Document And Entity Information
Document And Entity Information - shares | 3 Months Ended | |
Apr. 03, 2016 | May. 04, 2016 | |
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 | Apr. 3, 2016 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q1 | |
Current Fiscal Year End Date | --01-01 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 11,608,967 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Apr. 03, 2016 | Jan. 03, 2016 | Apr. 05, 2015 |
Current assets: | |||
Cash and cash equivalents | $ 29,749 | $ 86,542 | $ 39,657 |
Trade accounts receivable | 1,702 | 3,339 | |
Trade accounts receivable, Net | 2,801 | ||
Other accounts receivable | 814 | 706 | 1,206 |
Notes Receivable | 600 | 600 | 0 |
Inventories | 45,871 | 46,376 | 38,349 |
Prepaid income taxes | 0 | 0 | 196 |
Prepaids and other current assets | 1,220 | 1,585 | 1,345 |
Total current assets | 79,956 | 139,148 | 83,554 |
Property and equipment, net | 10,570 | 10,530 | 10,319 |
Intangible assets, net | 76 | 82 | 98 |
Deferred income taxes | 4,697 | 5,089 | 4,225 |
Note Receivable | 0 | 0 | 2,000 |
Other investments | 2,280 | 2,280 | 2,280 |
Other assets | 214 | 285 | 232 |
Total assets | 97,793 | 157,414 | 102,708 |
Current liabilities: | |||
Accounts payable | 74,260 | 121,917 | 77,763 |
Accrued liabilities | 6,743 | 12,336 | 6,262 |
Current portion of long-term financing obligation | 33 | 33 | 32 |
Current portion of deferred rent | 308 | 290 | 295 |
Total current liabilities | 81,344 | 134,576 | 84,352 |
Long-term financing obligation, less current portion | 447 | 455 | 480 |
Deferred rent, less current portion | 1,647 | 1,697 | 1,913 |
Unearned income | 1,836 | 1,988 | 0 |
Other long-term liabilities | $ 259 | $ 242 | $ 168 |
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; 21,748, 21,714 and 21,632 shares issued, respectively 11,609, 11,575 and 11,876 shares outstanding, respectively | 22 | 22 | 22 |
Additional paid-in capital | 232,968 | 232,148 | 228,189 |
Accumulated other comprehensive loss | (212) | (239) | (374) |
Retained earnings | 106,980 | 114,023 | 104,676 |
Treasury stock, at cost; 10,139, 10,139 and 9,756 shares outstanding, respectively | (327,498) | (327,498) | (316,718) |
Total stockholders' equity | 12,260 | 18,456 | 15,795 |
Total liabilities and stockholders' equity | $ 97,793 | $ 157,414 | $ 102,708 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares shares in Thousands | Apr. 03, 2016 | Jan. 03, 2016 | Apr. 05, 2015 |
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 | 21,748 | 21,714 | 21,632 |
Common stock, shares outstanding | 11,609 | 11,575 | 11,876 |
Treasury stock, at cost; shares outstanding | 10,139 | 10,139 | 9,756 |
Condensed Consolidated Statemen
Condensed Consolidated Statements Of Operations - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 03, 2016 | Apr. 05, 2015 | |
Income Statement [Abstract] | ||
Net sales | $ 103,056 | $ 106,447 |
Cost of sales | 82,830 | 86,474 |
Gross profit | 20,226 | 19,973 |
Selling, general and administrative expenses | 18,978 | 18,063 |
Operating income | 1,248 | 1,910 |
Other (loss) income, net: | ||
Interest income, net | 9 | 36 |
Other loss, net | 462 | (83) |
Total other (loss) income, net | 471 | (47) |
Income before income taxes | 1,719 | 1,863 |
Income tax expense | 639 | 676 |
Net income | $ 1,080 | $ 1,187 |
Basic net income per share | $ 0.09 | $ 0.10 |
Diluted net income per share | $ 0.09 | $ 0.10 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements Of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 03, 2016 | Apr. 05, 2015 | |
Other Comprehensive Income (Loss), Tax [Abstract] | ||
Net Income | $ 1,080 | $ 1,187 |
Other comprehensive income (loss): | ||
Foreign currency transaction adjustments | 27 | (138) |
Total comprehensive income | $ 1,107 | $ 1,049 |
Condensed Consolidated Stateme6
Condensed Consolidated Statement Of Changes In Stockholders' Equity - 3 months ended Apr. 03, 2016 - 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. 03, 2016 | $ 18,456 | $ 22 | $ 232,148 | $ 114,023 | $ (239) | $ (327,498) |
Balance, shares at Jan. 03, 2016 | 21,714 | |||||
Treasury Stock, Shares at Jan. 03, 2016 | (10,139) | (10,139) | ||||
Net income | $ 1,080 | 1,080 | ||||
Other comprehensive income | 27 | 27 | ||||
Dividends ($0.70 per share) | (8,123) | (8,123) | ||||
Tax deficiency from share-based awards | (94) | (94) | ||||
Exercise of common stock options | 1 | $ 0 | 1 | |||
Exercise of common stock options, shares | 0 | |||||
Issuance of common stock to directors | 10 | $ 0 | 10 | |||
