Item 15. Exhibits and Financial Statement Schedules

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(a)	The following documents are filed as a part of this Form 10-K:

Report of Independent Registered Public Accounting Firm			44
Consolidated Balance Sheets			46
Consolidated Statements of Income			47
Consolidated Statements of Cash Flows			48
Consolidated Statements of Stockholders’ Equity			49
Notes to Consolidated Financial Statements			50

The schedules required by Form 10-K have been omitted because they were inapplicable, included in the notes to the consolidated financial statements, or otherwise not required under the instructions contained in Regulation S-X.

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Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders

Ulta Salon, Cosmetics & Fragrance, Inc.

We have audited the accompanying consolidated balance sheets of Ulta Salon, Cosmetics & Fragrance, Inc. as of January 30, 2016 and January 31, 2015, and the related consolidated statements of income, cash flows, and stockholders’ equity for each of the three years in the period ended January 30, 2016. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Ulta Salon, Cosmetics & Fragrance, Inc. at January 30, 2016 and January 31, 2015, and the consolidated results of its operations and its cash flows for each of the three years in the period ended January 30, 2016, 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 January 30, 2016, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated March 30, 2016, expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP
Chicago, Illinois
March 30, 2016

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Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders

Ulta Salon, Cosmetics & Fragrance, Inc.

We have audited Ulta Salon, Cosmetics & Fragrance, Inc.’s internal control over financial reporting as of January 30, 2016, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). Ulta Salon, Cosmetics & Fragrance, Inc.’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Ulta Salon, Cosmetics & Fragrance, Inc. maintained, in all material respects, effective internal control over financial reporting as of January 30, 2016, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Ulta Salon, Cosmetics & Fragrance, Inc. as of January 30, 2016 and January 31, 2015, and the related consolidated statements of income, cash flows and stockholders’ equity for each of the three years in the period ended January 30, 2016 and our report dated March 30, 2016 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP
Chicago, Illinois
March 30, 2016

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Ulta Salon, Cosmetics & Fragrance, Inc.

Consolidated Balance Sheets

(In thousands, except per share data)		January 30, 2016				January 31, 2015
Assets
Current assets:
Cash and cash equivalents		$	345,840			$	389,149
Short-term investments			130,000				150,209
Receivables, net			64,992				52,440
Merchandise inventories, net			761,793				581,229
Prepaid expenses and other current assets			72,548				66,548
Deferred income taxes			—				20,780
Total current assets			1,375,173				1,260,355
Property and equipment, net			847,600				717,159
Deferred compensation plan assets			8,145				5,656
Total assets		$	2,230,918			$	1,983,170
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable		$	196,174			$	190,778
Accrued liabilities			187,351				149,412
Accrued income taxes			12,702				19,404
Total current liabilities			396,227				359,594
Deferred rent			321,789				294,127
Deferred income taxes			59,527				74,498
Other long-term liabilities			10,489				7,442
Total liabilities			788,032				735,661
Commitments and contingencies (note 4)
Stockholders’ equity:
Common stock, $.01 par value, 400,000 shares authorized; 64,131 and 64,762 shares issued; 63,540 and 64,184 shares outstanding; at January 30, 2016, and January 31, 2015, respectively			641				647
Treasury stock-common, at cost			(11,685	)			(9,713	)
Additional paid-in capital			621,715				576,982
Retained earnings			832,215				679,593
Total stockholders’ equity			1,442,886				1,247,509
Total liabilities and stockholders’ equity		$	2,230,918			$	1,983,170

See accompanying notes to financial statements.

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Ulta Salon, Cosmetics & Fragrance, Inc.

Consolidated Statements of Income

		Fiscal year ended
(In thousands, except per share data)		January 30, 2016				January 31, 2015				February 1, 2014
Net sales		$	3,924,116			$	3,241,369			$	2,670,573
Cost of sales			2,539,783				2,104,582				1,729,325
Gross profit			1,384,333				1,136,787				941,248
Selling, general and administrative expenses			863,354				712,006				596,390
Pre-opening expenses			14,682				14,366				17,270
Operating income			506,297				410,415				327,588
Interest income, net			(1,143	)			(894	)			(118	)
Income before income taxes			507,440				411,309				327,706
Income tax expense			187,432				154,174				124,857
Net income		$	320,008			$	257,135			$	202,849
Net income per common share:
Basic		$	5.00			$	4.00			$	3.17
Diluted		$	4.98			$	3.98			$	3.15
Weighted average common shares outstanding:
Basic			63,949				64,335				63,992
Diluted			64,275				64,651				64,461

See accompanying notes to financial statements.

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Ulta Salon, Cosmetics & Fragrance, Inc.

Consolidated Statements of Cash Flows

		Fiscal year ended
		January 30,				January 31,				February 1,
(In thousands)		2016				2015				2014
Operating activities
Net income		$	320,008			$	257,135			$	202,849
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			165,049				131,764				106,283
Deferred income taxes			5,809				9,246				3,868
Non-cash stock compensation charges			15,594				14,923				16,003
Excess tax benefits from stock-based compensation			(9,497	)			(3,229	)			(13,378	)
Loss on disposal of property and equipment			3,690				4,468				3,902
Change in operating assets and liabilities:
Receivables			(12,552	)			(5,391	)			(5,534	)
Merchandise inventories			(180,564	)			(123,296	)			(96,808	)
Prepaid expenses and other current assets			(6,000	)			(10,555	)			(5,541	)
Income taxes			2,795				7,284				18,673
Accounts payable			5,396				42,496				29,396
Accrued liabilities			37,926				37,644				14,215
Deferred rent			27,662				32,497				53,627
Other assets and liabilities			558				1,606				170
Net cash provided by operating activities			375,874				396,592				327,725
Investing activities
Purchases of short-term investments			(130,000	)			(200,209	)			—
Proceeds from short-term investments			150,209				50,000				—
Purchases of property and equipment			(299,167	)			(249,067	)			(226,024	)
Net cash used in investing activities			(278,958	)			(399,276	)			(226,024	)
Financing activities
Repurchase of common shares			(167,396	)			(39,923	)			(37,337	)
Stock options exercised			19,646				10,639				21,890
Excess tax benefits from stock-based compensation			9,497				3,229				13,378
Purchase of treasury shares			(1,972	)			(1,588	)			(631	)
Net cash used in financing activities			(140,225	)			(27,643	)			(2,700	)
Net (decrease) increase in cash and cash equivalents			(43,309	)			(30,327	)			99,001
Cash and cash equivalents at beginning of year			389,149				419,476				320,475
Cash and cash equivalents at end of year		$	345,840			$	389,149			$	419,476
Supplemental cash flow information
Cash paid for income taxes (net of refunds)		$	179,248			$	137,180			$	101,598
Noncash investing activities:
Change in property and equipment included in accrued liabilities		$	13			$	8,588			$	(3,161	)

See accompanying notes to financial statements.

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Ulta Salon, Cosmetics & Fragrance, Inc.

