þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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95-3732595
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(State or Other Jurisdiction
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(I.R.S. Employer
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of Incorporation or Organization)
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Identification No.)
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300 Atlantic Street, Suite 301, Stamford, CT
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06901
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(Address of Principal Executive Offices)
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(Zip Code)
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Large
accelerated
filer ¨
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Accelerated
filer ¨
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Non-accelerated filer ¨
(Do not check if a smaller reporting
company)
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Smaller reporting company þ
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FORWARD—LOOKING STATEMENTS | 3 | ||
PART I—FINANCIAL INFORMATION | 4 | ||
Item 1 — Financial Statements. | 4 | ||
Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations. | 12 | ||
Item 3 — Quantitative and Qualitative Disclosures About Market Risk. | 15 | ||
Item 4 — Controls and Procedures. | 15 | ||
PART II-OTHER INFORMATION | 16 | ||
Item 1A — Risk Factors. | 16 | ||
Item 6 — Exhibits. | 17 | ||
SIGNATURES | 18 | ||
EXHIBIT INDEX | 19 |
April 30,
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January 31,
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|||||||
2012
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2012
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|||||||
ASSETS
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||||||||
Current assets:
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||||||||
Cash and cash equivalents
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$ | 11,523 | $ | 10,433 | ||||
Marketable securities
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4,435 | 6,588 | ||||||
Trade accounts receivable
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1,029 | 1,267 | ||||||
Income tax receivable
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- | 21 | ||||||
Prepaid expenses and other current assets
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27 | 56 | ||||||
Total current assets
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17,014 | 18,365 | ||||||
Property and equipment, net
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- | - | ||||||
Other assets
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4 | 4 | ||||||
Total assets
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$ | 17,018 | $ | 18,369 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
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||||||||
Current liabilities:
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||||||||
Accrued salaries and benefits
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$ | 53 | $ | 330 | ||||
Accrued product licensing costs
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176 | 218 | ||||||
Deferred tax liability
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72 | 688 | ||||||
Income tax payable
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311 | - | ||||||
Other current liabilities
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244 | 614 | ||||||
Total current liabilities
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856 | 1,850 | ||||||
Non-current liabilities
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||||||||
Tax liabilities
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1,655 | 1,643 | ||||||
Total liabilities
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2,511 | 3,493 | ||||||
Stockholders’ equity:
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||||||||
Common stock, $.001 par value
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18 | 18 | ||||||
Additional paid-in capital
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57,250 | 57,177 | ||||||
Retained earnings
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5,302 | 4,856 | ||||||
Accumulated other comprehensive income
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434 | 1,322 | ||||||
Treasury stock, 15,951 at April 30, 2012 and January 31, 2012
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(48,497 | ) | (48,497 | ) | ||||
Total stockholders’ equity
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14,507 | 14,876 | ||||||
Total liabilities and stockholders’ equity
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$ | 17,018 | $ | 18,369 |
Three Months Ended April 30,
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||||||||
2012
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2011
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|||||||
Revenues:
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||||||||
Product licensing
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$ | 614 | $ | 1,759 | ||||
Cost of revenues:
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||||||||
Product licensing
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52 | 590 | ||||||
Gross margin
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562 | 1,169 | ||||||
Operating Expenses
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||||||||
Sales and marketing
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31 | 34 | ||||||
General and administrative
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405 | 637 | ||||||
436 | 671 | |||||||
Income from operations
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126 | 498 | ||||||
Other income, net
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609 | 113 | ||||||
Income before income taxes
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735 | 611 | ||||||
Provision for income taxes
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289 | 259 | ||||||
Net income
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$ | 446 | $ | 352 | ||||
Basic earnings per share
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$ | 0.13 | $ | 0.11 | ||||
Diluted earnings per share
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$ | 0.13 | $ | 0.11 | ||||
Weighted average common shares - outstanding — basic
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3,305 | 3,107 | ||||||
Weighted average common shares - outstanding — diluted
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3,531 | 3,315 |
Three Months Ended April 30,
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||||||||
2012
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2011
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|||||||
Net income
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$ | 446 | $ | 352 | ||||
Changes in unrealized gains in available for sale securities, net of taxes
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(391 | ) | (1 | ) | ||||
Reclassification adjustment for gains included in net income
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(497 | ) | - | |||||
Total comprehensive income, net of taxes
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$ | (442 | ) | $ | 351 |
Three Months Ended April 30,
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||||||||
2012
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2011
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|||||||
Cash flows from operating activities:
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||||||||
Net income
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$ | 446 | $ | 352 | ||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
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||||||||
Depreciation and amortization
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- | 21 | ||||||
Share-based compensation
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73 | 158 | ||||||
Realized gain on securities
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(614 | ) | (53 | ) | ||||
Income tax receivable
