þ
|
Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 | |
For the fiscal year ended January 31, 2009 | ||
or
|
||
o
|
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 | |
For the transition period from to |
Delaware
|
36-3685240 | |
(State or other jurisdiction
of
incorporation or organization) |
(I.R.S. Employer
Identification No.) |
|
1000 Remington Blvd., Suite 120
Bolingbrook, Illinois (Address of principal executive offices) |
60440
(Zip code) |
Title of Each Class
|
Name of Each Exchange on Which Registered
|
|
Common stock, par value $0.01 per share
|
The NASDAQ Global Select Market |
Large accelerated
filer
o
|
Accelerated filer þ | Non-accelerated filer o | Smaller reporting company o | |||
(Do
not check if a smaller reporting company)
|
2
Item 1. | Business |
3
4
5
Fiscal Year | ||||||||||||||||||||
2004 | 2005 | 2006 | 2007 | 2008 | ||||||||||||||||
Total stores beginning of period
|
126 | 142 | 167 | 196 | 249 | |||||||||||||||
Stores opened
|
20 | 25 | 31 | 53 | 63 | |||||||||||||||
Stores closed
|
(4 | ) | | (2 | ) | | (1 | ) | ||||||||||||
Total stores end of period
|
142 | 167 | 196 | 249 | 311 | |||||||||||||||
Stores remodeled
|
| 1 | 7 | 17 | 8 | |||||||||||||||
Total square footage
|
1,464,330 | 1,726,563 | 2,023,305 | 2,589,244 | 3,240,579 | |||||||||||||||
Average square footage per store
|
10,312 | 10,339 | 10,323 | 10,399 | 10,420 |
6
7
| Baby Boomers (born between 1946 and 1964): Baby Boomers have larger disposable incomes and are increasing their spending on personal care as well as health and wellness. The aging of the Baby Boomer generation is also influencing product innovation and demand for anti-aging products and cosmetic procedures. | |
| Generation X (born between 1965 and 1976): Generation X is entering their peak earning years and represents a significant contributor to overall consumer spending, including beauty products. A recent survey by American Express showed that Generation X spends 60% more on beauty products than Baby Boomers. In addition, while prior generations grew up shopping in department stores and general merchandisers, Generation X has grown up shopping in specialty stores and we believe seeks a retail environment that combines a compelling experience, functionality, variety and location. | |
| Generation Y (born between 1977 and 1994): According to the United States Census Bureau data, the 20 to 34 year-old age group is expected to grow by approximately 10% from 2003 to 2015. As Generation Y continues to enter the workforce, they will have increased disposable income to spend on beauty products. |
8
9
| Cosmetics, which includes products for the face, eyes, cheeks, lips and nails; | |
| Haircare, which includes shampoos, conditioners, styling products, and hair accessories; | |
| Salon styling tools, which includes hair dryers, curling irons and flat irons; | |
| Skincare and bath and body, which includes products for the face, hands and body; | |
| Fragrance for both men and women; | |
| Private label, consisting of Ulta branded cosmetics, skincare, bath and body products and haircare; and | |
| Other, including candles, home fragrance products, exercise accessories, educational DVDs and other miscellaneous health and beauty products. |
10
11
12
13
Item 1A. | Risk Factors |
14
15
| recognize and define product and beauty trends; | |
| anticipate, gauge and react to changing consumer demands in a timely manner; | |
| translate market trends into appropriate, saleable product and service offerings in our stores and salons in advance of our competitors; | |
| develop and maintain vendor relationships that provide us access to the newest merchandise on reasonable terms; and | |
| distribute merchandise to our stores in an efficient and effective manner and maintain appropriate in-stock levels. |
16
17
18
19
| Our rapidly expanding workforce, growing in pace with our number of stores, makes us vulnerable to changes in labor and employment laws. In addition, changes in federal and state minimum wage laws and other laws relating to employee benefits could cause us to incur additional wage and benefits costs, which could hurt our profitability and affect our growth strategy. | |
| Our salon business is subject to state board regulations and state licensing requirements for our stylists and our salon procedures. Failure to maintain compliance with these regulatory and licensing requirements could jeopardize the viability of our salons. | |
| We operate stores in California, which has enacted legislation commonly referred to as Proposition 65 requiring that clear and reasonable warnings be given to consumers who are exposed to chemicals known to the State of California to cause cancer or reproductive toxicity. Although we have sought to comply with Proposition 65 requirements, there can be no assurance that we will not be adversely affected by litigation relating to Proposition 65. |
