<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended NOVEMBER 1, 1997
[ ] 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 68847
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (308) 236-8491
___________________________________________________________
(Former name, former address and former fiscal year if changed since last
report)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [x] No [ ]
The number of shares issued of the Registrant's Common Stock, outstanding as of
December 5, 1997 was 14,276,211 shares of Common Stock.
<PAGE> 2
THE BUCKLE, INC.
FORM 10-Q
INDEX
<TABLE>
<CAPTION>
Pages
-----
<S> <C> <C>
Part 1. Financial Information (unaudited)
Balance Sheets - November 1, 1997 and
February 1, 1997 3
Statements of Income - thirteen and thirty-nine weeks
ended November 1, 1997 and November 2, 1996 4
Statements of Cash Flows - thirty-nine weeks ended
November 1, 1997 and November 2, 1996 5
Notes to financial statements 6
Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
Part 2. Other Information 11
Signatures 13
</TABLE>
2
<PAGE> 3
THE BUCKLE, INC.
BALANCE SHEETS
(columnar amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
ASSETS November 1, February 1,
- ------ 1997 1997
CURRENT ASSETS: ----------- -----------
<S> <C> <C>
Cash and cash equivalents $ 37,515 $ 35,486
Short-term investments 12,025 8,455
Accounts receivable, net of
allowance of $444,770 and $311,795 2,902 1,387
Inventory 44,848 31,106
Prepaid expenses and other assets 2,132 1,965
----------- -----------
Total current assets 99,422 78,399
PROPERTY AND EQUIPMENT: 56,817 49,248
Less accumulated depreciation 29,274 26,290
----------- -----------
27,543 22,958
OTHER ASSETS 1,329 660
----------- -----------
$ 128,294 $ 102,017
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 16,010 $ 9,407
Accrued employee compensation 11,535 9,565
Accrued store operating expenses 2,551 1,677
Gift certificates redeemable 872 1,106
Income taxes payable 3,411 1,740
----------- -----------
Total current liabilities 34,379 23,495
DEFERRED INCOME TAXES 479 479
STOCKHOLDERS' EQUITY:
Common stock, authorized 20,000,000 shares
of $.05 par value; issued 14,165,486 and
13,963,812 shares, respectively 708 698
Additional paid-in capital 26,846 25,171
Retained earnings 65,882 52,174
----------- -----------
Total stockholders' equity 93,436 78,043
----------- -----------
$ 128,294 $ 102,017
=========== ===========
</TABLE>
See notes to financial statements.
3
<PAGE> 4
THE BUCKLE, INC.
STATEMENTS OF INCOME
(amounts in thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Thirteen Weeks Ended Thirty-nine Weeks Ended
-------------------- -----------------------
November 1, November 2, November 1, November 2,
1997 1996 1997 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
SALES, net of returns and allowances $ 79,604 $ 61,073 $ 183,149 $ 144,321
COST OF SALES (including buying,
distribution and occupancy costs) 50,662 40,206 122,001 99,712
------------- ------------- ------------- -------------
Gross profit 28,942 20,867 61,148 44,609
OPERATING EXPENSES:
Selling 14,258 11,503 34,364 27,687
General and administrative 2,342 1,832 5,874 4,486
------------- ------------- ------------- -------------
16,600 13,335 40,238 32,173
------------- ------------- ------------- -------------
Income from operations 12,342 7,532 20,910 12,436
OTHER INCOME 454 261 1,114 678
------------- ------------- ------------- -------------
Income before income taxes 12,796 7,793 22,024 13,114
Income tax expense 4,824 2,986 8,316 4,983
------------- ------------- ------------- -------------
NET INCOME $ 7,972 $ 4,807 $ 13,708 $ 8,131
============= ============= ============= =============
Net income per share $0.52 $0.33 $0.91 $0.56
============= ============= ============= =============
Weighted average number
of shares outstanding 15,420 14,714 15,075 14,582
============= ============= ============= =============
See notes to financial statements.
</TABLE>
4
<PAGE> 5
THE BUCKLE, INC.
