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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 May 1, 2021
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 No. 001-39589
Academy Sports and Outdoors, Inc.
(Exact name of registrant as specified in its charter)
Delaware85-1800912
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
1800 North Mason Road
Katy, Texas 77449
(Address of principal executive offices) (Zip Code)
(281) 646-5200
(Registrant’s Telephone Number, including Area Code)
Not applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.01 per shareASONasdaq Global Select Market
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 June 1, 2021, Academy Sports and Outdoors, Inc. had 92,099,917 shares of common stock, par value $0.01 per share, outstanding.

1


ACADEMY SPORTS AND OUTDOORS, INC.
TABLE OF CONTENTS



Page

2


PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ACADEMY SPORTS AND OUTDOORS, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollar amounts in thousands, except per share data)

May 1, 2021January 30, 2021May 2, 2020
ASSETS
CURRENT ASSETS:
Cash and cash equivalents$593,288 $377,604 $725,615 
Accounts receivable - less allowance for doubtful accounts of $1,450, $1,172 and $4,432, respectively
10,831 17,306 9,771 
Merchandise inventories, net1,080,804 990,034 1,012,680 
Prepaid expenses and other current assets30,369 28,313 27,824 
Assets held for sale1,763 1,763 1,763 
Total current assets1,717,055 1,415,020 1,777,653 
PROPERTY AND EQUIPMENT, NET366,005 378,260 418,476 
RIGHT-OF-USE ASSETS1,127,645 1,143,699 1,125,933 
TRADE NAME577,000 577,000 577,000 
GOODWILL861,920 861,920 861,920 
OTHER NONCURRENT ASSETS7,685 8,583 11,343 
Total assets$4,657,310 $4,384,482 $4,772,325 
LIABILITIES AND STOCKHOLDERS' / PARTNERS' EQUITY
CURRENT LIABILITIES:
Accounts payable$864,966 $791,404 $411,263 
Accrued expenses and other current liabilities287,592 291,351 187,736 
Current lease liabilities82,676 80,338 105,099 
Current maturities of long-term debt4,000 4,000 34,116 
Total current liabilities1,239,234 1,167,093 738,214 
LONG-TERM DEBT, net781,035 781,489 1,924,641 
LONG-TERM LEASE LIABILITIES1,132,196 1,150,088 1,106,225 
DEFERRED TAX LIABILITIES, NET164,038 138,703  
OTHER LONG-TERM LIABILITIES26,932 35,126 22,697 
Total liabilities3,343,435 3,272,499 3,791,777 
COMMITMENTS AND CONTINGENCIES (NOTE 13)
REDEEMABLE MEMBERSHIP UNITS — 2,977 
STOCKHOLDERS' / PARTNERS' EQUITY (1):
Preferred stock, $0.01 par value, authorized 50,000,000 shares; none issued and outstanding
   
Partners' equity, membership units authorized, issued and outstanding were 72,478,106 as of May 2, 2020
 — 988,178 
Common stock, $0.01 par value, authorized 300,000,000 shares; 93,887,109 and 91,114,475 issued and outstanding as of May 1, 2021 and January 30, 2021 respectively.
939 911 — 
Additional paid-in capital150,370 127,228 — 
Retained earnings1,164,964 987,168 — 
Accumulated other comprehensive loss(2,398)(3,324)(10,607)
Stockholders' / partners' equity1,313,875 1,111,983 977,571 
Total liabilities and stockholders' / partners' equity$4,657,310 $4,384,482 $4,772,325 
(1) See Retrospective Presentation of Ownership Exchange in Note 2.
See Condensed Notes to Consolidated Financial Statements
3


ACADEMY SPORTS AND OUTDOORS, INC.
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(Unaudited)
(Amounts in thousands, except per share data)


Thirteen Weeks Ended
May 1, 2021May 2, 2020
NET SALES$1,580,333 $1,136,301 
COST OF GOODS SOLD1,016,632 838,356 
GROSS MARGIN563,701 297,945 
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES324,627 283,923 
OPERATING INCOME239,074 14,022 
INTEREST EXPENSE, NET14,549 24,522 
OTHER (INCOME), NET(397)(993)
INCOME (LOSS) BEFORE INCOME TAXES224,922 (9,507)
INCOME TAX EXPENSE47,126 513 
NET INCOME (LOSS)$177,796 $(10,020)
EARNINGS (LOSS) PER COMMON SHARE:
BASIC (1)
$1.93 $(0.14)
DILUTED (1)
$1.84 $(0.14)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
BASIC (1)
92,088 72,474 
DILUTED (1)
96,472 72,474 
(1) See Retrospective Presentation of Ownership Exchange in Note 2.


See Condensed Notes to Consolidated Financial Statements
4


ACADEMY SPORTS AND OUTDOORS, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
(Amounts in thousands)


Thirteen Weeks Ended
May 1, 2021May 2, 2020
COMPREHENSIVE INCOME (LOSS):
Net income (loss)$177,796 $(10,020)
Unrealized loss on interest rate swaps (4,434)
Recognized interest expense on interest rate swaps1,196 1,893 
Tax expense(270) 
Total comprehensive income (loss)$178,722 $(12,561)

See Condensed Notes to Consolidated Financial Statements

5


ACADEMY SPORTS AND OUTDOORS, INC.
CONSOLIDATED STATEMENTS OF PARTNERS' / STOCKHOLDERS' EQUITY
(Unaudited)
(Amounts in thousands)

Redeemable Membership UnitsPartners' Equity / Stockholders' EquityTotal Membership Units / Common Stock
Additional Paid-In CapitalRetained EarningsAccumulated Other Comprehensive Income (Loss)Total Partners' / Stockholders' Equity
Partners' EquityCommon Stock
UnitsAmountUnitsAmountSharesAmountAmountAmountAmountAmountUnits / Shares
Balances as of January 30, 2021 $  $ 91,114 $911 $127,228 $987,168 $(3,324)$1,111,983 91,114 
Net income— — — — — — — 177,796 — 177,796 — 
Equity compensation— — — — — — 5,874 — — 5,874 — 
Settlement of vested Restricted Stock Units— — — — 87 1 (1)— —  87 
Share-Based Award Payments adjustment for forfeitures— — — — — — 39 — — 39 — 
Stock option exercises— — — — 2,686 27 17,230 — — 17,257 2,686 
Recognized interest expense on interest rate swaps (net of tax impact of $270)
— — — — — — — — 926 926 — 
Balances as of May 1, 2021 $  $ 93,887 $939 $150,370 $1,164,964 $(2,398)$1,313,875 93,887 