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21 | 203 | ||||||
Tax liabilities
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558 | 11 | ||||||
Deferred tax asset and liability
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(616 | ) | - | |||||
Effects of liquidation of subsidiary
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- | (42 | ) | |||||
Changes in operating assets and liabilities:
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||||||||
Trade accounts receivables
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238 | 35 | ||||||
Prepaid expenses and other assets
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29 | 30 | ||||||
Accrued product licensing costs
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(42 | ) | 45 | |||||
Income taxes payable
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311 | 10 | ||||||
Other liabilities (includes salaries and benefits)
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(647 | ) | (106 | ) | ||||
Net cash provided by (used in) operating activities
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(243 | ) | 664 | |||||
Cash flows from investing activities:
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||||||||
Purchases of marketable securities
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(27,196 | ) | (152 | ) | ||||
Proceeds from sale of securities
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28,529 | - | ||||||
Net cash provided (used in) by investing activities
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1,333 | (152 | ) | |||||
Cash flows from financing activities:
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||||||||
Purchase of employee stock option
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- | (22 | ) | |||||
Proceeds from exercise of common stock options
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- | 77 | ||||||
Net cash provided by financing activities
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- | 55 | ||||||
Net increase in cash and cash equivalents
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1,090 | 567 | ||||||
Cash and cash equivalents, beginning of period
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10,433 | 12,384 | ||||||
Cash and cash equivalents, end of period
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$ | 11,523 | $ | 12,951 |
April 30, 2012 | ||||||||||||||||||||
Cost
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Unrealized
Gains
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Unrealized Losses
Less Than
12 Months
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Unrealized Losses 12 Months or
Longer
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Estimated Fair
Value
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||||||||||||||||
Cash and cash equivalents
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$ | 11,523 | $ | — | $ | — | $ | — | $ | 11,523 | ||||||||||
Exchange traded marketable securities
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3,735 | 704 | (4 | ) | — | 4,435 | ||||||||||||||
Total
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$ | 15,258 | $ | 704 | $ | (4 | ) | $ | — | $ | 15,958 |
January 31, 2012 | ||||||||||||||||||||
Cost
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Unrealized
Gains
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Unrealized Losses
Less Than
12 Months
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Unrealized Losses 12 Months or
Longer
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Estimated Fair
Value
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||||||||||||||||
Cash and cash equivalents
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$ | 10,433 | $ | — | $ | — | $ | — | $ | 10,433 | ||||||||||
Exchange traded marketable securities
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5,266 | 1,322 | — | — | 6,588 | |||||||||||||||
Total
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$ | 15,699 | $ | 1,322 | $ | — | $ | — | $ | 17,021 |
2012 | 2011 | |||||||||||||||||||||||
Net
Income
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Shares
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Per
Share
Amount
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Net
Income
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Shares
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Per
Share
Amount
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|||||||||||||||||||
(In thousands, except per share amounts) | ||||||||||||||||||||||||
Basic EPS
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||||||||||||||||||||||||
Earnings available to common stockholders
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$ | 446 | 3,305 | $ | 0.13 | $ | 352 | 3,107 | $ | 0.11 | ||||||||||||||
Effect of Dilutive Securities
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||||||||||||||||||||||||
Restricted Shares
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— | 192 | — | — | 29 | — | ||||||||||||||||||
Options
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— | 34 | — | — | 179 | — | ||||||||||||||||||
Diluted EPS
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||||||||||||||||||||||||
Earnings available to common stockholders with assumed conversions
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$ | 446 | 3,531 | $ | 0.13 | $ | 352 | 3,315 | $ | 0.11 |
Weighted Average
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||||||||||||||||
Weighted |
Remaining
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|||||||||||||||
Average Exercise | Contractual | Aggregate | ||||||||||||||
Options | Price | Term (Years) | Intrinsic Value | |||||||||||||
(In thousands, except per share amounts) | ||||||||||||||||
Balance outstanding January 31, 2012
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574 | $ | 2.39 | |||||||||||||
Granted
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50 | $ | 3.99 | |||||||||||||
Exercised
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- | $ | - | |||||||||||||
Canceled or expired
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- | $ | - | |||||||||||||
Balance outstanding April 30, 2012
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624 | $ | 2.52 | 6.45 | $ | 884 | ||||||||||
Stock options exercisable, April 30, 2012
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420 | $ | 2.18 | 5.35 | $ | 737 |
Number of
Shares
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Weighted
Average
Grant
Date Fair
Value
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|||||||
Non-vested stock awards as of January 31, 2012
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245,752
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2.47
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||||||
Granted
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5,000
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3.99
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||||||
Vested
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(2,500
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)
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3.05
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|||||
Forfeited
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-
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-
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||||||
Non-vested stock awards as of April 30, 2012
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248,252
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2.50
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Daily expected
stock price
volatility
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Daily expected
mean return on
equity
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Daily
expected
dividend yield
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Average daily
risk-free
interest rate
|
|||
2.759% | 0.040% | 0.000% | 0.003% |
•
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Sales and marketing expenses decreased 8.8% to approximately $31,000 for the three months ended April 30, 2012 from approximately $34,000 for the three months ended April 30, 2011.
