Company Quick10K Filing
Quick10K
Stage Stores
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$0.76 29 $22
10-Q 2019-08-03 Quarter: 2019-08-03
10-Q 2019-05-04 Quarter: 2019-05-04
10-K 2019-02-02 Annual: 2019-02-02
10-Q 2018-11-03 Quarter: 2018-11-03
10-Q 2018-08-04 Quarter: 2018-08-04
10-Q 2018-05-05 Quarter: 2018-05-05
10-K 2018-02-03 Annual: 2018-02-03
10-Q 2017-10-28 Quarter: 2017-10-28
10-Q 2017-07-29 Quarter: 2017-07-29
10-Q 2017-04-29 Quarter: 2017-04-29
10-K 2017-01-28 Annual: 2017-01-28
10-Q 2016-10-29 Quarter: 2016-10-29
10-Q 2016-07-30 Quarter: 2016-07-30
10-Q 2016-04-30 Quarter: 2016-04-30
10-K 2016-01-30 Annual: 2016-01-30
10-Q 2015-10-31 Quarter: 2015-10-31
10-Q 2015-08-01 Quarter: 2015-08-01
10-Q 2015-05-02 Quarter: 2015-05-02
10-K 2015-01-31 Annual: 2015-01-31
10-Q 2014-11-01 Quarter: 2014-11-01
10-Q 2014-08-02 Quarter: 2014-08-02
10-Q 2014-05-03 Quarter: 2014-05-03
10-K 2014-02-01 Annual: 2014-02-01
8-K 2019-11-07 Other Events, Exhibits
8-K 2019-10-03 Other Events, Exhibits
8-K 2019-09-25 Regulation FD, Exhibits
8-K 2019-09-17 Other Events, Exhibits
8-K 2019-08-22 Earnings, Exhibits
8-K 2019-08-08 Other Events, Exhibits
8-K 2019-07-29 Officers
8-K 2019-07-23 Other Events, Exhibits
8-K 2019-06-24 Officers
8-K 2019-06-20 Regulation FD, Exhibits
8-K 2019-05-31 Officers, Shareholder Vote
8-K 2019-05-23 Earnings, Exhibits
8-K 2019-05-09 Other Events, Exhibits
8-K 2019-04-04 Other Events, Exhibits
8-K 2019-03-28 Other Events, Exhibits
8-K 2019-03-07 Earnings, Exhibits
8-K 2019-02-21 Other Events, Exhibits
8-K 2019-02-04 Enter Agreement, Officers, Other Events, Exhibits
8-K 2019-01-28 Regulation FD, Exhibits
8-K 2019-01-14 Other Events, Exhibits
8-K 2019-01-11 Enter Agreement, Off-BS Arrangement, Exhibits
8-K 2019-01-02 Other Events, Exhibits
8-K 2018-11-20 Earnings, Other Events, Exhibits
8-K 2018-11-08 Other Events, Exhibits
8-K 2018-09-04 Officers, Exhibits
8-K 2018-08-09 Other Events, Exhibits
8-K 2018-08-08 Officers, Exhibits
8-K 2018-08-08 Officers
8-K 2018-08-03 Enter Agreement, Off-BS Arrangement, Exhibits
8-K 2018-06-07 Shareholder Vote
8-K 2018-06-06 Other Events, Exhibits
8-K 2018-05-10 Other Events, Exhibits
8-K 2018-03-19 Officers, Exhibits
8-K 2018-03-08 Earnings, Exhibits
8-K 2018-02-22 Other Events, Exhibits
8-K 2018-01-08 Other Events, Exhibits
8-K 2018-01-02 Other Events, Exhibits
URBN Urban Outfitters 2,296
DSW DSW 2,114
PLCE Children's Place 1,370
GCO Genesco 590
LE Lands' End 257
TLRD Tailored Brands 257
TLYS Tilly's 249
ASNA Ascena Retail Group 55
SMRT Stein Mart 34
DEST Destination Maternity 10
SSI 2019-08-03
Part I - Financial Information
Item 1. Financial Statements
Note 1 - Basis of Presentation
Note 2 - Fair Value Measurements
Note 3 - Debt Obligations
Note 4 - Revenue
Note 5 - Leases
Note 6 - Stock-Based Compensation
Note 7 - Pension Plan
Note 8 - Earnings per Share
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II - Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-10.1 ex101q22019.htm
EX-31.1 ex311q22019.htm
EX-31.2 ex312q22019.htm
EX-32 ex32q22019.htm