20
21
22
| differences between our actual financial and operating results and those expected by investors; | |
| fluctuations in quarterly operating results; | |
| our performance during peak retail seasons such as the holiday season; | |
| market conditions in our industry and the economy as a whole; | |
| changes in the estimates of our operating performance or changes in recommendations by any research analysts that follow our stock or any failure to meet the estimates made by research analysts; | |
| investors perceptions of our prospects and the prospects of the beauty products and salon services industries; | |
| the performance of our key vendors; | |
| announcements by us, our vendors or our competitors of significant acquisitions, divestitures, strategic partnerships, joint ventures or capital commitments; | |
| introductions of new products or new pricing policies by us or by our competitors; | |
| recruitment or departure of key personnel; and | |
| the level and quality of securities research analyst coverage for our common stock. |
23
| general U.S. economic conditions and, in particular, the retail sales environment; | |
| changes in our merchandising strategy or mix; | |
| performance of our new and remodeled stores; | |
| the effectiveness of our inventory management; | |
| timing and concentration of new store openings, including additional human resource requirements and related pre-opening and other start-up costs; | |
| cannibalization of existing store sales by new store openings; | |
| levels of pre-opening expenses associated with new stores; | |
| timing and effectiveness of our marketing activities, such as catalogs and newspaper inserts; | |
| seasonal fluctuations due to weather conditions; and | |
| actions by our existing or new competitors. |
24
| dividing our board of directors into three classes serving staggered three-year terms; | |
| authorizing our board of directors to issue preferred stock and additional shares of our common stock without stockholder approval; | |
| prohibiting stockholder actions by written consent; | |
| prohibiting our stockholders from calling a special meeting of stockholders; | |
| prohibiting our stockholders from making certain changes to our amended and restated certificate of incorporation or amended and restated bylaws except with a two-thirds majority stockholder approval; and | |
| requiring advance notice for raising business matters or nominating directors at stockholders meetings. |
Item 1B. | Unresolved Staff Comments |
25
36
Item 2.
Properties
Number
of Stores
6
22
1
28
10
1
22
16
31
6
2
1
2
2
6
4
8
6
3
2
6
9
9
13
6
6
3
13
1
4
3
42
2
9
4
2
311
26
Item 3.
Legal
Proceedings
Item 4.
Submission
of Matters to a Vote of Security Holders
54
President, Chief Executive Officer and Director
44
Chief Financial Officer and Assistant Secretary
27
Item 5.
Market
for Registrants Common Equity, Related Stockholder Matters
and Issuer Purchases of Equity Securities
High
Low
$
15.92
$
10.49
14.99
9.43
14.70
8.05
10.30
5.76
High
Low
$
35.63
$
28.89
32.25
11.78
28
Number of Securities
Number of Securities
to be Issued Upon
Weighted-Average
Remaining Available
Exercise of
Exercise Price of
for Future Issuance
Outstanding Options,
Outstanding Options,
Under Equity
Warrants and Rights
Warrants and Rights
Compensation Plans
5,300,338
$
10.27
3,038,480
5,300,338
$
10.27
3,038,480
29
Item 6.
Selected
Financial Data
Fiscal Year Ended(1)
January 31,
February 2,
February 3,
January 28,
January 29,
2009
2008
2007
2006
2005
(In thousands, except per share and per square foot data)
$
1,084,646
$
912,141
$
755,113
$
579,075
$
491,152
756,712
628,495
519,929
404,794
346,585
327,934
283,646
235,184
174,281
144,567
267,322
225,167
188,000
140,145
121,999
14,311
11,758
7,096
4,712
4,072
46,301
46,721
40,088
29,424
18,496
3,943
4,542
3,314
2,951
2,835
42,358
42,179
36,774
26,473
15,661
17,090
16,844
14,231
10,504
6,201
$
25,268
$
25,335
$
22,543
$
15,969
$
9,460
$
0.44
$
0.69
$
1.38
$
0.74
$
(0.70
)
$
0.43
$
0.48
$
0.45
$
0.33
$
(0.70
)
57,425
20,383
5,771
4,094
3,181
58,967
53,293
49,921
48,196
3,181
0.2
%
6.4
%
14.5
%
8.3
%
8.0
%
311
249
196
167
142
3,240,579
2,589,244
2,023,305
1,726,563
1,464,330
10,420
10,399
10,323
10,339
10,312
2,960,355
2,283,935
1,857,885
1,582,935
1,374,005
$
366
$
399
$
398
$
366
$
357
110,863
101,866
62,331
41,607
34,807
51,445
39,503
29,736
22,285
18,304
$
3,638
$
3,789
$
3,645
$
2,839
$
3,004
159,695
117,039
88,105
76,473
69,955
292,224
236,389
162,080
133,003
114,912
568,932
469,413
338,597
282,615
253,425
106,047
74,770
55,529
50,173
47,008
244,968
211,503
148,760
123,015
105,308
30
(1)
Our fiscal year-end is the Saturday closest to January 31 based
on a 52/53-week year. Each fiscal year consists of four 13-week
quarters, with an extra week added onto the fourth quarter every
five or six years.
