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, 2002
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 0-16999
_______________________
Urban Outfitters, Inc.
(Exact name of registrant as specified in its charter)
PENNSYLVANIA 23-2003332
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation of Organization) Identification No.)
1809 Walnut Street, Philadelphia, PA 19103
(Address of principal executive office) (Zip Code)
(215) 564-2313
(Registrant's telephone number including area code)
N/A
(Former name, former address and former fiscal year,
if changed since last report)
______________________
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No _____
----
Number of Shares Outstanding
Title of Each Class of Common Stock at May 13, 2002
----------------------------------- ----------------------------
Common Shares, par value, $.0001 per share 19,152,786
INDEX
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Page
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PART I Financial Information
------
Item 1. Financial Statements
Condensed Consolidated Balance Sheets at April 30, 2002,
January 31, 2002, and April 30, 2001 (Unaudited) 3
Condensed Consolidated Statements of Income for the three
months ended April 30, 2002 and 2001 (Unaudited) 4
Condensed Consolidated Statements of Shareholders' Equity for
the three months ended April 30, 2002 and 2001 (Unaudited) 5
Condensed Consolidated Statements of Cash Flows for the three
months ended April 30, 2002 and 2001 (Unaudited) 6
Notes to Condensed Consolidated Financial Statement 7 - 9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10 -12
Item 3. Quantitative and Qualitative Disclosure about Market Risk 13
PART II Other Information
-------
Item 6. Exhibits and Reports on Form 8-K 13
SIGNATURES 14
URBAN OUTFITTERS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
(Unaudited)
April 30, January 31, April 30,
2002 2002 2001
------------- ------------ -------------
ASSETS
------
Current assets:
Cash and cash equivalents $ 74,647 $ 28,251 $ 9,795
Marketable securities 4,032 32 332
Accounts receivable, net of allowances of $535, $562, and $536,
respectively 4,678 4,129 5,558
Inventories 42,143 41,086 41,903
Prepaid expenses, deferred taxes and other current assets 6,639 8,651 10,242
------------ ----------- ------------
Total current assets 132,139 82,149 67,830
Property and equipment, net 106,018 105,505 99,325
Deferred taxes and other assets 7,430 7,448 6,139
------------ ----------- ------------
$ 245,587 $ 195,102 $ 173,294
============ =========== ============
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current liabilities:
Accounts payable $ 22,497 $ 20,838 $ 22,243
Accrued expenses, accrued compensation and other current liabilities 18,493 19,992 14,283
------------ ----------- ------------
Total current liabilities 40,990 40,830 36,526
Deferred rent 8,836 8,384 6,257
------------ ----------- ------------
Total liabilities 49,826 49,214 42,783
------------ ----------- ------------
Commitments and contingencies (See Note 6)
Shareholders' equity:
Preferred shares; $.0001 par value, 10,000,000 shares authorized,
none issued - - -
Common shares; $.0001 par value, 50,000,000 shares authorized,
19,152,786, 17,352,886, and 17,253,486 issued and outstanding,
respectively 2 2 2
Additional paid-in capital 62,635 17,872 16,268
Retained earnings 133,871 129,116 115,260
Accumulated other comprehensive loss (747) (1,102) (1,019)
------------ ----------- ------------
Total shareholders' equity 195,761 145,888 130,511
------------ ----------- ------------
$ 245,587 $ 195,102 $ 173,294
============ =========== ============
See accompanying notes
3
URBAN OUTFITTERS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except share and per share data)
(Unaudited)
Three Months Ended
April 30,
-----------------------------------------
2002 2001
--------------- ---------------
Net sales $ 94,074 $ 71,834
Cost of sales, including certain buying, distribution
and occupancy costs 61,904 50,274
--------------- ---------------
Gross profit 32,170 21,560
Selling, general and administrative expenses 24,002 19,512
--------------- ---------------
Income from operations 8,168 2,048
Other income (expense), net (177) (113)
--------------- ---------------
