 2015USD ($) | Dec. 28, 2013USD ($) | Jan. 31, 2014item | Jan. 29, 2016USD ($)item | Jan. 30, 2015USD ($)item | Oct. 18, 2013$ / sharesshares | |
Nature of Business | ||||||||||
Stores in operation | 391 | 391 | ||||||||
Conversion to LLC | ||||||||||
Number of Class A common stock converted into membership unit | shares | 1 | |||||||||
Change in Fiscal Year | ||||||||||
Number of months in a fiscal year | 10 | |||||||||
Number of quarters in a fiscal year | 4 | |||||||||
Days in each fiscal quarter | 91 days | 91 days | 91 days | 91 days | ||||||
Number of weeks in period | 44 | 52 | 52 | |||||||
Number of days in a fiscal year | 364 | |||||||||
Number of weeks in a fiscal year every five to six years | 53 | |||||||||
Cash | ||||||||||
Number of business days within which the majority of payments are due for the settlement of debit and credit card transactions | 3 days | |||||||||
Cash, FDIC Uninsured Amount | $ | $ 3,900,000 | $ 2,100,000 | $ 3,900,000 | $ 2,100,000 | ||||||
Book overdrafts included in accounts payable | $ | $ 7,900,000 | $ 16,500,000 | ||||||||
Inventories | ||||||||||
Reduction in inventory | $ | $ 10,000,000 | $ 9,600,000 | ||||||||
Minimum | ||||||||||
Change in Fiscal Year | ||||||||||
Period during which fiscal years includes 53 weeks | 5 years | |||||||||
Maximum | ||||||||||
Change in Fiscal Year | ||||||||||
Period during which fiscal years includes 53 weeks | 6 years | |||||||||
Cash | ||||||||||
Cash, FDIC Insured Amount | $ | $ 250,000 | $ 250,000 | ||||||||
Class A Common Stock | ||||||||||
Conversion to LLC | ||||||||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.01 | |||||||||
Class B Common Stock | ||||||||||
Conversion to LLC | ||||||||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.01 | |||||||||
California | ||||||||||
Nature of Business | ||||||||||
Stores in operation | 283 | 283 | ||||||||
Texas | ||||||||||
Nature of Business | ||||||||||
Stores in operation | 49 | 49 | ||||||||
Arizona | ||||||||||
Nature of Business | ||||||||||
Stores in operation | 38 | 38 | ||||||||
Nevada | ||||||||||
Nature of Business | ||||||||||
Stores in operation | 21 | 21 |
Basis of Presentation and Sum39
Basis of Presentation and Summary of Significant Accounting Policies - Property and Equipment and Long-Lived Assets (Details) $ in Thousands | 10 Months Ended | 12 Months Ended | |
Jan. 31, 2014USD ($) | Jan. 29, 2016USD ($)store | Jan. 30, 2015USD ($) | |
Long-Lived Assets | |||
Long-lived and intangible assets impairment | $ 0 | $ 2,171 | $ 149 |
Fair value of assets held for disposal | $ 300 | ||
Owned buildings and improvements | Maximum | |||
Long-Lived Assets | |||
Property, Plant and Equipment, Useful Life | 30 years | ||
Fixtures and equipment | |||
Long-Lived Assets | |||
Long-lived and intangible assets impairment | $ 200 | ||
Fair value of assets held for disposal | $ 0 | ||
Fixtures and equipment | Minimum | |||
Long-Lived Assets | |||
Property, Plant and Equipment, Useful Life | 3 years | ||
Fixtures and equipment | Maximum | |||
Long-Lived Assets | |||
Property, Plant and Equipment, Useful Life | 5 years | ||
Transportation equipment | Minimum | |||
Long-Lived Assets | |||
Property, Plant and Equipment, Useful Life | 3 years | ||
Transportation equipment | Maximum | |||
Long-Lived Assets | |||
Property, Plant and Equipment, Useful Life | 5 years | ||
Information and technology major corporate systems | Maximum | |||
Long-Lived Assets | |||
Property, Plant and Equipment, Useful Life | 7 years | ||
Information and technology standalone systems | Maximum | |||
Long-Lived Assets | |||
Property, Plant and Equipment, Useful Life | 5 years | ||
Stores | |||
Long-Lived Assets | |||
Long-lived and intangible assets impairment | $ 800 | $ 100 | |
Texas | |||
Long-Lived Assets | |||
Number of stores in underperformance | store | 2 | ||
California | |||
Long-Lived Assets | |||
Number of stores in underperformance | store | 1 |
Basis of Presentation and Sum40
Basis of Presentation and Summary of Significant Accounting Policies - Goodwill and Other Intangible Assets, Leases and Advertising (Details) $ in Thousands | 3 Months Ended | 10 Months Ended | 12 Months Ended | |||
Jan. 29, 2016USD ($)store | Oct. 30, 2015USD ($)store | Jul. 31, 2015USD ($)store | Jan. 31, 2014USD ($) | Jan. 29, 2016USD ($)item | Jan. 30, 2015USD ($) | |
Goodwill and Other Intangible assets | ||||||
Number of reporting units | item | 2 | |||||
Goodwill | $ 387,772 | $ 387,772 | $ 479,745 | |||
Goodwill impairment loss | 0 | $ 120,000 | 91,973 | |||
Goodwill impairment adjustment | $ 28,000 | |||||
Leases | ||||||
Number of retail stores sold and concurrently leased back | store | 2 | 1 | 2 | |||
Carrying value of sale-leaseback transactions | $ 7,900 | |||||
Net proceeds from the sale-leaseback transactions | 8,700 | 9,359 | ||||
Net proceeds from the sale-leaseback transactions | $ 9,100 | $ 9,000 | ||||
Sale Leaseback obligation | $ 8,700 | |||||
Deferred gain | 1,500 | 2,600 | 1,500 | |||
Advertising | ||||||
Advertising expenses | $ 4,400 | 8,200 | 6,200 | |||
Wholesale reporting unit | ||||||
Goodwill and Other Intangible assets | ||||||
Goodwill | 12,500 | 12,500 | 12,500 | |||
Retail reporting unit | ||||||
Goodwill and Other Intangible assets | ||||||
Goodwill | 375,200 | $ 375,200 | $ 467,200 | |||
Goodwill impairment loss | 120,000 | |||||
Goodwill impairment adjustment | 28,000 | |||||
Goodwill impairment loss after preliminary analysis | $ 92,000 | |||||
Trade name | ||||||
Goodwill and Other Intangible assets | ||||||
Indefinite-lived intangible asset impairment loss | $ 0 | |||||
Fair value in excess of carrying value (as a percent) | 12.00% | 12.00% |
Basis of Presentation and Sum41
Basis of Presentation and Summary of Significant Accounting Policies - Comprehensive Income (Details) - USD ($) $ in Thousands | 10 Months Ended | 12 Months Ended | |
Jan. 31, 2014 | Jan. 29, 2016 | Jan. 30, 2015 | |
Basis of Presentation and Summary of Significant Accounting Policies | |||
Net (loss) income | $ (12,485) | $ (241,226) | $ 5,502 |
Unrealized losses on interest rate cash flow hedge, net of tax effects of $(102) in fiscal 2016, $(384) in fiscal 2015 and $(190) in transition fiscal 2014 | (284) | (152) | (576) |
Reclassification adjustment, net of tax effects of $658 in fiscal 2016, $647 in fiscal 2015 and $97 in transition fiscal 2014 | 145 | 988 | 969 |
Other comprehensive income (loss), net of tax | (139) | 836 | 393 |
Comprehensive (loss) income | (12,624) | (240,390) | 5,895 |
Tax effects of unrealized gains (losses) on interest rate cash flow hedge | (190) | (102) | (384) |
Tax effect of reclassification adjustment | $ 97 | $ 658 | $ 647 |
Goodwill and Other Intangible42
Goodwill and Other Intangible Assets and Liabilities - Finite and Indefinite Lived Intangible Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jan. 29, 2016 | Jan. 30, 2015 | |
Indefinite lived intangible assets: | ||
Goodwill Gross Carrying Amount | $ 479,745 | $ 479,745 |
Goodwill Impairment Losses | (91,973) | |
Goodwill Net Carrying Amount | 387,772 | 479,745 |
Indefinite Lived Assets Gross Carrying Amount | 889,745 | 889,745 |
Indefinite Lived Assets Impairment Losses | (91,973) | |
Indefinite Lived Assets Net Carrying Amount | 797,772 | 889,745 |
Finite lived intangible assets: | ||
Gross Carrying Amount | 68,543 | 68,723 |
Finite Lived Assets Impairment Losses | (1,136) | |
Accumulated Amortization | (24,165) | (18,412) |
Net Carrying Amount | 43,242 | 50,311 |
Total goodwill and other intangible assets, Gross Carrying Amount | 958,288 | 958,468 |
Total goodwill and other intangible assets, Impairment Losses | (93,109) | |
Total goodwill and other intangible assets, accumulated amortization | (24,165) | (18,412) |
Total goodwill and other intangible assets, Net Carrying Amount | $ 841,014 | 940,056 |
Trademarks | ||
Finite lived intangible assets: | ||
Remaining Amortization Life | 16 years | |
Gross Carrying Amount | $ 2,000 | 2,000 |
Finite Lived Assets Impairment Losses | (570) | |
Accumulated Amortization | (405) | (306) |
Net Carrying Amount | 1,025 | 1,694 |
Estimated amortization of finite lived intangible assets: | ||
FY 2,017 | 64 | |
FY 2,018 | 64 | |
FY 2,019 | 64 | |
FY 2,020 | 64 | |
FY 2,021 | 64 | |
Thereafter | $ 705 | |
Bargain Wholesale customer relationships | ||
Finite lived intangible assets: | ||
Remaining Amortization Life | 8 years | |
Gross Carrying Amount | $ 20,000 | 20,000 |
Accumulated Amortization | (6,752) | (5,096) |
Net Carrying Amount | 13,248 | 14,904 |
Estimated amortization of finite lived intangible assets: | ||
FY 2,017 | 1,656 | |
FY 2,018 | 1,656 | |
FY 2,019 | 1,656 | |
FY 2,020 | 1,656 | |
FY 2,021 | 1,656 | |
Thereafter | 4,968 | |
Favorable leases | ||
Finite lived intangible assets: | ||
Gross Carrying Amount | 46,543 | 46,723 |
Finite Lived Assets Impairment Losses | (566) | |
Accumulated Amortization | (17,008) | (13,010) |
Net Carrying Amount | 28,969 | 33,713 |
Estimated amortization of finite lived intangible assets: | ||
FY 2,017 | 4,165 | |
FY 2,018 | 3,976 | |
FY 2,019 | 4,001 | |
FY 2,020 | 3,650 | |
FY 2,021 | 3,391 | |
Thereafter | $ 9,786 | |
Favorable leases | Minimum | ||
Finite lived intangible assets: | ||
Remaining Amortization Life | 1 year | |
Favorable leases | Maximum | ||
Finite lived intangible assets: | ||
Remaining Amortization Life | 13 years | |
Trade name | ||
Indefinite lived intangible assets: | ||
Indefinite-Lived Intangible Assets (Excluding Goodwill), Total | $ 410,000 | $ 410,000 |
Goodwill and Other Intangible43
Goodwill and Other Intangible Assets and Liabilities - Unfavorable Leases (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Jan. 29, 2016USD ($) | Oct. 30, 2015USD ($) | Jan. 29, 2016USD ($)store | Jan. 30, 2015USD ($) | |
Unfavorable leases | ||||
Remaining Amortization Life, minimum | 1 year | 1 year | ||
Remaining Amortization Life, maximum | 14 years | 15 years | ||
