Sportsman's Warehouse
Annual Report 2015

Plain-text annual report

SPORTSMAN'S WAREHOUSE HOLDINGS, INC. FORM 10-K (Annual Report) Filed 03/24/16 for the Period Ending 01/30/16 Address Telephone CIK Symbol SIC Code 7035 HIGH TECH DRIVE MIDVALE, UT 84047-3706 801-556-6681 0001132105 SPWH 5940 - Miscellaneous Shopping Goods Stores http://www.edgar-online.com © Copyright 2016, EDGAR Online, Inc. All Rights Reserved. Distribution and use of this document restricted under EDGAR Online, Inc. Terms of Use.  UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549 FORM 10-K (Mark One)xANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended January 30, 2016OR¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934FOR THE TRANSITION PERIOD FROM TO Commission File Number 001-36401 SPORTSMAN’S WAREHOUSE HOLDINGS, INC.(Exact name of Registrant as specified in its Charter) Delaware 39-1975614(State or other jurisdiction ofincorporation or organization) (I.R.S. Employer Identification No.) 7035 South High Tech DriveMidvale, Utah 84047(Address of principal executive offices) (Zip Code)Registrant’s telephone number, including area code: (801) 566-6681 Securities registered pursuant to Section 12(b) of the Act: Common Stock, Par Value $0.01 Per Share; Common stock traded on the NASDAQ stock marketSecurities registered pursuant to Section 12(g) of the Act: NoneIndicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES ¨ NO xIndicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. YES ¨ NO xIndicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES x NO ¨Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted andposted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submitand post such files). YES x NO ¨Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405) is not contained herein, and will not be contained, to the best ofRegistrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. xIndicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definition of “largeaccelerated filer”, “accelerated filer”, and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer ¨ Accelerated filer x Non-accelerated filer ¨ (Do not check if a smaller reporting company) Smaller reporting company ¨Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ¨ NO xAs of July 31, 2015, the last business day of the registrant’s most recently completed second quarter, the aggregate market value of the voting and non-voting common equityheld by non-affiliates of the Registrant, based on the closing price of the shares of common stock on The NASDAQ Stock Market on July 31, 2015, was $210,123,179. Sharesheld by each executive officer, director and by each person who owns 10% or more of the outstanding common stock have been excluded in that such persons may be deemed tobe affiliates. The determination of affiliate status is not necessarily a conclusive determination for other purposes.The number of shares of Registrant’s Common Stock outstanding as of March 24, 2016 was 42,004,368.Portions of the Registrant’s Definitive Proxy Statement relating to the 2016 Annual Meeting of Shareholders, which will be filed with the Securities and Exchange Commissionwithin 120 days after the end of the 2015 fiscal year, are incorporated by reference into Part III of this Report. Table of Contents  PagePART I Item 1.Business4Item 1A.Risk Factors18Item 1B.Unresolved Staff Comments31Item 2.Properties31Item 3.Legal Proceedings31Item 4.Mine Safety Disclosures32 PART II Item 5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities33Item 6.Selected Financial Data34Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations37Item 7A.Quantitative and Qualitative Disclosures About Market Risk49Item 8.Financial Statements and Supplementary Data50Item 9.Changes in and Disagreements With Accountants on Accounting and Financial Disclosure70Item 9A.Controls and Procedures70Item 9B.Other Information70 PART III Item 10.Directors, Executive Officers and Corporate Governance71Item 11.Executive Compensation71Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters71Item 13.Certain Relationships and Related Transactions, and Director Independence71Item 14.Principal Accountant Fees and Services71 PART IV Item 15.Exhibits and Financial Statement Schedules72 iiReferences throughout this document to “Sportsman’s Warehouse,” “we,” “us,” and “our” refer to Sportsman’s Warehouse Holdings, Inc. and itssubsidiaries, and references to “Holdings” refer to Sportsman’s Warehouse Holdings, Inc. e xcluding its subsidiaries.STATEMENT REGARDING FORWARD-LOOKING STATEMENTSThis Annual Report on Form 10-K (this “10-K) contains statements that constitute forward-looking statements as that term is defined by the PrivateSecurities Litigation Reform Act of 1995. These statements concern our business, operations and financial performance and condition as well as our plans,objectives and expectations for our business operations and financial performance and condition, which are subject to risks and uncertainties. All statements otherthan statements of historical fact included in this 10-K are forward-looking statements. These statements may include words such as “aim,” “anticipate,”“assume,” “believe,” “can have,” “could,” “due,” “estimate,” “expect,” “goal,” “intend,” “likely,” “may,” “objective,” “plan,” “potential,” “positioned,”“predict,” “should,” “target,” “will,” “would” and other words and terms of similar meaning in connection with any discussion of the timing or nature of futureoperating or financial performance or other events or trends. For example, all statements we make relating to our plans and objectives for future operations,growth or initiatives and strategies are forward-looking statements.These forward-looking statements are based on current expectations, estimates, forecasts and projections about our business and the industry in which weoperate and our management’s beliefs and assumptions. We derive many of our forward-looking statements from our own operating budgets and forecasts, whichare based upon many detailed assumptions. While we believe that our assumptions are reasonable, we caution predicting the impact of known factors is verydifficult, and we cannot anticipate all factors that could affect our actual results.All of our forward-looking statements are subject to risks and uncertainties that may cause our actual results to differ materially from our expectations.Important factors that could cause actual results to differ materially from our expectations include, but are not limited to: ·our retail-based business model is impacted by general economic conditions and economic and financial uncertainties may cause a decline in consumerspending; ·our concentration of stores in the Western United States makes us susceptible to adverse conditions in this region, which could affect our sales andcause our operating results to suffer; ·we operate in a highly fragmented and competitive industry and may face increased competition; ·we may not be able to anticipate, identify and respond to changes in consumer demands, including regional preferences, in a timely manner; ·we may not be successful in operating our stores in any existing or new markets into which we expand; and ·current and future government regulations, in particular regulations relating to the sale of firearms and ammunition, may impact the demand for ourproducts and our ability to conduct our business.The above is not a complete list of factors or events that could cause actual results to differ from our expectations, and we cannot predict all of them. Allwritten and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by the cautionarystatements disclosed under “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this 10-K, as such disclosures may be amended, supplemented or superseded from time to time by other reports we file with the Securities and Exchange Commission (the“SEC”), including subsequent Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q, and public communications. You should evaluate all forward-looking statements made in this 10-K and otherwise in the context of these risks and uncertainties.Potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to placeundue reliance on any forward-looking statements we make. These forward-looking statements speak only as of the date of this 10-K and are not guarantees offuture performance or developments and involve known and unknown risks, uncertainties and other factors that are in many cases beyond our control. Except asrequired by law, we undertake no obligation to update or revise any forward-looking statements publicly, whether as a result of new information, futuredevelopments or otherwise. iiiPART IItem 1. Business.OverviewSportsman’s Warehouse is a high-growth outdoor sporting goods retailer focused on meeting the everyday needs of the seasoned outdoor veteran, the first-time participant and every enthusiast in between. Our mission is to provide a one-stop shopping experience that equips our customers with the right hunting,shooting, fishing and camping gear to maximize their enjoyment of the outdoors. We strive to accomplish this goal by tailoring our broad and deep merchandiseassortment to meet local conditions and demand, offering everyday low prices, providing friendly support from our knowledgeable, highly trained staff andoffering extensive in-store events and educational programming. These core strategies help position Sportsman’s Warehouse as the “local outdoor experts” and thepreferred place to both shop and share outdoor-based experiences in the communities we serve. As a result, we are expanding our loyal customer base in existingmarkets and increasing our store footprint in new markets, which we believe will further drive our growth and profitability.Sportsman’s Warehouse was founded in 1986 as a single retail store in Midvale, Utah and has grown to 66 stores across 20 states. Today, we have thelargest outdoor specialty store base in the Western United States and Alaska. Our stores range from 15,000 to 65,000 gross square feet, with an average size ofapproximately 44,000 gross square feet. Our store layout is adaptable to both standalone locations and strip centers. Based on publicly available information, webelieve it is less capital-intensive for us to open new stores compared to our principal competitors because our “no frills” store layout requires less initial cashinvestment to build out and our stores generally require less square footage than the stores of our competitors. Together, these features enable us to effectively servemarkets of multiple sizes, from Metropolitan Statistical Areas, or MSAs, with populations of less than 75,000 to major metropolitan areas with populations inexcess of 1,000,000, while generating consistent four-wall Adjusted EBITDA margins and returns on invested capital across a range of store sales volumes. Wemay post information that is important to investors on our website from time to time. The information provided on our website is not part of this report and is,therefore, not incorporated herein by reference.Our Competitive StrengthsWe believe the following competitive strengths allow us to capitalize on the growth opportunity within the outdoor activities and sporting goods market:Differentiated Shopping Experience for the Seasoned Outdoor Veteran, the First-Time Participant and Every Enthusiast in Between. We place greatemphasis on creating an inviting and engaging store experience for customers of all experience levels. For the seasoned outdoor veteran, we offer a one-stop,convenient store layout that promotes “easy-in, easy-out” access to replenish supplies, learn about local conditions and test products. We also serve first-timeparticipants and casual users who are interested in enjoying the outdoors but enter our store without a clear sense for what equipment they need for their chosenactivity. Our highly trained employees, who often are outdoor enthusiasts themselves and users of the products we sell, engage and interact with our customers inorder to educate them and equip them with the right gear. Our sales associates draw upon both formal vendor sales training as well as first-hand experiences fromusing our products in local conditions. This selling approach allows us to offer a broad range of products and to deliver a shopping experience centered on thecustomer’s needs, which we believe results in increased customer loyalty, repeat visits and frequent referrals to other potential customers.A customer’s shopping experience in our stores is further enhanced by a variety of helpful in-store offerings and features, including the issuance of huntingand fishing licenses, local fishing reports, availability of Sportsman’s News (our proprietary in-store newspaper), access to the Braggin’ Board (where customerscan post photos of their outdoor adventures), indoor test ranges for archery equipment and displays of customer-owned taxidermy. In addition, we host a variety ofin-store programs (such as “ladies night”), contests (such as Bucks & Bulls, a free-to-enter, big-game trophy contest) and a wide range of instructional seminars,from turkey frying to firearm operation and safety. These programs are all designed to help our customers connect with the outdoors and build the skill setsnecessary to maximize enjoyment of their chosen activities. As a result, we believe our stores often serve as gathering spots where local enthusiasts can sharestories, product knowledge and advice on outdoor recreation activities, which both drives traffic and fosters customer loyalty.4Locally Relevant Merchandise Serving the Comprehensive Needs of Outdoor Enthusiasts at a Compelling Value . We offer our customers an extensiveand carefully selected assortment of branded, high-quality outdoor products at competitive prices. We accomplish this in three principal ways: ·Locally Relevant Merchandise: We carry over 70,000 SKUs on average in each store, out of a pool of approximately 120,000 total SKUs. Each store’smerchandise is tailored to meet local conditions and consumer demand, taking into account seasonal requirements, regional game and fishing species,geographic diversity, weather patterns and key demographic factors, so that our customers have the right product, at the right time, for the right location. ·Breadth and Mix of Product Assortment: Our merchandise strategy is designed to serve a variety of purchasing occasions, from big-ticket items toreplenishment activity, as well as to meet the wide-ranging needs of customers from first-time participants to seasoned outdoor veterans. We prideourselves on carrying an extensive selection of branded, “good, better and best” hard goods at everyday low prices, including a broad array of in-stockconsumable items. Approximately 35.0% of our unit sales and 20.0% of our dollar sales during fiscal year 2015 were consumable goods, such asammunition, bait, cleaning supplies, food, lures, propane and reloading supplies. We believe this pairing of product breadth and consumable goodsappeals to a broad range of customers and drives both repeat traffic and increased average ticket value. ·Strong Vendor Relationships: We believe our vendors find our “brand-centric,” high-service store concept to be unique among national specialtyoutdoor retailers. Our attractive store locations, consistent presentation of merchandise and thorough product training present a compelling opportunityfor our vendors to offer their brands to local markets that historically have been served primarily by “mom & pop” retailers. As a result, we believe weare able to negotiate terms with our vendors that are similar to those offered to our principal competitors that are larger in size. We share the benefits ofthese strategic vendor relationships with our customers through better pricing and enhanced access to certain products that are limited in production.Flexible and Adaptable Real Estate Strategy . We believe that our store model, combined with our rigorous site selection process, is uniquely customizableto address the needs of the different markets we serve. Our stores can vary in size from approximately 15,000 to 65,000 gross square feet. We have had successwith leasing existing sites as well as constructing new build-to-suit sites. Our flexible store model permits us to serve both large metropolitan areas, like Phoenix,Arizona, and smaller MSAs, like Soldotna, Alaska, while generating consistent four-wall Adjusted EBITDA margins and returns on invested capital across a rangeof store sales volumes. In small- to medium-sized markets, we are often able to establish ourselves as a standalone destination for our customers; in larger markets,we have successfully leveraged existing infrastructure to open stores in shopping plazas near complementary retailers, drawing upon existing foot traffic. Webelieve our low-cost, flexible model allows us to access both large and small markets more economically than many of our peers.We maintain a disciplined approach to new store development and perform comprehensive market research before selecting a new site, including partneringwith specialized, third-party local real estate firms. We select sites based on criteria such as local demographics, traffic patterns, density of hunting and fishinglicense holders in the area, abundance of hunting and fishing game and outdoor recreation activities, store visibility and accessibility, purchase data from ourexisting customer database and availability of attractive lease terms. We have established productive relationships with well-regarded commercial real estate firmsand believe that we are a sought-after tenant, given the strength of the Sportsman’s Warehouse brand, the high volume of customers that visit our stores and ourflexible approach to site locations. As a result, we continue to have access to desirable retail sites on attractive terms.Low Cost Operating Structure with Attractive and Replicable Store Economics . We strive to maintain a lower operating cost structure than our principalcompetitors, which allows us to serve small- to medium-sized markets as well as larger MSAs. We achieve this by exercising tight control over store-levelexpenses, real estate costs and corporate overhead. In addition, our growing store base, efficient, localized marketing spend and “no frills” warehouse store layouthelp us maintain comparatively low operating costs and provide us with the opportunity to achieve four-wall Adjusted EBITDA margins of 10% or more for storesin most new markets. Our typical new store requires an average net investment of approximately $2.0 million, which includes store build-out (net of contributionsfrom landlords) and pre-opening cash expenditures. In addition, we stock each new store with initial inventory at an average cost of approximately $2.4 million.We target a pre-tax return on invested capital within one year after opening of over 50% excluding initial inventory cost (or over 20% including initial inventorycost), although our historical returns have often exceeded these thresholds. As of the end of fiscal year 2015, all of our stores that had been open for more thantwelve months were profitable and those stores had an average Adjusted EBITDA margin of 14.1%. We believe this low-cost, capital-efficient approach alsoallows us to successfully serve markets that are not well-suited for the more capital-intensive store models of our principal competitors. Approximately 59% of ourmarkets currently lack another nationally recognized outdoor specialty retailer, which we believe is a result of these dynamics.5Significant New Store Growth Opportunity within Existing and New Markets . We operate 66 stores across 20 states, primarily in t he Western UnitedStates and Alaska, with a presence in these markets that is nearly three times that of the next largest outdoor retailer. We believe our leadership position in theWestern United States, combined with our existing scalable infrastructure, provides a strong foundation for continued expansion within our core markets. Over thelonger term, we believe our distinct retail concept has the potential to expand to more than 300 locations throughout the United States based on research conductedfor us by Buxton Company, an independent consumer research and analytics firm. Passionate and Experienced Management Team with Proven Track Record . We are focused on delivering an unsurpassed shopping experience to anyonewho enjoys the excitement of the outdoors. This passion and commitment is shared by team members throughout our entire organization, from senior managementto the employees in our stores. Our senior management team has an average of 20 years of retail experience, with extensive capabilities across a broad range ofdisciplines, including merchandising, real estate, finance, compliance, store operations, supply chain management and information technology. We also prideourselves on the long tenure of our more than 200 store managers and corporate employees, who have been with us for an average of approximately 9 years.Our Growth StrategyWe are pursuing a number of strategies designed to continue our growth and strong financial performance, including:Expanding Our Store Base . We believe that our compelling new store economics and our track record of opening successful new stores provide a strongfoundation for continued growth through new store openings in existing, adjacent and new markets. Over the last three fiscal years, we have opened an average ofseven stores per year, excluding acquired stores. We have opened two new stores to date in fiscal year 2016 and currently plan to open an additional nine newstores in the remainder of fiscal year 2016. For the next several years thereafter, we intend to grow our store base at a rate of greater than 10 percent annually andexpect that most of our near-term growth will occur within the Western United States. Our longer-term plans include expanding our store base to serve the outdoorneeds of enthusiasts in markets across the United States. We believe our existing infrastructure, including distribution, information technology, loss prevention andemployee training, is capable of sustaining 100 or more stores without significant additional capital investment.Increasing Same Store Sales Growth . We are committed to increasing same store sales through a number of ongoing and new initiatives, including:expansion of our clothing offerings and private label program (such as our recently introduced proprietary Rustic Ridge TM and Killik TM clothing lines), our loyaltyprogram, the implementation of kiosks and mobile point-of-sale in our stores and expansion of our “store-within-a-store” programs with major brands such asCarhartt, Columbia Sportswear and Under Armour. Each of these initiatives is designed to foster additional shopping convenience, add deeper merchandiseselection and provide more product information to the customer. We believe these initiatives will drive additional traffic, improve conversion and increase averageticket value.Continuing to Enhance Our Operating Margins . We believe that our planned expansion of our store base and growth in same store sales will result inimproved Adjusted EBITDA margins as we take advantage of economies of scale in product sourcing and leverage our existing infrastructure, supply chain,corporate overhead and other fixed costs. Furthermore, we expect to increase our gross profit margin by expanding product offerings in our private label program,including our recently introduced proprietary Rustic Ridge T M and Killik TM clothing lines, and continuing marketing initiatives in our higher-margin clothing andfootwear departments.Growing the Sportsman’s Warehouse Brand . We are committed to supporting our stores, product offerings and brand through a variety of marketingprograms, private label offerings and corporate partnerships. Our marketing and promotional strategy includes coordinated print, digital and social media platforms.In-store, we offer a wide range of outdoor-themed activities and seminars, from turkey frying to firearm operation and safety. In addition, we sponsor communityoutreach and charity programs to more broadly connect with our local communities with the aim of promoting our brand and educating consumers. Finally, we arecommitted to local chapters of national, regional and local wildlife federations and other outdoor-focused organizations, such as Ducks Unlimited and the RockyMountain Elk Foundation. Many of our store managers and employees serve in senior positions in these organizations, which further strengthens our place asleaders in the local outdoor community. We believe all of these programs promote our mission of engaging with our customers and serving outdoor enthusiasts.Our StoresWe operate 66 stores across 20 states. Most of our stores are located in power, neighborhood and lifestyle centers. Power centers are large, unenclosedshopping centers that are usually anchored by three or more national supercenters, such as Target, Wal-Mart and Costco. Neighborhood centers are shoppingcenters anchored by a supermarket or drugstore that provide convenience goods and services to a neighborhood. Lifestyle centers are shopping centers that combinethe traditional functions of a shopping mall with leisure amenities such as pedestrian friendly areas, open air seating and inviting meeting spaces. We also operateseveral single-unit, stand-alone locations. Our stores average approximately 44,000 gross square feet.6The following table lists the l ocation by state of our 66 stores open as of March 24, 2016:   Number of Stores Number of Stores Utah 8 New Mexico 2 Washington 8 Wyoming 2 Oregon 7 Iowa 1 Idaho 6 Kentucky 1 Arizona 5 Louisiana 1 California 5 Mississippi 1 Colorado 5 North Dakota 1 Alaska 4 South Carolina 1 Montana 3 Tennessee 1 Nevada 3 Virginia 1 Store Design and LayoutWe present our broad and deep array of products in a convenient and engaging atmosphere to meet the everyday needs of all outdoor enthusiasts, from theseasoned veteran to the first-time participant. We maintain a consistent floor layout across our store base that we believe promotes an “easy-in, easy-out” shoppingexperience. All of our stores feature wide aisles, high ceilings, visible signage and central checkouts with multiple registers. Sportsman’s Warehouse stores, true totheir name, are designed in a “no frills” warehouse format that welcomes customers directly from or on the way to an outdoor activity. All of our stores also feature“store-within-a-store” concepts for certain popular brand partners, such as Carhartt, Columbia Sportswear and Under Armour, through which we dedicate a portionof our floor space to these brands to help increase visibility and drive additional sales. The diagram below demonstrates our typical store layout.Our stores include locally relevant features such as a large fishing board at the entrance that displays current fishing conditions in local lakes and rivers withcoordinating gear in end-cap displays in the fishing aisles. We actively engage our customers through in-store features such as the Braggin’ Board, various contests(such as Bucks & Bulls and Fish Alaska), and customer-owned taxidermy displays on the walls. We also host in-store programs such as “ladies night” and a widerange of instructional seminars, from Dutch oven cooking to choosing the right binocular. Annually, we organize approximately 3,000 programs across our storesfor the benefit of our customers. We believe these programs help us connect with the communities in which we operate and encourage first time participants tobuild the skills necessary to become outdoor enthusiasts and loyal customers.Expansion Opportunities and Site SelectionWe have developed a rigorous and flexible process for site selection. We select sites for new store openings based on criteria such as local demographics,traffic patterns, density of hunting and fishing license holders in the area, abundance of hunting and fishing game and outdoor recreation activities, store visibilityand accessibility, purchase data from our existing customer database and availability of attractive lease terms. Our store model is adaptable to markets of multiplesizes, from MSAs with populations of less than 75,000 to major metropolitan areas with populations in excess of 1,000,000. We have been successful both inremodeling existing buildings and in constructing new build-to-suit locations.7Our store model is designed to be profitable in a variety of real estate venues, including power, neighborhood and lifestyle centers as well as single-unit,stand-alone locations. In small- to medium-sized markets, we generally seek anchor locations within high-traffic, easily accessible shopping centers. In largermetropolitan areas, we generally seek locations in retail areas with major discount retailers (such as Wal-Mart), wholesale retailers (such as Costco), other specialtyhard line retailers (such as The Home Depot) or supermarkets. As we continue to expand our store base, we believe that small- to medium-sized markets offer asignificant opportunity. In these markets, we believe our store size, which is smaller than many of our national competitors but larger than many independentretailers, enables us to find convenient, easily accessible store locations while still offering the broad and deep selection of merchandise that our customers desire.In addition, our store format and size allow us to open multiple stores in local areas within major MSAs, which gives our customers convenient, easy access to ourproducts without having to travel long distances.Members of our real estate team spend considerable time evaluating prospective sites before bringing a proposal to our real estate committee. Our real estatecommittee, which is comprised of senior management including our Chief Executive Officer, Chief Financial Officer and Senior Vice President of Stores, approvesall prospective locations before a lease is signed.We believe there is a significant opportunity to expand our store base in the United States. Based on research conducted for us by Buxton Company, webelieve that we can grow our store base from 66 locations to more than 300 locations in the United States.We opened nine new stores in fiscal year 2015. We have opened two new stores to date in fiscal year 2016 and currently plan to open an additional nine newstores in the remainder of fiscal year 2016. For the next several years thereafter, we intend to grow our store base at a rate of greater than 10 percent annually. Ournew store openings are planned in existing, adjacent and new markets.Our new store growth plan is supported by our target new unit economics, which we believe to be compelling. A typical store location ranges in size from30,000 to 50,000 gross square feet. Our net investment to open a new store is approximately $2.0 million, consisting of pre-opening expenses and capitalinvestments, net of tenant allowances. In addition, we stock each new store with initial inventory at an average cost of approximately $2.4 million. For the firsttwelve month period after opening a new store, we target net sales of $8.0 million to $11.0 million, a four-wall Adjusted EBITDA margin of more than 10% and apre-tax return on invested capital of over 50% excluding initial inventory cost (or over 20% including initial inventory cost). Our new stores typically reach amature sales growth rate within three to four years after opening, with net sales increasing approximately 25% in the aggregate during this time period. For the 20stores opened since 2010 that have been open for a full twelve months, we achieved an average four-wall Adjusted EBITDA margin of 14.1% and an averageROIC of 98.3% excluding initial inventory cost (and 34.2% including initial inventory cost) during the first twelve months of operations. In addition, we achievedan average pre-tax payback period of less than one year (excluding initial inventory cost) and expect to achieve an average pre-tax payback period of approximately2.5 years (including initial inventory cost).E-Commerce Platform and Digital StrategyWe believe our website is an extension of our brand and our retail stores. Our website, www.sportsmanswarehouse.com , serves as both a sales channel anda platform for marketing and product education, and allows us to engage more fully with the local outdoor community. Our website features a similar merchandiseassortment as offered in our stores as well as certain products found exclusively online. Regulatory restrictions create certain structural barriers to the online sale ofapproximately 30% of our revenue, such as ammunition, certain cutlery, firearms, propane and reloading powder. As a result, this portion of our business iscurrently more protected from online-only retailers, such as Amazon.We also provide our online customers with convenient multi-channel services. To ensure that our customers have access to our entire assortment of productsavailable on the e-commerce website, our retail stores feature kiosks that allow customers to place orders for items that are available only on our website or that areout of stock or not regularly stocked. We view our kiosk offering as an important complement to our larger format stores, as well as a key differentiator andextension of our smaller format stores. Our in-store pickup offering allows customers to order products through our e-commerce website and pick up the productsin our retail stores without incurring shipping costs. We believe our ship-to-store functionality is a valuable service offering to customers, as well as a means togenerate additional foot traffic to our retail stores.8Our website also features an online version of our Braggin’ Board, which complements our retail store Braggin’ Board forum. In addition, our websitefeatures local area content, including fishing reports and event schedules, as well as online educational resources, including tips, advice and links to video demonstrations on our dedicated YouTube channel. In fiscal year 2014, we launched enhanced department and product pages, detailed buyer’s guides, and additionalinstructional product videos. We have also rolled out our social media strategy through our Facebook p age and Instagram feed. These platforms allow us to reachour customers more directly with targeted postings of advertisements and in-store events. We believe our online educational resources and community outreachdrive traffic to our website and retail s tores, while improving user engagement as shoppers move from single-purchase users to loyal customers. We provide onlinecustomer service support and fulfill all orders in-house through our distribution center. During fiscal year 2015, our e-commerce platf orm generated total sales of$7.7 million, or 1.1% of our total sales. Over the same period, our website received approximately 13.0 million visits, which we believe demonstrates our positionas a leading resource for outdoor products and product education .Our Products and ServicesMerchandise StrategyWe offer a broad range of products at a variety of price points and carry a deep selection of branded merchandise from well-known manufacturers, such asBrowning, Carhartt, Coleman, Columbia Sportswear, Federal Premium Ammunition, Honda, Johnson Outdoors, Remington, Shakespeare, Shimano, Smith &Wesson and Under Armour. To reinforce our convenient shopping experience, we offer our products at competitive, everyday low prices. We believe ourcompetitive pricing strategy supports our strong value proposition, instills price confidence in both our customers and our sales associates and is a critical elementof our competitive position.We believe we offer a wider selection of hard goods than many of our principal competitors. We employ a “good, better, and best” merchandise strategy,with an emphasis on “better” products that meet the needs of customers of all experience levels. We strive to keep our merchandise mix fresh and exciting bycontinuously searching for new, innovative products and introducing them to our customers. Our hunting and shooting department, which is strategically located atthe back of the store, is a key driver of store traffic and one of the reasons for our high frequency of customer visits. We carry a large array of consumable goods,which includes ammunition, bait, cleaning supplies, food, lures, propane and reloading supplies. During fiscal year 2015, sales of consumable goods accounted forapproximately 35.0% of our unit sales and 20.0% of our dollar sales. We believe the sale of consumables and replenishment items drives repeat traffic, withapproximately 66% of our customers visiting our stores seven or more times per year (according to our internal surveys). During such visits, our customersfrequently browse and purchase other items, including additional gear and accessories.We also carry a variety of private label offerings under the Rustic Ridge TM , Killik TM , Vital Impact TM , Yukon Gold, Lost River and Sportsman’sWarehouse brands. These products are designed and priced to complement