STATEMENTS OF CASH FLOWS
(amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Thirty-nine Weeks Ended
--------------------------------------
November 1, November 2,
1997 1996
------------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 13,708 $ 8,131
Adjustments to reconcile net income to net cash
flows from operating activities:
Depreciation 3,897 3,948
Loss on disposal of assets 31 18
Changes in assets and liabilities:
Accounts receivable (1,515) (995)
Inventory (13,742) (4,841)
Prepaid expenses and other assets (167) (5)
Accounts payable 6,603 3,060
Accrued employee compensation 1,970 1,076
Accrued store operating expenses 874 617
Gift certificates redeemable (234) (180)
Income taxes payable 1,671 21
------------- --------------
Net cash flows from operating activities 13,096 10,850
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (8,513) (3,629)
Increase in other assets (669) (244)
------------- --------------
Net cash flows from investing activities (9,182) (3,873)
CASH FLOWS FROM FINANCING ACTIVITIES:
Change in short-term investments (3,570) (445)
Stock options exercised 1,685 2,020
------------- --------------
Net cash flows from financing activities (1,885) 1,575
------------- --------------
Net increase in cash and cash equivalents 2,029 8,552
Cash and cash equivalents, Beginning of period 35,486 22,499
------------- --------------
Cash and cash equivalents, End of period $ 37,515 $ 31,051
============= ==============
</TABLE>
See notes to financial statements.
5
<PAGE> 6
THE BUCKLE, INC.
NOTES TO FINANCIAL STATEMENTS
THIRTEEN AND THIRTY-NINE WEEKS ENDED
NOVEMBER 1, 1997 AND NOVEMBER 2, 1996
(Unaudited)
1. Management Representation - The accompanying unaudited financial
statements have been prepared in accordance with generally accepted
accounting principles for interim financial information. Accordingly,
they do not include all of the information and footnotes required by
generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments necessary for a
fair presentation of the results of operations for the interim periods
have been included. All such adjustments are of a normal recurring
nature. Because of the seasonal nature of the business, results for
interim periods are not necessarily indicative of a full year's
operations. The accounting policies followed by the Company and
additional footnotes are reflected in the financial statements for the
fiscal year ended February 1, 1997, included in The Buckle, Inc.'s 1996
Annual Report.
2. Description of the Business - The Company is a retailer of medium to
better priced casual apparel for fashion conscious young men and women.
The Company operated 197 stores located in 26 states throughout the
central, midwest, northwest, and southwest regions of the United States
as of November 1, 1997, and 178 stores in 22 states as of November 2,
1996.
During the third quarter of fiscal 1997, the Company opened five new
stores. The Company opened four new stores during the third quarter of
fiscal 1996.
3. Net Income Per Share - Net income per share is based on the weighted
average number of shares of common stock and common stock equivalents
outstanding during the periods as calculated under the treasury stock
method. The earnings per share and the average weighted shares outstanding
for the prior year thirteen and thirty-nine week periods have been restated
to reflect the impact of the Company's 2-for-1 stock split made in the form
of a 100 percent stock dividend issued on April 24, 1997.
4. Accounting Pronouncement - In February 1997, the Financial Accounting
Standards Board issued SFAS No. 128, Earnings Per Share which specifies the
computation, presentation and disclosure requirements for earnings per
share. The objective of the statement is to simplify the computation of
earnings per share. The impact on the Company's earnings per share is not
materially different than earnings per share determined in accordance with
current guidance. SFAS No. 128 is applicable for fiscal years ending after
December 15, 1997.
6
<PAGE> 7
THE BUCKLE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of certain significant
factors which have affected the Company's financial condition and results of
operations during the periods included in the accompanying financial
statements.
RESULTS OF OPERATIONS
The table below sets forth the percentage relationships of sales and various
expense categories in the Statements of Income for each of the thirteen and
thirty-nine week periods ended November 1, 1997, and November 2, 1996:
THE BUCKLE, INC.
RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
Percentage of Net Sales Percentage of Net Sales
----------------------- -----------------------
Thirteen weeks ended Percentage Thirty-nine weeks ended Percentage
Nov. 1, Nov. 2, increase Nov. 1, Nov. 2, increase
1997 1996 (decrease) 1997 1996 (decrease)
---------------------------------------- ----------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Sales 100.0% 100.0% 30.3% 100.0% 100.0% 26.9%
Cost of sales(including
buying, distribution and
occupancy costs) 63.6% 65.8% 26.0% 66.6% 69.1% 22.4%
---------------------------------------- ----------------------------------------
Gross profit 36.4% 34.2% 38.7% 33.4% 30.9% 37.1%
Selling expenses 17.9% 18.8% 24.0% 18.8% 19.2% 24.1%
General and
administrative expenses 3.0% 3.0% 27.8% 3.2% 3.1% 30.9%
---------------------------------------- ----------------------------------------
Income from operations 15.5% 12.4% 63.9% 11.4% 8.6% 68.1%
Other income (expense) .6% .4% 73.9% .6% .5% 64.3%
---------------------------------------- ----------------------------------------
Income before provision
for income taxes 16.1% 12.8% 64.2% 12.0% 9.1% 67.9%
Provision for income 6.1% 4.9% 61.6% 4.5% 3.5% 66.9%
taxes
---------------------------------------- ----------------------------------------
Net Income 10.0% 7.9% 65.8% 7.5% 5.6% 68.6%
======================================== ========================================
</TABLE>
Net sales increased from $61.1 million in the third quarter of
fiscal 1996 to $79.6 million in the third quarter of fiscal 1997,
a 30.3% increase. Comparable store sales increased from the third
quarter of fiscal 1996 to the third quarter of fiscal 1997 by
$12.5 million or 21.1%. The comparable store sales increase
resulted partially from an increase in the average price per piece
of merchandise sold compared with the fiscal 1996 third quarter,
as well as from strong unit growth, especially in the categories
of footwear, outerwear and guy's denims.
7
<PAGE> 8
THE BUCKLE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Net sales increased from $144.3 million in the first nine months of fiscal 1996
to $183.1 million for the first nine months of fiscal 1997, a 26.9% increase.
Comparable store sales for the thirty-nine weeks ended November 1, 1997 compared
to the thirty-nine weeks ended November 2, 1996 increased $21.8 million or
15.9%. Sales growth of 11% for this thirty-nine week period was attributable to
the inclusion of a full nine months of operating results for the 17 stores
opened in 1996 and the opening of 16 new stores in the first thirty-nine weeks
of fiscal 1997. Average sales per square foot increased 15.1% from $179.01 to
$205.97.
Gross profit after buying, occupancy, and distribution expenses increased $8.1
million in the third quarter of fiscal 1997 to $28.9 million, a 38.7% increase.
As a percentage of net sales, gross profit increased from 34.2% in the third
quarter of fiscal 1996 to 36.4% in the third quarter of fiscal 1997. Gross
profit increased $16.5 million for the first thirty-nine weeks of fiscal 1997 to
$61.1 million, a 37.1% increase. As a percentage of net sales, gross profit in
the first nine months increased from 30.9% for fiscal 1996, to 33.4% for fiscal
1997. This increase was attributable to a decrease in occupancy costs as a
percentage of net sales due to leverage provided by the increase in comparable
store sales and by improvement in the merchandise margins. Gross profit also
increased due to an improvement in the actual merchandise margins for the three
quarters of fiscal 1997 compared to the first three quarters of fiscal 1996.
Selling expenses increased from $11.5 million for the third quarter of fiscal
1996 to $14.3 million for the third quarter of fiscal 1997, a 24.0% increase.
Selling expenses as a percentage of net sales decreased from 18.8% for the third
quarter fiscal 1996, to 17.9% for the third quarter of fiscal 1997. Year-to-date
selling expense rose 24.1% from $27.7 million through the first nine months of
fiscal 1996 to $34.4 million for the first nine months of fiscal 1997. As a
percentage of net sales, selling expense decreased from 19.2% in fiscal 1996, to
18.8% in fiscal 1997. The primary reason for the improvement in selling
expenses as a percentage of net sales is leverage provided by strong sales to
the areas of salaries and advertising expense.
