10-Q 1 urbn-20240430.htm 10-Q 10-Q
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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, 2024

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. YesNo

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). YesNo

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—93,399,211 shares outstanding on June 4, 2024.


TABLE OF CONTENTS

PART I

FINANCIAL INFORMATION

Item 1.

Financial Statements (unaudited)

 

 

 

 

Condensed Consolidated Balance Sheets as of April 30, 2024, January 31, 2024 and April 30, 2023

1

 

 

 

Condensed Consolidated Statements of Income for the three months ended April 30, 2024 and 2023

2

 

 

 

Condensed Consolidated Statements of Comprehensive Income for the three months ended April 30, 2024 and 2023

3

 

 

 

Condensed Consolidated Statements of Shareholders’ Equity for the three months ended April 30, 2024 and 2023

4

 

 

 

Condensed Consolidated Statements of Cash Flows for the three months ended April 30, 2024 and 2023

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

27

 

 

 

PART II

OTHER INFORMATION

 

 

 

Item 1.

Legal Proceedings

28

 

 

 

Item 1A.

Risk Factors

28

 

 

 

Item 5.

Other Information

28

 

 

 

Item 6.

Exhibits

29

 

 

 

Signatures

30

 


 

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,

 

 

 

2024

 

 

2024

 

 

2023

 

ASSETS

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

173,995

 

 

$

178,321

 

 

$

171,655

 

Marketable securities

 

 

312,558

 

 

 

286,744

 

 

 

209,777

 

Accounts receivable, net of allowance for doubtful accounts of
   $
933, $1,465 and $1,453, respectively

 

 

88,297

 

 

 

67,008

 

 

 

105,589

 

Inventory

 

 

578,990

 

 

 

550,242

 

 

 

590,326

 

Prepaid expenses and other current assets

 

 

219,886

 

 

 

200,188

 

 

 

223,894

 

Total current assets

 

 

1,373,726

 

 

 

1,282,503

 

 

 

1,301,241

 

Property and equipment, net

 

 

1,304,548

 

 

 

1,286,541

 

 

 

1,201,506

 

Operating lease right-of-use assets

 

 

910,965

 

 

 

920,396

 

 

 

921,893

 

Marketable securities

 

 

287,178

 

 

 

314,152

 

 

 

86,156

 

Other assets

 

 

312,285

 

 

 

307,617

 

 

 

281,874

 

Total Assets

 

$

4,188,702

 

 

$

4,111,209

 

 

$

3,792,670

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

Accounts payable

 

$

321,443

 

 

$

253,342

 

 

$

263,558

 

Current portion of operating lease liabilities

 

 

224,100

 

 

 

226,645

 

 

 

233,085

 

Accrued expenses, accrued compensation and other current liabilities

 

 

488,681

 

 

 

514,218

 

 

 

431,033

 

Total current liabilities

 

 

1,034,224

 

 

 

994,205

 

 

 

927,676

 

Non-current portion of operating lease liabilities

 

 

849,917

 

 

 

851,853

 

 

 

845,643

 

Other non-current liabilities

 

 

142,227

 

 

 

152,611

 

 

 

168,669

 

Total Liabilities

 

 

2,026,368

 

 

 

1,998,669

 

 

 

1,941,988

 

Commitments and contingencies (see Note 11)

 

 

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

 

 

 

 

Preferred shares; $.0001 par value, 10,000,000 shares authorized,
   
none issued

 

 

 

 

 

 

 

 

 

Common shares; $.0001 par value, 200,000,000 shares authorized,
   
93,379,211, 92,787,522 and 92,677,835 shares issued and
   outstanding, respectively

 

 

9

 

 

 

9

 

 

 

9

 

Additional paid-in-capital

 

 

31,572

 

 

 

37,943

 

 

 

15,133

 

Retained earnings

 

 

2,175,500

 

 

 

2,113,735

 

 

 

1,878,878

 

Accumulated other comprehensive loss

 

 

(44,747

)

 

 

(39,147

)

 

 

(43,338

)

Total Shareholders’ Equity

 

 

2,162,334

 

 

 

2,112,540

 

 

 

1,850,682

 

Total Liabilities and Shareholders’ Equity

 

$

4,188,702

 

 