Stage Stores Earnings 2019-08-03

SSI 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

Document
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A number of store leases provide for escalating minimum rent payments at pre-determined dates. Certain store leases provide for contingent rent payments based on a percentage of retail sales over contractual levels. Some of our leases include variable payments for maintenance, taxes and insurance.Settles in cash ranging from zero to a maximum of twice the number of target units awarded multiplied by the fair market value of one share of our common stock on the vesting date.Converts to common stock (unless otherwise determined by our Board of Directors, or its Compensation Committee) ranging from zero to a maximum of twice the number of granted shares outstanding on the vesting date.517500051750005175000Includes adjustments related to deferred revenue, estimated sales returns, breakage income, shipping and miscellaneous revenues, which are not allocated to merchandise categories.Related to the adoption of the new lease accounting standard. 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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  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 August 3, 2019

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

For the transition period from ______ to ______

Commission File Number 1-14035

Stage Stores, Inc.
(Exact name of registrant as specified in its charter)
Nevada
 
91-1826900
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)
 
 
 
 
2425 West Loop South
 
77027
Houston,
Texas
 
(Zip Code)
(Address of principal executive offices)
 
 

(800) 579-2302
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading
Symbol(s)
Name of each exchange on which registered
Common Stock ($0.01 par value)
SSI
New York Stock Exchange

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. (Check one):
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 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 September 4, 2019, there were 28,876,878 shares of the registrant’s common stock outstanding.



TABLE OF CONTENTS
 
 
 
 
 
 
 
 
Page No.
Item 1.
 
 
 
 
 
August 3, 2019, February 2, 2019 and August 4, 2018
 
 
 
 
Three and Six Months Ended August 3, 2019 and August 4, 2018
 
 
 
 
Six Months Ended August 3, 2019 and August 4, 2018
 
 
 
 
Three and Six Months Ended August 3, 2019 and August 4, 2018
 
Item 2.
Item 3.
Item 4.
 
 
 
 
 
 
 
 
 
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
 
 
 
 
 




Table of Contents

PART I – FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS
Stage Stores, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except par value)
(Unaudited)
 
 
 
 
 
 
 
August 3, 2019
 
February 2, 2019
 
August 4, 2018
ASSETS
 
 
 
 
 
Cash and cash equivalents
$
25,418

 
$
15,830

 
$
26,573

Merchandise inventories, net
499,001

 
424,555

 
476,883

Prepaid expenses and other current assets
50,138

 
52,518

 
48,525

Total current assets
574,557

 
492,903

 
551,981

 
 
 
 
 
 
Property, equipment and leasehold improvements, net of accumulated depreciation of $757,296, $733,366 and $722,938, respectively
201,928

 
224,803

 
236,151

Operating lease assets
321,982

 

 

Intangible assets
2,225

 
2,225

 
17,135

Other non-current assets, net
21,354

 
24,230

 
24,409

Total assets
$
1,122,046

 
$
744,161

 
$
829,676

 
 
 
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 

 
 

 
 
Accounts payable
$
155,865

 
$
106,825

 
$
122,680

Current portion of debt obligations
5,000

 
4,812

 
3,542

Current portion of operating lease liabilities
74,906

 

 

Accrued expenses and other current liabilities
76,455

 
65,715

 
73,506

Total current liabilities
312,226


177,352

 
199,728

 
 
 
 
 
 
Long-term debt obligations
318,775

 
250,294

 
268,682

Long-term operating lease liabilities
279,009

 

 

Other long-term liabilities
32,213

 
61,990

 
65,431

Total liabilities
942,223


489,636

 
533,841

 
 
 
 
 
 
Commitments and contingencies


 


 



 

 
 

 
 
Common stock, par value $0.01, 100,000 shares authorized, 34,052, 33,469 and 33,418 shares issued, respectively
341

 
335

 
334

Additional paid-in capital
425,033

 
423,535

 
421,621

Treasury stock, at cost, 5,175 shares, respectively
(43,546
)
 
(43,579
)
 
(43,388
)
Accumulated other comprehensive loss
(5,485
)
 
(5,857
)
 
