Quarterly Report (10-q)

Date : 06/10/2019 @ 8:14PM
Source : Edgar (US Regulatory)
Stock : Urban Outfitters Inc (URBN)
Quote : 30.81  0.0 (0.00%) @ 8:59AM

Quarterly Report (10-q)

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

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

For the Quarterly Period Ended April 30, 2019

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 No. 000-22754

 

Urban Outfitters, Inc.

(Exact Name of Registrant as Specified in Its Charter)

 

 

Pennsylvania

23-2003332

(State or Other Jurisdiction of

Incorporation or Organization)

(I.R.S. Employer

Identification No.)

 

 

5000 South Broad Street, Philadelphia, PA

19112-1495

(Address of Principal Executive Offices)

(Zip Code)

Registrant’s telephone number, including area code: (215) 454-5500

 

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 Shares, par value $.0001 per share

 

URBN

 

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, a 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  

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Common shares, $0.0001 par value—97,965,012 shares outstanding on June 4, 2019.

 

 

 


TABLE OF CONTENTS

PART I

FINANCIAL INFORMATION

 

Item 1.

Financial Statements (unaudited)

 

 

 

 

 

Condensed Consolidated Balance Sheets as of April 30, 2019 , January 31, 2019 and April 30, 2018

1

 

 

 

 

Condensed Consolidated Statements of Income for the three months ended April 30, 2019 and 2018

2

 

 

 

 

Condensed Consolidated Statements of Comprehensive Income for the three months ended April 30, 2019 and 2018

3

 

 

 

 

Condensed Consolidated Statements of Shareholders’ Equity for the three months ended April 30, 2019 and 2018

4

 

 

 

 

Condensed Consolidated Statements of Cash Flows for the three months ended April 30, 2019 and 2018

5

 

 

 

 

Notes to Condensed Consolidated Financial Statements

6

 

 

 

Item 2.

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

19

 

 

 

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

26

 

 

 

Item 4.

Controls and Procedures

26

 

 

 

PART II

OTHER INFORMATION

 

 

 

Item 1.

Legal Proceedings

27

 

 

 

Item 1A.

Risk Factors

27

 

 

 

Item 2.

Unregistered Sales of Equity Securities and the Use of Proceeds

27

 

 

 

Item 6.

Exhibits

28

 

 

 

 

Signatures

29

 

 


 

PART I

FINANCIAL INFORMATION

Item  1.

Financial Statements

URBAN OUTFITTERS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(amounts in thousands, except share data)

(unaudited)

  

 

 

April 30,

 

 

January 31,

 

 

April 30,

 

 

 

2019

 

 

2019

 

 

2018

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

291,199

 

 

$

358,260

 

 

$

313,713

 

Marketable securities

 

 

229,163

 

 

 

279,232

 

 

 

166,367

 

Accounts receivable, net of allowance for doubtful accounts of

   $892, $1,499 and $1,895, respectively

 

 

88,390

 

 

 

80,461

 

 

 

88,936

 

Inventory

 

 

408,362

 

 

 

370,507

 

 

 

404,617

 

Prepaid expenses and other current assets

 

 

122,183

 

 

 

114,296

 

 

 

123,505

 

Total current assets

 

 

1,139,297

 

 

 

1,202,756

 

 

 

1,097,138

 

Property and equipment, net

 

 

829,072

 

 

 

796,029

 

 

 

819,725

 

Operating lease right-of-use assets

 

 

1,088,290

 

 

 

 

 

 

 

Marketable securities

 

 

93,894

 

 

 

57,292

 

 

 

35,079

 

Deferred income taxes and other assets

 

 

101,267

 

 

 

104,438

 

 

 

99,273

 

Total Assets

 

$

3,251,820

 

 

$

2,160,515

 

 

$

2,051,215

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable

 

$

174,258

 

 

$

144,414

 

 

$

158,870

 

Current portion of operating lease liabilities

 

 

214,443

 

 

 

 

 

 

 

Accrued expenses, accrued compensation and other current liabilities

 

 

259,478

 

 

 

242,230

 

 

 

256,221

 

Total current liabilities

 

 

648,179

 

 

 

386,644

 

 

 

415,091

 

Non-current portion of operating lease liabilities

 

 

1,092,180

 

 

 

 

 

 

 

Deferred rent and other liabilities

 

 

63,490

 

 

 

284,773

 

 

 

289,709

 

Total Liabilities

 

 

1,803,849

 

 

 

671,417

 

 

 

704,800

 

Commitments and contingencies (see Note 12)

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

 

 

 

 

 

 

 

Preferred shares; $.0001 par value, 10,000,000 shares authorized,

   none issued

 

