UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
(Amendment No. 1)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended JULY 31, 2004
[ ] 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: 001-12951
THE BUCKLE, INC.
(Exact name of Registrant as specified in its charter)
NEBRASKA 47-0366193
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2407 WEST 24TH STREET, KEARNEY, NEBRASKA 68845-4915
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (308) 236-8491
-----------------------------------------------------------
(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 [ ] No [ ]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes [X] No [ ]
The number of shares issued of the Registrant's Common Stock, outstanding as of
September 2, 2004 was 21,509,333 shares of Common Stock.
EXPLANATORY NOTE
This Amendment No. 1 to The Buckle, Inc.'s (the "Company") Quarterly Report on
Form 10-Q/A ("Form 10-Q/A") is being filed in order to correct the previously
issued financial statements for the quarterly period ended July 31, 2004,
initially filed with the Securities and Exchange Commission (the "SEC") on
September 8, 2004 (the "Original Filing"). The corrections are to properly
account for landlord construction allowances in accordance with Statement of
Financial Accounting Standards No.13, "Accounting for Leases" and Financial
Accounting Standards Board Technical Bulletin No. 88-1, "Issues Relating to
Accounting for Leases"; and rent holidays in accordance with Financial
Accounting Standards Board Technical Bulletin No. 85-3, "Accounting for
Operating Leases with Scheduled Rent Increases." See Note 2: "Restatement and
Reclassification of Financial Statements" under Notes to Financial Statements
included in Item 1, "Financial Statements" of this Form 10-Q/A for additional
discussion and a summary of the effect of these changes on the Company's
financial statements as of July 31, 2004 and January 31, 2004 and for the
interim periods ended July 31, 2004 and August 2, 2003.
This Form 10-Q/A amends and restates only Items 1, 2 and 4 of Part I and Item 6
of Part II of the Original Filing to reflect the effects of this restatement of
our financial statements for the period presented or as deemed necessary in
connection with the completion of restated financial statements. The remaining
Items contained within this Amendment No. 1 on Form 10-Q/A consist of all other
Items originally contained on Form 10-Q for the fiscal quarter ended July 31,
2004. These remaining Items are not amended hereby, but are included for the
convenience of the reader. Except for the forgoing amended information, this
Form 10-Q/A continues to describe conditions as of the date of the Original
Filing, and we have not updated the disclosures contained herein to reflect
events that occurred at a later date.
In connection with the preparation of this Form 10-Q/A, the Company concluded
that it was appropriate to reclassify certain store operating liabilities
to/from gift certificates redeemable and employee compensation. Accordingly, we
have revised the classification to report these changes on the balance sheets as
of July 31, 2004 and January 31, 2004. The Company has also made corresponding
adjustments to the statements of cash flows for the periods ended July 31, 2004
and August 2, 2003, to reflect these reclassifications. See Note 2: "Restatement
and Reclassification of Financial Statements" under Notes to Financial
Statements included in Item 1, "Financial Statements " of this Form 10-Q/A for
additional discussion on the effects of the change in classification.
2
THE BUCKLE, INC.
FORM 10-Q/A
INDEX
Pages
-----
Part I. Financial Information (unaudited)
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 20
Item 4. Controls and Procedures 20
Part II. Other Information
Item 1. Legal Proceedings 21
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 21
Item 3. Defaults Upon Senior Securities 21
Item 4. Submission of Matters to a Vote of Security Holders 21
Item 5. Other Information 22
Item 6. Exhibits 22
Signatures 23
3
THE BUCKLE, INC.
BALANCE SHEETS
(Columnar amounts in thousands)
(Unaudited)
July 31, January 31,
2004 2004
(As Restated, (As Restated,
see Note 2) see Note 2)
------------- -------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 110,165 $ 119,976
Investments 23,245 23,346
Accounts receivable, net of
allowance of $95,000 and $181,000, respectively 1,467 3,585
Inventory 100,997 61,156
Prepaid expenses and other assets 4,863 9,083
----------- ----------
Total current assets 240,737 217,146
PROPERTY AND EQUIPMENT 173,838 169,453
Less accumulated depreciation and amortization 88,891 85,550
----------- ----------
84,947 83,903
LONG-TERM INVESTMENTS 50,237 52,647
OTHER ASSETS 2,428 2,526
----------- ----------
$ 378,349 $ 356,222
=========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 31,921 $ 14,207
Accrued employee compensation 6,738 11,890
Accrued store operating expenses 4,838 3,833
Gift certificates redeemable 2,682 3,778
Income taxes payable 3,073 2,760
----------- ----------
Total current liabilities 49,252 36,468
DEFERRED COMPENSATION 1,594 1,467
DEFERRED RENT LIABILITY 24,639 24,442
----------- ----------
Total liabilities 75,485 62,377
COMMITMENTS
STOCKHOLDERS' EQUITY
Common stock, authorized 100,000,000 shares
of $.01 par value; issued 21,561,849 and
21,484,316 shares, respectively 216 215
Additional paid-in capital 25,000 24,245
Retained earnings 279,018 272,125
Unearned compensation - restricted stock (1,370) (2,740)
----------- ----------
Total stockholders' equity 302,864 293,845
----------- ----------
$ 378,349 $ 356,222
=========== ==========
See notes to financial statements.
4
THE BUCKLE, INC.
STATEMENTS OF INCOME
(Amounts in thousands, except per share data)
(Unaudited)
Thirteen Weeks Ended Twenty-six Weeks Ended
-------------------- ----------------------
July 31, August 2, July 31, August 2,
2004 2003 2004 2003
(As Restated, (As Restated, (As Restated, (As Restated,
See Note 2) See Note 2) See Note 2) See Note 2)
----------- ----------- ----------- -----------
SALES, net of returns and allowances $ 96,848 $ 85,683 $191,622 $167,396
COST OF SALES (including buying,
distribution and occupancy costs) 67,054 61,111 131,166 119,980
-------- -------- -------- --------
Gross profit 29,794 24,572 60,456 47,416
-------- -------- -------- --------
OPERATING EXPENSES:
Selling 18,399 16,428 36,733 32,959
General and administrative 3,853 3,423 7,750 6,176
-------- -------- -------- --------
22,252 19,851 44,483 39,135
-------- -------- -------- --------
Income from operations 7,542 4,721 15,973 8,281
OTHER INCOME, Net 825 932 1,743 2,072
-------- -------- -------- --------
Income before income taxes 8,367 5,653 17,716 10,353
PROVISION FOR INCOME TAXES 3,050 2,078 6,511 3,804
-------- -------- -------- --------
NET INCOME $ 5,317 $ 3,575 $ 11,205 $ 6,549
======== ======== ======== ========
Per share amounts:
Basic income per share $ 0.25 $ 0.17 $ 0.52 $ 0.31
Diluted income per share $ 0.24 $ 0.17 $ 0.50 $ 0.30
Basic weighted average shares 21,406 21,006 21,388 21,014
Diluted weighted average shares 22,225 21,521 22,200 21,545
See notes to financial statements.