(4,823
)
Accumulated deficit
(196,520
)
 
(119,909
)
 
(77,909
)
Total stockholders' equity
179,823

 
254,525

 
295,835

Total liabilities and stockholders' equity
$
1,122,046


$
744,161

 
$
829,676

 
 
 
 
 
 
 


The accompanying notes are an integral part of these condensed consolidated financial statements.
4

Table of Contents

Stage Stores, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(in thousands, except per share data)
(Unaudited)
 
Three Months Ended
 
Six Months Ended
 
August 3, 2019
 
August 4, 2018
 
August 3, 2019
 
August 4, 2018
Net sales
$
367,865

 
$
369,294

 
$
695,586

 
$
713,523

Credit income
13,988

 
14,305

 
27,096

 
29,819

Total revenues
381,853

 
383,599

 
722,682

 
743,342

Cost of sales and related buying, occupancy and distribution expenses
295,204

 
286,807

 
572,803

 
568,548

Selling, general and administrative expenses
106,310

 
110,914

 
212,886

 
218,191

Interest expense
4,123

 
2,650

 
8,117

 
4,903

Loss before income tax
(23,784
)

(16,772
)
 
(71,124
)

(48,300
)
Income tax expense
150

 
150

 
300

 
300

Net loss
$
(23,934
)

$
(16,922
)
 
$
(71,424
)

$
(48,600
)
 
 
 
 
 
 
 
 
Other comprehensive income:
 
 
 
 
 
 
 
Amortization of employee benefit related costs, net of tax of $0, respectively
$
202

 
$
155

 
$
372

 
$
354

Total other comprehensive income
202


155

 
372


354

Comprehensive loss
$
(23,732
)

$
(16,767
)
 
$
(71,052
)

$
(48,246
)
 
 
 
 
 
 
 
 
Net loss per share:
 
 
 
 
 
 
 
Basic
$
(0.83
)
 
$
(0.60
)
 
$
(2.50
)
 
$
(1.74
)
Diluted
$
(0.83
)
 
$
(0.60
)
 
$
(2.50
)
 
$
(1.74
)
 
 
 
 
 
 
 
 
Weighted average shares outstanding:
 
 
 
 
 
 
 
Basic
28,791

 
28,152

 
28,616

 
27,959

Diluted
28,791

 
28,152

 
28,616

 
27,959

 
 
 
 
 
 
 
 



The accompanying notes are an integral part of these condensed consolidated financial statements.
5

Table of Contents

Stage Stores, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
 
Six Months Ended
 
August 3, 2019
 
August 4, 2018
Cash flows from operating activities:
 
 
 
Net loss
$
(71,424
)
 
$
(48,600
)
Adjustments to reconcile net loss to net cash used in operating activities:
 

 
 

Depreciation and amortization of long-lived assets
29,872

 
30,147

Impairment of long-lived assets
1,615

 
1,070

(Gain) loss on retirements of property, equipment and leasehold improvements
(678
)
 
17

Non-cash operating lease expense
34,919

 

Stock-based compensation expense
1,585

 
3,049

Dividends charged to compensation expense
21

 

Amortization of debt issuance costs
341

 
148

Deferred compensation obligation
(33
)
 
90

Amortization of employee benefit related costs
372

 
354

Construction allowances from landlords
3,553

 
757

Other changes in operating assets and liabilities:
 

 
 

Increase in merchandise inventories
(74,446
)
 
(38,506
)
Decrease in other assets
8,464

 
2,412

Decrease in operating lease liabilities
(37,601
)
 

Increase (decrease) in accounts payable and other liabilities
61,788

 
(19,958
)
Net cash used in operating activities
(41,652
)

(69,020
)
 
 
 
 
Cash flows from investing activities:
 

 
 

Additions to property, equipment and leasehold improvements
(18,610
)
 
(12,822
)
Proceeds from insurance and disposal of assets
678

 
1,802

Net cash used in investing activities
(17,932
)

(11,020
)
 
 
 
 
Cash flows from financing activities:
 

 
 

Proceeds from revolving credit facility borrowings
257,426

 
298,509

Payments of revolving credit facility borrowings
(186,445
)
 
(233,148
)
Proceeds from long-term debt obligation

 
25,000

Payments of long-term debt obligations
(1,758
)
 
(1,472
)
Payments of debt issuance costs
(36
)
 
