Ulta Beauty (ULTA) 10-K risk factor changes: FY2013 vs FY2012

While global credit and financial markets appear to be recovering from extreme disruptions [added: experienced over the past few years, uncertainty about continuing economic stability remains.]

Continued turbulence in the United States and international markets and economies and declines in consumer spending may adversely affect our ability to refinance maturing liabilities and access the capital markets to meet liquidity [removed: needs,] [added: needs] and could adversely affect our business, financial condition, profitability and cash flows.

[added: If we were to lose the benefit] of [added: the experience, efforts and abilities of] other key executive personnel, it could have a material adverse effect on our business, financial [removed: condition] [added: condition,] profitability and cash flows.

Our inability to [removed: facilitate an orderly] [added: effectively manage and maintain our business through this Chief Executive Officer] transition could have a material adverse effect on our business, financial condition, profitability and cash flows.

During fiscal [removed: 2011,] [added: 2012,] we opened [removed: 61] [added: 102] new stores.

We intend to continue to grow our number of stores for the foreseeable future, and believe we have the long-term potential to grow our store base to [removed: over 1,000] [added: approximately 1,200] stores in the United States.

During fiscal [removed: 2011,] [added: 2012,] the average investment required to open a typical new store was approximately [removed: $0.9] [added: $1.0] million.

We operate [removed: two] [added: three] distribution facilities, which house the distribution operations for Ulta retail stores together with the order fulfillment operations of our e-commerce business.

In order to support our recent and expected future growth and to maintain the efficient operation of our business, [removed: we intend to open a third] [added: additional] distribution [removed: center] [added: centers may need to be added] in [removed: fiscal 2012.][added: the future.]

Our failure to [removed: open our third distribution center in fiscal 2012 or to] [added: effectively upgrade and] expand our distribution capacity on a timely basis to keep pace with our anticipated growth in stores could have a material adverse effect on our business, financial condition, profitability and cash flows.

[removed: We have identified the need to] expand and upgrade our information systems to support recent and expected future growth.

Our e-commerce [removed: operations, while relatively small,] [added: operations] are increasingly important to our business.

[removed: Our business is also subject to a variety of other risks generally associated with sourcing] goods from abroad, such as political instability, disruption of imports by labor disputes and local business practices.

This risk is more pronounced during the current [removed: severe] economic downturn which has resulted in a number of national retailers filing for bankruptcy or closing stores due to depressed consumer spending levels.

Any of our other core brands could in the future decide to scale back or end its partnership with us and strengthen its relationship with our competitors, which could [removed: negatively impact the revenue we earn from the sale of such products.]

During fiscal [removed: 2011,] [added: 2012,] merchandise supplied to Ulta by our top ten vendors accounted for approximately 53% of our net sales.

[removed: In particular, failure to adequately comply] with the following legal requirements could have a material adverse effect on our business, financial conditions, profitability and cash [removed: flows.][added: flows:]

| | Ÿ | | In March 2010, comprehensive healthcare reform legislation under the Patient Protection and Affordable Care Act and the Health Care Education and Affordability Reconciliation Act (collectively, the “Acts”) was passed and signed into law. This healthcare reform legislation significantly expands healthcare coverage to many uninsured individuals and to those already insured. Due to the breadth and complexity of the healthcare reform legislation and the staggered implementation and uncertain timing of the regulations and lack of interpretive guidance, it is difficult to predict the overall impact of the healthcare reform legislation on our business over the coming years. Possible adverse effects include increased costs, exposure to expanded liability and requirements for us to revise the ways in which we conduct business. Additionally, [added: because significant provisions of the Acts will become effective on various dates over the next several years, future changes could significantly impact any effects on our business that we previously anticipated.] |

[removed: Moreover, our landlords have occasionally been unable, due to the requirements of local zoning laws, to obtain in a timely manner a certificate of occupancy with respect to the] shell of our stores and/or the larger shopping centers and/or common areas (which certificate of occupancy is required by local building codes for us to open our store), causing us in some instances to delay store openings.

Unexpected and undesirable side effects caused by our Ulta products for which we have not provided sufficient label warnings, or salon services which may have been performed negligently, could result in the discontinuance [added: of sales of our products or of certain salon services or prevent us from achieving or maintaining market acceptance of the affected products and services.]

In addition, we rely on discounts from the basic postal rate structure, such as discounts for bulk [added: mailings and sorting by zip code and carrier routes.]

[removed: As a result, we have been required to improve our] financial and managerial controls, reporting systems and procedures and have incurred and will continue to incur expenses to test our systems and to make such improvements.

[removed: Although we announced a special cash dividend on March 8, 2012 that is payable on May 15, 2012, any] [added: Any] future dividend payments will be within the discretion of our Board of Directors and will depend on, among other things, our financial condition, results of operations, capital requirements, capital expenditure requirements, contractual restrictions, anticipated cash needs, provisions of applicable law and other factors that our board of directors may deem relevant.

Effective February 21, 2013, Carl S.

Rubin resigned from his position as President and Chief Executive Officer and Dennis K.

Eck, a current board member, is currently serving as Interim Chief Executive Officer until a

permanent replacement is identified.

In addition, Scott M.

Settersten served as Acting Chief Financial Officer and Assistant Secretary of the Company from October 18, 2012 through March 12, 2013 at which time we announced his appointment as permanent Chief Financial Officer and Assistant Secretary.

We are in the process of completing a comprehensive search for a permanent Chief Executive Officer, however there can be no assurance that we will be able to identify and hire a qualified candidate in a timely manner.

Our ability to attract, select and hire a permanent Chief Executive Officer candidate may prove difficult, take more time than anticipated, and be costly.

This may require other senior management to divert part of their attention from their primary duties, which could have a material adverse effect on our business or operations.

We have identified the need to

_We are subject to risks relating to our information technology systems, and any failure to adequately protect our critical information technology systems could materially affect our operations._

We rely on information technology systems across our operations, including for management, supply chain and financial information and various other processes and transactions.

Our ability to effectively manage our business depends on the security, reliability and capacity of these systems.

Information technology system failures, network disruptions or breaches of security could disrupt our operations, causing delays or cancellation of customer orders or impeding the manufacture or shipment of products, processing of transactions or reporting of financial results.

An attack or other problem with our systems could also result in the disclosure of proprietary information about our business or confidential information concerning our customers or employees, which could result in significant damage to our business and our reputation.

Our business is also subject to a variety of other risks generally associated with sourcing

negatively impact the revenue we earn from the sale of such products.

In particular, failure to adequately comply

Moreover, our landlords have occasionally been unable, due to the requirements of local zoning laws, to obtain in a timely manner a certificate of occupancy with respect to the

As a result, we have been required to improve our

We paid a special cash dividend on May 15, 2012.

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_Our previously announced stock repurchase program could affect the price of our common stock and increase volatility and may be suspended or terminated at any time, which may result in a decrease in the trading price of our common stock._

On March 18, 2013, we announced that our Board of Directors had approved a stock repurchase program.

Under the program, we are authorized to repurchase shares of our common stock from time to time in the open market, in privately negotiated transactions, or otherwise, at prices that the Company deems appropriate and subject to market conditions, applicable law and other factors deemed relevant in the Company’s sole discretion, up to an aggregate purchase price of $150 million.

The timing and actual number of shares repurchased depend on a variety of factors including the timing of open trading windows, price, corporate and regulatory requirements, and other market conditions.

The program does not obligate the Company to repurchase any dollar amount or number of shares of common stock, and may be suspended or discontinued at any time and any suspension or discontinuation could cause the market price of our stock to decline.

Repurchases pursuant to our stock repurchase program could affect our stock price and increase its volatility.

The existence of a stock repurchase program could also cause our stock price to be higher than it would be in the absence of such a program and could potentially reduce the market liquidity for our stock.

There can be no assurance that any stock repurchases will enhance stockholder value because the market price of our common stock may decline below the levels at which we repurchased shares of common stock.

Although our stock repurchase program is intended to enhance long-term stockholder value, short-term stock price fluctuations could reduce the program’s effectiveness.

| --- | --- |

experienced over the past few years, uncertainty about continuing economic stability remains.

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

If we were to lose the benefit of the experience, efforts and abilities

On March 8, 2012 we announced the implementation of a Chief Financial Officer succession plan after our current CFO, Gregg R.

Bodnar, advised us that due to a family health issue he will be required to relocate and as such intends to step down from his current position at such time as a suitable successor CFO can be identified.

In order to facilitate an orderly transition, Mr. Bodnar plans to remain in his present position pending the appointment of his successor and is expected to assist in the transition of his successor.

There can be no assurance, however, that we will be able to timely identify a suitable successor Chief Financial Officer or that Mr. Bodnar’s services will be available to us through a transition period.

| | because significant provisions of the Acts will become effective on various dates over the next several years, future changes could significantly impact any effects on our business that we previously anticipated. |

of sales of our products or of certain salon services or prevent us from achieving or maintaining market acceptance of the affected products and services.

mailings and sorting by zip code and carrier routes.

| | Ÿ | | small trading volumes and small public float; |

_Our current principal stockholder has significant influence over us and they could delay, deter, or prevent a change of control or other business combination or otherwise cause us to take action with which you might not agree._

Our principal stockholder owns or controls, in the aggregate, approximately 18% of our outstanding common stock.

As a result, this stockholder will be able to exercise significant influence over all matters requiring stockholder approval, including the election of directors, amendment of our certificate of incorporation and approval of significant corporate transactions and will have significant influence over our management and policies.

Such concentration of voting power could have the effect of delaying or deterring a change of control or other business combination that might otherwise be beneficial to our stockholders.

In addition, the significant concentration of share ownership may adversely affect the trading price of our common stock because investors often perceive disadvantages in owning shares in companies with a stockholder holding such significant influence.

Such forward-looking statements are subject to various risks and uncertainties, which include, without limitation: the impact of weakness in the economy; changes in the overall level of consumer spending; changes in the wholesale cost of our products; the possibility that we may be unable to compete effectively in our highly competitive markets; the possibility that our continued opening of new stores could strain our resources and have a material adverse effect on our business and financial performance; the possibility that new store openings and existing locations may be impacted by developer or co-tenant issues; the possibility that the capacity of our distribution and order fulfillment infrastructure may not be adequate to support our recent growth and expected future growth plans; the possibility of material disruptions to our information systems; weather conditions that could negatively impact sales; [added: our ability to attract] and [added: retain key executive personnel; our ability to successfully execute and implement our common stock repurchase program; and] other risk factors detailed in our public filings with the Securities and Exchange Commission (the “SEC”), including risk factors contained in Item 1A, “Risk Factors” of this Annual Report on Form 10-K for the year ended [removed: January 28, 2012.][added: February 2, 2013.]

