spwh_Current_Folio_10Q

Table of Contents

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549


FORM 10-Q 


(Mark One)

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

For the quarterly period ended May 4, 2019

OR

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

Commission File Number: 001-36401


SPORTSMAN’S WAREHOUSE HOLDINGS, INC. 

(Exact Name of Registrant as Specified in its Charter)


Delaware

 

39-1975614

(State or other jurisdiction
of incorporation or organization)

 

(I.R.S. Employer
Identification No.)

 

 

 

7035 South High Tech Drive, Midvale, Utah

 

84047

(Address of principal executive offices)

 

(Zip code)

 

Registrant’s telephone number, including area code: (801) 566-6681


 

 

 

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common stock, $.01 par value

SPWH

The Nasdaq Stock Market LLC

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐ 

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

    

 

 

 

 

 

Large accelerated filer

    

Accelerated filer

    

 

 

 

 

Non-accelerated filer

 

☐ 

Smaller reporting company

 

 

 

 

 

Emerging growth company

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act:☒

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒ 

 

As of May 31, 2019, the registrant had 43,099,213 shares of common stock, $0.01 par value per share, outstanding.  

 

 

Table of Contents

SPORTSMAN’S WAREHOUSE HOLDINGS, INC.

 

TABLE OF CONTENTS

 

 

 

 

 

 

Page

PART I. FINANCIAL INFORMATION 

 

 

 

Item 1. 

Financial Statements (unaudited):

3

 

 

 

 

Condensed Consolidated Balance Sheets

3

 

 

 

 

Condensed Consolidated Statements of Operations

4

 

 

 

 

Condensed Consolidated Statement of Stockholders’ Equity (Deficit)

5

 

 

 

 

Condensed Consolidated Statements of Cash Flows

6

 

 

 

 

Notes to Condensed Consolidated Financial Statements

7

 

 

 

Item 2. 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

19

 

 

 

Item 3. 

Quantitative and Qualitative Disclosures About Market Risk

27

 

 

 

Item 4. 

Controls and Procedures

28

 

 

 

PART II. OTHER INFORMATION 

 

 

 

Item 1. 

Legal Proceedings

29

 

 

 

Item 1A. 

Risk Factors

29

 

 

 

Item 6. 

Exhibits

30

 

 

 

 

Signatures

31

 

We operate on a fiscal calendar that, in a given fiscal year, consists of the 52- or 53-week period ending on the Saturday closest to January 31st. Our fiscal first quarters ended May 4, 2019 and May 5, 2018, both consisted of 13 weeks and are referred to herein as the first quarter of fiscal year 2019 and the first quarter of fiscal year 2018, respectively. Fiscal year 2019 contains 52 weeks of operations and will end on February 1, 2020. Fiscal year 2018 contained 52 weeks of operations ended on February 2, 2019.

 

 

Table of Contents

References throughout this document to “Sportsman’s Warehouse,” “we,” “us,” and “our” refer to Sportsman’s Warehouse Holdings, Inc. and its subsidiaries, and references to “Holdings” refer to Sportsman’s Warehouse Holdings, Inc. excluding its subsidiaries.

 

STATEMENT REGARDING FORWARD-LOOKING STATEMENTS 

 

This Quarterly Report on Form 10-Q (this “10-Q”) contains statements that constitute forward-looking statements as that term is defined by the Private Securities Litigation Reform Act of 1995. These statements concern our business, operations and financial performance and condition as well as our plans, objectives and expectations for our business operations and financial performance and condition, which are subject to risks and uncertainties. All statements other than statements of historical fact included in this 10-Q are forward-looking statements. These statements may include words such as “aim,” “anticipate,” “assume,” “believe,” “can have,” “could,” “due,” “estimate,” “expect,” “goal,” “intend,” “likely,” “may,” “objective,” “plan,” “potential,” “positioned,” “predict,” “should,” “target,” “will,” “would” and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events or trends. For example, all statements we make relating to our plans and objectives for future operations, growth or initiatives and strategies are forward-looking statements.

 

These forward-looking statements are based on current expectations, estimates, forecasts and projections about our business and the industry in which we operate and our management’s beliefs and assumptions. We derive many of our forward-looking statements from our own operating budgets and forecasts, which are based upon many detailed assumptions. While we believe that our assumptions are reasonable, we caution that predicting the impact of known factors is very difficult, and we cannot anticipate all factors that could affect our actual results.

 

All of our forward-looking statements are subject to risks and uncertainties that may cause our actual results to differ materially from our expectations. Important factors that could cause actual results to differ materially from our expectations include, but are not limited to:

 

·

our retail-based business model is impacted by general economic conditions and economic and financial uncertainties may cause a decline in consumer spending;

·

current and future government regulations, in particular regulations relating to the sale of firearms and ammunition, may impact the supply and demand for our products and our ability to conduct our business;

·

our concentration of stores in the Western United States makes us susceptible to adverse conditions in this region, which could affect our sales and cause our operating results to suffer;

·

we operate in a highly fragmented and competitive industry and may face increased competition;

·

we may not be able to anticipate, identify and respond to changes in consumer demands, including regional preferences, in a timely manner; and

·

we may not be successful in operating our stores in any existing or new markets into which we expand. 

 

The above is not a complete list of factors or events that could cause actual results to differ from our expectations, and we cannot predict all of them. All written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by the cautionary statements disclosed under “Part I. Item 1A. Risk Factors,” appearing in our Annual Report on Form 10-K for the fiscal year ended February 1, 2019 and “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this 10-Q, as such disclosures may be amended, supplemented or superseded from time to time by other reports we file with the Securities and Exchange Commission, including subsequent Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q, and public communications. You should evaluate all forward-looking statements made in this 10-Q and otherwise in the context of these risks and uncertainties.