(2)
Fiscal 2006 was a 53-week operating year and the 53rd week
represented approximately $16.4 million in net sales.
(3)
Comparable store sales increase reflects sales for stores
beginning on the first day of the 14th month of operation.
Remodeled stores are included in comparable store sales unless
the store was closed for a portion of the current or comparable
prior year.
(4)
Total square footage per store is calculated by dividing total
square footage at end of year by number of stores at end of year.
(5)
Average total square footage represents a weighted average which
reflects the effect of opening stores in different months
throughout the year.
(6)
Net sales per average total square foot was calculated by
dividing net sales for the year by the average square footage
for those stores open during each year. Fiscal 2006 net
sales per average total square foot were adjusted to exclude the
net sales effect of the 53rd week.
(7)
Total debt includes approximately $4.8 million related to
the Series III preferred stock, which is presented between
the liabilities section and the equity section of our
consolidated balance sheet for all years prior to
February 2, 2008.
Item 7.
Managements
Discussion and Analysis of Financial Condition and Results of
Operations
31
32
33
the general national, regional and local economic conditions and
corresponding impact on customer spending levels;
the introduction of new products or brands;
the location of new stores in existing store markets;
competition;
our ability to respond on a timely basis to changes in consumer
preferences;
the effectiveness of our various marketing activities; and
the number of new stores opened and the impact on the average
age of all of our comparable stores.
the cost of merchandise sold, including all vendor allowances,
which are treated as a reduction of merchandise costs;
warehousing and distribution costs including labor and related
benefits, freight, rent, depreciation and amortization, real
estate taxes, utilities, and insurance;
store occupancy costs including rent, depreciation and
amortization, real estate taxes, utilities, repairs and
maintenance, insurance, licenses, and cleaning expenses;
salon payroll and benefits; and
shrink and inventory valuation reserves.
payroll, bonus and benefit costs for retail and corporate
employees;
advertising and marketing costs;
occupancy costs related to our corporate office facilities;
public company expense including Sarbanes-Oxley compliance
expenses;
stock-based compensation expense related to option grants which
will result in increases in expense as we implemented a
structured stock option compensation program in 2007;
depreciation and amortization for all assets except those
related to our retail and warehouse operations, which is
included in cost of sales; and
legal, finance, information systems and other corporate overhead
costs.
34
Fiscal Year Ended
January 31,
February 2,
February 3,
2009
2008
2007
(In thousands, except number of stores)
$
1,084,646
$
912,141
$
755,113
756,712
628,495
519,929
327,934
283,646
235,184
267,322
225,167
188,000
14,311
11,758
7,096
46,301
46,721
40,088
3,943
4,542
3,314
42,358
42,179
36,774
17,090
16,844
14,231
$
25,268
$
25,335
$
22,543
311
249
196
0.2
%
6.4
%
14.5
%
35
Fiscal Year Ended
January 31,
February 2,
February 3,
2009
2008
2007
100.0
%
100.0
%
100.0
%
69.8
%
68.9
%
68.9
%
30.2
%
31.1
%
31.1
%
24.6
%
24.7
%
24.9
%
1.3
%
1.3
%
0.9
%
4.3
%
5.1
%
5.3
%
0.4
%
0.5
%
0.4
%
3.9
%
4.6
%
4.9
%
1.6
%
1.8
%
1.9
%
2.3
%
2.8
%
3.0
%
a 90 basis point deleverage of fixed store costs primarily
driven by the acceleration of our new store program over the
last two years;
a 20 basis point deleverage of distribution center costs
due to one-time
start-up
costs and fixed on-going operating costs of our new Phoenix
distribution center opened in the first quarter fiscal
2008; and
a 20 basis point improvement in freight cost leverage due
to an improved transportation network due to the addition of our
new Phoenix distribution center and other cost management
strategies.
