0000799288false00007992882023-12-052023-12-05

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): December 5, 2023

 

 

LANDS’ END, INC.

(Exact name of registrant as specified in its charter)

 

 

Delaware			001-09769	36-2512786
(State or other jurisdiction of incorporation)			(Commission File Number)	(IRS Employer Identification No.)
1 Lands’ End Lane
Dodgeville, Wisconsin				53595
(Address of principal executive offices)				(Zip Code)

 

Registrant’s telephone number, including area code: (608) 935-9341

 

Not Applicable

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

☐		Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐		Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐		Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐		Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, par value $0.01 per share		LE		The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
 

 

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Item 2.02 Results of Operations and Financial Condition.

On December 5, 2023, Lands’ End, Inc. (the “Company”) announced its financial results for its third quarter ended October 27, 2023. A copy of the Company’s press release containing this information is being furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.

The information contained herein and in the accompanying exhibit shall not be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing, unless expressly incorporated by specific reference to such filing. The information in this Item 2.02, including Exhibit 99.1 hereto, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

Exhibit Number		Description
99.1		Press Release of Lands’ End, Inc. dated December 5, 2023
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

			LANDS’ END, INC.
Date:	December 5, 2023	By:	/s/ Bernard McCracken
			Name: Bernard McCracken Title: Chief Financial Officer and Treasurer

 

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Exhibit 99.1

 

 

 

Lands’ End Announces Third Quarter Fiscal 2023 Results

 

DODGEVILLE, Wis., December 5, 2023 (GLOBE NEWSWIRE) – Lands’ End, Inc. (NASDAQ: LE) today announced financial results for the third quarter ended October 27, 2023.

 

Andrew McLean, Chief Executive Officer, stated, “Our third quarter results reflect the continued strong execution of our solutions-based strategy to deliver compelling product for our customers and value to our shareholders. Our deliberate efforts to generate more profitable sales resulted in increased gross profit dollars and gross margin expansion of approximately 700 basis points and drove Adjusted EBITDA above the high end of our guidance range. We continued to build on our positive momentum, injecting newness across our assortment and increasing inventory turns, resulting in a 25% reduction in year-over-year inventory. Looking ahead, by continuing to play to our strengths and delivering our customers the solutions they need, we’re confident in our ability to drive profitable sales through the holiday season to finish the year strong.”

 

Third Quarter Financial Highlights

 

 

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Business Highlights:

 

Balance Sheet and Cash Flow Highlights

 

Cash and cash equivalents were $36.8 million as of October 27, 2023, compared to $28.8 million as of October 28, 2022.

 

Inventories, net, was $422.2 million as of October 27, 2023, and $564.9 million as of October 28, 2022. The 25.3% decrease in inventory was driven by the actions the Company has taken to improve inventory efficiency by reducing inventory purchases and capitalizing on speed-to-market initiatives.

 

Net cash provided by operations was $36.7 million for the 39 weeks ended October 27, 2023, compared to net cash used in operations of $126.0 million for the 39 weeks ended October 28, 2022. The $162.7 million improvement in cash provided by operating activities was primarily due to the year-over-year improvement in inventory flow and productivity.

 

As of October 27, 2023, the Company had $110.0 million of borrowings outstanding and $156.1 million of availability under its ABL Facility, compared to $160.0 million of borrowings and $ 103.2 million of availability as of October 28, 2022. Additionally, as of October 27, 2023, the Company had $233.8 million of term loan debt outstanding compared to $247.5 million of term loan debt outstanding as of October 28, 2022.

 

During the third quarter, the Company repurchased $3.0 million of the Company’s common stock under its previously announced share repurchase program. As of October 27, 2023, additional purchases of up to $31.8 million could be made under the program through February 2, 2024.

 

 

 

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Outlook

 

For the fourth quarter of fiscal 2023 the Company expects:

For fiscal 2023 the Company now expects:

 

 

 

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Conference Call

 

The Company will host a conference call on Tuesday, December 5, 2023, at 8:30 a.m. ET to review its third quarter financial results and related matters. The call may be accessed through the Investor Relations section of the Company’s website at http://investors.landsend.com.

 

About Lands’ End, Inc.

 

Lands’ End, Inc. (NASDAQ:LE) is a leading digital retailer of casual clothing, swimwear, outerwear, accessories, footwear, home products and uniform solutions. We offer products online at www.landsend.com, through our own Company Operated stores and through third-party distribution channels. We are a classic American lifestyle brand with a passion for quality, legendary service and real value. We seek to deliver timeless style for women, men, kids and the home. We also offer products to businesses and schools, for their employees and students, through the Outfitters distribution channel.
 

