QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
(Address of principal executive offices) |
(Zip Code) |
Title of each class: |
Trading Symbol(s): |
Name of each exchange on which registered: | ||
☒ |
Accelerated filer |
☐ | ||||
Non-accelerated filer |
☐ |
Smaller reporting company |
||||
Emerging growth company |
PAGE |
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Item 1. |
1 |
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Item 2. |
17 |
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Item 3. |
22 |
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Item 4. |
22 |
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Item 1. |
23 |
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Item 1A. |
23 |
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Item 2. |
23 |
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Item 3. |
23 |
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Item 4. |
23 |
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Item 5. |
23 |
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Item 6. |
24 |
Thirteen Weeks Ended |
Thirty-nine Weeks Ended |
|||||||||||||||
In thousands, except per share amounts |
November 3, 2019 |
October 28, 2018 |
November 3, 2019 |
October 28, 2018 |
||||||||||||
Net revenues |
$ |
$ |
$ |
$ |
||||||||||||
Cost of goods sold |
||||||||||||||||
Gross profit |
||||||||||||||||
Selling, general and administrative expenses |
||||||||||||||||
Operating income |
||||||||||||||||
Interest (income) expense, net |
||||||||||||||||
Earnings before income taxes |
||||||||||||||||
Income taxes |
||||||||||||||||
Net earnings |
$ |
$ |
$ |
$ |
||||||||||||
Basic earnings per share |
$ |
$ |
$ |
$ |
||||||||||||
Diluted earnings per share |
$ |
$ |
$ |
$ |
||||||||||||
Shares used in calculation of earnings per share: |
||||||||||||||||
Basic |
||||||||||||||||
Diluted |
|
Thirteen Weeks Ended |
Thirty-nine Weeks Ended |
||||||||||||||
In thousands |
November 3, 2019 |
October 28, 2018 |
November 3, 2019 |
October 28, 2018 |
||||||||||||
Net earnings |
$ | |
$ | |
$ | |
$ |
|
||||||||
Other comprehensive income (loss): |
||||||||||||||||
Foreign currency translation adjustments |
|
( |
) | ( |
) | ( |
) | |||||||||
Change in fair value of derivative financial instruments, net of tax (tax benefit) of $ |
|
( |
) | |
|
|||||||||||
Reclassification adjustment for realized (gain) loss on derivative financial instruments, net of tax of $ |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Comprehensive income |
$ | |
$ | |
$ | |
$ | |
||||||||
In thousands, except per share amounts |
November 3, 2019 |
February 3, 2019 |
October 28, 2018 |
|||||||||
ASSETS |
||||||||||||
Current assets |
||||||||||||
Cash and cash equivalents |
$ | |
$ | |
$ | |
||||||
Accounts receivable, net |
|
|
|
|||||||||
Merchandise inventories, net |
|
|
|
|||||||||
Prepaid expenses |
|
|
|
|||||||||
Other current assets |
|
|
|
|||||||||
Total current assets |
|
|
|
|||||||||
Property and equipment, net |
|
|
|
|||||||||
Operating lease right-of-use assets |
|
— |
— |
|||||||||
Deferred income taxes, net |
|
|
|
|||||||||
Goodwill |
|
|
|
|||||||||
Other long-term assets, net |
|
|
|
|||||||||
Total assets |
$ | |
$ | |
$ | |
||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||||||
Current liabilities |
||||||||||||
Accounts payable |
$ | |
$ | |
$ | |
||||||
Accrued expenses |
|
|
|
|||||||||
Gift card and other deferred revenue |
|
|
|
|||||||||
Borrowings under revolving line of credit |
|
— |
|
|||||||||
Income taxes payable |
|
|
|
|||||||||
Operating lease liabilities |
|
— |
— |
|||||||||
Other current liabilities |
|
|
|
|||||||||
Total current liabilities |
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|
|
|||||||||
Deferred rent and lease incentives |
|
|
|
|||||||||
Long-term debt |
|
|
|
|||||||||
Long-term operating lease liabilities |
|
— |
— |
|||||||||
Other long-term liabilities |
|
|
|
|||||||||
Total liabilities |
|
|
|
|||||||||
Commitments and contingencies – See Note F |
||||||||||||
Stockholders’ equity |
||||||||||||
Preferred stock: $ par value; |
|
— |
— |
|||||||||
Common stock: $ par value; |
|
|
|
|||||||||
Additional paid-in capital |
|
|
|
|||||||||
Retained earnings |
|
|
|
|||||||||
Accumulated other comprehensive loss |
( |
) | ( |
) | ( |
) | ||||||
Treasury stock, at cost: |
( |
) | ( |
) | ( |
) | ||||||
Total stockholders’ equity |
|
|
|
|||||||||
Total liabilities and stockholders’ equity |
$ | |
$ | |
$ | |
||||||
|
|
Additional Paid-in Capital |
Retained Earnings |
Accumulated Other Comprehensive Income (Loss) |
Treasury Stock |
Total Stockholders’ Equity |
||||||||||||||||||||||
|
|
Common Stock |
| |||||||||||||||||||||||||
In thousands |
Shares |
Amount |
||||||||||||||||||||||||||
Balance at February 3, 2019 |
|
$ | |
$ | |
$ | |
$ | ( |
) | $ | ( |
) | $ | |
|||||||||||||
Net earnings |
— |
— |
— |
|
— |
— |
|
|||||||||||||||||||||
Foreign currency translation adjustments |
— |
— |
— |
— |
( |
) | — |
( |
) | |||||||||||||||||||
Change in fair value of derivative financial instruments, net of tax |
— |
— |
— |
— |
|
— |
|
|||||||||||||||||||||
Reclassification adjustment for realized (gain) loss on derivative financial instruments, net of tax |
— |
— |
— |
— |
( |
) | — |
( |
) | |||||||||||||||||||
Conversion/release of stock-based awards 1 |
|
|
( |
) | — |
— |
( |
) | ( |
) | ||||||||||||||||||
Repurchases of common stock |
( |
) | ( |
) | ( |
) | ( |
) | — |
( |
) | ( |
) | |||||||||||||||
Reissuance of treasury stock under stock-based compensation plans 1 |
— |
— |
( |
) | — |
— |
|
— |
||||||||||||||||||||
Stock-based compensation expense |
— |
— |
|
— |
— |
— |
|
|||||||||||||||||||||
Dividends declared |
— |
— |
— |
( |
) | — |
— |
( |
) | |||||||||||||||||||
Adoption of accounting pronouncements 2 |
— |
— |
— |
( |
) | — |
— |
( |
) | |||||||||||||||||||
Balance at May 5, 2019 |
|
$ | |
$ | |
$ | |
$ | ( |
) | $ | ( |
) | $ | |
|||||||||||||
Net earnings |
— |
— |
— |
|
— |
— |
|
|||||||||||||||||||||
Foreign currency translation adjustments |
— |
— |
— |
— |
( |
) | — |
( |
) | |||||||||||||||||||
Change in fair value of derivative financial instruments, net of tax |
— |
— |
— |
— |
( |
) | — |
( |
) | |||||||||||||||||||
Reclassification adjustment for realized (gain) loss on derivative financial instruments, net of tax |
— |
— |
— |
— |
( |
) | — |
( |
) | |||||||||||||||||||
Conversion/release of stock-based awards 1 |
|
|
( |
) | — |
— |
— |
( |
) | |||||||||||||||||||
Repurchases of common stock |
( |
) | ( |
) | ( |
) | ( |
) | — |
— |
( |
) | ||||||||||||||||
Stock-based compensation expense |
— |
— |
|
— |
— |
— |
|
|||||||||||||||||||||
Dividends declared |
— |
— |
— |
( |
) | — |
— |
( |
) | |||||||||||||||||||
Balance at August 4, 2019 |
|
$ | |
$ | |
$ | |
$ | ( |
) | $ | ( |
) | $ | |
|||||||||||||
Net earnings |
— |
— |
— |
|
— |
— |
|
|||||||||||||||||||||
Foreign currency translation adjustments |
— |
— |
— |
— |
|
— |
|
|||||||||||||||||||||
Change in fair value of derivative financial instruments, net of tax |
— |
— |
— |
— |
|
— |
|
|||||||||||||||||||||
Reclassification adjustment for realized (gain) loss on derivative financial instruments, net of tax |
— |
— |
— |
— |
( |
) | — |
( |
) | |||||||||||||||||||
Conversion/release of stock-based awards 1 |
|
— |
( |
) | — |
— |
( |
) | ( |
) | ||||||||||||||||||
Repurchases of common stock |
( |
) | ( |
) | ( |
) | ( |
) | — |
— |
( |
) | ||||||||||||||||
Reissuance of treasury stock under stock-based compensation plans 1 |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
Stock-based compensation expense |
— |
— |
|
— |
— |
— |
|
|||||||||||||||||||||
Dividends declared |
— |
— |
— |
( |
) | — |
— |
( |
) | |||||||||||||||||||
Balance at November 3, 2019 |
|
$ |
|
$ |
|
$ |
|
$ |
( |
) |
$ |
( |
) |
$ |
|
|||||||||||||
1 |
Amounts are shown net of shares withheld for employee taxes. |
2 |
Relates to our adoption of ASU 2016-02, Leases, in fiscal 2019. See Note A. |
|
Additional Paid-in Capital |
Retained Earnings |
Accumulated Other Comprehensive Income (Loss) |
Treasury Stock |
Total Stockholders’ Equity |
|||||||||||||||||||||||
|
Common Stock |
| ||||||||||||||||||||||||||
In thousands |
Shares |
Amount |
||||||||||||||||||||||||||
Balance at January 28, 2018 |
|
$ | |
$ | |
$ | |
$ | ( |
) | $ | ( |
) | $ | |
|||||||||||||
Net earnings |
— |
— |
— |
|
— |
— |
|
|||||||||||||||||||||
Foreign currency translation adjustments |
— |
— |
— |
— |
( |
) | — |
( |
) | |||||||||||||||||||
Change in fair value of derivative financial instruments, net of tax |
— |
— |
— |
— |
|
— |
|
|||||||||||||||||||||
Reclassification adjustment for realized (gain) loss on derivative financial instruments, net of tax |
— |
— |
— |
— |
|
— |
|
|||||||||||||||||||||
Conversion/release of stock-based awards 1 |
|
|
( |
) | — |
— |
( |
) | ( |
) | ||||||||||||||||||
Repurchases of common stock |
( |
) | ( |
) | ( |
) | ( |
) | — |
— |
( |
) | ||||||||||||||||
Reissuance of treasury stock under stock-based compensation plans 1 |
— |
— |
( |
) | ( |
) | — |
|
— |
|||||||||||||||||||
Stock-based compensation expense |
— |
— |
|
— |
— |
— |
|
|||||||||||||||||||||