operating expenses from new stores opened in fiscal 2008 and
2007;
a 60 basis point improvement in leverage of corporate
overhead and store variable costs, including a 40 basis
point decrease in incentive compensation expense as compared to
fiscal 2007;
a 40 basis point increase in marketing expense driven by an
increased number of advertising vehicles and circulation to
drive customer traffic in a weaker economic environment; and
a 20 basis point increase in stock compensation expense.
an increase of $157.0 million in net sales from new stores
and comparable sales growth;
a 30 basis point decrease due to warehouse management
software-related inefficiencies during the first half of fiscal
2007; and
a 20 basis point increase due to increased vendor co-op
monies on increased advertising compared to the prior year.
37
operating expenses from new stores opened in fiscal 2007 and
fiscal 2006;
20 basis point decrease in stock compensation expense
representing the net effects of new 2007 stock option grants and
the non-recurring stock compensation charge of $2.8 million
in fiscal 2006;
a 40 basis point increase in marketing expense driven by
increased number of advertising vehicles and circulation to
drive customer traffic mainly during the fourth quarter of
fiscal 2007; and
the remainder is primarily attributed to improved leverage in
corporate overhead and store payroll on higher sales compared to
the prior year.
38
Fiscal Year Ended
January 31,
February 2,
February 3,
2009
2008
2007
(In thousands)
$
75,203
$
46,906
$
55,630
(110,863
)
(97,399
)
(64,745
)
35,509
50,637
9,921
$
(151
)
$
144
$
806
39
40
Less Than
1 to 3
3 to 5
After 5
Total
1 Year
Years
Years
Years
(In thousands)
$
627,586
$
82,296
$
159,070
$
143,551
$
242,669
106,047
106,047
$
733,633
$
82,296
$
265,117
$
143,551
$
242,669
(1)
Variable operating lease obligations related to common area
maintenance, insurance and real estate taxes are not included in
the table above. Total expense related to common area
maintenance, insurance and real estate taxes for fiscal 2008 was
$18.3 million.
(2)
The $18.0 million reflected as a current liability on the
consolidated balance sheet at January 31, 2009 represents
the maximum portion of the outstanding balance that we intend to
repay at any one point during fiscal 2009. However, we are not
contractually obligated to repay any principal on our revolving
credit facility until the term expires in May 2011. Interest
payments on the variable rate revolving credit facility are not
included in the table above. Outstanding borrowings bear
interest at the prime rate or the Eurodollar rate plus 1.00% up
to $100 million and 1.25% thereafter. The interest rate on
the outstanding balances under the facility as of
January 31, 2009 was 1.52%.
41
42
Item 7A.
Quantitative
and Qualitative Disclosures about Market Risk
43
Item 8.
Financial
Statements and Supplementary Data
Item 9.
Changes
in and Disagreements with Accountants on Accounting and
Financial Disclosure
Item 9A.
Controls
and Procedures
Item 9B.
Other
Information
44
Item 10.
Directors,
Executive Officers and Corporate Governance
Item 11.
Executive
Compensation
Item 12.
Security
Ownership and Certain Beneficial Owners and Management and
Related Stockholder Matters
Item 13.
Certain
Relationships and Related Transactions, and Director
Independence
Item 14.
Principal
Accountant Fees and Services
45
Item 15.