Consolidated Statements of Stockholders’ Equity

		Common Stock								Treasury - Common Stock								Additional Paid-In Capital				Retained Earnings				Total Stockholders’ Equity
(In thousands)		Issued Shares				Amount				Treasury Shares				Amount
Balance — February 2, 2013			64,565			$	645				(556	)		$	(7,494	)		$	496,930			$	296,861			$	786,942
Stock options exercised and other awards			729				7				—				—				21,883				—				21,890
Purchase of treasury shares			—				—				(6	)			(631	)			—				—				(631	)
Net income			—				—				—				—				—				202,849				202,849
Excess tax benefits from stock-based compensation			—				—				—				—				13,378				—				13,378
Stock compensation charge			—				—				—				—				16,003				—				16,003
Repurchase of common shares			(501	)			(5	)			—				—				—				(37,332	)			(37,337	)
Balance — February 1, 2014			64,793			$	647				(562	)		$	(8,125	)		$	548,194			$	462,378			$	1,003,094
Stock options exercised and other awards			290				3				—				—				10,636				—				10,639
Purchase of treasury shares			—				—				(16	)			(1,588	)			—				—				(1,588	)
Net income			—				—				—				—				—				257,135				257,135
Excess tax benefits from stock-based compensation			—				—				—				—				3,229				—				3,229
Stock compensation charge			—				—				—				—				14,923				—				14,923
Repurchase of common shares			(321	)			(3	)			—				—				—				(39,920	)			(39,923	)
Balance — January 31, 2015			64,762			$	647				(578	)		$	(9,713	)		$	576,982			$	679,593			$	1,247,509
Stock options exercised and other awards			403				4				—				—				19,642				—				19,646
Purchase of treasury shares			—				—				(13	)			(1,972	)			—				—				(1,972	)
Net income			—				—				—				—				—				320,008				320,008
Excess tax benefits from stock-based compensation			—				—				—				—				9,497				—				9,497
Stock compensation charge			—				—				—				—				15,594				—				15,594
Repurchase of common shares			(1,034	)			(10	)			—				—				—				(167,386	)			(167,396	)
Balance — January 30, 2016			64,131			$	641				(591	)		$	(11,685	)		$	621,715			$	832,215			$	1,442,886

See accompanying notes to financial statements.

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Ulta Salon, Cosmetics & Fragrance, Inc.

Notes to Consolidated Financial Statements

(In thousands, except per share data)

1. Business and basis of presentation

Ulta Salon, Cosmetics & Fragrance, Inc. was incorporated in the state of Delaware on January 9, 1990, to operate specialty retail stores selling cosmetics, fragrance, haircare and skincare products, and related accessories and services. The stores also feature full-service salons. As of January 30, 2016, the Company operated 874 stores in 48 states. As used in these notes and throughout this Annual Report on Form 10-K, all references to “we,” “us,” “our,” “Ulta,” “Ulta Beauty” or the “Company,” refer to Ulta Salon, Cosmetics & Fragrance, Inc. and its consolidated subsidiary, Ulta Inc. All amounts are stated in thousands, with the exception of per share amounts and number of stores.

The Company has determined its operating segments on the same basis that it uses to internally evaluate performance. The Company has combined its three operating segments, retail stores, salon services and e-commerce, into one reportable segment because they have a similar class of consumer, economic characteristics, nature of products and distribution methods.

2. Summary of significant accounting policies

Fiscal year

The Company’s fiscal year is the 52 or 53 weeks ending on the Saturday closest to January 31. The Company’s fiscal years ended January 30, 2016 (fiscal 2015), January 31, 2015 (fiscal 2014) and February 1, 2014 (fiscal 2013) were 52 week years.

Consolidation

The Company’s consolidated financial statements include the accounts of the Company and its wholly owned subsidiary. All significant intercompany accounts, transactions and unrealized profit were eliminated in consolidation.

Use of estimates

The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the accounting period. Actual results could differ from those estimates.

Cash and cash equivalents

Cash and cash equivalents include cash on hand and highly liquid investments with maturities of three months or less from the date of purchase. Cash equivalents include amounts due from third-party credit card receivables because such amounts generally convert to cash within one to three days with little or no default risk.

Short-term investments

The Company determines the balance sheet classification of its investments at the time of purchase and evaluates the classification at each balance sheet date. Money market funds, certificates of deposit and time deposits with maturities of greater than three months but no more than twelve months are carried at cost, which approximates fair value and are recorded in the Consolidated Balance Sheets in Short-term investments (see Note 9, “Investments”).

Receivables

Receivables consist principally of amounts receivable from vendors and landlord construction allowances earned but not yet received. These receivables are computed based on provisions of the vendor and lease agreements in place and the Company’s completed performance. The Company’s vendors are primarily U.S.-based producers of consumer products and real estate developers and landlords. The Company does not require collateral on its

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receivables and does not accrue interest. Credit risk with respect to receivables is limited due to the diversity of vendors and landlords comprising the Company’s vendor base. The Company performs ongoing credit evaluations of its vendors and evaluates the collectability of its receivables based on the length of time the receivable is past due and historical experience. The receivable for vendor allowances was $46,932 and $39,629 as of January 30, 2016 and January 31, 2015, respectively and the receivable for landlord allowances was $10,250 and $8,357 as of January 30, 2016 and January 31, 2015, respectively. The allowance for doubtful receivables totaled $1,112 and $1,346 as of January 30, 2016 and January 31, 2015, respectively.

Merchandise inventories

Merchandise inventories are stated at the lower of cost or market. Cost is determined using the weighted-average cost method and includes costs incurred to purchase and distribute goods. Inventory cost also includes vendor allowances related to co-op advertising, markdowns, and volume discounts. The Company maintains reserves for lower of cost or market and shrinkage.

Fair value of financial instruments

The carrying value of cash and cash equivalents, accounts receivable, and accounts payable approximates their estimated fair values due to the short maturities of these instruments. The Company had no outstanding debt as of January 30, 2016 and January 31, 2015.

Property and equipment

The Company’s property and equipment are stated at cost net of accumulated depreciation and amortization. Maintenance and repairs are charged to operating expense as incurred. The Company’s assets are depreciated or amortized using the straight-line method, over the shorter of their estimated useful lives or the expected lease term as follows:

Equipment and fixtures			3 to 10 years
Leasehold improvements			10 years
Electronic equipment and software			3 to 5 years

The Company capitalizes costs incurred during the application development stage in developing or purchasing internal use software. These costs are amortized over the estimated useful life of the software.

The Company periodically evaluates whether changes have occurred that would require revision of the remaining useful life of equipment and leasehold improvements or render them not recoverable. If such circumstances arise, the Company uses an estimate of the undiscounted sum of expected future operating cash flows during their holding period to determine whether the long-lived assets are impaired. If the aggregate undiscounted cash flows are less than the carrying amount of the assets, the resulting impairment charges to be recorded are calculated based on the excess of the carrying value of the assets over the fair value of such assets, with the fair value determined based on an estimate of discounted future cash flows. No significant impairments charges have been recognized in fiscal 2015, 2014 or 2013.