Gross Carrying Amount | $ 19,835 | $ 19,835 | $ 19,835 | |
Accumulated Amortization | (14,089) | (14,089) | (11,615) | |
Net Carrying Amount | 5,746 | 5,746 | $ 8,220 | |
Estimated amortization of unfavorable leases: | ||||
FY 2,017 | 1,785 | 1,785 | ||
FY 2,018 | 1,257 | 1,257 | ||
FY 2,019 | 836 | 836 | ||
FY 2,020 | 533 | 533 | ||
FY 2,021 | 335 | 335 | ||
Thereafter | 1,000 | 1,000 | ||
Goodwill impairment | 0 | $ 120,000 | 91,973 | |
Goodwill impairment adjustment | $ 28,000 | |||
Adjusted goodwill impairment | $ 92,000 | |||
Favorable leases | ||||
Estimated amortization of unfavorable leases: | ||||
Impairment charge | $ 600 | |||
Number of stores with impairment charge | store | 1 | |||
Trademarks | ||||
Estimated amortization of unfavorable leases: | ||||
Impairment charge | $ 600 |
Property and Equipment, net (De
Property and Equipment, net (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | |||
Jan. 29, 2016USD ($)store | Oct. 30, 2015store | Jul. 31, 2015USD ($)store | Jan. 29, 2016USD ($)store | Jan. 30, 2015USD ($) | |
Property and equipment | |||||
Total property and equipment | $ 773,217 | $ 773,217 | $ 750,539 | ||
Less: accumulated depreciation and amortization | (230,647) | (230,647) | (169,519) | ||
Property and equipment, net | 542,570 | 542,570 | 581,020 | ||
Estimated fair market value of building under a build-to-suit lease | $ 1,000 | 1,000 | 24,600 | ||
Carrying value of sale-leaseback transactions | $ 7,900 | ||||
Number of retail stores sold and concurrently leased back | store | 2 | 1 | 2 | ||
Land | |||||
Property and equipment | |||||
Total property and equipment | $ 170,871 | 170,871 | 176,506 | ||
Buildings | |||||
Property and equipment | |||||
Total property and equipment | 111,205 | 111,205 | 117,422 | ||
Estimated fair market value of building under a build-to-suit lease | 24,600 | 24,600 | 24,600 | ||
Buildings improvements | |||||
Property and equipment | |||||
Total property and equipment | 74,157 | 74,157 | 71,985 | ||
Land, buildings and building improvements | |||||
Property and equipment | |||||
Carrying value of sale-leaseback transactions | 8,800 | $ 8,800 | |||
Number of retail stores sold and concurrently leased back | store | 2 | ||||
Leasehold improvements | |||||
Property and equipment | |||||
Total property and equipment | 192,405 | $ 192,405 | 176,895 | ||
Fixtures and equipment | |||||
Property and equipment | |||||
Total property and equipment | 194,671 | 194,671 | 148,851 | ||
Transportation equipment | |||||
Property and equipment | |||||
Total property and equipment | 11,835 | 11,835 | 12,685 | ||
Construction in progress | |||||
Property and equipment | |||||
Total property and equipment | $ 18,073 | $ 18,073 | $ 46,195 |
Income Tax Provision - General
Income Tax Provision - General Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 10 Months Ended | 12 Months Ended | |
Jul. 31, 2015 | Jan. 31, 2014 | Jan. 29, 2016 | Jan. 30, 2015 | |
Current: | ||||
Federal | $ (843) | $ (216) | $ (1,289) | |
State | 1,349 | (1,128) | 676 | |
Foreign | 1 | 6 | ||
Current tax | 506 | (1,343) | (607) | |
Deferred: | ||||
Federal and state | $ 31,700 | (28,999) | 33,285 | 4,212 |
Provision (benefit) for income taxes | (28,493) | 31,942 | 3,605 | |
Differences between the provision (benefit) for income taxes and income taxes at the statutory federal income tax rate | ||||
Income taxes at statutory federal rate | (14,342) | (73,275) | 3,187 | |
State income taxes, net of federal income tax effect | (14,479) | 16,533 | 790 | |
Goodwill impairment | 32,191 | |||
Valuation allowance | 49,603 | |||
Effect of permanent differences | 2,137 | 8,009 | 816 | |
Welfare to work, and other job credits | (1,863) | (1,158) | (1,192) | |
Other | 54 | 39 | 4 | |
Provision (benefit) for income taxes | $ (28,493) | $ 31,942 | $ 3,605 | |
Difference between the provision for income taxes and income taxes at the statutory federal income tax rate, tax rate reconciliation | ||||
Difference between the provision (benefit) for income taxes and income taxes at the statutory federal income tax rate | (35.00%) | 35.00% | 35.00% | |
State income taxes, net of federal income tax effect (as a percent) | (35.30%) | (7.90%) | 8.70% | |
Goodwill impairment (as a percent) | (15.40%) | |||
Valuation allowance (as a percent) | (23.70%) | |||
Effect of permanent differences (as a percent) | 5.30% | (3.80%) | 9.00% | |
Welfare to work, and other job credits (as a percent) | (4.60%) | 0.50% | (13.10%) | |
Other (as a percent) | 0.10% | 0.00% | 0.00% | |
Income taxes rate (as a percent) | (69.50%) | (15.30%) | 39.60% | |
DEFERRED TAX ASSETS | ||||
Workers' compensation | $ 32,692 | $ 30,168 | ||
Uniform inventory capitalization | 7,374 | 7,584 | ||
Leases | 3,398 | 4,710 | ||
Stock-based compensation | 1,263 | 1,651 | ||
Net operating loss carry-forwards | 38,165 | 101 | ||
Inventory | 746 | 1,818 | ||
Accrued liabilities | 16,442 | 13,274 | ||
Amortization | 17 | 27 | ||
Debt extinguishment | 4,659 | 5,995 | ||
State taxes | 9,962 | 1,507 | ||
Credits | 28,572 | 24,746 | ||
Other | 3,443 | 3,851 | ||
Total Gross Deferred Tax Assets | 146,733 | 95,432 | ||
Less: Valuation Allowances | 81,760 | |||
Total Net Deferred Tax Assets | 64,973 | 95,432 | ||
DEFERRED TAX LIABILITIES | ||||
Depreciation | (28,782) | (24,192) | ||
Intangibles | (193,999) | (197,016) | ||
Prepaid expenses | (4,177) | (2,690) | ||
Other | (1,060) | (629) | ||
Total Deferred Tax Liabilities | (228,018) | (224,527) | ||
Net Deferred Tax Liabilities | (163,045) | (129,095) | ||
Increase in provision for income tax | $ 31,700 | $ (28,999) | $ 33,285 | $ 4,212 |
Income Tax Provision - Tax Cred
Income Tax Provision - Tax Credit (Details) - USD ($) $ in Thousands | Jan. 29, 2016 | Jan. 30, 2015 | Sep. 28, 2013 |
Credit carry-forward | |||
Accrued unrecognized tax benefits liabilities | $ 0 | $ 0 | |
Accrued interest and penalties related to uncertain tax positions | $ 0 | $ 0 | |
California Enterprise Zone | |||
Credit carry-forward | |||
Tax credit carryforward, amount | $ 11,600 |
Debt (Details)
Debt (Details) - USD ($) $ in Thousands | Apr. 08, 2016 | Aug. 24, 2015 | Oct. 08, 2013 | Apr. 24, 2012 | Apr. 04, 2012 | Jan. 13, 2012 | Jan. 29, 2016 | Jan. 30, 2015 | Dec. 28, 2013 | Jan. 31, 2014 | Jan. 29, 2016 | Jan. 30, 2015 | Apr. 07, 2016 | Dec. 29, 2011 |
Debt | ||||||||||||||
Total debt | $ 893,526 | $ 907,533 | $ 893,526 | $ 907,533 | ||||||||||
Less: current portion | 6,138 | 6,138 | 6,138 | 6,138 | ||||||||||
Long-term debt, net of current portion | 887,388 | 901,395 | 887,388 | 901,395 | ||||||||||
Debt Instruments | ||||||||||||||
Amount borrowed | $ 100,000 | |||||||||||||
Loss on extinguishment of debt | 4,391 | |||||||||||||
Significant components of interest expense | ||||||||||||||
Amortization of deferred financing costs and OID | 3,681 | 4,821 | 4,344 | |||||||||||
Other interest expense | 20 | 2,031 | 297 | |||||||||||
Interest expense | 50,820 | 65,653 | 62,734 | |||||||||||
Scheduled maturities of debt | ||||||||||||||
FY 2,017 | 53,938 | 53,938 | ||||||||||||
FY 2,018 | 6,138 | 6,138 | ||||||||||||
FY 2,019 | 587,724 | 587,724 | ||||||||||||
FY 2,020 | 250,000 | 250,000 | ||||||||||||
Long-term debt, current and non-current | 897,800 | 897,800 | ||||||||||||
Deferred financing costs | ||||||||||||||
Net Amount | 12,461 | 15,463 | 12,461 | 15,463 | ||||||||||
ABL Facility | ||||||||||||||
Debt | ||||||||||||||
Total debt | 47,800 | $ 57,000 | 47,800 | $ 57,000 | ||||||||||
Debt Instruments | ||||||||||||||
Maximum borrowing capacity | 175,000 | 175,000 | ||||||||||||
Increase in borrowing capacity available under certain circumstances | $ 50,000 | $ 50,000 | $ 50,000 | |||||||||||
Weighted average interest rate for borrowings | 2.53% | 1.99% | 2.53% | 1.99% | ||||||||||
Commitment fee on unused commitments (as a percent) | 0.50% | 0.50% | ||||||||||||
Amount outstanding | $ 47,800 | $ 57,000 | $ 47,800 | $ 57,000 | ||||||||||
Outstanding letters of credit | 2,500 | 2,500 | 2,500 | 2,500 | ||||||||||
Amount available | 90,900 | 115,500 | 90,900 | 115,500 | ||||||||||
Significant components of interest expense | ||||||||||||||
Interest debt expense | 759 | 2,446 | 1,360 | |||||||||||
Scheduled maturities of debt | ||||||||||||||
FY 2,017 | 47,800 | 47,800 | ||||||||||||
Deferred financing costs | ||||||||||||||
Net Amount | $ 916 | 1,196 | $ 916 | 1,196 | ||||||||||
ABL Facility | Base rate | ||||||||||||||
Debt Instruments | ||||||||||||||
Description of basis rate use for variable rate | Base Rate | |||||||||||||
Applicable margin (as a percent) | 0.75% | 0.75% | ||||||||||||
ABL Facility | LIBOR | ||||||||||||||
Debt Instruments | ||||||||||||||
Description of basis rate use for variable rate | LIBOR | |||||||||||||
Applicable margin (as a percent) | 1.75% | 1.75% | ||||||||||||
ABL Facility Amended August 2015 | ||||||||||||||
Debt Instruments | ||||||||||||||
Maximum borrowing capacity | $ 185,000 | |||||||||||||
Amendment fees | 500 | |||||||||||||
Amount of increase (decrease) in available credit facility due to amendment | $ 10,000 | |||||||||||||
ABL Facility Amended August 2015 | Minimum | ||||||||||||||
Debt Instruments | ||||||||||||||
Inventory advance rate (as a percent) | 90.00% | |||||||||||||
ABL Facility Amended August 2015 | Maximum | ||||||||||||||
Debt Instruments | ||||||||||||||
Inventory advance rate (as a percent) | 92.50% | |||||||||||||
ABL Facility Amended April 2016 | Subsequent Events | ||||||||||||||
Debt Instruments | ||||||||||||||
Maximum borrowing capacity | $ 160,000 | |||||||||||||
Amendment fees | $ 4,600 | |||||||||||||
Decrease in applicable margin upon refinancing of debt (as a percent) | (0.50%) | |||||||||||||
Maximum borrowing capacity of letters of credit | $ 45,000 | $ 50,000 | ||||||||||||
Amount of increase (decrease) in available credit facility due to amendment | $ (25,000) | |||||||||||||
