<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 MAY 2, 1998
[ ] 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
May 22, 1998 was 21,933,970 shares of Common Stock, adjusted for the Company's
June 8, 1998 3:2 stock split for shareholders of record as of May 28, 1998.
<PAGE> 2
THE BUCKLE, INC.
FORM 10-Q
INDEX
<TABLE>
<CAPTION>
Pages
-----
<S> <C>
Part 1. Financial Information (unaudited)
Balance Sheets - May 2, 1998 and
January 31, 1998 3
Statements of Income - thirteen weeks ended
May 2, 1998 and May 3, 1997 4
Statements of Cash Flows - thirteen weeks ended
May 2, 1998 and May 3, 1997 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 May 2, January 31,
- ------ 1998 1998
CURRENT ASSETS ---------- -----------
<S> <C> <C>
Cash and cash equivalents $ 44,559 $ 53,593
Short-term investments 17,696 14,013
Accounts receivable, net of
allowance of $490,567 2,044 2,149
Inventory 44,431 42,339
Prepaid expenses and other assets 2,174 2,370
-------- --------
Total current assets 110,904 114,464
PROPERTY AND EQUIPMENT 63,808 59,100
Less accumulated depreciation 30,818 29,688
-------- --------
32,990 29,412
OTHER ASSETS 961 961
-------- --------
$144,855 $144,837
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES
Accounts payable $ 15,264 $ 17,248
Accrued employee compensation 7,713 14,519
Accrued store operating expenses 2,409 2,407
Gift certificates redeemable 1,080 1,357
Income taxes payable 3,458 1,048
-------- --------
Total current liabilities 29,924 36,579
DEFERRED INCOME TAXES 377 377
STOCKHOLDERS' EQUITY
Common stock, authorized 100,000,000 shares
of $.01 par value; issued 21,929,208 and
21,659,604 shares, respectively 219 217
Additional paid-in capital 35,069 33,709
Retained earnings 80,519 75,505
Unearned compensation - restricted stock (1,253) (1,550)
-------- --------
Total stockholders' equity 114,554 107,881
-------- --------
$144,855 $144,837
======== ========
</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
--------------------
May 2, May 3,
1998 1997
------- -------
<S> <C> <C>
SALES, net of returns and allowances $67,028 $48,325
COST OF SALES (including buying,
distribution and occupancy costs) 44,287 33,560
------- -------
Gross profit 22,741 14,765
OPERATING EXPENSES:
Selling 12,952 9,785
General and administrative 2,225 1,598
------- -------
15,177 11,383
------- -------
Income from operations 7,564 3,382
OTHER INCOME 522 258
------- -------
Income before income taxes 8,086 3,640
Income tax expense 3,073 1,383
------- -------
NET INCOME $ 5,013 $ 2,257
======= =======
Basic income per share $0.23 $0.11
Diluted income per share $0.21 $0.10
Basic weighted average shares outstanding 21,928 20,950
Diluted weighted average shares outstanding 23,173 21,637
</TABLE>
See notes to financial statements.
4
<PAGE> 5
THE BUCKLE, INC.
STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Thirteen Weeks Ended
--------------------
May 2, 1998 May 3, 1997
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 5,013 $ 2,257
Adjustments to reconcile net income to net cash
flows from operating activities:
Depreciation 1,371 1,262
Loss on disposal of assets 47 11
Changes in operating assets and liabilities:
Accounts receivable 105 (457)
Inventory (2,092) (3,939)
Prepaid expenses and other assets 196 3
Accounts payable (1,984) 2,080
Accrued employee compensation (6,806) (3,760)
Accrued store operating expenses 2 (111)
Gift certificates redeemable (277) (214)
Income taxes payable 2,410 14
-------- --------
Net cash flows from operating activities (2,015) (2,854)
CASH FLOWS FROM INVESTING ACTIVITIES:
Change in short-term investments (3,683) (754)
Purchase of property and equipment (4,995) (1,997)
Increase in other assets - (5)
-------- --------
Net cash flows from investing activities (8,678) (2,756)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the exercise of stock options 1,659 30
-------- --------
Net cash flows from financing activities 1,659 30
-------- --------
Net decrease in cash and cash equivalents (9,034) (5,580)
Cash and cash equivalents, Beginning of period 53,593 35,487
-------- --------
Cash and cash equivalents, End of period $ 44,559 $ 29,907
======== ========
</TABLE>
See notes to financial statements.