Customer loyalty program

In early fiscal 2014, we completed the conversion of all our loyalty members to Ultamate Rewards, a points-based program. Ultamate Rewards enables customers to earn points based on their purchases. Points earned by members are valid for at least one year and may be redeemed on any product we sell. Prior to this conversion, we ran both Ultamate Rewards and our prior program, The Club at Ulta. The Club at Ulta was a certificate program offering customers reward certificates for free beauty products based on the level of purchases. The Company accrues the cost of anticipated redemptions related to these programs at the time of the initial purchase based on historical experience. The accrued liability related to these loyalty programs at January 30, 2016 and January 31, 2015 was $20,026 and $15,032 respectively. The cost of these programs, which was $54,464, $42,096 and $27,588 in fiscal 2015, 2014 and 2013, respectively, is included in cost of sales in the statements of income.

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Deferred rent

Many of the Company’s operating leases contain predetermined fixed increases of the minimum rental rate during the lease. For these leases, the Company recognizes the related rental expense on a straight-line basis over the expected lease term and records the difference between the amounts charged to expense and the rent paid as deferred rent. The lease term commences on the earlier of the date when the Company becomes legally obligated for rent payments or the date the Company takes possession of the leased space.

As part of many lease agreements, the Company receives construction allowances from landlords for tenant improvements. These leasehold improvements made by the Company are capitalized and amortized over the shorter of the lease term or 10 years. The construction allowances are recorded as deferred rent and amortized on a straight-line basis over the lease term as a reduction of rent expense.

Revenue recognition

Net sales include merchandise sales, salon service revenue and e-commerce revenue. Revenue from merchandise sales at stores is recognized at the time of sale, net of estimated returns. The Company provides refunds for product returns within 60 days from the original purchase date. Salon revenue is recognized when services are rendered. Salon service revenue amounted to $209,249, $175,533 and $145,815 for fiscal 2015, 2014 and 2013, respectively. Company coupons and other incentives are recorded as a reduction of net sales. State sales taxes are presented on a net basis as the Company considers itself a pass-through conduit for collecting and remitting state sales tax. E-commerce sales are recorded based on delivery of merchandise to the customer. E-commerce revenue amounted to $221,077, $149,857 and $95,809 for fiscal 2015, 2014 and 2013, respectively.

The Company’s gift card sales are deferred and recognized in net sales when the gift card is redeemed for product or services. The Company’s gift cards do not expire and do not include service fees that decrease customer balances. The Company has maintained Company-specific, historical data related to its large pool of similar gift card transactions sold and redeemed over a significant time frame. The Company recognizes gift card breakage to the extent there is no requirement for remitting balances to governmental agencies under unclaimed property laws. Gift card breakage is recognized over the same performance period, and in the same proportion, that the Company’s data has demonstrated that gift cards are redeemed. Gift card breakage was $3,728 and $2,720 at January 30, 2016 and January 31, 2015, respectively, and is recorded as a decrease in selling, general and administrative expense in the statements of income. Deferred gift card revenue was $31,830 and $22,681 at January 30, 2016 and January 31, 2015, respectively, and is included in accrued liabilities – accrued customer liabilities (Note 5).

Vendor allowances

The Company receives allowances from vendors in the normal course of business including advertising and markdown allowances, purchase volume discounts and rebates, and reimbursement for defective merchandise, and certain selling and display expenses. Substantially all vendor allowances are recorded as a reduction of the vendor’s product cost and are recognized in cost of sales as the product is sold.

Advertising

Advertising expense consists principally of paper, print and distribution costs related to the Company’s advertising circulars, as well as television, radio and digital advertising. The Company expenses the production and distribution costs related to its advertising circulars in the period the related promotional event occurs. Total advertising costs, exclusive of incentives from vendors and start-up advertising expense, amounted to $187,158, $157,847 and $140,774 for fiscal 2015, 2014 and 2013, respectively. Advertising expense as a percentage of sales was 4.8%, 4.9% and 5.3% for fiscal 2015, 2014 and 2013, respectively. Prepaid advertising costs included in prepaid expenses and other current assets were $6,413 and $8,899 as of January 30, 2016 and January 31, 2015, respectively.

Pre-opening expenses

Non-capital expenditures incurred prior to the grand opening of a new, remodeled or relocated store are charged against earnings as incurred.

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Cost of sales

Cost of sales includes the cost of merchandise sold including a majority of vendor allowances, which are treated as a reduction of merchandise costs; warehousing and distribution costs including labor and related benefits, freight, rent, depreciation and amortization, real estate taxes, utilities, and insurance; shipping and handling costs; store occupancy costs including rent, depreciation and amortization, real estate taxes, utilities, repairs and maintenance, insurance, licenses, and cleaning expenses; salon payroll and benefits; customer loyalty program expense; and shrink and inventory valuation reserves.

Selling, general and administrative expenses

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 company expense including Sarbanes-Oxley Act of 2002 compliance expenses; stock-based compensation expense; depreciation and amortization for all assets except those related to our retail and warehouse operations, which are included in cost of sales; and legal, finance, information systems and other corporate overhead costs.

Income taxes

Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities used for financial reporting purposes and the amounts used for income tax purposes. The amounts reported were derived using the enacted tax rates in effect for the year the differences are expected to reverse.

Income tax benefits related to uncertain tax positions are recognized only when it is more likely than not that the tax position will be sustained on examination by the taxing authorities. The determination is based on the technical merits of the position and presumes that each uncertain tax position will be examined by the relevant taxing authority that has full knowledge of all relevant information. Penalties and interest related to unrecognized tax positions are recorded in income tax expense.

Share-based compensation

Share-based compensation cost is measured at grant date, based on the fair value of the award, and is recognized on a straight-line method over the requisite service period for awards expected to vest. The Company recorded stock compensation expense of $15,594, $14,923 and $16,003 for fiscal 2015, 2014 and 2013, respectively (see Note 10, “Share-based awards”).

Insurance expense

The Company has insurance programs with third party insurers for employee health, workers compensation and general liability, among others, to limit the Company’s liability exposure. The insurance programs are premium based and include retentions, deductibles and stop loss coverage. Current stop loss coverage per claim is $200 for employee health claims, $100 for general liability claims and $250 for workers compensation claims. The Company makes collateral and premium payments during the plan year and accrues expenses in the event additional premium is due from the Company based on actual claim results.

Net income per common share

Basic net income per common share is computed by dividing income available to common stockholders by the weighted-average number of shares of common stock outstanding during the period. Diluted net income per share includes dilutive common stock equivalents, using the treasury stock method (see Note 11, “Net income per common share”).

Recent accounting pronouncements not yet adopted

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers, issued as a new Topic, Accounting Standards Codification Topic 606. The new revenue recognition standard provides a five-step analysis of transactions to determine when

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and how revenue is recognized. The core principle is that we will recognize revenue when we transfer promised goods or services to customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services. In August 2015, the FASB issued ASU 2015-14 Revenue from Contracts with Customers (Topic 606), which delayed the effective date of ASU 2014-09 by one year. With the deferral, the revenue recognition standard is effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods with early adoption permitted for annual reporting periods beginning after December 15, 2016, including interim reporting periods. This standard allows for either full retrospective or modified retrospective adoption. The Company is currently evaluating the application method and the impact of this new standard on its consolidated financial position, results of operations and cash flows.

In June 2014, the FASB issued ASU No. 2014-12, Compensation – Stock Compensation, Accounting Standards Codification Topic 718. This update clarifies the accounting for share-based awards with performance targets. The standard will take effect for public companies for annual reporting periods beginning after December 15, 2015, including interim reporting periods. The Company will not be affected by this guidance as the Company currently accounts for these awards in a manner consistent with the new guidance.

