RELATED PARTY TRANSACTIONS

According to statements on form Schedule 13D filed with the SEC by ESL, ESL beneficially owned significant portions of both the Company's and Sears Holdings Corporation's outstanding shares of common stock. Therefore, Sears Holdings Corporation, the Company's former parent company, is considered a related party.

In connection with the Separation, the Company entered into various agreements with Sears Holdings which, among other things, (i) govern specified aspects of the Company's relationship following the Separation, especially with regards to the Lands’ End Shops at Sears, and (ii) establish terms pursuant to which subsidiaries of Sears Holdings Corporation are providing services to us.

See further descriptions of the transactions in the Company's 2015 Annual Report on Form 10-K. The components of the transactions between the Company and Sears Holdings, which exclude pass-through payments to third parties, are as follows:

Lands’ End Shops at Sears

Related party costs charged by Sears Holdings to the Company related to Lands’ End Shops at Sears are as follows:



	13 Weeks Ended
(in thousands)	April 29, 2016		May 1, 2015
Rent, CAM and occupancy costs	$	6,306	$	6,350
Retail services, store labor	5,946		6,601
Financial services and payment processing	719		623
Supply chain costs	315		277
Total expenses	$	13,286	$	13,851
Number of Lands’ End Shops at Sears at period end	225		235

General Corporate Services

Related party costs charged by Sears Holdings to the Company for general corporate services are as follows:



	13 Weeks Ended
(in thousands)	April 29, 2016		May 1, 2015
Sourcing	$	1,372	$	1,584
Shop Your Way	462		525
Shared services	48		150
Total expenses	$	1,882	$	2,259

Use of Intellectual Property or Services

Related party revenue and costs charged by the Company to and from Sears Holdings for the use of intellectual property or services is as follows:



	13 Weeks Ended
(in thousands)	April 29, 2016			May 1, 2015
Lands' End business outfitters revenue	$	548		$	403
Call center services	446			214
Credit card revenue	245			287
Royalty income	32			21
Gift card (expense)	(7		)	(4		)
Total income	$	1,264		$	921

Call Center Services

The Company has entered into a contract with Sears Holdings Management Corporation, a subsidiary of Sears Holdings Corporation, to provide call center services in support of Sears Holdings’ SYW member loyalty program. This income is net of agreed upon costs directly attributable to the Company providing these services. The income is included in Net revenue and costs are included in Selling and administrative expenses in the Condensed Consolidated Statements of Operations. Total call center service income included in Net revenue was $1.9 million and $1.3 million for the First Quarter 2016 and First Quarter 2015, respectively.

Additional Balance Sheet Information

At April 29, 2016, May 1, 2015 and January 29, 2016 the Company included $4.0 million, $5.2 million and $3.9 million in Accounts receivable, net, respectively and $2.6 million, $7.8 million and $2.7 million in Accounts payable, respectively, in the Condensed Consolidated Balance Sheets to reflect amounts due from and owed to Sears Holdings.

At April 29, 2016, May 1, 2015 and January 29, 2016 a $13.9 million, $14.5 million and $13.7 million receivable, respectively, was recorded by the Company in Other assets in the Condensed Consolidated Balance Sheets to reflect the indemnification by Sears Holdings Corporation of the pre-Separation UTBs (including penalties and interest) for which Sears Holdings Corporation is responsible under the Tax Sharing Agreement.