Document And Entity Information
Document And Entity Information - shares | 6 Months Ended | |
Jul. 05, 2015 | Aug. 05, 2015 | |
Entity Information [Line Items] | ||
Entity Registrant Name | BLUE NILE INC | |
Entity Central Index Key | 1,091,171 | |
Document Type | 10-Q | |
Document Period End Date | Jul. 5, 2015 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q2 | |
Current Fiscal Year End Date | --01-03 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 11,509,917 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Jul. 05, 2015 | Jan. 04, 2015 | Jun. 29, 2014 |
Current assets: | |||
Cash and cash equivalents | $ 39,661 | $ 91,186 | $ 39,519 |
Trade accounts receivable | 3,875 | 2,137 | 1,380 |
Other accounts receivable, net | 1,262 | 1,571 | 481 |
Notes receivable | 1,200 | 0 | 0 |
Inventories | 36,794 | 41,668 | 32,149 |
Deferred income taxes | 1,186 | 1,123 | 588 |
Prepaids and other current assets | 1,947 | 1,524 | 1,673 |
Total current assets | 85,925 | 139,209 | 75,790 |
Property and equipment, net | 10,736 | 10,422 | 10,026 |
Intangible assets, net | 92 | 103 | 119 |
Deferred income taxes | 3,339 | 3,064 | 4,001 |
Note receivable | 0 | 2,000 | 2,000 |
Other investments | 2,280 | 2,280 | 2,280 |
Other assets | 225 | 256 | 240 |
Total assets | 102,597 | 157,334 | 94,456 |
Current liabilities: | |||
Accounts payable | 81,571 | 128,675 | 77,125 |
Accrued liabilities | 9,366 | 11,992 | 6,452 |
Current portion of long-term financing obligation | 33 | 32 | 32 |
Current portion of deferred rent | 292 | 292 | 273 |
Total current liabilities | 91,262 | 140,991 | 83,882 |
Long-term financing obligation, less current portion | 472 | 489 | 505 |
Deferred rent, less current portion | 1,844 | 1,982 | 2,119 |
Other long-term liabilities | $ 169 | $ 169 | $ 115 |
Commitments and contingencies | |||
Stockholders' equity: | |||
Preferred stock, $0.001 par value; 5,000 shares authorized, none issued and outstanding | $ 0 | $ 0 | $ 0 |
Common stock, $0.001 par value; 300,000 shares authorized; 21,648, 21,615 and 21,593 shares issued, respectively 11,517, 11,859 and 11,894 shares outstanding, respectively | 22 | 22 | 22 |
Additional paid-in capital | 229,283 | 227,146 | 225,964 |
Accumulated other comprehensive loss | (197) | (236) | (45) |
Retained earnings | 107,007 | 103,489 | 97,008 |
Treasury stock, at cost; 10,131, 9,756 and 9,699 shares outstanding, respectively | (327,265) | (316,718) | (315,114) |
Total stockholders' equity | 8,850 | 13,703 | 7,835 |
Total liabilities and stockholders' equity | $ 102,597 | $ 157,334 | $ 94,456 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares shares in Thousands | Jul. 05, 2015 | Jan. 04, 2015 | Jun. 29, 2014 |
Stockholders' equity: | |||
Preferred stock, par value | $ 0.001 | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 5,000 | 5,000 | 5,000 |
Preferred stock, shares issued | 0 | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 300,000 | 300,000 | 300,000 |
Common stock, shares issued | 21,648 | 21,615 | 21,593 |
Common stock, shares outstanding | 11,517 | 11,859 | 11,894 |
Treasury stock, at cost; shares outstanding | 10,131 | 9,756 | 9,699 |
Condensed Consolidated Statemen
Condensed Consolidated Statements Of Operations - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 05, 2015 | Jun. 29, 2014 | Jul. 05, 2015 | Jun. 29, 2014 | |
Income Statement [Abstract] | ||||
Net sales | $ 113,693 | $ 106,571 | $ 220,140 | $ 210,297 |
Cost of sales | 91,604 | 86,404 | 178,078 | 171,005 |
Gross profit | 22,089 | 20,167 | 42,062 | 39,292 |
Selling, general and administrative expenses | 18,650 | 16,980 | 36,713 | 34,497 |
Operating income | 3,439 | 3,187 | 5,349 | 4,795 |
Other income, net: | ||||
Interest income, net | 28 | 24 | 64 | 72 |
Other income, net | 116 | 36 | 33 | 34 |
Total other income, net | 144 | 60 | 97 | 106 |
Income before income taxes | 3,583 | 3,247 | 5,446 | 4,901 |
Income tax expense | 1,252 | 1,076 | 1,928 | 1,651 |
Net income | $ 2,331 | $ 2,171 | $ 3,518 | $ 3,250 |
Basic net income per share | $ 0.20 | $ 0.18 | $ 0.30 | $ 0.26 |
Diluted net income per share | $ 0.20 | $ 0.18 | $ 0.30 | $ 0.26 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements Of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 05, 2015 | Jun. 29, 2014 | Jul. 05, 2015 | Jun. 29, 2014 | |
Other Comprehensive Income (Loss), Tax [Abstract] | ||||
Net Income | $ 2,331 | $ 2,171 | $ 3,518 | $ 3,250 |
Other comprehensive income (loss): | ||||
Foreign currency transaction adjustments | 177 | (13) | 39 | (19) |
Total comprehensive income | $ 2,508 | $ 2,158 | $ 3,557 | $ 3,231 |
Condensed Consolidated Stateme6
Condensed Consolidated Statement Of Changes In Stockholders' Equity - 6 months ended Jul. 05, 2015 - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock [Member] | Additional Paid-In Capital [Member] | Retained Earnings [Member] | Accumulated Other Comprehensive Income (Loss) [Member] | Treasury Stock [Member] |
