0001564590-21-004688.txt : 20210208 0001564590-21-004688.hdr.sgml : 20210208 20210208160556 ACCESSION NUMBER: 0001564590-21-004688 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 66 CONFORMED PERIOD OF REPORT: 20210102 FILED AS OF DATE: 20210208 DATE AS OF CHANGE: 20210208 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Leslie's, Inc. CENTRAL INDEX KEY: 0001821806 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-RETAIL STORES, NEC [5990] IRS NUMBER: 000000000 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-39667 FILM NUMBER: 21601451 BUSINESS ADDRESS: STREET 1: 2005 E. INDIAN SCHOOL ROAD CITY: PHOENIX STATE: AZ ZIP: 85016 BUSINESS PHONE: 602-366-3817 MAIL ADDRESS: STREET 1: 2005 E. INDIAN SCHOOL ROAD CITY: PHOENIX STATE: AZ ZIP: 85016 10-Q 1 lesl-10q_20210102.htm 10-Q lesl-10q_20210102.htm
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

 

FORM 10-Q

 

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended January 2, 2021

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from        to         

Commission File Number: 001-39667

 

 

LESLIE’S, INC.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

20-8397425

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

2005 East Indian School Road

Phoenix, AZ

85016

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (602) 366-3999

 

 

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 $0.001 per share

 

LESL

 

The Nasdaq Global Select Market

Indicate 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 preceding 12 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  ☒    No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 submit such files).     Yes  ☒    No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

  

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

  

Smaller reporting company

 

 

 

 

 

 

 

 

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. 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes      No  

As of February 5, 2021, the registrant had 186,873,341 shares of common stock, $0.001 par value per share, outstanding.

 

 

 

 


 

Table of Contents

 

 

 

Page

PART I.

FINANCIAL INFORMATION

 

Item 1.

Financial Statements (Unaudited)

2

 

Condensed Consolidated Balance Sheets

2

 

Condensed Consolidated Statements of Operations

3

 

Condensed Consolidated Statements of Stockholders’ Deficit

4

 

Condensed Consolidated Statements of Cash Flows

5

 

Notes to Unaudited Condensed Consolidated Financial Statements

6

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

13

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

22

Item 4.

Controls and Procedures

22

PART II.

OTHER INFORMATION

 

Item 1.

Legal Proceedings

23

Item 1A.

Risk Factors

23

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

24

Item 3.

Defaults Upon Senior Securities

24

Item 4.

Mine Safety Disclosures

24

Item 5.

Other Information

24

Item 6.

Exhibits

25

Signatures

26

 

 

 

i


 

 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements about us and our industry that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our future results of operations or financial condition, business strategy and plans and objectives of management for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements because they contain words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” or “would” or the negative of these words or other similar terms or expressions. Our actual results could differ materially from those indicated in these forward-looking statements for a variety of reasons, including, among others:

 

our ability to execute on our growth strategies;

 

our ability to maintain favorable relationships with suppliers and manufacturers;

 

competition from mass merchants and specialty retailers;

 

impacts on our business from the sensitivity of our business to weather conditions, changes in the economy, and the housing market;

 

our ability to implement technology initiatives that deliver the anticipated benefits, without disrupting our operations;

 

our ability to attract and retain senior management and other qualified personnel;

 

regulatory changes and development affecting our current and future products;

 

our ability to obtain additional capital to finance operations;

 

our ability to establish and maintain intellectual property protection for our products, as well as our ability to operate our business without infringing the intellectual property rights of others;

 

impacts on our business from the COVID-19 pandemic; and

 

other risks and uncertainties, including those listed in the section titled “Risk Factors” in our filings with the U.S. Securities and Exchange Commission

You should not rely on forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, and operating results. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties, and other factors described in Part I, Item 1A, “Risk Factors” of our Annual Report on Form 10-K for the year ended October 3, 2020, Part II, Item 1A, “Risk Factors” of this Quarterly Report on Form 10-Q, and elsewhere in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. The results, events, and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events, or circumstances could differ materially from those described in the forward-looking statements.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this Quarterly Report on Form 10-Q. And while we believe that information provides a reasonable basis for these statements, that information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements.

The forward-looking statements made in this Quarterly Report on Form 10-Q are based on events or circumstances as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, or investments.