Dividends declared |
— |
— |
— |
( |
) | — |
— |
( |
) | |||||||||||||||||||
Adoption of accounting pronouncements 2 |
— |
— |
— |
|
— |
— |
|
|||||||||||||||||||||
Balance at April 29, 2018 |
|
$ | |
$ | |
$ | |
$ | ( |
) | $ | ( |
) | $ | |
|||||||||||||
Net earnings |
— |
— |
— |
|
— |
— |
|
|||||||||||||||||||||
Foreign currency translation adjustments |
— |
— |
— |
— |
( |
) | — |
( |
) | |||||||||||||||||||
Change in fair value of derivative financial instruments, net of tax |
— |
— |
— |
— |
|
— |
|
|||||||||||||||||||||
Conversion/release of stock-based awards 1 |
|
|
( |
) | — |
— |
( |
) | ( |
) | ||||||||||||||||||
Repurchases of common stock |
( |
) | ( |
) | ( |
) | ( |
) | — |
— |
( |
) | ||||||||||||||||
Reissuance of treasury stock under stock-based compensation plans 1 |
— |
— |
( |
) | ( |
) | — |
|
— |
|||||||||||||||||||
Stock-based compensation expense |
— |
— |
|
— |
— |
— |
|
|||||||||||||||||||||
Dividends declared |
— |
— |
— |
( |
) | — |
— |
( |
) | |||||||||||||||||||
Balance at July 29, 2018 |
|
$ | |
$ | |
$ | |
$ | ( |
) | $ | ( |
) | $ | |
|||||||||||||
Net earnings |
— |
— |
— |
|
— |
— |
|
|||||||||||||||||||||
Foreign currency translation adjustments |
— |
— |
— |
— |
( |
) |
— |
( |
) | |||||||||||||||||||
Change in fair value of derivative financial instruments, net of tax |
— |
— |
— |
— |
( |
) |
— |
( |
) | |||||||||||||||||||
Reclassification adjustment for realized (gain) loss on derivative financial instruments, net of tax |
— |
— |
— |
— |
( |
) |
— |
( |
) | |||||||||||||||||||
Conversion/release of stock-based awards 1 |
|
— |
( |
) |
— |
— |
— |
( |
) | |||||||||||||||||||
Repurchases of common stock |
( |
) |
( |
) |
( |
) |
( |
) |
— |
— |
( |
) | ||||||||||||||||
Reissuance of treasury stock under stock-based compensation plans 1 |
|
|
— |
|
|
|
— |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
| |
Stock-based compensation expense |
— |
— |
|
— |
— |
— |
|
|||||||||||||||||||||
Dividends declared |
— |
— |
— |
( |
) |
— |
— |
( |
) | |||||||||||||||||||
Balance at October 28, 2018 |
|
$ | |
$ | |
$ | |
$ | ( |
) | $ | ( |
) | $ | |
|||||||||||||
1 |
Amounts are shown net of shares withheld for employee taxes. |
2 |
Primarily relates to our adoption of ASU 2014-09, Revenue from Contracts with Customers, in fiscal 2018. |
|
Thirty-nine Weeks Ended |
|||||||
In thousands |
November 3, 2019 |
October 28, 2018 |
||||||
Cash flows from operating activities: |
||||||||
Net earnings |
$ | |
$ | |
||||
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities: |
||||||||
Depreciation and amortization |
|
|
||||||
L oss on disposal/impairment of assets |
|
|
||||||
Amortization of deferred lease incentives |
( |
) | ( |
) | ||||
Non-cash lease expense |
|
— |
||||||
Deferred income taxes |
( |
) | |
|||||
Tax benefit related to stock-based awards |
|
|
||||||
Stock-based compensation expense |
|
|
||||||
Other |
|
( |
) | |||||
Changes in: |
|
|||||||
Accounts receivable |
( |
) | ( |
) | ||||
Merchandise inventories |
( |
) | ( |
) | ||||
Prepaid expenses and other assets |
( |
) | ( |
) | ||||
Accounts payable |
( |
) | |
|||||
Accrued expenses and other liabilities |
( |
) | |
|||||
Gift card and other deferred revenue |
|
|
||||||
Deferred rent and lease incentives |
— |
|
||||||
Operating lease liabilities |
( |
) | — |
|||||
Income taxes payable |
( |
) | ( |
) | ||||
Net cash provided by operating activities |
|
|
||||||
Cash flows from investing activities: |
|
|||||||
Purchases of property and equipment |
( |
) | ( |
) | ||||
Other |
|
|
||||||
Net cash used in investing activities |
( |
) | ( |
) | ||||
Cash flows from financing activities: |
||||||||
Payment of dividends |
( |
) | ( |
) | ||||
Repurchases of common stock |
( |
) | ( |
) | ||||
Borrowings under revolving line of credit |
|
|
||||||
Tax withholdings related to stock-based awards |
( |
) | ( |
) | ||||
Net cash used in financing activities |
( |
) | ( |
) | ||||
Effect of exchange rates on cash and cash equivalents |
( |
) | |
|||||
Net decrease in cash and cash equivalents |
( |
) | ( |
) | ||||
Cash and cash equivalents at beginning of period |
|
|
||||||
Cash and cash equivalents at end of period |
$ | |
$ | |
||||
Shares |
||||
Balance at February 3, 2019 |
|
|||
Granted |
|
|||
Granted, with vesting subject to performance conditions |
|
|||
Released 1 |
( |
) | ||
Cancelled |
( |
) | ||
Balance at November 3, 2019 |
|
|||
Vested plus expected to vest at November 3, 2019 |
|
|||
In thousands, except per share amounts |
Net Earnings |
Weighted Average Shares |
Earnings Per Share |
|||||||||
Thirteen weeks ended November 3, 2019 |
||||||||||||
Basic |
$ | |
|
$ | |
|||||||
Effect of dilutive stock-based awards |
|
|||||||||||
Diluted |
$ | |
|
$ | |
|||||||
Thirteen weeks ended October 28, 2018 |
||||||||||||
Basic |
$ | |
|
$ | |
|||||||
Effect of dilutive stock-based awards |
|
|||||||||||
Diluted |
$ | |
|
$ | |
|||||||
Thirty-nine weeks ended November 3, 2019 |
||||||||||||
Basic |
$ | |
|
$ | |
|||||||
Effect of dilutive stock-based awards |
|
|||||||||||
Diluted |
$ | |
|
$ | |
|||||||
Thirty-nine weeks ended October 28, 2018 |
||||||||||||
Basic |
$ | |
|
$ | |
|||||||
Effect of dilutive stock-based awards |
|
|||||||||||
Diluted |
$ | |
|
$ | |
|||||||
|
Thirteen Weeks Ended |
Thirty-nine Weeks Ended |
||||||||||||||
In thousands |
November 3, 2019 |
October 28, 2018 |
November 3, 2019 |
October 28, 2018 |
||||||||||||
Pottery Barn |
$ | |
$ | |
$ | |
$ | |
||||||||
West Elm |
|
|
|
|
||||||||||||
Williams Sonoma |
|
|
|
|
||||||||||||
Pottery Barn Kids and Teen |
|
|
|
|
||||||||||||
Other 1 |
|
|
|
|
||||||||||||
Total 2 |
$ | |
$ | |
$ | |
$ | |
||||||||
1 |
Primarily consists of net revenues from our international franchise operations, Rejuvenation and Mark and Graham . |
2 |
Includes net revenues related to our international operations (including our operations in Canada, Australia, the United Kingdom and our franchise businesses) of approximately $ |
In thousands |
November 3, 2019 |
October 28, 2018 |
||||||
U.S. |
$ | |
$ | |
||||
International |
|
|
||||||
Total |
$ | |
$ | |
||||
In thousands |
November 3, 2019 |
October 28, 2018 |
||||||
Contracts designated as cash flow hedges |
$ |
$ | ||||||
Contracts not designated as cash flow hedges |
$ |
— |
$ |
Thirteen Weeks Ended |
Thirty-nine Weeks Ended |
|||||||||||||||||||||||||||||||
November 3, 2019 |
October 28, 2018 |
November 3, 2019 |
October 28, 2018 |
|||||||||||||||||||||||||||||
In thousands |
Cost of goods sold |
Selling, general and administrative expenses |
Cost of goods sold |
Selling, general and administrative expenses |
Cost of goods sold |
Selling, general and administrative expenses |
Cost of goods sold |
Selling, general and administrative expenses |
||||||||||||||||||||||||
Line items presented in the Condensed Consolidated Statement of Earnings in which the effects of derivatives are recorded |
$ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Gain (loss) recognized in income |
||||||||||||||||||||||||||||||||
Derivatives designated as cash flow hedges |
$ | $ | — |
$ | $ | $ | $ | — |
$ | $ | ||||||||||||||||||||||
Derivatives not designated as hedging instruments |
$ | — |
$ | $ | — |
$ | $ | — |
$ | $ | — |
$ |
In thousands |
November 3, 2019 |
October 28, 2018 |
||||||
Derivatives designated as cash flow hedges: |
||||||||
Other current assets |
$ |
$ |
||||||
Derivatives not designated as hedging instruments: |
||||||||
Other current assets |
$ |
— |
$ |
• |
Level 1: inputs which include quoted prices in active markets for identical assets or liabilities; |
• | Level 2: inputs which include observable inputs other than Level 1 inputs, such as quoted prices in active markets for similar assets or liabilities; quoted prices for identical or similar assets or 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 asset or liability; and |
• | Level 3: inputs which include unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the underlying asset or liability. |
In thousands |
Foreign Currency Translation |
Cash Flow Hedges |
Accumulated Other Comprehensive Income (Loss) |
|||||||||
Balance at February 3, 2019 |
$ |
( |
) |
$ |
|
$ |
( |
) | ||||
Foreign currency translation adjustments |
( |
) |
— |
( |
) | |||||||
Change in fair value of derivative financial instruments |
— |
|
|
|||||||||
Reclassification adjustment for realized (gain) loss on derivative financial instruments |
— |
( |
) |
( |
) | |||||||
Other comprehensive income (loss) |
( |
) |
|
( |
) | |||||||
Balance at May 5, 2019 |
( |
) |
|
( |
) | |||||||
Foreign currency translation adjustments |
( |
) |
— |
( |
) | |||||||
Change in fair value of derivative financial instruments |
— |
( |
) |
( |
) | |||||||
Reclassification adjustment for realized (gain) loss on derivative financial instruments |
— |
( |
) |
( |
) | |||||||
Other comprehensive income (loss) |
( |
) |
( |
) |
( |
) | ||||||
Balance at August 4, 2019 |
( |
) |
|
( |
) | |||||||
Foreign currency translation adjustments |
|
— |
|
|||||||||
Change in fair value of derivative financial instruments |
— |
|
|
|||||||||
Reclassification adjustment for realized (gain) loss on derivative financial instruments |
