lululemon athletica (LULU) 10-K risk factor changes: FY2016 vs FY2015

Maintaining, [removed: promoting] [added: promoting,] and positioning our brand will depend largely on the success of our marketing and merchandising efforts and our ability to provide a consistent, high quality [removed: product] [added: product,] and guest experience.

Our brand [added: and reputation] could be adversely affected if we fail to achieve these [removed: objectives or] [added: objectives,] if our public image [removed: or reputation were] [added: was] to be tarnished by negative [removed: publicity.][added: publicity, if we fail to deliver innovative and high quality products acceptable to our guests, or if we face a product recall.]

Additionally, while we devote considerable efforts and resources to protecting our intellectual property, if these efforts are not successful the value of our brand may be [removed: harmed, which could have a material adverse effect on our financial condition.][added: harmed.]

Additionally, if the unacceptability of our products are not discovered until after such products are purchased by our guests, our guests could lose confidence in the technical attributes of our products [added: or we could face a product recall] and our results of operations could suffer and our business, reputation, and brand could be harmed.

[removed: For example, Luon fabric, which is included in] many of our products, is supplied to the garment factories we use by a limited number of manufacturers, and the components used in manufacturing Luon fabric may each be supplied to our manufacturers by single companies.

In fiscal [removed: 2014,] [added: 2015,] approximately [removed: 63%] [added: 65%] of our products were produced by our top five manufacturing suppliers, 40% of raw materials were produced by a single manufacturer.

We have no long-term contracts with any of our suppliers or manufacturing sources for the production and supply of our fabrics and garments, and we compete with other companies for fabrics, raw materials, [removed: production] and [removed: import quota capacity.][added: production.]

In addition, if we experience significant increased demand, or if we need to replace an existing supplier or manufacturer, we may be unable to locate additional supplies of fabrics or raw materials or additional [added: manufacturing capacity on terms that are acceptable to us, or at all, or we may be unable to locate any supplier or manufacturer with sufficient capacity to meet our requirements or to fill our orders in a timely manner.]

Identifying a suitable supplier is an involved process that requires us to become satisfied with its quality control, responsiveness and service, financial [removed: stability] [added: stability,] and labor and other ethical practices.

Even if we are able to expand existing or find new manufacturing or fabric sources, we may encounter delays in production and added costs as a result of the time it takes to train our suppliers and manufacturers in our methods, [removed: products] [added: products,] and quality control standards.

Factors affecting the level of consumer spending for such discretionary items include general economic conditions, particularly those in North America and other factors such as consumer confidence in future economic conditions, fears of recession, the availability [added: and cost] of consumer credit, levels of unemployment, [removed: tax rates] and [removed: the cost of consumer credit.][added: tax rates.]

Unfavorable economic conditions may lead consumers to delay or reduce [removed: purchase] [added: purchases] of our products.

Consumer demand for our products may not reach our [removed: sales] targets, or may decline, when there is an economic downturn or economic uncertainty in our key markets, particularly in North America.

Competition may result in pricing pressures, reduced profit margins or lost market [removed: share] [added: share,] or a failure to grow our market share, any of which could substantially harm our business and results of operations.

[removed: Many of our competitors are large apparel and sporting goods companies with strong worldwide brand recognition, such as Nike, Inc., adidas AG, The Gap, Inc. and Under Armour, Inc.] Because of the fragmented nature of the industry, we also compete with other apparel sellers, including those specializing in yoga [removed: apparel.][added: apparel and other activewear.]

Many of our competitors have significant competitive advantages, including longer operating histories, larger and broader customer bases, more established relationships with a broader set of suppliers, greater brand recognition and greater financial, research and development, store development, marketing, [removed: distribution] [added: distribution,] and other resources than we do.

In addition, because we [removed: own no] [added: hold limited] patents [removed: or] [added: and] exclusive intellectual property rights in the technology, fabrics or processes underlying our products, our current and future competitors are able to manufacture and sell products with performance characteristics, fabrication [removed: techniques] [added: techniques,] and styling similar to our products.

Our business is subject to significant pressure on [removed: pricing and] costs [added: and pricing] caused by many factors, including intense competition, constrained sourcing capacity and related inflationary pressure, pressure from consumers to reduce the prices we charge for our [removed: products] [added: products,] and changes in consumer demand.

These factors may cause us to experience increased costs, reduce our [removed: sales] prices to consumers or experience reduced sales in response to increased prices, any of which could cause our operating [added: margin to decline if we are unable to offset these factors with reductions in operating costs and could have a material adverse effect on our financial conditions, operating results and cash flows.]

[removed: Failure] [added: Our failure] to anticipate and respond in a timely manner to changing consumer preferences could lead to, among other things, lower sales and excess inventory levels.

We are increasingly dependent on information systems to operate our e-commerce websites, process transactions, respond to guest inquiries, manage inventory, purchase, sell and ship goods on a timely [removed: basis] [added: basis,] and maintain cost-efficient operations.

We have expanded our operations rapidly since our inception in 1998 and our net revenue has increased from $40.7 million in fiscal 2004 to [removed: $1.8] [added: $2.1] billion in fiscal [removed: 2014.][added: 2015.]

Our costs for raw materials are affected by, among other things, weather, consumer demand, speculation on the commodities market, the relative valuations and fluctuations of the currencies of producer versus consumer [removed: countries] [added: countries,] and other factors that are generally unpredictable and beyond our control.

Increases in the cost of raw materials, including petroleum or the prices we pay for silver and our cotton yarn and cotton-based textiles, could have a material adverse effect on our cost of goods sold, results of operations, financial [removed: condition] [added: condition,] and cash flows.

In connection with our expansion efforts we may encounter obstacles we did not face in North America, including cultural and linguistic differences, differences in regulatory environments, labor practices and market practices, difficulties in keeping abreast of market, business and technical [removed: developments] [added: developments,] and foreign guests' tastes and preferences.

Our failure to develop our business in new international markets or experiencing disappointing growth outside of existing markets [removed: will] [added: could] harm our business and results of operations.

Our distribution facilities include computer controlled and automated equipment, which means their operations are complicated and may be subject to a number of risks related to security or computer viruses, the proper operation of software and hardware, electronic or power [removed: interruptions] [added: interruptions,] or other system failures.

In addition, because substantially all of our products are distributed from [removed: three] [added: four] locations, our operations could also be interrupted by labor difficulties, extreme or severe weather conditions or by floods, fires or other natural disasters near our distribution centers.

If we encounter problems with our distribution system, our ability to meet guest expectations, manage inventory, complete [removed: sales] [added: sales,] and achieve objectives for operating efficiencies could be harmed.

Our fabrics and manufacturing technology [added: generally] are not patented and can be imitated by our competitors.

The intellectual property rights in the technology, [removed: fabrics] [added: fabrics,] and processes used to manufacture our products [added: generally] are owned or controlled by our suppliers and are generally not unique to us.

Our ability to obtain intellectual property protection for our products is therefore limited and we [removed: currently] [added: do not generally] own [removed: no] patents or [added: hold] exclusive intellectual property rights in the technology, fabrics or processes underlying our products.

Because many of our competitors have significantly greater financial, distribution, [removed: marketing] [added: marketing,] and other resources than we do, they may be able to manufacture and sell products based on our fabrics and manufacturing technology at lower prices than we can.

We currently rely on a combination of copyright, trademark, trade [removed: dress] [added: dress,] and unfair competition laws, as well as confidentiality procedures and licensing arrangements, to establish and protect our intellectual property rights.

[removed: We cannot assure you that the] [added: The] steps [removed: taken by us] [added: we take] to protect our intellectual property rights [removed: will] [added: may not] be adequate to prevent infringement of [removed: such] [added: these] rights by others, including imitation of our products and misappropriation of our brand.

We are subject to risks associated with leasing retail [added: and distribution] space subject to long-term and non-cancelable leases.

A significant portion of our products are produced in South and South East Asia and increases in the costs of labor and other costs of doing business in the countries in this area could significantly increase our costs to produce our products and could have a negative impact on our operations, net [removed: revenue] [added: revenue,] and earnings.

Our growth will largely depend on our ability to successfully open and operate new [removed: stores.][added: stores, which depends on many factors, including, among others, our ability to:]

[added: We may not be able to successfully] implement our grassroots marketing efforts in a particular market in a timely manner, if at all.

The labeling, distribution, importation, [removed: marketing] [added: marketing,] and sale of our products are subject to extensive regulation by various federal agencies, including the Federal Trade Commission, Consumer Product Safety Commission and state attorneys general in the United States, the Competition Bureau and Health Canada in Canada, as well as by various other federal, state, provincial, local and international regulatory authorities in the countries in which our products are distributed or sold.

Any harm to our brand and reputation could have a material adverse effect on our financial condition.

For example, Luon fabric, which is included in

Many of our competitors are large apparel and sporting goods companies with strong worldwide brand recognition.

Changes in tax laws, capital or financing needs in the United States, or our intentions with respect to the reinvestment of foreign earnings could adversely affect our effective income tax rate and profitability.

We are subject to the income tax laws of the United States, Canada, and several other international jurisdictions.

If our capital or financing needs in the United States require us to repatriate earnings from foreign jurisdictions or if our intentions should change with respect to reinvesting foreign earnings, our effective income tax rates could be unfavorably impacted.

Our effective income tax rate may be adversely affected by a number of factors, including changes in the mix of earnings in countries with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities, changes in tax laws, the outcome of income tax audits in various jurisdictions around the world, and any changes to our plans related to repatriation of non-U.S. earnings for which we have not previously provided for U.S. taxes.

Such plans are affected by our intentions related to reinvestment in our foreign operations and the capital and financing needs of our U.S. operations.

Our effective tax rate might vary significantly as a result of our anticipated bilateral Advance Payment Arrangement ("APA") that we are in the process of negotiating with the Internal Revenue Service ("IRS") and the Canada Revenue Agency ("CRA").

We expect that the outcome of the APA will result in a significant payment from one of our U.S. subsidiaries to a Canadian subsidiary, that the ongoing net cash flow of our U.S. operations will be lower than previously expected, and that we will need to distribute funds to our U.S. parent entity to finance this payment and future working capital needs in the United States.

We are subject to the examination of our tax returns by the IRS, the CRA, and other tax authorities.

We regularly assess all of these matters to determine the adequacy of our tax provision, which is subject to significant discretion.

Although we believe our tax provision is adequate, the final determination of tax audits and any related disputes could be materially different from our historical income tax provisions and accruals.

The results of audits or related disputes could have an adverse effect on our financial statements for the period or periods for which the applicable final determinations are made.

We and our subsidiaries engage in a number of intercompany transactions across multiple tax jurisdictions.

Although we believe that these transactions reflect the accurate economic allocation of profit and that proper transfer pricing documentation is in place, the profit allocation and transfer pricing terms and conditions may be scrutinized by local tax authorities during an audit and any resulting changes may impact our mix of earnings in countries with differing statutory tax rates.

Current economic and political conditions make tax rules in any jurisdiction, including the United States and Canada, subject to significant change.

There have been proposals to reform U.S. and foreign tax laws that could significantly impact how U.S. multinational corporations are taxed on foreign earnings.

Although we cannot predict whether or in what form such proposals will pass, several of the proposals considered, if enacted into law, could have an adverse impact on our income tax expense and cash flows.

We also lease the majority of our distribution centers and our inability to secure appropriate real estate or lease terms could impact our ability to deliver our products to the market.

In addition, if we're not effective with our succession planning, it may have a negative impact on our ability to fill senior management roles in a timely manner.

We also hold a significant portion of our net assets in Canada.

During fiscal 2015, the change in the relative value of the U.S. dollar against the Canadian dollar resulted in a $63.2 million increase in accumulated other comprehensive loss within stockholders' equity.

During fiscal 2014, the change in the relative value of the U.S. dollar against the Canadian dollar resulted in a $103.3 million increase in accumulated other comprehensive loss within stockholders' equity.

We are subject to periodic claims and litigation that could result in unexpected expenses and could ultimately be resolved against us.

From time to time, we are involved in litigation and other proceedings, including matters related to product liability claims, stockholder class action and derivative claims, commercial disputes and intellectual property, as well as trade, regulatory, and other claims related to our business.

Any of these proceedings could result in significant settlement amounts, damages, fines or other penalties, divert financial and management resources, and result in significant legal fees.

An unfavorable outcome of any particular proceeding could exceed the limits of our insurance policies or the carriers may decline to fund such final settlements and/or judgments and could have an adverse impact on our business, financial condition, and results of operations.