our branded assortment, by offering our customers a quality alternative at all pricepoints. We believe the clothing, footwear and camping categories present a compelling near-term opportunity to expand our private label offering. In order toaddress these segments, we recently introduced our proprietary Rustic Ridge TM and Killik TM clothing lines. During fiscal year 2015, private label offeringsaccounted for less than 3.0% of our total sales, compared to more than 20% for many of our sporting goods retail peers. We believe our private label products arean important opportunity to drive sales and increase margins alongside our branded merchandise.In addition to outfitting our customers with the correct gear, we provide our customers with various in-store, value-added, technical support services. All ofour stores offer full-service archery technician services, fishing-reel line winding, gun bore sighting and scope mounting, among other services. We also help first-time participants enjoy the outdoors responsibly by issuing hunting and fishing licenses. We believe the support services provided by our highly trained stafftechnicians differentiate us from our competitors and drive customer loyalty and repeat traffic to our stores.9ProductsOur stores are organized into six departments. The table below summarizes the key product lines and brands by department: Department Product OfferingsCamping Backpacks, camp essentials, canoes and kayaks, coolers, outdoor cooking equipment, sleeping bags, tents andtoolsClothing Camouflage, jackets, hats, outerwear, sportswear, technical gear and work wearFishing Bait, electronics, fishing rods, flotation items, fly fishing, lines, lures, reels, tackle and small boatsFootwear Hiking boots, socks, sport sandals, technical footwear, trail shoes, casual shoes, waders and work bootsHunting and Shooting Ammunition, archery items, ATV accessories, blinds and tree stands, decoys, firearms, reloading equipment andshooting gearOptics, Electronics and Accessories Gift items, GPS devices, knives, lighting, optics ( e.g. , binoculars) and two-way radios Each department has buying and planning teams that are responsible for monitoring product availability from vendors and sales volume within thedepartment and across all stores. We actively monitor the profitability of each product category within each department and adjust our assortment and selling spaceaccordingly. This flexibility enables us to provide customers with more preferred product choices and to enhance the profit potential of each store.Hunting and shooting has historically been the largest contributor to our sales. Hunting and shooting department products are generally sold at significantlyhigher price points than other merchandise but often have lower margins. Camping is our second largest department, and family-oriented camping equipment inparticular continues to be a high growth product category. Although clothing sales decreased as a percentage of total sales during fiscal year 2015, overall clothingsales have grown as we have introduced new brands and styles, including our selections for women and children. We view clothing sales as an importantopportunity, given this department’s high gross margins and appeal to a broad, growing demographic.The following table shows our sales during the past three fiscal years presented by department:   Fiscal Year Ended   January 30,  January 31,  February 1, Department 2016  2015  2014 Camping  14.2%  13.5%  12.1%Clothing  8.6   9.5   8.8 Fishing  9.6   9.5   8.8 Footwear  7.1   7.4   6.6 Hunting and Shooting  48.6   47.9   52.1 Optics, Electronics and Accessories  9.3   9.5   9.1 Other  2.6   2.7   2.5 Total  100.0%  100.0%  100.0% Camping . Camping represented approximately 14.2% of our net sales during fiscal year 2015. Our camping assortment addresses both the technicalrequirements of the heavy-use camper, including gear for long-duration or deep-woods excursions, as well as the needs of the casual camper. We offer a broadselection of tents and shelters for both multi-day back country use and weekend outings, sleeping bags for the most extreme conditions as well as the summerovernight trip, backpacks and backpacking gear, including camouflaged styles for hunting, generators for home and camp use, cooking and food preparationequipment, including stoves and extended-use coolers, as well as dehydrated foods. Our camping department also includes canoes, kayaks and a selection ofrecreational family camping equipment, including basic automotive accessories, camp chairs and canopies. Our camping department includes brands such as AlpsMountaineering, Camp Chef, Coleman, Honda, Teton Sports, and Yeti Coolers.Clothing. Clothing represented approximately 8.6% of our net sales during fiscal year 2015 and includes camouflage, outerwear, sportswear, technical gear,work-wear, jackets and hats. We primarily offer well-known brands in our clothing department, such as Carhartt, Columbia, Kings Mountain Shadow, Sitka, andUnder Armour. We also intend to grow our proprietary clothing lines, Rustic Ridge TM and Killik TM . Our clothing selection offers technical performancecapabilities for a variety of hunting activities, including upland game, waterfowl, archery, big game hunting, turkey hunting and shooting sports. Performanceattributes include waterproofing, temperature control, scent control features and visual capabilities, such as blaze orange and camouflage in a wide range ofpatterns. Outerwear, particularly performance rainwear, is an important product category for customers who are fishing, hiking, hunting or marine enthusiasts. Wefurthermore complement our technical clothing with an assortment of casual clothing that fits our customers’ lifestyles, including a variety of branded graphic t-shirts, and private label motto t-shirts.10Fishing . Fishing represented approximately 9.6% of our net sales during fiscal year 2015 and includes products for fresh-water fishin g, salt-water fishing,fly-fishing, ice-fishing and boating. Our broad assortment appeals to the beginning and weekend angler, as well as avid and tournament anglers. In addition to lures,rods and reels, our fishing assortment features a wide selection of products in tackle management and organization, electronics, fly-fishing, ice-fishing and marineaccessories sub-categories. We also provide fishing-reel line winding services in all of our stores and live bait in most of our stores. We offer products for boat careand maintenance, as well as safety equipment and aquatic products such as float tubes and pontoons. All of our stores also sell fishing licenses. Our fishingdepartment includes brands such as Johnson Outdoors, Normark, Plano, Pure Fishing, Rive rs Wild Flies, and Shimano.Footwear . Footwear represented approximately 7.1% of our net sales during fiscal year 2015 and includes work boots, technical footwear, hiking boots,trail shoes, socks, sport sandals and waders. As with clothing, our footwear selection offers a variety of technical performance capabilities, such as different levelsof support and types of tread, waterproofing, temperature control and visual attributes. Our footwear department includes brands such as Danner, Keen, Merrell,Red Wing, and Under Armour.Hunting and Shooting . Hunting and shooting is our largest merchandise department, representing approximately 48.6% of our net sales during fiscal year2015. Products such as ammunition, cleaning supplies, firearms and reloading selections are typically key drivers of traffic in our stores. Our hunting and shootingmerchandise assortment provides equipment, accessories and consumable supplies for virtually every type of hunting and shooting sport. A backroom shop staffedwith technicians allows us to support our hunting assortments for the benefit of the hunter, shooter, and archery enthusiast.Our merchandise selection includes a wide variety of firearms designed for hunting, shooting sports and home and personal defense, including air guns,black powder muzzle loaders, handguns, rifles and shotguns. We carry a wide selection of ammunition, archery equipment, dog training products, huntingequipment, reloading equipment and shooting accessories. Our hunting and shooting department includes brands such as Federal Premium Ammunition, Hornady,Remington Arms, Ruger, Smith & Wesson, and Winchester.Optics, Electronics and Accessories. Our optics, electronics and accessories department represented approximately 9.3% of our net sales during fiscal year2015. This department supplements our other equipment departments with complementary products, such as optics (including binoculars, spotting scopes andrangefinders), GPS devices and other navigation gear, GoPro video cameras, two-way radios, specialized and basic cutlery and tools, including hunting and otherknives, lighting, bear spray and other accessories. Our optics, electronics and accessories department includes brands such as Garmin, Leica, Nikon, SwarovskiOptik and Vortex Optics.Other. Our other department represented approximately 2.6% of our net sales during fiscal year 2015 and includes hunting and fishing licenses, backgroundchecks and miscellaneous services.Loyalty ProgramsWe launched a loyalty program in the fall of 2013, through which our consumers are able to earn “points” towards Sportsman’s Warehouse gift cards onmost of their purchases. The program is free to join and accepted through all channels for both purchases and the use of redemption cards. As of January 30, 2016,we had approximately 850,000 participants in our loyalty program.Customers may obtain a loyalty program card when making a purchase in-store or online. After obtaining a card, the customer must register on our websitein order to redeem loyalty rewards. Customers earn one point for each dollar spent, with the exception of certain items, such as gift cards and fish and gamelicenses. For every 100 points accumulated, the customer is entitled to a $1.00 credit in loyalty rewards, which may be redeemed by logging into our website torequest a redemption card for any whole dollar amount (subject to the customer’s available point balance). The redemption card is then mailed to the customer andoperates as a gift card to be used for both in-store and online purchasing. The rewards points expire after 18 months of dormancy.In addition, we began issuing the multi-use Sportsman’s Warehouse Rewards VISA Platinum credit card in 2006 through US Bank. US Bank extends creditdirectly to cardholders and provides all servicing for the credit card accounts, funds the rewards and bears all credit and fraud losses. This card allows customers toearn points whenever and wherever they use their card. Customers may redeem earned points for products and services just as they would redeem loyalty cardpoints.11Sourcing and DistributionSourcingWe maintain central purchasing, replenishment and distribution functions to manage inventory planning, allocate merchandise to stores and oversee thereplenishment of basic merchandise to the distribution center. We have no long-term purchase commitments. During fiscal year 2015, we purchased merchandisefrom approximately 1,500 vendors with no vendor accounting for more than approximately 6% of total merchandise purchased. We have established long-standing,continuous relationships with our largest vendors.Our sourcing organization is currently managed by our merchant team in our corporate headquarters. We also have field merchants that coordinate certainmerchandising functions at the store level to provide a more localized merchandising model. To ensure that our product offerings are tailored to local marketconditions and demand, our merchant teams regularly meet one-on-one with our vendors, and attend trade shows, review trade periodicals and evaluatemerchandise offered by other retail and online merchants. We also frequently gather feedback and new product reviews from our store management and employees,as well as from reviews submitted by our customers. We believe this feedback is valuable to our vendor-partners and improves our access to new models andtechnologies.Distribution and FulfillmentWe distribute all of our merchandise from our efficient 507,000 square foot distribution center in Salt Lake City, Utah. We opened this facility in July 2013,more than doubling the available space from our prior facility, in order to accommodate our growing store base and e-commerce platform. The distribution centersupports replenishment for all 66 stores and manages the fulfillment of direct-to-consumer e-commerce orders. We use common carriers for replenishment of ourretail stores. We ship merchandise to our e-commerce customers via courier service. An experienced distribution management team leads a staff of 250 distributioncenter employees at peak inventory levels heading into the fourth quarter.The distribution center has scalable systems and processes that we believe can accommodate continued new store growth to exceed 100 stores. We use theHighJump warehouse management system to manage all activities. The system is highly adaptable and can be easily changed to accommodate new businessrequirements. For example, in 2010, we implemented a new picking process that allows e-commerce orders to be released without impacting the existingreplenishment operations of the distribution center. Additionally, we have developed customized order packing and shipping processes to handle the specificrequirements of the e-commerce business. We have the capability to both case pick and item pick, which is designed to ensure that our stores have sufficientquantities of product while also allowing us to maintain in inventory slow moving but necessary items. This balance allows us to stock the right products at thenecessary locations, all at the right time and in the correct quantity.Marketing and AdvertisingWe believe, based on internal surveys, that the majority of our customers are male, between the ages of 35 and 65, and have an annual household incomebetween $40,000 and $100,000. We also actively market to women and children and have expanded our product offerings of women’s and children’s outerwear,clothing and footwear to address rising participation rates in hunting and shooting sports, as well as overall outdoor activity.Our primary marketing efforts are focused on driving additional consumers to the stores and increasing the frequency and profitability of visits by customersof all types. We employ a two-pronged marketing approach: ·regional advertising programs; and ·local grass roots efforts to build brand awareness and customer loyalty.Our regional advertising programs emphasize seasonal requirements for hunting, fishing and camping in our various store geographies. Our advertisingmedium is typically newspaper inserts (primarily multi-page color inserts during key shopping periods such as the Christmas season and Father’s Day),supplemented with modest amounts of direct mail, seasonal use of local and national television ads and a variety of out-of-home media buys. We proactivelymodify the timing and content of our message to match local and regional preferences, changing seasons, weather patterns and topography of a given region. Inaddition, the use of co-op funding with select vendors to supplement our out-of-pocket media expenses allows us to improve brand exposure through variousadvertising vehicles, while partnering with national brands in relevant media channels. This program also reinforces the general consumer’s impression ofSportsman’s Warehouse as a preferred retailer for those brands. Finally, we sponsor regional and national television programming, including sponsoring theUltimate Bush Pilots, Angler’s Channel, Fishful Thinking, Hooked on Utah and RAM Outdoors. Our total media expenses for fiscal year 2015 were approximately$8.0 million, excluding co-op reimbursement of $1.4 million.12The second prong of our marketing effort is the time and resources devoted to fostering grass roots relationships in the local community. Each Sportsman’sWarehouse store employs a variety of outreach tools to build local awareness. One key co mponent to a successful store is hosting events throughout the year,targeting a variety of end user customer profiles (such as hunters, campers, anglers, women and children). In total, our store base hosts or facilitates approximately3,000 in-store and o ffsite seminars and events per year, such as “ladies night,” Eastman’s Deer Tour, Waterfowl Weekend, Conservation Days contest and Bucks& Bulls. We are also active in supporting a variety of conservation groups, such as Ducks Unlimited, Rocky Mountain Elk Foundation, Mule Deer Foundation andthe National Wild Turkey Federation, both at the corporate level and through store employee local memberships and participation. Company representatives attendmore than 500 events annually in the aggregate, both to pr ovide support for these organizations and to solidify ties between their members and the Sportsman’sbrand. Furthermore, we believe that the Sportsman’s News newspaper, offered in-store, provides a unique point of contact with our customers by offering out doorstories, product reviews, how-to articles and new product introductions to keep all of our customers up to date on the latest trends and technology. Finally, suchgrass roots campaigns enable us to reduce our initial marketing spend in connection with new store openings. We believe that these initiatives are highly cost-effective tools to create brand awareness and engender a loyal community of local customers, as well as a key differentiator versus other national retailers.Hiring, Training and Motivating our EmployeesWe believe that the recruitment, training and knowledge of our employees and the consistency and quality of the service they deliver are central to oursuccess. We emphasize deep product knowledge for store managers and sales associates at both the hiring and training stages. We hire most of our sales associatesfor a specific department or product category. As part of the interview process, we test each prospective employee for knowledge specific to the department orcategory in which he or she is applying to work. All of our managers and sales associates undergo focused sales training, consisting of both sales techniques andspecialized product instruction, both immediately upon hiring (approximately 20 hours) and continuing throughout their career (approximately 16 hours annually).In addition, our sales associates receive loss prevention instruction and departmental training upon hiring. For example, in our hunting department, all employeesreceive an additional nine hours of training on ATF and company policies initially upon hire, with continuing education throughout the year. Our store managerscomplete two to six months of on-the-job training at another store with an existing district manager, as part of which they receive approximately 80 hours ofdedicated managerial training and instruction. Our department heads receive extensive online training as well as on-site instruction, totaling approximately 40hours. As a result of these programs, our employees are highly trained to provide friendly and non-intimidating education, guidance and support to address ourcustomers’ needs.Our employees are often outdoor enthusiasts themselves, participating in outdoor activities alongside our customers in the local community. Our employeesspend approximately 17% of their gross wages in-store, underscoring their passion for both our company and the outdoor lifestyle. We believe this high level ofparticipation and employee store patronage is unique among our competitors in this industry and enhances our differentiated shopping experience.One of our unique assets is a specially designed training room (our “blue room”) located at our headquarters. Our blue room is used frequently for firm-widetraining programs and by vendors to stage training demonstrations for new products. Blue room sessions are broadcast real-time in high definition to each storelocation and are recorded for future viewing. Vendor training is especially interactive, permitting vendor representatives to present a uniform messagesimultaneously to all employees, while allowing managers and sales staff in individual stores to ask questions of the vendors and provide real-time feedback onproducts. This system decreases the vendor’s promotion and education costs and provides more meaningful training to our employees. Blue room training sessionsare particularly important for technical products, especially those with numerous features and a high unit price, because they enable our sales associates to bettereducate customers and provide additional assurance that a given product fits the customer’s needs. Given its utility as a cost-effective sales tool, our blue room isreserved well in advance by vendors. Our training program has been a critical factor in increasing conversion, which has led to average ticket growth ofapproximately 9% since the end of fiscal year 2010.Information TechnologyBusiness critical information technology, or IT, systems include our supply chain systems, merchandise system, point-of-sale (POS) system, warehousemanagement system, e-commerce system, loss prevention system and financial and payroll systems. Our IT infrastructure is robustly designed to be able to accessreal-time data from any store or channel. The network infrastructure allows us to quickly and cost effectively add new stores to the wide area network, or WAN.The private WAN is built on a CenturyLink (formerly Qwest) backbone with all of its resources and support. Additionally, we have implemented a redundantwireless WAN on Verizon’s infrastructure. Each Sportsman’s location is equipped with a backup power generator. All key systems will continue to run in the eventof a power or network outage. All data is backed up daily from one storage array to another storage array.13We have implemente d what we believe to be best-of-class software for all of our major business critical systems. Key operating systems include OracleApplications for ERP, Oracle ATG for our e-commerce channel, Demandware’s (formally Tomax’s) Retail.net and JPOS for in-stor e functionality and HighJumpfor WMS. Our physical infrastructure is also built on products from best-in-class vendors Cisco, Dell, Oracle Sun and VMWare. Originally designed with the goalof being able to run a significantly larger retail business, our IT systems are scalable to support our growth.The retail stores and the distribution center have loss prevention employees who monitor an average of 60 cameras at each store and 200 at the distributioncenter. These cameras are connected to digital video recorders (DVR) that record at least 30 days of video. Cameras are monitored locally during store hours. Inaddition, all cameras are monitored centrally at our headquarters in our dedicated surveillance room, which has capacity to monitor over 120 stores. This room isstaffed continuously and provides off-hours monitoring and backup for all stores. Digital recorded video can be searched by pixel movement, which can quicklyidentify any loss prevention issue. Our sophisticated systems are a key factor in our shrink rates of less than 1% and an important component of our comprehensivecompliance program.We furthermore have incorporated enhanced reporting tools that have allowed for more comprehensive monitoring of business performance, which has beencritical to management’s ability to drive strong store level performance. Management has access to a reporting dashboard that shows key performance indicators, orKPIs, on a company, store, department and category level. KPIs include sales, margin, budget, conversions, payroll, shrinkage and average order value all on adaily, weekly, monthly and yearly basis. All KPIs are compared to comparable prior year periods. District, store and department managers have access to the datarelevant to their area of responsibility. Real-time, up to the second, sales data is available on demand. The system allows for custom-created reports as required.Intellectual PropertySportsman’s Warehouse ® , Sportsman’s Warehouse America’s Premier Outfitter ® , Lost Creek ® , LC Lost Creek Fishing Gear and Accessories ® , RusticRidge TM , Killik TM , K Killik & Design TM , LC & Design TM , and Vital Impact TM are among our service marks or trademarks registered with the United StatesPatent and Trademark Office. We also have a pending trademark application for Yukon Gold. In addition, we own several other registered and unregisteredtrademarks and service marks involving advertising slogans and other names and phrases used in our business. We also own numerous domain names, includingwww.sportsmanswarehouse.com , among others. The information on, or that can be accessed through, our websites is not a part of this filing.We believe that our trademarks are valid and valuable and intend to maintain our trademarks and any related registrations. We do not know of any materialpending claims of infringement or other challenges to our right to use our marks in the United States or elsewhere. We have no franchises or other concessions thatare material to our operations.Our Market and CompetitionOur MarketWe compete in the large, growing and fragmented outdoor activities and sporting goods market, which we believe is currently underserved by full-linemulti-activity retailers. We believe, based on reports by the National Sporting Goods Association, or NSGA, and other industry sources, that U.S. outdoor activitiesand sporting goods retail sales totaled over $50 billion in 2013. The U.S. outdoor activities and sporting goods sector is comprised of three primary categories—equipment, clothing and footwear—with each category containing distinct product sets to support a variety of activities, including hunting, fishing, camping andshooting, as well as other sporting goods activities.We believe growth in the U.S. outdoor activities and sporting goods market is driven by several key trends, including: an expanding demographic focusedon healthy and active lifestyles; successful new product introductions centered around enhancing performance and enjoyment while participating in sporting andoutdoor activities; and the resilience of consumer demand for purchases in these categories versus other discretionary categories. We believe these factors willcontinue to foster growth in the outdoor activities and sporting goods market in the future.Within the retail sporting goods sector, we operate primarily in the outdoor equipment, clothing and footwear segment, which includes hunting andshooting, fishing, camping and boating. This segment is growing at a faster rate than the sporting goods industry at large. The 2011 U.S. Fish and Wildlife nationalsurvey, published once every five years, found that hunting and shooting and fishing participation increased 9% and 11%, respectively, for Americans aged 16 andolder from 2006 to 2011. This survey also found that fishing participation among women increased by 17% over the same time period.14A 2015 NSGA report indicated tha t, from 2013 to 2014, there was a 7% increase in hunting with firearms participation, a 7% increase in target shooting(live ammunition) participation, a 9% increase in fishing (fresh water) participation, a 9% increase in female participation in target sh ooing (live ammo), and an8% increase in female participation in fishing (fresh water) in the United States.Furthermore, we believe that specialty retailers have generated additional sales volume by expanding their presence, especially in smaller communities,which has increased customers’ access to products that formerly were less available. The nature of the outdoor activities to which we cater requires recurringpurchases throughout the year, resulting in high rates of conversion among customers. For example, active anglers typically purchase various fishing tacklethroughout the year based on seasons and changing conditions. Hunting with firearms typically is accompanied by recurring purchases of ammunition and cleaningsupplies throughout the year and multiple firearm styles for different hunted game.CompetitionWe believe that the principal competitive factors in our industry are breadth and depth of product selection, including locally relevant offerings, valuepricing, convenient locations, technical services and customer service. A few of our competitors have a larger number of stores, and some of them have a greatermarket presence, name recognition and financial, distribution, marketing and other resources than we have. We believe that we compete effectively with ourcompetitors with our distinctive branded selection and superior customer service, as well as our commitment to understanding and providing merchandise that isrelevant to our targeted customer base. We cater to the outdoor enthusiast and believe that we have both an in-depth knowledge of the technical outdoor customerand a “grab and go” store environment that is uniquely conducive to their need for value and convenience. We believe that our flexible box size, combined with ourlow-cost, high-service model, also allows us to enter into and serve smaller markets that our larger competitors cannot penetrate as effectively. Finally, certainbarriers, including legal restrictions, exist on the sale of our product offerings that comprise approximately 30% of our revenue, such as ammunition, certaincutlery, firearms, propane and reloading powder, create a structural barrier to competition from many online retailers, such as Amazon.Our principal competitors include the following: ·independent, local specialty stores, often referred to as “mom & pops”; ·other specialty retailers that compete with us across a significant portion of our merchandising categories through retail store, catalog or e-commercebusinesses, such as Bass Pro Shops, Cabela’s and Gander Mountain; ·large-format sporting goods stores and chains, such as Academy Sports + Outdoors and Dick’s Sporting Goods; and ·mass merchandisers, warehouse clubs, discount stores, department stores and online retailers, such as Amazon, Target and Wal-Mart.Independent, Local Specialty Stores . These stores generally range in size from approximately 2,000 to 10,000 square feet, and typically focus on one ortwo specific product categories, such as hunting, fishing or camping, and usually lack a broad selection of product.Other Specialty Retailers. Some of the other specialty retailers that compete with us across a significant portion of our merchandising categories are large-format retailers that generally range in size from 40,000 to 250,000 square feet. These retailers seek to offer a broad selection of merchandise focused on hunting,fishing, camping and other outdoor product categories. Some of these stores combine the characteristics of an outdoor retailer with outdoor entertainment andtheme attractions. We believe that the number of these stores that can be supported in any single market area is limited because of their large size and significantper-store cost.Other specialty retailers are smaller chains that typically focus on offering a broad selection of merchandise in one or more of the following productcategories—hunting, fishing, camping or other outdoor product categories. We believe that these other outdoor-focused chains generally do not offer a similardepth and breadth of merchandise or specialized services in all of our product categories.Large-Format Sporting Goods Stores And Chains . These stores generally range from 20,000 to 80,000 square feet and offer a broad selection of sportinggoods merchandise covering a variety of sporting goods categories, including baseball, basketball, football and home gyms, as well as hunting, fishing andcamping. However, we believe that the amount of space at these stores devoted to our outdoor product categories limits the extent of their offerings in these areas.15Mass Merchandisers, Warehouse Clubs, Discount Stores, Department Stores and Online Retailers . With respect to retailers in this category with physicalstores, these stores generally range in size from approximately 50,000 to over 200,000 square feet and are primarily located in shopping cent ers, free-standing sitesor regional malls. Hunting, fishing and camping merchandise and clothing represent a small portion of the stores’ assortment, and of their total sales. We believethat less than 10% of our product offering, and less than 5% of our hunting and shooting product offering, overlap with these stores.Over the past decade, specialty retailers, such as us, have gained market share of equipment sales at the expense of mass merchants, discount stores andindependent retailers, or “mom & pop” shops, which we believe comprise approximately 65% of the market. In addition, while there are over 55,000 Type 01Federal Firearms Licenses, or FFLs, in the United States today, only 4,400 are currently held by national or regional specialty stores. Since FFLs are issued at thestore level, these statistics imply that the remaining 92% of the market is fragmented among mom & pop stores. We believe this fragmentation within the totaladdressable market presents an attractive opportunity for us to continue to expand our market share, as customers increasingly prefer a broad and appealingselection of merchandise, competitive prices, high levels of service and one-stop shopping convenience.SeasonalityWe experience moderate seasonal fluctuations in our net sales and operating results as a result of holiday spending and the opening of hunting seasons.While our sales are more level throughout the year than many retailers, our sales are still traditionally somewhat higher in the third and fourth fiscal quarters than inthe other quarterly periods. On average over the last three fiscal years, we have generated 27.4% and 28.2% of our net sales in the third and fourth fiscal quarters,respectively, which includes the holiday selling season as well as the opening of the fall hunting season. However, Spring hunting, Father’s Day and the availabilityof hunting and fishing throughout the year in many of our markets counterbalance this seasonality to a certain degree. For additional information, see Part II, Item7 “Management’s Discussion and Analysis of Financial Condition and Results of Operation."Regulation and ComplianceRegulation and LegislationWe operate in highly regulated industries. There are a number of federal, state and local laws and regulations that affect our business. In every state in whichwe operate, we must obtain various licenses or permits in order to operate our business.Because we sell firearms at all of our retail stores, we are subject to regulation by the Bureau of Alcohol, Tobacco, Firearms and Explosives, or the “ATF”.Each store has a federal firearms license permitting the sale of firearms, and our distribution center has obtained a federal firearms license to store and distributefirearms. Certain states require a state license to sell firearms, and we have obtained these licenses for the states in which we operate that have such a requirement.We must comply with federal, state and local laws and regulations, including the National Firearms Act of 1934, or NFA, the Gun Control Act of 1968, orGCA, the Arms Export Control Act of 1976 and Internal Revenue Code provisions applicable to the Firearms and Ammunition Excise Tax, all of which have beenamended from time to time. The NFA and the GCA require our business to, among other things, maintain federal firearms licenses for our locations and perform apre-transfer background check in connection with all firearms purchases. We perform this background check using either the FBI-managed National InstantCriminal Background Check System, or NICS, or a comparable state government-managed system that relies on NICS and any additional information collected bythe state, a state point of contact. These background check systems either confirm that a transfer can be made, deny the transfer or require that the transfer bedelayed for further review, and provide us with a transaction number for the proposed transfer. We are required to record the transaction number on an ATF Form4473 and retain this form in our records for auditing purposes for 20 years for each approved transfer and five years for each denied or delayed transaction.The federal categories of prohibited purchasers are the prevailing minimum for all states. States (and, in some cases, local governments) on occasion enactlaws that further restrict permissible purchasers of firearms. We are also subject to numerous other federal, state and local laws and regulations regarding firearmsale procedures, record keeping, inspection and reporting, including adhering to minimum age restrictions regarding the purchase or possession of firearms orammunition, residency requirements, applicable waiting periods, importation regulations and regulations pertaining to the shipment and transportation of firearms.Over the past several years, bills have been introduced in the United