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•
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General and administrative expenses decreased 36.4% to $405,000 for the three months ended April 30, 2012 from $637,000 for the three months ended April 30, 2011. The decrease was due to lower stock-based compensation costs and the Company’s continued reduction of costs in general.
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(a) Evaluation of disclosure controls and procedures |
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, comprised of our Chief Executive Officer and Acting Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. |
For the period ended April 30, 2012 (the “Evaluation Date”), we carried out an evaluation, under the supervision and with the participation of our management, including the Chief Executive Officer and Acting Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rules 13a-15 and 15d-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based upon that evaluation, the Chief Executive Officer and Acting Chief Financial Officer concluded that, as of April 30, 2012, our disclosure controls and procedures were effective.
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(b) Changes in internal control over financial reporting
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In the three months ended April 30, 2012, there has been no change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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There have been no material changes to the risk factors disclosed under Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended January 31, 2012 (the “Form 10-K”). Please refer to that section of the Form 10-K for disclosures regarding the risks and uncertainties related to our business.
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(i)
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whether PVOF is able to complete an IPO,
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(ii)
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market conditions (including, without limitation, interest rates, the general condition of equity markets in the United States), and
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(iii)
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the ability of Peerless to attract and maintain employees with industry experience.
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Exhibit 3.1 (1) | Certificate of Incorporation of the Company. |
Exhibit 3.2 (2) | Amended Bylaws. |
Exhibit 10.1 | Peerless Systems Corporation's 2005 Incentives Award Plan Form of Stock Option Agreement. |
Exhibit 31.1
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Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act and Section302 of the Sarbanes-Oxley Act of 2002
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Exhibit 31.2
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Certification of Acting Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act and Section302 of the Sarbanes-Oxley Act of 2002
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Exhibit 32.1
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Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
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Exhibit 32.2
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Certification of Acting Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
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101.INS**
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XBRL Instance
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101.SCH**
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XBRL Taxonomy Extension Schema
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101.CAL**
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XBRL Taxonomy Extension Calculation
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101.DEF**
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XBRL Taxonomy Extension Definition
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101.LAB**
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XBRL Taxonomy Extension Labels
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101.PRE**
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XBRL Taxonomy Extension Presentation
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(1)
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Previously filed in the Company's Registration Statement on Form S-1 (File No. 333-09357), filed August 27, 1996, as amended and incorporated herein by reference.
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(2)
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Previously filed in the Company's Form 8-K, filed July 23, 2007, and incorporated herein by reference.
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Peerless Systems Corporation
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|||
By:
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/s/ Timothy E. Brog
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Chairman and Chief Executive Officer
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|||
/s/ Robert Kalkstein
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|||
Acting Chief Financial Officer
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Exhibit
Number
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Description of Exhibit
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Exhibit 3.1 (1) | Certificate of Incorporation of the Company. | |
Exhibit 3.2 (2) | Amended Bylaws. | |
Exhibit 10.1* | Peerless Systems Corporation's 2005 Incentives Award Plan Form of Stock Option Agreement. | |
Exhibit 31.1*
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Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act and Section302 of the Sarbanes-Oxley Act of 2002
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Exhibit 31.2*
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Certification of Acting Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act and Section302 of the Sarbanes-Oxley Act of 2002
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Exhibit 32.1*
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Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
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Exhibit 32.2*
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Certification of Acting Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
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|
101.INS**
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XBRL Instance
|
|
101.SCH**
|
XBRL Taxonomy Extension Schema
|
|
101.CAL**
|
XBRL Taxonomy Extension Calculation
|
|
101.DEF**
|
XBRL Taxonomy Extension Definition
|
|
101.LAB**
|
XBRL Taxonomy Extension Labels
|
|
101.PRE**
|
XBRL Taxonomy Extension Presentation
|
(1)
|
Previously filed in the Company's Registration Statement on Form S-1 (File No. 333-09357), filed August 27, 1996, as amended and incorporated herein by reference.
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(2)
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Previously filed in the Company's Form 8-K, filed July 23, 2007, and incorporated herein by reference.