We were founded in 1990 as a [removed: discount] beauty retailer at a time when prestige, mass and salon products were sold through [removed: separate distribution channels.][added: distinct channels – department stores for prestige products, drug stores and mass merchandisers for mass products, and salons and authorized retail outlets for professional hair care products.]

Key aspects of our [removed: beauty superstore strategy] [added: business] include our ability to offer our customers a broad selection of over 20,000 beauty products across the categories of cosmetics, fragrance, haircare, skincare, bath and body products and salon styling tools, as well as salon [added: styling tools.]

The continued growth of our business and any future increases in net sales, net income and cash flows is dependent on our ability to execute our growth strategy, including [removed: growing our] [added: accelerating] store [removed: base, expanding our product, brand] [added: growth, introducing new products, services] and [removed: service offerings,] [added: brands,] enhancing our loyalty program, broadening our marketing [removed: channels, expanding] [added: reach, increasing] our [removed: e-commerce business] [added: digital focus including Ulta.com] and improving our [removed: profitability by expanding] operating margin.

We believe that the [removed: steadily] expanding U.S. beauty products and [added: salon] services industry, the shift in distribution of prestige beauty products from department stores to specialty retail stores, coupled with Ulta’s competitive strengths, positions us to capture additional market share in the industry through successful execution of our growth strategy.

We do not expect our [removed: 10.9%] [added: 8.8%] fiscal [removed: 2011] [added: 2012] comparable store sales increase to continue into the future.

Our long-term annual comparable store sales increase target is [removed: 3%] [added: 4%] to [removed: 5%.][added: 6%, including the impact of e-commerce sales starting in 2013.]

Economic conditions in the U.S. continue to be [removed: uncertain.][added: uneven.]

Therefore, a store is included in our comparable store base on the first day of the period after one year of [removed: operations plus the initial one month grand opening period.]

[removed: Comparable] [added: Measuring comparable] store sales [removed: is a critical measure that] allows us to evaluate the performance of our store base as well as several other aspects of our overall strategy.

The Company’s fiscal years ended [added: February 2, 2013,] January 28, [removed: 2012,] [added: 2012 and] January 29, 2011 [removed: and January 30, 2010] were [added: 53,] 52 [added: and 52] week [removed: years] [added: years, respectively,] and are hereafter referred to as fiscal [removed: 2011,] [added: 2012,] fiscal [removed: 2010] [added: 2011] and fiscal [removed: 2009.][added: 2010.]

As of [removed: January 28, 2012,] [added: February 2, 2013,] we operated [removed: 449] [added: 550] stores across [removed: 43] [added: 45] states.

| [added: (In thousands)] | | [removed: January 28, 2012] [added: February 2, 2013] | | | | January [removed: 29, 2011] [added: 28, 2012] | | | | January [removed: 30, 2010] [added: 29, 2011] | | |

| Net sales | | $ | [removed: 1,776,151] [added: 2,220,256] | | | $ | [removed: 1,454,838] [added: 1,776,151] | | | $ | [removed: 1,222,771] [added: 1,454,838] | |

| Cost of sales | | | [removed: 1,159,311] [added: 1,436,582] | | | | [removed: 970,753] [added: 1,159,311] | | | | [removed: 846,202] [added: 970,753] | |

| Gross profit | | | [removed: 616,840] [added: 783,674] | | | | [removed: 484,085] [added: 616,840] | | | | [removed: 376,569] [added: 484,085] | |

| Selling, general and administrative expenses | | | [removed: 410,658] [added: 488,880] | | | | [removed: 358,106] [added: 410,658] | | | | [removed: 302,413] [added: 358,106] | |

| Pre-opening expenses | | | [removed: 9,987] [added: 14,816] | | | | [removed: 7,095] [added: 9,987] | | | | [removed: 6,003] [added: 7,095] | |

| Operating income | | | [removed: 196,195] [added: 279,978] | | | | [removed: 118,884] [added: 196,195] | | | | [removed: 68,153] [added: 118,884] | |

| Interest expense | | | [removed: 587] [added: 185] | | | | [removed: 755] [added: 587] | | | | [removed: 2,202] [added: 755] | |

| Income before income taxes | | | [removed: 195,608] [added: 279,793] | | | | [removed: 118,129] [added: 195,608] | | | | [removed: 65,951] [added: 118,129] | |

| Income tax expense | | | [removed: 75,344] [added: 107,244] | | | | [removed: 47,099] [added: 75,344] | | | | [removed: 26,595] [added: 47,099] | |

| Net income | | $ | [removed: 120,264] [added: 172,549] | | | $ | [removed: 71,030] [added: 120,264] | | | $ | [removed: 39,356] [added: 71,030] | |

| Number of stores end of period | | | [removed: 449] [added: 550] | | | | [removed: 389] [added: 449] | | | | [removed: 346] [added: 389] | |

| Comparable store sales increase | | | [removed: 10.9] [added: 8.8] | % | | | [removed: 11.0] [added: 10.9] | % | | | [removed: 1.4] [added: 11.0] | % |

| (Percentage of net sales) | | [removed: January 28, 2012] [added: February 2, 2013] | | | | January [removed: 29, 2011] [added: 28, 2012] | | | | January [removed: 30, 2010] [added: 29, 2011] | | |

| Cost of sales | | | [removed: 65.3] [added: 64.7] | % | | | [removed: 66.7] [added: 65.3] | % | | | [removed: 69.2] [added: 66.7] | % |

| Gross profit | | | [removed: 34.7] [added: 35.3] | % | | | [removed: 33.3] [added: 34.7] | % | | | [removed: 30.8] [added: 33.3] | % |

| Selling, general and [removed: adminstrative] [added: administrative] expenses | | | [removed: 23.1] [added: 22.0] | % | | | [removed: 24.6] [added: 23.1] | % | | | [removed: 24.7] [added: 24.6] | % |

| Pre-opening expenses | | | [removed: 0.6] [added: 0.7] | % | | | [removed: 0.5] [added: 0.6] | % | | | 0.5 | % |

| Operating income | | | [removed: 11.0] [added: 12.6] | % | | | [removed: 8.2] [added: 11.0] | % | | | [removed: 5.6] [added: 8.2] | % |

| Interest expense | | | 0.0 | % | | | [removed: 0.1] [added: 0.0] | % | | | [removed: 0.2] [added: 0.1] | % |

| Income before income taxes | | | [removed: 11.0] [added: 12.6] | % | | | [removed: 8.1] [added: 11.0] | % | | | [removed: 5.4] [added: 8.1] | % |

| Income tax expense | | | [removed: 4.2] [added: 4.8] | % | | | [removed: 3.2] [added: 4.2] | % | | | [removed: 2.2] [added: 3.2] | % |

| Net income | | | [removed: 6.8] [added: 7.8] | % | | | [removed: 4.9] [added: 6.8] | % | | | [removed: 3.2] [added: 4.9] | % |

The sales increases [removed: are] [added: were] due to the opening of 60 net new stores in 2011 and a 10.9% increase in comparable store sales which was primarily due to a 10.1% increase in store traffic.

| | Ÿ | | 70 basis points improvement in variable store and marketing expense leverage attributed to [removed: costs] [added: cost] efficiencies and higher sales volume; and |

Fiscal year [removed: 2010] [added: 2012] versus fiscal year [removed: 2009][added: 2011]

Salon service sales increased [removed: $9.8] [added: $22.9] million, or [removed: 12.8%,] [added: 23.2%] to [removed: $86.4] [added: $121.4] million compared to [removed: $76.6] [added: $98.5] million in fiscal [removed: 2009.][added: 2011.]

The sales increases are due to the opening of [removed: 43] [added: 101] net new stores in [removed: 2010] [added: 2012] and a [removed: 11.0%] [added: 8.8%] increase in comparable store sales which was primarily due to a [removed: 8.6%] [added: 6.5%] increase in store traffic.

After extensive research, we recognized an opportunity to better satisfy how women want to shop for beauty products.

We developed a unique retail approach by combining one-stop shopping, a compelling value proposition, convenient locations and an uplifting specialty retail experience.

We focus on providing affordable indulgence to our customers by combining unmatched product breadth, value and convenience with the distinctive environment and experience of a specialty retailer.

Fiscal stress in Europe and economic uncertainty in the U.S. related to deficit issues, potential tax increases and federal spending cuts have resulted in significant fluctuations in the financial markets.

operations plus the initial one month grand opening period.

Starting in the first quarter of 2013, comparable store sales will be reported including the Company’s e-commerce business.

Net sales increased $444.1 million, or 25.0%, to $2,220.3 million in fiscal 2012 compared to $1,776.2 million in fiscal 2011.

Gross profit increased $166.9 million, or 27.0%, to $783.7 million in fiscal 2012, compared to $616.8 million, in fiscal 2011.

The increase in gross profit margin in fiscal 2012 was primarily driven by:

| | Ÿ | | 30 basis points improvement in merchandise margins driven by our marketing and merchandising strategies. |

| | Ÿ | | 70 basis points in corporate overhead leverage attributed to higher sales volume; and |

Pre-opening expenses increased $4.8 million, or 48.4%, to $14.8 million in fiscal 2012 compared to $10.0 million in fiscal 2011.

Interest expense was $0.2 million in fiscal 2012 and $0.6 million in fiscal 2011.

The lower tax rate in fiscal 2012 is primarily due to a decrease in state taxes and less non-deductible executive compensation compared to fiscal 2011.

Net income increased $52.2 million, or 43.5%, to $172.5 million in fiscal 2012 compared to $120.3 million in fiscal 2011.

We attribute the increase in comparable store sales to our successful marketing and merchandise strategies.

The leverage in SG&A expense was primarily driven by:

Average inventory per store increased 20.5% compared to prior year.

The increase in inventory is due to the addition of 101 net new stores opened since January 28, 2012 and incremental inventory related to the recently added prestige brand boutiques as well as strategic inventory investments to improve in-stock levels.

The increase in taxes payable is primarily due to an increase in taxable income.

The $53.4 million cash flow benefit from income taxes is attributed to Federal income tax deductions due to accelerated bonus depreciation on fixed assets and tax deductible stock option exercises.