States Congress that would restrict or prohibit the manufacture, transfer, importation orsale of certain calibers of handgun ammunition, impose a tax and import controls on bullets designed to penetrate bullet-proof vests, impose a special occupationaltax and registration requirements on manufacturers of handgun ammunition and increase the tax on handgun ammunition in certain calibers. Recently, Congress hasdebated certain gun control measures that are supported by the current administration.16In September 2004, Congress declined to renew the Assault Weapons Ban of 1994, or AWB, which prohibited the ma nufacture of certain firearms definedas “assault weapons”; restricted the sale or possession of “assault weapons,” except those that were manufactured prior to the law’s enactment; and placedrestrictions on the sale of new high capacity ammunition feedin g devices. Various states and local jurisdictions, including Colorado and California (states in whichwe operate stores), have adopted their own versions of the AWB or high capacity ammunition feeding device restrictions, some of which restrictions apply t o theproducts we sell in other states. If a statute similar to the AWB were to be enacted or re-enacted at the federal level, it would impact our ability to sell certainproducts. Additionally, state and local governments have proposed laws and regulation s that, if enacted, would place additional restrictions on the manufacture,transfer, sale, purchase, possession and use of firearms, ammunition and shooting-related products. For example, several states, such as Colorado, Connecticut,Maryland, New Jersey , New York, and Washington have enacted laws and regulations that are more restrictive than federal laws and regulations that limit accessto and sale of certain firearms. For example, Connecticut and New York impose mandatory screening of ammunition purch ases; California and the District ofColumbia have requirements for microstamping (that is, engraving the handgun’s serial number on each cartridge) of new handguns; and some states prohibit thesale of guns without internal or external locking mechanisms. Other state or local governmental entities may also explore similar legislative or regulatory initiativesthat may further restrict the manufacture, sale, purchase, possession or use of firearms, ammunition and shooting-related products.The Protection of Lawful Commerce in Arms Act, which became effective in October 2005, prohibits civil liability actions from being brought or continuedin any federal or state court against federally licensed manufacturers, distributors, dealers or importers of firearms or ammunition for damages, punitive damages,injunctive or declaratory relief, abatement, restitution, fines, penalties or other relief resulting from the criminal or unlawful misuse of a qualified product by thirdparties. The legislation does not preclude traditional product liability actions.We are also subject to a variety of federal, state and local laws and regulations relating to, among other things, protection of the environment, human healthand safety, advertising, pricing, weights and measures, product safety, and other matters. Some of these laws affect or restrict the manner in which we can sellcertain items, such as handguns, smokeless powder, black powder substitutes, ammunition, bows, knives and other products. State and local laws and regulationsgoverning hunting, fishing, boating, ATVs and other outdoor activities and equipment can also affect our business. We believe that we are in substantialcompliance with the terms of such laws and that we have no liabilities under such laws that we expect could have a material adverse effect on our business, resultsof operations or financial condition.In addition, many of our imported products are subject to existing or potential duties, tariffs or quotas that may limit the quantity of products that we mayimport into the United States and other countries or impact the cost of such products. To date, quotas in the operation of our business have not restricted us, andcustoms duties have not comprised a material portion of the total cost of our products.Our e-commerce business is subject to the Mail or Telephone Order Merchandise Rule and related regulations promulgated by the FTC which affect ourcatalog mail order operations. FTC regulations, in general, govern the solicitation of orders, the information provided to prospective customers, and the timelinessof shipments and refunds. In addition, the FTC has established guidelines for advertising and labeling many of the products we sell.ComplianceWe are routinely inspected by the ATF and various state agencies to ensure compliance with federal and local regulations. While we view such inspectionsas a starting point, we employ more thorough internal compliance inspections to help ensure we are in compliance with all applicable laws. Our compliancedepartment conducts at least one on-site inspection of each store location annually. With the IT infrastructure systems we have in place, recall inspections can bedone remotely.We dedicate significant resources to ensure compliance with applicable federal, state and local regulations. Since we began operations in 1986, none of ourfederal firearm licenses have been revoked, and none of our ATF compliance inspections within the last ten years have resulted in a major violation.We are also subject to a variety of state laws and regulations relating to, among other things, advertising and product restrictions. Some of these lawsprohibit or limit the sale, in certain states and locations, of certain items, such as black powder firearms, ammunition, bows, knives, and similar products. Ourcompliance department administers various restriction codes and other software tools to prevent the sale of such jurisdictionally restricted items.We have particular expertise in the California market and have passed several California Department of Justice, or CA DOJ, firearm audits with zeroviolations or only minor violations. The CA DOJ communicates with us for policy discussion, recognizing the strength of our compliance infrastructure.17EmployeesAs of February 29, 2016 we had approximately 4,200 total employees. Of our total employees, approximately 200 were based at our corporate headquartersin Midvale, Utah, approximately 250 were located at our distribution center, and approximately 3,750 were store employees. We had approximately 1,900 full-timeemployees and approximately 2,300 part-time employees, who are primarily store employees. None of our employees are represented by a labor union or are partyto a collective bargaining agreement, and we have had no labor-related work stoppages. Our relationship with our employees is one of the keys to our success, andwe believe that relationship is good.Available InformationOur Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to reports filed or furnished pursuant toSections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended, or the Exchange Act are available on our web site atwww.sportsmanswarehouse.com, free of charge, as soon as reasonably practicable after the electronic filing of these reports with, or furnishing of these reports to,the SEC. Any materials we file with the SEC are available at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. Additionalinformation about the operation of the Public Reference Room can also be obtained by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains a website at www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, includingus.ITEM 1A. RISK FACTORSOur business faces significant risks and uncertainties. Certain important factors may have a material adverse effect on our business prospects, financialcondition and results of operations, and you should carefully consider them. Accordingly, in evaluating our business, we encourage you to consider the followingdiscussion of risk factors, in its entirety, in addition to other information contained in or incorporated by reference into this 10-K and our other public filings withthe SEC. Other events that we do not currently anticipate or that we currently deem immaterial may also affect our business, prospects, financial condition andresults of operations.Risks Related to Our BusinessOur retail-based business model is impacted by general economic conditions in our markets, and ongoing economic and financial uncertainties may causea decline in consumer spending that may adversely affect our business, operations, liquidity, financial results and stock price.As a retail business that depends on consumer discretionary spending, we may be adversely affected if our customers reduce, delay or forego their purchasesof our products as a result of continued job losses, bankruptcies, higher consumer debt and interest rates, higher energy and fuel costs, reduced access to credit,falling home prices, lower consumer confidence, uncertainty or changes in tax policies and tax rates and uncertainty due to potential national or internationalsecurity concerns. Decreases in same store sales, customer traffic or average ticket sales negatively affect our financial performance, and a prolonged period ofdepressed consumer spending could have a material adverse effect on our business. Promotional activities, vendor incentives, and decreased demand for consumerproducts could affect profitability and margins. In addition, adverse economic conditions may result in an increase in our operating expenses due to, among otherthings, higher costs of labor, energy, equipment and facilities. Due to recent fluctuations in the U.S. economy, our sales, operating and financial results for aparticular period are difficult to predict, making it difficult to forecast results to be expected in future periods. Any of the foregoing factors could have a materialadverse effect on our business, results of operations and financial condition and could adversely affect our stock price.Our concentration of stores in the Western United States makes us susceptible to adverse conditions in this region.The majority of our stores are located in the Western United States, comprising Alaska, Arizona, California, Colorado, Idaho, Montana, Nevada, NewMexico, Oregon, Utah, Washington and Wyoming. As a result, our operations are more susceptible to regional factors than the operations of more geographicallydiversified competitors. These factors include regional economic and weather conditions, natural disasters, demographic and population changes and governmentalregulations in the states in which we operate. Environmental changes and disease epidemics affecting fish or game populations in any concentrated region may alsoaffect our sales. If a region with a concentration of our stores were to suffer an economic downturn or other adverse event, our operating results could suffer.18Competition in the outdoor activities and sporting goods market could reduce our net sales and profitability.The outdoor activities and sporting goods market is highly fragmented and competitive. We compete directly or indirectly with the following types ofcompanies: ·independent, local specialty stores, often referred to as “mom & pops”; ·other specialty retailers that compete with us across a significant portion of our merchandising categories through retail store, catalog or e-commercebusinesses, such as Bass Pro Shops, Cabela’s and Gander Mountain; ·large-format sporting goods stores and chains, such as Academy Sports + Outdoors and Dick’s Sporting Goods; and ·mass merchandisers, warehouse clubs, discount stores, department stores and online retailers, such as Amazon, Target and Wal-Mart.A few of our competitors have a larger number of stores, and some of them have a greater market presence, name recognition and financial, distribution,marketing and other resources than we have. In addition, if our competitors reduce their prices, we may have to reduce our prices in order to compete, which couldharm our margins. Furthermore, some of our competitors may build new stores in or near our existing locations. As a result of this competition, we may need tospend more on advertising and promotion. Some of our mass merchandising competitors, such as Wal-Mart, do not currently compete in many of the product lineswe offer. However, if these competitors were to begin offering a broader array of competing products, or if any of the other factors listed above occurred, our netsales could be reduced or our costs could be increased, resulting in reduced profitability.If we fail to anticipate changes in consumer demands, including regional preferences, in a timely manner, our operating results could suffer.Our products appeal to consumers who regularly hunt, camp, fish and participate in various shooting sports. The preferences of these consumers cannot bepredicted with certainty and are subject to change. In addition, due to different game and fishing species and varied weather conditions found in different markets,it is critical that our stores stock products appropriate for their markets. Our success depends on our ability to identify product trends in a variety of markets as wellas to anticipate, gauge and quickly react to changing consumer demands in these markets. We usually must order merchandise well in advance of the applicableselling season. The extended lead times for many of our purchases may make it difficult for us to respond rapidly to new or changing product trends or changes inprices. If we misjudge either the market for our products or our customers’ purchasing habits, our net sales may decline significantly and we may not havesufficient quantities of merchandise to satisfy customer demand or we may be required to mark down excess inventory, either of which would result in lower profitmargins and harm our operating results.Our expansion into new, unfamiliar markets presents increased risks that may prevent us from being profitable in these new markets.We intend to expand by opening stores in new markets, which may include small- to medium-sized markets and which may not have existing nationaloutdoor sports retailers. As a result, we may have less familiarity with local customer preferences and encounter difficulties in attracting customers due to a reducedlevel of customer familiarity with our brand. Other factors that may impact our ability to open stores in new markets and operate them profitably, many of whichare beyond our control, include: ·our ability to identify suitable locations, including our ability to gather and assess demographic and marketing data to determine consumer demand forour products in the locations we select; ·our ability to negotiate favorable lease agreements; ·our ability to properly assess the profitability of potential new retail store locations; ·our ability to secure required governmental permits and approvals; ·our ability to hire and train skilled store operating personnel, especially management personnel; ·the availability of construction materials and labor and the absence of significant construction delays or cost overruns; ·our ability to provide a satisfactory mix of merchandise that is responsive to the needs of our customers living in the areas where new retail stores arebuilt; ·our ability to supply new retail stores with inventory in a timely manner; ·our competitors building or leasing stores near our retail stores or in locations we have identified as targets for a new retail store; ·consumer demand for our products, particularly firearms and ammunition, which drives traffic to our retail stores;19 ·regional economic and other factors in the geographies in which we expand; and ·general economic and business conditions affecting consumer confidence and spending and the overall strength of our business.Once we decide on a new market and find a suitable location, any delays in opening new stores could impact our financial results. It is possible that events,such as delays in the entitlements process or construction delays caused by permitting or licensing issues, material shortages, labor issues, weather delays or otheracts of god, discovery of contaminants, accidents, deaths or injunctions, could delay planned new store openings beyond their expected dates or force us to abandonplanned openings altogether. In addition, new retail stores typically generate lower operating margins because pre-opening expenses are expensed as they areincurred and because fixed costs, as a percentage of net sales, are higher. Furthermore, the substantial management time and resources which our retail storeexpansion strategy requires may result in disruption to our existing business operations, which may decrease our profitability.As a result of the above factors, we cannot assure you that we will be successful in operating our stores in new markets on a profitable basis.Our planned growth may strain our business infrastructure, which could adversely affect our operations and financial condition.Over time, we expect to expand the size of our retail store network in new and existing markets. As we grow, we will face the risk that our existingresources and systems, including management resources, accounting and finance personnel and operating systems, may be inadequate to support our growth. Wecannot assure you that we will be able to retain the personnel or make the changes in our systems that may be required to support our growth. Failure to securethese resources and implement these systems on a timely basis could have a material adverse effect on our operating results. In addition, hiring additional personneland implementing changes and enhancements to our systems will require capital expenditures and other increased costs that could also have a material adverseimpact on our operating results.Our expansion in new markets may also create new distribution and merchandising challenges, including strain on our distribution facility, an increase ininformation to be processed by our management information systems and diversion of management attention from existing operations towards the opening of newstores and markets. To the extent that we are not able to meet these additional challenges, our sales could decrease and our operating expenses could increase.Our ability to operate and expand our business and to respond to changing business and economic conditions will depend on the availability of adequatecapital.The operation of our business, the rate of our expansion and our ability to respond to changing business and economic conditions depend on the availabilityof adequate capital, which in turn depends on cash flow generated by our business and, if necessary, the availability of equity or debt capital. We will also needsufficient cash flow to meet our obligations under our existing debt agreements. We paid total cash interest on our credit facilities of $12.8 million, $16.4 millionand $19.0 million in fiscal years 2015, 2014 and 2013, respectively, and our term loans require us to make quarterly principal payments of $0.4 million.We are required to make mandatory prepayments based on any excess cash flows as defined in the term loan agreement. Due to our profitability duringfiscal year 2015, we are required to make a mandatory prepayment of approximately $7.7 million by May 6, 2016, which will reduce the outstanding amount underthe term loan.The amount that we are able to borrow and have outstanding under our revolving credit facility at any given time is subject to a borrowing base calculation,which is a contractual calculation equal to roughly (1) the lesser of (a) 90% of the net orderly liquidation value of our eligible inventory, and (b) 75% of the lowerof cost or market value of our eligible inventory, plus (2) 90% of the eligible accounts receivable, less certain reserves against outstanding gift cards, layawaydeposits and amounts outstanding under commercial letters of credit, each term as defined in the credit agreement for the revolving credit facility. As a result, ourability to borrow is subject to certain risks and uncertainties, such as a deterioration in the quality of our inventory (which is the largest asset in our borrowingbase), a decline in sales activity and the collection of our receivables, which could reduce the funds available to us under our revolving credit facility.We cannot assure you that our cash flow from operations or cash available under our revolving credit facility will be sufficient to meet our needs. If we areunable to generate sufficient cash flows from operations in the future, and if availability under our revolving credit facility is not sufficient, we may have to obtainadditional financing. If we obtain additional capital by issuing equity, the interests of our existing stockholders will be diluted. If we incur additional indebtedness,that indebtedness may contain significant financial and other covenants that may significantly restrict our operations. We cannot assure you that we could obtainrefinancing or additional financing on favorable terms or at all.20Our revolving credit facility and term loans contain restrictive covenants that may impair our ability to access sufficient capital and operate our business.Our revolving credit facility and term loans contain various provisions that limit our ability to, among other things: ·incur, create or assume certain indebtedness; ·create, incur or assume certain liens; ·make certain investments; ·make sales, transfers and dispositions of certain property; ·undergo certain fundamental changes, including certain mergers, liquidations and consolidations; ·purchase, hold or acquire certain investments; and ·declare or make certain dividends and distributions.These covenants may affect our ability to operate and finance our business as we deem appropriate. If we are unable to meet our obligations as they becomedue or to comply with various financial covenants contained in the instruments governing our current or future indebtedness, this could constitute an event ofdefault under the instruments governing our indebtedness.If there were an event of default under the instruments governing our indebtedness, the holders of the affected indebtedness could declare all of thatindebtedness immediately due and payable, which, in turn, could cause the acceleration of the maturity of all of our other indebtedness. We may not have sufficientfunds available, or we may not have access to sufficient capital from other sources, to repay any accelerated debt. Even if we could obtain additional financing, theterms of the financing may not be favorable to us. In addition, substantially all of our assets are subject to liens securing our revolving credit facility and term loans.If amounts outstanding under the revolving credit facility or term loans were accelerated, our lenders could foreclose on these liens and we could lose substantiallyall of our assets. Any event of default under the instruments governing our indebtedness could have a material adverse effect on our business, financial conditionand results of operations.Our same store sales may fluctuate and may not be a meaningful indicator of future performance.Our same store sales may vary from quarter to quarter, and an unanticipated decline in net sales or same store sales may cause the price of our commonstock to fluctuate significantly. A number of factors have historically affected, and will continue to affect, our same store sales results, including: ·changes or anticipated changes to regulations related to some of the products we sell; ·consumer preferences, buying trends and overall economic trends; ·our ability to identify and respond effectively to local and regional trends and customer preferences; ·our ability to provide quality customer service that will increase our conversion of shoppers into paying customers; ·competition in the regional market of a store; ·atypical weather; ·changes in our product mix; and ·changes in pricing and average ticket sales.Our operating results are subject to seasonal fluctuations.We experience moderate seasonal fluctuations in our net sales and operating results. On average over the last three fiscal years, we have generated 27.4%and 28.2% of our annual net sales in the third and fourth fiscal quarters, respectively, which includes the holiday selling season as well as the opening of the fallhunting season. We incur additional expenses in the third and fourth fiscal quarters due to higher purchase volumes and increased staffing in our stores. If, for anyreason, we miscalculate the demand for our products or our product mix during the third or fourth fiscal quarters, our sales in these quarters could decline, resultingin higher labor costs as a percentage of sales, lower margins and excess inventory, which could cause our annual operating results to suffer and our stock price todecline. Due to our seasonality, the possible adverse impact from other risks associated with our business, including atypical weather, consumer spending levelsand general business conditions, is potentially greater if any such risks occur during our peak sales seasons.21We rely on a single distribution center for our business, and if there is a natural disas ter or other serious disruption at such facility, we may be unable todeliver merchandise effectively to our stores or customers.We rely on a single distribution center in Salt Lake City, Utah for our business. Any natural disaster or other serious disruption at such facility due to fire,tornado, earthquake, flood or any other cause could damage our on-site inventory or impair our ability to use such distribution center. While we maintain businessinterruption insurance, as well as general property insurance, the amount of insurance coverage may not be sufficient to cover our losses in such an event. Any ofthese occurrences could impair our ability to adequately stock our stores or fulfill customer orders and harm our operating results.Any disruption of the supply of products from our vendors could have an adverse impact on our net sales and profitability.We cannot predict when, or the extent to which, we will experience any disruption in the supply of products from our vendors. Any such disruption couldnegatively impact our ability to market and sell our products and serve our customers, which could adversely impact our net sales and profitability.We depend on merchandise purchased from our vendors to obtain products for our stores. We have no contractual arrangements providing for continuedsupply from our key vendors, and our vendors may discontinue selling to us at any time. Changes in commercial practices of our key vendors or manufacturers,such as changes in vendor support and incentives or changes in credit or payment terms, could also negatively impact our results. If we lose one or more keyvendors or are unable to promptly replace a vendor that is unwilling or unable to satisfy our requirements with a vendor providing equally appealing products atcomparable prices, we may not be able to offer products that are important to our merchandise assortment.We also are subject to risks, such as the price and availability of raw materials and fabrics, labor disputes, union organizing activity, strikes, inclementweather, natural disasters, war and terrorism and adverse general economic and political conditions, that might limit our vendors’ ability to provide us with qualitymerchandise on a timely and cost-efficient basis. We may not be able to develop relationships with new vendors, and products from alternative sources, if any, maybe of a lesser quality and more expensive than those we currently purchase. Any delay or failure in offering products to our customers could have a materialadverse impact on our net sales and profitability.In addition, the SEC has adopted rules regarding disclosure of the use of conflict minerals (commonly referred to as tantalum, tin, tungsten and gold), whichare mined from the Democratic Republic of the Congo and surrounding countries. We have incurred costs to design and implement a process to discover the originof the tantalum, tin, tungsten and gold used in the products we sell, and may incur costs to audit our conflict minerals disclosures. Our reputation may also suffer ifthe products we sell contain conflict minerals originating in the Democratic Republic of the Congo or surrounding countries.Political and economic uncertainty and unrest in foreign countries where our merchandise vendors are located and trade restrictions upon imports fromthese foreign countries could adversely affect our ability to source merchandise and operating results.In fiscal year 2015, approximately 2.2% of our merchandise was imported directly from vendors located in foreign countries, with a substantial portion ofthe imported merchandise being obtained directly from vendors in China and El Salvador. In addition, we believe that a significant portion of our domestic vendorsobtain their products from foreign countries that may also be subject to political and economic uncertainty. We are subject to risks and uncertainties associated withchanging economic, political and other conditions in foreign countries where our vendors are located, such as: ·increased import duties, tariffs, trade restrictions and quotas; ·work stoppages; ·economic uncertainties; ·adverse foreign government regulations; ·wars, fears of war and terrorist attacks and organizing activities; ·adverse fluctuations of foreign currencies; ·natural disasters; and ·political unrest.We cannot predict when, or the extent to which, the countries in which our products are manufactured will experience any of the above events. Any eventcausing a disruption or delay of imports from foreign locations would likely increase the cost or reduce the supply of merchandise available to us and wouldadversely affect our operating results.22In addition, trade restrictions, including increased tariffs or quotas, embargoes, safeguards and customs restrictions against clothing items, as well as U.S. orforeign labor strikes, work stoppages or boycotts could increase the cost or reduce the supply of merchandise available to us or may require us to modify ourcurrent business practices, any of which could hurt our profitability.Finally, potential changes in federal restrictions on the importation of firearms and ammunition products could affect our ability to acquire certain popularbrands of firearms and ammunition products from importers and wholesalers, which could negatively impact our net sales until replacements in the United Statescan be obtained, if at all.A failure in our e-commerce operations, security breaches and cyber security risks could disrupt our business and lead to reduced sales and growthprospects and reputational damage.Our e-commerce business is an important element of our brand and relationship with our customers, and we expect it to continue to grow. In addition tochanging consumer preferences and shifting traffic patterns and buying trends in e-commerce, we are vulnerable to additional risks and uncertainties associatedwith e-commerce sales, including rapid changes in technology, website downtime and other technical failures, security breaches, cyber-attacks, consumer privacyconcerns, changes in state tax regimes and government regulation of internet activities. Our failure to successfully respond to these risks and uncertainties couldreduce our e-commerce sales, increase our costs, diminish our growth prospects and damage our brand, which could negatively impact our results of operations andstock price.In addition, there is no guarantee that we will be able to expand our e-commerce business. Many of our competitors already have e-commerce businessesthat are substantially larger and more developed than ours, which places us at a competitive disadvantage. In addition, there are regulatory restrictions on the sale ofapproximately 30% of our product offerings, such as ammunition, certain cutlery, firearms, propane and reloading powder. If we are unable to expand our e-commerce business, our growth plans will suffer and the price of our common stock could decline.We do not collect sales taxes in some jurisdictions, which could result in substantial tax liabilities and cause our future e-commerce sales to decrease.An increasing number of states have considered or adopted laws that attempt to impose tax collection obligations on out-of-state retailers. We believe thatthese initiatives are inconsistent with the United States Supreme Court’s holding that states, absent congressional legislation, may not impose tax collectionobligations on out-of-state e-commerce businesses unless the out-of-state e-commerce business has nexus with the state. A successful assertion by one or morestates requiring us to collect taxes where we do not do so could result in substantial tax liabilities, including for past sales, as well as penalties and interest. Theimposition by state governments of sales tax collection obligations on out-of-state e-commerce businesses who participate in e-commerce could also createadditional administrative burdens for us, put us at a competitive disadvantage if they do not impose similar obligations on our competitors and decrease our futuree-commerce sales, which could have a material adverse impact on our business and results of operations.Current and future government regulations, in particular regulations relating to the sale of firearms and ammunition, may negatively impact the demandfor our products and our ability to conduct our business.We operate in a complex regulatory and legal environment that could negatively impact the demand for our products and expose us to compliance andlitigation risks, which could materially affect our operations and financial results. These laws may change, sometimes significantly, as a result of political,economic or social events. Some of the federal, state or local laws and regulations that affect our business and demand for our products include: ·federal, state or local laws and regulations or executive orders that prohibit or limit the sale of certain items we offer, such as firearms, black powderfirearms, ammunition, bows, knives and similar products; ·the ATF, regulations, audit and regulatory policies that impact the process by which we sell firearms and ammunition and similar policies of stateagencies that have concurrent jurisdiction, such as the CA DOJ; ·laws and regulations governing hunting and fishing; ·laws and regulations relating to the collecting and sharing of non-public customer information; ·laws and regulations relating to consumer products, product liability or consumer protection, including regulation by the Consumer Product SafetyCommission and similar state regulatory agencies; ·laws and regulations relating to the manner in which we advertise, market or sell our products; ·labor and employment laws, including wage and hour laws;23 ·U.S. customs laws and regulations pertaining to proper item cla ssification, quotas and the payment of duties and tariffs; and ·FTC regulations governing the manner in which orders may be solicited and prescribing other obligations in fulfilling orders and consummating sales.Over the past several years, bills have been introduced in the United States Congress that would restrict or prohibit the manufacture, transfer, importation orsale of certain calibers of handgun ammunition, impose a tax and import controls on bullets designed to penetrate bullet-proof vests, impose a special occupationaltax and registration requirements on manufacturers of handgun ammunition and increase the tax on handgun ammunition in certain calibers. Because we carry theseproducts, such legislation could, depending on its scope, materially harm our sales.Additionally, state and local governments have proposed laws and regulations that, if enacted, would place additional restrictions on the manufacture,transfer, sale, purchase, possession and use of firearms, ammunition and shooting-related products. For example, in response to the Sandy Hook Elementaryshooting in Newtown, Connecticut and other incidents in the United States, several states, such as Colorado, Connecticut, Maryland, New Jersey, and New York,have enacted laws and regulations that limit access to and sale of certain firearms in ways more restrictive than federal laws. Other state or local governmentalentities may continue to explore similar legislative or regulatory restrictions that could prohibit the manufacture, sale, purchase, possession or use of firearms andammunition. In New York and Connecticut, mandatory screening of ammunition purchases is now required. In addition, California and the District of Columbiahave adopted requirements for micro-stamping (that is, engraving the handgun’s serial number on the firing pin of new handguns), and at least seven other statesand the United States Congress have introduced microstamping legislation for certain firearms. Lastly, some states prohibit the sale of firearms without internal orexternal locking mechanisms, and several states are considering mandating certain design features on