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 OCTOBER 30, 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 [X] 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
December 1, 2004 was 21,619,290 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 October 30, 2004,
initially filed with the Securities and Exchange Commission (the "SEC") on
December 7, 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 October 30, 2004 and January 31, 2004 and for the
interim periods ended October 30, 2004 and November 1, 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 October 30,
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 October 30, 2004 and January 31, 2004. The Company has also made
corresponding adjustments to the statements of cash flows for the periods ended
October 30, 2004 and November 1, 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 19
Item 4. Controls and Procedures 19
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 21
Item 6. Exhibits 21
Signatures 22
3
THE BUCKLE, INC.
BALANCE SHEETS
(Columnar amounts in thousands)
(Unaudited)
October 30, January 31,
2004 2004
(As Restated, (As Restated,
see Note 2) see Note 2)
------------- -------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 123,473 $ 119,976
Investments 26,578 23,346
Accounts receivable, net of
allowance of $118,000 and $181,000, respectively 2,173 3,585
Inventory 94,719 61,156
Prepaid expenses and other assets 5,211 9,083
--------- ---------
Total current assets 252,154 217,146
PROPERTY AND EQUIPMENT 176,587 169,453
Less accumulated depreciation and amortization 92,615 85,550
--------- ---------
83,972 83,903
LONG-TERM INVESTMENTS 46,521 52,647
OTHER ASSETS 2,382 2,526
--------- ---------
$ 385,029 $ 356,222
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 16,145 $ 14,207
Accrued employee compensation 10,929 11,890
Accrued store operating expenses 5,124 3,833
Gift certificates redeemable 2,779 3,778
Income taxes payable 8,658 2,760
--------- ---------
Total current liabilities 43,635 36,468
DEFERRED COMPENSATION 1,689 1,467
DEFERRED RENT LIABILITY 24,963 24,442
--------- ---------
Total liabilities 70,287 62,377
COMMITMENTS
STOCKHOLDERS' EQUITY
Common stock, authorized 100,000,000 shares
of $.01 par value; issued 21,549,690 and
21,484,316 shares, respectively 215 215
Additional paid-in capital 23,906 24,245
Retained earnings 291,306 272,125
Unearned compensation - restricted stock (685) (2,740)
--------- ---------
Total stockholders' equity 314,742 293,845
--------- ---------
$ 385,029 $ 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 Thirty-nine Weeks Ended
----------------------------- -----------------------------
October 30, November 1, October 30, November 1,
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 $ 133,722 $ 121,325 $ 325,344 $ 288,721
COST OF SALES (including buying,
distribution and occupancy costs) 81,531 77,706 212,697 197,686
----------- ----------- ----------- -----------
Gross profit 52,191 43,619 112,647 91,035
----------- ----------- ----------- -----------
OPERATING EXPENSES:
Selling 24,785 21,353 61,518 54,312
General and administrative 4,814 3,822 12,564 9,998
----------- ----------- ----------- -----------
29,599 25,175 74,082 64,310
----------- ----------- ----------- -----------
Income from operations 22,592 18,444 38,565 26,725
OTHER INCOME, Net 910 776 2,653 2,848
----------- ----------- ----------- -----------
Income before income taxes 23,502 19,220 41,218 29,573
PROVISION FOR INCOME TAXES 8,624 7,053 15,135 10,857
----------- ----------- ----------- -----------
NET INCOME $ 14,878 $ 12,167 $ 26,083 $ 18,716
=========== =========== =========== ===========
Per share amounts:
Basic income per share $ 0.70 $ 0.57 $ 1.22 $ 0.89
Diluted income per share $ 0.67 $ 0.56 $ 1.18 $ 0.87
Basic weighted average shares 21,357 21,207 21,377 21,091
Diluted weighted average shares 22,132 21,682 22,177 21,603
See notes to financial statements
5
THE BUCKLE, INC.
STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
Thirty-nine Weeks Ended
-----------------------------------
October 30, 2004 November 1, 2003
(As Restated, (As Restated,
see Note 2) see Note 2)
---------------- ----------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 26,083 $ 18,716
Adjustments to reconcile net income to net cash
flows from operating activities
Depreciation 11,913 11,568
Loss on disposal of assets 303 679
Deferred taxes (55) (21)
Amortization of unearned compensation-restricted stock 2,054 802
Changes in operating assets and liabilities
Accounts receivable 1,412 (2,291)
Inventory (33,563) (24,040)
Prepaid expenses and other assets 3,871 (1,154)
Accounts payable 1,938 4,770
Accrued employee compensation (961) (4,094)
Accrued store operating expenses 1,291 (35)
Gift certificates redeemable (999) (191)
Income taxes payable 5,898 5,927
Long-term liabilities and deferred compensation 743 3,353
------------ ------------
Net cash flows from operating activities 19,928 13,989
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of investments (17,837) (24,497)
Proceeds from sales and maturities of investments 20,731 22,669
Purchase of property and equipment (12,285) (16,004)
Change in other assets 200 190
------------ ------------
Net cash flows used in investing activities (9,191) (17,642)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the exercise of stock options 3,121 1,553
Purchases of common stock (3,460) (1,401)
Dividends paid to stockholders (6,901) (2,137)
------------ ------------
Net cash flows used in financing activities (7,240) (1,985)
------------ ------------
Net increase/(decrease) in cash and cash equivalents 3,497 (5,638)
Cash and cash equivalents, Beginning of period 119,976 92,976
------------ ------------
Cash and cash equivalents, End of period $ 123,473 $ 87,338
============ ============
See notes to financial statements.
6
THE BUCKLE, INC.
NOTES TO FINANCIAL STATEMENTS
THIRTEEN AND THIRTY-NINE WEEKS ENDED
OCTOBER 30, 2004 AND NOVEMBER 1, 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 THIRTY-NINE WEEKS ENDED
OCTOBER 30, 2004 AND NOVEMBER 1, 2003
(Unaudited)
Following is a summary of the effects of the restatement on the Company's
balance sheet as of October 30, 2004 and the Company's statements of income and
cash flows for each of the thirteen and thirty-nine week periods ending October
30, 2004 and November 1, 2003.
Balance Sheets
------------------------------------------------------
As
previously
October 30, 2004 reported Reclassifications Adjustments As Restated
--------------------------------- ---------- ----------------- ----------- -----------
Prepaid expenses and other assets $ 5,692 $ - $ (481) $ 5,211
Property and equipment, net 66,310 - 17,662 83,972
Other assets 1,107 - 1,275 2,382
Accrued employee compensation 11,204 (275) - 10,929
Accrued store operating expenses 6,925 (593) (1,208) 5,124
Gift certificates redeemable 1,911 868 - 2,779
Deferred rent liability - - 24,963 24,963
Deferred tax liability 1,490 - (1,490) -
Retained earnings 295,115 - (3,809) 291,306
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.
8
THE BUCKLE, INC.
NOTES TO FINANCIAL STATEMENTS
THIRTEEN AND THIRTY-NINE WEEKS ENDED
OCTOBER 30, 2004 AND NOVEMBER 1, 2003
(Unaudited)
Statements of Income
---------------------------------------
As
previously
Thirteen weeks ended October 30, 2004 reported Adjustments As restated
---------------------------------------- ---------- ----------- -----------
Cost of sales $ 81,480 $ 51 $ 81,531
Income from operations 22,643 (51) 22,592
Income before income taxes 23,553 (51) 23,502
Provision for income taxes 8,643 (19) 8,624
Net income 14,910 (32) 14,878
Earnings per share - basic $ 0.70 $ - $ 0.70
Earnings per share - diluted $ 0.67 $ - $ 0.67
Thirteen weeks ended November 1, 2003
Cost of sales $ 77,680 $ 26 $ 77,706
Income from operations 18,470 (26) 18,444
Income before income taxes 19,246 (26) 19,220
Provision for income taxes 7,063 (10) 7,053
Net income 12,183 (16) 12,167
Earnings per share - basic $ 0.57 $ - $ 0.57
Earnings per share - diluted $ 0.56 $ - $ 0.56
Thirty-nine weeks ended October 30, 2004
Cost of sales $212,545 $ 152 $212,697
Income from operations 38,717 (152) 38,565
Income before income taxes 41,370 (152) 41,218
Provision for income taxes 15,190 (55) 15,135
Net income 26,180 (97) 26,083
Earnings per share - basic $ 1.22 $ - $ 1.22
Earnings per share - diluted $ 1.18 $ - $ 1.18
Thirty-nine weeks ended November 1, 2003
Cost of sales $197,609 $ 77 $197,686
Income from operations 26,802 (77) 26,725
Income before income taxes 29,650 (77) 29,573
Provision for income taxes 10,885 (28) 10,857
Net income 18,765 (49) 18,716
Earnings per share - basic $ 0.89 $ - $ 0.89
Earnings per share - diluted $ 0.87 $ - $ 0.87
Statements of Cash Flows
----------------------------------------
As
previously
Thirty-nine weeks ended October 30, 2004 reported Adjustments As restated
---------------------------------------- ---------- ----------- -----------
Net cash flows from operating activities $ 17,582 $ 2,346 $ 19,928
Net cash flows from investing activities (6,845) (2,346) (9,191)
Thirty-nine weeks ended November 1, 2003
Net cash flows from operating activities $ 9,490 $ 4,499 $ 13,989
Net cash flows from investing activities (13,143) (4,499) (17,642)
9
THE BUCKLE, INC.