In addition, any proceeding could negatively impact our reputation among our guests and our brand image.

Our business could be negatively affected as a result of actions of activist stockholders, and such activism could impact the trading value of our securities.

Responding to actions by activist stockholders can be costly and time-consuming, disrupting our operations and diverting the attention of management and our employees.

Such activities could interfere with our ability to execute our strategic plan.

In addition, a proxy contest for the election of directors at our annual meeting would require us to incur significant legal fees and proxy solicitation expenses and require significant time and attention by management and our board of directors.

The perceived uncertainties as to our future direction also could affect the market price and volatility of our securities.

In addition, we are governed by Section 203 of the Delaware General Corporation Law which, subject to some specified exceptions, prohibits "business combinations" between a Delaware corporation and an "interested stockholder," which is

manufacturing capacity on terms that are acceptable to us, or at all, or we may be unable to locate any supplier or manufacturer with sufficient capacity to meet our requirements or to fill our orders in a timely manner.

margin to decline if we are unable to offset these factors with reductions in operating costs and could have a material adverse effect on our financial conditions, operating results and cash flows.

For example, severe weather conditions in Sumner, Washington in 2011, including snow and freezing rain, resulted in disruption in our distribution facilities and the local transportation system.

Our approach to identifying locations for our stores typically favors street locations, lifestyle centers and malls where we can be a part of the community.

As a result, our stores are typically located near retailers or fitness facilities that we believe are consistent with our guests' lifestyle choices.

Sales at these stores are derived, in part, from the volume of foot traffic in these locations.

Our ability to successfully open and operate new stores depends on many factors, including, among others, our ability to:

Accordingly, there can be no assurance that we will be able to successfully

and sustaining demand for our products.

This discussion summarizes our consolidated operating results, financial [removed: condition] [added: condition,] and liquidity during the three-year period ending [removed: February 1, 2015.][added: January 31, 2016.]

Fiscal [removed: 2014] [added: 2015, fiscal 2014,] and fiscal 2013 were 52 week [removed: years whereas fiscal 2012 was a 53 week year.][added: years.]

This discussion and analysis contains forward-looking statements based on current expectations that involve risks, uncertainties and assumptions, such as our plans, objectives, [removed: expectations] [added: expectations,] and intentions set forth in the "Special Note Regarding Forward-Looking Statements." Our actual results and the timing of events may differ materially from those anticipated in these forward looking statements as a result of various factors, including those set forth in the "Item 1A.

| • | Our net revenue increased from [removed: $1.6] [added: $1.8] billion in fiscal [removed: 2013] [added: 2014] to [removed: $1.8] [added: $2.1] billion in fiscal [removed: 2014,] [added: 2015,] representing an annual growth rate of [removed: 13%.] [added: 15%.] Our increase in net revenue from fiscal [removed: 2013] [added: 2014] to fiscal [removed: 2014] [added: 2015] resulted [added: primarily] from the addition of [removed: 48] [added: 61] net new [removed: corporate-owned] [added: company-operated] stores and [removed: increased] [added: the growth of our] direct to consumer [removed: net revenue.] [added: segment.] |

| • | Total comparable sales, which includes comparable store sales and direct to consumer, increased [removed: 1%] [added: 5%] in fiscal [removed: 2014] [added: 2015] and increased by [removed: 3%] [added: 10%] on a constant dollar basis. |

| • | Our direct to consumer segment is an increasingly substantial part of our growth strategy, and now represents [removed: 17.9%] [added: 19.5%] of our net revenue compared to [removed: 16.5%] [added: 17.9%] in fiscal [removed: 2013] [added: 2014] and [removed: 14.4%] [added: 16.5%] in fiscal [removed: 2012.] [added: 2013.] Direct to consumer net revenue increased [removed: 24%] [added: 30%] on a constant dollar basis primarily as the result of [added: an increase in the number of transactions which was driven by] increased traffic [removed: on our e-commerce websites.] [added: and higher conversion rates.] |

| • | Gross profit for fiscal [removed: 2014] [added: 2015] increased by 9% to [removed: $914.2] [added: $997.2] million, from [removed: $840.1] [added: $914.2] million in fiscal [removed: 2013.] [added: 2014.] As a percentage of net revenue, gross profit decreased to [removed: 50.9%] [added: 48.4%] compared to [removed: 52.8%] [added: 50.9%] in fiscal [removed: 2013.] [added: 2014.] The decrease in the gross margin [removed: percentage] was primarily due to [removed: product mix, increased product] [added: an increase in fixed] costs, [added: such as occupancy] and [removed: increased air freight usage.] [added: depreciation, an unfavorable impact of foreign exchange rates, and an increase in markdowns and discounts.] |

| • | Income from operations for fiscal [removed: 2014] [added: 2015] decreased by [removed: 4%] [added: 2%] to [removed: $376.0] [added: $369.1] million, from [removed: $391.4] [added: $376.0] million in fiscal [removed: 2013. As a percentage of net revenue, income from operations decreased to 20.9% compared to 24.6% of net revenue in fiscal 2013.] [added: 2014.] The decrease in income from operations was a result of an increase in selling, general and [removed: administration] [added: administrative] expenses, [removed: relative to the increase in net revenue,] partially offset by an increase in gross [removed: margin.] [added: profit. As a percentage of net revenue, income from operations decreased to 17.9% compared to 20.9% of net revenue in fiscal 2014.] |

| • | Diluted earnings per share for fiscal [removed: 2014] [added: 2015] were [removed: $1.66.] [added: $1.89,] compared to [removed: $1.91] [added: $1.66] in fiscal [removed: 2013.] [added: 2014.] Excluding [removed: the] [added: certain] tax [removed: expense of $33.7 million on the repatriated foreign earnings,] [added: and related interest adjustments,] diluted earnings per share were [added: $1.86 for fiscal 2015 and] $1.89 for fiscal 2014. |

Management's Discussion and Analysis of Financial Condition and Results of Operations" for reconciliations of constant dollar total comparable sales, constant dollar comparable store sales, constant dollar changes in direct to consumer net revenue, the [removed: fiscal 2014] [added: effective] tax rate excluding [removed: the] [added: certain] tax [removed: expense on the repatriation of foreign earnings,] and [added: related interest adjustments, and] diluted earnings per share excluding [removed: the] [added: certain] tax [removed: expense on the repatriation of foreign earnings] [added: and related interest adjustments] to measures calculated in accordance with United States generally accepted accounting principles ("GAAP").

Net revenue is comprised of [removed: corporate-owned] [added: company-operated] store [removed: net revenue,] [added: sales,] direct to consumer sales through www.lululemon.com, [removed: www.ivivva.com] [added: www.ivivva.com,] and other country and region specific websites, and other net revenue, which includes outlet sales, showroom sales, sales to wholesale accounts, warehouse sales, [removed: and] sales from temporary [removed: locations.][added: locations, and license and supply arrangement net revenue, which consists of royalties as well as sales of our products to licensees.]

Cost of goods sold includes the cost of purchased merchandise, including [removed: in-bound] freight, [removed: duty] [added: duty,] and nonrefundable taxes incurred in delivering the goods to our distribution centers.

It also includes occupancy costs and depreciation expense for our [removed: corporate-owned] [added: company-operated] store locations, all costs incurred in operating our distribution centers and production, [removed: design] [added: design, distribution,] and merchandise departments, hemming, [removed: and shrink] [added: shrink,] and [removed: valuation reserves.][added: inventory provision expense.]

The primary drivers of the costs of individual [removed: goods] [added: products] are the costs of raw materials and labor in the countries where we source our merchandise.

[removed: Provision for income taxes] [added: Income tax expense] depends on the statutory tax rates in the countries where we sell our [removed: products.][added: products and the proportion of taxable income earned in those jurisdictions.]

We [added: also] anticipate [removed: that] [added: that,] in the [removed: future] [added: future,] we may start to sell our products [removed: directly to some customers] [added: through retail locations] located in countries [removed: that] [added: in which] we have not yet [removed: operated in,] [added: operated,] in which [removed: case] [added: case,] we would become subject to taxation based on the foreign statutory rates in the countries where these sales take place and our effective tax rate could fluctuate accordingly.

| | | [removed: February 1, 2015] [added: January 31, 2016] | | | | February [removed: 2, 2014] [added: 1, 2015] | | | | February [removed: 3, 2013] [added: 2, 2014] | | |

| Net revenue | | $ | 1,797,213 | | | $ | 1,591,188 | | | [removed: $] [added: 100.0] | [removed: 1,370,358] [added: %] | | [added: 100.0 | % |]

| Cost of goods sold | | [removed: 883,033] [added: 1,063,357] | | | | [removed: 751,112] [added: 883,033] | | | | [removed: 607,532] [added: 751,112] | | |

| Gross profit | | [removed: 914,180] [added: 997,166] | | | | [removed: 840,076] [added: 914,180] | | | | [removed: 762,826] [added: 840,076] | | |

| Selling, general and administrative expenses | | [removed: 538,147] [added: 628,090] | | | | [removed: 448,718] [added: 538,147] | | | | [removed: 386,387] [added: 448,718] | | |

| Income from operations | | [added: $ |] 376,033 | | | [added: $] | 391,358 | | | | [removed: 376,439] | | | [added: |]

| Other [removed: income (expense),] [added: (expense) income,] net | | [removed: 7,102] [added: (581] | | [added: )] | | [removed: 5,768] [added: 7,102] | | | | [removed: 4,957] [added: 5,768] | | |

| Income before [removed: provision for] income [removed: taxes] [added: tax expense] | | [removed: 383,135] [added: 368,495] | | | | [removed: 397,126] [added: 383,135] | | | | [removed: 381,396] [added: 397,126] | | |

| Net income | | [removed: 239,033] [added: $] | [added: 266,047] | | | [removed: 279,547] [added: $] | [added: 239,033] | | | [removed: 271,431] [added: $] | [added: 279,547] | |

| | | [added: January 31, 2016 | | |] February 1, 2015 | | [added: |] February 2, 2014 | | [removed: February 3, 2013 |]

| | | (% of net revenue) | | | | | [added: | | |]

| Net revenue | | 100.0 | [added: %] | [added: |] 100.0 | [added: %] | [added: |] 100.0 | [added: % |]

| Cost of goods sold | | [added: 51.6 | | |] 49.1 | | [removed: 47.2] | [added: 47.2] | [removed: 44.3] |

| Gross profit | | [added: 48.4 | | |] 50.9 | | [removed: 52.8] | [added: 52.8] | [removed: 55.7] |

| Selling, general and administrative expenses | | [removed: 30.0] [added: 30.5] | | [removed: 28.2] | [added: 30.0] | [added: | |] 28.2 | [added: |]

| Income from operations | | [added: 17.9 | | |] 20.9 | | [removed: 24.6] | [added: 24.6] | [removed: 27.5] |

| Other [removed: income (expense),] [added: (expense) income,] net | | [removed: 0.4] [added: —] | | [added: |] 0.4 | | [removed: 0.3] | [added: 0.4 | |]

| Net income | | [added: 12.9 | % | |] 13.3 | [added: %] | [removed: 17.6] | [added: 17.6] | [removed: 19.8] [added: %] |

| | | Fiscal [removed: Year] [added: Years] Ended February 1, 2015 and February 2, 2014 | | | | | | | | | | | [added: | |]

| | | 2014 | | | | 2013 | | | | 2014 | | [added: |] 2013 | [added: |]

| | | (In thousands) | | | | | | | | (Percentages) | | | [added: | |]

| [removed: Corporate-owned] [added: Company-operated] stores | | $ | 1,348,225 | | | $ | 1,228,999 | | | 75.0 | [added: %] | [added: |] 77.3 | [added: % |]

| Direct to consumer | | 321,180 | | | | 263,083 | | | | 17.9 | | [added: |] 16.5 | [added: |]

| Other | | 127,808 | | | | 99,106 | | | | 7.1 | | [added: |] 6.2 | [added: |]

Fiscal 2015 was a year in which we made significant progress on our strategic priorities that positions us well for long term profitable growth.

We strengthened our leadership by filling key executive positions during the year and now have in place a complete, experienced, and culturally aligned management team to drive our strategic priorities towards our 10 year vision.

We reignited our product engine starting with our first global product launch, our new women's pant lines, that brought together the best of product innovation and education.

We also reorganized our design and merchandising teams, resulting in a singular creative voice for our women's and men's product with a renewed focus on design and innovation.