— |
( |
) |
( |
) | |||||||
Other comprehensive income (loss) |
|
( |
) |
|
||||||||
Balance at November 3, 2019 |
$ |
( |
) |
$ |
|
$ |
( |
) | ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January 28, 2018 |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) | |||
Foreign currency translation adjustments |
( |
) |
— |
( |
) | |||||||
Change in fair value of derivative financial instruments |
— |
|
|
|||||||||
Reclassification adjustment for realized (gain) loss on derivative financial instruments |
— |
|
|
|||||||||
Other comprehensive income (loss) |
( |
) |
|
|
||||||||
Balance at April 29, 2018 |
( |
) |
|
( |
) | |||||||
Foreign currency translation adjustments |
( |
) |
— |
( |
) | |||||||
Change in fair value of derivative financial instruments |
— |
|
|
|||||||||
Other comprehensive income (loss) |
( |
) |
|
( |
) | |||||||
Balance at July 29, 2018 |
( |
) |
|
( |
) | |||||||
Foreign currency translation adjustments |
( |
) |
— |
( |
) | |||||||
Change in fair value of derivative financial instruments |
— |
( |
) |
( |
) | |||||||
Reclassification adjustment for realized (gain) loss on derivative financial instruments |
— |
( |
) |
( |
) | |||||||
Other comprehensive income (loss) |
( |
) |
( |
) |
( |
) | ||||||
Balance at October 28, 2018 |
$ |
( |
) |
$ |
|
$ |
( |
) |
Working capital and other assets |
$ | |
||
Property and equipment, net |
|
|||
Intangible assets |
|
|||
Liabilities |
( |
) | ||
Total identifiable net assets acquired |
$ | |
||
Goodwill |
|
|||
Total purchase consideration |
$ |
|
In thousands |
Thirteen weeks ended November 3, 2019 |
Thirty-nine weeks ended November 3, 2019 |
||||||
Operating lease costs |
$ | |
$ | |
||||
Variable lease costs |
|
|
||||||
Total lease costs |
$ | |
$ | |
In thousands |
Thirteen weeks ended November 3, 2019 |
Thirty-nine weeks ended November 3, 2019 |
||||||
Cash paid for amounts included in the measurement of operating lease liabilities |
$ | |
$ | |
||||
Net additions to right-of-use assets |
|
|
Weighted average remaining lease term (years) |
|
|||
Weighted average incremental borrowing rate |
|
% |
In thousands |
||||
Remaining fiscal 2019 |
$ | |
||
Fiscal 2020 |
|
|||
Fiscal 2021 |
|
|||
Fiscal 2022 |
|
|||
Fiscal 2023 |
|
|||
Fiscal 2024 |
|
|||
Fiscal 2025 and thereafter |
|
|||
Total lease payments |
|
|||
Less interest |
( |
) | ||
Total operating lease liabilities |
|
|||
Less current operating lease liabilities |
( |
) | ||
Total non-current operating lease liabilities |
$ | |
In thousands |
|
|||
Fiscal 2019 |
$ | |
||
Fiscal 2020 |
|
|||
Fiscal 2021 |
|
|||
Fiscal 2022 |
|
|||
Fiscal 2023 |
|
|||
Thereafter |
|
|||
Total |
$ | |
Thirteen Weeks Ended |
Thirty-nine Weeks Ended |
|||||||||||||||
Comparable brand revenue growth (decline) |
November 3, 2019 |
October 28, 2018 |
November 3, 2019 |
October 28, 2018 |
||||||||||||
Pottery Barn |
3.4 |
% | 1.4 |
% | 3.1 |
% | 2.0 |
% | ||||||||
West Elm |
14.1 |
% | 8.3 |
% | 14.5 |
% | 8.9 |
% | ||||||||
Williams Sonoma |
(2.1 |
%) | 2.1 |
% | (1.6 |
%) | 3.1 |
% | ||||||||
Pottery Barn Kids and Teen |
4.0 |
% | 0.0 |
% | 3.1 |
% | 3.4 |
% | ||||||||
Total 1 |
5.5 |
% | 3.1 |
% | 5.2 |
% | 4.4 |
% |
1 |
Total comparable brand revenue growth includes the results of Rejuvenation and Mark and Graham. |
Store Count |
Average Leased Square Footage Per Store |
|||||||||||||||||||||||||||
August 4, 2019 |
Openings |
Closings |
November 3, 2019 |
October 28, 2018 |
November 3, 2019 |
October 28, 2018 |
||||||||||||||||||||||
Williams Sonoma |
218 |
— |
— |
218 |
226 |
6,900 |
6,800 |
|||||||||||||||||||||
Pottery Barn |
205 |
— |
— |
205 |
205 |
14,400 |
13,900 |
|||||||||||||||||||||
West Elm |
112 |
2 |
— |
114 |
112 |
13,100 |
13,200 |
|||||||||||||||||||||
Pottery Barn Kids |
78 |
1 |
— |
79 |
82 |
7,500 |
7,500 |
|||||||||||||||||||||
Rejuvenation |
10 |
— |
— |
10 |
8 |
8,500 |
8,800 |
|||||||||||||||||||||
Total |
623 |
3 |
— |
626 |
633 |
10,600 |
10,300 |
|||||||||||||||||||||
Store selling square footage at period-end |
4,154,000 |
4,084,000 |
||||||||||||||||||||||||||
Store leased square footage at period-end |
6,622,000 |
6,551,000 |
Thirteen Weeks Ended |
Thirty-nine Weeks Ended |
|||||||||||||||||||||||||||||||
In thousands |
November 3, 2019 |
% Net Revenues |
October 28, 2018 |
% Net Revenues |
November 3, 2019 |
% Net Revenues |
October 28, 2018 |
% Net Revenues |
||||||||||||||||||||||||
Cost of goods sold 1 |
$ | 924,300 |
64.1 |
% | $ | 861,999 |
63.5 |
% | $ | 2,608,054 |
64.3 |
% | $ | 2,444,067 |
63.7 |
% |
1 |
Includes total occupancy expenses of $179,237,000 and $177,261,000 for the third quarter of fiscal 2019 and the third quarter of fiscal 2018, respectively, and $529,905,000 and $521,544,000 for year-to-date fiscal 2019 and year-to-date fiscal 2018, respectively. |
Thirteen Weeks Ended |
Thirty-nine Weeks Ended |
|||||||||||||||||||||||||||||||
In thousands |
November 3, 2019 |
% Net Revenues |
October 28, 2018 |
% Net Revenues |
November 3, 2019 |
% Net Revenues |
October 28, 2018 |
% Net Revenues |
||||||||||||||||||||||||
Selling, general and administrative expenses |
$ | 416,281 |
28.9 |
% | $ | 400,600 |
29.5 |
% | $ | 1,184,176 |
29.2 |
% | $ | 1,155,990 |
30.1 |
% |
Fiscal period |
Total Number of Shares Purchased 1 |
Average Price Paid Per Share |
Total Number of Shares Purchased as Part of a Publicly Announced Program 1 |
Maximum Dollar Value of Shares That May Yet Be Purchased Under the Program |
||||||||||||
August 5, 2019 – September 1, 2019 |
193,942 |
$ | 65.14 |
193,942 |
$ | 639,050,000 |
||||||||||
September 2, 2019 – September 29, 2019 |
186,285 |
$ | 66.37 |
186,285 |
$ | 626,687,000 |
||||||||||
September 30, 2019 – November 3, 2019 |
230,122 |
$ | 67.73 |
230,122 |
$ | 611,101,000 |
||||||||||
Total |
610,349 |
$ | 66.49 |
610,349 |
$ | 611,101,000 |
1 |
Excludes shares withheld for employee taxes upon vesting of stock-based awards. |
Exhibit Number |
Exhibit Description | |||
10.1* |
||||
10.2* |
||||
10.3* |
||||
31.1* |
||||
31.2* |
||||
32.1* |
||||
32.2* |
||||
101* |
The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended November 3, 2019, formatted in Inline XBRL: (i) Condensed Consolidated Statements of Earnings, (ii) Condensed Consolidated Statements of Comprehensive Income, (iii) Condensed Consolidated Balance Sheets, (iv) Condensed Consolidated Statements of Stockholders’ Equity, (v) Condensed Consolidated Statements of Cash Flows and (vi) Notes to Condensed Consolidated Financial Statements, tagged as blocks of text and including detailed tags | |||
104* |
Cover Page Interactive Data File (formatted as Inline XBRL and contained in the Interactive Data Files submitted under Exhibit 101). |
* | Filed herewith. |
WILLIAMS-SONOMA, INC. | ||
By: |
/s/ Julie Whalen | |
Julie Whalen | ||
Duly Authorized Officer and Chief Financial Officer |
Exhibit 10.1
SIXTH AMENDMENT TO REIMBURSEMENT AGREEMENT
THIS SIXTH AMENDMENT TO REIMBURSEMENT AGREEMENT, dated as of August 23, 2019 (this Amendment), is entered into among WILLIAMS-SONOMA, INC., a corporation duly organized and validly existing under the laws of the State of Delaware (the Parent), Williams-Sonoma Singapore Pte. Ltd., a corporation duly organized and validly existing under the laws of Singapore (Williams-Sonoma Singapore and collectively with the Parent, the Borrowers) and BANK OF AMERICA, N.A., a national banking association (the Bank). Capitalized terms used herein and not otherwise defined shall have the meanings ascribed thereto in the Reimbursement Agreement (as defined below).
RECITALS
WHEREAS, the Borrowers and the Bank are parties to that certain Reimbursement Agreement, dated as of August 30, 2013 (as amended or modified from time to time, the Reimbursement Agreement); and
WHEREAS, the parties hereto have agreed to amend the Reimbursement Agreement as provided herein.
NOW, THEREFORE, in consideration of the agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:
AGREEMENT
1. Amendments. The definition of Maturity Date in Section 1.1 of the Reimbursement Agreement is hereby amended to read as follows:
Maturity Date means August 23, 2020.
2. Effectiveness; Conditions Precedent. This Amendment shall become effective upon satisfaction of the following conditions precedent:
(a) Execution of Counterparts of Amendment. The Bank shall have received counterparts of this Amendment, which collectively shall have been duly executed on behalf of each Borrower, each of the Guarantors and the Bank.
(b) Resolutions, Etc. The Bank shall have received, in form and substance satisfactory to the Bank, (i) for each of the Borrowers and the Guarantors, resolutions of its board of directors (or similar governing body) certified by its Secretary or an Assistant Secretary which authorize its execution, delivery and performance of this Amendment and (ii) such other documents as the Bank may reasonably request.
3. Expenses. The Parent agrees to reimburse the Bank for all reasonable out-of-pocket costs and expenses of the Bank in connection with the preparation, execution and delivery of this Amendment, including without limitation the reasonable fees and expenses of Moore & Van Allen PLLC.