Redeemable Membership UnitsPartners' Equity / Stockholders' EquityTotal Membership Units / Common Stock
Additional Paid-In CapitalRetained EarningsAccumulated Other Comprehensive Income (Loss)Total Partners' / Stockholders' Equity
Partners' EquityCommon Stock
Units (1)
Amount
Units (1)
Amount
Shares (1)
AmountAmountAmountAmountAmount
Units / Shares (1)
Balances as of February 1, 2020162 $2,818 72,306 $996,285  $ $ $ $(8,066)$988,219 72,468 
Net loss— — — (10,020)— — — — — (10,020)— 
Equity compensation— — — 2,109 — — — — — 2,109 — 
Adjustment to Redeemable Membership Units for settlement of vested Restricted Units12 200 — (200)— — — — — (200)12 
Adjustment to Redeemable Membership Units for repurchase of units from Managers(2)(41)2 41 — — — — — 41 — 
Repurchase of Redeemable Membership Units— — (2)(37)— — — — — (37)(2)
Unrealized loss on interest rate swaps— — — — — — — — (4,434)(4,434)— 
Recognized interest expense on interest rate swaps— — — — — — — — 1,893 1,893 — 
Balances as of May 2, 2020172 $2,977 72,306 $988,178 — $— $— $— $(10,607)$977,571 72,478 
(1) See Retrospective Presentation of Ownership Exchange in Note 2.

See Condensed Notes to Consolidated Financial Statements
6



ACADEMY SPORTS AND OUTDOORS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Amounts in thousands)

Thirteen Weeks Ended
May 1, 2021May 2, 2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)$177,796 $(10,020)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization25,298 27,447 
Non-cash lease expense500 12,871 
Equity compensation5,874 2,109 
Amortization of terminated interest rate swaps, deferred loan and other costs2,030 919 
Deferred income taxes25,064 (31)
Changes in assets and liabilities:
Accounts receivable, net6,474 4,229 
Merchandise inventories, net(90,769)87,069 
Prepaid expenses and other current assets(2,055)1,048 
Other noncurrent assets612 (49)
Accounts payable77,326 (12,149)
Accrued expenses and other current liabilities(29,039)(26,428)
Income taxes payable21,357  
Other long-term liabilities(1,240)3,741 
Net cash provided by operating activities219,228 90,756 
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures(16,808)(9,926)
Net cash used in investing activities(16,808)(9,926)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from ABL Facility 500,000 
Repayment of Term Loan(1,000)(4,563)
Share-Based Award Payments(2,993) 
Proceeds from exercise of stock options17,257  
Repurchase of Redeemable Membership Units (37)
Net cash provided by financing activities13,264 495,400 
NET INCREASE IN CASH AND CASH EQUIVALENTS215,684 576,230 
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD377,604 149,385 
CASH AND CASH EQUIVALENTS AT END OF PERIOD$593,288 $725,615 
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for interest$6,253 $28,258 
Cash paid for income taxes$1,773 $ 
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Non-cash issuance of common shares$501 $— 
Change in capital expenditures in accounts payable and accrued liabilities$3,765 $5,409 
Right-of-use assets obtained in exchange for new operating leases$5,939 $2,330 
See Condensed Notes to Consolidated Financial Statements

7


ACADEMY SPORTS AND OUTDOORS, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


1. Nature of Operations

The Company
All references to "we", "us," "our" or the "Company" in the financial statements refer to, (1) prior to October 1, 2020, New Academy Holding Company, LLC, a Delaware limited liability company ("NAHC") and the prior parent holding company for our operations, and its consolidated subsidiaries; and (2) on and after October 1, 2020, Academy Sports and Outdoors, Inc., a Delaware corporation ("ASO, Inc.") and the current parent holding company of our operations, and its consolidated subsidiaries. We conduct our operations primarily through our parent holding company's indirect subsidiary, Academy, Ltd., a Texas limited partnership doing business as "Academy Sports + Outdoors", or Academy, Ltd. Our fiscal year represents the 52 or 53 weeks ending on the Saturday closest to January 31. On August 3, 2011, an investment entity owned by investment funds and other entities affiliated with Kohlberg Kravis Roberts & Co. L.P. (collectively, "KKR"), acquired a majority interest in the Company. On October 6, 2020, we completed an initial public offering and as of May 1, 2021, KKR had a 44.6% ownership interest in the Company (see Note 14).
The Company is one of the leading full-line sporting goods and outdoor recreational products retailers in the United States in terms of net sales. As of May 1, 2021, we operated 259 "Academy Sports + Outdoors" retail locations in 16 states and three distribution centers located in Katy, Texas, Twiggs County, Georgia and Cookeville, Tennessee. We also sell merchandise to customers across most of the United States via our academy.com website.
Initial Public Offering and Reorganization Transactions
On October 6, 2020, ASO, Inc. completed an initial public offering (the "IPO") in which we issued and sold 15,625,000 shares of common stock, $0.01 par value for cash consideration of $12.22 per share (representing an initial public offering price of $13.00 per share, net of underwriting discounts) to a syndicate of underwriters led by Credit Suisse Securities (USA) LLC and J.P. Morgan Securities LLC, as representatives, resulting in net proceeds of approximately $184.9 million after deducting underwriting discounts, which included approximately $2.7 million paid to KKR Capital Markets LLC ("KCM"), an affiliate of KKR, for underwriting services in connection with the IPO, and $6.1 million in costs directly associated with the IPO ("Offering Costs"), such as legal and accounting fees. The shares sold in the offering were registered under the Securities Act of 1933, as amended (the "Securities Act"), pursuant to our registration statement on Form S-1 (File No. 333-248683) (the "Registration Statement"), which was declared effective by the Securities and Exchange Commission (the "SEC") on October 1, 2020.
In connection with our IPO, we completed a series of reorganization transactions (the "Reorganization Transactions") that resulted in:
NAHC, the previous parent holding company for the Company, being contributed to ASO, Inc. by its members and becoming a wholly-owned subsidiary of ASO, Inc., which thereupon became our parent holding company; and
one share of common stock of ASO, Inc. issued to then-existing members of NAHC for every 3.15 membership units of NAHC contributed to ASO, Inc.
IPO Over-Allotment Exercise
On November 3, 2020, ASO, Inc. issued and sold an additional 1,807,495 shares of the Company's common stock, par value $0.01 per share, for cash consideration of $12.22 per share (representing an initial public offering price of $13.00 per share, net of underwriting discounts) to the IPO underwriters, resulting in approximately $22.1 million in proceeds net of underwriting discounts, which included $0.3 million paid to KCM for underwriting services, pursuant to the partial exercise by the underwriters of their option to purchase up to 2,343,750 additional shares to cover over-allotments in connection with the IPO (the "IPO Over-Allotment Exercise"). The option expired with respect to the remaining shares.
8


