UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
| x | QUARTERLY REPORT UNDER SECTION 13 or 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Quarterly Period Ended April 30, 2004
OR
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number 000-22754
Urban Outfitters, Inc.
(Exact Name of Registrant as Specified in Its Charter)
| Pennsylvania | 23-2003332 | |
| (State or Other Jurisdiction of Incorporation of Organization) |
(I.R.S. Employer Identification No.) |
| 1809 Walnut Street, Philadelphia, PA | 19103 | |
| (Address of Principal Executive Offices) | (Zip Code) |
(215) 564-2313
(Registrant’s Telephone Number, Including Area Code)
Indicate by checkmark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by checkmark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes x No ¨
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Common stock, $0.0001 par value—40,236,371 shares outstanding on June 2, 2004.
TABLE OF CONTENTS
PART I
FINANCIAL INFORMATION
| Item 1. | Financial Statements (unaudited) | |||
| Condensed Consolidated Balance Sheets as of April 30, 2004, January 31, 2004 and April 30, 2003 |
1 | |||
| Condensed Consolidated Statements of Income for the three months ended April 30, 2004 and 2003 |
2 | |||
| 3 | ||||
| Condensed Consolidated Statements of Cash Flows for the three months ended April 30, 2004 and 2003 |
4 | |||
| Notes to Condensed Consolidated Financial Statements (Unaudited) |
5 | |||
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
11 | ||
| Item 3. | 17 | |||
| Item 4. | 17 | |||
| PART II | ||||
| OTHER INFORMATION | ||||
| Item 1. | 18 | |||
| Item 6. | 18 | |||
| 19 | ||||
URBAN OUTFITTERS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(amounts in thousands, except share and per share data)
(Unaudited)
| April 30, 2004 |
January 31, 2004 |
April 30, 2003 | |||||||
| ASSETS | |||||||||
| Current assets: |
|||||||||
| Cash and cash equivalents |
$ | 72,547 | $ | 67,194 | $ | 57,632 | |||
| Marketable securities |
23,526 | 19,979 | 7,000 | ||||||
| Accounts receivable, net of allowance for doubtful accounts of $819, $651 and $625, respectively |
7,446 | 6,711 | 5,538 | ||||||
| Inventories |
78,399 | 63,247 | 53,739 | ||||||
| Prepaid expenses, deferred taxes and other current assets |
16,959 | 18,704 | 15,222 | ||||||
| Total current assets |
198,877 | 175,835 | 139,131 | ||||||
| Property and equipment, net |
134,549 | 121,919 | 110,406 | ||||||
| Marketable securities |
58,547 | 52,315 | 28,672 | ||||||
| Deferred income taxes and other assets |
9,522 | 9,526 | 8,929 | ||||||
| $ | 401,495 | $ | 359,595 | $ | 287,138 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||
| Current liabilities: |
|||||||||
| Accounts payable |
$ | 37,929 | $ | 27,353 | $ | 21,604 | |||
| Accrued expenses, accrued compensation and other current liabilities |
38,673 | 30,409 | 22,734 | ||||||
| Total current liabilities |
76,602 | 57,762 | 44,338 | ||||||
| Deferred rent and other liabilities |
11,882 | 11,703 | 10,740 | ||||||
| Total liabilities |
88,484 | 69,465 | 55,078 | ||||||
| Commitments and contingencies (see Note 5) |
|||||||||
| Shareholders’ equity: |
|||||||||
| Preferred shares; $.0001 par value, 10,000,000 shares authorized, none issued |
— | — | — | ||||||
| Common shares; $.0001 par value, 50,000,000 shares authorized, 40,193,971, 39,888,271 and 38,915,872 shares issued and outstanding, respectively |
4 | 4 | 4 | ||||||
| Additional paid-in capital |
89,864 | 83,283 | 68,623 | ||||||
| Retained earnings |
221,774 | 204,905 | 162,922 | ||||||
| Accumulated other comprehensive income |
1,369 | 1,938 | 511 | ||||||
| Total shareholders’ equity |
313,011 | 290,130 | 232,060 | ||||||
| $ | 401,495 | $ | 359,595 | $ | 287,138 | ||||
See accompanying notes
1
URBAN OUTFITTERS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(amounts in thousands, except share and per share data)
