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Proc-Type: 2001,MIC-CLEAR
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<SEC-DOCUMENT>0000950137-01-500955.txt : 20010424
<SEC-HEADER>0000950137-01-500955.hdr.sgml : 20010424
ACCESSION NUMBER: 0000950137-01-500955
CONFORMED SUBMISSION TYPE: 10-K405
PUBLIC DOCUMENT COUNT: 10
CONFORMED PERIOD OF REPORT: 20010203
FILED AS OF DATE: 20010423
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: BUCKLE INC
CENTRAL INDEX KEY: 0000885245
STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-FAMILY CLOTHING STORES [5651]
IRS NUMBER: 470366193
STATE OF INCORPORATION: NE
FISCAL YEAR END: 0201
FILING VALUES:
FORM TYPE: 10-K405
SEC ACT:
SEC FILE NUMBER: 001-12951
FILM NUMBER: 1608891
BUSINESS ADDRESS:
STREET 1: 2407 W 24TH ST
CITY: KEARNEY
STATE: NE
ZIP: 68847
BUSINESS PHONE: 3082368491
MAIL ADDRESS:
STREET 1: P O BOX 1480
CITY: KEARNEY
STATE: NE
ZIP: 68848-1480
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-K405
<SEQUENCE>1
<FILENAME>c61814e10-k405.txt
<DESCRIPTION>ANNUAL REPORT
<TEXT>
<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended FEBRUARY 3, 2001
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from ____________ to ____________
Commission File Number: 000-20132
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
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (308) 236-8491
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
TITLE OF CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
-------------- -----------------------------------------
Common Stock, $.01 par value New York Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE
Indicate 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 if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. |X|
The aggregate market value (based on the closing price of the New York Stock
Exchange) of the Common Stock of the Registrant held by non-affiliates of the
Registrant was $115,063,141.41 on March 26, 2001. For purposes of this response,
executive officers and directors are deemed to be the affiliates of the
Registrant and the holdings by non-affiliates was computed as 6,764,441 shares.
The number of shares outstanding of the Registrant's Common Stock, as of March
26, 2001, was 20,518,647.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the definitive Proxy Statement dated April 26, 2001 for Registrant's
2001 Annual Meeting of Shareholders to be held May 31, 2001 are incorporated by
reference in Part III.
<PAGE> 2
THE BUCKLE, INC.
FORM 10-K
FEBRUARY 3, 2001
TABLE OF CONTENTS
PAGE
----
PART I
Item 1. Business 3
Item 2. Properties 10
Item 3. Legal Proceedings 11
Item 4. Submission of Matters to a Vote of Security Holders 11
PART II
Item 5. Market for Registrant's Common Equity and Related 11
Shareholder Matters
Item 6. Selected Financial Data 11
Item 7. Management's Discussion and Analysis of Financial 11
Condition and Results of Operations
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 11
Item 8. Financial Statements and Supplementary Data 11
Item 9. Changes In and Disagreements With Accountants on 11
Accounting and Financial Disclosure
PART III
Item 10. Directors and Executive Officers of the Registrant 12
Item 11. Executive Compensation 12
Item 12. Security Ownership of Certain Beneficial Owners and 12
Management
Item 13. Certain Relationships and Related Transactions 12
PART IV
Item 14. Exhibits, Financial Statements, Schedules and Reports 12
on Form 8-K
2
<PAGE> 3
PART I
ITEM 1 - BUSINESS
The Buckle, Inc. (the "Company") is a retailer of medium to better-priced casual
apparel, footwear and accessories for fashion conscious young men and women. As
of February 3, 2001, the Company operated 274 retail stores in 36 states
throughout the central United States, as well as in the northwest and
southwestern states under the names "Buckle" and "The Buckle." The Company
markets a wide selection of mostly brand name casual apparel, including denims,
other casual bottoms, tops, sportswear, outerwear, accessories, and footwear.
The Company emphasizes personalized attention to its customers and provides
individual customer services such as free alterations, free gift-wrapping, easy
layaways and a frequent shopper program. Most stores are located in regional,
high-traffic shopping malls, and this is the Company's strategy for future
expansion. All of the Company's central office functions, including purchasing,
pricing, advertising and distribution, are controlled from its headquarters and
distribution center in Kearney, Nebraska.
Incorporated in Nebraska in 1948, the Company commenced business under the name
Mills Clothing, Inc., a conventional men's clothing store with only one
location. In 1967, a second store, under the trade name Brass Buckle, was
purchased. In the early 1970s, the store image changed to that of a jeans store,
with a wide selection of denims and shirts. The first branch store was opened in
Columbus, Nebraska, in 1976. In 1977, the Company began selling young women's
apparel as well, and opened its first mall store. The Company has experienced
significant growth over the past ten years, growing from 71 stores at the start
of 1991 to 274 stores by the close of fiscal 2000. The Company changed its
corporate name to The Buckle, Inc. on April 23, 1991. All references herein to
fiscal 2000 refer to the 53-week period ended February 3, 2001. Fiscal 1999 and
fiscal 1998 refer to the 52-week periods ended January 29, 2000 and January 30,
1999, respectively.
The Company's principal executive offices and distribution center are located at
2407 West 24th Street, Kearney, Nebraska 68845. The Company's telephone number
is (308) 236-8491. The Company publishes its corporate web site at
www.buckle.com.
MARKETING AND MERCHANDISING
The Company's marketing and merchandising strategy is to offer customers a wide
selection of key brand name merchandise while also providing a broad range of
services designed to create customer loyalty. The Company provides a unique
specialty apparel store with merchandise designed to appeal to the fashion
conscious 12 to 24 year old. The merchandise mix includes denims, casual
bottoms, tops, sweaters, sportswear, outerwear, accessories, and footwear. Denim
is a significant contributor to total sales (26.6% of fiscal 2000 net sales) and
is a key to the Company's merchandising concept. The Company believes it
attracts customers with a selection of key brands and a wide variety of fits,
finishes and styles in denim. Shirts and tops are also significant contributors
to the total sales (32.2% of fiscal 2000 net sales). The Company strives to
provide a continually changing selection of the latest casual fashions.
The percentage of net sales over the past three fiscal years of the Company's
major product lines are set forth in the following table.
Percentage of Net Sales
-----------------------
Merchandise Group Fiscal Fiscal Fiscal
----------------- 2000 1999 1998
------ ------ ------
Denims 26.6% 25.0% 27.3%
Slacks/Casual Bottoms 5.4 4.3 4.1
Tops (including sweaters) 32.2 34.0 34.0
Sportswear/Fashion Clothes 6.5 7.8 7.5
Outerwear 3.3 2.7 2.3
Accessories 9.1 7.1 5.8
Footwear 14.4 16.6 17.3
Little Guys/Gals 2.2 2.4 1.3
Other 0.3 0.1 0.4
----- ----- -----
Total 100.0% 100.0% 100.0%
===== ===== =====
3
<PAGE> 4
Brand name merchandise constitutes over 85% of the Company's sales volume. The
balance is comprised of private label merchandise that is manufactured to the
Company's specifications. The Company's merchandisers continually work with
manufacturers and vendors to produce brand name merchandise that is unique in
color and style compared to the merchandise sold in other stores. While the
brands offered by the Company change to meet current customer preferences, the
Company currently offers brands such as Lucky Brand Dungarees, Dr. Martens,
Silver, Fossil, and Polo Jeans Company. The Company believes brand name
merchandise will continue to constitute the substantial majority of sales.
Management believes the Company provides a unique store setting by maintaining a
high level of customer service, and by offering a wide selection of fashionable,
quality merchandise at good values. The Company believes that it is essential to
create an enjoyable shopping atmosphere and to provide highly motivated
employees who give personal attention to customers. Each salesperson is educated
to help create a complete look for the customer by showing merchandise as
coordinating outfits. The Company also offers specialized services such as free
alterations, free gift wrapping, layaways, a special order system which allows
stores to obtain specifically requested merchandise from other Company stores, a
frequent shopper card, and The Buckle private label credit card. Customers are
encouraged to use the Company's layaway plan, which allows customers to make a
partial payment on merchandise that is then held by the store until the balance
is paid. For the past three fiscal years, an average of approximately six to
seven percent of net sales has been made on a layaway basis.
Merchandising and pricing decisions are made centrally; however, the Company's
distribution system allows for variation in the mix of merchandise distributed
to each store so that individual store inventories can be tailored to reflect
differences in customer buying patterns at various locations. In addition, to
assure a continually fresh, new look in its stores, the Company ships new
merchandise daily to most stores, including varying styles and colors that
differ from prior merchandise. The Company also has a transfer program which
shifts specific merchandise to locations where it is selling best. This
distribution and transfer system helps to maintain customer satisfaction by
providing in stock popular items and reducing the need to mark down slow-moving
merchandise at a particular location. The Company believes that the reduced
markdowns justify the incremental costs of distribution associated with the
transfer system. The Company does not hold storewide off-price sales at anytime.
In fiscal 1997, the store decor and fixtures were redesigned to up-to-date the
store appearance. The first store with the new design was opened in February
1997. Since that time, all new and fully remodeled stores have received this
design. During fiscal 2000, the Company began working with a nationally
recognized design firm to review the architectural finishes and lighting of the
store design. Particular attention is being paid to the storefront and front
counter finishes to re-fresh and update the store appearance, although not
redesigning the entire store. Lighting fixtures are being updated to reflect new
color-indexing lamps and energy efficiencies. Future areas to be reviewed
include column treatments and front counter design. The Company anticipates
finishing a proto-type store with new finishes for Back-to-School 2001 and
anticipates that new stores for Holiday 2001 will feature the new finishes and
design elements.
The basic overall store architectural design presents a unique atmosphere in
which the store's architectural elements, including feature display walls,
provide a backdrop, creating a strong visual presentation for the customer.
Special care is taken to provide a comfortable environment to which customers
can relate.
ADVERTISING AND PROMOTION
In fiscal 2000, the Company spent $4.0 million (net co-op reimbursements) or
1.0% of net sales on advertising, promotions and in-store point of sale
materials. In-store seasonal sign kits, promotional signage and image brochures
are used to enhance merchandising presentations, the stores' image and special
events at point of sale. Magazine advertising in leading teen publications is
used during key seasons to introduce new merchandise, build awareness and brand
the Buckle's image. The Buckle partners with key vendors on magazine
opportunities to extend the reach in these publications. Radio advertising
continues as a media source used to support special events and promotions such
as sweepstakes, grand openings and end-of-season sales in approximately 75% of
the Company's markets.
The Company has developed programs to help strengthen relationships with loyal
guests. Seasonal fliers and birthday cards are mailed to guests who have signed
up on the Buckle's in-house mailing list. In addition, the Company offers a
frequent shopper program (the Buckle Primo Card), a rewards program designed to
build customer loyalty. Private label credit card marketing is another avenue
for marketing to loyal guests. The Company offers exclusive benefits to active
Buckle Cardholders such as a seasonal newsletter, coupons and other special
targeted mailings.
4
<PAGE> 5
The Company publishes a corporate web site at www.buckle.com. The Company's web
site serves as a marketing tool reaching a growing online audience. Buckle.com
is an interactive, entertaining, informative and brand building environment
where visitors can get the latest Buckle fashion information with special
features including an online denim guide, shoe guides and style boutiques. The
Company has an opt-in online database and sends weekly e-mail blasts to fill
members in on the latest store promotions and product offerings. Online guests
can shop, enter monthly contests, fill out a wish list, find out about career
opportunities, and read the latest Buckle financial news. The Buckle Online
Store was launched April 26, 1999 as a marketing tool, extending the Company's
brand beyond the physical locations. Offering a small sampling of the
merchandise inventory online, the Company presents the online store as a "taste
test" in new markets as well as a customer service tool in existing markets.
STORE OPERATIONS
The Company has a Vice President of Sales, two regional managers, nine district
managers, and 51 area managers. Six of the district managers and all of the area
managers also serve as manager of their home base store. Each store has one
manager, one or two assistant managers, one to three additional full-time
salespeople and up to 20 part-time salespeople. Most stores have peak levels of
staff during the back-to-school and Christmas seasons. Almost every location
also employs a seamstress.
The Company places great importance on educating quality personnel. The Company
recruits interns and management trainees and focuses on building its management
organization from within. Store managers receive compensation in the form of a
base salary and incentive bonuses. District and area managers also receive added
incentives based upon the sales performance of stores in their district/area.
Store managers perform sales training of new employees at the store level.
Salespeople displaying particular talent generally are assigned to stores
operated by district managers for training as a store manager. A majority of the
Company's store managers and most of its middle and upper level management are
former salespeople, including the President of the Company, Dennis Nelson, and
its Chairman, Dan Hirschfeld.
The Company has established a comprehensive program stressing the prevention and
control of shrinkage losses. Steps taken to reduce shrinkage include monitoring
cash refunds, voids, inappropriate discounts, employee sales and
returns-to-vendor. The Company also has electronic article surveillance systems
in 98% of the Company's stores as well as surveillance camera systems in
approximately 58% of the stores. As a result, the Company achieved a merchandise
shrinkage rate of 0.6% of net sales for fiscal 2000, 0.7% of net sales for
fiscal 1999 and 0.5% for fiscal year 1998.
The average store is approximately 4,800 square feet (of which the Company
estimates an average of approximately 80% is selling space), and stores range in
size from 2,450 square feet to 8,475 square feet.
PURCHASING AND DISTRIBUTION
The Company has a very experienced buying team. The buying team includes the
President, two head women's merchandisers, six women's buyers, and three men's
buyers. Five members of this buying team have between 16 and 30 years of
experience with the Company. The experience and leadership within the buying
team contributes significantly to the company's success by enabling the buying
team to react quickly to changes in fashion and by providing extensive knowledge
of sources for branded and private label goods.
The Company purchases products from manufacturers within the United States and
from some foreign manufacturers. The Company's merchandising team monitors U.S.
fashion centers (in New York and on the West Coast) and shops high fashion
stores to adapt new ideas to The Buckle. The Company continually monitors fabric
selection, quality and delivery schedules. The Company has not experienced any
material difficulties with merchandise manufactured in foreign countries. The
Company does not have long-term or exclusive contracts with any brand name
manufacturer or supplier. The Company does have a long term relationship with an
agent in Hong Kong for the manufacture of The Buckle, Inc.'s private label
merchandise. An agreement with this company was entered into on November 28,
1994, for orders placed subsequent to this date. Management believes that as the
Company has grown it has been able to obtain better purchasing terms. Scott M.
Porter, Vice President of Men's Merchandising since April 19, 1991, retired from
the Company as of February 4, 2001. Mr. Porter had been with the Company since
May, 1978.
In fiscal 2000, Lucky Brand Dungarees (including their children and fragrance
divisions) and Dr. Martens made up 21.8% and 12.6%, respectively, of the
Company's net sales. No other vendor accounted for more than 10% of the
Company's sales. Current significant vendors include Lucky Brand Dungarees, Dr.
Martens, Fossil, Silver, and Polo Jeans Company. The Company continually strives
to offer brands that are currently popular with its customers and therefore, the
Company's suppliers and purchases from specific vendors may vary significantly
from year to year.
5
<PAGE> 6
The Buckle stores generally carry the same merchandise, with quantity and
seasonal variations based upon historical sales data, climate and perceived
local customer interest. The Company uses a centralized receiving and
distribution center located within the corporate headquarters building in
Kearney, NE. Merchandise is received daily in Kearney, sorted, tagged with
bar-coded tickets, (unless the vendor UPC code can be used or the merchandise is
pre-ticketed), and packaged for distribution to individual stores primarily via
United Parcel Service. The Company's goal is to ship the majority of its
merchandise out to the stores within one to two business days of receipt. This
system allows stores to receive new merchandise almost every day, providing
customers with a good reason to shop often and helping create excitement within
each store. During fiscal 1998, the Company began using "pre-packs" to expedite
the movement of merchandise through the distribution center.