NOTES TO FINANCIAL STATEMENTS
THIRTEEN AND THIRTY-NINE WEEKS ENDED
OCTOBER 30, 2004 AND NOVEMBER 1, 2003
(Unaudited)
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 October 30, 2004; of these authorized
shares, 308,797 shares were available for grant under the various plans,
of which 187,700 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.
Thirteen Weeks Ended Thirty-nine Weeks Ended
Oct 30, 2004 Nov. 1, 2003 Oct. 30, 2004 Nov. 1, 2003
--------------------------- ---------------------------
Net income (as restated, see Note 2) $ 14,878 $ 12,167 $ 26,083 $ 18,716
Add: Stock-based employee compensation
expense included in reported net
income, net of related tax effects 434 377 1,290 509
Deduct: Total stock-based employee
compensation expense determined
under fair value based method
for all awards, net of related tax effects (884) (1,053) (3,142) (2,536)
---------- ---------- ---------- ----------
Pro forma net income $ 14,428 $ 11,491 $ 24,231 $ 16,689
========== ========== ========== ==========
Earnings per share:
Basic - as reported (as restated, see Note 2) $ .70 $ .57 $ 1.22 $ .89
========== ========== ========== ==========
Basic - pro forma $ .68 $ .54 $ 1.13 $ .79
========== ========== ========== ==========
Diluted - as reported (as restated, see Note 2) $ .67 $ .56 $ 1.18 $ .87
========== ========== ========== ==========
Diluted - pro forma $ .65 $ .53 $ 1.09 $ .77
========== ========== ========== ==========
4. 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.
5. 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 327 stores located in 38
states throughout the central, northwestern and southern regions of the
United States as of October 30, 2004, and 319 stores in 38 states as of
November 1, 2003. During the third quarter of fiscal 2004, the Company
opened three new stores and substantially renovated one store. During the
third quarter of fiscal 2003, the Company opened six new stores and
substantially renovated two stores.
10
THE BUCKLE, INC.
NOTES TO FINANCIAL STATEMENTS
THIRTEEN AND THIRTY-NINE WEEKS ENDED
OCTOBER 30, 2004 AND NOVEMBER 1, 2003
(Unaudited)
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 Thirty-nine Weeks Ended
--------------------------- ---------------------------
Merchandise Group Oct. 30, 2004 Nov. 1, 2003 Oct. 30, 2004 Nov. 1, 2003
--------------------- ------------- ------------ ------------- ------------
Denims 43.8% 39.6% 39.0% 35.3%
Tops (incl. sweaters) 32.1% 31.4% 32.2% 32.3%
Accessories 10.0% 10.1% 10.9% 10.0%
Footwear 7.3% 8.2% 7.9% 9.6%
Outerwear 3.3% 4.6% 1.6% 2.3%
Casual bottoms 2.3% 5.1% 2.4% 3.9%
Sportswear/Fashions 1.1% 1.0% 6.0% 6.5%
Other 0.1% 0.0% 0.0% 0.1%
----- ----- ----- -----
100.0% 100.0% 100.0% 100.0%
===== ===== ===== =====
6. 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 179,835 and 1,002,750 shares
of common stock for the periods ended October 30, 2004 and November 1,
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
October 30, 2004 November 1, 2003
---------------------------------- ---------------------------------
Per Share Per Share
Income Shares Amount Income Shares Amount
------- ------- --------- ------- ------- ---------
Basic EPS
Net Income $14,878 21,357 $ 0.70 $12,167 21,207 $ 0.57
Effect of Dilutive Securities
Stock Options - 775 (.03) - 475 (.01)
------- ------- ------- ------- ------- -------
Diluted EPS $14,878 22,132 $ 0.67 $12,167 21,682 $ 0.56
======= ======= ======= ======= ======= =======
Thirty-nine Weeks Ended Thirty-nine Weeks Ended
October 30, 2004 November 1, 2003
---------------------------------- ---------------------------------
Per Share Per Share
Income Shares Amount Income Shares Amount
------- ------- --------- ------- ------- ---------
Basic EPS
Net Income $26,083 21,377 $ 1.22 $18,716 21,091 $ 0.89
Effect of Dilutive Securities
Stock Options - 800 (.04) - 512 (.02)
------- ------- ------- ------- ------- -------
Diluted EPS $26,083 22,177 $ 1.18 $18,716 21,603 $ 0.87
======= ======= ======= ======= ======= =======
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 October 30, 2004 and the
Company's statements of income and cash flows for thirteen and thirty-nine week
periods ended October 30, 2004 and November 1, 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 for 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
thirty-nine week periods ended October 30, 2004, and November 1, 2003:
THE BUCKLE, INC.