Secondary Offering
On January 27, 2021, ASO, Inc. entered into an Underwriting Agreement (the “Underwriting Agreement”), by and among ASO, Inc., Allstar LLC, Allstar Co-Invest Blocker L.P., KKR 2006 Allstar Blocker L.P., MSI 2011 LLC, MG Family Limited Partnership and the former management selling stockholder named therein (collectively, the “Selling Stockholders”), and Credit Suisse Securities (USA) LLC and J.P. Morgan Securities LLC, as representatives of the several underwriters named therein (the “Underwriters”), relating to an underwritten offering of 12,000,000 shares of Common Stock (the “Secondary Offering”), pursuant to the Company’s Registration Statement on Form S-1 (File No. 333-252390), filed on January 25, 2021. The Selling Stockholders granted the Underwriters the option to purchase, within 30 days from the date of the Underwriting Agreement, an additional 1,800,000 shares of Common Stock. On January 29, 2021, the Underwriters exercised in full their option to purchase the additional shares. The Secondary Offering was completed on February 1, 2021. Pursuant to the Underwriting Agreement, the Underwriters purchased the shares from the Selling Stockholders at a price of $20.69375 per share. The Company did not receive any proceeds from the Secondary Offering.
On May 10, 2021, ASO, Inc. completed a subsequent secondary offering and concurrent share repurchase of shares of its Common Stock (see Note 14).


2. Summary of Significant Accounting Policies
The accompanying unaudited financial statements of the Company have been prepared as though they were required to be in accordance with Rule 10-01 of Regulation S-X for interim financial statements, however, they do not include all information and footnotes required by United States generally accepted accounting principles ("GAAP") for complete financial statements. Certain information and footnote disclosures normally included in our annual consolidated financial statements prepared in accordance with GAAP have been condensed or omitted; however, we believe that the disclosures included herein are adequate to make the information presented not misleading. These condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and the notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended January 30, 2021, as filed with the Securities and Exchange Commission on April 7, 2021 (the "Annual Report"). The information furnished herein reflects all normal recurring adjustments which are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented. The results of operations for the thirteen weeks ended May 1, 2021 are not necessarily indicative of the results that will be realized for the fiscal year ending January 29, 2022 or any other period. The balance sheet as of January 30, 2021 has been derived from our audited financial statements as of that date. For further information, refer to our audited financial statements and notes thereto included in the Annual Report.

Basis of Presentation and Principles of Consolidation
These unaudited condensed consolidated financial statements include the accounts of ASO, Inc. and, its subsidiaries, NAHC, Academy Managing Co., LLC, Associated Investors, LLC, Academy, Ltd., the Company's operating company, and Academy International Limited. NAHC, Academy Managing Co., LLC, and Associated Investors, LLC are intermediate holding companies. All intercompany balances and transactions have been eliminated in consolidation. ASO Co-Invest Blocker Sub, L.P. and ASO Blocker Sub, L.P. were dissolved effective January 31, 2021.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with GAAP requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Our management bases its estimates on historical experience and other assumptions it believes to be reasonable under the circumstances. Actual results could differ significantly from those estimates. Our most significant estimates and assumptions that materially affect the financial statements involve difficult, subjective or complex judgments by management including the valuation of merchandise inventories, and performing goodwill, intangible and long-lived asset impairment analyses. Given the global economic climate and additional unforeseen effects from the COVID-19 pandemic, these estimates remain more challenging, and actual results could differ materially from our estimates.
9