In fiscal 1999, the Company completed remodeling its corporate headquarters and
during fiscal 1998 finished the expansion of its distribution center. The
current building space and distribution system will allow for handling up to 450
stores. The Company has developed an effective computerized system for tracking
merchandise from the time it is checked in at the Company's distribution center
until it arrives at the stores and is sold to a customer. The system's function
is to insure that store shipments are delivered accurately and promptly, to
account for inventory, and to assist in allocating merchandise among stores.
Management can track on a daily basis which merchandise is selling at specific
locations and directs transfers of merchandise from one store to another as
necessary. This allows stores to carry a reduced inventory while at the same
time satisfying customer demands.
To reduce inter-store shipping costs and provide a more timely restocking of
in-season merchandise, the Company has increased its focus on warehousing a
portion of initial shipments. Sales reports are then used to replenish on a
basis of one to three times each week, those stores that are experiencing the
greatest success selling specific styles, colors, and sizes of merchandise. This
system is also designed to prevent a crowded, cluttered look in the stores at
the beginning of a season.
STORE LOCATIONS AND EXPANSION STRATEGIES
As of April 1, 2001, the Company operated 277 stores in 36 states, including 3
stores opened in fiscal 2001. The existing stores are in 5 downtown locations, 9
strip centers, 2 lifestyle centers and 261 shopping malls. The Company
anticipates opening approximately 19 additional new stores in fiscal 2001 and
adding Virginia as a new state. All new stores for fiscal 2001 will be located
in higher traffic shopping malls. The following table lists the location of
existing stores as of April 1, 2001.
Location of Stores
------------------
State Number of Stores State Number of Stores
----- ---------------- ----- ----------------
Alabama 2 Montana 5
Arizona 3 Nebraska 15
Arkansas 5 New Mexico 4
California 3 North Carolina 4
Colorado 11 North Dakota 3
Florida 3 Ohio 12
Georgia 3 Oklahoma 14
Idaho 5 Oregon 2
Illinois 15 Pennsylvania 3
Indiana 11 South Carolina 1
Iowa 20 South Dakota 3
Kansas 15 Tennessee 7
Kentucky 5 Texas 30
Louisiana 7 Utah 6
Michigan 17 Washington 3
Minnesota 8 West Virginia 2
Mississippi 4 Wisconsin 13
Missouri 12 Wyoming 1
---
Total 277
===
6
<PAGE> 7
The Buckle has grown significantly over the past ten years, with the number of
stores increasing from 71 at the beginning of 1991 to 274 at the end of fiscal
2000. The Company's plan is to continue expansion by developing the geographic
region it currently serves and by expanding into contiguous markets. The Company
intends to open new stores only when management believes there is a reasonable
expectation of satisfactory results.
The following table sets forth information regarding store openings and closings
since the beginning of fiscal 1991 to the end of fiscal 2000:
Total Number of Stores Per Year
Fiscal Open at start Opened in Closed in
Year of year Current Year Current Year Total
-------------------------------------------------------------------
1991 71 15 - 86
1992 86 18 - 104
1993 104 27 - 131
1994 131 16 - 147
1995 147 17 - 164
1996 164 17 - 181
1997 181 19 1 199
1998 199 24 1 222
1999 222 27 1 248
2000 248 28 2 274
The Company's criteria used when considering a particular location for
expansion include:
1. Market area, including proximity to existing markets to capitalize on
name recognition;
2. Trade area population (number, average age, and college population);
3. Economic vitality of market area;
4. Mall location, anchor tenants, tenant mix, average sales per square
foot;
5. Available location within a mall, square footage, storefront width,
and facility of using the current store design;
6. Availability of suitable management personnel for the market;
7. Cost of rent, including minimum rent, common area and extra charges;
8. Estimated construction costs, including landlord charge backs and
tenant allowances.
The Company generally seeks sites of 4,000 to 5,000 square feet for its stores.
The projected cost of opening a store with the new design is approximately
$550,000, including construction costs of approximately $400,000 (which is prior
to any construction allowance received) and inventory costs of approximately
$150,000.
The Company anticipates opening approximately 22 new stores during fiscal 2001
and completing the remodeling of approximately eight existing stores. Remodels
range from partial to full, with construction costs for a full remodel being
nearly the same as for a new store. Of the stores scheduled for remodeling
during fiscal 2001, it is estimated that each will receive full remodeling. The
Company has budgeted a total of $17.0 million (before estimated construction
allowances from landlords of $2.0 million) for new store construction,
remodeling, technology upgrades and improvements at the corporate headquarters
during fiscal 2001.
The Company plans to expand in 2001 by opening stores in one new state as well
as openings in existing markets. New store openings are generally scheduled to
coincide with the increased customer traffic of the Easter, back-to-school or
Christmas holiday shopping seasons.
The Company believes that, given the time required for training personnel,
staffing a store and developing adequate district and regional managers, its
current management infrastructure is sufficient to support its currently planned
rate of growth.
The Company's ability to expand in the future will depend, in part, on general
business conditions; the ability to find suitable malls with acceptable sites on
satisfactory terms; the availability of financing; and the readiness of trained
store managers. There can be no assurance that the Company's expansion plans
will be fulfilled in whole or in part, or that leases under negotiation for
planned new sites will be obtained on terms favorable to the Company.
7
<PAGE> 8
MANAGEMENT INFORMATION SYSTEMS
The Company's management information systems (MIS) and electronic data
processing systems (EDP) consist of a full range of retail, financial and
merchandising systems, including purchasing, inventory distribution and control,
sales reporting, accounts payable, and merchandise management.
The system includes PC based point-of-sale (POS) registers equipped with bar
code readers in each store. These registers are polled nightly by the central
computer (IBM AS/400) using a virtual private network for collection of
comprehensive data, including complete item-level sales information, employee
time clocking, merchandise transfers and receipts, special orders, supply orders
and returns-to-vendor. In conjunction with the nightly polling, the central
computer sends the PC server messages from various departments at the Company
headquarters and price changes for the price lookup (PLU) file maintained within
the POS registers.
Each weekday morning, the Company initiates an electronic "sweep" of the
individual store bank accounts to the Company's primary concentration account.
This allows the Company to meet its obligations with a minimum of borrowing and
to invest excess cash on a timely basis.
Management monitors the performance of each of its stores on a continual basis.
Daily information is used to evaluate inventory, determine markdowns, analyze
profitability and assist management in the scheduling and compensation of
employees. Additionally, reports are generated verifying daily bank deposit
information against recorded sales, identifying transactions rung at prices that
differ from the PLU file, and listing selected "exception" transactions (e.g.
refunds, cash paid-outs, discounts). These reports are used to help assure
consistency among the stores and to help prevent losses due to error or
dishonesty.
The PLU system allows management to control merchandise pricing centrally,
permitting faster and more accurate processing of sales at the store and the
monitoring of specific inventory items to confirm that centralized pricing
decisions are carried out in each of the stores. Management is able to direct
all price changes, including promotional, clearance and markdowns on a central
basis and estimate the financial impact of such changes.
The Company is committed to ongoing review of the MIS and EDP systems to provide
productive, timely information and effective controls. This review includes
testing of new products and systems to assure that the Company is aware of
technological developments. Most important, continual feedback is sought from
every level of the Company to assure that information provided is pertinent to
all aspects of the Company's operations.
EMPLOYEES
As of February 3, 2001, the Company had approximately 5,500 employees -
approximately 860 of whom were full-time. The Company has an experienced
management team and substantially all of the management team, from store
managers through senior management, commenced work for the Company on the sales
floor. The Company experiences high turnover of store and distribution center
employees, primarily due to having a significant number of part-time employees.
However, the Company has not experienced significant difficulty in hiring
qualified personnel. Of the total employees, approximately 280 are employed at
the corporate headquarters and in the distribution center. None of the Company's
employees are represented by a union. Management believes that employee
relations are good.
The Company provides medical, dental, life insurance and long-term disability
plans, as well as a 401(k) and a section 125 cafeteria plan for eligible
employees. To be eligible for the plans, other than the 401(k) Plan, an employee
must have worked for the Company for 90 days or more, and his or her normal
workweek must be 35 hours or more. As of February 3, 2001, 710 employees
participated in the medical plan, 713 in the dental plan, 734 in the life
insurance plan, 658 in the long-term disability plan and 297 in the cafeteria
plan. With respect to the medical, dental and life insurance plans, the Company
pays 80% to 100% of the employee's expected premium cost, plus 10% to 100% of
the expected cost of dependent coverage under the health plan. The exact
percentage is based upon the employee's term of employment and job
classification within the Company. In addition, all employees receive discounts
on company merchandise.
COMPETITION
The men's and women's apparel industries are highly competitive with fashion,
selection, quality, price, location, store environment and service being the
principal competitive factors. While the Company believes that it is able to
compete
8
<PAGE> 9
favorably with other merchandisers, including department stores and specialty
retailers, with respect to each of these factors, the Company believes it
competes mainly on the basis of customer service and merchandise selection.
In the men's merchandise areas, the Company competes with specialty retailers
such as Gap, American Eagle Outfitters, Gadzooks, Pacific Sunwear, and
Abercrombie & Fitch. The men's market also competes with certain department
stores, such as Dillards, Saks, May Company stores, Federated stores, and other
local or regional department stores and specialty retailers, as well as with
mail order and internet merchandisers.
In the women's merchandise area, the Company competes with specialty retailers
such as Maurices, American Eagle Outfitters, Gadzooks, Pacific Sunwear,
Abercrombie & Fitch, Express, Gap, and Vanity. The women's sales also compete
with department stores, such as Dillards, Saks, May Company stores, Federated
stores, and certain local or regional department stores and specialty retailers,
as well as with mail order and internet merchandisers.
Many of the Company's competitors are considerably larger and have substantially
greater financial, marketing and other resources than the Company, and there is
no assurance that the Company will be able to compete successfully with them in
the future. Furthermore, while the Company believes it competes effectively for
favorable site locations and lease terms, competition for prime locations within
a mall is also intense.
TRADEMARKS
"BUCKLE", "BKLE", "RECLAIM", and "THE BUCKLE" are federally registered
trademarks of the Company. The Company believes the strength of its trademarks
is of considerable value to its business, and its trademarks are important to
its marketing efforts. The Company intends to protect and promote its
trademarks, as management deems appropriate.
EXECUTIVE OFFICERS OF THE COMPANY
The Executive Officers of the Company are listed below, together with brief
accounts of their experience and certain other information.
DANIEL J. HIRSCHFELD, AGE 59. Mr. Hirschfeld is Chairman of the Board of the
Company. He has served as Chairman of the Board since April 19, 1991. Prior to
that time, Mr. Hirschfeld served as President and Chief Executive Officer. Mr.
Hirschfeld has been involved in all aspects of the Company's business, including
the development of the Company's management information systems.
DENNIS H. NELSON, AGE 51. Mr. Nelson is President and Chief Executive Officer
and a Director of the Company. He has held the titles of President and Director
since April 19, 1991. Mr. Nelson was elected Chief Executive Officer on March
17, 1997. Mr. Nelson began his career with the Company in 1970 as a part-time
salesman while he was attending Kearney State College (now the University of
Nebraska - Kearney). While attending college, he became involved in
merchandising and sales supervision for the Company. Upon graduation from
college in 1973, Mr. Nelson became a full-time employee of the Company and he
has worked in all phases of the Company's operations since that date. Prior to
his election as President and Chief Operating Officer on April 19, 1991, Mr.
Nelson performed all of the functions normally associated with those positions.
KAREN B. RHOADS, AGE 42. Ms. Rhoads is the Vice-President - Finance, Treasurer
and a Director of the Company, and is the Chief Financial Officer. Ms. Rhoads
was elected a Director on April 19, 1991. She worked in the corporate offices
during college, and later worked part-time on the sales floor. Ms. Rhoads
practiced as a CPA for 6 1/2 years, during which time she began working on tax
and accounting matters for the Company as a client. She has been employed with
the Company since November 1987.
JAMES E. SHADA, AGE 45. Mr. Shada is Vice President - Sales. He began employment
with the Company in November of 1978 as a salesperson. Between 1979 and 1985, he
managed and opened new stores for the Company, and in 1985 Mr. Shada became the
Company's sales manager. He is also involved in other aspects of the business
including site selection and development and education of personnel as store
managers and as regional and district managers.
BRETT P. MILKIE, AGE 41. Mr. Milkie is Vice President-Leasing. He was elected
Vice President-Leasing on May 30, 1996. Mr. Milkie was a leasing agent for a
national retail mall developer for 6 years prior to joining the company in
January 1992 as director of leasing.
9
<PAGE> 10
SCOTT M. PORTER, AGE 38. Mr. Porter has served as the Vice President - Men's
Merchandising since April 19, 1991 and was elected as corporate Secretary on May
28, 1998. He joined the Company in May of 1978 as a part-time salesman. In 1983,
he commenced full-time employment with the Company as a store manager and began
participating in buying trips. Since 1987, Mr. Porter devoted most of his time
to men's merchandising, but was also involved in other aspects of the business,
including advertising and store design. Effective February 4, 2001, Mr. Porter
retired from the Company.
CERTAIN SIGNIFICANT EMPLOYEES
PATRICIA K. WHISLER, AGE 44. Ms. Whisler is a key women's merchandiser. She has
held this position since the beginning of fiscal 1991. Ms. Whisler joined the
Company in February, 1976 as a part-time salesperson and later became manager of
a Buckle store before returning to the corporate office in 1983 to work as part
of the growing merchandising team.
KARI G. SMITH, AGE 37. Ms. Smith is Regional Sales Manager. She has held this
position since October, 1990. Ms. Smith joined the Company May 16, 1978 as a
part-time salesperson. Later she became store manager in Great Bend, KS and then
began working with other stores as an area manager. As regional manager, Ms.
Smith has continued to develop her involvement with the sales management
executive team, helping with manager meetings and new store manager development,
as well as providing support for store managers, area managers and district
managers.
VICKIE S. HANSEN, AGE 46. Ms. Hansen is Regional Sales Manager. She has held
this position since February, 1995. Ms. Hansen joined the Company March 31, 1979
working as a salesperson. During her career, Ms. Hansen has opened and managed
several Buckle stores and also began working as an area manager. As regional
manager, Ms. Hansen has continued to develop her involvement with the sales
management executive team, helping with manager meetings and new store manager
development, as well as providing support for store managers, area managers and
district managers.
ITEM 2 - PROPERTIES
All of the store locations operated by the Company are leased facilities. Most
of the Company's stores have lease terms of approximately ten years and
generally do not contain renewal options. The Company has not in the past
experienced problems renewing its leases, although no assurance can be given
that the Company can renew existing leases on favorable terms. The Company seeks
to negotiate extensions on leases for stores undergoing remodeling to provide
terms of approximately ten years after completion of remodeling. Consent of the
landlord generally is required to remodel or change the name under which the
Company does business. The Company has not in the past experienced problems in
obtaining such consent. Most leases provide for a fixed minimum rental plus an
additional rental cost based upon a set percentage of sales beyond a specified
breakpoint, plus common area and other charges.
The current terms of the Company's leases, including automatic renewal options,
expire as follows:
During Fiscal Number of
Year expiring leases
---------------------------------------------------
2001 19
2002 22
2003 38
2004 26
2005 27
2006 19
2007 22
2008 and later 104
---
Total 277
===
The corporate headquarters and distribution center for the Company operate
within a facility purchased by the Company in 1988, and located in Kearney, NE.
The building provides approximately 179,000 square feet of space with over 70%
of the area being allocated for the distribution and returns-to-vendor
departments. During fiscal 2000, the Company purchased a 40,000 square foot
building with warehouse and office space near the corporate headquarters, which
will give the Company flexibility in its growth. The Company also acquired a
50-year lease, with favorable lease terms, on the land the building is built
upon.
10
<PAGE> 11
ITEM 3 - LEGAL PROCEEDINGS
From time to time, the Company is involved in litigation relating to claims
arising out of its operations in the normal course of business. As of the date
of this form, the Company was not engaged in any legal proceedings that are
expected, individually or in the aggregate, to have a material adverse effect on
the Company.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during the fourth
quarter of fiscal 2000.