5
THE BUCKLE, INC.
STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
Twenty-six Weeks Ended
----------------------
July 31, 2004 August 2, 2003
(As Restated, (As Restated,
see Note 2) see Note 2)
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 11,205 $ 6,549
Adjustments to reconcile net income to net cash
flows from operating activities
Depreciation 7,828 7,615
Loss on disposal of assets 296 609
Deferred taxes (38) (18)
Amortization of unearned compensation-restricted stock 1,370 206
Changes in operating assets and liabilities
Accounts receivable 2,118 (605)
Inventory (39,841) (26,772)
Prepaid expenses and other assets 4,219 (493)
Accounts payable 17,714 15,653
Accrued employee compensation (5,152) (5,362)
Accrued store operating expenses 1,005 162
Gift certificates redeemable (1,096) (952)
Income taxes payable 313 927
Long-term liabilities and deferred compensation 324 1,941
--------- ---------
Net cash flows (used in) from operating activities 265 (540)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of investments (8,206) (17,328)
Proceeds from sales and maturities of investments 10,717 10,464
Purchase of property and equipment (9,166) (11,642)
Change in other assets 137 (153)
--------- ---------
Net cash flows used in investing activities (6,518) (18,659)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the exercise of stock options 1,951 251
Purchases of common stock (1,195) (1,401)
Dividends paid to stockholders (4,314) -
--------- ---------
Net cash flows used in financing activities (3,558) (1,150)
--------- ---------
Net decrease in cash and cash equivalents (9,811) (20,349)
Cash and cash equivalents, Beginning of period 119,976 92,976
--------- ---------
Cash and cash equivalents, End of period $ 110,165 $ 72,627
========= =========
See notes to financial statements.
6
THE BUCKLE, INC.
NOTES TO FINANCIAL STATEMENTS
THIRTEEN AND TWENTY-SIX WEEKS ENDED JULY 31, 2004 AND AUGUST 2, 2003
(Unaudited)
1. Management Representation - The accompanying unaudited financial
statements have been prepared in accordance with accounting principles
generally accepted in the United States of America for interim financial
information. Accordingly, they do not include all of the information and
footnotes required by accounting principles generally accepted in the
United States of America for complete financial statements. In the opinion
of management, all adjustments necessary for a fair presentation of the
results of operations for the interim periods have been included.
Adjustments are of a normal recurring nature, except for adjustments
required to make lease-related corrections, per Note 2 below. Because of
the seasonal nature of the business, results for interim periods are not
necessarily indicative of a full year's operations. The accounting
policies followed by the Company and additional footnotes are reflected in
the financial statements for the fiscal year ended January 31, 2004,
included in The Buckle, Inc.'s 2003 Form 10-K/A.
2. Restatement of Financial Statements - On February 7, 2005, the Office of
the Chief Accountant of the Securities and Exchange Commission (SEC)
issued a letter to the American Institute of Certified Public Accountants
expressing its views regarding certain operating lease-related accounting
issues and their application under generally accepted accounting
principles in the United States of America (GAAP). In light of this
letter, the Company's management initiated a review of its lease
accounting and determined that its then current method of accounting for
leasehold improvements funded by landlord incentives or allowances under
operating leases (tenant improvement allowances) and its then current
method of accounting for rent holidays were not in accordance with GAAP.
As a result, the Company restated its financial statements for each of the
fiscal periods of 2004 and 2003 included in this report.
The Company had historically accounted for tenant improvement allowances
as reductions to the related leasehold improvement asset on the balance
sheets and capital expenditures in investing activities on the statements
of cash flows. Management determined that Financial Accounting Standards
Board (FASB) Technical Bulletin No. 88-1, Issues Relating to Accounting
for Leases, requires these allowances to be recorded as deferred rent
liabilities on the balance sheets and as a component of operating
activities on the statements of cash flows.
For leases initiated in fiscal 2000 and forward, the Company recognized
rent holiday periods on a straight-line basis over the lease term
commencing with the opening date of the retail stores. The store opening
date coincided with the commencement of business operations, which
corresponds to the intended use of the property. Management re-evaluated
FASB Technical Bulletin No. 85-3, Accounting for Operating Leases with
Scheduled Rent Increases, and determined that the lease term should
commence on the date the Company takes possession of the leased space for
construction purposes, which is generally three months prior to a store
opening date.
7
THE BUCKLE, INC.
NOTES TO FINANCIAL STATEMENTS
THIRTEEN AND TWENTY-SIX WEEKS ENDED JULY 31, 2004 AND AUGUST 2, 2003
(Unaudited)
Following is a summary of the effects of the restatement on the Company's
balance sheet as of July 31, 2004, and the Company's statements of income and
cash flows for each of the thirteen and twenty-six week periods ending July 31,
2004 and August 2, 2003.
Balance Sheets
--------------------------------------------------------
As
previously Reclass-
July 31, 2004 reported ifications Adjustments As Restated
------------- -------- ---------- ----------- -----------
Prepaid expenses and other assets $ 5,344 $ - $ (481) $ 4,863
Property and equipment, net 67,404 - 17,543 84,947
Other assets 1,170 - 1,258 2,428
Acccrued employee compensation 7,014 (276) - 6,738
Accrued store operating expenses 6,421 (528) (1,055) 4,838
Gift certificates redeemable 1,878 804 - 2,682
Deferred rent liability - - 24,639 24,639
Deferred tax liability 1,490 - (1,490) -
Retained earnings 282,792 - (3,774) 279,018
Certain reclassifications have been made to accrued employee compensation,
accrued store operating expenses and gift certificates redeemable to provide a
more accurate reporting of gift certificates redeemable from layaway returns and
the reserve account for health insurance claims, as shown above, to more
consistently report such liabilities on the balance sheets of the Company.