 

Potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on any forward-looking statements we make. These forward-looking statements speak only as of the date of this 10-Q and are not guarantees of future performance or developments and involve known and unknown risks, uncertainties and other factors that are in many cases beyond our control. Except as required by law, we undertake no obligation to update or revise any forward-looking statements publicly, whether as a result of new information, future developments or otherwise.

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PART I. FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

 

SPORTSMAN’S WAREHOUSE HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

Amounts in Thousands, Except Per Share Data

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

May 4,

 

February 2,

 

 

    

2019

    

2019

 

Assets

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash

 

$

1,715

 

$

1,547

 

Accounts receivable, net

 

 

289

 

 

249

 

Merchandise inventories

 

 

291,462

 

 

276,600

 

Income tax receivable

 

 

597

 

 

 —

 

Prepaid expenses and other

 

 

9,566

 

 

15,174

 

Total current assets

 

 

303,629

 

 

293,570

 

Operating lease right of use asset

 

 

189,431

 

 

 —

 

Property and equipment, net

 

 

91,049

 

 

92,084

 

Deferred income taxes

 

 

 —

 

 

2,997

 

Definite lived intangibles, net

 

 

239

 

 

246

 

Total assets

 

$

584,348

 

$

388,897

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable

 

$

49,982

 

$

24,953

 

Accrued expenses

 

 

56,528

 

 

56,384

 

Income taxes payable

 

 

 —

 

 

1,838

 

Operating lease liability, current

 

 

31,967

 

 

 —

 

Revolving line of credit

 

 

141,572

 

 

144,306

 

Current portion of long-term debt, net of discount and debt issuance costs

 

 

7,915

 

 

7,915

 

Current portion of deferred rent

 

 

 —

 

 

5,270

 

Total current liabilities

 

 

287,964

 

 

240,666

 

Long-term liabilities:

 

 

 

 

 

 

 

Long-term debt, net of discount, debt issuance costs, and current portion

 

 

25,739

 

 

27,717

 

Deferred income taxes

 

 

535

 

 

 —

 

Deferred rent, noncurrent

 

 

 —

 

 

41,854

 

Operating lease liability, noncurrent

 

 

187,570

 

 

 —

 

Total long-term liabilities

 

 

213,844

 

 

69,571

 

Total liabilities

 

 

501,808

 

 

310,237

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

 

Preferred stock, $.01 par value; 20,000 shares authorized; 0 shares issued and outstanding

 

 

 

 

 

 

 

Common stock, $.01 par value; 100,000 shares authorized; 43,174  and 42,978 shares issued and outstanding, respectively

 

 

432

 

 

430

 

Additional paid-in capital

 

 

84,753

 

 

84,671

 

Accumulated deficit

 

 

(2,645)

 

 

(6,441)

 

Total stockholders' equity

 

 

82,540

 

 

78,660

 

Total liabilities and stockholders' equity

 

$

584,348

 

$

388,897

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

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SPORTSMAN'S WAREHOUSE HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Amounts in Thousands Except Per Share Data

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

Thirteen Weeks Ended

 

 

 

May 4

 

May 5

 

 

 

2019

 

2018

 

Net sales

 

$

174,017

 

$

180,059

 

Cost of goods sold

 

 

119,844

 

 

124,493

 

Gross profit

 

 

54,173

 

 

55,566

 

 

 

 

 

 

 

 

 

Selling, general, and administrative expenses

 

 

59,530

 

 

59,216

 

Loss from operations

 

 

(5,357)

 

 

(3,650)

 

Interest expense

 

 

(2,105)

 

 

(3,557)

 

Loss before income taxes

 

 

(7,462)

 

 

(7,207)

 

Income tax benefit

 

 

(2,003)

 

 

(1,379)

 

Net loss

 

$

(5,459)

 

$

(5,828)

 

Loss per share:

 

 

 

 

 

 

 

Basic

 

$

(0.13)

 

$

(0.14)

 

Diluted

 

$

(0.13)

 

$

(0.14)

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

Basic

 

 

43,003

 

 

42,727

 

Diluted

 

 

43,003

 

 

42,727

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

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SPORTSMAN'S WAREHOUSE HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

Amounts in Thousands

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

Restricted nonvoting
common stock

 

Additional
paid-in-
capital

 

Accumulated
deficit

 

Total
stockholders'
equity

 

    

Shares

    

Amount

    

Shares

    

Amount

    

Amount

    

Amount

    

Amount

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at February 3, 2018

 

42,617

 

$

426

 

 —

 

$

 —

 

$

82,197

 

$

(32,825)

 

$

49,798

Impact of change for ASC 606 adoption

 

 —

 

 

 —

 

 —

 

 

 —

 

 

 —

 

 

2,634

 

 

2,634

Vesting of restricted stock units

 

216

 

 

 2

 

 —

 

 

 —

 

 

(2)

 

 

 —

 

 

 —

Payment of withholdings on restricted stock units

 

 —

 

 

 —

 

 —

 

 

 —

 

 

(699)

 

 

 —

 

 

(699)

Stock based compensation

 

 —

 

 

 —

 

 —

 

 

 —

 

 

1,572

 

 

 —

 

 

1,572

Net income

 

 —

 

 

 —

 

 —

 

 

 —

 

 

 —

 

 

(5,828)

 

 

(5,828)

Balance at May 5, 2018

 

42,833

 

$

428

 

 —

 

$

 —

 

$

83,068

 

$

(36,019)

 

$

47,477

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at February 2, 2019

 

42,978

 

$

430

 

 —

 

$

 —

 

$

84,671

 

$

(6,441)

 

$

78,660

Impact of change for ASC 842 adoption

 

 —

 

 

 —

 

 —

 

 

 —

 

 

 —

 

 

9,255

 

 