Issuance of common stock to directors, shares | 0 | |||||
Vesting of restricted stock units, value | 0 | $ 0 | 0 | |||
Vesting of restricted stock units, shares | 46 | |||||
Shares withheld related to net share settlement of share-based awards, value | (307) | $ 0 | (307) | |||
Shares withheld related to net share settlement of share-based awards, shares | (12) | |||||
Stock-based compensation | 1,210 | 1,210 | ||||
Balance at Apr. 03, 2016 | $ 12,260 | $ 22 | $ 232,968 | $ 106,980 | $ (212) | $ (327,498) |
Balance, shares at Apr. 03, 2016 | 21,748 | |||||
Treasury Stock, Shares at Apr. 03, 2016 | (10,139) | (10,139) |
Condensed Consolidated Stateme7
Condensed Consolidated Statements Of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 03, 2016 | Apr. 05, 2015 | |
Operating activities: | ||
Net income | $ 1,080 | $ 1,187 |
Adjustments to reconcile net income to net cash used in operating activities: | ||
Depreciation and amortization | 1,151 | 904 |
Stock-based compensation | 1,196 | 1,218 |
Deferred income taxes | 392 | (38) |
Tax deficiency from share-based awards | (94) | (36) |
Changes in assets and liabilities: | ||
Receivables | 1,529 | (299) |
Inventories | 505 | 3,319 |
Prepaid income taxes | 0 | (196) |
Prepaid expenses and other assets | 436 | 203 |
Accounts payable | (47,676) | (50,949) |
Accrued liabilities | (5,593) | (5,730) |
Unearned income | (152) | 0 |
Deferred rent and other | (15) | (67) |
Net cash used in operating activities | (47,241) | (50,484) |
Investing activities: | ||
Purchases of property and equipment | (1,142) | (799) |
Net cash used in investing activities | (1,142) | (799) |
Financing activities: | ||
Proceeds from stock option exercises | 1 | 0 |
Taxes paid for net share settlement of equity awards | (307) | (168) |
Payments of Dividends | (8,123) | 0 |
Principal payments under long-term financing obligation | (8) | (9) |
Net cash used in financing activities | (8,437) | (177) |
Effect of exchange rate changes on cash and cash equivalents | 27 | (69) |
Net decrease in cash and cash equivalents | (56,793) | (51,529) |
Cash and cash equivalents, beginning of period | 86,542 | 91,186 |
Cash and cash equivalents, end of period | 29,749 | 39,657 |
Supplemental disclosure of cash flow information: | ||
Cash paid for income taxes | $ 1,934 | $ 2,253 |
Condensed Consolidated Stateme8
Condensed Consolidated Statement of Changes in Stockholders' Equity (Parentheticals) | 3 Months Ended |
Apr. 03, 2016$ / shares | |
Special Dividend [Member] | |
Special Cash Dividend per share | $ 0.70 |
Description Of Our Business And
Description Of Our Business And Summary Of Significant Accounting Policies | 3 Months Ended |
Apr. 03, 2016 | |
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 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 3, 2016 , filed with the SEC on March 1, 2016 (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 3, 2016 is derived from the Company’s audited consolidated financial statements and notes thereto for the fiscal year ended January 3, 2016 , 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 taxes, and inventory valuation. 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 holds a $2.0 million note receivable (the “Note”) from the same privately-held company. As of April 3, 2016, the remaining balance of the Note was $0.6 million , with the remainder of the principal due 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 quarter ended April 3, 2016 . Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“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. In August 2015, the FASB issued ASU No. 2015-14, “Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date”, which delays the effective date by one year effective on the first quarter of 2018, with the option to adopt in the first quarter of fiscal 2017. In March 2016, the FASB issued ASU 2016-08,“Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net)”, which clarifies the implementation guidance on principal versus agent considerations. In April 2016, the FASB issued Accounting Standards Update No. 2016-10 “Revenue from Contracts with Customers (Topic 606)”, “Identifying Performance Obligations and Licensing”, which clarifies the following two aspects of Topic 606: (1) identifying performance obligations; and (2) the licensing implementation guidance. The effective date for both ASU 2016-08 and 2016-10 is consistent with ASU 2015-14. The Company is currently evaluating the impact this guidance will