In April 2015, the FASB issued ASU No. 2015-05, Customers’ Accounting for Fees Paid in a Cloud Computing Arrangement. This standard provides guidance to determine whether a cloud-based computing arrangement includes a software license. If a cloud-based computing arrangement includes a software license, the customer must account for the software element of the arrangement consistent with the acquisition of other software licenses. Otherwise, the customer must account for the arrangement as a service contract. The standard will take effect for public companies for annual reporting periods beginning after December 15, 2015, including interim reporting periods. Early adoption is permitted. The Company does not believe that the adoption of this ASU will have a material impact on its consolidated financial position, results of operations and cash flows.

In February 2016, the FASB issued ASU No. 2016-02, Leases, Accounting Standards Codification Topic 842. This standard will change the way all leases of one year or more are treated. Under this guidance, lessees will be required to capitalize virtually all leases on the balance sheet as a right-of-use asset and an associated financing lease liability or capital lease liability. The right-of-use asset represents the lessee’s right to use, or control the use of, a specified asset for the specified lease term. The lease liability represents the lessee’s obligation to make lease payments arising from the lease, measured on a discounted basis. Based on certain characteristics, leases are classified as financing leases or operating leases. Financing lease liabilities, those that contain provisions similar to capitalized leases, are amortized like capital leases under current accounting, as amortization expense and interest expense in the statement of operations. Operating lease liabilities are amortized on a straight-line basis over the life of the lease as lease expense in the statement of operations. The standard will take effect for public companies for annual reporting periods beginning after December 15, 2018, including interim reporting periods. The Company is currently evaluating the impact of this new standard on its consolidated financial position, results of operations and cash flows.

Recently adopted accounting pronouncements

In November 2015, the FASB issued ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes. The new standard requires that all deferred tax assets and liabilities, and any related valuation allowance, be reported as non-current in a classified balance sheet instead of separating deferred taxes and related valuation allowances into current and non-current amounts. The standard will take effect for public companies for annual reporting periods beginning after December 15, 2016, including interim reporting periods. As permitted, the Company adopted this standard, prospectively, in the fourth quarter of its fiscal year ended January 30, 2016. As a result of the adoption at January 30, 2016, current deferred income tax assets were classified as non-current liabilities on the Company’s consolidated balance sheet at January 30, 2016. The adoption of this standard did not have any other impact on our consolidated financial position, results of operations and cash flows.

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3. Property and equipment

Property and equipment consists of the following:

(In thousands)		January 30, 2016				January 31, 2015
Equipment and fixtures		$	556,499			$	447,782
Leasehold improvements			515,712				431,999
Electronic equipment and software			353,940				272,937
Construction-in-progress			75,804				90,531
			1,501,955				1,243,249
Less accumulated depreciation and amortization			(654,355	)			(526,090	)
Property and equipment, net		$	847,600			$	717,159

The Company had no capitalized interest for fiscal 2015 and 2014 as a result of not utilizing the credit facility during the year.

4. Commitments and contingencies

Leases — The Company leases retail stores, distribution and office facilities, and certain equipment. Original non-cancelable lease terms range from three to ten years, and store leases generally contain renewal options for additional years. A number of the Company’s store leases provide for contingent rentals based upon sales. Contingent rent amounts were insignificant in fiscal 2015, 2014 and 2013. Total rent expense under operating leases was $181,487, $159,245 and $138,086 for fiscal 2015, 2014 and 2013, respectively. Future minimum lease payments under operating leases as of January 30, 2016, are as follows:

Fiscal year		Operating Leases (in thousands)
2016		$	238,837
2017			240,654
2018			225,187
2019			209,867
2020			196,952
2021 and thereafter			647,636
Total minimum lease payments		$	1,759,133

Included in the operating lease schedule above is $176,749 of minimum lease payments for stores that are expected to open in fiscal 2016.

Contractual obligations — As of January 30, 2016, the Company had obligations of $4,908 related to commitments made to a third party for products and services for a future distribution center for which a lease has been signed. Payments under these commitments were $28,044 and $38,212 for fiscal 2015 and 2014, respectively. In addition, the Company has entered into various non-cancelable advertising and other goods and service contracts. These agreements expire over one year and the obligations under these agreements were $22,005 as of January 30, 2016.

General litigation — The Company is the defendant in four putative employment class action lawsuits that allege that the Company violated various provisions of California’s labor laws. All four of these lawsuits seek to recover damages and penalties as a result of these alleged practices. The Company has agreed to settle one of the suits for $1,750 (a significant portion of which will be allocated to attorneys’ fees for plaintiff’s counsel). The settlement, which is fully reserved for, remains subject to final court approval; preliminary approval was granted on March 11, 2016. Under the terms of the settlement, the Company admits no liability and the parties fully and finally release all claims. The Company denies the plaintiff’s allegations in the other three suits and is vigorously defending these matters.

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The Company is also involved in various legal proceedings that are incidental to the conduct of our business. In the opinion of management, the amount of any liability with respect to these proceedings, either individually or in the aggregate, will not be material.

5. Accrued liabilities

Accrued liabilities consist of the following:

(In thousands)		January 30, 2016				January 31, 2015
Accrued vendor liabilities (including accrued property and equipment costs)		$	27,894			$	24,705
Accrued customer liabilities			54,496				39,593
Accrued payroll, bonus and employee benefits			61,068				50,931
Accrued taxes, other			20,486				17,824
Other accrued liabilities			23,407				16,359
Accrued liabilities		$	187,351			$	149,412

6. Income taxes

The provision for income taxes consists of the following:

(In thousands)		Fiscal 2015				Fiscal 2014				Fiscal 2013
Current:
Federal		$	163,048			$	128,159			$	105,731
State			18,694				16,909				15,310
Total current			181,742				145,068				121,041
Deferred:
Federal			6,981				8,392				3,891
State			(1,291	)			714				(75	)
Total deferred			5,690				9,106				3,816
Provision for income taxes		$	187,432			$	154,174			$	124,857

A reconciliation of the federal statutory rate to the Company’s effective tax rate is as follows:

		Fiscal 2015				Fiscal 2014				Fiscal 2013
Federal statutory rate			35.0	%			35.0	%			35.0	%
State effective rate, net of federal tax benefit			2.2	%			2.8	%			3.0	%
Other			(0.3	%)			(0.3	%)			0.1	%
Effective tax rate			36.9	%			37.5	%			38.1	%

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Significant components of the Company’s deferred tax assets and liabilities are as follows:

(In thousands)		January 30, 2016				January 31, 2015
Deferred tax assets:
Reserves not currently deductible		$	27,734			$	22,380
Employee benefits			10,594				8,782
Credit carryforwards			441				338
Accrued liabilities			10,704				8,231
Inventory valuation			257				617
Total deferred tax assets			49,730				40,348
Deferred tax liabilities:
Property and equipment			48,898				44,882
Deferred rent obligation			49,548				38,409
Prepaid expenses			10,811				10,775
Total deferred tax liabilities			109,257				94,066
Net deferred tax liability		$	(59,527	)		$	(53,718	)

The Company adopted ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes, prospectively, in the fourth quarter of fiscal 2015. As a result of the adoption at January 30, 2016, current deferred income tax assets were classified as non-current liabilities on the Company’s consolidated balance sheet.