Statements of Income
-----------------------------------------------
As
previously
reported Adjustments As restated
---------- ----------- -----------
Thirteen weeks ended July 31, 2004
Cost of sales $ 67,003 $ 51 $ 67,054
Income from operations 7,593 (51) 7,542
Income before income taxes 8,418 (51) 8,367
Provision for income taxes 3,069 (19) 3,050
Net income 5,349 (32) 5,317
Earnings per share - basic $ 0.25 $ - $ 0.25
Earnings per share - diluted $ 0.24 $ - $ 0.24
Thirteen weeks ended August 2, 2003
Cost of sales $ 61,085 $ 26 $ 61,111
Income from operations 4,747 (26) 4,721
Income before income taxes 5,679 (26) 5,653
Provision for income taxes 2,087 (9) 2,078
Net income 3,592 (17) 3,575
Earnings per share - basic $ 0.17 $ - $ 0.17
Earnings per share - diluted $ 0.17 $ - $ 0.17
8
THE BUCKLE, INC.
NOTES TO FINANCIAL STATEMENTS
THIRTEEN AND TWENTY-SIX WEEKS ENDED JULY 31, 2004 AND AUGUST 2, 2003
(Unaudited)
Statements of Income
-----------------------------------------------
As
previously
reported Adjustments As restated
-------- ----------- -----------
Twenty-six weeks ended July 31, 2004
Cost of sales $ 131,065 $ 101 $ 131,166
Income from operations 16,074 (101) 15,973
Income before income taxes 17,817 (101) 17,716
Provision for income taxes 6,547 (36) 6,511
Net income 11,270 (65) 11,205
Earnings per share - basic $ 0.53 $ (0.01) $ 0.52
Earnings per share - diluted $ 0.51 $ (0.01) $ 0.50
Twenty-six weeks ended August 2, 2003
Cost of sales $ 119,929 $ 51 $ 119,980
Income from operations 8,332 (51) 8,281
Income before income taxes 10,404 (51) 10,353
Provision for income taxes 3,822 (18) 3,804
Net income 6,582 (33) 6,549
Earnings per share - basic $ 0.31 $ - $ 0.31
Earnings per share - diluted $ 0.31 $ (0.01) $ 0.30
Statements of Cash Flows
-----------------------------------------------
As
previously
reported Adjustments As restated
-------- ----------- -----------
Twenty-six weeks ended July 31, 2004
Net cash flows from operating activities $ (1,173) $ 1,438 $ 265
Net cash flows from investing activities (5,080) (1,438) (6,518)
Twenty-six weeks ended August 2, 2003
Net cash flows from operating activities $ (3,192) $ 2,652 $ (540)
Net cash flows from investing activities (16,007) (2,652) (18,659)
3. Stock-Based Compensation - The Company has three stock option plans which
allow for granting of stock options to employees and directors, as
described more fully in the notes included in the Company's 2003 Annual
Report. A total of 3,225,000 shares of common stock are authorized for
grants under such plans as of July 31, 2004; of these authorized shares,
178,719 shares were available for grant under the various plans, of which
66,050 were available to executive officers. The Company accounts for
those plans under the recognition and measurement principles of APB
Opinion No. 25, Accounting for Stock Issued to Employees, and related
interpretations. The stock-based compensation expense reflected in net
income is the result of the issuance of 169,840 shares of restricted stock
on June 26, 2003. There is no recorded expense from the issuance of stock
options, as all options granted under the various plans had an exercise
price equal to the market value of the common stock on the date of grant.
The following table illustrates the effect of the restricted stock expense
on net income and the impact on net income and earnings per share if the
Company had applied the fair value recognition provisions of FASB
Statement No. 123, Accounting for Stock-Based Compensation, to stock-based
employee compensation.
9
THE BUCKLE, INC.
NOTES TO FINANCIAL STATEMENTS
THIRTEEN AND TWENTY-SIX WEEKS ENDED JULY 31, 2004 AND AUGUST 2, 2003
(Unaudited)
Thirteen Weeks Ended Twenty-six Weeks Ended
July 31, 2004 Aug. 2, 2003 July 31, 2004 Aug. 2, 2003
--------------------------- ---------------------------
Net income (as re-stated, see Note 2) $ 5,317 $ 3,575 $ 11,205 $ 6,549
Add: Stock-based employee compensation expense
included in reported net
income, net of related tax effects 171 132 856 132
Deduct: Total stock-based employee
compensation expense determined
under fair value based method
for all awards, net of related tax effects (872) (431) (2,258) (1,483)
------------ ----------- -------- ---------
Pro forma net income $ 4,616 $ 3,276 $ 9,803 $ 5,198
============ =========== ======== =========
Earnings per share:
Basic - as reported $ .25 $ .17 $ .52 $ .31
============ =========== ======== =========
Basic - pro forma $ .22 $ .16 $ .46 $ .25
============ =========== ======== =========
Diluted - as reported $ .24 $ .17 $ .50 $ .30
============ =========== ======== =========
Diluted - pro forma $ .21 $ .15 $ .44 $ .24
============ =========== ======== =========
4. Description of the Business - The Company is a retailer of medium to
better priced casual apparel, footwear and accessories for fashion
conscious young men and women. The Company operates their business as one
reportable industry segment. The Company had 324 stores located in 38
states throughout the central, northwestern and southern regions of the
United States as of July 31, 2004, and 313 stores in 37 states as of
August 2, 2003. During the second quarter of fiscal 2004, the Company
opened three new stores and substantially renovated two stores. During the
second quarter of fiscal 2003, the Company opened three new stores and
substantially renovated seven stores.
The following is information regarding the Company's major product lines,
stated as a percentage of the Company's net sales:
Percentage of Net Sales Percentage of Net Sales
Thirteen Weeks Ended Twenty-six Weeks Ended
-------------------- ----------------------
July 31, 2004 Aug. 2, 2003 July 31, 2004 Aug. 2, 2003
------------- ------------ ------------- ------------
Merchandise Group
Denims 35.5% 31.8% 35.7% 32.2%
Tops (incl. sweaters) 33.9% 33.8% 32.4% 33.0%
Accessories 11.8% 10.8% 11.4% 10.0%
Sportswear/Fashions 9.2% 10.3% 9.4% 10.5%
Footwear 7.6% 9.7% 8.4% 10.6%
Casual bottoms 1.6% 3.2% 2.3% 3.1%
Outerwear 0.3% 0.4% 0.4% 0.6%
Other 0.1% 0.0% 0.0% 0.0%
----- ----- ----- -----
100.0% 100.0% 100.0% 100.0%
===== ===== ===== =====
10
THE BUCKLE, INC.