PART II
ITEM 5 - MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
The Company's common stock trades on the New York Stock Exchange under the
symbol BKE. Prior to the Company's initial public offering on May 6, 1992, there
was no public market for the Company's common stock. The Company has not paid
any cash dividends in fiscal 2000, 1999 or 1998, and has no current plans for
dividend payment.
The number of record holders of the Company's common stock as of March 26, 2001
was 438. Based upon information from the principal market makers, the Company
believes there are more than 4,200 beneficial owners. The last reported sales
price of the Company's common stock on March 26, 2001 was $17.01.
The remainder of the information required by this item is incorporated by
reference to the information on page 32 of the Company's 2000 Annual Report to
Shareholders under the caption "Stock Prices by Quarter" which is attached to
this Form 10-K.
ITEM 6 - SELECTED FINANCIAL DATA
The information required by this item is incorporated by reference to the
information on page 11 in the Company's 2000 Annual Report to Shareholders under
the caption "Selected Financial Data" which is attached to this Form 10-K.
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The information required by this item is incorporated by reference to the
information appearing on pages 12 through 15 in the Company's 2000 Annual Report
to Shareholders which is attached to this Form 10-K.
ITEM 7A - 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 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements together with the report thereon of Deloitte & Touche
LLP dated March 2, 2001, appearing on pages 16 through 31 of the Company's 2000
Annual Report to Shareholders (which is attached to this Form 10-K) are
incorporated by reference in this Form 10-K.
ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
11
<PAGE> 12
PART III
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this item appears under the captions "Executive
Officers of the Company" appearing on pages 9 and 10 of this report, and
"Election of Directors" in the Company's Proxy Statement for its 2001 Annual
Shareholders' Meeting and is incorporated by reference.
ITEM 11- EXECUTIVE COMPENSATION
The information required by this item appears under the caption "Executive
Compensation and Other Information" in the Company's Proxy Statement for its
2001 Annual Shareholders' Meeting and is incorporated by reference.
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this item appears under the caption "Election of
Directors" in the Company's Proxy Statement for its 2001 Annual Shareholders'
Meeting and is incorporated by reference.
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item appears under the caption "Compensation
Committee Interlocks and Insider Participation" in the Company's Proxy Statement
for its 2001 Annual Shareholders' Meeting and is incorporated by reference.
PART IV
ITEM 14 - EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K
(a)(1) FINANCIAL STATEMENTS
The Company's 2000 Annual Report to Shareholders, a copy of which appears as
Exhibit 13 to this Form 10-K Report, contains the following on pages 16 through
31 and are hereby incorporated by reference to this report:
Balance Sheets as of February 3, 2001, and January 29, 2000
Statements of Income for each of the three years in the period
ended February 3, 2001
Statements of Stockholders' Equity for each of the three years in the
period ended February 3, 2001
Statements of Cash Flows for each of the three years in the period
ended February 3, 2001
Notes to Financial Statements for each of the three years in the
period ended February 3, 2001
Independent Auditors' Report
(a)(2) FINANCIAL STATEMENT SCHEDULE
Independent Auditors' Report
II. Valuation and Qualifying Accounts and Reserves
All other schedules are omitted because they are not applicable or the required
information is presented in the financial statements or notes thereto. This
schedule is on page 14.
(b) REPORTS ON FORM 8-K
The Company did not file a report on Form 8-K during the quarter ended February
3, 2001.
(c) EXHIBITS
See index to exhibits on pages 15 and 16.
12
<PAGE> 13
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Date: April 23, 2001 By: /s/ DENNIS H. NELSON
-------------------------------------
Dennis H. Nelson,
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed by the following persons on behalf of the registrant and in the
capacities indicated on the 23rd day of April, 2001.
/s/ DANIEL J. HIRSCHFELD
- ------------------------------------ -----------------------------------
Daniel J. Hirschfeld Bill L. Fairfield
Chairman of the Board and Director Director
/s/ DENNIS H. NELSON
- ------------------------------------ -----------------------------------
Dennis H. Nelson Ralph M. Tysdal
President and Chief Executive Officer Director
and Director
/s/ KAREN B. RHOADS
- ------------------------------------ -----------------------------------
Karen B. Rhoads Bruce L. Hoberman
Vice President of Finance and Director
Chief Financial Officer and Director
/s/ ROBERT E. CAMPBELL
- ------------------------------------ -----------------------------------
Robert E. Campbell David A. Roehr
Director Director
/s/ WILLIAM D. ORR
- ------------------------------------
William D. Orr
Director
13
<PAGE> 14
INDEPENDENT AUDITORS' REPORT
BOARD OF DIRECTORS
THE BUCKLE, INC.
We have audited the financial statements of The Buckle, Inc., ("the Company") as
of February 3, 2001 and January 29, 2000, and for each of the three years in the
period ended February 3, 2001, and have issued our report thereon dated March 2,
2001; such financial statements and report are included in your 2000 Annual
Report to Stockholders and are incorporated herein by reference. Our audits also
included the financial statement schedule of The Buckle, Inc., listed in Item
14(a)(2). This financial statement schedule is the responsibility of the
Company's management. Our responsibility is to express an opinion based on our
audits. In our opinion, such financial statement schedule, when considered in
relation to the basic financial statements taken as a whole, presents fairly in
all material respects the information set forth therein.
DELOITTE & TOUCHE LLP
Omaha, Nebraska
March 2, 2001
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
Allowance for
Doubtful Accounts
-----------------
Balance, January 31, 1998 $ 490,567
Amounts charged to costs and expenses 1,132,004
Write-off of uncollectible accounts (1,322,571)
-----------
Balance, January 30, 1999 300,000
Amounts charged to costs and expenses 1,095,115
Write-off of uncollectible accounts (1,170,115)
-----------
Balance, January 29, 2000 225,000
Amounts charged to costs and expenses 857,968
Write-off of uncollectible accounts (832,968)
-----------
Balance, February 3, 2001 $ 250,000
===========
14
<PAGE> 15
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBITS PAGE NUMBER OR INCORPORATION
BY REFERENCE TO
<S> <C>
(3) Articles of Incorporation and By-Laws.
(3.1) Articles of Incorporation Exhibit 3.1 to Form S-1
of The Buckle, Inc. as amended No. 33-46294
(3.1.1) Amendment to the Articles of Exhibit 3.1.1 to Form S-1
Incorporation of The Buckle, Inc. No. 33-46294
(3.2) By-Laws of The Buckle, Inc. Exhibit 3.2 to Form S-1
No. 33-46294
(4) Instruments defining the rights of security
holders, including indentures
(4.1) See Exhibits 3.1 and 3.2 for provisions
of the Articles of Incorporation and
By-laws of the Registrant defining rights
of holders of Common Stock of the registrant
(4.2) Form of stock certificate for Common Stock Exhibit 4.1 to Form S-1
No. 33-46294
(9) Not applicable
(10) Material Contracts
(10.1) 1991 Stock Incentive Plan Exhibit 10.1 to Form S-1
No. 33-46294
(10.2) 1991 Non-Qualified Stock Option Plan Exhibit 10.2 to Form S-1
No. 33-46294
(10.3) Non-Qualified Stock Option Plan and Exhibit 10.3 to Form S-1
Agreement With Dennis Nelson No. 33-46294
(10.4) Acknowledgment for Dennis H. Nelson
dated April 18, 2001
(10.5) Acknowledgment for James E. Shada
dated April 18, 2001
(10.6) Acknowledgment for Brett P. Milkie
dated April 18, 2001
(10.7) Acknowledgment for Patricia K. Whisler
dated April 18, 2001
(10.10) Cash or Deferred Profit Sharing Plan Exhibit 10.10 to Form S-1
No. 33-46294
(10.10.1) Non-Qualified Deferred Compensation Plan Exhibit 10.10.1 to Form S-1
No. 33-46294
(10.11) Programmed Lending Note dated
May 25, 2000 for $7.5 million payable
to First National Bank and Trust Co. of Kearney
(now Wells Fargo Bank Nebraska, N.A.)
</TABLE>
15
<PAGE> 16
<TABLE>
<S> <C>
(10.12) Loan Agreement dated May 25, 2000
between The Buckle, Inc. and First National
Bank and Trust Co. of Kearney (now Wells Fargo
Bank Nebraska, N.A.), regarding $7.5 million
line of credit.
(10.13) Letter dated May 25, 2000 from First National
Bank and Trust Co. of Kearney (now Wells Fargo
Bank Nebraska, N.A.), regarding $7.5 million
line of credit and $7.5 million letter of
credit facility.
(10.17) 1993 Director Stock Option Plan Exhibit A to Proxy Statement
for Annual Meeting to be held
May 26, 1993
(10.18) 1993 Executive Stock Option Plan Exhibit B to Proxy Statement
for Annual Meeting to be held
May 26, 1993
(10.19) 1995 Management Incentive Plan Exhibit A to Proxy Statement
for Annual Meeting to be held
June 2, 1995
(10.20) 1995 Executive Stock Option Plan Exhibit B to Proxy Statement
for Annual Meeting to be held
June 2, 1995
(10.21) 1997 Management Incentive Plan Exhibit A to Proxy Statement
for Annual Meeting to be held
June 2, 1997
(10.22) 1998 Management Incentive Plan Exhibit A to Proxy Statement
for Annual Meeting to be held
May 28, 1998
(10.23) 1997 Executive Stock Option Plan Exhibit B to Proxy Statement
for Annual Meeting to be held
May 28, 1998
(10.24) 1998 Restricted Stock Plan Exhibit C to Proxy Statement
for Annual Meeting to be held
May 28, 1998
(10.25) 1999 Management Incentive Plan Exhibit A to Proxy Statement
for Annual Meeting to be held
June 4, 1999
(12) Not applicable
(13) 2000 Annual Report to Stockholders
(18) Not applicable
(19) Not applicable
(22) Not applicable
(23) Consent of Deloitte & Touche LLP
(25) Not applicable
(28) Not applicable
</TABLE>
16
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.4
<SEQUENCE>2
<FILENAME>c61814ex10-4.txt
<DESCRIPTION>ACKNOWLEDGMENT FOR DENNIS H. NELSON
<TEXT>
<PAGE> 1
EXHIBIT 10.4
ACKNOWLEDGMENT
1. Dennis H. Nelson, currently employed by The Buckle, Inc. ("Company")
of Kearney, Nebraska, will be paid an annual salary of $725,000 for so long as
the employee is employed by the Company during the fiscal year ending February
2, 2002.
2. In addition to the salary outlined in paragraph 1, above, a "Cash
Award" for the above fiscal year will be paid to you provided you are employed
by the Company on the last day of such fiscal year. Your Cash Award will be
calculated based upon the Company's growth in Pre-Bonus Net Income over the
previous year. You are designated a Level I Executive. The incentive multiple
level based on the percentage of change in Pre-Bonus Net Income is tied to your
base salary. The multiples for your fiscal 2001 cash award will be calculated as
follows:
Multiple
of Base
Salary
--------
LEVEL I
Change in Pre-Bonus Net Income 2001
------------------------------ ----
>10% decrease 0.00
10% decrease 0.70
No Change 1.10
>10% increase 1.50
>20% increase 1.80
>30% increase 2.30
>40% increase 2.70
>50% increase 3.20
No payment of a Cash Award for the year may be made until the Company's
Pre-Bonus Net Income for the year is certified by the Compensation Committee.
You shall not be entitled to receive payment of a Cash Award unless you are
still in the employ of (and shall not have delivered notice of resignation to)
the Company on the last day of the fiscal year for which the Cash Award is
earned.
The Cash Award will be paid on or before April 15 following the close
of the fiscal year. For calculating this Cash Award, "Pre-Bonus Net Income"
shall be defined as the Company's net income from operations after the deduction
of all expenses, excluding administrative and store manager percentage bonuses
and excluding income taxes, but including draws against such bonuses. Net income
from operations does not include earnings on cash investments. For this purpose,
net income shall be computed by the Company in accordance with the Company's
normal accounting practices, and the Company's calculations will be final and
conclusive.
3. Restricted Stock will be granted based upon a percentage of the Cash
Award and the fair market value of the Company's stock on the date of
certification by the Compensation Committee of the amount of the Cash Award.
Restricted Stock grants will be based upon the following:
17
<PAGE> 2
Change in Pre-Bonus Net Income Level I Executives
------------------------------ ------------------
Any decrease none
No Change 10%
10% increase 15%
20% increase 20%
30% increase and up 30%
Restricted Stock granted pursuant to this Plan will vest 20% per year over five
years. Disposal of any vested shares of Restricted Stock will be prohibited for
five years, subject to waiver in the event of death or disability. The effect on
income of all Restricted Stock grants will be included in the calculation of
Pre-Bonus Net Income.
4. Options to purchase 103,500 shares ("Options") of The Buckle, Inc.
common stock at $20.51 per share were granted to you pursuant to the 1997
Executive Stock Option Plan as of the last day of the fiscal year preceding this
Plan (2-03-01). Options granted under the Plan will vest according to the same
terms as the 1997 Management Incentive Plan. Those terms include a performance
feature whereby one-half of the Options granted will vest over three years if a
10% increase in Pre-Bonus Net Income is achieved, and the second one-half of the
Options granted vest over three years if a 30% increase in Pre-Bonus Net Income
is achieved. If the performance goals are not met the Options will ultimately
vest after ten years. This Plan added an "accelerator" feature for the Options
so that vesting may occur sooner than the three or ten years when and if the
market price of the Company's stock doubles from the fair market value of the
stock at the date of the grant. All Options will also include a "reload" feature
under this Plan.
5. You are allowed personal use of a company owned vehicle. You are
also allowed personal use of a corporate owned aircraft for up to 30 hours this
fiscal year.
6. A credit limit of $3,500 has been established on your The Buckle
charge account, subject to annual change as determined by management. Please
make sure your charge account balance does not exceed this limit. You may have
payments made to your charge account via payroll withholding during the year.
Management is committed to reviewing its policies continually.
Accordingly, the statements outlined above are subject to review and change at
any time, with or without notice.
I understand I have the right to terminate my employment with the
Company at any time, with or without notice, and the Company retains the same
right, with or without cause or notice. I recognize, therefore, that I am an "at
will" employee.
This acknowledgment supersedes any prior acknowledgment or agreement
with the Company. This acknowledgment does not constitute an agreement of
employment with the Company.
April 18, 2001
The Buckle, Inc.
Acknowledged by:
-------------------------------
Dennis H. Nelson
18
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.5
<SEQUENCE>3
<FILENAME>c61814ex10-5.txt
<DESCRIPTION>ACKNOWLEDGMENT FOR JAMES E. SHADA
<TEXT>
<PAGE> 1
EXHIBIT 10.5
ACKNOWLEDGMENT
1. James E. Shada, currently employed by The Buckle, Inc. ("Company")
of Kearney, Nebraska, will be paid an annual salary of $160,000 for so long as
the employee is employed by the Company during the fiscal year ending February
2, 2002.
2. In addition to the salary outlined in paragraph 1, above, a "Cash
Award" for the above fiscal year will be paid to you provided you are employed
by the Company on the last day of such fiscal year. Your Cash Award will be
calculated based upon the Company's growth in Pre-Bonus Net Income over the
previous year. You are designated a Level I Executive. The incentive multiple
level based on the percentage of change in Pre-Bonus Net Income is tied to your
base salary. The multiples for your fiscal 2001 cash award will be calculated as
follows:
Multiple
of Base
Salary
--------
LEVEL I
Change in Pre-Bonus Net Income 2001
------------------------------ ----
>10% decrease 0.00
10% decrease 0.70
No Change 1.10
>10% increase 1.50
>20% increase 1.80
>30% increase 2.30
>40% increase 2.70
>50% increase 3.20
No payment of a Cash Award for the year may be made until the Company's
Pre-Bonus Net Income for the year is certified by the Compensation Committee.