Maturity period prior to First Lien Term Loan Facility maturity date | 90 days | |||||||||||||
Maturity period prior to Senior Notes maturity date | 90 days | |||||||||||||
Minimum period after the maturity date of the credit facility that other refinanced debt obligations maturity date must exceed | 180 days | |||||||||||||
ABL Facility Amended April 2016 | Subsequent Events | Revolving Credit Facility | ||||||||||||||
Debt Instruments | ||||||||||||||
Increase in borrowing capacity available under certain circumstances | $ 25,000 | |||||||||||||
ABL Facility Amended April 2016 | Base rate | Subsequent Events | ||||||||||||||
Debt Instruments | ||||||||||||||
Applicable margin (as a percent) | 2.00% | |||||||||||||
ABL Facility Amended April 2016 | Eurocurrency loan | Subsequent Events | ||||||||||||||
Debt Instruments | ||||||||||||||
Applicable margin (as a percent) | 3.00% | |||||||||||||
First Lien Term Loan Facility | ||||||||||||||
Debt | ||||||||||||||
Total debt | $ 595,726 | 600,533 | $ 595,726 | 600,533 | ||||||||||
Scheduled quarterly payments | 1,535 | |||||||||||||
Unamortized OID | $ 4,724 | $ 5,606 | $ 4,724 | $ 5,606 | ||||||||||
Debt Instruments | ||||||||||||||
Amount borrowed | $ 525,000 | |||||||||||||
Refinancing costs | $ 11,200 | |||||||||||||
Interest rate at the end of the period (as a percent) | 4.50% | 4.50% | 4.50% | 4.50% | ||||||||||
Percentage of excess cash flow to be used for prepayment of debt | 50.00% | |||||||||||||
Stepdown percentage one of excess cash flow to be used for prepayment of debt | 25.00% | |||||||||||||
Stepdown percentage two of excess cash flow to be used for prepayment of debt (as a percent) | 0.00% | |||||||||||||
Excess cash flow payment required | 0 | $ 0 | $ 0 | |||||||||||
Ownership percentage in subsidiary | 100.00% | 100.00% | ||||||||||||
Scheduled quarterly payments as a percentage of original principal amount | 0.25% | |||||||||||||
Significant components of interest expense | ||||||||||||||
Interest debt expense | 23,367 | $ 28,855 | 29,233 | |||||||||||
Deferred financing costs | ||||||||||||||
Net Amount | $ 4,387 | $ 5,754 | $ 4,387 | $ 5,754 | ||||||||||
First Lien Term Loan Facility | Base rate | ||||||||||||||
Debt Instruments | ||||||||||||||
Applicable margin (as a percent) | 2.50% | 3.00% | 4.50% | |||||||||||
Description of basis rate use for variable rate | Base Rate | Base Rate | Base Rate | Base Rate | ||||||||||
First Lien Term Loan Facility | Federal funds rate | ||||||||||||||
Debt Instruments | ||||||||||||||
Description of basis rate use for variable rate | federal funds | |||||||||||||
Applicable margin (as a percent) | 0.50% | 0.50% | ||||||||||||
First Lien Term Loan Facility | One month adjusted Eurocurrency rate | ||||||||||||||
Debt Instruments | ||||||||||||||
Description of basis rate use for variable rate | adjusted Eurocurrency rate for one month | |||||||||||||
Applicable margin (as a percent) | 1.00% | 1.00% | ||||||||||||
First Lien Term Loan Facility | Adjusted Eurocurrency Rate | ||||||||||||||
Debt Instruments | ||||||||||||||
Description of basis rate use for variable rate | a Eurocurrency rate determined by reference to the London Interbank Offered Rate ("LIBOR") | |||||||||||||
First Lien Term Loan Facility | LIBOR | ||||||||||||||
Debt Instruments | ||||||||||||||
Applicable margin (as a percent) | 3.50% | 4.00% | 5.50% | |||||||||||
Interest rate, variable interest rate floor (as a percent) | 1.00% | 1.25% | 1.50% | |||||||||||
Description of basis rate use for variable rate | LIBOR | LIBOR | LIBOR | LIBOR | ||||||||||
First Lien Term Loan Facility | Prime rate | ||||||||||||||
Debt Instruments | ||||||||||||||
Variable rate (as a percent) | 3.50% | |||||||||||||
Description of basis rate use for variable rate | Prime Rate | |||||||||||||
Eurocurrency loans | Eurocurrency loan | ||||||||||||||
Debt Instruments | ||||||||||||||
Variable rate at the end of the period (as a percent) | 1.00% | 1.00% | 1.00% | 1.00% | ||||||||||
Applicable margin at the end of the period (as a percent) | 3.50% | 3.50% | 3.50% | 3.50% | ||||||||||
Senior Notes | ||||||||||||||
Debt | ||||||||||||||
Total debt | $ 250,000 | $ 250,000 | $ 250,000 | $ 250,000 | $ 250,000 | |||||||||
Debt Instruments | ||||||||||||||
Interest rate (as a percent) | 11.00% | |||||||||||||
Significant components of interest expense | ||||||||||||||
Interest debt expense | 22,993 | 27,500 | 27,500 | |||||||||||
Deferred financing costs | ||||||||||||||
Net Amount | $ 7,158 | $ 8,513 | $ 7,158 | $ 8,513 | ||||||||||
First Lien Term Loan Facility Amended April 2012 | ||||||||||||||
Debt Instruments | ||||||||||||||
Loss on extinguishment of debt | $ 4,400 | |||||||||||||
Additional Deferred debt issuance costs | $ 1,600 | |||||||||||||
First Lien Term Loan Facility Amended October 2013 | ||||||||||||||
Debt | ||||||||||||||
Scheduled quarterly payments | $ 1,500 | |||||||||||||
Debt Instruments | ||||||||||||||
Amount borrowed | $ 100,000 | |||||||||||||
Percentage of positive consolidated net income to determine a restricted payment under terms of debt instruments | 50.00% | |||||||||||||
Percentage of negative consolidated net income to determine a restricted payment under terms of debt instruments | 100.00% | |||||||||||||
Amount used to determine dividend and other payments | $ 20,000 | |||||||||||||
Scheduled quarterly payments as a percentage of amended principal amount | 0.25% |
Derivative Financial Instrume48
Derivative Financial Instruments (Details) - USD ($) $ in Thousands | 10 Months Ended | 12 Months Ended | ||
Jan. 31, 2014 | Jan. 29, 2016 | Jan. 30, 2015 | May. 31, 2012 | |
Derivatives not designated as hedging instruments | Chief Executive Officer | ||||
Derivative Financial Instruments | ||||
Payment period | 4 years | |||
Derivatives not designated as hedging instruments | Maximum | Chief Executive Officer | ||||
Fair Value | ||||
Derivative liabilities | $ 5,000 | |||
Derivatives not designated as hedging instruments | Selling, general and administrative expenses | ||||
Recorded amounts included in the consolidated statements of comprehensive income (loss) | ||||
Loss recognized | 1,445 | |||
Derivatives designated as cash flow hedging instruments | OCI | ||||
Recorded amounts included in the consolidated statements of comprehensive income (loss) | ||||
Loss related to effective portion of derivative recognized in OCI | $ 284 | 152 | $ 576 | |
Derivatives designated as cash flow hedging instruments | Interest expense. | ||||
Recorded amounts included in the consolidated statements of comprehensive income (loss) | ||||
Loss related to effective portion of derivatives reclassified from AOCI to interest expense | 145 | 988 | 969 | |
(Gain) loss related to ineffective portion of derivative recognized in interest expense | $ (150) | $ (244) | (112) | |
Interest Rate Swap | Derivatives designated as cash flow hedging instruments | ||||
Derivative Financial Instruments | ||||
Aggregate notional amount | $ 261,800 | |||
Effective fixed interest rate (as a percent) | 1.36% | |||
Applicable margin (as a percent) | 3.50% | |||
Interest Rate Swap | Derivatives designated as cash flow hedging instruments | other current liabilities | ||||
Fair Value | ||||
Derivative liabilities | $ 569 | 1,591 | ||
Interest Rate Swap | Derivatives designated as cash flow hedging instruments | other liabilities | ||||
Fair Value | ||||
Derivative liabilities | 596 | |||
Interest Rate Swap | Derivatives designated as cash flow hedging instruments | Accumulated Other Comprehensive Income (Loss) | ||||
Fair Value | ||||
Derivative liabilities | 162 | $ 998 | ||
Transition Payments | Derivatives not designated as hedging instruments | other current liabilities | ||||
Fair Value | ||||
Derivative liabilities | 1,033 | |||
Transition Payments | Derivatives not designated as hedging instruments | other liabilities | ||||
Fair Value | ||||
Derivative liabilities | $ 172 |
Fair Value of Financial Instr49
Fair Value of Financial Instruments - Fair Value Hierarchy (Details) - USD ($) $ in Thousands | Jan. 29, 2016 | Jan. 30, 2015 |
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability, Transfers, Net [Abstract] | ||
Transfer of assets from level 1 to 2 | $ 0 | $ 0 |
Transfer of assets from level 2 to 1 | 0 | 0 |
Transfer of liabilities from level 1 to 2 | 0 | 0 |
Transfer of liabilities from level 2 to 1 | 0 | 0 |
Fair value measurements on a recurring basis | ||
ASSETS | ||
Other assets - assets that fund deferred compensation | 709 | 724 |
LIABILITIES | ||
Other long-term liabilities - deferred compensation | 709 | 724 |
Fair value measurements on a recurring basis | Interest Rate Swap | ||
LIABILITIES | ||
Other current liabilities | 569 | 1,591 |
Other long-term liabilities | 596 | |
Fair value measurements on a recurring basis | Transition Payments | ||
LIABILITIES | ||
Other current liabilities | 1,033 | |
Other long-term liabilities | 172 | |
Fair value measurements on a recurring basis | Level 1 | ||
ASSETS | ||
Other assets - assets that fund deferred compensation | 709 | 724 |
LIABILITIES | ||
Other long-term liabilities - deferred compensation | 709 | 724 |
Fair value measurements on a recurring basis | Level 2 | Interest Rate Swap | ||
LIABILITIES | ||
Other current liabilities | 569 | 1,591 |
Other long-term liabilities | 596 | |
Fair value measurements on a recurring basis | Level 3 | ||
Fair value of financial instruments | ||
Assets | 0 | |
Liabilities | $ 0 | |
Fair value measurements on a recurring basis | Level 3 | Transition Payments | ||
LIABILITIES | ||
Other current liabilities | 1,033 | |
Other long-term liabilities | $ 172 |
Fair Value of Financial Instr50
Fair Value of Financial Instruments - Changes in Level 3 Instruments (Details) $ in Thousands | 12 Months Ended |
Jan. 29, 2016USD ($) | |
Total realized/unrealized gains (loss): | |
Included in earnings | $ (1,445) |
Purchases, redemptions and settlements: | |