Exhibits
and Financial Statement Schedules
47
49
50
51
52
56
71
46
47
on Internal Control over Financial Reporting
48
Consolidated Balance Sheets
(In thousands, except per share data)
January 31,
February 2,
2009
2008
$
3,638
$
3,789
18,268
20,643
213,602
176,109
24,294
19,184
8,628
8,278
9,219
276,708
228,944
292,224
236,389
4,080
$
568,932
$
469,413
$
18,000
$
47,811
52,122
51,202
54,719
5,064
117,013
111,905
88,047
74,770
101,288
71,235
17,616
323,964
257,910
582
574
(4,179
)
(4,179
)
293,052
284,951
(43,856
)
(69,124
)
(631
)
(719
)
244,968
211,503
$
568,932
$
469,413
49
Consolidated Statements of Income
(In thousands, except per share data)
Fiscal Year Ended
January 31,
February 2,
February 3,
2009
2008
2007
$
1,084,646
$
912,141
$
755,113
756,712
628,495
519,929
327,934
283,646
235,184
267,322
225,167
188,000
14,311
11,758
7,096
46,301
46,721
40,088
3,943
4,542
3,314
42,358
42,179
36,774
17,090
16,844
14,231
$
25,268
$
25,335
$
22,543
11,219
14,584
$
25,268
$
14,116
$
7,959
$
0.44
$
0.69
$
1.38
$
0.43
$
0.48
$
0.45
57,425
20,383
5,771
58,967
53,293
49,921
50
Consolidated Statements of Cash Flows
(In thousands)
Fiscal Year Ended
January 31,
February 2,
February 3,
2009
2008
2007
$
25,268
$
25,335
$
22,543
51,445
39,503
29,736
22,583
(3,284
)
(3,080
)
3,877
2,283
983
(1,774
)
(1,575
)
(5,360
)
267
195
3,518
2,375
(2,167
)
(2,719
)
(37,493
)
(46,872
)
(19,863
)
(5,110
)
(3,594
)
(449
)
(11,918
)
4,373
(421
)
(4,311
)
9,051
8,636
(59
)
2,790
12,188
30,053
20,868
9,918
75,203
46,906
55,630
(110,863
)
(101,866
)
(62,331
)
4,467
(2,414
)
(110,863
)
(97,399
)
(64,745
)
1,217,969
1,094,590
851,468
(1,186,692
)
(1,070,557
)
(846,112
)
(59
)
123,608
(93,012
)
(4,792
)
(1,950
)
(2,217
)
1,774
1,575
5,360
2,517
1,175
1,422
35,509
50,637
9,921
(151
)
144
806
3,789
3,645
2,839
$
3,638
$
3,789
$
3,645
$
4,764
$
5,429
$
3,798
$
6,509
$
16,146
$
17,193
$
(3,316
)
$
12,141
$
4,010
$
88
$
(738
)
$
68
$
$
$
(1,680
)
51
Consolidated Statements of Stockholders
Equity
(In thousands, except per share data)
Series I
Series II
Series IV
Series V
Series V-I
Convertible, Voting,
Convertible, Voting,
Convertible, Voting,
Convertible, Voting,
Convertible, Voting,
Total
Treasury -
Preferred Stock
Preferred Stock
Preferred Stock
Preferred Stock
Preferred Stock
Preferred Stock
Preferred Stock
Par Value
$.01
$.01
$.01
$.01
$.01
17,208
7,634
19,184
22,500
4,600
Issued
Issued
Issued
Issued
Issued
Issued
Treasury
Shares
Amount
Shares
Amount
Shares
Amount
Shares
Amount
Shares
Amount
Shares
Amount
Shares
Amount
16,915
$
39,040
7,634
$
74,455
19,184
$
42,296
21,448
$
50,576
920
$
2,108
66,101
$
208,475
(38
)
$
(12
)
4,277
4,575
5,503
229
14,584
16,915
43,317
7,634
74,455
19,184
46,871
21,448
56,079
920
2,337
66,101
223,059
(38
)
(12
)
(360
)
(1,803
)
3,107
3,590
4,341
181
11,219
(30,845
)
(31,311
)
(29,663
)
(1,193
)
(93,012
)
(16,915
)
(15,579
)
(7,634
)
(74,455
)
(19,184
)
(19,150
)
(21,448
)
(30,757
)
(920
)
(1,325
)
(66,101
)
(141,266
)
398
1,815
$
$
$
$
$
$
$
52
Consolidated Statements of Stockholders Equity
(Continued)
(In thousands)
Treasury -
Related
Accumulated
Common Stock
Common Stock
Additional
Deferred
Party
Other
Total
Issued