 

 

 

 

 

 

 

 

Common shares; $.0001 par value, 200,000,000 shares authorized,

   103,599,364, 105,642,283 and 108,670,688 shares issued and

   outstanding, respectively

 

 

10

 

 

 

11

 

 

 

11

 

Additional paid-in-capital

 

 

 

 

 

 

 

 

6,434

 

Retained earnings

 

 

1,478,678

 

 

 

1,516,190

 

 

 

1,358,683

 

Accumulated other comprehensive loss

 

 

(30,717

)

 

 

(27,103

)

 

 

(18,713

)

Total Shareholders’ Equity

 

 

1,447,971

 

 

 

1,489,098

 

 

 

1,346,415

 

Total Liabilities and Shareholders’ Equity

 

$

3,251,820

 

 

$

2,160,515

 

 

$

2,051,215

 

 

 

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

1


 

URBAN OUTFITTERS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(amounts in thousands, except share and per share data)

(unaudited)

 

 

 

Three Months Ended

 

 

 

April 30,

 

 

 

2019

 

 

2018

 

Net sales

 

$

864,413

 

 

$

855,688

 

Cost of sales

 

 

595,357

 

 

 

575,028

 

Gross profit

 

 

269,056

 

 

 

280,660

 

Selling, general and administrative expenses

 

 

229,036

 

 

 

226,764

 

Income from operations

 

 

40,020

 

 

 

53,896

 

Other income, net

 

 

2,680

 

 

 

80

 

Income before income taxes

 

 

42,700

 

 

 

53,976

 

Income tax expense

 

 

10,115

 

 

 

12,716

 

Net income

 

$

32,585

 

 

$

41,260

 

Net income per common share:

 

 

 

 

 

 

 

 

Basic

 

$

0.31

 

 

$

0.38

 

Diluted

 

$

0.31

 

 

$

0.38

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

Basic

 

 

104,437,460

 

 

 

108,490,926

 

Diluted

 

 

105,340,148

 

 

 

109,743,677

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

2


 

URBAN OUTFITTERS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(amounts in thousands)

(unaudited)

 

 

 

Three Months Ended

 

 

 

April 30,

 

 

 

2019

 

 

2018

 

Net income

 

$

32,585

 

 

$

41,260

 

Other comprehensive loss:

 

 

 

 

 

 

 

 

Foreign currency translation

 

 

(3,800

)

 

 

(7,969

)

Change in unrealized gains (losses) on marketable securities, net of tax

 

 

186

 

 

 

(93

)

Total other comprehensive loss

 

 

(3,614

)

 

 

(8,062

)

Comprehensive income

 

$

28,971

 

 

$

33,198

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

3


 

URBAN OUTFITTERS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(amounts in thousands, except share data)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

Common Shares

 

 

Additional

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

Number of

 

 

Par

 

 

Paid-in

 

 

Retained

 

 

Comprehensive

 

 

 

 

 

 

 

Shares

 

 

Value

 

 

Capital

 

 

Earnings

 

 

Loss

 

 

Total

 

Balances as of January 31, 2019

 

 

105,642,283

 

 

$

11

 

 

$

 

 

$

1,516,190

 

 

$

(27,103

)

 

$

1,489,098

 

Comprehensive income

 

 

 

 

 

 

 

 

 

 

 

32,585

 

 

 

(3,614

)

 

 

28,971

 

Share-based compensation

 

 

 

 

 

 

 

 

5,553

 

 

 

 

 

 

 

 

 

5,553

 

Share-based awards

 

 

563,989

 

 

 

 

 

 

974

 

 

 

 

 

 

 

 

 

974

 

Share repurchases

 

 

(2,606,908

)

 

 

(1

)

 

 

(6,527

)

 

 

(70,097

)

 

 

 

 

 

(76,625

)

Balances as of April 30, 2019

 

 

103,599,364

 

 

$

10

 

 

$

 

 

$

1,478,678

 

 

$

(30,717

)

 

$

1,447,971

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

Common Shares

 

 

Additional

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

Number of

 

 

Par

 

 

Paid-in

 

 

Retained

 

 

Comprehensive

 

 

 

 

 

 

 

Shares

 

 

Value

 

 

Capital

 

 

Earnings

 

 

Loss

 

 

Total

 

Balances as of January 31, 2018

 

 

108,248,568

 

 

$

11

 

 

$

684

 

 

$

1,310,859

 

 

$

(10,651

)

 

$

1,300,903

 

Comprehensive income

 

 

 

 

 

 

 

 

 

 

 

41,260

 

 

 

(8,062

)

 

 

33,198

 