You shall not be entitled to receive payment of a Cash Award unless you are
still in the employ of (and shall not have delivered notice of resignation to)
the Company on the last day of the fiscal year for which the Cash Award is
earned.
The Cash Award will be paid on or before April 15 following the close
of the fiscal year. For calculating this Cash Award, "Pre-Bonus Net Income"
shall be defined as the Company's net income from operations after the deduction
of all expenses, excluding administrative and store manager percentage bonuses
and excluding income taxes, but including draws against such bonuses. Net income
from operations does not include earnings on cash investments. For this purpose,
net income shall be computed by the Company in accordance with the Company's
normal accounting practices, and the Company's calculations will be final and
conclusive.
3. Restricted Stock will be granted based upon a percentage of the Cash
Award and the fair market value of the Company's stock on the date of
certification by the Compensation Committee of the amount of the Cash Award.
Restricted Stock grants will be based upon the following:
19
<PAGE> 2
Change in Pre-Bonus Net Income Level I Executives
------------------------------ ------------------
Any decrease none
No Change 10%
10% increase 15%
20% increase 20%
30% increase and up 30%
Restricted Stock granted pursuant to this Plan will vest 20% per year over five
years. Disposal of any vested shares of Restricted Stock will be prohibited for
five years, subject to waiver in the event of death or disability. The effect on
income of all Restricted Stock grants will be included in the calculation of
Pre-Bonus Net Income.
4. Options to purchase 13,860 shares ("Options") of The Buckle, Inc.
common stock at $20.51 per share were granted to you pursuant to the 1997
Executive Stock Option Plan as of the last day of the fiscal year preceding this
Plan (2/03/01). Options granted under the Plan will vest according to the same
terms as the 1997 Management Incentive Plan. Those terms include a performance
feature whereby one-half of the Options granted will vest over three years if a
10% increase in Pre-Bonus Net Income is achieved, and the second one-half of the
Options granted vest over three years if a 30% increase in Pre-Bonus Net Income
is achieved. If the performance goals are not met the Options will ultimately
vest after ten years. This Plan added an "accelerator" feature for the Options
so that vesting may occur sooner than the three or ten years when and if the
market price of the Company's stock doubles from the fair market value of the
stock at the date of the grant. All Options will also include a "reload" feature
under this Plan.
5. A credit limit of $3,500 has been established on your The Buckle
charge account, subject to annual change as determined by management. Please
make sure your charge account balance does not exceed this limit. You may have
payments made to your charge account via payroll withholding during the year.
Management is committed to reviewing its policies continually.
Accordingly, the statements outlined above are subject to review and change at
any time, with or without notice.
I understand I have the right to terminate my employment with the
Company at any time, with or without notice, and the Company retains the same
right, with or without cause or notice. I recognize, therefore, that I am an "at
will" employee.
This acknowledgment supersedes any prior acknowledgment or agreement
with the Company. This acknowledgment does not constitute an agreement of
employment with the Company.
April 18, 2001
The Buckle, Inc.
Acknowledged by:
--------------------------------
James E. Shada
20
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.6
<SEQUENCE>4
<FILENAME>c61814ex10-6.txt
<DESCRIPTION>ACKNOWLEDGMENT OF BRETT P. MILKIE
<TEXT>
<PAGE> 1
EXHIBIT 10.6
ACKNOWLEDGMENT
1. Brett P. Milkie, currently employed by The Buckle, Inc. ("Company")
of Kearney, Nebraska, will be paid an annual salary of $200,000 for so long as
the employee is employed by the Company during the fiscal year ending February
2, 2002.
2. In addition to the salary outlined in paragraph 1, above, a "Cash
Award" for the above fiscal year will be paid to you provided you are employed
by the Company on the last day of such fiscal year. Your Cash Award will be
calculated based upon the Company's growth in Pre-Bonus Net Income over the
previous year. You are designated a Level II Executive. The incentive multiple
level based on the percentage of change in Pre-Bonus Net Income is tied to your
base salary. The multiples for your fiscal 2001 cash award will be calculated as
follows:
LEVEL II Multiple
of Base
Change in Pre-Bonus Salary
------------------- --------
Net Income 2001
---------- ----
>10% decrease 0.00
10% decrease 0.40
No Change 0.65
>10% increase 0.85
>20% increase 1.075
>30% increase 1.251
>40% increase 1.50
>50% increase 1.75
No payment of a Cash Award for the year may be made until the Company's
Pre-Bonus Net Income for the year is certified by the Compensation Committee.
You shall not be entitled to receive payment of a Cash Award unless you are
still in the employ of (and shall not have delivered notice of resignation to)
the Company on the last day of the fiscal year for which the Cash Award is
earned.
The Cash Award will be paid on or before April 15 following the close
of the fiscal year. For calculating this Cash Award, "Pre-Bonus Net Income"
shall be defined as the Company's net income from operations after the deduction
of all expenses, excluding administrative and store manager percentage bonuses
and excluding income taxes, but including draws against such bonuses. Net income
from operations does not include earnings on cash investments. For this purpose,
net income shall be computed by the Company in accordance with the Company's
normal accounting practices, and the Company's calculations will be final and
conclusive.
3. Restricted Stock will be granted based upon a percentage of the Cash
Award and the fair market value of the Company's stock on the date of
certification by the Compensation Committee of the amount of the Cash Award.
Restricted Stock grants will be based upon the following:
21
<PAGE> 2
Change in Pre-Bonus Net Income Level II Executives
------------------------------ -------------------
Any decrease none
No Change 10%
10% increase 10%
20% increase 15%
30% increase and up 20%
Restricted Stock granted pursuant to this Plan will vest 20% per year over five
years. Disposal of any vested shares of Restricted Stock will be prohibited for
five years, subject to waiver in the event of death or disability. The effect on
income of all Restricted Stock grants will be included in the calculation of
Pre-Bonus Net Income.
4. Options to purchase 25,200 shares ("Options") of The Buckle, Inc.
common stock at $20.51 per share were granted to you pursuant to the 1997
Executive Stock Option Plan as of the last day of the fiscal year preceding this
Plan (2-03-01). Options granted under the Plan will vest according to the same
terms as the 1997 Management Incentive Plan. Those terms include a performance
feature whereby one-half of the Options granted will vest over three years if a
10% increase in Pre-Bonus Net Income is achieved, and the second one-half of the
Options granted vest over three years if a 30% increase in Pre-Bonus Net Income
is achieved. If the performance goals are not met the Options will ultimately
vest after ten years. This Plan added an "accelerator" feature for the Options
so that vesting may occur sooner than the three or ten years when and if the
market price of the Company's stock doubles from the fair market value of the
stock at the date of the grant. All Options will also include a "reload" feature
under this Plan.
5. A credit limit of $3,500 has been established on your The Buckle
charge account, subject to annual change as determined by management. Please
make sure your charge account balance does not exceed this limit. You may have
payments made to your charge account via payroll withholding during the year.
Management is committed to reviewing its policies continually.
Accordingly, the statements outlined above are subject to review and change at
any time, with or without notice.
I understand I have the right to terminate my employment with the
Company at any time, with or without notice, and the Company retains the same
right, with or without cause or notice. I recognize, therefore, that I am an "at
will" employee.
This acknowledgment supersedes any prior acknowledgment or agreement
with the Company. This acknowledgment does not constitute an agreement of
employment with the Company.
April 18, 2001
The Buckle, Inc.
Acknowledged by:
--------------------------------
Brett P. Milkie
22
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.7
<SEQUENCE>5
<FILENAME>c61814ex10-7.txt
<DESCRIPTION>ACKNOWLEDGMENT FOR PARTICIA K. WHISLER
<TEXT>
<PAGE> 1
EXHIBIT 10.7
ACKNOWLEDGMENT
1. Patricia K. Whisler, currently employed by The Buckle, Inc.
("Company") of Kearney, Nebraska, will be paid an annual salary of $200,000 for
so long as the employee is employed by the Company during the fiscal year ending
February 2, 2002.
2. In addition to the salary outlined in paragraph 1, above, a "Cash
Award" for the above fiscal year will be paid to you provided you are employed
by the Company on the last day of such fiscal year. Your Cash Award will be
calculated based upon the Company's growth in Pre-Bonus Net Income over the
previous year. You are designated a Level II Executive. The incentive multiple
level based on the percentage of change in Pre-Bonus Net Income is tied to your
base salary. The multiples for your fiscal 2001 cash award will be calculated as
follows:
LEVEL II Multiple
of Base
Change in Pre-Bonus Salary
------------------- ------
Net Income 2001
---------- ----
>10% decrease 0.00
10% decrease 0.40
No Change 0.65
>10% increase 0.85
>20% increase 1.075
>30% increase 1.251
>40% increase 1.50
>50% increase 1.75
No payment of a Cash Award for the year may be made until the Company's
Pre-Bonus Net Income for the year is certified by the Compensation Committee.
You shall not be entitled to receive payment of a Cash Award unless you are
still in the employ of (and shall not have delivered notice of resignation to)
the Company on the last day of the fiscal year for which the Cash Award is
earned.
The Cash Award will be paid on or before April 15 following the close
of the fiscal year. For calculating this Cash Award, "Pre-Bonus Net Income"
shall be defined as the Company's net income from operations after the deduction
of all expenses, excluding administrative and store manager percentage bonuses
and excluding income taxes, but including draws against such bonuses. Net income
from operations does not include earnings on cash investments. For this purpose,
net income shall be computed by the Company in accordance with the Company's
normal accounting practices, and the Company's calculations will be final and
conclusive.
3. Restricted Stock will be granted based upon a percentage of the Cash
Award and the fair market value of the Company's stock on the date of
certification by the Compensation Committee of the amount of the Cash Award.
Restricted Stock grants will be based upon the following:
23
<PAGE> 2
Change in Pre-Bonus Net Income Level II Executives
------------------------------ -------------------
Any decrease none
No Change 10%
10% increase 10%
20% increase 15%
30% increase and up 20%
Restricted Stock granted pursuant to this Plan will vest 20% per year over five
years. Disposal of any vested shares of Restricted Stock will be prohibited for
five years, subject to waiver in the event of death or disability. The effect on
income of all Restricted Stock grants will be included in the calculation of
Pre-Bonus Net Income.
4. Options to purchase 25,200 shares ("Options") of The Buckle, Inc.
common stock at $20.51 per share were granted to you pursuant to the 1997
Executive Stock Option Plan as of the last day of the fiscal year preceding this
Plan (2-03-01). Options granted under the Plan will vest according to the same
terms as the 1997 Management Incentive Plan. Those terms include a performance
feature whereby one-half of the Options granted will vest over three years if a
10% increase in Pre-Bonus Net Income is achieved, and the second one-half of the
Options granted vest over three years if a 30% increase in Pre-Bonus Net Income
is achieved. If the performance goals are not met the Options will ultimately
vest after ten years. This Plan added an "accelerator" feature for the Options
so that vesting may occur sooner than the three or ten years when and if the
market price of the Company's stock doubles from the fair market value of the
stock at the date of the grant. All Options will also include a "reload" feature
under this Plan.
5. A credit limit of $3,500 has been established on your The Buckle
charge account, subject to annual change as determined by management. Please
make sure your charge account balance does not exceed this limit. You may have
payments made to your charge account via payroll withholding during the year.
Management is committed to reviewing its policies continually.
Accordingly, the statements outlined above are subject to review and change at
any time, with or without notice.
I understand I have the right to terminate my employment with the
Company at any time, with or without notice, and the Company retains the same
right, with or without cause or notice. I recognize, therefore, that I am an "at
will" employee.
This acknowledgment supersedes any prior acknowledgment or agreement
with the Company. This acknowledgment does not constitute an agreement of
employment with the Company.
April 18, 2001
The Buckle, Inc.
Acknowledged by:
--------------------------------------
Patricia K. Whisler
24
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.11
<SEQUENCE>6
<FILENAME>c61814ex10-11.txt
<DESCRIPTION>PROGRAMMED LENDING NOTE
<TEXT>
<PAGE> 1
EXHIBIT 10.11
PROGRAMMED LENDING NOTE
$7,500,000.00 MAY 31, 2000
The undersigned jointly and severally
promise(s) to pay to the order of FIRST NATIONAL BANK AND TRUST CO. OF KEARNEY
("Lender") the sum of SEVEN MILLION FIVE HUNDRED THOUSAND AND NO/100 DOLLARS, or
so much thereof as may be advanced from time to time, with interest at the rate
set forth below (calculated on the basis of actual days elapsed in a 365 day
year) on the unpaid principal balance until this Note is fully paid. Principal
and interest shall be payable at Lender's office, or at such other place as the
holder hereof may designate, in lawful money of the United States. Unless
otherwise provided herein all payments shall be applied first to accrued
interest and the balance to principal.
The interest rate of this Note shall be:
[ ] an annual rate of __ %.
[ ] an annual rate ___________ Lender's Reference Rate as
established from time to time, each change in the interest rate to
be effective on the day of a change in the Reference Rate. The
initial interest rate shall be ___________ %.
[ ] an annual rate ___________ Lender's Reference Rate, to be
adjusted on the __________ day _____ of each during the term of
this Note. The initial interest rate shall be _____%.
[X] an annual rate 0.00% ABOVE NEW YORK PRIME AS PUBLISHED IN THE
WALL STREET JOURNAL AS ESTABLISHED FROM TIME TO TIME. The initial
rate shall be 9.50%. Interest after maturity (whether this Note matures by
demand, acceleration or lapse of time) shall be charged on the outstanding
principal of default at [ ] _____% above the rate at maturity or [X] 16.0%
("Default Rate"). In no event shall the interest charged on this Note exceed the
maximum rate, if any, allowed by law.
Principal and interest shall be due in a single payment on N/A or as
follows: MONTHLY INTEREST PAYMENTS DUE BEGINNING JULY 1, 2000, AND CONTINUING
MONTHLY THEREAFTER; and, if not sooner paid, all unpaid principal and accrued
interest shall be due and payable on MAY 31, 2001
[X] (Check if applicable) If any payment of principal or interest is
not paid within 15 days after the due date, a late charge of four percent(4%) of
the amount of the delinquent payment may be assessed by the holder; provided,
however, that nothing in this paragraph shall limit or affect the holder's right
to accelerate the sums owing under this Note as set forth below or any other
rights and remedies of the holder hereunder or under the Loan Documents (as
defined below).
The term "Lender's Reference Rate" shall mean a rate established by the
Lender from time to time for its internal use and guidance in the pricing of
loans. Lender may, at its sole discretion, change its Reference Rate and the
undersigned agree(s) that Lender is not obligated to give notice of changes in
Lender's Reference Rate or other index used for establishing the interest rate
of this Note. No representation is made that Lender's Reference Rate or other
index used for establishing the interest rate of this Note is either the lowest,
the best or a favored rate.
This obligation may be prepaid, in whole or in part, at any time
without penalty. Any partial prepayment shall not postpone the due date or
change the amount of any subsequent installments.
All advances under this Note made after maturity, if any, are subject
to all terms and conditions hereof and are due and payable on demand; provided
that Lender has no obligation to make any advances or readvances after maturity.
Upon non-payment of any installment of principal or interest when due;
or if holder shall at any time believe that the prospect of timely payment of
this Note is impaired; or upon the death, dissolution, termination of existence,
insolvency, business failure or appointment of a receiver of any part of the
property of, or upon any assignment for the benefit of creditors by, any
maker(s), endorser(s), surety(ies) or guarantor(s) of this Note; or upon the
occurrence of any event of default under any of the Loan Documents; the holder
shall have the right to declare the entire balance due and payable without
notice. If this Note is payable on demand nothing contained herein shall prevent
the holder from demanding payment of this Note at any time and for any reason
without prior notice. The failure of the holder to exercise this option to
accelerate, or to exercise any other right or remedy hereunder or under the Loan
Documents, shall not constitute a waiver of such option, right or remedy, and
the holder may exercise such option, right or remedy during any existing or
subsequent default regardless of any prior forbearance.