safety grounds, most of which would be applicable only tohandguns. Other state or local governmental entities may also explore similar legislative or regulatory initiatives that may further restrict the manufacture, sale,purchase, possession or use of firearms, ammunition and shooting-related products.The regulation of firearms, ammunition and shooting-related products may become more restrictive in the future. Changes in these laws and regulations oradditional regulation, particularly new laws or increased regulations regarding sales and ownership of firearms and ammunition, could cause the demand for andsales of our products to decrease and could materially adversely impact our net sales and profitability. Sales of firearms represent a significant percentage of our netsales and are critical in drawing customers to our stores. A substantial reduction in our sales or margins on sales of firearms and firearm related products due to theestablishment of new regulations could harm our operating results. Moreover, complying with increased or changed regulations could cause our operating expensesto increase.We may incur costs from litigation relating to products that we sell, particularly firearms and ammunition, which could adversely affect our net sales andprofitability.We may incur damages due to lawsuits relating to products we sell, including lawsuits relating to firearms, ammunition, tree stands and archery equipment.We may incur losses due to lawsuits, including potential class actions, relating to our performance of background checks on firearms purchases and compliancewith other sales laws as mandated by state and federal law. We may also incur losses from lawsuits relating to the improper use of firearms or ammunition sold byus, including lawsuits by municipalities or other organizations attempting to recover costs from manufacturers and retailers of firearms and ammunition. Ourinsurance coverage and the insurance provided by our vendors for certain products they sell to us may be inadequate to cover claims and liabilities related toproducts that we sell. In addition, claims or lawsuits related to products that we sell, or the unavailability of insurance for product liability claims, could result in theelimination of these products from our product line, thereby reducing net sales. If one or more successful claims against us are not covered by or exceed ourinsurance coverage, or if insurance coverage is no longer available, our available working capital may be impaired and our operating results could be materiallyadversely affected. Even unsuccessful claims could result in the expenditure of funds and management time and could have a negative impact on our profitabilityand on future premiums we would be required to pay on our insurance policies.If we fail to maintain the strength and value of our brand, our net sales are likely to decline.Our success depends on the value and strength of the Sportsman’s Warehouse brand. The Sportsman’s Warehouse name is integral to our business as wellas to the implementation of our strategies for expanding our business. Maintaining, promoting and positioning our brand will depend largely on the success of ourmarketing and merchandising efforts and our ability to provide high quality merchandise and a consistent, high quality customer experience. Our brand could beadversely affected if we fail to achieve these objectives or if our public image or reputation were to be tarnished by negative publicity. Any of these events couldresult in decreases in net sales.24Our inability or failure to protect our intellectual property could have a negative impact on our operating results.Our trademarks, service marks, copyrights, patents, trade secrets, domain names and other intellectual property are valuable assets that are critical to oursuccess. The unauthorized reproduction or other misappropriation of our intellectual property could diminish the value of our brands or goodwill and cause adecline in our net sales. Any infringement or other intellectual property claim made against us, whether or not it has merit, could be time-consuming, result incostly litigation, cause product delays or require us to enter into royalty or licensing agreements. As a result, any such claim could have a material adverse effect onour operating results.Unauthorized disclosure of sensitive or confidential customer information could harm our business and standing with our customers.The protection of our customer, employee and company data is critical to us. We rely on commercially available systems, software, tools and monitoring toprovide security for processing, transmission and storage of confidential customer information, such as payment card and personally identifiable information.Despite the security measures we have in place, our facilities and systems, and those of our third-party service providers, may be vulnerable to security breaches,acts of vandalism, computer viruses, misplaced or lost data, programming or human errors or other similar events. Any security breach involving themisappropriation, loss or other unauthorized disclosure of confidential information, whether by us or our vendors, could damage our reputation, expose us to risk oflitigation and liability, disrupt our operations and harm our business.Our computer hardware and software systems are vulnerable to damage that could harm our business.Our success, in particular our ability to successfully manage inventory levels, largely depends upon the efficient operation of our computer hardware andsoftware systems. We use management information systems to track inventory information at the store level, communicate customer information and aggregatedaily sales, margin and promotional information. These systems are vulnerable to damage or interruption from: ·fire, flood, tornado and other natural disasters; ·power loss, computer system failures, internet and telecommunications or data network failures, operator negligence, improper operation by orsupervision of employees, physical and electronic loss of data or security breaches, misappropriation and similar events; ·hacking by third parties and computer viruses; and ·upgrades, installations of major software releases and integration with new systems.Any failure that causes an interruption in our systems processing could disrupt our operations and result in reduced sales. We have centralized the majorityof our computer systems in our corporate office. It is possible that an event or disaster at our corporate office could materially and adversely affect the performanceof our company and the ability of each of our stores to operate efficiently.Our private brand offerings expose us to various risks.We expect to continue to grow our exclusive private brand offerings through a combination of brands that we own and brands that we license from thirdparties. We have invested in our development and procurement resources and marketing efforts relating to these private brand offerings. Although we believe thatour private brand products offer value to our customers at each price point and provide us with higher gross margins than comparable third-party branded productswe sell, the expansion of our private brand offerings also subjects us to certain specific risks in addition to those discussed elsewhere in this section, such as: ·potential mandatory or voluntary product recalls; ·our ability to successfully protect our proprietary rights (including defending against counterfeit, knock offs, grey-market, infringing or otherwiseunauthorized goods); ·our ability to successfully navigate and avoid claims related to the proprietary rights of third parties; ·our ability to successfully administer and comply with obligations under license agreements that we have with the licensors of brands, including, insome instances, certain minimum sales requirements that, if not met, could cause us to lose the licensing rights or pay damages; and ·other risks generally encountered by entities that source, sell and market exclusive branded offerings for retail.An increase in sales of our private brands may also adversely affect sales of our vendors’ products, which may, in turn, adversely affect our relationshipwith our vendors. Our failure to adequately address some or all of these risks could have a material adverse effect on our business, results of operations andfinancial condition.25If we lose key management or are unable to attract and retain the talent required for our business, our operating results and financial condition couldsuffer.Our performance depends largely on the leadership efforts and abilities of our executive officers and other key employees. We have entered intoemployment agreements with John V. Schaefer, our President and Chief Executive Officer, and Kevan P. Talbot, our Chief Financial Officer and Secretary. Noneof our other employees have an employment agreement with us. If we lose the services of one or more of our key employees, we may not be able to successfullymanage our business or achieve our growth objectives. As our business grows, we will need to attract and retain additional qualified personnel in a timely manner.Our business depends on our ability to meet our labor needs.Our success depends in part upon our ability to attract, motivate and retain a sufficient number of qualified employees, including district managers, storemanagers, department managers and sales associates, who understand and appreciate our outdoor culture and are able to adequately represent this culture to ourcustomers. Qualified individuals of the requisite caliber and number needed to fill these positions may be in short supply in some areas, and the turnover rate in theretail industry is high. If we are unable to hire and retain sales associates capable of consistently providing a high level of customer service, as demonstrated bytheir enthusiasm for our culture and knowledge of our merchandise, our business could be materially adversely affected. Although none of our employees iscurrently covered by collective bargaining agreements, our employees may elect to be represented by labor unions in the future, which could increase our laborcosts. Additionally, competition for qualified employees could require us to pay higher wages to attract a sufficient number of employees. An inability to recruitand retain a sufficient number of qualified individuals in the future may delay the planned openings of new stores. Any such delays, any material increases inemployee turnover rates at existing stores or any increases in labor costs could have a material adverse effect on our business, financial condition or operatingresults.Increases in the minimum wage could adversely affect our financial results.From time to time, legislative proposals are made to increase the federal minimum wage in the United States, as well as the minimum wage in a number ofindividual states. Base wage rates for some of our employees are at or slightly above the minimum wage. As federal or state minimum wage rates increase, we mayneed to increase not only the wage rates of our minimum wage employees, but also the wages paid to our other hourly employees as well. Any increase in the costof our labor could have an adverse effect on our operating costs, financial condition and results of operations.We may pursue strategic acquisitions or investments, and the failure of an acquisition or investment to produce the anticipated results or the inability tofully integrate the acquired companies could have an adverse impact on our business.We may from time to time acquire or invest in complementary companies, businesses or assets. The success of such acquisitions or investments will bebased on our ability to make accurate assumptions regarding the valuation, operations, growth potential, integration and other factors relating to the respectivebusiness or assets. Our acquisitions or investments may not produce the results that we expect at the time we enter into or complete the transaction. For example,we may not be able to capitalize on previously anticipated synergies. Furthermore, acquisitions may result in dilutive issuances of our equity securities, theincurrence of debt, contingent liabilities, amortization expenses or write-offs of goodwill or other intangibles, any of which could harm our financial condition orresults of operations. We also may not be able to successfully integrate operations that we acquire, including their personnel, financial systems, supply chain andother operations, which could adversely affect our business. Acquisitions may also result in the diversion of our capital and our management’s attention from otherbusiness issues and opportunities.A new standard for lease accounting may significantly impact the timing and amount in which we report our lease expense.In February 2016, the Financial Accounting Standards Board, or FASB, and the International Accounting Standards Board, or IASB, issued an accountingpronouncement with substantial changes to existing lease accounting that affects all lease arrangements. The new standard is effective beginning in the first quarterof 2019 and early adoption is permitted. Under the new accounting model, lessees are required to record an asset representing the right-to-use the leased item forthe lease term, or right-of-use asset, and a corresponding liability to make lease payments. The right-of-use asset and liability incorporate the rights arising underthe lease and are based on the lessee’s assessment of expected payments to be made over the lease term. The model requires measuring these amounts at the presentvalue of the future expected payments.Once we adopt this new standard, we expect that, for the majority of our leases, the lease expense would include the amortization of the right-of-use assetand the recognition of interest expense based upon the lessee’s incremental borrowing rate (or the rate implicit in the lease, if known) on the repayment of the leaseobligation. Currently, management is assessing the impact the adoption of the new final lease standard will have on our financial statements. Although we believethe presentation of our financial statements will likely change, including the pattern of lease expense recognition, we do not believe the accounting pronouncementwill change the fundamental economic reasons for which we lease our stores.26We may not achieve projected goals and objectives in the time periods that we anticipate or announce publicly, which could harm our business and causethe price of our common stock to decline.We set targets and timing to accomplish certain objectives regarding our business. We have included some of these targets in this filing and may makesimilar future public statements. For example, we state in this filing that: ·we currently plan to open nine additional new stores in fiscal year 2016 and, for the next several years thereafter, intend to grow our store base at a rategreater than 10 percent annually; and ·we target a minimum 10% four-wall Adjusted EBITDA margin and a minimum return on invested capital of 50% excluding initial inventory cost (or20% including initial inventory cost) in the first twelve months of operation for a new store.This filing also includes other forecasts and targets. These forecasts and targets are based on our current expectations. We may not achieve these forecastsand targets, and the actual achievement and timing of these events can vary due to a number of factors, including currently unforeseen matters and matters beyondour control. You should not unduly rely on these forecasts or targets in deciding whether to invest in our common stock.Risks Related to Our Common StockAffiliates of Seidler Equity Partners III, L.P. (collectively, “Seidler”) beneficially own approximately 36.4% of our common stock, and their interests mayconflict with or differ from the interests of our other stockholders.Seidler beneficially owns approximately 36.4% of our common stock. As a result, Seidler has significant influence over the election of all of our directorsand the approval of significant corporate transactions that require the approval of our board of directors or stockholders, such as mergers and the sale ofsubstantially all of our assets. So long as Seidler continues to own a significant amount of the outstanding shares of our common stock, it will have the ability toexert significant influence over our corporate decisions. Seidler may act in a manner that advances its best interests and not necessarily those of other stockholdersby, among other things: ·delaying, deferring or preventing a change in control transaction; ·entrenching our management and/or our board of directors; ·impeding a merger, consolidation, takeover or other business combination involving us; ·discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control of us; or ·causing us to enter into transactions or agreements that are not in the best interests of all stockholders.Additionally, Seidler is in the business of making investments in companies and may in the future acquire interests in businesses that directly or indirectlycompete with certain portions of our business or our suppliers or customers. Seidler may also pursue acquisitions that may be complementary to our business, and,as a result, those acquisition opportunities may not be available to us.Seidler and the members of our board of directors who are affiliated with Seidler, by the terms of our certificate of incorporation, are not required to offer usany transaction opportunity of which they become aware and could take any such opportunity for themselves or offer it to other companies in which they have aninvestment, unless such opportunity is expressly offered to them solely in their capacity as our directors. We, by the terms of our certificate of incorporation,expressly renounce any interest in any such corporate opportunity to the extent permitted under applicable law, even if the opportunity is one that we wouldreasonably be deemed to have pursued if given the opportunity to do so, unless such opportunity is expressly offered to any director or officer in his or her capacityas our director or officer. Our certificate of incorporation cannot be amended to eliminate our renunciation of any such corporate opportunity arising prior to thedate of any such amendment. Seidler or its affiliates may also acquire competing businesses that may not be attractive to us, and have no obligation to refrain fromacquiring competing businesses. Any competition could intensify if an affiliate or subsidiary of Seidler were to enter into or acquire a business similar to ourspecialty retail operations. Seidler or its affiliates may enter into or acquire a competing business in the future.27Although we are no longer a “controlled company” within the meaning of The NASDAQ Stock Market corporate governance standards, we may continueto rely on exemptions from some of the co rporate governance requirements that provide protection to stockholders of other companies.Affiliates of Seidler no longer control a majority of our outstanding common stock. As a result, we are no longer a “controlled company” within themeaning of The NASDAQ Stock Market corporate governance standards. The NASDAQ Stock Market corporate governance requirements require that: ·a majority of the board of directors consist of “independent directors” as defined under The NASDAQ Stock Market corporate governance standards; ·our director nominees be selected, or recommended for our board of directors’ selection, either (1) by a majority of independent directors in a vote byindependent directors, pursuant to a nominations process adopted by a board resolution, or (2) by a nominating and governance committee comprisedsolely of independent directors with a written charter addressing the nominations process; and ·the compensation of our executive officers be determined, or recommended to the board for determination, by a majority of independent directors in avote by independent directors, or by a compensation committee comprised solely of independent directors.Currently, a majority of our board of directors consists of independent directors, and we have an audit committee and a compensation committee comprisedsolely of independent directors. However, our nominating and governance committee is not comprised solely of independent directors. The rules of The NASDAQStock Market require that our nominating and governance committee be composed entirely of independent directors within one year of closing our secondarypublic offering in September 2015, or by September 30, 2016. During this transition period, however, we could avail ourselves of any of the exemptions describedabove even if we are not currently relying upon them. Accordingly, during this transition period, our stockholders may not have the same protections afforded tostockholders of companies that are subject to all of The NASDAQ Stock Market corporate governance standards.Our bylaws, our certificate of incorporation and Delaware law contain provisions that could discourage another company from acquiring us and mayprevent attempts by our stockholders to replace or remove our current management.Provisions of our bylaws, our certificate of incorporation and Delaware law may discourage, delay or prevent a merger or acquisition that stockholders mayconsider favorable, including transactions in which our stockholders might otherwise receive a premium for their shares. In addition, these provisions may frustrateor prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace or remove ourboard of directors. These provisions include: ·establishing a classified board of directors; ·providing that directors may be removed only for cause; ·not providing for cumulative voting in the election of directors; ·requiring at least a supermajority vote of our stockholders to amend our bylaws or certain provisions of our certificate of incorporation; ·eliminating the ability of stockholders to call special meetings of stockholders; ·establishing advance notice requirements for nominations for election to the board of directors or for proposing matters that can be acted on bystockholders at stockholder meetings; ·prohibiting stockholder action by written consent once Seidler owns less than a majority of the outstanding shares of our common stock; and ·authorizing the issuance of “blank check” preferred stock without any need for action by stockholders.In addition, we will be subject to Section 203 of the Delaware General Corporation Law once Seidler ceases to beneficially own at least 15% of the totalvoting power of our then-outstanding shares of common stock. In general, subject to some exceptions, Section 203 prohibits a Delaware corporation from engagingin any “business combination” with any “interested stockholder” (which is generally defined as an entity or person who, together with the person’s affiliates andassociates, beneficially owns, or within three years prior to the time of determination of interested stockholder status did own, 15% or more of the outstandingvoting stock of the corporation), for a three-year period following the date that the stockholder became an interested stockholder. Section 203 could have the effectof delaying, deferring or preventing a change in control that our stockholders might consider to be in their best interests.28Further, our certificate of incorporation provides that, subject to limited exceptions, the Court of Chance ry of the State of Delaware will be, to the fullestextent permitted by law, the exclusive forum for any derivative action or proceeding brought on our behalf; any action asserting a breach of fiduciary duty; anyaction asserting a claim against us arising pursuant to the Delaware General Corporation Law; or any action asserting a claim against us that is governed by theinternal affairs doctrine. This exclusive forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it f inds favorable for disputeswith us or our directors, officers or other employees and agents, which may discourage such lawsuits against us and our directors, officers, employees and agents.Together, these charter and statutory provisions could make the removal of management more difficult and may discourage transactions that otherwisecould involve payment of a premium over prevailing market prices for our common stock. The existence of the foregoing provisions and anti-takeover measurescould limit the price that investors might be willing to pay in the future for shares of our common stock. They could also deter potential acquirers of our company,thereby potentially reducing the likelihood that our stockholders could receive a premium for their common stock in an acquisition.We expect that the price of our common stock will fluctuate.Volatility in the market price of our common stock may prevent our stockholders from being able to sell their common stock at or above the prices they paidfor their common stock. The market price for our common stock could fluctuate significantly for various reasons, including: ·our operating and financial performance and prospects, including seasonal fluctuations in our financial performance; ·conditions that impact demand for our products; ·the public’s reaction to our press releases, other public announcements and filings with the SEC; ·changes in earnings estimates or recommendations by securities analysts who track our common stock; ·market and industry perception of our success, or lack thereof, in pursuing our growth strategy; ·strategic actions by us or our competitors, such as acquisitions or restructurings; ·changes in federal and state government regulation; ·changes in accounting standards, policies, guidance, interpretations or principles; ·arrival or departure of key personnel; ·sales of common stock by us or members of our management team; and ·changes in general market, economic and political conditions in the United States and global economies or financial markets, including those resultingfrom natural disasters, terrorist attacks, acts of war and responses to such events.In addition, if the market for stocks in our industry, or the stock market in general, experiences a loss of investor confidence, the trading price of ourcommon stock could decline for reasons unrelated to our business, financial condition or results of operations. If any of the foregoing occurs, it could cause ourstock price to fall and may expose us to lawsuits that, even if unsuccessful, could be costly to defend and distract our management.We are an emerging growth company (“EGC”) within the meaning of The Jumpstart our Business Startups Act (“JOBS Act”), and the reduced reportingrequirements applicable to EGCs may make our common stock less attractive to investors.Because we qualify as an EGC under the JOBS Act, we have elected to comply with some of the reduced disclosure and other reporting requirementsavailable to us as an EGC for a period of up to five years following our initial public offering if we remain an EGC. For example, for as long as we remain an EGC,we are not subject to certain governance requirements, such as holding a “say-on-pay” and “say-on-golden-parachute” advisory votes, we are not required toinclude a “Compensation Discussion and Analysis” section in our proxy statements and reports filed under the Exchange Act, and we do not need to obtain anannual attestation report on our internal control over financial reporting from a registered public accounting firm pursuant to Section 404(b) of the Sarbanes-OxleyAct of 2002 (the “Sarbanes-Oxley Act”). We could be an EGC for a period up to the end of the fifth fiscal year after our initial public offering, although we willcease to be an EGC earlier than this five-year period if our total annual gross revenues equal or exceed $1 billion in a fiscal year, if we issue more than $1 billion innon-convertible debt over a three-year period or if we become a “large accelerated filer” (which requires, among other things, the market value of our commonstock held by non-affiliates to be at least $700 million as of the last business day of our second fiscal quarter of any fiscal year).29Accordingly, for up to five fiscal years after our initial public offering, our stockholders may not receive the same level of disclosure that is afforded tostockholders of a non-EGC. It is possible that investors will find our common stock to be less att ractive because we have elected to comply with the reduceddisclosure and other reporting requirements available to us as an EGC, which could adversely affect the trading market for our common stock and the prices atwhich stockholders may be able to sell their common stock.The requirements of being a public company may strain our resources and divert management’s attention.As a public company, we are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform andConsumer Protection Act of 2010 and other applicable securities rules and regulations. Compliance with these rules and regulations have increased our legal andfinancial compliance costs, make some activities more difficult, time-consuming or costly and increase demand on our systems and resources. The Exchange Actrequires, among other things, that we file annual, quarterly and current reports with respect to our business and results of operations and proxy or informationstatements in connection with matters upon which our stockholders may vote. As a result of our public disclosure of information in filings required of a publiccompany, our business and financial condition have become more visible, which could result in threatened or actual litigation, or other adverse actions taken bycompetitors and other third parties. In addition, our management team has limited experience managing a public company or complying with the increasinglycomplex laws pertaining to public companies, and a number of our directors have limited experience serving on the boards of public companies. The time andresources necessary to comply with the requirements of being a public company and contend with any action that might be brought against us as a result of publiclyavailable information could divert our resources and the attention of our management and adversely affect our business, financial condition and results ofoperations.If we are unable to implement and maintain effective internal control over financial reporting, investors may lose confidence in the accuracy andcompleteness of our financial reports, and the market price of our common stock may be adversely affected.As a public company, we are required to implement and maintain effective internal control over financial reporting and to disclose any material weaknessesidentified in our internal controls. Our management is required to furnish an annual report regarding the effectiveness of our internal control over financialreporting pursuant to Section 404 of the Sarbanes-Oxley Act (“Section 404”). We have refined, implemented, and tested the internal controls required to complywith Section 404. If we identify material weaknesses in our internal control over financial reporting, if we fail to comply with the requirements of Section 404 in atimely manner or if we are unable to assert that our internal control over financial reporting is effective, investors may lose confidence in the accuracy andcompleteness of our financial reports and the market price of our common stock could be adversely affected. We could also become subject to investigations byThe NASDAQ Stock Market, the SEC or other regulatory authorities, which could require additional financial and management resources.We do not expect to pay any cash dividends for the foreseeable future.We currently expect to retain all available funds and future earnings, if any, for use in the operation and growth of our business and do not anticipate payingany cash dividends in the foreseeable future. Any future determination to pay dividends will be at the discretion of our board of directors, subject to compliancewith applicable law and any contractual provisions, including under the credit agreements governing our term loans and revolving credit facility and agreementsgoverning any additional indebtedness we may incur in the future, that restrict or limit our ability to pay dividends, and will depend upon, among other factors, ourresults of operations, financial condition, earnings, capital requirements and other factors that our board of directors deems relevant. Further, because we are aholding company, our ability to pay dividends depends on our receipt of cash dividends from our operating subsidiaries, which may further restrict our ability topay dividends as a result of the laws of their jurisdiction of organization, agreements of our subsidiaries or covenants under our existing or future indebtedness. Allof our business operations are conducted through our wholly owned subsidiaries, Sportsman’s Warehouse, Inc. and Minnesota Merchandising Corporation and theirsubsidiaries. The ability of Sportsman’s Warehouse, Inc. and Minnesota Merchandising Corporation to pay dividends to us, and our ability to pay dividends on ourcapital stock, is limited by our term loans. Our revolving credit facility also limits our ability to pay dividends on our capital stock. Our ability to pay dividendsmay also be restricted by the terms of any future credit agreement or any future debt or preferred equity securities of ours or of our subsidiaries.If securities or industry analysts publish inaccurate or unfavorable research about us, our stock price and trading volume could decline.The trading market for our common stock will depend in part on the research reports that securities or industry analysts publish about us, our business andour industry. Assuming we obtain securities or industry analyst coverage, if one or more of the analysts who cover us downgrade our stock or publish inaccurate orunfavorable research about us, our business or our industry, our stock price would likely decline. If one or more of these analysts cease coverage of our company orfail to publish reports on us regularly, demand for our stock could decrease, which might cause our stock price and trading volume to decline.30I TEM 1B. UNRESOLVED STAFF COMMENTSNone.ITEM 2. PROPERTIESWe do not plan to own any material real property, but rather intend to lease all of our store locations. From time to time we will self-develop one of ourproperties with the intention to enter into a sale-leaseback transaction with a third party. Depending upon where we are in the process of completing the sale-leaseback transaction, we may legally own real property at any particular balance sheet date. Our corporate headquarters is located in an approximately 60,000square foot building in Midvale, Utah. The building is leased under an agreement expiring on December 31, 2018.Our distribution center is located in a 507,000 square foot facility in Salt Lake City, Utah. The building is leased under an agreement expiring on December31, 2023, with three options that each allow us to extend for an additional five years. We believe that our distribution center is of sufficient scale to support anetwork of up to 100 stores.We operate 66 retail stores in 20 states. In total we have approximately 2.8 million gross square feet across all of our stores. All of our stores are leased fromthird parties with lease terms typically ranging from five to fifteen years, and many of our lease agreements have additional five-year renewal options. All of ourleases provide for additional payments associated with common area maintenance, real estate, taxes and insurance. In addition, many of our lease agreements havedefined escalating rent provisions over the initial term and extensions.ITEM 3. LEGAL PROCEEDINGSOn March 11, 2013, we acquired certain assets and assumed certain liabilities of Wholesale Sports Outdoor Outfitters, or Wholesale Sports, relating to theirretail business of hunting, fishing and camping goods and supplies. Concurrently with our asset purchase, Alamo Group, LLC, an unrelated third party, purchasedall of the stock of Wholesale Sports. On March 22, 2013, the landlord of a store in Spokane, Washington that was formerly operated by Wholesale Sports, andwhich was one of the five stores whose leases we did not assume in our purchase of assets from Wholesale Sports, filed a complaint against the seller of WholesaleSports, Wholesale Sports and Alamo Group in the Superior Court for the State of Washington in the County of Spokane captioned as North Town Mall v. UnitedFarmers of Alberta Co-Operative Limited, et al., Case No. 13-2-01201-9. The complaint, as amended, alleged claims for breach of lease, violation of Washington’sFraudulent Transfer Act, tortious interference with contractual relations, piercing the corporate veil, assumption of the Spokane store lease and fraud and/ornegligent representation. We were named as a co-defendant in the amended complaint with respect to the fraudulent conveyance, tortious interference, andassumption of the lease claims. The complaint