2012, compared to $128.6 million and $97.1 million in fiscal 2011 and 2010, respectively.

On September 5, 2012, we entered into Amendment No. 1 to the Amended and Restated Loan and Security Agreement (the Amendment) with the lender group.

The Amendment updated certain administrative terms and conditions and provides us greater flexibility to take certain corporate actions.

There were no changes to the revolving loan amounts available, interest rates, covenants or maturity date under terms of the Loan Agreement.

Any decrease in sales

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| Operating lease obligations(1) | | $ | 1,208,527 | | | $ | 155,542 | | | $ | 313,609 | | | $ | 278,565 | | | $ | 460,811 | |

After extensive research, we recognized an opportunity to better satisfy how a woman wanted to shop for beauty products, which led to what we believe to be our unique combination of beauty superstore and specialty store attributes.

We combine the unique elements of a beauty superstore with the distinctive environment and experience of a specialty retailer.

##### [Table of Contents](#toc)

haircare products.

Fiscal stress in the U.S. and Europe has resulted in significant fluctuations in the U.S. stock markets and has negatively impacted consumer sentiment.

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

Our interest expense will fluctuate based on the seasonal borrowing requirements associated with acquiring inventory in advance of key holiday selling periods and fluctuation in the variable interest rates we are charged on outstanding balances.

Our credit facility is used to fund seasonal inventory needs and new and remodel store capital requirements in excess of our cash on hand and cash flow from operations.

| | | (In thousands, except number of stores) | | | | | | | | | | |

Net sales increased $232.0 million, or 19.0%, to $1,454.8 million in fiscal 2010 compared to $1,222.8 million in fiscal 2009.

We believe the improvement in our comparable store sales trends is due to a combination of factors including effective marketing and merchandise programs and the relatively lower comparable store sales level in the prior year.

We also believe that overall consumer sentiment and shopping patterns improved in 2010 when compared to 2009 which may have contributed to our improving trends.

Gross profit increased $107.5 million, or 28.6%, to $484.1 million in fiscal 2010, compared to $376.6 million, in fiscal 2009.

Gross profit in fiscal 2010 was impacted by:

| | Ÿ | | 80 basis points improvement in merchandise margin due to improved promotional pricing and a shift in category mix towards higher margin product compared with fiscal 2009; and |

| | Ÿ | | 20 basis points of supply chain efficiencies on product handling automation, engineering efforts and higher sales volume. |

SG&A expense as a percentage of sales was primarily impacted by:

| | Ÿ | | 30 basis points deleverage due to the non-recurring executive compensation charge related to our newly appointed President and Chief Executive Officer. |

Pre-opening expenses increased $1.1 million, or 18.2%, to $7.1 million in fiscal 2010 compared to $6.0 million in fiscal 2009.

Interest expense decreased $1.4 million, or 65.7%, to $0.8 million in fiscal 2010 compared to $2.2 million in fiscal 2009.

The decrease in the effective tax rate in fiscal 2010 is primarily attributed to the large number of stock option exercises and share sales deemed to be disqualifying dispositions.

Net income increased $31.6 million, or 80.5%, to $71.0 million in fiscal 2010 compared to $39.4 million in fiscal 2009.

The increase is due to the addition of 60 net new stores opened since January 29, 2011, offset by a 3.0% decrease in average inventory per store driven by our comparable store sales increases and management initiatives focused on leveraging store and supply chain inventories.

In fiscal 2010, we finalized the tax benefit estimates related to bonus depreciation on fixed assets and stock option exercises in the fourth quarter which resulted in tax deductions in excess of our year to date estimated tax payments.

In fiscal 2011, we were able to better forecast the implications of those significant tax drivers as well as the resulting estimated tax payments.

On August 31, 2010, we terminated our credit facility with Bank of America and entered into a new credit facility pursuant to a Loan and Security Agreement with Wells Fargo Bank, National Association, as Administrative Agent, Collateral Agent and a Lender thereunder, JPMorgan Chase Bank, N.A. as a Lender, and PNC Bank, National Association, as a Lender.

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| Operating lease obligations(1) | | $ | 935,909 | | | $ | 123,945 | | | $ | 252,236 | | | $ | 221,551 | | | | | $ | 338,177 | |

We did not utilize the credit facility during fiscal [removed: 2011.][added: 2012.]

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| --- | --- |

The Company had an interest rate swap agreement with a notional amount of $25 million which was designated as a cash flow hedge.

The agreement expired on January 31, 2010.

The interest rate swap was recorded at fair value in fiscal 2009 and changes in market value related to the effective portion of the cash flow hedge was recorded as unrecognized gain or loss in accumulated other comprehensive income (loss) section of the stockholders’ equity in the balance sheets.

Ulta [removed: Salon, Cosmetics & Fragrance, Inc.] [added: Beauty (or Ulta, we, the Company)] is the largest beauty retailer that provides one-stop shopping for prestige, mass and salon products and salon services in the United States.

We focus on providing affordable indulgence to our customers by combining [removed: the] [added: unmatched] product breadth, value and convenience [removed: of a beauty superstore] with the distinctive environment and experience of a specialty retailer.

_One-Stop [removed: Shopping__._] [added: Shopping._] Our customers can satisfy all of their beauty needs at Ulta.

_Our Value Proposition._ We believe our focus on delivering a compelling value proposition to our customers across all of our product categories is fundamental to [removed: our] customer loyalty.

Our displays, store design and open layout [removed: allow us] [added: provide] the flexibility to respond to consumer trends and changes in our merchandising strategy.

We were founded in 1990 as a [removed: discount] beauty retailer at a time when prestige, mass and salon products were sold through distinct channels — department stores for prestige products, drug stores and mass merchandisers for mass products, and salons and authorized retail outlets for professional hair care products.

After extensive research, we recognized an opportunity to better satisfy how [removed: a woman wanted] [added: women want] to shop for beauty products.

[removed: led to what we believe to be] [added: We developed] a unique retail approach [removed: that focuses on all aspects of how women prefer to shop for beauty products] by combining [removed: the fundamental elements of a beauty superstore, including] one-stop shopping, a compelling value [removed: proposition and] [added: proposition,] convenient [removed: locations, together with] [added: locations and] an uplifting specialty retail experience.

We appeal to a wide range of customers by offering over 500 brands, such as Bare [removed: Escentuals] [added: Minerals and Urban Decay] cosmetics, Chanel and Estée Lauder fragrances, [removed: L’Oréal haircare] [added: Redken] and [removed: cosmetics] [added: Matrix haircare, as well as Dermalogica] and [removed: Paul Mitchell haircare.][added: Philosophy skincare and Clarisonic and Hot Tools personal care appliances.]

Because [removed: our offerings span] [added: we offer] a broad array of [removed: product categories] [added: products] in prestige, mass and salon, we appeal to a wide range of customers including women of all ages, demographics, and lifestyles.

_Our unique customer experience._ We combine [removed: the] [added: unmatched product breadth,] value and convenience [removed: of a beauty superstore] with the distinctive environment and experience of a specialty retailer.

Our distribution infrastructure consistently delivers an in-stock rate of greater than 95%, [removed: so] [added: allowing] our customers [removed: know they will] [added: to] find the products they are looking for.

Our well-trained beauty [removed: consultants] [added: advisors] are not commission-based and therefore can provide unbiased and customized advice tailored to our customers’ needs.

[removed: Together with our] [added: Our] customer service strategy, [removed: our] store locations, layout and design [removed: help] create [removed: our] [added: a] unique [removed: retail] shopping experience, which we believe increases both the frequency and length of our customers’ visits.

_Retail format poised to benefit from shifting channel [removed: dynamics__._] [added: dynamics._] Over the past several years, the approximately [removed: $93] [added: $100] billion beauty products and salon services industry has experienced significant changes, including a shift in how manufacturers distribute and customers purchase beauty products.

This has enabled the specialty retail channel [removed: in which we operate] to grow at a greater rate than the industry overall since at least 2000.

We [added: regularly] employ a broad range of media, including digital, catalogs and newspaper [removed: inserts, to entertain and educate our customers and, most importantly,] [added: inserts] to drive traffic to our [removed: stores.][added: stores as well as entertain and educate our customers.]

_Strong vendor relationships across product categories._ We have strong, active relationships with over 300 vendors, including Estée Lauder, Bare [removed: Escentuals,] [added: Minerals,] Coty, L’Oréal and Procter & Gamble.

We believe the scope [removed: and extent] of these relationships, which span the three distinct beauty categories of prestige, mass and salon and [added: which] have taken years to develop, create a significant impediment for other retailers to replicate our model.

[removed: These relationships also frequently afford us the opportunity to] [added: We] work closely with our vendors to market both new and existing brands in a collaborative manner.

_Experienced management [removed: team_.] [added: team__._] We have an experienced senior management team with extensive retail experience that brings a creative merchandising approach and a disciplined operating philosophy to our business.

_Accelerate pace of new store expansion and grow to [added: approximately 1,200 stores in the United States._ We believe that] over [removed: 1,000] [added: the long-term, we have the potential to grow our store base to approximately 1,200 Ulta] stores in the United [removed: States_.][added: States.]

[removed: As the economy continues to recover, we] [added: We] have been successful in opening new stores in diverse markets across the United [removed: States] [added: States,] allowing us to [removed: increase] [added: accelerate] our new store growth rates [removed: back to historical levels] consistent with our long-term target of 15% to 20%.

We opened [removed: 61] [added: 102] new stores during fiscal [removed: 2011,] [added: 2012,] representing a [removed: 16%] [added: 23%] increase in square footage growth and a [removed: 30%] [added: 67%] increase in the number of new stores opened compared to [removed: 47] [added: 61 new stores] in fiscal [removed: 2010.][added: 2011.]

We also remodeled [removed: 17] [added: 21] stores and relocated [removed: 2] [added: 3] stores in fiscal [removed: 2011.][added: 2012.]