Reclassifications
Within the merchandise division sales table presented in Note 3, certain products and categories were recategorized amongst various categories and divisions, respectively, to better align with our current merchandising strategy and view of the business. As a result, we have reclassified sales between divisions in the thirteen weeks ended May 2, 2020 for comparability purposes. This reclassification is in divisional presentation only and did not impact the overall net sales balances previously disclosed.
Retrospective Presentation of Ownership Exchange
Prior to the IPO, ASO, Inc. was a wholly-owned subsidiary of NAHC. On the IPO pricing date (October 1, 2020), the then-existing members of NAHC contributed all of their membership units of NAHC to ASO, Inc. and, in exchange, received one share of common stock of ASO, Inc. for every 3.15 membership units of NAHC contributed to ASO, Inc. (such 3.15:1 contribution and exchange ratio, the "Contribution Ratio"). As a result of such contributions and exchanges, upon the IPO, NAHC became a wholly-owned subsidiary of ASO, Inc., which became our parent holding company. The par value and authorized shares of the common stock of ASO, Inc. of $0.01 and 300,000,000, respectively, remain unchanged as a result of such contributions and exchanges. All membership units and redeemable membership units in the financial statements and notes have been retrospectively adjusted to give effect to the Contribution Ratio, as if such contributions and exchanges occurred as of all pre-IPO periods presented, including the periods presented on the Balance Sheets, Statements of Income, Statements of Partners’ / Stockholders’ Equity, Note 9. Equity and Share-Based Compensation, and Note 10. Earnings per Common Share.
Redeemable Membership Units
Prior to October 1, 2020, Allstar Managers LLC, a Delaware limited liability company ("Managers"), owned membership units in NAHC (each, a "NAHC Membership Unit"). Managers was dissolved and its assets were distributed to its members on December 23, 2020. Managers was 100% owned by certain current and former executives and directors of the Company and was formed to facilitate the purchase of indirect contingently redeemable ownership interests in NAHC. Prior to October 1, 2020, certain executives and directors could acquire contingently redeemable membership units in Managers (the "Redeemable Membership Units"), either by (1) purchasing the Redeemable Membership Units with cash consideration, which was subsequently contributed to NAHC by Managers in exchange for a number of NAHC Membership Units equal to the number of Redeemable Membership Units purchased, or (2) by receiving the Redeemable Membership Units in settlement of vested restricted units awarded to the executive or director under the Company's 2011 Unit Incentive Plan (see Note 9). Each outstanding Redeemable Membership Unit in Managers corresponded to an outstanding NAHC Membership Unit, on a unit-for-unit basis.
On October 1, 2020, Managers received one share of ASO, Inc. common stock in exchange for every 3.15 membership units in NAHC that Managers contributed to ASO, Inc., and the Redeemable Membership Units in Managers that were held by its owners were reduced proportionately by the Contribution Ratio, so that the outstanding number of Redeemable Membership Units in Managers equal the number of shares of ASO, Inc. common stock held by Managers on a 1:1 basis.
NAHC was the sole managing member of Managers with a controlling voting interest, but no economic interest, in Managers. As the sole managing member of Managers, NAHC operated and controlled all business affairs of Managers.
The terms and conditions of the agreements governing the Redeemable Membership Units included provisions by which the holder, or its heirs, had the right to require Managers or NAHC to purchase the holder's Redeemable Membership Units upon the holder’s termination of employment due to death or disability for cash at fair value. The carrying value of the Redeemable Membership Units was classified as temporary equity, initially at fair value, as redemption was an event that was not solely within our control. If redemption became probable, we were required to re-measure the Redeemable Membership Units to fair value. Periodically, these rights lapsed due to contractual expiration or a holder's termination of employment for reasons other than death or disability.
10


Recent Accounting Pronouncements
ASU 2019-12 Income Taxes (Topic 740)

In December 2019, the FASB issued ASU 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes". ASU 2019-12 is effective for fiscal years and interim periods beginning after December 15, 2020. This update simplifies the accounting for income taxes by removing certain exceptions and amends existing guidance to improve consistent application. The Company adopted ASU 2019-12 on January 31, 2021 and it did not have a material impact on our financial position, results of operations or cash flows.
Reference Rate Reform

In March 2020, the FASB issued ASU 2020-04, "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting." This pronouncement provides temporary optional expedients and exceptions to the current guidance on contract modifications and hedge accounting to ease the financial reporting burden related to the expected market transition from the London Interbank Offered Rate ("LIBOR") and other interbank offered rates to alternative reference rates. The adoption of this guidance is effective for all entities as of March 12, 2020 through December 31, 2022. The Company is currently evaluating the expedients and exceptions provided by this amendment as it relates to our transition from LIBOR to another reference rate to determine the impact.


3. Net Sales
Revenue from merchandise sales is recognized, net of sales tax, when the Company’s performance obligation to the customer is met, which is when the Company transfers control of the merchandise to the customer. Store merchandise sales are recognized at the point of sale and e-commerce sales are recognized upon delivery to the customer.
The following table sets forth the approximate amount of sales by merchandise divisions for the periods presented (amounts in thousands):
Thirteen Weeks Ended
May 1, 2021May 2, 2020
Merchandise division sales (1)
Outdoors$485,661 $428,744 
Sports and recreation402,424 294,887 
Apparel375,757 208,573 
Footwear310,447 196,425 
Total merchandise sales (2)
1,574,289 1,128,629 
Other sales (3)
6,044 7,672 
Net Sales$1,580,333 $1,136,301 
(1) Certain products and categories were recategorized amongst various categories and divisions, respectively, to better align with our current merchandising strategy and view of the business. As a result, we have reclassified sales between divisions in the thirteen weeks ended May 2, 2020 for comparability purposes. This reclassification is in divisional presentation only and did not impact the overall net sales balances previously disclosed (see Note 2).
(2) E-commerce sales consisted of 7.4% and 13.1% of merchandise sales for the thirteen weeks ended May 1, 2021 and May 2, 2020, respectively.
(3) Other sales consisted primarily of the sales return allowance, gift card breakage income, credit card bounties and royalties, shipping income, net hunting and fishing license income and other items.
We sell gift cards in stores, online and in third-party retail locations. A liability for gift cards, which is recorded in accrued expenses and other liabilities on our balance sheets is established at the time of sale and revenues are recognized as the gift cards are redeemed in stores or on our website.
11


The following is a reconciliation of the gift card liability (amounts in thousands):
Thirteen Weeks Ended
May 1, 2021May 2, 2020
Gift card liability, beginning balance$74,253 $67,993 
Issued18,442 11,606 
Redeemed(28,490)(21,010)
Recognized as breakage income(963)(803)
Gift card liability, ending balance$63,242 $57,786 


4. Long-Term Debt

Our debt consisted of the following (amounts in thousands) as of:
May 1, 2021January 30, 2021May 2, 2020
ABL Facility, due November 2025$ $ $500,000 
Term Loan, due November 2027399,000 400,000 1,464,432 
Notes, due November 2027400,000 400,000  
Total debt799,000 800,000 1,964,432 
Less current maturities(4,000)(4,000)(34,116)
Less unamortized discount on Term Loan(3,714)(3,861)(2,321)
Less deferred loan costs (1)
(10,251)(10,650)(3,354)
Long-term debt, net$781,035 $781,489 $1,924,641 
(1) Deferred loan costs are related to the Term Loan and Notes.
As of May 1, 2021, January 30, 2021 and May 2, 2020, the balance in deferred loan costs related to the ABL Facility (as defined below) was approximately $5.2 million, $5.5 million and $3.2 million, respectively, and was included in other noncurrent assets on our consolidated balance sheets. Total amortization of deferred loan costs was $0.7 million and $0.6 million for the thirteen weeks ended May 1, 2021 and May 2, 2020, respectively. Total expenses related to accretion of original issuance discount were $0.1 million and $0.3 million for the thirteen weeks ended May 1, 2021 and May 2, 2020, respectively. The expenses related to amortization of deferred loan costs and accretion of original issuance discount are included in interest expense, net on the consolidated statements of income (loss).
On November 6, 2020, the Company issued the Notes (as defined below), entered into the 2020 Term Loan (as defined below), and entered into the 2020 ABL Facility (the "Refinancing Transactions"). The Company used the net proceeds from the Notes and the net proceeds from the 2020 Term Loan, together with cash on hand, to repay in full outstanding borrowings under its then-existing term loan, in the amount of $1,431.4 million.
Term Loan

