SHAREHOLDERS' EQUITY

3 Months Ended

Mar. 29, 2020

SHAREHOLDERS’ EQUITY

Changes in the balance of each component of shareholders’ equity during the reporting periods were as follows:



	Thirteen weeks ended
(in thousands)	March 29, 2020			March 31, 2019

Common stock shares
Beginning balance	38,593			40,054
Purchases and retirement of common stock	(2,930		)	(234		)
Issuances under equity plans, including tax benefits	415			308
Stock-based compensation	50			24
Ending balance	36,128			40,152

Common stock amount
Beginning balance	$	1		$	1
Current period activity	—			—
Ending balance	1			1

Retained earnings
Beginning balance	639,210			606,087
Net income (loss)	(150,494		)	8,276
Purchases and retirement of common stock (1)	(52,346		)	(5,303		)
Issuances under equity plans, including tax benefits	(1,471		)	(1,057		)
Stock-based compensation	1,507			3,606
Change in accounting standard cumulative-effect adjustment (2)	(602		)	—
Ending balance	435,804			611,609

Accumulated other comprehensive loss
Beginning balance, net of tax	(13,238		)	(14,649		)
Foreign currency translation adjustment	(6,625		)	1,326
Ending balance, net of tax	(19,863		)	(13,323		)

Total shareholders’ equity ending balance	$	415,942		$	598,287

(1)

Under applicable Washington State law, shares purchased are not displayed separately as treasury stock on our Consolidated Balance Sheets and are treated as authorized but unissued shares. It is our accounting policy to first record these purchases as a reduction to our common stock account. Once the common stock account has been reduced to a nominal balance, remaining purchases are recorded as a reduction to our retained earnings. Furthermore, activity in our common stock account related to stock-based compensation is also recorded to retained earnings until such time as the reduction to retained earnings due to stock repurchases has been recovered.


(2)	As a result of our adoption of the accounting standard for credit losses, we recognized a cumulative-effect adjustment to retained earnings of $0.6 million in the first quarter of 2020.

Share repurchase plan

On October 16, 2019, our Board of Directors authorized a $100.0 million share repurchase program of our outstanding common stock. The share repurchase program does not obligate us to acquire any particular amount of common stock and does not have an expiration date. We may choose to purchase shares in the open market, from individual holders, through an accelerated share repurchase program or otherwise. As of March 29, 2020, $66.7 million remains available for repurchase of common stock under the existing authorization.

As part of the existing share repurchase plan, on February 28, 2020 we entered into an accelerated share repurchase (“ASR”) agreement with a third-party financial institution to repurchase $40.0 million of our common stock. Under the ASR agreement, we paid $40.0 million to the financial institution and received an initial delivery of 2,150,538 shares, which represented 80% of the total shares we expect to receive based on the market price at the time of the initial delivery. This transaction was conducted prior to the medical community’s acknowledgment of the expected severity that COVID-19 would have on the United States.

The final number of shares delivered upon settlement of the agreement will be determined with reference to the volume weighted average price of our shares over the term of the ASR agreement, less the agreed-upon discount, which will end no later than July 2, 2020. Under the terms of the ASR agreement, upon settlement, we will either receive additional shares from the financial institution or be required to deliver additional shares or cash to the financial institution. We control the election to either deliver additional shares or cash to the financial institution, if required. As such, the forward stock purchase contract was considered indexed to our own stock and is classified as an equity instrument. The value of the initial shares received was recorded as a reduction to retained earnings, and the number of shares initially received was an immediate reduction in the weighted average common shares calculation for basic and diluted earnings per share.