Treasury
Paid-In
Stock-based
Notes
Accumulated
Comprehensive
Stockholders
Shares
Amount
Shares
Amount
Capital
Compensation
Receivable
Deficit
Income (Loss)
Equity
Shares
Amount
4,513
$
71
(1
)
$
$
6,533
$
(431
)
$
(373
)
$
(91,199
)
$
(49
)
$
123,015
2,896
46
3,056
3,102
(241
)
(2,217
)
(2,217
)
(14,584
)
(4,094
)
(4,094
)
68
68
22,543
22,543
22,611
5,360
5,360
(431
)
431
690
690
293
293
7,409
$
117
(242
)
$
(2,217
)
$
15,501
$
$
(4,467
)
$
(83,240
)
$
19
$
148,760
53
Consolidated Statements of Stockholders Equity
(Continued)
(In thousands)
Treasury -
Related
Accumulated
Common Stock
Common Stock
Additional
Party
Other
Total
Issued
Treasury
Paid-In
Notes
Accumulated
Comprehensive
Stockholders
Shares
Amount
Shares
Amount
Capital
Receivable
Deficit
Income (Loss)
Equity
7,409
$
117
(242
)
$
(2,217
)
$
15,501
$
(4,467
)
$
(83,240
)
$
19
$
148,760
559
5
1,170
1,175
(11
)
(147
)
(1,950
)
(11,219
)
4,467
4,467
(738
)
(738
)
25,335
25,335
24,597
1,575
1,575
2,152
2,152
131
131
(43
)
43
7,667
77
123,531
123,608
(93,012
)
41,776
418
(252
)
(1,815
)
140,848
57,411
$
574
(505
)
$
(4,179
)
$
284,951
$
$
(69,124
)
$
(719
)
$
211,503
54
Consolidated Statements of Stockholders Equity
(Continued)
(In thousands)
Treasury -
Accumulated
Common Stock
Common Stock
Additional
Other
Total
Issued
Treasury
Paid-In
Accumulated
Comprehensive
Stockholders
Shares
Amount
Shares
Amount
Capital
Deficit
Loss
Equity
57,411
$
574
(505
)
$
(4,179
)
$
284,951
$
(69,124
)
$
(719
)
$
211,503
834
8
2,509
2,517
88
88
25,268
25,268
25,356
1,774
1,774
3,877
3,877
(59
)
(59
)
58,245
$
582
(505
)
$
(4,179
)
$
293,052
$
(43,856
)
$
(631
)
$
244,968
55
1.
Business
and basis of presentation
2.
Summary
of significant accounting policies
56
Notes to Consolidated Financial
Statements (Continued)
3 to 10 years
10 years
3 to 5 years
57
Notes to Consolidated Financial
Statements (Continued)
58
Notes to Consolidated Financial
Statements (Continued)
59
Notes to Consolidated Financial
Statements (Continued)
60
Notes to Consolidated Financial
Statements (Continued)
3.
Property
and equipment
January 31,
February 2,
2009
2008
$
173,994
$
136,039
199,007
149,022
78,541
61,761
18,081
30,316
469,623
377,138
(177,399
)
(140,749
)
$
292,224
$
236,389
4.
Commitments
and contingencies
Operating
Leases
$
82,296
81,868
77,202
73,323
70,228
242,669
$
627,586
61
Notes to Consolidated Financial
Statements (Continued)
5.
Accrued
liabilities
January 31,
February 2,
2009
2008
$
13,265
$
17,222
12,908
11,910
7,914
12,537
7,152
5,675
9,963
7,375
$
51,202
$
54,719
6.
Income
taxes
Fiscal
Fiscal
Fiscal
2008
2007
2006
$
2,383
$
18,150
$
15,165
1,935
2,369
2,102
4,318
20,519
17,267
11,725
(3,102
)
(2,228
)
1,047
(573
)
(808
)
12,772
(3,675
)
(3,036
)
$
17,090
$
16,844
$
14,231
62
Notes to Consolidated Financial
Statements (Continued)
Fiscal
Fiscal
Fiscal
2008
2007
2006
35.0
%
35.0
%
35.0
%
3.4
%
4.3
%
3.4
%
1.9
%
0.6
%
0.3
%
40.3
%
39.9
%
38.7
%
January 31,
February 2,
2009
2008
$
10,491
$
11,655
2,576
2,315
989
963
2,799
1,038
671
243
16,855
16,885
15,771
5,815
3,586
4,483
124
26,193
3,586
$
(9,338
)
$
13,299
7.
Notes
payable
63
Notes to Consolidated Financial
Statements (Continued)
8.