We made key investments in our website, omni-channel capabilities, supply chain, and information technology infrastructure.

These are foundational investments that will support and enable our long term growth.

In addition to continuing our expansion in the United States, we opened company-operated stores for the first time in Germany and Hong Kong and opened additional stores in Singapore and the United Kingdom.

We also opened showrooms in new markets in France, Korea, Malaysia, Sweden, and Switzerland.

As of January 31, 2016, we operated 20 showrooms in 10 different countries in Asia and Europe.

In addition, our licensee in the Middle East opened two licensed stores in the United Arab Emirates during fiscal 2015.

In fiscal 2016, our top priority will be first to strengthen and grow our women's category, specifically with a renewed focus on our tops.

For men's, we will continue to focus on product design, while also adding more dedicated square footage through store expansions.

To further grow our direct to consumer segment, we will make investments in customer relationship management, analytics, and digital marketing, while also launching our new North America website in the first half of fiscal 2016.

In international markets, we will focus our efforts in key cities, while expanding into new markets where we've seen strong traction from our showroom performance.

Our final priority is operational excellence, where we are investing in developing a scalable and world-class supply chain and operational infrastructure that we expect to be a key enabler of our long term growth.

| • | Company-operated stores accounted for 73.6% of total net revenue in fiscal 2015, 75.0% of total net revenue in fiscal 2014 and 77.3% of total net revenue in fiscal 2013. Comparable store sales increased by 4% on a constant dollar basis for fiscal 2015 primarily as the result of increased traffic which resulted in an increase in the number of transactions, and due to higher average unit retail prices. |

| • | Income tax expense for fiscal 2015 decreased by 29% to $102.4 million, from $144.1 million in fiscal 2014. Our effective tax rate for fiscal 2015 was 27.8% compared to 37.6% for fiscal 2014. Fiscal 2015 included a net income tax recovery of $7.4 million related to our transfer pricing arrangements and estimated taxes associated with the repatriation of foreign earnings. In addition, fiscal 2015 included a related net interest expense of $3.5 million recorded in other (expense) income, net. Fiscal 2014 included an income tax expense of $33.7 million related to the repatriation of foreign earnings used to fund our share repurchase program. Our effective tax rate excluding these adjustments would have been 29.5% for fiscal 2015 compared to 28.8% for fiscal 2014. |

We expect selling, general and administrative expenses to increase in fiscal 2016 as we incur additional operating expenses to support our store and direct to consumer growth, while also making strategic investments to support the long term growth of the business.

To the extent the relative proportion of taxable income in the jurisdictions fluctuates, so will our effective tax rate.

| Income tax expense | | 102,448 | | | | 144,102 | | | | 117,579 | | |

| | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | |

| Income before income tax expense | | 17.9 | | | 21.3 | | | 25.0 | |

| Income tax expense | | 5.0 | | | 8.0 | | | 7.4 | |

Comparison of Fiscal 2015 to Fiscal 2014

Net revenue increased $263.3 million, or 15%, to $2.061 billion in fiscal 2015 from $1.797 billion in fiscal 2014.

Total comparable sales, which includes comparable store sales and direct to consumer, increased 5% in fiscal 2015 compared to fiscal 2014.

Excluding the effect of foreign currency fluctuations, total comparable sales would have increased by 10%.

Our net revenue on a segment basis for fiscal 2015 and fiscal 2014 is summarized below.

| | | Fiscal Years Ended January 31, 2016 and February 1, 2015 | | | | | | | | | | | | |

| | | 2015 | | | | 2014 | | | | 2015 | | | 2014 | |

| Company-operated stores | | $ | 1,516,323 | | | $ | 1,348,225 | | | 73.6 | % | | 75.0 | % |

| Direct to consumer | | 401,525 | | | | 321,180 | | | | 19.5 | | | 17.9 | |

| Other | | 142,675 | | | | 127,808 | | | | 6.9 | | | 7.1 | |

| Net revenue | | $ | 2,060,523 | | | $ | 1,797,213 | | | 100.0 | % | | 100.0 | % |

Company-operated Stores.

Net revenue from our company-operated stores segment increased $168.1 million, or 12%, to $1.516 billion in fiscal 2015 from $1.348 billion in fiscal 2014.

During fiscal 2015 we opened 61 net new stores, which included 49 stores in the United States, three stores in Canada, four stores in the United Kingdom, two stores in Hong Kong, and one store in each of Germany, Puerto Rico, and Singapore.

The increase in net revenue from our company-operated stores segment resulted from an increase of $175.4 million from non-comparable stores, which includes sales from new stores that have not been open for 12 months and sales from stores which have been significantly expanded.

Net revenue numbers for fiscal 2012 include results from the 53rd week; however, total comparable sales and comparable stores sales calculations exclude the 53rd week.

Fiscal 2014 was a year in which we continued to make investments we believe will help us to drive growth and expand our business.

We have strengthened the foundation of our business through continued investments in product quality and supply chain and these investments will continue through fiscal 2015.

Throughout fiscal 2014 we also focused on our product assortment, guest experience, and our go-to-market process for our products.

Our improved product assortment helped to enhance our guest experience and contributed to the improved total comparative sales performance we saw in the second half of fiscal 2014.

The opening of our new distribution center in Columbus, Ohio in fiscal 2014 has also helped improve guest experience through a reduction in our average transit times for online orders and will also benefit retail distribution to our corporate owned stores in the United States.

We opened 48 net new corporate-owned stores in fiscal 2014, of which 40 were in the United States.

In addition to our plans for further new store openings in the United States, we are focused on accelerating our international expansion.

During fiscal 2014 we opened corporate-owned stores for the first time in the United Kingdom and Singapore and opened showrooms for the first time in China.

We will continue to utilize a community-based approach to building brand awareness and guest loyalty in new countries but will look to do so over a shorter period of time than previously, so that we can accelerate our international growth.

We see potential for further expansion for our men’s category and our ivivva athletica brand.

In the men's category we expanded both in-store and online product assortment and we opened our first standalone men’s store in Soho, New York.

For ivivva, we opened 10 new stores during fiscal 2014 and will continue to invest in this brand and open further stores through fiscal 2015.

In fiscal 2015, we expect to substantially complete this foundational work and accelerate our investments in innovation to drive sustainable global growth.

| | |

| --- | --- |

| • | Corporate-owned stores accounted for 75.0% of total net revenue in fiscal 2014, 77.3% of total net revenue in fiscal 2013 and 79.6% of total net revenue in fiscal 2012. Comparable store sales decreased by 1% on a constant dollar basis for fiscal 2014 primarily as the result of lower conversion rates and lower units purchased per transaction. |

| • | Tax expense for fiscal 2014 increased by 23% to $144.1 million, from $117.6 million in fiscal 2013. Fiscal 2014 includes a tax expense of $33.7 million related to the repatriation of foreign earnings that will be used to fund the share buyback program. The tax rate excluding the $33.7 million tax expense on the repatriation of foreign earnings would have been 28.8%, compared to 29.6% in fiscal 2013. The tax rate for fiscal 2014, including the tax expense on the repatriation of foreign earnings, was 37.6%. |

We anticipate that our selling, general and administrative expenses will increase in absolute dollars due to anticipated continued growth of our corporate support staff and store-level employees.

| | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Provision for income taxes | | 144,102 | | | | 117,579 | | | | 109,965 | | |

| Net income attributable to non-controlling interest | | — | | | | — | | | | 875 | | |

| Net income attributable to lululemon athletica inc. | | $ | 239,033 | | | $ | 279,547 | | | $ | 270,556 | |

| | | | | | | |

| --- | --- | --- | --- | --- | --- | --- |

| Income before provision for income taxes | | 21.3 | | 25.0 | | 27.8 |

| Provision for income taxes | | 8.0 | | 7.4 | | 8.0 |

| Net income attributable to non-controlling interest | | — | | — | | 0.1 |

| Net income attributable to lululemon athletica inc. | | 13.3 | | 17.6 | | 19.7 |

Corporate-Owned Stores.

The increase in gross profit was partially offset by increased costs related to our production, design, distribution and merchandising departments, as well as increases in fixed costs, such as occupancy costs and depreciation.

We have reviewed our general corporate expenses and determined some costs previously classified as general corporate are direct segment expenses.

Accordingly, all prior year comparable information has been reclassified to conform to the current year classification.

percentage of net revenue as well as lower gross margin resulting from product mix, increased product costs, and increased air freight costs.

Provision for Income Taxes

Comparison of Fiscal 2013 to Fiscal 2012

Net revenue increased $220.8 million, or 16%, to $1.591 billion in fiscal 2013 from $1.370 billion in fiscal 2012.

Total comparable sales, including comparable stores and direct to consumer, and excluding the fifty-third week’s sales of fiscal 2012, increased 7% in fiscal 2013, or 9% excluding the effect of foreign currency fluctuations.

The constant dollar increase in comparable store sales was driven primarily by the strength of our existing product lines, successful introduction of new products and increasing recognition of the lululemon athletica brand name, especially at our U.S. stores, that drove higher transactions per store in the United States.

Therefore, the net revenues, expenses, [removed: assets] [added: assets,] and liabilities of our foreign subsidiaries are translated from their functional currencies into U.S. dollars.

Fluctuations in the value of the U.S. [removed: Dollar] [added: dollar] affect the reported amounts of net revenue, expenses, [removed: assets] [added: assets,] and liabilities.

Foreign exchange differences which arise on translation of our foreign [removed: subsidiaries’] [added: subsidiaries'] balance sheets into U.S. dollars are recorded as a [removed: cumulative] [added: foreign currency] translation adjustment in accumulated other comprehensive income [added: or loss] within stockholders' equity.

[removed: The] [added: A] strengthening of the U.S. dollar against the Canadian dollar [removed: during fiscal 2014 has resulted] [added: results] in:

A 10% [removed: depreciation] [added: appreciation] in the relative value of the [removed: Canadian] [added: U.S.] dollar against the [removed: U.S.] [added: Canadian] dollar compared to the exchange rates in effect for fiscal [removed: 2014] [added: 2015] would have resulted in lost income from operations of approximately $2.2 million in fiscal [removed: 2014.][added: 2015.]

This assumes a consistent 10% [removed: depreciation] [added: appreciation] in the [removed: Canadian] [added: U.S.] dollar against the [removed: U.S.] [added: Canadian] dollar throughout the fiscal year.

The timing of changes in the relative value of the [removed: Canadian] [added: U.S.] dollar combined with the seasonal nature of our business, can affect the magnitude of the impact that fluctuations in foreign exchange rates have on our income from operations.

As of [removed: February 1, 2015,] [added: January 31, 2016,] aside from letters of [removed: credit and guarantees,] [added: credit,] we had no outstanding balances under our revolving facilities.

We also hold a significant portion of our net assets in Canada.

During fiscal 2015, the change in the relative value of the U.S. dollar against the Canadian dollar resulted in a $63.2 million increase in accumulated other comprehensive loss within stockholders' equity.

During fiscal 2014, the change in the relative value of the U.S. dollar against the Canadian dollar resulted in a $103.3 million increase in accumulated other comprehensive loss within stockholders' equity.

lululemon athletica inc. is a [removed: designer] [added: designer, distributor,] and retailer of technical athletic apparel.

We promote a set of core values in our business which [removed: include,] [added: include] developing the highest quality products, operating with integrity, leading a balanced and fun life, and nurturing entrepreneurial spirit.

In this Annual Report on Form 10-K ("10-K" or "Report") for the fiscal year ended [removed: February 1, 2015] [added: January 31, 2016] ("fiscal [removed: 2014"),] [added: 2015"),] lululemon athletica inc. (together with its subsidiaries) is referred to as [removed: "lululemon,] [added: "lululemon,"] "the Company," "we," "us" or "our."

We offer a comprehensive line of apparel and accessories for women, [removed: men] [added: men,] and female youth.

Our apparel assortment includes items such as pants, shorts, [removed: tops] [added: tops,] and jackets designed for healthy lifestyle [removed: activities] and athletic [removed: pursuits] [added: activities] such as yoga, running, [removed: general fitness,] [added: other sweaty pursuits,] and [removed: dance-inspired apparel] [added: athletic wear] for female youth.

Although we benefit from the growing number of people that participate in yoga, we believe the percentage of our products sold for other activities will continue to increase as we broaden our product [removed: range to address other activities.][added: range.]

Our fitness-related accessories include an array of items such as bags, socks, underwear, yoga [removed: mats] [added: mats,] and water bottles.