Income before income taxes 7,991 1,935
Income tax expense 3,236 784
--------------- ---------------
Net income $ 4,755 $ 1,151
=============== ===============
Net income per common share:
Basic $ 0.27 $ 0.07
=============== ===============
Diluted $ 0.26 $ 0.07
=============== ===============
Weighted average common shares outstanding:
Basic 17,569,709 17,253,482
=============== ===============
Diluted 18,112,904 17,292,362
=============== ===============
See accompanying notes
4
URBAN OUTFITTERS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(in thousands, except share data)
(Unaudited)
Comprehensive
Income Common Shares
----------------- -----------------
Accumulated
Additional Other
Number of Par Paid-in Retained Comprehensive
Quarter Shares Value Capital Earnings Loss Total
----------------- ----------------- ---------- -------- ------------- ---------
Balances at February 1, 2002 17,352,886 $ 2 $ 17,872 $ 129,116 $ (1,102) $ 145,888
Net income $ 4,755 4,755 4,755
Foreign currency translation
adjustments, net 355 355 355
-----------------
Comprehensive income $ 5,110
=================
Stock issued for cash, net of
issuance costs 1,600,000 41,470 41,470
Exercise of stock options 199,900 2,407 2,407
Tax effect of exercises 886 886
------------- ------ ---------- --------- ------------- ---------
Balances at April 30, 2002 19,152,786 $ 2 $ 62,635 $ 133,871 $ (747) $ 195,761
============= ====== ========== ========= ============= =========
Balances at February 1, 2001 17,253,486 $ 2 $ 16,268 $ 114,109 $ (767) $ 129,612
Net income $ 1,151 1,151 1,151
Foreign currency translation
adjustments, net (270) (270) (270)
Change in unrealized net losses
on marketable securities 18 18 18
-----------------
Comprehensive income $ 899
=================
------------- ------ ---------- --------- ------------- ---------
Balances at April 30, 2001 17,253,486 $ 2 $ 16,268 $ 115,260 $ (1,019) $ 130,511
============= ====== ========== ========= ============= =========
See accompanying notes
5
URBAN OUTFITTERS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
Three months ended
April 30,
-------------------------
2002 2001
------------ -----------
Cash flows from operating activities:
Net income $ 4,755 $ 1,151
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 4,212 3,647
Tax benefit of stock option exercises 886 -
Changes in assets and liabilities:
Increase in receivables (543) (2,114)
Increase in inventories (1,003) (7,117)
Decrease (increase) in prepaid expenses and other assets 2,032 (396)
Increase in payables, accrued expenses and other liabilities 1,801 3,679
------------ -----------
Net cash provided by (used in) operating activities 12,140 (1,150)
------------ -----------
Cash flows from investing activities:
Capital expenditures (5,705) (5,071)
Purchases of marketable securities (4,000) -
------------ -----------
Net cash used in investing activities (9,705) (5,071)
------------ -----------
Cash flows from financing activities:
Exercise of stock options 2,407 -
Issuance of common shares 41,470 -
------------ -----------
Net cash provided by financing activities 43,877 -
------------ -----------
Effect of exchange rate changes on cash and cash equivalents 84 (270)
------------ -----------
Increase (decrease) in cash and cash equivalents 46,396 (6,491)
Cash and cash equivalents at beginning of period 28,251 16,286
------------ -----------
Cash and cash equivalents at end of period $ 74,647 $ 9,795
============ ===========
See accompanying notes
6
URBAN OUTFITTERS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. The results of operations for the three months
ended April 30, 2002 are not necessarily indicative of the results to be
expected for the full year. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Company's Annual
Report on Form 10-K for the fiscal year ended January 31, 2002, filed with the
Securities and Exchange Commission on March 22, 2002.
2. Public Offering
In April 2002, the Company completed a public offering of 1.6 million
shares of its common stock at a price of $28.00 per share. The Company received
net proceeds of approximately $41.5 million from the offering. In conjunction
with the offering, certain selling shareholders exercised options which resulted
in additional cash proceeds of approximately $1.5 million.