NOTES TO FINANCIAL STATEMENTS
THIRTEEN AND TWENTY-SIX WEEKS ENDED JULY 31, 2004 AND AUGUST 2, 2003
(Unaudited)
5. Net Income Per Share - Basic earnings per share data are based on the
weighted average outstanding common shares during the period. Diluted
earnings per share data are based on the weighted average outstanding
common shares and the effect of all dilutive potential common shares,
including stock options. Options to purchase 81,540 and 1,537,865 shares
of common stock for the periods ended July 31, 2004 and August 2, 2003,
respectively, are not included in the computation of diluted earnings per
share because the options would be considered anti-dilutive.
Thirteen Weeks Ended Thirteen Weeks Ended
July 31, 2004 August 2, 2003
--------------------------------- ---------------------------------
Per Share Per Share
Income Shares Amount Income Shares Amount
------ ------ ------ ------ ------ ------
Basic EPS
Net Income $5,317 21,406 $ 0.25 $3,575 21,006 $ 0.17
Effect of Dilutive Securities
Stock Options - 819 (.01) - 515 -
------ ------ -------- ------ ------ --------
Diluted EPS $5,317 22,225 $ 0.24 $3,575 21,521 $ 0.17
====== ====== ======== ====== ====== ========
Twenty-six Weeks Ended Twenty-six Weeks Ended
July 31, 2004 August 2, 2003
--------------------------------- ----------------------------------
Per Share Per Share
Income Shares Amount Income Shares Amount
------ ------ ------ ------ ------ ------
Basic EPS
Net Income $11,205 21,388 $ 0.52 $ 6,549 21,014 $ 0.31
Effect of Dilutive Securities
Stock Options - 812 (.02) - 531 (.01)
------- ------ -------- -------- ------ --------
Diluted EPS $11,205 22,200 $ 0.50 $ 6,549 21,545 $ 0.30
======= ====== ======== ======== ====== ========
6. Reclassifications - Certain reclassifications have been made to the
balance sheet amounts as reported to consistently reflect the Company's
current classifications of assets and liabilities.
11
THE BUCKLE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the Financial
Statements and notes thereto of the Company included in this Form 10-Q/A. The
following is management's discussion and analysis of certain significant factors
which have affected the Company's financial condition and results of operations
during the periods included in the accompanying financial statements.
RESTATEMENT OF FINANCIAL STATEMENTS
On February 7, 2005, the Office of the Chief Accountant of the Securities and
Exchange Commission (SEC) issued a letter to the American Institute of Certified
Public Accountants expressing its views regarding certain operating
lease-related accounting issues and their application under generally accepted
accounting principles in the United States of America (GAAP). In light of this
letter, the Company's management initiated a review of its lease accounting and
determined that its then current method of accounting for leasehold improvements
funded by landlord incentives or allowances under operating leases (tenant
improvement allowances) and its then current method of accounting for rent
holidays were not in accordance with GAAP. As a result, the Company restated its
financial statements for each of the fiscal periods of 2004 and 2003 included in
this report.
The Company had historically accounted for tenant improvement allowances as
reductions to the related leasehold improvement asset on the balance sheets and
as capital expenditures in investing activities on the statements of cash flows.
Management determined that Financial Accounting Standards Board (FASB) Technical
Bulletin No. 88-1, Issues Relating to Accounting for Leases, requires these
allowances to be recorded as deferred rent liabilities on the consolidated
balance sheets and as a component of operating activities on the statements of
cash flows.
For leases initiated in fiscal 2000 and forward, the Company recognized rent
holiday periods on a straight-line basis over the lease term commencing with the
opening date of the retail stores. The store opening date coincided with the
commencement of business operations, which corresponds to the intended use of
the property. Management re-evaluated FASB Technical Bulletin No. 85-3,
Accounting for Operating Leases with Scheduled Rent Increases, and determined
that the lease term should commence on the date the Company takes possession of
the leased space for construction purposes, which is generally approximately
three months prior to a store opening date.
See Note 2 to the financial statements for a summary of the effects of the
restatement on the Company's balance sheet as of July 31, 2004 and the Company's
statements of income and cash flows for thirteen and twenty-six week periods
ended July 31, 2004 and August 2, 2003. The accompanying Management's Discussion
and Analysis gives effect to these corrections.
EXECUTIVE OVERVIEW
Company management considers the following items to be key performance
indicators in evaluating Company performance.
Comparable Store Sales - Stores are deemed to be comparable stores if they were
open in the prior year on the first day of the fiscal period being presented and
were open for the full fiscal period in both the current and prior year. Stores
which have been remodeled, expanded and/or relocated, but would otherwise be
included as comparable stores, are not excluded from the comparable store sales
calculation. Management considers comparable store sales to be an important
indicator of current company performance, helping provide positive operating
leverage for certain fixed costs when results are positive. Negative comparable
store sales results could reduce net sales and have a negative impact on
operating leverage, thus reducing net earnings.
12
THE BUCKLE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Beginning with the four-week period ended May 1, 2004, the Company changed its
method of reporting comparable store sales to exclude internet sales. Comparable
store sales reported all periods subsequent to that date reflect the impact of
this change. The impact of internet sales on comparable store sales results for
all prior periods was immaterial.
Net Merchandise Margins - Management evaluates the components of merchandise
margin including initial markup and the amount of markdowns during a period. Any
inability to obtain acceptable levels of initial markups or any significant
increase in the Company's use of markdowns, could have an adverse effect on the
Company's gross margin and results of operations.
Operating Margin - Operating margin is a good indicator for management of the
Company's success. Operating margin can be positively or negatively affected by
comparable store sales, merchandise margins, occupancy costs and the Company's
ability to control operating costs.
Cash Flow and Liquidity (working capital) - Management reviews current cash and
short-term investments along with cash flow from operating, investing and
financing activities to determine the Company's short-term cash needs for
operations and expansion. The Company believes that existing cash and cash flow
from operations will be sufficient to fund current and long-term anticipated
capital expenditures and working capital requirements for the next several
years.
RESULTS OF OPERATIONS
The table below sets forth the percentage relationships of sales and various
expense categories in the Statements of Income for each of the thirteen and
twenty-six week periods ended July 31, 2004, and August 2, 2003:
THE BUCKLE, INC.