Our design team continues to source and develop technically advanced fabrics and innovative functional features that we believe will help advance our product [removed: line] [added: lines] and differentiate us from the competition.

Although we were founded to address the unique needs of women, we are also successfully designing products for men and [removed: athletic] female youth who [removed: also] appreciate the technical rigor and premium quality of our products.

[added: In] addition, we believe consumer purchase decisions are driven by both an actual need for functional products and a desire to [removed: create] [added: live] a particular [removed: lifestyle perception.]

We primarily conduct our business through two channels: [removed: corporate-owned stores,] [added: company-operated stores] and direct to consumer.

We also generate net revenue from our [removed: corporate-owned outlets and] [added: outlets,] showrooms, [removed: through] sales to wholesale accounts, [removed: from] warehouse sales, [removed: and from] sales from temporary [removed: locations.][added: locations, and license and supply arrangements.]

As of [removed: February 1, 2015,] [added: January 31, 2016,] we operated [removed: 302 corporate-owned] [added: 363 company-operated] stores located in the United States, Canada, Australia, New Zealand, the United Kingdom, [added: Singapore, Hong Kong, Germany,] and [removed: Singapore.][added: Puerto Rico.]

Our direct to consumer segment includes the net revenue which we generate from our lululemon and ivivva e-commerce websites, www.lululemon.com and [removed: www.ivivva.com] [added: www.ivivva.com,] and other country and region specific websites.

While most of our [removed: corporate-owned] [added: company-operated] stores are branded lululemon athletica, [removed: 22] [added: 43] of our [removed: corporate-owned] [added: company-operated] stores are branded ivivva athletica and specialize in [removed: dance-inspired apparel] [added: athletic wear] for female youth.

Our [removed: corporate-owned] [added: company-operated] stores by [removed: brand] [added: brand,] and by [removed: country] [added: country,] as of [removed: February 1, 2015] [added: January 31, 2016] and February [removed: 2, 2014,] [added: 1, 2015,] are summarized in the table below:

| | | [removed: February 1, 2015] [added: January 31, 2016] | | | February [removed: 2, 2014] [added: 1, 2015] | |

| United States | | [removed: 200] [added: 229] | | | [removed: 168] [added: 200] | |

| Canada | | [removed: 46] [added: 48] | | | [removed: 45] [added: 46] | |

| Australia | | 26 | | | [removed: 25] [added: 26] | |

| New Zealand | | 5 | | | [removed: 4] [added: 5] | |

| United Kingdom | | [removed: 2] [added: 6] | | | [removed: —] [added: 2] | |

| Singapore | | [removed: 1] [added: 2] | | | [removed: —] [added: 1] | |

| United States | | [removed: 11] [added: 31] | | | [removed: 3] [added: 11] | |

| Canada | | [removed: 11] [added: 12] | | | [removed: 9] [added: 11] | |

| Total | | [removed: 302] [added: 363] | | | [removed: 254] [added: 302] | |

[added: | • | License and supply arrangements \-] We [added: enter into license and supply arrangements from time to time when we] believe that [removed: partnering] [added: it will be to our advantage to partner] with companies and individuals with significant experience and proven success in certain target [removed: countries is to our advantage.][added: markets. |]

[removed: On] [added: In] January [removed: 11,] 2015, we entered into a license and supply [removed: agreement] [added: arrangement] with a partner in the Middle East which grants [removed: it] [added: our partner] the right to operate lululemon athletica branded retail locations in the United Arab Emirates, Kuwait, Qatar, [removed: Oman] [added: Oman,] and Bahrain for an initial term of five years.

Under this [removed: arrangement] [added: arrangement,] we [removed: will be supplying the] [added: supply our] partner with lululemon products, [removed: training] [added: training,] and other support.

We perform ongoing evaluations of our portfolio of [removed: corporate-owned] [added: company-operated] store locations.

In fiscal [removed: 2014] [added: 2015,] we closed one of our [removed: corporate-owned] [added: company-operated] stores.

As we continue our evaluation we [removed: may] [added: may,] in future [removed: periods] [added: periods,] close [added: or relocate] additional [removed: corporate-owned] [added: company-operated] store locations.

During fiscal [removed: 2014] [added: 2015,] our [removed: corporate-owned] [added: company-operated] stores open at least one year, which average approximately [removed: 2,950] [added: 2,968] square feet, averaged sales of [removed: $1,678] [added: $1,541] per square foot.

Direct to consumer is an increasingly substantial part of our business, representing approximately [removed: 17.9%] [added: 19.5%] of our net revenue in fiscal [removed: 2014,] [added: 2015,] compared to [removed: 16.5%] [added: 17.9%] of our net revenue in fiscal [removed: 2013] [added: 2014] and [removed: 14.4%] [added: 16.5%] of our net revenue in fiscal [removed: 2012.][added: 2013.]

Our direct to consumer channel makes our product accessible to more markets than our [removed: corporate-owned] [added: company-operated] store channel alone.

Other net revenue accounted for [removed: 7.1%] [added: 6.9%] of total net revenue in fiscal [removed: 2014] [added: 2015,] compared to [removed: 6.2%] [added: 7.1%] in fiscal [removed: 2013] [added: 2014,] and [removed: 6.0%] [added: 6.2%] of total net revenue in fiscal [removed: 2012.][added: 2013.]

| • | Wholesale - Our wholesale accounts include premium yoga studios, health [removed: clubs] [added: clubs,] and fitness centers. We believe these premium wholesale locations offer an alternative distribution channel that is convenient for our core consumer and enhances the image of our brand. We do not intend wholesale to be a significant contributor to overall sales. Instead, we [removed: intend to] use the channel to build brand awareness, especially in new markets, including those outside of North America. |

| • | Outlets and warehouse sales - We utilize outlets as well as warehouse sales, which are [removed: typically] held [removed: one or more times a year,] [added: from time] to [added: time, to] sell slow moving inventory and inventory from prior seasons to retail customers at discounted prices. |

| • | Showrooms - Our showrooms are typically small locations that we open [removed: from time to time] when we enter new markets and feature a limited selection of our product offering. |

We pursue a multi-faceted strategy which leverages our local ambassadors, social media, in-store community [removed: boards] [added: boards,] and a variety of grassroots initiatives.

lifestyle.

Company-Operated Stores

As of January 31, 2016, our retail footprint included 363 company-operated stores.

| Hong Kong | | 2 | | | — | |

| Germany | | 1 | | | — | |

| Puerto Rico | | 1 | | | — | |

| | | 320 | | | 280 | |

| | | 43 | | | 22 | |

We opened 61 net new company-operated stores in fiscal 2015, including eight new stores outside of North America.

In fiscal 2016, our new store growth will be primarily focused on continuing the build-out of our company-operated stores in the United States while also expanding our retail footprint in Asia and Europe.

Our real estate strategy over the next several years will not only consist of opening new company-operated stores, but also in overall square footage growth through store expansions and relocations.

The square footage of our company-operated stores excludes space used for non-retail activities such as yoga studios and office space.

| | |

| --- | --- |

As of January 31, 2016, there were two licensed stores in the United Arab Emirates, which are not included in the above company-operated stores table.

We own our distribution center in Columbus (Ohio), which has approximately 307,000 square feet.

During fiscal 2015, we entered into a new lease for an approximately 156,000 square foot distribution center in Vancouver.

We plan to relocate our existing leased distribution center in Vancouver to this premises.

In

Our Stores

As of February 1, 2015, our retail footprint included 211 stores in the United States, 57 stores in Canada, 26 stores in Australia, five in New Zealand, two in the United Kingdom, and one in Singapore.

| | | 280 | | | 242 | |

| | | 22 | | | 12 | |

We opened 48 net new corporate-owned stores in North America, Australia, Europe and Asia in fiscal 2014.

Over the next fiscal year, our new store growth will be primarily focused on corporate-owned stores in the United States.

Over the next few years we intend to expand our presence outside of North America and Australia, as part of our long-term business strategy.

As of February 1, 2015 there were no franchised retail locations in operation.

During fiscal 2014, approximately 59%

We believe our North American manufacturers provide us with the speed to market necessary to respond quickly to changing trends and increased demand.

During fiscal 2013 we purchased the distribution center in Columbus with approximately 307,000 square feet that we opened in fiscal 2014.

distinctive apparel and accessory designs, as well as a number of corresponding design patents in the United States and registered community designs in Europe.

In addition to the legal matters described below, we are, from time to time, involved in routine legal matters incidental to the conduct of our business, including legal matters such as initiation and defense of proceedings to protect intellectual property rights, [removed: slip and fall/personal] [added: personal] injury claims, product liability claims, and similar matters.

On July 15, 2015, plaintiffs Hallandale Beach Police Officers and Firefighters' Personnel Retirement Fund and Laborers' District Council Industry Pension Fund filed in the Delaware Court of Chancery a derivative lawsuit on behalf of lululemon against certain of our current and former directors, captioned Laborers' District Council Industry Pension Fund v.

Bensoussan, et al., C.A. No. 11293-CB.

Plaintiffs claim that the individual defendants breached their fiduciary duties to lululemon by allegedly failing to investigate certain trades of lululemon stock owned by Dennis J.

Wilson in 2013.

Plaintiffs also claim that Mr. Wilson breached his fiduciary duties by making his broker aware of certain non-public, material events prior to executing sales of lululemon stock on Mr. Wilson's behalf.

The defendants have filed motions to dismiss the action for failure to adequately plead that demand on the board was excused and the individual defendants have filed motions for failure to state a claim upon which relief may be granted.

On October 9, 2015, certain of our current and former hourly employees filed a class action lawsuit in the Supreme Court of New York entitled Rebecca Gathmann-Landini et al v.

lululemon USA inc. On December 2, 2015, the case was removed to the United States District Court for the Eastern District of New York.

The lawsuit alleges that we violated various New York

labor codes by failing to pay all earned wages, including overtime compensation.

The plaintiffs are seeking an unspecified amount of damages.

We intend to vigorously defend this matter.

On October 25, 2013, plaintiff Laborers' District Council Industry Pension Fund filed a books-and-records action in the Delaware Court of Chancery entitled Laborers' District Council Construction Industry Pension Fund v.

lululemon athletica inc., C.A. No. 9039-VCP (Del.

Ch.) under 8 Del.

C.

Sec.

220 based on a demand letter it sent to us on or around August 8, 2013 to request certain lululemon records relating to the March 2013 sheer Luon issue, our announcement that our then CEO, Christine Day, intended to resign, and certain stock trades executed by the then-Chairman of our board of directors, Mr. Wilson, prior to our announcement regarding our former CEO, Christine Day.

The Court held a one-day trial on February 19, 2014, which took the form of an oral argument.

On April 2, 2014, the Court rejected the majority of books and records sought by plaintiff and ordered us to produce a narrow category of documents relating to one trade made by the our former Chairman.

On June 11, 2014, the Court consolidated this action with the action captioned Hallandale Beach Police Officers and Firefighters' Personnel Retirement Fund v.

lululemon athletica inc., C.A. No. 8522-VCP (Del.

Ch.), which is described below.

On June 13, 2014, Plaintiffs filed a Motion to Enforce the Court's April 2, 2014 Telephonic Rulings and Compel in Camera Inspection of Withheld and Redacted Documents.

The Court held a hearing on the Motion to Enforce on December 1, 2014 and the judgment on the Motion remains pending.

We believe there is no merit to the Motion.

On August 12, 2013 and August 23, 2013, plaintiffs Thomas Canty and Tammy Federman filed shareholder derivative actions entitled Canty v.

Day, et al., No. 13-CV-5629 (S.D.N.Y.) and Federman v.

Day, et al., No. 13-CV-5977 (S.D.N.Y.).

Plaintiffs allege that they are acting on behalf of us and name as defendants our current and former directors and certain officers.

On January 17, 2014, plaintiffs filed an amended complaint, operative in both actions.

In that amended complaint, plaintiffs challenge certain public disclosures and conduct relating to the March 2013 sheer Luon issue, the June 2013 announcement regarding the resignation of our former CEO, Christine Day, and certain stock trades executed by Mr. Wilson and Ms. Day in the months leading up to that announcement.

Plaintiffs allege violations of Section 14(a) of the Securities Exchange Act and breach of fiduciary duty, unjust enrichment, abuse of control, and gross mismanagement.

On April 9, 2014, the Court dismissed all of plaintiffs' claims due to plaintiffs' failure to make a pre-suit demand.

On May 9, 2014, plaintiff in the Canty action filed a notice of appeal to the United States Court of Appeals for the Second Circuit.