Our fiscal [removed: 2011] [added: 2012] and [removed: 2010] [added: 2011] new store program represents primarily new stores opened in existing centers compared to prior years when the new store openings were more balanced between new and existing centers.

| | | [removed: 2007 | | | |] 2008 | | | | 2009 | | | | 2010 | | | | 2011 | | | [added: | 2012 | | |]

| Total stores beginning of period | | | [removed: 196 | | | |] 249 | | | | 311 | | | | 346 | | | | 389 | | [added: | | 449 | |]

| Stores opened | | | [removed: 53 | | | |] 63 | | | | 37 | | | | 47 | | | | 61 | | [added: | | 102 | |]

| Stores closed | | | [removed: —] [added: (1] | [added: )] | | | [removed: (1] [added: (2] | ) | | | [removed: (2] [added: (4] | ) | | | [removed: (4] [added: (1] | ) | | | (1 | ) |

| Total stores end of period | | | [removed: 249 | | | |] 311 | | | | 346 | | | | 389 | | | | 449 | | [added: | | 550 | |]

| Stores remodeled | | | [removed: 17 | | | |] 8 | | | | 6 | | | | 13 | | | | 17 | | [added: | | 21 | |]

| Total square footage | | | [removed: 2,589,244 | | | |] 3,240,579 | | | | 3,613,840 | | | | 4,094,808 | | | | 4,747,148 | | [added: | | 5,847,393 | |]

| Average square footage per store | | | [removed: 10,399 | | | |] 10,420 | | | | 10,445 | | | | 10,526 | | | | 10,573 | | [added: | | 10,632 | |]

[removed: _Continue expanding] [added: _Expanding] our offering by adding new products, brands and [removed: service offerings._] [added: service._] Our strategy is to continue to expand our portfolio of products, brands and services both by capitalizing on the success of our existing vendor relationships and by identifying and developing new vendor relationships.

We also offer haircare services in our full service salons as well as skin and brow services in [removed: each] [added: most] of our stores.

_Enhancing our successful loyalty [removed: program._] [added: programs._] We have [removed: over nine] [added: approximately eleven] million active [removed: customer loyalty members] [added: Ulta customers] who are enrolled in our loyalty programs.

We have been converting loyalty members from [removed: our national] [added: The Club at Ulta, a] certificate [removed: program] [added: program,] to the ULTAmate Rewards program which is a points-based program.

[removed: Currently slightly more than 20%] [added: Currently, approximately half] of our stores are on the points-based program and we [removed: will be rolling additional markets onto] [added: expect to roll out] this program [added: to additional markets] in [removed: fiscal 2012.][added: the future.]

[removed: _Broaden] [added: _Broadening] our marketing reach._ We believe [added: our marketing initiatives are] a key component of our [removed: success is the brand exposure we get from our marketing initiatives, which provide] [added: success, providing] an effective means to introduce new products, brands and services to our existing and potential new customers.

We also offer private label Ulta products in key categories, such as, cosmetics, skin care and bath.

_Loyal and active customer base._ Approximately eleven million Ulta customers are members of our loyalty programs.

Brand additions include Coach, Dolce and Gabbana, Cartier, Fendi, Chloe, Marc Jacobs, Oscar de la Renta and Thierry Mugler in fragrance; Dermalogica, Philosophy, Dr. Brandt, Juice Beauty, Vichy and La Roche-Posay; Benefit, Butter London, CK One, and Laura Geller in cosmetics; and Carol’s Daughter, DermOrganic, Living Proof, and Ouidad in hair care.

We currently operate two loyalty programs, ULTAmate Rewards and The Club at Ulta.

Both loyalty programs provide a robust database of customer and shopping behavior.

During 2012, we implemented a new Customer Relationship Management tool to enable customer segmentation and one-on-one marketing communications tailored to our customers’ unique beauty needs.

We believe our loyalty programs combined with our growing Customer Relationship Management capabilities provide significant long-term opportunity for Ulta.

approximately $1.0 million, which includes capital investments, net of landlord contributions, pre-opening expenses, and initial inventory, net of payables.

As of February 2, 2013, we operated 550 stores in 45 states.

We continue to expand our service offering, adding services such as gel manicures, microdermabrasion and hair extensions to select locations.

find everything she needs in one stop.

Our merchandising team consists of a Senior Vice President of Merchandising overseeing a team of category Vice Presidents and their team of buyers.

Our primary marketing expenditure is in direct mail catalogs and free-standing newspaper inserts which highlight the breadth of our selection of prestige, mass and salon beauty products, new products and services and special offers.

We advertise in national beauty and lifestyle magazines and execute a comprehensive public relations strategy to enhance Ulta’s reputation as a beauty destination, increase brand awareness, support our charitable efforts on behalf of The Breast Cancer Research Foundation and drive awareness of new products, in-store events and new store openings.

Our loyalty programs are an important tool to increase retention of existing customers and to enhance their loyalty to the Ulta brand.

We currently operate two loyalty programs, ULTAmate Rewards and The Club at Ulta.

Approximately 11 million active customers are enrolled in these loyalty programs, generating more than 50 percent of Ulta’s sales.

The Club at Ulta is a certificate program offering customers reward certificates for free beauty products based on their level of purchases.

ULTAmate Rewards is a points-based program in which customers earn points based on their purchases.

Points earned are valid for one year and may be redeemed on any product or select salon services.

We expect to convert all loyalty program members to the ULTAmate Rewards program over time.

Both loyalty programs provide us with rich customer data which continue to fuel our direct marketing programs, with the long term goal of driving higher share of our customers’ spend in the beauty category.

During 2012 we implemented the first phase of a new Customer Relationship Management solution to enable more sophisticated mining of this customer data in our loyalty member database as well as greater personalization of our marketing.

A growing percentage of our marketing expense is directed at our digital marketing strategy as a highly effective channel to communicate with existing customers and reach customers who are not familiar with Ulta or who haven’t yet shopped with us.

Our online marketing strategy includes search engine optimization, paid search, mobile advertising, affiliate relationships, social media, display advertising, and other digital marketing channels.

Our learning management system allows us to provide ongoing training to all associates to continually enhance their product knowledge, technical skills and guest service expertise.

on a continual basis.

We make available at this address under investor relations (at http://ir.ulta.com), free of charge, our proxy statement, annual report to shareholders, annual report on

This

##### [Table of Contents](#toc)

We also have private label Ulta offerings in key categories.

_Loyal and active customer base__._ We have over nine million customer loyalty program members.

We continue to believe that over the long-term, we have the potential to grow our store base to over 1,000 Ulta stores in the

United States.

Brand additions include Mark Jacobs, Givenchy, Taylor Swift, Dolce and Gabanna and Coach in fragrance; Bliss, Clarisonic, Mario Badescu, Jack Black, The Art of Shaving, Dermalogica and Philosophy in skin care; Laura Geller, Butter London, Benefit, Cargo and Tarte in cosmetics; and Living Proof, Phyto, Ouidad and Pureology in hair care.

Both loyalty programs provide a robust database of information relative to customer information and shopping behavior which provides a significant long-term opportunity for CRM applications including enabling customer segmentation and one-on-one marketing communications tailored to our customers’ unique beauty needs.

We plan to continue to leverage our

Key trends

We believe an important shift is occurring in the distribution of beauty products.

Department stores, which have traditionally been the primary distribution channel for prestige beauty products, have been meaningfully affected by changing consumer preferences and industry consolidation over the past decade.

We believe women, particularly younger generations, tend to find department stores intimidating, high-pressured and hinder a multi-brand shopping experience and, as such, are choosing to shop elsewhere for their beauty care needs.

According to industry sources, 55% of women aged 18 to 24 shop in specialty stores, compared to 40% of women aged 18 to

64.

Over the past ten years, department stores have lost significant market share to specialty stores in apparel, and we believe the beauty category is undergoing a similar shift in retail channels.

We believe women are seeking a shopping experience that provides something different, a place to experiment, learn about various products, find what they want and indulge themselves.

A recent Kline & Company report found that consumers seek out specialty retailers for a number of reasons including that specialty stores carry more niche products, the merchandise and retail environment is more fun and provides the ability to shop across product lines and the customer service is better than in other channels.

As a result of this market transformation, there are a number of beauty brands pursuing new distribution channels for their products, such as specialty retail, spas and salons, direct response television (i.e., home shopping and infomercials) and the Internet.

In addition, many smaller brands are selling their products through these channels due to the high fixed costs associated with operating in most department stores and to capitalize on consumers’ growing propensity to shop in these channels.

According to industry sources, color cosmetics sales through these channels are projected to grow at a higher rate than sales of color cosmetics in total.

There are a number of beauty brands that have built significant consumer awareness and sales by initially offering their products on direct response television.

We benefit from offering brands that sell their products through this channel, as we experience increased store traffic and sales after these brands appear on television.

Historically, manufacturers have distributed their products through distinct channels—department stores for prestige products, drug stores and mass merchandisers for mass products, and salons and authorized retail outlets for professional hair care products.

We believe women are increasingly shopping across retail channels as well as purchasing a combination of prestige and mass beauty products.

We attribute this trend to a number of factors, including the growing availability of prestige brands outside of department stores and increased innovation in mass products.

Based on the competitive environment in which we operate, we believe that we have been at the forefront of breaking down the industry’s historical distribution paradigm by combining a wide range of beauty products, categories and price points under one roof.

Our strategy reflects a more customer-centric model of how women prefer to shop today for their beauty needs.

Major growth drivers for the industry include favorable consumer spending trends, product innovation and growth of certain population segments.

| | Ÿ | | Baby Boomers (born between 1946 and 1964): Baby Boomers have larger disposable incomes and are increasing their spending on personal care as well as health and wellness. The aging of the Baby Boomer generation is also influencing product innovation and demand for anti-aging products and cosmetic procedures. |

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

| | Ÿ | | Generation X (born between 1965 and 1976): Generation X is entering their peak earning years and represents a significant contributor to overall consumer spending, including beauty products. A survey by American Express showed that Generation X spends 60% more on beauty products than Baby Boomers. In addition, while prior generations grew up shopping in department stores and general merchandisers, Generation X has grown up shopping in specialty stores and we believe seeks a retail environment that combines a compelling experience, functionality, variety and location. |

| | Ÿ | | Generation Y (born between 1977 and 1994): According to the United States Census Bureau data, the 20 to 34 year-old age group is expected to grow by approximately 10% from 2003 to 2015. As Generation Y continues to enter the workforce, they will have increased disposable income to spend on beauty products. |

We believe we are well positioned to capitalize on these trends and capture additional market share in the industry.

We believe we have demonstrated an ability to provide a differentiated store experience for customers as well as offer a breadth and depth of merchandise previously unavailable from more traditional beauty retailers.

expenses, and initial inventory, net of payables.

As of January 28, 2012, we operated 449 stores in 43 states.