$

4,111,209

 

 

$

3,792,670

 

 

 

 

 

 

 

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,

 

 

 

2024

 

 

2023

 

Net sales

 

$

1,200,732

 

 

$

1,113,674

 

Cost of sales (excluding store impairment and lease abandonment charges)

 

 

787,746

 

 

 

742,443

 

Store impairment and lease abandonment charges

 

 

4,601

 

 

 

 

Gross profit

 

 

408,385

 

 

 

371,231

 

Selling, general and administrative expenses

 

 

333,761

 

 

 

299,848

 

 Income from operations

 

 

74,624

 

 

 

71,383

 

Other income, net

 

 

6,246

 

 

 

1,019

 

Income before income taxes

 

 

80,870

 

 

 

72,402

 

Income tax expense

 

 

19,105

 

 

 

19,585

 

Net income

 

$

61,765

 

 

$

52,817

 

Net income per common share:

 

 

 

 

 

 

Basic

 

$

0.66

 

 

$

0.57

 

Diluted

 

$

0.65

 

 

$

0.56

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

Basic

 

 

93,124,568

 

 

 

92,474,688

 

Diluted

 

 

95,000,706

 

 

 

93,821,292

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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,

 

 

 

2024

 

 

2023

 

Net income

 

$

61,765

 

 

$

52,817

 

Other comprehensive (loss) income:

 

 

 

 

 

 

Foreign currency translation

 

 

(3,298

)

 

 

3,177

 

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

 

 

(2,302

)

 

 

2,120

 

Total other comprehensive (loss) income

 

 

(5,600

)

 

 

5,297

 

Comprehensive income

 

$

56,165

 

 

$

58,114

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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, 2024

 

 

92,787,522

 

 

$

9

 

 

$

37,943

 

 

$

2,113,735

 

 

$

(39,147

)

 

$

2,112,540

 

Comprehensive income

 

 

 

 

 

 

 

 

 

 

 

61,765

 

 

 

(5,600

)

 

 

56,165

 

Share-based compensation

 

 

 

 

 

 

 

 

7,599

 

 

 

 

 

 

 

 

 

7,599

 

Share-based awards

 

 

934,534

 

 

 

 

 

 

475

 

 

 

 

 

 

 

 

 

475

 

Share repurchases

 

 

(342,845

)

 

 

 

 

 

(14,445

)

 

 

 

 

 

 

 

 

(14,445

)

Balances as of April 30, 2024

 

 

93,379,211

 

 

$

9

 

 

$

31,572

 

 

$

2,175,500

 

 

$

(44,747

)

 

$

2,162,334

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

Common Shares

 

 

Additional

 

 

 

 

 

Other

 

 

 

 

 

 

Number of

 

 

Par

 

 

Paid-in

 

 

Retained

 

 

Comprehensive

 

 

 

 

 

Shares

 

 

Value

 

 

Capital

 

 

Earnings

 

 

Loss

 

 

Total

 

Balances as of January 31, 2023

 

 

92,180,709

 

 

$

9

 

 

$

15,248

 

 

$

1,826,061

 

 

$

(48,635

)

 

$

1,792,683

 

Comprehensive income

 

 

 

 

 

 

 

 

 

 

 

52,817

 

 

 

5,297

 

 

 

58,114

 

Share-based compensation

 

 

 

 

 

 

 

 

7,735

 

 

 

 

 

 

 

 

 

7,735

 

Share-based awards

 

 

790,388

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share repurchases

 

 

(293,262

)

 

 

 

 

 

(7,850

)

 

 

 

 

 

 

 

 

(7,850

)

Balances as of April 30, 2023

 

 

92,677,835

 

 

$

9

 

 

$

15,133

 

 

$

1,878,878

 

 

$

(43,338

)

 

$

1,850,682

 

 

 

 

 

 

 

 

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

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,

 

 

 

2024

 

 

2023

 

Cash flows from operating activities:

 

 

 

 

 

 

Net income

 

$

61,765

 

 

$

52,817

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

27,761

 

 

 

23,879

 

Non-cash lease expense

 

 

51,470

 

 

 

50,859

 

Provision for deferred income taxes

 

 

12,735

 

 

 

2,457

 

Share-based compensation expense

 