General and administrative expenses increased from $1.8 million in the third
quarter of fiscal 1996 to $2.3 million in the third quarter of fiscal 1997, a
27.8% increase. As a percentage of net sales, general and administrative
expenses remained consistent with the prior year third quarter at 3.0%. For the
first nine months of fiscal 1997, general and administrative expense rose 30.9%
from $4.5 million for the three quarters ended November 2, 1996, to $5.9 million
for the three quarters ended November 1, 1997. As a percentage of net sales,
general and administrative expense increased to 3.2% for the first nine months
of fiscal 1997 compared to 3.1% for the first nine months of fiscal 1996.
Increases in general and administrative expenses, as a percentage of net sales,
resulted primarily from higher bonus accruals for incentives based upon net
profits. General and administrative expenses also increased due to the costs
associated with filing to trade on the New York Stock Exchange.
As a result of the above changes, the Company's income from operations increased
$4.8 million to $12.3 million for the third quarter of fiscal 1997 compared to
$7.5 million for the third quarter of fiscal 1996, a 63.9% increase. Income
from operations was 15.5% of net sales in the third quarter of fiscal 1997
compared to 12.4% in the third quarter of fiscal 1996.
8
<PAGE> 9
THE BUCKLE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Income from operations, year-to-date through November 1, 1997, was $20.9
million, up $8.5 million or 68.1% from the prior year first nine months. Income
from operations was 11.4% of net sales for the first nine months of fiscal 1997
compared to 8.6% for the first nine months of fiscal 1996.
For the quarter ended November 1, 1997, other income increased 73.9%. For the
nine months ended November 1, 1997, other income increased 64.3%. These
increases are primarily due to additional interest income, as the levels of cash
and short term investments is greater than in the same periods of fiscal 1996.
Income tax expense as a percentage of pre-tax income was 37.8% in the first
nine months of fiscal 1997 compared to 38.0% in the first nine months of fiscal
1996. The primary reason for the lower effective income tax rate is the growth
in the amount of federal and/or state tax-exempt interest income.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary ongoing cash requirements are for inventory, payroll, new
store expansion, and remodeling. Historically, the Company's primary source of
working capital has been cash flow from operations. During the first three
quarters of fiscal 1997 and 1996, the Company's cash flow provided by operating
activities was $13.1 million and $10.9 million, respectively.
The uses of cash for both thirty-nine week periods include payment of annual
bonuses accrued at fiscal year end, changes in inventory and accounts payable
for build up of inventory levels, and construction costs for opening new stores.
Uses of cash in the third quarter of fiscal 1997 also included the purchase of a
corporate aircraft. The primary differences creating less cash flow this year
versus last year are a greater build up in inventory and a higher level of
capital expenditures for the first three quarters of fiscal 1997 compared to
fiscal 1996.
The Company has available an unsecured line of credit of $5.0 million and a $5.0
million line of credit for foreign and domestic letters of credit, with First
National Bank and Trust Company of Kearney, Nebraska. 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 November 1, 1997, the Company had working capital of $65.0 million,
including $37.5 million of cash and cash equivalents and short-term investments
of $12.0 million. There were no bank borrowings during the first three quarters
of fiscal 1997 and 1996.
During the first three quarters of fiscal 1997 and 1996 the Company invested
$4.2 million and $3.5 million, respectively, in new store construction, store
renovation and upgrading store technology, net of any construction allowances
received from landlords. The Company also spent approximately $1.3 million and
$150,000 in the first three quarters of fiscal 1997 and 1996, respectively, in
capital expenditures for the corporate headquarters. During the fiscal 1997
9
<PAGE> 10
THE BUCKLE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
third quarter, the Company began an expansion to the corporate headquarters and
distribution facility. The addition will be approximately 122,000 square feet,
added to the current 55,000 square foot building. The majority of the space
will be used for the distribution center. The total cost of the project is
currently estimated to be $7.5 million, with completion of the distribution
system in the second quarter of fiscal 1998 and completion of the office
expansion by the end of fiscal 1998. Also in the third quarter of fiscal 1997,
the Company upgraded its corporate aircraft at a cost of $3.0 million, net of
trade-in. 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.
During the remainder of fiscal 1997, the Company anticipates completing three
additional new store construction projects. As of November 1, 1997, seven
additional lease contracts have been signed, and additional leases are in
various stages of negotiation. Management now estimates that total capital
expenditures during fiscal 1997 will be approximately $13.5 million before any
landlord allowances, estimated to be at approximately $2.4 million.