requested that the court order “avoidance” of an alleged transfer of assets from Wholesale Sports to us and/or AlamoGroup, damages based on future rent to be paid under the lease in the approximate amount of $4.5 million, attachment of assets, attorneys’ fees and costs asprovided for in contract, and such other relief that the court deems just and proper. In addition, the amended complaint alleged that we and Alamo Group wereliable for expenses that the landlord would incur as a result of default under the lease, including expenses related to returning the store premises to the conditioncalled for in the lease and the cost to locate a new tenant.On March 12, 2014, we were added as a defendant to a pending consolidated action filed in the United States District Court, Western District ofWashington, captioned as Lacey Market Place Associates II, LLC, et al. v. United Farmers of Alberta Co-Operative Limited, et al., Case No. 2:13-cv-00383-JLRagainst United Farmers of Alberta Co-Operative Limited, the seller of Wholesale Sports, Wholesale Sports, Alamo Group and Donald F. Gaube and spouse. Theamended complaint was filed by the landlords of two stores we did not assume in our purchase of assets from Wholesale Sports. Such stores were formerlyoperated by Wholesale Sports in Skagit and Thurston Counties in Washington. The amended complaint alleged breach of lease, breach of collateral assignment,misrepresentation, intentional interference with contract, piercing the corporate veil and violation of Washington’s Fraudulent Transfer Act. We were named as aco-defendant with respect to the intentional interference with contract and fraudulent conveyance claims. The amended complaint sought against us and alldefendants unspecified money damages, declaratory relief and attorneys’ fees and costs. On January 28, 2015, the court in the Lacey Marketplace action granted inpart and denied in part our motion for summary judgment and dismissed the intentional interference claim against us, but declined to dismiss the fraudulent transferclaim.31Trial in the Lacey Marketplace action began March 2, 2015 and concluded March 6, 2015. On March 9, 2015, the jury in the trial awarded $11.9 millionagainst the defendants to the action, including us. We reviewed the decision and accrued $4.0 million in our results for the fiscal year ended January 31, 2015related to this matter. We strongly disagreed with the jury’s verdict and filed post-trial motions seeking to have the verdict set aside. On July 30, 2015, the courtgranted our motion for judgment as a matter of law. Both United Farmers of Alberta Co-Operative Limited, a co-defendant, and the plaintiff ha ve appealed thecourt’s summary judgment ruling against the tortious interference claim, and the July 30, 2015 ruling to the appellate court and the appeal is currently in process.Based on the court’s most recent judgment in our favor, we determined that the likelihood of loss in this case is not probable, and, as such, we reversed the previousaccrual of $4.0 million in our results for the fiscal year ended January 30, 2016. The accrual and subsequent reversal of the $4.0 million is recorded in selling, general, and administrative expenses in the accompanying statements of income.When we become aware of a claim or potential claim, we assess the likelihood of any loss or exposure. If a loss contingency is probable and the amount ofthe loss can be reasonably estimated, we record an accrual for the loss. In such cases, there may be an exposure to potential loss in excess of the amount accrued.Where a loss is not probable but is reasonably possible or where a loss in excess of the amount accrued is reasonably possible, we disclose an estimate of theamount of the loss or range of possible losses for the claim if a reasonable estimate can be made, unless the amount of such reasonably possible losses is notmaterial to our financial position, results of operations or cash flows. The ability to predict the ultimate outcome of such matter involves judgments and inherentuncertainties. The actual outcome could differ.We are subject to various legal proceedings and claims, including employment claims, wage and hour claims, intellectual property claims, contractual andcommercial disputes and other matters that arise in the ordinary course of our business. While the outcome of these and other claims cannot be predicted withcertainty, we do not believe that the outcome of these matters individually or in the aggregate will have a material adverse effect on our business, results ofoperations or financial condition.ITEM 4. MINE SAFETY DISCLOSURESNot Applicable.32PART IIITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHODLER MATTERS AND ISSUER PURCHASES OF EQUITYSECURITIESMarket for Registrant’s Common EquityThe common stock of Sportsman’s Warehouse Holdings Incorporated is listed for trading on the NASDAQ under the symbol “SPWH." As of February 29,2016, there were 92 holders of record of our common stock. This number does not include persons who hold our common stock in nominee or “street name”accounts through brokers or banks.The following table sets forth, for the fiscal quarters indicated, the high and low sales prices per share of our common stock as reported on the NASDAQ:  2015 High Low First Quarter 9.73 6.81 Second Quarter 12.88 9.18 Third Quarter 14.91 9.92 Fourth Quarter 13.78 9.26 2014 High Low First Quarter 10.90 9.47 Second Quarter 10.10 5.79 Third Quarter 7.67 5.46 Fourth Quarter 8.10 6.29 Dividend PolicyWe did not pay any dividends in fiscal year 2015 or fiscal year 2014.We currently expect to retain all available funds and future earnings, if any, for use in the operation and growth of our business and do not anticipate payingany cash dividends in the foreseeable future. Any future determination to pay dividends will be at the discretion of our board of directors, subject to compliancewith applicable law and any contractual provisions, including under the credit agreements governing our term loans and revolving credit facility and agreementsgoverning any additional indebtedness we may incur in the future, that restrict or limit our ability to pay dividends, and will depend upon, among other factors, ourresults of operations, financial condition, earnings, capital requirements and other factors that our board of directors deems relevant. Because we are a holdingcompany, our ability to pay dividends depends on our receipt of cash dividends from our operating subsidiaries, which may further restrict our ability to paydividends as a result of the laws of their jurisdiction of organization, agreements of our subsidiaries or covenants under our existing or future indebtedness. All ofour business operations are conducted through our wholly owned subsidiaries, Sportsman’s Warehouse, Inc. and Minnesota Merchandising Corporation and theirsubsidiaries. The ability of Sportsman’s Warehouse, Inc. and Minnesota Merchandising Corporation to pay dividends to us, and our ability to pay dividends on ourcapital stock, is limited by our term loans. Our revolving credit facility also limits our ability to pay dividends on our capital stock. Our ability to pay dividendsmay also be restricted by the terms of any future credit agreement or any future debt or preferred equity securities of ours or of our subsidiaries.Equity Compensation Plan InformationEquity compensation plan information required by this Item 5 will be included in our definitive proxy statement for our annual meeting of stockholders,which will be filed with the SEC no later than 120 days after the end of our fiscal year ended January 30, 2016 (the "Proxy Statement"), and is incorporated hereinby reference.Stock Performance GraphThe stock price performance graph below shall not be deemed soliciting material or to be filed with the SEC or subject to Regulation 14A or 14C under theExchange Act or to the liabilities of Section 18 of the Exchange Act, nor shall it be incorporated by reference into any past or future filing under the Securities Actof 1933, as amended, or the Securities Act or the Exchange Act, except to the extent we specifically request that it be treated as soliciting material or specificallyincorporate it by reference into a filing under the Securities Act or the Exchange Act.33The following graph shows the cumulative total stockholder return of an investment of $100 in cash at market close on April 17, 2014 (the first day oftrading of our Common Stock), through January 29, 2016 for (i) our Common Stock (“SPWH”), (ii) the S&P 500 Retailing Industry Group Index (“S&P Retail”)and (iii) the Russel l 2000 Index (“Russell 2000”). Pursuant to applicable SEC rules, all values assume reinvestment of the full amount of all dividends. Thestockholder return shown on the graph below is not necessarily indicative of future performance, and we do not make or endorse any predictions as to futurestockholder returns.  4/17/2014 5/2/2014 8/1/2014 10/31/2014 1/30/2015 5/1/2015 7/31/2015 10/30/2015 1/29/2016 SPWH$100.00 $103.38 $59.38 $71.69 $73.13 $96.51 $119.90 $110.36 $134.46 S&P Retail 100.00 99.81 101.23 109.99 118.76 130.94 141.46 148.43 137.24 Russell 2000 100.00 99.20 97.98 103.13 102.42 107.93 108.86 102.11 90.99 ITEM 6. SELECTED FINANCIAL DATA.  Fiscal Year Ended January 30, January 31, February 1, 2016 2015 2014 (in thousands, except per share amounts) Consolidated Statements of Income Data: Net sales$729,912 $660,003 $643,163 Cost of goods sold 491,382 444,796 435,933 Gross profit 238,530 215,207 207,230 Selling, general and administrative expenses 179,218 170,315 147,140 Bankruptcy-related expenses (1) — — 55 Income from operations 59,312 44,892 60,035 Interest expense (14,156) (22,480) (25,447)Income before income taxes 45,156 22,412 34,588 Income tax expense 17,385 8,628 12,838 Net income$27,771 $13,784 $21,750 Earnings per share: Basic$0.66 $0.34 $0.66 Diluted$0.66 $0.34 $0.66 Weighted average shares outstanding: Basic shares 41,966 39,961 33,170 Diluted shares 42,334 40,141 33,185 34 Fiscal Year Ended January 30, January 31, February 1, 2016 2015 2014 (in thousands, except number of stores and per share amounts) Consolidated Balance Sheet Data: Total current assets$233,059 $203,671 $176,316 Total assets 303,024 270,723 224,229 Long-term debt (including current portion), net of discount 156,712 158,046 231,132 Total liabilities 305,083 302,055 345,325 Total stockholders’ deficit (2,059) (31,332) (121,096)Total liabilities and stockholders’ deficit 303,024 270,723 224,229 Other Data: Adjusted EBITDA (2)$73,024 $66,252 $70,716 Adjusted EBITDA margin (2) 10.0% 10.0% 10.9%Number of stores open at end of period64 55 47 Same store sales growth for period (3) 1.1% (8.4)% (3.7)% Cash dividend declared per common share (on a pre-split basis)$— $— $8.73 (1)On March 21, 2009, Sportsman’s Warehouse Holdings, Inc. and its subsidiaries filed voluntary petitions for relief under Chapter 11 of the United StatesBankruptcy Code, seeking to reorganize the business under the provisions of the Bankruptcy Code. The plan of reorganization under the Bankruptcy Codewas confirmed by the United States Bankruptcy Court for the District of Delaware on July 30, 2009 and became effective when all material conditions ofthe plan of reorganization were satisfied on August 14, 2009. We incurred certain costs related to our restructuring and emergence from Chapter 11bankruptcy and included a liability as part of the reorganization value at August 14, 2009, the date of emergence from bankruptcy. Bankruptcy-relatedexpenses are those amounts that are greater than the initial estimated restructuring costs. They are expensed as incurred.(2)Adjusted EBITDA has been presented in this filing as a supplemental measure of financial performance that is not required by, or presented in accordancewith, generally accepted accounting principles, or GAAP. We define Adjusted EBITDA as net income plus interest expense, income tax expense,depreciation and amortization, stock-based compensation expense, pre-opening expenses, and other gains, losses, and expenses that we do not believe areindicative of our ongoing expenses. Adjusted EBITDA margin means, for any period, the Adjusted EBITDA for that period divided by the net sales for thatperiod.Adjusted EBITDA and Adjusted EBITDA margin are included in this filing because they are key metrics used by management and our board of directors toassess our financial performance. Adjusted EBITDA and Adjusted EBITDA margin are frequently used by analysts, investors and other interested parties inthe evaluation of companies in our industry. In addition to assessing our financial performance, we use Adjusted EBITDA and Adjusted EBITDA margin asadditional measurement tools for purposes of business decision-making, including evaluating store performance, developing budgets and managingexpenditures.Adjusted EBITDA is not a GAAP measure of our financial performance or liquidity and should not be considered as an alternative to net income as ameasure of financial performance or cash flows from operations as a measure of liquidity, or any other performance measure derived in accordance withGAAP, and it should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. Additionally, AdjustedEBITDA is not intended to be a measure of free cash flow for management’s discretionary use, as it does not reflect certain cash requirements such as taxpayments, debt service requirements, capital expenditures, store openings and certain other cash costs that may recur in the future. Adjusted EBITDAcontains certain other limitations, including the failure to reflect our cash expenditures or future requirements for capital expenditures or contractualcommitments. In evaluating Adjusted EBITDA, you should be aware that, in the future, we will incur expenses that are the same as or similar to some of theadjustments reflected in this presentation, such as income tax expense (benefit), interest expense, depreciation and amortization and pre-opening expenses.Our presentation of Adjusted EBITDA should not be construed to imply that our future results will be unaffected by any such adjustments. Managementcompensates for these limitations by relying on our GAAP results in addition to using Adjusted EBITDA supplementally. Our measures of AdjustedEBITDA are not necessarily comparable to other similarly titled captions of other companies due to different methods of calculation. See below for areconciliation of net income to Adjusted EBITDA.(3)Net sales from a store are included in same store sales on the first day of the 13th full month following the store’s opening or acquisition by us. We excludenet sales from e-commerce from our calculation of same store sales, and for fiscal years consisting of 53 weeks, we exclude net sales during the 53rd weekfrom our calculation of same store sales. The figures shown represent growth over the corresponding period in the prior fiscal year.35A reconciliation of net income to Adjusted EBITDA is set forth below:  Fiscal Year Ended January 30, January 31, February 1, 2016 2015 2014 (in thousands) Net income$27,771 $13,784 $21,750 Plus: Interest expense 14,156 22,480 25,447 Income tax expense 17,385 8,628 12,838 Depreciation and amortization 11,569 9,150 6,277 Stock-based compensation expense (a) 2,257 3,293 365 Pre-opening expenses (b) 3,159 2,717 1,653 IPO bonus (c) — 2,200 — Litigation accrual (reversal) (d) (4,000) 4,000 — Bankruptcy-related expenses (e) — — 55 Acquisition expenses (f) — — 2,331 Secondary offering expenses (g) 727 — — Adjusted EBITDA$73,024 $66,252 $70,716 (a)Stock-based compensation expense represents non-cash expenses related to equity instruments granted to employees under our 2013 Performance IncentivePlan and Employee Stock Purchase Plan.(b)Pre-opening expenses include expenses incurred in the preparation and opening of a new store location, such as payroll, travel and supplies, but do notinclude the cost of the initial inventory or capital expenditures required to open a location.(c)As a result of the completion of our initial public offering and pursuant to the terms of the employment agreements with our executive officers, we paid $2.2million in bonuses to our executive officers.(d)Based on the court’s most recent judgment in our favor regarding the Lacey Marketplace litigation, we determined that the likelihood of loss in this case isnot probable, and, as such, we reversed the previous accrual of $4.0 million in our results for the fiscal year ended January 30, 2016. See Item 3. LegalProceedings.(e)We incurred certain costs related to our restructuring and emergence from Chapter 11 bankruptcy and included a liability as part of the reorganization valueat August 14, 2009, the date of emergence from bankruptcy. Bankruptcy-related expenses are those amounts that are greater than the initial estimatedrestructuring costs. They are expensed as incurred.(f)Acquisition expenses for fiscal year 2013 relate to the costs associated with the acquisition of our 10 previously operated stores in Montana, Oregon andWashington.(g)Expenses paid by us in connection with a secondary offering of our common stock by affiliates of Seidler Equity Partners III, L.P. and one of our executiveofficers.36I TEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULS OF OPERATIONSThe discussion below contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from thoseanticipated in these forward-looking statements as a result of various factors, including those which are discussed in the “Risk Factors” section in Part I, Item 1Aof this 10-K. Also see “Statement Regarding Forward-Looking Statements” preceding Part I.The following discussion and analysis should be read in conjunction with the consolidated financial statements and the notes thereto included in this 10-K.OverviewWe are a high-growth outdoor sporting goods retailer focused on meeting the everyday needs of the seasoned outdoor veteran, the first-time participant andevery enthusiast in between. Our mission is to provide a one-stop shopping experience that equips our customers with the right quality, brand name hunting,shooting, fishing and camping gear to maximize their enjoyment of the outdoors.Our business was founded in 1986 as a single retail store in Midvale, Utah. Today, we operate 66 stores in 20 states, totaling approximately 2.8 milliongross square feet. During fiscal year 2015, we increased our gross square footage by 9.8% through the opening of nine stores in the following locations: ●Spokane, Washington on March 7, 2015; ●Klamath Falls, Oregon on April 25, 2015; ●Heber City, Utah on May 9, 2015; ●Show Low, Arizona on June 27, 2015; ●Williston, North Dakota on July 11, 2015; ●Fresno, California on July 18, 2015; ●Albany, Oregon on August 15, 2015; ●Flagstaff, Arizona on September 12, 2015; and ●Sheridan, Colorado on September 19, 2015.During fiscal year 2016, we have opened stores in the following locations: ●Slidell, Louisiana on February 27, 2016 and ●South Jordan, Utah, on March 19, 2016.Individual stores are aggregated into one operating and reportable segment.How We Assess the Performance of Our BusinessIn assessing the performance of our business, we consider a variety of performance and financial measures. The key measures for determining how ourbusiness is performing are net sales, same store sales, gross margin, selling, general and administrative expenses, income from operations and Adjusted EBITDA.Fiscal YearWe operate using a 52/53 week fiscal year ending on the Saturday closest to January 31. Fiscal years 2015, 2014 and 2013 ended on January 30, 2016,January 31, 2015 and February 1, 2014, respectively. Fiscal years 2015, 2014, and 2013 each contained 52 weeks of operations.37Net Sales and Same Store SalesOur net sales are primarily received from revenue generated in our stores and also include sales generated through our e-commerce platform. Whenmeasuring revenue generated from our stores, we review our same store sales as well as the performance of our stores that have not operated for a sufficient amountof time to be included in same store sales. We include net sales from a store in same store sales on the first day of the 13th full fiscal month following the store’sopening or acquisition by us. We exclude net sales from e-commerce from our calculation of same store sales.Measuring the change in year-over-year same store sales allows us to evaluate how our retail store base is performing. Various factors affect same storesales, including: ·changes or anticipated changes to regulations related to some of the products we sell; ·consumer preferences, buying trends and overall economic trends; ·our ability to identify and respond effectively to local and regional trends and customer preferences; ·our ability to provide quality customer service that will increase our conversion of shoppers into paying customers; ·competition in the regional market of a store; ·atypical weather; ·changes in our product mix; and ·changes in pricing and average ticket sales.Opening new stores is also an important part of our growth strategy. Since the beginning of fiscal year 2010, we opened 29 stores, including the nine newstores we have opened in fiscal year 2015 and the two new stores we have opened in fiscal year 2016. For the next several years, we intend to grow our store baseat a rate of greater than 10 percent annually. As part of our growth strategy, we also re-acquired 10 stores in fiscal ye a r 2013 that were previously operated underour Sportsman’s Warehouse banner.For our new locations, we measure our investment by reviewing the new store’s four-wall Adjusted EBITDA margin and pre-tax return on invested capital(“ROIC”). We target a minimum 10% four-wall Adjusted EBITDA margin and a minimum ROIC of 50% excluding initial inventory costs (or 20% including initialinventory cost) for the first full twelve months of operation for a new store. The 20 new stores that we have opened since 2010 and that have been open for a fulltwelve months (excluding the 10 acquired stores) have achieved an average four-wall Adjusted EBITDA margin of 14.1% and an average ROIC of 98.3%excluding initial inventory cost (and 34.2% including initial inventory cost) during their first full twelve months of operations. Four-wall Adjusted EBITDA means,for any period, a particular store’s Adjusted EBITDA, excluding any allocations of corporate selling, general and administrative expenses allocated to that store.Four-wall Adjusted EBITDA margin means, for any period, a store’s four-wall Adjusted EBITDA divided by that store’s net sales. For a definition of AdjustedEBITDA and Adjusted EBITDA margin and a reconciliation of net income to Adjusted EBITDA, see “—Non-GAAP Measures.” ROIC means a store’s four-wallAdjusted EBITDA for a given period divided by our initial cash investment in the store. We calculate ROIC both including and excluding the initial inventory cost.We also have been scaling our e-commerce platform and increasing sales through our website, www.sportsmanswarehouse.com .We believe the key drivers to increasing our total net sales will be: ·increasing our total gross square footage by opening new stores; ·continuing to increase and improve same store sales in our existing markets; ·increasing customer visits to our stores and improving our conversion rate through focused marketing efforts and continually high standards of customerservice; ·increasing the average ticket sale per customer; and ·expanding our e-commerce platform.Gross ProfitGross profit is our net sales less cost of goods sold. Gross margin measures our gross profit as a percentage of net sales. Our cost of goods sold primarilyconsists of merchandise acquisition costs, including freight-in costs, shipping costs, payment term discounts received from the vendor and vendor allowances andrebates associated directly with merchandise and shipping costs related to e-commerce sales.38We believe the key drivers to improving our gross margin are increasing the product mix to higher margin products, particularly clothing and footwear,improving buying opportunities with our vendor partners and coordinating pricing strategies among our stores and buying group. Our ability to properly manageour inventory can also impact our gro ss profit. Successful inventory management ensures we have sufficient high margin products in stock at all times to meetcustomer demand, while overstocking of items could lead to markdowns in order to help a product sell. We believe that the overall growt h of our business willallow us to generally maintain or increase our gross margins, because increased merchandise volumes will enable us to maintain our strong relationships with ourvendors.Selling, General and Administrative ExpensesWe closely manage our selling, general and administrative expenses. Our selling, general and administrative expenses are comprised of payroll, rent andoccupancy, depreciation and amortization, acquisition expenses, pre-opening expenses and other operating expenses, including share-based compensation expenseand litigation accrual. Pre-opening expenses include expenses incurred in the preparation and opening of a new store location, such as payroll, travel and supplies,but do not include the cost of the initial inventory or capital expenditures required to open a location.Our selling, general and administrative expenses are primarily influenced by the volume of net sales of our locations, except for our corporate payroll, rentand occupancy and depreciation and amortization, which are generally fixed in nature. We control our selling, general and administrative expenses through abudgeting and reporting process that allows our personnel to adjust our expenses as trends in net sales activity are identified.We expect that our selling, general and administrative expenses will increase in future periods due to our continuing growth and in part to additional legal,accounting, insurance and other expenses we expect to incur as a result of being a public company.Income from OperationsIncome from operations is gross profit less selling, general and administrative expenses. We use income from operations as an indicator of the productivityof our business and our ability to manage selling, general and administrative expenses.Adjusted EBITDAWe define Adjusted EBITDA as net income plus interest expense, income tax expense, depreciation and amortization, stock-based compensation expense,pre-opening expenses, and other gains, losses, and expenses that we do not believe are indicative of our ongoing expenses. In evaluating our business, we useAdjusted EBITDA and Adjusted EBITDA margin as an additional measurement tool for purposes of business decision-making, including evaluating storeperformance, developing budgets and managing expenditures. See “—Non-GAAP Measures.”Results of OperationsThe following table summarizes key components of our results of operations as a percentage of net sales for the periods indicated:  Fiscal Year Ended January 30, 2016 January 31, 2015 February 1, 2014 Percentage of net sales: Net sales 100.0% 100.0% 100.0%Cost of goods sold 67.3 67.4 67.8 Gross profit 32.7 32.6 32.2 Selling, general and administrative expenses 24.6 25.8 22.9 Bankruptcy-related expenses 0.0 0.0 0.0 Income from operations 8.1 6.8 9.3 Interest expense 1.9 3.4 3.9 Income before income taxes 6.2 3.4 5.4 Income tax expense 2.4 1.3 2.0 Net income 3.8% 2.1% 3.4%Adjusted EBITDA 10.0% 10.0% 10.9% 39The following table shows our sales during the periods presented by department:   Fiscal Year Ended Department Product Offerings January 30, 2016 January 31, 2015 February 1, 2014 Camping Backpacks, camp essentials, canoes and kayaks, coolers,outdoor cooking equipment, sleeping bags, tents and tools 14.2% 13.5% 12.1%Clothing Camouflage, jackets, hats, outerwear, sportswear, technicalgear and work wear 8.6 9.5 8.8 Fishing Bait, electronics, fishing rods, flotation items, fly fishing,lines, lures, reels, tackle and small boats 9.6 9.5 8.8 Footwear Hiking boots, socks, sport sandals, technical footwear, trailshoes, casual shoes, waders and work boots 7.1 7.4 6.6 Hunting and Shooting Ammunition, archery items, ATV accessories, blinds andtree stands, decoys, firearms, reloading equipment andshooting gear 48.6 47.9 52.1 Optics, Electronics and Accessories Gift items, GPS devices, knives, lighting, optics (e.g.binoculars) and two-way radios 9.3 9.5 9.1 Other 2.6 2.7 2.5 Total 100.0% 100.0% 100.0% Fiscal Year 2015 Compared to Fiscal Year 2014Net Sales . Net sales increased by $69.9 million, or 10.6%, to $729.9 million in the fiscal year 2015 compared to $660.0 million in fiscal year 2014. Netsales increased due to net sales generated from our nine new stores openings during fiscal year 2015 and a full year of the eight stores opened during fiscal year2014 for the period of time prior to inclusion in our same store sales. These new stores generated $62.5 million in additional net sales in the fiscal year 2015compared to fiscal year 2014. This increase from our new store openings was supplemented by an increase in our same stores sales for the period of 1.1%.With respect to same store sales, three of our six departments (camping, hunting and shooting, and fishing) realized an increase in same store sales. Ourhunting and shooting department experienced a same store sales increase of 2.2% during fiscal year 2015 when compared to fiscal year 2014. Our camping andfishing departments experienced same store sales increases of 6.5% and 2.6%, respectively. Sales in our camping department were positively impacted by increasedproduct innovations within various categories. The increases in camping, hunting and shooting, and fishing were partially offset by the clothing, footwear, andoptics, electronics and accessories departments, which had same store sales decreases of 7.7%, 2.3%, and 1.0%, respectively, during the same period. Our clothingand footwear departments were negatively impacted by unseasonably warm weather in the majority of our markets. As of January 30, 2016, we had 55 storesincluded in our same store sales calculation.During fiscal year 2015, we opened nine new stores. These nine new locations generated net sales of $47.1 million during this period. Existing stores thatwere not included in same store sales generated $15.4 million in additional net sales in fiscal year 2015 over fiscal year 2014.Net sales from our e-commerce business increased by $0.2 million, or 2.7%, to $7.7 million in fiscal year 2015 compared to $7.5 million in fiscal year 2014.Gross Profit. Gross profit increased by $23.3 million, or 10.8%, to $238.5 million for fiscal year 2015 from $215.2 million for fiscal year 2014. As apercentage of net sales, gross profit increased by 0.1% to 32.7% for fiscal year 2015 from 32.6% in fiscal year 2014. The increase in gross profit from the priorfiscal year was due to an increase in vendor incentives received during the year.40Selling, General and Administrative Expenses. Selling, general and administrative expenses increased by $8.9 million, or 5.2%, to $179.2 million for fiscalyear 2015 from $170.3 million for fiscal year 2014. Selling, general and administrative expenses were 24.6% of net sales in fiscal year 2015 compared to 25.8% ofnet sales in fiscal year 2014. In fiscal year 2015, we incurred $0.7 million in costs related to a secondary offering. Also, in fiscal year 2015, we reversed the $4.0million accrual taken in fiscal yea r 2014 related to the Lacey Marketplace litigation matter because the court granted our motion for judgment as a matter of law. Infiscal year 2014, we paid a one-time discretionary bonus of $2.2 million in conjunction with the successful completion of our initial public offering. We did notincur this expense in fiscal year 2015. Excluding the secondary offering costs, the litigation accrual and subsequent reversal, and the one-time bonus, selling,general and administrative expenses increased by $18.4 mil lion and selling, general and administrative expenses were 25.0% of net sales in fiscal year 2015compared to 24.9% of net sales in fiscal year 2014. Specifically, we incurred additional payroll, rent, and depreciation and amortization of $7.1 million, $3. 