 

 

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Forward-Looking Statements

 

This press release contains forward-looking statements that involve risks and uncertainties, including statements regarding the Company’s continued strong execution of its solutions-based strategy to deliver quality for its customers and value to its shareholders, and its ability to play to its strengths and deliverer its customers the solutions they need, and to drive profitable sales through the holiday season to finish the year strong; the Company’s outlook and expectations as to net revenue, net income/loss, earnings/loss per share, Adjusted net income/loss, Adjusted earnings/loss per share and Adjusted EBITDA for the fourth quarter of fiscal 2023 and for the full year of fiscal 2023, and capital expenditures for fiscal 2023; the Company’s plan to expand the exclusive women’s swim collection at Target; the Company’s continued pursuit and intended results of its licensing strategy; and the potential for additional purchases under the Company’s share repurchase program. The following important factors and uncertainties, among others, could cause actual results to differ materially from those described in these forward-looking statements: global supply chain challenges in the recent past have resulted in a significant increase in inbound transportation costs and delays in receiving product; disruption in the Company’s supply chain, including with respect to its distribution centers, third-party manufacturing partners and logistics partners, caused by limits in freight capacity, increases in transportation costs, port congestion, other logistics constraints, and closure of certain manufacturing facilities and production lines due to public health crises and other global economic conditions; the impact of global economic conditions, including inflation, on consumer discretionary spending; the impact of public health crises on operations, customer demand and the Company’s supply chain, as well as its consolidated results of operation, financial position and cash flows; the Company may be unsuccessful in implementing its strategic initiatives, or its initiatives may not have their desired impact on its business; the Company’s ability to obtain additional financing on commercially acceptable terms or at all, including, the condition of the lending and debt markets, as the Company seeks to refinance its term loan; the Company’s ability to offer merchandise and services that customers want to purchase; changes in customer preference from the Company’s branded merchandise; the Company’s results may be materially impacted if tariffs on imports to the United States increase and it is unable to offset the increased costs from current or future tariffs through pricing negotiations with its vendor base, moving production out of countries impacted by the tariffs, passing through a portion of the cost increases to the customer, or other savings opportunities; customers’ use of the Company’s digital platform, including customer acceptance of its efforts to enhance its eCommerce websites, including the Outfitters website; customer response to the Company’s marketing efforts across all types of media; the Company’s maintenance of a robust customer list; the Company’s retail store strategy may be unsuccessful; the Company’s Third Party channel may not develop as planned or have its desired impact; the Company’s dependence on information technology and a failure of information technology systems, including with respect to its eCommerce operations, or an inability to upgrade or adapt its systems; fluctuations and increases in costs of raw materials as well as fluctuations in other production and distribution-related costs; impairment of the Company’s relationships with its vendors; the Company’s failure to maintain the security of customer, employee or company information; the risk of cybersecurity events and their impact on the Company; the Company’s failure to compete effectively in the apparel industry; legal, regulatory, economic and political risks associated with international trade and those markets in which the Company conducts business and sources its merchandise; the Company’s failure to protect or preserve the image of its brands and its intellectual property rights; increases in postage, paper and printing costs; failure by third parties who provide the Company with services in connection with certain aspects of its business to perform their obligations; the Company’s failure to timely and effectively obtain shipments of products from its vendors and deliver merchandise to its customers; reliance on promotions and markdowns to encourage customer purchases; the Company’s failure to efficiently manage inventory levels; unseasonal or severe weather conditions; the adverse effect on the Company’s reputation if its independent vendors or licensees do not use ethical business practices or comply with applicable laws and regulations; assessments for additional state taxes; incurrence of charges due to impairment of goodwill, other intangible assets and long-lived assets; the impact on the Company’s business of adverse worldwide economic and market conditions, including inflation and other economic factors that negatively impact consumer spending on discretionary items; the stock repurchase program may not be executed to the full extent within its duration, due to business or market conditions; the ability of the Company’s principal stockholders to exert substantial influence over the Company; and other risks, uncertainties and factors discussed in the “Risk Factors” section of the Company’s Annual Report on Form 10-K for the fiscal year ended January 27, 2023. The Company intends the forward-looking statements to speak only as of the time made and does not undertake to update or revise them as more information becomes available, except as required by law.
 

 

 

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CONTACTS

 

Lands’ End, Inc.

