Blue Nile 10-Q 10 Nov 15 2015 Q3 Quarterly report Financial data

Document And Entity Information

Document And Entity Information - shares	9 Months Ended
	Oct. 04, 2015	Nov. 03, 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	Oct. 4, 2015
Amendment Flag	false
Document Fiscal Year Focus	2,015
Document Fiscal Period Focus	Q3
Current Fiscal Year End Date	--01-03
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		11,533,206

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Oct. 04, 2015	Jan. 04, 2015	Sep. 28, 2014
Current assets:
Cash and cash equivalents	$ 33,609	$ 91,186	$ 32,324
Trade accounts receivable	4,006	2,137	3,032
Other accounts receivable, net	930	1,571	468
Notes receivable	600	0	0
Inventories	41,946	41,668	33,084
Deferred income taxes	1,015	1,123	742
Prepaid income taxes	0	0	297
Prepaids and other current assets	2,317	1,524	1,536
Total current assets	84,423	139,209	71,483
Property and equipment, net	10,795	10,422	10,378
Intangible assets, net	87	103	108
Deferred income taxes	3,829	3,064	3,927
Note receivable	0	2,000	2,000
Other investments	2,280	2,280	2,280
Other assets	218	256	262
Total assets	101,632	157,334	90,438
Current liabilities:
Accounts payable	76,328	128,675	72,312
Accrued liabilities	8,816	11,992	6,522
Current portion of long-term financing obligation	33	32	32
Current portion of deferred rent	291	292	286
Total current liabilities	85,468	140,991	79,152
Long-term financing obligation, less current portion	464	489	497
Deferred rent, less current portion	1,771	1,982	2,051
Unearned income	2,141	0	0
Other long-term liabilities	$ 201	$ 169	$ 117
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; 21,672, 21,615 and 21,601 shares issued, respectively 11,533, 11,859 and 11,845 shares outstanding, respectively	22	22	22
Additional paid-in capital	230,290	227,146	226,812
Accumulated other comprehensive loss	(211)	(236)	(153)
Retained earnings	108,984	103,489	98,658
Treasury stock, at cost; 10,139, 9,756 and 9,756 shares outstanding, respectively	(327,498)	(316,718)	(316,718)
Total stockholders' equity	11,587	13,703	8,621
Total liabilities and stockholders' equity	$ 101,632	$ 157,334	$ 90,438

Condensed Consolidated Balance3

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares shares in Thousands	Oct. 04, 2015	Jan. 04, 2015	Sep. 28, 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	21,672	21,615	21,601
Common stock, shares outstanding	11,533	11,859	11,845
Treasury stock, at cost; shares outstanding	10,139	9,756	9,756

Condensed Consolidated Statemen

Condensed Consolidated Statements Of Operations - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 04, 2015	Sep. 28, 2014	Oct. 04, 2015	Sep. 28, 2014
Income Statement [Abstract]
Net sales	$ 109,943	$ 105,760	$ 330,083	$ 316,057
Cost of sales	88,712	86,910	266,790	257,915
Gross profit	21,231	18,850	63,293	58,142
Selling, general and administrative expenses	18,192	16,290	54,905	50,787
Operating income	3,039	2,560	8,388	7,355
Other (loss) income, net:
Interest income, net	12	19	76	91
Other loss, net	(33)	(81)	0	(47)
Total other (loss) income, net	(21)	(62)	76	44
Income before income taxes	3,018	2,498	8,464	7,399
Income tax expense	1,041	848	2,969	2,499
Net income	$ 1,977	$ 1,650	$ 5,495	$ 4,900
Basic net income per share	$ 0.17	$ 0.14	$ 0.47	$ 0.40
Diluted net income per share	$ 0.17	$ 0.14	$ 0.47	$ 0.40

Condensed Consolidated Stateme5

Condensed Consolidated Statements Of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 04, 2015	Sep. 28, 2014	Oct. 04, 2015	Sep. 28, 2014
Other Comprehensive Income (Loss), Tax [Abstract]
Net Income	$ 1,977	$ 1,650	$ 5,495	$ 4,900
Other comprehensive income (loss):
Foreign currency transaction adjustments	(14)	(108)	25	(127)
Total comprehensive income	$ 1,963	$ 1,542	$ 5,520	$ 4,773