Share-based compensation

 

 

 

 

 

 

 

 

5,524

 

 

 

 

 

 

 

 

 

5,524

 

Share-based awards

 

 

560,430

 

 

 

 

 

 

5,273

 

 

 

 

 

 

 

 

 

5,273

 

Cumulative effect of change in

     accounting pronouncements

 

 

 

 

 

 

 

 

 

 

 

6,564

 

 

 

 

 

 

6,564

 

Share repurchases

 

 

(138,310

)

 

 

 

 

 

(5,047

)

 

 

 

 

 

 

 

 

(5,047

)

Balances as of April 30, 2018

 

 

108,670,688

 

 

$

11

 

 

$

6,434

 

 

$

1,358,683

 

 

$

(18,713

)

 

$

1,346,415

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

4


 

URBAN OUTFITTERS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(amounts in thousands)

(unaudited)

 

 

 

 

 

 

 

April 30,

 

 

 

2019

 

 

2018

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net income

 

$

32,585

 

 

$

41,260

 

Adjustments to reconcile net income to net cash provided by operating

   activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

27,809

 

 

 

30,464

 

ROU asset amortization

 

 

46,626

 

 

 

 

Provision (benefit) for deferred income taxes

 

 

4,163

 

 

 

(7,166

)

Share-based compensation expense

 

 

5,553

 

 

 

5,524

 

Loss on disposition of property and equipment, net

 

 

552

 

 

 

1,985

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

Receivables

 

 

(8,003

)

 

 

(12,194

)

Inventory

 

 

(38,551

)

 

 

(54,379

)

Prepaid expenses and other assets

 

 

(12,396

)

 

 

1,599

 

Payables, accrued expenses, operating lease liabilities and other liabilities

 

 

(32,445

)

 

 

47,022

 

Net cash provided by operating activities

 

 

25,893

 

 

 

54,115

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Cash paid for property and equipment

 

 

(37,716

)

 

 

(24,634

)

Cash paid for marketable securities

 

 

(129,896

)

 

 

(52,237

)

Sales and maturities of marketable securities

 

 

151,761

 

 

 

57,400

 

Net cash used in investing activities

 

 

(15,851

)

 

 

(19,471

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Proceeds from the exercise of stock options

 

 

974

 

 

 

5,273

 

Share repurchases related to share repurchase program

 

 

(71,242

)

 

 

 

Share repurchases related to taxes for share-based awards

 

 

(5,383

)

 

 

(5,047

)

Net cash (used in) provided by financing activities

 

 

(75,651

)

 

 

226

 

Effect of exchange rate changes on cash and cash equivalents

 

 

(1,452

)

 

 

(3,377

)

(Decrease) increase in cash and cash equivalents

 

 

(67,061

)

 

 

31,493

 

Cash and cash equivalents at beginning of period

 

 

358,260

 

 

 

282,220

 

Cash and cash equivalents at end of period

 

$

291,199

 

 

$

313,713

 

Supplemental cash flow information:

 

 

 

 

 

 

 

 

Cash paid during the year for:

 

 

 

 

 

 

 

 

Income taxes

 

$

3,030

 

 

$

2,414

 

Non-cash investing activities—Accrued capital expenditures

 

$

31,761

 

 

$

26,177

 

 

 

 

 

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

5


 

URBAN OUTFITTERS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except share and per share data)

(unaudited)

1. Basis of Presentation

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. These condensed financial statements should be read in conjunction with Urban Outfitters, Inc.’s (the “Company’s”) Annual Report on Form 10-K for the fiscal year ended January 31, 2019, filed with the United States Securities and Exchange Commission on April 1, 2019.

The Company’s business experiences seasonal fluctuations in net sales and net income, with a more significant portion typically realized in the second half of each year predominantly due to the year-end holiday period. Historically, and consistent with the retail industry, this seasonality also impacts our working capital requirements, particularly with regard to inventory. Accordingly, the results of operations for the three months ended April 30, 2019 are not necessarily indicative of the results to be expected for the full year.

The Company’s fiscal year ends on January 31. All references in these notes to the Company’s fiscal years refer to the fiscal years ended on January 31 in those years. For example, the Company’s fiscal year 2020 will end on January 31, 2020.