Our merchandising team reports directly to our CEO and consists of a Senior Vice President of Merchandising who oversees a team that includes approximately five category Vice Presidents and 27 Divisional Merchandise Managers, Senior Buyers, Buyers and Assistant/Associate Buyers.

Our Senior Vice President of Merchandising has over 30 years of experience and each merchandising vice president has over 15 years of experience developing relationships in the industry with which he or she works.

We have no long-term supply agreements or exclusive arrangements with our vendors.

_General litigation —_ [removed: In May 2010,] [added: On March 2, 2012,] a putative employment class action lawsuit was filed against us and certain unnamed defendants in state court in [added: Los Angeles County,] California.

The Company denies plaintiff’s allegations and [removed: intends to] [added: is] vigorously [removed: defend] [added: defending] the matter.

On April 12, 2012, the Company removed the case to the United States District Court for the Central District of California.

The plaintiff and members of the proposed class are alleged to be (or have been) non-exempt hourly employees.

The suit alleges that Ulta violated various provisions of the California labor laws and failed to provide plaintiff and members of the proposed class with full meal periods, paid rest breaks, certain wages, overtime compensation and premium pay.

The suit seeks to recover damages and penalties as a result of these alleged practices.

On June 21, 2010, we filed our answer to the lawsuit.

On January 12, 2011, the Company and plaintiffs engaged in a voluntary mediation.

Although we continue to deny plaintiffs’ allegations, in the interest of putting certain of the claims behind us, we agreed in principle to settle all claims of the putative class consisting of non-exempt hourly hair designers in the salon department within the California retail stores.

The settlement, which is not an admission of liability, is subject to final documentation and Court approval.

Counsel for the plaintiffs has agreed to dismiss without prejudice the claims of all other putative class members.

The proposed settlement was approved and became final in January 2012.

The settlement amount was not material.

On March 2, 2012, a putative employment class action lawsuit was filed against us and certain unnamed defendants in state court in Los Angeles County, California.

| | | For the fiscal year ended [removed: January 28, 2012] [added: February 2, 2013] |

| Large accelerated filer þ | | Accelerated filer ¨ | | [removed: Non- accelerated] [added: Non-accelerated] filer ¨ | | Smaller reporting company ¨ |

The aggregate market value of the voting stock held by non-affiliates of the registrant, based upon the closing sale price of the common stock on July [removed: 30, 2011,] [added: 28, 2012,] as reported on the NASDAQ Global Select Market, was approximately [removed: $3,034,284,000.][added: $4,199,998,000.]

Shares of the registrant’s common stock held by each executive officer and director and by each entity or person that, to the registrant’s knowledge, owned 5% or more of the registrant’s outstanding common stock as of July [removed: 30, 2011] [added: 28, 2012] have been excluded in that such persons may be deemed to be affiliates of the registrant.

The number of shares of the registrant’s common stock, par value $0.01 per share, outstanding as of March [removed: 22, 2012] [added: 28, 2013] was [removed: 62,474,444] [added: 63,670,003] shares.

| Item 1. | | [removed: [Business](#tx265737_2)] [added: [Business](#tx466694_2)] | | | 3 | |

| Item 1A. | | [Risk [removed: Factors](#tx265737_3)] [added: Factors](#tx466694_3)] | | | [removed: 13] [added: 12] | |

| Item 1B. | | [Unresolved Staff [removed: Comments](#tx265737_4)] [added: Comments](#tx466694_4)] | | | 23 | |

| Item 2. | | [removed: [Properties](#tx265737_5)] [added: [Properties](#tx466694_5)] | | | 24 | |

| Item 3. | | [Legal [removed: Proceedings](#tx265737_6)] [added: Proceedings](#tx466694_6)] | | | 25 | |

| Item 4. | | [Mine Safety [removed: Disclosures](#tx265737_7)] [added: Disclosures](#tx466694_7)] | | | 25 | |

| Item 5. | | [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#tx265737_9)] [added: Securities](#tx466694_9)] | | | 26 | |

| Item 6. | | [Selected Financial [removed: Data](#tx265737_10)] [added: Data](#tx466694_10)] | | | 29 | |

| Item 7. | | [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#tx265737_11)] [added: Operations](#tx466694_11)] | | | 30 | |

| Item 7A. | | [Quantitative and Qualitative Disclosures about Market [removed: Risk](#tx265737_12)] [added: Risk](#tx466694_12)] | | | [removed: 40] [added: 39] | |

| Item 8. | | [Financial Statements and Supplementary [removed: Data](#tx265737_13)] [added: Data](#tx466694_13)] | | | 40 | |

| Item 9. | | [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#tx265737_14)] [added: Disclosure](#tx466694_14)] | | | 40 | |

| Item 9A. | | [Controls and [removed: Procedures](#tx265737_15)] [added: Procedures](#tx466694_15)] | | | [removed: 41] [added: 40] | |

| Item 9B. | | [Other [removed: Information](#tx265737_16)] [added: Information](#tx466694_16)] | | | [removed: 41] [added: 40] | |

| [removed: [Part III](#tx265737_17)] [added: [Part III](#tx466694_17)] | | | | | | [removed: [](#tx265737_17)] [added: [](#tx466694_17)] |

| Item 10. | | [Directors, Executive Officers and Corporate [removed: Governance](#tx265737_18)] [added: Governance](#tx466694_18)] | | | [removed: 42] [added: 41] | |

| Item 11. | | [Executive [removed: Compensation](#tx265737_19)] [added: Compensation](#tx466694_19)] | | | [removed: 42] [added: 41] | |

| Item 12. | | [Security Ownership and Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#tx265737_20)] [added: Matters](#tx466694_20)] | | | [removed: 42] [added: 41] | |

| Item 13. | | [Certain Relationships and Related Transactions, and Director [removed: Independence](#tx265737_21)] [added: Independence](#tx466694_21)] | | | [removed: 42] [added: 41] | |

| Item 14. | | [Principal Accountant Fees and [removed: Services](#tx265737_22)] [added: Services](#tx466694_22)] | | | [removed: 42] [added: 41] | |

| Item 15. | | [Exhibits and Financial Statement [removed: Schedules](#tx265737_24)] [added: Schedules](#tx466694_24)] | | | [removed: 43] [added: 42] | |

Such forward-looking statements are subject to various risks and uncertainties, which include, without limitation: the impact of weakness in the economy; changes in the overall level of consumer spending; changes in the wholesale cost of our products; the possibility that we may be unable to compete effectively in our highly competitive markets; the possibility that our continued opening of new stores could strain our resources and have a material adverse effect on our business and financial performance; the possibility that new store openings and existing locations may be impacted by developer or co-tenant issues; the possibility that the capacity of our distribution and order fulfillment infrastructure may not be adequate to support our recent growth and expected future growth plans; the possibility of material disruptions to our information systems; weather conditions that could negatively impact sales; [added: our ability to attract] and [added: retain key executive personnel; our ability to successfully execute and implement our common stock repurchase program; and] other risk factors detailed in our public filings with the Securities and Exchange Commission (the “SEC”), including risk factors contained in Item 1A, “Risk Factors” of this Annual Report on Form 10-K for the year ended [removed: January 28, 2012.][added: February 2, 2013.]

10-K 1 d466694d10k.htm 10-K

| [Part I](#tx466694_1) | | | | | | [](#tx466694_1) |

| [Part II](#tx466694_8) | | | | | | [](#tx466694_8) |

| [Part IV](#tx466694_23) | | | | | | [](#tx466694_23) |

10-K 1 d265737d10k.htm FORM 10-K

| [Part I](#tx265737_1) | | | | | | [](#tx265737_1) |

| [Part II](#tx265737_8) | | | | | | [](#tx265737_8) |

| [Part IV](#tx265737_23) | | | | | | [](#tx265737_23) |

Most of our retail store leases provide for a fixed minimum annual rent and generally have a [removed: fixed] 10-year initial term with options for two or three extension periods of five years each, exercisable at our option.

As of [removed: January 28, 2012,] [added: February 2, 2013,] we operated [removed: 449] [added: 550] retail stores in [removed: 43] [added: 45] states, as shown in the table below:

| State | | Number [removed: of stores] [added: of stores] | | |

| Alabama | | | [removed: 9] [added: 10] | |

| Arkansas | | | [removed: 3] [added: 4] | |

| California | | | [removed: 39] [added: 55] | |

| Colorado | | | [removed: 11] [added: 12] | |

| Connecticut | | | [removed: 3] [added: 5] | |

| Florida | | | [removed: 31] [added: 39] | |

| Georgia | | | [removed: 19] [added: 21] | |

| Idaho | | | [removed: 1] [added: 3] | |

| Illinois | | | [removed: 37] [added: 38] | |

| Indiana | | | [removed: 8] [added: 10] | |

| Iowa | | | [removed: 4] [added: 6] | |

| Louisiana | | | [removed: 4] [added: 9] | |

| Maine | | | [removed: 2] [added: 3] | |

| Maryland | | | [removed: 8] [added: 9] | |

| Massachusetts | | | [removed: 6] [added: 7] | |

| Michigan | | | [removed: 15] [added: 23] | |

| Mississippi | | | [removed: 3] [added: 4] | |

| Missouri | | | [removed: 4] [added: 9] | |

| Nebraska | | | [removed: 2] [added: 3] | |

| New Hampshire | | | [removed: 1] [added: 2] | |

| New Jersey | | | [removed: 13] [added: 14] | |

| New York | | | [removed: 15] [added: 19] | |

| Ohio | | | [removed: 14] [added: 18] | |

| Oklahoma | | | [removed: 7] [added: 8] | |

| Oregon | | | [removed: 5] [added: 6] | |

| Pennsylvania | | | [removed: 18] [added: 20] | |

| South Carolina | | | [removed: 6] [added: 10] | |

| Tennessee | | | [removed: 7] [added: 8] | |

| Texas | | | [removed: 57] [added: 67] | |

| Utah | | | [removed: 4] [added: 6] | |

| Virginia | | | [removed: 11] [added: 14] | |

| Washington | | | [removed: 7] [added: 9] | |

| Wisconsin | | | [removed: 5] [added: 7] | |

As of [removed: January 28, 2012,] [added: February 2, 2013,] we operated [removed: two] [added: three] distribution facilitates located in Romeoville, [removed: Illinois and] [added: Illinois,] Phoenix, [removed: Arizona.][added: Arizona and Chambersburg, Pennsylvania.]