4. Ratification of Reimbursement Agreement. Each Borrower and each Guarantor acknowledges and consents to the terms set forth herein and agrees that this Amendment does not impair, reduce or limit any of its obligations under the Transaction Documents, as amended hereby. This Amendment is a Transaction Document.
5. Authority/Enforceability. Each Borrower and each Guarantor represents and warrants as follows:
(a) It has taken all necessary action to authorize the execution, delivery and performance of this Amendment.
(b) This Amendment has been duly executed and delivered by such Borrower and Guarantor and constitutes its legal, valid and binding obligations, enforceable in accordance with its terms, except as limited by bankruptcy, insolvency or other laws of general application relating to the enforcement of creditors rights and general principles of equity.
(c) No approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority or any other Person is necessary or required in connection with the execution, delivery or performance by such Person of this Amendment.
(d) The execution and delivery of this Amendment does not (i) contravene the terms of its articles of incorporation, bylaws or other organizational documents (as applicable) or (ii) violate any applicable law, rule or regulation.
6. Representations and Warranties of the Borrowers. Each Borrower represents and warrants to the Bank that after giving effect to this Amendment (a) the representations and warranties set forth in Article 6 of the Reimbursement Agreement are true and correct in all material respects as of the date hereof, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct in all material respects as of such earlier date, and (b) no event has occurred and is continuing which constitutes a Default.
7. Counterparts/Telecopy. This Amendment may be executed in any number of counterparts, each of which when so executed and delivered shall be an original, but all of which shall constitute one and the same instrument. Delivery of executed counterparts of this Amendment by telecopy or other secure electronic format (.pdf) shall be effective as an original.
8. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE; PROVIDED THAT THE BANK SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
9. Successors and Assigns. This Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.
10. Headings. The headings of the sections hereof are provided for convenience only and shall not in any way affect the meaning or construction of any provision of this Amendment.
11. Severability. If any provision of this Amendment is held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the remaining provisions of this Amendment shall not be affected or impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
[remainder of page intentionally left blank]
Each of the parties hereto has caused a counterpart of this Amendment to be duly executed and delivered as of the date first above written.
BORROWERS: | WILLIAMS-SONOMA, INC., | |||||
a Delaware corporation | ||||||
By: | /s/ Julie Whalen | |||||
Name: | Julie Whalen | |||||
Title: | Chief Financial Officer | |||||
WILLIAMS-SONOMA SINGAPORE PTE. LTD. | ||||||
By: | /s/ Beth Thompson | |||||
Name: | Beth Thompson | |||||
Title: | Director | |||||
ACKNOWLEDGED AND AGREED: | ||||||
GUARANTORS: | WILLIAMS-SONOMA, INC. | |||||
REJUVENATION INC. | ||||||
SUTTER STREET MANUFACTURING, INC. | ||||||
WILLIAMS-SONOMA ADVERTISING, INC. | ||||||
WILLIAMS-SONOMA DIRECT, INC. | ||||||
WILLIAMS-SONOMA DTC, INC. | ||||||
WILLIAMS-SONOMA DTC TEXAS, INC. | ||||||
WILLIAMS-SONOMA GIFT MANAGEMENT, INC. | ||||||
WILLIAMS-SONOMA RETAIL SERVICES, INC. | ||||||
WILLIAMS-SONOMA STORES, INC. | ||||||
By: | /s/ Julie Whalen | |||||
Name: | Julie Whalen | |||||
Title: | Chief Financial Officer |
WILLIAMS-SONOMA, INC.
SIXTH AMENDMENT TO REIMBURSEMENT AGREEMENT
BANK: | BANK OF AMERICA, N.A. | |||||
By: | /s/ Anthony Hoye | |||||
Name: | Anthony Hoye | |||||
Title: | Director |
WILLIAMS-SONOMA, INC.
SIXTH AMENDMENT TO REIMBURSEMENT AGREEMENT
Exhibit 10.2
SIXTH AMENDMENT TO REIMBURSEMENT AGREEMENT
THIS SIXTH AMENDMENT TO REIMBURSEMENT AGREEMENT, dated as of August 23, 2019 (this Amendment), is entered into among WILLIAMS-SONOMA, INC., a corporation duly organized and validly existing under the laws of the State of Delaware (the Parent), Williams-Sonoma Singapore Pte. Ltd., a corporation duly organized and validly existing under the laws of Singapore (Williams-Sonoma Singapore and collectively with the Parent, the Borrowers) and WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association (the Bank). Capitalized terms used herein and not otherwise defined shall have the meanings ascribed thereto in the Reimbursement Agreement (as defined below).
RECITALS
WHEREAS, the Borrowers and the Bank are parties to that certain Reimbursement Agreement, dated as of August 30, 2013 (as amended or modified from time to time, the Reimbursement Agreement); and
WHEREAS, the parties hereto have agreed to amend the Reimbursement Agreement as provided herein.
NOW, THEREFORE, in consideration of the agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:
AGREEMENT
1. Amendments. The definition of Maturity Date in Section 1.1 of the Reimbursement Agreement is hereby amended to read as follows:
Maturity Date means August 23, 2020.
2. Effectiveness; Conditions Precedent. This Amendment shall become effective upon satisfaction of the following conditions precedent:
(a) Execution of Counterparts of Amendment. The Bank shall have received counterparts of this Amendment, which collectively shall have been duly executed on behalf of each Borrower, each of the Guarantors and the Bank.
(b) Resolutions, Etc. The Bank shall have received, in form and substance satisfactory to the Bank, (i) for each of the Borrowers and the Guarantors, resolutions of its board of directors (or similar governing body) certified by its Secretary or an Assistant Secretary which authorize its execution, delivery and performance of this Amendment and (ii) such other documents as the Bank may reasonably request.
3. Expenses. The Parent agrees to reimburse the Bank for all reasonable out-of-pocket costs and expenses of the Bank in connection with the preparation, execution and delivery of this Amendment, including without limitation the reasonable fees and expenses of Moore & Van Allen PLLC.
4. Ratification of Reimbursement Agreement. Each Borrower and each Guarantor acknowledges and consents to the terms set forth herein and agrees that this Amendment does not impair, reduce or limit any of its obligations under the Transaction Documents, as amended hereby. This Amendment is a Transaction Document.
5. Authority/Enforceability. Each Borrower and each Guarantor represents and warrants as follows:
(a) It has taken all necessary action to authorize the execution, delivery and performance of this Amendment.
(b) This Amendment has been duly executed and delivered by such Borrower and Guarantor and constitutes its legal, valid and binding obligations, enforceable in accordance with its terms, except as limited by bankruptcy, insolvency or other laws of general application relating to the enforcement of creditors rights and general principles of equity.
(c) No approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority or any other Person is necessary or required in connection with the execution, delivery or performance by such Person of this Amendment.
(d) The execution and delivery of this Amendment does not (i) contravene the terms of its articles of incorporation, bylaws or other organizational documents (as applicable) or (ii) violate any applicable law, rule or regulation.
6. Representations and Warranties of the Borrowers. Each Borrower represents and warrants to the Bank that after giving effect to this Amendment (a) the representations and warranties set forth in Article 6 of the Reimbursement Agreement are true and correct in all material respects as of the date hereof, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct in all material respects as of such earlier date, and (b) no event has occurred and is continuing which constitutes a Default.
7. Counterparts/Telecopy. This Amendment may be executed in any number of counterparts, each of which when so executed and delivered shall be an original, but all of which shall constitute one and the same instrument. Delivery of executed counterparts of this Amendment by telecopy or other secure electronic format (.pdf) shall be effective as an original.
8. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE; PROVIDED THAT THE BANK SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
9. Successors and Assigns. This Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.
10. Headings. The headings of the sections hereof are provided for convenience only and shall not in any way affect the meaning or construction of any provision of this Amendment.
11. Severability. If any provision of this Amendment is held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the remaining provisions of this Amendment shall not be affected or impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
[remainder of page intentionally left blank]
Each of the parties hereto has caused a counterpart of this Amendment to be duly executed and delivered as of the date first above written.
BORROWERS: | WILLIAMS-SONOMA, INC., | |||||
a Delaware corporation | ||||||
By: | /s/ Julie Whalen | |||||
Name: | Julie Whalen | |||||
Title: | Chief Financial Officer | |||||
WILLIAMS-SONOMA SINGAPORE PTE. LTD. | ||||||
By: | /s/ Beth Thompson | |||||
Name: | Beth Thompson | |||||
Title: | Director | |||||
ACKNOWLEDGED AND AGREED: | ||||||
GUARANTORS: | WILLIAMS-SONOMA, INC. | |||||
REJUVENATION INC. | ||||||
SUTTER STREET MANUFACTURING, INC. | ||||||
WILLIAMS-SONOMA ADVERTISING, INC. | ||||||
WILLIAMS-SONOMA DIRECT, INC. | ||||||
WILLIAMS-SONOMA DTC, INC. | ||||||
WILLIAMS-SONOMA DTC TEXAS, INC. | ||||||
WILLIAMS-SONOMA GIFT MANAGEMENT, INC. | ||||||
WILLIAMS-SONOMA RETAIL SERVICES, INC. | ||||||
WILLIAMS-SONOMA STORES, INC. | ||||||
By: | /s/ Julie Whalen | |||||
Name: | Julie Whalen | |||||
Title: | Chief Financial Officer |
WILLIAMS-SONOMA, INC.
SIXTH AMENDMENT TO REIMBURSEMENT AGREEMENT
BANK: | WELLS FARGO BANK, NATIONAL ASSOCIATION | |||||||
By: | /s/ Maribelle Villaseñor |
|||||||
Name: | Maribelle Villaseñor | |||||||
Title: | Director |
WILLIAMS-SONOMA, INC.
SIXTH AMENDMENT TO REIMBURSEMENT AGREEMENT
Exhibit 10.3
SIXTH AMENDMENT TO REIMBURSEMENT AGREEMENT
THIS SIXTH AMENDMENT TO REIMBURSEMENT AGREEMENT, dated as of August 23, 2019 (this Amendment), is entered into among WILLIAMS-SONOMA, INC., a corporation duly organized and validly existing under the laws of the State of Delaware (the Parent), Williams-Sonoma Singapore Pte. Ltd., a corporation duly organized and validly existing under the laws of Singapore (Williams-Sonoma Singapore and collectively with the Parent, the Borrowers) and U.S. BANK NATIONAL ASSOCIATION, a national banking association (the Bank). Capitalized terms used herein and not otherwise defined shall have the meanings ascribed thereto in the Reimbursement Agreement (as defined below).
RECITALS
WHEREAS, the Borrowers and the Bank are parties to that certain Reimbursement Agreement, dated as of August 30, 2013 (as amended or modified from time to time, the Reimbursement Agreement); and
WHEREAS, the parties hereto have agreed to amend the Reimbursement Agreement as provided herein.