Settlements | 240 |
Ending balance | (1,205) |
Unrealized gains (losses) included in other comprehensive loss | |
Total amount of unrealized gains (losses) for the period included in earnings relating to liabilities held at the reporting period | $ (1,205) |
Fair Value of Financial Instr51
Fair Value of Financial Instruments - Fair Value of Debt (Details) - Level 1 - USD ($) $ in Millions | 12 Months Ended | |
Jan. 29, 2016 | Jan. 30, 2015 | |
Senior Notes | ||
Fair value of financial instruments | ||
Estimated fair value of debt instrument | $ 103.1 | $ 264.7 |
Fair value adjustment to liability incurred or settled | (146.9) | $ 14.7 |
First Lien Term Loan Facility | ||
Fair value of financial instruments | ||
Estimated fair value of debt instrument | 393 | |
Fair value adjustment to liability incurred or settled | $ (207) |
Fair Value of Financial Instr52
Fair Value of Financial Instruments - Assets and Liabilities Measured at Fair Value Nonrecurring Basis (Details) $ in Thousands | 3 Months Ended | 10 Months Ended | 12 Months Ended | ||
Jan. 29, 2016USD ($)store | Oct. 30, 2015USD ($) | Jan. 31, 2014USD ($) | Jan. 29, 2016USD ($)store | Jan. 30, 2015USD ($) | |
Fair Value of Financial Instruments | |||||
Carrying value of land held for sale | $ 1,500 | ||||
Assets and liabilities that are measured at fair value on a nonrecurring basis | |||||
Goodwill impairment | $ 0 | $ 120,000 | $ 91,973 | ||
Asset impairment | $ 0 | 2,171 | 149 | ||
Fair value of assets after impairment | 300 | 300 | |||
Trademarks | |||||
Assets and liabilities that are measured at fair value on a nonrecurring basis | |||||
Impairment charge | 600 | ||||
Fixtures and equipment | |||||
Assets and liabilities that are measured at fair value on a nonrecurring basis | |||||
Asset impairment | 200 | ||||
Fair value of assets after impairment | $ 0 | 0 | |||
Stores | |||||
Assets and liabilities that are measured at fair value on a nonrecurring basis | |||||
Asset impairment | $ 800 | 100 | |||
Nonrecurring | |||||
Assets and liabilities that are measured at fair value on a nonrecurring basis | |||||
Fair value of assets after impairment | $ 1,400 | ||||
Texas | |||||
Assets and liabilities that are measured at fair value on a nonrecurring basis | |||||
Number of stores in underperformance | store | 2 | 2 | |||
California | |||||
Assets and liabilities that are measured at fair value on a nonrecurring basis | |||||
Number of stores in underperformance | store | 1 | 1 |
Related-Party Transactions (Det
Related-Party Transactions (Details) $ in Thousands | Oct. 21, 2013USD ($) | Oct. 08, 2013USD ($) | Mar. 31, 2015USD ($) | Jul. 31, 2014USD ($) | Apr. 30, 2014USD ($)shares | Oct. 31, 2013USD ($)shares | Sep. 30, 2013USD ($)shares | Jan. 31, 2014USD ($) | Jan. 29, 2016USD ($)item | Jan. 30, 2015USD ($) |
Related-Party Transactions | ||||||||||
Proceeds from Issuance of Debt | $ 100,000 | |||||||||
Distribution made | 95,512 | |||||||||
Investment in shares of preferred stock | 19,200 | |||||||||
Management Services Agreements | ||||||||||
Related-Party Transactions | ||||||||||
Reimbursement of expenses by entity and its parent to affiliates of the sponsors | $ 400 | $ 0 | ||||||||
Management services expense | 0 | 0 | ||||||||
Number Holdings, Inc. | ||||||||||
Related-Party Transactions | ||||||||||
Distribution made | $ 95,500 | |||||||||
Investment in shares of preferred stock | 19,200 | |||||||||
Number Holdings, Inc. | Stockholders' agreement | ||||||||||
Related-Party Transactions | ||||||||||
Threshold amount of additional indebtedness for which approval of majority of directors required | 20,000 | |||||||||
Threshold amount of issuance or sale of capital stock for which approval of majority of directors required | 20,000 | |||||||||
Threshold fair value of assets for sale or transfer or acquisition for which approval of majority of directors required | 20,000 | |||||||||
Maximum | Management Services Agreements | ||||||||||
Related-Party Transactions | ||||||||||
Reimbursement of expenses by entity and its parent to affiliates of the sponsors | $ 100 | |||||||||
First Lien Term Loan Facility Amended October 2013 | ||||||||||
Related-Party Transactions | ||||||||||
Proceeds from Issuance of Debt | $ 100,000 | |||||||||
Ares Corporate Opportunities Fund III LP and Canada Pension Plan Investment Board | Senior Notes | ||||||||||
Related-Party Transactions | ||||||||||
Debt owned by affiliate | $ 102,100 | |||||||||
Ares | Number Holdings, Inc. | Stockholders' agreement | ||||||||||
Related-Party Transactions | ||||||||||
Right to designate number of members in parent's board of directors | item | 4 | |||||||||
Ares | Minimum | Number Holdings, Inc. | Stockholders' agreement | ||||||||||
Related-Party Transactions | ||||||||||
Number of director's approval required for significant corporate actions | item | 1 | |||||||||
Ares | Maximum | Number Holdings, Inc. | Stockholders' agreement | ||||||||||
Related-Party Transactions | ||||||||||
Right to designate number of independent members in parent's board of directors, subject to approval of affiliate | item | 3 | |||||||||
Ares | First Lien Term Loan Facility Amended October 2013 | ||||||||||
Related-Party Transactions | ||||||||||
Amount borrowed | $ 0 | $ 1,400 | ||||||||
Mr. Kvitko | Number Holdings, Inc. | Class B Common Stock | ||||||||||
Related-Party Transactions | ||||||||||
Payment made for repurchase of options | $ 400 | |||||||||
Mr. Rick Anicetti | Number Holdings, Inc. | Stock Purchase Agreement | ||||||||||
Related-Party Transactions | ||||||||||
Aggregate purchase price | $ 500 | |||||||||
Mr. Rick Anicetti | Number Holdings, Inc. | Stock Purchase Agreement | Class A Common Stock | ||||||||||
Related-Party Transactions | ||||||||||
Number of shares issued | shares | 354 | |||||||||
Mr. Rick Anicetti | Number Holdings, Inc. | Stock Purchase Agreement | Class B Common Stock | ||||||||||
Related-Party Transactions | ||||||||||
Number of shares issued | shares | 354 | |||||||||
Mr. Michael Fung | Number Holdings, Inc. | Stock Purchase Agreement | ||||||||||
Related-Party Transactions | ||||||||||
Aggregate purchase price | $ 400 | |||||||||
Mr. Michael Fung | Number Holdings, Inc. | Stock Purchase Agreement | Class A Common Stock | ||||||||||
Related-Party Transactions | ||||||||||
Number of shares issued | shares | 310 | |||||||||
Mr. Michael Fung | Number Holdings, Inc. | Stock Purchase Agreement | Class B Common Stock | ||||||||||
Related-Party Transactions | ||||||||||
Number of shares issued | shares | 310 | |||||||||
Mr. Frank School | Number Holdings, Inc. | ||||||||||
Related-Party Transactions | ||||||||||
Payment made for repurchase of options | $ 200 | |||||||||
Andrew Giancamilli | Number Holdings, Inc. | Stock Purchase Agreement | ||||||||||
Related-Party Transactions | ||||||||||
Aggregate purchase price | $ 500 | |||||||||
Andrew Giancamilli | Number Holdings, Inc. | Stock Purchase Agreement | Class A Common Stock | ||||||||||
Related-Party Transactions | ||||||||||
Number of shares issued | shares | 410 | |||||||||
Andrew Giancamilli | Number Holdings, Inc. | Stock Purchase Agreement | Class B Common Stock | ||||||||||
Related-Party Transactions | ||||||||||
Number of shares issued | shares | 410 | |||||||||
CPPIB | Number Holdings, Inc. | Stockholders' agreement | ||||||||||
Related-Party Transactions | ||||||||||
Right to designate number of members in parent's board of directors | item | 2 | |||||||||
CPPIB | Number Holdings, Inc. | Stockholders' agreement | Class A Common Stock | ||||||||||
Related-Party Transactions | ||||||||||
Minimum beneficial ownership percentage considered to designate members in parent's board of directors | 15.00% | |||||||||
CPPIB | Minimum | Number Holdings, Inc. | Stock Purchase Agreement | ||||||||||
Related-Party Transactions | ||||||||||
Number of director's approval required for significant corporate actions | item | 1 | |||||||||
The Rollover Investors | Number Holdings, Inc. | ||||||||||
Related-Party Transactions | ||||||||||
Aggregate consideration paid by parent for shares | 129,700 | |||||||||
Payment made for repurchase of options | $ 7,800 | |||||||||
Mr. Gonthier | Number Holdings, Inc. | Stock Purchase Agreement | ||||||||||
Related-Party Transactions | ||||||||||
Aggregate purchase price | $ 6,000 | |||||||||
Mr. Gonthier | Number Holdings, Inc. | Stock Purchase Agreement | Class A Common Stock | ||||||||||
Related-Party Transactions | ||||||||||
Number of shares issued | shares | 4,922 | |||||||||
Mr. Gonthier | Number Holdings, Inc. | Stock Purchase Agreement | Class B Common Stock | ||||||||||
Related-Party Transactions | ||||||||||
Number of shares issued | shares | 4,922 |
Commitments and Contingencies -
Commitments and Contingencies - Lease Commitments (Details) $ in Thousands | 10 Months Ended | 12 Months Ended | |
Jan. 31, 2014USD ($) | Jan. 29, 2016USD ($)storeitem | Jan. 30, 2015USD ($) | |
Commitments and Contingencies | |||
Number of locations classified as a capital lease | item | 1 | ||
Number of location classified as financing lease | item | 4 | ||
Rental expenses (including property taxes, maintenance and insurance) | $ 60,800 | $ 97,500 | $ 85,500 |
Payments of percentage rent on operating leases | 200 | 300 | 300 |
Sub-lease income earned | $ 400 | 400 | 500 |
Operating leases | |||
2,017 | 75,631 | ||
2,018 | 68,994 | ||
2,019 | 63,031 | ||
2,020 | 54,404 | ||
2,021 | 44,655 | ||
Thereafter | 175,434 | ||
Future minimum lease payments | 482,149 | ||
Financing lease | |||
2,017 | 2,661 | ||
2,018 | 2,811 | ||
2,019 | 2,679 | ||
2,020 | 2,842 | ||
2,021 | 3,391 | ||
Thereafter | 34,274 | ||
Future minimum lease payments | 48,658 | ||
Less amount representing interest | (21,809) | ||
Unamortized balance of financing obligations at end of lease term | 8,855 | ||
Total financing obligations | 35,704 | ||
Capital lease | |||
2,017 | 106 | ||