RESULTS OF OPERATIONS
Percentage of Net Sales Percentage of Net Sales
----------------------------------- ------------------------------------
Thirteen weeks ended Percentage Twenty-six weeks ended Percentage
July 31, August 2, increase July 31, August 2, increase
2004 2003 (decrease) 2004 2003 (decrease)
---- ---- ---------- ---- ---- ----------
Net sales 100.0% 100.0% 13.0% 100.0% 100.0% 14.5%
Cost of sales (including
buying, distribution and
occupancy costs) 69.2% 71.3% 9.7% 68.5% 71.6% 9.3%
----- ---- ---- ----- ----- -----
Gross profit 30.8% 28.7% 21.3% 31.5% 28.3% 27.5%
Selling expenses 19.0% 19.2% 12.0% 19.2% 19.7% 11.4%
General and
administrative expenses 4.0% 4.0% 12.5% 4.0% 3.7% 25.5%
----- ---- ---- ----- ----- -----
Income from operations 7.8% 5.5% 59.8% 8.3% 4.9% 92.9%
Other income, net 0.9% 1.1% (11.5)% 0.9% 1.2% (15.9)%
----- ---- ---- ----- ----- -----
Income before income
taxes 8.7% 6.6% 48.0% 9.2% 6.2% 71.1%
Provision for income tax 3.2% 2.4% 46.8% 3.4% 2.3% 71.2%
----- ---- ---- ----- ----- -----
Net income 5.5% 4.2% 48.7% 5.8% 3.9% 71.1%
===== ==== ==== ===== ===== =====
Net sales increased from $85.7 million in the second quarter of fiscal 2003 to
$96.8 million in the second quarter of fiscal 2004, a 13.0% increase. Comparable
store sales increased from the second quarter of fiscal 2003 to the second
quarter of fiscal 2004 by $5.7 million or 6.8%. The comparable store sales
increase resulted partially from a 2.4% increase in the average price per piece
of merchandise sold compared with the fiscal 2003
13
THE BUCKLE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
second quarter. Sales growth for this thirteen week period was also attributable
to the inclusion of a full three months of operating results for the 10 stores
opened after the first quarter of 2003 and the opening of 8 new stores in the
first two quarters of fiscal 2004.
Net sales increased from $167.4 million in the first six months of fiscal 2003
to $191.6 million for the first six months of fiscal 2004, a 14.5% increase.
Comparable store sales for the twenty-six weeks ended July 31, 2004 compared to
the twenty-six weeks ended August 2, 2003 increased $15.1 million or 9.3%. The
comparable store sales growth was partially a function of a 2.0% increase in the
average units per transaction and a 1.6% increase in average price per piece of
merchandise sold. Sales growth for this twenty-six week period was also
attributable to the inclusion of a full six months of operating results for the
16 stores opened in 2003 and the opening of 8 new stores in the first twenty-six
weeks of fiscal 2004.
The Company's increase in average price per piece of merchandise sold (as stated
above) during the second quarter and year-to-date periods was a function of
increasing price points in denims, woven shirts, and accessories, partially
offset by decreasing price points in other categories. The changes in price
points a primarily a reflection of merchandise shifts in terms of brands,
product styles, fabrics, details and finishes. Average sales per square foot
increased 8.6% from $110 to $120 for the six months ended July 31, 2004.
.
Gross profit after buying, occupancy and distribution expenses increased $5.2
million in the second quarter of fiscal 2004 to $29.8 million, a 21.3% increase.
As a percentage of net sales, gross profit was 30.8% in the second quarter of
fiscal 2004 versus 28.7% in the second quarter of fiscal 2003
Gross profit increased $13.0 million for the first twenty-six weeks of fiscal
2004 to $60.5 million, a 27.5% increase. As a percentage of net sales, gross
profit in the first six months increased from 28.3% for fiscal 2003, to 31.5%
for fiscal 2004. Increases in gross profit, as a percentage of net sales, for
both the three and six month periods of fiscal 2004 compared to the same periods
of fiscal 2003 resulted primarily from improvement in actual merchandise margins
of 0.4% and 1.4%, respectively. This improvement was achieved through fewer
markdowns, timely sell-throughs on new products and an increase in sales of
private label merchandise, which achieves higher margins. Additional
improvement, as a percentage of net sales, came from reduced occupancy cost as a
percentage of nets sales of 1.3% and 1.4% for the second quarter and
year-to-date periods, respectively, and from reduced distribution cost as a
percentage of net sales of 0.4% for both the second quarter and year-to-date
periods due to leverage provided by comparable store sales increases.
Selling expense increased from $16.4 million in the second quarter of fiscal
2003 to $18.4 million for the second quarter of fiscal 2004, a 12.0% increase.
Selling expenses as a percentage of net sales decreased from 19.2% for the
second quarter of fiscal 2003 to 19.0% for the second quarter of fiscal 2004.
Year-to-date selling expense rose 11.4% from $33.0 million through the first
half of fiscal 2003 to $36.7 million for the first half of fiscal 2004. As a
percentage of net sales, selling expense in the first six months decreased from
19.7% for fiscal 2003, to 19.2% for fiscal 2004. As a percentage of net sales,
the decreases in selling expense for both the three and six month periods were
primarily attributable to lower sales salaries (down 0.4% and 0.7%,
respectively, as a percentage of net sales), reduced travel expenses (down 0.1%
and 0.2% respectively) and reduced bad debt expense (down 0.1% in each period),
which were partially offset by increases in the bonus accrual for each period
for year-end incentives based on growth in comparable store sales, gross margin
and net income (up 0.2% and 0.4% respectively), increased internet advertising
expense (up 0.3% in each period) and increased bankcard charges (up 0.10% in
each period).
General and administrative expenses increased from $3.4 million in the second
quarter of fiscal 2003 to $3.9 million for the second quarter of fiscal 2004, a
12.5% increase. As a percentage of net sales, general and administrative
expenses remained the same at 4.0% for the second quarter of fiscal 2004
compared to the second quarter of fiscal 2003. For the first half of fiscal
2004, general and administrative expense rose 25.5%
14
THE BUCKLE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
from $6.2 million for the six months ended August 2, 2003, to $7.8 million for
the six months ended July 31, 2004. As a percentage of net sales, general and
administrative expense increased to 4.0% for the first half of fiscal 2004
compared to 3.7% for the first half of fiscal 2003. Increase in general and
administrative expense, as a percentage of net sales, for the six month period
of fiscal 2004 compared to the same period of fiscal 2003 resulted primarily
from an increase in the accrual for restricted stock compensation (0.6%) and
from higher bonus accruals for year-end incentives based upon growth in
comparable store sales, growth in gross margin and growth in net income (0.1%).