The Court of Appeals has scheduled an oral argument on the appeal on March 27, 2015.

We believe there is no merit to the appeal.

On July 2, 2013, plaintiff Houssam Alkhoury filed a putative shareholder class action entitled Alkhoury v.

lululemon athletica inc., et al., No. 13-CV-4596 (S.D.N.Y.) against lululemon, a certain director and a certain officer of ours (collectively, "Defendants").

On October 1, 2013, the Court appointed Louisiana Sheriffs' Pension & Relief Fund as Lead Plaintiff and on November 1, 2013, Lead Plaintiff filed a consolidated class action complaint on behalf of a proposed class of purchasers of lululemon stock between September 7, 2012 through June 11, 2013 (the "Complaint").

In its Complaint, Lead Plaintiff asserted causes of action under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 against Defendants based on certain public disclosures made by us relating to lululemon's product quality and the March 2013 sheer Luon issue.

On January 15, 2014, Lead Plaintiff filed a consolidated amended class action complaint (the "Amended Complaint") on behalf of a proposed

class of purchasers of lululemon stock between September 7, 2012 through January 10, 2014.

In its Amended Complaint, Lead Plaintiff added new claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 based on certain of lululemon's public disclosures related to our ongoing quality control improvements and the impact of those improvements on our financial results.

On April 18, 2014, the Court dismissed all of Lead Plaintiff's claims for failure to state a claim.

Lead Plaintiff filed a notice of appeal of this decision and filed its appeal brief on August 1, 2014.

We filed a reply on October 23, 2014, Lead Plaintiff filed a further reply on November 6, 2014, and a hearing has been scheduled for May 8, 2015.

On May 3, 2013, plaintiff Hallandale Beach Police Officers and Firefighters' Personnel Retirement Fund filed a books-and-records action in the Delaware Court of Chancery entitled Hallandale Beach Police Officers and Firefighters' Personnel Retirement Fund v.

220 based on a demand letter it sent to us on April 17, 2013 to request certain lululemon records relating to the March 2013 sheer Luon issue and revisions to our executive bonus plan.

We moved to dismiss the complaint on May 28, 2013.

On June 14, 2013, plaintiff sent a supplemental demand letter that requested additional records from us relating to our announcement that Christine Day intended to resign as our Chief Executive Officer, and certain stock trades executed by our then-Chairman, Mr. Wilson, prior to our announcement regarding Ms. Day.

On July 1, 2013, plaintiff filed an amended complaint to incorporate allegations relating to the June 14, 2013 supplemental demand letter.

For the fiscal year ended [removed: February 1, 2015][added: January 31, 2016]

The aggregate market value of the voting stock held by non-affiliates of the registrant on [removed: August 1, 2014] [added: July 31, 2015] was approximately [removed: $3,986,474,344.][added: $5,091,622,000.]

Such aggregate market value was computed by reference to the closing price of the common stock as reported on the Nasdaq Global Select Market on [removed: August 1, 2014.][added: July 31, 2015.]

For purposes of determining this amount only, the registrant has defined affiliates as including the executive [removed: officers] [added: officers, directors,] and [removed: directors] [added: owners] of [added: 10% or more of] the [added: outstanding common stock of the] registrant on [removed: August 1, 2014.][added: July 31, 2015.]

At March [removed: 23, 2015] [added: 24, 2016] there were [removed: 132,131,605] [added: 127,494,121] shares of the registrant's common stock, par value $0.005 per share, outstanding.

At March [removed: 23, 2015,] [added: 24, 2016,] there were outstanding [removed: 9,832,541] [added: 9,803,819] exchangeable shares of Lulu Canadian Holding, Inc., a wholly-owned subsidiary of the registrant.

In addition, at March [removed: 23, 2015,] [added: 24, 2016,] the registrant had outstanding [removed: 9,832,541] [added: 9,803,819] shares of special voting stock, through which the holders of exchangeable shares of Lulu Canadian Holding, Inc. may exercise their voting rights with respect to the registrant.

| Portions of Proxy Statement for the [removed: 2015] [added: 2016] Annual Meeting of Stockholders | | Part III |

| Item 1. | [removed: [BUSINESS](#s718BC30091A0F037898C742F77E8C6F4)] [added: [BUSINESS](#sB6D755F65F85556EC6B2EB31FBBF576E)] | [removed: [1](#s718BC30091A0F037898C742F77E8C6F4)] [added: [1](#sB6D755F65F85556EC6B2EB31FBBF576E)] |

| Item 1A. | [RISK [removed: FACTORS](#s579927FD3642C328ECDC742F784617EA)] [added: FACTORS](#s606C69695B0EE2691072EB31FC1C5CAD)] | [removed: [5](#s579927FD3642C328ECDC742F784617EA)] [added: [5](#s606C69695B0EE2691072EB31FC1C5CAD)] |

| Item 2. | [removed: [PROPERTIES](#s7FE4B5C73240807F9F96742F78645D10)] [added: [PROPERTIES](#sC5DF76F1688E77C70D0FEB31FC7AA0F4)] | [removed: [12](#s7FE4B5C73240807F9F96742F78645D10)] [added: [14](#sC5DF76F1688E77C70D0FEB31FC7AA0F4)] |

| Item 3. | [LEGAL [removed: PROCEEDINGS](#s9CAAF7176A0221FD7159742F7877CFCE)] [added: PROCEEDINGS](#s7F542B461D4A3B063CC1EB31FC990B77)] | [removed: [13](#s9CAAF7176A0221FD7159742F7877CFCE)] [added: [14](#s7F542B461D4A3B063CC1EB31FC990B77)] |

| Item 5. | [MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY [removed: SECURITIES](#sEE990665F8830CE26782742F6FF197E6)] [added: SECURITIES](#s21031EF154D05E52275CEB31F3418599)] | [removed: [15](#sEE990665F8830CE26782742F6FF197E6)] [added: [16](#s21031EF154D05E52275CEB31F3418599)] |

| Item 6. | [SELECTED CONSOLIDATED FINANCIAL [removed: DATA](#s989FDE549B9305D101B9742F6ED02F37)] [added: DATA](#s4D5B7A7AFF4E575931AAEB31F3CEDFA2)] | [removed: [18](#s989FDE549B9305D101B9742F6ED02F37)] [added: [19](#s4D5B7A7AFF4E575931AAEB31F3CEDFA2)] |

| Item 7. | [MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF [removed: OPERATIONS](#sBCFE9A49160F46D3E669742F798A867D)] [added: OPERATIONS](#sF292DB20A8D9AED40514EB31FDB2CB4C)] | [removed: [19](#sBCFE9A49160F46D3E669742F798A867D)] [added: [20](#sF292DB20A8D9AED40514EB31FDB2CB4C)] |

| Item 7A. | [QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET [removed: RISK](#sE526FA1AEBA68F537DF2742F7BD0C557)] [added: RISK](#sADF0763DF1CB6B2DF163EB32011E1986)] | [removed: [34](#sE526FA1AEBA68F537DF2742F7BD0C557)] [added: [35](#sADF0763DF1CB6B2DF163EB32011E1986)] |

| Item 8. | [FINANCIAL STATEMENTS AND SUPPLEMENTARY [removed: DATA](#s549CA8E56C7E4ABECFCB742F7BF1C105)] [added: DATA](#sE8B5E7C2B08A6B2C7045EB32013DB85A)] | [removed: [35](#s549CA8E56C7E4ABECFCB742F7BF1C105)] [added: [36](#sE8B5E7C2B08A6B2C7045EB32013DB85A)] |

| Item 9A. | [CONTROLS AND [removed: PROCEDURES](#s9792FB1BF236C04C9CB4742F80D1268E)] [added: PROCEDURES](#sA21556B32F8E7226A088EB320912728D)] | [removed: [58](#s9792FB1BF236C04C9CB4742F80D1268E)] [added: [61](#sA21556B32F8E7226A088EB320912728D)] |

| [PART [removed: III](#s0826A348D47881B791DF742F80F1E0C5)] [added: III](#s6CC524BAF4E32FD525CDEB3209238FFF)] | | |

| Item 10. | [DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE [removed: GOVERNANCE](#sA1067121FECA5EBA5573742F81068B2E)] [added: GOVERNANCE](#s1CCCDE92ACDAD56D9E61EB320929BD85)] | [removed: [59](#sA1067121FECA5EBA5573742F81068B2E)] [added: [62](#s1CCCDE92ACDAD56D9E61EB320929BD85)] |

| Item 11. | [EXECUTIVE [removed: COMPENSATION](#sB1A4577908677007CFDB742F812774B1)] [added: COMPENSATION](#sBA66610CF070922BEB43EB320936A667)] | [removed: [59](#sB1A4577908677007CFDB742F812774B1)] [added: [62](#sBA66610CF070922BEB43EB320936A667)] |

| Item 12. | [SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER [removed: MATTERS](#s0BBDA145D20DB18EDBF5742F703EC06E)] [added: MATTERS](#s5C42F9CAA7E5DFFBB267EB31F3CE02B1)] | [removed: [59](#s0BBDA145D20DB18EDBF5742F703EC06E)] [added: [62](#s5C42F9CAA7E5DFFBB267EB31F3CE02B1)] |

| Item 13. | [CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR [removed: INDEPENDENCE](#sBA5F13A69E749ED34F61742F817A84C4)] [added: INDEPENDENCE](#s22514136FBA2E19AC0F6EB3209750908)] | [removed: [60](#sBA5F13A69E749ED34F61742F817A84C4)] [added: [63](#s22514136FBA2E19AC0F6EB3209750908)] |

| Item 14. | [PRINCIPAL ACCOUNTANT FEES AND [removed: SERVICES](#sCD7B8C86B65A290D1E45742F81ACFFB0)] [added: SERVICES](#s766DCEDCDBAEC60C0B59EB320996A3AF)] | [removed: [60](#sCD7B8C86B65A290D1E45742F81ACFFB0)] [added: [63](#s766DCEDCDBAEC60C0B59EB320996A3AF)] |

| Item 15. | [EXHIBITS AND FINANCIAL STATEMENT [removed: SCHEDULE](#sC38545BF1B016A6F4C0E742F8201F4F1)] [added: SCHEDULE](#s34F0BD14109A54079BD9EB3209E913F0)] | [removed: [61](#sC38545BF1B016A6F4C0E742F8201F4F1)] [added: [64](#s34F0BD14109A54079BD9EB3209E913F0)] |

Discussions containing forward-looking statements may be found in the material set forth under [removed: "Business,"] [added: "Business",] "Management's Discussion and Analysis of Financial Condition and Results of [removed: Operations"] [added: Operations",] and in other sections of the report.

We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business [removed: strategy] [added: strategy,] and financial needs.

10-K 1 lulu-20160131x10k.htm 10-K

| [PART I](#s2CEFB750217F8B0E4AB4EB31FB618FEE) | | |

| [PART II](#sB6D5F288F7C9C9270370EB31FCA98536) | | |

| [PART IV](#s8BDDE373A012F7467E21EB3209D3DA52) | | |

10-K 1 lulu-20150201x10k.htm 10-K

| [PART I](#s9AABB487903C7FA958B2742F7795A5BF) | | |

| [PART II](#s34CADB024789DA43BDF4742F788FA29C) | | |

| [PART IV](#s0A1A1B0363D3CB9D4BF8742F81CD13D0) | | |

The general location, use and approximate size of our owned properties at [removed: February 1, 2015,] [added: January 31, 2016,] are set forth below:

The general location, use, approximate size and lease renewal date of our [added: principal non-retail] leased properties at [removed: February 1, 2015,] [added: January 31, 2016,] are set forth below:

In addition to [removed: the locations listed above,] [added: those distribution centers,] we hold inventory at warehouses managed by third-parties in Hong [removed: Kong] [added: Kong, China,] and the Netherlands.

As of [removed: February 1, 2015,] [added: January 31, 2016,] we leased approximately [removed: 888,000] [added: 1,065,000] gross square feet relating to [removed: 300] [added: 361] of our [removed: 302] [added: 363] stores.

We currently operate four distribution centers located in the United States, Canada, and Australia.

During fiscal 2015 we entered into a new lease for an approximately 156,000 square foot distribution center in Vancouver, BC which expires in January 2031.

We plan to relocate our existing leased distribution center in Vancouver, BC to this premises.