1


 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

LESLIE’S, INC.

Condensed Consolidated Balance Sheets

(Amounts in Thousands, Except Share and Per Share Amounts)

(Unaudited)

 

As of

 

January 2,

2021

 

 

October 3,

2020

 

 

December 28,

2019

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

104,077

 

 

$

157,072

 

 

$

1,938

 

Accounts and other receivables, net

 

 

37,116

 

 

 

31,481

 

 

 

49,657

 

Inventories

 

 

174,535

 

 

 

148,966

 

 

 

185,130

 

Prepaid expenses and other current assets

 

 

39,899

 

 

 

34,614

 

 

 

6,201

 

Total current assets

 

 

355,627

 

 

 

372,133

 

 

 

242,926

 

Property and equipment, net

 

 

62,628

 

 

 

66,391

 

 

 

71,805

 

Operating lease right-of-use assets

 

 

191,125

 

 

 

177,655

 

 

 

212,492

 

Goodwill and other intangibles, net

 

 

120,636

 

 

 

121,186

 

 

 

122,718

 

Deferred tax assets

 

 

14,729

 

 

 

6,583

 

 

 

 

Other assets

 

 

2,363

 

 

 

2,490

 

 

 

1,345

 

Total assets

 

$

747,108

 

 

$

746,438

 

 

$

651,286

 

Liabilities and stockholders’ deficit

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable

 

$

69,046

 

 

$

92,372

 

 

$

75,265

 

Accrued expenses

 

 

59,086

 

 

 

101,167

 

 

 

54,381

 

Operating lease liabilities

 

 

56,398

 

 

 

54,459

 

 

 

60,502

 

Income taxes payable

 

 

 

 

 

1,857

 

 

 

 

Current portion of long-term debt

 

 

8,341

 

 

 

8,341

 

 

 

8,341

 

Total current liabilities

 

 

192,871

 

 

 

258,196

 

 

 

198,489

 

Revolving commitment

 

 

 

 

 

 

 

 

6,300

 

Deferred tax liabilities

 

 

 

 

 

 

 

 

3,911

 

Operating lease liabilities, noncurrent

 

 

139,796

 

 

 

130,234

 

 

 

162,329

 

Long-term debt, net

 

 

795,394

 

 

 

1,179,550

 

 

 

1,185,256

 

Other long-term liabilities

 

 

5,457

 

 

 

5,457

 

 

 

7,936

 

Total liabilities

 

 

1,133,518

 

 

 

1,573,437

 

 

 

1,564,221

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ deficit

 

 

 

 

 

 

 

 

 

 

 

 

Common stock, $0.001 par value, 205,150,000 shares authorized

   and 186,618,446 issued and outstanding at January 2, 2021 and

   156,500,000 shares authorized, issued, and outstanding at

   October 3, 2020 and December 28, 2019

 

 

187

 

 

 

157

 

 

 

157

 

Additional paid in capital (deficit)

 

 

192,753

 

 

 

(278,063

)

 

 

(279,251

)

Retained deficit

 

 

(579,350

)

 

 

(549,093

)

 

 

(633,841

)

Total stockholders’ deficit

 

 

(386,410

)

 

 

(826,999

)

 

 

(912,935

)

Total liabilities and stockholders’ deficit

 

$

747,108

 

 

$

746,438

 

 

$

651,286

 

 

See accompanying notes which are an integral part of these condensed consolidated financial statements.

 

2


 

LESLIE’S, INC.

Condensed Consolidated Statements of Operations

(Amounts in Thousands, Except Share and Per Share Amounts)

(Unaudited)

 

 

 

Three months ended

 

 

 

January 2,

2021

 

 

December 28,

2019

 

Sales

 

$

145,006

 

 

$

122,978

 

Cost of merchandise and services sold

 

 

93,291

 

 

 

81,900

 

Gross profit

 

 

51,715

 

 

 

41,078

 

Selling, general and administrative expenses

 

 

77,489

 

 

 

59,721

 

Operating loss

 

 

(25,774

)

 

 

(18,643

)

Other expense:

 

 

 

 

 

 

 

 

Interest expense

 

 

11,516

 

 

 

22,417

 

Loss on debt extinguishment

 

 

7,281

 

 

 

 

Other expenses, net

 