We refer to the 2015 Term Loan and the 2020 Term Loan collectively as the "Term Loan".
On July 2, 2015, Academy, Ltd. entered into a seven-year $1.8 billion senior secured term loan facility (the "2015 Term Loan") with Morgan Stanley Senior Funding, Inc., as the administrative and collateral agent, and other lenders, and a five-year $650 million secured asset-based revolving credit facility (the "2015 ABL Facility") with JPMorgan Chase Bank, N.A., as administrative agent, and other lenders. Academy, Ltd. received proceeds from the 2015 Term Loan of $1.8 billion, which was net of discount of $9.1 million. The 2015 Term Loan bore interest at our election, at either (1) LIBOR rate with a floor of 1.00%, plus a margin of 4.00%, or (2) a base rate equal to the highest of (a) the federal funds rate plus 0.50%, (b) Morgan Stanley Senior Funding, Inc.'s "prime rate," or (c) the one-month LIBOR rate plus 1.00%, plus a margin of 3.00%. Quarterly principal payments of approximately $4.6 million were required through June 30, 2022, with the balance due in full on the maturity date of July 2, 2022.

12


On November 6, 2020, Academy, Ltd. entered into a seven-year $400.0 million senior secured term loan (the "2020 Term Loan") with Credit Suisse AG, Cayman Island Branch ("Credit Suisse"), as the administrative agent and collateral agent and the several other lenders and parties. The 2020 Term Loan will mature on November 6, 2027. The 2020 Term Loan bears interest, at Academy, Ltd.’s election, at either (1) LIBOR rate with a floor of 0.75%, plus a margin of 5.00%, or (2) a base rate equal to the highest of (a) the federal funds rate plus 0.50%, (b) Credit Suisse’s "prime rate", or (c) the one-month LIBOR rate plus 1.00%, plus a margin of 4.00%. Quarterly principal payments of approximately $1.0 million are required through September 30, 2027, with the balance due in full on the maturity date of November 6, 2027. As of May 1, 2021, the weighted average interest rate was 5.75%, with interest payable monthly. The terms and conditions of the 2020 Term Loan also require that the outstanding balance under the 2020 Term Loan is prepaid under certain circumstances. In connection with the 2020 Term Loan, the Company capitalized related professional fees of $5.8 million as deferred loan costs. As of May 1, 2021, no prepayment was due under the terms and conditions of the Term Loan.

On May 25, 2021, the Company refinanced its 2020 Term Loan and paid down approximately $99.0 million of the Term Loan (see Note 14).
Notes
On November 6, 2020, Academy, Ltd. issued $400.0 million of 6.00% senior secured notes which are due November 15, 2027 (the "Notes"), pursuant to an indenture, dated as of November 6, 2020 (the "Indenture") with The Bank of New York Mellon Trust Company, N.A., as trustee and collateral agent. The Notes will pay interest semi-annually in arrears in cash on May 15 and November 15 of each year at a rate of 6.00% per year, commencing on May 15, 2021. In connection with issuance of the Notes, the Company capitalized related professional fees of $5.2 million as deferred loan costs.
On or after November 15, 2023, Academy, Ltd. may, at its option and on one or more occasions, redeem all or a part of the Notes at the redemption prices set forth in the Indenture, plus accrued and unpaid interest, if any, to, but excluding, the applicable redemption date. At any time prior to November 15, 2023, Academy, Ltd. may, at its option and on one or more occasions, redeem all or part of the Notes at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the applicable redemption date, plus a "make-whole" premium as described in the Indenture. In addition, at any time prior to November 15, 2023, Academy, Ltd. may, at its option and on one or more occasions, redeem up to 40% of the aggregate principal amount of the Notes at a redemption price equal to 106.00% of the aggregate principal amount thereof, with an amount equal to or less than the net cash proceeds from one or more equity offerings to the extent such net cash proceeds are received by or contributed to Academy, Ltd., plus accrued and unpaid interest, if any, to, but excluding, the applicable redemption date.
ABL Facility
We refer to the 2015 ABL Facility and the 2020 ABL Facility collectively as the "ABL Facility".
On July 2, 2015, Academy, Ltd. entered into a five-year $650 million secured asset-based revolving credit facility (the "2015 ABL Facility"). On May 22, 2018, the Company amended the agreement governing the 2015 ABL Facility to increase the commitment on the facility from $650 million to $1 billion. In connection with the amendment to the 2015 ABL Facility, the Company capitalized related professional fees of $2.8 million as deferred loan costs and wrote off $0.1 million in previously capitalized deferred loan costs. The 2015 ABL Facility was scheduled to mature on May 22, 2023, subject to a springing maturity clause which could have been triggered 91 days before the July 2, 2022 maturity of the 2015 Term Loan.
On November 6, 2020, Academy, Ltd., as borrower, and the Guarantors, as guarantors, amended the 2015 ABL Facility by entering into an amendment to the First Amended and Restated ABL Credit Agreement, dated as of July 2, 2015, with JPMorgan Chase Bank, N.A. as the administrative agent and collateral agent, letter of credit issuer and swingline lender (the "ABL Agent") and the several lenders party thereto, which ABL Amendment, among other things, extended the maturity of Academy, Ltd.’s asset-based revolving credit facility thereunder to November 6, 2025 (the "2020 ABL Facility"). In connection with the 2020 ABL Facility, the Company capitalized related professional fees of $3.1 million as deferred loan costs.
13