Balance at Jan. 04, 2015 | $ 13,703 | $ 22 | $ 227,146 | $ 103,489 | $ (236) | $ (316,718) |
Balance, shares at Jan. 04, 2015 | 21,615 | |||||
Treasury Stock, Shares at Jan. 04, 2015 | (9,756) | (9,756) | ||||
Net income | $ 3,518 | 3,518 | ||||
Other comprehensive income | 39 | 39 | ||||
Tax deficiency from share-based awards | (183) | (183) | ||||
Exercise of common stock options | 1 | $ 0 | 1 | |||
Exercise of common stock options, shares | 0 | |||||
Issuance of common stock to directors | 20 | $ 0 | 20 | |||
Issuance of common stock to directors, shares | 1 | |||||
Vesting of restricted stock units, value | 0 | $ 0 | 0 | |||
Vesting of restricted stock units, shares | 42 | |||||
Shares withheld related to net share settlement of equity awards, value | (282) | $ 0 | (282) | |||
Shares withheld related to net share settlement of equity awards, shares | (10) | |||||
Stock-based compensation | 2,581 | 2,581 | ||||
Repurchase of common stock, value | (10,547) | $ (10,547) | ||||
Repurchase of common stock, shares | (375) | |||||
Balance at Jul. 05, 2015 | $ 8,850 | $ 22 | $ 229,283 | $ 107,007 | $ (197) | $ (327,265) |
Balance, shares at Jul. 05, 2015 | 21,648 | |||||
Treasury Stock, Shares at Jul. 05, 2015 | (10,131) | (10,131) |
Condensed Consolidated Stateme7
Condensed Consolidated Statements Of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jul. 05, 2015 | Jun. 29, 2014 | |
Operating activities: | ||
Net income | $ 3,518 | $ 3,250 |
Adjustments to reconcile net income to net cash used in operating activities: | ||
Depreciation and amortization | 1,831 | 1,819 |
Stock-based compensation | 2,538 | 2,223 |
Deferred income taxes | (338) | 1,919 |
Tax deficiency from share-based awards | (183) | (1,609) |
Excess tax benefit from share-based awards | 0 | (173) |
Changes in assets and liabilities: | ||
Receivables | (1,428) | 1,665 |
Inventories | 4,874 | 2,381 |
Prepaid federal income taxes | 0 | 247 |
Prepaid expenses and other assets | (392) | (349) |
Accounts payable | (47,394) | (45,720) |
Accrued liabilities | (2,626) | (4,299) |
Deferred rent and other | (138) | (115) |
Net cash used in operating activities | (39,738) | (38,761) |
Investing activities: | ||
Purchases of property and equipment | (1,952) | (1,565) |
Payments received on note receivable | 800 | 0 |
Net cash used in investing activities | (1,152) | (1,565) |
Financing activities: | ||
Repurchase of common stock | (10,279) | (38,212) |
Proceeds from stock option exercises | 0 | 2,255 |
Taxes paid for net share settlement of equity awards | (282) | (214) |
Excess tax benefit from share-based awards | 0 | 173 |
Principal payments under long-term financing obligation | (16) | (88) |
Net cash used in financing activities | (10,577) | (36,086) |
Effect of exchange rate changes on cash and cash equivalents | (58) | (11) |
Net decrease in cash and cash equivalents | (51,525) | (76,423) |
Cash and cash equivalents, beginning of period | 91,186 | 115,942 |
Cash and cash equivalents, end of period | 39,661 | 39,519 |
Supplemental disclosure of cash flow information: | ||
Cash paid for income taxes | 3,020 | 992 |
Non-cash investing and financing activities: | ||
Unsettled repurchases of common stock | $ 268 | $ 492 |
Description Of Our Business And
Description Of Our Business And Summary Of Significant Accounting Policies | 6 Months Ended |
Jul. 05, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description Of Our Business And Summary Of Significant Accounting Policies | Description of Our Business and Summary of Significant Accounting Policies The Company Blue Nile, Inc. (“Blue Nile”, the “Company”, “we” or “our”) is a leading online retailer of high-quality diamonds and fine jewelry. In addition to sales of diamonds and fine jewelry, the Company provides education, guidance and support to enable customers to more effectively learn about and purchase diamonds and fine jewelry. The Company, a Delaware corporation based in Seattle, Washington, was formed in March 1999. The Company serves consumers in over 40 countries and territories all over the world through its website at www.bluenile.com. Information found on the Company’s website is not incorporated by reference into this Quarterly Report on Form 10-Q or any of its other filings with the U.S. Securities and Exchange Commission (the “SEC”). Basis of Presentation The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Notes to Consolidated Financial Statements contained in the Company’s Annual Report on Form 10-K for the year ended January 4, 2015 , filed with the SEC on March 2, 2015 (the “Annual Report”). The same accounting policies are followed for preparing quarterly and annual financial statements. In the opinion of