 

 

 

 

137

 

Total other expense

 

 

18,797

 

 

 

22,554

 

Loss before taxes

 

 

(44,571

)

 

 

(41,197

)

Income tax benefit

 

 

(14,314

)

 

 

(15,010

)

Net loss

 

$

(30,257

)

 

$

(26,187

)

Net loss per share

 

 

 

 

 

 

 

 

Basic and diluted

 

$

(0.17

)

 

$

(0.17

)

Weighted average shares outstanding

 

 

 

 

 

 

 

 

Basic and diluted

 

 

176,989,755

 

 

 

156,500,000

 

 

See accompanying notes which are an integral part of these condensed consolidated financial statements.

 

3


 

LESLIE’S, INC.

Condensed Consolidated Statements of Stockholders’ Deficit

(Amounts in Thousands, Except Share and Per Share Amounts)

(Unaudited)

 

 

 

Common Stock

 

 

Additional

Paid in

Capital

 

 

Retained

 

 

Total

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

(Deficit)

 

 

Deficit

 

 

Deficit

 

Balance, September 28, 2019

 

 

156,500,000

 

 

$

157

 

 

$

(279,848

)

 

$

(607,666

)

 

$

(887,357

)

Impact of adoption of new accounting pronouncements

 

 

 

 

 

 

 

 

 

 

 

12

 

 

 

12

 

Equity-based compensation

 

 

 

 

 

 

 

 

597

 

 

 

 

 

 

597

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(26,187

)

 

 

(26,187

)

Balance, December 28, 2019

 

 

156,500,000

 

 

$

157

 

 

$

(279,251

)

 

$

(633,841

)

 

$

(912,935

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, October 3, 2020

 

 

156,500,000

 

 

$

157

 

 

$

(278,063

)

 

$

(549,093

)

 

$

(826,999

)

Issuance of shares under stock incentive plans

 

 

118,446

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock upon initial public offering,

   net of offering costs

 

 

30,000,000

 

 

 

30

 

 

 

458,656

 

 

 

 

 

 

458,686

 

Equity-based compensation

 

 

 

 

 

 

 

 

12,160

 

 

 

 

 

 

12,160

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(30,257

)

 

 

(30,257

)

Balance, January 2, 2021

 

 

186,618,446

 

 

$

187

 

 

$

192,753

 

 

$

(579,350

)

 

$

(386,410

)

 

See accompanying notes which are an integral part of these condensed consolidated financial statements.

4


 

LESLIE’S, INC.

Condensed Consolidated Statements of Cash Flows

(Amounts in Thousands)

(Unaudited)

 

 

 

Three months ended

 

 

 

January 2,

2021

 

 

December 28,

2019

 

Operating Activities

 

 

 

 

 

 

 

 

Net loss

 

$

(30,257

)

 

$

(26,187

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

6,595

 

 

 

7,276

 

Equity-based compensation

 

 

12,160

 

 

 

597

 

Amortization of deferred financing costs and debt discounts

 

 

648

 

 

 

848

 

Provision for doubtful accounts

 

 

59

 

 

 

58

 

Deferred income taxes

 

 

(8,146

)

 

 

2,672

 

(Gain) loss on disposition of assets

 

 

(1,758

)

 

 

443

 

Loss on debt extinguishment

 

 

7,281

 

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts and other receivables

 

 

(5,694

)

 

 

(15,842

)

Inventories

 

 

(25,569

)

 

 

(34,402

)

Prepaid expenses and other current assets

 

 

(5,285

)

 

 

1,502

 

Other assets

 

 

127

 

 

 

75

 

Accounts payable and accrued expenses

 

 

(65,629

)

 

 

(21,922

)

Income taxes payable

 

 

(1,857

)

 

 

(6,713

)

Operating lease assets and liabilities, net

 

 

(1,969

)

 

 

10,339

 

Net cash used in operating activities

 

 

(119,294

)

 

 

(81,256

)

Investing Activities

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(2,706

)

 

 

(5,738

)

Acquisitions, net of cash acquired

 

 

 

 

 

(6,188

)

Proceeds from disposition of fixed assets

 

 

2,404

 

 

 

6

 

Net cash used in investing activities

 

 

(302

)

 

 

(11,920

)

Financing Activities

 