Condensed Consolidated Stateme6

Condensed Consolidated Statement Of Changes In Stockholders' Equity - 9 months ended Oct. 04, 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	$ 5,495			5,495
Other comprehensive income	25				25
Tax deficiency from share-based awards	(597)		(597)
Exercise of common stock options	241	$ 0	241
Exercise of common stock options, shares		8
Issuance of common stock to directors	30	$ 0	30
Issuance of common stock to directors, shares		1
Vesting of restricted stock units, value	0	$ 0	0
Vesting of restricted stock units, shares		62
Shares withheld related to net share settlement of share-based awards, value	(424)	$ 0	(424)
Shares withheld related to net share settlement of share-based awards, shares		(14)
Stock-based compensation	3,894		3,894
Repurchase of common stock, value	(10,780)					$ (10,780)
Repurchase of common stock, shares						(383)
Balance at Oct. 04, 2015	$ 11,587	$ 22	$ 230,290	$ 108,984	$ (211)	$ (327,498)
Balance, shares at Oct. 04, 2015		21,672
Treasury Stock, Shares at Oct. 04, 2015	(10,139)					(10,139)

Condensed Consolidated Stateme7

Condensed Consolidated Statements Of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Oct. 04, 2015	Sep. 28, 2014
Operating activities:
Net income	$ 5,495	$ 4,900
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization	2,771	2,742
Stock-based compensation	3,831	3,245
Deferred income taxes	(657)	1,839
Tax deficiency from share-based awards	(597)	(1,798)
Excess tax benefit from share-based awards	(29)	(173)
Changes in assets and liabilities:
Receivables	(1,228)	26
Inventories	(278)	1,446
Prepaid income taxes	0	(50)
Prepaid expenses and other assets	(755)	(234)
Accounts payable	(52,344)	(50,071)
Accrued liabilities	(3,176)	(4,229)
Unearned income	2,141	0
Deferred rent and other	(180)	(168)
Net cash used in operating activities	(45,006)	(42,525)
Investing activities:
Purchases of property and equipment	(2,940)	(2,820)
Payments received on note receivable	1,400	0
Net cash used in investing activities	(1,540)	(2,820)
Financing activities:
Repurchase of common stock	(10,780)	(40,308)
Proceeds from stock option exercises	241	2,266
Taxes paid for net share settlement of equity awards	(424)	(244)
Excess tax benefit from share-based awards	29	173
Principal payments under long-term financing obligation	(24)	(96)
Net cash used in financing activities	(10,958)	(38,209)
Effect of exchange rate changes on cash and cash equivalents	(73)	(64)
Net decrease in cash and cash equivalents	(57,577)	(83,618)
Cash and cash equivalents, beginning of period	91,186	115,942
Cash and cash equivalents, end of period	33,609	32,324
Supplemental disclosure of cash flow information:
Cash paid for income taxes	$ 4,825	$ 2,506

Description Of Our Business And

Description Of Our Business And Summary Of Significant Accounting Policies	9 Months Ended
	Oct. 04, 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 (loss), 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. During the nine months ended October 4, 2015, the Company received payment of $1.4 million on the principal amount, 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 October 4, 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 October 4, 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 year 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.