We believe our current administrative offices, distribution centers, and the warehouse space available through our third-party logistics providers will be sufficient for our near term expansion plans.

| Vancouver, BC | | Executive and Administrative Offices | | 58,000 | | | May 2020 |

We currently operate four distribution centers located in Vancouver, British Columbia, Sumner, Washington, Columbus, Ohio and Melbourne, Victoria.

We purchased the Columbus, Ohio distribution center in fiscal 2013 and it commenced operations during fiscal 2014.

We expect that our current administrative offices and distribution centers are sufficient for our expansion plans for the foreseeable future.

| Fiscal Year Ended [removed: February 2, 2014] [added: January 31, 2016] | | | | | | | | |

As of [removed: February 1, 2015,] [added: January 31, 2016,] there were approximately [removed: 700] [added: 800] holders of record of our common stock.

We have never declared or paid any cash dividends on our common stock and do not anticipate paying any cash dividends on our common [removed: stock at this time.][added: stock.]

Any future determination as to the payment of cash dividends will be at the discretion of our board of directors and will depend on our financial condition, operating results, current and anticipated cash needs, plans for [removed: expansion] [added: expansion,] and other factors that our board of directors considers to be relevant.

The graph set forth below compares the cumulative total stockholder return on our common stock between January [removed: 31, 2010] [added: 30, 2011] (the date of our fiscal year end five years ago) and [removed: February 1, 2015,] [added: January 31, 2016,] with the cumulative total return of (i) the S&P 500 Index and (ii) S&P 500 Apparel, Accessories & Luxury Goods [removed: Index(1),] [added: Index,] over the same period.

This graph assumes the investment of $100 on January [removed: 31, 2010 in] [added: 30, 2011 at] the closing sale price our common stock, the S&P 500 Index and the S&P Apparel, Accessories & Luxury Goods Index and assumes the reinvestment of dividends, if any.

Information used in the graph was obtained from the Nasdaq [removed: Stock Market website, a source] [added: and S&P Capital IQ websites, sources] believed to be reliable, but we are not responsible for any errors or omissions in such information.

[removed: ][added: ]

| | | [removed: 31-Jan-10 | | | |] 30-Jan-11 | | | | 29-Jan-12 | | | | 03-Feb-13 | | | | 02-Feb-14 | | | | 01-Feb-15 | | | [added: | 31-Jan-16 | | |]

| S&P 500 Apparel, Accessories & Luxury Goods Index | | $ | 100.00 | | | $ | [removed: 135.25] [added: 140.71] | | | $ | [removed: 190.32] [added: 128.80] | | | $ | [removed: 174.21] [added: 147.40] | | | $ | [removed: 199.36] [added: 151.22] | | | $ | [removed: 204.52] [added: 125.13] | |

The following table provides information regarding our [removed: repurchases] [added: purchases] of shares of our common stock during the thirteen weeks ended [removed: February 1, 2015] [added: January 31, 2016] related to our stock repurchase program:

| (1) | Monthly information is presented by reference to our fiscal periods during our fourth quarter of fiscal [removed: 2014.] [added: 2015.] |

| (2) | Our stock repurchase program was approved by our board of directors in June 2014. Common shares are repurchased in the open market at prevailing market prices, [added: including under written plans complying] with the [added: provisions of Rule 10b5-1 and Rule 10b-18 of the Securities Exchange Act of 1934, with the] timing and actual number of common shares [removed: to be] repurchased depending upon market conditions, eligibility to trade, and other factors. The repurchases [removed: will] [added: may] be made up until June 2016, and the maximum dollar value of shares to be repurchased is $450 million. |

The following table provides information regarding our purchases of shares of our common stock during the thirteen weeks ended [removed: February 1, 2015] [added: January 31, 2016] related to our Employee Share Purchase Plan:

| Period(1) | | Total Number of Shares Purchased(2) | | | Average Price Paid per Share | | | | Total Number of Shares Purchased as Part of Publicly Announced Plans or [removed: Programs(3)] [added: Programs(2)] | | | Maximum Number of Shares that May Yet Be Purchased Under the Plans or [removed: Programs(2,3)] [added: Programs(2)] | |

[removed: | (2) |] Excluded from this disclosure are shares repurchased to settle statutory employee tax withholding related to the vesting of [removed: performance-based restricted stock unit] [added: stock-based compensation] awards. [removed: |]

| [removed: (3)] [added: (2)] | Our Employee Share Purchase Plan (ESPP) was approved by our board of directors and stockholders in September 2007. All shares purchased under the ESPP are purchased on the Nasdaq Global Select Market (or such other stock exchange as we may designate from time to time). Unless our board of directors terminates the ESPP earlier, the ESPP will continue until all shares authorized for purchase under the ESPP have been purchased. The maximum number of shares authorized to be purchased under the ESPP is 6,000,000. |

| Fourth Quarter | | $ | 62.07 | | | $ | 44.09 | |

| Third Quarter | | 66.70 | | | | 48.28 | | |

| Second Quarter | | 68.80 | | | | 59.79 | | |

| First Quarter | | 69.77 | | | | 60.96 | | |

| lululemon athletica inc. | | $ | 100.00 | | | $ | 186.88 | | | $ | 197.78 | | | $ | 133.17 | | | $ | 193.06 | | | $ | 180.91 | |

| S&P 500 Index | | $ | 100.00 | | | $ | 103.13 | | | $ | 118.56 | | | $ | 139.66 | | | $ | 156.31 | | | $ | 152.02 | |

| November 2, 2015 - November 29, 2015 | | 699,106 | | | $ | 48.55 | | | 699,106 | | | $ | 98,784,068 | |

| November 30, 2015 - January 3, 2016 | | 1,180,281 | | | 49.29 | | | | 1,180,281 | | | 40,603,314 | | |

| January 4, 2016 - January 31, 2016 | | 224,406 | | | 53.72 | | | | 224,406 | | | 28,548,349 | | |

| Total | | 2,103,793 | | | | | | | 2,103,793 | | | | | |

| November 2, 2015 - November 29, 2015 | | 10,402 | | | $ | 50.32 | | | 10,402 | | | 5,188,628 | |

| November 30, 2015 - January 3, 2016 | | 16,331 | | | 51.04 | | | | 16,331 | | | 5,172,297 | |

| January 4, 2016 - January 31, 2016 | | 9,015 | | | 59.26 | | | | 9,015 | | | 5,163,282 | |

| Total | | 35,748 | | | | | | | 35,748 | | | | |

| (1) | Monthly information is presented by reference to our fiscal periods during our fourth quarter of fiscal 2015. |

| Fourth Quarter | | $ | 71.56 | | | $ | 45.68 | |

| Third Quarter | | 76.57 | | | | 65.29 | | |

| Second Quarter | | 82.28 | | | | 61.33 | | |

| First Quarter | | 76.88 | | | | 62.32 | | |

We anticipate that we will retain all of our available funds for use in the operation and expansion of our business.

__________

| | |

| --- | --- |

| (1) | The previously compared S&P Retail Index is no longer published. |

| lululemon athletica inc. | | $ | 100.00 | | | $ | 242.99 | | | $ | 454.11 | | | $ | 480.59 | | | $ | 323.58 | | | $ | 469.12 | |

| S&P 500 Index | | $ | 100.00 | | | $ | 118.85 | | | $ | 122.58 | | | $ | 140.91 | | | $ | 166.00 | | | $ | 185.78 | |

| November 3, 2014 - November 30, 2014 | | 326,312 | | | $ | 42.96 | | | 326,312 | | | $ | 305,716,285 | |

| December 1, 2014 - January 4, 2015 | | 70,157 | | | 44.86 | | | | 70,157 | | | 302,569,190 | | |

| January 5, 2015 - February 1, 2015 | | — | | | — | | | | — | | | 302,569,190 | | |

| Total | | 396,469 | | | | | | | 396,469 | | | | | |

| November 3, 2014 - November 30, 2014 | | 10,952 | | | $ | 44.82 | | | 10,952 | | | 5,300,350 | |

| December 1, 2014 - January 4, 2015 | | 14,104 | | | 51.35 | | | | 14,104 | | | 5,286,246 | |

| January 5, 2015 - February 1, 2015 | | 7,391 | | | 64.49 | | | | 7,391 | | | 5,278,855 | |

| Total | | 32,447 | | | | | | | 32,447 | | | | |

The selected consolidated financial data set forth below is derived from our consolidated financial statements and should be read in conjunction with our consolidated financial statements for the years ended [added: January 31, 2016,] February 1, 2015, February 2, 2014, February 3, [removed: 2013, January 29, 2012] [added: 2013] and January [removed: 30, 2011.][added: 29, 2012.]

The consolidated statement of operations and comprehensive income data for each of the years ended [added: January 31, 2016,] February 1, [removed: 2015,] [added: 2015 and] February 2, 2014 and [removed: February 3, 2013 and] the consolidated balance sheet data as of [added: January 31, 2016 and] February 1, 2015 [removed: and February 2, 2014] is derived from, and qualified by reference to, our audited consolidated financial statements and related notes appearing elsewhere in this Annual Report.

| | | [added: January 31, 2016 | | | |] February 1, 2015 | | | | February 2, 2014 | | | | February 3, 2013 | | | | January 29, 2012 | | | [removed: | January 30, 2011 | | |]

| Net revenue | | $ | [removed: 1,797,213] [added: 2,060,523] | | | $ | [removed: 1,591,188] [added: 1,797,213] | | | $ | [removed: 1,370,358] [added: 1,591,188] | | | $ | [removed: 1,000,839] [added: 1,370,358] | | | $ | [removed: 711,704] [added: 1,000,839] | |

| Cost of goods sold | | [removed: 883,033] [added: 1,063,357] | | | | [removed: 751,112] [added: 883,033] | | | | [removed: 607,532] [added: 751,112] | | | | [removed: 431,488] [added: 607,532] | | | | [removed: 316,757] [added: 431,488] | | |

| Gross profit | | [removed: 914,180] [added: 997,166] | | | | [removed: 840,076] [added: 914,180] | | | | [removed: 762,826] [added: 840,076] | | | | [removed: 569,351] [added: 762,826] | | | | [removed: 394,947] [added: 569,351] | | |

| Selling, general and administrative expenses | | [removed: 538,147] [added: 628,090] | | | | [removed: 448,718] [added: 538,147] | | | | [removed: 386,387] [added: 448,718] | | | | [removed: 282,393] [added: 386,387] | | | | [removed: 212,784] [added: 282,393] | | |

| Income from operations | | [removed: 376,033] [added: 369,076] | | | | [removed: 391,358] [added: 376,033] | | | | [removed: 376,439] [added: 391,358] | | | | [removed: 286,958] [added: 376,439] | | | | [removed: 180,391] [added: 286,958] | | |

| Other [removed: income (expense),] [added: (expense) income,] net | | [removed: 7,102] [added: (581] | | [added: )] | | [removed: 5,768] [added: 7,102] | | | | [removed: 4,957] [added: 5,768] | | | | [removed: 2,500] [added: 4,957] | | | | [removed: 2,886] [added: 2,500] | | |

| Income before [removed: provision for] income [removed: taxes] [added: tax expense] | | [removed: 383,135] [added: 368,495] | | | | [removed: 397,126] [added: 383,135] | | | | [removed: 381,396] [added: 397,126] | | | | [removed: 289,458] [added: 381,396] | | | | [removed: 183,277] [added: 289,458] | | |

| [removed: Provision for income taxes] [added: Income tax expense] | | [removed: 144,102] [added: 102,448] | | | | [removed: 117,579] [added: 144,102] | | | | [removed: 109,965] [added: 117,579] | | | | [removed: 104,494] [added: 109,965] | | | | [removed: 61,080] [added: 104,494] | | |

| Net income | | [removed: 239,033] [added: 266,047] | | | | [removed: 279,547] [added: 239,033] | | | | [removed: 271,431] [added: 279,547] | | | | [removed: 184,964] [added: 271,431] | | | | [removed: 122,197] [added: 184,964] | | |

| Net income attributable to non-controlling interest | | — | | | | — | | | | [removed: 875] [added: —] | | | | [removed: 901] [added: 875] | | | | [removed: 350] [added: 901] | | |

| Net income attributable to lululemon athletica inc. | | $ | [removed: 239,033] [added: 266,047] | | | $ | [removed: 279,547] [added: 239,033] | | | $ | [removed: 270,556] [added: 279,547] | | | $ | [removed: 184,063] [added: 270,556] | | | $ | [removed: 121,847] [added: 184,063] | |