These increases were partially offset by reductions, as a percentage of net
sales in loss on assets (0.1%) and certain other general and administrative
expenses.
As a result of the above changes, the Company's income from operations increased
$2.8 million to $7.5 million for the second quarter of fiscal 2004 compared to
$4.7 million for the second quarter of fiscal 2003, a 59.8% increase. Income
from operations was 7.8% of net sales for the second quarter of fiscal 2004
compared to 5.5% of net sales for the second quarter of fiscal 2003. Income from
operations, year-to-date through July 31, 2004, was $16.0 million, a $7.7
million increase from the first half of 2003. Income from operations was 8.3% of
net sales for the first six months of fiscal 2004 compared to 4.9% for the first
six months of fiscal 2003.
For the quarter ended July 31, 2004, other income decreased $0.1 million. For
the six months ended July 31, 2004, other income decreased $0.3 million. Other
income decreased in the both the three and six-month periods of fiscal 2004
compared to the same periods of the prior year due to reduced interest income as
rates continued to be lower than the prior year and due to a reduction in the
net unrealized gains in the non-qualified deferred compensation plan compared to
the prior year.
Income tax expense, as a percentage of pre-tax income, was 36.4% in the second
quarter of fiscal 2004 compared to 36.8% for the second quarter of fiscal 2003.
For both the first half of fiscal 2004 and fiscal 2003, income tax expense was
36.8% for the first half of fiscal 2004 compared to 36.7% of pre-tax income for
the same period in the prior year.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary ongoing cash requirements are for inventory, payroll, new
store expansion, and remodeling. Historically, the Company's primary source of
working capital has been cash flow from operations. However, the first half of
each fiscal year is typically a period of decreasing cash flows created by
various operating, investing and financing activities. During the first half of
fiscal 2004 and 2003, the Company's cash flow provided (used) by operating
activities was $0.3 and $(0.5) million, respectively.
The uses of cash for both twenty-six week periods include payment of annual
bonuses accrued at fiscal year end, changes in inventory and accounts payable
for build up of inventory levels, and construction costs for new and remodeled
stores. The differences in cash flow for the first half of fiscal 2004 compared
to the first half of fiscal 2003 were primarily due to growth in net income,
greater build-up of inventory, fewer purchases of investments and quarterly
dividend payments to stockholders which began in the third quarter of fiscal
2003.
The Company has available an unsecured line of credit of $17.5 million with
Wells Fargo Bank, N.A. for operating needs and letters of credit. The note
provides that outstanding letters of credit cannot exceed $10 million. Borrowing
under the line of credit note provides for interest to be paid at a rate equal
to the prime rate established by the Bank. As of July 31, 2004, the Company had
working capital of $191.5 million, including $110.2 million of cash and cash
equivalents and short-term investments of $23.2 million. The Company has, from
time to time, borrowed against this line during periods of peak inventory
build-up. There were no bank borrowings during the first half of fiscal 2004 and
only minor bank borrowings during the first half of fiscal 2003.
15
THE BUCKLE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
During the first half of fiscal 2004 and 2003 the Company invested $8.8 million
and $11.1 million, respectively, in new store construction, store renovation and
upgrading store technology. The Company also spent approximately $0.4 million
and $0.5 million in the first half of fiscal 2004 and 2003, respectively, in
capital expenditures for the corporate headquarters and distribution center.
During the remainder of fiscal 2004, the Company anticipates completing
approximately seven additional store construction projects, including
approximately five new stores and approximately two stores to be remodeled
and/or relocated. As of July 31, 2004, five additional lease contracts have been
signed, and additional leases are in various stages of negotiation.
Management now estimates that total capital expenditures during fiscal 2004 will
be approximately $19.6 million. The Company believes that existing cash and cash
flow from operations will be sufficient to fund current and long-term
anticipated capital expenditures and working capital requirements for the next
several years. The Company has a consistent record of generating positive cash
flow each year and, as of May 1, 2004, had total cash and investments of $183.6
million. The Company does not currently have plans for a merger, acquisition or
accelerated store expansion. The Company's plans for new store expansion and
remodels/relocations during the next three years are reasonably consistent with
its past three fiscal years' average. Based upon past results and current plans,
management does not anticipate any material changes in the Company's need for
cash in the upcoming year. However, future conditions may reduce the
availability of funds based upon factors such as a decrease in demand for the
Company's product, change in product mix, competitive factors and general
economic conditions as well as other risks and uncertainties which would reduce
the Company's sales, net profitability and cash flows. Also, the Company's
acceleration in store openings and/or remodels, or the Company entering into a
merger, acquisition or other financial related transaction, could reduce the
amount of cash available for further capital expenditures and working capital
requirements.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Management's Discussion and Analysis of Financial Condition and Results of
Operations are based upon The Buckle, Inc.'s financial statements, which have
been prepared in accordance with accounting principles generally accepted in the
United States of America. The preparation of these financial statements requires
that management make estimates and judgments that affect the reported amounts of
assets and liabilities, and disclosure of contingent assets and liabilities, at
the financial statement date, and the reported amounts of sales and expenses
during the reporting period. The Company regularly evaluates its estimates.
Management bases its estimates on past experience and on various other factors
that are thought to be reasonable under the circumstances, the results of which
form the basis for making judgments about the carrying values of assets and
liabilities that are not readily apparent from other sources. Actual results may
differ from these estimates under different assumptions or conditions.
The Company's certain critical accounting policies are listed below.
1. Revenue Recognition. Sales are recorded upon the purchase of merchandise
by customers. The Company accounts for layaway sales in accordance with
SAB No. 101, recognizing revenue from sales made under its layaway program
upon delivery of the merchandise to the customer. Revenue is not recorded
when gift cards and gift certificates are sold, but rather when a card is
redeemed for merchandise. A current liability is recorded at the time of
card purchases. The Company establishes a current liability for estimated
merchandise returns based upon historical average sales return percentage,
applying the percentage using the assumption that merchandise returns will
occur within nine days following the sale. Customer returns could
potentially exceed historical average and returns may occur after the time
period reserved for, thus reducing future net sales results and
potentially reducing future net earnings. The accrued liability for
reserve for sales returns was $258,000 at both July 31, 2004 and January
31, 2004.