Bernard McCracken

Chief Financial Officer

(608) 935-9341

 

Investor Relations:

ICR, Inc.

Tom Filandro

(646) 277-1235

Tom.Filandro@icrinc.com

 

-Financial Tables Follow-
 

 

 

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LANDS’ END, INC.

Condensed Consolidated Balance Sheets

(Unaudited)

 

(in thousands, except per share data)		October 27, 2023				October 28, 2022				January 27, 2023*
ASSETS
Current assets
Cash and cash equivalents		$	36,821			$	28,829			$	39,557
Restricted cash			1,833				1,833				1,834
Accounts receivable, net			31,422				49,409				44,928
Inventories, net			422,160				564,856				425,513
Prepaid expenses and other current assets			47,952				47,205				44,894
Total current assets			540,188				692,132				556,726
Property and equipment, net			121,400				121,907				127,638
Operating lease right-of-use asset			26,216				31,441				30,325
Goodwill			—				106,700				106,700
Intangible asset			257,000				257,000				257,000
Other assets			2,758				3,786				3,759
TOTAL ASSETS		$	947,562			$	1,212,966			$	1,082,148
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Current portion of long-term debt		$	13,750			$	13,750			$	13,750
Accounts payable			161,426				228,863				171,557
Lease liability – current			5,754				5,808				5,414
Accrued expenses and other current liabilities			109,927				111,872				106,756
Total current liabilities			290,857				360,293				297,477
Long-term borrowings under ABL Facility			110,000				160,000				100,000
Long-term debt, net			215,306				226,227				223,506
Lease liability – long-term			26,065				32,033				31,095
Deferred tax liabilities			51,176				45,087				45,953
Other liabilities			3,253				3,758				3,365
TOTAL LIABILITIES			696,657				827,398				701,396
Commitments and contingencies
STOCKHOLDERS’ EQUITY
Common stock, par value $0.01 authorized: 480,000 shares;    issued and outstanding: 31,719, 33,001 and 32,626, respectively			317				330				326
Additional paid-in capital			358,811				369,198				366,181
(Accumulated deficit) Retained earnings			(90,797	)			34,566				31,267
Accumulated other comprehensive loss			(17,426	)			(18,526	)			(17,022	)
TOTAL STOCKHOLDERS’ EQUITY			250,905				385,568				380,752
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$	947,562			$	1,212,966			$	1,082,148

 

*Derived from the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended January 27, 2023.

 

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LANDS’ END, INC.

Condensed Consolidated Statements of Operations

(Unaudited)

 

 

		13 Weeks Ended								39 Weeks Ended
(in thousands, except per share data)		October 27, 2023				October 28, 2022				October 27, 2023				October 28, 2022
Net revenue		$	324,735			$	370,983			$	957,656			$	1,025,826
Cost of sales (excluding depreciation and amortization)			172,142				222,573				527,529				604,204
Gross profit			152,593				148,410				430,127				421,622
Selling and administrative			135,282				132,807				377,662				377,074
Depreciation and amortization			9,595				9,761				28,439				29,228
Goodwill impairment			106,700				—				106,700				—
Other operating expense, net			2,324				3,096				2,916				3,135
Operating (loss) income			(101,308	)			2,746				(85,590	)			12,185
Interest expense			11,677				10,825				35,984				27,807
Other (income) expense, net			(132	)			230				(488	)			(97	)
Loss before income taxes			(112,853	)			(8,309	)			(121,086	)			(15,525	)
Income tax (benefit) expense			(459	)			(3,627	)			978				(6,293	)
NET LOSS		$	(112,394	)		$	(4,682	)		$	(122,064	)		$	(9,232	)
NET LOSS PER COMMON SHARE
Basic:		$	(3.52	)		$	(0.14	)		$	(3.80	)		$	(0.28	)
Diluted:		$	(3.52	)		$	(0.14	)		$	(3.80	)		$	(0.28	)
Basic weighted average common shares outstanding			31,887				33,064				32,140				33,196
Diluted weighted average common shares outstanding			31,887				33,064				32,140				33,196

 

 

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Definitions, Reconciliations and Uses of Non-GAAP Financial Measures

 

In addition to our Net income (loss) determined in accordance with GAAP, for purposes of evaluating operating performance, we report the following non-GAAP measures: Adjusted net income (loss) and Adjusted EBITDA. Adjusted net income (loss) is also expressed on a per share (basic and diluted) basis.