The ABL Facility is used to provide financing for working capital and other general corporate purposes, as well as to support certain letters of credit requirements, and availability is subject to customary borrowing base and availability provisions. During the normal course of business, we periodically utilize letters of credit primarily for the purchase of import goods and in support of insurance contracts. As of May 1, 2021, we had outstanding letters of credit of approximately $17.2 million, of which $13.6 million were issued under the ABL Facility, and we had no borrowings outstanding under the ABL Facility, leaving the available borrowing capacity under the ABL Facility of $819.4 million.
Borrowings under the ABL Facility bear interest, at our election, at either (1) LIBOR plus a margin of 1.25% to 1.75%, or (2) a base rate equal to the highest of (a) the federal funds rate plus 0.50%, (b) JPMorgan Chase Bank, N.A.'s "prime rate", or (c) the one-month LIBOR rate plus 1.00%, plus a margin of 0.25% to 0.75%. The ABL Facility also provides a fee applicable to the unused commitments of 0.25%. The terms and conditions of the ABL Facility also require that we prepay outstanding loans under the ABL Facility under certain circumstances. As of May 1, 2021, no future prepayments of outstanding loans have been triggered under the terms and conditions of the ABL Facility.
Covenants. The ABL Facility and Term Loan agreements and the Indenture contain covenants, including, among other things, covenants that restrict Academy, Ltd.'s ability to incur certain additional indebtedness, create or permit liens on assets, engage in mergers or consolidations, pay dividends, make other restricted payments, make loans or advances, engage in transactions with affiliates or amend material documents. Additionally, at certain times, the ABL Facility is subject to a minimum adjusted fixed charge coverage ratio. These covenants are subject to certain qualifications and limitations. We were in compliance with these covenants as of May 1, 2021.
Capitalized Interest. We capitalized interest primarily related to construction of new stores and store renovations in the amount of $0.1 million and $0.1 million for the thirteen weeks ended May 1, 2021 and May 2, 2020, respectively.


5. Derivative Financial Instruments
We have historically used interest rate swap agreements to hedge market risk relating to possible adverse changes in interest rates.
All interest rate swaps had been designated as cash flow hedges of variable rate interest payments on borrowings under the Term Loan. On January 19, 2021, we settled our three remaining outstanding interest rate swaps in full, which were scheduled to expire on various dates during 2021, for $4.1 million. As of May 1, 2021, we do not have any derivative financial instruments outstanding.
The fair value of these interest rate swaps is as follows (amounts in thousands) as of:
May 1, 2021January 30, 2021May 2, 2020
Derivatives designated as hedging instruments
Assets
Amounts included in other current assets$ $ $ 
Amounts included in other noncurrent assets   
Liabilities
Amounts included in accrued expenses and other current liabilities  8,912 
Amounts included in other long-term liabilities  1,735 
Total derivatives designated as hedging instruments net liability$ $ $(10,647)

For derivatives designated as hedging instruments, amounts included in AOCI are reclassified to interest expense in the same period during which the hedged transaction affects earnings, which is as interest expense is recorded on the underlying Term Loan.

14


The impact of gains and losses related to interest rate swaps that are deferred into AOCI and subsequently reclassified into expense as follows (amounts in thousands):

Thirteen Weeks Ended
May 1, 2021May 2, 2020
Accumulated Other Comprehensive Loss, beginning$(3,324)$(8,066)
Loss deferred into AOCI (4,434)
Increase to interest expense (net of tax impact of $270 in the thirteen weeks ended May 1, 2021)
926 1,893 
Accumulated Other Comprehensive Loss, ending$(2,398)$(10,607)


6. Fair Value Measurements
Fair value is defined as an exit price that would be received from the sale of an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Authoritative guidance establishes a three-level hierarchy for disclosure that is based on the extent and level of judgment used to estimate the fair value of the assets and liabilities.
The fair value measurements are classified as either:
Level 1 which represents valuations based on unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
Level 2 which represents valuations based on quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability; and
Level 3 which represents valuations based on prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).
In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy in which the fair value measurement is classified in its entirety, is based on the lowest level input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. There were no transfers made into or out of the Level 1, 2 or 3 categories during any period presented.
The following table provides the fair value hierarchy for our derivative financial instruments (amounts in thousands) as of:
Fair Value HierarchyMay 1, 2021January 30, 2021May 2, 2020
Assets
Interest rate swapLevel 2$ $ $ 
Liabilities
Interest rate swapLevel 2$ $ $10,647 

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We value our derivative financial instruments using a discounted cash flow analysis based on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market based inputs including interest rates and implied volatilities. Our valuations also consider both our own and the respective counterparty's non-performance risk. We have considered unobservable market factors such as the likelihood of default by us and our counterparty, our net exposures, credit enhancements, and remaining maturities in determining a credit valuation adjustment to include as part of the fair value of our derivative financial instruments. To date, the credit valuation adjustment did not comprise a material portion of the fair value of the derivative financial instruments. Therefore, we consider our derivative financial instruments to fall within Level 2 of the fair value hierarchy.
Other Financial Instruments
Periodically we make cash investments in money market funds comprised of U.S. Government treasury bills and securities, which are classified as cash and redeemable on demand. As of May 1, 2021, January 30, 2021 and May 2, 2020, we held $476.0 million, $284.0 million and $662.0 million in money market funds, respectively.
The fair value of the Term Loan and Notes is estimated using a discounted cash flow analysis based on quoted market prices for the instrument in an inactive market and is therefore classified as Level 2 within the fair value hierarchy. As of May 1, 2021, the estimated fair value of the Term Loan and Notes was $0.8 billion. As of January 30, 2021 and May 2, 2020, the estimated fair value of the Term Loan was $0.8 billion and $0.9 billion, respectively. As borrowings on the ABL Facility are generally repaid in less than 12 months, we believe that fair value approximates the carrying value.