NOW, THEREFORE, in consideration of the agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:
AGREEMENT
1. Amendments. The definition of Maturity Date in Section 1.1 of the Reimbursement Agreement is hereby amended to read as follows:
Maturity Date means August 23, 2020.
2. Effectiveness; Conditions Precedent. This Amendment shall become effective upon satisfaction of the following conditions precedent:
(a) Execution of Counterparts of Amendment. The Bank shall have received counterparts of this Amendment, which collectively shall have been duly executed on behalf of each Borrower, each of the Guarantors and the Bank.
(b) Resolutions, Etc. The Bank shall have received, in form and substance satisfactory to the Bank, (i) for each of the Borrowers and the Guarantors, resolutions of its board of directors (or similar governing body) certified by its Secretary or an Assistant Secretary which authorize its execution, delivery and performance of this Amendment and (ii) such other documents as the Bank may reasonably request.
3. Expenses. The Parent agrees to reimburse the Bank for all reasonable out-of-pocket costs and expenses of the Bank in connection with the preparation, execution and delivery of this Amendment, including without limitation the reasonable fees and expenses of Moore & Van Allen PLLC.
4. Ratification of Reimbursement Agreement. Each Borrower and each Guarantor acknowledges and consents to the terms set forth herein and agrees that this Amendment does not impair, reduce or limit any of its obligations under the Transaction Documents, as amended hereby. This Amendment is a Transaction Document.
5. Authority/Enforceability. Each Borrower and each Guarantor represents and warrants as follows:
(a) It has taken all necessary action to authorize the execution, delivery and performance of this Amendment.
(b) This Amendment has been duly executed and delivered by such Borrower and Guarantor and constitutes its legal, valid and binding obligations, enforceable in accordance with its terms, except as limited by bankruptcy, insolvency or other laws of general application relating to the enforcement of creditors rights and general principles of equity.
(c) No approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority or any other Person is necessary or required in connection with the execution, delivery or performance by such Person of this Amendment.
(d) The execution and delivery of this Amendment does not (i) contravene the terms of its articles of incorporation, bylaws or other organizational documents (as applicable) or (ii) violate any applicable law, rule or regulation.
6. Representations and Warranties of the Borrowers. Each Borrower represents and warrants to the Bank that after giving effect to this Amendment (a) the representations and warranties set forth in Article 6 of the Reimbursement Agreement are true and correct in all material respects as of the date hereof, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct in all material respects as of such earlier date, and (b) no event has occurred and is continuing which constitutes a Default.
7. Counterparts/Telecopy. This Amendment may be executed in any number of counterparts, each of which when so executed and delivered shall be an original, but all of which shall constitute one and the same instrument. Delivery of executed counterparts of this Amendment by telecopy or other secure electronic format (.pdf) shall be effective as an original.
8. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE; PROVIDED THAT THE BANK SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
9. Successors and Assigns. This Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.
10. Headings. The headings of the sections hereof are provided for convenience only and shall not in any way affect the meaning or construction of any provision of this Amendment.
11. Severability. If any provision of this Amendment is held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the remaining provisions of this Amendment shall not be affected or impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
[remainder of page intentionally left blank]
Each of the parties hereto has caused a counterpart of this Amendment to be duly executed and delivered as of the date first above written.
BORROWERS: | WILLIAMS-SONOMA, INC., | |||||
a Delaware corporation | ||||||
By: | /s/ Julie Whalen | |||||
Name: | Julie Whalen | |||||
Title: | Chief Financial Officer | |||||
WILLIAMS-SONOMA SINGAPORE PTE. LTD. | ||||||
By: | /s/ Beth Thompson | |||||
Name: | Beth Thompson | |||||
Title: | Director | |||||
ACKNOWLEDGED AND AGREED: | ||||||
GUARANTORS: | WILLIAMS-SONOMA, INC. | |||||
REJUVENATION INC. | ||||||
SUTTER STREET MANUFACTURING, INC. | ||||||
WILLIAMS-SONOMA ADVERTISING, INC. | ||||||
WILLIAMS-SONOMA DIRECT, INC. | ||||||
WILLIAMS-SONOMA DTC, INC. | ||||||
WILLIAMS-SONOMA DTC TEXAS, INC. | ||||||
WILLIAMS-SONOMA GIFT MANAGEMENT, INC. | ||||||
WILLIAMS-SONOMA RETAIL SERVICES, INC. | ||||||
WILLIAMS-SONOMA STORES, INC. | ||||||
By: | /s/ Julie Whalen | |||||
Name: | Julie Whalen | |||||
Title: | Chief Financial Officer |
WILLIAMS-SONOMA, INC.
SIXTH AMENDMENT TO REIMBURSEMENT AGREEMENT
BANK: | U.S. BANK NATIONAL ASSOCIATION | |||||||
By: | /s/ Joyce P. Dorsett |
|||||||
Name: | Joyce P. Dorsett | |||||||
Title: | Senior Vice President |
WILLIAMS-SONOMA, INC.
SIXTH AMENDMENT TO REIMBURSEMENT AGREEMENT
Exhibit 31.1
CERTIFICATION
I, Laura Alber, certify that:
1. | I have reviewed this quarterly report on Form 10-Q of Williams-Sonoma, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
Date: December 12, 2019
By: | /s/ Laura Alber | |
Laura Alber | ||
Chief Executive Officer |
Exhibit 31.2
CERTIFICATION
I, Julie Whalen, certify that:
1. | I have reviewed this quarterly report on Form 10-Q of Williams-Sonoma, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
Date: December 12, 2019
By: | /s/ Julie Whalen | |
Julie Whalen | ||
Chief Financial Officer |
Exhibit 32.1
CERTIFICATION BY CHIEF EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q for the period ended November 3, 2019 of Williams-Sonoma, Inc. (the Company) as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Laura Alber, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
1. | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the periods presented in the Report. |
By: | /s/ Laura Alber | |
Laura Alber | ||
Chief Executive Officer |
Date: December 12, 2019
Exhibit 32.2
CERTIFICATION BY CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q for the period ended November 3, 2019 of Williams-Sonoma, Inc. (the Company) as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Julie Whalen, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
1. | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the periods presented in the Report. |
By: | /s/ Julie Whalen | |
Julie Whalen | ||
Chief Financial Officer |
Date: December 12, 2019
Acquisition of Outward, Inc. - Additional Information (Detail) - Outward Inc. - USD ($) |
9 Months Ended | |
---|---|---|
Dec. 01, 2017 |
Nov. 03, 2019 |
|
Business Acquisition [Line Items] | ||
Contractual purchase price | $ 112,000,000 | |
Purchase consideration | 80,812,000 | |
Consideration owed to former owners of an acquired business, contingent upon continued future service | $ 26,690,000 | |
Acquisition payment period | 4 years | |
Cash paid to settle pre-existing obligations as part of a business combination, excluded from consideration transferred | $ 4,498,000 | |
Consideration owed to certain key employees of an acquired business, contingent upon continued future service and certain financial targets | $ 20,000,000 | |
3-D Imaging Data and Intellectual Property | ||
Business Acquisition [Line Items] | ||
Finite lived intangible asset useful life | 4 years |
Foreign Currency Forward Contracts Outstanding with Notional Values (Detail) - Foreign Exchange Contract - Cash Flow Hedging - USD ($) $ in Thousands |
Nov. 03, 2019 |
Oct. 28, 2018 |
---|---|---|
Derivatives designated as hedging instruments | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Exchange of foreign currency contracts | $ 19,700 | $ 13,300 |
Not Designated as Hedging Instrument | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Exchange of foreign currency contracts | $ 5,200 |
STOCK-BASED COMPENSATION (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Summary of Restricted Stock Units Activity | The following table summarizes o ur restricted stock unit activity during the thirty-nine weeks ended November 3, 2019:
1 Excludes105,436 incremental shares released due to achievement of performance conditions above target. |
ACCUMULATED OTHER COMPREHENSIVE INCOME (Tables) |
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Changes in Accumulated Other Comprehensive Income (Loss) by Component, Net of Tax | Changes in accum u lated other comprehensive income (loss) by component, net of tax, are as follows:
|
ACQUISITION OF OUTWARD, INC. |
9 Months Ended | |||||||||||||||||||||||||||||||||||
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Nov. 03, 2019 | ||||||||||||||||||||||||||||||||||||
ACQUISITION OF OUTWARD, INC | NOTE K. ACQUISITION OF OUTWARD, INC. On December 1, 2017, we acquired Outward, Inc., a 3-D imaging and augmented reality platform for the home furnishings and décor industry. Outward’s technology enables applications in product visualization, digital room design and augmented and virtual reality. Of the $112,000,000 contractual purchase price, approximately $80,812,000 was deemed to be purchase consideration, $26,690,000 is payable to former stockholders of Outward over a period of four years from the acquisition date, contingent upon their continued service during that time, and $4,498,000 primarily represents settlement of pre-existing obligations of Outward with third parties on the acquisition date. Certain key employees of Outward may also collectively earn up to an additional $20,000,000, contingent upon achievement of certain financial performance targets, and subject to their continued service over the performance period. Both of these contingent amounts will be recognized as post-combination compensation expense as they are earned.The purchase consideration has been allocated based on estimates of the fair value of identifiable assets acquired and liabilities assumed, as set forth in the table below.