have on its consolidated financial statements and related disclosures and the timing of adoption. In July 2015, the 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 related disclosures and the timing of adoption. In November 2015, the FASB issued Accounting Standards Update No. 2015-17 (“ASU 2015-17”), “Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes” which simplifies the presentation of deferred income taxes by requiring deferred tax assets and liabilities to be classified as noncurrent on the balance sheet. ASU 2015-17 is effective for periods beginning on January 1, 2017 and may be applied prospectively or retrospectively. Early adoption is permitted. The Company retrospectively adopted this guidance effective January 3, 2016. The impact of adopting ASU 2015-17 resulted in a reclassification of our current deferred income tax asset to non-current deferred income tax asset in the amount of $1.0 million , in our previously presented consolidated balance sheet as of April 5, 2015. In January 2016, the FASB issued Accounting Standards Update No. 2016-01 “Financial Instruments - Overall (“ASU 2016-01”),“Recognition and Measurement of Financial Assets and Financial Liabilities” which amends various aspects of recognition, measurement, presentation and disclosure of financial instruments. This update will require prospective application at the beginning of the Company’s first quarter of fiscal year 2018. For certain provisions, early adoption is permitted. The Company is currently evaluating the impact this guidance will have on its consolidated financial statements and related disclosures and the timing of adoption. In February 2016, the FASB issued Accounting Standards Update No. 2016-02 “Leases (Topic 842)”, which increases transparency and comparability among companies accounting for lease transactions. The most significant change of this update will require the recognition of lease assets and liabilities on the balance sheet for operating lease arrangements with lease terms greater than 12 months for lessees. This update will require a modified retrospective application which includes a number of optional practical expedients related to the identification and classification of leases commenced before the effective date. This update will become effective beginning the first quarter of the Company’s fiscal year 2019. Early application is permitted. The Company is currently evaluating the impact this guidance will have on its consolidated financial statements and related disclosures and the timing of adoption. In March 2016, the FASB issued Accounting Standards Update No. 2016-04 “Liabilities - Extinguishments of Liabilities (Subtopic 405-20)”, “Recognition of Breakage for Certain Prepaid Stored-Value Products” which narrows the scope exception for liabilities related to the sale of prepaid stored-value products to account for breakage on those liabilities consistent with the breakage guidance in Topic 606, “Revenue from Contracts with Customers”. This update will become effective beginning the first quarter of the Company’s fiscal year 2018, and shall be applied using either a modified retrospective transition method, or a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year in which the guidance is effective, or retrospectively. Early adoption is permitted. The Company is currently evaluating the impact this guidance will have on its consolidated financial statements and related disclosures and the timing of adoption. In March 2016, the FASB issued Accounting Standards Update No. 2016-09 “Compensation - Stock Compensation (Topic 718)”, “Improvements to Employee Share-Based Payment Accounting” which simplifies the accounting for share-based payment transactions, including income taxes, classification of awards as equity or liabilities and classification of cash flows. This update will become effective beginning the first quarter of the Company’s fiscal year 2017. Early adoption is permitted. The Company is currently evaluating the impact this guidance will have on its consolidated financial statements and related disclosures and the timing of adoption. |
Stock-based Compensation
Stock-based Compensation | 3 Months Ended |
Apr. 03, 2016 | |
Share-based Compensation [Abstract] | |