Future minimum lease payments | 106 | ||
Less amount representing interest | (4) | ||
Total capital obligations | 102 | ||
Future Minimum Sub-lease Income | |||
2,017 | 297 | ||
2,018 | 183 | ||
2,019 | 187 | ||
2,020 | 62 | ||
Future minimum lease payments | 729 | ||
Gross asset amount recorded under capital lease | 300 | 300 | |
Accumulated depreciation | $ 300 | $ 200 | |
Number of leases related to sale and and leaseback transaction | item | 2 | ||
Number of stores recorded as a finance lease obligation and related construction in progress | store | 1 |
Commitments and Contingencies55
Commitments and Contingencies - Self-Insured Health Insurance and Legal Matters (Details) - USD ($) | Jun. 29, 2015 | Jan. 29, 2016 | Jan. 31, 2014 | Jan. 29, 2016 | Jan. 30, 2015 |
Commitments and contingencies | |||||
Estimated fair market value of property | $ 1,000,000 | $ 1,000,000 | $ 24,600,000 | ||
Non-current liabilities | 600,000 | 600,000 | |||
Current and non-current liabilities | 24,900,000 | ||||
Changes in the reserves for Workers' Compensation | |||||
Balance at the beginning of the period | 70,491,000 | ||||
Balance at the end of the period | 76,389,000 | 76,389,000 | 70,491,000 | ||
Wage and Hour Matters | Shelley Pickett v. 99 Cents Only Stores | Minimum | |||||
Changes in the reserves for Health Insurance | |||||
Civil penalties per violation, per each pay period for each affected employee | 100 | 100 | |||
Wage and Hour Matters | Shelley Pickett v. 99 Cents Only Stores | Maximum | |||||
Changes in the reserves for Health Insurance | |||||
Civil penalties per violation, per each pay period for each affected employee | 200 | 200 | |||
Workers' Compensation | |||||
Changes in the reserves for Workers' Compensation | |||||
Balance at the beginning of the period | $ 39,498,000 | 70,491,000 | 73,918,000 | ||
Claims Payments | (19,850,000) | (29,740,000) | (29,105,000) | ||
Reserve Accruals | 7,200,000 | 54,270,000 | 35,638,000 | 25,678,000 | |
Balance at the end of the period | 76,389,000 | 73,918,000 | 76,389,000 | 70,491,000 | |
Health Insurance | |||||
Changes in the reserves for Health Insurance | |||||
Balance at the beginning of the period | 516,000 | 457,000 | 600,000 | ||
Claims Payments | (5,624,000) | (6,081,000) | (6,664,000) | ||
Reserve Accruals | 5,708,000 | 6,047,000 | 6,521,000 | ||
Balance at the end of the period | 423,000 | $ 600,000 | 423,000 | 457,000 | |
Environmental Matters | |||||
Changes in the reserves for Health Insurance | |||||
Amount demanded by District Attorney | $ 187,500 | ||||
Texas | Workers' Compensation | Maximum | |||||
Changes in the reserves for Workers' Compensation | |||||
Balance at the beginning of the period | 100,000 | ||||
Balance at the end of the period | 100,000 | 100,000 | 100,000 | ||
California | Workers' Compensation | |||||
Changes in the reserves for Workers' Compensation | |||||
Balance at the beginning of the period | 70,400,000 | ||||
Balance at the end of the period | $ 76,300,000 | $ 76,300,000 | $ 70,400,000 |
Stock-Based Compensation Plan56
Stock-Based Compensation Plans (Details) $ / shares in Units, $ in Thousands | May. 25, 2015 | Jan. 31, 2014USD ($) | Oct. 09, 2013shares | Oct. 02, 2015item$ / sharesshares | Jan. 29, 2016$ / sharesshares | May. 01, 2015$ / sharesshares | Sep. 28, 2013USD ($) | Jan. 31, 2014USD ($)$ / sharesshares | Jan. 29, 2016USD ($)$ / sharesshares | Jan. 30, 2015USD ($)$ / sharesshares | Mar. 30, 2013USD ($) | Jan. 29, 2016USD ($)$ / sharesshares | Feb. 27, 2012shares |
Stock-based compensation | |||||||||||||
Options granted (in shares) | 57,050 | ||||||||||||
Stock-Based Compensation | |||||||||||||
Stock-based compensation | $ | $ (4,766) | $ 1,538 | $ 2,846 | ||||||||||
Income tax (charge) benefit | $ | (3,900) | $ (200) | $ 1,100 | ||||||||||
Number of Shares | |||||||||||||
Granted (in shares) | 57,050 | ||||||||||||
Cancelled (in shares) | (34,935) | ||||||||||||
Stock awards available for grant under the 2012 Plan | |||||||||||||
Available for grant at the beginning of the period (in shares) | 36,840 | 36,840 | |||||||||||
Granted (in shares) | (57,050) | ||||||||||||
Cancelled (in shares) | 34,935 | ||||||||||||
Available for grant at the end of the period (in shares) | 14,725 | 14,725 | 36,840 | ||||||||||
President and Chief Executive Officer | |||||||||||||
Stock awards available for grant under the 2012 Plan | |||||||||||||
Exercise price of options (in dollars per share) | $ / shares | $ 750 | ||||||||||||
Fair value base for exercise price adjustment (in dollars per share) | $ / shares | $ 1,000 | ||||||||||||
Class A Common Stock | 2012 Plan | Number Holdings, Inc. | |||||||||||||
Stock-based compensation | |||||||||||||
Number of shares authorized under the plan | 85,000 | ||||||||||||
Class B Common Stock | 2012 Plan | Number Holdings, Inc. | |||||||||||||
Stock-based compensation | |||||||||||||
Number of shares authorized under the plan | 85,000 | ||||||||||||
Employee Option Grants | |||||||||||||
Stock-based compensation | |||||||||||||
Expiration term | 10 years | ||||||||||||
Options outstanding (in shares) | 23,085 | 23,085 | 23,085 | ||||||||||
Number of Shares | |||||||||||||
Outstanding at the end of the period (in shares) | 23,085 | 23,085 | |||||||||||
Employee Option Grants | Minimum | |||||||||||||
Stock-based compensation | |||||||||||||
Vesting period | 4 years | ||||||||||||
Employee Option Grants | Maximum | |||||||||||||
Stock-based compensation | |||||||||||||
Vesting period | 5 years | ||||||||||||
Employee Option Grants | Number Holdings, Inc. | |||||||||||||
Stock-based compensation | |||||||||||||
Options granted (in shares) | 57,050 | ||||||||||||
Options outstanding (in shares) | 69,585 | 48,130 | 48,130 | 48,130 | 69,585 | ||||||||
Fair value of awards vested | $ | $ 400 | $ 4,000 | $ 3,800 | ||||||||||
Stock-Based Compensation | |||||||||||||
Stock-based compensation | $ | $ 0 | ||||||||||||
Assumptions made for estimating the fair value of stock options at the date of grant using the Black-Scholes pricing model | |||||||||||||
Weighted-average fair value of options granted (in dollars per share) | $ / shares | $ 486.95 | $ 373.35 | $ 506.47 | ||||||||||
Risk free interest rate (as a percent) | 1.78% | 1.92% | 2.12% | ||||||||||
Expected life (in years) | 6 years 3 months 11 days | 6 years 7 months 13 days | 6 years 5 months 23 days | ||||||||||
Expected stock price volatility (as a percent) | 39.20% | 42.10% | 35.00% | ||||||||||
Expected dividend yield (as a percent) | 0.00% | 0.00% | 0.00% | ||||||||||
Share-based compensation costs, additional disclosure | |||||||||||||
Total unrecognized compensation cost related to non-vested options | $ | $ 19,100 | ||||||||||||
Vested (in shares) | 1,139 | 8,623 | 8,226 | ||||||||||
Aggregate pre-tax intrinsic value of options exercised | $ | $ 100 | ||||||||||||
Exercised (in shares) | 0 | 660 | |||||||||||
Number of Shares | |||||||||||||
Options outstanding at the beginning of the period (in shares) | 48,130 | 48,130 | |||||||||||
Granted (in shares) | 57,050 | ||||||||||||
Exercised (in shares) | 0 | (660) | |||||||||||
Cancelled (in shares) | (34,935) | ||||||||||||
Outstanding at the end of the period (in shares) | 69,585 | 69,585 | 48,130 | ||||||||||
Exercisable at the end of the period (in shares) | 7,441 | ||||||||||||
Exercisable and expected to vest at the end of the period (in shares) | 41,896 | ||||||||||||
Weighted Average Exercise Price | |||||||||||||
Options outstanding at the beginning of the period (in dollars per share) | $ / shares | $ 1,171 | $ 1,171 | |||||||||||
Granted (in dollars per share) | $ / shares | 876 | ||||||||||||
Exercised (in dollars per share) | $ / shares | 1,000 | ||||||||||||
Cancelled (in dollars per share) | $ / shares | 1,213 | ||||||||||||
Outstanding at the end of the period (in dollars per share) | $ / shares | $ 910 | $ 910 | $ 1,171 | ||||||||||
Exercisable at the end of the period (in dollars per share) | $ / shares | $ 1,076 | ||||||||||||
Exercisable and expected to vest at the end of the period (in dollars per share) | $ / shares | 928 | ||||||||||||
Weighted Average Remaining Contractual Life | |||||||||||||
Outstanding at the end of the period | 9 years 1 month 6 days | ||||||||||||
Exercisable at the end of the period | 6 years 9 months 18 days | ||||||||||||
Exercisable and expected to vest at the end of the period | 8 years 8 months 12 days | ||||||||||||
Stock awards available for grant under the 2012 Plan | |||||||||||||
Granted (in shares) | (57,050) | ||||||||||||
Cancelled (in shares) | 34,935 | ||||||||||||
Employee Option Grants | Number Holdings, Inc. | Maximum | |||||||||||||
Share-based compensation costs, additional disclosure | |||||||||||||
Aggregate pre-tax intrinsic value of options exercised | $ | $ 100 | ||||||||||||
Employee Option Grants | Brad Lukow | Options vesting on the achievement of performance | |||||||||||||
Stock-based compensation | |||||||||||||
Options granted (in shares) | 1,250 | ||||||||||||
Number of Shares | |||||||||||||
Granted (in shares) | 1,250 | ||||||||||||
Stock awards available for grant under the 2012 Plan | |||||||||||||
Granted (in shares) | (1,250) | ||||||||||||
Employee Option Grants | Chief Merchandising Officer Member | Options vesting on the achievement of performance | |||||||||||||
Stock-based compensation | |||||||||||||
Options granted (in shares) | 5,000 | ||||||||||||
Number of Shares | |||||||||||||
Granted (in shares) | 5,000 | ||||||||||||
Stock awards available for grant under the 2012 Plan | |||||||||||||
Granted (in shares) | (5,000) | ||||||||||||
Employee Option Grants | Board Members | |||||||||||||
Stock-based compensation | |||||||||||||
Expiration term | 10 years | ||||||||||||
Employee Option Grants | Board Members | Tranche One Member | |||||||||||||
Stock-based compensation | |||||||||||||
Vesting period | 3 years | ||||||||||||