9,255

Vesting of restricted stock units

 

196

 

 

 2

 

 —

 

 

 —

 

 

(2)

 

 

 —

 

 

 —

Payment of withholdings on restricted stock units

 

 —

 

 

 —

 

 —

 

 

 —

 

 

(369)

 

 

 —

 

 

(369)

Stock based compensation

 

 —

 

 

 —

 

 —

 

 

 —

 

 

453

 

 

 —

 

 

453

Net loss

 

 —

 

 

 —

 

 —

 

 

 —

 

 

 —

 

 

(5,459)

 

 

(5,459)

Balance at May 4, 2019

 

43,174

 

$

432

 

 —

 

$

 —

 

$

84,753

 

$

(2,645)

 

$

82,540

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SPORTSMAN'S WAREHOUSE HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Amounts in Thousands

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

Thirteen Weeks Ended

 

 

 

May 4,

 

May 5,

 

    

 

2019

 

2018

Cash flows from operating activities:

 

 

 

 

 

 

 

Net loss

 

 

$

(5,459)

 

$

(5,828)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

 

 

 

 

 

 

 

Depreciation of property and equipment

 

 

 

4,606

 

 

4,387

Amortization and write-off of discount on debt and deferred financing fees

 

 

 

84

 

 

192

Amortization of definite lived intangible

 

 

 

 7

 

 

276

Change in deferred rent

 

 

 

 —

 

 

(649)

Gain on asset dispositions

 

 

 

(311)

 

 

 —

Noncash lease expense

 

 

 

7,610

 

 

 —

Deferred income taxes

 

 

 

431

 

 

237

Stock-based compensation

 

 

 

453

 

 

1,572

Change in operating assets and liabilities:

 

 

 

 

 

 

 

Accounts receivable, net

 

 

 

(40)

 

 

(63)

Operating lease liabilities

 

 

 

(8,513)

 

 

 —

Merchandise inventories

 

 

 

(14,862)

 

 

(35,607)

Prepaid expenses and other

 

 

 

1,786

 

 

(78)

Accounts payable

 

 

 

25,340

 

 

27,501

Accrued expenses

 

 

 

(5,254)

 

 

630

Income taxes payable and receivable

 

 

 

(2,435)

 

 

(1,619)

Net cash provided by (used in) operating activities

 

 

 

3,443

 

 

(9,049)

Cash flows from investing activities:

 

 

 

 

 

 

 

Purchase of property and equipment

 

 

 

(3,402)

 

 

(4,474)

Proceeds from sale of property and equipment

 

 

 

311

 

 

 —

Net cash used in investing activities

 

 

 

(3,091)

 

 

(4,474)

Cash flows from financing activities:

 

 

 

 

 

 

 

Net (payments) borrowings on line of credit

 

 

 

(2,734)

 

 

6,874

Increase in book overdraft

 

 

 

4,919

 

 

8,358

Payment of withholdings on restricted stock units

 

 

 

(369)

 

 

(699)

Principal payments on long-term debt

 

 

 

(2,000)

 

 

(400)

Net cash (used in) provided by financing activities

 

 

 

(184)

 

 

14,133

Net change in cash

 

 

 

168

 

 

610

Cash at beginning of period

 

 

 

1,547

 

 

1,769

Cash at end of period

 

 

$

1,715

 

$

2,379

 

 

 

 

 

 

 

 

Supplemental disclosures of cash flow information:

 

 

 

 

 

 

 

Cash paid during the period for:

 

 

 

 

 

 

 

Interest, net of amounts capitalized

 

 

$

2,021

 

$

3,137

Income taxes, net of refunds

 

 

 

 —

 

 

 —

 

 

 

 

 

 

 

 

Supplemental schedule of noncash investing and financing activities:

 

 

 

 

 

 

 

Noncash change in lease asset and operating liabilities from remeasurement of existing leases

 

 

$

13,149

 

$

 —

and addition of new leases

 

 

 

 

 

 

 

Purchases of property and equipment included in accounts payable and accrued expenses

 

 

$

1,356

 

$

1,829

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

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SPORTSMAN’S WAREHOUSE HOLDINGS, INC.

AND SUBSIDIARIES

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

Amounts reported in thousands, except per share data

(1) Description of Business and Basis of Presentation

Description of Business

Sportsman’s Warehouse Holdings, Inc. (“Holdings”) and its subsidiaries (collectively, the “Company”) operate retail sporting goods stores. As of May 4, 2019, the Company operated 92 stores in 23 states. The Company also operates an e-commerce platform at www.sportsmans.com. The Company’s stores and website are aggregated into one single operating and reportable segment.

Basis of Presentation

The condensed consolidated financial statements included herein are unaudited and have been prepared by management of the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted pursuant to such rules and regulations. The Company’s condensed consolidated balance sheet as of February 2, 2019 was derived from the Company’s audited consolidated balance sheet as of that date. All other condensed consolidated financial statements contained herein are unaudited and reflect all adjustments that are, in the opinion of management, necessary to summarize fairly our condensed consolidated financial statements for the periods presented. All of these adjustments are of a normal recurring nature. The results of the fiscal quarter ended May 4, 2019 are not necessarily indicative of the results to be obtained for the year ending February 1, 2020. These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended February 2, 2019 filed with the SEC on March 29, 2019 (the “Fiscal 2018 Form 10-K”).

 

(2) Summary of Significant Accounting Policies

 

The Company’s significant accounting policies are described in Note 1 to the Company’s Fiscal 2018 Form 10-K. Except for the changes below, the Company has consistently applied the accounting policies to all periods presented in these condensed consolidated financial statements.