7. Property and Equipment
Property and equipment consists of the following (amounts in thousands) as of:
May 1, 2021January 30, 2021May 2, 2020
Leasehold improvements$443,513 $438,287 $433,981 
Equipment and software565,873 561,333 539,357 
Furniture and fixtures322,326 319,764 316,295 
Construction in progress23,926 23,575 20,062 
Land3,698 3,699 3,698 
Total property and equipment1,359,336 1,346,658 1,313,393 
Accumulated depreciation and amortization(993,331)(968,398)(894,917)
Property and equipment, net$366,005 $378,260 $418,476 

Depreciation expense was $25.3 million and $27.4 million in the thirteen weeks ended May 1, 2021 and May 2, 2020, respectively and is included in selling, general and administrative expenses on the consolidated statements of income.

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8. Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consist of the following (amounts in thousands) as of:
May 1, 2021January 30, 2021May 2, 2020
Accrued interest$14,003 $7,684 $3,191 
Accrued personnel costs60,830 113,032 20,155 
Accrued professional fees3,453 2,547 2,363 
Accrued sales and use tax29,493 14,980 21,514 
Accrued self-insurance14,125 13,471 13,463 
Deferred revenue - gift cards and other66,309 76,778 61,361 
Income taxes payable45,087 23,730 5,481 
Interest rate swaps   8,912 
Property taxes24,798 16,978 26,537 
Sales return allowance6,100 5,800 4,300 
Other23,394 16,351 20,459 
Accrued expenses and other current liabilities$287,592 $291,351 $187,736 


9. Equity and Share-Based Compensation
On September 29, 2020, the ASO, Inc. Board of Directors adopted the 2020 Omnibus Incentive Plan (the "2020 Omnibus Incentive Plan"), which became effective on October 1, 2020. The plan reserved a total of 5,150,000 shares of common stock for issuance. Concurrent with the adoption of the 2020 Omnibus Incentive Plan, the NAHC 2011 Unit Incentive Plan (the "2011 Unit Incentive Plan") was frozen and no further issuances will be permitted as part of the 2011 Unit Incentive Plan. As of May 1, 2021, there were 3,707,752 shares that were authorized and available for grant under the 2020 Omnibus Incentive Plan.
On September 29, 2020, the Academy Sports and Outdoors, Inc. Board of Directors adopted the 2020 Employee Stock Purchase Plan (the "ESPP"), which became effective on October 1, 2020 upon the effectiveness of the Registration Statement. As of May 1, 2021, we have reserved a total of 2,000,000 shares of common stock for issuance and no common shares were issued or outstanding pursuant to the ESPP. Our initial offering period related to the ESPP commenced during the thirteen weeks ended May 1, 2021.
Equity compensation expense was $5.9 million and $2.1 million for the thirteen weeks ended May 1, 2021 and May 2, 2020, respectively and is included in selling, general and administrative expenses in the statements of income.
2011 Unit Incentive Plan
The 2011 Unit Incentive Plan provides for the grant of certain equity incentive awards (each, an "Award"), such as options to purchase ASO, Inc. common stock (each, a "Unit Option") and restricted units that may settle in ASO, Inc. common stock (each, a "Restricted Unit") to our directors, executives, and eligible employees of the Company.
Unit Options granted under the 2011 Unit Incentive Plan consist of Unit Options that vest upon the satisfaction of time-based requirements (each, a "Service Unit Option") and Unit Options that vest upon the satisfaction of both time-based requirements and Company performance-based requirements (each, a "Performance Unit Option").
Restricted Units granted under the 2011 Unit Incentive Plan consist of Restricted Units that vest upon the satisfaction of time-based requirements (each, a "Service Restricted Unit") and Restricted Units that vest upon the satisfaction of a liquidity event-based requirement together with a time-based requirement and/or a performance-based requirement (each, a "Liquidity Event Restricted Unit"). In each case, vesting of the Company’s outstanding and unvested Unit Options and Restricted Units is contingent upon the holder’s continued service through the date of each applicable vesting event.
Concurrent with the adoption of the 2020 Omnibus Incentive Plan on October 1, 2020, no further Awards are authorized to be granted under the 2011 Unit Incentive Plan.
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Subsequent to May 1, 2021, the May 2021 Secondary Offering (as defined in Note 14) reduced KKR's ownership interest in the Company to 31.3% and resulted in a vesting event for awards granted under the 2011 Unit Incentive Plan, whereby unvested time awards, and performance-based awards which had previously met their performance targets, vested, and unvested performance-based awards which had not previously met their performance targets were forfeited. As a result, we incurred approximately $24.9 million in non-cash expenses related to equity-based compensation and approximately $15.4 million of cash expenses related to taxes on equity-based compensation. Additionally, approximately $8.2 million of cash payments for equity-based compensation distributions will be accelerated (see Note 14).
2020 Omnibus Incentive Plan
The 2020 Omnibus Incentive plan provides for the grant of Awards such as options to purchase ASO, Inc. common stock (each, a "Stock Option") and restricted stock units which may settle in ASO, Inc. common stock (each, a "Restricted Stock Unit") to our directors, executives, and eligible employees of the Company.
Stock Options granted under the 2020 Omnibus Incentive Plan consist of Stock Options that vest upon the satisfaction of time-based requirements (each, a "Service Stock Option" and Service Unit Options and Service Stock Options together are "Service Options").
Restricted Stock Units granted under the 2020 Omnibus Incentive Plan consist of Restricted Stock Units that vest upon the satisfaction of time-based requirements (each, a "Service Restricted Stock Unit") and Restricted Stock Units that vest upon the satisfaction of a time-based requirement and performance-based requirement (each, a "Performance Restricted Stock Unit"). In each case, vesting of the Company’s outstanding and unvested Stock Options and Restricted Stock Units is contingent upon the holder’s continued service through the date of each applicable vesting event.
ESPP
Our ESPP allows eligible employees to contribute up to 15% of their eligible earnings toward the semi-annual purchase of the Company's shares of common stock at a discount of 15% of the closing stock price on the first or last day of the six-month offering period, whichever is lower.
The number of shares reserved for issuance under the ESPP will be increased automatically on the first day of each fiscal year, beginning in fiscal year 2021, by a number equal to the lesser of (1) 1,000,000 shares of common stock, (2) 2.0% of the total number of all classes of the company's common stock outstanding on the last day of the immediately preceding fiscal year, or (3) a lower number of shares determined by the ASO, Inc. Board of Directors.
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Distribution
On August 28, 2020, NAHC paid a $257.0 million, or $1.1257 per unit (or $3.5460 as converted using the Contribution Ratio), distribution to its members of record as of August 25, 2020. Cash on hand was used to fund $248.0 million of the distribution, with the remainder distributed through an offset of outstanding loans receivable from one member and state income tax withholding made on behalf of NAHC's members. Holders of the outstanding granted equity Awards are entitled to receive value equal to $1.1257 per Award (or $3.5460 as converted using the Contribution Ratio), which was or will be made in the form of cash payments, additional Restricted Unit grants or Unit Option exercise price adjustments. Cash payments due for unvested Awards will be payable upon vesting of such Awards. In accordance with the terms of the 2011 Unit Incentive Plan, the Company made the following adjustments to each outstanding Award (per unit components, shares and exercise prices shown above and below are converted using the Contribution Ratio as described in the Retrospective Presentation of Ownership Exchange in Note 2):
Exercise price reductions of $0.28 for 9,788,000 Unit Options (or $0.89 for 3,107,301 Stock Options, as converted);
Exercise price reductions of $1.12 for 1,746,594 Unit Options (or $3.53 for 554,474 Stock Options, as converted);
Additional Restricted Unit grants of 159,362 units (or 50,590 Liquidity Event Restricted Units, as converted); and
Cash payments for vested Unit Options and vested Restricted Units ("Share-Based Award Payments") of $24.0 million were paid through May 1, 2021. Share-Based Award Payments payable as of May 1, 2021 for unvested awards is $8.2 million, which is reflected within accrued expenses and other current liabilities on the Company's consolidated balance sheets. The May 2021 Secondary Offering resulted in the acceleration of cash payments for equity-based compensation distributions of approximately $8.2 million (see Note 14).
These exercise price adjustments did not increase the value of the Unit Options and no related additional equity compensation was or will be incurred.
Service Option Fair Value Assumptions
The fair value for Service Options granted was estimated using a Black-Scholes option-pricing model. The expected lives of the Service Options granted were based on the "SEC simplified" method and a mid-point assumption, respectively. Expected price volatility was determined based on the implied volatilities of comparable companies over a historical period that matches the expected life of the Award. The risk-free interest rate was based on the expected U.S. Treasury rate over the expected life. The dividend yield was based on the expectation that no dividends will be paid. The assumptions used to calculate the fair value of Awards granted are evaluated and modified, as necessary, to reflect current market conditions and experience.
The following table presents the assumptions and grant date fair values for Service Options granted in the thirteen weeks ended May 1, 2021:
Expected life in years6.18
Expected volatility44 %
Weighted-average volatility44 %
Risk-free interest rate
1.16% to 1.22%
Dividend yield 