5
<PAGE> 6
THE BUCKLE, INC.
NOTES TO FINANCIAL STATEMENTS
THIRTEEN WEEKS ENDED MAY 2, 1998 AND MAY 3, 1997
(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 January 31, 1998, included in The
Buckle, Inc.'s 1997 Annual Report.
2. Description of the Business - The Company is a retailer of medium to better
priced casual apparel and footwear for fashion conscious young men and
women. The Company operated 204 stores located in 28 states throughout the
central, northwestern and southern areas of the United States as of May 2,
1998, and 186 stores in 23 states as of May 3, 1997. During the first
quarter of fiscal 1998, the Company opened six new stores, substantially
renovated three stores and closed one store. During the first quarter of
fiscal 1997, the Company opened five new stores.
3. Net Income Per Share - The Financial Accounting Standards Board (FASB)
issued Statement No. 128, "Earnings Per Share", which is applicable for
fiscal years ending after December 15, 1997. FASB No. 128 requires dual
presentation of Basic and Diluted earnings per share for all periods for
which an income statement is presented. 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 and warrants.
4. Accounting Pronouncements - In June 1997, the FASB issued Statement No.
130, "Reporting Comprehensive Income." This statement establishes
standards for reporting and display of comprehensive income and its
components in a full set of general-purpose financial statements. The
adoption of this standard in the first quarter of fiscal 1998 had no impact
on the Company's financial statement.
Also in June 1997, the FASB issued Statement No. 131, "Disclosure About
Segments of an Enterprise and Related Information", which is effective in
1998. FASB No. 131 establishes standards for the way public enterprises
report information about operating segments. The Company currently
complies with most provisions of this statement and any incremental
disclosure required by that statement is expected to be minimal.
5. Stock Split and Authorized Shares - On June 8, 1998 the Company completed
a 3:2 stock split for shareholders of record as of May 28, 1998. Also, on
May 28, 1998 the Company's shareholders approved an amendment to the
Articles of Incorporation increasing the number of shares of common stock
authorized to 100,000,000 and changing the par value per share to $0.01.
All applicable amounts reflected in this Form 10-Q have been retroactively
adjusted to report the affects of the stock split and the change in par
value.
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 the thirteen week periods
ended May 2, 1998, and May 3, 1997:
THE BUCKLE, INC.
RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
Percentage of Net Sales
-----------------------
Thirteen weeks ended Percentage
May 2, May 3, Increase
1998 1997 (decrease)
-----------------------------------
<S> <C> <C> <C>
Net Sales 100.0% 100.0% 38.7%
Cost of sales (including
buying, distribution and
occupancy costs) 66.1% 69.5% 32.0%
-----------------------------------
Gross profit 33.9% 30.5% 54.0%
Selling expenses 19.3% 20.2% 32.4%
General and
administrative expenses 3.3% 3.3% 39.2%
-----------------------------------
Income from operations 11.3% 7.0% 123.7%
Other income .8% .5% 102.3%
-----------------------------------
Income before provision
for income taxes 12.1% 7.5% 122.1%
Provision for income taxes 4.6% 2.8% 122.1%
-----------------------------------
Net Income 7.5% 4.7% 122.1%
===================================
</TABLE>
Net sales increased from $48.3 million in the first quarter of fiscal 1997 to
$67.0 million in the first quarter of fiscal 1998, a 38.7% increase. Comparable
store sales increased from the first quarter of fiscal 1997 to the first quarter
of fiscal 1998 by $13.0 million or 27.4%. The comparable store sales increase
resulted partially from an increase in the average price per piece of
merchandise sold compared with the fiscal 1997 first quarter. Sales growth of
11.3% for this thirteen week period was attributable to the inclusion of a full
three months of operating results for the 19 stores opened in 1997 and the
opening of 6 new stores in the first thirteen weeks of fiscal 1998. Average
sales per square foot increased 25.4% from $55.98 to $70.22.
7
<PAGE> 8
THE BUCKLE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Gross profit after buying, occupancy, and distribution expenses increased $8.0
million in the first quarter of fiscal 1998 to $22.7 million, a 54.0% increase.
As a percentage of net sales, gross profit increased from 30.5% in the first
quarter of fiscal 1997 to 33.9% in the first quarter of fiscal 1998. This
increase was attributable primarily to a decrease in occupancy costs as a
percentage of net sales due to leverage provided by the increase in comparable
store sales. Gross profit was also improved due to an improvement in the
actual merchandise margins for the first quarter of fiscal 1998 compared to the
first quarter of fiscal 1997.