The Company believes presenting non-GAAP financial measures provides useful information to investors, allowing them to assess how the business performed excluding the effects of non-recurring and non-operational amounts. The Company believes the use of the non-GAAP financial measures facilitates comparing the results being reported against past and future results by eliminating amounts that it believes are not comparable between periods and assists investors in evaluating the effectiveness of the Company’s operations and underlying business trends in a manner that is consistent with management’s own methods for evaluating business performance.

Our management uses Adjusted net income (loss) and Adjusted EBITDA to evaluate the operating performance of our business for comparable periods and to discuss our business with our Board of Directors, institutional investors and other market participants. Adjusted EBITDA is also used as the basis for a performance measure used in executive incentive compensation.

The methods we use to calculate our non-GAAP financial measures may differ significantly from methods other companies use to compute similar measures. As a result, any non-GAAP financial measures presented herein may not be comparable to similar measures provided by other companies. Adjusted net income (loss) and Adjusted EBITDA should not be used by investors or other third parties as the sole basis for formulating investment decisions as these measures may exclude a number of important cash and non-cash recurring items.

Adjusted net income (loss) is defined as net income (loss) excluding certain significant items as set forth below. Adjusted net income (loss) is also presented on a per share (basic and diluted) basis. While Adjusted net income (loss) is a non-GAAP measurement, management believes that it is an important indicator of operating performance and useful to investors. Significant items, while periodically affecting our results, may vary significantly from period to period and have a disproportionate effect in a given period, which affects comparability of results and are described below:

 

 

 

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The following tables set forth, for the periods indicated, a reconciliation of Net loss to Adjusted net loss and Adjusted net loss per share:

 

Unaudited		13 Weeks Ended
(in thousands, except per share amounts)		October 27, 2023				October 28, 2022
Net loss		$	(112,394	)		$	(4,682	)
Goodwill and long-lived asset impairment			106,700				120
Corporate restructuring			2,266				—
Lands' End Japan closure			23				3,858
Tax effects on adjustments			(159	)			(977	)
ADJUSTED NET LOSS		$	(3,564	)		$	(1,681	)
ADJUSTED DILUTED NET LOSS PER SHARE		$	(0.11	)		$	(0.05	)
Diluted weighted average common shares outstanding			31,887				33,064

 

Unaudited		39 Weeks Ended
(in thousands, except per share amounts)		October 27, 2023				October 28, 2022
Net loss			(122,064	)			(9,232	)
Goodwill and long-lived asset impairment			106,700				120
Corporate restructuring			2,656				—
Lands' End Japan closure			122				3,858
Tax effects on adjustments			(200	)			(977	)
ADJUSTED NET LOSS		$	(12,786	)		$	(6,231	)
ADJUSTED DILUTED NET LOSS PER SHARE		$	(0.40	)		$	(0.19	)
Diluted weighted average common shares outstanding			32,140				33,196

 

While Adjusted EBITDA is a non-GAAP measurement, management believes that it is an important indicator of operating performance, and useful to investors, because:

 

 

 

 

 

 

 

 

 

 

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The following tables set forth, for the periods indicated, selected income statement data, both in dollars and as a percentage of Net revenue and a reconciliation of Net loss to Adjusted EBITDA:

 

Unaudited		13 Weeks Ended
(in thousands)		October 27, 2023								October 28, 2022
Net loss		$	(112,394	)			(34.6	)%		$	(4,682	)			(1.3	)%
Income tax (benefit)			(459	)			(0.1	)%			(3,627	)			(1.0	)%
Other (income) expense, net			(132	)			(0.0	)%			230				0.1	%
Interest expense			11,677				3.6	%			10,825				2.9	%
Operating (loss) income			(101,308	)			(31.2	)%			2,746				0.7	%
Depreciation and amortization			9,595				3.0	%			9,761				2.6	%
Goodwill and long-lived asset impairment			106,700				32.9	%			120				0.0	%
Corporate restructuring			2,266				0.7	%			—				—	%
Lands' End Japan closure			23				0.0	%			3,858				1.0	%
Other			—				—	%			178				0.0	%
Adjusted EBITDA		$	17,276				5.3	%		$	16,663				4.5	%

 