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Participant:
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||||
Grant Date:
|
||||
Exercise Price per Share:
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$
|
|||
Total Exercise Price:
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$
|
|||
Total Number of Shares
Subject to the Option:
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shares
|
|||
Expiration Date:
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Type of Option:
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¨
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Incentive Stock Option
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¨
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Non-Qualified Stock Option
|
||||
Vesting Schedule:
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This Option shall vest and become exercisable for the shares of Stock as follows: (i) ______% shall vest on the date that is _____ month(s) from the Grant Date and (ii) an additional ______% shall vest on each __________________________________________ thereafter. so that all of the Option Shares shall be vested on the _____________ anniversary of the Grant Date. In no event, however, shall this Option vest and become exercisable for any additional shares of Stock after Participant’s Termination of Employment, Termination of Directorship or Termination of Consultancy, as applicable.
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PEERLESS SYSTEMS CORPORATION
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PARTICIPANT
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|||||||||
By:
|
By:
|
|||||||||
Print Name:
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Print Name:
|
|||||||||
Title:
|
||||||||||
Address:
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300 Atlantic St., Suite 301
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Address:
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||||||||
Stamford, CT 06901
|
||||||||||
Grant Date:
|
||||
Number of Shares as to which Option is Exercised:
|
||||
Exercise Price per Share:
|
$
|
|||
Total Exercise Price:
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$
|
|||
Certificate to be issued in name of:
|
||||
Payment delivered herewith:
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$______________ (Representing the full exercise price
|
|||
for the Shares, as well as any applicable withholding tax)
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Form of Payment:
|
||||||
(Please specify)
|
Type of Option:
|
¨
|
Incentive Stock Option
|
¨
|
Non-Qualified Stock Option
|
ACCEPTED BY:
PEERLESS SYSTEMS CORPORATION |
SUBMITTED BY:
|
|||||||||
By:
|
By:
|
|||||||||
Print Name:
|
Print Name:
|
|||||||||
Title:
|
||||||||||
Address:
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||||||||||
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ Timothy E. Brog
|
||
Chairman and Chief Executive Officer
|
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ Robert Kalkstein
|
||
Acting Chief Financial Officer
|
The following certifications are being furnished solely to accompany the Report pursuant to 18 U.S.C. § 1350, and are not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and are not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
|
Pursuant to 18 U.S.C. § 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officers of Peerless Systems Corporation, a Delaware corporation (the “Company”), hereby certify, to each such officer’s knowledge, that:
|
(i)
|
the accompanying Quarterly Report on Form 10-Q of the Company for the quarter ended April 30, 2012 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and
|
(ii)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of, and for, the periods presented in such Report.
|
Dated: June 14, 2012
|
/s/ Timothy E. Brog
|
Chairman and Chief Executive Officer
|
A signed original of this written statement required by Section 906 has been provided to Peerless Systems Corporation and will be retained by Peerless Systems Corporation and furnished to the Securities and Exchange Commission or its staff upon request. |
The following certifications are being furnished solely to accompany the Report pursuant to 18 U.S.C. § 1350, and are not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and are not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
|
Pursuant to 18 U.S.C. § 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officers of Peerless Systems Corporation, a Delaware corporation (the “Company”), hereby certify, to each such officer’s knowledge, that:
|
(i)
|
the accompanying Quarterly Report on Form 10-Q of the Company for the quarter ended April 30, 2012 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and
|
(ii)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of, and for, the periods presented in such Report.
|
Dated: June 14, 2012
|
/s/ Robert Kalkstein
|
Acting Chief Financial Officer
|
A signed original of this written statement required by Section 906 has been provided to Peerless Systems Corporation and will be retained by Peerless Systems Corporation and furnished to the Securities and Exchange Commission or its staff upon request. |
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Note 3 - Cash, Cash Equivalents, and Marketable Securities
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Apr. 30, 2012
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Cash and Cash Equivalents Disclosure [Text Block] |
3. Cash,
Cash Equivalents, and Marketable Securities
As
of April 30, 2012 and January 31, 2012, cash, cash
equivalents, and marketable securities included the
following (in thousands):
Cash
equivalents are comprised of money market funds traded in
an active market with no restrictions. On a
recurring basis, the Company measures its investments, cash
equivalents, and marketable securities at fair
value. Cash, cash equivalents, and marketable
securities are classified within Level I of the fair value
hierarchy because they are valued using observable inputs,
such as quoted prices in active markets.
During
the three months ended April 30, 2012, the Company recorded
approximately $0.6 million of realized gains on
investments. Financial instruments purchased with
intention to sell over a short period were classified as
trading securities. Realized gains and losses on
trading securities were calculated using average cost
method. The Company's investments consist of
available-for-sale securities as of April 30,
2012.
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