 

7,599

 

 

 

7,735

 

Amortization of tax credit investment

 

 

4,380

 

 

 

3,976

 

Store impairment and lease abandonment charges

 

 

4,601

 

 

 

 

Loss on disposition of property and equipment, net

 

 

135

 

 

 

222

 

Changes in assets and liabilities:

 

 

 

 

 

 

Receivables

 

 

(21,512

)

 

 

(35,030

)

Inventory

 

 

(29,818

)

 

 

(1,649

)

Prepaid expenses and other assets

 

 

(37,542

)

 

 

(35,045

)

Payables, accrued expenses and other liabilities

 

 

36,663

 

 

 

22,257

 

Operating lease liabilities

 

 

(59,686

)

 

 

(56,201

)

Net cash provided by operating activities

 

 

58,551

 

 

 

36,277

 

Cash flows from investing activities:

 

 

 

 

 

 

Cash paid for property and equipment

 

 

(41,091

)

 

 

(32,904

)

Cash paid for marketable securities

 

 

(95,799

)

 

 

(74,101

)

Sales and maturities of marketable securities

 

 

91,081

 

 

 

69,456

 

Initial cash payment for tax credit investment

 

 

 

 

 

(20,000

)

Net cash used in investing activities

 

 

(45,809

)

 

 

(57,549

)

Cash flows from financing activities:

 

 

 

 

 

 

Proceeds from the exercise of stock options

 

 

475

 

 

 

 

Share repurchases related to taxes for share-based awards

 

 

(14,445

)

 

 

(7,850

)

Tax credit investment liability payments

 

 

(1,341

)

 

 

(468

)

Net cash used in financing activities

 

 

(15,311

)

 

 

(8,318

)

Effect of exchange rate changes on cash and cash equivalents

 

 

(1,757

)

 

 

(15

)

Decrease in cash and cash equivalents

 

 

(4,326

)

 

 

(29,605

)

Cash and cash equivalents at beginning of period

 

 

178,321

 

 

 

201,260

 

Cash and cash equivalents at end of period

 

$

173,995

 

 

$

171,655

 

Supplemental cash flow information:

 

 

 

 

 

 

Cash paid during the year for income taxes

 

$

2,983

 

 

$

1,115

 

Non-cash investing activities—Accrued capital expenditures

 

$

37,391

 

 

$

19,529

 

Right-of-use assets obtained in exchange for operating lease liabilities

 

$

60,868

 

 

$

19,698

 

Non-cash investing activities—Accrued tax credit investment installments

 

$

 

 

$

62,120

 

 

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, 2024, filed with the United States Securities and Exchange Commission on April 1, 2024.

The Company’s business experiences seasonal fluctuations in net sales and net income, with a more significant portion of net sales 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, 2024 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 2025 will end on January 31, 2025.

Recent Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board ("FASB") issued an accounting standards update which includes amendments that further enhance income tax disclosures. The update requires disaggregated information about an entity's effective tax rate reconciliation and income taxes paid by jurisdiction, among other changes. The update will be effective for the Company in its annual consolidated financial statements for the fiscal year ending January 31, 2026, and can be applied prospectively or retrospectively. The Company is currently assessing this update and the additional disclosures that will be required within the notes to its consolidated financial statements.

In November 2023, the FASB issued an accounting standards update that introduces additional segment disclosure requirements. The update requires entities to quantitatively disclose significant segment expenses that are regularly provided to the chief operating decision maker for each reportable segment as well as an amount for other segment items for each reportable segment and a description of their composition. Entities are also required to disclose how reported measures of segment profit or loss are used in assessing segment performance and deciding how to allocate resources. The update will be effective for the Company in its annual consolidated financial statements for the fiscal year ending January 31, 2025, and interim periods thereafter. The Company is currently assessing this update and expects adoption of this update to result in additional disclosures in the notes to its consolidated financial statements. The update will be applied retrospectively to all prior periods presented.

 

2. 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 and other electronic payment transactions and sales to the Company's wholesale segment customers and franchisees. For the three month period ended April 30, 2024, the opening and closing balances of contract receivables, net of allowance for doubtful accounts, were $67,008 and $88,297, respectively. For the three month period ended April 30, 2023, the opening and closing balances of contract receivables, net of allowance for doubtful accounts, were $70,339 and $105,589, respectively. Contract receivables are included in “Accounts receivable, net of allowance for doubtful accounts” in the Condensed Consolidated Balance Sheets.