(354
)
Payments for stock related compensation
(15
)
 
(260
)
Cash dividends paid

 
(2,912
)
Net cash provided by financing activities
69,172


85,363

Net increase in cash and cash equivalents
9,588


5,323

 
 
 
 
Cash and cash equivalents:
 

 
 

Beginning of period
15,830

 
21,250

End of period
$
25,418


$
26,573

 
 
 
 
Supplemental disclosures including non-cash investing and financing activities:
 

 
 

Interest paid
$
7,726

 
$
4,866

Income taxes paid
$
473

 
$
14

Unpaid liabilities for capital expenditures
$
4,166

 
$
4,798

 
 
 
 


The accompanying notes are an integral part of these condensed consolidated financial statements.
6

Table of Contents

Stage Stores, Inc.
Condensed Consolidated Statements of Stockholders’ Equity
(in thousands, except per share amounts)
(Unaudited)
 
Common Stock
 
Additional Paid-in Capital
 
Treasury Stock
 
Accumulated Other Comprehensive Loss
 
Accumulated Deficit
 
 
 
Shares
 
Amount
 
 
Shares
 
Amount
 
 
 
Total
Balance at May 4, 2019
33,805

 
$
338

 
$
424,407

 
(5,175
)
 
$
(43,552
)
 
$
(5,687
)
 
$
(172,607
)
 
$
202,899

Net loss

 

 

 

 

 

 
(23,934
)
 
(23,934
)
Other comprehensive income

 

 

 

 

 
202

 

 
202

Deferred compensation

 

 
(6
)
 

 
6

 

 

 

Issuance of equity awards, net
247

 
3

 
(3
)
 

 

 

 

 

Tax withholdings paid for net settlement of stock awards

 

 
(1
)
 

 

 

 

 
(1
)
Stock-based compensation expense

 

 
636

 

 

 

 

 
636

Dividends on forfeited stock awards charged to compensation expense

 

 

 

 

 

 
21

 
21

Balance at August 3, 2019
34,052

 
$
341

 
$
425,033

 
(5,175
)
 
$
(43,546
)
 
$
(5,485
)
 
$
(196,520
)
 
$
179,823

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common Stock
 
Additional Paid-in Capital
 
Treasury Stock
 
Accumulated Other Comprehensive Loss
 
Accumulated Deficit
 
 
 
Shares
 
Amount
 
 
Shares
 
Amount
 
 
 
Total
Balance at May 5, 2018
33,111

 
331

 
420,091

 
(5,175
)
 
(43,339
)
 
(4,978
)
 
(59,520
)
 
312,585

Net loss

 

 

 

 

 

 
(16,922
)
 
(16,922
)
Other comprehensive income

 

 

 

 

 
155

 

 
155

Dividends on common stock, $0.05 per share

 

 

 

 

 

 
(1,467
)
 
(1,467
)
Deferred compensation

 

 
49

 

 
(49
)
 

 

 

Issuance of equity awards, net
307

 
3

 
(3
)
 

 

 

 

 

Tax withholdings paid for net settlement of stock awards

 

 
(7
)
 

 

 

 

 
(7
)
Stock-based compensation expense

 

 
1,491

 

 

 

 

 
1,491

Balance at August 4, 2018
33,418

 
$
334

 
$
421,621

 
(5,175
)
 
$
(43,388
)
 
$
(4,823
)
 
$
(77,909
)
 
$
295,835

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

The accompanying notes are an integral part of these condensed consolidated financial statements.
7

Table of Contents

Stage Stores, Inc.
Condensed Consolidated Statements of Stockholders’ Equity - continued
(in thousands, except per share amounts)
(Unaudited)
 
Common Stock
 
Additional Paid-in Capital
 
Treasury Stock
 
Accumulated Other Comprehensive Loss
 
Accumulated Deficit
 
 
 
Shares
 
Amount
 
 
Shares
 
Amount
 
 
 
Total
Balance at February 2, 2019
33,469

 
$
335

 
$
423,535

 
(5,175
)
 
$
(43,579
)
 
$
(5,857
)
 
$
(119,909
)
 
$
254,525

Cumulative-effect adjustment (a)

 

 

 

 

 

 
(5,208
)
 
(5,208
)
Net loss

 

 

 

 

 

 
(71,424
)
 