The Phoenix warehouse contains approximately [removed: 330,000] [added: 437,000] square feet.

The Chambersburg warehouse contains approximately 373,000 square [removed: feet and is expected to open in fiscal 2012.][added: feet.]

| Montana | | | 1 | |

| West Virginia | | | 1 | |

| Total | | | 550 | |

| Total | | | 449 | |

In August 2011, we entered into a lease for a distribution center located in Chambersburg, Pennsylvania.

The names of our executive officers, their ages and their positions are shown [removed: below:][added: below.]

| Carl S. Rubin | | [removed: 52] [added: 53] | | [added: Former] President, Chief Executive Officer and Director |

| [removed: Gregg R. Bodnar] [added: Scott M. Settersten] | | [removed: 47] [added: 52] | | Chief Financial Officer and Assistant Secretary |

| Robert S. Guttman | | [removed: 59] [added: 60] | | Senior Vice President, General Counsel & Secretary |

Rubin._ Mr. Rubin [removed: has been] [added: was] our Chief Executive Officer [removed: since] [added: from] September 2010 [removed: and President and Director since May 2010.][added: to February 2013.]

Mr. Rubin first joined Office Depot as Executive Vice President, Chief Marketing Officer [removed: and Chief Merchandising Officer in 2004.]

On February 14, 2013, the Company announced the resignation of Carl S.

Rubin as President, Chief Executive Officer and Director and the appointment of Dennis K.

Eck as our Interim Chief Executive Officer.

| Dennis K. Eck | | 69 | | Interim Chief Executive Officer and Chairman of the Board of Directors |

_Dennis K.

Eck_.

Mr. Eck was named Interim Chief Executive Officer on February 21, 2013 and has served as Chairman of the Board of Directors and a director of Ulta since 2003.

Prior to that, Mr. Eck served in various executive roles with Coles Myer, one of Australia’s largest retailers, from 1994 to 2001 where he was Chief Executive Officer and a member of the board of Coles Myer LTD Australia from November 1997 to September 2001.

Prior to 1994, Mr. Eck served in various executive roles with Vons Companies, Inc. and American Stores, Inc.

and Chief Merchandising Officer in 2004.

_Scott M.

Settersten._ Mr. Settersten was named Chief Financial Officer and Assistant Secretary on March 12, 2013 after having previously served as Acting Chief Financial Officer and Assistant Secretary since October 18, 2012.

Prior to this role, Mr. Settersten served as Vice President of Accounting since 2010 and was responsible for accounting, tax, external reporting and investor relations.

He joined Ulta Beauty in January 2005 as a Director of Financial Reporting.

Prior to joining Ulta Beauty, Mr. Settersten spent 15 years with Pricewaterhouse Coopers LLP as a certified public accountant serving in various senior manager roles in the assurance and risk management practices.

_Gregg R.

Bodnar._ Mr. Bodnar has been our Chief Financial Officer and Assistant Secretary since October 2006.

Prior to joining Ulta, Mr. Bodnar was Senior Vice President and Chief Financial Officer of Borders International (a subsidiary of Borders Group, Inc.) from January 2003 to June 2006.

From 1996 to 2003, Mr. Bodnar served in various positions of increasing responsibility within the finance department of Borders Group, Inc., and from 1993 to 1996, served as Vice President, Finance and Chief Financial Officer of Rao Group Inc. Mr. Bodnar was an auditor and certified public accountant at the public accounting firm of Coopers & Lybrand from 1988 to 1993.

The following table sets forth the high and low sales prices for our common stock on the NASDAQ Global Select Market during fiscal years [removed: 2011] [added: 2012] and [removed: 2010:][added: 2011:]

| Fiscal Year [removed: 2010] [added: 2012] | | High | | | | Low | | |

The last reported sale price of our common stock on the NASDAQ Global Select Market on March [removed: 22, 2012] [added: 28, 2013] was [removed: $93.59] [added: $81.17] per share.

As of March [removed: 22, 2012,] [added: 28, 2013,] we had [removed: 94] [added: 77] holders of record of our common stock.

The special cash dividend, [removed: which totals approximately $62] [added: totaling $62.5] million, [removed: will be payable] [added: was paid] on May 15, 2012.

The following table provides information about Ulta common stock that may be issued under our equity compensation plans as of [removed: January 28, 2012.][added: February 2, 2013.]

| Plan category | | Number of [removed: securities to] [added: securities to] be issued [removed: upon exercise of outstanding] [added: upon exercise of outstanding] options, warrants and rights | | | | [removed: Weighted-average exercise] [added: Weighted-average exercise] price [removed: of outstanding options, warrants] [added: of outstanding options, warrants] and rights | | | | Number of [removed: securities remaining available for] [added: securities remaining available for] future [removed: issuance under equity compensation] [added: issuance under equity compensation] plans | | |

Set forth below is a graph comparing the cumulative total stockholder return on Ulta’s common stock with the NASDAQ Global Select Market Composite Index (NQGS) and the S&P Retail Index (RLX) for the period covering Ulta’s first trading day on October 25, 2007 through the end of Ulta’s fiscal year ended [removed: January 28, 2012.][added: February 2, 2013.]

The graph assumes an investment of $100 made at the closing of trading on October 25, 2007, in (i) Ulta’s common stock, (ii) the stocks comprising the [removed: NQGS,] [added: NQGS] and (iii) stocks comprising the RLX.

[removed: ][added: ]

| First quarter | | | $95.56 | | | $ | 76.15 | |

| Second quarter | | | 97.70 | | | | 83.78 | |

| Third quarter | | | 101.54 | | | | 83.74 | |

| Fourth quarter | | | 101.99 | | | | 86.93 | |

None.

| Equity compensation plans approved by security holders | | | 1,806,801 | | | $ | 41.60 | | | | 4,916,248 | |

| Total | | | 1,806,801 | | | $ | 41.60 | | | | 4,916,248 | |

| --- | --- |

| First quarter | | $ | 25.36 | | | $ | 17.29 | |

| Second quarter | | | 26.18 | | | | 21.24 | |

| Third quarter | | | 32.33 | | | | 22.18 | |

| Fourth quarter | | | 37.85 | | | | 30.41 | |

The following table sets forth repurchases of our common stock during the fourth quarter of 2011:

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

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

| Period | | Total number of shares purchased (1) | | | | Average price paid per share | | | | Total number of shares purchased as part of publicly announced plans or programs (2) | | | | Number of maximum shares that may yet to be purchased under plans or programs (2) | | |

| November 27, 2011 to December 24, 2011 | | | 672 | | | | 68.37 | | | | — | | | | — | |

| December 25, 2011 to January 28, 2012 | | | 49,325 | | | | 64.67 | | | | — | | | | — | |

| | | | 49,997 | | | | 64.72 | | | | — | | | | — | |

| (1) | Represents shares of the Company’s common stock transferred from employees in satisfaction of minimum statutory tax withholding obligations upon the vesting of restricted stock during the period. |

| (2) | During the fourth quarter of 2011, the Company did not have a formal plan or program for the repurchase of the Company’s common stock. |

| Equity compensation plans approved by security holders | | | 3,559,395 | | | $ | 26.46 | | | | 5,030,937 | |

| Total | | | 3,559,395 | | | $ | 26.46 | | | | 5,030,937 | |

| | | [added: February 2, 2013 | | | |] January 28, 2012 | | | | January 29, 2011 | | | | January 30, 2010 | | | | January 31, 2009 | | | [removed: | February 2, 2008 | | |]

| Net [removed: sales] [added: sales(2)] | | $ | [removed: 1,776,151] [added: 2,220,256] | | | $ | [removed: 1,454,838] [added: 1,776,151] | | | $ | [removed: 1,222,771] [added: 1,454,838] | | | $ | [removed: 1,084,646] [added: 1,222,771] | | | $ | [removed: 912,141] [added: 1,084,646] | |

| Cost of sales | | | [removed: 1,159,311] [added: 1,436,582] | | | | [removed: 970,753] [added: 1,159,311] | | | | [removed: 846,202] [added: 970,753] | | | | [removed: 752,939] [added: 846,202] | | | | [removed: 628,495] [added: 752,939] | |

| Gross profit | | | [removed: 616,840] [added: 783,674] | | | | [removed: 484,085] [added: 616,840] | | | | [removed: 376,569] [added: 484,085] | | | | [removed: 331,707] [added: 376,569] | | | | [removed: 283,646] [added: 331,707] | |

| Selling, general and administrative expenses | | | [removed: 410,658] [added: 488,880] | | | | [removed: 358,106] [added: 410,658] | | | | [removed: 302,413] [added: 358,106] | | | | [removed: 271,095] [added: 302,413] | | | | [removed: 225,167] [added: 271,095] | |

| Pre-opening expenses | | | [removed: 9,987] [added: 14,816] | | | | [removed: 7,095] [added: 9,987] | | | | [removed: 6,003] [added: 7,095] | | | | [removed: 14,311] [added: 6,003] | | | | [removed: 11,758] [added: 14,311] | |

| Operating income | | | [removed: 196,195] [added: 279,978] | | | | [removed: 118,884] [added: 196,195] | | | | [removed: 68,153] [added: 118,884] | | | | [removed: 46,301] [added: 68,153] | | | | [removed: 46,721] [added: 46,301] | |

| Interest expense | | | [removed: 587] [added: 185] | | | | [removed: 755] [added: 587] | | | | [removed: 2,202] [added: 755] | | | | [removed: 3,943] [added: 2,202] | | | | [removed: 4,542] [added: 3,943] | |

| Income before income taxes | | | [removed: 195,608] [added: 279,793] | | | | [removed: 118,129] [added: 195,608] | | | | [removed: 65,951] [added: 118,129] | | | | [removed: 42,358] [added: 65,951] | | | | [removed: 42,179] [added: 42,358] | |

| Income tax expense | | | [removed: 75,344] [added: 107,244] | | | | [removed: 47,099] [added: 75,344] | | | | [removed: 26,595] [added: 47,099] | | | | [removed: 17,090] [added: 26,595] | | | | [removed: 16,844] [added: 17,090] | |

| Net income | | $ | [removed: 120,264] [added: 172,549] | | | $ | [removed: 71,030] [added: 120,264] | | | $ | [removed: 39,356] [added: 71,030] | | | $ | [removed: 25,268] [added: 39,356] | | | $ | [removed: 25,335] [added: 25,268] | |