The undersigned agree(s) to pay all costs, fees and expenses incurred
by the holder in connection with any action taken to collect any sums due
hereunder or under the Loan Documents, to enforce any provisions hereof or of
the Loan Documents, or to protect any of the holder's rights hereunder or under
the Loan Documents (collectively, "Costs"). Such Costs shall include, but not be
limited to, costs of title searches, commitments and policies, sums advanced to
25
<PAGE> 2
discharge liens on or otherwise to protect any collateral for this Note, and
unless prohibited by law reasonable attorney fees. Such Costs shall be added to
the principal sum due hereunder and draw interest at the Default Rate.
Lender shall have at all times a security interest in and right of
set-off against the balances in any deposit account with respect to which the
maker(s) and endorser(s) hereof, or any of them, are parties, and may at any
time, without notice, apply the same against payment of this Note or any other
obligation of the undersigned to Lender, whether due or not, regardless of the
existence or amount of any other security held by Lender.
The holder hereof may without notice to or consent of, and without
releasing or diminishing the liability of, any maker or endorser of this Note:
(i) agree with any maker hereof to modify the rate or any terms of payment of
this Note, or any terms of the Loan Documents without limitation; (ii) sell,
exchange, cancel, release, surrender, realize upon or otherwise deal with in any
manner and in any order all or any part of any collateral securing this Note; or
(iii) release any party to this Note. Each maker and endorser waives
presentment, demand, notice of dishonor and protest, and consents to any number
of extensions and renewals for any periods without notice. The undersigned
agree(s) that each provision whose box is checked is part of this Note. This
Note shall be the joint and several obligation of all makers, sureties,
guarantors and endorsers and shall be binding upon each of them, their
successors and assigns. This Note shall be governed by the laws of the State of
Nebraska.
This Note is governed by, and Lender is entitled to the benefits of,
any and all loan agreement(s), security agreement(s), mortgage(s), deed(s) of
trust, and other security documents executed by the undersigned, or any of them,
in favor of Lender, including without limitation LOAN AGREEMENT DATED 5-31-2000
(collectively, "Loan Documents").
These funds are advanced for the purpose of WORKING CAPITAL
-------------------------
THE BUCKLE, INC.
BY DENNIS H. NELSON
------------------------
Note No. LINE 229351 Address PO BOX 1480
KEARNEY, NE 68848
26
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.12
<SEQUENCE>7
<FILENAME>c61814ex10-12.txt
<DESCRIPTION>LOAN AGREEMENT
<TEXT>
<PAGE> 1
EXHIBIT 10.12
LOAN AGREEMENT
This LOAN AGREEMENT ("Agreement") is made as of the 31st day of MAY,
2000, between FIRST NATIONAL BANK AND TRUST CO. OF KEARNEY ("Lender") and THE
BUCKLE, INC. ("Borrower," whether one or more; unless expressly indicated
otherwise, all references to Borrower shall be both individually and
collectively if Borrower is more than one person and/or entity).
I. THE LOAN
1.1 LOAN. Lender shall lend Borrower the sum of $7,500,000.00 (the
"Loan"), as evidenced by the following note(s) PROGRAMMED LENDING NOTE OF EVEN
DATE IN THE AMOUNT OF $7,500,000.00 (the "Note," whether one or more), and
pursuant to the terms of a loan commitment letter dated, 2000 ("Commitment
Letter"). The Loan shall be governed by the terms of this Agreement, the
Commitment Letter, the Note and the other "Loan Documents" (as defined in the
Note), all of which are incorporated herein by reference. The terms and
conditions of this Agreement, the Commitment Letter, the Note and the other Loan
Documents shall be considered cumulative and not exclusive or alternative.
1.2 PROGRAMMED LENDING. With respect to that portion of the Loan, if
any, that is represented by one or more programmed lending notes, Lender at
Borrower's request will advance funds under and in accordance with the terms of
each such note from time to time as long as the outstanding principal balance
does not exceed the maximum principal amount of the note. The actual principal
balance outstanding at any one time may be increased or decreased from time to
time as a result of advances by Lender and payments by Borrower, and a payment
by the Borrower during the term of a programmed lending note of the entire
principal balance of such note shall not operate as a discharge of Borrower
under the note.
1.3 ADVANCES. All Loan advances may be made to Borrower's regular
checking account number 326-406. A check or other charge presented against this
account in excess of the account balance may be treated by Lender as a request
for a Loan advance, and payment by Lender of any such check may at its option
constitute a Loan advance under this Agreement. Advances, if made pursuant to
the payment of a check or other charge, shall be debited to the Loan balance and
credited to the checking account balance, and unless otherwise agreed by Lender
shall be in multiples of $1,000 or an amount equal to the unused portion of the
maximum credit available if less than $1,000.
II. CONDITIONS OF LENDING/ADVANCES
The obligation of Lender to make the Loan and any advances under the
Note(or any of them if more than one) is subject to the following conditions
precedent: (a) Borrower is not in default under any provisions of this
Agreement, the Commitment Letter, any Note or any other Loan Documents; (b) all
warranties and representations of Borrower under this Agreement, the Commitment
Letter, the Note and the other Loan Documents are true as of the date of the
requested advance; (c) no litigation or other legal proceeding is pending or
threatened against Borrower that has not been disclosed to Lender in writing
before the date of the Loan or advance; (d) there is no material adverse change
in the financial condition or earning power of Borrower or any guarantor of the
Loan, or material decrease in the value of any security for the Loan; and (e)
there is no change in any law or regulation that makes it unlawful for Lender to
make the Loan or advances under the Note (or any of them if more than one) or to
give effect to Lender's obligations as contemplated hereby. Further, Lender may
require appropriate documentation as to the reason for a requested advance
before making an advance.
III. SECURITY
3.1 LOAN DOCUMENTS. All advances and readvances made pursuant to the
Note (or any of them if more than one) and this Agreement shall be secured by
all security agreements, mortgages, deed(s) of trust and other security
documents set forth in the Note and included within the term "Loan Documents"
therein. Such security shall secure all existing and future indebtedness owed by
Borrower to Lender.
3.2 FURTHER ASSURANCES. Borrower agrees to execute and deliver such
security agreements, financing statements, and other such documents as Lender
will require for perfection of security interests, liens, and other security
described above, as Lender may reasonably request at any time from time to time
in form satisfactory to Lender.
27
<PAGE> 2
IV. COVENANTS
Until payment of all sums owing under this Agreement, the Commitment
Letter, the Note and the other Loan Documents Borrower shall:
4.1 FINANCIAL INFORMATION. Furnish to Lender with reasonable promptness
the following financial information:
4.2 LEGAL PROCEEDINGS. Notify Lender in writing of any material legal
action or proceeding commenced against Borrower.
4.3 ENVIRONMENTAL LAWS. Keep its property and operations in compliance
with all applicable laws, ordinances and regulations relating to industrial
hygiene or environmental protection (collectively, "Environmental Laws"); allow
Lender to enter Borrower's property to conduct any and all inspections and
testing that Lender reasonably deems necessary or desirable to determine whether
Borrower is in compliance with Environmental Laws; notify Lender of any spill,
release or discovery of any substance deemed to be hazardous or toxic under any
Environmental Laws (collectively, "Hazardous Materials") on, onto or from any of
Borrower's properties; notify Lender of any order, request, notice or other form
of written or oral communication from any governmental agency relating to any
violation or potential violation of any Environmental Laws in connection with
any of Borrower's properties; and indemnify and hold harmless Lender, its
directors, employees and agents, and any successors to Lender's interest, from
and against any and all claims, damages, losses and liabilities arising in
connection with the presence, use, disposal or transport of any Hazardous
Materials on, under, from or about Borrower's property. NOTWITHSTANDING ANYTHING
CONTAINED IN THIS AGREEMENT TO THE CONTRARY, THE PROVISIONS OF THIS PARAGRAPH
4.3, INCLUDING WITHOUT LIMITATION BORROWER'S OBLIGATION PURSUANT TO THE
FOREGOING INDEMNITY, SHALL SURVIVE PAYMENT OF THE LOAN.
4.4 MAINTAIN ENTITY. If Borrower is or includes a corporation or
partnership, maintain its existence as a duly organized corporation and/or
partnership and promptly notify Lender of any change in its articles of
incorporation and/or partnership agreement.
V. WARRANTIES AND REPRESENTATIONS
Borrower warrants and represents to Lender as follows:
5.1 FINANCIAL STATEMENTS. All financial statements relating to Borrower
provided to Lender fairly reflect the financial condition of Borrower as of the
dates of such statements, and there has been no material adverse change in the
financial condition of Borrower since the dates thereof.
5.2 PROCEEDINGS. No proceedings exist or are threatened against
Borrower that will substantially and adversely affect Borrower's condition,
financial or otherwise.
VI. OTHER COVENANTS, WARRANTIES AND REPRESENTATIONS
In addition to the above covenants, warranties and representations,
Borrower covenants, warrants and represents to Lender as follows:
VII. EVENTS OF DEFAULT
In addition to anything contained in the Commitment Letter, the Note
and the other Loan Documents, the occurrence of any of the following shall
constitute an Event of Default by Borrower:
7.1 FAILURE OF PAYMENT. Failure to pay in full all principal and
interest under the Note (or any of them if more than one) when due.
7.2 FALSE WARRANTIES OR REPRESENTATIONS. Any of the warranties or
representations in sections V and VI hereof being or becoming materially false,
or any information contained in any schedule, statement, report, notice or other
writing furnished by or on behalf of Borrower to Lender pursuant to this
Agreement, or otherwise in connection with the Loan, being materially false.
7.3 BREACH OF COVENANT. A breach or failure in performance of any
covenant set forth in sections IV and VI hereof.
7.4 OTHER BREACH. A breach or failure in the performance of any other
provision of the Agreement, not specified above, which shall have continued for
a period of thirty (30) days after Lender has given notice of such breach or
failure; or a breach or failure in the performance of any term, covenant,
warranty, representation or other agreement contained in the Commitment Letter,
any Note or any other Loan Documents, after giving effect to any express notice
requirement and/or curative period set forth therein.
28
<PAGE> 3
7.5 OTHER INDEBTEDNESS. Any default in the payment or performance of
any indebtedness, liability or obligation of Borrower (or any one or more of
them if more than one) to Lender, not specified above, whether now existing or
hereafter arising.
VIII. REMEDIES
The occurrence of any Event of Default shall constitute a default under
the Note and the other Loan Documents, and Lender shall have all rights and
remedies available under this Agreement, the Commitment Letter, the Note, the
other Loan Documents and applicable law, including without limitation the right
to declare the entire balance of the Note immediately due and payable, and all
such rights and remedies shall be cumulative. No delay or omission of Lender in
exercising any of its rights or remedies shall operate as a waiver of such right
or remedy or any other right or remedy of Lender, and a waiver on any occasion
shall not constitute a waiver of such right or remedy on any future occasion.
IX. MISCELLANEOUS
9.1 GOVERNING LAW. This Agreement and the Loan shall be governed by the
laws of the State of Nebraska.
9.2 SURVIVAL OF REPRESENTATIONS. All covenants, warranties and
representations made in writing by Borrower in connection herewith shall survive
the execution and delivery of this Agreement, the Commitment Letter, the Note
and the other Loan Documents.
9.3 BINDING EFFECT. All agreements, covenants, warranties and
representations in this Agreement shall bind and inure to the benefit of the
respective successors and assigns of the parties hereto.
9.4 ASSIGNMENT. Borrower may not assign this Agreement, the Commitment
Letter, the Note (or any of them if more than one) or any other Loan Documents
without the express written consent of Lender, which shall be exercised at
Lender's sole discretion.
9.5 RENEWALS; EXTENSIONS. The provisions of this Agreement shall apply
to any renewal or extension of the Loan, except as modified or amended in
writing by the parties hereto at the time of such renewal or extension.
9.6 JOINT AND SEVERAL LIABILITY. If Borrower consists of more than one
person and/or entity, the obligations, liabilities, covenants, agreements,
warranties and representations contained in or arising from this Agreement are
joint and several as to each such person and/or entity.
9.7 LIMITATION OF LIABILITY. LENDER SHALL NOT BE LIABLE FOR ANY CLAIMS,
DEMANDS, LOSSES OR DAMAGES MADE, CLAIMED OR SUFFERED BY ANY PARTY TO THIS
AGREEMENT.
9.8 ENTIRE AGREEMENT. This Agreement, the Note and the other Loan
Documents contain the entire agreement of the parties, and cannot be modified or
altered unless reduced to writing and consented to by all the undersigned
parties.
FIRST NATIONAL BANK AND TRUST CO. OF KEARNEY
--------------------------------------------
Name and Lender
Date: 5-31-00 BY: LARRY L. JEPSON
----------------------------------
Title: CHAIRMAN AND CEO
-------------------------------
THE BUCKLE, INC
-------------------------------
Borrower
Date: 5-31-00 BY: DENNIS H. NELSON, PRESIDENT
----------------------------------
Borrower
Date:
----------------------------------
Borrower
STATE OF )
) ss.
COUNTY OF )
The foregoing Agreement was acknowledged before me this __________ day
of, __________ by ______________________________________________________________
________________________________________________________________________________
- ---------- ----------------------------------
Notary Public
29
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.13
<SEQUENCE>8
<FILENAME>c61814ex10-13.txt
<DESCRIPTION>LETTER FOR FIRST NATIONAL BANK AND TRUST CO.
<TEXT>
<PAGE> 1
EXHIBIT 10.13
May 24, 2000
Dennis H. Nelson, President & CEO
The Buckle, Inc.
2407 West 24th Street
P.O. Box 1480
Kearney, NE 68848-1480
Dear Dennis:
Our bank is pleased to issue a credit facility in the total amount of
$15,000,000.00 to your Company effective on the expiration of the existing loan
commitment on May 31, 2000. The purpose of this loan commitment is to provide
your Company with the funds for your financing needs required for this operating
year, subject to the following terms and conditions:
1) An unsecured operating line of credit in the amount of
$7,500,000.00 available for your use until the loan expiration date
of May 31, 2001, at which time it will be subject to annual
renewal, as has been the case in previous years.
2) An annual clean provision of the line of credit whereby your
Company will rest the line with a zero balance for at least 60
consecutive days during this line of credit commitment period.
2) The interest rate charged on the unsecured operating line of credit
will be the National Prime Rate as published in the "Wall Street
Journal" date of change. Interest will be billed and payable
monthly on the unsecured line of credit.
3) A $7,500,000.00 irrevocable commercial letter of credit line.
4) The Company agrees to provide the bank with quarterly financial
statements consisting of a balance sheet and income statement, as
well as provide the bank with an annual fiscal year-end audited
financial statement.
Congratulations on your Company's continued strong financial performance in both
growth and profitability. We appreciate this opportunity to be able to assist
your fine Company with this financing package in support of your growth
objectives. If the terms and conditions of this loan commitment are satisfactory
to you, please acknowledge your acceptance by signing the following
Acknowledgment and returning it to my attention in the postage-paid return
envelope I have provided for your convenience.
Thank you very much.
Sincerely yours,
LARRY L. JEPSON
Larry L. Jepson
Chairman & CEO
ACKNOWLEDGMENT
The Undersigned acknowledges and accepts this loan commitment with attendant
terms and conditions as stated, this 25th day of May, 2000.
THE BUCKLE, INC.