RESULTS OF OPERATIONS
Percentage of Net Sales Percentage of Net Sales
--------------------------------- ------------------------------------
Thirteen weeks ended Percentage Thirty-nine weeks ended Percentage
Oct. 30, Nov. 1, increase Oct. 30, Nov. 1, increase
2004 2003 (decrease) 2004 2003 (decrease)
-------- ------- ---------- --------- ------- ----------
Net sales 100.0% 100.0% 10.2% 100.0% 100.0% 12.7%
Cost of sales (including
buying, distribution and
occupancy costs) 61.0% 64.0% 4.9% 65.4% 68.5% 7.6%
----- ----- ----- ----- ----- ------
Gross profit 39.0% 36.0% 19.7% 34.6% 31.5% 23.7%
Selling expenses 18.5% 17.6% 16.1% 18.9% 18.8% 13.3%
General and
administrative expenses 3.6% 3.2% 26.0% 3.9% 3.5% 25.7%
----- ----- ----- ----- ----- ------
Income from operations 16.9% 15.2% 22.5% 11.9% 9.3% 44.3%
Other income, net 0.7% 0.6% 17.2% 0.8% 1.0% (6.8)%
----- ----- ----- ----- ----- ------
Income before income
taxes 17.6% 15.8% 22.3% 12.6% 10.2% 39.4%
Provision for income tax 6.5% 5.8% 22.3% 4.6% 3.7% 39.4%
----- ----- ----- ----- ----- ------
Net income 11.1% 10.0% 22.3% 8.0% 6.5% 39.4%
===== ===== ===== ===== ===== ======
Net sales increased from $121.3 million in the third quarter of fiscal 2003 to
$133.7 million in the third quarter of fiscal 2004, a 10.2% increase. Comparable
store sales increased from the third quarter of fiscal 2003 to the third quarter
of fiscal 2004 by $6.0 million or 5.1%. The comparable store sales increase
resulted partially from a 0.9% increase in the average price per piece of
merchandise sold compared with the fiscal 2003 third quarter.
13
THE BUCKLE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Net sales increased from $288.7 million in the first nine months of fiscal 2003
to $325.3 million for the first nine months of fiscal 2004, a 12.7% increase.
Comparable store sales for the thirty-nine weeks ended October 30, 2004 compared
to the thirty-nine weeks ended November 1, 2003 increased $20.9 million or 7.5%.
The comparable store sales increase resulted partially from a 1.2% increase in
the average price per piece of merchandise sold compared with the first
thirty-nine weeks of fiscal 2003. Sales growth for this thirty-nine week period
was also attributable to the inclusion of a full nine months of operating
results for the 16 stores opened in 2003 and the opening of 11 new stores in the
first thirty-nine weeks of fiscal 2004.
The Company's increase in the average price per piece of merchandise sold (as
stated above) during the third quarter and year-to-date was primarily
attributable to the following changes: an increase in the average price of
accessories of 6.9% and an increase denim price points of approximately 4.5%,
partially offset by decreases average prices in fashion wear of 8.1%, decrease
in outerwear price points of 17.1%, and decreased average prices in footwear of
4.8%. The average price points for the remaining merchandise categories remained
even with the prior year. These changes are primarily a reflection of
merchandise shifts in terms of brands, product styles, fabrics, details and
finishes. Average sales per square foot increased 7.4% from $188 to $202 for the
nine months ended October 30, 2004.