16
THE BUCKLE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
2. Inventory. Inventory is valued at the lower of cost or market. Cost is
determined using the average cost method that approximates the first-in,
first-out (FIFO) method. Management makes adjustments to inventory and
cost of goods sold based upon estimates to reserve for merchandise
obsolescence and markdowns that could affect market value, based on
assumptions using calculations applied to current inventory levels by
department within each of four different markdown levels. Management also
reviews the levels of inventory in each markdown group versus the
estimated future demand for such product and the current market
conditions. Such judgments could vary significantly from actual results,
either favorably or unfavorably, due to fluctuation in future economic
conditions, industry trends, consumer demand and the competitive retail
environment. Such changes in market conditions could negatively impact the
sale of markdown inventory causing further markdowns, or inventory
obsolescence, resulting in increased cost of goods sold from write-offs,
and reducing the Company's net earnings. The liability recorded as a
reserve for markdowns and/or obsolescence was $4.1 million and $2.5
million as of July 31, 2004 and January 31, 2004, respectively. We are not
aware of any events, conditions or changes in demand or price that would
indicate to us that our inventory valuation may be materially inaccurate
at this time.
3. Income Taxes. Current income tax expense is the amount of income taxes
expected to be payable for the current fiscal year. The Company records a
deferred tax asset and liability for expected future tax consequences
resulting from temporary differences between financial reporting and tax
bases of assets and liabilities. The Company considers future taxable
income and ongoing tax planning in assessing the value of its deferred tax
assets. If the Company determines that it is more than likely that these
assets will not be realized, the Company would reduce the value of these
assets to their expected realizable value, thereby decreasing net income.
Estimating the value of these assets is based upon the Company's judgment.
If the Company subsequently determined that the deferred tax assets, which
had been written down, would be realized in the future, such value would
be increased. Adjustment would be made to increase net income in the
period such determination was made.
4. Operating Leases. The Company leases retail stores under operating leases.
Most lease agreements contain tenant improvement allowances, rent
holidays, rent escalation clauses and/or contingent rent provisions. For
purposes of recognizing lease incentives and minimum rental expenses on a
straight-line basis over the terms of the leases, the Company uses the
date of initial possession to begin amortization, which is generally when
the Company enters the space and begins to make improvements in
preparation of intended use. For tenant improvement allowances and rent
holidays, the Company records a deferred rent liability on the balance
sheets and amortizes the deferred rent over the terms of the leases as
reductions to rent expense on the statements of earnings.
For scheduled rent escalation clauses during the lease terms or for rental
payments commencing at a date other than the date of initial occupancy,
the Company records minimum rental expenses on a straight-line basis over
the terms of the leases on the statements of income. Certain leases
provide for contingent rents, which are determined as a percentage of
gross sales in excess of specified levels. The Company records a
contingent rent liability on the balance sheets and the corresponding rent
expense when specified levels have been achieved. If the Company
subsequently determined the lease term to vary from that used in
calculations of straight-line rent expense, there could be additional
expense to be recorded, thus reducing the Company's earnings for the
period of correction.
17
THE BUCKLE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS
As referenced in the tables below, the Company has contractual obligations and
commercial commitments that may affect the financial condition of the Company.
Based on management's review of the terms and conditions of its contractual
obligations and commercial commitments, there is no known trend, demand,
commitment, event or uncertainty that is reasonably likely to occur which would
have a material effect on the Company's financial condition or results of
operations. In addition, the commercial obligations and commitments made by the
Company are customary transactions which are similar to those of other
comparable retail companies.
The following tables identify the material obligations and commitments as of
July 31, 2004:
Payments Due by Period
--------------------------------------------------------------------------------
Contractual obligations
(dollar amounts in Less than 1
thousands) Total year 1-3 years 4-5 years After 5 years
---------- ----- ---- --------- --------- -------------
Long term debt and purchase $ - $ - $ - $ - $ -
obligations
Deferred Compensation $ 1,594 $ - $ - $ - $ 1,594
Operating leases $ 199,854 $ 30,909 $ 56,043 $ 49,205 $ 63,697
Total contractual obligations $ 201,448 $ 30,909 $ 56,043 $ 49,205 $ 65,291
Amount of Commitment Expiration Per Period
--------------------------------------------------------------------------------
Other Commercial
Commitments (dollar Total Amounts Less than 1
amounts in thousands) Committed year 1-3 years 4-5 years After 5 years
-------------------------- --------- ---- --------- --------- -------------
Lines of Credit $ 17,500 $ 17,500 $ - $ - $ -
Total Commercial Commitments $ 17,500 $ 17,500 $ - $ - $ -
The Company did not have any contingent liability for landlord allowances as of
July 31, 2004. The Company has available an unsecured line of credit of $17.5
million of which $10 million is available for letters of credit. Certain
merchandise purchase orders require that the Company open letters of credit.
When the Company takes possession of the merchandise, it releases payment on the
letters of credit. Amounts of outstanding letters of credit, reported in the
notes included in the Company's 2003 Annual Report, reflect the open letters of
credit on merchandise ordered, but not yet received or funded. The Company
believes it has sufficient credit available to open letters of credit for
merchandise purchases.
18
THE BUCKLE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
SEASONALITY AND INFLATION
The Company's business is seasonal, with the Christmas season (from
approximately November 15 to December 30) and the back-to-school season (from
approximately July 15 to September 1) historically contributing the greatest
volume of net sales. For fiscal years 2001, 2002 and 2003, the Christmas and
back-to-school seasons accounted for approximately 40% of the Company's fiscal
year net sales. Although the operations of the Company are influenced by general
economic conditions, the Company does not believe that inflation has had a
material effect on the results of operations during the twenty-six week periods
ended July 31, 2004, and August 2, 2003.
FORWARD LOOKING STATEMENTS
Information in this report, other than historical information, may be considered
to be forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995 (the "1995 Act"). Such statements are made in good
faith by the Company pursuant to the safe-harbor provisions of the 1995 Act. In
connection with these safe-harbor provisions, this management's discussion and
analysis contains certain forward-looking statements, which reflect management's
current views and estimates of future economic conditions, company performance
and financial results. The statements are based on many assumptions and factors
that could cause future results to differ materially. Such factors include, but
are not limited to, changes in product mix, changes in fashion trends,
competitive factors and general economic conditions, economic conditions in the
retail apparel industry, as well as other risks and uncertainties inherent in
the Company's business and the retail industry in general. Any changes in these
factors could result in significantly different results for the Company. The
Company further cautions that the forward-looking information contained herein
is not exhaustive or exclusive. The Company does not undertake to update any
forward-looking statements, which may be made from time to time by or on behalf
of the Company.