Selling expenses increased from $9.8 million for the first quarter of fiscal
1997 to $13.0 million for the first quarter of fiscal 1998, a 32.4% increase.
Selling expenses as a percentage of net sales for the first quarter of fiscal
1998 decreased to 19.3% compared to 20.2% for the first quarter of 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 $1.6 million in the first
quarter of fiscal 1997 to $2.2 million in the first quarter of fiscal 1998, a
39.2% increase. As a percentage of net sales, general and administrative
expenses for the first quarter of fiscal 1998 remained consistent with the
prior year's first quarter at 3.3%.
As a result of the above changes, the Company's income from operations
increased $4.2 million to $7.6 million for the first quarter of fiscal 1998
compared to $3.4 million for the first quarter of fiscal 1997, a 123.7%
increase. Income from operations was 11.3% of net sales in the first quarter
of fiscal 1998 compared to 7.0% in the first quarter of fiscal 1997.
For the quarter ended May 2, 1998, other income increased 102.3%. This
increase was primarily due to additional interest income, as the levels of cash
and short-term investments were greater than in the first quarter of 1997.
Income tax expense as a percentage of pre-tax income was 38.0% in the first
quarter of both fiscal 1998 and fiscal 1997.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary ongoing cash requirements are for inventory, payroll, new
store expansion, and remodeling. Historically, the Company's primary source of
working capital has been cash flow from operations. However, the first quarter
of each fiscal year is typically a period of decreasing cash flows created by
various operating, investing, and financing activities. During the first
quarter of fiscal 1998 and 1997, the Company's cash flow used by operating
activities was $2.0 and $2.9 million, respectively.
8
<PAGE> 9
THE BUCKLE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The uses of cash for both thirteen-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. The primary differences creating greater usage of cash this year
versus last year are a higher level of capital expenditures and a higher level
of bonuses paid.
The Company has available an unsecured line of credit of $5.0 million and a
$5.0 million letter of credit facility 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 May 2, 1998, the Company had working capital of $81.0
million, including $44.6 million of cash and cash equivalents and short-term
investments of $17.7 million. There were no bank borrowings during the first
quarter of fiscal 1998 and 1997.
During the first quarter of fiscal 1998 and 1997 the Company invested $2.5
million and $1.9 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 $2.5 million and
$100,000 in the first quarter of fiscal 1998 and 1997, respectively, in capital
expenditures for the corporate headquarters. During the fiscal 1997 third
quarter, the Company began an expansion to the corporate headquarters and
distribution facility. The addition will be approximately 134,000 square feet,
added to the current 55,000 square foot building. The majority of the space
will be used for the distribution center, with approximately 7,000 square feet
of new office space. The total cost of this project is estimated to be $7.5
million, with completion of the distribution system and new office space in the
second quarter of fiscal 1998. The Company will then begin remodeling the
existing office space and the former distribution area to add additional space
for offices, supply department, returns-to-vendor and storage. This project is
estimated to start later this year to be completed during fiscal 1999.
Architectural plans and estimates are now being compiled for review. 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 1998, the Company anticipates completing
approximately nineteen additional store construction projects, including
approximately fourteen new stores and approximately five stores to be remodeled
and/or relocated. As of May 2, 1998, four additional lease contracts have been
signed, and additional leases are in various stages of negotiation. Management
now estimates that total capital expenditures during fiscal 1998 will be
approximately $13.0 million before any landlord allowances estimated to be $1.5
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 1995, 1996, and 1997,
9
<PAGE> 10
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 thirteen week periods ended May 2, 1998, and May 3,
1997.
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
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
(a) None
(b) None
(c) None
(d) 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 May 2, 1998.
11
<PAGE> 12
EXHIBIT 11
THE BUCKLE, INC.