Stock-based Compensation

Stock-based Compensation	9 Months Ended
	Oct. 04, 2015
Share-based Compensation [Abstract]
Stock-Based Compensation	Stock-based Compensation As of October 4, 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. There were no stock options granted during the quarter ended September 28, 2014. The following weighted average assumptions were used for the valuation of stock options granted during the periods presented: Quarter ended Year to date ended October 4, October 4, September 28, Expected term 4.5 years 4.5 years 4.5 years Expected volatility 46.3 % 46.8 % 46.9 % Expected dividend yield 0.0 % 0.0 % 0.0 % Risk-free interest rate 1.7 % 1.5 % 1.5 % Estimated weighted average fair value per stock option granted $ 12.41 $ 11.38 $ 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 October 4, 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 39 28.31 Exercised (8 ) 31.76 Canceled (79 ) 49.25 Balance, October 4, 2015 973 $ 38.37 5.62 $ 901 Vested and expected to vest at October 4, 2015 956 $ 38.50 5.57 $ 879 Exercisable, October 4, 2015 817 $ 39.66 5.17 $ 739 During the year to date ended October 4, 2015 , the total fair value of stock options vested was $1.9 million . A summary of RSU activity for the year to date ended October 4, 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 284 28.95 Vested (62 ) 30.18 Canceled (9 ) 31.24 Balance, October 4, 2015 322 $ 29.59 1.70 $ 10,171 Vested and expected to vest at October 4, 2015 271 $ 35.21 1.56 $ 8,565 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 $1.9 million during year to date ended October 4, 2015 and $1.0 million during year to date ended September 28, 2014 . During the year to date ended October 4, 2015 and September 28, 2014 , the total fair value of RSUs vested was approximately $1.9 million and $1.1 million , respectively. As of October 4, 2015 , the Company had total unrecognized compensation costs related to unvested stock options and RSUs of $9.0 million , before income taxes. The Company expects to recognize this cost over a weighted average period of 1.9 years for the options and 3.4 years for the RSUs.

Inventories

Inventories	9 Months Ended
	Oct. 04, 2015
Inventory Disclosure [Abstract]
Inventories	Inventories Inventories are stated at cost and consist of the following (in thousands): October 4, 2015 January 4, 2015 September 28, 2014 Loose diamonds $ 12,516 $ 6,439 $ 4,026 Fine jewelry and other 29,430 35,229 29,058 Total $ 41,946 $ 41,668 $ 33,084

Net Income Per Share

Net Income Per Share	9 Months Ended
	Oct. 04, 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 October 4, September 28, October 4, September 28, Net income $ 1,977 $ 1,650 $ 5,495 $ 4,900 Weighted average common shares outstanding 11,523 11,844 11,706 12,248 Basic net income per share $ 0.17 $ 0.14 $ 0.47 $ 0.40 Dilutive effect of stock options and RSUs 89 21 73 64 Common stock and common stock equivalents 11,612 11,865 11,779 12,312 Diluted net income per share $ 0.17 $ 0.14 $ 0.47 $ 0.40 For the quarter and year to date ended October 4, 2015 , the Company excluded 744,920 and 859,546 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 September 28, 2014 , the Company excluded 1,133,355 and 1,057,421 stock option shares, respectively, from the computation of diluted net income per share due to their antidilutive effect.

Commitments and Contingencies

Commitments and Contingencies	9 Months Ended
	Oct. 04, 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.

Subsequent Events

Subsequent Events - USD ($) $ in Millions	9 Months Ended	27 Months Ended
	Oct. 04, 2015	Feb. 02, 2018	Nov. 02, 2015
Subsequent Events
Stock Repurchase Program	Subsequent Events On November 2, 2015, Blue Nile’s Board of Directors authorized the renewal of the Company’s repurchase program. The Company is authorized to repurchase up to $100.0 million of the Company’s common stock over the next 27 months
Subsequent Event
Subsequent Events
Stock Repurchase Program, Period in Force		27 months
Stock Repurchase Program, Authorized Amount			$ 100

Description Of Our Business A14

Description Of Our Business And Summary Of Significant Accounting Policies (Policy)	9 Months Ended
	Oct. 04, 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 (loss), 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. During the nine months ended October 4, 2015, the Company received payment of $1.4 million on the principal amount, 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 October 4, 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 October 4, 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 year 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.
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)	9 Months Ended
	Oct. 04, 2015
Share-based Compensation [Abstract]
Weighted-Average Assumptions For Valuation Of Stock Options Granted	Quarter ended Year to date ended October 4, October 4, September 28, Expected term 4.5 years 4.5 years 4.5 years Expected volatility 46.3 % 46.8 % 46.9 % Expected dividend yield 0.0 % 0.0 % 0.0 % Risk-free interest rate 1.7 % 1.5 % 1.5 % Estimated weighted average fair value per stock option granted $ 12.41 $ 11.38 $ 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 39 28.31 Exercised (8 ) 31.76 Canceled (79 ) 49.25 Balance, October 4, 2015 973 $ 38.37 5.62 $ 901 Vested and expected to vest at October 4, 2015 956 $ 38.50 5.57 $ 879 Exercisable, October 4, 2015 817 $ 39.66 5.17 $ 739
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 284 28.95 Vested (62 ) 30.18 Canceled (9 ) 31.24 Balance, October 4, 2015 322 $ 29.59 1.70 $ 10,171 Vested and expected to vest at October 4, 2015 271 $ 35.21 1.56 $ 8,565