2million, and $2.4 million, respectively, during fiscal year 2015 compared to fiscal year 2014, but these increases were lower on a per-store percentage basis. Wealso incurred additional operating expenses of $5.2 million in fiscal year 2015 related to a n increase in professional fees and other fees related to the LaceyMarketplace litigation matter as well as fees incurred as part of the additional stores that opened during the year.Interest Expense. Interest expense decreased by $8.3 million, or 37.0%, to $14.2 million in fiscal year 2015 from $22.5 million for fiscal year 2014. Interestexpense decreased primarily as a result of our lower debt balance and lower interest rate on the debt during fiscal year 2015 compared to fiscal year 2014 as a resultof the refinance on our term loan in December 2014 and the amendment on our line of credit facility in August 2015.Income Taxes. We recorded an income tax expense of $17.4 million for fiscal year 2015 compared to income tax expense of $8.6 million for fiscal year2014. Our effective tax rate remained unchanged in fiscal year 2015 from fiscal year 2014 at 38.5%. The effective tax rate did not change as there were no materiallegislative changes impacted the state tax rate or state apportionment methods in certain states where we operate.Fiscal Year 2014 Compared to Fiscal Year 2013Net Sales . Net sales increased by $16.8 million, or 2.6%, to $660.0 million in the fiscal year 2014 compared to $643.2 million in fiscal year 2013. Net salesincreased due to net sales generated from our eight new stores openings during fiscal year 2014 and a full year of the 14 stores, either opened or acquired, duringfiscal year 2013 for the period of time prior to inclusion in our same store sales. These new stores generated $69.5 million in additional net sales in the fiscal year2014 compared to fiscal year 2013. This increase from our new store openings was partially offset by a decline in our same stores sales for the period of 8.4% (or adecrease of 2.5% excluding firearms and ammunition).Each of our departments recognized an increase in net sales in fiscal year 2014 from fiscal year 2013 except for our hunting and shooting department. Ourcamping, clothing, fishing, footwear and optics, electronics and accessories departments had a combined increase of $32.4 million in net sales over the prior yearperiod as a result of the expansion of our product offerings in the clothing and footwear departments that was a result of the roll out of a “store-within-a-store”concept with certain of our key vendors and increased demand in our camping department. This increase was partially offset by an $18.3 million decrease in thehunting and shooting department as a result of decreased demand for firearms, ammunition and related products as compared to the corresponding period of fiscalyear 2013. During the fourth fiscal quarter of fiscal year 2012, we experienced increased demand for firearms that continued into fiscal year 2013, due in part to thepublic perception during that period that federal or state legislation might be enacted that would potentially make it more difficult to purchase certain firearms,ammunition and reloading supplies. Our sales of firearms returned closer to historical sales levels during the latter part of fiscal year 2013, which when combinedwith sales of ammunition and related products, resulted in the decrease in same store sales for fiscal year 2014 compared to the same period in fiscal year 2013.With respect to same store sales, four of our six departments (clothing, hunting and shooting, fishing, and optics, electronics and accessories) realized adecline in same store sales because of the decrease in demand for firearms and ammunition, as discussed above, and the associated decrease in customer trafficassociated with this decreased demand. Our hunting and shooting department experienced a same store sales decline of 16.1% during fiscal year 2014 whencompared to fiscal year 2013. Warm weather in our markets also adversely impacted the sales of our clothing products causing clothing department sales to declineapproximately 2.0% when compared with clothing department sales from fiscal year 2013. These declines were partially offset by the camping and footweardepartments, which had same store sales increases of 2.9% and 3.3%, respectively, during the same period. As of January 31, 2015, we had 47 stores included inour same store sales calculation.During fiscal year 2014, we opened eight new stores. These eight new locations generated net sales of $51.1 million during this period. Existing stores thatwere not included in same store sales generated $18.4 million in additional net sales in fiscal year 2014 over fiscal year 2013.Net sales from our e-commerce business remained flat at $7.5 million in fiscal year 2014 when compared to fiscal year 2013.41Gross Profit. Gross profit increased by $8.0 million, or 3.8%, to $215.2 million for fiscal year 2014 from $207.2 million for fiscal year 2013. As apercentage of net sales, gross profit increased by 0.4% to 32.6% for fiscal year 2014 from 32.2% in fiscal year 2013. The increase in gross profit from thecorresponding period of the prior fiscal year was due to an increase in vendor incentives received during the year combined with a shift in the sales mix from lowermargin products to higher margin products.Selling, General and Administrative Expenses. Selling, general and administrative expenses increased by $23.2 million, or 15.8%, to $170.3 million forfiscal year 2014 from $147.1 million for fiscal year 2013. The increase in these expenses resulted from an increase in the number of stores in operation over thecorresponding period of the prior year. Our payroll, rent and depreciation and amortization expenses increased $10.7 million, $4.7 million and $2.9 million,respectively, for fiscal year 2014 from fiscal year 2013. Also, as described in “Item 3. Legal Proceedings”, there was an additional $4.0 million increase in otheroperating expenses due to an accrual with respect to a litigation matter. These increases were partially offset by a decrease in the costs associated with ouracquisition of the 10 stores in March 2013 of $2.3 million during fiscal year 2013. Our total payroll expense for the first half of fiscal year 2014 included $2.2million in bonuses paid as a result of the successful completion of our initial public offering and pursuant to the terms of the employment agreements with ourexecutive officers and $3.3 million in non-cash stock-based compensation, $1.2 million of which was due to accelerated vesting triggered by our initial publicoffering. Selling, general and administrative expenses were 25.8% of net sales in fiscal year 2014 compared to 22.9% of net sales in fiscal year 2013. Selling,general and administrative expenses increased as a percentage of net sales primarily due to the increase in bonuses and stock-based compensation expense relatedto our initial public offering, increased payroll, rent and pre-opening expenses from the new store locations and the litigation accrual described above.Interest Expense. Interest expense decreased by $3.0 million, or 11.7%, to $22.5 million in fiscal year 2014 from $25.4 million for fiscal year 2013. Interestexpense decreased primarily as a result of our lower debt balance during fiscal year 2014 compared to fiscal year 2013. Specifically, as described below under “—Liquidity and Capital Resources,” we used the net proceeds from our initial public offering and partial exercise of the underwriter’s overallotment to repay $73.3million outstanding under our term loan facility in April and May of 2014. Additionally, we refinanced our term loan in the fourth quarter of 2014, which resultedin additional interest expense of $5.7 million in fiscal year 2014 related to this refinance and increased our outstanding amount from $158.8 million to $160.0million. In August 2013, we refinanced our term loan facility and increased the outstanding amount under this facility by $110.0 million, from $125.0 million to$235.0 million, and, as a result of this refinance, we recorded $8.1 million of interest expense in fiscal year 2013.Income Taxes. We recorded an income tax expense of $8.6 million for fiscal year 2014 compared to income tax expense of $12.8 million for fiscal year2013. Our effective tax rate for fiscal year 2014 of 38.5% increased from the effective tax rate for fiscal year 2013 of 37.1%. The increase was primarily due tolegislative changes which impacted the apportionment methods in certain states where we operate.SeasonalityDue to holiday buying patterns and the openings of hunting season across the country, net sales are typically higher in the third and fourth fiscal quartersthan in the first and second fiscal quarters. We also incur additional expenses in the third and fourth fiscal quarters due to higher volume and increased staffing inour stores. We anticipate our net sales will continue to reflect this seasonal pattern.The timing of our new retail store openings also may have an impact on our quarterly results. First, we incur certain one-time expenses related to openingeach new retail store, all of which are expensed as they are incurred. Second, most store expenses generally vary proportionately with net sales, but there is also afixed cost component, which includes occupancy costs. These fixed costs typically result in lower store profitability during the initial period after a new retail storeopens. Due to both of these factors, new retail store openings may result in a temporary decline in operating profit, in dollars and/or as a percentage of net sales.Weather conditions affect outdoor activities and the demand for related clothing and equipment. Customers’ demand for our products, and, therefore, ournet sales, can be significantly impacted by weather patterns on a local, regional and national basis.42Quarterly Results of OperationsThe following table sets forth unaudited financial and operating data for each fiscal quarter of fiscal years 2015 and 2014. This quarterly information hasbeen prepared on a basis consistent with our audited financial statements and includes all normal recurring adjustments that we consider necessary for a fairpresentation of the information shown. This information should be read in conjunction with “Part II, Item 6. Selected Financial Data” and “Part II, Item 8. FinancialStatements and Supplementary Data” of this 10-K. Our quarterly operating results may fluctuate significantly as a result of the factors described above and avariety of other factors, and operating results for any fiscal quarter are not necessarily indicative of results for a full fiscal year.   Fiscal Year 2015 Fiscal Year 2014 FourthQuarter ThirdQuarter SecondQuarter First Quarter FourthQuarter ThirdQuarter SecondQuarter First Quarter (unaudited) (in thousands, except per share data, percentages and number of stores) Net sales $212,730 $199,704 $172,985 $144,493 $185,578 $182,532 $159,468 $132,425 Gross profit 70,812 66,565 58,002 43,151 61,601 60,651 52,827 40,128 Income (loss) fromoperations (1) 22,109 19,169 16,786 1,248 14,145 18,625 12,343 (221)Net income (loss) (1)(2) 11,390 9,541 8,200 (1,360) 3,173 8,916 5,063 (3,368)Diluted earnings (loss)per share 0.27 0.23 0.19 (0.03) 0.08 0.21 0.12 (0.10)As a percentage of fullyear results: Net sales 29.1% 27.4% 23.7% 19.8% 28.1% 27.7% 24.2% 20.0%Gross profit 29.7 27.9 24.3 18.1 28.6 28.2 24.6 18.6 Income (loss) fromoperations 37.3 32.3 28.3 2.1 31.4 41.3 27.5 (0.5)Net income (loss) 41.0 34.4 29.5 (4.9) 18.5 52.0 29.5 (20.7)Operating data: Number of stores open atend of period 64 64 61 57 55 55 54 51 (1)This line includes, for the third quarter of 2015, $0.7 million in expenses paid by us in connection with a secondary offering of our common stock by affiliates of Seidler Equity PartnersIII, L.P. and one of our executive officers; for the fourth quarter of fiscal year 2014, an accrual of $4.0 million and, for the second quarter of fiscal year 2015, the reversal of the $4.0million accrual, with respect to the litigation matter discussed in the “Legal Matters” subsection of Note 17 to our consolidated financial statements; and, for the first quarter of 2014,$2.2 million in bonuses that were paid to our executive officers as a result of the completion of our initial public offering and pursuant to the terms of the employment agreements withour executive officers.(2)Includes, for the fourth quarter of fiscal year 2014, term loan refinance-related fees of $5.7 million.Liquidity and Capital ResourcesOur primary capital requirements are for seasonal working capital needs and capital expenditures related to opening new stores. Our sources of liquidity tomeet these needs have primarily been borrowings under our revolving credit facility, operating cash flows and short and long-term debt financings from banks andfinancial institutions. We believe that our cash on hand, cash generated by operating activities and funds available under our revolving credit facility will besufficient to finance our operating activities for at least the next twelve months.For fiscal year 2015, we incurred approximately $34.0 million in gross capital expenditures. We also received $19.0 million from sale-leasebacktransactions. We expect gross capital expenditures between $35.0 million and $40.0 million for fiscal year 2016. We intend to fund these initiatives with ouroperating cash flows and funds available under our revolving credit facility. Other investment opportunities, such as potential strategic acquisitions or storeexpansion rates in excess of those presently planned, may require additional funding.43Cash flows from operatin g, investing and financing activities are shown in the following table:  Fiscal Year Ended January 30, January 31, 2016 2015 (in thousands) Cash flows from operating activities$35,662 $20,473 Cash flows from investing activities (14,951) (30,167)Cash flows from financing activities (20,353) 10,091 Cash and cash equivalents at end of period 2,109 1,751 Net cash provided by operating activities was $35.7 million for fiscal year 2015, compared to $20.5 million for fiscal year 2014. Our net cash provided byoperating activities increased primarily due to favorable changes in accounts payable, income taxes receivable and payable, deferred income taxes, and depreciationof $17.4 million, $8.9 million, $3.1 million, and $2.4 million, respectively, as well as a $14.0 million increase in net income compared to fiscal year 2014. Theseincreases were partially offset by unfavorable changes in inventory, accrued expenses, amortization of discount on debt and deferred financing fees, prepaidexpenses, and deferred rent of $7.3 million, $7.1 million, $5.7 million, $5.5 million, and $4.2 million, respectively.Net cash used in investing activities was $15.0 million for fiscal year 2015 compared to $30.2 million for fiscal year 2014. The decrease in cash used ininvesting activities was primarily a result of proceeds of $19.0 million received from sale-leaseback transactions in fiscal year 2015. Capital expenditures increasedby $3.8 million to $34.0 million for fiscal year 2015 compared to $30.2 million for fiscal year 2014. This increase was primarily a result of opening one additionalstore in fiscal year 2015 compared to fiscal year 2014.Net cash used in financing activities was $20.4 million for fiscal year 2015 compared to net cash provided by financing activities of $10.1 million for fiscalyear 2014. In fiscal year 2015, net cash used in financing activities was primarily for $18.2 million in repayments on our revolving line of credit and term loan. Incontrast, in fiscal year 2014, we received net proceeds of $12.0 million from our initial public offering and borrowings under our term loan and revolving line ofcredit, net of repayments on our outstanding debt. Our outstanding debt consists of our senior secured revolving line of credit and our senior secured term loans.Senior Secured Revolving Credit Facility. We have a senior secured revolving credit facility with Wells Fargo Bank, National Association, or Wells Fargo,that provides for borrowings in the aggregate amount of up to $135.0 million, subject to a borrowing base calculation. As of January 30, 2016, $89.5 million wasavailable for borrowing and $25.3 million was outstanding under the revolving credit facility. All borrowings under the revolving credit facility are limited to aborrowing base equal to roughly (1) the lesser of (a) 90% of the net orderly liquidation value of our eligible inventory and (b) 75% of the lower of cost or marketvalue of our eligible inventory, plus (2) 90% of the eligible accounts receivable, less certain reserves against outstanding gift cards, layaway deposits and amountsoutstanding under commercial letters of credit, each term as defined in the credit agreement. The revolving credit facility matures on December 3, 2019.Each of the subsidiaries of Sportsman’s Warehouse Holdings, Inc., or Holdings, is a borrower under the revolving credit facility, and all obligations underthe revolving credit facility are guaranteed by Holdings. All of our obligations under the revolving credit facility are secured by a lien on substantially all ofHoldings’ tangible and intangible assets and the tangible and intangible assets of all of our subsidiaries, including a pledge of all capital stock of each of oursubsidiaries. The lien securing the obligations under the revolving credit facility is a first priority lien as to certain liquid assets, including cash, accounts receivable,deposit accounts and inventory. In addition, the credit agreement contains provisions that enable Wells Fargo to require us to maintain a lock-box for the collectionof all receipts.Borrowings under the revolving credit facility bear interest based on either, at our option, the base rate or LIBOR, in each case plus an applicable margin.The base rate is the higher of (1) Wells Fargo’s prime rate, (2) the federal funds rate (as defined in the credit agreement) plus 0.50% and (3) the one-month LIBOR(as defined in the credit agreement) plus 1.00%. The applicable margin for loans under the revolving credit facility, which varies based on the average dailyavailability, ranges from 0.50% to 1.00% per year for base rate loans and from 1.50% to 2.00% per year for LIBOR loans. The weighted average interest rate on theamount outstanding under the revolving credit facility as of January 30, 2016 was 2.16%.Interest on base rate loans is payable monthly in arrears and interest on LIBOR loans is payable based on the LIBOR interest period selected by us, whichcan be 30, 60 or 90 days. All amounts that are not paid when due under our revolving credit facility will accrue interest at the rate otherwise applicable plus 1.75%until such amounts are paid in full.44We may be required to make mandatory prepayments under the revolving credit facility in the event of a disposition of certain property or assets, in theevent of receipt of certain insurance or condemnation proceeds, upon the issuance of certain debt or equity securities, up on the incurrence of certain indebtednessfor borrowed money or upon the receipt of certain payments not received in the ordinary course of business.The revolving credit facility contains customary affirmative and negative covenants, including covenants that limit our ability to incur, create or assumecertain indebtedness, to create, incur or assume certain liens, to make certain investments, to make sales, transfers and dispositions of certain property and toundergo certain fundamental changes, including certain mergers, liquidations and consolidations. The revolving credit facility also requires us to maintain aminimum availability at all times of not less than 10% of the gross borrowing base, and in any event, not less than $5.0 million. The revolving credit facility alsocontains customary events of default. As of January 30, 2016, we were in compliance with all covenants under the revolving credit facility.Senior Secured Term Loan . We have a $160.0 million senior secured term loan facility with a financial institution. The term loan was issued at a price of99% of the aggregate principal amount and has a maturity date of December 3, 2020. The term loan requires quarterly principal payments of $0.4 million payableon the last business day of each fiscal quarter continuing up to and including October 30, 2020. A final installment payment consisting of the remaining unpaidbalance is due on December 3, 2020. As of January 30, 2016, there was $158.0 million outstanding under the term loan.All of Sportsman’s Warehouse, Inc.’s obligations under the term loan are guaranteed by Holdings, Minnesota Merchandising Corporation, a wholly ownedsubsidiary of Holdings, and each of Sportsman’s Warehouse, Inc.’s subsidiaries.The term loan is secured by a lien on substantially all of the tangible and intangible assets of Sportsman’s Warehouse, Inc. The lien securing the obligationsunder the term loan is a first priority lien as to certain non-liquid assets, including equipment, intellectual property, proceeds of assets sales and other personalproperty.Sportsman’s Warehouse, Inc. may be required to make mandatory prepayments on the term loan in the event of, among other things, certain asset sales, thereceipt of payment in respect of certain insurance claims or upon the issuance or incurrence of certain indebtedness. Sportsman’s Warehouse, Inc. may also berequired to make mandatory prepayments based on any excess cash flows as defined in the term loan agreement. Due to our profitability during fiscal year 2015,we are required to make a mandatory prepayment of approximately $7.7 million by May 6, 2016, which will reduce the amount outstanding under the term loan.The term loan bears interest at a rate per annum equal to the one-, two-, three-, or six-month LIBOR (or, the nine- or 12-month LIBOR), as defined in theterm loan agreement, at our election, which cannot be less than 1.25%, plus an applicable margin of 6.00%.The term loan contains customary affirmative and negative covenants, including covenants that limit our ability to incur, create or assume certainindebtedness, to incur or assume certain liens, to purchase, hold or acquire certain investments, to declare or make certain dividends and distributions and to engagein certain mergers, consolidations and asset sales. The term loan also requires us to comply with specified financial covenants, including a minimum interestcoverage ratio and a maximum total net leverage ratio. The term loan also contains customary events of default. As of January 30, 2016, we were in compliancewith all covenants under the term loan.Critical Accounting PoliciesOur financial statements are prepared in accordance with GAAP. In connection with the preparation of the financial statements, we are required to makeassumptions, make estimates and apply judgment that affect the reported amounts of assets, liabilities, revenue, expenses and the related disclosures. We base ourassumptions, estimates and judgments on historical experience, current trends and other factors that we believe to be relevant at the time the consolidated financialstatements are prepared. On a regular basis, we review the accounting policies, assumptions, estimates and judgments to ensure that our financial statements arepresented fairly and in accordance with GAAP. However, because future events and their effects cannot be determined with certainty, actual results could differfrom our assumptions and estimates, and such differences could be material.Our significant accounting policies are discussed in Note 2 of the Notes to our consolidated financial statements. We believe that the following accountingpolicies are the most critical to aid in fully understanding and evaluating our reported financial results.Revenue RecognitionWe recognize revenue on our retail sales at the time of the sale in the store. We record a reserve for estimated product returns in each reporting period basedon our historical experience. Had our estimate of product returns been lower or higher by 10% as of January 30, 2016, our operating income would have beencorrespondingly higher or lower by approximately $0.1 million.45Our policy regarding gift cards sold is to record revenue as the gift cards are redeemed for merchandise. Prior to their redemption, the gift cards are recordedas a liability. Gift card breakage income is recognized based upon historical redemption patter ns and represents the balance of gift cards for which we believe thelikelihood of redemption by the customer is remote. During the fiscal years ended January 30, 2016 and January 31, 2015, we recognized $0.8 million and $0.8million, respectively, in gift card breakage income. We include gift card breakage income as a reduction in selling, general and administrative expenses, ifapplicable. Had our estimate of breakage on our recorded liability for gift cards been lower or higher by 10% of the recorded lia bility as of January 30, 2016, ourselling, general and administrative expenses would have been correspondingly higher or lower by approximately $0.9 million.Loyalty breakage income is recognized based upon the balance of loyalty points that have expired after a dormancy period of 18 months. During the fiscalyear ended January 30, 2016, we recognized $0.2 million of loyalty breakage income. We did not recognize any loyalty breakage income for the fiscal year endedJanuary 31, 2015. This income is included in the accompanying consolidated statements of income as an increase in net sales. Had our estimate of breakage on ourrecorded liability for loyalty points been lower or higher by 10% of the recorded liability as of January 30, 2016, our net sales would have been correspondinglyhigher or lower by less than $0.1 million.Inventory ValuationWe value our inventory at the lower of cost or market. Cost is determined using the weighted average cost method. We estimate a provision for inventoryshrinkage based on our historical inventory accuracy rates as determined by periodic cycle counts. The allowance for damaged goods from returns is based uponour historical experience. We also adjust inventory for obsolete or slow moving inventory based on inventory productivity reports and by specific identification ofobsolete or slow moving inventory. Had our estimated inventory reserves been lower or higher by 10% as of January 30, 2016, our cost of sales would have beencorrespondingly lower or higher by approximately $0.4 million.Valuation of Long-Lived AssetsWe review our long-lived assets with definite lives for impairment whenever events or changes in circumstances may indicate that the carrying value of anasset may not be recoverable. We use an estimate of the future undiscounted net cash flows of the related asset or group of assets over their remaining useful livesin measuring whether the assets are recoverable. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized forthe amount by which the carrying amount exceeds the estimated fair value of the asset. Impairment of long-lived assets is assessed at the lowest levels for whichthere are identifiable cash flows that are independent of other groups of assets. Assets to be disposed of are reported at the lower of the carrying amount or fairvalue, less the estimated costs to sell. No impairment charge to long-lived assets was recorded during the fiscal year ended January 30, 2016 or January 31, 2015.Off Balance Sheet ArrangementsWe are not party to any off balance sheet arrangements.Contractual ObligationsThe following table summarizes our contractual obligations as of January 30, 2016 and the effect such obligations are expected to have on our liquidity andcash flows in future periods.   Payments Due by Period Total Less than 1year 1-3 years 3-5 years More than 5years (in thousands) Long-term debt obligations (1)$210,317 $20,415 $24,796 $165,106 $— Operating lease obligations (2) 295,704 36,840 75,277 68,990 114,597 Standby letters of credit 750 750 — — — Purchase obligations (3) 13,471 13,236 217 18 — 46 (1)Long-term debt obligations do not reflect the amounts outstanding under our revolving credit facility, because those amounts are considered currentliabilities, and do not reflect any mandatory prepayments of our term loans that may be required upon the occurrence of certain events, which are describedabove under “—Liquidity and Capital Resources.” Long-term obligations include interest to be paid until maturity. For loans that have variable rate interest,we have calculated future interest obligations based on the interest rate for that loan as of January 30, 2016.(2)Operating lease obligations in the table above do not include additional payments associated with common area maintenance, real estate, taxes andinsurance. Such payments were $7.3 million, $6.3 million and $5.0 million in fiscal years 2015, 2014, and 2013, respectively.(3)In the ordinary course of business, we enter into arrangements with vendors to purchase merchandise in advance of expected delivery. Because thesepurchase orders do not contain any termination payments or other penalties if cancelled, they are not included in this table of contractual obligations. Inaccordance with GAAP, these obligations are not recorded in our financial statements.Non-GAAP MeasuresIn evaluating our business, we use Adjusted EBITDA and Adjusted EBITDA margin as supplemental measures of our operating performance. We defineAdjusted EBITDA as net income plus interest expense, income tax expense, depreciation and amortization, stock-based compensation expense, pre-openingexpenses, and other gains/losses, and expenses that we do not believe are indicative of our ongoing expenses. Adjusted EBITDA margin means, for any period, theAdjusted EBITDA for that period divided by the net sales for that period. We consider Adjusted EBITDA and Adjusted EBITDA margin important supplementalmeasures of our operating performance and believe they are frequently used by analysts, investors and other interested parties in the evaluation of companies in ourindustry. Other companies in our industry, however, may calculate Adjusted EBITDA and Adjusted EBITDA margin differently than we do. Management also usesAdjusted EBITDA and Adjusted EBITDA margin as additional measurement tools for purposes of business decision-making, including evaluating storeperformance, developing budgets and managing expenditures.Adjusted EBITDA is not defined under GAAP and is not a measure of operating income, operating performance or liquidity presented in accordance withGAAP. Adjusted EBITDA has limitations as an analytical tool, and when assessing our operating performance, you should not consider Adjusted EBITDA inisolation or as a substitute for net income or other consolidated income statement data prepared in accordance with GAAP. Some of these limitations include, butare not limited to: ·Adjusted EBITDA does not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments; ·Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs; ·Adjusted EBITDA may be defined differently by other companies, and, therefore, it may not be directly comparable to the results of other companies inour industry; ·Adjusted EBITDA does not reflect the interest expense, or the cash requirements necessary to service interest or principal payments, on our debt; and ·Adjusted EBITDA does not reflect income taxes or the cash requirements for any tax payments.47The following table presents a reconciliation of net income, the most directly comparable financial measure presented in accord ance with GAAP, toAdjusted EBITDA for the fiscal years ended January 30, 2016, January 31, 2015, and February 1, 2014.  Fiscal Year Ended January 30, January 31, February 1, 2016 2015 2014 (dollars in thousands) Net income$27,771 $13,784 $21,750 Plus: Interest expense 14,156 22,480 25,447 Income tax expense 17,385 8,628 12,838 Depreciation and amortization 11,569 9,150 6,277 Stock-based compensation expense (1) 2,257 3,293 365 Pre-opening expenses (2) 3,159 2,717 1,653 IPO bonus (3) — 2,200 — Litigation accrual (reversal) (4) (4,000) 4,000 — Bankruptcy-related expenses (5) — — 55 Acquisition expenses (6) — — 2,331 Secondary offering expenses (7) 727 — — Adjusted EBITDA$73,024 $66,252 $70,716             Adjusted EBITDA margin 10.0% 10.0%  10.9% (1)Stock-based compensation expense represents non-cash expenses related to equity instruments granted to employees under our 2013 Performance IncentivePlan and Employee Stock Purchase Plan.(2)Pre-opening expenses include expenses incurred in the preparation and opening of a new store location, such as payroll, travel and supplies, but do notinclude the cost of the initial inventory or capital expenditures required to open a location.(3)As a result of the completion of our initial public offering and pursuant to the terms of the employment agreements with our executive officers, we paid $2.2million in bonuses to our executive officers.(4)Based on the court’s most recent judgment in our favor regarding the Lacey Marketplace litigation, we determined that the likelihood of loss in this case isnot probable, and, as such, we reversed the previous accrual of $4.0 million in our results for the fiscal year ended January 30, 2016. See Item 3. LegalProceedings.(5)We incurred certain costs related to our restructuring and emergence from Chapter 11 bankruptcy and included a liability as part of the reorganization valueat August 14, 2009, the date of emergence from bankruptcy. Bankruptcy-related expenses are those amounts that are greater than the initial estimatedrestructuring costs. They are expensed as incurred.(6)Acquisition expenses for fiscal year 2013 relate to the costs associated with the acquisition of our 10 previously operated stores in Montana, Oregon andWashington.(7)Expenses paid by us in connection with a secondary offering of our common stock by affiliates of Seidler Equity Partners III, L.P. and one of our executiveofficers.Recent Accounting PronouncementsFor a description of recent accounting pronouncements, see the notes to our consolidated financial statements. Under the Jumpstart Our Business StartupAct, “emerging growth companies” (“EGCs”) can delay adopting new or revised accounting standards until such time as those standards apply to privatecompanies. We have irrevocably elected not to avail ourselves of this exemption from new or revised accounting standards, and, therefore, we will be subject to thesame new or revised accounting standards as other public companies that are not EGCs.We will continue to be an EGC for a period up to the end of the fifth fiscal year after our initial public offering. We could cease to be an EGC earlier thanthis five-year period if our total annual gross revenues equal or exceed $1 billion in a fiscal year, if we issue more than $1 billion in non-convertible debt over athree-year period or if we become a “large accelerated filer” (which requires, among other things, the market value of our common stock held by non-affiliates tobe at least $700 million as of the last business day of our second fiscal quarter of any fiscal year). For further information, see Part I, Item 1A. “Risk Factors—Weare an EGC within the meaning of the JOBS Act and we cannot be certain if the reduced reporting requirements applicable to EGCs will make our common stockless attractive to investors.”48ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKOur principal exposure to market risk relates to changes in interest rates. Our revolving credit facility and term loans carry floating interest rates that are tiedto LIBOR, the federal funds rate and the prime rate, and, therefore, our income and cash flows will be exposed to changes in interest rates to the extent that we donot have effective hedging arrangements in place. We historically have not used interest rate swap agreements to hedge the variable cash flows associated with theinterest on our credit facilities. At January 30, 2016, the weighted average interest rate on our borrowings under our revolving credit facility was 2.16%. Based on asensitivity analysis at January 30, 2016, assuming the amount outstanding under our revolving credit facility would be outstanding for a full year, a 100 basis pointincrease in interest rates would increase our annual interest expense by approximately $0.3 million. As long as LIBOR is less than 1.25%, the interest rate on our$160.0 million term loan will be fixed at 7.25%. Since we entered into the term loan facility on December 3, 2014, LIBOR has not exceeded 1.25%. We do not usederivative financial instruments for speculative or trading purposes. However, this does not preclude our adoption of specific hedging strategies in the future. 49I TEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATATABLE OF CONTENTS  Page REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM51 CONSOLIDATED FINANCIAL STATEMENTS: Consolidated Balance Sheets52 Consolidated Statements of Income53 Consolidated Statements of Stockholders’ Deficit54 Consolidated Statements of Cash Flows55 Notes to Consolidated Financial Statements56 50R eport of Independent Registered Public Accounting FirmThe Board of Directors and StockholdersSportsman’s Warehouse Holdings, Inc.:We have audited the accompanying consolidated balance sheets of Sportsman’s Warehouse Holdings, Inc. and subsidiaries as of January 30, 2016 andJanuary 31, 2015, and the related consolidated statements of income, stockholders’ deficit, and cash flows for each of the fiscal years in the three-year period endedJanuary 30, 2016. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on theseconsolidated 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 thatwe plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includesexamining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principlesused and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide areasonable basis for our opinion.In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Sportsman’sWarehouse Holdings, Inc. and subsidiaries as of January 30, 2016 and January 31, 2015, and the results of their operations and their cash flows for each of thefiscal years in the three-year period ended January 30, 2016, in conformity with U.S. generally accepted accounting principles./s/ KPMG LLPSalt Lake City, UtahMarch 24, 2016 51SPORTSMAN’S WAREHOUSE HOLDINGS, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETSAmounts in Thousands, Except Per Share Data  January 30, January 31, 2016 2015 Assets Current assets: Cash and cash equivalents$2,109 $1,751 Accounts receivable, net 469 425 Merchandise inventories 217,794 185,909 Prepaid expenses and other 9,686 7,468 Deferred income taxes, current 3,001 2,928 Income taxes receivable — 5,190 Total current assets 233,059 203,671 Property and equipment, net 62,432 54,317 Deferred income taxes, noncurrent 2,263 5,398 Definite lived intangibles, net 3,923 5,729 Other long-term assets, net 1,347 1,608 Total assets$303,024 $270,723 Liabilities and Stockholders' Deficit Current liabilities: Accounts payable$46,698 $28,500 Accrued expenses 42,480 42,620 Income taxes payable 1,779 — Revolving line of credit 25,263 41,899 Current portion of long-term debt, net of discount 9,033 1,333 Current portion of deferred rent 3,018 2,873 Total current liabilities 128,271 117,225 Long-term liabilities: Long-term debt, net of discount and current portion 147,679 156,713 Deferred rent, noncurrent 29,133 28,117 Total long-term liabilities 176,812 184,830 Total liabilities 305,083 302,055 Commitments and contingencies Stockholders' deficit: Preferred stock, $.01 par value; 20,000 shares authorized; 0 shares issued and outstanding — — Common stock, $.01 par value; 100,000 shares authorized; 42,004 and 41,818 shares issuedand outstanding, respectively 420 418 Additional paid-in capital 77,757 76,257 Accumulated deficit (80,236) (108,007)Total stockholders' deficit (2,059) (31,332)Total liabilities and stockholders' deficit$303,024 $270,723 See accompanying notes to the consolidated financial statements 52SPORTSMAN’S WAREHOUSE HOLDINGS, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF INCOMEAmounts in Thousands, Except Per Share Data  Fiscal Year Ended  January 30,  January 31,  February 1,  2016  2015  2014 Net sales$729,912 $660,003 $643,163 Cost of goods sold 491,382 444,796 435,933 Gross profit 238,530 215,207 207,230 Selling, general, and administrative expenses 179,218 170,315 147,140 Bankruptcy related expenses — — 55 Income from operations 59,312 44,892 60,035 Interest expense (14,156) (22,480) (25,447)Income before income taxes 45,156 22,412 34,588 Income tax expense 17,385 8,628 12,838 Net income$27,771 $13,784 $21,750 Earnings per share: Basic$0.66 $0.34 $0.66 Diluted$0.66 $0.34 $0.66 Weighted average shares outstanding: Basic 41,966 39,961 33,170 Diluted 42,334 40,141 33,185 See accompanying notes to the consolidated financial statements 53SPORTSMAN’S WAREHOUSE HOLDINGS, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICITAmounts in Thousands  Common Stock Restricted nonvotingcommon stock Additionalpaid-in-capital Accumulateddeficit Totalstockholders'deficit Shares Amount Shares Amount Amount Amount Amount Balance at February 2, 2013 27,265 $273 5,964 $60 $— $(42,177) $(41,844)Dividends — — — — — (101,065) (101,065)Repurchase and retirement of restricted nonvoting common stock — — (287) (3) — (299) (302)Stock based compensation — — — — 365 — 365 Net income — — — — — 21,750 21,750 Balance at February 1, 2014 27,265 $273 5,677 $57 $365 $(121,791) $(121,096)Issuance of common shares 8,683 86 — — 73,305 — 73,391 Conversion of nonvoting common stock to commonstock 5,677 57 (5,677) (57) — — — Vesting of restricted stock units 193 2 — — (2) — - Payment of withholdings on restricted stock units — — — — (991) — (991)Excess tax benefit from restricted stock units — — — — 287 — 287 Stock based compensation — — — — 3,293 — 3,293 Net income — — — — — 13,784 13,784 Balance at January 31, 2015 41,818 $418 — $— $76,257 $(108,007) $(31,332)Vesting of restricted stock units 186 2 — — (2) — — Payment of withholdings on restricted stock units — — — — (1,041) — (1,041)Excess tax benefit from restricted stock units — — — — 286 — 286 Stock based compensation — — — — 2,257 — 2,257 Net income — — — — — 27,771 27,771 Balance at January 30, 2016 42,004 $420 — $— $77,757 $(80,236) $(2,059)See accompanying notes to the consolidated financial statements 54SPORTSMAN’S WAREHOUSE HOLDINGS, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWSAmounts in Thousands  Fiscal Years Ended January 30,  January 31, February 1, 2016  2015 2014 Cash flows from operating activities: Net income$27,771 $13,784 $21,750 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation of property and equipment 9,763 7,344 4,749 Amortization of discount on debt and deferred financing fees 817 6,497 6,952 Amortization of definite lived intangible 1,806 1,806 1,528 Net increase in deferred rent 1,161 5,397 432 Gain on asset dispositions — — (112)Deferred income taxes 3,062 (46) 2,169 Excess tax benefits from stock-based compensation arrangements (286) (287) — Stock-based compensation 2,257 3,293 365 Change in operating assets and liabilities: Accounts receivable, net (44) (12) 1,052 Merchandise inventories (31,885) (24,575) (28,344)Prepaid expenses and other (5,435) 86 (1,522)Other long-term assets 239 (107) 49 Accounts payable 18,198 836 1,333 Accrued expenses 983 8,127 2,049 Income taxes receivable and payable 7,255 (1,670) (12,416)Net cash provided by operating activities 35,662 20,473 34 Cash flows from investing activities: Purchase of property and equipment (33,957) (30,167) (20,416)Purchase of business — — (47,767)Proceeds from sale-leaseback transactions 19,006 — — Proceeds from sale of fixed assets — — 124 Net cash used in investing activities (14,951) (30,167) (68,059)Cash flows from financing activities: Net borrowings on line of credit (16,636) 12,847 29,052 Borrowings on term loan — 160,000 235,000 Issuance of common stock, net — 73,393 (302)Dividends paid — — (101,065)(Decrease) increase in book overdraft (1,123) 2,609 5,696 Excess tax benefits from stock-based compensation arrangements 286 287 — Payment of withholdings on restricted stock units (1,041) (993) — Payment of deferred financing costs (239) (2,227) (3,960)Principal payments on unsecured note payable — — (2,756)Principal payments on long-term debt (1,600) (234,225) (125,863)Discount on term loan — (1,600) (2,938)Net cash (used in) provided by financing activities (20,353) 10,091 32,864 Net change in cash and cash equivalents 358 397 (35,161)Cash and cash equivalents at beginning of year 1,751 1,354 36,515 Cash and cash equivalents at end of year$2,109 $1,751 $1,354 Net cash paid during the year for: Interest$12,799 $16,408 $18,979 Income taxes 7,032 10,328 23,089 See accompanying notes to the consolidated financial statements 55SPORTSMAN’S WAREHOUSE HOLDINGS, INC. AND SUBSIDIARIESNotes to Consolidated Financial StatementsAmounts in Thousands (1) Nature of BusinessDescription of BusinessSportsman’s Warehouse Holdings, Inc. (“Holdings”), a Delaware Corporation, and subsidiaries (collectively, the “Company”) operate retail sporting goodsstores. As of January 30, 2016, the Company operated 64 stores in 19 states.Voluntary Reorganization under Chapter 11On March 21, 2009, the Company and all of its subsidiaries filed a voluntary bankruptcy petition for reorganization under Chapter 11 of the United StatesBankruptcy Code in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”). On July 30, 2009, the Bankruptcy Court entered anorder approving and confirming the Plan of Reorganization (the “Reorganization Plan”). On May 22, 2013, the Company’s bankruptcy case was closed after a finaldecree was entered by the bankruptcy court.Bankruptcy-Related ExpensesThe adoption of fresh start reporting upon emergence from bankruptcy required the Company to allocate the reorganization value to its assets and liabilitiesin a manner similar to that which is required under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 805,Business Combinations, including estimated costs required to restructure and emerge from Chapter 11 bankruptcy. The Company incurred certain costs related torestructuring and emergence from Chapter 11 bankruptcy and included a liability as part of the reorganization value at August 14, 2009, the date of emergence frombankruptcy. Amounts greater than the estimated restructuring costs are expensed as incurred and included as a separate component of the consolidated statementsof income to arrive at income from operations. (2) Summary of Significant Accounting PoliciesPrinciples of ConsolidationThe consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) andinclude the accounts of its four wholly owned subsidiaries, Sportsman’s Warehouse, Inc. (“Sportsman’s Warehouse”), Pacific Flyway Wholesale, LLC (“PacificFlyway”), Sportsman’s Warehouse Southwest, Inc., and Minnesota Merchandising Corporation. All intercompany transactions and accounts have been eliminatedin consolidation.Fiscal YearThe Company operates using a 52/53 week fiscal year ending on the Saturday closest to January 31. Fiscal years 2015, 2014 and 2013 ended on January 30,2016, January 31, 2015 and February 1, 2014, respectively. Fiscal years 2013, 2014, and 2015 contain 52 weeks of operations.SeasonalityThe Company’s business is generally seasonal, with a significant portion of total sales occurring during the third and fourth quarters of the fiscal year.Use of Estimates in the Preparation of Consolidated Financial StatementsThe preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect thereported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reportedamounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.56Segment ReportingThe Company operates solely as a sporting goods retailer whose Chief Operating Decision Maker (“CODM”) is the Chief Executive Officer. The CODMreviews financial information presented on a consolidated and individual store and cost center basis, for purposes of allocating resources and evaluating financialperformance. The Company’s stores typically have similar square footage and offer essentially the same general product mix. The Company’s core customerdemographic remains similar chainwide, as does the Company’s process for the procurement and marketing of its product mix. Furthermore, the Companydistributes its product mix chainwide from a single distribution center. Given that the stores have the same economic characteristics, the individual stores areaggregated into one single operating and reportable segment.Cash and Cash EquivalentsThe Company considers cash on hand in stores and highly liquid investments with an initial maturity of three months or less as cash and cash equivalents.Checks issued pending bank clearance that result in overdraft balances for accounting purposes are classified as accrued expenses in the accompanyingconsolidated balance sheets.In accordance with the terms of a financing agreement (Note 9), the Company maintains depository accounts with two banks in a lock-box arrangement.Deposits into these accounts are used to reduce the outstanding balance on the line of credit as soon as the respective bank allows the funds to be transferred to thefinancing company. At January 30, 2016 and January 31, 2015, the combined balance in these accounts were $5,939 and $5,987, respectively. Accordingly, theseamounts have been classified as a reduction in the line of credit as if the transfers had occurred on January 30, 2016 and January 31, 2015, respectively.Accounts ReceivableThe Company offers credit terms on the sale of products to certain government and corporate retail customers and requires no collateral from thesecustomers. The Company performs ongoing credit evaluations of its customers’ financial condition and maintains an allowance for doubtful accounts receivablebased upon historical experience and a specific review of accounts receivable at the end of each period. Actual bad debts may differ from these estimates and thedifference could be significant. At January 30, 2016 and January 31, 2015, the allowance for doubtful accounts receivable totaled $0 and $113, respectively. Theactivity in the allowance for doubtful accounts was not significant for the fiscal years ended January 30, 2016, January 31, 2015 and February 1, 2014.Merchandise InventoriesMerchandise inventories are stated at the lower of cost or market. Cost is determined using the weighted average cost method. The Company estimates aprovision for inventory shrinkage based on its historical inventory accuracy rates as determined by periodic cycle counts. The allowance for damaged goods fromreturns is based upon historical experience. The Company also adjusts inventory for obsolete or slow moving inventory based on inventory productivity reports andby specific identification of slow moving or obsolete inventory. The inventory reserves for shrinkage, damaged, or obsolescence totaled $4,306 and $4,089 atJanuary 30, 2016 and January 31, 2015, respectively.Property and EquipmentProperty and equipment are recorded at cost. Leasehold improvements primarily include the cost of improvements funded by landlord incentives orallowances. Maintenance, repairs, minor renewals, and betterments are expensed as incurred. Major renewals and betterments are capitalized. Upon retirement ordisposal of assets, the cost and accumulated depreciation and amortization are eliminated from the respective accounts and the related gains or losses are credited orcharged to earnings.Depreciation and amortization of property and equipment is computed using the straight-line method over the estimated useful lives of the related assets.Leasehold improvements are amortized over the shorter of the useful lives of the improvements or the term of the lease. Furniture, fixtures, and equipment, aredepreciated over useful lives ranging from 3 to 10 years.Impairment of Long-Lived AssetsThe Company reviews its long-lived assets with definite lives for impairment whenever events or changes in circumstances may indicate that the carryingvalue of an asset may not be recoverable. The Company uses an estimate of the future undiscounted net cash flows of the related asset or group of assets over theirremaining useful lives in measuring whether the assets are recoverable. If the carrying amount of an asset exceeds its estimated future cash flows, an impairmentcharge is recognized for the amount by which the carrying amount exceeds the estimated fair value of the asset. Impairment of long-lived assets is assessed at thelowest levels for which there are identifiable cash flows that are independent of other groups of assets. Assets to be disposed of are reported at the lower of thecarrying amount or fair value, less the estimated costs to sell. No impairment charge to long-lived assets was recorded during the fiscal years ended January 30,2016, January 31, 2015 or February 1, 2014.57Prepaid Expenses and OtherPrepaid expenses and other primarily consists of prepaid expenses, vendor rebates receivable, vendor advertising receivables and miscellaneous deposits.Revenue RecognitionRevenue is recognized for retail sales at the time of the sale in the store. The Company records a reserve for estimated product returns in each reportingperiod, based on its historical experience. The Company’s sales returns reserve was $799 and $716 at January 30, 2016, and January 31, 2015, respectively.Revenue for gift cards sold is deferred and recognized as the gift cards are redeemed for merchandise. Gift card breakage income is recognized based uponhistorical redemption patterns and represents the balance of gift cards for which the Company believes the likelihood of redemption by the customer is remote.During the fiscal years ended January 30, 2016, January 31, 2015 and February 1, 2014, the Company recognized $846, $833 and $0 of gift card breakage income,respectively. This income is included in the accompanying consolidated statements of income as a reduction in selling, general, and administrative expenses(“SG&A”).In November of 2013, the Company launched a customer loyalty program. Under this program, the Company issues credits in the form of points to loyaltyprogram members. The value of points earned by loyalty program members is included in accrued liabilities and recorded as a reduction of net sales at the time thepoints are earned. Loyalty breakage income is recognized based upon the balance of loyalty points that have expired after a dormancy period of 18 months. Duringthe fiscal year ended January 30, 2016, the Company recognized $232 of loyalty breakage income. The Company did not recognize any loyalty breakage incomefor the fiscal year ended January 31, 2015. This income is included in the accompanying consolidated statements of income as an increase in net sales.Customer deposits on items placed in layaway are recorded as a liability. Revenue is recognized on layaway transactions at the point where the customertakes possession of the merchandise. These liabilities are recorded as unearned revenue in accrued expenses in the consolidated balance sheets.Sales taxes collected from customers and remitted to governmental authorities are accounted for on a net basis and, therefore, are excluded from net sales inthe consolidated statements of income.Cost of Goods SoldCost of goods sold primarily consists of merchandise acquisition costs, including freight-in costs, shipping costs, terms discounts received from the vendorand vendor allowances and rebates associated directly with merchandise. Vendor allowances include allowances and rebates received from vendors. The Companyrecords an estimate of earned allowances based on purchase volumes. These funds are determined for each fiscal year, and the majority is based on variousquantitative contract terms. Amounts expected to be received from vendors relating to purchase of merchandise inventories are recognized as a reduction of cost ofgoods sold as the merchandise is sold. Historical program results and current purchase volumes are reviewed when establishing the estimate for earned allowances.Shipping and Handling Fees and CostsAll shipping and handling fees billed to customers are recorded as a component of net sales. All costs incurred related to the shipping and handling ofproducts are recorded in cost of sales.Vendor AllowancesVendor allowances include price allowances, volume rebates, store opening costs reimbursements, marketing participation and advertising reimbursementsreceived from vendors under the terms of specific arrangements with certain vendors. Vendor allowances related to merchandise are recognized as a reduction ofthe costs of merchandise as sold. Vendor reimbursements of costs are recorded as a reduction to expense in the period the related cost is incurred based on actualcosts incurred. Any cost reimbursements exceeding expenses incurred are recognized as a reduction of the cost of merchandise sold. Volume allowances may beestimated based on historical purchases and estimates of projected purchases.58Tenant AllowancesThe Company enters into various types of lease agreements in the operation of its stores, including remodel and build-to-suit arrangements. Under any typeof lease agreement, the Company may receive reimbursement from a landlord for some of the costs related to occupancy or tenant improvements per leaseprovisions. These reimbursements may be referred to as tenant allowances or landlord reimbursements ("tenant allowances"). Reimbursement from a landlord foroccupancy or tenant improvements is treated differently depending on the type of arrangement. Under most of the Company’s lease agreements, tenant allowancesare included within deferred rent on the accompanying consolidated balance sheets. The deferred rent credit is amortized as rent expense on a straight-line basisover the term of the lease. Landlord reimbursements from these transactions are included in cash flows from operating activities as a change in deferred rent.In lease agreements where the Company is the deemed owner of the building during the construction period, a deemed sale-leaseback of the building occurswhen construction is complete and the lease term begins. Under these lease agreements, as the tenant allowances are received, the value of the Company’sconstruction-in-progress or leasehold improvements is reduced accordingly. The deemed sale-leaseback transactions are included in cash flows from investingactivities.Health InsuranceThe Company maintains for its employees a partially self-funded health insurance plan. The Company maintains stop-loss insurance through an insurancecompany with a $100 per person deductible and aggregate claims limit above a predetermined threshold. The Company is under contract .with this insurance company through December 2016. The Company intends to maintain this plan indefinitely. However, the plan may be terminated,modified, suspended, or discontinued at any time for any reason specified by the Company.The Company has established reserve amounts based upon claims history and estimates of claims that have been incurred but not reported (“IBNR”). As ofJanuary 30, 2016 and January 31, 2015, the Company estimated the IBNR to be $980 and $811, respectively. Actual claims may differ from the estimate and suchdifference could be significant. These reserves are included in accrued expenses in the accompanying consolidated balance sheets.Workers Compensation InsuranceEffective November 1, 2014, the Company maintains for its employees a high-deductible workers compensation plan. The Company maintains stop-lossinsurance through an insurance company with a $150 per claim deductible and aggregate claims limit above a predetermined threshold. The Company intends tomaintain this plan indefinitely. However, the plan may be terminated, modified, suspended, or discontinued at any time for any reason specified by the Company.Prior to November 1, 2014, we operated under a guaranteed cost insurance program.The Company has established reserve amounts based upon claims history and estimates of IBNR. As of January 30, 2016 and January 31, 2015, theCompany estimated the IBNR to be $527 and $107, respectively, related to the workers compensation plan. Actual claims may differ from the estimate and suchdifference could be significant. These reserves are included in accrued expenses in the accompanying consolidated balance sheets.Operating Leases and Deferred RentThe Company has various operating lease commitments on its store locations. Certain leases contain rent escalation clauses that require higher rentalpayments in later years. Leases may also contain rent holidays, or free rents, during the lease term. Rent expense is recognized on a straight-line basis over the leaseterm. Rent expense in excess of rental payments is recorded as deferred rent on the accompanying consolidated balance sheets.AdvertisingCosts for newspaper, television, radio, and other advertising are expensed in the period in which the advertising occurs. The Company participates invarious advertising and marketing cooperative programs with its vendors, who, under these programs, reimburse the Company for certain costs incurred. Paymentsreceived under these cooperative programs are recorded as a decrease to expense in the period that the advertising occurred. For the fiscal years ended January 30,2016, January 31, 2015 and February 1, 2014, net advertising expenses totaled $6,634, $4,629 and $4,685, respectively. These amounts are included in selling,general and administrative expenses in the accompanying consolidated statements of income.59Stock-Based CompensationCompensation expense is estimated based on grant date fair value on a straight-line basis over the requisite service or offering period. Costs associated withawards are included in compensation expense as a component of selling, general, and administrative expenses.Income TaxesThe Company recognizes a deferred income tax liability or deferred income tax asset for the future tax consequences attributable to differences between thefinancial statement basis of existing assets and liabilities and their respective tax basis. Deferred income tax assets and liabilities are measured using enacted taxrates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. A valuation allowance isprovided against deferred income tax assets when it is more likely than not that all or some portion of the deferred income tax assets will not be realized.The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained onexamination by the relevant tax authorities, based on the technical merits of the position. Interest and potential penalties are accrued related to unrecognized taxbenefits in the provision for income taxes.Fair Value of Financial InstrumentsThe carrying amounts of financial instruments except for long-term debt approximate fair value because of the general short-term nature of theseinstruments. The carrying amounts of long-term variable rate debt approximate fair value as the terms are consistent with market terms for similar debt instruments.The carrying amount of the Company’s financial instruments approximates fair value as of January 30, 2016 and January 31, 2015.Earnings Per ShareBasic earnings per share is calculated by dividing net income by the weighted-average shares of common stock outstanding, reduced by shares repurchasedand held in treasury, during the period. Diluted earnings per share represents basic earnings per share adjusted to include the potentially dilutive effect ofoutstanding share option awards, nonvested share awards and nonvested share unit awards.Comprehensive IncomeThe Company has no components of income that would require classification as other comprehensive income for the fiscal years ended January 30, 2016,January 31, 2015 or February 1, 2014.Recent Accounting PronouncementsRevenue from Contracts with CustomersIn May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-09 “Revenue from Contracts with Customers” (Topic 606) (“ASU 2014-09”).ASU 2014-09 is a comprehensive new revenue recognition model requiring a company to recognize revenue to depict the transfer of goods or services to acustomer at an amount reflecting the consideration it expects to receive in exchange for those goods or services. In August 2015, the FASB issued ASU 2015-14,“Revenue from Contracts with Customers” (Topic 606): Deferral of the Effective Date (“ASU 2015-14). ASU 2015-14 simply formalized a one year deferral of theeffective date of ASU 2014-09. As a result of these two standards updates, the Company expects that it will apply the new revenue standard to annual and interimreporting periods beginning after December 15, 2017. In adopting ASU 2014-09 and ASU 2015-14, companies may use either a full retrospective or a modifiedretrospective approach. Management is evaluating the provisions of ASU 2014-09 and ASU 2015-14 and has not yet selected a transition method nor have theydetermined what impact the adoption of ASU 2014-09 and ASU 2015-14 will have on the Company's financial position or results of operations.Simplifying the Presentation of Debt Issuance CostsIn April 2015, the FASB issued ASU 2015-03, “Simplifying the Presentation of Debt Issuance Costs” (“ASU 2015-03”). ASU 2015-03 requires that debtissuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistentwith debt discounts. ASU 2015-03 is effective for the first interim period for fiscal years beginning after December 15, 2015, with early adoption permitted forfinancial statements that have not been previously issued. Management does not expect the adoption of ASU 2015-03 to have any effect on the Company’sfinancial position or results of operations.60Simplifying the Measurement of InventoryIn July 2015, the FASB issued ASU 2015-11, “Simplifying the Measurement of Inventory” (“ASU 2015-11”). Under ASU 2015-11, inventory will bemeasured at the “lower of cost and net realizable value” and options that currently exist for “market value” will be eliminated. ASU 2015-11 defines net realizablevalue as the “estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation.” No otherchanges were made to the current guidance on inventory measurement. ASU 2015-11 is effective for interim and annual periods beginning after December 15,2016. Early application is permitted and should be applied prospectively. Management is evaluating the provisions of this statement, including which period toadopt, and has not determined what impact the adoption of ASU 2015-11 will have on the Company's financial position or results of operations.Presentation and Subsequent Measurement of Debt Issuance Costs Association with Line of Credit ArrangementsIn August 2015, the FASB issued ASU 2015-15, “Presentation and Subsequent Measurement of Debt Issuance Costs Association with Line of CreditArrangements” (“ASU 2015-15”). ASU 2015-15 indicates that the guidance in ASU 2015-03 did not address presentation or subsequent measurement of debtissuance costs related to line of credit arrangements. Given the absence of authoritative guidance within ASU 2015-03, the SEC staff has indicated that they wouldnot object to an entity deferring and presenting debt issuance costs ratably over the term of the line of credit arrangement, regardless of whether there are anyoutstanding borrowings on the line of credit arrangement. Management does not expect the adoption of ASU 2015-15 to have any effect on the Company’sfinancial position or results of operations.Simplifying the Presentation of Deferred TaxesIn November 2015, the FASB issued ASU 2015-17 “Balance Sheet Classification of Deferred Taxes” (Topic 740) (“ASU 2015-17”). ASU 2015-17 isintended to simplify the presentation of deferred income taxes and requires that deferred tax liabilities and assets be classified as noncurrent in the company’sconsolidated balance sheets. ASU 2015-17 is required to be adopted for annual periods beginning after December 15, 2016, with early adoption permitted. TheCompany will adopt the provisions of ASU 2015-17 prospectively, with the first annual period of change effective January 31, 2016. Management expects that theadoption of ASU 2015-17 to have an effect on the presentation of the Company’s financial position but no effect on the Company’s results of operations.Lease AccountingIn February 2016, the FASB issued ASU 2016-02, “Leases” (“ASU 2016-02”). The standard amends the existing accounting standards for lease accounting,including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. ASU 2016-02 will be effectivebeginning in the first quarter of 2019. Early adoption of ASU 2016-02 is permitted. The new leases standard requires a modified retrospective transition approachfor all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. Management is currently evaluating theimpact of adopting ASU 2016-02 on the Company’s consolidated financial statements.(3) Supplemental Cash Flow InformationThe following table sets forth non-cash investing items for the years ended: Fiscal Years Ended  January 30,  January 31, February 1,  2016  2015 2014 Leasehold improvements acquired through tenant allowances$3,036 $311 $— Purchases of property and equipment included in accounts payable 1,094 1,263 1,307 (4) Initial Public OfferingOn April 23, 2014, the Company completed its initial public offering, pursuant to which it issued and sold 8,333 shares of common stock at a price to thepublic of $9.50 per share; included in this offering was the sale of 4,167 shares by affiliates of Seidler Equity Partners III, L.P. The total net proceeds raised by theCompany were $70,299 after deducting underwriting discounts and commissions of $5,542 and other offering expenses of $3,326. Total net proceeds were used tomake an unscheduled early payment on the term loan (Note 10). In connection with the initial public offering, all of the then-outstanding shares of restrictednonvoting common stock automatically converted into shares of common stock.61On May 16, 2014, the underwriters of the Company’s initial public offering of common stock partially exercised the over-allotment option granted at thetime of the initial public offering to purchase an additional 1,400 shares of common stock at the public offering price of $9.50 per share, less underwriting discountsand commissions, which consists of 350 shares sold by the Company and 1,050 shares sold by affiliate s of Seidler Equity Partners III, L.P. The Company received,after deducting underwriting discounts and commissions and estimated offering expenses, approximately $3,100 of net proceeds. Substantially all of the netproceeds were used for the repayment of an additional amount outstanding under the Company’s term loans. (5) Secondary OfferingOn September 30, 2015, 6,250 shares of common stock were sold in a secondary offering by certain existing shareholders, including affiliates of Seidler EquityPartners III, L.P. On October 26, 2015, the underwriters of the secondary offering partially exercised the option granted at the time of the secondary offering topurchase an additional 649 shares of common stock at the secondary offering price of $12.25 per share, less underwriting discounts and commissions, whichconsists solely of shares sold by affiliates of Seidler Equity Partners III, L.P. The Company received no proceeds from the secondary offering or partial exercise ofthe option. Total expenses incurred related to the secondary offering and the exercise of the option was $727 and is recorded in selling, general, and administrativeexpenses in the accompanying statements of income. (6) Property and EquipmentProperty and equipment as of January 30, 2016 and January 31, 2015 are as follows:  January 30,  January 31, 2016  2015 Furniture, fixtures, and equipment$41,833  $32,678 Leasehold improvements 45,179   34,398 Construction in progress 5,593   7,651 Total property and equipment, gross 92,605   74,727 Less accumulated depreciation and amortization (30,173)  (20,410)Total property and equipment, net$62,432  $54,317 Depreciation expense was $9,763, $7,344 and $4,749 for the fiscal years ended January 30, 2016, January 31, 2015 and February 1, 2014, respectively. (7) Definite Lived Intangible AssetIntangible assets increased as a result of the non-compete agreement associated with the acquisition of certain assets and assumed liabilities of WholesaleSports Outdoor Outfitters (“Wholesale Sports”) in March 2013. The following table summarizes the definite lived intangible assets:   January 30, 2016  Amortization period Gross carryingamount Accumulatedamortization Net carrying amount Amortizing intangible assets:  Non-compete agreement 5 years $9,063 (5,140) 3,923 Total  $9,063 (5,140) 3,923    January 31, 2015  Amortization period Gross carryingamount Accumulatedamortization Net carrying amount Amortizing intangible assets:  Non-compete agreement 5 years $9,063 (3,334) 5,729 Total  $9,063 (3,334) 5,729 Amortization expense for definite lived intangible asset was $1,806 for the fiscal year ended January 30, 2016. Amortization expense for the next threeyears is $1,806 in fiscal year 2016, $1,806 in fiscal year 2017 and $311 in fiscal year 2018. 62(8) Accrued Expenses and Other LiabilitiesAccrued expenses and other liabilities consist of the following at January 30, 2016 and January 31, 2015:  January 30, January 31, 2016 2015 Book overdraft$7,182 $8,305 Unearned revenue 14,787 11,663 Accrued payroll and related expenses 8,573 7,104 Sales and use tax payable 2,998 3,708 Litigation accrual — 4,000 Other 8,940 7,840 $42,480 $42,620 (9) Revolving Line of CreditThe Company has a senior secured revolving credit facility (“Revolving Line of Credit”) with Wells Fargo Bank, National Association (“Wells Fargo”) thatprovides for borrowings in the aggregate amount of up to $135,000, subject to a borrowing base calculation. All borrowings under the revolving credit facility arelimited to a borrowing base equal to roughly (1) the lesser of (a) 90% of the net orderly liquidation value of our eligible inventory and (b) 75% of the lower of costor market value of our eligible inventory, plus (2) 90% of the eligible accounts receivable, less certain reserves against outstanding gift cards, layaway deposits andamounts outstanding under commercial letters of credit, each term as defined in the credit agreement.Each of the subsidiaries of the Company is a borrower under the revolving credit facility, and all obligations under the revolving credit facility areguaranteed by the Company. All of the Company’s obligations under the revolving credit facility are secured by a lien on substantially all of the Company’stangible and intangible assets and the tangible and intangible assets of all of the Company’s subsidiaries, including a pledge of all capital stock of each of theCompany’s subsidiaries. The lien securing the obligations under the revolving credit facility is a first priority lien as to certain liquid assets, including cash,accounts receivable, deposit accounts and inventory. In addition, the credit agreement contains provisions that enable Wells Fargo to require the Company tomaintain a lock-box for the collection of all receipts.As of January 30, 2016 and January 31, 2015, the Company had $31,202 and $47,886, respectively, in outstanding revolving loans under the RevolvingLine of Credit. Amounts outstanding are offset on the consolidated balance sheets by amounts in depository accounts under lock-box arrangements, which were$5,939 and $5,987 as of January 30, 2016 and January 31, 2015, respectively. As of January 30, 2016, the Company had stand-by commercial letters of credit of$750 under the terms of the Revolving Line of Credit.Borrowings under the revolving credit facility bear interest based on either, at the Company’s option, the base rate or LIBOR, in each case plus anapplicable margin. The base rate is the higher of (1) Wells Fargo’s prime rate, (2) the federal funds rate (as defined in the credit agreement) plus 0.50% and (3) theone-month LIBOR (as defined in the credit agreement) plus 1.00%. The applicable margin for loans under the revolving credit facility, which varies based on theaverage daily availability, ranges from 0.50% to 1.0% per year for base rate loans and from 1.50% to 2.00% per year for LIBOR loans. The weighted averageinterest rate on the amount outstanding under the revolving credit facility as of January 30, 2016 was 2.16%.The Company may be required to make mandatory prepayments under the revolving credit facility in the event of a disposition of certain property or assets,in the event of receipt of certain insurance or condemnation proceeds, upon the issuance of certain debt or equity securities, upon the incurrence of certainindebtedness for borrowed money or upon the receipt of certain payments not received in the ordinary course of business.The Revolving Line of Credit contains customary affirmative and negative covenants, including covenants that limit the Company’s ability to incur, createor assume certain indebtedness, to create, incur or assume certain liens, to make certain investments, to make sales, transfers and dispositions of certain propertyand to undergo certain fundamental changes, including certain mergers, liquidations and consolidations. The Revolving Line of Credit also requires us to maintain aminimum availability at all times of not less than 10% of the gross borrowing base, and in any event, not less than $5,000. The revolving credit facility alsocontains customary events of default. The Revolving Line of Credit matures on December 3, 2019. 