The following table presents the Award grants during the thirteen weeks ended May 1, 2021:
Service OptionsService Restricted UnitsPerformance Restricted Units
Number of shares889,989 157,649 190,708 
Weighted average grant date fair value per Award$11.74 $26.97 $26.99 
Weighted average exercise price per Award$26.99 N/AN/A

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The following table presents the unrecognized compensation cost as of May 1, 2021:
Service OptionsPerformance Unit OptionsService Restricted UnitsLiquidity Event Restricted UnitsPerformance Restricted Units
Remaining expense$24,583,043 $498,614 $4,170,078 $11,069,761 $5,003,780 
Weighted average life remaining in years3.01.83.71.63.7


10. Earnings per Common Share
Basic earnings per common share is calculated based on net income divided by the basic weighted average common shares outstanding during the period, and diluted earnings per common share is calculated based on net income divided by the diluted weighted average common shares outstanding. Diluted weighted average common shares outstanding is based on the basic weighted average common shares outstanding plus any potential dilutive effect of stock-based awards outstanding during the period using the treasury stock method, which assumes the potential proceeds received from the dilutive stock options are used to purchase treasury stock. Anti-dilutive stock-based awards do not include awards which have a performance or liquidity event target which has yet to be achieved.
Basic and diluted weighted average common shares outstanding and basic and diluted earnings per common share are calculated as follows (amounts in thousands except per share amounts):
Thirteen Weeks Ended
May 1, 2021May 2, 2020
Net income (loss)$177,796 $(10,020)
Weighted average common shares outstanding - basic (1)
92,088 72,474 
Dilutive effect of Service Restricted Units and Service Restricted Stock Units (1)
  
Dilutive effect of Performance Restricted Stock Units and Liquidity Event Restricted Units (1)
910  
Dilutive effect of Service Options (1)
2,095  
Dilutive effect of Performance Unit Options and Performance Stock Options (1)
1,379  
Dilutive effect of ESPP shares  
Weighted average common shares outstanding - diluted (1)
96,472 72,474 
Earnings per common share - basic$1.93 $(0.14)
Earnings per common share - diluted$1.84 $(0.14)
Anti-dilutive stock-based awards excluded from diluted calculation (1)
303 9,447 
(1) See Retrospective Presentation of Ownership Exchange in Note 2.

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11. Income Taxes
Prior to October 1, 2020, the Company, was treated as a flow through entity for U.S. federal income tax purposes and thus no federal income tax expense was recorded in our statements of income for periods prior to October 1, 2020. Our tax rate prior to October 1, 2020 was almost entirely the result of state income taxes. In connection with our IPO, as a result of the Reorganization Transactions completed on October 1, 2020, on and after October 1, 2020, the Company is treated as a U.S. corporation for U.S. federal, state, and local income tax purposes and accordingly, a provision for income taxes has been recorded for the anticipated tax consequences of our reported results of operations for federal, state and local income taxes since October 1, 2020. NAHC continued to operate as a tax partnership through January 30, 2021.
Effective January 31, 2021, NAHC discontinued partnership treatment for tax purposes. As a result, our deferred tax liability was no longer measured by reference to membership units in NAHC and instead was measured by reference to the underlying assets and liabilities of our operations.