19
ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company has evaluated the disclosure requirements of Item 305 of S-K
"Quantitative and Qualitative Disclosures about Market Risk," and has concluded
that the Company has no market risk sensitive instruments for which these
additional disclosures are required.
ITEM 4 - CONTROLS AND PROCEDURES
During the second quarter of fiscal 2004, there were no changes in the Company's
internal control over financial reporting that materially affected or are
reasonable likely to materially affect internal control over financial
reporting.
However, on March 3, 2005, Company management announced that, in light of the
views expressed by the staff of the Securities and Exchange Commission ("SEC")
on February 7, 2005, the Company's management reviewed its lease-related
accounting policies and determined that its then-current method of accounting
for leasehold improvements funded by landlord allowances under operating leases
(tenant improvement allowances), accounting for rent holidays and straight-line
rent appeared to be incorrect.
Management and the Chairman of the Audit Committee determined that the Company's
accounting for tenant improvement allowances, rent holidays and straight-line
rent was incorrect and thus the company's audited financial statements for the
years ended January 31, 2004 and February 1, 2003, and unaudited interim
financial statements for these years, should be restated.
Based upon the definition of "material weakness" in the Public Accounting
Oversight Board's Auditing Standards No. 2, an Audit of Internal Control Over
Financial Reporting Performed in Conjunction With an Audit of Financial
Statements, restatement of financial statements in prior filings with the SEC is
a strong indicator of the existence of a "material weakness" in design or
operation of internal control over financial reporting. Based on that,
management concluded that a material weakness existed in the Company's internal
control over financial reporting, and disclosed this to the Audit Committee and
to the independent registered public accountants.
The Company also carried out an evaluation, under the supervision and with the
participation of the Company's management, including the chief executive officer
and the chief financial officer, of the effectiveness of the design and
operation of the disclosure controls and procedures, as defined in Rules
13a-15(e) and 15d-15 (e) under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). Based upon that evaluation, which included the matters
discussed above, the Company's chief executive officer and chief financial
officer concluded that the Company's disclosure controls and procedures were not
effective, as of the end of the period covered by this report, in ensuring that
material information relating to The Buckle, Inc. required to be disclosed by
the Company in reports that it files or submits under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified
in the SEC's rules and forms.
The Company has remediated the material weakness in internal control over
financial reporting and the ineffectiveness of its disclosure controls and
procedures by conducting a review of its accounting related to leases,
establishing new lease-related accounting policies and correcting its method of
accounting for tenant allowances, rent holidays and straight-line rent.
20
THE BUCKLE, INC.
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings: None
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds:
The following table sets forth information concerning purchases made by the
Company of its common stock for the periods indicated:
Approximate
Total Number of Dollar Value of
Total Shares Purchased Shares that May
Number Average as Part of Yet Be Purchased
of Shares Price Paid Publicly Under Publicly
Purchased Per Share Announced Plan Announced Plan
--------- ---------- -------------- --------------
May 2, to May 29, 2004 -0- $ 3,883,750
May 30, to July 3, 2004 40,000 $ 26.00 40,000 2,843,750
July 4, to July 31, 2004 5,700 26.84 5,700 2,695,550
------ ------- ------ -----------
45,700 $ 26.10 45,700
====== ======= ====== ===========
These shares were part of a 500,000 share repurchase plan, announced by
the Company on December 27, 2000. Subsequent to July 31, 2004, the Company
has repurchased 440,000 shares of its common stock at a cost of
approximately $10,000,000, bringing the total repurchased under the plan
to 2,590,000 shares.
Item 3. Defaults Upon Senior Securities: None
Item 4. Submission of Matters to a Vote of Security Holders:
(a) May 28, 2004, Annual Meeting
(b) Board of Directors:
Daniel J. Hirschfeld Robert E. Campbell
Dennis H. Nelson William D. Orr
Karen B. Rhoads Ralph M. Tysdal
James E. Shada Bruce L. Hoberman
Bill L. Fairfield David A. Roehr
NUMBER OF SHARES*
-----------------
For Against Abstain Del N-Vote
--- ------- ------- ----------
(c) 1. Election of Board of Directors:
Daniel J. Hirschfeld 19,654,406 0 1,596,552
Dennis H. Nelson 19,654,706 0 1,596,252
Karen B. Rhoads 19,649,139 0 1,601,819
James E. Shada 19,654,556 0 1,596,402
Bill L. Fairfield 20,955,877 0 295,081
Robert E. Campbell 20,965,576 0 285,382
William D. Orr 20,965,260 0 285,698
Ralph M. Tysdal 20,965,476 0 285,482
Bruce L. Hoberman 20,968,860 0 282,098
David A. Roehr 20,967,476 0 283,482
21
THE BUCKLE, INC.
PART II -- OTHER INFORMATION
Number of Shares*
----------------
For Against Abstain Del N-Vote
--- ------- ------- ----------
2. Appoint Deloitte & Touche LLP
as independent auditors. 21,169,969 79,833 1,156
3. Approve Company's 2004
Management Incentive Program 19,228,418 679,820 9,316 1,333,404
4. Approve Amendment to Company's
1997 Executive Stock Plan 18,425,974 1,481,639 9,941 1,333,404
5. Approve Awards Pursuant to
Company's 1998 Restricted
Stock Plan 20,456,893 786,601 7,464
6. Approve Amendment to Company's
1998 Employee Stock Option Plan 18,170,225 1,739,868 7,461 1,333,404
*includes only shares represented in person or by proxy at the annual meeting
(d) None
Item 5. Other Information: None
Item 6. Exhibits:
(a) Exhibits 31.1 and 31.2 certifications, as well as Exhibits 32.1 and
32.2 Certifications Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
22
THE BUCKLE, INC.
SIGNATURES
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.
THE BUCKLE, INC.
Dated: April 18, 2005 /s/ DENNIS H. NELSON
----------------------------------
DENNIS H. NELSON, President and CEO
Dated: April 18, 2005 /s/ KAREN B. RHOADS
----------------------------------
KAREN B. RHOADS, Vice President
of Finance and CFO
23