| Foreign currency translation adjustment | | [removed: (105,339] [added: (64,796] | | ) | | [removed: (89,158] [added: (105,339] | | ) | | [removed: (459] [added: (89,158] | | ) | | [removed: 1,220] [added: (459] | | [added: )] | | [removed: 14,462] [added: 1,220] | | |

| Comprehensive income | | $ | [removed: 133,694] [added: 201,251] | | | $ | [removed: 190,389] [added: 133,694] | | | $ | [removed: 270,097] [added: 190,389] | | | $ | [removed: 185,283] [added: 270,097] | | | $ | [removed: 136,309] [added: 185,283] | |

| Basic earnings per share | | $ | [removed: 1.66] [added: 1.90] | | | $ | [removed: 1.93] [added: 1.66] | | | $ | [removed: 1.88] [added: 1.93] | | | $ | [removed: 1.29] [added: 1.88] | | | $ | [removed: 0.86] [added: 1.29] | |

| Diluted earnings per share | | $ | [removed: 1.66] [added: 1.89] | | | $ | [removed: 1.91] [added: 1.66] | | | $ | [removed: 1.85] [added: 1.91] | | | $ | [removed: 1.27] [added: 1.85] | | | $ | [removed: 0.85] [added: 1.27] | |

| Basic weighted-average number of shares outstanding | | [removed: 143,935] [added: 140,365] | | | | [removed: 144,913] [added: 143,935] | | | | [removed: 144,000] [added: 144,913] | | | | [removed: 143,196] [added: 144,000] | | | | [removed: 141,720] [added: 143,196] | | |

| Diluted weighted-average number of shares outstanding | | [removed: 144,298] [added: 140,610] | | | | [removed: 146,043] [added: 144,298] | | | | [removed: 145,806] [added: 146,043] | | | | [removed: 145,278] [added: 145,806] | | | | [removed: 143,858] [added: 145,278] | | |

| Cash and cash equivalents | | $ | [removed: 664,479] [added: 501,482] | | | $ | [removed: 698,649] [added: 664,479] | | | $ | [removed: 590,179] [added: 698,649] | | | $ | [removed: 409,437] [added: 590,179] | | | $ | [removed: 316,286] [added: 409,437] | |

| Total assets | | [removed: 1,296,213] [added: 1,314,077] | | | | [removed: 1,252,388] [added: 1,296,213] | | | | [removed: 1,052,678] [added: 1,252,388] | | | | [removed: 736,034] [added: 1,052,678] | | | | [removed: 499,302] [added: 736,034] | | |

| Total stockholders' equity | | [removed: 1,089,568] [added: 1,027,482] | | | | [removed: 1,096,682] [added: 1,089,568] | | | | [removed: 887,299] [added: 1,096,682] | | | | [removed: 606,181] [added: 887,299] | | | | [removed: 394,293] [added: 606,181] | | |

| Non-controlling interest | | — | | | | — | | | | — | | | | [removed: 4,805] [added: —] | | | | [removed: 3,904] [added: 4,805] | | |

| | | January 31, 2016 | | | | February 1, 2015 | | | | February 2, 2014 | | | | February 3, 2013 | | | | January 29, 2012 | | |

| Operating expenses: | | | | | | | | | | | | | | | | | | | | |

| Provision for impairment and lease exit costs | | — | | | | — | | | | — | | | | — | | | | 1,772 | | |

[added: To the Stockholders of] lululemon athletica inc.

| [Report of Independent Registered Public Accounting [removed: Firm](#s8CAA97C71EBA9C37EC4B742F7C24A9CD)] [added: Firm](#sC9756DD79C26CF6C90C1EB32017C24BE)] | [removed: [36](#s8CAA97C71EBA9C37EC4B742F7C24A9CD)] [added: [37](#sC9756DD79C26CF6C90C1EB32017C24BE)] |

| [Consolidated Balance [removed: Sheets](#s3DB50EB841DE5B300E8B742F67E7B4E6)] [added: Sheets](#s5ADC22979CD8A4C9C3F2EB31E91ACB5D)] | [removed: [37](#s3DB50EB841DE5B300E8B742F67E7B4E6)] [added: [38](#s5ADC22979CD8A4C9C3F2EB31E91ACB5D)] |

| [Consolidated Statements of Operations and Comprehensive [removed: Income](#s062A719D3C0C46772472742F6829296D)] [added: Income](#s5B29DB77DB57E2CA9F2AEB31E9485CC7)] | [removed: [38](#s062A719D3C0C46772472742F6829296D)] [added: [39](#s5B29DB77DB57E2CA9F2AEB31E9485CC7)] |

| [Consolidated Statements of Stockholders' [removed: Equity](#sDCE1F724C010000E6A55742F68546239)] [added: Equity](#s2CE3B44C2D3614C4AC21EB31E968189E)] | [removed: [39](#sDCE1F724C010000E6A55742F68546239)] [added: [40](#s2CE3B44C2D3614C4AC21EB31E968189E)] |

| [Consolidated Statements of Cash [removed: Flows](#s6F7BD737C3AD1D6D02B2742F68FC789B)] [added: Flows](#s326D288A5F7AC188E6EDEB31EA32AF5F)] | [removed: [41](#s6F7BD737C3AD1D6D02B2742F68FC789B)] [added: [42](#s326D288A5F7AC188E6EDEB31EA32AF5F)] |

| [Notes to the Consolidated Financial [removed: Statements](#s4257993F024EC4787EFA742F7D4735A9)] [added: Statements](#s9687DA9CA3C35DE0E577EB32035F7EE5)] | [removed: [42](#s4257993F024EC4787EFA742F7D4735A9)] [added: [43](#s9687DA9CA3C35DE0E577EB32035F7EE5)] |

We have audited the accompanying consolidated balance sheets of lululemon athletica inc. and its subsidiaries as of [added: January 31, 2016 and] February 1, 2015 and [removed: February 2, 2014 and] the related consolidated statements of operations and comprehensive income, stockholders' equity and cash flows for the [removed: 52, 52, and 53] [added: 52] week periods ended [added: January 31, 2016,] February 1, [removed: 2015, February 2, 2014,] [added: 2015] and February [removed: 3, 2013, respectively.][added: 2, 2014.]

We also have audited lululemon athletica [removed: inc.'s] [added: inc.] and its subsidiaries' internal control over financial reporting as of [removed: February 1, 2015,] [added: January 31, 2016,] based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission [removed: (COSO).][added: ("COSO").]

Our responsibility is to express [removed: an opinion] [added: opinions] on these consolidated financial statements, [added: on] the financial statement [removed: schedule] [added: schedule,] and [added: on] the company's internal control over financial reporting based on our integrated audits.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements [removed: and the financial statement schedule] are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of lululemon athletica inc. and its subsidiaries as of [added: January 31, 2016 and] February 1, 2015 and [removed: February 2, 2014 and] the results of their operations and their cash flows for the [removed: 52, 52, and 53] [added: 52] week periods ended [added: January 31, 2016,] February 1, 2015, [added: and] February 2, 2014, [removed: and February 3, 2013, respectively,] in conformity with accounting principles generally accepted in the United States of America.

Also, in our opinion, lululemon athletica inc. and its subsidiaries maintained, in all material respects, effective internal control over financial reporting as of [removed: February 1, 2015,] [added: January 31, 2016,] based on criteria established in Internal Control - Integrated Framework (2013) issued by COSO.

| Chartered [added: Professional] Accountants |

| | | [added: January 31, 2016 | | | |] February 1, 2015 | | | | February 2, 2014 | | |

| Cash and cash [removed: equivalents] [added: equivalents, beginning of period] | | $ | 664,479 | | | $ | 698,649 | | [added: | $ | 590,179 | |]

| Accounts receivable | | [removed: 13,746] [added: 13,108] | | | | [removed: 11,903] [added: 13,746] | | |

| Inventories | | [removed: 208,116] [added: 284,009] | | | | [removed: 188,790] [added: 208,116] | | |

| [removed: Prepaid] [added: Other prepaid] expenses and other current assets | | [removed: 64,671] [added: 26,987] | | | | [removed: 46,197] [added: 24,124] | | |

| Property and equipment, net | | [removed: 296,008] [added: 349,605] | | | | [removed: 255,603] [added: 296,008] | | |

| Goodwill and intangible assets, net | | [removed: 26,163] [added: 24,777] | | | | [removed: 28,201] [added: 26,163] | | |

| Deferred income tax [removed: asset] [added: assets] | | [removed: 16,018] [added: 11,802] | | | | [removed: 18,300] [added: 16,018] | | |

| Other non-current assets | | [removed: 7,012] [added: 10,854] | | | | [removed: 4,745] [added: 7,012] | | |

| Accounts payable | | $ | [removed: 9,339] [added: 10,381] | | | $ | [removed: 12,647] [added: 9,339] | |

| Accrued inventory liabilities | | [removed: 22,296] [added: 25,451] | | | | [removed: 15,415] [added: 22,296] | | |

| Accrued compensation and related expenses | | [removed: 29,932] [added: 43,524] | | | | [removed: 19,445] [added: 29,932] | | |

| Income taxes payable | | [removed: 20,073] [added: 37,736] | | | | [removed: 769] [added: 20,073] | | |

| Unredeemed gift card liability | | [removed: 46,252] [added: 57,736] | | | | [removed: 38,343] [added: 46,252] | | |

| Other accrued liabilities | | [removed: 31,989] [added: 50,676] | | | | [removed: 29,595] [added: 31,989] | | |

| Deferred income tax [removed: liability] [added: liabilities] | | [removed: 3,633] [added: 10,759] | | | | [removed: 3,977] [added: 3,633] | | |

| Other non-current liabilities | | [removed: 43,131] [added: 50,332] | | | | [removed: 35,515] [added: 43,131] | | |

| Undesignated preferred stock, $0.01 par [removed: value,] [added: value:] 5,000 shares [removed: authorized,] [added: authorized;] none issued and outstanding | | — | | | | — | | |

| Exchangeable stock, no par [removed: value,] [added: value:] 60,000 shares [removed: authorized, issued] [added: authorized; 9,804] and [removed: outstanding] 9,833 [added: issued] and [removed: 29,955] [added: outstanding] | | — | | | | — | | |

| Special voting stock, $0.000005 par [removed: value,] [added: value:] 60,000 shares [removed: authorized, issued] [added: authorized; 9,804] and [removed: outstanding] 9,833 [added: issued] and [removed: 29,955] [added: outstanding] | | — | | | | — | | |

| Common stock, $0.005 par [removed: value,] [added: value:] 400,000 shares [removed: authorized, issued] [added: authorized; 127,482] and [removed: outstanding] 132,112 [added: issued] and [removed: 115,342] [added: outstanding] | | [removed: 661] [added: 637] | | | | [removed: 577] [added: 661] | | |

| Additional paid-in capital | | [removed: 241,695] [added: 245,533] | | | | [removed: 240,351] [added: 241,695] | | |

| Retained earnings | | [removed: 1,020,619] [added: 1,019,515] | | | | [removed: 923,822] [added: 1,020,619] | | |

| Accumulated other comprehensive loss | | [removed: (173,407] [added: (238,203] | | ) | | [removed: (68,068] [added: (173,407] | | ) |

| | | [removed: February 1, 2015] [added: January 31, 2016] | | | | February [removed: 2, 2014] [added: 1, 2015] | | | | February [removed: 3, 2013] [added: 2, 2014] | | |

| Net revenue | | $ | [removed: 1,797,213] [added: 2,060,523] | | | $ | [removed: 1,591,188] [added: 1,797,213] | | | $ | [removed: 1,370,358] [added: 1,591,188] | |

| March 29, 2016 |

| | | January 31, 2016 | | | | February 1, 2015 | | |

| Cash and cash equivalents | | $ | 501,482 | | | $ | 664,479 | |

| Prepaid and receivable income taxes | | 91,453 | | | | 40,547 | | |

| | | 917,039 | | | | 951,012 | | |

| | | $ | 1,314,077 | | | $ | 1,296,213 | |

| | | 225,504 | | | | 159,881 | | |

| | | 286,595 | | | | 206,645 | | |

| | | 1,027,482 | | | | 1,089,568 | | |

| | | $ | 1,314,077 | | | $ | 1,296,213 | |

| Income tax expense | | 102,448 | | | | 144,102 | | | | 117,579 | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Net income | | | | | | | | | | | | | | | | | | | | | | | | | 266,047 | | | | | | | | 266,047 | | |

| Stock-based compensation expense | | | | | | | | | | | | | | | | | | | | | 10,356 | | | | | | | | | | | | 10,356 | | |

| Common stock issued upon settlement of stock-based compensation | | | | | | | | | | | | | | 350 | | | 2 | | | | 4,702 | | | | | | | | | | | | 4,704 | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | Exchangeable Stock | | | | | Special Voting Stock | | | | | | | Common Stock | | | | | | | Additional Paid-in Capital | | | | Retained Earnings | | | | Accumulated Other Comprehensive Income (Loss) | | | | Total | | |

| | | Shares | | | Par Value | | Shares | | | Par Value | | | | Shares | | | Par Value | | | | | | | | | | | | | | | | | | |

| Shares withheld related to net share settlement of stock-based compensation | | | | | | | | | | | | | | (50 | ) | | — | | | | (2,857 | | ) | | | | | | | | | | (2,857 | | ) |

| Repurchase of common stock | | | | | | | | | | | | | | (4,959 | ) | | (26 | | ) | | (7,016 | | ) | | (267,151 | | ) | | | | | | (274,193 | | ) |

| Balance at January 31, 2016 | | 9,804 | | | | | 9,804 | | | $ | — | | | 127,482 | | | $ | 637 | | | $ | 245,533 | | | $ | 1,019,515 | | | $ | (238,203 | ) | | $ | 1,027,482 | |

| Changes in operating assets and liabilities | | | | | | | | | | | | |

| Prepaid and receivable income taxes | | (52,110 | | ) | | (15,234 | | ) | | 3,067 | | |

| Other accrued liabilities | | 19,563 | | | | 3,788 | | | | 7,998 | | |

| Other non-current assets and liabilities | | 2,480 | | | | 5,004 | | | | 4,748 | | |

The Company operates stores in the United States, Canada, Australia, New Zealand, the United Kingdom, Singapore, Hong Kong, Germany, and Puerto Rico.