3. Recent Accounting Pronouncements
In August 2001, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets" ("SFAS No. 144"), which establishes
a single accounting model, based on the framework established in SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of," and resolves significant implementation issues related to SFAS
No. 121. SFAS No. 144 superceded SFAS No. 121 and Accounting Principles Board
Opinion No. 30, "Reporting the Results of Operations - Reporting the Effects of
a Disposal of a Segment of a Business, and Extraordinary, Unusual and
Infrequently Occurring Events and Transactions." The adoption of SFAS No. 144 on
February 1, 2002 did not have an impact on the Company's financial position or
results of operations.
4. Marketable Securities
All marketable securities are classified as available-for-sale for all
periods presented:
April 30, 2002 January 31, 2002 April 30, 2001
-------------- ---------------- --------------
(in thousands)
Current
Available-for-sale ..................... $4,032 $ 32 $ 332
------ ----- -----
Total marketable securities ............... $4,032 $ 32 $ 332
====== ===== =====
Marketable securities are carried at fair value.
7
URBAN OUTFITTERS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
5. Line of Credit
On September 12, 2001, the Company entered into a new $25 million line
of credit facility (the "Line") with one of its banks. The Line, which replaced
the Company's $16.2 million discretionary line of credit with the bank, is a
one-year committed line of credit to fund working capital requirements and
letters of credit. The Line contains sublimits for letters of credit and
European subsidiary borrowings. Cash advances bear interest at LIBOR plus 1.25%
to 1.75% based upon the Company's achievement of prescribed adjusted debt
ratios. The agreement subjects the Company to various restrictive covenants,
including maintenance of certain financial ratios such as a fixed charge
coverage ratio, adjusted debt ratio and minimum tangible net worth and limits
the Company's capital expenditures and share repurchases and prohibits the
payment of cash dividends on common stock. At April 30, 2002, the Company was in
compliance with all covenants under this facility. As of and during the three
months ended April 30, 2002, there were no borrowings. Outstanding letters of
credit and standby letters of credit were $14.7 million, $9.4 million and $11.4
million at April 30, 2002, January 31, 2002 and April 30, 2001, respectively.
6. Commitments and Contingencies
The Company is party to various legal proceedings arising from normal
business activities. Management believes that the ultimate resolution of these
matters will not have a material adverse effect on the Company's financial
position or results of operations.
7. Net Income Per Share
The difference between the number of weighted average common shares
outstanding used for basic net income per share and the number used for dilutive
net income per share represents the share effect of dilutive stock options.
Options to purchase 113,300 and 1,123,500 shares were outstanding at
April 30, 2002 and 2001, respectively, but were not included in the computation
of EPS because their effect would be antidilutive.
8. Segment Reporting
Urban Outfitters is a national retailer of lifestyle-oriented general
merchandise through 82 stores operating under the retail names "Urban
Outfitters" and "Anthropologie," and through a catalog and two web sites. Sales
from this retail segment account for over 90% of total consolidated sales for
the fiscal year ended January 31, 2002. The remainder is derived from a
wholesale division that manufactures and distributes apparel to the retail
segment and to approximately 1,100 better specialty retailers worldwide.
The Company has aggregated its operations into these two reportable
segments based upon their unique management, customer base and economic
characteristics. Reporting in this format provides management with the financial
information necessary to evaluate the success of the segments and the overall
business. The Company evaluates the performance of the segments based on the net
sales and pre-tax income from operations (excluding intercompany royalty and
interest charges) of the segment. Corporate expenses include expenses incurred
in and directed by the corporate office that are not allocated to segments. The
principal identifiable assets for each operating segment are inventory and fixed
assets. Other assets are comprised primarily of general corporate assets, which
principally consist of cash and cash equivalents, marketable securities,
accounts receivable and other assets. The Company accounts for intersegment
sales and transfers as if the sales and transfers were made to third parties
making similar volume purchases.
8
URBAN OUTFITTERS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
Both the retail and wholesale segment are highly diversified. No
customer comprises more than 10% of sales. Foreign operations are not material
relative to the overall Company.