 

Leases

 

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842), which requires lessees to recognize on the balance sheet assets and liabilities for leases with lease terms of more than 12 months. Consistent with prior GAAP, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee will depend primarily on its classification as a finance or operating lease. However, unlike prior GAAP—which required only finance (formerly capital) leases to be recognized on the balance sheet—the new ASU requires both types of leases to be recognized on the balance sheet. The ASU took effect for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. This standard can be applied at the beginning of the earliest period presented using the modified retrospective approach, which includes certain practical expedients that an entity may elect to apply, including an election to use certain transition relief. In July 2018, the FASB issued ASU No. 2018-10, Codification Improvements to Topic 842,

Leases and ASU No. 2018-11, Leases (Topic 842): Targeted Improvements, which make improvements to Accounting Standards Codification (“ASC”) 842 and allow entities to not restate comparative periods in transition to ASC 842 and instead report the comparative periods under ASC 840.

 

The Company adopted ASC 842 using the modified retrospective approach at the beginning of the first quarter of fiscal 2019, coinciding with the standard’s effective date. In accordance with ASC 842, the Company did not restate comparative periods in transition to ASC 842 and instead reported comparative periods under ASC 840. Adoption of the

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standard resulted in the initial recognition of operating lease right-of-use (“ROU”) assets of $183,000 and operating lease liabilities of $214,000 as of February 3, 2019. These amounts are based on the present value of such commitments using the Company’s incremental borrowing rate (“IBR”), which was determined through use of the Company’s credit rating to develop a rate curve that approximates the Company’s market risk profile.  The adoption of this standard had a material impact on the Company’s consolidated statement of income, stockholders’ equity(deficit) and cash flows, with a $9,300 net adjustment recorded to beginning retained earnings on February 3, 2019 due to the acceleration of recognition of a deferred gain and derecognition of related deferred tax asset the Company was amortizing relating to the historical sale of owned properties. In addition, the Company completed its evaluation of the practical expedients offered and enhanced disclosures required in ASC 842, as well as identified arrangements that contain embedded leases, among other activities, to account for the adoption of this standard.

 

The Company elected the following practical expedients:

 

·

A package of practical expedients allowing the Company to:

1.

Carry forward its historical lease classification (i.e. it was not necessary to reclassify any existing leases at the adoption date of ASC 842),

2.

Avoid reassessing whether any expired or existing contracts are or contain leases, and

3.

Avoid reassessing initial indirect costs for any existing lease.

·

A practical expedient allowing the Company to not separate lease components (e.g. fixed payments including, rent, real estate taxes, and insurance costs) from nonlease components (e.g. common area maintenance costs), primarily impacting the Company’s real estate leases. The election of this practical expedient eliminates the burden of separately estimating the real estate lease and nonlease costs on a relative stand-alone basis.

·

A practical expedient related to land easements, allowing the Company to carry forward the accounting treatment for land easements on existing agreements and eliminated the need to reassess existing lease contracts to determine if land easements are separate leases under ASC 842.

 

The Company did not elect a practical expedient which would allow the Company to use hindsight in determining the lease term (that is, when considering lessee options to extend or terminate the lease and to purchase the underlying asset) and to assess impairment of the entity’s ROU assets, since election of this expedient could make adoption more complex give that re-evaluation of the lease term and impairment consideration affect other aspects of lease accounting.

 

In accordance with ASC 842, the Company determines if an arrangement is a lease at inception. The Company has operating leases for the Company’s retail stores, distribution center, and corporate office. Operating leases are included in operating lease ROU assets and operating lease liabilities, current and noncurrent, on the interim unaudited condensed consolidated balance sheet. Lease liabilities are calculated using the effective interest method. Operating lease classification results in a straight-line expense recognition pattern over the lease term and recognized lease expense as a single expense component, which results in amortization of the ROU asset that equals the difference between lease expense and interest expense. Operating leases are included in selling, general and administrative expense, based on the use of the leased asset, on the interim unaudited condensed consolidated statement of operations. Leases with an initial term of 12 months of less are not recorded on the balance sheet and are not material; the Company recognizes lease expense for these leases on a straight-line basis over the remaining lease term.

 

ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the reasonably certain lease term. As the Company’s leases generally do not provide an implicit rental rate, the Company uses an IBR to determine the present value of future rental payments. The IBR is based on the Company’s credit rating to develop a yield curve that approximates the Company’s market risk profile. The operating lease ROU asset also includes any prepaid lease payments made by the tenant and is reduced by lease incentives such as tenant improvement allowances. The operating lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense is recognized on a straight-line basis over the lease term.

 

For fiscal 2018, the Company evaluated and classified its leases as operating leases for financial reporting purposes, in accordance with ASC 840.

 

In accordance with ASC 840, deferred rent represents the difference between rent paid and amounts expensed for operating leases. Certain leases have scheduled rent increases, and certain leases include an initial period of free or

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reduced rent as an inducement to enter into the lease agreement (“rent holidays”). The Company recognized rent expense for rent increases and rent holidays on a straight-line basis over the term of the underlying leases, without regard to when rent payments are made. The calculation of straight-line rent begins on the possession date and extends through the “reasonably assured” lease term as defined in ASC 840.

 

Additionally, in accordance with ASC 840, landlord allowances for tenant improvements, or lease incentives, were recorded as deferred rent and amortized on a straight-line basis over the “reasonably assured” lease term as a component of rent expense.

 

See Note 5 for a further discussion on leases.

 

Recently Issued Accounting Pronouncements

 

In August 2018, the FASB issued ASU No. 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. This standard aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The Company’s accounting for the service element of a hosting arrangement that is a service contract is not affected by the proposed amendments and will continue to be expensed as incurred in accordance with existing guidance. This standard does not expand on existing disclosure requirements except to require a description of the nature of hosting arrangements that are service contracts. This standard is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted, including adoption in any interim period for which financial statements have not been issued. Entities can choose to adopt the new guidance prospectively or retrospectively. The

Company plans to adopt the updated disclosure requirements of ASU No. 2018-15 prospectively in the first quarter of fiscal 2020, coinciding with the standard’s effective date, and expects the impact from this standard to be immaterial.