BY: DENNIS NELSON, PRESIDENT & CEO May 25, 2000
----------------------------------- ----------------
Dennis Nelson, President & CEO Date
30
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-13
<SEQUENCE>9
<FILENAME>c61814ex13.txt
<DESCRIPTION>2000 ANNUAL REPORT TO STOCKHOLDERS
<TEXT>
<PAGE> 1
FINANCIAL TABLE OF CONTENTS
Selected Financial Data 11
Management's Discussion and Analysis of
Financial Condition and Results of Operations 12
Balance Sheets 16
Statements of Income 17
Statements of Stockholders' Equity 18
Statements of Cash Flows 19
Notes to Financial Statements 20
Independent Auditors' Report 31
Stock Prices by Quarter 32
<PAGE> 2
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
FISCAL YEARS ENDED
- --------------------------------------------------------------------------------------------------------------------
FEBRUARY 3, JANUARY 29, JANUARY 30, JANUARY 31, FEBRUARY 1,
2001 2000 1999 1998 1997
---------------------------------------------------------------------------------
(dollar amounts in thousands, except per share and selected operating data)
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Net Sales $ 393,247 $ 375,526 $ 337,916 $ 267,921 $ 206,393
Cost of sales (including
buying, distribution and
occupancy costs) 262,146 243,517 216,668 174,379 140,359
---------------------------------------------------------------------------------
Gross profit 131,101 132,009 121,248 93,542 66,034
Selling expenses 69,635 64,876 59,557 49,040 38,361
General and
administrative expenses 10,365 11,004 10,073 8,962 7,185
---------------------------------------------------------------------------------
Income from operations 51,101 56,129 51,618 35,540 20,488
Other income 3,860 3,367 2,534 1,877 1,179
---------------------------------------------------------------------------------
Income before income taxes
and cumulative effect of
change in accounting 54,961 59,496 54,152 37,417 21,667
Provision for income taxes 20,164 22,110 20,123 14,086 8,043
---------------------------------------------------------------------------------
Income before cumulative effect
of change in accounting 34,797 37,386 34,029 23,331 13,624
Cumulative effect of change in
accounting, net of taxes (270) - - - -
---------------------------------------------------------------------------------
Net income $ 34,527 $ 37,386 $ 34,029 $ 23,331 $ 13,624
=================================================================================
Basic income per share $ 1.68 $ 1.72 $ 1.55 $ 1.10 $ 0.65
=================================================================================
Diluted income per share $ 1.61 $ 1.64 $ 1.47 $ 1.05 $ 0.63
=================================================================================
SELECTED OPERATING DATA
Stores open at end of period 274 248 222 199 181
Average sales per square
foot, (gross sq. ft.) $ 309 $ 334 $ 344 $ 300 $ 255
Average sales per store (000's) $ 1,482 $ 1,581 $ 1,603 $ 1,400 $ 1,183
Comparable store sales change -6.0% 0.9% 15.4% 18.6% 11.1%
BALANCE SHEET DATA
Working capital $ 135,836 $ 107,582 $ 104,035 $ 77,448 $ 54,904
Total assets $ 230,533 $ 198,546 $ 186,113 $ 144,460 $ 102,017
Long term debt - - - - -
Stockholders' equity $ 194,066 $ 163,260 $ 146,130 $ 107,881 $ 78,043
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE> 3
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following table sets forth certain financial data expressed as a percentage
of net sales and the percentage change in the dollar amount of such items
compared to the prior period.
<TABLE>
<CAPTION>
PERCENTAGE OF NET SALES PERCENTAGE INCREASE
FOR FISCAL YEARS ENDED (DECREASE)
- --------------------------------------------------------------------------------------------------------------------------
FEBRUARY 3, JANUARY 29, JANUARY 30, FISCAL YEAR
2001 2000 1999 1999 TO 2000 1998 TO 1999
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Net Sales 100.0% 100.0% 100.0% 4.7% 11.1%
Cost of sales (including buying,
distribution and occupancy costs) 66.7% 64.8% 64.1% 7.7% 12.4%
-------------------------------------------------------------------------------
Gross profit 33.3% 35.2% 35.9% -0.7% 8.9%
Selling expenses 17.7% 17.3% 17.6% 7.4% 8.9%
General and administrative expenses 2.6% 2.9% 3.0% -5.8% 9.2%
-------------------------------------------------------------------------------
Income from operations 13.0% 15.0% 15.3% -9.0% 8.7%
Other income 1.0% .9% .8% 14.7% 32.9%
-------------------------------------------------------------------------------
Income before income taxes 14.0% 15.9% 16.1% -7.6% 9.9%
Provision for income taxes 5.1% 5.9% 6.0% -8.8% 9.9%
-------------------------------------------------------------------------------
Net income 8.8% 10.0% 10.1% -6.9% 9.9%
===============================================================================
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
FISCAL 2000 COMPARED TO FISCAL 1999
Based upon the retail calendar, fiscal 2000 was a 53-week year compared to 52
weeks in the prior year, giving retailers an extra week of sales. During fiscal
2000, net sales increased to $393.2 million from $375.5 million in fiscal 1999,
a 4.7% increase. Comparable store sales decreased by $21.3 million, or 6.0% for
the 52 weeks ended January 27, 2001 compared to the same 52-week period in the
prior year. The Company had 2.8% sales growth in fiscal 2000 that was
attributable to the inclusion of a full year of operating results in fiscal 2000
for stores opened in fiscal 1999 and 6.7% from the opening of 28 new stores in
fiscal 2000. The change in the method of revenue recognition for layaway sales
in accordance with the guidance and interpretations provided by the SEC's SAB
No. 101-Revenue Recognition resulted in a decrease in comparable stores sales
for fiscal 2000 of 0.2% compared to fiscal 1999. The remaining 1.4% of the sales
increase came from $5.0 million in sales during the extra week of the fiscal
year.
The Company's average retail price of merchandise decreased nearly 4%, dropping
a $1.60 per piece in fiscal 2000 compared to fiscal 1999, primarily due to lower
price points in knit tops, outerwear and footwear, as well as, from the decline
in footwear sales as a percentage of net sales. Footwear accounted for 14.4% of
fiscal 2000 sales versus 16.6% of fiscal 1999 sales. Average sales per square
foot decreased 7.5% from $334 to $309.
Gross profit after buying, distribution and occupancy costs decreased $0.9
million in fiscal 2000 to $131.1 million, a 0.7% decrease. As a percentage of
net sales, gross profit decreased from 35.2% in fiscal 1999 to 33.3% in fiscal
2000.
12
<PAGE> 4
The decrease was primarily attributable to an increase in occupancy costs. A
portion of the occupancy cost increase in fiscal 2000 resulted from higher
depreciation costs due to the fiscal 1999 rollout of new point of sale systems
to every store. Lower actual merchandise margins for fiscal 2000 compared to
fiscal 1999 also contributed to the decline. Merchandise shrinkage decreased to
.6% as a percentage of net sales in fiscal 2000 compared to .7% as a percentage
of net sales in fiscal 1999.
Selling expenses increased from $64.9 million for fiscal 1999 to $69.6 million
for fiscal 2000, a 7.4% increase. Selling expenses as a percent of net sales
increased to 17.7% for fiscal 2000 from 17.3% for fiscal 1999. The increase was
primarily attributable to higher sales salaries and higher selling supplies as a
percentage of net sales due to a decline in leverage provided by comparable
store sales. Sales salaries were also up in fiscal 2000 due to an increased pay
structure for the majority of the sales staff compared to fiscal 1999.
General and administrative expenses decreased from $11.0 million in fiscal 1999
to $10.4 million in fiscal 2000, a 5.8% decrease. As a percentage of net sales,
general and administrative expense decreased to 2.6% for fiscal 2000 from 2.9%
for fiscal 1999. Decreases in general and administrative expenses, as a
percentage of net sales, resulted primarily from leverage provided by the
restructuring of the Company's executive compensation plan.
As a result of the above changes, the Company's income from operations decreased
$5.0 million to $51.1 million for fiscal 2000 compared to $56.1 million for
fiscal 1999, a 9.0% decrease. Income from operations was 13.0% as a percentage
of net sales in fiscal 2000 compared to 15.0% in fiscal 1999.
Other income for fiscal 2000 increased 14.7% from fiscal 1999 to $3.9 million.
Other income in fiscal 2000 increased due to additional interest income and
greater state tax incentives received compared to fiscal 1999.
Income tax expense as a percentage of pre-tax income was 36.7% in fiscal 2000
compared to 37.2% in fiscal 1999. The decrease in the income tax percentage rate
was primarily due to state tax incentives.
FISCAL 1999 COMPARED TO FISCAL 1998
Net sales increased from $337.9 million in fiscal 1998 to $375.5 million in
fiscal 1999, an 11.1% increase. Comparable store sales increased by $2.9
million, or 0.9% for fiscal 1999 compared to the same period in the prior year.
The Company had 4.2% sales growth in fiscal 1999 that was attributable to the
inclusion of a full year of operating results in fiscal 1999 for stores opened
in fiscal 1998 and 6.0% from the opening of 27 new stores in fiscal 1999. The
Company's average retail price per piece of merchandise remained consistent in
fiscal 1999 compared to fiscal 1998 prices. The company saw slightly higher
price points in the denim, casual bottoms and shoe categories, which were offset
by lower price points in sportswear and little guys/gals categories. Average
sales per square foot decreased 2.9% from $344 to $334.
Gross profit after buying, distribution and occupancy costs increased $10.8
million in fiscal 1999 to $132.0 million, an 8.9% increase. As a percentage of
net sales, gross profit decreased from 35.9% in fiscal 1998 to 35.2% in fiscal
1999. The decrease was primarily attributable to higher occupancy costs as a
percentage of net sales due to a decline in leverage provided by comparable
store sales. Gross margin was also impacted by the increase in merchandise
shrinkage which rose to 0.7% in fiscal 1999 compared to 0.5% in fiscal 1998.
13
<PAGE> 5
Selling expenses increased from $59.6 million for fiscal 1998 to $64.9 million
for fiscal 1999, an 8.9% increase. Selling expenses as a percent of net sales
decreased to 17.3% for fiscal 1999 from 17.6% for fiscal 1998. The primary
reason for the improvement in selling expenses, as a percentage of net sales, is
due to the implementation of the Company's 1999 Management Incentive Program,
which reduced management's bonus accrual.
General and administrative expenses increased from $10.1 million in fiscal 1998
to $11.0 million in fiscal 1999, a 9.2% increase. As a percentage of net sales,
general and administrative expense decreased to 2.9% for fiscal 1999 from 3.0%
for fiscal 1998. Decreases in general and administrative expenses, as a
percentage of net sales, resulted primarily from the implementation of the
Company's 1999 Management Incentive Program, which reduced the bonus accrual for
management.
As a result of the above changes, the Company's income from operations increased
$4.5 million to $56.1 million for fiscal 1999, an 8.7% increase compared to
fiscal 1998. Income from operations was 15.0% as a percentage of net sales in
fiscal 1999 compared to 15.3% in fiscal 1998.
Other income for fiscal 1999 increased 32.9% from fiscal 1998 to $3.4 million.
The increase is primarily due to additional interest income, as the average
level of cash and short-term investments was greater than in the same period of
fiscal 1998.
Income tax expense as a percentage of pre-tax income was 37.2% in both fiscal
1999 and fiscal 1998, bringing net earnings to $37.4 million for fiscal 1999
versus $34.0 million for fiscal 1998, an increase of 9.9%.
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 fiscal 2000, 1999,
and 1998 the Company's cash flow from operations was $47.2 million, $40.9
million, and $38.5 million, respectively. During fiscal 2000 and 1999, the
Company also used cash for repurchasing shares of the Company's common stock. In
fiscal 2000, the Company purchased 559,200 shares at a cost of $7.3 million,
1,520,220 shares in fiscal 1999 at a cost of $24.2 million and 120,600 shares in
fiscal 1998 at a cost of $1.9 million. The Company has available an unsecured
line of credit of $7.5 million and a $7.5 million line of credit for foreign and
domestic letters of credit, with Wells Fargo Bank Nebraska, N.A. Borrowings
under the lending arrangements provide for interest to be paid at a rate equal
to the prime rate published in the Wall Street Journal on the date of the
borrowings. As of February 3, 2001, the Company's working capital was $135.8
million, including $69.2 million of cash and cash equivalents.
The Company has, from time to time, borrowed against these lines of credit
during periods of peak inventory build-up. There were only minor bank borrowings
during fiscal 2000 and fiscal 1999 and no borrowings during fiscal 1998. The
Company had no bank borrowings as of February 3, 2001.
During fiscal 2000, 1999, and 1998, the Company invested $13.4 million, $18.6
million, and $10.4 million, respectively, in new store construction, store
renovation and upgrading store technology, net of any construction allowances
received from landlords. The Company also spent $1.3 million, $2.8 million, and
$6.7 million, in fiscal 2000, 1999, and
14
<PAGE> 6
1998, respectively, in capital expenditures for the corporate headquarters and
distribution facility. During fiscal 1998, the Company completed its expansion
to the corporate headquarters and distribution facility and began remodeling the
existing building. The total cost of the expansion plus all phases of the
remodel project was approximately $8.5 million. Also, during the second quarter
of fiscal 1999, the Company purchased a second corporate aircraft at a cost of
$3.6 million.
During fiscal 2001, the Company anticipates completing approximately 30 store
construction projects, including approximately 22 new stores and approximately 8
stores to be remodeled and/or relocated. As of March 2001, leases for 16 new
stores have been signed, and leases for 10 additional locations are under
negotiation; however, exact new store openings, remodels and relocations may
vary from those anticipated. The average cost of opening a new store during
fiscal 2000 was approximately $550,000, including construction costs of
approximately $400,000 and inventory costs of approximately $150,000, net of
payables. Management estimates that total capital expenditures during fiscal
2001 will be approximately $17.0 million, before landlord allowances, estimated
to be $2.0 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.
SEASONALITY AND INFLATION
The Company's business is seasonal, with the Holiday 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 2000, 1999, and 1998, the Holiday and back-to-school
seasons accounted for an average of 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 past three fiscal years.
Quarterly results may vary depending on the timing and amount of sales and costs
associated with the opening of new stores and the remodeling of existing stores.
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, and 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.
15
<PAGE> 7
BALANCE SHEETS
(dollar amounts in thousands, except share and per share amounts)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
FEBRUARY 3, JANUARY 29,
ASSETS 2001 2000
-----------------------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 69,155 $ 37,205
Investments (Note B):
Held-to-maturity 34,847 40,357
Available-for-sale 4,398 4,002
Accounts receivable, net of allowance of $250 and $225, respectively 2,068 3,430
Inventory 54,392 55,045
Prepaid expenses and other assets (Note E) 6,593 2,387
-----------------------------
Total current assets 171,453 142,426
-----------------------------
PROPERTY AND EQUIPMENT (Note C): 103,686 91,735
Less accumulated depreciation (47,605) (38,168)
-----------------------------
56,081 53,567
-----------------------------
OTHER ASSETS (Notes B, E and F) 2,999 2,553
-----------------------------
$ 230,533 $ 198,546
=============================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 13,703 $ 15,773
Accrued employee compensation 11,753 12,587
Accrued store operating expenses 4,072 3,491
Gift certificates redeemable 2,199 1,925
Income taxes payable 3,890 1,068
-----------------------------
Total current liabilities 35,617 34,844
DEFERRED COMPENSATION (Note H) 850 442
-----------------------------
Total liabilities 36,467 35,286
-----------------------------
COMMITMENTS (Notes D and G)
STOCKHOLDERS' EQUITY (Note I):
Common stock, authorized 100,000,000 shares of $.01 par value; issued
and outstanding; 20,378,657 and 20,726,149 shares, respectively 204 207
Additional paid-in capital 13,006 17,131
Retained earnings 181,447 146,920
Unearned compensation - restricted stock (620) (791)
Accumulated other comprehensive income (loss) 29 (207)
-----------------------------
Total stockholders' equity 194,066 163,260
-----------------------------
$ 230,533 $ 198,546
=============================
- ------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements.