Financial
instruments
64
Notes to Consolidated Financial
Statements (Continued)
Fair Value Measurement Using
Level 1
Level 2
Level 3
$
$
1,042
$
9.
Share-based
awards
Fiscal
Fiscal
Fiscal
2008
2007
2006
48.7%
37.0%
45.0%
2.3%
4.7%
4.8%
5.2
5.0
5.5
None
None
None
65
Notes to Consolidated Financial
Statements (Continued)
Common Stock Options
Fiscal 2008
Fiscal 2007
Fiscal 2006
Weighted-
Weighted-
Weighted-
Average
Average
Average
Shares
Exercise Price
Shares
Exercise Price
Shares
Exercise Price
4,644
$
7.35
4,122
$
3.51
6,139
$
1.61
1,856
13.39
1,136
18.58
1,330
6.21
(834
)
3.02
(559
)
2.11
(2,882
)
1.08
(366
)
5.51
(55
)
4.85
(465
)
1.52
5,300
$
10.27
4,644
$
7.35
4,122
$
3.51
2,296
$
6.17
2,409
$
4.01
2,050
$
2.34
66
Notes to Consolidated Financial
Statements (Continued)
Fiscal 2006
Weighted-
Average
Exercise
Shares
Price
13
$
1.11
(13
)
1.11
$
$
Options outstanding
Options exercisable
Weighted-
Weighted-
Average
Average
Remaining
Weighted-
Remaining
Weighted-
Number of
Contractual Life
Average
Number
Contractual Life
Average
Options
(Years)
Exercise Price
of Options
(Years)
Exercise Price
79
4
$
.17
79
4
$
.17
290
6
.95
290
6
.95
834
5
2.48
834
5
2.48
679
7
3.48
471
7
3.44
458
8
9.18
180
8
9.18
2,466
10
13.89
239
9
15.55
494
9
22.78
203
9
23.77
5,300
8
$
10.27
2,296
7
$
6.17
67
Notes to Consolidated Financial
Statements (Continued)
10.
Net
income per common share
Fiscal Year Ended
January 31,
February 2,
February 3,
2009
2008
2007
$
25,268
$
25,335
$
22,543
11,219
14,584
$
25,268
$
14,116
$
7,959
57,425
20,383
5,771
1,542
2,321
2,398
30,589
41,752
58,967
53,293
49,921
$
0.44
$
0.69
$
1.38
$
0.43
$
0.48
$
0.45
11.
Employee
benefit plans
12.
Related-party
transactions
68
Notes to Consolidated Financial
Statements (Continued)
13.
Valuation
and qualifying accounts
Balance at
Charged to
Balance at
Beginning
Costs and
end
of Period
Expenses
Deductions
of Period
$
309
$
209
$
(222
)(a)
$
296
1,745
3,785
(3,525
)
2,005
1,801
1,840
(1,277
)
2,364
422
298
(411
)(a)
309
1,005
3,620
(2,880
)
1,745
701
1,561
(461
)
1,801
224
338
(140
)(a)
422
722
2,003
(1,720
)
1,005
758
359
(416
)
701
(a)
Represents writeoff of uncollectible accounts.
69
Notes to Consolidated Financial
Statements (Continued)
14.
Selected
quarterly financial data (unaudited)
70
Exhibit
3
.1
Amended and Restated Certificate of Incorporation (incorporated
by reference to Exhibit 3.1 to the Companys Registration
Statement on Form S-1 (file No. 333-144405) filed with the
Securities and Exchange Commission on August 17, 2007).
3
.2
Amended and Restated Bylaws (incorporated by reference to
Exhibit 3.2 to the Companys Registration Statement on Form
S-1 (file No. 333-144405) filed with the Securities and Exchange
Commission on August 17, 2007).
4
.1
Specimen Common Stock Certificate (incorporated by reference to
Exhibit 4.1 to the Companys Registration Statement on Form
S-1 (file No. 333-144405) filed with the Securities and Exchange
Commission on October 11, 2007).
4
.2
Third Amended and Restated Registration Rights Agreement between
Ulta Salon, Cosmetics & Fragrance, Inc. and the
stockholders party thereto (incorporated by reference to Exhibit
4.2 to the Companys Registration Statement on Form S-1
(file No. 333-144405) filed with the Securities and Exchange
Commission on August 17, 2007).