63(10) Long-Term DebtLong-term debt consisted of the following as of January 30, 2016 and January 31, 2015:  January 30, January 31, 2016 2015 Term loan$158,000 $159,600 Less discount (1,288) (1,554) 156,712 158,046 Less current portion, net of discount (9,033) (1,333)Long-term portion$147,679 $156,713 Term LoanThe Company has a $160,000 senior secured term loan facility (“Term Loan”) with a financial institution. The Term Loan was issued at a price of 99% ofthe aggregate principal amount and has a maturity date of December 3, 2020.All of Sportsman’s Warehouse, Inc.’s obligations under the Term Loan are guaranteed by Holdings, Minnesota Merchandising Corporation, a wholly ownedsubsidiary of Holdings, and each of Sportsman’s Warehouse, Inc.’s subsidiaries.The Term Loan is secured by a lien on substantially all of the Company’s tangible and intangible assets. The lien securing the obligations under the TermLoan is a first priority lien as to certain non-liquid assets, including equipment, intellectual property, proceeds of assets sales and other personal property.The Term Loan requires quarterly principal payments of $400 payable on the last business day of each fiscal quarter up to and including October 30, 2020.A final installment payment consisting of the remaining unpaid balance is due on December 3, 2020.Sportsman’s Warehouse, Inc. may be required to make mandatory prepayments on the Term Loan in the event of, among other things, certain asset sales,the receipt of payment in respect of certain insurance claims or the issuance or incurrence of certain indebtedness. Sportsman’s Warehouse, Inc. may also berequired to make mandatory prepayments based on any excess cash flows as defined in the agreement for the Term Loan. Due to the Company’s profitabilityduring fiscal year 2015, the Company is required to make a mandatory prepayment of $7,700 by May 6, 2016, which will reduce the amount outstanding under theterm loan.The Term Loan bears interest at a rate per annum equal to the one-, two-, three-, or six-month LIBOR (or, the nine- or 12-month LIBOR), as defined in theterm loan agreement, at the Company’s election, which cannot be less than 1.25%, plus an applicable margin of 6.00%.The Term Loan contain customary affirmative and negative covenants, including covenants that limit the Company’s ability to incur, create or assumecertain indebtedness, to incur or assume certain liens, to purchase, hold or acquire certain investments, to declare or make certain dividends and distributions and toengage in certain mergers, consolidations and asset sales. The Term Loan also requires the Company to comply with specified financial covenants, including aminimum interest coverage ratio on a trailing twelve month basis and a maximum total net leverage ratio. The Term Loan also contains customary events ofdefault.As of January 30, 2016, the Term Loan had $156,712 outstanding, net of an unamortized discount of $1,288. During fiscal year 2015, Company recognized$266 of non-cash interest expense with respect to the amortization of this discount. During fiscal year 2014, the Company recognized $2,739 of non-cash interestexpense with respect to the amortization of the discount on the prior term loan.Restricted Net AssetsThe provisions of the Term Loan and the Revolving Line of Credit restrict all of the net assets of the Company’s consolidated subsidiaries, which constituteall of the net assets on the Company’s consolidated balance sheet as of January 30, 2016, from being used to pay any dividends without prior written consent fromthe financial institutions party to the Company’s Term Loan and Revolving Line of Credit. 64(11) Sale Leaseback TransactionsDuring the fiscal year ended January 30, 2016, the Company completed a sale-leaseback of the land and buildings for two store locations. The Company receivedgross cash proceeds of $12,068, exclusive of transaction costs of approximately $277. The carrying value of the properties sold were $11,964. The Companyrealized a loss on this transaction of $173, which has been recorded in selling, general, and administrative expenses in the accompanying statements of income. Thecurrent and long-term portions of the deferred loss are included in current portion of deferred rent and deferred rent, noncurrent, respectively, in the consolidatedbalance sheet as of January 20, 2016. Amortization of the deferred loss is reflected as an increase to rent expense and is included within selling, general, andadministrative expenses in the consolidated statement of income for the year ended January 30, 2016.During the fiscal year ended January 30, 2016, the Company completed a deemed sale-leaseback of the land and buildings for three store locations. In each of therelated lease agreements for these store locations, the Company was required to pay all construction costs directly with the right of reimbursement up to a pre-determined tenant allowance. Also, the Company indemnified the landlords with respect to costs arising from third-party damage arising from the acts or omissionof employees, sub-lessees, assignees, agent, and/or contractors arising during construction. As a result, and, based on appropriate accounting guidance, theCompany was deemed the owner of the land and building during the construction period. The deemed sale occurred when the construction of the assets werecomplete and the lease terms began. At the time of sale, any assets, up to the value of each pre-determined tenant allowance, were written off the Company’sbooks, and any remaining amounts were considered leasehold improvements. The total value of tenant allowances received during fiscal year 2015 was $5,652. (12) Common StockHolders of common stock are entitled to one vote per share, and to receive dividends and, upon liquidation or dissolution, are entitled to receive all assetsavailable for distribution to stockholders on a proportional basis with the restricted nonvoting common stockholders. The holders have no preemptive or othersubscription rights, and there are no redemption or sinking fund provisions with respect to such shares. (13) Earnings Per ShareBasic earnings per share is calculated by dividing net income by the weighted-average number of shares of common stock outstanding, reduced by thenumber of shares repurchased and held in treasury, during the period. Diluted earnings per share represents basic earnings per share adjusted to include thepotentially dilutive effect of outstanding share option awards, nonvested share awards and nonvested share unit awards.The following table sets forth the computation of basic and diluted earnings per common share:  Fiscal Year Ended January 30, January 31, February 1, 2016 2015 2014 Net income$27,771 $13,784 $21,750 Weighted-average shares of common stock outstanding: Basic 41,966 39,961 33,170 Dilutive effect of common stock equivalents 368 180 15 Diluted 42,334 40,141 33,185 Basic earnings per share$0.66 $0.34 $0.66 Diluted earnings per share$0.66 $0.34 $0.66 (14) Stock-Based CompensationStock-Based CompensationT he Company recognized total stock-based compensation expense of $2,257, $3,293, and $365 during fiscal years 2015, 2014, and 2013, respectively.Compensation expense related to the Company's stock-based payment awards is recognized in selling, general, and administrative expenses in the consolidatedstatements of income.Employee Stock PlansAs of January 30, 2016, the number of shares available for awards under the 2013 Performance Incentive Plan (the “2013 Plan”) was 1,728,995. As of January 30,2016, there were 598,697 awards outstanding under the 2013 Plan.65Nonvested Stock Unit AwardsDuring fiscal year 2015, the Company issued 27,668 nonvested stock units to employees or independent members of the Board of Directors at a weighted averagegrant date fair value of $11.28 per share. The nonvested stock units issued to employees vest evenly over four years on the grant date anniversary. The nonvestedstock units issued to independent members of the Board of Directors vest evenly over 12 months on the grant date anniversary.During fiscal year 2014, the Company issued 5,000 nonvested stock units to employees at a weighted average grant date fair value of $7.04 per share. Thenonvested stock units vest evenly over four years on the grant date anniversary.As of January 30, 2016 and January 31, 2015, respectively, the Company had $4,279 and $6,268 remaining in unrecognized compensation costs related tononvested restricted stock units. The weighted average grant date fair value of the outstanding shares were $7.15 and $7.06, respectively. The expected net taxbenefit related to the unrecognized compensation costs were $1,647 and $2,413, respectively.The Company had no net share settlements in fiscal year 2015 or 2014.The following table sets forth the rollforward of outstanding restricted stock units:   Weigthed  average  grant-date Shares  fair value Balance at January 31, 2015 887,853  $7.06 Grants 27,668   11.28 Forfeitures 7,892   7.06 Vested 308,932   7.27 Balance at January 30, 2016 598,697  $7.15    Weigthed  average  grant-date Shares  fair value Balance at February 1, 2014 1,193,747  $7.06 Grants 5,000   7.04 Forfeitures 13,493   7.06 Vested 297,401   7.06 Balance at January 31, 2015 887,853  $7.06 (15) Employee Stock Purchase PlanIn June 2015, the Company’s stockholders approved the Sportsman’s Warehouse Holdings, Inc. Employee Stock Purchase Plan (“ESPP”), which providesfor the granting of up to 800 shares of the Company’s common stock to eligible employees. The ESPP period is semi-annual and allows participants to purchase theCompany’s stock at 85% of the lower of (i) the market value per share of the common stock on the first day of the offering period or (ii) the market value per shareof the common stock on the purchase date. The first plan period began on January 1, 2016. Stock-based compensation expense related to the ESPP in fiscal year2015 was $15.The Company uses the Black-Scholes model to estimate the fair value of shares to be issued as of the grant date using the following weighted averageassumptions:  Fiscal Year Ended January 30, 2016 Risk-free interest rate 0.49%Expected life (in years) 0.5 Expected volatility 36.1%Dividend yield — 66(16) Income TaxesFor the fiscal years ended January 30, 2016, January 31, 2015 and February 1, 2014, the income tax provision consisted of the following:   January 30, January 31, February 1, 2016 2015 2014 Current: Federal $12,341 $7,482 $9,421 State 1,982 1,192 1,248 Total current 14,323 8,674 10,669 Deferred: Federal 2,746 (103) 1,830 State 316 57 339 Total deferred 3,062 (46) 2,169 Total income tax provision $17,385 $8,628 $12,838 The provision for income taxes differs from the amounts computed by applying the federal statutory rate as follows for the following periods:   January 30, January 31, February 1,   2016 2015 2014 Federal statutory rate  35.0%  35.0%  35.0%State tax, net of federal benefit  3.5   3.5   3.6 Permanent items  0.2   0.2   0.3 Other items (0.2)  (0.2)  (1.8) Effective income tax rate  38.5%  38.5%  37.1% The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at January 30, 2016 andJanuary 31, 2015, respectively, are presented below:   January 30, January 31,  2016 2015 Deferred tax assets:    Accrued liabilities $468  $444 Allowance for doubtful accounts  —   44 Deferred rent  12,377   11,932 Intangible asset  1,293   — Inventories  2,335   2,189 Litigation accrual  —   1,540 Net operating loss  —   51 Sales return reserve  308   276 Stock-based compensation  634   600 Total gross deferred tax assets $17,415  $17,076 Deferred tax liabilities:    Depreciation $(11,407) $(8,125)Prepaid expenses  (744)  (625)Total gross deferred tax liabilities $(12,151) $(8,750)Net deferred tax asset $5,264  $8,326 67 As of January 30, 2016 and January 31, 2015, the components of the current and long-term deferred income taxes are as follows:   January 30, January 31,  2016 2015 Current deferred tax assets, net:  Accrued liabilities $468  $444 Allowance for doubtful accounts  - 44 Inventories  2,335   2,189 Prepaid expenses  (744) (625)Sales return reserve  308   276 Stock-based compensation  634   600 Current deferred tax assets, net $3,001 $2,928 Non-current deferred tax assets, net:  Deferred rent $12,377  $11,932 Depreciation  (11,407) (8,125)Intangible asset  1,293   — Litigation accrual  — 1,540 Net operating loss  —   51 Non-current deferred tax assets, net $2,263 $5,398 Deferred tax assets have resulted primarily from the Company’s future deductible temporary differences. In assessing the realizability of deferred tax assets,management considers whether it is more likely than not that some portion or all of the deferred tax asset will not be realized. The Company’s ability to realize itsdeferred tax assets depends upon the generation of sufficient future taxable income to allow for the utilization of its deductible temporary differences.Management evaluates the realizability of the deferred tax assets and the need for additional valuation allowances annually. At January 30, 2016, based oncurrent facts and circumstances, management believes that it is more likely than not that the Company will realize benefit for its gross deferred tax assets.As of January 30, 2016, the Company had no unrecognized tax benefits. The Company does not anticipate that unrecognized tax benefits will significantlyincrease or decrease within 12 months of the reporting date. There are no income tax returns that are currently under examination. Federal and state tax years thatremain subject to examination are periods ended January 29, 2011 through January 31, 2015.At January 31, 2015, the Company had state net operating loss carry-forwards of approximately $1,387, which were used to offset taxable income in fiscalyear 2015.The Company’s policy is to accrue interest expense, and penalties as appropriate, on estimated unrecognized tax benefits as a charge to interest expense inthe consolidated statements of income. During fiscal year 2014, the Company accrued interest and penalties of $14. No interest or penalties were accrued for fiscalyear 2015 or fiscal year 2013. (17) Commitments and ContingenciesOperating LeasesThe Company leases its retail store, office space, and warehouse locations under non-cancelable operating leases. Certain of these leases include tenantallowances that are amortized over the life of the lease. In 2015, 2014 and 2013, the Company received tenant allowances of $5,652, $5,129 and $200, respectively.The Company expects to receive $16,705 in tenant allowances under leases during fiscal year 2016. Certain leases require the Company to pay contingent rentalamounts based on a percentage of sales, in addition to real estate taxes, insurance, maintenance and other operating expenses associated with the leased premises.These agreements expire at various dates through July 2030 and generally contain three, five-year renewal options. Rent expense under these leases totaled$33,209, $30,520 and $27,118 for the fiscal years ended January 30, 2016, January 31, 2015 and February 1, 2014, respectively.68Future minimum lease payments for non-cancelable operating leases by fiscal year, as of January 30, 2016 are as follows: Fiscal Year:      2016  36,840 2017  37,869 2018  37,408 2019  35,076 2020  33,914 Thereafter  114,597   295,704 Legal MattersThe Company is involved in various legal matters generally incidental to its business. After discussion with legal counsel, the Company believes that thedisposition of these matters will not have a material impact on its consolidated financial condition, liquidity, or results of operations.On March 12, 2014, the Company was added as a defendant to a pending consolidated action filed in the United States District Court, Western District ofWashington, captioned as Lacey Market Place Associates II, LLC, et al. v. United Farmers of Alberta Co-Operative Limited, et al., Case No. 2:13-cv-00383-JLRagainst United Farmers of Alberta Co-Operative Limited (the seller of Wholesale Sports), Wholesale Sports, Alamo Group, LLC and Donald F. Gaube and spouse.The amended complaint was filed by the landlords of two stores that the Company did not assume in the Company’s purchase of assets from Wholesale Sports.Such stores were formerly operated by Wholesale Sports in Skagit and Thurston Counties in Washington. The amended complaint alleged breach of lease, breachof collateral assignment, misrepresentation, intentional interference with contract, piercing the corporate veil and violation of Washington’s Fraudulent TransferAct. The Company was named as a co-defendant with respect to the intentional interference with contract and fraudulent conveyance claims. The amendedcomplaint sought against the Company and all defendants unspecified money damages, declaratory relief and attorneys’ fees and costs. On January 28, 2015, thecourt in the Lacey Marketplace action granted in part and denied in part the Company’s motion for summary judgment and dismissed the intentional interferenceclaim against the Company, but declined to dismiss the fraudulent transfer claim.Trial in the Lacey Marketplace action began March 2, 2015 and concluded March 6, 2015. On March 9, 2015, the jury in the trial awarded $11,887 againstthe defendants to the action, including the Company. The Company reviewed the decision and accrued $4,000 in its results for the fiscal year ended January 31,2015 related to this matter. The Company strongly disagreed with the jury’s verdict and filed post-trial motions seeking to have the verdict set aside. On July 30,2015, the court granted the Company’s motion for judgment as a matter of law. Both United Farmers of Alberta Co-Operative Limited, a co-defendant, and theplaintiff have appealed the court’s summary judgment ruling against the tortious interference claim, and the July 30, 2015 ruling to the appellate court and theappeal is currently in process. Based on the court’s most recent judgment in favor of the Company, the Company determined that the likelihood of loss in this caseis not probable, and, as such, the Company reversed the previous accrual of $4,000 in its results for the fiscal year ended January 30, 2016. The reversal of the$4,000 accrual is recorded in selling, general, and administrative expenses in the accompanying statements of income.(18) Related-Party TransactionsOn August 14, 2009, the Company entered into a reimbursement agreement with Seidler Equity Partners III, L.P. Under the terms of this agreement, theCompany agreed to reimburse Seidler Equity Partners III, L.P. for various out-of-pocket costs and expenses related to the Company up to a maximum of $150annually. During the fiscal years ended January 30, 2016, January 31, 2015, and February 1, 2014, the Company made payments of $12, $35 and $18, respectively,under this agreement. At January 30, 2016 and January 31, 2015, there were no amounts payable under the terms of this agreement. (19) Retirement PlanThe Company sponsors a profit sharing plan (the “Plan”) for which Company contributions are based upon wages paid. As approved by the Board ofDirectors, the Company makes discretionary contributions to the Plan at rates determined by management. The Company made contributions of $282, $276 and$234 for the fiscal years ended January 30, 2016, January 31, 2015, and February 1, 2014, respectively. 69 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURENone.ITEM 9A. CONTROLS AND PROCEDURESDisclosure Controls and ProceduresAs of the end of the period covered by this report, management, including our chief executive officer and chief financial officer, evaluated the effectivenessof our disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).Based upon the evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective as of January30, 2016 to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act of 1934 is recorded, processed, summarizedand reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and proceduresdesigned to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is accumulated and communicated to ourmanagement, including our chief executive officer and our chief financial officer, as appropriate to allow timely decisions regarding required disclosure.Management’s Report on Internal Control Over Financial ReportingOur management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act for us. Internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of our financialreporting for external purposes in accordance with accounting principles generally accepted in the United States of America.With the participation of our Chief Executive Officer and our Chief Financial Officer, management evaluated the effectiveness of our internal control overfinancial reporting as of January 30, 2016, based on the criteria established in Internal Control – Integrated Framework (2013) issued by the Committee ofSponsoring Organizations of the Treadway Commission. Based on this evaluation, management concluded that our internal control over financial reporting waseffective as of January 30, 2016.Exemption from Attestation Report of Independent Registered Public Accounting FirmThis 10-K does not include an attestation report from our registered public accounting firm regarding internal control over financial reporting.Management’s report was not subject to attestation by our registered public accounting firm pursuant to rules of the SEC that permit emerging growth companies,which we are, to provide only management’s report in this 10-K.Changes in Internal Control Over Financial ReportingThere were no changes in our internal control over financial reporting during the 13 weeks ended January 30, 2016 that have materially affected, or arereasonably likely to materially affect, our internal control over financial reporting.ITEM 9B. OTHER INFORMATIONNone. 70 PART IIIITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCEThe Company has adopted a Code of Conduct and Ethics applicable to our employees, directors, and officers. This Code of Conduct and Ethics is applicableto our principal executive officer, principal financial officer, principal accounting officer and controller, or persons performing similar functions. The code isavailable on the Company’s website at investors.sportsmanswarehouse.com. To the extent required by rules adopted by the SEC and NAS DAQ, we intend topromptly disclose future amendments to certain provisions of the code, or waivers of such provisions granted to executive officers and directors on our website atinvestors.sportsmanswarehouse.com.The remaining information required by this Item 10 will be included in our Proxy Statement and is incorporated herein by reference.ITEM 11. EXECUTIVE COMPENSATIONThe information required by this Item 11 will be included in our Proxy Statement and is incorporated herein by reference.ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT RELATED STOCKHOLDER MATTERSThe information required by this Item 12 will be included in our Proxy Statement and is incorporated herein by reference.ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCEThe information required by this Item 13 will be included in our Proxy Statement and is incorporated herein by reference.ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICESThe information required by this Item 14 will be included in our Proxy Statement and is incorporated herein by reference.71 PART IVITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES(a)The following documents are filed as part of this report: 1.Financial Statements: ·Report of Independent Registered Public Accounting Firm ·Consolidated Balance Sheets – January 30, 2016 and January 31, 2015 ·Consolidated Statements of Income – Years ended January 30, 2016, January 31, 2015 and February 1, 2014 ·Consolidated Statements of Stockholders’ Deficit – Years ended January 30, 2016, January 31, 2015 and February 1, 2014 ·Consolidated Statements of Cash Flows – Years ended January 30, 2016, January 31, 2015 and February 1, 2014 ·Notes to Consolidated Financial Statements 2.Exhibits: See Item 15(b) below.(b)Exhibits Exhibit Number Description 3.1 Amended and Restated Certificate of Incorporation of Sportsman’s Warehouse Holdings, Inc. (incorporated by reference to Exhibit 3.1 to theCompany’s Quarterly Report on Form 10-Q filed on June 11, 2014). 3.2 Amended and Restated Bylaws of Sportsman’s Warehouse Holdings, Inc. (incorporated by reference to Exhibit 3.2 to the Company’sQuarterly Report on Form 10-Q filed on June 11, 2014). 4.1 Form of Specimen Common Stock of Sportsman’s Warehouse Holdings, Inc. (incorporated by reference to Exhibit 4.1 to Amendment No. 1to the Company’s Registration Statement on Form S-1 (Registration No. 333.1944421) filed on March 24, 2014). 4.2 Registration Rights Agreement, dated April 15, 2014, among Sportsman’s Warehouse Holdings, Inc., SEP SWH Holdings, L.P. and New SEPSWH Holdings, L.P. (incorporated by reference to Exhibit 4.2 to the Company's Registration Statement on Form S-1 (Registration No. 333-1944421) filed on March 7, 2014). 10.3.1† Second Amendment to Credit Agreement (amended and restated Credit Agreement to reflect first amendment), dated as of November 13,2012, among Sportsman’s Warehouse, Inc., as Lead Borrower, the other Borrowers party thereto, Sportsman’s Warehouse Holdings, Inc., as aGuarantor, the Lenders party thereto, and Wells Fargo Bank, National Association, as Administrative Agent, Collateral Agent, and Swing LineLender (incorporated by reference to Exhibit 10.3.2 to the Company’s Registration Statement on Form S-1 (Registration No. 333-1944421)filed on March 7, 2014). 10.3.2† Third Amendment to Credit Agreement, dated as of August 20, 2013, among Sportsman’s Warehouse, Inc., as Lead Borrower, the otherBorrowers party thereto, Sportsman’s Warehouse Holdings, Inc., as a Guarantor, the Lenders party thereto, and Wells Fargo Bank, NationalAssociation, as Administrative Agent, Collateral Agent, and Swing Line Lender (incorporated by reference to Exhibit 10.3.4 to the Company’sRegistration Statement on Form S-1 (Registration No. 333-1944421) filed on March 7, 2014). 10.3.3 Side Letter, dated as of July 8, 2013, from Wells Fargo Bank, National Association to Sportsman’s Warehouse, Inc. (incorporated by referenceto Exhibit 10.3.3 to the Company’s Registration Statement on Form S-1 (Registration No. 333-1944421) filed on March 7, 2014). 10.3.4 Side Letter, dated as of October 21, 2013, from Wells Fargo Bank, National Association to Sportsman’s Warehouse, Inc. (incorporated byreference to Exhibit 10.3.5 to the Company’s Registration Statement on Form S-1 (Registration No. 333-1944421) filed on March 7, 2014). 72 Exhibit Number Description 10.3.5 Fourth Amendment to Credit Agreement, dated as of March 20, 2014, among Sportsman’s Warehouse, Inc., as Lead Borrower, the otherBorrowers party thereto, Sportsman’s Warehouse Holdings, Inc., as a Guarantor, the Lenders party thereto, and Wells Fargo Bank, NationalAssociation, as Administrative Agent, Collateral Agent, and Swing Line Lender (incorporated by reference to Exhibit 10.3.6 to AmendmentNo. 1 to the Company’s Registration Statement on Form S-1 (Registration No. 333-1944421) filed on March 24, 2014). 10.3.6 † Fifth Amendment to Credit Agreement and Third Amendment to Security Agreement, effective as of December 3, 2014, by and among WellsFargo Retail Finance, LLC, a global investment company, as Lender, and Sportsman’s Warehouse, Inc., as Borrower (incorporated byreference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed on December 5, 2014). 10.4 Guaranty, dated as of May 28, 2010, by Sportsman’s Warehouse Holdings, Inc., as Guarantor, in favor of Wells Fargo Retail Finance, LLC, asAdministrative Agent and Collateral Agent, and the Credit Parties (incorporated by reference to Exhibit 10.4 to the Company’s RegistrationStatement on Form S-1 (Registration No. 333-1944421) filed on March 7, 2014). 10.5 Security Agreement, dated as of May 28, 2010, by Sportsman’s Warehouse, Inc., Minnesota Merchandising Corp., Sportsman’s WarehouseSouthwest, Inc. and Pacific Flyway, LLC, as Borrowers, and Sportsman’s Warehouse Holdings, Inc., as Guarantor, in favor of Wells FargoRetail Finance, LLC, as Collateral Agent (incorporated by reference to Exhibit 10.5 to the Company’s Registration Statement on Form S-1(Registration No. 333-1944421) filed on March 7, 2014). 10.6 Form of Agreement between holders of restricted nonvoting common stock and Sportsman’s Warehouse Holdings, Inc. (incorporated byreference to Exhibit 10.6 to the Company’s Registration Statement on Form S-1 (Registration No. 333-1944421) filed on March 7, 2014). 10.7* Sportsman’s Warehouse Holdings, Inc. 2013 Performance Incentive Plan. (incorporated by reference to Exhibit 10.7 to the Company’sRegistration Statement on Form S-1 (Registration No. 333-1944421) filed on March 7, 2014). 10.8* Form of Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.8 to the Company’s Registration Statement onForm S-1 (Registration No. 333-1944421) filed on March 7, 2014). 10.9* Form of Indemnification Agreement for Directors and Executive Officers (incorporated by reference to Exhibit 10.9 to the Company’sRegistration Statement on Form S-1 (Registration No. 333-1944421) filed on March 7, 2014). 10.10* Employment Agreement, dated December 10, 2013, between Sportsman’s Warehouse Holdings, Inc. and John V. Schaefer (incorporated byreference to Exhibit 10.10 to the Company’s Registration Statement on Form S-1 (Registration No. 333-1944421) filed on March 7, 2014). 10.11* Employment Agreement, dated January 21, 2014, between Sportsman’s Warehouse Holdings, Inc. and Kevan P. Talbot (incorporated byreference to Exhibit 10.11 to the Company’s Registration Statement on Form S-1 (Registration No. 333-1944421) filed on March 7, 2014). 10.12† Term Loan Agreement, effective as of December 3, 2014, by and among Cortland Capital Market Services LLC, a global investmentcompany, as Lender, and Sportsman’s Warehouse, Inc., as Borrower (incorporated by reference to Exhibit 10.1 to the Company’s QuarterlyReport on Form 10-Q filed on December 5, 2014). 10.13† Guarantee and Collateral Agreement, effective as of December 3, 2014, by and among Cortland Capital Market Services LLC, a globalinvestment company, as Lender, and Sportsman’s Warehouse, Inc., as Borrower (incorporated by reference to Exhibit 10.2 to the Company’sQuarterly Report on Form 10-Q filed on December 5, 2014). 10.14 Sportsman's Warehouse Holdings, Inc. Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.1 to the Company’s QuarterlyReport on Form 10-Q filed on August 28, 2015). 73 Exhibit Number Description 10.15 Sixth Amendment to Credit Agreement, effective as of August 26, 2015, by and among Wells Fargo Bank, National Association (as successorby merger to Wells Fargo Retail Finance, LLC), as Lender, and Sportsman’s Warehouse, Inc., as Borrower (incorporated by reference toExhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed on August 28, 2015). 10.16 Seventh Amendment to Credit Agreement, dated as of September 21, 2015, by and among Wells Fargo Bank, National Association, asAdministrative Agent, Collateral Agent, and Swing Line Lender, and Sportsman’s Warehouse, Inc., as Lead Borrower, and the other partieslisted on the signature pages thereto (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with theSEC on September 21, 2015). 21.1** Subsidiaries of Sportsman’s Warehouse Holdings, Inc. 23.1** Consent of KPMG LLP. 23.2** Consent of Buxton Company. 31.1** Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2** Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1*** Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002. 101.INS** XBRL Instance Document. 101.SCH** XBRL Taxonomy Extension Schema Document. 101.CAL** XBRL Taxonomy Extension Calculation Linkbase Document. 101.DEF** XBRL Taxonomy Extension Definition Linkbase Document. 101.LAB** XBRL Taxonomy Extension Label Linkbase Document. 101.PRE** XBRL Taxonomy Extension Presentation Linkbase Document. * Management contract or compensatory plan or arrangement** Filed herewith*** Furnished herewith† Indicates that certain information contained herein has been omitted and confidentially submitted separately with the Securities andExchange Commission. Confidential treatment has been requested with respect to the omitted portions. 74 SIGNATURESPursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report to besigned on its behalf by the undersigned, thereunto duly authorized . SPORTSMAN’S WAREHOUSE HOLDINGS, INC. Date: March 24, 2016By: /s/ John V. Schaefer John V. Schaefer President and Chief Executive Officer (Principal Executive Officer)Date: March 24, 2016By: /s/ Kevan P. Talbot Kevan P. Talbot Chief Financial Officer and Secretary (Principal Financial and Accounting Officer) 75 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 inthe capacities and on the dates indicated: Signature Title Date /s/ John V. Schaefer President, Chief Executive March 24, 2016John V. Schaefer Officer and Director (Principal Executive Officer) /s/ Kevan P. Talbot Chief Financial Officer and Secretary March 24, 2016Kevan P. Talbot (Principal Financial and Accounting Officer) /s/ Christopher Eastland Director March 24, 2016Christopher Eastland /s/ Leonard Lee Director March 24, 2016Leonard Lee /s/ Kent V. Graham Director March 24, 2016Kent V. Graham /s/ Gregory P. Hickey Director March 24, 2016Gregory P. Hickey /s/ Joseph P. Schneider Director March 24, 2016Joseph P. Schneider /s/ Kay L. Toolson Director March 24, 2016Kay L. Toolson 76 Exhibit 21.1 Subsidiaries Jurisdiction of IncorporationSportsman’s Warehouse Holdings, Inc. Delaware Sportsman’s Warehouse, Inc. Utah Sportsman’s Warehouse Southwest, Inc. California Pacific Flyway Wholesale, LLC Delaware  Exhibit 23.1 Consent of Independent Registered Public Accounting FirmThe Board of DirectorsSportsman’s Warehouse Holdings, Inc. We consent to the incorporation by reference in the registration statements (Nos. 333-206632 and 333-195338) on Form S-8 and (No. 333-204517) on Form S-3 ofSportsman’s Warehouse Holdings, Inc. of our report dated March 24, 2016, with respect to the consolidated balance sheets of Sportsman’s Warehouse Holdings,Inc. and subsidiaries as of January 30, 2016 and January 31, 2015, and the related consolidated statements of income, stockholders’ equity (deficit), and cash flowsfor each of the fiscal years in the three-year period ended January 30, 2016, which report appears in the January 30, 2016 annual report on Form 10-K ofSportsman’s Warehouse Holding, Inc. and subsidiaries. (signed) KPMG LLPSalt Lake City, UtahMarch 24, 2016  Exhibit 23.2 CONSENT OF EXPERTMarch 24, 2016Sportsman’s Warehouse Holdings, Inc.7035 South High Tech DriveMidvale, Utah 84047Re: Report on Sportsman’s Warehouse’s Growth PotentialLadies and Gentlemen:This letter confirms that Buxton Company (“Buxton”) hereby consents to the incorporation by reference in the Registration Statements on Form S-8 (No.333-206632 and 333-195338) and the Registration Statement on Form S-3 (No. 333-204517) of Sportsman’s Warehouse Holdings Inc. (the “Company”) to theCompany naming Buxton as a source of information and data relating to the growth potential of the Company included in the Company’s Annual Report on Form10-K for the year ended January 30, 2016. Sincerely, Buxton Company /s/ David GloverBy: David GloverTitle: Chief Financial Officer Exhibit 31.1Certification of Chief Executive Officer pursuant toSection 302 of the Sarbanes-Oxley Act of 2002I, John V. Schaefer, certify that: 1.I have reviewed this annual report on Form 10-K of Sportsman’s Warehouse Holdings, Inc.; 2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport; 3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others withinthose entities, particularly during the period in which this report is being prepared; b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles; c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s mostrecent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likelyto materially affect, the registrant’s internal control over financial reporting; and 5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internalcontrol over financial reporting.Date: March 24, 2016 /s/ John V. SchaeferJohn V. SchaeferPresident and Chief Executive Officer Exhibit 31.2Certification of Chief Financial Officer pursuant toSection 302 of the Sarbanes-Oxley Act of 2002I, Kevan P. Talbot, certify that: 1.I have reviewed this annual report on Form 10-K of Sportsman’s Warehouse Holdings, Inc.; 2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport; 3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others withinthose entities, particularly during the period in which this report is being prepared; b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles; c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s mostrecent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likelyto materially affect, the registrant’s internal control over financial reporting; and 5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internalcontrol over financial reporting.Date: March 24, 2016 /s/ Kevan P. TalbotKevan P. TalbotChief Financial Officer and Secretary Exhibit 32.1Certification pursuant to 18 U.S.C. Section 1350,as adopted pursuant to Section 906 of theSarbanes-Oxley Act of 2002In connection with the Annual Report on Form 10-K of Sportsman’s Warehouse Holdings, Inc. (the “Registrant”) for the fiscal year ended January 30, 2016,as filed with the Securities and Exchange Commission on the date hereof (the “Report”), John V. Schaefer, as President and Chief Executive Officer of theRegistrant, and Kevan P. Talbot, the Chief Financial Officer and Secretary of the Registrant, hereby certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that, to the best of their knowledge: 1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.Date: March 24, 2016 /s/ John V. SchaeferJohn V. SchaeferPresident and Chief Executive OfficerDate: March 24, 2016 /s/ Kevan P. TalbotKevan P. TalbotChief Financial Officer and Secretary The foregoing certification is being furnished pursuant to 18 U.S.C. Section 1350. It is not being filed for purposes of Section 18 of the Securities Exchange Act of1934, as amended, and it is not to be incorporated by reference into any filing of the Company, regardless of any general incorporation language in such filing.

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