SEASONALITY AND INFLATION
The Company's business is seasonal, with the Christmas season (from
approximately November 15 to December 30) and the back-to-school season (from
approximately July 15 to September 1) historically contributing the greatest
volume of net sales. For fiscal years 1994, 1995, and 1996, the Christmas 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
thirty-nine week periods ended November 1, 1997, and November 2, 1996.
FORWARD LOOKING STATEMENTS
Information in this report, other than historical information, may be considered
to be forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995 (the "1995 Act"). Such statements are made in
good faith by the Company pursuant to the safe-harbor provisions of the 1995
Act. In connection with these safe-harbor provisions, this management's
discussion and analysis contains certain forward-looking statements, which
reflect management's current views and estimates of future economic conditions,
company performance and financial results. The statements are based on many
assumptions and factors that could cause future results to differ materially.
Such factors include, but are not limited to, changes in product mix, changes in
fashion trends, competitive factors and general economic conditions, economic
conditions in the retail apparel industry, as well as other risks and
uncertainties inherent in the Company's business and the retail industry in
general. Any changes in these factors could result in significantly different
results for the Company. The Company further cautions that the forward-looking
information contained herein is not exhaustive or exclusive. The Company does
not undertake to update any forward-looking statements, which may be made from
time to time by or on behalf of the Company.
10
<PAGE> 11
THE BUCKLE, INC.
PART II -- OTHER INFORMATION
<TABLE>
<S> <C> <C>
Item 1. Legal Proceedings: None
Item 2. Changes in Securities: None
Item 3. Defaults Upon Senior Securities: None
Item 4. Submission of Matters to a Vote of Security Holders: None
Item 5. Other Information: None
Item 6. Exhibits and Reports on Form 8-K:
(a) See Exhibit 11, statement regarding computation of
earnings per share.
(b) No reports on Form 8-K were filed by the Company during
the quarter ended November 1, 1997.
</TABLE>
11
<PAGE> 12
EXHIBIT 11
THE BUCKLE, INC.
COMPUTATIONS OF EARNINGS PER SHARE
(Amounts in thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Thirteen Weeks Ended Thirty-nine Weeks Ended
------------------------------ ------------------------------
November 1, November 2, November 1, November 2,
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
FINANCIAL STATEMENT COMPUTATIONS:
Net Income $ 7,972 $ 4,807 $ 13,708 $ 8,131
----------- ----------- ----------- -----------
NET INCOME PER SHARE:
Shares used in this computation:
Weighted average shares outstanding 14,166 13,960 14,058 13,886
Dilutive effect of stock options 1,254 754 1,017 696
----------- ----------- ----------- -----------
Common and common equivalent shares 15,420 14,714 15,075 14,582
=========== =========== =========== ===========
Net income per share $0.52 $0.33 $0.91 $0.56
=========== =========== =========== ===========
</TABLE>
12
<PAGE> 13
THE BUCKLE, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE BUCKLE, INC.
Dated: ______________, 1997 ________________________________
DENNIS H. NELSON, President
and CEO
Dated: ______________, 1997 ________________________________
KAREN B. RHOADS, Vice President
of Finance and CFO
13
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1998
<PERIOD-START> AUG-03-1997
<PERIOD-END> NOV-01-1997
<CASH> 37,515
<SECURITIES> 12,025
<RECEIVABLES> 3,347
<ALLOWANCES> 445
<INVENTORY> 44,848
<CURRENT-ASSETS> 99,422
<PP&E> 56,817
<DEPRECIATION> 29,274
<TOTAL-ASSETS> 128,294
<CURRENT-LIABILITIES> 34,379
<BONDS> 0
708
0
<COMMON> 0
<OTHER-SE> 92,728
<TOTAL-LIABILITY-AND-EQUITY> 128,294
<SALES> 79,604
<TOTAL-REVENUES> 79,604
<CGS> 50,662
<TOTAL-COSTS> 16,600
<OTHER-EXPENSES> (454)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 12,796
<INCOME-TAX> 4,824
<INCOME-CONTINUING> 7,972
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,972
<EPS-PRIMARY> .52
<EPS-DILUTED> .52
</TABLE>
