The statement of cash flows for Lands€™ End is reproduced here:

Required:
a. Lands€™ End recently implemented a strategy of filling nearly all orders when the order is placed. In what year do you believe the company implemented this strategy and how is the strategy reflected in the information contained in the statement of cash flows?
b. Explain how the following items reconcile net income to net cash flows from operating activities:
(1) Depreciation
(2) Receivables
(3) Inventory
(4) Reserve for returns
c. Calculate free cash flows for each year shown.
d. How does Lands€™ End use its free cash flow? Do you think its use of free cash flows reflects good financialstrategy?

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LANDS' END, INC. & SUBSIDIARIES Consolidated Statements of Cash Flows FOR PERIOD ENDED ($ thousands) Year 9 Year 8 ear 7 Cash flows from operating activities Net income $ 31,185 64,150 50,952 Adjustments to reconcile net income to net cash flows from operating activities- Pretax nonrecurring charge Depreciation and amortization Deferred compensation expense Deferred income taxes Pretax gain on sale of subsidiary Loss on disposal of fixed assets.. Changes in assets and liabilities excluding 12,600 18,731 15,127 323 1,158) (7,805) 1127 13,558 (5,948) effects of divestitures Receivables Inventory Prepaid advertising Other prepaid expenses Accounts payable... Reserve for returns Accrued liabilities Accrued profit sharing... Income taxes payable (5,640) 21,468 (2,844) (2,504) 4,179 (104,545) 7,447) (1,366) 11,616 944 (675) 22,371 4,758 (145) 14,205 629 4,390 1,454 8,268 6,993 (2,030) (5,899) 1,349 64 74,260 (46,750) (46,750) (26,932) 121.795 Net cash flows from (used for) operating activities Cash flows from (used for) investing activities Cash paid for capital additions Proceeds from sale of subsidiary (47,659) 12,350 (35,309) (18,481) (18,481) Net cash flows used for investing activities Cash flows from (used for) financing activities Proceeds from short-term debt- Purchases of treasury stock.. Issuance of treasury stock 6,505 (35,557) 1,845 (27,207) 21,242 (45,899) 409 (24,248) (30,143) (27,663) (86,489 75,651 17,176 $92,827 Net cash flows used for financing activities- Net increase (decrease) in cash and cash equivalents... 303 6,338 6,641 92,827 Beginning cash and cash equivalents. Ending cash and cash equivalents.... 6,338