2. Recent Accounting Pronouncements

Recently Adopted

In February 2016, the Financial Accounting Standards Board (“FASB”) issued an accounting standards update that amends the existing accounting standards for lease accounting. This update requires lessees to recognize a right-of-use asset and lease liability for both operating and finance leases. The Company adopted the new guidance on February 1, 2019 using a modified retrospective approach at the beginning of the period of adoption. The Company elected the “package of three” practical expedients and did not reassess expired or existing leases as of the effective date. The Company also elected the practical expedient to not separate non-lease components from lease components as it pertains to real estate leases. Adoption on February 1, 2019 resulted in the recognition of approximately $1.3 billion of lease liabilities based on the present value of the remaining minimum rental payments using discount rates as of the effective date. Corresponding right-of-use assets of approximately $1.1 billion were recognized, with the offsetting balance representing a reduction in the previously recognized deferred rent balance. Adoption did not result in a material impact on the Company’s Consolidated Statements of Income or Consolidated Statements of Cash Flows.

Recently Issued

In June 2016, the FASB issued an accounting standards update that introduces a new model for recognizing credit losses on financial instruments based on an estimate of current expected credit losses. This includes loan commitments, accounts receivable, trade receivables and certain off-balance sheet credit exposures. The guidance also modifies the impairment model for available-for-sale debt securities. The update will be effective for the Company on February 1, 2020 and early adoption is permitted. The Company has concluded that this update will not have a material impact on its consolidated financial statements and related disclosures.

6


 

3. Revenue from Contracts with Customers

Contract receivables occur when the Company satisfies all of its performance obligations under a contract and recognizes revenue prior to billing or receiving consideration from a customer for which it has an unconditional right to payment. Contract receivables arise from credit card transactions and sales to Wholesale segment customers and franchisees. For the three month period ended April 30, 2019, the opening and closing balance of contract receivables, net of allowance for doubtful accounts, was $80,461 and $88,390, respectively. For the three month period ended April 30, 2018, the opening and closing balance of contract receivables, net of allowance for doubtful accounts, was $76,962 and $88,936, respectively. Contract receivables are included in “Accounts receivable, net of allowance for doubtful accounts” in the Condensed Consolidated Balance Sheets.

Contract liabilities represent unearned revenue and result from the Company receiving consideration in a contract with a customer for which it has not satisfied all of its performance obligations. The Company’s contract liabilities result from customer deposits, customer loyalty programs and the issuance of gift cards. Gift cards are expected to be redeemed within two years of issuance, with the majority of redemptions occurring in the first year. For the three month period ended April 30, 2019, the opening and closing balances of contract liabilities were $49,747 and $43,187, respectively. For the three month period ended April 30, 2018, the opening and closing balances of contract liabilities were $56,637 and $34,543, respectively. Contract liabilities are included in “Accrued expenses, accrued compensation and other current liabilities” in the Condensed Consolidated Balance Sheets. During the three month period ended April 30, 2019, the Company recognized $15,289 of revenue that was included in the contract liability balance at the beginning of the period.

 

 

7


 

4. Marketable Securities

During all periods shown, marketable securities are classified as available-for-sale. The amortized cost, gross unrealized gains (losses) and fair value of available-for-sale securities by major security type and class of security as of April 30, 2019, January 31, 2019 and April 30, 2018 were as follows:

 

 

 

Amortized

 

 

Unrealized

 

 

Unrealized

 

 

Fair

 

 

 

Cost

 

 

Gains

 

 

(Losses)

 

 

Value

 

As of April 30, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Short-term Investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate bonds

 

$

169,627

 

 

$

72

 

 

$

(70

)

 

$

169,629

 

Municipal and pre-refunded municipal bonds

 

 

52,131

 

 

 

23

 

 

 

(6

)

 

 

52,148

 

Federal government agencies

 

 

2,735

 

 

 

4

 

 

 

 

 

 

2,739

 

Certificates of deposit

 

 

1,650

 

 

 

 

 

 

 

 

 

1,650

 

Commercial paper

 

 

2,997

 

 

 

 

 

 

 

 

 

2,997

 

 

 

 

229,140

 

 

 

99

 

 

 

(76

)

 

 

229,163

 

Long-term Investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate bonds

 

 

71,105

 

 

 

95

 

 

 

(46

)

 

 

71,154

 

Municipal and pre-refunded municipal bonds

 

 

11,035

 

 

 

11

 

 

 

(8

)

 

 

11,038

 

Mutual funds, held in rabbi trust

 

 

7,733

 

 

 

208

 

 

 

 

 

 

 

7,941

 

Federal government agencies

 

 

2,351

 

 

 

7

 

 

 

 

 

 

2,358

 

Certificates of deposit

 

 

1,403

 

 

 

 

 

 

 

 

 

1,403

 

 

 

 

93,627

 

 

 

321

 

 

 

(54

)

 

 

93,894

 

 

 

$

322,767

 

 

$

420

 

 

$

(130

)

 

$

323,057

 

As of January 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Short-term Investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate bonds