(71,424
)
Other comprehensive income

 

 

 

 

 
372

 

 
372

Deferred compensation

 

 
(33
)
 

 
33

 

 

 

Issuance of equity awards, net
583

 
6

 
(6
)
 

 

 

 

 

Tax withholdings paid for net settlement of stock awards

 

 
(48
)
 

 

 

 

 
(48
)
Stock-based compensation expense

 

 
1,585

 

 

 

 

 
1,585

Dividends on forfeited stock awards charged to compensation expense

 

 

 

 

 

 
21

 
21

Balance at August 3, 2019
34,052

 
$
341

 
$
425,033

 
(5,175
)
 
$
(43,546
)
 
$
(5,485
)
 
$
(196,520
)
 
$
179,823

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(a) Related to the adoption of the new lease accounting standard. See Note 1 for further disclosures regarding the adoption impact.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common Stock
 
Additional Paid-in Capital
 
Treasury Stock
 
Accumulated Other Comprehensive Loss
 
Accumulated Deficit
 
 
 
Shares
 
Amount
 
 
Shares
 
Amount
 
 
 
Total
Balance at February 3, 2018
32,806

 
$
328

 
$
418,658

 
(5,175
)
 
$
(43,298
)
 
$
(5,177
)
 
$
(26,397
)
 
$
344,114

Net loss

 

 

 

 

 

 
(48,600
)
 
(48,600
)
Other comprehensive income

 

 

 

 

 
354

 

 
354

Dividends on common stock, $0.10 per share

 

 

 

 

 

 
(2,912
)
 
(2,912
)
Deferred compensation

 

 
90

 

 
(90
)
 

 

 

Issuance of equity awards, net
612

 
6

 
(6
)
 

 

 

 

 

Tax withholdings paid for net settlement of stock awards

 

 
(170
)
 

 

 

 

 
(170
)
Stock-based compensation expense

 

 
3,049

 

 

 

 

 
3,049

Balance at August 4, 2018
33,418

 
$
334

 
$
421,621

 
(5,175
)
 
$
(43,388
)
 
$
(4,823
)
 
$
(77,909
)
 
$
295,835

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stage Stores, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)

NOTE 1 - BASIS OF PRESENTATION
    
The accompanying condensed consolidated financial statements of Stage Stores, Inc. and its subsidiary (“we,” “us” or “our”) have been prepared in accordance with the requirements of the U.S. Securities and Exchange Commission (“SEC”) for interim financial information and do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America (“GAAP”) for complete financial statements. Those adjustments that are, in the opinion of management, necessary for a fair presentation of the results of the interim periods have been made. Results of operations for such interim periods are not necessarily indicative of the results of operations for a full year due to seasonality and other factors. The condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto filed with our Annual Report on Form 10-K for the year ended February 2, 2019 (“Form 10-K”).    

We are a retailer of trend-right, moderately priced, name-brand apparel, accessories, cosmetics, footwear and home goods. As of August 3, 2019, we operated in 42 states through 645 BEALLS, GOODY’S, PALAIS ROYAL, PEEBLES and STAGE specialty department stores and 141 GORDMANS off-price stores, as well as an e-commerce website (www.stage.com). Our department stores are predominantly located in small towns and rural communities. Our off-price stores are predominantly located in smaller and mid-sized markets in the Midwest.

References to a particular year are to our fiscal year, which is the 52- or 53-week period ending on the Saturday closest to January 31st of the following calendar year.  For example, a reference to “2019” is a reference to the fiscal year ending February 1, 2020, and “2018” is a reference to the fiscal year ended February 2, 2019. Fiscal years 2019 and 2018 are comprised of 52 weeks. References to the “three months ended August 3, 2019” and “three months ended August 4, 2018” are for the respective 13-week fiscal quarters. References to quarters relate to our fiscal quarters. References to the “six months ended August 3, 2019” and “six months ended August 4, 2018” are for the respective 26-week fiscal periods.

Recently Adopted Accounting Pronouncements. In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Updates (“ASU”) 2016-02, Leases (Topic 842), and subsequently issued related ASUs, which were incorporated into Topic 842. Under the new standard, lessees are required to recognize a right-of-use asset and a lease liability, measured on a discounted basis, at the later of the lease commencement date and the date of adoption. The guidance also requires qualitative and quantitative disclosures about the amount, timing and uncertainty of cash flows arising from leases. We adopted the new standard on February 3, 2019, the first day of fiscal 2019.