Inventories (Tables)

Inventories (Tables)	9 Months Ended
	Oct. 04, 2015
Inventory Disclosure [Abstract]
Inventories Stated At Cost (in thousands)	October 4, 2015 January 4, 2015 September 28, 2014 Loose diamonds $ 12,516 $ 6,439 $ 4,026 Fine jewelry and other 29,430 35,229 29,058 Total $ 41,946 $ 41,668 $ 33,084

Net Income Per Share (Tables)

Net Income Per Share (Tables)	9 Months Ended
	Oct. 04, 2015
Earnings Per Share [Abstract]
Computation Of Basic And Diluted Net Income Per Share	Quarter ended Year to date ended October 4, September 28, October 4, September 28, Net income $ 1,977 $ 1,650 $ 5,495 $ 4,900 Weighted average common shares outstanding 11,523 11,844 11,706 12,248 Basic net income per share $ 0.17 $ 0.14 $ 0.47 $ 0.40 Dilutive effect of stock options and RSUs 89 21 73 64 Common stock and common stock equivalents 11,612 11,865 11,779 12,312 Diluted net income per share $ 0.17 $ 0.14 $ 0.47 $ 0.40

Note Receivable and Other Inves

Note Receivable and Other Investments (Details) - USD ($)	9 Months Ended
	Oct. 04, 2015	Sep. 28, 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	$ 1,400,000	$ 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) $ in Millions	9 Months Ended
	Oct. 04, 2015USD ($)
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 ($) shares in Thousands, $ in Millions	3 Months Ended	9 Months Ended
	Sep. 28, 2014	Oct. 04, 2015	Sep. 28, 2014
Share-based Compensation [Abstract]
Options, Granted	0
Fair value of stock options vested		$ 1.9
Intrinsic value of RSUs vested		1.9	$ 1
Fair value of RSUs vested		1.9	$ 1.1
Unrecognized compensation costs related to unvested stock options and RSUs, before income taxes		$ 9
Stock Options [Member]
Share-based Compensation [Abstract]
Options, Granted		39
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 10 months 24 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 4 months 24 days

Stock-based Compensation (Weigh

Stock-based Compensation (Weighted-Average Assumptions For Valuation Of Stock Options Granted) (Details) - $ / shares	3 Months Ended	9 Months Ended
	Oct. 04, 2015	Oct. 04, 2015	Sep. 28, 2014
Share-based Compensation [Abstract]
Expected term	4 years 6 months	4 years 6 months	4 years 6 months
Expected volatility	46.30%	46.80%	46.90%
Expected dividend yield	0.00%	0.00%	0.00%
Risk-free interest rate	1.70%	1.50%	1.50%
Estimated weighted average fair value per stock option granted	$ 12.41	$ 11.38	$ 13.28