 

 

 

 

 

 

 

Revolving commitment borrowings

 

 

 

 

 

6,300

 

Repayment of senior notes

 

 

(390,000

)

 

 

 

Principal payments on term loan

 

 

(2,085

)

 

 

(2,085

)

Proceeds from issuance of common stock upon initial public offering, net

 

 

458,686

 

 

 

 

Net cash provided by financing activities

 

 

66,601

 

 

 

4,215

 

Net decrease in cash and cash equivalents

 

 

(52,995

)

 

 

(88,961

)

Cash and cash equivalents, beginning of period

 

 

157,072

 

 

 

90,899

 

Cash and cash equivalents, end of period

 

$

104,077

 

 

$

1,938

 

Supplemental Disclosure of Cash Payments for:

 

 

 

 

 

 

 

 

Interest

 

$

19,635

 

 

$

26,473

 

Income taxes

 

 

920

 

 

 

2,875

 

 

See accompanying notes which are an integral part of these condensed consolidated financial statements.

 

5


 

LESLIE’S, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Note 1—Business and Operations

Leslie’s, Inc. (“Leslie’s,” “we,” “our,” “us,” “its,” or the “Company”) is the leading direct-to-consumer pool and spa care brand. We market and sell pool and spa supplies and related products and services, which primarily consist of maintenance items such as chemicals, equipment and parts, cleaning accessories, as well as safety, recreational, and fitness-related products. We currently market our products through 936 company-operated locations in 37 states and e-commerce websites.

Note 2—Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

We prepared the accompanying interim condensed consolidated financial statements following U.S. generally accepted accounting principles (“GAAP”). The financial statements include all normal and recurring adjustments that are necessary for a fair presentation of our financial position and operating results. The condensed consolidated financial statements include the accounts of Leslie’s, Inc. and our subsidiaries. All significant intercompany accounts and transactions have been eliminated. These interim condensed consolidated financial statements and the related notes should be read in conjunction with the audited condensed consolidated financial statements and notes for the years ended October 3, 2020 and September 28, 2019.

Initial Public Offering

In November 2020, the Company completed an initial public offering (“IPO”) of 30,000,000 shares of common stock at a public offering price of $17.00 per share for net proceeds of $458.7 million, after deducting underwriting discounts and commissions of $45.0 million and offering costs of $6.3 million. The shares of common stock sold in the IPO and the net proceeds from the IPO included the full exercise of the underwriters’ option to purchase additional shares.

In November 2020, the Company used the net proceeds from the IPO to repay the entire outstanding amount related to its $390.0 million Senior Unsecured Notes. The remaining proceeds will be used for working capital and general corporate purposes.

Stock Split

All share and per share information included in the accompanying condensed consolidated financial statements has been adjusted to reflect a 156,500-for-1 stock split which was effected on October 23, 2020. The par value of the common stock was not adjusted as the result of the stock split.

Fiscal Periods

We operate on a fiscal calendar that results in a fiscal year consisting of a 52- or 53-week period ending on the Saturday closest to September 30th. In a 52-week fiscal year, each quarter contains 13 weeks of operations; in a 53-week fiscal year, each of the first, second and third quarters includes 13 weeks of operations and the fourth quarter includes 14 weeks of operations. References to fiscal 2020 refer to the fiscal year ended October 3, 2020 which contained 53 weeks.  References to the three months ended January 2, 2021 and the three months ended December 28, 2019 refer to the 13 weeks ended January 2, 2021 and December 28, 2019, respectively.

Use of Estimates in the Preparation of Financial Statements

To prepare financial statements that conform to GAAP, we make estimates and assumptions that affect the amounts reported in our financial statements and accompanying notes. Our most significant estimates relate to the allowance for doubtful accounts, inventory obsolescence reserves, vendor programs, income taxes, self-insurance, and goodwill impairment evaluations. We continually review our estimates and make adjustments as necessary, but actual results could be significantly different from what we expected when we made these estimates.

6


 

Fair Value Measurements

As of January 2, 2021 and October 3, 2020, we held no assets that are required to be measured at fair value on a recurring basis.

Fair Value of Financial Instruments

We evaluate our financial assets and liabilities subject to fair value measurements on a recurring basis to determine the appropriate level of classification for each reporting period.