Intangible assets acquired primarily represent 3-D imaging data and core intellectual property, which are being amortized over a useful life of four years. Goodwill is primarily attributable to expected synergies as a result of the acquisition, which include the leverage of acquired technology and talent to drive improved conversion, cost savings and operating efficiencies. None of the goodwill will be deductible for income tax purposes.Outward, Inc. is a wholly-owned subsidiary of Williams-Sonoma, Inc. Results of operations for Outward have been included in our Condensed Consolidated Financial Statements from the acquisition date. |
STOCK-BASED COMPENSATION |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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STOCK-BASED COMPENSATION | NOTE C. STOCK-BASED COMPENSATION Equity Award Programs Our Amended and Restated 2001 Long-Term Incentive Plan (the “Plan”) provides for grants of incentive stock options, nonqualified stock options, stock-settled stock appreciation rights (collectively, “option awards”), restricted stock awards, restricted stock units (including those that are performance-based), deferred stock awards (collectively, “stock awards”) and dividend equivalents up to an aggregate of 36,570,000 shares. As of November 3, 2019, there were approximately 5,367,000 shares available for future grant. Awards may be granted under the Plan to our officers, employees and non-employee members of the board of directors of the company (the “Board”) or any parent or subsidiary. Shares issued as a result of award exercises or releases are primarily funded with the issuance of new shares.Option Awards Annual grants of option awards are limited to 1,000,000 shares on a per person basis and have a maximum term of seven years. The exercise price of these option awards must not be less than 100% of the closing price of our stock on the trading day prior to the grant date. Option awards granted to employees generally vest evenly over a period of four years for service-based awards. Certain option awards contain vesting acceleration clauses, which are triggered upon certain events including, but not limited to, retirement, or a merger or similar corporate event. Stock Awards Annual grants of stock awards are limited to 1,000,000 shares on a per person basis. Stock awards granted to employees generally vest evenly over a period of four years for service-based awards. Certain performance-based awards, which have variable payout conditions based on predetermined financial targets, generally vest three years from the date of grant. Certain stock awards and other agreements contain vesting acceleration clauses which are triggered upon certain events including, but not limited to, retirement, or a merger or similar corporate event. Stock awards granted to non-employee Board members generally vest in one year. Non-employee Board members automatically receive stock awards on the date of their initial election to the Board and annually thereafter on the date of the annual meeting of stockholders (so long as they continue to serve as a non-employee Board member).Stock-Based Compe n sation Expense During the thirteen and thirty-nine weeks ended November 3, 2019, we recognized total stock-based compensation expense, as a component of selling, general and administrative expenses, of $14,115,000 and $49,516,000, respectively. During the thirteen and thirty-nine weeks ended October 28, 2018, we recognized total stock-based compensation expense, as a component of selling, general and administrative expenses, of $14,427,000 and $40,953,000, respectively. Restricted Stock Units The following table summarizes o ur restricted stock unit activity during the thirty-nine weeks ended November 3, 2019:
1 Excludes105,436 incremental shares released due to achievement of performance conditions above target. |
STOCK REPURCHASE PROGRAM AND DIVIDENDS |
9 Months Ended |
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Nov. 03, 2019 | |
STOCK REPURCHASE PROGRAM AND DIVIDENDS | NOTE G. STOCK REPURCHASE PR O GRAM AND DIVIDENDS Stock Repurchase Program During the thirteen weeks ended November 3, 2019, we repurchased 610,349 shares of our common stock at an average cost of $66.49 per share for a total cost of approximately $40,583,000. During the thirty-nine weeks ended November 3, 2019, we repurchased 1,838,971 shares of our common stock at an average cost of $61.29 per share for a total cost of approximately $112,714,000. As of November 3, 2019, there was $611,101,000 remaining under our current stock repurchase program. As of November 3, 2019 and , we held treasury stock of $941,00028, and $205,000, respectively, that represents the cost of shares available for issuance that are intended to satisfy future stock-based award settlements in certain foreign jurisdictions. During the thirteen weeks ended October 28, 2018, we repurchased 742,508 shares of our common stock at an average cost of $61.15 per share for a total cost of approximately $45,403,000. During the thirty-nine weeks ended October 28, 2018, we repurchased 3,883,875 shares of our common stock at an average cost of $56.70 per share for a total cost of approximately $ 220,221,000 .Stock repurchases under our program may be made through open market and privately negotiated transactions at times and in such amounts as management deems appropriate. The timing and actual number of shares repurchased will depend on a variety of factors including price, corporate and regulatory requirements, capital availability and other market conditions. Dividends We declared cash dividends of $0.48 and $0.43 per common share during the thirteen weeks ended November 3, 2019 and October 28, 2018, respectively. We declared cash dividends of $1.44 and $1.29 per common share during the thirty-nine weeks ended November 3, 2019 and October 28, 2018, respectively. Our quarterly cash dividend may be limited or terminated at any time. |
Reconciliation of Net Earnings and Number of Shares Used in Basic and Diluted Earnings Per Share Computations (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Nov. 03, 2019 |
Oct. 28, 2018 |
Nov. 03, 2019 |
Oct. 28, 2018 |
|
Earnings Per Share [Line Items] | ||||
Net Earnings, Basic | $ 74,713 | $ 81,465 | $ 190,017 | $ 178,346 |
Net Earnings, Diluted | $ 74,713 | $ 81,465 | $ 190,017 | $ 178,346 |
Weighted Average Shares, Basic | 77,897 | 80,475 | 78,356 | 82,070 |
Weighted Average Shares, Effect of dilutive stock-based awards | 1,294 | 1,166 | 1,109 | 881 |
Weighted Average Shares, Diluted | 79,191 | 81,641 | 79,465 | 82,951 |
Earnings Per Share, Basic | $ 0.96 | $ 1.01 | $ 2.43 | $ 2.17 |
Earnings Per Share, Diluted | $ 0.94 | $ 1.00 | $ 2.39 | $ 2.15 |
Future Minimum Lease Payments Under Our Operating Lease Liabilities (Detail) - USD ($) $ in Thousands |
Nov. 03, 2019 |
Feb. 03, 2019 |
---|---|---|
Remaining fiscal 2019 | $ 66,826 | |
Fiscal 2020 | 273,977 | $ 262,429 |
Fiscal 2021 | 240,772 | 225,755 |
Fiscal 2022 | 207,974 | 190,263 |
Fiscal 2023 | 174,827 | 160,308 |
Fiscal 2024 | 151,029 | |
Fiscal 2025 and thereafter | 453,319 | |
Total lease payments | 1,568,724 | $ 1,690,944 |
Less interest | (215,791) | |
Total operating lease liabilities | 1,352,933 | |
Less current operating lease liabilities | (225,530) | |
Total non-current operating lease liabilities | $ 1,127,403 |
Condensed Consolidated Statements of Earnings - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|
Nov. 03, 2019 |
Oct. 28, 2018 |
Nov. 03, 2019 |
Oct. 28, 2018 |
|||
Net revenues | [1] | $ 1,442,472 | $ 1,356,983 | $ 4,054,418 | $ 3,835,157 | |
Cost of goods sold | 924,300 | 861,999 | 2,608,054 | 2,444,067 | ||
Gross profit | 518,172 | 494,984 | 1,446,364 | 1,391,090 | ||
Selling, general and administrative expenses | 416,281 | 400,600 | 1,184,176 | 1,155,990 | ||
Operating income | 101,891 | 94,384 | 262,188 | 235,100 | ||
Interest (income) expense, net | 2,564 | 2,288 | 7,486 | 5,073 | ||
Earnings before income taxes | 99,327 | 92,096 | 254,702 | 230,027 | ||
Income taxes | 24,614 | 10,631 | 64,685 | 51,681 | ||
Net earnings | $ 74,713 | $ 81,465 | $ 190,017 | $ 178,346 | ||
Basic earnings per share | $ 0.96 | $ 1.01 | $ 2.43 | $ 2.17 | ||
Diluted earnings per share | $ 0.94 | $ 1.00 | $ 2.39 | $ 2.15 | ||
Shares used in calculation of earnings per share: | ||||||
Basic | 77,897 | 80,475 | 78,356 | 82,070 | ||
Diluted | 79,191 | 81,641 | 79,465 | 82,951 | ||
|
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares |
Nov. 03, 2019 |
Feb. 03, 2019 |
Oct. 28, 2018 |
---|---|---|---|
Preferred stock, par value | $ 0.01 | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 7,500,000 | 7,500,000 | 7,500,000 |
Preferred stock, shares issued | 0 | 0 | 0 |
Common stock, par value | $ 0.01 | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 253,125,000 | 253,125,000 | 253,125,000 |
Common stock, shares issued | 77,612,000 | 78,813,000 | 80,282,000 |
Common stock, shares outstanding | 77,612,000 | 78,813,000 | 80,282,000 |
Treasury stock, shares | 14,000 | 2,000 | 2,000 |
BORROWING ARRANGEMENTS |
9 Months Ended |
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Nov. 03, 2019 | |
BORROWING ARRANGEMENTS | NOTE B. BORR O WING ARRANGEMENTSCredit Facility We have a credit facility, which provides for a $500,000,000 unsecured revolving line of cr e dit (the “revolver”) and a $300,000,000 unsecured term loan facility (the “term loan”). The revolver may be used to borrow revolving loans or request the issuance of letters of credit. We may, upon notice to the administrative agent, request existing or new lenders to increase the revolver by up to $250,000,000, at such lenders’ option, to provide for a total of $750,000,000 of unsecured revolving credit. The revolver matures on January 8, 2023, at which time all outstanding borrowings must be repaid and all outstanding letters of credit must be cash collateralized. We may, prior to January 8, 2020, elect to extend the maturity date for an additional year, subject to lender approval. During the third quarter of fiscal 2019, we had borrowings of $40,000,000 under the revolver. For year-to-date fiscal 2019, we had borrowings of $100,000,000 under the revolver (at a year-to-date weighted average interest rate of 3.12%), all of which was outstanding as of November 3, 2019. During the third quarter and for year-to-date fiscal 2018, we had borrowings of $60,000,000 under the revolver(at a year-to-date weighted average interest rate of 3.28%) . Additionally, as of November 3, 2019, $12,402,000 in issued but undrawn standby letters of credit was outstanding under the credit facility. The standby letters of credit were issued to secure the liabilities associated with workers’ compensation and other insurance programs.As of November 3, 2019, we had $300,000,000 outstanding under our term loan (at a year-to-date weighted average interest rate of 3.47%). The term loan matures on January 8, 2021, at which time all outstanding principal and any accrued interest must be repaid.The interest rates under the credit facility are variable, and may be elected by us as: (i) the London Interbank Offer Rate plus an applicable margin based on our leverage ratio ranging from 0.91% to 1.775% for a revolver borrowing, and 1.0% to 2.0% for the term loan; or (ii) a base rate as defined in the credit facility plus an applicable margin ranging from 0% to 0.775% for a revolver borrowing, and 0% to 1.0% for the term loan. As of November 3, 2019, we were in compliance with our financial covenants under the credit facility and, based on current projections, we expect to remain in compliance throughout the next 12 months. Letter of Credit Facilities We have three unsecured letter of credit reimbursement facilities for a total of $70,000,000 , each of which matures on August 23, 2020 . The letter of credit facilities contain covenants that are consistent with our credit facility. Interest on unreimbursed amounts under the letter of credit facilities accrues at a base rate as defined in the credit facility plus an applicable margin based on our leverage ratio. As of November 3, 2019, an aggregate of $8,221,000 was outstanding under the letter of credit facilities, which represents only a future commitment to fund inventory purchases to which we have not taken legal title. The latest expiration possible for any future letters of credit issued under the facilities is January 20, 2021. |