Stock-Based Compensation | Stock-based Compensation As of April 3, 2016 , 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 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. 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 April 3, 2016. A summary of RSU activity for the quarter ended April 3, 2016 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 4, 2016 301 $ 29.25 Granted 159 24.85 Special Dividend Adjustment 11 — Vested (46 ) 25.09 Canceled (13 ) 27.93 Balance, April 3, 2016 412 $ 27.31 1.78 $ 10,920 Vested and expected to vest at April 3, 2016 344 $ 33.32 1.66 $ 9,106 The aggregate intrinsic value in the table above is before applicable income taxes and represent the amount recipients would have received if all 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 $1.2 million during the quarter ended April 3, 2016 and $0.7 million during the quarter ended April 5, 2015 . During the quarters ended April 3, 2016 and April 5, 2015 , the total fair value of RSUs vested was approximately $1.1 million and $0.7 million , respectively. As of April 3, 2016 , the Company had total unrecognized compensation costs related to unvested RSUs of $8.7 million , before income taxes. The Company expects to recognize this cost over a weighted average period of 3.2 years . Special Dividend Adjustment On February 9, 2016 , the Company’s Board of Directors declared a special cash dividend of $0.70 per share of common stock (see Note 6: Stockholders' Equity). The Company’s equity incentive plan and related form of award agreement provide that in connection with the declaration of such special dividend, the outstanding RSUs shall be automatically credited with dividend equivalents to reflect dividends declared and paid and such dividend equivalents will be subject to all the terms and conditions, including vesting, of the awards to which they relate. The portion of the dividend equivalents that vest will be charged to retained earnings. Performance Based Award On February 15, 2016, the Company’s chief executive officer was granted approximately 45,000 RSUs which only vest if the Company achieves a pre-established net income target for fiscal year 2016. If the Company meets the performance target, 1/4th of the shares subject to the equity award shall vest on the first anniversary of the vesting commencement date and 1/16th of the shares vesting quarterly thereafter, subject to the chief executive officer’s continued service. The related RSUs are included in the table above under RSUs granted. For the quarter ended as of April 3, 2016, the Company recognized compensation expense as it is currently deemed probable that the performance target will be achieved. |
Inventories
Inventories | 3 Months Ended |
Apr. 03, 2016 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories Inventories are stated at cost and consist of the following (in thousands): April 3, 2016 January 3, 2016 April 5, 2015 Loose diamonds $ 11,424 $ 12,420 $ 5,933 Fine jewelry and other 34,447 33,956 32,416 Total $ 45,871 $ 46,376 $ 38,349 |
Net Income Per Share
Net Income Per Share | 3 Months Ended |
Apr. 03, 2016 | |
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 April 3, April 5, Net income $ 1,080 $ 1,187 Weighted average common shares outstanding 11,592 11,869 Basic net income per share $ 0.09 $ 0.10 Dilutive effect of stock options and RSUs 74 54 Common stock and common stock equivalents 11,666 11,923 Diluted net income per share $ 0.09 $ 0.10 The Company excluded 825,912 and 857,992 stock option and award shares from the computation of diluted net income per share for the quarters ended April 3, 2016 and April 5, 2015 , respectively, due to their antidilutive effect. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Apr. 03, 2016 | |
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. |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Apr. 03, 2016 | |
Special Dividend [Member] | |
Dividends Payable [Line Items] | |
Stockholders' Equity Note Disclosure [Text Block] | Stockholders’ Equity On February 9, 2016 , the Company’s Board of Directors declared a special cash dividend of $0.70 per share of common stock, paid on March 7, 2016 to shareholders of record at the close of business on February 22, 2016 . The Company determined the value of the dividend based on the level of earnings in fiscal year 2015. On an annual basis, the Company will reassess its use of capital, including investments in operations, strategic alternatives, share repurchases, and cash dividends. |
Description Of Our Business A15
Description Of Our Business And Summary Of Significant Accounting Policies (Policy) | 3 Months Ended |
Apr. 03, 2016 | |