(Unaudited)
| Three months ended April 30, | |||||||
| 2004 |
2003 | ||||||
| Net sales |
$ | 170,290 | $ | 107,028 | |||
| Cost of sales, including certain buying, distribution and occupancy costs |
100,396 | 69,095 | |||||
| Gross profit |
69,894 | 37,933 | |||||
| Selling, general and administrative expenses |
41,498 | 27,273 | |||||
| Income from operations |
28,396 | 10,660 | |||||
| Other income (expense), net |
(44 | ) | 84 | ||||
| Income before income taxes |
28,352 | 10,744 | |||||
| Income tax expense |
11,483 | 4,351 | |||||
| Net income |
$ | 16,869 | $ | 6,393 | |||
| Net income per common share: |
|||||||
| Basic |
$ | 0.42 | $ | 0.16 | |||
| Diluted |
$ | 0.41 | $ | 0.16 | |||
| Weighted average common shares outstanding: |
|||||||
| Basic |
40,147,971 | 38,819,574 | |||||
| Diluted |
41,472,332 | 39,532,440 | |||||
See accompanying notes
2
URBAN OUTFITTERS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(amounts in thousands, except share data)
(Unaudited)
| Common Shares |
Accumulated Income |
Total |
|||||||||||||||||||||
| Comprehensive Income (Loss) |
Number of Shares |
Par Value |
Additional Paid-in Capital |
Retained Earnings |
|||||||||||||||||||
| Balances as of February 1, 2004 |
39,888,271 | $ | 4 | $ | 83,283 | $ | 204,905 | $ | 1,938 | $ | 290,130 | ||||||||||||
| Net income |
$ | 16,869 | — | — | — | 16,869 | — | 16,869 | |||||||||||||||
| Foreign currency translation |
(184 | ) | — | — | — | — | (184 | ) | (184 | ) | |||||||||||||
| Unrealized loss on marketable securities, net |
(385 | ) | — | — | — | — | (385 | ) | (385 | ) | |||||||||||||
| Comprehensive income |
$ | 16,300 | |||||||||||||||||||||
| Exercise of stock options |
305,700 | — | 2,263 | — | — | 2,263 | |||||||||||||||||
| Tax effect of exercises |
— | — | 4,318 | — | — | 4,318 | |||||||||||||||||
| Balances as of April 30, 2004 |
40,193,971 | $ | 4 | $ | 89,864 | $ | 221,774 | $ | 1,369 | $ | 313,011 | ||||||||||||
| Balances as of February 1, 2003 |
38,763,272 | $ | 4 | $ | 67,160 | $ | 156,529 | $ | 692 | $ | 224,385 | ||||||||||||
| Net income |
$ | 6,393 | — | — | — | 6,393 | — | 6,393 | |||||||||||||||
| Foreign currency translation |
(185 | ) | — | — | — | — | (185 | ) | (185 | ) | |||||||||||||
| Unrealized gains on marketable securities, net |
4 | — | — | — | — | 4 | 4 | ||||||||||||||||
| Comprehensive income |
$ | 6,212 | |||||||||||||||||||||
| Exercise of stock options |
152,600 | — | 1,175 | — | — | 1,175 | |||||||||||||||||
| Tax effect of exercises |
— | — | 288 | — | — | 288 | |||||||||||||||||
| Balances at April 30, 2003 |
38,915,872 | $ | 4 | $ | 68,623 | $ | 162,922 | $ | 511 | $ | 232,060 | ||||||||||||
See accompanying notes
3
URBAN OUTFITTERS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(amounts in thousands)
(Unaudited)
| Three months ended April 30, |
||||||||
| 2004 |
2003 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net income |
$ | 16,869 | $ | 6,393 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Depreciation and amortization |
6,431 | 4,948 | ||||||
| Tax benefit of stock option exercises |
4,318 | 288 | ||||||
| Changes in assets and liabilities: |
||||||||
| Increase in accounts receivable |
(740 | ) | (2,279 | ) | ||||
| Increase in inventories |
(15,206 | ) | (4,941 | ) | ||||
| Decrease (increase) in prepaid expenses and other assets |
1,732 | (2,253 | ) | |||||
| Increase in accounts payable, accrued expenses and other liabilities |
12,515 | 703 | ||||||
| Net cash provided by operating activities |
25,919 | 2,859 | ||||||
| Cash flows from investing activities: |
||||||||
| Capital expenditures |
(11,858 | ) | (5,925 | ) | ||||
| Purchases of marketable securities |
(19,792 | ) | (24,228 | ) | ||||
| Sales and maturities of marketable securities |
9,205 | 11,578 | ||||||
| Net cash used in investing activities |
(22,445 | ) | ||||||