management, all adjustments necessary for the fair presentation of the financial position, results of operations and cash flows for the interim periods have been included and are of a normal, recurring nature. The financial information as of January 4, 2015 is derived from the Company’s audited consolidated financial statements and notes thereto for the fiscal year ended January 4, 2015 , included in Item 8 of the Annual Report. Due to a number of factors, including the seasonal nature of the retail industry and other factors described in this Quarterly Report on Form 10-Q, quarterly results are not necessarily indicative of the results for the full fiscal year or any other subsequent interim period. Principles of Consolidation The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All transactions and balances between the Company and its wholly-owned subsidiaries are eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Some of the more significant estimates include the allowance for sales returns, accounting for income taxes, and assumptions used to determine stock-based compensation expense. Actual results could differ materially from those estimates. Foreign Currency The functional currency of most of the Company's subsidiaries is the applicable local currency. The assets and liabilities of our subsidiaries have been translated to U.S. dollars using the exchange rates effective on the balance sheet dates, while income and expense accounts are translated at the average rates in effect during the periods presented. The resulting translation adjustments are recorded as a component of other comprehensive income (loss) within stockholders' equity. The Company offers customers the ability to transact in 23 currencies. Some of the Company’s subsidiaries engage in transactions denominated in currencies other than the Company’s functional currency. Gains or losses arising from these transactions are recorded in other income, net in the condensed consolidated statements of operations. Note Receivable and Other Investments The Company holds a minority ownership of a privately-held company in the form of convertible preferred shares, purchased for an aggregate amount of $2.0 million , which we account for under the cost method of accounting. The Company held a $2.0 million note receivable (the “Note”) from the same privately-held company. The Company received payment of $0.8 million on the principal amount in June 2015 with the remainder of the principal collectable within a year. The interest rate changes over the term of the Note to LIBOR plus a predetermined rate per annum . The Note is recorded at its face amount on the Company's condensed consolidated balance sheet. The Company holds a minority ownership in another privately-held company in the form of common stock and warrants, purchased for $280,000 , which we account for under the cost method of accounting. The Company reviews its investments for impairment when events and circumstances indicate that the decline in fair value of the assets below the carrying value is other-than-temporary. No other-than-temporary impairment charges were recorded for the year to date ended July 5, 2015 . Credit Agreement On February 17, 2015, the Company renewed its Credit Agreement (the “Credit Agreement”) with U.S. Bank National Association (the “Lender”). The Credit Agreement provides for a $40.0 million (the “Credit Limit”) unsecured, revolving credit facility (the “Revolving Loan”) with the Company's option to increase the Credit Limit to $50.0 million . Under the terms and conditions of the Credit Agreement, the Company may borrow from the Lender for one year with annual renewals at the Lender's discretion. The Company also has the ability to convert the outstanding balance to a fixed term of up to five years. The aggregate principal amounts outstanding at any one time shall not exceed the Credit Limit. As of July 5, 2015 , the Company does not have any amounts outstanding under the Credit Agreement and is in compliance with the covenants of the Credit Agreement. Recent Accounting Pronouncements In July 2015, the Financial Accounting Standards Board (“FASB”) issued guidance on the subsequent measurement of inventory, which changes the measurement from lower of cost or market to lower of cost and net realizable value. The guidance will require prospective application at the beginning of the Company's first quarter of fiscal 2017, but permits adoption in an earlier period. The Company is currently evaluating the impact this guidance will have on its consolidated financial statements and the timing of adoption. In May 2014, the FASB issued Accounting Standards Update No. 2014-09 (“ASU 2014-09”), “Revenue from Contracts with Customers (Topic 606)” which amends the existing accounting standards for revenue recognition. ASU 2014-09 