The fair value of the Term Loan due in 2023 (see Note 7) was determined to be $806.6 million at January 2, 2021. These fair value estimates, determined to be Level 2, are subjective in nature and involve uncertainties and matters of judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect these estimates.

The fair value of the interest rate cap agreements (see Note 7) was determined to be Level 2 and is included in other assets on the condensed consolidated balance sheets as of January 2, 2021 and October 3, 2020. Changes in fair value of the interest rate cap are recorded in other expenses in the condensed consolidated statement of operations.

The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximate fair value due to the short-term maturity of these instruments.

There were no transfers between levels in the fair value hierarchy during the three months ended January 2, 2021 or during fiscal year 2020, respectively.

Seasonality

Our business is highly seasonal. In general, sales and earnings are highest during our fiscal third and fourth quarters, which include April through September and represent the peak months of swimming pool use. Sales are substantially lower during our fiscal first and second quarters.

 

Prior Period Reclassifications

Reclassifications of certain immaterial prior period amounts have been made to conform to current period presentation.

Note 3—Business Combinations

Fiscal 2020 Acquisition

In October 2019, we acquired the assets of a retailer of supplies and services for hot tubs, swim spas and saunas. The acquisition included six locations in the Pacific Northwest and expanded our physical presence to 37 states. The acquisition did not have a material impact on our financial position or results of operations. Our condensed consolidated financial statements include the results of operations of the acquisition from the date of acquisition. The total purchase consideration was allocated to the assets acquired and liabilities assumed at their estimated fair values as of the date of acquisition, as determined by management. The excess of the purchase price over the amounts allocated to assets acquired and liabilities assumed has been recorded as goodwill. The goodwill resulting from the acquisition is deductible for income tax purposes. The purchase accounting for this acquisition is complete.

Note 4 —Goodwill and Other Intangibles, Net

Goodwill

The carrying amount of goodwill for the periods ended January 2, 2021, October 3, 2020, and December 28, 2019 were as follows (in thousands):

 

Balance, January 2, 2021

 

$

93,295

 

Balance, October 3, 2020

 

$

93,295

 

Balance, December 28, 2019

 

$

92,821

 

 

7


 

 

Other Intangible Assets

Our other intangible assets are as follows as of January 2, 2021:

 

 

 

Weighted

Average

Remaining

Useful Life

 

 

Gross

Carrying

Value

 

 

Accumulated

Amortization

 

 

Net

Carrying

Amount

 

 

 

(In years)

 

 

(In thousands)

 

Trade name and trademarks (finite life)

 

 

2.4

 

 

$

5,540

 

 

$

(5,167

)

 

$

373

 

Trade name and trademarks (indefinite life)

 

Indefinite

 

 

 

17,750

 

 

 

 

 

 

17,750

 

Non-compete agreements

 

 

4.5

 

 

 

8,633

 

 

 

(6,958

)

 

 

1,675

 

Consumer relationships

 

 

3.6

 

 

 

17,200

 

 

 

(10,485

)

 

 

6,715

 

Internally developed software

 

 

2.6

 

 

 

4,000

 

 

 

(3,482

)

 

 

518

 

Other

 

 

1.3

 

 

 

1,000

 

 

 

(967

)

 

 

33

 

Total

 

 

 

 

 

$

54,123

 

 

$

(27,059

)

 

$

27,064

 

 

Our other intangible assets are as follows as of October 3, 2020:

 

 

 

Weighted

Average

Remaining

Useful Life

 

 

Gross

Carrying

Value

 

 

Accumulated

Amortization

 

 

Net

Carrying

Amount

 

 

 

(In years)

 

 

(In thousands)

 

Trade name and trademarks (finite life)

 

 

2.6

 

 

$

5,540

 

 

$

(5,139

)

 

$

401

 

Trade name and trademarks (indefinite life)

 

Indefinite

 

 

 

17,750

 

 

 

 

 

 

17,750

 

Non-compete agreements

 

 

4.9

 

 

 

8,633

 

 

 

(6,872

)

 

 

1,761

 

Consumer relationships

 

 

3.8

 

 

 

17,200

 

 

 

(10,118

)

 

 

7,082

 

Internally developed software

 

 

2.9

 

 

 

4,000

 

 

 

(3,434

)

