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Table of Contents
lululemon athletica inc. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except per share amounts and store count information, unless
otherwise indicated)
1 NATURE OF OPERATIONS AND BASIS OF PRESENTATION
Nature of operations
lululemon athletica inc., a Delaware corporation ("lululemon" and, together with its subsidiaries unless the context otherwise requires, the
"Company") is engaged in the design, manufacture and distribution of healthy lifestyle inspired athletic apparel, which is sold through a chain of
corporate-owned and operated retail stores, direct to consumer through e-commerce and through a network of wholesale accounts. The
Company's primary markets are the United States, Canada, Australia, and New Zealand, where 171 , 54 , 25 , and four corporate-owned stores,
respectively, were in operation as at February 2, 2014 . There were 254 , 211 , and 174 corporate-owned stores in operation as at February 2,
2014 , February 3, 2013 , and January 29, 2012 , respectively.
Basis of presentation
The accompanying consolidated financial statements include the financial position, results of operations and cash flows of the Company
and its subsidiary companies during the three-year period ended February 2, 2014 . The consolidated financial statements have been prepared
using the U.S. dollar and are presented in accordance with United States generally accepted accounting principles ("GAAP").
The Company has experienced, and expects to continue to experience, significant seasonal variations in net revenue and income from
operations. Seasonal variations in revenue are primarily related to increased sales of products during the fourth fiscal quarter, reflecting historical
strength in sales during the holiday season. Historically, seasonal variations in income from operations have been driven principally by increased
net revenue in the fourth fiscal quarter.
The Company's fiscal year ends on the Sunday closest to January 31 of the following year, typically resulting in a 52 week year, but
occasionally giving rise to an additional week, resulting in a 53 week year. Fiscal 2013 is a 52 week year whereas fiscal 2012 was a 53 week
year. Net sales numbers for fiscal 2012 include this additional week; however, comparable stores sales calculations exclude the 53rd week.
Fiscal 2013 , 2012 and 2011 ended on February 2, 2014 , February 3, 2013 , and January 29, 2012 , respectively.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of consolidation
The consolidated financial statements include the accounts of lululemon athletica inc. and its wholly-owned subsidiaries. All inter-
company balances and transactions have been eliminated. The results of operations of lululemon athletica australia Pty attributable to the non-
controlling interest for fiscal 2012 and fiscal 2011 are presented within equity and net income, and are shown separately from the Company's
equity and net income attributable to the Company.
Cash and cash equivalents
Cash and cash equivalents consist of cash on hand, bank balances and short-term deposits with original maturities of less than three
months . The Company has not experienced any losses related to these balances, and management believes its credit risk to be minimal.
Accounts receivable
Accounts receivable primarily arise out of sales to wholesale accounts and landlord deferred lease inducements. The allowance for
doubtful accounts represents management's best estimate of probable credit losses in accounts receivable and is reviewed monthly. Receivables
are written off against the allowance when management believes that the amount receivable will not be recovered. As at February 2, 2014 ,
February 3, 2013 and January 29, 2012 the Company recorded an insignificant allowance for doubtful accounts.
Inventories
Inventories, consisting of finished goods and raw materials, are stated at the lower of cost and market value. Cost is determined using
weighted-average costs. For finished goods, market is defined as net realizable value, and for raw materials,
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