is based on the principle that revenue should be recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new revenue standard may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of adoption. Early adoption is permitted. ASU 2014-09 is effective for the Company in the first quarter of its fiscal year 2018. The Company is currently evaluating the effect that the updated standard will have on its consolidated financial statements and related disclosures. In August 2014, the FASB issued Accounting Standards Update No. 2014-15 (“ASU 2014-15”), “Presentation of Financial Statements - Going Concern.” The new standard provides guidance around management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern and to provide related footnote disclosures. The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted. The adoption of this standard is not expected to have a material impact on our financial statements and related disclosures. |
Stock-based Compensation
Stock-based Compensation | 6 Months Ended |
Jul. 05, 2015 | |
Share-based Compensation [Abstract] | |
Stock-Based Compensation | Stock-based Compensation As of July 5, 2015 , the Company had four equity plans. Additional information regarding these plans is disclosed in the Annual Report. Stock-based compensation expense, net of estimated forfeitures, is recognized on a straight-line basis over the vesting period for each stock option or restricted stock unit (“RSU”) grant that is expected to vest at some point in the future. Forfeitures are estimated at the date of grant based on the Company's historical experience and future expectations. The fair value of each stock option on the date of grant is estimated using the Black-Scholes-Merton option valuation model. The fair value of each RSU is based on the Fair Market Value (as defined in the Company's 2013 Equity Incentive Plan) of the Company's common stock on the date of the grant. The following weighted average assumptions were used for the valuation of stock options granted during the periods presented: Quarter ended Year to date ended July 5, June 29, July 5, June 29, Expected term 4.5 years 4.5 years 4.5 years 4.5 years Expected volatility 46.9 % 46.8 % 46.9 % 46.9 % Expected dividend yield 0.0 % 0.0 % 0.0 % 0.0 % Risk-free interest rate 1.5 % 1.6 % 1.5 % 1.5 % Estimated weighted average fair value per stock option granted $ 11.07 $ 12.44 $ 11.07 $ 13.28 The assumptions used to calculate the fair value of stock options granted are evaluated and revised, if necessary, to reflect market conditions and the Company’s experience. A summary of stock option activity for the year to date ended July 5, 2015 is as follows: Options (in thousands) Weighted Average Exercise Price Weighted Average Remaining Contractual Term (in years) Aggregate Intrinsic Value (in thousands) Balance, January 5, 2015 1,021 $ 39.56 Granted 30 27.51 Exercised — 24.50 Canceled (24 ) 44.74 Balance, July 5, 2015 1,027 $ 39.09 5.55 $ 586 Vested and expected to vest at July 5, 2015 1,010 $ 39.22 5.50 $ 572 Exercisable, July 5, 2015 844 $ 40.63 5.03 $ 493 During the year to date ended July 5, 2015 , the total fair value of stock options vested was $1.4 million . A summary of RSU activity for the year to date ended July 5, 2015 is as follows: RSUs (in thousands) Weighted Average Grant Date Fair Value Weighted Average Remaining Contractual Term (in years) Aggregate Intrinsic Value (in thousands) Balance, January 5, 2015 109 $ 31.74 Granted 283 28.94 Vested (42 ) 28.24 Canceled (5 ) 31.60 Balance, July 5, 2015 345 $ 29.87 1.84 $ 10,368 Vested and expected to vest at July 5, 2015 287 $ 35.76 1.69 $ 8,608 The aggregate intrinsic value in the tables above are before applicable income taxes and represent the amount recipients would have received if all stock options had been exercised or RSUs had been released on the last business day of the period indicated, based on the closing stock price of the Company's common stock on such date. The total intrinsic value of RSUs vested was approximately $1.3 million during year to date ended July 5, 2015 and $0.7 million during year to date ended June 29, 2014 . During the year to date ended July 5, 2015 and June 29, 2014 , the total fair value of RSUs vested was approximately $1.2 million and $0.8 million , respectively. As of July 5, 2015 , the Company had total unrecognized compensation costs related to unvested stock options and RSUs of $10.1 million , before income taxes. The Company expects to recognize this cost over a weighted average period of 1.8 years for the options and 3.6 years for the RSUs. |
Inventories
Inventories | 6 Months Ended |
Jul. 05, 2015 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories Inventories are stated at cost and consist of the following (in thousands): July 5, 2015 January 4, 2015 June 29, 2014 Loose diamonds $ 9,353 $ 6,439 $ 3,322 Fine jewelry and other 27,441 35,229 28,827 Total $ 36,794 $ 41,668 $ 32,149 |