6


 

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 the issuance of gift cards, customer deposits, Nuuly Rent deferred subscription fee revenue and customer loyalty programs. 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, 2024, the opening and closing balances of contract liabilities were $91,408 and $89,127, respectively. For the three month period ended April 30, 2023, the opening and closing balances of contract liabilities were $82,867 and $76,750, 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, 2024, the Company recognized $28,172 of revenue that was included in the contract liability balance at the beginning of the period. During the three month period ended April 30, 2023, the Company recognized $17,788 of revenue that was included in the contract liability balance at the beginning of the period.

7


 

3. 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, 2024, January 31, 2023 and April 30, 2023 were as follows:

 

 

Amortized

 

 

Unrealized

 

 

Unrealized

 

 

Fair

 

 

 

Cost

 

 

Gains

 

 

(Losses)

 

 

Value

 

As of April 30, 2024

 

 

 

 

 

 

 

 

 

 

 

 

Short-term Investments:

 

 

 

 

 

 

 

 

 

 

 

 

Corporate bonds

 

$

145,891

 

 

$

3

 

 

$

(1,000

)

 

$

144,894

 

Federal government agencies

 

 

76,515

 

 

 

 

 

 

(204

)

 

 

76,311

 

Municipal and pre-refunded municipal bonds

 

 

49,515

 

 

 

4

 

 

 

(204

)

 

 

49,315

 

US Treasury securities

 

 

28,925

 

 

 

 

 

 

(127

)

 

 

28,798

 

Certificates of deposit

 

 

10,249

 

 

 

 

 

 

 

 

 

10,249

 

Commercial paper

 

 

2,991

 

 

 

 

 

 

 

 

 

2,991

 

 

 

314,086

 

 

 

7

 

 

 

(1,535

)

 

 

312,558

 

Long-term Investments:

 

 

 

 

 

 

 

 

 

 

 

 

Corporate bonds

 

 

119,907

 

 

 

19

 

 

 

(1,116

)

 

 

118,810

 

Federal government agencies

 

 

53,486

 

 

 

 

 

 

(502

)

 

 

52,984

 

Municipal and pre-refunded municipal bonds

 

 

38,785

 

 

 

9

 

 

 

(286

)

 

 

38,508

 

US Treasury securities

 

 

49,943

 

 

 

 

 

 

(677

)

 

 

49,266

 

Certificates of deposit

 

 

11,250

 

 

 

 

 

 

 

 

 

11,250

 

Mutual funds, held in rabbi trust

 

 

15,950

 

 

 

443

 

 

 

(33

)

 

 

16,360

 

 

 

289,321

 

 

 

471

 

 

 

(2,614

)

 

 

287,178

 

 

$

603,407

 

 

$

478

 

 

$

(4,149

)

 

$

599,736

 

As of January 31, 2024

 

 

 

 

 

 

 

 

 

 

 

 

Short-term Investments:

 

 

 

 

 

 

 

 

 

 

 

Corporate bonds

 

$

123,418

 

 

$

27

 

 

$

(883

)

 

$

122,562

 

Federal government agencies

 

 

68,730

 

 

 

35

 

 

 

(94

)

 

 

68,671

 

Municipal and pre-refunded municipal bonds

 

 

47,915

 

 

 

9

 

 

 

(414

)

 

 

47,510

 

US Treasury securities

 

 

27,231

 

 

 

 

 

 

(36

)

 

 

27,195

 

Certificates of deposit

 

 

10,249

 

 

 

 

 

 

 

 

 

10,249

 

Commercial paper

 

 

10,557

 

 

 

 

 

 

 

 

 

10,557

 

 

 

288,100

 

 

 

71

 

 

 

(1,427

)

 

 

286,744

 

Long-term Investments:

 

 

 

 

 

 

 

 

 

 

 

 

Corporate bonds

 

 

147,924

 

 

 

441

 

 

 

(388

)

 

 

147,977

 

Federal government agencies

 

 

65,698

 

 

 

138

 

 

 