 

 

566

 

Other

 

 

1.6

 

 

 

1,000

 

 

 

(958

)

 

 

42

 

Total

 

 

 

 

 

$

54,123

 

 

$

(26,521

)

 

$

27,602

 

 

Our other intangible assets are as follows as of December 28, 2019:

 

 

 

Weighted

Average

Remaining

Useful Life

 

 

Gross

Carrying

Value

 

 

Accumulated

Amortization

 

 

Net

Carrying

Amount

 

 

 

(In years)

 

 

(In thousands)

 

Trade name and trademarks (finite life)

 

 

2.3

 

 

$

5,540

 

 

$

(5,054

)

 

$

486

 

Trade name and trademarks (indefinite life)

 

Indefinite

 

 

 

17,750

 

 

 

 

 

 

17,750

 

Non-compete agreements

 

 

4.0

 

 

 

8,633

 

 

 

(6,317

)

 

 

2,316

 

Consumer relationships

 

 

3.4

 

 

 

17,200

 

 

 

(8,998

)

 

 

8,202

 

Internally developed software

 

 

2.3

 

 

 

4,000

 

 

 

(3,244

)

 

 

756

 

Other

 

 

1.3

 

 

 

1,000

 

 

 

(933

)

 

 

67

 

Total

 

 

 

 

 

$

54,123

 

 

$

(24,546

)

 

$

29,577

 

 

 

Amortization expense for the three months ended January 2, 2021, October 3, 2020, and December 28, 2019 were $0.5 million, $0.6 million, and $0.6 million, respectively. No impairment of goodwill or other intangible assets were recorded in the three months ended January 2, 2021, October 3, 2020, or December 28, 2019.

8


 

The estimated future amortization expense related to finite-lived intangible assets on our balance sheet as of January 2, 2021 is as follows (in thousands):

 

Remainder of fiscal 2021

 

$

1,520

 

2022

 

 

1,936

 

2023

 

 

1,703

 

2024

 

 

1,065

 

2025

 

 

968

 

Thereafter

 

 

2,122

 

Total

 

$

9,314

 

 

Intangible assets also include costs associated with acquiring mailing lists for our proprietary database. As of each of January 2, 2021, October 3, 2020, and December 28, 2019, the gross amounts capitalized on the condensed consolidated balance sheets for mailing lists were $1.6 million with a net carrying value of $0.3 million.

Note 5—Inventories

 

 

 

(In thousands)

 

As of

 

January 2,

2021

 

 

October 3,

2020

 

 

December 28,

2019

 

Raw materials

 

$

2,577

 

 

$

1,967

 

 

$

1,237

 

Finished goods

 

 

171,958

 

 

 

146,999

 

 

 

183,893

 

Inventories

 

$

174,535

 

 

$

148,966

 

 

$

185,130

 

 

Note 6—Accrued Expenses

Accrued expenses consist of the following:

 

 

 

(In thousands)

 

As of

 

January 2,

2021

 

 

October 3,

2020

 

 

December 28,

2019

 

Accrued payroll and employee benefits

 

$

19,394

 

 

$

32,420

 

 

$

12,529

 

Occupancy expenses

 

 

3,150

 

 

 

3,573

 

 

 

5,992

 

Interest

 

 

489

 

 

 

9,377

 

 

 

12,887

 

Sales taxes

 

 

7,970

 

 

 

11,164

 

 

 

5,540

 

Self-insurance reserves

 

 

5,993

 

 

 

6,518

 

 

 

6,607

 

Customer deposits

 

 

9,304

 

 

 

13,286

 

 

 

3,317

 

All other current liabilities

 

 

12,786

 

 

 

24,829

 

 

 

7,509

 

Total

 

$

59,086

 

 

$

101,167

 

 

$

54,381

 

 

9


 

 

Note 7—Long-Term Debt

The table below presents our debt obligations as of the periods presented (in thousands):

 

 

 

Effective

Interest Rate (1)

 

January 2,

2021

 

 

October 3,

2020

 

 

December 28,

2019

 

Term Loan—due on August 16, 2023

 

3.65%

(2)

$

809,093

 

 

$

811,178

 

 

$

819,520

 

Senior Unsecured Notes—due on August 16, 2024

 

 

 

 

 

 

 

390,000