(3) Revenue Recognition

 

Revenue recognition accounting policy

 

The Company operates solely as an outdoor retailer, which includes both retail stores and an e-commerce platform, that offers a broad range of products in the United States and online. Generally, all revenues are recognized when control of the promised goods is transferred to customers, in an amount that reflects the consideration in exchange for those goods. Accordingly, the Company implicitly enters into a contract with customers to deliver merchandise inventory at the point of sale. Collectability is reasonably assured since the Company only extends immaterial credit purchases to certain municipalities.

 

Substantially all of the Company’s revenue is for single performance obligations for the following distinct items:

 

·

Retail store sales

 

·

E-commerce sales

 

·

Gift cards and loyalty reward program

 

For performance obligations related to retail store and e-commerce sales contracts, the Company typically transfers control, for retail stores, upon consummation of the sale when the product is paid for and taken by the customer and, for e-commerce sales, when the products are tendered for delivery to the common carrier.

 

The transaction price for each contract is the stated price on the product, reduced by any stated discounts at that point in time. The Company does not engage in sales of products that attach a future material right which could result in a separate performance obligation for the purchase of goods in the future at a material discount. The implicit point-of-sale contract with the customer, as reflected in the transaction receipt, states the final terms of the sale, including the description, quantity, and price of each product purchased. Payment for the Company’s contracts is due in full upon delivery. The customer agrees to a stated price implicit in the contract that does not vary over the contract.

 

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The transaction price relative to sales subject to a right of return reflects the amount of estimated consideration to which the Company expects to be entitled. This amount of variable consideration included in the transaction price, and measurement of net sales, is included in net sales only to the extent that it is probable that there will be no significant reversal in a future period. Actual amounts of consideration ultimately received may differ from the Company’s estimates. The allowance for sales returns is estimated based upon historical experience and a provision for estimated returns is recorded as a reduction in sales in the relevant period. The estimated merchandise inventory cost related to the sales returns is recorded in prepaid expenses and other. The estimated refund liabilities are recorded in accrued expenses.  If actual results in the future vary from the Company’s estimates, the Company adjusts these estimates, which would affect net sales and earnings in the period such variances become known.

 

Contract liabilities are recognized primarily for gift card sales and our loyalty reward program. Cash received from the sale of gift cards is recorded as a contract liability in accrued expenses, and the Company recognizes revenue upon the customer’s redemption of the gift card. Gift card breakage is recognized as revenue in proportion to the pattern of customer redemptions by applying a historical breakage rate of 3.0% when no escheat liability to relevant jurisdictions exists. Based upon historical experience, gift cards are predominantly redeemed in the first two years following their issuance date. The Company does not sell or provide gift cards that carry expiration dates. ASC 606 requires the Company to allocate the transaction price between the goods and the loyalty reward points based on the relative stand alone selling price. The Company recognized revenue for the breakage of loyalty reward points as revenue in proportion to the pattern of customer redemption of the points by applying a historical breakage rate of 25% when no escheat liability to relevant jurisdictions exists.

 

Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer, are excluded from revenue.

 

Sales returns

 

The Company estimates a reserve for sales returns and records the respective reserve amounts, including a right of return asset when a product is expected to be returned and resold. Historical experience of actual returns and customer return rights are the key factors used in determining the estimated sales returns.

 

Contract balances

 

The following table provides information about right of return assets, contract liabilities, and sales return liabilities with customers as of May 4, 2019:

 

 

 

 

 

 

May 4, 2019

 

February 2, 2019

Right of return assets, which are included in prepaid expenses and other

$ 1,051

 

$ 1,496

Estimated contract liabilities, net of breakage

(19,239)

 

(20,298)

Sales return liabilities, which are included in accrued expenses

1,569

 

2,233

 

For the 13 weeks ended May 4, 2019 the Company recognized approximately $290 in gift card breakage and approximately $310 in loyalty reward breakage. Gift card and loyalty reward breakage revenue for the 13 weeks ended May 5, 2018 were $319 and $265, respectively.  

 

The current balance of the right of return assets is the expected amount of inventory to be returned that is expected to be resold. The current balance of the contract liabilities primarily relates to the gift card and loyalty reward program liabilities. The Company expects the revenue associated with these liabilities to be recognized in proportion to the pattern of customer redemptions over the next two years. The current balance of sales return liabilities is the expected amount of sales returns from sales that have occurred.

 

Disaggregation of revenue from contracts with customers

 

In the following table, revenue from contracts with customers is disaggregated by department. The percentage of net sales related to the Company’s departments for the 13 weeks ended May 4, 2019 and May 5, 2018, was approximately:

 

 

 

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Thirteen Weeks Ended

 

 

 

 

May 4,

 

May 5,

Department

    

Product Offerings

    

2019

    

2018

Camping

 

Backpacks, camp essentials, canoes and kayaks, coolers, outdoor cooking equipment, sleeping bags, tents and tools

 

11.9%

 

11.5%

Clothing

 

Camouflage, jackets, hats, outerwear, sportswear, technical gear and work wear

 

8.0%

 

7.3%

Fishing

 

Bait, electronics, fishing rods, flotation items, fly fishing, lines, lures, reels, tackle and small boats

 

12.1%

 

11.6%

Footwear

 

Hiking boots, socks, sport sandals, technical footwear, trail shoes, casual shoes, waders and work boots

 

7.4%

 

6.4%

Hunting and Shooting

 

Ammunition, archery items, ATV accessories, blinds and tree stands, decoys, firearms, reloading equipment and shooting gear

 

