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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, 2020

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: (215454-5500

 

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—97,779,586 shares outstanding on June 24, 2020.

 

 

 


EXPLANATORY NOTE

Urban Outfitters, Inc. (the "Company") relied on the Securities and Exchange Commission’s Order under Section 36 of the Securities Exchange Act of 1934 Modifying Exemptions From the Reporting and Proxy Delivery Requirements for Public Companies dated March 25, 2020 (Release No. 34-88465) (the "Order") to delay the filing of this Quarterly Report on Form 10-Q due to the coronavirus (“COVID-19”) outbreak. The original due date for filing of this Quarterly Report on Form 10-Q was June 9, 2020. On June 8, 2020, the Company filed a Current Report on Form 8-K to indicate its intention to rely on the Order for such extension. Consistent with the Company’s statements made in the Current Report on Form 8-K, the Company was unable to file this Quarterly Report on Form 10-Q until June 30, 2020 because the Company’s operations and business have experienced significant disruptions due to the unprecedented conditions surrounding the COVID-19 outbreak. These disruptions include, but are not limited to, the temporary leaves of absence of a significant number of our employees, the temporary closures of all of our offices and global retail locations, and other financial and operational concerns associated with or caused by COVID-19. Specifically, the Company relied on the Order to allow for additional time to complete the impairment assessments of the Company’s long-lived assets for the quarter, which was necessary to finalize this Quarterly Report on Form 10-Q. 


TABLE OF CONTENTS

PART I

FINANCIAL INFORMATION

 

Item 1.

Financial Statements (unaudited)

 

 

 

 

 

Condensed Consolidated Balance Sheets as of April 30, 2020, January 31, 2020 and April 30, 2019

1

 

 

 

 

Condensed Consolidated Statements of Operations for the three months ended April 30, 2020 and 2019

2

 

 

 

 

Condensed Consolidated Statements of Comprehensive (Loss) Income for the three months ended April 30, 2020 and 2019

3

 

 

 

 

Condensed Consolidated Statements of Shareholders’ Equity for the three months ended April 30, 2020 and 2019

4

 

 

 

 

Condensed Consolidated Statements of Cash Flows for the three months ended April 30, 2020 and 2019

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

28

 

 

 

Item 4.

Controls and Procedures

28

 

 

 

PART II

OTHER INFORMATION

 

 

 

Item 1.

Legal Proceedings

29

 

 

 

Item 1A.

Risk Factors

29

 

 

 

Item 2.

Unregistered Sales of Equity Securities and the Use of Proceeds

30

 

Item 6.

Exhibits

31

 

 

 

 

Signatures

32

 

 


 

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,

 

 

 

2020

 

 

2020

 

 

2019

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

588,740

 

 

$

221,839

 

 

$

291,199

 

Marketable securities

 

 

65,121

 

 

 

211,453

 

 

 

229,163

 

Accounts receivable, net of allowance for doubtful accounts of

   $6,304, $880 and $892, respectively

 

 

55,910

 

 

 

88,288

 

 

 

88,390

 

Inventory

 

 

335,640

 

 

 

409,534

 

 

 

408,362

 

Prepaid expenses and other current assets

 

 

131,517

 

 

 

122,282

 

 

 

122,183

 

Total current assets

 

 

1,176,928

 

 

 

1,053,396

 

 

 

1,139,297

 

Property and equipment, net

 

 

880,353

 

 

 

890,032

 

 

 

829,072

 

Operating lease right-of-use assets

 

 

1,116,597

 

 

 

1,170,531

 

 

 

1,088,290

 

Marketable securities

 

 

13,272

 

 

 

97,096

 

 

 

93,894

 

Deferred income taxes and other assets

 

 

169,054

 

 

 

104,578

 

 

 

101,267

 

Total Assets

 

$

3,356,204

 

 

$

3,315,633

 

 

$

3,251,820

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable

 

$

104,702

 

 

$

167,871

 

 

$

174,258

 

Current portion of operating lease liabilities

 

 

243,671

 

 

 

221,593

 

 

 

214,443

 

Accrued expenses, accrued compensation and other current liabilities

 

 

315,204

 

 

 

249,306

 

 

 

259,478

 

Total current liabilities

 

 

663,577

 

 

 

638,770

 

 

 

648,179

 

Non-current portion of operating lease liabilities

 

 

1,088,932

 

 

 

1,137,495

 

 

 

1,092,180

 

Long-term debt

 

 

220,000

 

 

 

 

 

 

 

Deferred rent and other liabilities

 

 

85,587

 

 

 

84,013

 

 

 

63,490

 

Total Liabilities

 

 

2,058,096

 

 