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 3, 2016 , filed with the SEC on March 1, 2016 (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 3, 2016 is derived from the Company’s audited consolidated financial statements and notes thereto for the fiscal year ended January 3, 2016 , 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 taxes, and inventory valuation. 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 holds a $2.0 million note receivable (the “Note”) from the same privately-held company. As of April 3, 2016, the remaining balance of the Note was $0.6 million , with the remainder of the principal due 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 quarter ended April 3, 2016 . |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“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. In August 2015, the FASB issued ASU No. 2015-14, “Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date”, which delays the effective date by one year effective on the first quarter of 2018, with the option to adopt in the first quarter of fiscal 2017. In March 2016, the FASB issued ASU 2016-08,“Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net)”, which clarifies the implementation guidance on principal versus agent considerations. In April 2016, the FASB issued Accounting Standards Update No. 2016-10 “Revenue from Contracts with Customers (Topic 606)”, “Identifying Performance Obligations and Licensing”, which clarifies the following two aspects of Topic 606: (1) identifying performance obligations; and (2) the licensing implementation guidance. The effective date for both ASU 2016-08 and 2016-10 is consistent with ASU 2015-14. The Company is currently evaluating the impact this guidance will have on its consolidated financial statements and related disclosures and the timing of adoption. In July 2015, the 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 related disclosures and the timing of adoption. In November 2015, the FASB issued Accounting Standards Update No. 2015-17 (“ASU 2015-17”), “Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes” which simplifies the presentation of deferred income taxes by requiring deferred tax assets and liabilities to be classified as noncurrent on the balance sheet. ASU 2015-17 is effective for periods beginning on January 1, 2017 and may be applied prospectively or retrospectively. Early adoption is permitted. The Company retrospectively adopted this guidance effective January 3, 2016. The impact of adopting ASU 2015-17 resulted in a reclassification of our current deferred income tax asset to non-current deferred income tax asset in the amount of $1.0 million , in our previously presented consolidated balance sheet as of April 5, 2015. In January 2016, the FASB issued Accounting Standards Update No. 2016-01 “Financial Instruments - Overall (“ASU 2016-01”),“Recognition and Measurement of Financial Assets and Financial Liabilities” which amends various aspects of recognition, measurement, presentation and disclosure of financial instruments. This update will require prospective application at the beginning of the Company’s first quarter of fiscal year 2018. For certain provisions, early adoption is permitted. The Company is currently evaluating the impact this guidance will have on its consolidated financial statements and related disclosures and the timing of adoption. In February 2016, the FASB issued Accounting Standards Update No. 2016-02 “Leases (Topic 842)”, which increases transparency and comparability among companies accounting for lease transactions. The most significant change of this update will require the recognition of lease assets and liabilities on the balance sheet for operating lease arrangements with lease terms greater than 12 months for lessees. This update will require a modified retrospective application which includes a number of optional practical expedients related to the identification and classification of leases commenced before the effective date. This update will become effective beginning the first quarter of the Company’s fiscal year 2019. Early application is permitted. The Company is currently evaluating the impact this guidance will have on its consolidated financial statements and related disclosures and the timing of adoption. In March 2016, the FASB issued Accounting Standards Update No. 2016-04 “Liabilities - Extinguishments of Liabilities (Subtopic 405-20)”, “Recognition of Breakage for Certain Prepaid Stored-Value Products” which narrows the scope exception for liabilities related to the sale of prepaid stored-value products