53.6%

 

56.2%

Optics, Electronics, Accessories, and Other

 

Gift items, GPS devices, knives, lighting, optics (e.g. binoculars), two-way radios, and other license revenue, net of revenue discounts

 

7.0%

 

7.0%

Total

 

 

 

100.0%

 

100.0%

 

(4) Property and Equipment

Property and equipment as of May 4, 2019 and February 2, 2019 were as follows:

 

 

 

 

 

 

 

 

 

 

 

May 4,

 

February 2,

 

 

    

2019

    

2019

 

Furniture, fixtures, and equipment

 

$

72,184

 

$

71,820

 

Leasehold improvements

 

 

95,011

 

 

94,573

 

Construction in progress

 

 

4,494

 

 

1,743

 

Total property and equipment, gross

 

 

171,689

 

 

168,136

 

Less accumulated depreciation and amortization

 

 

(80,640)

 

 

(76,052)

 

Total property and equipment, net

 

$

91,049

 

$

92,084

 

 

 

(5) Accrued Expenses

Accrued expenses consisted of the following as of May 4, 2019 and February 2, 2019:

 

 

 

 

 

 

 

 

 

 

May 4,

 

February 2,

 

    

2019

    

2019

Book overdraft

 

$

15,216

 

$

10,297

Unearned revenue

 

 

20,616

 

 

21,836

Accrued payroll and related expenses

 

 

8,472

 

 

11,590

Sales and use tax payable

 

 

4,054

 

 

4,250

Accrued construction costs

 

 

1,239

 

 

760

Other

 

 

6,931

 

 

7,651

Total Accrued Expenses

 

$

56,528

 

$

56,384

 

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(6) Leases

At the inception of the lease, the Company’s operating leases have remaining certain lease terms of up to 10 years, which typically includes multiple options for the Company to extend the lease which are not reasonably certain.

The adoption of ASC 842 resulted in recording a non-cash transitional adjustment to ROU assets and operating lease liabilities of $183,000 and $214,000, respectively, as of February 3, 2019. The difference between the ROU assets and operating lease liabilities at transition primarily represented existing deferred rent, tenant improvement allowances and prepaid rent of $14,200,  $20,600 and $3,800, respectively, which were recorded as a component of the ROU asset in connection with the non-cash transitional adjustment. As a result of the adoption of ASC 842, the Company also recorded an increase to retained earnings of $9,300, net of tax, as of February 3, 2019, in relation to the accelerated recognition of a deferred gain, and derecognition of the related deferred tax asset, which the Company was amortizing relating to the historical sales of owned properties it currently leases.

As of May 4, 2019, ROU assets recorded for operating leases were $189,400 and accumulated amortization associated with operating leases was $7,600. In the first quarter of fiscal 2019, the Company recorded a non-cash increase of $13,100 to ROU assets and operating lease liabilities resulting from lease remeasurements from the exercise of lease extension options and new leases added.

The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. 

In accordance with ASC 842, total lease expense recorded during the 13 weeks ended May 4, 2019 was $14,384.

In accordance with ASC 842, other information related to leases was as follows:

 

 

 

 

 

 

 

13 Weeks Ended

 

 

May 4,

 

    

2019

Operating cash flows from operating leases

 

$

(11,868)

    Cash paid for amounts included in the measurement of lease liabilities -  operating leases

 

 

(11,868)

 

 

 

 

 

 

As of May 4,

 

    

2019

 

 

 

 

Right-of-use assets obtained in exchange for new or remeasured operating lease liabilities

 

$

13,149

Weighted-average remaining lease term - operating leases

 

 

6.11 years

Weighted-average discount rate - operating leases

 

 

7.80%

 

In accordance with ASC 842, maturities of operating lease liabilities as of May 4, 2019 were as follows:

 

 

 

 

 

 

 

Operating

Year Endings:

Leases (in thousands)

2019

 

$

36,127

2020

 

 

47,939

2021

 

 

44,185

2022

 

 

40,003

2023

 

 

34,787

Thereafter

 

 

83,076

Undiscounted cash flows

 

$

286,117

Reconciliation of lease liabilities:

 

 

 

    Present values

 

$

219,537

    Lease liabilities - current

 

 

31,967

    Lease liabilities - noncurrent

 

 

187,570

Lease liabilities - total

 

$

219,537

    Difference between undiscounted and discounted cash flows

 

$

66,580

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In accordance with ASC 840, rent expense for operating leases consisted of the following:

 

 

 

 

 

 

 

13 Weeks Ended

 

 

May 5,

 

    

2018

Operating lease expense

 

$

13,138

Total lease expense

 

 

13,138

In accordance with ASC 840, future minimum lease payments under non-cancelable leases as of February 2, 2019 were as follows:

 

 

 

 

 

 

 

Operating

Year Endings:

Leases (in thousands)

2019

 

$

47,551

2020

 

 

46,824

2021

 

 

43,070

2022

 

 

38,160

2023

 

 

33,246

Thereafter

 

 

74,821

Total minimum lease payments

 

$

283,672

 

 

 

 

 

 

 

(7) Revolving Line of Credit

 

On May 23, 2018, Sportsman’s Warehouse, Inc. (“SWI”), a wholly owned subsidiary of the Company, as borrower, and Wells Fargo Bank, National Association (“Wells Fargo”), with a consortium of banks led by Wells Fargo, entered into an Amended and Restated Credit Agreement (as amended, restated, supplemented or otherwise modified, the “Amended Credit Agreement”). The Amended Credit Agreement amended and restated in its entirety that certain Credit Agreement, dated as of May 28, 2010, by and among SWI, as borrower, and Wells Fargo, as lender, and the other parties listed on the signature pages thereto.