COMPUTATIONS OF EARNINGS PER SHARE
(dollar amounts in thousands, except per share data)
<TABLE>
<CAPTION>
Thirteen Weeks Ended Thirteen Weeks Ended
May 2, 1998 May 3, 1997
------------------------------ ------------------------------
Income Shares Per Share Income Shares Per Share
Amount Amount
<S> <C> <C> <C> <C> <C> <C>
Basic EPS
Net Income $5,013 21,928 $0.23 $2,257 20,950 $0.11
Effect of Dilutive
Securities
Stock Options 1,245 687
------------------------------ ------------------------------
Diluted EPS $5,013 23,173 $0.21 $2,257 21,637 $0.10
============================== ==============================
</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: , 1998 DENNIS H. NELSON
--------------- -----------------------------------
DENNIS H. NELSON, President and CEO
Dated: , 1998 KAREN B. RHOADS
--------------- -----------------------------------
KAREN B. RHOADS, Vice President
of Finance and CFO
13
<PAGE> 14
ACKNOWLEDGMENT
1. Dennis Nelson, currently employed by The Buckle, Inc. ("Company") of
Kearney, Nebraska, will be paid an annual salary of $500,000 for so long as
the employee is employed by the Company during the fiscal year ending January
30, 1999.
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 22.00% of the "Management Bonus Pool." The Management
Bonus Pool will be calculated as a fixed percentage of the Company's Pre-Bonus
Net Income for fiscal 1998 and shall be calculated as follows:
(a) On the first $20 million of Pre-Bonus Net Income there shall be
nothing contributed to the Management Bonus Pool.
(b) On Pre-Bonus Net Income in excess of $20 million ("Excess Pre-Bonus
Net Income"), the amount to be contributed to the Management Bonus
Pool will be based upon the increase in fiscal 1998 Pre-Bonus Net
Income over fiscal 1997 Pre-Bonus Net Income as follows:
<TABLE>
<CAPTION>
Increase in Pre-Bonus Net Income Percentage of Excess Pre-Bonus
Net Income to be Contributed to
Management Bonus Pool
<S> <C>
No increase 15.0%
> 0 - 10% 17.0%
>10 - 20% 18.0%
>20 - 30% 19.0%
>30% 20.0%
</TABLE>
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.
Any person eligible for a Cash Award who is no longer employed, for whatever
reason, by the Company on the last day of such fiscal year shall forfeit any
right, claim or interest to any Cash Award.
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 date of certification
by the Compensation Committee of the amount of the Cash Award. Restricted
Stock grants will equal 10% of your Cash Award if there is either no increase
or a decrease in Pre-Bonus Net Income; 20% of your Cash Award if there is up to
a 30% (but not including 30%) increase in Pre-Bonus Net Income; and 30% of your
Cash Award if there is a 30% or greater increase in Pre-Bonus Net Income.
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 70,000 shares ("Options") of The Buckle, Inc.
common stock at $33.50 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 (1-31-98). Options granted under the Plan will vest
14
<PAGE> 15
according to the same terms as the 1997 Management Incentive Plan. Those terms
include a performance feature as follows:
4a. One-half of the Options will be earned upon determination by the
Compensation Committee that the company has achieved a 10% increase
in Pre-Bonus Net Income for fiscal 1998. These earned options will
vest one-third immediately, one third on January 29, 2000 and
one-third on January 28, 2001.
4b. The second half of the Options will be earned upon determination by
the Compensation Committee that the Company has achieved a 30%
increase in Pre-Bonus Net Income for fiscal 1998. These earned
options will vest one-third immediately, one third January 29, 2000
and one-third on January 28, 2001.
4c. If the 10% and/or the 30% performance goals are not achieved, the
respective options will ultimately vest on December 31, 2007, even
though they have not been earned.
4d. The 1998 Management Incentive Plan will add 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 the
1998 Management Incentive 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.
June 9, 1998
The Buckle, Inc.
Acknowledged by: _______________________________
Date:_____________________
15
<PAGE> 16
ACKNOWLEDGMENT
1. Scott Porter, currently employed by The Buckle, Inc. ("Company") of
Kearney, Nebraska, will be paid an annual salary of $250,000 for so long as
the employee is employed by the Company during the fiscal year ending January
30, 1999.
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 12.50% of the "Management Bonus Pool." The Management
Bonus Pool will be calculated as a fixed percentage of the Company's Pre-Bonus
Net Income for fiscal 1998 and shall be calculated as follows:
(a) On the first $20 million of Pre-Bonus Net Income there shall be
nothing contributed to the Management Bonus Pool.
(b) On Pre-Bonus Net Income in excess of $20 million ("Excess Pre-Bonus
Net Income"), the amount to be contributed to the Management Bonus
Pool will be based upon the increase in fiscal 1998 Pre-Bonus Net
Income over fiscal 1997 Pre-Bonus Net Income as follows:
<TABLE>
<CAPTION>
Increase in Pre-Bonus Net Income Percentage of Excess Pre-Bonus
Net Income to be Contributed to
Management Bonus Pool
<S> <C>
No increase 15.0%
> 0 - 10% 17.0%
>10 - 20% 18.0%
>20 - 30% 19.0%
>30% 20.0%
</TABLE>
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.