Net Income Per Share
Net Income Per Share | 6 Months Ended |
Jul. 05, 2015 | |
Earnings Per Share [Abstract] | |
Net Income Per Share | Net Income Per Share Basic net income per share is based on the weighted average number of common shares outstanding. Diluted net income per share is based on the weighted average number of common shares and common share equivalents outstanding. Common share equivalents included in the computation represent shares issuable upon assumed exercise of outstanding stock options and conversion of unvested RSUs, except when the effect of their inclusion would be antidilutive. The following tables set forth the computation of basic and diluted net income per share (in thousands, except per share data): Quarter ended Year to date ended July 5, June 29, July 5, June 29, Net income $ 2,331 $ 2,171 $ 3,518 $ 3,250 Weighted average common shares outstanding 11,728 12,099 11,798 12,450 Basic net income per share $ 0.20 $ 0.18 $ 0.30 $ 0.26 Dilutive effect of stock options and RSUs 33 40 51 82 Common stock and common stock equivalents 11,761 12,139 11,849 12,532 Diluted net income per share $ 0.20 $ 0.18 $ 0.30 $ 0.26 For the quarter and year to date ended July 5, 2015 , the Company excluded 966,644 and 912,014 stock option shares, respectively, from the computation of diluted net income per share due to their antidilutive effect. For the quarter and year to date ended June 29, 2014 , the Company excluded 1,080,994 and 993,930 stock option shares, respectively, from the computation of diluted net income per share due to their antidilutive effect. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jul. 05, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies In the ordinary course of business, the Company may be subject from time to time to various proceedings, lawsuits, disputes or claims. In addition, the Company is regularly audited by various tax authorities. Although the Company cannot predict with assurance the outcome of any litigation or audit, it does not believe there are currently any such actions that, if resolved unfavorably, would have a material impact on the Company’s financial condition, results of operations or cash flows. |
Description Of Our Business A13
Description Of Our Business And Summary Of Significant Accounting Policies (Policy) | 6 Months Ended |
Jul. 05, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Notes to Consolidated Financial Statements contained in the Company’s Annual Report on Form 10-K for the year ended January 4, 2015 , filed with the SEC on March 2, 2015 (the “Annual Report”). The same accounting policies are followed for preparing quarterly and annual financial statements. In the opinion of management, all adjustments necessary for the fair presentation of the financial position, results of operations and cash flows for the interim periods have been included and are of a normal, recurring nature. The financial information as of January 4, 2015 is derived from the Company’s audited consolidated financial statements and notes thereto for the fiscal year ended January 4, 2015 , included in Item 8 of the Annual Report. Due to a number of factors, including the seasonal nature of the retail industry and other factors described in this Quarterly Report on Form 10-Q, quarterly results are not necessarily indicative of the results for the full fiscal year or any other subsequent interim period. |
Principles of Consolidation | Principles of Consolidation The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All transactions and balances between the Company and its wholly-owned subsidiaries are eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Some of the more significant estimates include the allowance for sales returns, accounting for income taxes, and assumptions used to determine stock-based compensation expense. Actual results could differ materially from those estimates. |
Foreign Currency | Foreign Currency The functional currency of most of the Company's subsidiaries is the applicable local currency. The assets and liabilities of our subsidiaries have been translated to U.S. dollars using the exchange rates effective on the balance sheet dates, while income and expense accounts are translated at the average rates in effect during the periods presented. The resulting translation adjustments are recorded as a component of other comprehensive income (loss) within stockholders' equity. The Company offers customers the ability to transact in 23 currencies. Some of the Company’s subsidiaries engage in transactions denominated in currencies other than the Company’s functional currency. Gains or losses arising from these transactions are recorded in other income, net in the condensed consolidated statements of operations. |