At January 30, 2016 and January 31, 2015, the Company had $441 and $338, respectively, credit carryforwards for state income tax purposes.

The Company accounts for uncertainty in income taxes in accordance with the ASC rules for income taxes. The reserve for uncertain tax positions was $2,262 and $1,414 at January 30, 2016 and January 31, 2015, respectively. The balance is the Company’s best estimate of the potential liability for uncertain tax positions. A reconciliation of the Company’s unrecognized tax benefits, excluding interest and penalties, is as follows:

(In thousands)		January 30, 2016				January 31, 2015
Balance at beginning of the period		$	1,414			$	795
Increase due to a current year position			900				670
Decrease due to a prior period position			(52	)			(51	)
Balance at the end of the period		$	2,262			$	1,414

The Company acknowledges that the amount of unrecognized tax benefits may change in the next twelve months. However, it does not expect the change to have a significant impact on its consolidated financial statements. Income tax-related interest and penalties were insignificant for fiscal 2015 and 2014.

The Company files tax returns in the U.S. Federal and State jurisdictions. The Company is no longer subject to U.S. Federal examinations by the Internal Revenue Services for years before 2012 and is no longer subject to examinations by State authorities before 2011.

7. Notes payable

On October 19, 2011, the Company entered into an Amended and Restated Loan and Security Agreement (the Loan Agreement) with Wells Fargo Bank, National Association, as Administrative Agent, Collateral Agent and a Lender thereunder, Wells Fargo Capital Finance LLC as a Lender, J.P. Morgan Securities LLC as a Lender, JP Morgan Chase Bank, N.A. as a Lender and PNC Bank, National Association, as a Lender. The Loan Agreement

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amended and restated the Loan and Security Agreement, dated as of August 31, 2010, by and among the Company and the lenders. The Loan Agreement extended the maturity of the Company’s credit facility to October 2016, provides maximum revolving loans equal to the lesser of $200,000 or a percentage of eligible owned inventory, contains a $10,000 subfacility for letters of credit and allows the Company to increase the revolving facility by an additional $50,000, subject to consent by each lender and other conditions. The Loan Agreement contains a requirement to maintain a minimum amount of excess borrowing availability at all times.

On September 5, 2012, the Company entered into Amendment No. 1 to the Loan Agreement (the First Amendment) with the lender group. The First Amendment updated certain administrative terms and conditions and provides the Company 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.

On December 6, 2013, the Company entered into Amendment No. 2 to the Loan Agreement (the Second Amendment) with the lender group. The Second Amendment further extended the maturity of the facility to December 2018. Substantially all of the Company’s assets are pledged as collateral for outstanding borrowings under the facility. Outstanding borrowings will bear interest at the prime rate or London Interbank Offered Rate plus 1.50% and the unused line fee is 0.20%.

As of January 30, 2016 and January 31, 2015, the Company had no borrowings outstanding under the credit facility and the Company was in compliance with all terms and covenants of the agreement.

8. Fair value measurements

The carrying value of cash and cash equivalents, accounts receivable, and accounts payable approximates their estimated fair values due to the short maturities of these instruments.

Fair value is measured using inputs from the three levels of the fair value hierarchy, which are described as follows:

a. Level 1 — observable inputs such as quoted prices for identical instruments in active markets.

b. Level 2 — inputs other than quoted prices in active markets that are observable either directly or indirectly through corroboration with observable market data.

c. Level 3 — unobservable inputs in which there is little or no market data, which would require the Company to develop its own assumptions.

As of January 30, 2016 and January 31, 2015, the Company held financial liabilities of $7,491 and $5,574, respectively, related to its non-qualified deferred compensation plan. The liabilities have been categorized as Level 2 as they are based on third-party reported net asset values which are based primarily on quoted market prices of underlying assets of the funds within the plan.

9. Investments

The Company’s short-term investments as of January 30, 2016 and January 31, 2015, consist of $130,000 and $150,209, respectively, in certificates of deposit. These short-term investments are carried at cost, which approximates fair value and are recorded in the Consolidated Balance Sheets in Short-term investments. The contractual maturity of the Company’s investments was less than twelve months at January 30, 2016.

10. Share-based awards

Equity incentive plans

The Company has had a number of equity incentive plans over the years. The plans were adopted in order to attract and retain the best available personnel for positions of substantial authority and to provide additional incentive to employees, directors, and consultants to promote the success of the Company’s business. Incentive compensation was awarded under the Amended and Restated Restricted Stock Option Plan until April 2002 and under the 2002 Equity Incentive Plan through July 2007, at which time the 2007 Incentive Award Plan was

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adopted. All of the plans generally provided for the grant of incentive stock options, non-qualified stock options, restricted stock, restricted stock units, stock appreciation rights, and other types of awards to employees, consultants and directors. Unless provided otherwise by the administrator of the plan, options vested over four years at the rate of 25% per year from the date of grant and most must be exercised within ten years. Options were granted with the exercise price equal to the fair value of the underlying stock on the date of grant.

2011 Incentive award plan

In June 2011, the Company adopted the 2011 Incentive Award Plan (the 2011 Plan). The 2011 Plan provides for the grant of incentive stock options, non-qualified stock options, restricted stock, restricted stock units, stock appreciation rights, performance awards, dividend equivalent rights, stock payments, deferred stock and cash-based awards to employees, consultants, and directors. Following its adoption, awards are only being made under the 2011 Plan, and no further awards will be made under any prior plan. As of January 30, 2016, the 2011 Plan reserves for the issuance upon grant or exercise of awards up to 4,096 shares of the Company’s common stock.

The Company recorded stock compensation expense of $15,594, $14,923 and $16,003 for fiscal 2015, 2014 and 2013, respectively. Cash received from option exercises under all share-based payment arrangements for fiscal 2015, 2014 and 2013 was $19,646, $10,639 and $21,890, respectively. The total income tax benefit recognized in the income statement for equity compensation arrangements was $5,354, $3,526 and $4,812 for fiscal 2015, 2014 and 2013, respectively. The actual tax benefit realized for the tax deductions from option exercise and restricted stock vesting of the share-based payment arrangements totaled $14,970, $6,892 and $18,169, respectively, for fiscal 2015, 2014 and 2013.

Employee stock options

The Company measures share-based compensation cost on the grant date, based on the fair value of the award, and recognizes the expense on a straight-line method over the requisite service period for awards expected to vest. The Company estimated the grant date fair value of stock options using a Black-Scholes valuation model using the following weighted-average assumptions:

		Fiscal 2015		Fiscal 2014		Fiscal 2013
Volatility rate		37.9%		40.7%		49.2%
Average risk-free interest rate		1.6%		1.4%		0.9%
Average expected life (in years)		4.9		3.8		4.4
Dividend yield		None		None		None

The expected volatility is based on the historical volatility of the Company’s common stock. The risk free interest rate is based on the United States Treasury yield curve in effect on the date of grant for the respective expected life of the option. The expected life represents the time the options granted are expected to be outstanding. The expected life of options granted is derived from historical data on Ulta Beauty stock option exercises. Forfeitures of options are estimated at the grant date based on historical rates of the Company’s stock option activity and reduce the compensation expense recognized. The Company does not currently pay a regular dividend.