| Basic | | $ | [removed: 1.96] [added: 2.73] | | | $ | [removed: 1.20] [added: 1.96] | | | $ | [removed: 0.68] [added: 1.20] | | | $ | [removed: 0.44] [added: 0.68] | | | $ | [removed: 0.69] [added: 0.44] | |

| Diluted | | $ | [removed: 1.90] [added: 2.68] | | | $ | [removed: 1.16] [added: 1.90] | | | $ | [removed: 0.66] [added: 1.16] | | | $ | [removed: 0.43] [added: 0.66] | | | $ | [removed: 0.48] [added: 0.43] | |

| Basic | | | [removed: 61,259] [added: 63,250] | | | | [removed: 58,959] [added: 61,259] | | | | [removed: 57,915] [added: 58,959] | | | | [removed: 57,425] [added: 57,915] | | | | [removed: 20,383] [added: 57,425] | |

| Diluted | | | [removed: 63,334] [added: 64,396] | | | | [removed: 61,288] [added: 63,334] | | | | [removed: 59,237] [added: 61,288] | | | | [removed: 58,967] [added: 59,237] | | | | [removed: 53,293] [added: 58,967] | |

| Comparable store sales [removed: increase(2)] [added: increase(3)] | | | [removed: 10.9] [added: 8.8] | % | | | [removed: 11.0] [added: 10.9] | % | | | [removed: 1.4] [added: 11.0] | % | | | [removed: 0.2] [added: 1.4] | % | | | [removed: 6.4] [added: 0.2] | % |

| Number of stores end of year | | | [removed: 449] [added: 550] | | | | [removed: 389] [added: 449] | | | | [removed: 346] [added: 389] | | | | [removed: 311] [added: 346] | | | | [removed: 249] [added: 311] | |

| Total square footage end of year | | | [removed: 4,747,148] [added: 5,847,393] | | | | [removed: 4,094,808] [added: 4,747,148] | | | | [removed: 3,613,840] [added: 4,094,808] | | | | [removed: 3,240,579] [added: 3,613,840] | | | | [removed: 2,589,244] [added: 3,240,579] | |

| Total square footage per [removed: store(3)] [added: store(4)] | | | [removed: 10,573] [added: 10,632] | | | | [removed: 10,526] [added: 10,573] | | | | [removed: 10,445] [added: 10,526] | | | | [removed: 10,420] [added: 10,445] | | | | [removed: 10,399] [added: 10,420] | |

| Average total square [removed: footage(4)] [added: footage(5)] | | | [removed: 4,413,236] [added: 5,315,653] | | | | [removed: 3,811,597] [added: 4,413,236] | | | | [removed: 3,459,628] [added: 3,811,597] | | | | [removed: 2,960,355] [added: 3,459,628] | | | | [removed: 2,283,935] [added: 2,960,355] | |

| Net sales per average total square [removed: foot(5)] [added: foot(6)] | | $ | [removed: 402] [added: 418] | | | $ | [removed: 382] [added: 402] | | | $ | [removed: 353] [added: 382] | | | $ | [removed: 366] [added: 353] | | | $ | [removed: 399] [added: 366] | |

| Capital expenditures | | | [removed: 128,636] [added: 188,578] | | | | [removed: 97,115] [added: 128,636] | | | | [removed: 68,105] [added: 97,115] | | | | [removed: 110,863] [added: 68,105] | | | | [removed: 101,866] [added: 110,863] | |

| Depreciation and amortization | | | [removed: 75,931] [added: 88,233] | | | | [removed: 64,936] [added: 75,931] | | | | [removed: 62,166] [added: 64,936] | | | | [removed: 51,445] [added: 62,166] | | | | [removed: 39,503] [added: 51,445] | |

| Cash and cash equivalents | | $ | [removed: 253,738] [added: 320,475] | | | $ | [removed: 111,185] [added: 253,738] | | | $ | [removed: 4,017] [added: 111,185] | | | $ | [removed: 3,638] [added: 4,017] | | | $ | [removed: 3,789] [added: 3,638] | |

| Working capital | | | [removed: 415,377] [added: 568,257] | | | | [removed: 241,032] [added: 415,377] | | | | [removed: 136,417] [added: 241,032] | | | | [removed: 159,695] [added: 136,417] | | | | [removed: 117,039] [added: 159,695] | |

| Property and equipment, net | | | [removed: 376,985] [added: 483,059] | | | | [removed: 326,099] [added: 376,985] | | | | [removed: 290,861] [added: 326,099] | | | | [removed: 292,224] [added: 290,861] | | | | [removed: 236,389] [added: 292,224] | |

| Total assets | | | [removed: 957,217] [added: 1,275,249] | | | | [removed: 730,488] [added: 957,217] | | | | [removed: 553,635] [added: 730,488] | | | | [removed: 568,932] [added: 553,635] | | | | [removed: 469,413] [added: 568,932] | |

| Total debt | | | — | | | | — | | | | — | | | | [removed: 106,047] [added: —] | | | | [removed: 74,770] [added: 106,047] | |

| Total stockholders’ equity | | | [removed: 584,704] [added: 786,942] | | | | [removed: 402,533] [added: 584,704] | | | | [removed: 292,608] [added: 402,533] | | | | [removed: 244,968] [added: 292,608] | | | | [removed: 211,503] [added: 244,968] | |

| [removed: (2)] [added: (3)] | Comparable store sales increase reflects sales for stores beginning on the first day of the 14th month of operation. Remodeled stores are included in comparable store sales unless the store was closed for a portion of the current or comparable prior year. |

| [removed: (3)] [added: (4)] | Total square footage per store is calculated by dividing total square footage at end of year by number of stores at end of year. |

| [removed: (4)] [added: (5)] | Average total square footage represents a weighted average which reflects the effect of opening stores in different months throughout the year. |

| [removed: (5)] [added: (6)] | Net sales per average total square foot was calculated by dividing net sales for the year by the average square footage for those stores open during each year. |

| Dividends declared per common share | | $ | 1.00 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | |

| (2) | Fiscal 2012 was a 53-week operating year and the 53rd week represented approximately $40 million in net sales. |

| --- | --- |

##### [Table of Contents](#toc)

Based on management’s evaluation as of [removed: January 28, 2012,] [added: February 2, 2013,] our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) are effective to ensure that the information required to be disclosed by us in our reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Under the supervision and with the participation of our principal executive officer and our principal financial officer, management evaluated the effectiveness of our internal control over financial reporting as of [removed: January 28, 2012,] [added: February 2, 2013,] based on the criteria established in “Internal Control [removed: —] [added: –] Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Based on this evaluation, our principal executive officer and principal financial officer concluded that our internal controls over financial reporting were effective as of [removed: January 28, 2012.][added: February 2, 2013.]

Ernst & Young LLP, the independent registered public accounting firm that audited our financial statements included in this Annual Report on Form 10-K, has audited the effectiveness of our internal control over financial reporting as of [removed: January 28, 2012] [added: February 2, 2013] and has issued the attestation report included in Item 15 of this Annual Report on Form 10-K.

There were no changes to our internal controls over financial reporting during the three months ended [removed: January 28, 2012] [added: February 2, 2013] that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

| --- | --- |

The information required by this item with respect to our executive officers is set forth after Part I, Item 4 of this report under the caption “Executive Officers of the Registrant.” The additional information required by this item is incorporated by reference to our definitive proxy statement to be filed within 120 days after our fiscal year ended [removed: January 28, 2012] [added: February 2, 2013] pursuant to Regulation 14A under the Exchange Act in connection with our [removed: 2012] [added: 2013] annual meeting of stockholders.

The information required by this item is incorporated by reference to our definitive proxy statement to be filed within 120 days after our fiscal year ended [removed: January 28, 2012] [added: February 2, 2013] pursuant to Regulation 14A under the Exchange Act in connection with our [removed: 2012] [added: 2013] annual meeting of stockholders.

The information required by this item is incorporated by reference to our definitive proxy statement to be filed within 120 days after our fiscal year ended [removed: January 28, 2012] [added: February 2, 2013] pursuant to Regulation 14A under the Exchange Act in connection with our [removed: 2012] [added: 2013] annual meeting of stockholders.

The information required by this item is incorporated by reference to our definitive proxy statement to be filed within 120 days after our fiscal year ended [removed: January 28, 2012] [added: February 2, 2013] pursuant to Regulation 14A under the Exchange Act in connection with our [removed: 2012] [added: 2013] annual meeting of stockholders.

The information required by this item is incorporated by reference to our definitive proxy statement to be filed within 120 days after our fiscal year ended [removed: January 28, 2012] [added: February 2, 2013] pursuant to Regulation 14A under the Exchange Act in connection with our [removed: 2012] [added: 2013] annual meeting of stockholders.

| [Report of Independent Registered Public Accounting [removed: Firm](#tx265737_30)] [added: Firm](#tx466694_25)] | | | [removed: 44] [added: 43] | |

| [Balance [removed: Sheets](#tx265737_31)] [added: Sheets](#tx466694_26)] | | | [removed: 46] [added: 45] | |

| [Statements of [removed: Income](#tx265737_32)] [added: Income](#tx466694_27)] | | | [removed: 47] [added: 46] | |

| [Statements of Cash [removed: Flows](#tx265737_33)] [added: Flows](#tx466694_28)] | | | [removed: 48] [added: 47] | |

| [Statements of Stockholders’ [removed: Equity](#tx265737_34)] [added: Equity](#tx466694_29)] | | | [removed: 49] [added: 48] | |

| [Notes to Financial [removed: Statements](#tx265737_35)] [added: Statements](#tx466694_30)] | | | [removed: 50] [added: 49] | |

We have audited the accompanying balance sheets of Ulta Salon, Cosmetics & Fragrance, Inc. (the Company) as of [removed: January 28, 2012] [added: February 2, 2013] and January [removed: 29, 2011,] [added: 28, 2012,] and the related statements of income, cash flows, and stockholders’ equity for each of the three years in the period ended [removed: January 28, 2012.][added: February 2, 2013.]

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Ulta Salon, Cosmetics & Fragrance, Inc. at [removed: January 28, 2012] [added: February 2, 2013] and January [removed: 29, 2011,] [added: 28, 2012,] and the results of its operations and its cash flows for each of the three years in the period ended [removed: January 28, 2012,] [added: February 2, 2013,] in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Ulta Salon, Cosmetics & Fragrance, Inc.’s internal control over financial reporting as of [removed: January 28, 2012,] [added: February 2, 2013,] based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated [removed: March 28, 2012,] [added: April 3, 2013,] expressed an unqualified opinion thereon.