Note Receivable and Other Investments | Note Receivable and Other Investments The Company holds a minority ownership of a privately-held company in the form of convertible preferred shares, purchased for an aggregate amount of $2.0 million , which we account for under the cost method of accounting. The Company held a $2.0 million note receivable (the “Note”) from the same privately-held company. The Company received payment of $0.8 million on the principal amount in June 2015 with the remainder of the principal collectable within a year. The interest rate changes over the term of the Note to LIBOR plus a predetermined rate per annum . The Note is recorded at its face amount on the Company's condensed consolidated balance sheet. The Company holds a minority ownership in another privately-held company in the form of common stock and warrants, purchased for $280,000 , which we account for under the cost method of accounting. The Company reviews its investments for impairment when events and circumstances indicate that the decline in fair value of the assets below the carrying value is other-than-temporary. No other-than-temporary impairment charges were recorded for the year to date ended July 5, 2015 . |
Credit Agreement | Credit Agreement On February 17, 2015, the Company renewed its Credit Agreement (the “Credit Agreement”) with U.S. Bank National Association (the “Lender”). The Credit Agreement provides for a $40.0 million (the “Credit Limit”) unsecured, revolving credit facility (the “Revolving Loan”) with the Company's option to increase the Credit Limit to $50.0 million . Under the terms and conditions of the Credit Agreement, the Company may borrow from the Lender for one year with annual renewals at the Lender's discretion. The Company also has the ability to convert the outstanding balance to a fixed term of up to five years. The aggregate principal amounts outstanding at any one time shall not exceed the Credit Limit. As of July 5, 2015 , the Company does not have any amounts outstanding under the Credit Agreement and is in compliance with the covenants of the Credit Agreement. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In July 2015, the Financial Accounting Standards Board (“FASB”) issued guidance on the subsequent measurement of inventory, which changes the measurement from lower of cost or market to lower of cost and net realizable value. The guidance will require prospective application at the beginning of the Company's first quarter of fiscal 2017, but permits adoption in an earlier period. The Company is currently evaluating the impact this guidance will have on its consolidated financial statements and the timing of adoption. In May 2014, the FASB issued Accounting Standards Update No. 2014-09 (“ASU 2014-09”), “Revenue from Contracts with Customers (Topic 606)” which amends the existing accounting standards for revenue recognition. ASU 2014-09 is based on the principle that revenue should be recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new revenue standard may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of adoption. Early adoption is permitted. ASU 2014-09 is effective for the Company in the first quarter of its fiscal year 2018. The Company is currently evaluating the effect that the updated standard will have on its consolidated financial statements and related disclosures. In August 2014, the FASB issued Accounting Standards Update No. 2014-15 (“ASU 2014-15”), “Presentation of Financial Statements - Going Concern.” The new standard provides guidance around management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern and to provide related footnote disclosures. The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted. The adoption of this standard is not expected to have a material impact on our financial statements and related disclosures. |
Stock-based Compensation | Stock-based compensation expense, net of estimated forfeitures, is recognized on a straight-line basis over the vesting period for each stock option or restricted stock unit (“RSU”) grant that is expected to vest at some point in the future. Forfeitures are estimated at the date of grant based on the Company's historical experience and future expectations. The fair value of each stock option on the date of grant is estimated using the Black-Scholes-Merton option valuation model. The fair value of each RSU is based on the Fair Market Value (as defined in the Company's 2013 Equity Incentive Plan) of the Company's common stock on the date of the grant. |
Inventory | Inventories are stated at cost |