to account for breakage on those liabilities consistent with the breakage guidance in Topic 606, “Revenue from Contracts with Customers”. This update will become effective beginning the first quarter of the Company’s fiscal year 2018, and shall be applied using either a modified retrospective transition method, or a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year in which the guidance is effective, or retrospectively. Early adoption is permitted. The Company is currently evaluating the impact this guidance will have on its consolidated financial statements and related disclosures and the timing of adoption. In March 2016, the FASB issued Accounting Standards Update No. 2016-09 “Compensation - Stock Compensation (Topic 718)”, “Improvements to Employee Share-Based Payment Accounting” which simplifies the accounting for share-based payment transactions, including income taxes, classification of awards as equity or liabilities and classification of cash flows. This update will become effective beginning the first quarter of the Company’s fiscal year 2017. Early adoption is permitted. The Company is currently evaluating the impact this guidance will have on its consolidated financial statements and related disclosures and the timing of adoption. |
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 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. 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. If the Company meets the performance target, 1/4th of the shares subject to the equity award shall vest on the first anniversary of the vesting commencement date and 1/16th of the shares vesting quarterly thereafter, subject to the chief executive officer’s continued service. The related RSUs are included in the table above under RSUs granted. For the quarter ended as of April 3, 2016, the Company recognized compensation expense as it is currently deemed probable that the performance target will be achieved. |
Special Dividends Adjustment | The Company’s equity incentive plan and related form of award agreement provide that in connection with the declaration of such special dividend, the outstanding RSUs shall be automatically credited with dividend equivalents to reflect dividends declared and paid and such dividend equivalents will be subject to all the terms and conditions, including vesting, of the awards to which they relate. The portion of the dividend equivalents that vest will be charged to retained earnings. |
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) | 3 Months Ended |
Apr. 03, 2016 | |
Share-based Compensation [Abstract] | |
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 4, 2016 301 $ 29.25 Granted 159 24.85 Special Dividend Adjustment 11 — Vested (46 ) 25.09 Canceled (13 ) 27.93 Balance, April 3, 2016 412 $ 27.31 1.78 $ 10,920 Vested and expected to vest at April 3, 2016 344 $ 33.32 1.66 $ 9,106 |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Apr. 03, 2016 | |
Inventory Disclosure [Abstract] | |
Inventories Stated At Cost (in thousands) | April 3, 2016 January 3, 2016 April 5, 2015 Loose diamonds $ 11,424 $ 12,420 $ 5,933 Fine jewelry and other 34,447 33,956 32,416 Total $ 45,871 $ 46,376 $ 38,349 |
Net Income Per Share (Tables)
Net Income Per Share (Tables) | 3 Months Ended |
Apr. 03, 2016 | |
Earnings Per Share [Abstract] | |
Computation Of Basic And Diluted Net Income Per Share | Quarter ended April 3, April 5, Net income $ 1,080 $ 1,187 Weighted average common shares outstanding 11,592 11,869 Basic net income per share $ 0.09 $ 0.10 Dilutive effect of stock options and RSUs 74 54 Common stock and common stock equivalents 11,666 11,923 Diluted net income per share $ 0.09 $ 0.10 |
Note Receivable and Other Inves
Note Receivable and Other Investments (Details) - USD ($) | 3 Months Ended | ||
Apr. 03, 2016 | Jan. 03, 2016 | Apr. 05, 2015 | |
Receivables [Abstract] | |||
Notes, Loans and Financing Receivable, Net, Noncurrent | $ 0 | $ 0 | $ 2,000,000 |
Notes, Loans and Financing Receivable, Net, Current | $ 600,000 | 600,000 | 0 |
Line of Credit Facility, Interest Rate Description | LIBOR plus a predetermined rate per annum | ||
Other Investments [Abstract] | |||
Other-than-temporary Impairment Charges | $ 0 | ||
Investment [Line Items] | |||
Cost Method Investments | 2,280,000 | $ 2,280,000 | $ 2,280,000 |
Convertible Preferred Stock [Member] | |||
Investment [Line Items] | |||
Cost Method Investments | 2,000,000 | ||
Equity Securities [Member] | |||
Investment [Line Items] | |||
Cost Method Investments | $ 280,000 |