 

1,860,278

 

 

 

1,803,849

 

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,

   97,777,322, 97,976,815 and 103,599,364 shares issued and

   outstanding, respectively

 

 

10

 

 

 

10

 

 

 

10

 

Additional paid-in-capital

 

 

3,593

 

 

 

9,477

 

 

 

 

Retained earnings

 

 

1,335,430

 

 

 

1,473,872

 

 

 

1,478,678

 

Accumulated other comprehensive loss

 

 

(40,925

)

 

 

(28,004

)

 

 

(30,717

)

Total Shareholders’ Equity

 

 

1,298,108

 

 

 

1,455,355

 

 

 

1,447,971

 

Total Liabilities and Shareholders’ Equity

 

$

3,356,204

 

 

$

3,315,633

 

 

$

3,251,820

 

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

1


 

URBAN OUTFITTERS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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

(unaudited)

 

 

 

Three Months Ended

 

 

 

April 30,

 

 

 

2020

 

 

2019

 

Net sales

 

$

588,483

 

 

$

864,413

 

Cost of sales (excluding store impairment)

 

 

562,112

 

 

 

595,357

 

Store impairment

 

 

14,528

 

 

 

 

Gross profit

 

 

11,843

 

 

 

269,056

 

Selling, general and administrative expenses

 

 

210,578

 

 

 

229,036

 

(Loss) income from operations

 

 

(198,735

)

 

 

40,020

 

Other income, net

 

 

162

 

 

 

2,680

 

(Loss) income before income taxes

 

 

(198,573

)

 

 

42,700

 

Income tax (benefit) expense

 

 

(60,131

)

 

 

10,115

 

Net (loss) income

 

$

(138,442

)

 

$

32,585

 

Net (loss) income per common share:

 

 

 

 

 

 

 

 

Basic

 

$

(1.41

)

 

$

0.31

 

Diluted

 

$

(1.41

)

 

$

0.31

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

Basic

 

 

97,910,314

 

 

 

104,437,460

 

Diluted

 

 

97,910,314

 

 

 

105,340,148

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

2


 

URBAN OUTFITTERS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(amounts in thousands)

(unaudited)

 

 

 

 

Three Months Ended

 

 

 

April 30,

 

 

 

2020

 

 

2019

 

Net (loss) income

 

$

(138,442

)

 

$

32,585

 

Other comprehensive (loss) income:

 

 

 

 

 

 

 

 

Foreign currency translation

 

 

(12,617

)

 

 

(3,800

)

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

 

 

(304

)

 

 

186

 

Total other comprehensive (loss) income

 

 

(12,921

)

 

 

(3,614

)

Comprehensive (loss) income

 

$

(151,363

)

 

$

28,971

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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, 2020

 

 

97,976,815

 

 

$

10

 

 

$

9,477

 

 

$

1,473,872

 

 

$

(28,004

)

 

$

1,455,355

 

Comprehensive (loss)

 

 

 

 

 

 

 

 

 

 

 

(138,442

)

 

 

(12,921

)

 

 

(151,363

)

Share-based compensation

 

 

 

 

 

 

 

 

4,872

 

 

 

 

 

 

 

 

 

4,872

 

Share-based awards

 

 

437,174

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share repurchases

 

 

(636,667

)

 

 

 

 

 

(10,756

)

 

 

 

 

 

 

 

 

(10,756

)

Balances as of April 30, 2020

 

 

97,777,322

 

 

$

10

 

 

$

3,593

 

 

$

1,335,430

 

 

$

(40,925

)

 

$

1,298,108

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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)

  

 

 

Three Months Ended

 

 

 

April 30,

 

 

 

2020

 

 

2019

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net (loss) income

 

$

(138,442

)

 

$

32,585

 

Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

27,924

 

 

 

27,809

 

Non-cash lease expense

 

 

48,370

 

 

 

46,626

 

(Benefit) provision for deferred income taxes

 

 

(14,388

)

 

 

4,163

 

Share-based compensation expense

 

 

4,872

 

 

 

5,553

 

Store impairment

 

 

14,528

 

 

 

 

Loss on disposition of property and equipment, net

 

 

439

 

 

 

552

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

Receivables

 

 

32,118

 

 

 

(8,003

)

Inventory

 

 

71,759

 

 

 

(38,551

)

Prepaid expenses and other assets

 

 

(50,542

)

 

 

(12,396

)

Payables, accrued expenses and other liabilities

 

 

(29,071

)

 

 

15,081

 

Operating lease liabilities

 

 

(27,219

)

 

 

(47,526

)

Net cash (used in) provided by operating activities

 

 

(59,652

)

 

 