Unaudited		39 Weeks Ended
(in thousands)		October 27, 2023								October 28, 2022
Net loss		$	(122,064	)			(12.7	)%		$	(9,232	)			(0.9	)%
Income tax expense (benefit)			978				0.1	%			(6,293	)			(0.6	)%
Other income, net			(488	)			(0.1	)%			(97	)			(0.0	)%
Interest expense			35,984				3.8	%			27,807				2.7	%
Operating (loss) income			(85,590	)			(8.9	)%			12,185				1.2	%
Depreciation and amortization			28,439				3.0	%			29,228				2.8	%
Goodwill and long-lived asset impairment			106,700				11.1	%			120				0.0	%
Corporate restructuring			2,656				0.3	%			—				—	%
Lands' End Japan closure			122				0.0	%			3,858				0.4	%
Loss on disposal of property and equipment			100				0.0	%			39				0.0	%
Other			189				0.0	%			866				0.1	%
Adjusted EBITDA		$	52,616				5.5	%		$	46,296				4.5	%

 

 

 

 

 

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Fourth Quarter Fiscal 2023 Guidance Adjusted EBITDA					13 Weeks Ended
(in millions)					October 27, 2023
Net income					$	4.0		—	$	7.0
Depreciation, interest, other income, taxes and other adjustments						23.5		—		24.5
Adjusted EBITDA					$	27.5		—	$	31.5

 

Fourth Quarter Fiscal 2023 Guidance Adjusted Net Income and Adjusted Diluted Earnings Per Share					13 Weeks Ended
(in millions)					October 27, 2023
Net income					$	4.0		—	$	7.0
Goodwill impairment, corporate restructuring costs and other adjustments						4.0		—		4.0
Adjusted net income					$	8.0		—	$	11.0
Diluted earnings per share					$	0.13		—	$	0.22
Adjusted diluted earnings per share					$	0.25		—	$	0.34

 

Fiscal 2023 Guidance Adjusted EBITDA					53 Weeks Ended
(in millions)					February 2, 2024
Net loss					$	(118.0	)	—	$	(115.0	)
Depreciation, interest, other income, taxes and other adjustments						198.0		—		199.0
Adjusted EBITDA					$	80.0		—	$	84.0

 

Fiscal 2023 Guidance Adjusted Net Loss and Adjusted Diluted Net Loss Per Share					53 Weeks Ended
(in millions)					January 29, 2021
Net loss					$	(118.0	)	—	$	(115.0	)
Goodwill impairment, corporate restructuring costs and other adjustments						113.0		—		113.0
Adjusted net loss					$	(5.0	)	—	$	(2.0	)
Diluted net loss per share					$	(3.70	)	—	$	(3.60	)
Adjusted diluted net loss per share					$	(0.16	)	—	$	(0.07	)

 

 

 

 

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LANDS’ END, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 

		39 Weeks Ended
(in thousands)		October 27, 2023				October 28, 2022
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss		$	(122,064	)		$	(9,232	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization			28,439				29,228
Amortization of debt issuance costs			2,456				2,361
Loss on disposal of property and equipment			100				39
Stock-based compensation			3,619				3,537
Deferred income taxes			5,330				460
Goodwill and long-lived asset impairment			106,700				120
Other			(583	)			(744	)
Change in operating assets and liabilities:
Accounts receivable, net			13,258				(1,246	)
Inventories, net			2,796				(188,899	)
Accounts payable			(4,334	)			82,057
Other operating assets			(2,504	)			(10,604	)
Other operating liabilities			3,454				(33,072	)
Net cash provided by (used in) operating activities			36,667				(125,995	)
CASH FLOWS FROM INVESTING ACTIVITIES
Sales of property and equipment			—				88
Purchases of property and equipment			(28,535	)			(20,544	)
Net cash used in investing activities			(28,535	)			(20,456	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings under ABL Facility			169,000				222,000
Payments of borrowings under ABL Facility			(159,000	)			(62,000	)
Payments on term loan			(10,313	)			(10,313	)
Payments of debt issuance costs			(67	)			—
Payments for taxes related to net share settlement of equity awards			(1,210	)			(4,315	)
Purchases and retirement of common stock			(9,788	)			(5,234	)
Net cash (used in) provided by financing activities			(11,378	)			140,138
Effects of exchange rate changes on cash, cash equivalents and restricted cash			509				840
NET DECREASE IN CASH, CASH EQUIVALENTS AND       RESTRICTED CASH			(2,737	)			(5,473	)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH,       BEGINNING OF PERIOD			41,391				36,135
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD		$	38,654			$	30,662
SUPPLEMENTAL CASH FLOW DATA
Unpaid liability to acquire property and equipment		$	3,893			$	4,922
Income taxes paid (refunded)		$	(200	)		$	4,146
Interest paid		$	33,171			$	26,170
Operating lease right-of-use-assets (reversal) obtained in exchange for lease liabilities		$	(755	)		$	4,223

 

 

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