The Company granted 294 stock options during fiscal 2015. The compensation cost that has been charged against income for stock option grants was $7,899, $9,078, and $10,214 for fiscal 2015, 2014, and 2013, respectively. The weighted-average grant date fair value of options granted in fiscal 2015, 2014 and 2013 was $56.44, $32.38 and $34.31, respectively. The total fair value of stock options issued that vested during fiscal 2015, 2014 and 2013 was $8,236, $8,799 and $10,544, respectively. At January 30, 2016, there was approximately $23,032 of unrecognized compensation expense related to unvested stock options. The unrecognized compensation expense is expected to be recognized over a weighted-average period of approximately three years. The total intrinsic value of options exercised was $36,610, $15,032 and $49,404 in fiscal 2015, 2014 and 2013, respectively.

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A summary of the status of the Company’s stock option activity is presented in the following table (shares in thousands):

		Fiscal 2015								Fiscal 2014								Fiscal 2013
		Number of options				Weighted- average exercise price				Number of options				Weighted- average exercise price				Number of options				Weighted- average exercise price
Common stock options outstanding
Beginning of year			1,073			$	72.12				1,090			$	56.94				1,807			$	41.60
Granted			294				160.01				371				99.40				302				84.50
Exercised			(356	)			55.20				(238	)			44.79				(705	)			31.07
Forfeited			(72	)			91.74				(150	)			72.57				(314	)			53.15
End of year			939			$	104.58				1,073			$	72.12				1,090			$	56.94
Exercisable at end of year			316			$	61.44				440			$	43.98				363			$	34.37
Vested and Expected to vest			890			$	103.36				1,028			$	71.28				1,046			$	56.47

The following table presents information related to options outstanding and options exercisable at January 30, 2016, under the Company’s stock option plans based on ranges of exercise prices (shares in thousands):

		Options outstanding												Options exercisable
Options outstanding		Number of options				Weighted- average remaining contractual life (years)				Weighted- average exercise price				Number of options				Weighted- average remaining contractual life (years)				Weighted- average exercise price
$1.11 - 15.81			64				3			$	13.28				64				3			$	13.28
22.86 - 37.85			55				5				27.49				55				5				27.49
47.19 - 69.96			72				5				66.64				72				5				66.64
74.91 - 89.79			94				7				80.73				28				7				80.90
91.12 - 99.66			295				8				97.63				75				8				97.46
101.35 - 165.27			359				9				152.14				22				8				119.38
End of year			939				8			$	104.58				316				6			$	61.44

The aggregate intrinsic value of outstanding and exercisable options as of January 30, 2016 was $71,947 and $37,819, respectively. The last reported sale price of our common stock on the NASDAQ Global Select Market on January 30, 2016 was $181.17 per share.

Restricted stock units

The Company issues restricted stock units to certain employees and its Board of Directors. Employee grants will generally cliff vest after three years and director grants will cliff vest within one year. The grant date fair value of restricted stock units is based on the closing market price of shares of the Company’s common stock on the date of grant. Restricted stock units are expensed straight-line over the requisite service period. The compensation expense recorded in fiscal 2015, 2014 and 2013 was $6,040, $5,845 and $5,789, respectively. Forfeitures of restricted stock units are estimated at the grant date based on historical rates of the Company’s stock award activity and reduce the compensation expense recognized. At January 30, 2016, unrecognized compensation cost related to restricted stock awards was $9,445. The unrecognized compensation expense is expected to be recognized over a weighted-average period of approximately two years.

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A summary of the status of the Company’s restricted stock units activity is presented in the following table (shares in thousands):

		Fiscal 2015								Fiscal 2014								Fiscal 2013
		Number of units				Weighted- average grant date fair value				Number of units				Weighted- average grant date fair value				Number of units				Weighted- average grant date fair value
Restricted stock units outstanding
Beginning of year			151			$	91.74				162			$	87.54				62			$	81.81
Granted			60				154.77				71				97.73				141				86.07
Vested			(47	)			102.36				(52	)			91.91				(25	)			81.41
Forfeited			(20	)			96.11				(30	)			82.91				(16	)			75.39
End of year			144			$	116.42				151			$	91.74				162			$	87.54
Expected to vest			132			$	116.42				140			$	91.74				152			$	87.54

Performance-based restricted stock units

The Company began granting performance-based restricted stock units in fiscal 2015 to certain employees. These awards will cliff vest after three years based upon achievement of pre-established goals at the end of the second year of the term. Consistent with restricted stock units, the grant date fair value of performance-based restricted stock units is based on the closing market price of shares of the Company’s common stock on the date of grant. Performance-based units are expensed on a straight-line basis over the requisite service period, based on the probability of achieving the performance goal, with changes in expectations recognized as an adjustment to earnings in the period of the change. If the performance goal is not met, no compensation cost is recognized and any previously recognized compensation cost is reversed. The compensation expense recorded in fiscal 2015 was $1,655. Forfeitures of performance-based restricted stock awards are estimated at the grant date based on historical rates of the Company’s stock award activity and reduce the compensation expense recognized. At January 30, 2016, unrecognized compensation cost related to performance-based restricted stock units was $2,239. The unrecognized compensation expense is expected to be recognized over a weighted-average period of approximately two years.

A summary of the status of the Company’s performance-based restricted stock unit activity is presented in the following table (shares in thousands):

		Fiscal 2015
		Number of units				Weighted- average grant date fair value
Performance-based restricted stock units outstanding
Beginning of year			—			$	—
Granted			22				151.20
Vested			—				—
Forfeited			(2	)			151.20
End of year			20			$	151.20
Expected to vest			19			$	151.20

The number of performance-based units presented is based on achieving the targeted performance goals as defined in the performance-based unit agreements. As of January 30, 2016, the maximum number of units that could vest under the provisions of the agreements was 40.

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11. Net income per common share

The following is a reconciliation of net income and the number of shares of common stock used in the computation of net income per basic and diluted share:

		Fiscal year ended
(In thousands, except per share data)		January 30, 2016				January 31, 2015				February 1, 2014
Numerator for diluted net income per share — net income		$	320,008			$	257,135			$	202,849
Denominator for basic net income per share — weighted-average common shares			63,949				64,335				63,992
Dilutive effect of stock options and non-vested stock			326				316				469
Denominator for diluted net income per share			64,275				64,651				64,461
Net income per common share:
Basic		$	5.00			$	4.00			$	3.17
Diluted		$	4.98			$	3.98			$	3.15

The denominator for diluted net income per common share for fiscal years 2015, 2014 and 2013 exclude 370, 686 and 658 employee options, respectively, due to their anti-dilutive effects. As of January 30, 2016, outstanding performance-based restricted stock units were excluded from the computation of diluted shares because the number of shares ultimately issued is contingent on the achievement of certain performance targets of the Company and the performance period is not yet complete.

12. Employee benefit plans

The Company provides a 401(k) retirement plan covering all employees who qualify as to age and length of service. The plan is funded through employee contributions and a Company match. In fiscal 2015, 2014 and 2013, the Company match was 100% of the first 3.0% of eligible compensation. As of January 30, 2016 and January 31, 2015, the liability for the Company match was $5,031 and $4,104, respectively.