Stock-based Compensation (Summa

Stock-based Compensation (Summary Of Stock Option Activity) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 28, 2014	Oct. 04, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options, Granted	0
Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options, Balance, January 5, 2015		1,021
Options, Granted		39
Options, Exercised		(8)
Options, Canceled		(79)
Options, Balance, October 4, 2015		973
Options, Vested and expected to vest at October 4, 2015		956
Options, Exercisable, October 4, 2015		817
Options, Weighted Average Exercise Price, Balance, January 5, 2015		$ 39.56
Options, Weighted Average Exercise Price, Granted		28.31
Options, Weighted Average Exercise Price, Exercised		31.76
Options, Weighted Average Exercise Price, Canceled		49.25
Options, Weighted Average Exercise Price, Balance, October 4, 2015		38.37
Options, Weighted Average Exercise Price, Vested and expected to vest at October 4, 2015		38.50
Options, Weighted Average Exercise Price, Exercisable, October 4, 2015		$ 39.66
Options, Weighted Average Remaining Contractual Term (in years), Balance, October 4, 2015		5 years 7 months 13 days
Options, Weighted Average Remaining Contractual Term (in years), Vested and expected to vest at October 4,2015		5 years 6 months 26 days
Options, Weighted Average Remaining Contractual Term (in years), Exercisable, October 4, 2015		5 years 2 months 1 day
Options, Aggregate Intrinsic Value, Balance, October 4, 2015		$ 901
Options, Aggregate Intrinsic Value, Vested and expected to vest at October 4, 2015		879
Options, Aggregate Intrinsic Value, Exercisable, October 4, 2015		$ 739

Stock-based Compensation (Sum23

Stock-based Compensation (Summary Of RSU Activity) (Details) - Restricted Stock Units (RSUs) [Member] $ / shares in Units, shares in Thousands, $ in Thousands	9 Months Ended
	Oct. 04, 2015USD ($)$ / sharesshares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
RSUs, Balance, January 5, 2015	109
RSUs, Granted	284
RSUs, Vested	(62)
RSUs, Canceled	(9)
RSUs, Balance, October 4, 2015	322
RSUs, Vested and expected to vest at October 4, 2015	271
RSUs, Weighted Average Grant Date Fair Value, Balance, January 5, 2015 | $ / shares	$ 31.74
RSUs, Weighted Average Grant Date Fair Value, Granted | $ / shares	28.95
RSUs, Weighted Average Grant Date Fair Value, Vested | $ / shares	30.18
RSUs, Weighted Average Grant Date Fair Value, Canceled | $ / shares	31.24
RSUs, Weighted Average Grant Date Fair Value, Balance, October 4, 2015 | $ / shares	29.59
RSUs. Weighted Average Grant Date Fair Value, Vested And Expected To Vest at October 4, 2015 | $ / shares	$ 35.21
RSUs, Weighted Average Remaining Contractual Term (in years), Balance, October 4, 2015	1 year 8 months 12 days
RSUs, Weighted Average Remaining Contractual Term, Vested and expected to vest at October 4, 2015	1 year 6 months 22 days
RSUs, Aggregate Intrinsic Value, Balance, October 4, 2015 | $	$ 10,171
RSUs, Aggregate Intrinsic Value, Vested and expected to vest at October 4, 2015 | $	$ 8,565

Inventories (Inventories Stated

Inventories (Inventories Stated At Cost) (Details) - USD ($) $ in Thousands	Oct. 04, 2015	Jan. 04, 2015	Sep. 28, 2014
Inventory Disclosure [Abstract]
Loose diamonds	$ 12,516	$ 6,439	$ 4,026
Fine jewelry and other	29,430	35,229	29,058
Total	$ 41,946	$ 41,668	$ 33,084

Net Income Per Share (Narrative

Net Income Per Share (Narrative) (Details) - shares	3 Months Ended		9 Months Ended
	Oct. 04, 2015	Sep. 28, 2014	Oct. 04, 2015	Sep. 28, 2014
Earnings Per Share [Abstract]
Stock option shares excluded from computation of diluted net income per share due to their antidilutive effect	744,920	1,133,355	859,546	1,057,421

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		9 Months Ended
	Oct. 04, 2015	Sep. 28, 2014	Oct. 04, 2015	Sep. 28, 2014
Earnings Per Share [Abstract]
Net income	$ 1,977	$ 1,650	$ 5,495	$ 4,900
Weighted average common shares outstanding	11,523	11,844	11,706	12,248
Basic net income per share	$ 0.17	$ 0.14	$ 0.47	$ 0.40
Dilutive effect of stock options and RSUs	89	21	73	64
Common stock and common stock equivalents	11,612	11,865	11,779	12,312
Diluted net income per share	$ 0.17	$ 0.14	$ 0.47	$ 0.40