16
<PAGE> 8
STATEMENTS OF INCOME
(dollar amounts in thousands, except per share amounts)
<TABLE>
<CAPTION>
FISCAL YEARS ENDED
- --------------------------------------------------------------------------------------------------------
FEBRUARY 3, JANUARY 29, JANUARY 30,
2001 2000 1999
----------------------------------------------
<S> <C> <C> <C>
SALES, Net of returns and allowances of
$28,203, $26,420 and $22,683, respectively $ 393,247 $ 375,526 $ 337,916
COST OF SALES (Including buying, distribution
and occupancy costs) 262,146 243,517 216,668
----------------------------------------------
Gross profit 131,101 132,009 121,248
----------------------------------------------
OPERATING EXPENSES:
Selling 69,635 64,876 59,557
General and administrative 10,365 11,004 10,073
----------------------------------------------
80,000 75,880 69,630
----------------------------------------------
INCOME FROM OPERATIONS 51,101 56,129 51,618
OTHER INCOME, Net 3,860 3,367 2,534
----------------------------------------------
INCOME BEFORE INCOME TAXES AND CUMULATIVE EFFECT
OF CHANGE IN ACCOUNTING 54,961 59,496 54,152
PROVISION FOR INCOME TAXES (Note E) 20,164 22,110 20,123
----------------------------------------------
INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING 34,797 37,386 34,029
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING,
net of taxes (Note A) (270) - -
----------------------------------------------
NET INCOME $ 34,527 $ 37,386 $ 34,029
==============================================
BASIC INCOME PER SHARE (Note J):
Income before cumulative effect of change in accounting $ 1.69 $ 1.72 $ 1.55
Cumulative effect of change in accounting, net of taxes (0.01) - -
----------------------------------------------
Net income $ 1.68 $ 1.72 $ 1.55
==============================================
DILUTED INCOME PER SHARE (Note J):
Income before cumulative effect of change in accounting $ 1.63 $ 1.64 $ 1.47
Cumulative effect of change in accounting, net of taxes (0.02) - -
----------------------------------------------
Net income $ 1.61 $ 1.64 $ 1.47
==============================================
- --------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements.
17
<PAGE> 9
STATEMENTS OF STOCKHOLDERS' EQUITY
(dollar amounts in thousands)
<TABLE>
<CAPTION>
ACCUMULATED
OTHER
ADDITIONAL COMPREHENSIVE
COMMON PAID-IN RETAINED UNEARNED INCOME COMPREHENSIVE
STOCK CAPITAL EARNINGS COMPENSATION (LOSS) TOTAL INCOME
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, February 1, 1998 $ 143 $ 33,783 $ 75,505 $ (1,550) $ - $ 107,881
3-for-2 stock split 74 (74) - - - -
Common stock (347,550 shares)
issued on exercise of stock options 4 2,448 - - - 2,452
Amortization of restricted stock
issuance - - - 264 - 264
Cancellation of restricted stock - (231) - 231 - -
Common stock (120,600 shares)
purchased and retired (1) (1,935) - - - (1,936)
Tax benefit related to exercise of
employee stock options - 3,440 - - - 3,440
Net income - - 34,029 - - 34,029 $ 34,029
---------------------------------------------------------------------------------------
BALANCE, January 30, 1999 220 37,431 109,534 (1,055) - 146,130
Comprehensive income:
Net income - - 37,386 - - 37,386 $ 37,386
Unrealized loss on available-for-sale
securities, net of taxes of $125 - - - - (207) (207) (207)
-------------
Total comprehensive income $ 37,179
=============
Common stock (199,812 shares)
issued on exercise of stock options 1 1,075 - - - 1,076
Restricted stock issuance
(77,636 shares) 1 1,755 - - - 1,756
Amortization of restricted stock
issuance - - - 264 - 264
Common stock (1,520,220 shares)
purchased and retired (15) (24,228) - - - (24,243)
Tax benefit related to exercise of
employee stock options - 1,098 - - - 1,098
---------------------------------------------------------------------------------------
BALANCE, January 29, 2000 207 17,131 146,920 (791) (207) 163,260
Comprehensive income:
Net income - - 34,527 - - 34,527 $ 34,527
Unrealized gain on available-for-sale
securities, net of taxes of $142 - - - - 236 236 236
-------------
Total comprehensive income $ 34,763
=============
Common stock (196,886 shares)
issued on exercise of stock options 2 1,485 - - - 1,487
Restricted stock issuance
(14,792 shares) 1 255 - - - 256
Amortization of restricted stock
issuance - - - 171 - 171
Common stock (559,200 shares)
purchased and retired (6) (7,299) - - - (7,305)
Tax benefit related to exercise of
employee stock options - 1,434 - - - 1,434
------------------------------------------------------------------------
BALANCE, February 3, 2001 $ 204 $ 13,006 $ 181,447 $ (620) $ 29 $ 194,066
========================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements.
18
<PAGE> 10
STATEMENTS OF CASH FLOWS
(dollar amounts in thousands)
<TABLE>
<CAPTION>
FISCAL YEARS ENDED
- -----------------------------------------------------------------------------------------------------------------------
FEBRUARY 3, JANUARY 29, JANUARY 30,
2001 2000 1999
-----------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 34,527 $ 37,386 $ 34,029
Adjustments to reconcile net income to net cash flows from operating
activities:
Depreciation 11,696 9,624 6,968
Amortization of unearned compensation - restricted stock 171 264 264
Deferred taxes (296) (545) (842)
Loss on disposal of assets 455 902 253
Cumulative effect of change in accounting, net of taxes 270 - -
Changes in operating assets and liabilities:
Accounts receivable (238) 550 (1,613)
Inventory 1,693 (5,634) (7,072)
Prepaid expenses (3,029) 1,331 3,092
Accounts payable (2,470) (1,044) (431)
Accrued employee compensation 337 (2,576) 2,400
Accrued store operating expenses 581 174 910
Gift certificates redeemable 274 332 236
Deferred compensation 408 442 -
Income taxes payable 2,822 (269) 289
-----------------------------------------------
Net cash flows from operating activities 47,201 40,937 38,483
-----------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (14,690) (24,963) (17,052)
Proceeds from sale of property and equipment 25 113 -
Decrease (increase) in other assets (261) 580 (1,157)
Purchase of investments (19,551) (33,150) (22,910)
Proceeds from maturities of investments 25,044 15,150 10,232
-----------------------------------------------
Net cash flows from investing activities (9,433) (42,270) (30,887)
-----------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the exercise of stock options 1,487 1,076 2,452
Purchases of common stock (7,305) (24,243) (1,936)
-----------------------------------------------
Net cash flows from financing activities (5,818) (23,167) 516
-----------------------------------------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 31,950 (24,500) 8,112
CASH AND CASH EQUIVALENTS, Beginning of year 37,205 61,705 53,593
-----------------------------------------------
CASH AND CASH EQUIVALENTS, End of year $ 69,155 $ 37,205 $ 61,705
===============================================
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements.
19
<PAGE> 11
NOTES TO FINANCIAL STATEMENTS
FISCAL YEARS ENDED FEBRUARY 3, 2001, JANUARY 29, 2000 AND JANUARY 30, 1999
(Dollar Amounts are in Thousands in Charts and Text Except Share and Per Share
Amounts)
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
FISCAL YEAR - The Buckle, Inc. (the Company) has its fiscal year end on the
Saturday nearest January 31. All references in these financial statements to
fiscal years are to the calendar year in which the fiscal year begins. Fiscal
2000 represents the 53-week period ended February 3, 2001 and fiscal 1999 and
1998 represent the 52-week periods ended January 29, 2000 and January 30,
1999, respectively.
NATURE OF OPERATIONS - The Company is a retailer of medium to better priced
casual apparel, footwear and accessories for fashion conscious young men and
women operating 274 stores located in 36 states throughout the central,
northwestern and southern regions of the United States, as of February 3,
2001.
During fiscal 2000, the Company opened twenty-eight new stores, substantially
renovated eleven stores and closed two stores. During fiscal 1999, the
Company opened twenty-seven new stores, substantially renovated ten stores,
and closed one store. During fiscal 1998, the Company opened twenty-four new
stores, substantially renovated six stores, and closed one store.
REVENUE RECOGNITION - The Company operates on a cash and carry basis, so
revenue is recognized at the time of sale. Merchandise returns are estimated
and accrued at the end of the period.
INVESTMENTS - The Company accounts for investments in accordance with
Statement of Financial Accounting Standards Board (SFAS) No. 115, Accounting
for Certain Investments in Debt and Equity Securities. Held-to-maturity
securities are carried at amortized cost. Available-for-sale securities are
reported at fair value, with unrealized gains and losses excluded from
earnings and reported as a separate component of stockholders' equity (net of
the effect of income taxes) until they are sold. Trading securities are
reported at fair value, with unrealized gains and losses included in
earnings.
INVENTORIES - Inventories are stated at the lower of cost or market. Cost is
determined on the average cost method.
DEPRECIATION AND AMORTIZATION - Property and equipment are stated on the
basis of historical cost. Depreciation is provided using a combination of
accelerated and straight-line methods based upon the estimated useful lives
of the assets. The majority of the property and equipment have useful lives
of five to ten years with the exception of a building, which has an estimated
useful life of 31.5 years.
CASH EQUIVALENTS - For purposes of the statement of cash flows, the Company
considers all highly liquid debt instruments with an original maturity of
three months or less when purchased to be cash equivalents.
20
<PAGE> 12
PRE-OPENING EXPENSES - Costs related to opening new stores are expensed as
incurred.
ADVERTISING COSTS - Advertising costs are expensed as incurred and amounted
to $3,985, $4,150 and $3,513 for fiscal years 2000, 1999 and 1998,
respectively.
STOCK-BASED COMPENSATION - The Company accounts for its stock-based
compensation under provisions of Accounting Principles Board Opinion 25,
Accounting for Stock Issued to Employees (APB25).
FINANCIAL INSTRUMENTS AND CREDIT RISK CONCENTRATIONS - Financial instruments,
which potentially subject the Company to concentrations of credit risk, are
primarily cash, investments and accounts receivable. The Company places its
investments primarily in tax-free municipal bonds or U.S. Treasury securities
with short-term maturities, and limits the amount of credit exposure to any
one entity. Concentrations of credit risk with respect to accounts
receivable are limited due to the nature of the Company's receivables, which
include employee receivables, which can be offset against future
compensation. The Company's financial instruments have a fair value
approximating the carrying value.
EARNINGS 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.
STOCK-SPLIT - On May 28, 1998, the Company obtained shareholder approval to
increase the number of common shares from 20 million shares to 100 million
shares and decrease the par value from $.05 to $.01 per share. All share and
per share data have been restated to reflect this change. This change was
made to allow for the Company's 3-for-2 stock split made in the form of a
stock dividend issued on June 8, 1998. The weighted average shares
outstanding and per share data for all periods have also been restated to
reflect this stock dividend.
USE OF ESTIMATES - The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from these estimates.
COMPREHENSIVE INCOME - During fiscal 1999, the Company implemented Statement
of Financial Accounting Standards (SFAS) No. 130, Reporting Comprehensive
Income, which establishes reporting requirements for the display of
comprehensive income and its components. The adoption had no impact on net
income. Unrealized gains and losses on the Company's available-for-sale
securities are included in accumulated other comprehensive income (loss) and
are separately included as a component of stockholders' equity, net of
related income taxes.
ACCOUNTING PRONOUNCEMENTS - SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities, is effective for all fiscal years
beginning after June 15, 2000. SFAS No. 133, as amended, establishes
accounting and reporting standards for derivative instruments, including
certain derivative instruments embedded in other
21
<PAGE> 13
NOTES TO FINANCIAL STATEMENTS
(Dollar Amounts are in Thousands in Charts and Text Except Share and Per Share
Amounts)
contracts and for hedging activities. Under SFAS 133, certain contracts that
were not formerly considered derivatives may now meet the definition of a
derivative. The Company will adopt this Statement effective February 4, 2001.
Management does not expect the adoption of SFAS 133 to have a significant
impact on the financial position, results of operations, or cash flows of the
Company.
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING - On January 30, 2000, the Company
changed its revenue recognition policy related to layaway sales in accordance
with the guidance and interpretations provided by the SEC's Staff Accounting
Bulletin (SAB) No. 101, Revenue Recognition. This SAB affected the Company's
recognition of layaway sales, which requires recognition of revenue from
sales made under its layaway program upon delivery of the merchandise to the
customer. In the first quarter of fiscal 2000, the Company recorded a $270
cumulative effect adjustment for the change in this accounting principle in
accordance with APB Opinion No. 20, Accounting Changes. If SAB No. 101 had
been adopted prior to fiscal 2000, the net income for fiscal 1999 and 1998
would have been $37,408 and $33,931, respectively, versus the $37,386 and
$34,029 as reported.
RECLASSIFICATION - Certain reclassifications have been made to 1999 and 1998
balances to conform to the 2000 presentation.
B. INVESTMENTS
The following is a summary of investments as of February 3, 2001:
<TABLE>
<CAPTION>
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Available-for-Sale Securities:
U.S. corporate securities $ 4,352 $ 46 $ - $ 4,398
------------------------------------------------------
Held-to-Maturity Securities:
State and municipal bonds $ 33,685 $ 290 $ (210) $ 33,765
U.S. corporate bonds 1,017 2 (11) 1,008
U.S. treasuries 145 - - 145
------------------------------------------------------
$ 34,847 $ 292 $ (221) $ 34,918
------------------------------------------------------
Trading Securities:
Mutual funds $ 926 $ - $ (76) $ 850
------------------------------------------------------
- -------------------------------------------------------------------------------------------
</TABLE>
22
<PAGE> 14
The following is a summary of investments as of January 29, 2000:
<TABLE>
<CAPTION>
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Available-for-Sale Securities:
U.S. corporate securities $ 4,334 $ - $ (332) $ 4,002
------------------------------------------------------
Held-to-Maturity Securities:
State and municipal bonds $ 36,014 $ 4 $ (329) $ 35,689
U.S. corporate bonds 2,848 - (6) 2,842
U.S. treasuries 1,495 - (24) 1,471
------------------------------------------------------
$ 40,357 $ 4 $ (359) $ 40,002
------------------------------------------------------
Trading Securities:
Mutual funds $ 411 $ 31 $ - $ 442
------------------------------------------------------
- -------------------------------------------------------------------------------------------
</TABLE>
Trading securities have been classified in other assets. These trading
securities are held in a Rabbi Trust and are intended to fund the Company's
deferred compensation plan (See Note H).
C. PROPERTY AND EQUIPMENT
A summary of the cost of property and equipment follows:
- --------------------------------------------------------------------------------
FEBRUARY 3, JANUARY 29,
2001 2000
-------------------------------
Land $ 917 $ 908
Building and improvements 8,343 7,567
Office equipment 2,791 2,479
Transportation equipment 7,758 7,758
Leasehold improvements 35,452 30,687
Furniture and fixtures 43,022 36,131
Shipping/receiving equipment 4,152 4,055
Screenprinting equipment 102 102
Construction-in-progress 1,149 2,048
-------------------------------
$103,686 $ 91,735
-------------------------------
- --------------------------------------------------------------------------------
23
<PAGE> 15
NOTES TO FINANCIAL STATEMENTS
(Dollar Amounts are in Thousands in Charts and Text Except Share and Per Share
Amounts)
D. FINANCING ARRANGEMENTS
The Company has available an unsecured line of credit of $7.5 million and a
$7.5 million letter of credit facility. Borrowings under the line of credit
and letter of credit provide for interest to be paid at a rate equal to the
prime rate published in The Wall Street Journal on the date of the
borrowings. There were no bank borrowings at February 3, 2001 and January 29,
2000. There were immaterial bank borrowings during fiscal 2000 and 1999, and
there were no borrowings at any time during fiscal 1998. The Company had
outstanding letters of credit totaling $857 and $1,459 at February 3, 2001
and January 29, 2000, respectively.
E. INCOME TAXES
The provision for income taxes consists of:
FISCAL YEAR
- --------------------------------------------------------------------------------
2000 1999 1998
--------------------------------------------------
Current:
Federal $ 17,454 $ 19,247 $ 17,747
State 3,006 3,408 3,218
Deferred (296) (545) (842)
--------------------------------------------------
Total $ 20,164 $ 22,110 $ 20,123
==================================================
Total tax expense for the year varies from the amount which would be provided
by applying the statutory income tax rate to earnings before income taxes.