Gross profit after buying, occupancy and distribution expenses increased $8.6
million in the third quarter of fiscal 2004 to $52.2 million, a 19.7% increase.
As a percentage of net sales, gross profit was 39.0% in the third quarter of
fiscal 2004 versus 36.0% in the third quarter of fiscal 2003. Gross profit
increased $21.6 million for the first thirty-nine weeks of fiscal 2004 to $112.6
million, a 23.7% increase. As a percentage of net sales, gross profit in the
first nine months increased from 31.5% for fiscal 2003, to 34.6% for fiscal
2004. Increases in gross profit, as a percentage of net sales, for both the
three and nine month periods of fiscal 2004 compared to the same periods of
fiscal 2003 resulted primarily from improvement in actual merchandise margins of
2.0% and 1.7%, respectively. This improvement was achieved through fewer
markdowns, timely sell-throughs on new products and an increase in sales of
private label merchandise which has higher margins. Additional improvements came
from occupancy costs which decreased as a percentage of net sales by 0.9% and
1.2% for the third quarter and year-to-date, respectively, and distribution
costs which decreased by 0.3% for each the three and nine-month periods reported
due to leverage provided by growth in comparable store sales for the periods.
Selling expense increased from $21.4 million in the third quarter of fiscal 2003
to $24.8 million for the third quarter of fiscal 2004, a 16.1% increase. Selling
expenses as a percentage of net sales increased from 17.6% for the third quarter
of fiscal 2003 to 18.5% for the third quarter of fiscal 2004. Year-to-date
selling expense rose 13.3% from $54.3 million through the first nine months of
fiscal 2003 to $61.5 million for the first nine months of fiscal 2004. As a
percentage of net sales, selling expense in the first nine months increased from
18.8% for fiscal 2003, to 18.9% for fiscal 2004. As a percentage of net sales,
the increases in selling expense for both the three and nine month periods were
primarily attributable to higher bonus accruals for year-end incentives based
upon growth in comparable store sales, growth in gross margin and growth in net
income. This resulted in additional expense of 1.2% and 0.8% for the three and
nine months, respectively. This increase was partially offset by slight
reductions in discretionary spending for advertising (down 0.1% each period) and
store and meeting travel (down 0.2% each period).
General and administrative expenses increased from $3.8 million in the third
quarter of fiscal 2003 to $4.8 million for the third quarter of fiscal 2004, a
26.0% increase. As a percentage of net sales, general and administrative
expenses increased from 3.2% for the third quarter of fiscal 2003 to 3.6% for
the third quarter of fiscal 2004. For the first nine months of fiscal 2004,
general and administrative expense rose 25.7% from $10.0 million for the nine
months ended November 1, 2003, to $12.6 million for the nine months ended
October 30, 2004. As a percentage of net sales, general and administrative
expense increased to 3.9% for the first nine months of fiscal 2004 compared to
3.5% for the first nine months of fiscal 2003. The increase in general and
administrative expense, as a percentage of net sales, for the three months ended
October 30, 2004, compared to the same period of fiscal 2003, resulted primarily
from a higher bonus accrual for year-end
14
THE BUCKLE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
incentives based upon growth in comparable store sales, gross margin and net
income (0.4% increase). The increase in general and administrative expense, as a
percentage of net sales, for the first nine months of fiscal 2004 compared to
the same period of fiscal 2003 resulted primarily from recording compensation
expense related to restricted stock granted in 2003 (0.3% increase) and higher
bonus accruals for year-end incentives based upon growth in comparable store
sales, gross margin and net income (0.3% increase).
As a result of the above changes, the Company's income from operations increased
$4.2 million to $22.6 million for the third quarter of fiscal 2004 compared to
$18.4 million for the third quarter of fiscal 2003, a 22.5% increase. Income
from operations was 16.9% of net sales for the third quarter of fiscal 2004
compared to 15.2% of net sales for the third quarter of fiscal 2003. Income from
operations, year-to-date through October 30, 2004, was $38.6 million, an $11.9
million increase from the first nine months of the prior year. Income from
operations was 11.9% of net sales for the first nine months of fiscal 2004
compared to 9.3% for the first nine months of fiscal 2003.