Any person eligible for a Cash Award who is no longer employed, for whatever
reason, by the Company on the last day of such fiscal year shall forfeit any
right, claim or interest to any Cash Award.
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 date of certification
by the Compensation Committee of the amount of the Cash Award. Restricted
Stock grants will equal 10% of your Cash Award if there is either no increase
or a decrease in Pre-Bonus Net Income; 20% of your Cash Award if there is up to
a 30% (but not including 30%) increase in Pre-Bonus Net Income; and 30% of your
Cash Award if there is a 30% or greater increase in Pre-Bonus Net Income.
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 39,000 shares ("Options") of The Buckle, Inc.
common stock at $33.50 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 (1-31-98). Options granted under the Plan will vest
16
<PAGE> 17
according to the same terms as the 1997 Management Incentive Plan. Those terms
include a performance feature as follows:
4a. One-half of the Options will be earned upon determination by the
Compensation Committee that the company has achieved a 10% increase
in Pre-Bonus Net Income for fiscal 1998. These earned options will
vest one-third immediately, one third on January 29, 2000 and
one-third on January 28, 2001.
4b. The second half of the Options will be earned upon determination by
the Compensation Committee that the Company has achieved a 30%
increase in Pre-Bonus Net Income for fiscal 1998. These earned
options will vest one-third immediately, one third January 29, 2000
and one-third on January 28, 2001.
4c. If the 10% and/or the 30% performance goals are not achieved, the
respective options will ultimately vest on December 31, 2007, even
though they have not been earned.
4d. The 1998 Management Incentive Plan will add 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 the
1998 Management Incentive 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.
June 9, 1998
The Buckle, Inc.
Acknowledged by: _______________________________
Date:_____________________
17
<PAGE> 18
ACKNOWLEDGMENT
1. Jim Shada, currently employed by The Buckle, Inc. ("Company") of
Kearney, Nebraska, will be paid an annual salary of $225,000 for so long as
the employee is employed by the Company during the fiscal year ending January
30, 1999.
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 11.30% of the "Management Bonus Pool." The Management
Bonus Pool will be calculated as a fixed percentage of the Company's Pre-Bonus
Net Income for fiscal 1998 and shall be calculated as follows:
(a) On the first $20 million of Pre-Bonus Net Income there shall be
nothing contributed to the Management Bonus Pool.
(b) On Pre-Bonus Net Income in excess of $20 million ("Excess Pre-Bonus
Net Income"), the amount to be contributed to the Management Bonus
Pool will be based upon the increase in fiscal 1998 Pre-Bonus Net
Income over fiscal 1997 Pre-Bonus Net Income as follows:
<TABLE>
<CAPTION>
Increase in Pre-Bonus Net Income Percentage of Excess Pre-Bonus
Net Income to be Contributed to
Management Bonus Pool
<S> <C>
No increase 15.0%
> 0 - 10% 17.0%
>10 - 20% 18.0%
>20 - 30% 19.0%
>30% 20.0%
</TABLE>
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.
Any person eligible for a Cash Award who is no longer employed, for whatever
reason, by the Company on the last day of such fiscal year shall forfeit any
right, claim or interest to any Cash Award.
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 date of certification
by the Compensation Committee of the amount of the Cash Award. Restricted
Stock grants will equal 10% of your Cash Award if there is either no increase
or a decrease in Pre-Bonus Net Income; 20% of your Cash Award if there is up to
a 30% (but not including 30%) increase in Pre-Bonus Net Income; and 30% of your
Cash Award if there is a 30% or greater increase in Pre-Bonus Net Income.
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 23,100 shares ("Options") of The Buckle, Inc.
common stock at $33.50 per share were granted to you pursuant to the 1997
Executive Stock Option Plan as of the
18
<PAGE> 19
last day of the fiscal year preceding this Plan (1-31-98). Options granted
under the Plan will vest according to the same terms as the 1997 Management
Incentive Plan. Those terms include a performance feature as follows:
4a. One-half of the Options will be earned upon determination by the
Compensation Committee that the company has achieved a 10% increase
in Pre-Bonus Net Income for fiscal 1998. These earned options will
vest one-third immediately, one third on January 29, 2000 and
one-third on January 28, 2001.