The Company also has a non-qualified deferred compensation plan for highly compensated employees whose contributions are limited under qualified defined contribution plans. The plan is funded through employee contributions and, beginning in 2014, a Company match. In fiscal 2015 and 2014, the Company match was 100% of the first 3.0% of salary. For fiscal year 2015 and 2014, the liability for the Company match was $554 and $465, respectively. Amounts contributed and deferred under the plan are credited or charged with the performance of investment options offered under the plan as elected by the participants. In the event of bankruptcy, the assets of this plan are available to satisfy the claims of general creditors. The liability for compensation deferred under the Company’s plan included in other long-term liabilities was $7,491 and $5,574 as of January 30, 2016 and January 31, 2015, respectively. The Company manages the risk of changes in the fair value of the liability for deferred compensation by electing to match its liability under the plan with investment vehicles that offset a substantial portion of its exposure. The cash value of the investment vehicles included in deferred compensation plan assets was $8,145 and $5,656 as of January 30, 2016 and January 31, 2015, respectively. Total expense recorded under this plan is included in selling, general and administrative expenses and was insignificant during fiscal 2015 and 2014.

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13. Valuation and qualifying accounts

Description		Balance at beginning of period				Charged to costs and expenses				Deductions				Balance at end of period
		(In thousands)
Fiscal 2015
Allowance for doubtful accounts		$	1,346			$	2,063			$	(2,297	)(a)		$	1,112
Shrink reserve			11,598				29,894				(26,233	)			15,259
Inventory — lower of cost or market reserve			5,253				3,323				(3,573	)			5,003
Insurance:
Workers Comp / General Liability Prepaid Asset			(1,789	)(b)			5,935				(6,072	)			(1,926	)
Employee Health Care Accrued Liability			2,435				55,423				(53,671	)			4,187
Fiscal 2014
Allowance for doubtful accounts		$	915			$	874			$	(443	)(a)		$	1,346
Shrink reserve			9,358				22,374				(20,134	)			11,598
Inventory — lower of cost or market reserve			4,861				4,368				(3,976	)			5,253
Insurance:
Workers Comp / General Liability Prepaid Asset			(1,817	)(b)			6,899				(6,871	)			(1,789	)
Employee Health Care Accrued Liability			2,606				41,335				(41,506	)			2,435
Fiscal 2013
Allowance for doubtful accounts		$	973			$	300			$	(358	)(a)		$	915
Shrink reserve			4,020				16,298				(10,960	)			9,358
Inventory — lower of cost or market reserve			2,364				4,522				(2,025	)			4,861
Insurance:
Workers Comp / General Liability Prepaid Asset			(2,400	)(b)			7,060				(6,477	)			(1,817	)
Employee Health Care Accrued Liability			2,232				34,422				(34,048	)			2,606

(a)	Represents write-off of uncollectible accounts

(b)	Represents prepaid insurance

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14. Selected quarterly financial data (unaudited)

The following tables set forth the Company’s unaudited quarterly results of operations for each of the quarters in fiscal 2015 and fiscal 2014. The Company’s quarterly periods are the 13 weeks ending on the Saturday closest to April 30, July 31, October 31 and January 31.

		2015
		First				Second				Third				Fourth
(In thousands, except per share data)
Net sales		$	868,122			$	876,999			$	910,700			$	1,268,295
Cost of sales			564,938				570,524				575,062				829,259
Gross profit			303,184				306,475				335,638				439,036
Selling, general and administrative expenses			192,485				183,937				218,763				268,169
Pre-opening expenses			3,117				4,078				6,106				1,381
Operating income			107,582				118,460				110,769				169,486
Interest income, net			(311	)			(276	)			(283	)			(273	)
Income before income taxes			107,893				118,736				111,052				169,759
Income tax expense			40,947				44,567				39,982				61,936
Net income		$	66,946			$	74,169			$	71,070			$	107,823
Net income per common share:
Basic		$	1.04			$	1.16			$	1.11			$	1.69
Diluted		$	1.04			$	1.15			$	1.11			$	1.69

		2014
		First				Second				Third				Fourth
(In thousands, except per share data)
Net sales		$	713,770			$	734,236			$	745,722			$	1,047,641
Cost of sales			467,817				474,894				463,967				697,904
Gross profit			245,953				259,342				281,755				349,737
Selling, general and administrative expenses			162,443				157,768				181,093				210,702
Pre-opening expenses			2,629				3,595				6,574				1,568
Operating income			80,881				97,979				94,088				137,467
Interest income, net			(200	)			(209	)			(254	)			(231	)
Income before income taxes			81,081				98,188				94,342				137,698
Income tax expense			31,128				37,394				35,218				50,434
Net income		$	49,953			$	60,794			$	59,124			$	87,264
Net income per common share:
Basic		$	0.78			$	0.94			$	0.92			$	1.36
Diluted		$	0.77			$	0.94			$	0.91			$	1.35

The sum of the quarterly net income per common share may not equal the annual total due to quarterly changes in the weighted average shares and share equivalents outstanding.

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15. Stock repurchase program

On March 18, 2013, the Company announced that our Board of Directors had authorized a share repurchase program (the 2013 Share Repurchase Program) pursuant to which the Company could repurchase up to $150,000 of the Company’s common stock. Repurchases pursuant to the terms of the 2013 Share Repurchase Program were made from time to time in the open market, in privately negotiated transactions or otherwise, at prices the Company deemed appropriate and subject to market conditions, applicable law and other factors deemed relevant in the Company’s sole discretion. The 2013 Share Repurchase Program did not have an expiration date, but provided for suspension or discontinuation at any time.

On September 11, 2014, the Company announced that our Board of Directors authorized a new share repurchase program (the 2014 Share Repurchase Program) pursuant to which the Company could repurchase up to $300,000 of the Company’s common stock. The 2014 Share Repurchase Program authorization revoked the previously authorized but unused amount of $112,664 from the 2013 Share Repurchase Program. The 2014 Share Repurchase Program did not have an expiration date and could be suspended or discontinued at any time. On March 12, 2015, the Company announced that our Board of Directors authorized an increase of $100,000 to the 2014 Share Repurchase Program effective March 17, 2015.

During fiscal year 2013, we purchased 501 shares of common stock for $37,337 at an average price of $74.58 from the 2013 Share Repurchase Program. During fiscal 2014, we purchased 321 shares of common stock for $39,923 at an average price of $124.31 from the 2014 Share Repurchase Program. During fiscal 2015, we purchased 1,034 shares of common stock for $167,396 at an average price of $161.81 from the 2014 Share Repurchase Program.

16. Subsequent event

On March 10, 2016, the Company announced that the Board of Directors authorized a new share repurchase program (the 2016 Share Repurchase Program) pursuant to which the Company may repurchase up to $425,000 of the Company’s common stock. The 2016 Share Repurchase Program authorization revokes the previously authorized but unused amounts from the 2014 Share Repurchase Program. The 2016 Share Repurchase Program does not have an expiration date and may be suspended or discontinued at any time. As part of the 2016 Share Repurchase Program, the Company entered into an Accelerated Share Repurchase (ASR) agreement with Goldman, Sachs & Co. to repurchase $200,000 of the Company’s common stock. Under the ASR agreement, the Company paid $200,000 to Goldman, Sachs & Co. and received an initial delivery of 852 shares in the first quarter of 2016, which represents 80% of the total shares the Company expects to receive based on the market price at the time of the initial delivery. The final number of shares delivered upon settlement of the agreement will be determined with reference to the average price of the Company’s common stock over the term of the ASR agreement.