Transition elections:

We elected to apply the effective date transition method as of the February 3, 2019 adoption date. Comparative periods prior to the adoption of the new standard have not been restated and are reported under the legacy guidance in Accounting Standards Codification (“ASC”) Topic 840, Leases.
We elected the package of practical expedients in the transition guidance, which permits us not to reassess under the new standard our prior conclusions about lease identification, lease classification and initial direct costs.
We elected not to use the practical expedient of using hindsight to determine the lease term and in assessing impairment of the right-of-use assets.
Accounting policy elections:

We elected the short-term lease exemption for leases that have a lease term of twelve months or less. For leases that qualify for the short-term exemption, we will not recognize a right-of-use asset or liability and will recognize those lease expenses on a straight-line basis over the lease term.
We elected to not separate lease and non-lease components for all of our current lease classes.

    

The accompanying notes are an integral part of these condensed consolidated financial statements.
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The adoption of the standard resulted in the recognition of operating lease assets and liabilities of $344.2 million and $375.8 million, respectively, as of February 3, 2019. Included in the measurement of the operating lease assets and liabilities is the reclassification of balances historically recorded as deferred rent and deferred rent tenant allowances. We also recognized a cumulative effect charge of $5.2 million, net of tax, to the opening accumulated deficit balance. This adjustment reflects $5.8 million in depreciation of leasehold improvements associated with conforming the asset useful life to the remaining lease life as of the transition date. It also reflects $0.6 million associated with the derecognition of lease obligations that had been classified as finance obligations under the former failed sale-leaseback guidance applied to build-to-suit arrangements. Under the new standard, these leases are classified as operating leases. The adoption of the standard did not have a material impact on our results of operations or cash flows. In addition, our bank covenants under our Credit Facility were not affected by the adoption of the standard. See Note 5 for further disclosures regarding leases.

Recent Accounting Pronouncements Not Yet Adopted.    In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement, which eliminates, adds and modifies certain disclosure requirements for fair value measurements. The new standard will be effective for us in the first quarter of fiscal 2020, with early adoption permitted. We are currently evaluating the impact of the new guidance on our disclosures.

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 (a consensus of the FASB Emerging Issues Task Force), which aligns the requirements for capitalizing implementation costs in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The guidance also requires disclosure of the nature of hosting arrangements that are service contracts. The new standard will be effective for us in the first quarter of fiscal 2020, with early adoption permitted. We are currently evaluating the impact of the new guidance on our financial statements and disclosures.

NOTE 2 - FAIR VALUE MEASUREMENTS

We recognize or disclose the fair value of our financial and non-financial assets and liabilities on a recurring and non-recurring basis. Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities which are required to be recorded at fair value, we assume the highest and best use of the asset by market participants in which we would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability.

We applied the following fair value hierarchy, which prioritizes the inputs used to measure fair value into three levels, and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:
Level 1 –
Quoted prices in active markets for identical assets or liabilities.
 
 
Level 2 –
Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
 
 
Level 3 –
Inputs that are both unobservable and significant to the overall fair value measurement reflect our estimates of assumptions that market participants would use in pricing the asset or liability.
         


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Financial assets and liabilities measured at fair value on a recurring basis were as follows (in thousands):
 
August 3, 2019
 
Balance
 
Quoted Prices in Active Markets for Identical Instruments
(Level 1)
 
Significant Other Observable Inputs
(Level 2)
 
Significant Unobservable Inputs
(Level 3)
Other assets:
 
 
 
 
 
 
 
Securities held in grantor trust for deferred
compensation plans
(a)(b)
$
16,763

 
$
16,763

 
$

 
$

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
February 2, 2019
 
Balance
 
Quoted Prices in Active Markets for Identical Instruments
(Level 1)
 
Significant Other Observable Inputs
(Level 2)
 
Significant Unobservable Inputs
(Level 3)
Other assets:
 

 
 

 
 

 
 

Securities held in grantor trust for deferred
compensation plans
(a)(b)
$
19,536

 
$
19,536

 
$

 
$

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
August 4, 2018
 
Balance
 
Quoted Prices in Active Markets for Identical Instruments
(Level 1)
 