COMMITMENTS AND CONTINGENCIES |
9 Months Ended |
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Nov. 03, 2019 | |
COMMITMENTS AND CONTINGENCIES | NOTE F. COMMITMENTS AND CONTINGENCIES We are involved in lawsuits, claims and proceedings incident to the ordinary course of our business. These disputes, which are not currently material, are increasing in number as our business expands and our company grows. We review the need for any loss contingency reserves and establish reserves when, in the opinion of management, it is probable that a matter would result in liability, and the amount of loss, if any, can be reasonably estimated. In view of the inherent difficulty of predicting the outcome of these matters, it may not be possible to determine whether any loss is probable or to reasonably estimate the amount of the loss until the case is close to resolution, in which case no reserve is established until that time. Any claims against us, whether meritorious or not, could result in costly litigation, require significant amounts of management time and result in the diversion of significant operational resources. The results of these lawsuits, claims and proceedings cannot be predicted with certainty. However, we believe that the ultimate resolution of these current matters will not have a material adverse effect on our Condensed Consolidated Financial Statements taken as a whole. |
ACCUMULATED OTHER COMPREHENSIVE INCOME |
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ACCUMULATED OTHER COMPREHENSIVE INCOME | NOTE J. ACCUMULATED OTHER COMPREHENSIVE INCOME Changes in accum u lated other comprehensive income (loss) by component, net of tax, are as follows:
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Summary of Segment Reporting Information by Segment (Detail) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
Nov. 03, 2019 |
Oct. 28, 2018 |
Nov. 03, 2019 |
Oct. 28, 2018 |
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Segment Reporting Information [Line Items] | ||||||||
Net revenues | [1] | $ 1,442,472 | $ 1,356,983 | $ 4,054,418 | $ 3,835,157 | |||
Pottery Bam [Member] | ||||||||
Segment Reporting Information [Line Items] | ||||||||
Net revenues | 556,985 | 533,469 | 1,573,958 | 1,530,300 | ||||
West Elm [Member] | ||||||||
Segment Reporting Information [Line Items] | ||||||||
Net revenues | 390,341 | 339,099 | 1,057,398 | 913,662 | ||||
Williams Sonoma [Member] | ||||||||
Segment Reporting Information [Line Items] | ||||||||
Net revenues | 205,493 | 203,936 | 591,761 | 600,092 | ||||
Pottery Bam Kids and Teen [Member] | ||||||||
Segment Reporting Information [Line Items] | ||||||||
Net revenues | 228,051 | 227,331 | 632,950 | 621,534 | ||||
Other [Member] | ||||||||
Segment Reporting Information [Line Items] | ||||||||
Net revenues | [2] | $ 61,602 | $ 53,148 | $ 198,351 | $ 169,569 | |||
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Summary of Restricted Stock Unit Activity (Detail) - Restricted Stock Units (RSUs) |
9 Months Ended | |||
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Nov. 03, 2019
shares
| ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Balance at February 3, 2019, shares | 3,012,923 | |||
Granted, shares | 1,036,010 | |||
Granted, with vesting subject to performance conditions, shares | 238,786 | |||
Released, shares | (985,540) | [1] | ||
Cancelled, shares | (347,205) | |||
Balance at November 3, 2019 | 2,954,974 | |||
Vested plus expected to vest at November 3, 2019 | 3,115,488 | |||
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Weighted Average Remaining Operating Lease Term And Incremental Borrowing Rate (Detail) |
Nov. 03, 2019 |
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Weighted average remaining lease term (years) | 7 years 5 months 4 days |
Weighted average incremental borrowing rate | 3.72% |
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Nov. 03, 2019 |
Oct. 28, 2018 |
Nov. 03, 2019 |
Oct. 28, 2018 |
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Net earnings | $ 74,713 | $ 81,465 | $ 190,017 | $ 178,346 |
Other comprehensive income (loss): | ||||
Foreign currency translation adjustments | 1,783 | (1,830) | (2,477) | (5,968) |
Change in fair value of derivative financial instruments, net of tax (tax benefit) of $97, $(23), $163 and $378 | 5 | (65) | 77 | 1,064 |
Reclassification adjustment for realized (gain) loss on derivative financial instruments, net of tax of $187, $43, $221 and $19 | (8) | (120) | (235) | (71) |
Comprehensive income | $ 76,493 | $ 79,450 | $ 187,382 | $ 173,371 |
Summary of Fair Value of Identifiable Assets Acquired and Liabilities Assumed (Detail) - USD ($) $ in Thousands |
Nov. 03, 2019 |
Feb. 03, 2019 |
Oct. 28, 2018 |
---|---|---|---|
Business Acquisition [Line Items] | |||
Goodwill | $ 85,355 | $ 85,382 | $ 85,649 |
Outward Inc. | |||
Business Acquisition [Line Items] | |||
Working capital and other assets | 718,000 | ||
Property and equipment, net | 2,049,000 | ||
Intangible assets | 18,300,000 | ||
Liabilities | (6,886,000) | ||
Total identifiable net assets acquired | 14,181,000 | ||
Goodwill | 66,631,000 | ||
Total purchase consideration | $ 80,812,000 |
Effect of Derivative Instruments in Condensed Consolidated Financial Statements (Detail) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Nov. 03, 2019 |
Oct. 28, 2018 |
Nov. 03, 2019 |
Oct. 28, 2018 |
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Derivative [Line Items] | ||||
Line items presented in the Condensed Consolidated Statement of Earnings in which the effects of derivatives are recorded | $ 924,300 | $ 861,999 | $ 2,608,054 | $ 2,444,067 |
Line items presented in the Condensed Consolidated Statement of Earnings in which the effects of derivatives are recorded | 416,281 | 400,600 | 1,184,176 | 1,155,990 |
Cost of Sales [Member] | ||||
Derivative [Line Items] | ||||
Line items presented in the Condensed Consolidated Statement of Earnings in which the effects of derivatives are recorded | 924,300 | 861,999 | 2,608,054 | 2,444,067 |
Derivatives designated as cash flow hedges | 204 | 163 | 499 | 90 |
Selling, General and Administrative Expenses [Member] | ||||
Derivative [Line Items] | ||||
Line items presented in the Condensed Consolidated Statement of Earnings in which the effects of derivatives are recorded | 416,281 | 400,600 | 1,184,176 | 1,155,990 |
Derivatives designated as cash flow hedges | 16 | 49 | ||
Derivatives not designated as hedging instruments | $ 6 | $ 105 | $ 24 | $ 4,048 |
FINANCIAL STATEMENTS - BASIS OF PRESENTATION (Policies) |
9 Months Ended |
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Nov. 03, 2019 | |
New Accounting Pronouncements | New Accounting Pronouncements In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases right-of-use asset and an operating lease liability for virtually all leases. This ASU, as amended, was effective for us beginning in the first quarter of fiscal 2019. The adoption of this ASU resulted in an increase in total long-term assets and total liabilities of approximately $1.2 billion, which includes an increase in liabilities for lease obligations of approximately $1.4 billion, a decrease in deferred rent and deferred lease incentives of approximately $0.2 billion, and an increase in right-of-use assets of approximately $1.2 billion on the first day of fiscal 2019. We also recorded an approximate $3.3 million, net of tax, reduction to the opening balance of retained earnings resulting from the impairment of certain long-lived assets upon adoption of this ASU. We have elected to apply the provisions of this ASU at the adoption date, instead of to the earliest comparative period presented in the financial statements. We have elected the package of practical expedients upon adoption, which permits us not to reassess whether existing contracts are or contain leases, the lease classification of existing leases, or initial direct costs for existing leases. We have also elected not to separate lease and non-lease components for all of our leases and not to recognize a right-of-use asset and a lease liability for short-term leases. The adoption of this ASU did not materially impact our Condensed Consolidated Statement of Earnings.In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities (Topic 815), non-financial and financial risk components and aligns the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. The guidance also makes certain targeted improvements to simplify the application of hedge accounting guidance and ease the administrative burden of hedge documentation requirements and assessing hedge effectiveness. Entities should apply the guidance to existing cash flow and net investment hedge relationships using a modified retrospective approach with a cumulative effect adjustment recorded to opening retained earnings on the date of adoption. The guidance also provides transition relief to make it easier for entities to apply certain amendments to existing hedges where the hedge documentation needs to be modified. This ASU was effective for us in the first quarter of fiscal 2019. The adoption of this ASU did not have a material impact on our financial condition, results of operations or cash flows.In August 2018, the FASB issued ASU
2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. internal-use software. Accordingly, the amendments require an entity in a hosting arrangement that is a service contract to follow the guidance in Subtopic 350-40 to determine which implementation costs to capitalize as an asset related to the service contract and which costs to expense. This ASU is effective for us in the first quarter of fiscal 2020. We do not expect the adoption of this ASU to have a material impact on our financial condition, results of operations or cash flows. |
DERIVATIVE FINANCIAL INSTRUMENTS (Tables) |
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Foreign Currency Forward Contracts Outstanding with Notional Values | As of November 3, 2019 and October 28, 2018, we had foreign currency forward contracts outstanding (in U.S. dollars) with notional values as follows:
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Effect of Derivative Instruments in Consolidated Financial Statements | The effect of derivative instruments in our Condensed Consolidated Financial Statements during the thirteen and thirty-nine weeks ended November 3, 2019 and October 28, 2018,
pre-tax, was as follows:
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Fair Values of Derivative Instruments | The fair values of our derivative financial instruments are presented below according to their classification in our Condensed Consolidated Balance Sheets. All fair values were measured using Level 2 inputs as defined by the fair value hierarchy described in Note I.