25,893

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Cash paid for property and equipment

 

 

(43,518

)

 

 

(37,716

)

Cash paid for marketable securities

 

 

(45,517

)

 

 

(129,896

)

Sales and maturities of marketable securities

 

 

311,258

 

 

 

151,761

 

Net cash provided by (used in) investing activities

 

 

222,223

 

 

 

(15,851

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Borrowings under long-term debt

 

 

220,000

 

 

 

 

Proceeds from the exercise of stock options

 

 

 

 

 

974

 

Share repurchases related to share repurchase program

 

 

(7,036

)

 

 

(71,242

)

Share repurchases related to taxes for share-based awards

 

 

(3,720

)

 

 

(5,383

)

Net cash provided by (used in) financing activities

 

 

209,244

 

 

 

(75,651

)

Effect of exchange rate changes on cash and cash equivalents

 

 

(4,914

)

 

 

(1,452

)

Increase (decrease) in cash and cash equivalents

 

 

366,901

 

 

 

(67,061

)

Cash and cash equivalents at beginning of period

 

 

221,839

 

 

 

358,260

 

Cash and cash equivalents at end of period

 

$

588,740

 

 

$

291,199

 

Supplemental cash flow information:

 

 

 

 

 

 

 

 

Cash paid during the year for:

 

 

 

 

 

 

 

 

Income taxes

 

$

6,342

 

 

$

3,030

 

Non-cash investing activities—Accrued capital expenditures

 

$

5,176

 

 

$

31,761

 

 

 

 

 

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, 2020, filed with the United States Securities and Exchange Commission on March 31, 2020.

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, 2020 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 2021 will end on January 31, 2021.

Recent Accounting Pronouncements

The Company has considered all new accounting standards updates issued by the Financial Accounting Standards Board (“FASB”) and has concluded that there are no recent accounting standard updates that will have a material impact on its consolidated financial statements and related disclosures.

2. Impact of the Coronavirus Pandemic

On March 11, 2020, the World Health Organization declared the novel strain of coronavirus (COVID-19) a global pandemic and recommended containment and mitigation measures worldwide, causing public health officials to recommend precautions to mitigate the spread of the virus, including warning against congregating in heavily populated areas, such as malls and shopping centers. On March 14, 2020, the Company announced that it temporarily closed all stores globally; however, the Company continued to fulfill digital orders from its stores where permitted by local authorities. The Company’s distribution and fulfillment centers remained open to support the digital business and the Wholesale segment operations but have done so with additional safety procedures and enhanced cleaning to protect the health of employees. The Company closed its offices and showrooms globally with the exception of location dependent employees. All other corporate and showroom employees are working remotely. The coronavirus pandemic continues to materially impact the Company’s operations in the United States and globally, and related government and private sector responsive actions have and will continue to adversely affect its business operations. Because it is impossible to predict the effect and ultimate impact of the coronavirus pandemic, current financial information may not be necessarily indicative of future operating results and the Company’s plans as described below may change.

In response to the coronavirus pandemic, the Company has taken many additional measures to protect its financial position and increase financial flexibility during this challenging time period. Those include:

 

Furloughing a substantial number of store, wholesale and home office associates,

 

Suspending all new hiring except in its fulfillment and call centers,

 

Suspending all merit raises and bonuses for fiscal 2021,

 

Borrowing $220,000 (and subsequently repaying $100,000 on June 17, 2020) under its Amended Credit Facility to further protect its cash reserves (see Note 6, “Debt”),

6


 

 

Reducing its capital budget by over $140,000 from approximately $260,000 to approximately $120,000 by delaying or cancelling projects,

 

Adjusting inventory levels by cancelling or delaying many orders and asking for price concessions on those remaining,

 

Reducing all non-payroll expenses, including creative, marketing, and travel, among others,

 

Extending payment terms for both merchandise and non-merchandise vendor invoices by 30 days,

 

Reducing certain occupancy and occupancy related expenses,

 

Reducing investments in two Company growth initiatives: Nuuly and expansion into China,

 

Reducing senior leadership compensation for the duration of the furlough time period,

 

Eliminating Board of Directors’ cash compensation through the date of the 2021 Annual Meeting of Shareholders, and

 

Suspending share repurchases for the foreseeable future (see Note 9, “Shareholders’ Equity”).