Significant Other Observable Inputs
(Level 2)
 
Significant Unobservable Inputs
(Level 3)
Other assets:
 

 
 

 
 

 
 

Securities held in grantor trust for deferred
compensation plans
(a)(b)
$
20,188

 
$
20,188

 
$

 
$

 
 
 
 
 
 
 
 
 
(a) The liability for the amount due to participants corresponding in value to the securities held in the grantor trust is recorded in other long-term liabilities.
(b) Using the market approach, the fair values of these securities represent quoted market prices multiplied by the quantities held. Net gains and losses related to the changes in fair value in the assets and liabilities under the various deferred compensation plans are recorded in selling, general and administrative expenses and were nil for the six months ended August 3, 2019 and August 4, 2018, and for the fiscal year ended February 2, 2019.
    


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Non-financial assets measured at fair value on a nonrecurring basis were as follows (in thousands):
 
August 3, 2019
 
Balance
 
Quoted Prices in Active Markets for Identical Instruments
(Level 1)
 
Significant Other Observable Inputs
(Level 2)
 
Significant Unobservable Inputs
(Level 3)
Assets:
 
 
 
 
 
 
 
Assets held for sale (a)
$
2,799

 
$

 
$

 
$
2,799

Operating lease assets (b)
4,585

 

 

 
4,585

Store property, equipment and leasehold improvements (b)
629

 

 

 
629

Total Assets
$
8,013

 
$

 
$

 
$
8,013

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
February 2, 2019
 
Balance
 
Quoted Prices in Active Markets for Identical Instruments
(Level 1)
 
Significant Other Observable Inputs
(Level 2)
 
Significant Unobservable Inputs
(Level 3)
Assets:
 
 
 
 
 
 
 
Store property, equipment and leasehold improvements (a)
$
1,583

 
$

 
$

 
$
1,583

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
August 4, 2018
 
Balance
 
Quoted Prices in Active Markets for Identical Instruments
(Level 1)
 
Significant Other Observable Inputs
(Level 2)
 
Significant Unobservable Inputs
(Level 3)
Assets:
 
 
 
 
 
 
 
Store property, equipment and leasehold improvements (a)
$
1,101

 
$

 
$

 
$
1,101


(a) Assets held for sale are recorded at the asset’s fair value less estimated costs to sell and are reflected in prepaid expenses and other current assets. For the six months ended August 3, 2019, we recognized impairment charges of $1.0 million based on a third party valuation of the underlying assets. These impairment charges are recorded in selling, general and administrative expenses.

(b) Using an undiscounted cash flow model, we evaluate the cash flow trends of our stores at least annually and when events or changes in circumstances, such as a store closure, indicate that the asset group may not be fully recoverable. When a store’s projected undiscounted cash flows indicate its asset carrying value may not be recoverable, we use a discounted cash flow model to estimate the fair value of the underlying asset group. An impairment write-down is recorded if the carrying value of an asset exceeds its fair value. Key assumptions in estimating future cash flows include, among other things, expected future operating performance, including expected closure date and lease term, and changes in economic conditions. We believe estimated future cash flows are sufficient to support the carrying value of our right-of-use operating lease and long-lived assets. Significant changes in the key assumptions used in our cash flow projections may result in additional asset impairments. For the six months ended August 3, 2019 and August 4, 2018 and during fiscal year 2018, we recognized impairment charges of $0.6 million, $1.1 million, and $2.8 million, respectively. Impairment charges related to store property, equipment and leasehold improvements are recorded in cost of sales and related buying, occupancy and distribution expenses.

Due to the short-term nature of cash and cash equivalents, payables and short-term debt obligations, the carrying value approximates the fair value of these instruments. In addition, we believe that the credit facility obligation approximates its fair value because interest rates are adjusted daily based on current market rates.



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NOTE 3 - DEBT OBLIGATIONS

Debt obligations for each period presented consisted of the following (in thousands):

 
August 3, 2019
 
February 2, 2019
 
August 4, 2018
Revolving loan
$
275,025

 
$
204,044

 
$
244,649

Term loan
48,750

 
50,000

 
25,000

Finance obligations

 
554

 
1,064

Other financing

 
508

 
1,511

Total debt obligations
323,775


255,106

 
272,224

Less: Current portion of debt obligations
5,000

 
4,812

 
3,542