4b. The second half of the Options will be earned upon determination by
the Compensation Committee that the Company has achieved a 30%
increase in Pre-Bonus Net Income for fiscal 1998. These earned
options will vest one-third immediately, one third January 29, 2000
and one-third on January 28, 2001.
4c. If the 10% and/or the 30% performance goals are not achieved, the
respective options will ultimately vest on December 31, 2007, even
though they have not been earned.
4d. The 1998 Management Incentive Plan will add 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 the
1998 Management Incentive 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.
June 9, 1998
The Buckle, Inc.
Acknowledged by: _______________________________
Date:_____________________
19
<PAGE> 20
ACKNOWLEDGMENT
1. Gary Lalone, 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 January
30, 1999.
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 10.00% of the "Management Bonus Pool." The Management
Bonus Pool will be calculated as a fixed percentage of the Company's Pre-Bonus
Net Income for fiscal 1998 and shall be calculated as follows:
(a) On the first $20 million of Pre-Bonus Net Income there shall be
nothing contributed to the Management Bonus Pool.
(b) On Pre-Bonus Net Income in excess of $20 million ("Excess Pre-Bonus
Net Income"), the amount to be contributed to the Management Bonus
Pool will be based upon the increase in fiscal 1998 Pre-Bonus Net
Income over fiscal 1997 Pre-Bonus Net Income as follows:
<TABLE>
<CAPTION>
Increase in Pre-Bonus Net Income Percentage of Excess Pre-Bonus
Net Income to be Contributed to
Management Bonus Pool
<S> <C>
No increase 15.0%
> 0 - 10% 17.0%
>10 - 20% 18.0%
>20 - 30% 19.0%
>30% 20.0%
</TABLE>
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.
Any person eligible for a Cash Award who is no longer employed, for whatever
reason, by the Company on the last day of such fiscal year shall forfeit any
right, claim or interest to any Cash Award.
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 date of certification
by the Compensation Committee of the amount of the Cash Award. Restricted
Stock grants will equal 10% of your Cash Award if there is either no increase
or a decrease in Pre-Bonus Net Income; 20% of your Cash Award if there is up to
a 30% (but not including 30%) increase in Pre-Bonus Net Income; and 30% of your
Cash Award if there is a 30% or greater increase in Pre-Bonus Net Income.
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.
20
<PAGE> 21
4. Options to purchase 23,100 shares ("Options") of The Buckle, Inc.
common stock at $33.50 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 (1-31-98). Options granted under the Plan will vest according to the
same terms as the 1997 Management Incentive Plan. Those terms include a
performance feature as follows:
4a. One-half of the Options will be earned upon determination by the
Compensation Committee that the company has achieved a 10% increase
in Pre-Bonus Net Income for fiscal 1998. These earned options will
vest one-third immediately, one third on January 29, 2000 and
one-third on January 28, 2001.
4b. The second half of the Options will be earned upon determination by
the Compensation Committee that the Company has achieved a 30%
increase in Pre-Bonus Net Income for fiscal 1998. These earned
options will vest one-third immediately, one third January 29, 2000
and one-third on January 28, 2001.
4c. If the 10% and/or the 30% performance goals are not achieved, the
respective options will ultimately vest on December 31, 2007, even
though they have not been earned.
4d. The 1998 Management Incentive Plan will add 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 the
1998 Management Incentive 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.
June 9, 1998
The Buckle, Inc.
Acknowledged by: _______________________________
Date:_____________________
21
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-30-1999
<PERIOD-START> FEB-01-1998
<PERIOD-END> MAY-02-1998
<EXCHANGE-RATE> 1
<CASH> 44,559
<SECURITIES> 17,696
<RECEIVABLES> 2,535
<ALLOWANCES> 491
<INVENTORY> 44,431
<CURRENT-ASSETS> 110,904
<PP&E> 63,808
<DEPRECIATION> 30,818
<TOTAL-ASSETS> 144,855
<CURRENT-LIABILITIES> 29,924
<BONDS> 0
0
0
<COMMON> 219
<OTHER-SE> 114,335
<TOTAL-LIABILITY-AND-EQUITY> 144,855
<SALES> 67,028
<TOTAL-REVENUES> 67,028
<CGS> 44,287
<TOTAL-COSTS> 15,177
<OTHER-EXPENSES> (522)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 8,086
<INCOME-TAX> 3,073
<INCOME-CONTINUING> 5,013
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,013
<EPS-PRIMARY> .23
<EPS-DILUTED> .21
</TABLE>