Employee Option Grants | Board Members | Tranche Two Member | |||||||||||||
Stock-based compensation | |||||||||||||
Vesting period | 4 years | ||||||||||||
Employee Option Grants | Board Members | Tranche Three Member | |||||||||||||
Stock-based compensation | |||||||||||||
Vesting period | 5 years | ||||||||||||
Employee Option Grants | Felicia Thornton | Time-based service options | |||||||||||||
Stock-based compensation | |||||||||||||
Vesting percentage | 50.00% | ||||||||||||
Employee Option Grants | Felicia Thornton | Options vesting on the achievement of performance | |||||||||||||
Stock-based compensation | |||||||||||||
Vesting percentage | 50.00% | ||||||||||||
Employee Option Grants | Felicia Thornton | Number Holdings, Inc. | Time-based service options | |||||||||||||
Stock-based compensation | |||||||||||||
Vesting period | 4 years | ||||||||||||
Employee Option Grants | Stephane Gonthier | Time-based service options | |||||||||||||
Stock-based compensation | |||||||||||||
Vesting period | 4 years | ||||||||||||
Percentage of options that vested based on time-based service | 20.00% | ||||||||||||
Employee Option Grants | Stephane Gonthier | Number Holdings, Inc. | Time-based service options | |||||||||||||
Stock-based compensation | |||||||||||||
Percentage of options that vested based on time-based service | 75.00% | ||||||||||||
Employee Option Grants | Stephane Gonthier | Number Holdings, Inc. | Time-based service awards vesting on the first anniversary | |||||||||||||
Stock-based compensation | |||||||||||||
Vesting percentage | 30.00% | ||||||||||||
Employee Option Grants | Stephane Gonthier | Number Holdings, Inc. | Time-based service awards vesting on the second anniversary | |||||||||||||
Stock-based compensation | |||||||||||||
Vesting percentage | 20.00% | ||||||||||||
Employee Option Grants | Stephane Gonthier | Number Holdings, Inc. | Time-based service awards vesting on the third anniversary | |||||||||||||
Stock-based compensation | |||||||||||||
Vesting percentage | 25.00% | ||||||||||||
Employee Option Grants | Stephane Gonthier | Number Holdings, Inc. | Time-based service awards vesting on the fourth anniversary | |||||||||||||
Stock-based compensation | |||||||||||||
Vesting percentage | 25.00% | ||||||||||||
Employee Option Grants | Stephane Gonthier | Number Holdings, Inc. | Options vesting on the achievement of performance | |||||||||||||
Stock-based compensation | |||||||||||||
Vesting percentage | 25.00% | ||||||||||||
Employee Option Grants | 2012 Plan | Number Holdings, Inc. | |||||||||||||
Stock-based compensation | |||||||||||||
Period of rights repurchases after the date of participant's termination of employment | 180 days | ||||||||||||
Period of rights repurchases from the latest date that an option can be exercised | 90 days | ||||||||||||
Employee Option Grants | 2012 Plan | Chief Executive Officer | |||||||||||||
Stock awards available for grant under the 2012 Plan | |||||||||||||
Number of grants issued | item | 2 | ||||||||||||
Employee Option Grants | Class A and Class B Common Stock | Management and Directors | Number Holdings, Inc. | |||||||||||||
Stock-based compensation | |||||||||||||
Options granted (in shares) | 69,585 | ||||||||||||
Number of Shares | |||||||||||||
Granted (in shares) | 69,585 | ||||||||||||
Stock awards available for grant under the 2012 Plan | |||||||||||||
Granted (in shares) | (69,585) | ||||||||||||
Employee Option Grants | Class A and Class B Common Stock | Felicia Thornton | Number Holdings, Inc. | |||||||||||||
Stock-based compensation | |||||||||||||
Options granted (in shares) | 10,000 | ||||||||||||
Number of Shares | |||||||||||||
Granted (in shares) | 10,000 | ||||||||||||
Stock awards available for grant under the 2012 Plan | |||||||||||||
Granted (in shares) | (10,000) | ||||||||||||
Employee Option Grants | Class A and Class B Common Stock | Stephane Gonthier | Number Holdings, Inc. | |||||||||||||
Stock-based compensation | |||||||||||||
Options granted (in shares) | 21,505 | ||||||||||||
Number of Shares | |||||||||||||
Granted (in shares) | 21,505 | ||||||||||||
Stock awards available for grant under the 2012 Plan | |||||||||||||
Granted (in shares) | (21,505) | ||||||||||||
Employee Option Grants | Class A and Class B Common Stock | 2012 Plan | Chief Executive Officer | Options vesting on the achievement of performance | |||||||||||||
Stock awards available for grant under the 2012 Plan | |||||||||||||
Exercise price of options (in dollars per share) | $ / shares | 1,000 | ||||||||||||
Former Executive Put Rights | |||||||||||||
Stock-based compensation | |||||||||||||
Fair value of awards vested | $ | $ 0 | $ 1,200 | $ 6,500 | ||||||||||
Former Executive Put Rights | Number Holdings, Inc. | |||||||||||||
Stock-based compensation | |||||||||||||
Maximum put right extended exercise period, if exercising the put right is prohibited | 3 years | ||||||||||||
Period after termination after which put right expires and is deemed unexercised | 4 years | ||||||||||||
Former Executive Put Rights | Class A and Class B Common Stock | Former Executive Officers | Number Holdings, Inc. | Maximum | |||||||||||||
Stock-based compensation | |||||||||||||
Conditional price per combined share of Class A and Class B stock for repurchase put rights (in dollars per share) | $ / shares | $ 1,000 | ||||||||||||
Number of shares of common stock under the first condition for application of put right | 20,000 | ||||||||||||
Value of shares of common stock under the second condition for application of put right | $ | $ 12,500 | ||||||||||||
Former Executive Put Rights | Class A and Class B Common Stock | Former Chief Administrative Officer | Number Holdings, Inc. | |||||||||||||
Stock-based compensation | |||||||||||||
Value of shares of common stock under the second condition for application of put right | $ | $ 12,500 | ||||||||||||
Former Executive Put Rights | Class A and Class B Common Stock | Former Chief Administrative Officer | Number Holdings, Inc. | Maximum | |||||||||||||
Stock-based compensation | |||||||||||||
Conditional price per combined share of Class A and Class B stock for repurchase put rights (in dollars per share) | $ / shares | $ 1,000 | ||||||||||||
Number of shares of common stock under the first condition for application of put right | 20,000 | ||||||||||||
Former Executive Put Rights | Class A and Class B Common Stock | Former Executive Vice President of Special Projects | Number Holdings, Inc. | |||||||||||||
Stock-based compensation | |||||||||||||
Value of shares of common stock under the second condition for application of put right | $ | $ 12,500 | ||||||||||||
Former Executive Put Rights | Class A and Class B Common Stock | Former Executive Vice President of Special Projects | Number Holdings, Inc. | Maximum | |||||||||||||
Stock-based compensation | |||||||||||||
Conditional price per combined share of Class A and Class B stock for repurchase put rights (in dollars per share) | $ / shares | $ 1,000 | ||||||||||||
Number of shares of common stock under the first condition for application of put right | 20,000 | ||||||||||||
Exercise price 1 | Employee Option Grants | Class A and Class B Common Stock | 2012 Plan | Chief Executive Officer | |||||||||||||
Stock-based compensation | |||||||||||||
Options granted (in shares) | 15,500 | ||||||||||||
Number of Shares | |||||||||||||
Granted (in shares) | 15,500 | ||||||||||||
Stock awards available for grant under the 2012 Plan | |||||||||||||
Exercise price of options (in dollars per share) | $ / shares | $ 1,000 | ||||||||||||
Granted (in shares) | (15,500) | ||||||||||||
Exercise price 1 | Employee Option Grants | Class A and Class B Common Stock | 2012 Plan | Chief Executive Officer | Time-based service options | |||||||||||||
Stock-based compensation | |||||||||||||
Vesting period | 4 years | ||||||||||||
Vesting percentage | 50.00% | ||||||||||||
Exercise price 1 | Employee Option Grants | Class A and Class B Common Stock | 2012 Plan | Chief Executive Officer | Options vesting on the achievement of performance | |||||||||||||
Stock-based compensation | |||||||||||||
Vesting percentage | 50.00% | ||||||||||||
Exercise price 2 | Employee Option Grants | Class A and Class B Common Stock | 2012 Plan | Chief Executive Officer | |||||||||||||
Stock-based compensation | |||||||||||||
Options granted (in shares) | 15,500 | ||||||||||||
Number of Shares | |||||||||||||
Granted (in shares) | 15,500 | ||||||||||||
Stock awards available for grant under the 2012 Plan | |||||||||||||
Granted (in shares) | (15,500) | ||||||||||||
Exercise price 2 | Employee Option Grants | Class A and Class B Common Stock | 2012 Plan | Chief Executive Officer | Time-based service options | |||||||||||||
Stock-based compensation | |||||||||||||
Vesting period | 4 years | ||||||||||||
Vesting percentage | 50.00% | ||||||||||||
Exercise price 2 | Employee Option Grants | Class A and Class B Common Stock | 2012 Plan | Chief Executive Officer | Minimum | |||||||||||||
Stock awards available for grant under the 2012 Plan | |||||||||||||
Exercise price of options (in dollars per share) | $ / shares | $ 750 | ||||||||||||
Fair value base for exercise price adjustment (in dollars per share) | $ / shares | $ 1,000 | ||||||||||||
Exercise price 2 | Employee Option Grants | Class A and Class B Common Stock | 2012 Plan | Chief Executive Officer | Options vesting on the achievement of performance | |||||||||||||
Stock-based compensation | |||||||||||||
Vesting percentage | 50.00% |
Operating Segments (Details)
Operating Segments (Details) - item | 10 Months Ended | 12 Months Ended | |
Jan. 31, 2014 | Jan. 29, 2016 | Jan. 30, 2015 | |
Concentration Risk [Line Items] | |||
Number of reportable segments | 1 | ||
Revenue | Customer | |||
Concentration Risk [Line Items] | |||
Number of major customers | 0 | 0 | 0 |
Employee Benefit Plans (Details