Three months ended
April 30,
--------------------
2002 2001
---- ----
Net sales
Retail operations ......................... $ 89,485 $ 67,428
Wholesale operations ...................... 5,562 5,229
Intersegment elimination .................. (973) (823)
-------- --------
Total net sales ........................... $ 94,074 $ 71,834
======== ========
Income from operations
Retail operations ......................... $ 8,680 $ 2,862
Wholesale operations ...................... 387 (23)
Intersegment elimination .................. (158) (164)
-------- --------
Total segment operating income ............ 8,909 2,675
General corporate expenses ................ (741) (627)
-------- --------
Total income from operations .............. $ 8,168 $ 2,048
======== ========
April 30, 2002 January 31, 2002 April 30, 2001
-------------- ---------------- --------------
Property and equipment, net
Retail operations ....................... $ 105,215 $ 104,655 $ 98,347
Wholesale operations .................... 802 849 977
Corporate ............................... 1 1 1
--------- --------- ---------
Total property and equipment, net ....... $ 106,018 $ 105,505 $ 99,325
========= ========= =========
Inventories
Retail operations ....................... $ 40,947 $ 39,014 $ 39,692
Wholesale operations .................... 1,196 2,072 2,211
--------- --------- ---------
Total inventories ....................... $ 42,143 $ 41,086 $ 41,903
========= ========= =========
9
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
GENERAL
This Securities and Exchange Commission filing is being made pursuant
to the "safe harbor" provisions of the Private Securities Litigation Reform Act
of 1995. Certain matters contained in this filing may constitute forward-looking
statements. When used in this Form 10-Q, the words "project," "believe,"
"anticipate," "expect" and similar expressions are intended to identify
forward-looking statements, although not all forward-looking statements contain
these identifying words. Any one, or all, of the following factors could cause
actual financial results to differ materially from those financial results
mentioned in the forward-looking statements: the difficulty in predicting and
responding to shifts in fashion trends, changes in the level of competitive
pricing and promotional activity and other industry factors, overall economic
and market conditions and the resultant impact on consumer spending patterns,
including any effects of terrorist acts or war, availability of suitable retail
space for expansion, timing of store openings, seasonal fluctuations in gross
sales, the departure of one or more key senior managers, import risks, including
potential disruptions and changes in duties, tariffs and quotas and other risks
identified in filings with the Securities and Exchange Commission. The Company
disclaims any intent or obligation to update forward-looking statements even if
experience or future changes make it clear that actual results may differ
materially from any projected results expressed or implied therein.
Thus far this fiscal year, the Company has opened two new Anthropologie
stores. Management plans to open approximately ten to twelve additional stores
during the remainder of the fiscal year.
RESULTS OF OPERATIONS
The Company's fiscal year ends on January 31. All references in this
discussion to fiscal years of the Company refer to the fiscal years ended on
January 31 in those years. For example, the Company's Fiscal 2003 will end on
January 31, 2003. This discussion of results of operations addresses the first
quarter of FY 2003.
The following table sets forth, for the periods indicated, the
percentage of the Company's net sales represented by certain income statement
data. The following discussion should be read in conjunction with the table that
follows:
Three months ended
April 30,
----------------------
2002 2001
---- ----
Net sales 100.0% 100.0%
Cost of sales, including certain buying,
distribution and occupancy costs 65.8 70.0
------ ------
Gross profit 34.2 30.0
Selling, general and administrative expenses 25.5 27.2
------ ------
Income from operations 8.7 2.8
Other income (expense), net (0.2) (0.1)
------ ------
Income before income taxes 8.5 2.7
Income tax expense 3.4 1.1
------ ------
Net income 5.1% 1.6%
====== ======
10
THREE MONTHS ENDED APRIL 30, 2002 COMPARED TO
THREE MONTHS ENDED APRIL 30, 2001
Net sales increased by 31.0% during the first quarter ended April 30,
2002 to $94.1 million from $71.8 million for the same quarter last year. The
$22.3 million increase over the prior year's first quarter was the result of an
18.2% comparable store sales increase of $10.9 million along with noncomparable
and new store sales increases of $10.4 million. In addition, direct-to-consumer
and Free People wholesale contributed $0.8 million and $0.2 million of sales
increases, respectively, in the quarter. Comparable store sales increases were
comprised of a 12.1% increase for Urban Retail and a 27.3% increase for
Anthropologie. Increases in the number of transactions in comparable stores and
an increase in average sales prices resulting from a lower proportion of
markdowns accounted for the comparable store sales dollar increase. The increase
in net sales attributable to noncomparable and new stores was caused by the
opening of two new stores during the first quarter of Fiscal 2003 and eleven new
stores in Fiscal 2002 which were noncomparable for the first quarter of Fiscal
2003. In addition, direct-to-consumer sales increased as a result of increased
customer response and overall demand, both in dollars per catalog and unique
site visits.