(94

)

 

 

65,742

 

Municipal and pre-refunded municipal bonds

 

 

39,243

 

 

 

160

 

 

 

(35

)

 

 

39,368

 

US Treasury securities

 

 

34,604

 

 

 

169

 

 

 

(26

)

 

 

34,747

 

Certificates of deposit

 

 

11,250

 

 

 

 

 

 

 

 

 

11,250

 

Mutual funds, held in rabbi trust

 

 

13,817

 

 

 

1,344

 

 

 

(93

)

 

 

15,068

 

 

 

312,536

 

 

 

2,252

 

 

 

(636

)

 

 

314,152

 

 

$

600,636

 

 

$

2,323

 

 

$

(2,063

)

 

$

600,896

 

 

8


 

 

 

Amortized

 

 

Unrealized

 

 

Unrealized

 

 

Fair

 

 

 

Cost

 

 

Gains

 

 

(Losses)

 

 

Value

 

As of April 30, 2023

 

 

 

 

 

 

 

 

 

 

 

 

Short-term Investments:

 

 

 

 

 

 

 

 

 

 

 

 

Corporate bonds

 

$

86,052

 

 

$

1

 

 

$

(1,214

)

 

$

84,839

 

Federal government agencies

 

 

21,284

 

 

 

 

 

 

(28

)

 

 

21,256

 

Municipal and pre-refunded municipal bonds

 

 

45,467

 

 

 

 

 

 

(547

)

 

 

44,920

 

US Treasury securities

 

 

22,903

 

 

 

1

 

 

 

(16

)

 

 

22,888

 

Commercial paper

 

 

35,874

 

 

 

 

 

 

 

 

 

35,874

 

 

 

211,580

 

 

 

2

 

 

 

(1,805

)

 

 

209,777

 

Long-term Investments:

 

 

 

 

 

 

 

 

 

 

 

 

Corporate bonds

 

 

42,823

 

 

 

17

 

 

 

(2,141

)

 

 

40,699

 

Federal government agencies

 

 

14,340

 

 

 

9

 

 

 

(37

)

 

 

14,312

 

Municipal and pre-refunded municipal bonds

 

 

19,071

 

 

 

5

 

 

 

(906

)

 

 

18,170

 

Certificates of deposit

 

 

249

 

 

 

 

 

 

 

 

 

249

 

Mutual funds, held in rabbi trust

 

 

12,656

 

 

 

132

 

 

 

(62

)

 

 

12,726

 

 

 

89,139

 

 

 

163

 

 

 

(3,146

)

 

 

86,156

 

 

$

300,719

 

 

$

165

 

 

$

(4,951

)

 

$

295,933

 

Proceeds from the sales and maturities of available-for-sale securities were $91,081 and $69,456 for the three months ended April 30, 2024 and 2023, respectively. The Company included in “Other income, net,” in the Condensed Consolidated Statements of Income, a net realized loss of $23 and a net realized gain of $1 for the three months ended April 30, 2024 and 2023, respectively. Amortization of discounts and premiums, net, resulted in a benefit of $2,155 and $278 for the three months ended April 30, 2024 and 2023, respectively. Amortization of discounts and premiums, net, is included in “Other income, net” in the Condensed Consolidated Statements of Income. 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.

4. 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, 2024

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Corporate bonds

 

$

 

 

$

263,704

 

 

$

 

 

$

263,704

 

Federal government agencies

 

 

 

 

 

129,295

 

 

 

 

 

 

129,295

 

Municipal and pre-refunded municipal bonds

 

 

 

 

 

87,823

 

 

 

 

 

 

87,823

 

US Treasury securities

 

 

 

 

 

78,064

 

 

 

 

 

 

78,064

 

Certificates of deposit

 

 

 

 

 

21,499

 

 

 

 

 

 

21,499

 

Mutual funds, held in rabbi trust

 

 

16,360

 

 

 

 

 

 

 

 

 

16,360

 

Commercial paper

 

 

 

 

 

2,991

 

 

 

 

 

 

2,991

 

 

$

16,360

 

 

$

583,376

 

 

$

 

 

$

599,736

 

 

 

Marketable Securities Fair Value as of

 

 

 

January 31, 2024

 

 

 

Level 1