Employee Benefit Plans (Details) - USD ($) $ in Thousands | 10 Months Ended | 12 Months Ended | |
Jan. 31, 2014 | Jan. 29, 2016 | Jan. 30, 2015 | |
401(k) Plan | |||
Matching contributions made by the entity during the year | $ 1,600 | $ 2,000 | $ 1,900 |
Deferred Compensation Plan | |||
Deferred compensation liability | 709 | 724 | |
Deferred Compensation Plan | |||
Deferred Compensation Plan | |||
Deferred compensation liability | $ 700 | $ 700 | |
401(k) plan | |||
401(k) Plan | |||
Eligibility for employee participation in the plan, period of service | 30 days | ||
Eligibility for employer matching contributions, period of service | 1 year | ||
Employer match of employee contributions of first 3% of eligible compensation (as a percent) | 100.00% | ||
Percentage of eligible compensation, matched 100% by employer | 3.00% | ||
Employer match of employee contributions of next 2% of eligible compensation (as a percent) | 50.00% | ||
Percentage of eligible compensation, matched 50% by employer | 2.00% |
Assets Held for Sale (Details)
Assets Held for Sale (Details) - USD ($) $ in Thousands | 1 Months Ended | |||
Oct. 02, 2015 | May. 01, 2015 | Jan. 29, 2016 | Jan. 30, 2015 | |
Assets held for sale | ||||
Carrying value of land held for sale | $ 2,308 | $ 3,094 | ||
Rancho Mirage land and Bullhead land | Held for sale | ||||
Assets held for sale | ||||
Carrying value of land held for sale | $ 2,300 | |||
Rancho Mirage land | Held for sale | ||||
Assets held for sale | ||||
Carrying value of land held for sale | $ 3,100 | |||
Pasadena-Shaver property | Disposed of by sale | ||||
Assets held for sale | ||||
Carrying value of land held for sale | $ 1,400 | |||
Net proceeds from sale of property | $ 1,400 | |||
City of Commerce, Cold storage distribution center | Disposed of by sale | ||||
Assets held for sale | ||||
Carrying value of land held for sale | $ 6,500 | |||
Net proceeds from sale of property | $ 11,800 |
Other Current Assets and Othe60
Other Current Assets and Other Accrued Expenses (Details) - USD ($) $ in Thousands | Jan. 29, 2016 | Jan. 30, 2015 |
Other current assets | ||
Prepaid expenses | $ 13,317 | $ 13,231 |
Other | 5,286 | 5,808 |
Total other current assets | 18,603 | 19,039 |
Other accrued expenses | ||
Accrued interest | 6,875 | 8,363 |
Accrued occupancy costs | 11,433 | 11,766 |
Accrued legal reserves and fees | 8,371 | 6,006 |
Accrued interest swap | 569 | 1,591 |
Accrued California Redemption Value | 2,225 | 951 |
Other | 11,991 | 11,491 |
Total other accrued expenses | $ 41,464 | $ 40,168 |
Financial Guarantees - Balance
Financial Guarantees - Balance Sheets (Details) - USD ($) $ in Thousands | Jan. 29, 2016 | Jan. 30, 2015 | Jan. 31, 2014 | Mar. 30, 2013 | Dec. 29, 2011 |
Current Assets: | |||||
Cash | $ 2,312 | $ 12,463 | $ 34,842 | $ 45,476 | |
Accounts receivable, net | 1,674 | 1,954 | |||
Income taxes receivable | 3,665 | 10,911 | |||
Deferred income taxes | 16,633 | 41,583 | |||
Inventories, net | 196,651 | 296,040 | |||
Assets held for sale | 2,308 | 3,094 | |||
Other | 18,603 | 19,039 | |||
Total current assets | 241,846 | 385,084 | |||
Property and equipment, net | 542,570 | 581,020 | |||
Deferred financing costs, net | 12,461 | 15,463 | |||
Intangible assets, net | 453,242 | 460,311 | |||
Goodwill | 387,772 | 479,745 | |||
Deposits and other assets | 7,319 | 7,543 | |||
Total assets | 1,645,210 | 1,929,166 | |||
Current Liabilities: | |||||
Accounts payable | 79,197 | 139,287 | |||
Payroll and payroll-related | 18,421 | 20,004 | |||
Sales tax | 13,314 | 14,087 | |||
Other accrued expenses | 41,464 | 40,168 | |||
Workers' compensation | 76,389 | 70,491 | |||
Short-term debt and current portion of long-term debt | 6,138 | 6,138 | |||
Current portion of capital and financing lease obligation | 989 | 380 | |||
Total current liabilities | 235,912 | 290,555 | |||
Long-term debt, net of current portion | 887,388 | 901,395 | |||
Unfavorable lease commitments, net | 5,746 | 8,220 | |||
Deferred rent | 27,389 | 23,293 | |||
Deferred compensation liability | 709 | 724 | |||
Capital and financing lease obligation, net of current portion | 34,817 | 24,681 | |||
Long-term deferred income taxes | 179,678 | 170,678 | |||
Other liabilities | 5,118 | 1,868 | |||
Total liabilities | 1,376,757 | 1,421,414 | |||
Member's Equity | |||||
Member units | 550,226 | 549,135 | |||
Investment in Number Holdings, Inc. preferred stock | (19,200) | (19,200) | |||
Accumulated deficit | (262,411) | (21,185) | |||
Other comprehensive loss | (162) | (998) | |||
Total equity | 268,453 | 507,752 | 499,087 | ||
Total liabilities and equity | 1,645,210 | 1,929,166 | |||
Consolidating Adjustments | |||||
Current Assets: | |||||
Cash | (478) | ||||
Equity investments and advances to subsidiaries | (1,134,283) | (808,895) | |||
Total assets | (1,134,283) | (808,895) | |||
Current Liabilities: | |||||
Intercompany payable | (1,076,160) | (735,858) | |||
Total current liabilities | (1,076,160) | (735,858) | |||
Total liabilities | (1,076,160) | (735,858) | |||
Member's Equity | |||||
Member units | (1) | (1) | |||
Additional paid-in capital | (99,943) | (99,943) | |||
Accumulated deficit | 41,821 | 26,907 | |||
Total equity | (58,123) | (73,037) | |||
Total liabilities and equity | (1,134,283) | (808,895) | |||
Issuer | |||||
Current Assets: | |||||
Cash | 1,266 | 11,333 | 33,723 | 45,841 | |
Accounts receivable, net | 1,568 | 1,844 | |||
Income taxes receivable | 3,665 | 10,911 | |||
Deferred income taxes | 16,633 | 41,583 | |||
Inventories, net | 171,691 | 263,284 | |||
Assets held for sale | 2,308 | 1,680 | |||
Other | 17,296 | 18,023 | |||
Total current assets | 214,427 | 348,658 | |||
Property and equipment, net | 484,764 | 517,739 | |||
Deferred financing costs, net | 12,461 | 15,463 | |||
Equity investments and advances to subsidiaries | 604,542 | 451,053 | |||
Intangible assets, net | 451,245 | 458,043 | |||
Goodwill | 387,772 | 479,745 | |||
Deposits and other assets | 6,932 | 7,040 | |||
Total assets | 2,162,143 | 2,277,741 | |||
Current Liabilities: | |||||
Accounts payable | 74,313 | 136,884 | |||
Intercompany payable | 528,767 | 357,909 | |||
Payroll and payroll-related | 17,024 | 18,489 | |||
Sales tax | 12,801 | 13,562 | |||
Other accrued expenses | 38,714 | 37,756 | |||
Workers' compensation | 76,314 | 70,416 | |||
Short-term debt and current portion of long-term debt | 6,138 | 6,138 | |||
Current portion of capital and financing lease obligation | 989 | 380 | |||
Total current liabilities | 755,060 | 641,534 | |||
Long-term debt, net of current portion | 887,388 | 901,395 | |||
Unfavorable lease commitments, net | 5,702 | 8,103 | |||
Deferred rent | 25,218 | 21,006 | |||
Deferred compensation liability | 709 | 724 | |||
Capital and financing lease obligation, net of current portion | 34,817 | 24,681 | |||
Long-term deferred income taxes | 179,678 | 170,678 | |||
Other liabilities | 5,118 | 1,868 | |||
Total liabilities | 1,893,690 | 1,769,989 | |||
Member's Equity | |||||
Member units | 550,226 | 549,135 | |||
Investment in Number Holdings, Inc. preferred stock | (19,200) | (19,200) | |||
Accumulated deficit | (262,411) | (21,185) | |||
Other comprehensive loss | (162) | (998) | |||
Total equity | 268,453 | 507,752 | |||
Total liabilities and equity | 2,162,143 | 2,277,741 | |||
Issuer | Senior Notes | Predecessor | |||||
Supplemental financial information | |||||
Principal amount of debt instrument issued | $ 250,000 | ||||
Subsidiary Guarantors | |||||
Current Assets: | |||||
Cash | 1,009 | 1,097 | $ 1,119 | $ 113 | |
Accounts receivable, net | 106 | 110 | |||
Inventories, net | 24,960 | 32,756 | |||
Assets held for sale | 1,414 | ||||
Other | 1,294 | 1,005 | |||
Total current assets | 27,369 | 36,382 | |||
Property and equipment, net | 57,780 | 63,251 | |||
Equity investments and advances to subsidiaries | 527,905 | 357,842 | |||
Intangible assets, net | 1,997 | 2,268 | |||
Deposits and other assets | 379 | 503 | |||
Total assets | 615,430 | 460,246 | |||
Current Liabilities: | |||||
Accounts payable | 4,884 | 2,403 | |||
Intercompany payable | 545,012 | 377,382 | |||
Payroll and payroll-related | 1,397 | 1,515 | |||
Sales tax | 513 | 525 | |||
Other accrued expenses | 2,718 | 2,375 | |||
Workers' compensation | 75 | 75 | |||
Total current liabilities | 554,599 | 384,275 | |||
Unfavorable lease commitments, net | 44 | 117 | |||
Deferred rent | 2,168 | 2,287 | |||
Total liabilities | 556,811 | 386,679 | |||
Member's Equity | |||||
Additional paid-in capital | 99,943 | 99,943 | |||
Accumulated deficit | (41,324) | (26,376) | |||
Total equity | 58,619 | 73,567 | |||
Total liabilities and equity | 615,430 | 460,246 | |||
Non-Guarantor Subsidiaries | |||||
Current Assets: | |||||
Cash | 37 | 33 | |||
Other | 13 | 11 | |||
Total current assets | 50 | 44 | |||
Property and equipment, net | 26 | 30 | |||
Equity investments and advances to subsidiaries | 1,836 | ||||
Deposits and other assets | 8 | ||||
Total assets | 1,920 | 74 | |||
Current Liabilities: | |||||
Intercompany payable | 2,381 | 567 | |||
Other accrued expenses | 32 | 37 | |||
Total current liabilities | 2,413 | 604 | |||
Deferred rent | 3 | ||||
Total liabilities | 2,416 | 604 | |||
Member's Equity | |||||
Member units | 1 | 1 | |||
Accumulated deficit | (497) | (531) | |||
Total equity | (496) | (530) | |||
Total liabilities and equity | $ 1,920 | $ 74 |
Financial Guarantees - Statemen
Financial Guarantees - Statements of Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | 10 Months Ended | 12 Months Ended | ||
Jan. 29, 2016 | Oct. 30, 2015 | Jan. 31, 2014 | Jan. 29, 2016 | Jan. 30, 2015 | |
Net Sales: | |||||
Total sales | $ 1,528,743 | $ 2,003,995 | $ 1,926,949 | ||
Cost of sales | 1,033,077 | 1,441,631 | 1,308,849 | ||
Gross profit | 495,666 | 562,364 | 618,100 | ||
Selling, general and administrative expenses | 481,449 | 614,026 | 546,259 | ||
Goodwill impairment | $ 0 | $ 120,000 | 91,973 | ||
Operating (loss) income | 14,217 | (143,635) | 71,841 | ||