Description Of Our Business A20
Description Of Our Business And Summary Of Significant Accounting Policies Description Of Our Business And Summary Of Significant Accounting Policies Recent Accounting Pronouncements (Details) $ in Millions | Apr. 05, 2015USD ($) |
New Accounting Pronouncement, Early Adoption, Effect [Member] | |
New Accounting Pronouncement, Early Adoption [Line Items] | |
Deferred Tax Assets, Net, Current | $ 1 |
Stock-based Compensation (Narat
Stock-based Compensation (Naratives) (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | |
Apr. 03, 2016 | Apr. 05, 2015 | |
Share-based Compensation [Abstract] | ||
Intrinsic value of RSUs vested | $ 1.2 | $ 0.7 |
Fair value of RSUs vested | 1.1 | $ 0.7 |
Unrecognized compensation costs related to unvested stock options and RSUs, before income taxes | $ 8.7 | |
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 2 months 12 days | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 159,000 | |
Special Dividend [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Dividends Payable, Date Declared | Feb. 9, 2016 | |
Common Stock, Dividends, Per Share, Cash Paid | $ 0.70 | |
Performance Shares [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 45,000 |
Stock-based Compensation (Summa
Stock-based Compensation (Summary Of Stock Option Activity) (Details) shares in Thousands | 3 Months Ended |
Apr. 03, 2016shares | |
Stock Options [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Options, Granted | 0 |
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 | 3 Months Ended |
Apr. 03, 2016USD ($)$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
RSUs, Balance, January 4, 2016 | shares | 301 |
RSUs, Granted | shares | 159 |
Special Dividend, Adjustment | shares | 11 |
RSUs, Vested | shares | (46) |
RSUs, Canceled | shares | (13) |
RSUs, Balance, April 3, 2016 | shares | 412 |
RSUs, Vested and expected to vest at April 3, 2016 | shares | 344 |
RSUs, Weighted Average Grant Date Fair Value, Balance, January 4, 2016 | $ / shares | $ 29.25 |
RSUs, Weighted Average Grant Date Fair Value, Granted | $ / shares | 24.85 |
Special Dividends, Weighted Average Grant Date Fair Value, Adjustment | $ / shares | 0 |
RSUs, Weighted Average Grant Date Fair Value, Vested | $ / shares | 25.09 |
RSUs, Weighted Average Grant Date Fair Value, Canceled | $ / shares | 27.93 |
RSUs, Weighted Average Grant Date Fair Value, Balance, April 3, 2016 | $ / shares | 27.31 |
RSUs. Weighted Average Grant Date Fair Value, Vested And Expected To Vest at April 3, 2016 | $ / shares | $ 33.32 |
RSUs, Weighted Average Remaining Contractual Term (in years), Balance, April 3, 2016 | 1 year 9 months 11 days |
RSUs, Weighted Average Remaining Contractual Term, Vested and expected to vest at April 3, 2016 | 1 year 7 months 28 days |
RSUs, Aggregate Intrinsic Value, Balance, April 3, 2016 | $ | $ 10,920 |
RSUs, Aggregate Intrinsic Value, Vested and expected to vest at April 3, 2016 | $ | $ 9,106 |
Inventories (Inventories Stated
Inventories (Inventories Stated At Cost) (Details) - USD ($) $ in Thousands | Apr. 03, 2016 | Jan. 03, 2016 | Apr. 05, 2015 |
Inventory Disclosure [Abstract] | |||
Loose diamonds | $ 11,424 | $ 12,420 | $ 5,933 |
Fine jewelry and other, Net | 34,447 | 33,956 | |
Fine jewelry and other | 32,416 | ||
Total | $ 45,871 | $ 46,376 | $ 38,349 |
Net Income Per Share (Narrative
Net Income Per Share (Narrative) (Details) - shares | 3 Months Ended | |
Apr. 03, 2016 | Apr. 05, 2015 | |
Earnings Per Share [Abstract] | ||
Stock option and award shares excluded from computation of diluted net income per share due to their antidilutive effect | 825,912 | 857,992 |
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 | |
Apr. 03, 2016 | Apr. 05, 2015 | |
Earnings Per Share [Abstract] | ||
Net income | $ 1,080 | $ 1,187 |
Weighted average common shares outstanding | 11,592 | 11,869 |
Basic net income per share | $ 0.09 | $ 0.10 |
Dilutive effect of stock options and RSUs | 74 | 54 |
Common stock and common stock equivalents | 11,666 | 11,923 |
Diluted net income per share | $ 0.09 | $ 0.10 |
Stockholders' Equity (Special D
Stockholders' Equity (Special Dividends Paid) (Details) - Special Dividend [Member] - $ / shares | Mar. 07, 2016 | Feb. 22, 2016 | Apr. 03, 2016 |
Dividends Payable [Line Items] | |||
Dividends Payable, Date Declared | Feb. 9, 2016 | ||
Special Cash Dividend per share | $ 0.70 | ||
Dividends Payable, Date Paid | Mar. 7, 2016 | ||
Dividends Payable, Date of Record | Feb. 22, 2016 |