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Earnings Per Share- Additional Information (Detail) - shares |
3 Months Ended | 9 Months Ended | ||
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Nov. 03, 2019 |
Oct. 28, 2018 |
Nov. 03, 2019 |
Oct. 28, 2018 |
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Earnings Per Share [Line Items] | ||||
Anti-dilutive stock-based awards excluded from the computation of diluted earnings per share | 2,000 | 6,000 | 28,000 | 16,000 |
Borrowing Arrangements - Additional Information (Detail) - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Nov. 03, 2019 |
Oct. 28, 2018 |
Nov. 03, 2019 |
Oct. 28, 2018 |
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Debt Instrument [Line Items] | ||||
Maximum borrowing capacity under letter of credit facilities including additional borrowing capacity | $ 70,000,000 | $ 70,000,000 | ||
Letter of credit facilities, maturity date | Aug. 23, 2020 | |||
Outstanding letter of credit facilities | 8,221,000 | $ 8,221,000 | ||
Borrowings under revolving line of credit | 100,000,000 | $ 60,000,000 | ||
Line of credit | 100,000,000 | $ 60,000,000 | 100,000,000 | $ 60,000,000 |
Standby Letters of Credit | ||||
Debt Instrument [Line Items] | ||||
Amount issued but undrawn under credit facility | 12,402,000 | $ 12,402,000 | ||
Unsecured Revolving Line Of Credit | ||||
Debt Instrument [Line Items] | ||||
Letter of credit facilities, maturity date | Jan. 08, 2023 | |||
Current borrowing capacity | 500,000,000 | $ 500,000,000 | ||
Maximum borrowing capacity including additional borrowing capacity | $ 250,000,000 | $ 250,000,000 | ||
Interest rate description | The interest rates under the credit facility are variable, and may be elected by us as: (i) the London Interbank Offer Rate plus an applicable margin based on our leverage ratio ranging from 0.91% to 1.775% for a revolver borrowing, and 1.0% to 2.0% for the term loan; or (ii) a base rate as defined in the credit facility plus an applicable margin ranging from 0% to 0.775% for a revolver borrowing, and 0% to 1.0% for the term loan. | |||
Weighted average interest rate | 3.12% | 3.28% | 3.12% | 3.28% |
Borrowings under revolving line of credit | $ 40,000,000 | $ 60,000,000 | $ 100,000,000 | $ 60,000,000 |
Line of credit | 100,000,000 | $ 60,000,000 | 100,000,000 | $ 60,000,000 |
Unsecured Revolving Line Of Credit | Maximum | ||||
Debt Instrument [Line Items] | ||||
Additional borrowing capacity | 750,000,000 | $ 750,000,000 | ||
Unsecured Revolving Line Of Credit | Margin Based On Leverage Ratio | Maximum | ||||
Debt Instrument [Line Items] | ||||
Leverage ratio | 1.775% | |||
Unsecured Revolving Line Of Credit | Margin Based On Leverage Ratio | Minimum | ||||
Debt Instrument [Line Items] | ||||
Leverage ratio | 0.91% | |||
Unsecured Revolving Line Of Credit | Base Rate | Maximum | ||||
Debt Instrument [Line Items] | ||||
Leverage ratio | 0.775% | |||
Unsecured Revolving Line Of Credit | Base Rate | Minimum | ||||
Debt Instrument [Line Items] | ||||
Leverage ratio | 0.00% | |||
Unsecured Term Loan Facility | ||||
Debt Instrument [Line Items] | ||||
Debt instrument face amount | 300,000,000 | $ 300,000,000 | ||
Long term debt | $ 300,000,000 | $ 300,000,000 | ||
Debt instrument, maturity date | Jan. 08, 2021 | |||
Weighted average interest rate | 3.47% | 3.47% | ||
Unsecured Term Loan Facility | Margin Based On Leverage Ratio | Maximum | ||||
Debt Instrument [Line Items] | ||||
Leverage ratio | 2.00% | |||
Unsecured Term Loan Facility | Margin Based On Leverage Ratio | Minimum | ||||
Debt Instrument [Line Items] | ||||
Leverage ratio | 1.00% | |||
Unsecured Term Loan Facility | Base Rate | Maximum | ||||
Debt Instrument [Line Items] | ||||
Leverage ratio | 1.00% | |||
Unsecured Term Loan Facility | Base Rate | Minimum | ||||
Debt Instrument [Line Items] | ||||
Leverage ratio | 0.00% |
Summary of Long-lived Assets by Geographic Areas (Detail) - USD ($) $ in Thousands |
Nov. 03, 2019 |
Oct. 28, 2018 |
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Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-lived assets | $ 2,304,579 | $ 1,127,333 |
US | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-lived assets | 2,140,505 | 1,076,367 |
Non-US [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-lived assets | $ 164,074 | $ 50,966 |
EARNINGS PER SHARE |
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EARNINGS PER SHARE | NOTE D. EARNINGS PER SHARE Basic earnings per share is computed as net earnings divided by the weighted average number of common shares outstanding for the period. Diluted earnings per share is computed as net earnings divided by the weighted average number of common shares outstanding and common stock equivalents outstanding for the period. Common stock equivalents consist of shares subject to stock-based awards with exercise prices less than or equal to the average market price of our common stock for the period, to the extent their inclusion would be dilutive. The following is a reconciliation of net earnings and the number of shares used in the basic and diluted earnings per share computations:
Stock-based awards of 2,000 and 28,000 were excluded from the computation of diluted earnings per share for the thirteen and thirty-nine weeks ended November 3, 2019, respectively, a s their inclusion would be anti-dilutive. Stock-based awards of 6,000 and 16,000 were excluded from the computation of diluted earnings per share for the thirteen and thirty-nine weeks ended October 28, 2018, respectively, as their inclusion would be anti-dilutive. |
DERIVATIVE FINANCIAL INSTRUMENTS |
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DERIVATIVE FINANCIAL INSTRUMENTS | NOTE H. DERIVATIVE FINANCIAL INSTRUMENTS We have businesses in Canada, Australia and the United Kingdom, and operations throughout Asia and Europe, which expose us to market risk associated with foreign currency exchange rate fluctuations. Substantially all of our purchases and sales are denominated in U.S. dollars, which limits our exposure to this risk. However, some of our foreign operations have a functional currency other than the U.S. dollar. To mitigate this risk, we hedge a portion of our foreign currency exposure with foreign currency forward contracts in accordance with our risk management policies. We do not enter into such contracts for speculative purposes. The assets or liabilities associated with these derivative financial instruments are measured at fair value and recorded in either other current or long-term assets or other current or long-term liabilities. As discussed below, the accounting for gains and losses resulting from changes in fair value depends on whether the derivative financial instrument is designated as a hedge and qualifies for hedge accounting in accordance with Accounting Standards Codification (“ASC”) 815, Derivatives and Hedging Cash Flow Hedges We enter into foreign currency forward contracts designated as cash flow hedges (to sell Canadian dollars and purchase U.S. dollars) for forecasted inventory purchases in U.S. dollars by our Canadian subsidiary. These hedges have terms of up to 18 months. All hedging relationships are formally documented, and the forward contracts are designed to mitigate foreign currency exchange risk on hedged transactions. We record the effective portion of changes in the fair value of our cash flow hedges in other comprehensive income (“OCI”) until the earlier of when the hedged forecasted inventory purchase occurs or the respective contract reaches maturity. Subsequently, as the inventory is sold to the customer, we reclassify amounts previously recorded in OCI to cost of goods sold. Changes in the fair value of the forward contract related to interest charges (or forward points) are excluded from the assessment and measurement of hedge effectiveness and are recorded in cost of goods sold. Based on the rates in effect as of November 3, 2019, we expect to reclassify a net pre-tax gain of approximately $37,000 from OCI to cost of goods sold over the next 12 months.We also enter into non-designated foreign currency forward contracts (to sell Australian dollars and British pounds and purchase U.S. dollars) to reduce the exchange risk associated with our assets and liabilities denominated in a foreign currency. Any foreign exchange gains or losses related to these contracts are recognized in selling, general and administrative expenses.As of November 3, 2019 and October 28, 2018, we had foreign currency forward contracts outstanding (in U.S. dollars) with notional values as follows:
Hedge effectiveness is evaluated prospectively at inception, on an ongoing basis, as well as retrospectively using regression analysis. Any measurable ineffectiveness of the hedge is recorded in selling, general and administrative expenses. No gain or loss was recognized for cash flow hedges due to hedge ineffectiveness and all hedges were deemed effective for assessment purposes for the thirteen and thirty-nine weeks ended November 3, 2019 and October 28, 2018. The effect of derivative instruments in our Condensed Consolidated Financial Statements during the thirteen and thirty-nine weeks ended November 3, 2019 and October 28, 2018,
pre-tax, was as follows:
The fair values of our derivative financial instruments are presented below according to their classification in our Condensed Consolidated Balance Sheets. All fair values were measured using Level 2 inputs as defined by the fair value hierarchy described in Note I.
We record all derivative assets and liabilities on a gross basis. They do not meet the balance sheet netting criteria as discussed in ASC 210,
Balance Sheet |
FINANCIAL STATEMENTS - BASIS OF PRESENTATION |
9 Months Ended |
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Nov. 03, 2019 | |
FINANCIAL STATEMENTS - BASIS OF PRESENTATION | NOTE A. FINANCIAL STATEMENTS - BASIS OF PRESENTATION These financial statements include Williams-Sonoma, Inc. and its wholly owned subsidiaries (“we,” “us” or “our”). The Condensed Consolidated Balance Sheets as of November 3, 2019 and October 28, 2018, the Condensed Consolidated Statements of Earnings, the Condensed Consolidated Statements of Comprehensive Income, and the Condensed Consolidated Statements of Stockholders’ Equity for the thirteen weeks and thirty-nine weeks then ended and the Condensed Consolidated Statements of Cash Flows for the thirty-nine weeks then ended, have been prepared by us, without audit. In our opinion, the financial statements include all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position at the balance sheet dates and the results of operations for the thirteen and thirty-nine weeks then ended. Intercompany transactions and accounts have been eliminated. The balance sheet as of February 3, 2019, presented herein, has been derived from our audited Consolidated Balance Sheet included in our Annual Report on Form 10-K for the fiscal year ended February 3, 2019.The results of operations for the thirteen and thirty-nine weeks ended November 3, 2019 are not necessarily indicative of the operating results of the full year. Certain information and footnote disclosures normally included in the annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been omitted. These financial statements should be read in conjunction with the Consolidated Financial Statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended February 3, 2019.New Accounting Pronouncements In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases right-of-use asset and an operating lease liability for virtually all leases. This ASU, as amended, was effective for us beginning in the first quarter of fiscal 2019. The adoption of this ASU resulted in an increase in total long-term assets and total liabilities of approximately $1.2 billion, which includes an increase in liabilities for lease obligations of approximately $1.4 billion, a decrease in deferred rent and deferred lease incentives of approximately $0.2 billion, and an increase in right-of-use assets of approximately $1.2 billion on the first day of fiscal 2019. We also recorded an approximate $3.3 million, net of tax, reduction to the opening balance of retained earnings resulting from the impairment of certain long-lived assets upon adoption of this ASU. We have elected to apply the provisions of this ASU at the adoption date, instead of to the earliest comparative period presented in the financial statements. We have elected the package of practical expedients upon adoption, which permits us not to reassess whether existing contracts are or contain leases, the lease classification of existing leases, or initial direct costs for existing leases. We have also elected not to separate lease and non-lease components for all of our leases and not to recognize a right-of-use asset and a lease liability for short-term leases. The adoption of this ASU did not materially impact our Condensed Consolidated Statement of Earnings.In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities (Topic 815), non-financial and financial risk components and aligns the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. The guidance also makes certain targeted improvements to simplify the application of hedge accounting guidance and ease the administrative burden of hedge documentation requirements and assessing hedge effectiveness. Entities should apply the guidance to existing cash flow and net investment hedge relationships using a modified retrospective approach with a cumulative effect adjustment recorded to opening retained earnings on the date of adoption. The guidance also provides transition relief to make it easier for entities to apply certain amendments to existing hedges where the hedge documentation needs to be modified. This ASU was effective for us in the first quarter of fiscal 2019. The adoption of this ASU did not have a material impact on our financial condition, results of operations or cash flows.In August 2018, the FASB issued ASU
2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. internal-use software. Accordingly, the amendments require an entity in a hosting arrangement that is a service contract to follow the guidance in Subtopic 350-40 to determine which implementation costs to capitalize as an asset related to the service contract and which costs to expense. This ASU is effective for us in the first quarter of fiscal 2020. We do not expect the adoption of this ASU to have a material impact on our financial condition, results of operations or cash flows. |
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