4
.3
Stockholder Rights Agreement (incorporated by reference to
Exhibit 4.4 to the Companys Registration Statement on Form
S-1 (file No. 333-144405) filed with the Securities and Exchange
Commission on August 17, 2007).
10
.12(a)
Second Amendment to Lease, dated February 20, 2008, by and
between Bolingbrook Investors, LLC and Ulta Salon, Cosmetics and
Fragrance, Inc. (incorporated by reference to Exhibit 10.1 to
the Companys Quarterly Report on Form 10-Q (file No.
001-33764) filed with the Securities and Exchange Commission on
June 17, 2008)
10
.13(a)*
Second Amendment to Lease, dated March 17, 2008, by and between
Southwest Valley Partners, LLC and Ulta Salon, Cosmetics and
Fragrance, Inc. (incorporated by reference to Exhibit 10.2 to
the Companys Quarterly Report on Form 10-Q (file No.
001-33764) filed with the Securities and Exchange Commission on
June 17, 2008)
10
.14(a)
First Amendment to Third Amended and Restated Loan and Security
Agreement, dated as of August 15, 2008 (incorporated by
reference to Exhibit 10.15 to the Companys Current Report
on Form 8-K (file No. 001-33764) filed with the Securities and
Exchange Commission on August 20, 2008).
10
.15*
Acceptance Letter and Commencement Date Agreement, dated March
24, 2008, by and between Southwest Valley Partners, LLC and Ulta
Salon, Cosmetics and Fragrance, Inc. (incorporated by reference
to Exhibit 10.3 to the Companys Quarterly Report on Form
10-Q (file No. 001-33764) filed with the Securities and Exchange
Commission on June 17, 2008)
10
.16
Employment Agreement, dated as of June 16, 2008, by and between
Ulta Salon, Cosmetics & Fragrance, Inc. and Lyn Kirby.
(incorporated by reference to Exhibit 10.4 to the Companys
Quarterly Report on Form 10-Q (file No. 001-33764) filed with
the Securities and Exchange Commission on June 17, 2008)
10
.16(a)
Amendment to Option Agreement with Grant Date March 24, 2008, by
and between Ulta Salon, Cosmetics & Fragrance, Inc. and Lyn
Kirby
10
.17
Ulta Salon, Cosmetics & Fragrance, Inc. Nonqualified
Deferred Compensation Plan
23
.1
Consent of Independent Registered Public Accounting Firm
31
.1
Certification of the Chief Executive Officer pursuant to Rules
13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934,
as adopted pursuant to section 302 of the Sarbanes-Oxley Act of
2002.
31
.2
Certification of the Chief Financial Officer pursuant to Rules
13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934,
as adopted pursuant to section 302 of the Sarbanes-Oxley Act of
2002.
32
.1
Certification of the Chief Executive Officer and Chief Financial
Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
*
Confidential treatment has been requested with respect to
certain portions of this Exhibit pursuant to
Rule 24b-2
under the Securities Exchange Act. Omitted portions have been
filed separately with the Securities and Exchange Commission.
71
By:
President, Chief Executive Officer and Director (Principal
Executive Officer)
April 2, 2009
Chief Financial Officer and Assistant Secretary (Principal
Financial and Accounting Officer)
April 2, 2009
Director
April 2, 2009
Director
April 2, 2009
Chairman of the Board of Directors
April 2, 2009
Director
April 2, 2009
Director
April 2, 2009
Director
April 2, 2009
Director
April 2, 2009
Director
April 2, 2009
72
/s/ Dennis K. Eck | ||||
By: | Dennis K. Eck | |||
Its: | Non-Executive Chairman |
/s/ Lyn Kirby | ||||
Lyn Kirby | ||||
2
3
(1) | 75% of Base Salary, and | ||
(2) | 100% of Bonuses, or | ||
(3) | 100% of Bonuses in excess of a dollar amount specified by the Participant. |
4
5
6
7
8
9
10
11
12
13
14
ULTA SALON, COSMETICS & FRAGRANCE, INC. | ||||||
|
||||||
|
By: |
/s/ Wayne LHeureux
|
||||
|
Title: | Senior Vice President, Human Resources |
15
By: |
/s/ Lynelle
P. Kirby
|
By: |
/s/ Gregg
R. Bodnar
|
By: |
/s/
Lynelle P. Kirby
|
By: |
/s/
Gregg R. Bodnar
|