 

The Amended Credit Agreement increased the amount available to borrow under the Company’s senior secured revolving credit facility (“Revolving Line of Credit”) from $150,000 to $250,000, subject to a borrowing base calculation, and provided for a new $40,000 term loan (the “Term Loan”).

 

In conjunction with the Amended Credit Agreement, the Company incurred $1,331 of fees paid to various parties which were capitalized. Fees associated with the Revolving Line of Credit were recorded in prepaid and other assets. Fees associated with the Term Loan offset the loan balance on the condensed consolidated balance sheet of the Company.

 

As of May 4, 2019 and February 2, 2019, the Company had $150,016 and $151,341 in outstanding revolving loans under the Revolving Line of Credit, respectively. Amounts outstanding are offset on the condensed consolidated balance sheets by amounts in depository accounts under lock-box or similar arrangements, which were $8,444 and $7,035 as of May 4, 2019 and February 2, 2019, respectively. As of May 4, 2019, the Company had stand-by commercial letters of credit of $1,705 under the terms of the Revolving Line of Credit.

 

The Amended Credit Agreement contains customary affirmative and negative covenants, including covenants that limit the Company’s ability to incur, create or assume certain indebtedness, to create, incur or assume certain liens, to make certain investments, to make sales, transfers and dispositions of certain property and to undergo certain fundamental changes, including certain mergers, liquidations and consolidations. The Amended Credit Agreement also requires the Company to maintain a minimum availability at all times of not less than 10% of the gross borrowing base. The Amended Credit Agreement contains customary events of default. The Revolving Line of Credit matures on May 23, 2023.

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As of May 4, 2019, the Revolving Line of Credit had $1,022 in deferred financing fees and as of February 2, 2019, the Revolving Line of Credit had $1,085 in deferred financing fees. During the 13 weeks ended May 4, 2019, the Company recognized $63 of non-cash interest expense with respect to the amortization of these deferred financing fees. During the 13 weeks ended May 5, 2018, the Company recognized $22 of non-cash interest expense with respect to the amortization of deferred financing fees.

 

For the 13 weeks ended May 4, 2019, and May 5, 2018, gross borrowings under the Revolving Line of Credit were $185,616 and $206,533 respectively. For the 13 weeks ended May 4, 2019, and May 5, 2018 gross paydowns under the Revolving Line of Credit were $189,280 and $197,467 respectively.

(8) Long-Term Debt

Long-term debt consisted of the following as of May 4, 2019 and February 2, 2019:

 

 

 

 

 

 

 

 

 

 

 

May 4,

 

February 2,

 

 

    

2019

    

2019

 

Term loan

 

 

34,000

 

 

36,000

 

Less debt issuance costs

 

 

(346)

 

 

(368)

 

 

 

 

33,654

 

 

35,632

 

Less current portion, net of discount and debt issuance costs

 

 

(7,915)

 

 

(7,915)

 

Long-term portion

 

$

25,739

 

$

27,717

 

 

Term Loan

On May 23, 2018, the Company entered into the Term Loan, which was issued at a price of 100% of the aggregate principal amount of $40,000 and has a maturity date of May 23, 2023.

Also on May 23, 2018, the Company borrowed $135,400 under the Revolving Line of Credit and used the proceeds from the New Term Loan and the Revolving Line of Credit to repay the Company’s prior term loan with a financial institution that had an outstanding principal balance of $134,700 and was scheduled to mature on December 3, 2020 (the”Prior Term Loan”).  

 

The Term Loan bears interest at a rate of LIBOR plus 5.75%.

 

As of May 4, 2019, and February 2, 2019, the Term Loan had an outstanding balance of $34,000 and $36,000, respectively. The outstanding amounts under the Term Loan as of May 4, 2019 and February 2, 2019 are offset on the condensed consolidated balance sheets by an unamortized debt issuance costs of $346 and $368, respectively.

 

During the 13 weeks ended May 4, 2019 and May 5, 2018, the Company recognized $22 and $113, respectively, of non-cash interest expense with respect to the amortization of the debt issuance costs.

 

During the 13 weeks ended May 5, 2018, the Company recognized $58, of non-cash interest expense with respect to the amortization of the discount related to the Prior Term Loan.  

 

During the 13 weeks ended May 4, 2019, the Company made the required quarterly payment on the New Term Loan of $2,000.

 

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Restricted Net Assets

 

The provisions of the Term Loan and the Revolving Line of Credit restrict all of the net assets of the Company’s consolidated subsidiaries, which constitute all of the net assets on the Company’s condensed consolidated balance sheet as of May 4, 2019, from being used to pay any dividends without prior written consent from the financial institutions party to the Company’s Term Loan and Revolving Line of Credit.

(9) Income Taxes

The Company recognized an income tax benefit of $2,003 and $1,379  in the 13 weeks ended May 4, 2019 and May 5, 2018, respectively. The Company’s effective tax rate for the 13 weeks ended May 4, 2019 and May 5, 2018 was 26.8% and 19.1%, respectively. The Company’s effective tax rate will generally differ from the U.S. Federal statutory rate of 21.0%, due to state taxes, permanent items, and discrete items relating to stock award deductions.

(10) Earnings Per Share

Basic earnings per share is calculated by dividing net income by the weighted-average number of shares of common stock outstanding, reduced by the number of shares repurchased and held in treasury, during the period. Diluted earnings per share represents basic earnings per share adjusted to include the potentially dilutive effect of outstanding share option awards, nonvested share awards and nonvested share unit awards.