 

$

227,287

 

 

$

24

 

 

$

(214

)

 

$

227,097

 

Municipal and pre-refunded municipal bonds

 

 

43,677

 

 

 

15

 

 

 

(18

)

 

 

43,674

 

Federal government agencies

 

 

1,458

 

 

 

 

 

 

 

 

 

1,458

 

Certificates of deposit

 

 

1,050

 

 

 

 

 

 

 

 

 

1,050

 

Commercial paper

 

 

2,979

 

 

 

 

 

 

 

 

 

2,979

 

Treasury bills

 

 

2,975

 

 

 

 

 

 

(1

)

 

 

2,974

 

 

 

 

279,426

 

 

 

39

 

 

 

(233

)

 

 

279,232

 

Long-term Investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate bonds

 

 

34,265

 

 

 

34

 

 

 

(63

)

 

 

34,236

 

Municipal and pre-refunded municipal bonds

 

 

7,554

 

 

 

7

 

 

 

(3

)

 

 

7,558

 

Mutual funds, held in rabbi trust

 

 

6,301

 

 

 

450

 

 

 

 

 

 

6,751

 

Federal government agencies

 

 

6,603

 

 

 

2

 

 

 

(1

)

 

 

6,604

 

Certificates of deposit

 

 

2,143

 

 

 

 

 

 

 

 

 

2,143

 

 

 

 

56,866

 

 

 

493

 

 

 

(67

)

 

 

57,292

 

 

 

$

336,292

 

 

$

532

 

 

$

(300

)

 

$

336,524

 

8


 

 

 

 

Amortized

 

 

Unrealized

 

 

Unrealized

 

 

Fair

 

 

 

Cost

 

 

Gains

 

 

(Losses)

 

 

Value

 

As of April 30, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Short-term Investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate bonds

 

$

110,657

 

 

$

 

 

$

(294

)

 

$

110,363

 

Municipal and pre-refunded municipal bonds

 

 

54,659

 

 

 

 

 

 

(47

)

 

 

54,612

 

Certificates of deposit

 

 

1,392

 

 

 

 

 

 

 

 

 

1,392

 

 

 

 

166,708

 

 

 

 

 

 

(341

)

 

 

166,367

 

Long-term Investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate bonds

 

 

18,137

 

 

 

 

 

 

(212

)

 

 

17,925

 

Municipal and pre-refunded municipal bonds

 

 

7,873

 

 

 

 

 

 

(30

)

 

 

7,843

 

Mutual funds, held in rabbi trust

 

 

6,453

 

 

 

33

 

 

 

(3

)

 

 

6,483

 

Certificates of deposit

 

 

2,828

 

 

 

 

 

 

 

 

 

2,828

 

 

 

 

35,291

 

 

 

33

 

 

 

(245

)

 

 

35,079

 

 

 

$

201,999

 

 

$

33

 

 

$

(586

)

 

$

201,446

 

 

Proceeds from the sales and maturities of available-for-sale securities were $151,761 and $57,400 for the three months ended April 30, 2019 and 2018, respectively. The Company included in “Other income, net,” in the Condensed Consolidated Statements of Income, a net realized gain of $7 for the three months ended April 30, 2019, and a net realized loss of $13 for the three months ended April 30, 2018. Amortization of discounts and premiums, net, resulted in a reduction of “Other income, net” of $119 and $634 for the three months ended April 30, 2019 and 2018, respectively. Mutual funds represent assets held in an irrevocable rabbi trust for the Company’s Non-qualified Deferred Compensation Plan (“NQDC”). These assets are a source of funds to match the funding obligations to participants in the NQDC but are subject to the Company’s general creditors. The Company elected the fair value option for financial assets for the mutual funds held in the rabbi trust resulting in all unrealized gains and losses being recorded in “Other income, net” in the Condensed Consolidated Statements of Income.

5. Fair Value

The Company utilizes a hierarchy that prioritizes fair value measurements based on the types of inputs used for the various valuation techniques (market approach, income approach and cost approach that relate to its financial assets and financial liabilities). The levels of the hierarchy are described as follows:

 

Level 1: Observable inputs such as quoted prices in active markets for identical assets or liabilities.

 

Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly; these include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

 

Level 3: Unobservable inputs that reflect the Company’s own assumptions.

9


 

Management’s assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of financial assets and liabilities and their placement within the fair value hierarchy. The Company’s financial assets that are accounted for at fair value on a recurring basis are presented in the tables below:

 

 

 

Marketable Securities Fair Value as of

 

 

 

April 30, 2019

 

 

 

Level 1

 

 

Level 2