The major reasons for this difference (expressed as a percent of pre-tax
income) are as follows:
FISCAL YEAR
- --------------------------------------------------------------------------------
2000 1999 1998
-----------------------------------
Statutory rate 35.0% 35.0% 35.0%
State income tax effect 3.9 4.3 4.0
Tax exempt interest income (1.8) (1.8) (1.6)
Expenses not deductible 0.1 0.1 0.1
Benefits of state tax credits (0.5) (0.4) (0.3)
-----------------------------------
Effective tax rate 36.7% 37.2% 37.2%
===================================
24
<PAGE> 16
Deferred tax assets and liabilities are comprised of the following:
- --------------------------------------------------------------------------------
FEBRUARY 3, JANUARY 29,
2001 2000
-------------------------
Deferred tax assets:
Unearned compensation - restricted stock $1,017 $ 953
Inventory 850 874
Option compensation 388 437
Accrued vacation 334 318
Unrealized loss on available-for-sale securities - 125
Depreciation 28 -
Unrealized loss on trading securities 74 -
Other 363 304
-------------------------
$3,054 $3,011
=========================
Deferred tax liabilities:
Depreciation $ - $ 116
Unrealized gain on trading securities - 12
Unrealized gain on available-for-sale securities 17 -
-------------------------
$ 17 $ 128
=========================
- --------------------------------------------------------------------------------
At February 3, 2001 and January 29, 2000, respectively, the net current
deferred tax assets of $1,839 and $1,868 are classified in prepaid expenses
and the net noncurrent deferred tax assets of $1,198 and $1,015 are
classified in other assets.
Cash paid for income taxes was $16,250, $19,814 and $18,003 in fiscal years
2000, 1999 and 1998, respectively.
F. RELATED PARTY TRANSACTIONS
Included in other assets is a note receivable of $765 and $735 at February 3,
2001 and January 29, 2000, respectively, from a life insurance trust fund
controlled by the Company's Chairman. The note is secured by a life insurance
policy on the Chairman.
G. LEASE COMMITMENTS
The Company conducts its operations in leased facilities under numerous
noncancellable operating leases expiring at various dates through 2013. Most
of the Company's stores have lease terms of approximately ten years and
25
<PAGE> 17
NOTES TO FINANCIAL STATEMENTS
(Dollar Amounts are in Thousands in Charts and Text Except Share and Per Share
Amounts)
generally do not contain renewal options. Operating lease base rental expense
for fiscal 2000, 1999 and 1998 was $22,326, $18,710 and $15,049,
respectively. Most of the rental payments are based on a minimum annual
rental plus a percentage of sales in excess of a specified amount. Percentage
rents for fiscal 2000, 1999 and 1998 were $1,268, $2,318 and $2,457,
respectively. Total future minimum rental commitments under these operating
leases are as follows:
FISCAL YEAR
- --------------------------------------------------------------------------------
2001 $ 22,046
2002 24,556
2003 24,623
2004 22,625
2005 19,872
Thereafter 80,850
------------
Total minimum payments required $194,572
============
- --------------------------------------------------------------------------------
H. EMPLOYEE BENEFITS
The Company has a 401(k) profit sharing plan covering all eligible employees
who desire to participate. Contributions to the plan are based upon the
amount of the employees' deferrals and the employer's matching formula. The
Company may contribute to the plan at its discretion. The total expense under
the profit sharing plan was $550, $601 and $1,001 for fiscal years 2000, 1999
and 1998, respectively.
During fiscal 1999, the Company established The Buckle, Inc. Deferred
Compensation Plan. The plan covers the Company's executive officers. The plan
is funded by participant contributions and a specified annual Company
matching contribution not to exceed 6% of the participant's compensation. The
Company's contributions for fiscal 2000 and 1999 were $110 and $182,
respectively.
I. STOCK-BASED COMPENSATION
The Company has several stock option plans that provide for granting of
options to purchase common stock to designated employees, officers and
directors. The options may be in the form of incentive stock options or
nonqualified stock options, and are granted at fair market value on the date
of grant. The options generally expire ten years from the date of grant. At
February 3, 2001, 390,814 shares of common stock were available for grant
under the various option plans of which 354,874 shares were not available to
executive officers of the Company.
The Company granted 75,000 shares of restricted common stock in December 1997
with an aggregate market value of $1,550 at fiscal 1997 year end. Unearned
compensation equivalent to the market value of the shares at
26
<PAGE> 18
the date of grant was charged to stockholders' equity. Such unearned
compensation is being amortized into compensation expense over a five year
period, at which time the shares will fully vest.
Pursuant to the 1998 Management Incentive Plan, compensation expense of $256
and $1,756 associated with the fiscal 1999 and 1998 bonus was recorded as
accrued employee compensation at January 29, 2000 and January 30, 1999.
During fiscal years 2000 and 1999, the Company granted 14,792 and 77,636
shares, respectively, of restricted common stock related to this amount upon
approval of the Board of Directors. There was no stock compensation expense
for the year ended February 3, 2001.
The Company accounts for its stock-based compensation under the provisions of
Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to
Employees (APB Opinion No. 25), which utilizes the intrinsic value method.
Compensation cost related to stock-based compensation was $171, $519 and
$2,022 for the fiscal years ended 2000, 1999 and 1998, respectively.
If compensation cost for the Company's stock-based compensation plan had been
determined based on the fair value at the grant dates for awards under the
plans consistent with the method of SFAS No. 123, Accounting for
Stock-Based Compensation, the Company's net income and net income per share
would have been reduced to the pro forma amounts indicated below:
- --------------------------------------------------------------------------------
2000 1999 1998
------------------------------------------------------
Net income As reported $ 34,527 $ 37,386 $ 34,029
Pro forma $ 30,641 $ 31,854 $ 30,167
Basic income per share As reported $ 1.68 $ 1.72 $ 1.55
Pro forma $ 1.49 $ 1.46 $ 1.37
Diluted income per share As reported $ 1.61 $ 1.64 $ 1.47
Pro forma $ 1.43 $ 1.40 $ 1.30
- --------------------------------------------------------------------------------
The weighted average fair value of options granted during the year under the
SFAS No. 123 methodology was $12.39, $17.87 and $15.75 per option for fiscal
2000, 1999 and 1998, respectively. The fair value of options granted under
the Plans was estimated at the date of grant using a binomial option pricing
model with the following assumptions:
- --------------------------------------------------------------------------------
2000 1999 1998
--------------------------------------------------
Risk-free interest rate 6.0% 6.0% 6.0%
Dividend yield 0.0% 0.0% 0.0%
Expected volatility 60.0% 60.0% 58.0%
Expected life (years) 6.0 years 6.0 years 6.0 years
- --------------------------------------------------------------------------------
27
<PAGE> 19
NOTES TO FINANCIAL STATEMENTS
(Dollar Amounts are in Thousands in Charts and Text Except Share and Per Share
Amounts)
A summary of the Company's stock-based compensation activity related to
stock options for the last three fiscal years is as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
2000 1999 1998
--------------------------------------------------------------------------------------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
NUMBER PRICE NUMBER PRICE NUMBER PRICE
<S> <C> <C> <C> <C> <C> <C>
Outstanding - beginning
of year 4,163,380 $ 13.01 3,905,746 $ 11.09 3,259,055 $ 6.21
Granted 500,375 16.00 483,540 26.05 1,241,310 22.80
Expired/terminated (45,078) 23.94 (26,094) 26.37 (154,495) 18.06
Exercised (197,036) 7.55 (199,812) 5.38 (440,124) 5.52
--------------------------------------------------------------------------------------------------
Outstanding - end 4,421,641 $ 13.54 4,163,380 $ 13.01 3,905,746 $ 11.09
of year ==================================================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
There were 2,765,205; 2,743,868; and 2,509,213 options exercisable at February
3, 2001, January 29, 2000 and January 30, 1999, respectively.
The following table summarizes information about stock options outstanding as of
February 3, 2001:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
- ------------------------------------------------------------------------------------------------------------------------------------
WEIGHTED
AVERAGE WEIGHTED WEIGHTED
REMAINING AVERAGE AVERAGE
RANGE OF NUMBER CONTRACTUAL EXERCISE NUMBER EXERCISE
EXERCISE PRICES OUTSTANDING LIFE PRICE EXERCISABLE PRICE
<S> <C> <C> <C> <C> <C> <C>
$ 3.000 $ 3.000 641,600 0.88 years $ 3.00 641,600 $ 3.00
$ 4.167 $ 4.750 245,225 4.00 4.59 245,225 4.59
$ 4.958 $ 5.583 219,075 3.00 5.42 219,075 5.42
$ 6.000 $ 6.667 327,453 4.67 6.31 327,453 6.31
$ 8.500 $ 9.292 932,690 3.86 9.14 932,690 9.14
$ 11.500 $ 16.375 404,475 8.99 16.34 5,700 14.88
$ 17.188 $ 23.250 1,148,803 7.17 21.10 311,384 22.03
$ 26.750 $ 34.083 502,320 7.82 28.28 82,078 33.75
-----------------------------------------------------------------------------------------------
4,421,641 5.23 $ 13.54 2,765,205 $ 8.88
===============================================================================================
</TABLE>
28
<PAGE> 20
J. EARNINGS PER SHARE
The following table provides a reconciliation between basic and diluted
earnings per share (amounts in thousands except per share amounts):
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
2000 1999 1998
-------------------------------------------------------------------------------------------------
PER PER PER
SHARE SHARE SHARE
INCOME SHARES AMOUNT INCOME SHARES AMOUNT INCOME SHARES AMOUNT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BASIC EPS
Net income $ 34,527 20,540 $ 1.68 $37,386 21,777 $ 1.72 $34,029 21,964 $ 1.55
EFFECT OF DILUTIVE
SECURITIES
Stock Options -- 851 -- -- 1,076 -- -- 1,172 --
=================================================================================================
DILUTED EPS $ 34,527 21,391 $ 1.61 $37,386 22,853 $ 1.64 $34,029 23,136 $ 1.47
=================================================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Options to purchase 1,982,233, 977,288 and 131,340 shares of common
stock in fiscal 2000, 1999 and 1998, respectively, are not included in
the computation of diluted earnings per share because the options would
be considered anti-dilutive.
K. SEGMENT INFORMATION
The Company is a retailer of medium to better priced casual apparel,
footwear and accessories. The Company operates 274 stores located in 36
states throughout the central, northwestern and southern regions of the
United States at February 3, 2001. The Company operates their business
as one reportable industry segment.
The following is information regarding the Company's major product
lines and are stated as a percentage of the Company's net sales:
<TABLE>
<CAPTION>
PERCENTAGE OF NET SALES
- ------------------------------------------------------------------------------------------------------------------------------------
FISCAL YEAR
-------------------------------------------------------------
MERCHANDISE GROUP 2000 1999 1998
<S> <C> <C> <C>
Denims 26.6 % 25.0 % 27.3 %
Slacks/Casual Bottoms 5.4 4.3 4.1
Tops (including sweaters) 32.2 34.0 34.0
Sportswear/Fashion Clothes 6.5 7.8 7.5
Outerwear 3.3 2.7 2.3
Accessories 9.1 7.1 5.8
Shoes 14.4 16.6 17.3
Little Guys/Gals 2.2 2.4 1.3
Other 0.3 0.1 0.4
100.0 % 100.0 % 100.0 %
=============================================================
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
29
<PAGE> 21
NOTES TO FINANCIAL STATEMENTS
(Dollar Amounts are in Thousands in Charts and Text Except Share and Per Share
Amounts)
L. QUARTERLY FINANCIAL DATA (UNAUDITED)
Summarized quarterly financial information for fiscal 2000 and 1999 are as
follows:
<TABLE>
<CAPTION>
QUARTER
- ------------------------------------------------------------------------------------------
FISCAL 2000 FIRST SECOND THIRD FOURTH TOTAL
<S> <C> <C> <C> <C> <C>
Net sales $ 78,501 $ 77,111 $114,161 $123,474 $393,247
Gross profit $ 23,931 $ 22,117 $ 39,818 $ 45,235 $131,101
Income before cumulative
effect of change in accounting $ 4,866 $ 3,770 $ 11,605 $ 14,556 $ 34,797
Net income $ 4,596 $ 3,770 $ 11,605 $ 14,556 $ 34,527
Basic income per share:
Income before cumulative
effect of change in accounting $ 0.24 $ 0.18 $ 0.56 $ 0.71 $ 1.69
Net income $ 0.22 $ 0.18 $ 0.56 $ 0.71 $ 1.68
Diluted income per share:
Income before cumulative
effect of change in accounting $ 0.23 $ 0.18 $ 0.54 $ 0.68 $ 1.63
Net income $ 0.21 $ 0.18 $ 0.54 $ 0.68 $ 1.61
- ------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
QUARTER
- ------------------------------------------------------------------------------------------
FISCAL 1999 FIRST SECOND THIRD FOURTH TOTAL
<S> <C> <C> <C> <C> <C>
Net sales $ 79,688 $ 79,584 $107,463 $108,791 $375,526
Gross profit $ 27,101 $ 26,626 $ 38,558 $ 39,724 $132,009
Income from operations $ 9,793 $ 9,870 $ 17,955 $ 19,414 $ 57,032
Net income $ 6,469 $ 6,375 $ 11,552 $ 12,990 $ 37,386
Basic income per share $ 0.29 $ 0.29 $ 0.54 $ 0.61 $ 1.72
Diluted income per share $ 0.28 $ 0.27 $ 0.51 $ 0.58 $ 1.64
- ------------------------------------------------------------------------------------------
</TABLE>
Basic and diluted shares outstanding are computed independently for each of the
quarters presented and, therefore, may not sum to the totals for the year.
30
<PAGE> 22
INDEPENDENT AUDITORS' REPORT
Board of Directors and Stockholders
The Buckle, Inc.
Kearney, Nebraska
We have audited the accompanying balance sheets of The Buckle, Inc. (the
Company), as of February 3, 2001 and January 29, 2000, and the related
statements of income, stockholders' equity and cash flows for each of the three
fiscal years in the period ended February 3, 2001. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of The Buckle, Inc. as of February 3, 2001 and
January 29, 2000, and the results of its operations and its cash flows for each
of the three fiscal years in the period ended February 3, 2001 in conformity
with accounting principles generally accepted in the United States of America.
As discussed in Note A to the financial statements, the Company changed its
method of accounting for layaway sales in fiscal year 2000.
/s/ DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
Omaha, Nebraska
March 2, 2001
31
<PAGE> 23
STOCK PRICES BY QUARTER
The Company's common stock trades on the New York Stock Exchange under the
symbol BKE. The Company did not pay any cash dividends in fiscal 2000, 1999 or
1998, and has no current plans for cash dividend payments.
The number of record holders of the Company's common stock as of March 26, 2001
was 438. Based upon information from the principal market makers, the Company
believes there are more than 4,000 beneficial owners. The last reported sales
price of the Company's common stock on March 26, 2001 was $17.01.
Following is the Company's quarterly market range for fiscal years 2000, 1999
and 1998.
2000 1999 1998
- --------------------------------------------------------------------------------
HIGH LOW HIGH LOW HIGH LOW
Quarter
First 17.19 12.38 29.50 18.06 36.25 23.25
Second 14.44 10.81 32.56 19.50 39.13 23.06
Third 16.38 11.19 30.00 16.00 28.19 12.25
Fourth 21.13 15.00 16.81 12.56 30.50 18.00
- --------------------------------------------------------------------------------
All stock prices reflect the Company's 3:2 stock split issued on June 8, 1998.
32
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23
<SEQUENCE>10
<FILENAME>c61814ex23.txt
<DESCRIPTION>CONSENT OF DELOITTE & TOUCHE LLP
<TEXT>
<PAGE> 1
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement
Nos. 33-48402, 33-70633, 33-70641 and 33-70643 on Form S-8 of our
reports dated March 2, 2001, appearing in and incorporated by reference
in the Annual Report on Form 10-K of The Buckle, Inc. for the year
ended February 3, 2001.
DELOITTE & TOUCHE LLP
Omaha, Nebraska
April 17, 2001
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----