Earnings Per Share | Basic net income per share is based on the weighted average number of common shares outstanding. Diluted net income per share is based on the weighted average number of common shares and common share equivalents outstanding. Common share equivalents included in the computation represent shares issuable upon assumed exercise of outstanding stock options and conversion of unvested RSUs, except when the effect of their inclusion would be antidilutive. |
Stock-based Compensation (Table
Stock-based Compensation (Tables) | 6 Months Ended |
Jul. 05, 2015 | |
Share-based Compensation [Abstract] | |
Weighted-Average Assumptions For Valuation Of Stock Options Granted | Quarter ended Year to date ended July 5, June 29, July 5, June 29, Expected term 4.5 years 4.5 years 4.5 years 4.5 years Expected volatility 46.9 % 46.8 % 46.9 % 46.9 % Expected dividend yield 0.0 % 0.0 % 0.0 % 0.0 % Risk-free interest rate 1.5 % 1.6 % 1.5 % 1.5 % Estimated weighted average fair value per stock option granted $ 11.07 $ 12.44 $ 11.07 $ 13.28 |
Summary Of Stock Option Activity | Options (in thousands) Weighted Average Exercise Price Weighted Average Remaining Contractual Term (in years) Aggregate Intrinsic Value (in thousands) Balance, January 5, 2015 1,021 $ 39.56 Granted 30 27.51 Exercised — 24.50 Canceled (24 ) 44.74 Balance, July 5, 2015 1,027 $ 39.09 5.55 $ 586 Vested and expected to vest at July 5, 2015 1,010 $ 39.22 5.50 $ 572 Exercisable, July 5, 2015 844 $ 40.63 5.03 $ 493 |
Summary Of Restricted Stock Unit Activity | RSUs (in thousands) Weighted Average Grant Date Fair Value Weighted Average Remaining Contractual Term (in years) Aggregate Intrinsic Value (in thousands) Balance, January 5, 2015 109 $ 31.74 Granted 283 28.94 Vested (42 ) 28.24 Canceled (5 ) 31.60 Balance, July 5, 2015 345 $ 29.87 1.84 $ 10,368 Vested and expected to vest at July 5, 2015 287 $ 35.76 1.69 $ 8,608 |
Inventories (Tables)
Inventories (Tables) | 6 Months Ended |
Jul. 05, 2015 | |
Inventory Disclosure [Abstract] | |
Inventories Stated At Cost (in thousands) | July 5, 2015 January 4, 2015 June 29, 2014 Loose diamonds $ 9,353 $ 6,439 $ 3,322 Fine jewelry and other 27,441 35,229 28,827 Total $ 36,794 $ 41,668 $ 32,149 |
Net Income Per Share (Tables)
Net Income Per Share (Tables) | 6 Months Ended |
Jul. 05, 2015 | |
Earnings Per Share [Abstract] | |
Computation Of Basic And Diluted Net Income Per Share | Quarter ended Year to date ended July 5, June 29, July 5, June 29, Net income $ 2,331 $ 2,171 $ 3,518 $ 3,250 Weighted average common shares outstanding 11,728 12,099 11,798 12,450 Basic net income per share $ 0.20 $ 0.18 $ 0.30 $ 0.26 Dilutive effect of stock options and RSUs 33 40 51 82 Common stock and common stock equivalents 11,761 12,139 11,849 12,532 Diluted net income per share $ 0.20 $ 0.18 $ 0.30 $ 0.26 |
Note Receivable and Other Inves
Note Receivable and Other Investments (Details) - USD ($) | 6 Months Ended | |||
Jul. 05, 2015 | Jun. 29, 2014 | Apr. 05, 2015 | Jan. 04, 2015 | |
Other Investments [Abstract] | ||||
Other-than-temporary Impairment Charges | $ 0 | |||
Investment [Line Items] | ||||
Cost Method Investments | 2,280,000 | $ 2,280,000 | $ 2,280,000 | |
Receivables [Abstract] | ||||
Note receivable | 0 | 2,000,000 | $ 2,000,000 | $ 2,000,000 |
Proceeds from Collection of Notes Receivable | $ 800,000 | $ 0 | ||
Note Receivable, Interest Rate Description | LIBOR plus a predetermined rate per annum | |||
Convertible Preferred Stock [Member] | ||||
Investment [Line Items] | ||||
Cost Method Investments | $ 2,000,000 | |||
Equity Securities [Member] | ||||
Investment [Line Items] | ||||
Cost Method Investments | $ 280,000 |
Credit Agreement (Details)
Credit Agreement (Details) - Jul. 05, 2015 - USD ($) $ in Millions | Total |
Credit Agreement [Abstract] | |
Credit Agreement, Current Borrowing Capacity | $ 40 |
Credit Agreement, Amount Outstanding | 0 |
Credit Agreement, Maximum Borrowing Capacity | $ 50 |
Credit Agreement, Option to Term Out, Term | 5 years |
Stock-based Compensation (Narra
Stock-based Compensation (Narrative) (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jul. 05, 2015 | Jun. 29, 2014 | |
Share-based Compensation [Abstract] | ||
Fair value of stock options vested | $ 1.4 | |
Intrinsic value of RSUs vested | 1.3 | $ 0.7 |
Fair value of RSUs vested | 1.2 | $ 0.8 |
Unrecognized compensation costs related to unvested stock options and RSUs, before income taxes | $ 10.1 | |
Stock Options [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total unrecognized compensation costs related to unvested stock options and RSUs, weighted average period of recognition | 1 year 9 months 29 days | |
Restricted Stock Units (RSUs) [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total unrecognized compensation costs related to unvested stock options and RSUs, weighted average period of recognition | 3 years 7 months 6 days |
Stock-based Compensation (Weigh
Stock-based Compensation (Weighted-Average Assumptions For Valuation Of Stock Options Granted) (Details) - $ / shares | 3 Months Ended | 6 Months Ended | ||