Other (income) expense: | |||||
Interest income | (16) | (4) | |||
Interest expense | 50,820 | 65,653 | 62,734 | ||
Loss on extinguishment of debt | 4,391 | ||||
Total other expense, net | 55,195 | 65,649 | 62,734 | ||
(Loss) income before provision for income taxes | (40,978) | (209,284) | 9,107 | ||
Provision for income taxes | (28,493) | 31,942 | 3,605 | ||
Net (loss) income | (12,485) | (241,226) | 5,502 | ||
Comprehensive (loss) income | (12,624) | (240,390) | 5,895 | ||
Consolidating Adjustments | |||||
Net Sales: | |||||
Total sales | (751) | ||||
Gross profit | (751) | ||||
Selling, general and administrative expenses | (751) | ||||
Other (income) expense: | |||||
Equity in (earnings) loss of subsidiaries | (8,668) | (14,914) | (11,503) | ||
Total other expense, net | (8,668) | (14,914) | (11,503) | ||
(Loss) income before provision for income taxes | 8,668 | 14,914 | 11,503 | ||
Net (loss) income | 8,668 | 14,914 | 11,503 | ||
Comprehensive (loss) income | 8,668 | 14,914 | 11,503 | ||
Issuer | |||||
Net Sales: | |||||
Total sales | 1,394,131 | 1,827,058 | 1,746,916 | ||
Cost of sales | 932,841 | 1,303,576 | 1,169,431 | ||
Gross profit | 461,290 | 523,482 | 577,485 | ||
Selling, general and administrative expenses | 438,405 | 560,231 | 494,147 | ||
Goodwill impairment | 91,973 | ||||
Operating (loss) income | 22,885 | (128,722) | 83,338 | ||
Other (income) expense: | |||||
Interest income | (16) | (4) | |||
Interest expense | 50,820 | 65,653 | 62,734 | ||
Equity in (earnings) loss of subsidiaries | 8,668 | 14,914 | 11,503 | ||
Loss on extinguishment of debt | 4,391 | ||||
Total other expense, net | 63,863 | 80,563 | 74,237 | ||
(Loss) income before provision for income taxes | (40,978) | (209,285) | 9,101 | ||
Provision for income taxes | (28,493) | 31,941 | 3,599 | ||
Net (loss) income | (12,485) | (241,226) | 5,502 | ||
Comprehensive (loss) income | (12,624) | (240,390) | 5,895 | ||
Subsidiary Guarantors | |||||
Net Sales: | |||||
Total sales | 134,612 | 176,937 | 180,033 | ||
Cost of sales | 100,236 | 138,055 | 139,418 | ||
Gross profit | 34,376 | 38,882 | 40,615 | ||
Selling, general and administrative expenses | 43,044 | 53,830 | 51,587 | ||
Operating (loss) income | (8,668) | (14,948) | (10,972) | ||
Other (income) expense: | |||||
(Loss) income before provision for income taxes | (8,668) | (14,948) | (10,972) | ||
Net (loss) income | (8,668) | (14,948) | (10,972) | ||
Comprehensive (loss) income | $ (8,668) | (14,948) | (10,972) | ||
Non-Guarantor Subsidiaries | |||||
Net Sales: | |||||
Total sales | 751 | ||||
Gross profit | 751 | ||||
Selling, general and administrative expenses | 716 | 525 | |||
Operating (loss) income | 35 | (525) | |||
Other (income) expense: | |||||
(Loss) income before provision for income taxes | 35 | (525) | |||
Provision for income taxes | 1 | 6 | |||
Net (loss) income | 34 | (531) | |||
Comprehensive (loss) income | $ 34 | $ (531) |
Financial Guarantees - Statem63
Financial Guarantees - Statements of Cash Flows (Details) - USD ($) $ in Thousands | 3 Months Ended | 10 Months Ended | 12 Months Ended | |
Jul. 31, 2015 | Jan. 31, 2014 | Jan. 29, 2016 | Jan. 30, 2015 | |
Cash flows from operating activities: | ||||
Net cash provided by operating activities | $ 80,924 | $ 31,657 | $ 38,271 | |
Cash flows from investing activities: | ||||
Purchases of property and equipment | (62,090) | (65,950) | (111,387) | |
Proceeds from sales of property and fixed assets | 1,473 | 31,436 | 39 | |
Net cash used in investing activities | (60,617) | (34,514) | (111,348) | |
Cash flows from financing activities: | ||||
Investment in Number Holdings, Inc. preferred stock | (19,200) | |||
Dividend paid | (95,512) | |||
Payments of long-term debt | (6,174) | (6,138) | (6,138) | |
Proceeds under revolving credit facility | 471,350 | 305,500 | ||
Payments under revolving credit facility | (480,550) | (248,500) | ||
Payments of debt issuance costs | (2,343) | (487) | ||
Proceeds from financing lease obligations | $ 8,700 | 9,359 | ||
Payments of capital and financing lease obligations | (69) | (381) | (88) | |
Payments to repurchase stock options of Number Holdings, Inc. | (7,781) | (390) | (76) | |
Net settlement of stock options of Number Holdings, Inc. for tax withholdings | (57) | |||
Proceeds from long-term debt | 100,000 | |||
Excess tax benefit from stock-based payment arrangements | 138 | |||
Net cash (used in) provided by financing activities | (30,941) | (7,294) | 50,698 | |
Net (decrease) increase in cash | (10,634) | (10,151) | (22,379) | |
Cash - beginning of period | 45,476 | 12,463 | 34,842 | |
Cash - end of period | 34,842 | 2,312 | 12,463 | |
Consolidating Adjustments | ||||
Cash flows from operating activities: | ||||
Net cash provided by operating activities | 478 | |||
Cash flows from investing activities: | ||||
Investment in subsidiary | 1 | |||
Net cash used in investing activities | 1 | |||
Cash flows from financing activities: | ||||
Capital contributions | (1) | |||
Net cash (used in) provided by financing activities | (1) | |||
Net (decrease) increase in cash | 478 | |||
Cash - beginning of period | (478) | |||
Issuer | ||||
Cash flows from operating activities: | ||||
Net cash provided by operating activities | 69,651 | 31,091 | 28,239 | |
Cash flows from investing activities: | ||||
Purchases of property and equipment | (52,280) | (63,817) | (101,357) | |
Proceeds from sales of property and fixed assets | 1,452 | 29,953 | 31 | |
Investment in subsidiary | (1) | |||
Net cash used in investing activities | (50,828) | (33,864) | (101,327) | |
Cash flows from financing activities: | ||||
Investment in Number Holdings, Inc. preferred stock | (19,200) | |||
Dividend paid | (95,512) | |||
Payments of long-term debt | (6,174) | (6,138) | (6,138) | |
Proceeds under revolving credit facility | 471,350 | 305,500 | ||
Payments under revolving credit facility | (480,550) | (248,500) | ||
Payments of debt issuance costs | (2,343) | (487) | ||
Proceeds from financing lease obligations | 9,359 | |||
Payments of capital and financing lease obligations | (69) | (381) | (88) | |
Payments to repurchase stock options of Number Holdings, Inc. | (7,781) | (390) | (76) | |
Net settlement of stock options of Number Holdings, Inc. for tax withholdings | (57) | |||
Proceeds from long-term debt | 100,000 | |||
Excess tax benefit from stock-based payment arrangements | 138 | |||
Net cash (used in) provided by financing activities | (30,941) | (7,294) | 50,698 | |
Net (decrease) increase in cash | (12,118) | (10,067) | (22,390) | |
Cash - beginning of period | 45,841 | 11,333 | 33,723 | |
Cash - end of period | 33,723 | 1,266 | 11,333 | |
Subsidiary Guarantors | ||||
Cash flows from operating activities: | ||||
Net cash provided by operating activities | 10,795 | 559 | 9,970 | |
Cash flows from investing activities: | ||||
Purchases of property and equipment | (9,810) | (2,130) | (10,000) | |
Proceeds from sales of property and fixed assets | 21 | 1,483 | 8 | |
Net cash used in investing activities | (9,789) | (647) | (9,992) | |
Cash flows from financing activities: | ||||
Net (decrease) increase in cash | 1,006 | (88) | (22) | |
Cash - beginning of period | 113 | 1,097 | 1,119 | |
Cash - end of period | $ 1,119 | 1,009 | 1,097 | |
Non-Guarantor Subsidiaries | ||||
Cash flows from operating activities: | ||||
Net cash provided by operating activities | 7 | 62 | ||
Cash flows from investing activities: | ||||
Purchases of property and equipment | (3) | (30) | ||
Net cash used in investing activities | (3) | (30) | ||
Cash flows from financing activities: | ||||
Capital contributions | 1 | |||
Net cash (used in) provided by financing activities | 1 | |||
Net (decrease) increase in cash | 4 | 33 | ||
Cash - beginning of period | 33 | |||
Cash - end of period | $ 37 | $ 33 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) $ in Millions | Apr. 08, 2016 | Apr. 07, 2016 | Jan. 29, 2016 |
ABL Facility | |||
Subsequent Events | |||
Increase in borrowing capacity available under certain circumstances | $ 50 | $ 50 | |
Maximum borrowing capacity | $ 175 | ||
Subsequent Events | ABL Facility Amended April 2016 | |||
Subsequent Events | |||
Amount of increase (decrease) in available credit facility due to amendment | $ (25) | ||
Maturity period prior to First Lien Term Loan Facility maturity date | 90 days | ||
Maturity period prior to Senior Notes maturity date | 90 days | ||
Minimum period after the maturity date of the credit facility that other refinanced debt obligations maturity date must exceed | 180 days | ||
Decrease in applicable margin upon refinancing of debt (as a percent) | (0.50%) | ||
Maximum borrowing capacity | $ 160 | ||
Maximum borrowing capacity of letters of credit | 45 | $ 50 | |
Amendment fees | 4.6 | ||
Subsequent Events | ABL Facility Amended April 2016 | Revolving Credit Facility | |||
Subsequent Events | |||
Increase in borrowing capacity available under certain circumstances | $ 25 | ||
Subsequent Events | ABL Facility Amended April 2016 | Base Rate | |||
Subsequent Events | |||
Applicable margin (as a percent) | 2.00% | ||
Subsequent Events | ABL Facility Amended April 2016 | Eurocurrency loan | |||
Subsequent Events | |||
Applicable margin (as a percent) | 3.00% |
SCHEDULE II - VALUATION AND Q65
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS (Details) - USD ($) $ in Thousands | 10 Months Ended | 12 Months Ended | |
Jan. 31, 2014 | Jan. 29, 2016 | Jan. 30, 2015 | |
Allowance for doubtful accounts | |||
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS | |||
Beginning of Period | $ 84 | $ 58 | $ 107 |
Addition | 136 | 116 | 67 |
Reduction | 113 | 34 | 116 |
End of Period | 107 | 140 | $ 58 |
Tax valuation allowance | |||
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS | |||
Beginning of Period | 11,610 | ||
Addition | 81,760 | ||
Reduction | $ 11,610 | ||
End of Period | $ 81,760 |