As a result of the coronavirus pandemic, during the three months ended April 30, 2020, the Company recorded certain additional reserves and non-cash charges. During the three months ended April 30, 2020, the Company assessed the value of its inventory in the Retail and Wholesale segments and recorded a $43,327 increase in its inventory obsolescence reserves.  During the three months ended April 30, 2020, the Company recorded a $5,800 increase in allowance for doubtful accounts reserves for Wholesale segment customer accounts receivables as a result of the significant disruption and uncertainty currently in the wholesale macro environment.  Finally, during the three months ended April 30, 2020, the Company determined that certain long-lived assets at the Company’s retail locations were unable to recover their carrying value primarily due to the impact of the mandated store closures and anticipated reduced store net sales during the remainder of fiscal 2021 as a result of the coronavirus pandemic. These assets were written down to a fair value resulting in impairment charges of $14,528 across 39 retail locations.

As a result of the global coronavirus pandemic, governments in the United States, United Kingdom (“U.K.”), Canada and various other jurisdictions have implemented programs to encourage companies to retain and pay employees that are unable to work or are limited in the work that they can perform in light of closures or a significant decline in sales. The Company continued to pay all employees through at least April 1, 2020. On March 31, 2020, the Company announced it furloughed a substantial number of store, wholesale and home office employees beginning April 1. Impacted employees continued to receive enrolled benefits during the furlough period. As such, the Company qualifies for certain of these programs which will partially offset related expenses. The Company is evaluating the reimbursement it is eligible to receive under such programs and will record the cumulative benefit in the second quarter of fiscal 2021 and through the eligibility period of such programs.

Beginning April 25, 2020, the Company started to reopen stores in select states and countries. When the Company reopened these stores, it did so in accordance with local government guidelines. As of June 24, 2020, the Company has reopened more than 570 of its stores globally and intends to continue reopening stores around the world as states and countries permit the reopening of retail operations. The Company has not changed its remote work arrangements for its corporate employees.

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 the Company’s Wholesale segment customers and franchisees. For the three month period ended April 30, 2020, the opening and closing balances of contract receivables, net of allowance for doubtful accounts, were $88,288 and $55,910, respectively. For the three month period ended April 30, 2019, the opening and closing balances of contract receivables, net of allowance for doubtful accounts, were $80,461 and $88,390, respectively. During the three month period ended April 30, 2020, the Company recorded a $5,800 increase in allowance for doubtful accounts reserves for Wholesale segment customer accounts receivables as a result of the significant disruption and uncertainty currently in the wholesale macro environment. Contract receivables are included in “Accounts receivable, net of allowance for doubtful accounts” in the Condensed Consolidated Balance Sheets.

7


 

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, 2020, the opening and closing balances of contract liabilities were $52,926 and $49,502, respectively. For the three month period ended April 30, 2019, the opening and closing balances of contract liabilities were $49,747 and $43,187, 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, 2020, the Company recognized $12,763 of revenue that was included in the contract liability balance at the beginning of the period. 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.

 

 

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, 2020, January 31, 2020 and April 30, 2019 were as follows:

 

 

 

Amortized

 

 

Unrealized

 

 

Unrealized

 

 

Fair

 

 

 

Cost

 

 

Gains

 

 

(Losses)

 

 

Value

 

As of April 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Short-term Investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Municipal and pre-refunded municipal bonds

 

$

50,887

 

 

$

5

 

 

$

(31

)

 

$

50,861

 

Corporate bonds

 

 

14,246

 

 

 

21

 

 

 

(7

)

 

 

14,260

 

 

 

 

65,133

 

 

 

26

 

 

 

(38

)

 

 

65,121

 

Long-term Investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Municipal and pre-refunded municipal bonds

 

 

2,350

 

 

 

21

 

 

 

(1

)

 

 

2,370

 

Corporate bonds

 

 

2,572

 

 

 

3

 

 

 

(4

)

 

 

2,571

 

Mutual funds, held in rabbi trust

 

 

7,400

 

 

 

682

 

 

 

 

 

 

8,082

 

Certificates of deposit

 

 

249

 

 

 

 

 

 

 

 

 

249

 

 

 

 

12,571

 

 

 

706

 

 

 

(5

)

 

 

13,272

 

 

 

$

77,704

 

 

$

732

 

 

$

(43

)

 

$

78,393

 

As of January 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Short-term Investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Municipal and pre-refunded municipal bonds

 

$

38,617

 

 

$

20

 

 

$

(11

)

 

$

38,626

 

Corporate bonds

 

 

166,790

 

 

 

318

 

 

 

(26

)

 

 

167,082

 

Federal government agencies

 

 

1,152

 

 

 

3

 

 

 

 

 

 

1,155

 

Certificates of deposit

 

 

2,593

 

 

 

 

 

 

 

 

 

2,593

 

Commercial paper

 

 

1,997

 

 

 

 

 

 

 

 

 

1,997

 

 

 

 

211,149

 

 

 

341

 

 

 

(37