Jul. 05, 2015 | Jun. 29, 2014 | Jul. 05, 2015 | Jun. 29, 2014 | |
Share-based Compensation [Abstract] | ||||
Expected term | 4 years 6 months | 4 years 6 months | 4 years 6 months | 4 years 6 months |
Expected volatility | 46.90% | 46.80% | 46.90% | 46.90% |
Expected dividend yield | 0.00% | 0.00% | 0.00% | 0.00% |
Risk-free interest rate | 1.50% | 1.60% | 1.50% | 1.50% |
Estimated weighted average fair value per stock option granted | $ 11.07 | $ 12.44 | $ 11.07 | $ 13.28 |
Stock-based Compensation (Summa
Stock-based Compensation (Summary Of Stock Option Activity) (Details) - Jul. 05, 2015 - Stock Options [Member] - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | Total |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Options, Balance, January 5, 2015 | 1,021 |
Options, Granted | 30 |
Options, Exercised | 0 |
Options, Canceled | (24) |
Options, Balance, July 5, 2015 | 1,027 |
Options, Vested and expected to vest at July 5, 2015 | 1,010 |
Options, Exercisable, July 5, 2015 | 844 |
Options, Weighted Average Exercise Price, Balance, January 5, 2015 | $ 39.56 |
Options, Weighted Average Exercise Price, Granted | 27.51 |
Options, Weighted Average Exercise Price, Exercised | 24.50 |
Options, Weighted Average Exercise Price, Canceled | 44.74 |
Options, Weighted Average Exercise Price, Balance, July 5, 2015 | 39.09 |
Options, Weighted Average Exercise Price, Vested and expected to vest at July 5, 2015 | 39.22 |
Options, Weighted Average Exercise Price, Exercisable, July 5, 2015 | $ 40.63 |
Options, Weighted Average Remaining Contractual Term (in years), Balance, July 5, 2015 | 5 years 6 months 18 days |
Options, Weighted Average Remaining Contractual Term (in years), Vested and expected to vest at July 5,2015 | 5 years 6 months |
Options, Weighted Average Remaining Contractual Term (in years), Exercisable, July 5, 2015 | 5 years 11 days |
Options, Aggregate Intrinsic Value, Balance, July 5, 2015 | $ 586 |
Options, Aggregate Intrinsic Value, Vested and expected to vest at July 5, 2015 | 572 |
Options, Aggregate Intrinsic Value, Exercisable, July 5, 2015 | $ 493 |
Stock-based Compensation (Sum22
Stock-based Compensation (Summary Of RSU Activity) (Details) - Jul. 05, 2015 - Restricted Stock Units (RSUs) [Member] - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | Total |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
RSUs, Balance, January 5, 2015 | 109 |
RSUs, Granted | 283 |
RSUs, Vested | (42) |
RSUs, Canceled | (5) |
RSUs, Balance, July 5, 2015 | 345 |
RSUs, Vested and expected to vest at July 5, 2015 | 287 |
RSUs, Weighted Average Grant Date Fair Value, Balance, January 5, 2015 | $ 31.74 |
RSUs, Weighted Average Grant Date Fair Value, Granted | 28.94 |
RSUs, Weighted Average Grant Date Fair Value, Vested | 28.24 |
RSUs, Weighted Average Grant Date Fair Value, Canceled | 31.60 |
RSUs, Weighted Average Grant Date Fair Value, Balance, July 5, 2015 | 29.87 |
RSUs. Weighted Average Grant Date Fair Value, Vested And Expected To Vest at July 5, 2015 | $ 35.76 |
RSUs, Weighted Average Remaining Contractual Term (in years), Balance, July 5, 2015 | 1 year 10 months 2 days |
RSUs, Weighted Average Remaining Contractual Term, Vested and expected to vest at July 5, 2015 | 1 year 8 months 9 days |
RSUs, Aggregate Intrinsic Value, Balance, July 5, 2015 | $ 10,368 |
RSUs, Aggregate Intrinsic Value, Vested and expected to vest at July 5, 2015 | $ 8,608 |
Inventories (Inventories Stated
Inventories (Inventories Stated At Cost) (Details) - USD ($) $ in Thousands | Jul. 05, 2015 | Jan. 04, 2015 | Jun. 29, 2014 |
Inventory Disclosure [Abstract] | |||
Loose diamonds | $ 9,353 | $ 6,439 | $ 3,322 |
Fine jewelry and other | 27,441 | 35,229 | 28,827 |
Total | $ 36,794 | $ 41,668 | $ 32,149 |
Net Income Per Share (Narrative
Net Income Per Share (Narrative) (Details) - shares | 3 Months Ended | 6 Months Ended | ||
Jul. 05, 2015 | Jun. 29, 2014 | Jul. 05, 2015 | Jun. 29, 2014 | |
Earnings Per Share [Abstract] | ||||
Stock option shares excluded from computation of diluted net income per share due to their antidilutive effect | 966,644 | 1,080,994 | 912,014 | 993,930 |
Net Income Per Share (Computati
Net Income Per Share (Computation Basic And Diluted Net Income Per Share) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 05, 2015 | Jun. 29, 2014 | Jul. 05, 2015 | Jun. 29, 2014 | |
Earnings Per Share [Abstract] | ||||
Net income | $ 2,331 | $ 2,171 | $ 3,518 | $ 3,250 |
Weighted average common shares outstanding | 11,728 | 12,099 | 11,798 | 12,450 |
Basic net income per share | $ 0.20 | $ 0.18 | $ 0.30 | $ 0.26 |
Dilutive effect of stock options and RSUs | 33 | 40 | 51 | 82 |
Common stock and common stock equivalents | 11,761 | 12,139 | 11,849 | 12,532 |
Diluted net income per share | $ 0.20 | $ 0.18 | $ 0.30 | $ 0.26 |