The Company's gross profit margin, expressed as a percentage of sales,
increased to 34.2% from 30.0% for the comparable period last year. This increase
was primarily caused by improvements to the initial cost of goods and decreased
markdown requirements which together increased gross profit, expressed as a
percentage of sales, by 2.5%. Additionally, leveraging of the Company's
occupancy expenses caused by the significant comparable store sales increase
accounted for another 1.1% of the increase, expressed as a percentage of sales.
Selling, general and administrative expenses, expressed as a percentage
of sales, decreased to 25.5% from 27.2% for the quarter ended April 30, 2002
versus the same quarter last year. This improvement was primarily attributable
to the leveraging of expenses as a result of the increase in comparable store
sales.
Net income for the quarter ended April 30, 2002 was $4.8 million or
$0.26 per diluted share versus $1.2 million or $0.07 per diluted share for the
comparable quarter last year.
LIQUIDITY AND CAPITAL RESOURCES
Cash, cash equivalents and marketable securities were $78.7 million at
April 30, 2002, as compared to $28.2 million at January 31, 2002 and $10.1
million at April 30, 2001. Increases in cash, cash equivalents and marketable
securities were primarily a result of the Company's successful public offering
of 1.6 million common shares of stock during the first quarter of Fiscal 2003.
The Company's net working capital was $91.1 million at April 30, 2002, as
compared to $41.3 million at January 31, 2002 and $31.3 million at April 30,
2001.
Total inventories at April 30, 2002 increased by 1.0% versus the
comparable period end last year, principally attributable to the increase in the
number of new retail stores. Comparable store inventories at April 30, 2002 were
5.5% below last year's levels as a result of strong "sell-throughs". Management
believes that current inventory levels, although lean, are sufficient to sustain
anticipated sales trends.
The Company expects that capital expenditures for the current year will
not exceed $25 million. The primary use of cash will be to open new stores and
purchase inventories. The Company believes that existing cash and investments at
April 30, 2002, together with future cash from operations and available credit
under the Company's line of credit facility, assuming renewal or replacement,
will be sufficient to meet the Company's cash needs for the next three years.
Accrued expenses, accrued compensation and other current liabilities
increased to $18.5 million as of April 30, 2002 from $14.3 million at April 30,
2001. The increase in the components of accrued expenses and other current
liabilities is primarily attributable to additional stores and incentive
compensation accruals associated with improved profitability.
Additional paid-in-capital increased to $62.6 million as of April 30,
2002 from $16.3 million at April 30, 2001.
11
This increase was primarily the result of the Company's completed public
offering during the first quarter of Fiscal 2003 of 1.6 million of its common
shares which generated approximately $41.5 million, net of selling expenses.
Additionally, certain option exercises since April 30, 2001 generated another
$4.9 million, including the estimated tax benefit related to the exercises.
These monies will be used, in part, to fund additional new store openings.
On September 12, 2001, the Company entered into a new $25 million line
of credit facility (the "Line") with one of its banks. The Line, which replaced
the Company's $16.2 million discretionary line of credit with the bank, is a
one-year committed line of credit to fund working capital requirements and
letters of credit. The Line contains sublimits for letters of credit and
European subsidiary borrowings. Cash advances bear interest at LIBOR plus 1.25%
to 1.75% based upon the Company's achievement of prescribed adjusted debt
ratios. The agreement subjects the Company to various restrictive covenants,
including maintenance of certain financial ratios such as a fixed charge
coverage ratio, adjusted debt ratio and minimum tangible net worth and limits
the Company's capital expenditures and share repurchases and prohibits the
payment of cash dividends on common stock. At April 30, 2002, the Company was in
compliance with all covenants under this facility. As of and during the three
months ended April 30, 2002, there were no borrowings. Outstanding letters of
credit and standby letters of credit were $14.7 million, $9.4 million and $11.4
million at April 30, 2002, January 31, 2002 and April 30, 2001, respectively
OTHER MATTERS
Recent Accounting Pronouncements
In August 2001, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets" ("SFAS No. 144"), which establishes
a single accounting model, based on the framework established in SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of," and resolves significant implementation issues related to SFAS
No. 121. SFAS No. 144 superceded SFAS No. 121 and Accounting Principles Board
Opinion No. 30, "Reporting the Results of Operations - Reporting the Effects of
a Disposal of a Segment of a Business, and Extraordinary, Unusual and
Infrequently Occurring Events and Transactions." The adoption of SFAS No. 144 on
February 1, 2002 did not have an impact on our financial position or results of
operations.