For the quarter ended October 30, 2004, other income increased $0.1 million due
to additional interest and dividend income earned on a higher level of cash and
investments compared to the same period in the prior year. For the nine months
ended October 30, 2004, other income decreased $0.2 million primarily from lower
interest rates earned on cash and investments during the first half of the
current fiscal year compared to the same period of fiscal 2003.
Income tax expense, as a percentage of pre-tax income, was 36.7% in both the
third quarter of fiscal 2004 and the third quarter of fiscal 2003, bringing net
income to $14.9 million for the third quarter of fiscal 2004 versus $12.2
million for the third quarter of fiscal 2003, a 22.3% increase. Income tax
expense was also 36.7% of pre-tax income for both the first nine months of
fiscal 2004 and fiscal 2003, bringing net income to $26.1 million for the first
three quarters of fiscal 2004 versus $18.7 million for the same period of fiscal
2003, a 39.4% increase.
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. During the first nine months
of fiscal 2004 and 2003, the Company's cash flow provided by operating
activities was $19.9 and $14.0 million, respectively.
The uses of cash for both thirty-nine 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 nine months of fiscal 2004
compared to the first nine months 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 shareholders 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. 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 nine months of fiscal 2004 and only minor
bank borrowings during the first nine months of fiscal 2003. As of October 30,
2004, the Company had working capital of $208.5 million, including $123.5
million of cash and cash equivalents and short-term investments of $26.6
million.
During the first nine months of fiscal 2004 and 2003 the Company invested $11.5
million and $15.3 million, respectively, in new store construction, store
renovation and upgrading store technology. The Company also spent approximately
$0.8 million and $0.7 million in the first nine months of fiscal 2004 and 2003,
respectively, in capital expenditures for the corporate headquarters and
distribution center.
15
THE BUCKLE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
During the remainder of fiscal 2004, the Company anticipates completing
approximately three additional store construction projects, including two new
stores and one store to be remodeled and/or relocated. As of October 30, 2004,
three 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 October 30, 2004, had total cash and investments of
$196.6 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 and $258,000 at October 30, 2004
and January 31, 2004, respectively.
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 $3.6 million and $2.5
million as of October 30, 2004 and January 31, 2004, respectively. We are
not aware of any events, conditions or changes in demand or price that
would indicate 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
OFF BALANCE SHEET ARRANGEMENTS, 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
October 30, 2004:
Payments Due by Period
-------------------------------------------------------------------------------
Contractual obligations Less than 1
(dollar amounts in thousands) Total year 1-3 years 4-5 years After 5 years
------------------------------- ------------ --------------- --------------- ------------- -------------
Long term debt and purchase $ - $ - $ - $ - $ -
obligations
Deferred Compensation $ 1,689 $ - $ - $ - $ 1,689
Operating leases $ 205,369 $ 31,088 $ 57,225 $ 50,179 $ 66,877
Total contractual obligations $ 207,058 $ 31,088 $ 57,225 $ 50,179 $ 68,566
Amount of Commitment Expiration Per Period
------------------------------------------------------------------------------
Other Commercial Commitments Total Amounts Less than 1
(dollar 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
October 30, 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 thirty-nine week periods
ended October 30, 2004, and November 1, 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.
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 third 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
19
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
Dollar Value of
Total Total Number of Shares that May Yet
Number Average Shares Purchased Be Purchased
of Shares Price Paid As Part of Publicly Under Publicly
Purchased Per Share Announced Plan Announced Plan
August 1, to August 28, 2004 60,000 $ 26.25 60,000 $ 1,135,550
August 29, to October 2, 2004 25,000 $ 26.73 25,000 $ 485,550
October 3, to October 30, 2004 - - - $ 485,550
------ --------- ------
85,000 $ 26.39 85,000
====== ========= ======
These shares were part of a 500,000 share repurchase plan, announced by
the Company on December 27, 2000. Subsequent to October 30, 2004, the
Company has not repurchased any additional shares of its common stock,
bringing the total repurchased under the plan to 481,325 shares.
Item 3. Defaults Upon Senior Securities: None
Item 4. Submission of Matters to a Vote of Security Holders: 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.
21
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
Chief Executive Officer
Dated: April 18, 2005 /s/ KAREN B. RHOADS
------------------------------------------
KAREN B. RHOADS, Vice President
of Finance and Chief Financial Officer
22