Item 15. Exhibits and Financial Statement Schedules | --- | --- |

(b)	Exhibits

The exhibits listed in the accompanying Exhibit Index are filed as part of this Annual Report on Form 10-K.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Bolingbrook, State of Illinois, on March 30, 2016.

ULTA SALON, COSMETICS & FRAGRANCE, INC.
By:		/s/ Scott M. Settersten
		Scott M. Settersten
		Chief Financial Officer, Treasurer and Assistant Secretary

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:

Signatures		Title		Date
/s/ Mary N. Dillon Mary N. Dillon		Chief Executive Officer and Director (Principal Executive Officer)		March 30, 2016
/s/ Scott M. Settersten Scott M. Settersten		Chief Financial Officer, Treasurer and Assistant Secretary (Principal Financial and Accounting Officer)		March 30, 2016
/s/ Michelle L. Collins Michelle L. Collins		Director		March 30, 2016
/s/ Robert F. DiRomualdo Robert F. DiRomualdo		Director		March 30, 2016
/s/ Dennis K. Eck Dennis K. Eck		Director		March 30, 2016
/s/ Catherine Halligan Catherine Halligan		Director		March 30, 2016
/s/ Charles Heilbronn Charles Heilbronn		Director		March 30, 2016
/s/ Michael R. MacDonald Michael R. MacDonald		Director		March 30, 2016
/s/ George Mrkonic George Mrkonic		Director		March 30, 2016
/s/ Lorna E. Nagler Lorna E. Nagler		Director		March 30, 2016
/s/ Charles J. Philippin Charles J. Philippin		Chairman of the Board of Directors		March 30, 2016
/s/ Vanessa A. Wittman Vanessa A. Wittman		Director		March 30, 2016

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Ulta Salon, Cosmetics & Fragrance, Inc.

Exhibit Index to Annual Report on Form 10-K

For the Fiscal Year Ended January 30, 2016

						Incorporated by Reference
Exhibit Number		Description of document		Filed Herewith		Form				Exhibit Number				File Number				Filing Date
3.1		Amended and Restated Certificate of Incorporation					S-1				3.1				333-144405				8/17/2007
3.2		Amended and Restated Bylaws					S-1				3.2				333-144405				8/17/2007
4.1		Third Amended and Restated Registration Rights Agreement between Ulta Salon, Cosmetics & Fragrance, Inc. and the stockholders party thereto					S-1				4.2				333-144405				8/17/2007
4.2		Stockholder Rights Agreement					S-1				4.4				333-144405				8/17/2007
10.1		Ulta Salon, Cosmetics & Fragrance, Inc. Second Amended and Restated Restricted Stock Option Plan*					S-1				10.7				333-144405				8/17/2007
10.2		Amendment to Ulta Salon, Cosmetics & Fragrance, Inc. Second Amended and Restated Restricted Stock Option Plan*					S-1				10.7	(a)			333-144405				8/17/2007
10.3		Ulta Salon, Cosmetics & Fragrance, Inc. 2002 Equity Incentive Plan*					S-1				10.9				333-144405				8/17/2007
10.4		Ulta Salon, Cosmetics & Fragrance, Inc. 2007 Incentive Award Plan*					S-1				10.10				333-144405				9/27/2007
10.5		Ulta Salon, Cosmetics & Fragrance, Inc. 2011 Incentive Award Plan*					DEF 14A				Appendix A				001-33764				5/2/2011
10.6		Form of Restricted Stock Unit Award Agreement — Performance Shares under the 2011 Incentive Award Plan*					8-K				10.1				001-33764				3/31/2015
10.7		Ulta Salon, Cosmetics & Fragrance, Inc. Non-qualified Deferred Compensation Plan*					10-K				10.17				001-33764				4/2/2009
10.8		Letter Agreement dated June 20, 2013 between Ulta Salon, Cosmetics & Fragrance, Inc. and Mary N. Dillon*					8-K				10.1				001-33764				6/24/2013
10.9		Amended and Restated Loan and Security Agreement, dated October 19, 2011, by and among Ulta Salon, Cosmetics & Fragrance, Inc., Wells Fargo Bank, National Association, Wells Fargo Capital Finance, LLC, J.P. Morgan Securities LLC, JPMorgan Chase Bank, N.A. and PNC Bank, National Association					8-K				10.1				001-33764				10/25/2011

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								Incorporated by Reference
Exhibit Number		Description of document		Filed Herewith				Form				Exhibit Number				File Number				Filing Date
10.10		Amendment No. 1 to Amended and Restated Loan and Security Agreement dated as of September 5, 2012, by and among Ulta Salon, Cosmetics and Fragrance Inc., Wells Fargo Bank, National Association, Wells Fargo Capital Finance, LLC, J.P. Morgan Securities LLC, JPMorgan Chase Bank, N.A. and PNC Bank, National Association							10-Q				10.1				001-33764				9/6/2012
10.11		Amendment No. 2 to Amended and Restated Loan and Security Agreement dated December 6, 2013, by and among Ulta Salon, Cosmetics & Fragrance, Inc., Wells Fargo Bank, National Association, Wells Fargo Capital Finance, LLC, J.P. Morgan Securities LLC, JPMorgan Chase Bank, N.A. and PNC Bank, National Association							8-K				10.1				001-33764				12/9/2013
10.12		Form of 2013 Retention and Severance Agreement for Scott M. Settersten*							8-K				10.1				001-33764				3/13/2013
10.13		Letter Agreement dated September 13, 2013 between Ulta Inc. and Jeffrey J. Childs*							10-Q				10.1				001-33764				6/10/2014
10.14		Letter Agreement dated January 6, 2014 between Ulta Inc. and David Kimball*							10-Q				10.1				001-33764				6/4/2015
21		List of Subsidiaries							10-K				21.1				001-33764				4/2/2014
23		Consent of Independent Registered Public Accounting Firm			X
31.1		Certification of the Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002			X
31.2		Certification of the Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002			X
32		Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002			X

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								Incorporated by Reference
Exhibit Number		Description of document		Filed Herewith				Form		Exhibit Number		File Number		Filing Date
99		Proxy Statement for the 2016 Annual Meeting of Stockholders. [To be filed with the SEC under Regulation 14A within 120 days after January 30, 2016; except to the extent specifically incorporated by reference, the Proxy Statement for the 2016 Annual Meeting of Stockholders shall not be deemed to be filed with the SEC as part of this Annual Report on Form 10-K]
101.INS		XBRL Instance			X
101.SCH		XBRL Taxonomy Extension Schema			X
101.CAL		XBRL Taxonomy Extension Calculation			X
101.LAB		XBRL Taxonomy Extension Labels			X
101.PRE		XBRL Taxonomy Extension Presentation			X
101.DEF		XBRL Taxonomy Extension Definition			X

*	A management contract or compensatory plan or arrangement.