We have audited Ulta Salon, Cosmetics & Fragrance, Inc.’s internal control over financial reporting as of [removed: January 28, 2012,] [added: February 2, 2013,] based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria).

In our opinion, Ulta Salon, Cosmetics & Fragrance, Inc. maintained, in all material respects, effective internal control over financial reporting as of [removed: January 28, 2012,] [added: February 2, 2013,] based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the balance sheets of Ulta Salon, Cosmetics & Fragrance, Inc. as of [removed: January 28, 2012] [added: February 2, 2013] and January [removed: 29, 2011,] [added: 28, 2012,] and the related statements of income, cash flows and stockholders’ equity for each of the three years in the period ended [removed: January 28, 2012] [added: February 2, 2013] and our report dated [removed: March 28, 2012] [added: April 3, 2013] expressed an unqualified opinion thereon.

| | | [removed: January 28,] [added: February 2,] | | | | January [removed: 29,] [added: 28,] | | |

| (In thousands, except per share data) | | [removed: 2012] [added: 2013] | | | | [removed: 2011] [added: 2012] | | |

| Cash and cash equivalents [added: at beginning of year] | | [removed: $] | 253,738 | | | [removed: $] | 111,185 | | [added: | | 4,017 | |]

| Receivables, net | | | [removed: 26,153] [added: 41,515] | | | | [removed: 22,292] [added: 26,153] | |

| Merchandise inventories, net | | | [removed: 244,647] [added: 361,125] | | | | [removed: 218,516] [added: 244,647] | |

| Prepaid expenses and other current assets | | | [removed: 43,430] [added: 50,452] | | | | [removed: 32,790] [added: 43,430] | |

| Deferred income taxes | | | [removed: 12,264] [added: 15,757] | | | | [removed: 8,922] [added: 12,264] | |

| Total current assets | | | [removed: 580,232] [added: 789,324] | | | | [removed: 404,389] [added: 580,232] | |

| Property and equipment, net | | | [removed: 376,985] [added: 483,059] | | | | [removed: 326,099] [added: 376,985] | |

| Total assets | | $ | [removed: 957,217] [added: 1,275,249] | | | $ | [removed: 730,488] [added: 957,217] | |

| Accounts payable | | $ | [removed: 86,442] [added: 118,886] | | | $ | [removed: 87,093] [added: 86,442] | |

| Accrued liabilities | | | [removed: 74,411] [added: 92,127] | | | | [removed: 76,264] [added: 74,411] | |

| Accrued income taxes | | | [removed: 4,002] [added: 10,054] | | | | [removed: —] [added: 4,002] | |

| Total current liabilities | | | [removed: 164,855] [added: 221,067] | | | | [removed: 163,357] [added: 164,855] | |

| Deferred rent | | | [removed: 163,463] [added: 208,003] | | | | [removed: 134,572] [added: 163,463] | |

| Deferred income taxes | | | [removed: 44,195] [added: 56,361] | | | | [removed: 30,026] [added: 44,195] | |

| Total liabilities | | | [removed: 372,513] [added: 488,307] | | | | [removed: 327,955] [added: 372,513] | |

| Common stock, $.01 par value, 400,000 shares authorized; [removed: 62,764] [added: 64,565] and [removed: 60,707] [added: 62,764] shares issued; [removed: 62,209] [added: 64,009] and [removed: 60,202] [added: 62,209] shares outstanding; at [added: February 2, 2013, and] January 28, 2012, [removed: and January 29, 2011,] respectively | | | [removed: 627] [added: 645] | | | | [removed: 606] [added: 627] | |

| Treasury stock-common, at cost | | | [removed: (7,415] [added: (7,494] | ) | | | [removed: (4,179] [added: (7,415] | ) |

| Additional paid-in capital | | | [removed: 404,698] [added: 496,930] | | | | [removed: 339,576] [added: 404,698] | |

| Retained earnings | | | [removed: 186,794] [added: 296,861] | | | | [removed: 66,530] [added: 186,794] | |

| Total stockholders’ equity | | | [removed: 584,704] [added: 786,942] | | | | [removed: 402,533] [added: 584,704] | |

| Total liabilities and stockholders’ equity | | $ | [removed: 957,217] [added: 1,275,249] | | | $ | [removed: 730,488] [added: 957,217] | |

| (In thousands, except per share data) | | [removed: January 28, 2012] [added: February 2, 2013] | | | | January [removed: 29, 2011] [added: 28, 2012] | | | | January [removed: 30, 2010] [added: 29, 2011] | | |

| Net sales | | $ | [removed: 1,776,151] [added: 2,220,256] | | | $ | [removed: 1,454,838] [added: 1,776,151] | | | $ | [removed: 1,222,771] [added: 1,454,838] | |

| Cost of sales | | | [removed: 1,159,311] [added: 1,436,582] | | | | [removed: 970,753] [added: 1,159,311] | | | | [removed: 846,202] [added: 970,753] | |

| Gross profit | | | [removed: 616,840] [added: 783,674] | | | | [removed: 484,085] [added: 616,840] | | | | [removed: 376,569] [added: 484,085] | |

| Selling, general and administrative expenses | | | [removed: 410,658] [added: 488,880] | | | | [removed: 358,106] [added: 410,658] | | | | [removed: 302,413] [added: 358,106] | |

| [Exhibits](#tx466694_31) | | | 61 | |

April 3, 2013

April 3, 2013

| Deferred compensation plan assets | | | 2,866 | | | | — | |

| Other long-term liabilities | | | 2,876 | | | | — | |

| Dividends declared per common share | | $ | 1.00 | | | $ | — | | | $ | — | |

| Dividends paid | | | (62,482 | ) | | | — | | | | — | |

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| Stock options exercised and other awards | | | 1,801 | | | | 18 | | | | — | | | | — | | | | 31,512 | | | | — | | | | 31,530 | |

| Common stock repurchased | | | — | | | | — | | | | (1 | ) | | | (79 | ) | | | — | | | | — | | | | (79 | ) |

| Net income | | | — | | | | — | | | | — | | | | — | | | | — | | | | 172,549 | | | | 172,549 | |

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| Comprehensive income | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 172,549 | |

| Dividends paid | | | — | | | | — | | | | — | | | | — | | | | — | | | | (62,482 | ) | | | (62,482 | ) |

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| Balance — February 2, 2013 | | | 64,565 | | | $ | 645 | | | | (556 | ) | | $ | (7,494 | ) | | $ | 496,930 | | | $ | 296,861 | | | $ | 786,942 | |

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The Company currently operates two loyalty programs, ULTAmate Rewards and The Club at Ulta.

The Club at Ulta is a certificate program offering customers reward certificates for free beauty products based on their level of purchases.

ULTAmate Rewards is a points-based program in which customers earn points based on their purchases.

Points earned are valid for one year and may be redeemed on any product or select salon service.

Selling, general and administrative expenses includes payroll, bonus, and benefit costs for retail and corporate employees; advertising and marketing costs; occupancy costs related to our corporate office facilities; public

| | | February 2, 2013 | | | | January 28, 2012 | | |

| | | | 838,390 | | | | 673,354 | |

| 2013 | | $ | 155,542 | |

| 2014 | | | 160,168 | |

| 2015 | | | 153,441 | |

| 2016 | | | 144,991 | |

| 2017 | | | 133,574 | |

| 2018 and thereafter | | | 460,811 | |

On April 12, 2012, the Company removed the case to the United States District Court for the Central District of California.

| | | February 2, 2013 | | | | January 28, 2012 | | |

| | | February 2, 2013 | | | | January 28, 2012 | | |

| [Exhibits](#tx265737_36) | | | 63 | |

##### [Table of Contents](#toc)

March 28, 2012

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| Prepaid income taxes | | | — | | | | 10,684 | |

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| Proceeds on long-term borrowings | | | — | | | | — | | | | 1,161,673 | |

| Payments on long-term borrowings | | | — | | | | — | | | | (1,267,720 | ) |

| Cash paid for interest | | $ | — | | | $ | — | | | $ | 2,440 | |

| Unrealized gain on interest rate swap hedge, net of tax | | $ | — | | | $ | — | | | $ | 631 | |

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| Balance — January 31, 2009 | | | 58,245 | | | $ | 582 | | | | (505 | ) | | $ | (4,179 | ) | | $ | 293,052 | | | $ | (43,856 | ) | | $ | (631 | ) | | $ | 244,968 | |

| Stock options exercised | | | 429 | | | | 4— | | | | | | | | — | | | | 1,224 | | | | — | | | | — | | | | 1,228 | |

| Unrealized gain on interest rate swap hedge, net of $411 income tax | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 631 | | | | 631 | |

| Comprehensive income | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 120,264 | |

_Derivative financial instruments_

The Company had an interest rate swap that expired on January 31, 2010.

This derivative financial instrument was designated and qualified as a cash flow hedge.

Accordingly, the effective portion of the gain or loss on the derivative instrument was reported as a component of accumulated other comprehensive income (loss) and reclassified into interest expense in the same period or periods during which the hedged transaction affects earnings.

The remaining gain or loss, the ineffective portion, on the derivative instrument, if other than inconsequential, was recognized in interest expense during the period of change.

This derivative, which was immaterial, was recorded in the January 30, 2010 balance sheet at fair value.

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The Company maintains two customer loyalty programs.

The Company’s national certificate program provides reward point certificates for free beauty products.

The Company is also rolling out its ULTAmate Rewards program in which customers earn purchase-based points on an annual basis which can be redeemed at any time.

| | | | 673,354 | | | | 579,799 | |

| | | Operating | | |

| 2012 | | $ | 123,945 | |

| 2013 | | | 128,415 | |

| 2014 | | | 123,821 | |

| 2015 | | | 115,413 | |

| 2016 | | | 106,138 | |

| 2017 and thereafter | | | 338,177 | |

Also included in the schedule above is the Chambersburg, Pennsylvania distribution center which is expected to open in fiscal 2012.

The plaintiff and members of the proposed class are alleged to be (or have been) non-exempt hourly employees.

The suit alleges that Ulta violated various provisions of the California labor laws and failed to provide plaintiff and members of the proposed class with full meal periods, paid rest breaks, certain wages, overtime compensation and premium pay.

The suit seeks to recover damages and penalties as a result of these alleged practices.