Certain comparative figures have been reclassified to conform to the financial presentation adopted for the current year.

In fiscal 2015, the Company wrote-off $14,247 of inventory, and in fiscal 2014 the Company wrote-off $12,361 of inventory.

Company is contractually obligated to remove in order to comply with the lease agreement.

The recognition of a deferred income tax asset is based upon several assumptions and forecasts, including current and anticipated taxable income, the utilization of previously unrealized non-operating loss carry forwards, and regulatory reviews of tax filings.

Given the judgments and estimates required and the sensitivity of the results to the significant assumptions used, the Company believes the accounting estimates used in relation to the valuation of deferred income tax assets are subject to measurement uncertainty and are susceptible to a material change if the underlying assumptions change.

The Company evaluates its tax filing positions and recognizes the largest amount of tax benefit that is considered more likely than not to be sustained upon examination by the relevant taxing authorities based on the technical merits of the position.

This determination requires the use of significant judgment.

Income tax expense is adjusted in the period in which an uncertain tax position is effectively settled, the statute of limitations expires, facts or circumstances change, tax laws change, or new information becomes available.

Actual results could differ from those estimates.

Recent accounting pronouncements

To the Stockholders and Directors of

| March 25, 2015 |

| | | 951,012 | | | | 945,539 | | |

| | | $ | 1,296,213 | | | $ | 1,252,388 | |

| | | 159,881 | | | | 116,214 | | |

| | | 206,645 | | | | 155,706 | | |

| | | 1,089,568 | | | | 1,096,682 | | |

| Provision for income taxes | | 144,102 | | | | 117,579 | | | | 109,965 | | |

| Net income attributable to non-controlling interest | | — | | | | — | | | | 875 | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Balance at January 29, 2012 | | 33,412 | | | $ | — | | | 33,412 | | | $ | — | | | 110,135 | | | $ | 551 | | | $ | 205,557 | | | $ | 373,719 | | | $ | 21,549 | | | $ | 601,376 | | | $ | 4,805 | | | $ | 606,181 | |

| Net income attributable to lululemon athletica inc. | | | | | | | | | | | | | | | | | | | | | | | | | | | 270,556 | | | | | | | | 270,556 | | | | | | | | 270,556 | | |

| Restricted share issuance | | | | | | | | | | | | | | | | 16 | | | — | | | | — | | | | | | | | | | | | — | | | | | | | | — | | |

| Stock options exercised | | | | | | | | | | | | | | | | 873 | | | 4 | | | | 11,010 | | | | | | | | | | | | 11,014 | | | | | | | | 11,014 | | |

| Non-controlling interest: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Net income attributable to non-controlling interests | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 875 | | | | 875 | | |

| Purchase of remaining non-controlling interests | | | | | | | | | | | | | | | | | | | | | | | (20,333 | | ) | | | | | | | | | | (20,333 | | ) | | (5,680 | | ) | | (26,013 | | ) |

| Restricted share issuance | | | | | | | | | | | | | | | | 58 | | | — | | | | — | | | | | | | | | | | | — | | | | | | | | — | | |

| Stock options exercised | | | | | | | | | | | | | | | | 686 | | | 3 | | | | 8,168 | | | | | | | | | | | | 8,171 | | | | | | | | 8,171 | | |

| Stock options exercised | | | | | | | | | | | | | | | | 158 | | | 1 | | | | 2,912 | | | | | | | | | | | | 2,913 | | | | | | | | 2,913 | | |

| Restricted share issuance | | | | | | | | | | | | | | | | 34 | | | — | | | | — | | | | | | | | | | | | — | | | | | | | | — | | |

| Other, including net changes in other non-cash balances | | | | | | | | | | | | |

| Prepaid tax installments | | (15,234 | | ) | | 3,067 | | | | (7,812 | | ) |

| Other accrued liabilities | | 3,271 | | | | 7,837 | | | | 1,777 | | |

| Sales tax collected | | 517 | | | | 161 | | | | (4,232 | | ) |

| Other non-cash balances | | 7,373 | | | | 5,217 | | | | 5,632 | | |

| Purchase of non-controlling interest | | — | | | | — | | | | (26,013 | | ) |

| Cash and cash equivalents, beginning of period | | $ | 698,649 | | | $ | 590,179 | | | $ | 409,437 | |

The Company's primary markets are the United States, Canada, Australia, New Zealand, the United Kingdom, and Singapore where 211, 57, 26, five, two, and one corporate-owned store(s), respectively, were in operation as at February 1, 2015.

Certain prior year amounts have been reclassified to conform to fiscal 2014 presentation.

The results of operations of lululemon athletica australia Pty attributable to the non-controlling interest for fiscal 2012 are presented within equity and net income, and are shown separately from the Company's equity and net income attributable to the Company.

and for raw materials, market is defined as replacement cost.

All foreign exchange gains or losses are

recorded in the consolidated statements of operations under selling, general and administrative expenses.

Recently issued accounting standards

| | | $ | 208,116 | | | $ | 188,790 | |

| | | $ | 296,008 | | | $ | 255,603 | |

| | | 24,413 | | | | 25,279 | | |

| | | 1,750 | | | | 2,922 | | |

Disclosure controls and procedures are controls and procedures designed to reasonably ensure that information required to be disclosed in our reports filed under the Exchange Act, such as this report, is recorded, processed, [removed: summarized] [added: summarized,] and reported within the time periods specified in the SEC's rules and forms.

Further, the design of a control system must reflect the fact that there are resource limitations on all control [removed: systems,] [added: systems;] no evaluation of internal controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected.

Based on this evaluation, management concluded that we maintained effective internal control over financial reporting as of [removed: February 1, 2015.][added: January 31, 2016.]

The effectiveness of our internal control over financial reporting as of [removed: February 1, 2015] [added: January 31, 2016] has been audited by PricewaterhouseCoopers LLP our independent registered public accounting firm, as stated in their report in Item 8 of Part II of this Form 10-K.

There were no changes in our internal control over financial reporting during the fourth quarter of the fiscal year ended [removed: February 1, 2015, which were identified in connection with management’s evaluation required by Rules 13a-15(d) and 15d-15(d) under the Securities Exchange Act of 1934, as amended,] [added: January 31, 2016] that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

The information required by this item concerning our directors, director nominees and Section 16 beneficial ownership reporting compliance is incorporated by reference to our definitive Proxy Statement for our [removed: 2015] [added: 2016] Annual Meeting of Stockholders under the captions "Election of Directors," "Section 16(a) Beneficial Ownership Reporting Compliance," "Executive Officers" and "Corporate Governance."

Any amendments, other than technical, administrative or other non-substantive amendments, to our Code of Business Conduct and Ethics or waivers from the provisions of the Code of Business Conduct and Ethics for our principal executive officer and our principal financial and accounting officer will be disclosed on our website within four business days following the [added: effective] date of such amendment or waiver.

The information required by this item is incorporated by reference to our [removed: 2015] [added: 2016] Proxy Statement under the captions "Executive Compensation" and "Executive Compensation Tables."

The information required by this item is incorporated by reference to our [removed: 2015] [added: 2016] Proxy Statement under the caption "Principal Stockholders and Stock Ownership by Management."

Equity Compensation Plan Information (as of [removed: February 1, 2015)][added: January 31, 2016)]

| (1) | This amount represents the following: (a) [removed: 879,282] [added: 867,212] shares subject to outstanding options, (b) [removed: 451,503] [added: 394,973] shares subject to outstanding performance-based restricted stock units, and (c) [removed: 186,033] [added: 333,049] shares subject to outstanding restricted stock units. The options, performance-based restricted stock units and restricted stock units are all under our [added: 2007 Equity Incentive Plan or our] 2014 Equity Incentive Plan. Restricted shares outstanding under our 2014 Equity Incentive Plan have already been reflected in our total outstanding common stock balance. |

| (3) | This includes (a) [removed: 15,180,132] [added: 14,690,742] shares of our common stock available for future issuance pursuant to our 2014 Equity Incentive Plan and (b) [removed: 5,278,855] [added: 5,163,282] shares of our common stock available for future issuance pursuant to our Employee Share Purchase Plan. The number of shares remaining available for future issuance under our 2014 Equity Incentive Plan is reduced by 1.7 shares for each award other than stock options granted and by one share for each stock option award granted. Outstanding awards that expire or are canceled without having been exercised or settled in full are available for issuance again under our 2014 Equity Incentive Plan and shares that are withheld in satisfaction of tax withholding obligations for full value awards are also again available for issuance. No further awards may be issued under the predecessor plan, our 2007 Equity Incentive Plan. |

| Equity compensation plans approved by stockholders | | 1,595,234 | | | $ | 49.54 | | | 19,854,024 | |

| Total | | 1,595,234 | | | $ | 49.54 | | | 19,854,024 | |

| Equity compensation plans approved by stockholders | | 1,516,818 | | | $ | 39.25 | | | 20,458,987 | |

| Total | | 1,516,818 | | | $ | 39.25 | | | 20,458,987 | |

The information required by this item is incorporated by reference to our [removed: 2015] [added: 2016] Proxy Statement under the captions "Certain Relationships and Related Party Transactions" and "Corporate Governance."

The information required by this item is incorporated by reference to our [removed: 2015] [added: 2016] Proxy Statement under the caption "Fees for Professional Services."

| For the year ended February [removed: 3, 2013] [added: 2, 2014] | | $ | [removed: (1,126] [added: (91] | ) | | $ | [removed: (2,823] [added: —] | [removed: )] | | $ | [removed: 2,949] [added: —] | | | $ | [removed: (1,000] [added: (91] | ) |

| For the year ended February 2, 2014 | | [removed: (1,000] [added: $] | [added: (1,000] | ) | | [removed: (3,462] [added: $] | [added: (3,462] | ) | | [added: $ |] 3,364 | | | [added: $] | (1,098 | [removed: |] ) |

| For the year ended February [removed: 3, 2013] [added: 2, 2014] | | $ | [removed: (1,086] [added: (5,250] | ) | | $ | [removed: (6,901] [added: (22,449] | ) | | $ | [removed: 2,737] [added: 22,206] | | | $ | [removed: (5,250] [added: (5,493] | ) |

| For the year ended February 2, 2014 | | [removed: (5,250] [added: $] | [added: 1,828] | [removed: )] | | [removed: (22,449] [added: $] | [added: (173] | ) | | [removed: 22,206] [added: $] | [added: —] | | | [removed: (5,493] [added: $] | [added: 1,655] | [removed: )] |

| For the year ended February [removed: 3, 2013] [added: 2, 2014] | | $ | [removed: (283] [added: (519] | ) | | $ | [removed: (3,727] [added: (6,327] | ) | | $ | [removed: 3,491] [added: 5,935] | | | $ | [removed: (519] [added: (911] | ) |