 

The following table sets forth the computation of basic and diluted income per common share:

 

 

 

 

 

 

 

 

 

 

Thirteen Weeks Ended

 

 

 

May 4,

 

 

May 5,

 

    

 

2019

 

 

2018

Net loss

 

$

(5,459)

 

$

(5,828)

Weighted-average shares of common stock outstanding:

 

 

 

 

 

 

Basic

 

 

43,003

 

 

42,727

Dilutive effect of common stock equivalents

 

 

 —

 

 

 —

Diluted

 

 

43,003

 

 

42,727

Basic loss per share

 

$

(0.13)

 

$

(0.14)

Diluted loss per share

 

$

(0.13)

 

$

(0.14)

Restricted stock units considered anti-dilutive and excluded in the calculation

 

 

155

 

 

331

 

 

(11) Stock-Based Compensation

 

Stock-Based Compensation

During the 13 weeks ended May 4, 2019 and May 5, 2018, the Company recognized total stock-based compensation expense of $453 and $1,572, respectively. Compensation expense related to the Company's stock-based payment awards is recognized in selling, general, and administrative expenses in the condensed consolidated statements of operations.

 

Employee Stock Plans

As of May 4, 2019, the number of shares available for awards under the 2013 Performance Incentive Plan (the “2013 Plan”) was 276.  As of May 4, 2019, there were 432 unvested stock awards outstanding under the 2013 Plan.

 

Employee Stock Purchase Plan

The Company also has an Employee Stock Purchase Plan (“ESPP”) that was approved by shareholders in fiscal year 2015, under which 800 shares of common stock have been authorized. Shares are issued under the ESPP twice yearly at the end of each offering period. For the 13 weeks ended May 4, 2019,  no shares were issued under the ESPP and the number of shares available for issuance was 566.

 

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Nonvested Restricted Stock Awards

During the 13 weeks ended May 4, 2019 and May 5, 2018, the Company did not issue any nonvested restricted stock awards to employees.

The following table sets forth the rollforward of outstanding nonvested stock awards (per share amounts are not in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

Weighted

 

 

 

 

 

average

 

 

 

 

 

grant-date

 

 

    

Shares

    

fair value

 

Balance at February 2, 2019

 

26

 

$

11.25

 

Grants

 

 —

 

 

 —

 

Forfeitures

 

 —

 

 

 —

 

Vested

 

(26)

 

 

11.25

 

Balance at May 4, 2019

 

 —

 

$

 —

 

 

 

 

 

 

 

 

 

 

 

 

Weighted

 

 

 

 

 

average

 

 

 

 

 

grant-date

 

 

    

Shares

    

fair value

 

Balance at February 3, 2018

 

108

 

$

11.25

 

Grants

 

 —

 

 

 —

 

Forfeitures

 

 —

 

 

 —

 

Vested

 

(80)

 

 

11.25

 

Balance at May 5, 2018

 

28

 

$

11.25

 

 

Nonvested Performance-Based Stock Awards

During the 13 weeks ended May 4, 2019, the Company did not issue any performance-based stock awards.

 

During the 13 weeks ended May 5, 2018, the Company issued 163 nonvested performance-based stock awards to employees at a weighted average grant date fair value of $4.91 per share. The nonvested performance-based stock awards issued to employees vest over three years with one third vesting on each grant date anniversary. The number of shares issued was contingent on management achieving fiscal year 2018 performance targets for same store sales and gross margin. If minimum threshold performance targets are not achieved, no shares will vest. The maximum number of shares subject to the award is 326, and the “target” number of shares subject to the award is 163 as reported below. Following the end of the performance period (fiscal year 2018), the number of shares eligible to vest, based on actual performance, will be fixed and vesting will then be subject to each employee’s continued employment over the remaining service period. The issued shares estimate the most likely outcome of the performance conditions to be achieved for the performance period. Based on the fiscal year 2018 results, the number of shares issued in relation to these grants was 34.

 

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The following table sets forth the rollforward of outstanding nonvested performance-based stock awards (per share amounts are not in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

Weighted

 

 

 

 

 

average

 

 

 

 

 

grant-date

 

 

    

Shares

    

fair value

 

Balance at February 2, 2019

 

34

 

$

6.07

 

Grants

 

 —

 

 

 —

 

Forfeitures

 

 —

 

 

 —

 

Vested

 

(6)

 

 

11.25

 

Balance at May 4, 2019

 

28

 

$

4.91

 

 

 

 

 

 

 

 

 

 

 

 

Weighted

 

 

 

 

 

average

 

 

 

 

 

grant-date

 

 

 

Shares

    

fair value

 

Balance at February 3, 2018

 

49

 

$

11.25

 

Grants

 

163

 

 

4.91

 

Forfeitures

 

 —

 

 

 —

 

Vested

 

(46)

 

 

11.25

 

Balance at May 5, 2018

 

166

 

$

5.17

 

 

Nonvested Stock Unit Awards

During the 13 weeks ended May 4, 2019, the Company issued 157 nonvested stock units to employees of the Company at an average value of $4.89 per share. The shares issued to employees of the Company vest over a three year period with one third of the shares vesting on each grant date anniversary.

 

During the 13 weeks ended May 5, 2018, the Company issued 250 nonvested stock units to employees of the Company at an average value of $4.91 per share. The shares issued to employees of the Company vest over a three year period with one third of the shares vesting on each grant date anniversary.

 

The following table sets forth the rollforward of outstanding nonvested stock units (per share amounts are not in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

Weighted

 

 

 

 

 

average

 

 

 

 

 

grant-date

 

 

    

Shares

    

fair value

 

Balance at February 2, 2019

 

441

 

$

4.92

 

Grants

 

157

 

 

4.89

 

Forfeitures

 

(9)

 

 

4.91

 

Vested

 

(185)

 

 

4.75

 

Balance at May 4, 2019

 

404

 

$

4.91

 

 

 

 

 

 

 

 

 

 

 

 

Weighted

 

 

 

 

 

average

 

 

 

 

 

grant-date

 

 

    

Shares

    

fair value

 

Balance at February 3, 2018

 

419