Seasonality and Quarterly Results
While the Company has been profitable in each of its last 49 operating
quarters, its operating results are subject to seasonal fluctuations. The
Company's highest sales levels have historically occurred during the five-month
period from August 1 to December 31 of each year (the back-to-school and holiday
periods). Sales generated during these periods have traditionally had a
significant impact on the Company's results of operations. Any decreases in
sales for these periods or in the availability of working capital needed in the
months preceding these periods could have a material adverse effect on the
Company's results of operations. While the Company's comparable store sales
trend since April 30, 2002 has continued to exceed its conservative plan,
results of operations in any one fiscal quarter are not necessarily indicative
of the results of operations that can be expected for any other fiscal quarter
or for the full fiscal year.
The Company's results of operations may also fluctuate from quarter to
quarter as a result of the amount and timing of expenses incurred in connection
with, and sales contributed by, new stores, store expansions and the integration
of new stores into the operations of the Company or by the size and timing of
mailings and web site traffic for the Company's direct response operations.
Fluctuations in the bookings and shipments of wholesale merchandise between
quarters can also have positive or negative effects on earnings during the
quarters.
12
Item 3. Quantitative and Qualitative Disclosure About Market Risk
The Company is exposed to the following types of market risks -
fluctuations in the purchase price of merchandise, as well as other goods and
services; the value of foreign currencies in relation to the U.S. dollar; and
changes in interest rates. Due to the Company's inventory turn and its
historical ability to pass through the impact of any generalized changes in its
cost of goods to its customers through pricing adjustments, commodity and other
product risks are not expected to be material. The Company purchases
substantially all its merchandise in U.S. dollars, including a portion of the
goods for its stores located in Canada and Europe. As explained in the section
above on "Recent Accounting Pronouncements," market risks are further limited by
the Company's purchase of short-term foreign currency forward exchange
contracts.
The Company's exposure to market risk for changes in interest rates
relates to its cash , cash equivalents and marketable securities. As of April
30, 2002, the Company's cash, cash equivalents and marketable securities
consisted primarily of funds invested in money market accounts, which bear
interest at a variable rate, and corporate demand notes. Due to the average
maturity and conservative nature of the Company's investment portfolio, we
believe a sudden change in interest rates would not have a material effect on
the value of our investment portfolio. As the interest rates on predominately
all of our cash equivalents are variable, a change in interest rates earned on
our investment portfolio would impact interest income and expense along with
cash flows, but would not impact the fair market value of the related underlying
instruments. The Company intends to transfer a portion of its short-term
investment portfolio at April 30, 2002 into longer term marketable securities.
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits: 3.1 The Company's Amended and Restated Articles of
Incorporation (incorporated by reference to Exhibit
3.1 to the Company's Registration Statement on Form
S-1 (File No. 33-69378) filed on September 24,
1993).
3.2 The Company's Amended and Restated Bylaws
(incorporated by reference to Exhibit 3.2 to the
Company's Registration Statement on Form S-1 (File
No. 33- 69378) filed on September 24, 1993).
(b) Reports on Form 8-K: None
13
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
URBAN OUTFITTERS, INC.
(Registrant)
By: /s/ Richard A. Hayne
-------------------------------
Richard A. Hayne
Chairman of the Board of
Directors
By: /s/ Stephen A. Feldman
------------------------------
Stephen A. Feldman
Chief Financial Officer
Dated:
14